10-K
1
f10k2021_bluewater.htm
ANNUAL REPORT
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-41294
Blue
Water Vaccines Inc.
(Exact name of registrant as specified in its
charter)
Delaware
81-2262816
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
201 E. Fifth Street, Suite 1900
Cincinnati, OH
45202
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including
area code: (513) 620-4101
Securities registered pursuant to Section
12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of exchange on which registered
Common stock, $0.00001 par value
BWV
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Act:
None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer
☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark
whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 726(b)) by the registered public accounting
firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 2021, the last business day of
the registrant’s most recently completed second fiscal quarter, the registrant’s securities were not publicly traded. The
registrant’s common stock began trading on The Nasdaq Capital Market on February 18, 2022.
As of March 15, 2022, the registrant had 11,048,587
shares of common stock, $0.00001 par value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Page
Cautionary Note Regarding Forward-Looking Statements
ii
Summary of Material Risks Associated with our Business
iii
PART I
Item 1.
Business
1
Item 1A.
Risk Factors
52
Item 1B.
Unresolved Staff Comments
99
Item 2.
Properties
99
Item 3.
Legal Proceedings
99
Item 4.
Mine Safety Disclosures
99
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
100
Item 6.
[Reserved]
100
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
101
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
111
Item 8.
Financial Statements and Supplementary Data
111
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
111
Item 9A.
Controls and Procedures
112
Item 9B.
Other Information
112
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
112
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
113
Item 11.
Executive Compensation
120
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
130
Item 13.
Certain Relationships and Related Transactions , and Director Independence
131
Item 14.
Principal Accountant Fees and Services
135
PART IV
Item 15.
Exhibits and Financial Statement Schedules
136
Item 16.
Form 10-K Summary
136
Signatures
138
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form
10-K (this “Report”) contains forward-looking statements that reflect our current expectations and views of future events.
The forward-looking statements are contained principally in the sections entitled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” Readers are cautioned that known and unknown risks, uncertainties
and other factors, including those over which we may have no control and others listed in the “Risk Factors” section of this
Report, may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking
statements.
In some cases, you can identify forward-looking
statements by the words “may,” “might,” “will,” “could,” “would,” “should,”
“expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,”
“estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,”
or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not all forward-looking
statements contain these words. These statements relate to future events or our future financial performance or condition and involve
known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement
to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements include, but
are not limited to, statements about:
● our projected financial position and estimated cash burn
rate;
● our estimates regarding expenses, future revenues and capital
requirements;
● our ability to continue as a going concern;
● our need to raise substantial additional capital to fund
our operation;
● the success, cost and timing of our clinical trials;
● our dependence on third parties in the conduct of our clinical
trials;
● our ability to obtain the necessary regulatory approvals
to market and commercialize our product candidates;
● the ultimate impact of the ongoing COVID-19 pandemic, or
any other health epidemic, on our business, our clinical trials, our research programs, healthcare systems or the global economy as a
whole;
● the potential that results of pre-clinical and clinical trials
indicate our current product candidates or any future product candidates we may seek to develop are unsafe or ineffective;
● the results of market research conducted by us or others;
● our ability to obtain and maintain intellectual property
protection for our current product candidates;
● our ability to protect our intellectual property rights and
the potential for us to incur substantial costs from lawsuits to enforce or protect our intellectual property rights;
● the possibility that a third party may claim we or our third-party
licensors have infringed, misappropriated or otherwise violated their intellectual property rights and that we may incur substantial
costs and be required to devote substantial time defending against claims against us;
● our reliance on third parties;
● the success of competing therapies and products that are
or become available;
● our ability to expand our organization to accommodate potential
growth and our ability to retain and attract key personnel;
● the potential for us to incur substantial costs resulting
from product liability lawsuits against us and the potential for these product liability lawsuits to cause us to limit our commercialization
of our product candidates;
● market acceptance of our product candidates, the size and
growth of the potential markets for our current product candidates and any future product candidates we may seek to develop, and our
ability to serve those markets; and
● the successful development of our commercialization capabilities,
including sales and marketing capabilities.
These forward-looking statements
involve numerous risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are
reasonable, our expectations may later be found to be incorrect. Our actual results of operations or the results of other matters that
we anticipate herein could be materially different from our expectations. Important risks and factors that could cause our actual results
to be materially different from our expectations are generally set forth in “Risk Factors,” “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” “Business” and other sections in this Report. You should
thoroughly read this Report and the documents that we refer to with the understanding that our actual future results may be materially
different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.
The forward-looking statements
made in this Report relate only to events or information as of the date on which the statements are made in this Report. Except as required
by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information,
future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You
should read this Report and the documents that we refer to in this Report and have filed as exhibits to this Report, completely and with
the understanding that our actual future results may be materially different from what we expect.
ii
SUMMARY OF MATERIAL RISKS ASSOCIATED WITH OUR
BUSINESS
The following is a summary
of certain risks, uncertainties and other factors related to our company. These do not represent all of the risks we face. You should
carefully consider all of the risk factors presented in “Item 1A. Risk Factors” and all other information contained in this
Report including the financial statements in order to a more complete picture of the risk factors we face.
Our business is subject to a number of
risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial
condition, results of operations, cash flows and prospects that you should consider before making a decision to invest in our common
stock. These risks are discussed more fully in “Risk Factors” beginning on page 52 of this Report. These risks include,
but are not limited to, the following:
● We are in the early stages of vaccine development and have
a very limited operating history and no products approved for commercial sale, which may make it difficult for you to evaluate the success
of our business to date and to assess our future viability.
● We have incurred significant net losses since inception,
do not generate any revenue, and anticipate that we will continue to incur substantial net losses for the foreseeable future and may
never achieve or maintain profitability. Our stock is a highly speculative investment.
● We will require significant additional capital to make the
investments we need to execute our longer-term business plan. We estimate that, based on our existing cash as of December 31, 2021,
together with the net proceeds received from our initial public offering, we have cash on hand sufficient to fund our operations into
the second quarter of 2023. If we are unable to raise additional capital when needed, we could be forced to delay, reduce or terminate
certain of our development programs or other operations, and we may be unable to continue as a going concern in the long term. If we
cannot continue as a viable entity, our stockholders may lose some or all of their investment in us.
● Due to the significant resources required for the development
of our vaccine candidates, and depending on our ability to access capital, we must prioritize development of certain vaccine candidates.
Moreover, we may expend our limited resources on vaccine candidates that do not yield a successful vaccine and fail to capitalize on
vaccine candidates that may be more profitable or for which there is a greater likelihood of success.
● We depend entirely on the success of a limited number of
product candidates, which are in preclinical development and none of which have commenced a clinical trial. If we do not obtain regulatory
approval for and successfully commercialize one or more of our product candidates or we experience significant delays in doing so, we
may never become profitable.
● The marketing approval process of the U.S. Food and
Drug Association, or FDA, is lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain marketing
approval for our current product candidates and future product candidates we intend to develop, our business will be substantially harmed.
● The future results of our current or future clinical trials
may not support our product candidates’ claims or may result in the discovery of unexpected adverse side effects.
iii
● Even if we obtain regulatory approval of our vaccine candidates,
the products may not gain market acceptance among regulators, advisory boards, physicians, patients, third-party payors and others in
the medical community.
● We may be adversely affected by the ongoing coronavirus pandemic.
● We intend to rely on third parties to conduct our clinical
trials and to conduct some aspects of our research and pre-clinical testing and those third parties may not perform satisfactorily, including
failing to meet deadlines for the completion of such trials, research or testing.
● Our Chief Executive Officer, Chief Financial Officer and
other key personnel may allocate their time to other businesses thereby causing conflicts of interest in their determination as to how
much time to devote to our affairs and potentially competitive fiduciary and pecuniary interests that conflict with our interests.
● We may in the future have conflicts with our current or future
partners or third party providers that could delay or prevent the development or commercialization of our current and future product
candidates.
● It is difficult and costly to protect our proprietary rights,
and we may not be able to ensure their protection. If our patent position does not adequately protect our product candidates, others
could compete against us more directly, which would harm our business, possibly materially.
● We are dependent on licensed intellectual property. If we
were to lose our rights to licensed intellectual property, we may not be able to continue developing or commercializing our product candidates,
if approved. If we breach any of the agreements under which we license the use, development and commercialization rights to our product
candidates or technology from third parties or, in certain cases, we fail to meet certain development deadlines, we could lose license
rights that are important to our business.
● Some of the intellectual property covered by our licenses
concerns patent applications and provisional applications. We cannot assure investors that any of the currently pending or future patent
applications will result in granted patents, nor can we predict how long it will take for such patents to be granted.
● If we fail to comply with healthcare regulations, we could
face substantial enforcement actions, including civil and criminal penalties and our business, operations and financial condition could
be adversely affected.
● Healthcare Reform in the United States has been implemented
in the past, and we expect further changes to be proposed in the future, leading to potential uncertainty in the healthcare industry.
Violations of healthcare laws can have an adverse impact on our ability to advance our product candidates and our operating results.
● Obtaining regulatory approval for clinical trials of our
vaccine candidates in children and adolescents may require additional studies and/or longer duration of studies since the requirements
for regulatory approval for the pediatric populations are more stringent.
● The market price of our common stock has been extremely volatile and
may continue to be highly volatile due to numerous circumstances beyond our control, and stockholders could lose all or part of their
investment.
● Our failure to meet the continued listing requirements of
Nasdaq could result in a de-listing of our common stock.
● We are an “emerging growth company” and the reduced
disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
● Our amended and restated certificate of incorporation (“Amended
and Restated Certificate of Incorporation”) and our amended and restated bylaws (“Amended and Restated Bylaws”), and
Delaware law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our stock price
to decline.
● A possible “short squeeze” due to a sudden increase
in demand of our common stock that largely exceeds supply may lead to price volatility in our common stock.
iv
PART I
Item 1. Business
Overview
We are a biotechnology company focused on the research
and development of transformational vaccines to prevent infectious diseases worldwide. Our versatile vaccine platform has unique molecular
properties that enables delivery of various antigens, which can be utilized to develop singular or multi-targeted vaccines. Our lead influenza
(flu) vaccine program uses proprietary technology to identify specific epitopes, or proteins, with cross-reactive properties that enables
the potential development of a universal flu vaccine. We are focused on developing novel vaccines that induce durable and long-term immunity.
We believe that our pipeline and vaccine platform are synergistic for developing next generation preventive vaccines to improve both health
outcomes and quality of life globally.
Our pipeline includes novel vaccine candidates exclusively
licensed from renowned research institutions. We seek to develop vaccines that provide long-lasting immunity to harmful viral and bacterial
pathogens that cause infections in patient populations with high unmet needs. Our exclusive license agreements include patented influenza
epitopes of limited variability, or ELV, identified through a proprietary computational research and discovery process, discovered by
Dr. Sunetra Gupta and her team at the University of Oxford. Our collaborators are pioneers in vaccine discovery and development.
We are exploring the development of these influenza ELV’s utilizing our Norovirus shell and protrusion (S&P) nanoparticle vaccine
platform licensed from Cincinnati Children’s Hospital Medical Center, or CHMC. We are also utilizing our platform to develop
a vaccine for the prevention of gastroenteritis cause by both norovirus and rotavirus. Our exclusively licensed S. pneumoniae vaccine
candidate is from St. Jude Children’s Research Hospital. The vaccine is designed to prevent harmful middle-ear infections in children
and is being developed for intranasal delivery well suited for pediatric patients. We leverage the expertise of our collaborators to pursue
the discovery and development of vaccines for these diseases, which are high unmet needs globally.
In addition, we have expertise in identifying business
development opportunities for our platform vaccines technologies and portfolio. This allows for both internal pipeline expansion and the
ability to generate non-dilutive revenue from potential licensing partners to utilize our discovery engine vaccine platform. There is
potential for adjunctive or next generation therapeutic exploration to enhance current standard of care options.
Vaccination has been used as an effective method
of protecting individuals against harmful diseases by utilizing the body’s natural defense system to develop resistance or immunity
to infections (World Health Organization, https://www.who.int/news-room/q-a-detail/herd-immunity-lockdowns-and-covid-19 ). The body’s
immune system naturally creates antibodies and cell — mediated immunity to defend against foreign pathogens. Vaccines
introduce or present these foreign pathogens, prompting the body’s immune system produce a response protective against the pathogen
without exposing the body to the relevant lethal or harmful infection (World Health Organization, https://www.who.int/news-room/q-a-detail/herd-immunity-lockdowns-and-covid-19 ).
While vaccines are generally able to provide resistance against disease, many infectious diseases can evolve or mutate leading to shortcomings
of traditional vaccines, such as yearly reformulations. We believe our vaccine candidates can provide an alternative to the current standards
of care by harnessing durable and long-lived immune response to specific or multiple antigens.
The global vaccine market has recently experienced
significant growth caused by rising awareness of the importance of immunization and vaccination benefits in emerging markets as well as
by projects to fuel further global market expansion. For instance, The World Health Organization (WHO) has undertaken initiatives to increase
immunization awareness through its Global Vaccine Action Plan and Global Immunization Vision and Strategy.
As such, market research professionals project the
global vaccine market size to reach $73.78 billion by 2028, representing a CAGR of 7.3% over the forecast period, driven by rising
prevalence of infectious diseases, increasing government funding for vaccine production and growing emphasis on becoming immunized.
This market acceleration has been coupled with various
strategic transactions in the sector, including consolidations and mergers and acquisitions in recent years. Major market participants
have strategically acquired start-ups and mid-sized companies to broaden their products portfolios and service offerings. For instance,
in February 2019, Bharat Biotech acquired Chiron Behring Vaccines, one of the leading manufacturers of rabies vaccines across the
globe. Additionally, in October 2018, Emergent BioSolutions, a multinational specialty biopharmaceutical company, acquired PaxVax
for $270 million, and in July 2017 Sanofi acquired Protein Sciences for $650 million. The appetite of these companies to
buttress their vaccine programs and pipelines reflects the increasing importance of vaccines in the healthcare sector, both nationally
and worldwide.
1
The U.S. Centers for Disease Control, or CDC,
its Advisory Committee on Immunization Practices, or ACIP, and similar international advisory bodies develop vaccine recommendations for
both children and adults. New pediatric vaccines that receive ACIP preferred recommendations are almost universally adopted, and adult
vaccines that receive a preferred recommendation are widely adopted. We believe that our vaccine candidates will be well-positioned to
obtain these preferred recommendations, by virtue of their longer and more durable immunity, which could drive rapid and significant market
adoption.
PIPELINE
Our vaccine candidates are being developed in a
manner that is scalable, designed to be cost-effective and provide long term benefit to patients from infectious agents.
Strategy
We aim to identify, discover and develop novel preventive
vaccines for infectious diseases. Key elements of our strategy include:
● Investment in advancing the development of our novel vaccine
pipeline programs through IND-enabling activities and Phase I clinical studies.
● We plan to advance our main vaccine programs: influenza,
S. pneumoniae induced AOM norovirus-rotavirus, and norovirus-malaria.
● Our in-licensed vaccine candidates are carefully selected
based on the following criteria: area of significant unmet medical need for preventive long-term vaccine; strong scientific rationale
and established clinical and regulatory pathways; defined competitive landscape and potential future commercial opportunity; and license
exclusivity.
● Prioritizing the research and development for our lead
influenza vaccine candidates, BWV-101 and BWV-102 through Phase I.
● Our goal is to develop a universal influenza vaccine that
protects against all strains of influenza, including pandemic strains. In collaboration with The University of Oxford and CHMC, we are
evaluating vaccine candidates to pursue the best development path forward to stimulate durable and broad-spectrum immunogenicity.
● We will leverage the pre-clinical and clinical experience
we gain from the development of BWV-102 to accelerate the development of the BWV-101 program. We expect that the manufacturing and clinical
data collected will provide invaluable insight for development of the universal vaccine candidate.
● Maximize and utilize the value of our collaborators and
third-party vendors.
● We will combine disciplined business strategies to further
expand the potential synergies with current collaborators.
2
● Deploy and expand our proprietary norovirus S&P nanoparticle
platform.
● Our immunogenic multi-purpose vaccine platform technologies
can be utilized with an array of infectious disease agents to access multiple development pathways and allow for potential next-generation
life cycle management to expand our pipeline and pursue business development opportunities. There is potential for the platform to pursue
adjunctive therapies to currently available drugs, and for current therapies to be re-optimized and formulated to protect against multiple
antigens.
Management and History
Blue Water Vaccines Inc. was founded in October 2018
by our Chief Executive Officer, or CEO, Joseph Hernandez, with the initial goal of developing a transformational universal flu vaccine
to treat and prevent infections in patients globally. Our initial technology, licensed from the University of Oxford, provides a novel
approach to developing a universal influenza vaccine. Subsequently, our team has identified other program candidates and technologies
to broaden and diversify our vaccine pipeline.
Mr. Hernandez, our Chairman and CEO, is a veteran
entrepreneur, philanthropist, and operator with a broad skillset of founding, building, and selling companies, as well as executing business
development transactions and securing private and public capital, including Digene, Noachis Terra and Blue Water Acquisition Corp. Mr. Hernandez
was responsible for our initial $7 million seed funding round from investors including CincyTech. In addition to his position as
our Chairman and CEO, Mr. Hernandez also serves on the board of directors for Clarus Therapeutics, Inc. (Nasdaq: CRXT) in addition
to certain other private companies. Subsequently, a team of veteran industry executives and advisors were assembled, bringing valuable
expertise to our growing infectious disease company.
Jon Garfield, our Chief Financial Officer, has over
20 years of financial leadership experience, including with healthcare companies. Mr. Garfield regularly provides
consulting services to private equity funds and privately held companies and has served as the CEO of Unity MSK since
February 2021, and served as interim Chief Financial Officer of Blue Water Vaccines Inc. from September 2021 until the
consummation of our initial public offering in February 2022, upon which he became our full-time Chief Financial Officer. Erin
Henderson, who serves as our Chief Business Officer and Corporate Secretary, has over 20 years of leading strategic
transactions, governmental and stakeholder relations and corporate expansion. Previously, since 2010, she was the Managing Principal
at The Aetos Group, a management consulting firm serving both the public and private sectors. Andrew Skibo is our Head of Biologic
Operations and was recently Head of Global Biologics Operations at MedImmune/AstraZeneca and previously worked for Amgen and
Genentech (now Roche), where he was responsible for operations, engineering, construction, and validation for large-scale capital
projects related to bio-pharmaceutical manufacturing. Ronald Cobb, Ph.D., our Head of Science and Discovery, was recently Chief
Scientific Officer at Ology Bioservices (formerly Nanotherapeutics) and previously worked for RTI Biologics and Berlex Biosciences.
Brian Price, Ph.D., our Head of Technology Strategy, brings over 20 years of successful product development experience and
business development growth based on programs in toxicology, analytics, and therapeutic and vaccine development.
Additionally, members of our Board of Directors
have extensive expertise in the fields of life sciences, business, and finance. In addition to Mr. Hernandez, our directors include
Michael Venerable, CEO of CincyTech, Kimberly Murphy, former VP, Commercialization Leader, influenza at GlaxoSmithKlein and Chair of Clarus
Therapeutics (Nasdaq: CRXT), Allan Shaw, an experienced biotechnology CFO and James Sapirstein, R.Ph., M.B.A, President and CEO of AzurRx
BioPharma (Nasdaq:AZRX). Our Scientific Advisory Board includes Sunetra Gupta, Ph.D. Professor of Theoretical Epidemiology at The
University of Oxford, a leading voice in infectious disease globally; David Zarley, Ph.D., with more than 30 years of experience
in vaccine research and development, including former leadership roles at Pfizer and Wyeth; and John Rice, Ph.D., Managing Director at
CincyTech, with more than 30 years of biotechnology advising experience.
3
Subject to certain non-compete restrictions, our
chief executive officer, Joseph Hernandez, and other key personnel may pursue other business or investment ventures while employed with
us. Accordingly, they may have conflicts of interest in allocating time among various business activities and potentially competitive
fiduciary and pecuniary interests that conflict with our interests. See “Risk Factors — Our Chief Executive Officer,
Joseph Hernandez and our Chief Financial Officer, Jon Garfield, hold certain management positions and directorships of other companies
and may allocate their time to such other businesses, which may cause conflicts of interest in their determination as to how much time
to devote to our affairs and potentially competitive fiduciary and pecuniary interests that conflict with our interests.” For a
complete discussion of the business affairs of our officers, directors and other personnel, please see “Management — Executive
Officers and Directors.” Any such additional business activities or ventures may present conflicts to our interests. We do not believe
that any such potential conflicts would materially affect our ability to conduct our operations.
Our Vaccine Platform
BWV Norovirus (NoV) S&P Nanoparticle Versatile Vaccine Platform
Bioengineering the shell (S) and protruding (P) domains
of the norovirus capsid protein, polyvalent nanoparticles and polymers/oligomers provide a versatile vaccine platform with wide applications
Our Approach to Stimulating the Immune System for Infectious Disease
Protection
Our S&P platform was co-invented by two researchers,
Xi Jason Jiang, Ph.D., and Ming Tan, Ph.D., of the Division of Infectious Disease at the Cincinnati Children’s Hospital Medical
Center. The pre-clinical research conducted at CHMC provided encouraging data that supports further investigation and development of the
platform for our vaccine candidates. The S&P platform combines two or more immunogenic components, a norovirus antigen plus at least
one additional antigen, together creating novel constructs. The norovirus nanoparticle enhances immunogenicity of the inserted antigen.
The S & P particles themselves also act as antigens, and are large enough to trigger an immune response to a foreign substance.
By combining the norovirus nanoparticle with one or more antigens from other infectious disease(s), the immune system is stimulated to
create antibodies to both the norovirus and the additional antigen(s).
Key Elements of our Platform
We are leveraging our disruptive norovirus nanoparticle
platform to develop novel, broad-spectrum vaccines for adult and child infectious disease prevention by taking advantage of:
● Flexible and Scalable discovery platform engine. We
believe we are able to design and create novel vaccines that are stable and scalable for broad spectrum prophylactics. Through this platform’s
adaptability, we may opportunistically expand our pipeline and potentially collaborate with third parties for additional vaccines, as
well as therapeutics.
● Cost-effective and Rapid Production of Novel Vaccines. We
are potentially able to reduce the cost and time to manufacture a vaccine candidate by utilizing an E.coli expression platform, compared
to traditional vaccine production which uses other, longer production-time platforms, such as Chinese Hamster Ovary (CHO) cells. We have
bioengineered these nanoparticles to be stable and effective, as determined through animal immunogenicity studies, using E.coli
expression which may provide cost savings and efficiency compared to other VLPs needing a eukaryotic expression system. (Pharmaceutics
2019, 11, 472; doi:10.3390/pharmaceutics11090472).
● Multi-antigen and Pathogen Capabilities. One
of the key features of our platform is its ability to carry multiple antigens at a time, thereby creating a multi-targeted vaccine. It
also provides the opportunity to develop vaccines for protection against not only viral pathogens, but also bacterial and potentially
parasitic and fungal pathogens.
● Therapeutic potential. We believe
our platform may offer opportunities to develop non-infectious disease therapeutic products, for example being used as a carrier or vehicle
to transport drugs to specific target locations.
4
Viral capsid proteins are responsible for many basic
functions necessary for viral life cycles, such as viral attachment and entry, and thus can elicit neutralizing antibodies against viral
infection after immunization to humans and animals. Consequently, viral capsid proteins are promising vaccine targets against viral infection.
Indeed, various capsid protein nanoparticles and complexes have been developed and used as nonreplicating subunit vaccines to combat various
infectious diseases.
Unlike traditional live-attenuated and inactivated
virus vaccines that need cultivation of infectious virions and are associated with certain safety concerns, the nonreplicating VLP vaccines
derived from bioengineered viral capsid proteins do not involve an infectious agent and, therefore, may be safer and have lower manufacturing
costs than traditional vaccines. Thus, VLP vaccines represent a next generation of innovative vaccine strategy.
Structure
● The NoV (VP1) capsid structure consists of two major domains:
(i) a N-terminal shell (S) domain and (ii) a C-terminal protruding (P) domain. The S domain builds the interior shell of the
capsid and the P domain forms the dimeric protrusions of the capsid.
● The protrusions (P) of norovirus capsid interact with
viral glycan receptors for attachment to host cells to initiate an infection.
● The S domain interacts homotypically and drives self-formation
of an approximately 60 nm VLP.
● The P domain exhibits homotypic interactions, forming a 24
nm VLP with dimeric protrusions for stabilization of the viral capsid. Additionally, it can also form oligomers or polymers.
Figure 1. Lineage
structures of norovirus capsid protein or viral protein 1 (VP1) and various nanoparticles derived from full-length or truncated VP1. The
N-terminal shell (S) (green) and the C-terminal protruding (P) (dark blue) domains with a short flexible hinge (light blue)
in between (with amino acid numbers based on GI.1 Norwalk virus VP1) are shown. (A) Production of full-length norovirus VP1s via
a eukaryotic expression system self-assembles into virus-like particles (VLPs). (B) Production of the S or P domain via the Escherichia
coli expression system self-assembles into S or P nanoparticles.
5
Due to the homotypic interaction attributed to the
norovirus capsid domains, researchers at CHMC, through bioengineering, designed and generated two subviral nanoparticles, the 24-valent
P 24 and the 60-valent S 60 nanoparticles, and P-derived polymers to serve as a multifunctional vaccine platform against
different pathogens and illnesses.
● These nanoparticles and polymers are easily produced, highly
stable, and extremely immunogenic which we believe makes them compelling platforms to serve to display foreign antigens, self-assembling
into chimeric nanoparticles or polymers as vaccine candidates.
● There are several preclinical studies that showed P 24 /S 60
chimeric vaccine candidates that can display different foreign antigens and epitopes, as set forth below in Tables 1 and 2. Therefore,
there may be additional candidates to further explore as human vaccines. (Xia et al. ACS Nano 2018, 12, 10665−10682) .
● Such VLPs and capsid-like nanoparticles may be excellent
vaccine candidates against corresponding viral pathogens because they can retain arrays of antigenic epitopes that faithfully mimic those
of the native virions, and these repeated viral antigens and epitopes stimulate strong immune responses in their animal and human hosts.
In addition, such highly immunogenic subviral nanoparticles may also serve as versatile platforms that are able to display foreign antigens
for improved immune responses to facilitate development of novel vaccines against various pathogens and diseases.
● The fact that the P 24 VLP nanoparticles and polymers
are composed of authentic norovirus antigens and retain norovirus-specific molecular patterns make it an excellent vaccine candidate
against the norovirus.
● In addition, the natures of self-formation, high stability,
polyvalence, and high immunogenicity, as evidenced by animal studies conducted in gnotobiotic pig models and mouse models, results included
herein, of the nanoparticles and polymers make them strong vaccine candidate platforms to display foreign antigens, resulting in chimeric
nanoparticles as vaccine candidates against further pathogens and diseases.
Our multifunctional vaccine platform is a robust
discovery engine and has broad application using both S 60 and P 24 nanoparticles to target multiple pathogens and
illnesses.
The P 24 nanoparticle has also been used
to display multiple viral epitopes for enhanced immunogenicity for novel subunit vaccine development, see Table 1 below. These include
the M2e epitope of the matrix 2 (M2) protein and the HA2 protein B cell epitope of influenza viruses, the B cell epitope of VP3 of enterovirus
71 (EV71), the 4E10 and 10E8 epitopes of human immunodeficiency virus type 1 (HIV-1), among others.
Table 1. Summary of norovirus nanoparticles and polymers as vaccine
candidates and platforms to display foreign antigens and epitopes.
Nanoparticle/ Polymer
Antigen/Epitope to be Displayed (Pathogen)
Chimeric Products as
Vaccine Candidate
Immunity against
Pathogens or Diseases
S 60
VP8* (rotavirus)
S 60 – VP8*
Rotavirus
P 24
P domain (norovirus)
P 24
Norovirus
P 24
VP8* (rotavirus)
P 24 – VP8*
Rotavirus and norovirus
P 24
M2e (influenza virus)
P 24 – M2e
Influenza virus
P 24
HA2 B cell epitope
(influenza virus)
Trivalent HA2-PP (P 24 -HA2:90-105)
Influenza A virus and influenza B virus
P 24
VP3 B cell epitope (EV71)
PP-71-6 (P 24 -71-6)
EV71
P 24
4E10/10E8 epitopes (HIV-1)
4E10-PP/10E8-PP
HIV-1
P 24
Amyloid-beta, A β
PP-3copy-A β 1-6
Alzheimer’s disease
P polymer
P domains (noroviruses)
NoV P GI -NoV P GII
GST NoV P +
Different noroviruses
P polymer
P domain (HEV)
NoV P-HEV P
Norovirus and HEV
P polymer
P domain (astrovirus) P domain (HEV)
Ast P-HEV P-NoV P
Norovirus, astrovirus,
and HEV
P polymer
P domain (astrovirus) P domain (HEV)
VP8* (rotavirus)
Ast P-HEV P-VP8*
Rotavirus, astrovirus,
and HEV
Note: EV71, enterovirus 71; HIV-1, human immunodeficiency virus type
1; HEV, hepatitis E virus; Ast, astrovirus, NoV, norovirus, P, protruding domain; P+, the P domain with an end-linked cysteine-containing
peptide that can self-assemble into oligomers; PP, P particle; GI, norovirus genogroup I; GII, norovirus genogroup II. Please
see the main text for details.
6
The S 60 Nanoparticle as a Multifunctional vaccine platform
Recent technology has generated S nanoparticles
using an E. coli system with stabilized expression and self-assembly. The S nanoparticles feature exposed C-terminal flexible hinge
sites that offer ideal fusion sites for displaying foreign antigens.
Researchers at CHMC have developed a technology
to produce uniform 60-valent NoV S 60 nanoparticles with high efficiency using a simple bacterial expression system. This was
achieved by taking advantage of the homotypic interactions of the NoVVP1 S domain that naturally builds the interior shells of NoV capsids,
as well as several modifications to stabilize the S domain proteins and enhance the inter-S domain interactions, respectively. Specifically,
we introduced an R69A mutation to destruct the exposed protease cleavage sites on the surface of the native shell that otherwise leads
to easy degradation of the S proteins. In addition, we introduced triple (V57C/Q58C/S136’C) cysteine mutations to establish inter-S
domain disulfide bonds between two pairs of sterically close residues that belong to two neighboring S domains. This led to significantly
enhanced stability and yields of the self-assembled S 60 nanoparticles produced by the simple E. coli system. The below
bullets are supported by published data by Ming Tan, the co-inventor of the S&P platform, and his research team at CHMC.
● An important feature of our technology was to rationally
introduce intermolecular disulfide bonds to stabilize the S 60 nanoparticles. This approach could also be used to stabilize
other viral protein particles or complexes.
● The 60 freely exposed C-termini are a key feature facilitating
the S 60 nanoparticle to be a useful vaccine platform. Foreign antigens or epitopes can simply be fused to the end of the S
domain via flexible linker through recombinant DNA technology.
● Uniform 60-valent NoV VLPs or S particles produced in a bacterial
expression system have not been produced before.
● Importantly, our S 60 nanoparticles maintained
the native conformation with authentic antigenicity; thus, our NoV S 60 nanoparticle technology represents a significant bioengineering
advancement as uniform 60-valent NoV VLP or S particle via an expression system have never been produced before (Xia et al. ACS
Nano 2018, 12, 10665−10682).
● Uniform complexity and size of vaccine particles are important
factors in quality control of vaccine products, as variations in complexity and size will result in variations in immunization outcomes
of the vaccines.
Broad application to fuse several antigens to the S 60
nanoparticle based on multiple studies shown below conducted by CHMC (Xia et al. ACS Nano 2018, 12, 10665−10682)
CHMC has been able to fuse several antigens to the
S 60 nanoparticle to the same exposed S domain C-terminus via the same linker. These included (1) the rotavirus (RV) surface
spike protein VP8*; (2) the HA1 antigen or receptor-binding domain (RBD) (223 amino acids) of the hemagglutinin (HA) of anH7N9
influenza A virus; (2) the TSR antigen (67 amino acids) of the circumsporozoite surface protein (CSP) of the malaria parasite
Plasmodium falciparum; (3) the protruding domain antigen (187 amino acids) of a hepatitis E virus; (4) a longer version
of the RV VP8*antigen (231 amino acids); and (5) the VP8*antigen (159 amino acids) of the murine RV (mRV) EDIM strain (Table
1). Particle formations of these fusion proteins have been shown by gel-filtration and/or EM (Table1). In addition, they have shown that
the S 60 nanoparticle-displayed HA1 and mRV VP8*antigens elicited significantly higher HA1- and mRV VP8*-specific antibody titers,
respectively, than those elicited by the free HA1 or mRV VP8*antigens (Table 2).
7
Table 2. List of Antigens That Have Been Displayed by the S 60
Nanoparticles
epitope/antigen
size
(residue)
yield (mg/L
bacteria culture)
S 60 – antigen
particle formation
significant immune enhancement in mice f
RV VP8* antigen
159
~40
yes
yes
HA1 antigen a
223
~10
yes
yes
TSR/CSP antigen b
67
~10
yes
ND
full RV VP8* antigen c
231
~20
yes
ND
murine RV VP8* antigen d
159
~5
yes
yes
HEV protruding domain antigen e
187
~10
yes
ND
a HA1 antigen containing the receptor binding site is the head
portion of the hemagglutinin (HA) of H7N9 influenza A virus.
b TSR/CSP antigen is the C-terminal portion of the major surface
protein of acircumsporozoite (CSP) that plays a key role in host cell invasion of the malaria parasite Plasmodium falciparum.
c Full RV VP8*antigen is the full-length VP8*domain of the
spike protein of a human P[8] rotavirus.
d Murine RV VP8*antigen is the core portion of the VP8*protein
constituting the head of the spike protein of a murine rotavirus EDIM strain.
e HEV protruding domain antigen is part of the protruding domain
of a hepatitis E virus capsid.
f Immune enhancements of the S 60 nanoparticle-displayed
antigens were measured in mice using free monomeric antigens as control for comparisons. “ND” = not determined.
S 60 nanoparticles may serve as a polyvalent vaccine platform
(Xia et al. ACS Nano 2018, 12, 10665−10682)
● We believe the self-assembled, polyvalent S 60
nanoparticle with 60 flexibly exposed S domain C-termini is an ideal vaccine platform for antigen presentation and immunogenicity enhancement.
● This has been supported by studies showing that when Hisx6
tag was fused to the hinge of the S domain via a linker, fusion proteins self-formed into the S 60 nanoparticles.
● This has also been demonstrated by constructing a chimeric,
and reconfirmed by cyroEM density map, S 60 nanoparticle displaying 60 RV (rotavirus) VP8* proteins, the major rotavirus neutralizing
antigen. The S 60 -VP8*particles can be easily produced with high stability. The chimeric nanoparticle induced higher
immunoglobulin, or IgG, response in mice (n=6) toward the displayed VP8*antigen than soluble VP8* antigen. Mouse sera experiments were
completed analyzing vaccinated versus the control group to show neutralizing activity against RV infection. The statistical differences
between the groups are (*P < 0.05, **P < 0.01, ***P < 0.001) as shown below (Figure 2) (Xia et al. ACS Nano 2018, 12, 10665−10682).
● The RV surface spike protein, VP8* was tested for feasibility
of the S 60 nanoparticle by the analysis using EM micrograph examination and ESI-MS analysis. S 60 -VP8*particles
exhibited stronger blockade in mice (n=6) sera after vaccination (P=0.0003) (Xia et al. ACS Nano 2018, 12, 10665−10682).
● The polyvalent B- and T-cell epitopes of the antigens on
the polyvalent VLP platform led to induction of stronger humoral and cellular immune responses, respectively, in animals and humans compared
with those elicited by the monovalent epitopes of the free antigen. Thus, the polyvalent VLP platform is likely to increase the immunogenicity
of the displayed antigens. Mouse sera experiments were completed analyzing vaccinated versus the control group to show neutralizing activity
against RV infection. The statistical differences between the groups are (*P < 0.05, **P < 0.01, ***P < 0.001) as shown below.
(Xia et al. ACS Nano 2018, 12, 10665−10682).
8
Figure 2. S 60 -VP8*particles
enhanced immunogenicity toward the displayed RV VP8*antigens. The same dose/dosage of the S 60 -VP8*particles, free VP8*antigens,
and S 60 nanoparticles without VP8*was given to mice (N=6), respectively, followed by measurements of theVP8*-specific IgG responses
(A), 50% blocking titers (BT50) against RV VP8*-glycan ligand interaction (B), and neutralization activity against RV infection/replication
in culture cells (C) of the resulting mouse antisera. (A) VP8*-specific IgG responses/titers elicited by theS60-VP8*particles,
free VP8*antigens, and the S60nanoparticles, respectively. (B) BT50against RV VP8*−ligand interactions by the mouse sera after
vaccination with the same three immunogens, respectively. (C) Neutralizing activity against RV infection/replication in culture cells
by mouse sera after immunization with the same three immunogens, respectively. In all these experiments mouse sera after immunization
with diluent (PBS) are used as negative controls.
The P 24 Nanoparticle as a versatile platform (Tan et
al. Nanomedicine, 2012. 7.6,1-9)
9
The crystal structure of norovirus VLPs indicates
that P domain is involved in strong dimeric interactions forming dimeric protrusions on the viral surface. The oligomeric interactions
of the P domains are also observed at the five-fold axes to further stabilize the capsid structure. When the P domain protein was expressed
using the E. coli system, it self-assembled into P dimers, as well as 24 valent P nanoparticles, P 24 . P dimers
and P 24 nanoparticles can exchange dynamically, depending on concentration of the P domain protein, indication that the assembled
P 24 particles at this stage were unstable and easy to disassemble back into P dimers. To facilitate P 24 nanoparticle
formation, inter-P domain disulfide bonds were introduced through fusion of a cysteine-containing peptide to the end of the P domain.
During the P 24 nanoparticle assembly, the cysteine patches were brought to the center of the P 24 nanoparticles,
resulting in sterically close contact and thus forming inter-P domain disulfide bonds that significantly stabilized the P 24
nanoparticles, which could no longer disassemble back into the P dimers.
● P 24 nanoparticles can be produced using an E.
coli expression system faster and a lower cost than VLPs.
● Both VLP and P 24 nanoparticles without adjuvant
produce innate, humoral, and cellular immunity.
● The platform can be used to display foreign antigens, epitopes
and viral pathogens and non-infectious disease.
● Studies have demonstrated immune response against flu, rotavirus,
and norovirus using bi- or trivalent vaccine candidates developed using this approach, noting the potential for the development of a
universal flu vaccine. Pre-clinical studies in influenza and rotavirus are provided below supporting our vaccine candidate programs.
See — Our Infectious Disease Vaccine Candidates .
Our Infectious Disease Vaccine Candidates
Infectious diseases are one of the leading causes
of death worldwide. Infectious disease is caused by microorganisms or pathogens, including viruses, bacteria, fungi, and parasites that
infect an individual and cause disease. Diseases often cause high fever, inflammation, or other symptoms. While some diseases can be treated
with drugs or therapeutics, some infectious agents evolve to become resistant to commonly used drugs, such as antibiotics, and can become
difficult to control. Infectious diseases can be passed from person to person or transmitted by insects or other animals. In many cases,
vaccines are used to elicit a protective immune response in the absence of an infection to render an individual immune to a particular
infectious disease.
BWV-101: UNIVERSAL INFLUENZA & BWV-102 H1 INFLUENZA
The company’s lead vaccine programs are focused
on developing transformational and novel influenza vaccines: BWV-101 for an influenza vaccine to provide protection against H1, H3 and
Flu B infections; and BWV-102 for a H1 only vaccine. This program is licensed from the University of Oxford in which all relevant studies
were performed to support our hypothesis. Our goal is to develop a vaccine that protects against all influenza strains that commonly infect
humans by targeting specific parts of the influenza viruses, which are of limited variability across flu strains and induce a strong protective
immune response. This POC will be leveraged to develop BWV-101 by studying the cross-reactivity of different flu strains, H1, H3 and influenza
B. The BWV-101 vaccine candidate may potentially provide a therapeutic benefit that negates the need for annual vaccination, vaccine
reformulation, and provide long-lasting broad protection against the flu to millions globally (Thompson et al. Nature Communications.
2018. 9:385).
10
Influenza
Influenza is a viral infection of the respiratory
system, causing an infected person to suffer from certain symptoms, including fever, muscle aches, runny nose, cough, congestion, headaches,
and fatigue. The four types of influenza viruses include type A, B, C, and D. The type A and B influenza viruses are referred to
as human influenza viruses that are primarily responsible for seasonal flu epidemics each year. Type A flu viruses are further divided
into two subtypes, named based on differences in two viral surface proteins called hemagglutinin (H) and neuraminidase (N).
Influenza types C and D present a lower priority for vaccination, as Type C viruses cause a mild respiratory illness in humans and has
not been associated with human epidemics, and Type D viruses primarily affect cattle and are not known to cause illness in humans ( https://www.cdc.gov/flu/about/viruses/types.htm ).
Figure 3. This graphic
shows influenza virus types including the two types of influenza viruses (A,B) that cause most human illness and that are responsible
for the flu season each year. Influenza A viruses are further classified into subtypes, while influenza B viruses are further classified
into two lineages: B/Yamagata and B/Victoria.
There is a major unmet need for the development
of a novel universal flu vaccine as a prophylactic therapy. Influenza is a major respiratory pathogen. The WHO estimates there are an
estimated 1 billion cases of influenza infection with 3-5 million severe cases and 290,000-650,000 related respiratory
human deaths worldwide every year. The estimate does not take into account deaths from other diseases such as cardiovascular disease,
which can be influenza related. The next influenza pandemic is believed by many experts to be a potentially devastating global health
threat. Influenza mortality rates are highest for the very young and elderly.
The global influenza vaccine market was valued at
$3.96 billion in 2018, and is projected to reach $6.20 billion by 2026, representing a CAGR of 5.9% from 2019 to 2026. Currently,
the standard of care and most effective protection against flu is through annual vaccination. The WHO estimates that worldwide, approximately
$4 billion is spent on influenza vaccines annually. However, the flu also a major cause of work absenteeism, leading to an estimated
annual productivity loss in the U.S. of $87 billion. Flu vaccination consists of a yearly injection of attenuated or inactivated
(dead) influenza viruses to induce humoral immunity in the form of the antibodies against the current circulating or anticipated seasonal
influenza strains. The induction of antibody-producing B-cells through vaccination allows the immune system to defend the body against
the influenza virus circulating during the winter months.
An annual seasonal flu vaccine is the best way to
help protect against flu. Vaccination has been shown to have many benefits including reducing the risk of flu illnesses, hospitalizations
and even the risk of flu-related death in children. The CDC recommends use of any licensed, age-appropriate influenza vaccine during the 2020-2021
influenza season, including inactivated influenza vaccine (IIV), recombinant influenza vaccine (RIV), or live attenuated influenza vaccine
(LAIV). No preference is expressed for any influenza vaccine over another. Both trivalent and quadrivalent influenza vaccines will be
available. The trivalent vaccines formulation will include A(H1N1) pdm09, A(H3N2) and B/Victoria. The quadrivalent vaccine formulations
will include A(H1N1) pdm09, A(H3N2) and B/Victoria, plus B/Yamagata ( https://www.cdc.gov/flu/about/viruses/types.htm ).
11
The current influenza vaccines induce antibodies
that target regions of the virus that are highly variable and have serious shortcomings, as they:
(i) must be administered annually,
(ii) typically provide protection to only 50% of the individuals
who receive it; and
(iii) need to be updated annually and reformulated 6 months
prior to influenza season, such that strains that are subsequently prevalent during the applicable “flu season” are not protected
against by the vaccine.
Our Proprietary Epitope Discovery
Using the technology that we have exclusively licensed
from the University of Oxford, we are developing a universal influenza vaccine. Our exclusive license agreements include patented influenza
epitopes of limited variability, or ELV, identified through a proprietary computational research and discovery process, discovered by
Dr. Sunetra Gupta and her team at the University of Oxford. We have acquired intellectual property for cross-protective epitopes
to be used for our vaccine candidates that were developed and identified through a unique computational discovery process at Oxford University.
The data produced through computational analysis at Oxford has shown that antigen evolution in influenza is limited to certain regions
of the virus that facilitate binding and entry to host cells and these regions of limited antigenic variability are naturally immunogenic
and therefore may be used to develop universal immunity to influenza viruses. We have identified epitopes of limited variability in H1
influenza that have circulated throughout history (since 1918) and make ideal vaccine targets and have completed similar analysis of H3
and Flu B strains for similar epitopes which will be used to produce our lead vaccine candidate BWV-101 as a universal vaccine for influenza
infection. Due to the cross-reactive nature of the H1 epitopes in pre-pandemic H1 influenza A, we are also pursuing the development of
a stand-alone H1 vaccine (BWV-102). These epitopes are able to be formulated into a vaccine candidate using our VLP platform technologies
and may be evaluated using other vaccine technologies through partnerships in order to accelerate development of potential vaccines or
to explore adjunct therapies (Thompson et al. Nature Communications. 2018. 9:385).
Figure 4. Current
influenza vaccine targets.
Antigenic Drift (Thompson et al. Nature Communications. 2018. 9:385)
A single conformational epitope is typically 8 to
15 amino acids in length and in an extreme circumstance (where every change creates an escape mutant), a single epitope could theoretically
vary from 208 to 2015 different ways. Therefore, a highly variable virus like influenza should be able to mutate in countless ways during
each subsequent season. This would inevitability lead to an explosion of genetic diversity and numerous circulating strains.
However, it seems that there is a constraint limiting
how influenza evolves, leading to a single or limited number of strains dominating each season. In 2007, Sunetra Gupta led a group of
researchers at the University of Oxford who published a proprietary mathematical model proposing that the single strain dominance, typically
seen worldwide annually, could be explained by hypothesizing that epitopes of ‘limited variability’ exist (Antigenic Drift
Hypothesis). The model hypothesizes that while there is a significant amount of mutation of influenza strains, this variability occurs
in a specific portion of the virus, while certain epitopes are required to remain relatively constant and are more limited in their variability
in order for the virus to infect individuals, thus clarifying how influenza is not as variable as commonly thought.
12
Antigenic Drift Hypothesis Illustration
Figure 5. Identification
of a site of limited variability in the head domain of the H1 HA.
b,c Location of ABS of lowest variability containing position
147 with position 147 shown in yellow and the rest of the site colored in red.
d Phylogenetic trees of pre-pandemic and post-pandemic highlighted
rectangle H1N1with tips colored according to the conformation of the epitope of limited variability (hereafter called OREO). Please note
the re-introduction of H1N1influenza in 1977 involved a strain which previously circulated in 1949/50.
The Antigenic Drift Hypothesis suggests the existence
of epitopes of limited variability mediate a population’s immunity to influenza strains. As a particular influenza strain circulates
in the population, immunity to a specific pattern of epitopes is induced. This leads the virus to change its antigenic configuration and
cycle through its limited repertoire of antigenic conformations. However, population immunity also changes due to birth and death within
the population (i.e. individuals in the population who had experienced and developed immunity to certain conformations die). This allows
prior epitope conformations to reappear. The loss of herd immunity to these epitope of limited variability causes the emergence of epidemics
( Thompson et al. Nature Communications. 2018. 9:385 ).
13
Oxford scientists have identified the naturally
antigenic regions that drive immunity to influenza by evaluating serum from these from various age groups of humans using assays and ELISAs
reveal periodic cross-reactivity to ELV. Pseudotype microneutralisation data reveals a cyclical pattern of epitope recognition. The
studies of children’s sera were used to detect antibodies and demonstrated that young children ages 6 to 12 had immunity to historical
influenza strains that circulated many years prior to when they were born and they could never have possibly been exposed to, one
of which that last circulated in 1934. Mutagenesis of the identified regions of limited variability in various historical viruses removed
the protective immunity. Furthermore, vaccination of mice, as shown below, with these regions of the influenza virus produced an identical
immune response that was observed in the children. For example, the mice vaccinated with either the region from the influenza virus circulating
in 2006 or 1977 were protected against infection with an influenza with a virus that last circulated in 1934, replicating the immunity
seen in children ages 6 to 12. (Thompson et al. Nature Communications. 2018. 9:385)
14
Figure 6. Sequential
vaccination using chimeric HA constructs. Five groups of mice were sequentially vaccinated with 2009-like (blue), 2006-like (red),1995-like
(orange), 1977-like (green) and 1940-like (pink) epitope sequences substituted into H6, H5 and H11 Has. Two further control groups were
sequentially vaccinated with H6, H5 and H11 constructs without any sequence substituted into the Has (vaccinated controls). Further two
groups were mock vaccinated (unvaccinated controls). c,d,f,g Pseudotype microneutralisation assays using 0.5μl of
sera from the bleed at 21 weeks. Error bars are mean ± s.e.m.n=6 for experimental groups and control groups. The values provided
are an average of two replicates
15
This work demonstrated that vaccination with just
four variants of one region of limited variability in H1 influenza was able to elicit immunity to all historical H1 influenza strains.
As these regions periodically reappear and disappear over time, vaccination with all of the possible variants would be expected to provide
protection against future influenza strains as well. The identified epitopes are restricted in their variability due to presence of a
receptor-binding site and small alpha helix structure between disulphide bonds.
The following research findings form the basis for
our influenza vaccine candidates:
1. Epitopes of limited variability which are under strong immune
selection exist within influenza.
2. These epitopes drive the antigenic evolution of influenza.
3. These epitopes cycle between a limited number of different
conformations.
4. Epitopes of limited variability would make ideal vaccine
targets.
BWV-101: Universal Influenza Vaccine
Our approach to developing a novel, universal flu
vaccine for the prevention and protection against human influenza strains and potential pandemic strains by targeting specific limited
variability epitopes includes the following steps and processes.
We are exploring development of an influenza vaccine
utilizing both the S & P nanoparticles to determine the most effective and efficient presentation of our ELVs and the versatile
S&P nanoparticle vaccine platform from CHMC with the H1 influenza antigens. Data in preclinical mice (Rotavirus-specific-antibody-free
BALB/c mice, n=5-7) challenge studies inserted M2e, a spike protein of influenza, into a P-particle loop; showed mice that were vaccinated
had 100% protection when injected with lethal doses of influenza (Tan et al. JOURNAL OF VIROLOGY, Jan. 2011, p. 753 – 764).
This dual approach will allow us to gain valuable information as we further the development and manufacturing of the BWV-102 program and
utilize it for the development of BWV-101. We are currently assessing the ELVs to determine the most effective and efficient route of
antigen presentation. Additionally, we are currently optimizing antigens for H3 and Flu B to be included with the identified H1 antigens
to finalize our universal influenza vaccine formulation.
We are using established manufacturing methods,
including E.coli fermentation to produce our chimeric proteins, to reduce the cost and increase the efficiency and scalability
of our manufacturing process for the vaccine. The antigens will be displayed by a proprietary virus-like particle (VLP) that can be produced
in E. coli (Pharmaceutics 2019, 11, 472; doi:10.3390/pharmaceutics11090472). Our research and discovery model uses bioinformatics
and phylogenetic analysis to identify possible sites of epitopes of limited variability before confirming their existence experimentally.
To date, we have identified naturally immunogenic
epitopes for H1, H3 and influenza B. Bioinformatics studies and wet lab studies suggest that these epitopes, especially H1N1, and
the chimeric scaffold configuration of our vaccine induce immunity due to induction of broad cross-reactive antibodies in other strains
such as H10N3 (bird flu), and pandemic strains including H5NX, H7NX, and H9NX. H9NX (Thompson et al. Nature Communications. 2018.
9:385). Therefore, we foresee the development of H1N1 vaccine as a priority due to its high cross-reactive priorities.
16
BWV-102 Stand-Alone H1 Vaccine
We are developing our H1 stand-alone influenza prophylactic
product, BWV-102, to address potential pandemic zoonotic H1 strains, specifically the G4 EA H1N1 identified by scientists and reported
in June 2020, as a potential next pandemic strain. BWV-102 is being developed using the H1 ELVs identified by the team at the University
of Oxford. While the product is designed to protect against infection from any H1 strain, there is potential for cross protection from
H5 and H10 strain infections as well. Preclinical studies were conducted in Balb C mice (n=6) using a prime-boost-boost protocol (Thompson
et al. Nature Communications. 2018. 9:385). The proposed Phase I clinical study will employ this prime — boost protocol;
however, it is possible that a single dose of the vaccine candidate will confer protection against current and historical H1 strains with
a prime-boost dose or a single dose.
As reported in 2020, the G4 EA H1N1 strain is the
most prevalent influenza strain circulating among swine populations in China. The strain was first identified in 2016 and has been monitored
by scientists in China through their swine surveillance program. The strain has genes from a mix of pig, avian and human viruses, including
genes from the 2009 H1N1 flu pandemic virus. Currently, the G4 EA H1N1 strain is not transmissible human to human, however, scientists
hypothesize that there is a high likelihood of strain reassortment occurring that could make human to human transmissibility possible.
The current H1N1 influenza strain circulating may provide some protection against disease induced by G4 EA H1N1 infection.
The ability of the BWV-102 ELVs to induce an immune
response and protection against heterologous challenge with historical strains was assessed in Balb-C mice (n=6) ( Thompson et al. Nature
Communications. 2018. 9:385 ). We are currently assessing the ELVs in combination with the S 60 particle, P 24
particle and a proprietary VLP, currently in development, to determine the most effective and efficient route of antigen presentation.
Manufacturing of the product is expected to occur in E. coli (Pharmaceutics 2019, 11, 472; doi:10.3390/pharmaceutics11090472) .
We anticipate results of the VLP presentation assessments in the first half of 2022.
BWV-201 Streptococcus pneumoniae (S. pneumoniae) Vaccine
Our BWV-201 vaccine candidate is a live attenuated
serotype-independent vaccine, for which early data supports further investigation to pursue a long-term preventive intranasal vaccine
for S. pneumoniae induced acute otitis media, or AOM. We in-licensed the novel live attenuated S. pneumoniae strain
from St. Jude Children’s Research Hospital, or St. Jude, as a potential serotype independent vaccine.
The potential of this vaccine to provide a long-term,
leading alternative treatment for AOM and subsequent introduction of a novel preventative standard of care. The development of a novel
vaccine could eradicate potential short-term pain and/or long-term harmful side effects from contracting the virus. Complications from
AOM include sensorineural hearing loss, or SNHL, in adults but are more relevant for the endangerment of children.
Researchers from St. Jude developed a strain of
S. pneumoniae that contains greatly reduced virulence yet can transiently colonize the nasopharyngeal cavity, inducing immune responses
to significantly decrease the incidence of AOM and sinusitis as demonstrated in animal models. Our vaccine production is a straightforward
process, utilizing the entire novel attenuated bacterium with purification and concentration steps only in the downstream process, thereby
reducing the time and cost of production significantly compared to commonly used polysaccharide or conjugate vaccines.
Based on information from the American Academy of
Pediatrics, over 5 million cases of AOM are reported annually in the U.S., resulting in approximately 30 million medical care
visits and over 10 million antibiotic prescriptions. AOM is the most common condition treated with antibiotics in the United States
and increasing antibiotic resistance among the organisms responsible for AOM is of concern to researchers.
Additional statistics supporting the need for a
novel preventive vaccine:
● The global AOM rate is 10.85%, or 709 million cases
per year, with 51% occurring in children under 5 years old (Tong et al. BMC Health Serv Res. 2018; 18: 318).
● By 3 years of age, 80% of children globally are expected
to have at least one episode of AOM. (Vergison A, Lancet Infect Dis. 2010 Mar;10(3):195-203. Doi: 10.1016/S1473-3099(10)70012-8.
PMID: 20185098.).
● Current treatment for AOM is by antibiotic prescription,
with more than 80% of all consultations resulting in a prescription. (Haggard, M. Eur J Pediatr 170, 323 – 332 (2011).
https://doi.org/10.1007/s00431-010-1286-4 ).
17
● Even with the introduction of the pneumococcal conjugate
vaccine (PCV13) in 2010, 26-36% of cases of AOM in U.S. were caused by S. pneumoniae. (Casey JR, Kaur R, Friedel VC,
Pichichero ME. Acute otitis media otopathogens during 2008 to 2010 in Rochester, New York. Pediatr Infect Dis J . 2013;32(8):805-809.
Doi:10.1097/INF.0b013e31828d9acc).
● Worldwide cases of AOM due to S. pneumoniae is estimated
to be 30-50%. (Bergenfelz C, Hakansson AP. Curr Otorhinolaryngol Rep. 2017;5(2):115-124. Doi: 10.1007/s40136-017-0152-6. Epub
2017 May 20. PMID: 28616365; PMCID: PMC5446555.).
● An estimated $4.3 billion USD is spent on AOM treatment
each year in the U.S. alone. (Tong S, BMC Health Serv Res. 2018 May 2;18(1):318. Doi: 10.1186/s12913-018-3139-1. PMID: 29720156;
PMCID: PMC5932897.).
The current standard of care treatment for AOM in
children is reliant on antibiotics. The resolution rate of AOM in children is 81% without antibiotic treatment vs. 93% with antibiotic
treatment. Antibiotic treatment of AOM in children has limitations, including recurrence within 30 days.
The CDC recommends broad pneumococcal vaccines for
children younger than 2 and for adults over 65 years of age (CDC). The CDC also recommends vaccinations for children and adults age
2 through 64 either previously unvaccinated or partially vaccinated. Two vaccines are currently approved in the U.S. and other countries:
Prevnar13 or PCV13 (Pfizer) (ii) Pneumovax or PPSV23 (Merck). An additional vaccine, Synflorix, is for approved use outside of the
U.S. for the prevention of pneumococcal disease and S. pneumoniae induced AOM for the 10 serotypes included in the vaccine.
Therefore, an effective serotype independent S.
pneumoniae AOM vaccine could significantly impact pediatric healthcare demand. As a preventative treatment, the vaccine’s advantages
include: reduction of near-term pain; reduction of recurrent AOM that may result in the need for tympanostomy tube placement; lessening
of antibiotic usage, which would decrease the number of antibiotic resistant organisms in the environment; and avoiding potential long-term
hearing loss.
Previous live, attenuated strains of S. pneumoniae
were generated by deleting several highly immunogenic virulent genes and therefore may not be optimal vaccine candidates. Some of these
deletions include antigens that induce antibody responses following pneumococcal carriage and otitis media in young children and therefore
may not be optimal vaccine candidates.
Our technology in-licensed from St. Jude focuses
on candidate genes essential for microbial adaptation to the host environment while maintaining virulence determinants. The St. Jude researchers
developed a S. pneumoniae strain with a deletion in ftsY , a central component of the signal recognition pathway (SRP). SRP
mutants have greatly reduced virulence, although virulence factors are still produced. The S. pneumoniae ftsY deletion strain may
potentially make an ideal live attenuated vaccine, as it can transiently colonize the nasopharyngeal cavity without inducing immune responses
to virulence protein antigens but does not cause invasive disease.
Our
candidate vaccine is a live attenuated serotype-independent vaccine, that early data supports further development to pursue a potential
long-term preventive intranasal treatment. BWV-201 will likely require two doses to provide life-long protection. BWV-201’s has
the ability to transiently colonize the nasopharyngeal cavity and significantly decrease the incidence of AOM and sinusitis in animal
models. The vaccine candidate is derived from the noninvasive serotype 19F strain BHN97, which normally causes sinusitis/purulent rhinitis
and AOM. As previously noted, the ftsY gene was deleted by St. Jude researchers, and is designated BHN97 ⊗ ftsY
(Rosch, Jason W et al. EMBO molecular medicine vol. 6,1 (2014): 141-54. Doi:10.1002/emmm.201202150).
Our vaccine production is a straightforward approach,
utilizing the entire bacterium with purification and concentration steps only in the downstream process thereby significantly reducing
the time and cost of production compared to polysaccharide or conjugate vaccines.
18
Preclinical data colonization and invasiveness and Otitis Media/Sinusitis
Efficacy
Our pre-clinical data has shown encouraging results
from the research and development of BWV-201 as a potential intranasal delivered vaccine candidate. Multiple animal models have demonstrated
protection from AOM.
To demonstrate vaccine efficacy against AOM and
sinusitis, mice were immunized (prime and two boosts) with Prevnar 7 (PCV7), Prevnar 13 (PCV13), Pneumovax (PCV23), D39x and BHN197 caxP
and ftsY deletion mutants. Deletion of ftsY, a central component of the signal recognition particle (SRP) pathway show heightened sensitivity
to environmental stress and have greatly diminished virulence. Deletion of caxP, a calcium/magnesium transporter, renders host physiological
conditions in blood and mucosa toxic to the bacterium. BHN97ftsY serotype 19F is also characterized in PCV7, PCV13, and PCV23 (Rosch,
Jason W et al. EMBO molecular medicine vol. 6,1 (2014): 141-54. Doi:10.1002/emmm.201202150).
This head-to-head preclinical study mice (n=25-31)
that were either vaccinated by mock or live attenuated with deletions of either type 2 or 19F backgrounds. This was challenged by bioluminescent
BMH97X twice daily for AOM and sinusitis. Histopathology was also used to analyze the ears of mice. Xenogen imaging PPV23 was used as
a negative control.
Two weeks following the second boost, the bioluminescent
strain BNH97x (type 19F), a serotype included in Prevnar 7, Pneumovax and BHN97ftsY (referred to as homologous challenge) were introduced
to the mice. Only BHN97∆ftsY (BWV-201), and to a lesser extent Prevnar 7, showed significant reduction in AOM and only BHN97∆ftsY
demonstrated significantly reduced sinusitis compared to mock infected animals. The incidence of AOM was significantly ( p <
0.05 compared to mock) lower in BHN97∆ftsY — vaccinated mice (Figure A-below). Only BHN97∆ftsY vaccine
significantly decreased the incidence of sinusitis ( p < 0.05). Measurement of luminescence at 24 and 72 h confirmed protection
engendered by BHN97∆ftsY.
Figure
7. Vaccine protection against otitis media and sinusitis. Mice (n=25 – 31 per group, performed
at least twice for each group) were mock-vaccinated with PBS (Mock) or vaccinated with live attenuated vaccines deleted for caxP or ftsY
on either a type2 (D39∆caxP, D39 ⊗ ftsY)
or type19F (BNH97∆caxP, BNH97∆ftsY) background. Mice were challenged with a bioluminescent S. pneumoniae strain BNH97X
(type19F) and imaged twice daily for development of AOM or sinusitis. A. The proportion of mice developing an infection of the ear
or sinus by Xenogen imaging. * =p<0.05 by Chi-squared test compared to the mock vaccinated group. PPV23 was used as a negative control
(60% otitis and 80% sinusitis). Errors bars represent standard error of the mean. PCV7 is Prevnar 7, PPV23 is Pneumovax and BHN97∆ftsY
is BWV-201.
To
determine if BHN97∆ftsY, or BWV-201, (serotype 19F) can induce heterotypic AOM protection (AOM caused by a S. pneumoniae serotype
not contained in the vaccine), mice (n=20) were immunized as detailed above and challenged with BHN54 (serotype 7), which causes otitis
media in about 50% of challenged animals. The control vaccine Prevnar 13 contains serotype 7; therefore, this study compares heterotypic
(BHN97∆ftsY) versus homotypic (Prevnar 13) vaccine protection. BHN97 ∆ ftsY
had a 10-fold lower incidence of AOM, (*p < 0.05) when compared to mock immunized animals, demonstrating that the attenuated vaccine
does induce heterotypic protection. Bioluminescent signaling as well as, reduction in weight loss also demonstrated secondary analysis
supporting vaccine protection.
19
BHN97∆ftsY induced protection from AOM was
additionally confirmed in a chinchilla (n=20) animal model. The animals were immunized (prime and two boosts) and then challenged with
BHN97 two weeks after the final boost. Vaccinated animals had a decreased incidence of culture-positive ears and had a significantly
decreased number of recoverable bacteria from the middle ear (A). Following vaccination, a reduction in the number of culture positive
ears in vaccinated group compared to the mock animals was observed (B) as well as significant reduction in recoverable CFUs from
middle ear 7 days post challenge (C) * = p < 0.05 by Mann — Whitney.
Figure 8. Vaccine
protection in a chinchilla model of otitis media. The BHN97strain is capable of causing otitis media in chinchillas via intranasal administration
as observed by recoverable bacterial colony forming units (CFUs) from the middle ear (A) following challenge. B, C Following vaccination
with BHN97 ∆ftsY (BWV-201), a reduction in the number of culture positive ears in the vaccinated group compared to the mock animals
was observed (B) as well as a significant reduction in recoverable CFUs from the middle ear at 7days post challenge (C). * =p<0.05by
Mann — Whitney. Vaccine is BHN97 ∆ftsY (BWV-201).
A potential advantage of an attenuated S. pneumoniae
vaccine such as BHN97∆ftsY is that immune responses are directed to bacterial proteins rather than just polysaccharides and
should not be limited to serotype specific protection. Purified polysaccharide (PPV) vaccines such as Pneumovax (produced by Merck &Co.)
and pneumococcal conjugate vaccines such as Prevnar 7/13/20 (produced by Wyeth/Pfizer) or Synflorix (produced by GlaxoSmithKline plc)
are generally considered serotype specific, inducing protection to disease caused only by pneumococcal strains contained in the vaccines.
20
BWV-301 Norovirus-Rotavirus Vaccine Program
We are developing BWV-201 to prevent acute gastroenteritis,
or AGE, caused by norovirus and rotavirus, utilizing the P 24 nanoparticle of our vaccine platform. The vaccine is based on
one or two doses of the norovirus P 24 nanoparticle presenting 24 rotavirus VP8* antigens. Most cases of gastroenteritis are
caused by viruses. The CDC reports that viral gastroenteritis infections cause 200,000 deaths in children worldwide each year. Common
symptoms of viral gastroenteritis causes nausea, vomiting, diarrhea, anorexia, weight loss, and dehydration.
Gastroenteritis
Gastroenteritis, often called stomach flu, is inflammation
of the gastrointestinal tract — the stomach and intestine. Symptoms may include diarrhea, vomiting and abdominal pain.
Fever, lack of energy and dehydration may also occur. While gastroenteritis is usually caused by viruses, bacteria, parasites, and fungus
can also cause gastroenteritis. Eating improperly prepared food, drinking contaminated water or close contact with a person who is infected
can spread the disease. Norovirus and rotavirus are two viruses that cause gastroenteritis in adults and children.
In 2015, there were two billion cases of gastroenteritis,
resulting in 1.3 million deaths globally. Children and those in the developing world are affected the most. In 2011, there were about
1.7 billion cases, resulting in about 700,000 deaths of children under the age of five. In the developing world, children less than
two years of age frequently get six or more infections a year. It is less common in adults, partly due to the development of immunity.
In adults, norovirus is the most common cause of severe disease. Rotavirus, however, is the common cause of AGE in children.
Norovirus
Norovirus causes significant debilitating AGE, with
a reported 700 million infections and 20% of all diarrheal cases reported annually worldwide, according to the CDC. About 200 million
cases are seen among children under 5 years old, leading to an estimated 50,000 child deaths every year. Norovirus is the cause of
approximately 20% of all AGE cases worldwide each year. It is estimated that 68.9 cases of norovirus infection occur in every 1000 people.
In North America, norovirus induced AGE tends to be seasonal, occurring in cooler, rainy months and particularly impacts groups in
close proximity, such as in schools, dormitories, medical facilities, and cruise ships.
Norovirus costs $60.3 billion worldwide each
year (CDC). Globally, norovirus resulted in a total of approximately $4.2 billion in direct health system costs and approximately
$60.3 billion in societal costs per year. Disease among children younger than 5 years cost society $39.8 billion, compared
to $20.4 billion for all other age groups combined. Costs per norovirus illness varied by both region and age and was highest among
adults ages 55 years and older. Productivity losses represented 84-99% of total costs varying by region. While low and middle
income countries and high income countries had similar disease incidence (10,148 vs. 9,935 illness per 100,000 persons), high income countries
generated 62% of global health system costs (Bartsch et al. PloS One 2016; 11:e0151219).
In North America, the median yearly cost of outbreaks
was $7.6 million in direct medical costs, and $165.3 million in productivity losses. An average of approximately 113,000 hospitalizations,
8.2-122.9 million missed school/work days, $0.2-$2.3 billion in direct medical costs, and $1.4-$20.7 billion in productivity
losses was due to sporadic illness. The total economic impact of norovirus infection was $10.6 billion based on the current incidence
estimate 68.9 cases per 1000 population, or approximately $0.15 million per person infected.
The total economic burden is greatest in young children
but the highest cost per illness is among older age groups in some regions. These large costs overwhelmingly are from productivity losses
resulting from acute illness. Low, middle, and high income countries all have a considerable economic burden, suggesting that norovirus
gastroenteritis is a truly global economic problem.
21
There is not a norovirus vaccine on the market presently.
There are, however, a number of rotavirus vaccines currently marketed around the world. RotaTeq, owned by Merck, a live, oral pentavalent
vaccine and Rotarix, owned by GSK, a monovalent, human, live attenuated vaccine are recommended by the World Health Organization (WHO)
for global use in children and approved for use in the U.S., Canada and Europe. Other monovalent vaccines are available but only approved
for use in one country, either China, Vietnam or India.
Development
P 24 VLPs produced in E. coli and
norovirus VP1 VLPs produced in a baculovirus expression system were both demonstrated to elicit innate, humoral and cellular immunity
in a mouse model, indicating that both constructs have potential as norovirus virus candidates. In addition, when delivered intranasally
both constructs were able to induce partial cross-variant protection against diarrhea in a gnotobiotic pig model. Ramesh et al. Vaccines
2019, 7, 777.
Rotavirus
Rotavirus is the most common cause of diarrheal
disease among infants and young children, causing an estimated 111 million episodes of diarrhea annually, 2 million hospitalizations
and 352,000-592,000 deaths annually, according to the CDC. After the introduction of live attenuated oral vaccines the incidence
of rotaviral hospitalizations and deaths have significantly declined. However, there is still a need for efficacious, cost-effective rotavirus
vaccines.
The rotavirus vaccine is recommended by the CDC
and ACIP as a prevention for children. However, managing the symptoms is the only way to help adults and children infected with either
of the viruses. Due to the potential of death, most treatments are focused on dehydration prevention and management. Treatment involves
getting enough fluids. For mild or moderate cases, this can typically be achieved by drinking oral rehydration solution (a combination
of water, salts and sugar). In those who are breastfed, continued breastfeeding is recommended. For more severe cases, intravenous fluids
may be needed and care provided in the hospital. Fluids may also be given by a nasogastric tube. Zinc supplementation is recommended in
children. Antibiotics are generally not needed. However, antibiotics are recommended for young children with a fever and bloody diarrhea.
To determine the potential of the P 24
VLP to serve as a rotavirus vaccine candidate, the 159 amino acid VP8* protein was inserted into a P 24 domain surface
loop. The fusion proteins self-assembled into P 24 VLPs, and the 24 rotavirus VP8* antigens were demonstrated by cryo-EM to
be displayed on the outermost surface of the chimeric P 24 VLP. Mice (n-5-7) immunized intranasally with the P 24 -VP8*
or intramuscularly with Freund’s adjuvant elicited significantly higher rotavirus neutralizing antibodies than the free VP8* immunized
under the same conditions (IN or IM). (P >0.05), (Tan et al. J. Virol. 85(2):753-764. 2011.
P 24 -VP8* VLPs were further characterized
as a potential rotavirus vaccine in mouse and gnotobiotic pig challenge studies. A construct consisting of P 24 and the VP8*
antigen from the murine rotavirus EDIM strain was constructed and tested using a murine rotavirus challenge model. Mice (n=5-7) were immunized
with P 24 -mouseVP8*, mouseVP8* alone or P 24 -human VP8* 3 times intranasally without adjuvant. Rotavirus shedding
was significantly lower in animals immunized with P 24 -mouseVP8* than mock vaccinated or animals that received mouseVP8* only
or P 24 -humanVP8* * (P >0.05) (Tan et al. J. Virol. 85(2):753-764. 2011).
22
Additionally, an immunogenicity study was conducted
in gnotobiotic pigs (n=25). A construct of P 24 and the VP8* antigen corresponding to human rotavirus Wa strain was tested in
a gnotobiotic pig challenge model. Animals were immunized intramuscularly (IM) three times with either P 24 -WuVP8* with luminium
hydroxide adjuvant or luminium hydroxide alone and were challenged with human Wa rotavirus 7 days post dose three. Animals immunized
with P 24 -WuVP8* showed a significant reduction in the mean duration of diarrhea, virus shedding and significantly lower fecal
cumulative consistency scores compared to adjuvant only control group (*, p < 0.05; **, p < 0.01). (Ramesh et al. Vaccines 7: 177
2019; doi:10.3390/vaccines7040177).
Figure 9. .P24-VP8*
vaccine protected against VirHRV diarrhea and reduced overall virus shed among vaccinated pigs. Fecal consistency (A) and virus shedding
(B) were monitored daily from post challenge day (PCD) 1 to PCD 7 after the challenge with VirHRV. Fecal consistency scores≥2
were considered to be diarrheic (dashed line indicates the threshold of diarrhea). Statistical significance between vaccinated and control
groups, determined by multiple t tests, are indicated by asterisks (*,p<0.05; **,p<0.01).
Additionally, serum samples were collected from
the pigs at the times of P 24 -VP8* vaccine administration (PID 0, PID 10, PID21 and PID 21) and VirHRV challenge
(PID 27) and upon euthanasia (PCD 7). The P 24 -VP8* vaccine was highly immunogenic in Gn pigs. It induced strong VP8*-specific
serum IgG and Wa-specific virus-neutralizing antibody responses from post-inoculation day 21 to PCD 7. Comparisons between groups
at the same time points were carried out using Student’s t-test and significant differences are identified by *** (n = 10 – 15;
p < 0.001). Tukey-Kramer HSD was used for the comparison of different time points within the same group, where different capital letters
(A, B, C,D) indicate a significant difference, p < 0.01, and shared letters indicate no significant difference. These findings support
further investigation of the noro-rotavirus dual nanoparticle vaccine. (Ramesh et al. Vaccines 7: 177 2019; doi:10.3390/vaccines7040177)
23
Figure 10. Geometric
mean VP8*-specific IgG (A) and IgA (B) and Wa-HRV neutralizing (C) antibody titers in serum collected from Gn pigs at PID 0,
10, 21, 28, and PCD 7. Pigs were vaccinated with P24-VP8* vaccine or Al(OH)3 adjuvant only. Each serum specimen was tested at an initial
dilution of 1:4. Negative samples were assigned an arbitrary value of 2 for calculation and graphical illustration purposes. Comparisons
between groups at the same time points were carried out using Student’s t-test and significant differences are identified by ***
(n = 10 – 15; p < 0.001). Tukey-Kramer HSD was used for the comparison of different time points within the same group,
where different capital letters (A, B, C, D) indicate a significant difference, p < 0.01, and shared letters indicate no significant
difference.
An effective norovirus culture-based neutralization
assay is not available, due to the lack of an efficient cell culture system to produce human norovirus. Therefore, a surrogate neutralization
assay has been developed in the field, measuring the ability of antisera to block norovirus VLP binding to host receptors. In addition
to generating rotavirus neutralizing antibody, Tan et al (J. Virol. 86:753-764. 2011) demonstrated that anti- P 24 -VP8*
mouse sera blocked norovirus VLP binding, indicating that the insertion of the VP8* fragment did not inhibit induction of norovirus VLP
binding antibodies and suggesting the P 24 -VP8 construct could potentially serve as a single vaccine against both rotavirus
and norovirus disease (P >0.05).
24
Our Vaccine
We hold the exclusive global license for the novel
norovirus-rotavirus combination vaccine (except in China and Hong Kong) from Cincinnati Children’s Hospital Medical Center,
or CHMC, CHMC researchers engineered the norovirus major structural protein VP1 such that the N-terminal shell (S) and C-terminal
protruding (P) domains of VPI could be expressed as separate S 60 and P 24 virus-like particles (VLPs). Unlike
norovirus VLPs composed of the intact VP1 protein or the unmodified S 60 fragment, our S 60 and P 24 VLPs
can be expressed in E. coli . The researchers demonstrated that S 60 VLPs could be used to present foreign antigens on
the surface of the S 60 VLP. Further, it has also demonstrated that foreign antigens could also be expressed on the surface
of the P 24 VLP. The proposed norovirus-rotavirus vaccine is based on the P 24 VLP technology. Our vaccine production
is based on an E.coli expression platform.
Development
Following IND submission, if accepted, we intend
to initiate our Phase I clinical trial in healthy adults ages 18 to 54. If approved, we believe our vaccine is well positioned
to receive a recommendation from the CDC, ACIP, and similar international advisory groups for inclusion in vaccine programs.
BWV-302: Norovirus-malaria vaccine program
Additionally, we are currently investigating a malaria
vaccine, BWV-302, utilizing our norovirus platform. The vaccine is designed to offer protection from both norovirus and malaria, infectious
diseases that occur frequently together in geographic regions. The vaccine utilizes a protein identified on the surface of the plasmodium
parasite being presented on the surface of the norovirus nanoparticle. Preclinical study results testing our vaccine design are expected
in 2023.
Malaria
Malaria can be a deadly disease caused by protozoan
parasites from the Plasmodium family, primarily spread by mosquitos (CDC, https://wwwnc.cdc.gov/travel/diseases/malaria) . Malaria
may also, at times, be transmitted through blood transfusion, organ transplantation and from mother to fetus. (CDC, https://wwwnc.cdc.gov/travel/yellowbook/2020/travel-related-infectious-diseases/malaria ).
While transmission through blood transfusion is rare in the U.S., there are no approved blood tests currently available to screen blood
donation for malaria. There were approximately 219 million cases of malaria reported in 2019 globally, resulting in approximately
409,000 deaths, of which approximately 67% were children. (WHO, https://www.who.int/news-room/fact-sheets/detail/malaria ). Symptoms
of malaria normally manifest themselves within 7 to 10 days of exposure, and can at times, be mistaken for other illnesses, including
influenza. Severe malaria is life-threatening and can cause multi-organ failure in adults and severe anemia, metabolic acidosis and cerebral
malaria in children. The World Health Organization estimates that almost half of the global population is at risk of contracting malaria.
Infants, children under 5 years of age, pregnant women and immune compromised individuals are highest risk of developing the disease.
Additionally, non-immune migrants, mobile populations and travelers are at risk of developing severe disease. Neurological issues in children
may continue to persist after cerebral malaria, including ataxia, palsy, speech impairment, deafness and blindness.
25
More than 100 species of Plasmodium have been identified.
Four of the species have been recognized as naturally infecting humans, while one that infects macaques and has been identified as a cause
of zoonotic malaria. In rare cases, additional species may infect humans. The primary four parasites that cause human infection are P. falciparum,
P. vivax, P. ovale and ( https://www.cdc.gov/malaria/about/biology/index.html ). P. knowlesi is naturally occurring in
macaques in Southeast Asia and has recently been reported as the cause zoonotic malaria, especially in Malaysia. P. falciparum is
found world-wide, can cause severe malaria and is the predominate human malaria causing species around the world.
There is currently one vaccine for malaria, RTS,S/AS01
(MVI-GSK) targeting the falciparum CS protein, which received a positive opinion from the European Medicines Agency (EMA) for use outside
of the European Union in infants 6 weeks of age and older. ( https://www.ema.europa.eu/en/news/first-malaria-vaccine-receives-positive-scientific-opinion-ema )
According to the EMA, the World Health Organization and the relevant regulatory agencies for countries outside of the European Union can
authorize its use. The vaccine is currently being administered to infants and children in parts of Africa within high transmission regions.
The vaccine’s efficacy appears to wane after five years (Laurens MB. RTS,S/AS01 vaccine (Mosquirix™): an overview.
Hum Vaccin Immunother. 2020;16(3):480-489. Doi:10.1080/21645515.2019.1669415). The recommended course of action for preventing
malaria is prevention of mosquito bites, and for those most vulnerable, a preventative treatment with sulfadoxine-pyrimethamine, especially
in high transmission areas (WHO). In certain regions, the WHO has recommended the addition of amodiaquine to children under 5 years
of age monthly during the high transmission season, along with sulfadoxine-pyrimethamine. Many regions employ mosquito control measures
to reduce mosquito populations, however, 73 countries have reported mosquito resistance to at least 1 of the 4 most commonly used insecticides,
while 23 countries have reported mosquito resistance to all of the commonly used insecticides.
Once malaria is diagnosed, the two most common treatments
are Chloroquine phosphate and Artemisinin-based combination (ACT) therapies. Chloroquine is the preferred treatment, however, some malaria
parasites have become resistant to chloroquine and it may not be an effective treatment. ACT is a combination of two or more drugs that
work against the malaria parasite in different ways. This is usually the preferred treatment for chloroquine-resistant malaria. However,
as recently reported in Nature Medicine, there is growing concern about Artemisinin — derivative resistant P.falciparum
in the Greater Mekong subregion (Cambodia, Thailand, Vietnam, Myanmar and Laos) ( https://www.nature.com/articles/s41591-020-1005-2.pdf ).
Previous occurrences of resistant strains also first appeared in the Greater Mekong subregion and then spread to other parts of the world.
( https://www.nature.com/articles/s41591-020-1005-2.pdf ).
Our Vaccine
We hold the exclusive global license for the novel
norovirus-malaria combination vaccine from Cincinnati Children’s Hospital Medical Center, or CHMC, CHMC researchers engineered the
norovirus major structural protein VP1 such that the N-terminal shell (S) and C-terminal protruding (P) domains of VPI could
be expressed as separate S 60 and P 24 virus-like particles (VLPs). Unlike norovirus VLPs composed of the intact VP1
protein or the unmodified S 60 fragment, our S 60 and P 24 VLPs can be expressed in E. coli . The researchers,
Xi Jason Jiang, Ph.D., and Ming Tan, Ph.D., demonstrated that S 60 VLPs could be used to present foreign antigens on the surface
of the S 60 VLP. Further, it has also demonstrated that foreign antigens could also be expressed on the surface of the
P 24 VLP. (see BWV Norovirus (NoV) S&P Nanoparticle Versatile Vaccine Platform ). The proposed norovirus-malaria
vaccine, P-CS)TSR is based on the P 24 VLP technology. Our vaccine production is based on an E.coli expression platform.
26
The circumsporozoite (CS) protein is the major surface
component of P. falciparum sporozoites and is essential for host cell invasion. Our vaccine, developed by Jiang and Ming from CHMC,
combines a small domain of the CS protein with the norovirus P 24 particle creating a chimeric nanoparticle capable of eliciting
an immune response. A mouse immunization study was conducted using the P 24 particle presenting the small domain of the CS protein.
Mice (n=16) were immunized three times with the chimeric nanoparticle using aluminum hydroxide as an adjuvant, 3D7-His, 3D7-GST and PBS. Sera
was collected and evaluated.
High antibody titers, as determined by ELISA, were
observed after the second immunization and higher titers were observed after the third immunization. The antibodies were also shown to
recognize the plasmodium falciparum 3D7 strain using immunofluorescence assays. These data demonstrate the potential of our vaccine candidate
against malaria. We expect to conduct an animal challenge study to further analyze the protective nature of BWV-302 and support an IND
application.
Table 3. Mouse malaria antibody titer post-immunization
Antibody titer after 2 nd immunization
Antibody titer after 3 rd immunization
Figure 11. IFA of plasmodium
sporozoites (3D7) stained with anti-P 24 particle presenting the small domain of the CS protein mouse sera
Development
We anticipate conducting an animal challenge study
for BWV-302 in the first half of 2022. Upon completion, the technology will be transferred to a partner CDMO for process optimization,
GMP production and toxicology studies, as well as other studies required by the FDA for IND submission, currently anticipated for the
second half of 2022. Following IND submission immediately upon completion of the toxicology study, if successful, we intend to initiate
our Phase I clinical trial in healthy adults ages 18 to 54 upon acceptance by the FDA, which we anticipate to occur in first half
of 2023.
Government Regulation and Product Approval
The FDA and other regulatory authorities at federal,
state and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing,
manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval,
advertising, promotion, marketing, post-approval monitoring and post-approval reporting of drugs and biologics such as those we are developing.
27
Small molecule drugs are subject to regulation under
the Food, Drug, and Cosmetic Act, or FDCA, and biological products are additionally subject to regulation under the Public Health Service
Act, or PHSA, and both are subject to additional federal, state, local and foreign statutes and regulations. We, along with third-party
contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory
agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.
United States
U. S. Biopharmaceuticals Regulation
The process required by the FDA before drug and
biologic product candidates may be marketed in the United States generally involves the following:
● completion of extensive preclinical laboratory tests and
animal studies performed in accordance with applicable regulations, including the FDA’s Good Laboratory Practice, or GLP, regulations;
● submission to the FDA of an investigational new drug application,
IND, which must become effective before clinical trials may begin;
● approval by an independent institutional review board or
ethics committee at each clinical site before the trial is commenced;
● performance of adequate and well-controlled human clinical
trials in accordance with FDA’s Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of a drug candidate
and safety, purity and potency of a proposed biologic product candidate for its intended purpose;
● preparation of and submission to the FDA of a new drug application,
or NDA, or biologics license application, or BLA, as applicable, after completion of all pivotal clinical trials;
● satisfactory completion of an FDA Advisory Committee review,
if applicable;
● a determination by the FDA within 60 days of its receipt
of an NDA or BLA to file the application for review;
● satisfactory completion of an FDA pre-approval inspection
of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with current Good Manufacturing
Practice requirements, or cGMPs, and of selected clinical investigation sites to assess compliance with GCPs; and
● FDA review and approval of an NDA, or licensure of a BLA,
to permit commercial marketing of the product for particular indications for use in the United States.
Preclinical and Clinical Development
Prior to beginning the first clinical trial with
a product candidate, we must submit an IND to the FDA. An IND is a request for authorization from the FDA to administer an investigational
new drug product to humans. The central focus of an IND submission is on the general investigational plan and the protocol or protocols
for preclinical studies and clinical trials. The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics,
pharmacology and harmacodynamics characteristics of the product, chemistry, manufacturing and controls information, and any available
human data or literature to support the use of the investigational product. An IND must become effective before human clinical trials
may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day period, raises
safety concerns or questions about the proposed clinical trial. In such a case, the IND may be placed on clinical hold and the IND sponsor
and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin. Submission of an IND therefore may
or may not result in FDA authorization to begin a clinical trial.
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Clinical trials involve the administration of the
investigational product to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the
requirement that all research subjects provide their informed consent for their participation in any clinical study. Clinical trials are
conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and
the effectiveness criteria to be evaluated. A separate submission to the existing IND must be made for each successive clinical trial
conducted during product development and for any subsequent protocol amendments. Furthermore, an independent institutional review board
for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent
form before the clinical trial begins at that site, and must monitor the study until completed. Regulatory authorities, the institutional
review board or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being
exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives. Some studies also include oversight
by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides
authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and
may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration
of efficacy.
For purposes of biopharmaceutical development, human
clinical trials are typically conducted in three sequential phases that may overlap or be combined;
● Phase 1. The investigational product is initially
introduced into patients with the target disease or condition. These studies are designed to test the safety, dosage tolerance, absorption,
metabolism and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible,
to gain early evidence on effectiveness.
● Phase 2. The investigational product is administered
to a limited patient population to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse
side effects and safety risks.
● Phase 3. The investigational product is administered
to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and
to further test for safety, generally at multiple geographically dispersed clinical trial sites. These clinical trials are intended to
establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.
In some cases, the FDA may require, or companies
may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product. These so-called
Phase 4 studies may be made a condition to approval of the application. Concurrent with clinical trials, companies may complete additional
animal studies and develop additional information about the characteristics of the product candidate and must finalize a process for manufacturing
the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing
quality batches of the product candidate and, among other things, must develop methods for testing the identity, strength, quality and
purity of the final product, or for biologics, the safety, purity and potency. Additionally, appropriate packaging must be selected and
tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over
its shelf life.
During all phases of clinical development, regulatory
agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical study investigators. The FDA
or the sponsor or its data safety monitoring board may suspend a clinical study at any time on various grounds, including a finding that
the research patients or patients are being exposed to an unacceptable health risk. Similarly, an institutional review board can suspend
or terminate approval of a clinical study at its institution if the clinical study is not being conducted in accordance with the institutional
review board’s requirements or if the biological product candidate has been associated with unexpected serious harm to patients.
There are also requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries.
Sponsors of clinical trials of FDA-regulated products are required to register and disclose certain clinical trial information, which
is publicly available at www.clinicaltrials.gov .
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NDA/BLA Submission and Review
Assuming successful completion of all required testing
in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials
are submitted to the FDA as part of an NDA or BLA, as applicable, requesting approval to market the product for one or more indications.
The application must include all relevant data available from pertinent preclinical studies and clinical trials, including negative or
ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing,
controls, and proposed labeling, among other things. The submission of an application requires payment of a substantial application user
fee to the FDA, unless a waiver or exemption applies. The FDA has sixty days from the applicant’s submission to either issue
a refusal to file letter or accept the application for filing, indicating that it is sufficiently complete to permit substantive review.
Once an NDA or BLA has been accepted for filing,
the FDA’s goal is to review standard applications within 10 months after it accepts the application for filing, or, if the
application qualifies for priority review, six months after the FDA accepts the application for filing. In both standard and priority
reviews, the review process is often significantly extended by FDA requests for additional information or clarification. The FDA reviews
an NDA to determine whether a drug is safe and effective for its intended use and a BLA to determine whether a biologic is safe, pure
and potent. FDA also reviews whether the facility in which the product is manufactured, processed, packed or held meets standards designed
to assure and preserve the product’s identity, safety, strength, quality, potency and purity. The FDA may convene an advisory committee
to provide clinical insight on application review questions. Before approving an NDA or BLA, the FDA will typically inspect the facility
or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes
and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.
Additionally, before approving an application, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.
If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the
deficiencies in the submission and often will request additional testing or information. Notwithstanding the submission of any requested
additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
After the FDA evaluates an application and conducts
inspections of manufacturing facilities where the investigational product and/or its drug substance will be manufactured, the FDA may
issue an approval letter or a Complete Response letter. An approval letter authorizes commercial marketing of the product with specific
prescribing information for specific indications. A Complete Response letter will describe all of the deficiencies that the FDA has identified
in the application, except that where the FDA determines that the data supporting the application are inadequate to support approval,
the FDA may issue the Complete Response letter without first conducting required inspections, testing submitted product lots and/or reviewing
proposed labeling. In issuing the Complete Response letter, the FDA may recommend actions that the applicant might take to place the application
in condition for approval, including requests for additional information or clarification, which may include the potential requirement
for additional clinical studies. The FDA may delay or refuse approval of an application if applicable regulatory criteria are not satisfied,
require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.
If regulatory approval of a product is granted,
such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be
marketed. For example, the FDA may approve the application with a risk evaluation and mitigation strategy, or REMS, to ensure the benefits
of the product outweigh its risks. A REMS is a safety strategy to manage a known or potential serious risk associated with a product and
to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician
communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization
tools. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls
and specifications. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is
not maintained or if problems occur after the product reaches the marketplace. The FDA may require one or more Phase 4 post-market
studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization, and may limit
further marketing of the product based on the results of these post-marketing studies.
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Expedited Development and Review Programs
The FDA offers a number of expedited development
and review programs for qualifying product candidates. The fast track program is intended to expedite or facilitate the process for reviewing
new products that meet certain criteria. Specifically, new products are eligible for fast track designation if they are intended to treat
a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.
Fast track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor
of a fast track product has opportunities for frequent interactions with the review team during product development and, once an NDA or
BLA is submitted, the product may be eligible for priority review. A fast track product may also be eligible for rolling review, where
the FDA may consider for review sections of the NDA or BLA on a rolling basis before the complete application is submitted, if the sponsor
provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines
that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.
A product intended to treat a serious or life-threatening
disease or condition may also be eligible for breakthrough therapy designation to expedite its development and review. A product can receive
breakthrough therapy designation if preliminary clinical evidence indicates that the product, alone or in combination with one or more
other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints,
such as substantial treatment effects observed early in clinical development. The designation includes all of the fast track program features,
as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite
the development and review of the product, including involvement of senior managers.
Any marketing application for a drug or biologic
submitted to the FDA for approval, including a product with a fast track designation and/or breakthrough therapy designation, may be eligible
for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review and accelerated approval.
A product is eligible for priority review if it has the potential to provide a significant improvement in the treatment, diagnosis or
prevention of a serious disease or condition. Priority review designation means the FDA’s goal is to take action on the marketing
application within six months of the 60-day filing date.
Additionally, products studied for their safety
and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination
that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint
that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible
morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability
or lack of alternative treatments. As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate
and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality
or other clinical benefit. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional
materials, which could adversely impact the timing of the commercial launch of the product.
Fast track designation, breakthrough therapy designation
and priority review do not change the standards for approval but may expedite the development or approval process. 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.
Orphan Drug Designation
Under the Orphan Drug Act, the FDA may grant orphan
designation to a drug or biologic intended to treat a rare disease or condition, which is a disease or condition that affects fewer than
200,000 individuals in the United States, or more than 200,000 individuals in the United States for which there is no reasonable
expectation that the cost of developing and making available in the United States a drug or biologic for this type of disease or
condition will be recovered from sales in the United States for that drug or biologic. Orphan drug designation must be requested
before submitting an NDA or BLA. After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and
its potential orphan use are disclosed publicly by the FDA. The orphan drug designation does not convey any advantage in, or shorten
the duration of, the regulatory review or approval process.
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If a product that has orphan drug designation subsequently
receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusive approval
(or exclusivity), which means that the FDA may not approve any other applications, including a full NDA or BLA, to market the same drug
or biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to
the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can
assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which
the drug was designated. Orphan drug exclusivity does not prevent the FDA from approving a different drug or biologic for the same disease
or condition, or the same drug or biologic for a different disease or condition. Among the other benefits of orphan drug designation are
tax credits for certain research and a waiver of the NDA or BLA application fee.
A designated orphan drug may not receive orphan
drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. In addition,
exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially
defective.
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, product sampling and 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 user fee requirements, under which the FDA assesses an annual program fee
for each product identified in an approved NDA or BLA. Biopharmaceutical 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 cGMPs, 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 cGMPs 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 cGMPs and other aspects of regulatory compliance.
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. Other potential consequences include, among other things:
● restrictions on the marketing or manufacturing of a product,
complete withdrawal of the product from the market or product recalls;
● fines, warning or untitled letters or holds on post-approval
clinical studies;
● refusal of the FDA to approve pending applications or supplements
to approved applications, or suspension or revocation of existing product approvals;
● product seizure or detention, or refusal of the FDA to permit
the import or export of products;
● consent decrees, corporate integrity agreements, debarment
or exclusion from federal healthcare programs;
● mandated modification of promotional materials and labeling
and the issuance of corrective information;
● the issuance of safety alerts, Dear Healthcare Provider letters,
press releases and other communications containing warnings or other safety information about the product; or
● injunctions or the imposition of civil or criminal penalties.
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The FDA closely regulates the marketing, labelling,
advertising and promotion of biopharmaceutical 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. However, companies may share truthful
and not misleading information that is otherwise consistent with a product’s FDA approved labelling. 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 labelling 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.
U.S. Market Exclusivity
A biological product can obtain pediatric market
exclusivity in the U.S., which, if granted, adds six months to existing exclusivity periods, including some regulatory exclusivity
periods tied to patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may
be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such
a study.
The Biologics Price Competition and Innovation Act of 2009,
or BPCIA, created an abbreviated approval pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed
reference biological product. This amendment to the PHSA attempts to minimize duplicative testing.
Biosimilarity, which requires that there be no clinically
meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown
through analytical studies, animal studies, and a clinical trial or trials. Interchangeability requires that a product is biosimilar to
the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product
and, for products administered multiple times, the biologic and the reference biologic may be interchanged after one has been previously
administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. However,
complexities associated with the larger, and often more complex, structure of biological products, as well as the process by which such
products are manufactured, pose significant hurdles to implementation that are still being worked out by the FDA.
The FDA will not accept an application for a biosimilar
or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference
product, and the FDA will not approve an application for a biosimilar or interchangeable product based on the reference biological product
until 12 years after the date of first licensure of the reference product. “First licensure” typically means the initial
date the particular product at issue was licensed in the U.S. Date of first licensure does not include the date of licensure of (and
a new period of exclusivity is not available for) a biological product if the licensure is for a supplement for the biological product
or for a subsequent application by the same sponsor or manufacturer of the biological product (or licensor, predecessor in interest, or
other related entity) for a change (not including a modification to the structure of the biological product) that results in a new indication,
route of administration, dosing schedule, dosage form, delivery system, delivery device or strength, or for a modification to the structure
of the biological product that does not result in a change in safety, purity, or potency.
The BPCIA is complex and continues to be interpreted
and implemented by the FDA. In addition, government proposals have sought to reduce the 12-year reference product exclusivity period.
Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.
As a result, the ultimate implementation and impact of the BPCIA is subject to significant uncertainty.
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Pediatric Study Plan and Pediatric Exclusivity
Under the Pediatric Research Equity Act, as amended,
or the PREA, certain NDAs and certain NDA supplements must contain data that can be used to assess the safety and efficacy of the product
candidate for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric
subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of pediatric data or full or partial
waivers. The PREA requires that a sponsor who is planning to submit a marketing application for a product candidate that includes a new
active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study
Plan, or the PSP, within 60 days of an end-of-phase 2 meeting or, if there is no such meeting, as early as practicable before the
initiation of the phase 3 or phase 2/3 study. The initial PSP must include an outline of the pediatric study or studies that the sponsor
plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for
not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement
to provide data from pediatric studies along with supporting information. The FDA and the sponsor must reach an agreement on the PSP. A
sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on
data collected from preclinical studies, early phase clinical trials and/or other clinical development programs. Unless otherwise required
by regulation, the PREA does not apply to a drug for an indication for which orphan designation has been granted, except that the PREA
will apply to an original NDA for a new active ingredient that is orphan-designated if the drug is a molecularly targeted cancer product
intended for the treatment of an adult cancer and is directed at a molecular target that the FDA determines to be substantially relevant
to the growth or progression of a pediatric cancer.
A drug can also obtain pediatric market exclusivity
in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This
six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion
of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.
Patent Term Restoration and Extension
Depending upon the timing, duration and specifics
of the FDA approval of our product candidates, some of our U.S. patents may be eligible for limited patent term extension. The provisions
of the Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch-Waxman Act, permit a patent restoration term
of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However,
patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval
date. The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of
a BLA plus the time between the submission date of a BLA and the approval of that application. Only one patent applicable to an approved
product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The
USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future,
we may apply for restoration of patent term for one of our currently owned or licensed patents to add patent life beyond its current expiration
date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.
Many other countries also provide for patent term
extensions or similar extensions of patent protection for biologic products. For example, in Japan, it may be possible to extend the patent
term for up to five years and in Europe, it may be possible to obtain a supplementary patent certificate that would effectively extend
patent protection for up to five years.
Federal and State Fraud and Abuse, Data Privacy and Security, and
Transparency Laws and Regulations
In addition to FDA restrictions on marketing of
pharmaceutical products, federal and state healthcare laws and regulations restrict business practices in the biopharmaceutical industry.
These laws may impact, among other things, our current and future business operations, including our clinical research activities, and
proposed sales, marketing and education programs and constrain the business or financial arrangements and relationships with healthcare
providers and other parties through which we market, sell and distribute our products for which we obtain marketing approval. These laws
include anti-kickback and false claims laws and regulations, data privacy and security, and transparency laws and regulations, including,
without limitation, those laws described below.
The U.S. federal Anti-Kickback Statute prohibits
any person or entity from, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce
or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable
under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted to include
anything of value. The U.S. federal Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers
on the one hand and prescribers, purchasers and formulary managers 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. 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 statute
has been violated.
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A person or entity does not need to have actual
knowledge of this statute or specific intent to violate it in order to have committed a violation. In addition, the government may assert
that a claim including items or services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false
or fraudulent claim for purposes of the federal civil False Claims Act or the civil monetary penalties laws.
Federal civil and criminal false claims laws and
civil monetary penalties laws, including the federal civil False Claims Act, which can be enforced by individuals through civil whistleblower
and qui tam actions, prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false
claim for payment to the federal government or knowingly making, using or causing to be made or used a false record or statement material
to a false or fraudulent claim to the federal government. A claim includes “any request or demand” for money or property presented
to the U.S. government. Several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly
providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies
have been prosecuted for causing false claims to be submitted because of the companies’ marketing of products for unapproved, and
thus non-reimbursable, uses.
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 a scheme to defraud any healthcare benefit program, including private third-party payors and 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. Also, many states have similar fraud and abuse statutes or regulations that
apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.
In addition, we may 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 for Economic and Clinical Health Act, or HITECH, and their respective implementing regulations, impose specified requirements
on certain types of individuals and entities 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, which include certain healthcare providers, healthcare clearinghouses and health
plans, that create, receive, maintain or transmit individually identifiable 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,
state laws govern the privacy and security of health information in certain circumstances, many of which are not pre-empted by HIPAA,
differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
The federal Physician Payments Sunshine Act requires
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, to report annually to the Centers for Medicare & Medicaid
Services, or CMS, information related to payments or other transfers of value made to physicians and teaching hospitals, and applicable
manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians
and their immediate family members.
We may also be subject to state laws that require
pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance
guidance promulgated by the federal government, state laws that require drug manufacturers to report information related to payments and
other transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing, and state and local laws
that require the registration of pharmaceutical sales representatives.
Because of the breadth of these laws and the narrowness
of available statutory exceptions and regulatory safe harbors, it is possible that some of our business activities could be subject to
challenge under one or more of such laws. If our operations are found to be in violation of any of the federal and state laws described
above or any other governmental regulations that apply to us, we may be subject to significant criminal, civil and administrative penalties
including damages, fines, imprisonment, disgorgement, additional reporting requirements and oversight if we become subject to a corporate
integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm,
diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment
or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which
may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, implementation
of corporate compliance programs, reporting of payments or transfers of value to healthcare professionals, and additional data privacy
and security requirements.
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Healthcare Reform
Coverage and Reimbursement
The future commercial success of our product candidates,
if approved, will depend in part on the extent to which third-party payors, such as governmental payor programs at the federal and state
levels, including Medicare and Medicaid, private health insurers and other third-party payors, provide coverage of and establish adequate
reimbursement levels for our product candidates. Third-party payors generally decide which products they will pay for and establish reimbursement
levels for those products. In particular, in the United States, no uniform policy for coverage and reimbursement exists. Private
health insurers and other third-party payors often provide coverage and reimbursement for products based on the level at which the government,
through the Medicare program, provides coverage and reimbursement for such products, but also on their own methods and approval process
apart from Medicare determinations. Therefore, coverage and reimbursement can differ significantly from payor to payor.
In the United States, the European Union, or
EU, and other potentially significant markets for our product candidates, government authorities and third-party payors are increasingly
attempting to limit or regulate the price of products, particularly for new and innovative products, which often has resulted in average
selling prices lower than they would otherwise be. Further, the increased emphasis on managed healthcare in the United States and
on country and regional pricing and reimbursement controls in the EU will put additional pressure on product pricing, reimbursement and
usage. These pressures can arise from rules and practices of managed care groups, judicial decisions and laws and regulations related
to Medicare, Medicaid and healthcare reform, pharmaceutical coverage and reimbursement policies and pricing in general.
Third-party payors are increasingly imposing additional
requirements and restrictions on coverage and limiting reimbursement levels for products. For example, federal and state governments reimburse
products at varying rates generally below average wholesale price. These restrictions and limitations influence the purchase of products.
Third-party payors may limit coverage to specific products on an approved list, or formulary, which might not include all of the FDA-approved
products for a particular indication. Similarly, because certain of our product candidates are physician-administered, separate reimbursement
for the product itself may or may not be available. Instead, the administering physician may only be reimbursed for providing the treatment
or procedure in which our product is used. Third-party payors are increasingly challenging the price and examining the medical necessity
and cost-effectiveness of products, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies
in order to demonstrate the medical necessity and cost-effectiveness of our product candidates, in addition to the costs required to obtain
the FDA approvals. Our product candidates may not be considered medically necessary or cost-effective. A payor’s decision to provide
coverage for a product does not imply that an adequate reimbursement rate will be approved. Adequate third-party payor reimbursement may
not be available to enable us to realize an appropriate return on our investment in product development. Legislative proposals to reform
healthcare or reduce costs under government insurance programs may result in lower reimbursement for our product candidates, if approved,
or exclusion of our product candidates from coverage and reimbursement. The cost containment measures that third-party payors and providers
are instituting and any healthcare reform could significantly reduce our revenue from the sale of any approved product candidates.
The United States and some foreign jurisdictions
are considering enacting or have enacted a number of additional legislative and regulatory proposals to change the healthcare system in
ways that could affect our ability to sell our product candidates profitably, if approved. 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 expanding access. In the United States, the pharmaceutical industry has been a particular focus of these
efforts, which include major legislative initiatives to reduce the cost of care through changes in the healthcare system, including limits
on the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded healthcare
programs, and increased governmental control of drug pricing.
There have been several U.S. government initiatives
over the past few years to fund and incentivize certain comparative effectiveness research, including creation of the Patient-Centered
Outcomes Research Institute under the ACA. It is also possible that comparative effectiveness research demonstrating benefits in
a competitor’s product could adversely affect the sales of our product candidates.
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The ACA became law in March 2010 and substantially
changed the way healthcare is financed by third-party payors, and significantly impacts the U.S. pharmaceutical industry. Among other
measures that may have an impact on our business, the ACA established an annual, nondeductible fee on any entity that manufactures or
imports specified branded prescription drugs and biologic agents; a new Medicare Part D coverage gap discount program; and a new
formula that increased the rebates a manufacturer must pay under the Medicaid Drug Rebate Program. Additionally, the ACA extended manufacturers’
Medicaid rebate liability, expands eligibility criteria for Medicaid programs, and expanded entities eligible for discounts under the
Public Health Service Act. At this time, we are unsure of the full impact that the ACA will have on our business.
Since its enactment, there have been judicial and
Congressional challenges to certain aspects of the ACA, as well as recent efforts by the Trump administration to repeal or replace certain
aspects of the ACA, and we expect such challenges and amendments to continue. Since January 2017, President Trump has signed two
Executive Orders and other directives designed to delay the implementation of certain ACA provisions or otherwise circumvent requirements
for health insurance mandated by the ACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace
all or part of the ACA. While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of
certain taxes under the ACA have been signed into law. The Tax Cuts and Jobs Act of 2017, or Tax Act, includes a provision that
repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail
to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.”
On January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation
of certain ACA-mandated fees, including the so-called “Cadillac” tax on certain high cost employer-sponsored insurance plans,
the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on nonexempt medical
devices. The Bipartisan Budget Act of 2018, or the BBA, among other things, amended the ACA, effective January 1, 2019,
to increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D
and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” In July 2018, CMS
published a final rule permitting further collections and payments to and from certain ACA qualified health plans and health insurance
issuers under the ACA adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses
to determine this risk adjustment. In December 2018, a U.S. District Court Judge in the Northern District of Texas, or Texas
District Court Judge, ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was
repealed as part of the Tax Act, the remaining provisions of the ACA are invalid as well. While the Texas District Court Judge, as well
as the Trump administration and CMS, have stated that the ruling will have no immediate effect, it is unclear how this decision, subsequent
appeals, and other efforts to repeal and replace the ACA will impact the ACA.
In addition, other legislative changes have been
proposed and adopted since the ACA was enacted. In August 2011, the President signed into law the Budget Control Act of 2011,
as amended, which, among other things, included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which began
in 2013 and, following passage of subsequent legislation, including the BBA, will continue through 2027 unless additional Congressional
action is taken. In January 2013, the American Taxpayer Relief Act of 2012 was enacted which, among other things, reduced
Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments
to providers from three to five years.
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Further, there has been increasing legislative and
enforcement interest in the United States with respect to drug pricing practices. Specifically, there have been 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, and reform government program reimbursement methodologies for
drugs. At the federal level, the Trump administration’s budget proposal for fiscal year 2019 contains further drug price control
measures that could be enacted during the 2019 budget process or in other future legislation, including, for example, measures to permit
Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug
prices under Medicaid, and to eliminate cost sharing for generic drugs for low-income patients. Additionally, the Trump administration
released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to
increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to
lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers. The U.S. Department
of Health and Human Services, or HHS, has already started the process of soliciting feedback on some of these measures and is implementing
others under its existing authority. For example, in September 2018, CMS announced that it will allow Medicare Advantage plans the
option to use step therapy for Part B drugs beginning January 1, 2019. On January 31, 2019, the HHS Office of Inspector
General proposed modifications to U.S. federal Anti-Kickback Statute safe harbors which, among other things, may affect rebates paid
by manufacturers to Medicare Part D plans, the purpose of which is to further reduce the cost of drug products to consumers. In addition,
CMS issued a final rule, effective on July 9, 2019, that requires direct-to-consumer television advertisements of prescription drugs
and biological products, for which payment is available through or under Medicare or Medicaid, to include in the advertisement the Wholesale
Acquisition Cost, or list price, of that drug or biological product if it is equal to or greater than $35 for a monthly supply or usual
course of treatment. Prescription drugs and biological products that are in violation of these requirements will be included on a public
list. Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures
to control drug costs. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control
pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain
product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other
countries and bulk purchasing. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures
to determine which drugs and suppliers will be included in their healthcare programs. Furthermore, there has been increased interest by
third party payors and governmental authorities in reference pricing systems and publication of discounts and list prices. These measures
could reduce future demand for our products or put pressure on our pricing.
Additionally, in May 2018, the Trickett Wendler,
Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017, or the Right to Try Act, was signed into law.
The law, among other things, provides a federal framework for certain patients to access certain investigational new drug products that
have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible
patients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program.
There is no obligation for a drug manufacturer to make its drug products available to eligible patients as a result of the Right to Try
Act.
Foreign Regulation
In order to market any product outside of the United States,
we would need to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy and governing,
among other things, clinical trials, marketing authorization, commercial sales and distribution of our product candidates. For example,
in the EU, we must obtain authorization of a clinical trial application, or CTA, in each member state in which we intend to conduct a
clinical trial. Whether or not we obtain FDA approval for a drug, we would need to obtain the necessary approvals by the comparable regulatory
authorities of foreign countries before we can commence clinical trials or marketing of the drug in those countries. The approval process
varies from country to country and can involve additional product testing and additional administrative review periods. The time required
to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. Regulatory approval in
one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may
negatively impact the regulatory process in others.
Further, some countries outside of the United States,
including the EU member states, Switzerland and the United Kingdom, have also adopted data protection laws and regulations, which impose
significant compliance obligations. In the EU, the collection and use of personal health data is governed by the provisions of the General
Data Protection Regulation, or GDPR. The GDPR became effective on May 25, 2018, repealing its predecessor directive and increasing
responsibility and liability of pharmaceutical companies in relation to the processing of personal data of EU subjects. The GDPR, together
with the national legislation of the EU member states governing the processing of personal data, impose strict obligations and restrictions
on the ability to process personal data, including health data from clinical trials and adverse event reporting. In particular, these
obligations and restrictions concern potentially burdensome documentation requirements, granting certain rights to individuals to control
how we collect, use, disclose, retain and process information about them, the information provided to the individuals, the transfer of
personal data out of the EU, security breach notifications, and security and confidentiality of the personal data. The processing of sensitive
personal data, such as physical health condition, may impose heightened compliance burdens under the GDPR and is a topic of active interest
among foreign regulators. In addition, the GDPR provides for more robust regulatory enforcement and fines of up to €20 million
or 4% of the annual global revenue of the noncompliant company, whichever is greater. Data protection authorities from the different EU
member states may interpret the GDPR and national laws differently and impose additional requirements, which add to the complexity of
processing personal data in the EU. Guidance on implementation and compliance practices are often updated or otherwise revised.
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European Union
European Union Coverage Reimbursement and Pricing
In the European Union, pricing and reimbursement
schemes vary widely from country to country. Some countries provide that drug products may be marketed only after a reimbursement price
has been agreed. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular drug
candidate to currently available therapies, or so called health technology assessments, in order to obtain reimbursement or pricing approval.
For example, the European Union provides options for its member states to restrict the range of drug products for which their national
health insurance systems provide reimbursement and to control the prices of medicinal products for human use. European Union member states
may approve a specific price for a drug product or may instead adopt a system of direct or indirect controls on the profitability of the
company.
EU Drug regulation
In order to market any product outside of the United States,
we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety
and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products.
Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory
authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions such as in China
and Japan. Although many of the issues discussed above with respect to the United States apply similarly in the context of the EU,
the approval process varies between countries and jurisdictions and can involve additional product testing and additional administrative
review periods. The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required
to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure
or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others. Failure
to comply with applicable foreign regulatory requirements, may be subject to, among other things, fines, suspension or withdrawal of regulatory
approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
Non-clinical studies and clinical trials
Similarly to the United States, the various
phases of non-clinical and clinical research in the EU are subject to significant regulatory controls.
Non-clinical studies are performed to demonstrate
the health or environmental safety of new chemical or biological substances. Non-clinical studies must be conducted in compliance with
the principles of good laboratory practice (GLP) as set forth in EU Directive 2004/10/EC. In particular, non-clinical studies, both
in vitro and in vivo, must be planned, performed, monitored, recorded, reported and archived in accordance with the GLP principles, which
define a set of rules and criteria for a quality system for the organizational process and the conditions for non-clinical studies. These
GLP standards reflect the Organization for Economic Co-operation and Development requirements.
Clinical trials of medicinal products in the EU
must be conducted in accordance with EU and national regulations and the International Conference on Harmonization (ICH) guidelines on
good clinical practices (GCP) as well as the applicable regulatory requirements and the ethical principles that have their origin in the
Declaration of Helsinki. Additional GCP guidelines from the European Commission, focusing in particular on traceability, apply to clinical
trials of advanced therapy medicinal products. If the sponsor of the clinical trial is not established within the EU, it must appoint
an entity within the EU to act as its legal representative. The sponsor must take out a clinical trial insurance policy, and in most EU
member states, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial.
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Certain countries outside of the United States,
including the EU, have a similar process that requires the submission of a clinical study application (CTA) much like the IND prior to
the commencement of human clinical studies. A CTA must be submitted to each country’s national health authority and an independent
ethics committee, much like the FDA and the IRB, respectively. Once the CTA is approved by the national health authority and the ethics
committee has granted a positive opinion in relation to the conduct of the trial in the relevant member state(s), in accordance with a
country’s requirements, clinical study development may proceed.
The CTA must include, among other things, a copy
of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the
medicinal product under investigation. Currently, CTAs must be submitted to the competent authority in each EU member state in which the
trial will be conducted. Under the new Regulation on Clinical Trials, which is currently expected to become applicable by early 2022,
there will be a centralized application procedure where one national authority takes the lead in reviewing the application and the other
national authorities have only a limited involvement. Any substantial changes to the trial protocol or other information submitted with
the CTA must be notified to or approved by the relevant competent authorities and ethics committees. Medicines used in clinical trials
must be manufactured in accordance with good manufacturing practice (GMP). Other national and EU-wide regulatory requirements also apply.
Marketing Authorizations
To market a medicinal product in the EU and in many
other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely, in the EU, medicinal product candidates can
only be commercialized after obtaining a Marketing Authorization (MA). To obtain regulatory approval of an investigational medicinal product
under EU regulatory systems, we must submit a marketing authorization application (MAA.) The process for doing this depends, among other
things, on the nature of the medicinal product. There are two types of Mas:
● the “Union MA”, which is issued by the European
Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use (CHMP) of the
European Medicines Agency (EMA) and which is valid throughout the entire territory of the EU. The Centralized Procedure is mandatory
for certain types of products, such as (i) medicinal products derived from biotechnology medicinal products, (ii) designated
orphan medicinal products, (iii) advanced therapy products (such as gene therapy, somatic cell therapy or tissue-engineered medicines),
and (iv) medicinal products containing a new active substance indicated for the treatment certain diseases, such as HIV/AIDS, cancer,
neurodegenerative diseases, diabetes, other auto-immune and viral diseases. The Centralized Procedure is optional for products containing
a new active substance not yet authorized in the EU, or for products that constitute a significant therapeutic, scientific or technical
innovation or that the granting of authorization would be in the interest of public health in the EU; and
● “National Mas”, which are issued by the competent
authorities of the EU member states and only cover their respective territory, are available for products not falling within the mandatory
scope of the Centralized Procedure. Where a product has already been authorized for marketing in an EU member state, this National MA
can be recognized in another member state through the Mutual Recognition Procedure. If the product has not received a National MA in
any member state at the time of application, it can be approved simultaneously in various member states through the Decentralized Procedure.
Under the Decentralized Procedure an identical dossier is submitted to the competent authorities of each of the member states in which
the MA is sought, one of which is selected by the applicant as the Reference member state.
Under the above-described procedures, in order to
grant the MA, the EMA or the competent authorities of the EU member states make an assessment of the risk-benefit balance of the product
on the basis of scientific criteria concerning its quality, safety and efficacy.
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Under the Centralized Procedure, the maximum timeframe
for the evaluation of a MAA by the EMA is 210 days. Where there is a major public health interest and an unmet medical need for a
product, the CHMP may perform an accelerated review of a MA in no more than 150 days (not including clock stops). Innovative products
that target an unmet medical need and are expected to be of major public health interest may be eligible for a number of expedited development
and review programs, such as the PRIME scheme, which provides incentives similar to the breakthrough therapy designation in the US PRIME
is a voluntary scheme aimed at enhancing the EMA’s support for the development of medicines that target unmet medical needs. It
is based on increased interaction and early dialogue with companies developing promising medicines, to optimize their product development
plans and speed up their evaluation to help them reach patients earlier. Product developers that benefit from PRIME designation can expect
to be eligible for accelerated assessment but this is not guaranteed. The benefits of a PRIME designation include the appointment of a
CHMP rapporteur before submission of a MAA, early dialogue and scientific advice at key development milestones, and the potential to qualify
products for accelerated review earlier in the application process.
Mas have an initial duration of five years.
After these five years, the authorization may be renewed for an unlimited period on the basis of a reevaluation of the risk-benefit
balance, unless the EMA decides, on justified grounds relating to pharmacovigilance, to mandate one additional five-year renewal period.
Data and marketing exclusivity
The EU also provides opportunities for market exclusivity.
Upon receiving MA, new chemical entity, or reference product candidates, generally receive eight years of data exclusivity and an
additional two years of market exclusivity. If granted, the data exclusivity period prevents generic or biosimilar applicants from
relying on the pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar
MA in the EU during a period of eight years from the date on which the reference product was first authorized in the EU. The
market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until 10 years
have elapsed from the initial authorization of the reference product in the EU. The overall 10-year market exclusivity period can
be extended to a maximum of eleven years if, during the first eight years of those 10 years, the MA holder obtains an authorization
for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a
significant clinical benefit in comparison with existing therapies. However, there is no guarantee that a product will be considered by
the EU’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity.
Pediatric Development
In the EU, MAAs for new medicinal products candidates
have to include the results of trials conducted in the pediatric population, in compliance with a pediatric investigation plan (PIP) agreed
with the EMA’s Pediatric Committee (PDCO). The PIP sets out the timing and measures proposed to generate data to support a pediatric
indication of the drug for which MA is being sought. The PDCO can grant a deferral of the obligation to implement some or all of the measures
of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults. Further, the obligation to
provide pediatric clinical trial data can be waived by the PDCO when these data is not needed or appropriate because the product is likely
to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations,
or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients. Once the MA
is obtained in all EU Member States and study results are included in the product information, even when negative, the product is eligible
for six months’ supplementary protection certificate extension (if any is in effect at the time of authorization).
Post-Approval Requirements
Similar to the United States, both MA holders
and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA, the European Commission and/or the
competent regulatory authorities of the member states. The holder of a MA must establish and maintain a pharmacovigilance system and appoint
an individual qualified person for pharmacovigilance who is responsible for oversight of that system. Key obligations include expedited
reporting of suspected serious adverse reactions and submission of periodic safety update reports (PSURs).
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All new MAA must include a risk management plan
(RMP) describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks
associated with the product. The regulatory authorities may also impose specific obligations as a condition of the MA. Such risk-minimization
measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct
of additional clinical trials or post-authorization safety studies.
The advertising and promotion of medicinal products
is also subject to laws concerning promotion of medicinal products, interactions with physicians, misleading and comparative advertising
and unfair commercial practices. All advertising and promotional activities for the product must be consistent with the approved summary
of product characteristics, and therefore all off-label promotion is prohibited. Direct-to-consumer advertising of prescription medicines
is also prohibited in the EU. Although general requirements for advertising and promotion of medicinal products are established under
EU directives, the details are governed by regulations in each member state and can differ from one country to another.
The aforementioned EU rules are generally applicable
in the European Economic Area (EEA) which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland.
For other countries outside of the EU, such as countries
in Latin America or Asia (e.g. China and Japan), the requirements governing the conduct of clinical studies, product licensing, pricing
and reimbursement vary from country to country. In all cases, again, the clinical studies are conducted in accordance with GCP and the
applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki. If we fail to comply
with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory
approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
Privacy and data protection laws
We are also subject to laws and regulations in non-US
countries covering data privacy and the protection of health-related and other personal information. For instance, EU member states and
other jurisdictions have adopted data protection laws and regulations, which impose significant compliance obligations. Laws and regulations
in these jurisdictions apply broadly to the collection, use, storage, disclosure, processing and security of personal information that
identifies or may be used to identify an individual, such as names, contact information, and sensitive personal data such as health data.
These laws and regulations are subject to frequent revisions and differing interpretations,
As of May 2018, the General Data Protection
Regulation (GDPR) replaced the Data Protection Directive with respect to the processing of personal data in the European Union. The GDPR
imposes many requirements for controllers and processors of personal data, including, for example, higher standards for obtaining consent
from individuals to process their personal data, more robust disclosures to individuals and a strengthened individual data rights regime,
shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining
to health data and pseudonymised (i.e., key-coded) data and additional obligations when we contract third-party processors in connection
with the processing of the personal data. The GDPR allows EU member states to make additional laws and regulations further limiting the
processing of genetic, biometric or health data. Failure to comply with the requirements of GDPR and the applicable national data protection
laws of the EU member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding
financial year, whichever is higher, and other administrative penalties.
Japan
Japanese drug regulation
Non-clinical studies and clinical trials
Being a member of the International Conference on
Harmonization (ICH), Japan has pharmaceutical regulations fundamentally similar to those of the United States or EU.
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Non-clinical studies are performed to demonstrate
the health safety of new chemical or biological substances. Non-clinical studies must be conducted in compliance with the principles of
Japanese good laboratory practice (GLP) which reflect the Organization for Economic Co-operation and Development requirements. Currently,
Japan and EU have a mutual recognition agreement for GLP, and data generated compliant with EU requirements will be accepted by the Japanese
authorities. There is no similar agreement with the United States.
Clinical trials of medicinal products in Japan must
be conducted in accordance with Japanese regulations based on ICH guidelines governing good clinical practices (GCP). They focus on ethics
of the clinical trial and protection of the privacy of the trial subjects. If the sponsor of the clinical trial is not established within
Japan, it must appoint an entity within the country to act as its caretaker who should be authorized to act on the sponsor’s behalf.
The sponsor must take out a clinical trial insurance policy, and, according to the industry agreement, should put in place a common compensation
policy for the injuries from the trial.
Prior to the commencement of human clinical studies,
the sponsor must complete evaluation of the safety of the investigative product, and submit a clinical trial notification and the protocol
to the authorities in advance, upon agreement of the IRB of the participating institutions. When the authorities do not comment on the
notification, the sponsor may proceed with the clinical trial.
Any substantial changes to the trial protocol or
other information submitted must be cleared by the IRB and notified to the authorities. Medicines used in clinical trials must be manufactured
in accordance with good manufacturing practice (GMP).
Product approval
To market a medicinal product in Japan, we must
obtain regulatory approval. To obtain regulatory approval of an investigational medicinal product, we must submit a new drug application.
The process for doing this depends, among other things, on the nature of the medicinal product and there are currently a few different
pathways for approval. If the product is designed for treating certain “difficult diseases” or those whose patient size is
limited, we may be able to obtain designation as an orphan drug product if it demonstrates unique therapeutic value. Approval application
for such designated orphan products will be processed on an expedited basis and the authorities’ requirement for clinical data will
be much limited. Separately, the latest amendment to the law introduced separate pathways for (i) truly innovative products with
a unique mode of action and (ii) those which will satisfy unmet medical needs. These products will also be processed on an expedited
basis.
The evaluation of applications will be based on
an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
Once the review organization complete its review task, the matter will be considered by the advisory committee of experts, and the government
will grant approval upon positive recommendation from the committee.
The volume and quality of the clinical data will
be the key determinant of the approval decision. Clinical trial data generated overseas will be accepted as part of the data package consistent
with the ICH recommendation. Typically, a limited dose response clinical trial for Japanese subjects is required to ensure that data are
extrapolatable for the Japanese population. In a more recent development, the authorities encourage manufacturers to organize an international
joint clinical trial with some Japanese participation under a joint protocol, to expedite the clinical trial process. Regulatory approval
does not expire.
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Licensing requirement
Separate from the approval requirement, it is also
mandatory to possess a distribution license of an appropriate class for the manufacturer to commercially distribute the product in Japan.
Non-Japanese companies who possess only the product approval may designate an appropriate license holder in Japan to commercially distribute
the product, rather than distributing it on its own. The license is valid for 5 years.
Intellectual Property
Exclusive License Agreement with Children’s Hospital Medical
Center, d/b/a Cincinnati Children’s Hospital Medical Center
On June 1, 2021 (the “Effective Date”),
the Company entered into a license agreement with Children’s Hospital Medical Center, d/b/a Cincinnati Children’s Hospital
Medical Center (“CHMC”) to develop and commercialize certain CHMC patents and related technology directed at a virus-like
particle (VLP) vaccine platform that utilizes nanoparticle delivery technology, which may have potential broad application to develop
vaccines for multiple infectious diseases (“the CHMC Agreement”). The license is exclusive, worldwide, and is for all uses
(other than the “Excluded Field” of immunization against, and prevention, control, or reduction in severity of gastroenteritis
caused by Rotavirus and Norovirus in China and Hong Kong). The license is sublicensable with prior CHMC written approval consistent
with the terms of the CHMC Agreement.
The CHMC Agreement includes the below patents, which
we refer to as the “Licensed Patents”, and any divisionals, continuations and continuations-in-part thereto (solely to the
extent that the claims in the continuations-in-part are directed to the subject matter specifically claimed in the Licensed Patents, and
they have the same priority date as the Licensed Patents, but do not include any different or additional claims), and any patents resulting
therefrom:
U.S. Patent
Application No.
U.S.
Patent No.
Granted Claim Type
U.S.
Expiration
Foreign Counterparts
12/797,396
8,486,421
Compositions of the vaccine/vaccine platform
1/13/2031
CN107043408B EP2440582B1 JP5894528B2
13/924,906
9,096,644
Method of treatment
9/20/2030
CN107043408B EP2440582B1 JP5894528B2
13/803,057
9,562,077
Compositions of the vaccine platform
11/8/2033
none
16/489,095
pending
pending**
[3/15/2038]*
Pending applications in Canada, China, EU and Japan
63/149,742 (filed 2/16/2021)
pending
pending**
[February 2042] #
TBD
63/162,369 (filed 3/17/2021)
pending
pending**
[March 2042] #
TBD
* Projected expiration if patent issues: 20 years from
earliest non-provisional application filing date.
# Non-provisional application not yet filed. Expiration projected
21 years from provisional application filing date. Dependent on timely conversion to non-provisional application and issuance of
patent.
** This is a pending application. Claim type will be determined
after U.S. prosecution is complete. The claim type sought includes compositions of the vaccine and vaccine platform.
The CHMC Agreement also grants the Company a non-exclusive
limited license to use and copy internally any technical information in existence and known before the Effective Date by CHMC solely as
necessary for the use and practice of the Licensed Patents (the “Technology”).
The term of the CHMC Agreement begins on the Effective
Date and extends on a jurisdiction by jurisdiction and product by product basis until the later of: (i) the last to expire Licensed
Patent; (ii) ten (10) years after the first commercial sale; or, (iii) entrance onto the market of a biosimilar or interchangeable
product. CHMC has reserved the right to practice, have practiced, and transfer the Licensed Patents and Technology for research and development
purposes, including education, research, teaching, publication and public service, but not to use or practice the Licensed Patents or
Technology in Field of Use for any commercial or profit purpose.
44
The Licensed Patents granted to the Company under
the CHMC Agreement are also subject to any rights of the United States federal, state and/or local Government(s), as well as nonprofit
entities, if certain patents or technologies were created in the course of Government-funded or non-profit entity-funded research. The
CHMC Agreement also contains compulsory licensing provisions under which CHMC must notify the Company in writing whenever CHMC may become
aware of third parties that are interested in obtaining rights to the Licensed Patents or Technology for purposes that are beyond the
scope of the Company’s development and commercialization plan. The Company may elect to pursue the new purposes itself (and negotiate
commercially reasonable development targets), or enter into sublicense negotiations with the interested third party. However, if the Company
fails to meet its development targets for the new purposes or fails to enter into a sublicense agreement with the interested third party
within nine (9) months of the notice from CHMC, then the new purpose will be excluded from the license grant and CHMC will be free
to pursue licensing of the Licensed Patents or Technology within the Excluded Field to an interested third party.
Any patented modification, alteration or improvement
of any invention claimed in a Licensed Patents or Technology which is conceived or reduced to practice solely by the Company (“Company
Improvement”) is owned by the Company; however, for any such Company Improvement, the Company will automatically grant to CHMC a
worldwide, perpetual, sublicensable, nonexclusive, paid-up, royalty-free license to use any Company Improvements solely for clinical or
non-clinical, non-commercial research, testing, educational and patient care purposes. The CHMC Agreement also provides the Company with
an option to license any CHMC or jointly patented modification, alteration or improvement of any invention claimed in a Licensed Patent
(“CHMC Improvement” and “Joint Improvement, respectively”), with option fee for each Improvement that the Company
elects to include in the license grant of the CHMC Agreement.
The Company is required to pay CHMC an aggregate
of up to $59.75 million upon the achievement of specified development milestones, of approximately $0.5 million, regulatory
milestones, of approximately $1.25 million and commercial milestones, of approximately $58 million (excluding any royalty arrangements).
In the event the Company enters into a sublicense agreement with a third party who is not an affiliate, then the Company is obligated
to pay CHMC a percentage of all non-royalty sublicensing revenue. Specifically, the Company must pay twenty-five percent (25%) for revenue
received from the sublicensee prior to first net sale of a licensed product, fifteen percent (15%) for revenue received after first net
sale of a licensed product or five percent after the first sale of a second licensed product. No annual maintenance fee is required.
Pursuant to the CHMC Agreement, the Company paid
to CHMC a one-time $25,000 initial license fee; thereafter, the Company is required to pay $100,000 deferred license fee upon the earlier
of the Company’s first to occur convertible debt or equity raise after the Effective Date. On the one year anniversary of the Effective
Date, the Company will be required to pay to CHMC an additional deferred $100,000 license fee.
Under the CHMC Agreement, the Company is obligated
to use commercially reasonable efforts to bring licensed products to market through diligent research and development, testing, manufacturing
and commercialization and to use best efforts to make all necessary regulatory filings and obtain all necessary regulatory approvals,
and achieve milestones relating to development and sales, and report to CHMC on progress. The Company will also be obligated to pay the
agreed upon development milestone payments to CHMC.
Development milestones include: (i) IND filings
of each Licensed Product; (ii) BLA or equivalent allowed for Licensed Product in U.S. or E.U.; (iii) first commercial sale
of licensed product in the U.S.; (iv) first commercial sale of licensed product in the E.U.; (v) first commercial sale of licensed
product in Japan; (vi) first commercial sale in Rest of World (ROW); (vii) conclusion of the first calendar year. Pursuant to
the terms of the CHMC Agreement, if the Company fails to achieve milestones or make milestone payments on certain milestones, and cannot
mutually agree with CHMC on an amendment to the milestones, then CHMC will have the option of converting any and all of such exclusive
licenses to nonexclusive licenses.
45
In addition to the fees discussed above, beginning
on the first Net Sale, the Company will pay CHMC running royalties on a quarterly basis as a percentage of Net Sales (as defined in the
CHMC Agreement) of the Company, its affiliates and any subsidiaries. Similarly, in the event the Company enters into a sublicense agreement,
the Company shall pay CHMC a percentage of all non-royalty sublicensing revenues received from the sublicensee. There is a 5% royalty
rate for products and processes for P-Particle VLP Bivalent vaccine for norovirus and rotavirus; a 4% royalty rate for products and processes
for Universal Flu Vaccine(s); and a 2% royalty rate for all other products or processes for other indications. To date, no payments have
been made related to the milestones or royalties. Before any Valid Claims (as defined in the CHMC Agreement) exist, the running royalty
rates are reduced by fifty percent (50%).
The CHMC Agreement also contains an anti-stacking
provision pursuant to which in the event the Company is legally required to pay royalties to one or more third parties whose patent rights
dominate the Licensed Patents, and would therefore be infringed by exercise of the license rights granted in the CHMC Agreement, the Company
may reduce running royalty payments by fifty percent (50%). In the event the Company grants sublicenses, the Company is obligated to pay
CHMC as follows: (i) specified percentage of revenue received prior to first Net Sale of first Licensed Product; (ii) specified
percentage for revenue received after first Net Sales of first Licensed Product but before first Net Sales of second Licensed Product;
or (iii) specified percentage for revenues received after first Net Sales of second Licensed Product.
CHMC reserved the first and sole right, using in-house
or outside legal counsel selected by CHMC, to prepare, file, prosecute, maintain and extend patents and patent applications, and the Company
agreed to reimburse CHMC for its legal and administrative costs incurred in the course of doing such. The Company also agreed to reimburse
CHMC for incurred legal fees of approximately $177,100 as of the Effective Date. CHMC will provide the Company a reasonable opportunity
to comment during prosecution and will consider the Company’s comments, but CHMC retained control over all final decisions. If CHMC
elects to not be responsible for the prosecution or maintenance of any such patents, the Company will receive a sixty (60) days’
written notice upon which the Company may elect, at the Company’s expense, to assume the responsibilities and obligations to prosecute
and maintain the patents (among other things); thereafter, the Company will use reasonable efforts to give CHMC an opportunity to comment,
but the final decision with respect to such matter will remain with the Company.
The CHMC Agreement contains no CHMC representations
or warranties. The CHMC Agreement also requires the Company to indemnify CHMC and other related parties against all claims, suit, actions,
demands, judgments, or investigations arising out of any product the Company produces under the CHMC Agreement, as set forth in the CHMC
Agreement, and requires the Company, beginning with the earlier of the first clinical trial or commercial sale or other commercialization
to obtain liability insurance.
CHMC will have the first and sole right but not
the obligation, at its own expense, to initiate an infringement suit or other appropriate actions against third party infringers and receives
all therefrom. For joint suits initiated against third party infringers and receives damages or profits recovered therefrom. In the event
CHMC does not, within six (6) months after becoming aware of infringement, secure cessation of the infringement, the Company will
have the right to initiate suit at its own expense. Any damages or profits that the Company recovers will be treated as Net Sales subject
to royalties after the Company has been compensated for its costs in handling such action. In the event of a joint infringement suit,
the Company and CHMC will agree in writing who will control the action and how cost and recoveries will be shared.
The Company may terminate the CHMC Agreement for
convenience, at any time prior to first commercial sale of a product or process by providing one hundred and eighty (180) days’
written notice to CHMC. It may also terminate for a CHMC uncured material breach. CHMC may terminate the CHMC Agreement for an uncured
Company material breach or insolvency or bankruptcy. In the event the Company’s material breach is for failure to meet any of the
milestone payments, the Company is entitled to a nonexclusive license to continue developing indications that have already entered development
at any stage or in which the Company has invested in developing. CHMC may also terminate the CHMC Agreement to the fullest extent permitted
by law in the countries of the worldwide territory, in the event the Company or its affiliates challenge or induce others set up challenges
to the validity or enforceability of any of the Licensed Patents and the Company will be obligated reimburse CHMC for its costs, including
reasonable attorneys’ fees.
46
Option Agreement between Oxford University Innovation Limited
and Blue Water Vaccines Inc.
On December 18, 2018, the Company entered into
an option agreement with Oxford University Innovation Limited (“OUI”), pursuant to which the Company paid an option fee of
between $25,000, to OUI in exchange for a period of exclusivity, in advance of a fundraising of fifteen million dollars ($15,000,000).
Under the option agreement, the Company has the right to exercise the option for the grant of the right to the Company to an exclusive,
worldwide license to PCT Patent Application number PCT/GB/2017/052510, any patents granted in response to that application, any corresponding
foreign patents and applications deriving priority from that application, and any addition, continuation, continuation-in-part, division,
reissue, renewal or extension based thereon, and related know-how and confidential information (the “Technology”).
Exercise of the option by the Company was conditional
upon the Company submitting a business plan for the subsequent two years, including a development plan for the technology and a financial
projection, demonstrating the Company’s ability to develop the Technology and evidence of the Company’s solvency and receipt
of fifteen million dollars ($15,000,000) in funds for the development of the Technology. The Company has agreed that, as a condition precedent
to the license becoming effective, it must provide funding for three years of salary for Dr. Craig Thompson in Oxford’s
Department of Zoology of four hundred and twenty thousand pounds (£420,000). No additional funds are required to fulfill the three-year
salary commitment, at this time, and none are anticipated prior to the completion of the three year term.
License Agreement between Oxford University Innovation Limited
and Blue Water Vaccines Inc.
On July 16, 2019, the Company entered into
an exclusive, worldwide agreement (“OUI Agreement”) with Oxford University Innovation Limited (“OUI”), pursuant
to which the Company obtained an exclusive worldwide license for all fields to PCT Patent Application number PCT/GB/2017/052510, entitled
“Immunogenic Composition,” any patents granted in response to that application, any corresponding foreign patents and applications
deriving priority from that application, and any addition, continuation, continuation-in-part, division, reissue, renewal or extension
based thereon, and a nonexclusive license to related know-how and confidential information, as set forth in the below chart (the “Licensed
Technology”):
U.S. Patent
Application No.
U.S. Patent No.
Granted Claim Type
U.S. Expiration
Foreign Counterparts
16/326,749
11,123,422
Compositions and method of treatment
8/25/2037
Pending applications in Australia, Canada, China, EU and Japan
17/458,712
pending
pending**
[8/25/2037]*
* Projected expiration if patent issues: 20 years from
earliest non-provisional application filing date.
** This is a pending application. Claim type will be determined
after U.S. prosecution is complete. The claim type sought includes compositions of the compositions and method of treatment.
The OUI Agreement has a term concluding ten years
following the last to expire of all licensed patents and patent applications as defined under the terms of the OUI Agreement. The license
was conditional upon the Company entering into a separate agreement with Oxford University to provide funding for three years’
salary for Dr. Craig Thompson in the University’s Department of Zoology, which amounted to four hundred and twenty thousand
pounds (£420,000), which was paid by the Company in January 2020. No additional funds are required to fulfill the three-year
salary commitment, at this time, and none are anticipated prior to the completion of the three year term.
Improvements to the Licensed Technology as defined
in the OUI Agreement belong to OUI and are included in the Licensed Technology. All Company Improvements of belong to the Company. The
Company granted to OUI, and OUI subsequently granted to Oxford University, a non-transferable, irrevocable, perpetual, royalty-free license
to use and publish the Licensed Technology and the Company’s Improvements upon the Licensed Technology for non-commercial use. If
a Licensed Product is covered by the Medicines Access Policy of Oxford University to promote, the Company shall adhere to the requirements
of the Medicines Access Policy.
47
The Company is required to pay OUI milestone payments
of up to an aggregate of $51 million upon the achievement of specified development milestones, of approximately $2.25 million,
regulatory milestones, of approximately $9.5 million and commercial milestones, of approximately $39.5 million (excluding any
royalty arrangements). An annual maintenance fee, or minimum sum, $10,000 to $20,000 will be required beginning in 2023 through launch,
increasing to $250,000, which would be the highest “minimum sum” of royalties in any year prior until expiration or revocation
of the last valid claim covering a licensed product, in which case the annual maintenance fee will no longer be required and the “step
down” royalty rate will apply.
The Company did not pay a signing fee to OUI and
is obligated to pay a 6% royalty on all net sales of licensed products, as defined in the OUI Agreement, as well as royalties between
25% on any sums received by the Company from any sublicensee (including all up-front, milestone and other one-off payments received by
the Company from any sub-licenses or other contracts granted by the Company with respect to the licensed technology). After the expiration
or revocation of the last Valid Claim (as defined in the OUI Agreement) covering a Licensed Product, a “step down” royalty
rate shall apply to such Licensed Technology and no minimum sum will be payable by the Company. If the Company has to pay royalties to
a third party to use a proprietary manufacturing process proprietary adjuvants in order to make or have made a Licensed Product, the Company
will be able to deduct from all royalty payments, up to a maximum amount of twenty-five percent (25%) of the royalties due to OUI. The
OUI Agreement entitles the Company to supply a commercially reasonable quantity (not exceeding 5% of units sold in any quarter) of licensed
products for promotional sampling.
In the event that royalties paid to OUI do not amount
to the “minimum sum”, as discussed above, under the OUI Agreement for a particular year, the Company is obligated to make
up the difference between the royalties actually paid and such minimum sum. The minimum sums vary over time, and reduces to $0 once the
“step down” applies. The minimum sums and milestone fees are indexed to the RPI (Retail Prices index for all items which is
published in the United Kingdom by the Office for National Statistics, or any replacement of it) and will be increased or decreased as
appropriate as set forth in the OUI Agreement.
The Company is obligated to use its best efforts
to develop and market Licensed Products in accordance with its development plan report to OUI on progress and achieve the following milestones
and must pay OUI nonrefundable milestone fees as follows when it achieves them: initiation of first Phase I study; initiation of
first Phase II study; initiation of first Phase III/pivotal registration studies; first submission of application for regulatory
approval (BLA/NDA); marketing authorization in the United States; marketing authorization in any EU country; marketing authorization
in Japan; first marketing authorization in any other country; first commercial sale in Japan; first commercial sale in any ROW country;
first year that annual sales equal or exceed certain thresholds.
The Company is obligated to pay, and has paid, £11,323
to OUI for any past patent expenses that were incurred prior to the execution of the OUI Agreement. Upon consultation with the Company
and at the Company’s expense, OUI shall prosecute, use all reasonable endeavors to maintain and renew the patents throughout the
duration of the OUI Agreement. The Company and OUI agreed to inform each other in writing of any misappropriation or infringement of any
rights to the licensed technology; however, the Company has the first right to take legal action at its own cost in relation to any such
misappropriation or infringement, but must discuss any proposed legal action with OUI and take into account any legitimate interest of
OUI in the legal action that it takes. If the Company notifies OUI that it does not intend to take legal action in such matters, OUI may
take any legal action at its own cost. All profits or damages recovered after unrecovered costs and expenses are deducted are treated
as net sales for which royalties would be due.
OUI makes no warranties at all with regard to the
Licensed Technology or whether use of it will infringe third party rights. The Company is required to indemnify OUI and Oxford University
from all third party claims, damages, and liabilities asserted by third parties arising directly or indirectly from use of the Licensed
Technology; marketing of Licensed Products; or breach of the OUI Agreement. The OUI Agreement is governed by English law and the parties
agreed to submit to the exclusive jurisdiction of English Courts for resolution of any disputes arising out of or in connection with the
OUI Agreement, with the exception of actions relating to intellectual property disputes or confidential information which may be brought
in any court of competent jurisdiction.
Either party may terminate the OUI Agreement for
an uncured material breach. The Company may terminate the OUI Agreement for any reason at any time upon six months’ written
notice expiring after the third anniversary of the OUI Agreement. OUI may terminate immediately if the Company has a petition presented
for its winding-up or passes a resolution for winding up other than for a bona fide amalgamation or reconstruction or compounds with its
creditors or has a receiver or administrator appointed. OUI may also terminate if the Company opposes or challenges the validity of any
of the patents or applications in the Licensed Technology; raises the claim that the know-how of the Licensed Technology is not necessary
to develop and market Licensed Products; or in OUI’s reasonable opinion, is taking inadequate or insufficient steps develop or market
Licensed Products and does not take any further steps that OUI requests by written notice within a reasonable time.
48
Exclusive License Agreement between St. Jude Children’s
Research Hospital, Inc. & Blue Water Vaccines Inc.
On January 27, 2020 (the “Effective Date”),
the Company entered into an exclusive, worldwide license agreement with St. Jude Children’s Research Hospital, Inc. (“St.
Jude”), pursuant to which St. Jude granted the Company an exclusive license to develop licensed products and produce vaccines for
use in humans (“St. Jude Agreement”) under U.S. Provisional Patent Application No. 61/537,290 (U.S. Patent No. 9,265,819
issued on February 23, 2016), and U.S. Provisional Patent Application No. 62/817,748 (filed March 13, 2019), and any issued
patents, divisions, continuations, continuations-in-part, to the extent that the claims are directed to subject matter described in the
above-referenced patent applications and are entitled to the priority date of the existing patent rights, re-examinations, substitutions,
renewals, restorations, additions, or registrations thereof, as well as non-United States counterparts thereof, and extensions and
supplementary protection certificates thereon (“Patent Rights”), all as set forth in the below chart:
U.S. Patent
Application No.
U.S. Patent No.
Granted Claim Type
U.S. Expiration
Foreign Counterparts
14/345,988
9,265,819
Compositions and method of treatment
9/19/2032
none
17/602,414 #
pending
pending**
[3/12/2040]*
Pending Applications in: Australia,
Brazil, Canada, China, Europe,
Hong Kong, Japan and Korea
* Projected expiration if patent issues: 20 years from
earliest non-provisional application filing date.
# U.S. National stage entry of WO 2020/183420 (PCT/IB2020/052250).
** This is a pending application. Claim type will be determined
after U.S. prosecution is complete. The claim type sought includes compositions and method of treatment.
The license is sublicensable consistent with the
terms and conditions of the St. Jude Agreement, provided that the Company remains responsible for the performance by each of its sublicensees.
The license is subject to any government rights the United States has reserved, and St. Jude retained the right to make, have made,
provide and use for St. Jude’s non-commercial research and clinical purposes, including the right to distribute St. Jude’s
biological material disclosed and claimed in the Patent Rights for non-profit academic research use to non-commercial entities as is customary
in the scientific community and to sell the biological materials as research reagents for research use only by the scientific community.
The Company is required to pay St. Jude milestone
payments of up to an aggregate of $1.0 million upon the achievement of specified development milestones, of approximately $0.2 million,
regulatory milestones, of approximately $0.3 million and commercial milestones, of approximately $0.5 million (excluding any
royalty arrangements). In the event the Company enters into a sublicense agreement with a third party who is not an affiliate, then the
Company is obligated to pay St. Jude fifteen percent of any sublicense consideration, subject to specified exclusions, but including any
upfront or milestone fees and including any premium paid by sublicensee over Fair Market Value (as defined in the agreement) for the Company’s
stock.
In exchange for the licenses, the Company paid St.
Jude an initial license fee of $15,000 and is required to pay an annual maintenance fee of $10,000 beginning on the first anniversary
of the Effective Date (which is waived if all of the developmental milestones scheduled for completion before such annual fee is due have
been achieved), milestone payments, patent reimbursement, and running royalties based on net sales of licensed products under the St.
Jude Agreement.
49
Under the St. Jude Agreement, the Company is obligated
to use commercially reasonable efforts to develop and commercialize the licensed product(s). If the Company fails to achieve the development
milestones contained in the St. Jude Agreement, and if the Company and St. Jude fail to agree upon a mutually satisfactory revised time
line, St. Jude will have the right to terminate the St. Jude Agreement.
The milestones include the following events: (i) complete
IND enabling study by 2020; (ii) Initiate animal toxicology study by last half of 2020; (iii) file IND by first half of 2021;
(iv) complete Phase I Clinical Trial by first half of 2022; (v) commence Phase II Clinical Trial by first half of
2024; (vi) commence Phase III Clinical Trial by 2026; and, (vii) regulatory approval, U.S. or foreign equivalent by
2026. Upon achievement of certain development and commercialization milestones, the Company is required to make milestone payments to
St. Jude between the achievement of certain milestones (commencement of a Phase III clinical trial through first commercial sale).
Additionally, the Company is obligated to make running
4% royalty payments payable, for each licensed product(s) sold by the Company, its affiliates or sublicensees, based on the net sales
for the duration of the St. Jude Agreement. Furthermore, the Company is obligated to pay a percentage between 15% of other consideration
received for any sublicenses.
The Company reimbursed St. Jude approximately $32,400
for certain patent costs incurred by St. Jude prior to the Effective Date of the St. Jude Agreement, and is obligated to reimburse St.
Jude for reasonable patent costs incurred by St. Jude subsequent to the Effective Date.
The Company is responsible for and shall bear all
expenses relating to the filing, prosecution, and maintenance of all patent rights licensed under the St. Jude Agreement. The Company
has the first right to enforce any patent against infringement, and shall keep St. Jude informed of the status of such; however, before
the Company may commence any action with respect to any such alleged infringement, the Company shall take into consideration the views
of St. Jude and the potential effect on the public interest.
Prior to initial human testing or first commercial
sale of a licensed product, and thereafter so long as the licensed products are being sold in any particular country, the Company (and
its sublicenses) is required to obtain and maintain insurance to cover its indemnity obligations, and to obtain and maintain product liability
insurance coverage.
St. Jude represented and warranted that it has good
and marketable title to the Patent Rights, but made no other representations and warranties. The term of the agreement commenced on the
Effective Date, and shall continue, in each country, until the date of expiration of the last to expire valid claim included within the
Patent Rights in that country. Either party may terminate the St. Jude Agreement in the event the other party (a) files or has filed
against it a petition under the Bankruptcy Act (among other things) or (b) fails to perform or otherwise breaches its obligations
under the St. Jude Agreement, and has not cured such failure or breach within sixty (60) days. The Company may terminate for any
reason on thirty (30) days written notice.
Manufacturing and Supply
We currently do not own or operate any manufacturing
facilities, but our strategic partnership with Ology Bioservices, Inc. (which was later acquired by National Resilience, Inc.) (“Ology”)
provides us with access to substantial resources to facilitate an independent supply path to the market. Ology is a leading global contract
manufacturer with deep domain expertise and experience in large and small-scale production of clinical, as well as commercial-stage products.
We have entered into agreements with Ology to secure capacity, technical expertise and resources to support the production of our products
and processes that are intended to scale to commercial scale at Ology or other commercial manufacturing sites.
In July 2019, we entered into a development
and manufacturing master services agreement with Ology, which we refer to, as amended, as the Ology Agreement, pursuant to which Ology
is obligated to perform manufacturing process development and clinical manufacture and supply of components.
50
Under the Ology Agreement, we will pay Ology agreed
upon fees for Ology’s performance of manufacturing services, and we will reimburse Ology for its out-of-pocket costs associated
with purchasing raw materials, plus a customary handling fee. The Company entered into an initial Project Addendum on October 18,
2019 and the Company was required to pay Ology an aggregate of approximately $4 million. Due to unforeseen delays associated with
COVID-19, the Company and Resilience entered into a letter agreement dated January 9, 2020 to stop work on the project. The Company
paid Ology $100,000 for services, of which $48,600 remains as prepaid expense as of December 31, 2020. The second Project Addendum
was executed May 21, 2021 and the Company is obligated to pay Ology an aggregate amount of approximately $2.8 million, plus
reimbursement for materials and outsourced testing, which will be billed at cost plus 15%. This project began during the year ended December 31,
2021, and the Company has incurred related research and development expenses of approximately $328,000 of which approximately $164,000
and $115,000 was recorded as accounts payable and accrued expenses, respectively, at December 31, 2021.
Either party may terminate a Project Addendum and/or
the Ology Agreement upon the material breach of any provision of this Agreement by the other Party if such breach is not cured by the
breaching party within thirty (30) calendar days after receipt by the breaching Party of written notice of such default.
The Company may terminate the Ology Agreement or the associated Project Addendum for any or no reason upon sixty (60) days’
prior written notice to Ology.
For additional details regarding our relationship
with Ology, see Note 5 to our financial statements included elsewhere in this Report.
Employees
As of March 15, 2022, we had 5 full-time and 6 subcontracted
employees. None of our employees are represented by a collective bargaining agreement, and we have never experienced any work stoppage.
We believe we have good relations with our employees.
Properties and Facilities
We are currently leasing an office located at 201
E Fifth Street, Suite 1900, Cincinnati, OH 45202, which is renewed on a monthly basis. All of our research and development is performed
on the premises of our third-party providers.
Legal Proceedings
From time to time we may be involved in various
disputes and litigation matters that arise in the ordinary course of business. We are currently not a party to any material legal proceedings.
Changes in and Disagreements with Accountants
None.
Corporation Information
We
were incorporated in Delaware on October 26, 2018. Our principal executive offices are located at 201 E Fifth Street, Suite
1900, Cincinnati, OH 45202, and our telephone number is (513) 620-4101. Our corporate website address is www.bluewatervaccines.com .
The information contained on or accessible through our website is not part of this Annual Report on Form 10-K
Available Information
We
maintain a website at www.bluewatervaccines.com . You may access
our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Exchange Act with the SEC free of charge at our website as soon as reasonably practicable
after such material is electronically filed with, or furnished to, the SEC. The reference to our website address does not constitute incorporation
by reference of the information contained on our website, and you should not consider the contents of our website in making an investment
decision with respect to our common stock.
51
Item 1A. Risk Factors.
Investing in our common stock involves a high
degree of risk. You should carefully consider the following information about these risks, together with the other information appearing
elsewhere in this Report, including our financial statements, the notes thereto and the section entitled “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” before deciding to invest in our common stock. The occurrence of
any of the following risks could have a material adverse effect on our business, reputation, financial condition, results of operations
and future growth prospects, as well as our ability to accomplish our strategic objectives. As a result, the trading price of our
common stock could decline and you could lose all or part of your investment. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair our business operations and the market price of our common stock.
Risks Related to our Financial Position and Need for Capital
We are in the early stages of vaccine development and have a
very limited operating history and no products approved for commercial sale, which may make it difficult for you to evaluate the success
of our business to date and to assess our future viability.
To date, we have devoted substantially all of our
resources to performing research and development, undertaking preclinical studies and enabling manufacturing activities in support of
our product development efforts, hiring personnel, licensing and developing our technology and vaccine candidates, organizing and staffing
our company, performing business planning, establishing our intellectual property portfolio and raising capital to support and expand
such activities. As an organization, we have not yet demonstrated an ability to successfully complete clinical development, obtain regulatory
approvals, manufacture a commercial-scale product or conduct sales and marketing activities necessary for successful commercialization
or arrange for a third party to conduct these activities on our behalf. Consequently, any predictions about our future success or viability
may not be as accurate as they could be if we had a longer operating history.
Our current vaccine candidate pipeline includes
four preclinical programs. We may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors
in achieving our business objectives, including with respect to our vaccine candidates. We will need to transition in the future from
a company with a research and development focus to a company capable of supporting commercial activities and may not be successful in
such a transition.
We have incurred significant net losses since inception, do not
generate any revenue, and anticipate that we will continue to incur substantial net losses for the foreseeable future and may never achieve
profitability. Our stock is a highly speculative investment.
We are a preclinical stage biotechnology vaccine
company that was incorporated in October 2018. Investment in preclinical stage companies and vaccine development is highly speculative
because it entails substantial upfront capital expenditures and significant risk that any potential vaccine candidate will not gain regulatory
approval or become commercially viable. We do not have any products approved for sale and have not generated any revenue from product
sales. As a result, we are not profitable and have incurred losses in each year since inception. Our net losses were $3.4 million
and $1.6 million for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, we had an
accumulated deficit of $6.0 million.
We expect to continue to spend significant resources
to fund research and development of, and seek regulatory approvals for, our vaccine candidates. We expect to incur substantial and increasing
operating losses over the next several years as our research, development, manufacturing, preclinical testing and clinical trial
activities increase. As a result, our accumulated deficit will also increase significantly. Additionally, there can be no assurance that
the product candidates currently under development or that may be under development by us in the future will be approved for sale in the
U.S. or elsewhere. Furthermore, there can be no assurance that if such products are approved they will be successfully commercialized,
and the extent of our future losses and the timing of our profitability are highly uncertain. If we are unable to achieve profitability,
we may be unable to continue our operations.
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We will require substantial additional funding to finance our
long-term operations. If we are unable to raise additional capital when needed, we could be forced to delay, reduce or terminate certain
of our development programs or other operations.
As of December 31, 2021, we had cash and cash
equivalents of $1.9 million. As of February 28, 2022, we had cash and cash equivalents of $19.3 million as a result of the net proceeds
received from the initial public offering. We estimate that, based on our existing cash as of December 31, 2021, together with the net
proceeds received from the initial public offering, we have cash on hand sufficient to fund our operations into the second quarter of
2023. We will need to raise additional capital prior to commencing additional pivotal trials for certain of our vaccine candidates. We
believe that we will need to raise substantial additional capital to fund our continuing operations and the development and commercialization
of our current product candidates and future product candidates in the long-term. Our business or operating plan may change as a result
of many factors currently unknown to us, and we may need to seek additional funds sooner than planned. We expect to finance our subsequent
cash needs through public or private equity or debt financings, third-party (including government) funding and marketing and distribution
arrangements, as well as other collaborations, strategic alliances and licensing arrangements or any combination of these approaches.
In addition, we may need to accelerate the growth of our sales capabilities and distribution beyond what is currently envisioned, and
this would require additional capital.
However, we may not be able to secure funding when
we need it or on favorable terms and we may not be able to raise sufficient funds to commercialize our current and future product candidates
we intend to develop. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions
and the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide, including the
trading price of common stock, resulting from the ongoing COVID-19 pandemic. Our future capital requirements will depend on many factors,
including:
● the timing, scope, progress, results and costs of research
and development, testing, screening, manufacturing, preclinical development and clinical trials;
● the outcome, timing and cost of seeking and obtaining regulatory
approvals from the FDA and comparable foreign regulatory authorities, including the potential for such authorities to require that we
perform field efficacy studies for our vaccine candidates, require more studies than those that we currently expect or change their requirements
regarding the data required to support a marketing application;
● the cost of building a sales force in anticipation of any
product commercialization;
● the costs of future commercialization activities, including
product manufacturing, marketing, sales, royalties and distribution, for any of our vaccine candidates for which we receive marketing
approval;
● our ability to maintain existing, and establish new, strategic
collaborations, licensing or other arrangements and the financial terms of any such agreements, including the timing and amount of any
future milestone, royalty or other payments due under any such agreement;
● any product liability or other lawsuits related to our products;
● the expenses needed to attract, hire and retain skilled personnel;
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● the revenue, if any, received from commercial sales, or sales
to foreign governments, of our vaccine candidates for which we may receive marketing approval;
● the costs to establish, maintain, expand, enforce and defend
the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that
we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing of any patents or other intellectual
property rights;
● the expenses needed to attract, hire and retain skilled personnel;
● the costs of operating as a public company; and
● the impact of the COVID-19 pandemic, which may exacerbate
the magnitude of the factors discussed above.
Our ability to raise additional funds will depend
on financial, economic and other factors, many of which are beyond our control. We cannot be certain that additional funding will be available
on acceptable terms, or at all. We have no committed source of additional capital and if we are unable to raise additional capital in
sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization
of our vaccine candidates or other research and development initiatives. Our license agreements may also be terminated if we are unable
to meet the payment obligations or milestones under the agreements. We could be required to seek collaborators for our vaccine candidates
at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available, or relinquish
or license on unfavorable terms our rights to our vaccine candidates in markets where we otherwise would seek to pursue development or
commercialization ourselves.
We may consider strategic alternatives in order to maximize stockholder
value, including financings, strategic alliances, licensing arrangements, acquisitions or the possible sale of our business. We may not
be able to identify or consummate any suitable strategic alternatives and any consummated strategic alternatives may have an adverse impact
on our vaccine candidates.
We may consider all strategic alternatives that
may be available to us to maximize stockholder value, including financings, strategic alliances, licensing arrangements, acquisitions
or the possible sale of our business. We currently have no agreements or commitments to engage in any specific strategic transactions,
and our exploration of various strategic alternatives may not result in any specific action or transaction. To the extent that this engagement
results in a transaction, our business objectives may change depending upon the nature of the transaction. There can be no assurance that
we will enter into any transaction as a result of the engagement. Furthermore, if we determine to engage in a strategic transaction, we
cannot predict the impact that such strategic transaction might have on our operations or stock price. We also cannot predict the impact
on our stock price if we fail to enter into a transaction.
In addition, we face significant competition in
seeking appropriate strategic partners, and the negotiation process is time-consuming and complex. Moreover, we may not be successful
in our efforts to establish a strategic partnership or other alternative arrangements for our vaccine candidates because they may be deemed
to be at too early of a stage of development for collaborative effort, and third parties may not view our vaccine candidates as having
the requisite potential to demonstrate safety and efficacy. Any delays in entering into new strategic partnership agreements related to
our vaccine candidates could delay the development and commercialization of our vaccine candidates in certain geographies for certain
indications, which would harm our business prospects, financial condition and results of operations.
If we license products or businesses, we may not
be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company
culture. We cannot be certain that, following a strategic transaction or license, we will achieve the results, revenue or specific net
income that justifies such transaction.
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Raising additional capital may cause dilution to our existing
stockholders and investors, restrict our operations or require us to relinquish rights to our product candidates on unfavorable terms
to us.
We may seek additional capital through a variety
of means, including through private and public equity offerings and debt financings, collaborations, strategic alliances and marketing,
distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt
securities, or through the issuance of shares under other types of contracts, or upon the exercise or conversion of outstanding options,
warrants, convertible debt or other similar securities, the ownership interests of our stockholders will be diluted, and the terms of
such financings may include liquidation or other preferences, anti-dilution rights, conversion and exercise price adjustments and
other provisions that adversely affect the rights of our stockholders, including rights, preferences and privileges that are senior to
those of our holders of common stock in terms of the payment of dividends or in the event of a liquidation. In addition, debt financing,
if available, could include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt,
making capital expenditures, entering into licensing arrangements, or declaring dividends and may require us to grant security interests
in our assets. If we raise additional funds through collaborations, strategic alliances, or marketing, distribution or licensing arrangements
with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, product or product candidates
or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings
when needed, we may need to curtail or cease our operations.
Due to the significant resources required for the development
of our vaccine candidates, and depending on our ability to access capital, we must prioritize development of certain vaccine candidates.
Moreover, we may expend our limited resources on vaccine candidates that do not yield a successful vaccine and fail to capitalize on vaccine
candidates that may be more profitable or for which there is a greater likelihood of success.
Due to the significant resources required for the
development of our vaccine candidates, we must decide which vaccine candidates to pursue and advance and the amount of resources to allocate
to each. Our decisions concerning the allocation of research, development, management and financial resources toward particular vaccine
candidates may not lead to the development of any viable commercial vaccines and may divert resources away from better opportunities.
Similarly, our potential decisions to delay, terminate, license or collaborate with third parties in respect of certain vaccine candidates
may subsequently also prove to be less than optimal and could cause us to miss valuable opportunities. If we make incorrect determinations
regarding the viability or market potential of any of our vaccine candidates or misread trends in the biopharmaceutical industry, in particular
for vaccines, our business could be seriously harmed. As a result, we may fail to capitalize on viable commercial products or profitable
market opportunities, be required to forego or delay pursuit of opportunities with other vaccine candidates that may later prove to have
greater commercial potential than those we choose to pursue or relinquish valuable rights to such vaccine candidates through collaboration,
licensing or other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain
sole development and commercialization rights.
We have identified weaknesses in our internal controls, and we
cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in
the future.
As a public company, we are subject to the reporting
requirements of the Exchange Act, and the Sarbanes-Oxley Act. We expect that the requirements of these rules and regulations will continue
to increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and
place significant strain on our personnel, systems and resources.
The Sarbanes-Oxley Act requires, among other things,
that we maintain effective disclosure controls and procedures, and internal control over financial reporting.
We do not yet have effective disclosure controls
and procedures, or internal controls over all aspects of our financial reporting. We are continuing to develop and refine our disclosure
controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will
file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Our management
has deemed certain conditions to be material weaknesses in our internal controls. For example, we failed to employ a sufficient number
of staff to maintain optimal segregation of duties and to provide optimal levels of oversight in order to process financial information
in a timely manner, analyze and account for complex, non-routine transactions, and prepare financial statements. In addition, we do not
yet have adequate internal controls in place for the timely identification, approval or reporting of related party transactions. Our management
is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under
the Exchange Act. We will be required to expend time and resources to further improve our internal controls over financial reporting,
including by expanding our staff to include financial consultants and other qualified resources, which we commenced during the fourth
quarter of 2021. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify
or avoid material weaknesses in the future.
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Our current controls and any new controls that we
develop may become inadequate because of changes in conditions in our business, including increased complexity resulting from our international
expansion. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future.
Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm
our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements
for prior periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect
the results of management reports and independent registered public accounting firm audits of our internal control over financial reporting
that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls
and procedures, and internal control over financial reporting could also cause investors to lose confidence in our reported financial
and other information, which would likely have a negative effect on the market price of our common stock.
We are not currently required to comply with the
SEC rules that implement Section 404 of the Sarbanes-Oxley Act, and are therefore not required to make a formal assessment of the
effectiveness of our internal control over financial reporting for that purpose. We will be required to provide an annual management report
on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Our
independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting
until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered
public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control
over financial reporting is documented, designed or operating.
Our ability to use our net operating loss carryforwards and certain
other tax attributes may be limited, each of which could harm our business.
As of December 31, 2021, we had U.S. federal
and state net operating loss carryforwards of approximately $4.9 million and $5.1 million, respectively. Under Sections 382
and 383 of the Internal Revenue Code, or the Code, if a corporation undergoes an “ownership change,” the corporation’s
ability to use its pre-ownership change net operating loss carryforwards and other pre-ownership change tax attributes, such as research
tax credits, to offset its post-ownership change income and taxes may be limited. In general, an ownership change will occur when the
percentage of the Corporation’s ownership (by value) of one or more “5-percent stockholders” (as defined in the Code)
has increased by more than 50 percent over the lowest percentage owned by such stockholders at any time during the prior three years
(calculated on a rolling basis). Similar rules may apply under state tax laws. An entity that experiences an ownership change generally
will be subject to an annual limitation on its pre-ownership change tax loss and credit carryforwards equal to the equity value of the
corporation immediately before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the U.S. Internal
Revenue Service (subject to certain adjustments). The annual limitation would be increased each year to the extent that there is an unused
limitation in a prior year. In the event that it is determined that we have in the past experienced an ownership change as a result of
transactions in our stock, or if we experience one or more ownership changes as a result of future transactions in our stock, then we
may be limited in our ability to use our net operating loss carryforwards and other tax assets to reduce taxes owed on the net taxable
income that we earn. Any limitations on the ability to use our net operating loss carryforwards and other tax assets could harm our business.
Our insurance coverage may be inadequate or expensive.
We are subject to claims in the ordinary course
of business. These claims may involve substantial amounts of money and involve significant defense costs. It is not possible to prevent
or detect all activities giving rise to claims and the precautions we take may not be effective in all cases. We maintain voluntary and
required insurance coverage, including, among others, general liability, property, director and officer, business interruption, cyber
and data breach. Our insurance coverage is expensive and maintaining or expanding our insurance coverage may have an adverse effect on
our results of operations and financial condition.
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Our insurance coverage may be insufficient to protect
us against all losses and costs stemming from operational and technological failures and we cannot be certain that such insurance will
continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future
claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of
changes in our insurance policies, including premium increases or the imposition of large retention, or deductible, or co-insurance requirements,
could have an adverse effect on our business, financial condition and results of operations.
Risks Related to the Development of our Product Candidates
We depend entirely on the success of a limited number of product
candidates, which are in preclinical development and none of which have commenced a clinical trial. If we do not obtain regulatory approval
for and successfully commercialize one or more of our product candidates or we experience significant delays in doing so, we may never
become profitable.
We do not have any products that have received regulatory
approval and may never be able to develop marketable product candidates. We expect that a substantial portion of our efforts and expenses
over the next few years will be devoted to the development of our product candidates; specifically, the commencement of Phase I
clinical trials for our vaccine candidates. As a result, our business currently depends heavily on the successful development, regulatory
approval and, if approved, commercialization of these product candidates. We cannot be certain that our product candidates will receive
regulatory approval or will be successfully commercialized even if they receive regulatory approval. The research, testing, manufacturing,
safety, efficacy, labeling, approval, sale, marketing and distribution of our product candidates are, and will remain, subject to comprehensive
regulation by the FDA and similar foreign regulatory authorities. Before obtaining regulatory approvals for the commercial sale of any
product candidate, we must demonstrate through pre-clinical studies and clinical trials that the product candidate is safe and effective
for use in each target indication. Vaccine development is a long, expensive and uncertain process, and delay or failure can occur at any
stage of any of our clinical trials. Failure to obtain regulatory approval for our product candidates in the United States will prevent
us from commercializing and marketing our product candidates. The success of our product candidates will depend on several additional
factors, including:
● completing clinical trials that demonstrate their efficacy
and safety;
● receiving marketing approvals from applicable regulatory
authorities;
● completing any post-marketing studies required by applicable
regulatory authorities;
● establishing commercial manufacturing capabilities;
● launching commercial sales, marketing and distribution operations;
● the prevalence and severity of adverse events experienced
with our product candidates;
● acceptance of our product candidates by patients, the medical
community and third-party payors;
● a continued acceptable safety profile following approval;
● obtaining and maintaining healthcare coverage and adequate
reimbursement for our product candidates;
● competing effectively with other therapies, including with
respect to the sales and marketing of our product candidates, if approved; and
● qualifying for, maintaining, enforcing and defending our
intellectual property rights and claims.
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Many of these factors are beyond our control, including
the time needed to adequately complete clinical testing, the regulatory submission process, potential threats to our intellectual property
rights and changes in the competitive landscape. It is possible that none of our product candidates will ever obtain regulatory approval,
even if we expend substantial time and resources seeking such approval. If we do not achieve one or more of these factors in a timely
manner or at all, we could experience significant delays or an inability to successfully complete clinical trials, obtain regulatory approval
or, if approved, commercialize our product candidates, which would materially harm our business, financial condition and results of operations.
The marketing approval process of the FDA is lengthy, time consuming
and inherently unpredictable, and if we are ultimately unable to obtain marketing approval for our current product candidates and future
product candidates we intend to develop, our business will be substantially harmed.
We are at a very early stage of development for
all of our product candidates. The product candidates we intend to develop have not gained marketing approval in the U.S., and we cannot
guarantee that we will ever have marketable products. Our business is substantially dependent on our ability to complete the development
of, obtain marketing approval for, and successfully commercialize our current and future product candidates in a timely manner. We cannot
commercialize our product candidates in the United States without first obtaining approval from the FDA to market each product candidate.
Our product candidates could fail to receive marketing approval for many reasons, including among others:
● the FDA may disagree with the design or implementation of
our clinical trials;
● Our clinical trials for our product candidate(s) must
be successful if we are to seek and obtain regulatory marketing application through the submission of a new Biological License Application
(BLA) and marketing authorization application (MAA) with the U.S. Food and Drug Administration (FDA) and the European Medicines
Agency (EMA), respectively. Advanced clinical trials are often not successful even if prior trials were successful, and even if we are
able to conduct advanced clinical trials and those trials are successful, we may not obtain necessary regulatory approvals for our product
candidate(s) or we may be unable to successfully commercialize our products even if we receive the necessary regulatory approvals
In addition, the process of seeking regulatory approval
to market the product candidates we intend to develop is expensive and time consuming and, notwithstanding the effort and expense incurred,
approval is never guaranteed. If we are not successful in obtaining timely approval of our product candidates from the FDA, we may never
be able to generate significant revenue and may be forced to cease operations. The new Biological License Application, or BLA, process
is costly, lengthy and uncertain. Any BLA application filed by us will have to be supported by extensive data, including, but not limited
to, technical, pre-clinical, clinical, manufacturing and labelling data, to demonstrate to the FDA’s satisfaction the safety and
efficacy of the product for its intended use.
In order to commence a clinical trial in the United States,
we will be required to seek FDA acceptance of an IND for each of our product candidates. We cannot be sure any IND we submit to the FDA,
or any similar clinical trial application we submit in other countries, will be accepted. If we will be required by regulatory authorities
to conduct additional preclinical testing prior to filing an IND or similar application to clinically evaluate any of our product candidates,
this may result in delay in our product candidate development. The results of any such preclinical testing may not be positive and may
not support an application to study any of our product candidates in additional clinical trials.
It is possible that the FDA or EMA will not view
our ongoing or planned trials as providing adequate support for future clinical trials or for an application for marketing approval, for
any one or more reasons, including elements of the design or execution of the trials or safety concerns or other trial results. If we
are unable to confirm or replicate the results of our trials in larger patient group or if negative results are obtained, we would likely
be further delayed or prevented from advancing further clinical development any of our product candidates.
Additionally, the FDA or EMA may disagree with the
sufficiency of our proposed reliance upon the preclinical, manufacturing or clinical data generated by third-party academic-sponsored
trials, or our interpretation of preclinical, manufacturing or clinical data from our ongoing trials. If so, the FDA or EMA may require
us to obtain and submit additional preclinical, manufacturing or clinical data.
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Obtaining approvals from the FDA and from the regulatory
agencies in other countries is an expensive and time-consuming process and is uncertain as to outcome. The FDA and other agencies could
ask us to supplement our submissions, collect non-clinical data, conduct additional clinical trials or engage in other time-consuming
actions, or it could simply deny our applications. In addition, even if we obtain a BLA approval or pre-market approvals in other countries,
the approval could be revoked or other restrictions imposed if post-market data demonstrate safety issues or lack of effectiveness. We
cannot predict with certainty how, or when, the FDA will act. If we are unable to obtain the necessary regulatory approvals, our financial
condition and cash flow may be adversely affected, and our ability to grow domestically and internationally may be limited. Additionally,
even if cleared or approved, our products may not be approved for the specific indications that are most necessary or desirable for successful
commercialization or profitability.
We may encounter substantial delays in completing our clinical
studies which in turn will require additional costs, or we may fail to demonstrate adequate safety and efficacy to the satisfaction of
applicable regulatory authorities.
It is impossible to predict if or when our current
or future product candidates, will prove safe or effective in humans or will receive regulatory approval. Before obtaining marketing
approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies to demonstrate
the safety and efficacy of the product candidates in humans. Clinical testing is expensive, time-consuming and uncertain as to outcome.
We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of
one or more clinical studies can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development
include:
● delays in reaching, or failing to reach, a consensus with
regulatory agencies on study design;
● delays in reaching, or failing to reach, agreement on acceptable
terms with a sufficient number of prospective contract research organizations, or CROs, and clinical study sites, the terms of which
can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
● delays in recruiting a sufficient number of suitable patients
to participate in our clinical studies;
● imposition of a clinical hold by regulatory agencies, after
an inspection of our clinical study operations or study sites;
● failure by our CROs, other third parties or us to adhere
to clinical study, regulatory or legal requirements;
● failure to perform in accordance with the FDA’s good
clinical practices, or GCPs, or applicable regulatory guidelines in other countries;
● delays in the testing, validation, manufacturing and delivery
of sufficient quantities of our product candidates to the clinical sites;
● delays in having patients complete participation in a study
or return for post-treatment follow-up;
● clinical study sites or patients dropping out of a study;
● delay or failure to address any patient safety concerns that
arise during the course of a trial;
● unanticipated costs or increases in costs of clinical trials
of our product candidates;
● occurrence of serious adverse events associated with the
product candidates that are viewed to outweigh its potential benefits; or
● changes in regulatory requirements and guidance that require
amending or submitting new clinical protocols.
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We could also encounter delays if a clinical trial
is suspended or terminated by us, by the Institutional Review Board, or IRB, or the Ethics Commission of the institutions in which such
trials are being conducted, by an independent Safety Review Board, or SRB, for such trial or by the FDA or other regulatory authorities.
Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical
trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site
by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects,
failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate
funding to continue the clinical trial.
Any inability to successfully complete pre-clinical
and clinical development could result in additional costs to us or impair our ability to generate revenues from product sales, regulatory
and commercialization milestones and royalties. In addition, if we make manufacturing or formulation changes to our product candidates,
we may need to conduct additional studies to bridge our modified product candidates to earlier versions.
Clinical study delays could also shorten any periods
during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market
before we do, which could impair our ability to successfully commercialize our product candidates. In addition, any delays in completing
our clinical trials will increase our costs, slow down our product candidates’ development and approval process and jeopardize
our ability to commence product sales and generate revenues. Any of these occurrences may significantly harm our business, financial condition
and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may
also ultimately lead to the denial of regulatory approval of our product candidates.
The outcome of pre-clinical studies and early clinical
trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict
final results. Further, pre-clinical and clinical data are often susceptible to various interpretations and analyses, and many companies
that have believed their product candidates performed satisfactorily in pre-clinical studies and clinical trials have nonetheless failed
to obtain marketing approval. If the results of our clinical studies are inconclusive or if there are safety concerns or adverse
events associated with our product candidates, we may:
● be delayed in obtaining marketing approval for our product
candidates, if approved at all;
● obtain approval for indications or patient populations that
are not as broad as intended or desired;
● obtain approval with labeling that includes significant use
or distribution restrictions or safety warnings;
● be required to change the way the product is administered;
● be required to perform additional clinical studies to support
approval or be subject to additional post-marketing testing requirements;
● have regulatory authorities withdraw their approval of a
product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy;
● be sued; or
● experience damage to our reputation.
Additionally, our product candidates could potentially
cause other adverse events that have not yet been predicted. The inclusion of ill patients in our clinical studies may result in deaths
or other adverse medical events due to other therapies or medications that such patients may be using. As described above, any of these
events could prevent us from achieving or maintaining market acceptance of our product candidates and impair our ability to commercialize
our products.
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Obtaining and maintaining regulatory approval of our vaccine
candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our vaccine candidates in
other jurisdictions.
Obtaining and maintaining regulatory approval of
our vaccine candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other
jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory
approval process in others. For example, even if the FDA grants marketing approval of a vaccine candidate, comparable regulatory authorities
in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the vaccine candidate in those countries. Approval
procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those
in the United States, including additional preclinical studies or clinical trials as clinical studies conducted in one jurisdiction
may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a vaccine
candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we
intend to charge for our products is also subject to approval.
We may also submit marketing applications in other
countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of vaccine candidates
with which we must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance with foreign
regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction
of our products in certain countries. If we fail to comply with the regulatory requirements in international markets and/or receive applicable
marketing approvals, our target market will be reduced and our ability to realize the full market potential of our vaccine candidates
will be harmed.
Modifications to our products may require new BLA approvals.
Once a particular product receives FDA approval,
expanded uses or uses in new indications of our products may require additional human clinical trials and new regulatory approvals, including
additional IND and BLA submissions and premarket approvals before we can begin clinical development, and/or prior to marketing and sales.
If the FDA requires new approvals for a particular use or indication, we may be required to conduct additional clinical studies, which
would require additional expenditures and harm our operating results. If the products are already being used for these new indications,
we may also be subject to significant enforcement actions. Conducting clinical trials and obtaining approvals can be a time-consuming
process, and delays in obtaining required future approvals could adversely affect our ability to introduce new or enhanced products in
a timely manner, which in turn would harm our future growth.
Additional delays to the completion of clinical
studies may result from modifications being made to the protocol during the clinical trial, if such modifications are warranted and/or
required by the occurrences in the given trial .
Each modification to the protocol during a clinical
trial has to be submitted to the FDA. This could result in the delay or halt of a clinical trial while the modification is evaluated.
In addition, depending on the quantity and nature of the changes made, the FDA could take the position that the data generated by the
clinical trial are not poolable because the same protocol was not used throughout the trial. This might require the enrollment of additional
subjects, which could result in the extension of the clinical trial and the FDA delaying approval of a product. Any such delay could have
a material adverse effect on our business and results of operations.
There can be no assurance that the data generated from our clinical
trials using modified protocols will be acceptable to the FDA or other regulatory authorities.
There can be no assurance that the data generated
using modified protocols will be acceptable to the FDA or other regulatory authorities or that if future modifications during the trial
are necessary, that any such modifications will be acceptable to the FDA or other regulatory authorities. If the FDA or other regulatory
authorities believe that prior approval is required for a particular modification, they can delay or halt a clinical trial while they
evaluate additional information regarding the change.
Serious injury or death resulting from a failure
of our product candidates during current or future clinical trials could also result in the FDA or other regulatory authority delaying
our clinical trials or denying or delaying approval of a product.
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Even though an adverse event may not be the result
of the failure of our product candidate, the FDA or other regulatory authority could delay or halt a clinical trial for an indefinite
period of time while an adverse event is reviewed, and likely would do so in the event of multiple such events.
Any delay or termination of our current or future
clinical trials as a result of the risks summarized above, including delays in obtaining or maintaining required approvals from the FDA
or other regulatory authorities, delays in patient enrollment, the failure of patients to continue to participate in a clinical trial,
and delays or termination of clinical trials as a result of protocol modifications or adverse events during the trials, may cause an increase
in costs and delays in the filing of any product submissions with the FDA or other regulatory authorities, delay the approval and commercialization
of our products or result in the failure of the clinical trial, which could adversely affect our business, operating results and prospects.
We will depend on enrollment and retention of patients in our
clinical trials for our product candidates. If we experience delays or difficulties enrolling or retaining patients in our clinical trials,
our research and development efforts and business, financial condition, and results of operations could be materially adversely affected.
Successful and timely completion of clinical trials
will require that we enroll and retain a sufficient number of patient candidates. Any clinical trials we conduct may be subject to delays
for a variety of reasons, including as a result of patient enrollment taking longer than anticipated, patient withdrawal, or adverse events.
These types of developments could cause us to delay the trial or halt further development.
Our clinical trials will compete with other clinical
trials that are in the same therapeutic areas as our product candidates, and this competition reduces the number and types of patients
available to us, as some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by
one of our competitors. Moreover, enrolling patients in clinical trials for diseases in which there is an approved standard of care is
challenging, as patients will first receive the applicable standard of care. Many patients who respond positively to the standard of care
do not enroll in clinical trials. This may limit the number of eligible patients able to enroll in our clinical trials who have the potential
to benefit from our product candidates and could extend development timelines or increase costs for these programs. Patients who fail
to respond positively to the standard of care treatment will be eligible for clinical trials of unapproved drug candidates. However, these
prior treatment regimens may render our therapies less effective in clinical trials.
Because the number of qualified clinical investigators
and clinical trial sites is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our
competitors use, which will reduce the number of patients who are available for our clinical trials at such clinical trial sites.
Patient enrollment depends on many factors, including:
● the size and nature of the patient population;
● the severity of the disease, condition or infection under
investigation;
● eligibility criteria for the trial;
● the proximity of patients to clinical sites;
● the design of the clinical protocol;
● the ability to obtain and maintain patient consents;
● perceived risks and benefits of the product candidate under
evaluation;
● the ability to recruit clinical trial investigators with
the appropriate competencies and experience;
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● the risk that patients enrolled in clinical trials will drop
out of the trials before the administration of our product candidates or trial completion;
● the availability of competing clinical trials;
● the availability of such patients during the COVID-19 pandemic;
● the availability of new drugs approved for the indication
the clinical trial is investigating; and
● clinicians’ and patients’ perceptions as to the
potential advantages of the drug being studied in relation to other available therapies.
These factors may make it difficult for us to enroll
enough patients to complete our clinical trials in a timely and cost-effective manner. Delays in the completion of any clinical trial
of our product candidates will increase our costs, slow down our product candidate development and approval process, and delay or potentially
jeopardize our ability to commence product sales and generate revenue. In addition, some of the factors that cause, or lead to, a delay
in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
Conducting successful clinical studies may require the enrollment
of large numbers of patients, and suitable patients may be difficult to identify and recruit.
Patient enrollment in clinical trials and completion
of patient participation and follow-up depends on many factors, including the size of the patient population; the nature of the trial
protocol; the attractiveness of, or the discomforts and risks associated with, the treatments received by enrolled subjects; the availability
of appropriate clinical trial investigators; support staff; and the proximity of patients to clinical sites and ability to comply with
the eligibility and exclusion criteria for participation in the clinical trial and patient compliance. For example, patients may be discouraged
from enrolling in our clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up
to assess the safety and effectiveness of our products or if they determine that the treatments received under the trial protocols are
not attractive or involve unacceptable risks or discomforts. Patients may also not participate in our clinical trials if they choose to
participate in contemporaneous clinical trials of competitive products.
The results of our future clinical trials may not support our
product candidates’ claims or may result in the discovery of unexpected adverse side effects.
Even if our clinical trials are completed as planned,
we cannot be certain that their results will support our product candidates claims or that the FDA or foreign authorities will agree with
our conclusions regarding them. Success in pre-clinical studies and early clinical trials does not ensure that later clinical trials will
be successful, and we cannot be sure that the later trials will replicate the results of prior trials and pre-clinical studies. The clinical
trial process may fail to demonstrate that our product candidates are safe and effective for the proposed indicated uses. If the FDA concludes
that the clinical trials for any product for which we might seek approval, has failed to demonstrate safety and effectiveness, we would
not receive FDA approval to market that product in the United States for the indications sought.
In addition, such an outcome could cause us to abandon
a product candidate and might delay development of others. Any delay or termination of our clinical trials will delay the filing of any
product submissions with the FDA and, ultimately, our ability to commercialize our product candidates and generate revenues. It is also
possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of our product candidates’
profiles.
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Adverse events involving our products may lead the FDA or other
regulatory authorities to delay or deny approval for our products or result in product recalls that could harm our reputation, business
and financial results.
Additionally, if any of our product candidates receives
marketing approval, the FDA could require us to adopt a Risk Evaluation and Mitigation Strategy, or REMS, and other non-U.S. regulatory
authorities could impose other specific obligations as a condition of approval to ensure that the benefits outweigh its risks, which may
include, among other things, a medication guide outlining the risks of the product for distribution to patients, a communication plan
to health care practitioners, and restrictions on how or where the product can be distributed, dispensed or used. Furthermore, if we or
others later identify undesirable side effects caused by any of our product candidates, several potentially significant negative consequences
could result, including:
● regulatory authorities may suspend or withdraw approvals
of such a product candidate;
● regulatory authorities may require additional warnings or
limitations of use in product labeling;
● we may be required to change the way a product candidate
is distributed, dispensed, or administered or conduct additional clinical trials;
● we could be sued and held liable for harm caused to patients;
and
● our reputation may suffer.
Any of these events could prevent us from achieving
or maintaining market acceptance of our product candidates and could significantly harm our business, prospects, financial condition and
results of operations.
Once a product receives FDA approval, the agency
has the authority to require the recall of commercialized products in the event of adverse side effects, material deficiencies or defects
in design or manufacture. The authority to require a recall must be based on an FDA finding that there is a reasonable probability that
the product would cause serious injury or death. Manufacturers may, under their own initiative, recall a product if any material deficiency
in a product is found. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of adverse side
effects, impurities or other product contamination, manufacturing errors, design or labeling defects or other deficiencies and issues.
Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our financial condition and
results of operations. The FDA requires that certain classifications of recalls be reported to FDA within ten working days after
the recall is initiated. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA. We
may initiate voluntary recalls involving our products in the future. A future recall announcement could harm our reputation with customers
and negatively affect our sales. In addition, the FDA and/or other regulatory agencies could take enforcement action for failing to report
the recalls when they were conducted.
Even if we obtain regulatory approval of our vaccine candidates,
the products may not gain market acceptance among regulators, advisory boards, physicians, patients, third-party payors and others in
the medical community.
Even if any of our vaccine candidates receive marketing
approval, they may fail to receive recommendations for use by regulators or advisory boards that recommend vaccines, or gain market acceptance
by physicians, patients, third-party payors and others in the medical community. If such vaccine candidates do not achieve an adequate
level of acceptance, we may not generate significant product revenue and may not become profitable. The degree of market acceptance of
any vaccine candidate, if approved for commercial sale, will depend on a number of factors, including but not limited to:
● receiving CDC and ACIP recommendations for use, as well as
recommendations of comparable foreign regulatory and advisory bodies;
● prevalence and severity of the disease targets for which
our vaccine candidates are approved;
● physicians, hospitals, third-party payors and patients considering
our vaccine candidates as safe and effective;
● the potential and perceived advantages of our vaccine candidates
over existing vaccines, including with respect to spectrum coverage or immunogenicity;
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● the prevalence and severity of any side effects;
● product labeling or product insert requirements of the FDA
or comparable foreign regulatory and advisory bodies;
● limitations or warnings contained in the labeling approved
by the FDA or comparable foreign regulatory and advisory bodies;
● the timing of market introduction of our vaccine candidates
as well as competitive products;
● the cost of treatment in relation to alternative treatments;
● the availability of coverage and adequate reimbursement and
pricing by third-party payors, including government authorities;
● the willingness of patients to pay out-of-pocket in
the absence of coverage and adequate reimbursement by third-party payors, including government authorities;
● relative convenience and ease of administration, including
as compared to competitive vaccines and alternative treatments; and
● the effectiveness of our sales and marketing efforts.
In the United States, the CDC and ACIP develop
vaccine recommendations for both children and adults, as do similar agencies around the world. To develop its recommendations, ACIP forms
working groups that gather, analyze and prepare scientific information. The ACIP also considers many of the factors above, as well as
myriad additional factors such as the value of vaccination for the target population regarding the outcomes, health economic data and
implementation issues. ACIP recommendations are also made within categories, such as in an age group or a specified risk group. For example,
the ACIP may determine that a preferred recommendation in a smaller child population may be more economical than recommending vaccinations
for a larger adult population, which could adversely impact our market opportunity.
New pediatric vaccines that receive an ACIP preferred
recommendation are almost universally adopted, and adult vaccines that receive a preferred recommendations are widely adopted. For example,
in 2014, the ACIP voted to recommend Prevnar 13 for routine use to help protect adults ages 65 years and older against pneumococcal
disease, which caused Prevnar 13 to become the standard of care along with continued use of Pneumovax 23. ACIP can also modify its preferred
recommendation. For instance, in June 2019, the ACIP voted to revise the pneumococcal vaccination guidelines and recommend Prevnar
13 for adults 65 and older based on the shared clinical decision making of the provider and patient, rather than a preferred use recommendation,
which means the decision to vaccinate should be made at the individual level between health care providers and their patients. Pfizer
recently noted that this revised recommendation is expected to have a negative effect on Prevnar 13 revenue for future periods.
If our vaccine candidates are approved but fail
to receive CDC and ACIP recommendations, or recommendations of other comparable foreign regulatory and advisory bodies, or achieve market
acceptance among physicians, healthcare providers, patients, third-party payors or others in the medical community, we will not be able
to generate significant revenue. Even if our products achieve market acceptance, we may not be able to maintain that market acceptance
over time if new products or technologies are introduced that are more favorably received than our products, are more cost effective or
render our products obsolete.
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Obtaining regulatory approval for clinical trials of our vaccine
candidates in children and adolescents may require additional studies and/or longer duration of studies since the requirements for regulatory
approval for the pediatric populations are more stringent.
Pediatric vaccine candidates’ development
may require additional studies to determine safe dosing and long-term monitoring. These additional studies may require investment of significant
additional resources beyond those required for regulatory approval of the vaccines in adults. Approval of our vaccine candidates may be
delayed due to these additional requirements and this may have an adverse effect on the commercial prospects of our vaccine candidates,
especially our pediatric vaccine candidate, BWV-201, as well as delay our ability to generate product revenue, possibly materially. In
addition, as a result of COVID-19 (or other potential pandemics), there may be a smaller pool of children from which we can enroll for
our clinical trials. We cannot guarantee that we will receive regulatory approval to commercialize our product candidates in the pediatric
populations or the adult population.
Even if we are able to commercialize our product candidates,
such products may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives,
which would harm our business.
The regulations that govern marketing approvals,
pricing, coverage and reimbursement for new drugs vary widely from country to country. In the United States, new and future legislation
may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals.
Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins
after marketing or product-licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject
to continuing governmental control even after initial marketing approval is granted. As a result, we might obtain marketing approval for
a vaccine in a particular country but then be subject to price regulations that delay its commercial launch, possibly for lengthy time
periods, and negatively impact the revenue we are able to generate from the sale of the drug in that country. Adverse pricing limitations
may hinder our ability to commercialize and generate revenue from our product candidates, even if our product candidates obtain marketing
approval.
Our ability to commercialize our current and any
future product candidates successfully also will depend in part on the extent to which coverage and adequate reimbursement for these products
and related treatments will be available from government health programs, private health insurers, integrated delivery networks and other
third-party payors. Third-party payors decide which vaccines they will pay for and establish reimbursement levels. A significant trend
in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to
control costs by limiting coverage and the amount of payment for particular vaccines. Increasingly, third-party payors are requiring that
drug companies provide predetermined discounts from list prices and are challenging the prices charged for medical products. Coverage
and reimbursement may not be available for any product that we commercialize and, if reimbursement is available, the level of reimbursement
may not be sufficient for commercial success. Coverage and reimbursement may impact the demand for, or the price of, any product candidate
for which we obtain marketing approval. If coverage and reimbursement is not available or is available only to limited levels, we may
not be able to successfully commercialize any product candidate for which we obtain marketing approval.
There may be significant delays in obtaining coverage
and adequate reimbursement for newly approved products, and coverage may be more limited than the purposes for which the product is approved
by the FDA or similar regulatory authorities outside the United States. Moreover, eligibility for coverage and reimbursement does
not imply that any product will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture,
sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may
not be made permanent. Coverage and reimbursement rates may vary according to the use of the drug and the medical circumstances under
which it is used may be based on reimbursement levels already set for lower cost products or procedures or may be incorporated into existing
payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs
or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold
at lower prices than in the United States. Commercial third-party payors often rely upon Medicare coverage policies and payment limitations
in setting their own reimbursement policies. Our inability to promptly obtain coverage and profitable payment rates from both government-funded
programs and private payors for any approved products that we develop could have a material adverse effect on our operating results, our
ability to raise capital needed to commercialize our approved products and our overall financial condition.
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Any product candidate for which we obtain marketing approval
could be subject to marketing restrictions or withdrawal from the market and we may be subject to penalties if we fail to comply with
regulatory requirements or if we experience unanticipated problems with our products.
Any product candidate for which we obtain marketing
approval, along with the manufacturing processes and facilities, post-approval clinical data, labeling, advertising and promotional activities
for such product, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements
include submissions of promotional materials and safety and other post-marketing information and reports, registration and listing requirements,
current Good Manufacturing Practice (“cGMP”) requirements for product facilities, quality assurance and corresponding maintenance
of records and documents and requirements regarding the distribution of samples to physicians and related recordkeeping. Even if marketing
approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may
be marketed or to the conditions of approval or contain requirements for costly post-marketing testing and surveillance to monitor the
safety or efficacy of the medicine. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure that they are
marketed only for the approved indications and in accordance with the provisions of the approved labeling. However, companies may share
truthful and not misleading information that is otherwise consistent with the product’s FDA approved labeling. The FDA imposes stringent
restrictions on manufacturers’ communications regarding off-label use and if we do not comply with these restrictions, we may be
subject to enforcement actions.
In addition, later discovery of previously unknown
problems with our products, manufacturers or manufacturing processes and facilities or failure to comply with regulatory requirements,
may result in, among other things:
● restrictions on such products, manufacturers or manufacturing
processes or facilities;
● restrictions on the labeling, marketing, distribution or
use of a product;
● requirements to conduct post-approval clinical trials, other
studies or other post-approval commitments;
● warning or untitled letters;
● withdrawal or recall of the products from the market;
● refusal to approve pending applications or supplements to
approved applications that we submit;
● fines, restitution or disgorgement of profits or revenue;
● suspension or withdrawal of marketing approvals;
● refusal to permit the import or export of our products;
● product seizure; and
● injunctions or the imposition of civil or criminal penalties.
Failure to obtain regulatory approvals in foreign jurisdictions
will prevent us from marketing our products internationally.
We intend to market future products in international
markets. In order to market our future products in regions such as the European Economic Area, or EEA, Asia Pacific, or APAC, and many
other foreign jurisdictions, we must obtain separate regulatory approvals.
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For example, in the EEA, medicinal products can
only be commercialized after obtaining a Marketing Authorization, or MA. Before granting the MA, the European Medicines Agency or
the competent authorities of the member states of the EEA make an assessment of the risk-benefit balance of the product on the basis of
scientific criteria concerning its quality, safety and efficacy. In Japan, the Pharmaceuticals and Medical Devices Agency, or the PMDA,
of the Ministry of Health Labour and Welfare, or MHLW, must approve an application under the Pharmaceutical Affairs Act before a new drug
product may be marketed in Japan.
We have had limited interactions with foreign regulatory
authorities. The approval procedures vary among countries and can involve additional clinical testing, and the time required to obtain
approval may differ from that required to obtain FDA approval. Moreover, clinical studies conducted in one country may not be accepted
by regulatory authorities in other countries. Approval by the FDA does not ensure approval by regulatory authorities in other countries,
and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries
or by the FDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory
process in others. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may
not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and even if
we file we may not receive necessary approvals to commercialize our products in any market.
If our products do not receive favorable third-party reimbursement,
or if new restrictive legislation is adopted, market acceptance of our products may be limited and we may not generate significant revenues.
Our ability to commercialize our products will depend
in part on the extent to which appropriate reimbursement levels for the cost of our proposed formulations and products and related treatments
are obtained by governmental authorities, private health insurers and other organizations, such as Health Maintenance Organizations, or
HMOs. Reimbursement from third parties depends greatly on our ability to present data which demonstrate positive outcomes and reduced
utilization of other products or services as well as cost data which show that treatment costs using the new product are equal to or less
than what is currently covered for other products. If our products do not receive favorable third-party reimbursement and patients are
unwilling or unable to pay for our products out-of-pocket, it could limit our revenues and harm our business.
The continuing efforts of government and insurance
companies, health maintenance organizations and other payers of healthcare costs to contain or reduce costs of health care may affect
our future revenues and profitability, and the future revenues and profitability of our potential customers, suppliers and collaborative
partners and the availability of capital. For example, in certain foreign markets, pricing or profitability of prescription pharmaceuticals
is subject to government control. In the United States, recent federal and state government initiatives have been directed at lowering
the total cost of health care. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, a sweeping
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 healthcare and health insurance industries, impose new taxes and fees on the health industry
and impose additional health policy reforms. Federal and state legislatures will likely continue to focus on health care reform, controlling
the cost of prescription pharmaceuticals and on the reform of the Medicare and Medicaid systems. While we cannot predict whether any such
legislative or regulatory proposals will be adopted, the announcement or adoption of such proposals could materially harm our business,
financial condition and results of operations.
Risks Related to our Business and Industry
We may be adversely affected by the ongoing coronavirus pandemic.
The outbreak of the novel coronavirus COVID-19 (“COVID-19”)
has evolved into a global pandemic. The coronavirus has spread to many regions of the world. The extent to which the coronavirus impacts
our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including
new information that may emerge concerning the coronavirus and the actions to contain the coronavirus or treat its impact, among others.
As a result of the continuing spread of COVID-19,
our business operations could be delayed or interrupted. Currently, we operate virtually, i.e., our program activities are and will continue
to be carried out, on our behalf, by competent contract research organizations (CROs) with expertise in pre-clinical, clinical and/or
chemistry and manufacturing areas. Due to COVID-19, our planned project timelines may be delayed due to reduced availability of human
resources or critical supplies needed to carry out such plans. Due to shelter-in-place/stay-at-home orders and other government restrictions,
our employees conducting research and development or manufacturing activities at external vendor locations across the globe may not be
able to access their laboratory or manufacturing space which may result in our core activities being significantly limited or curtailed,
possibly for an extended period of time.
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Moreover, our clinical trials may be affected by
the COVID-19 pandemic. Site initiation, participant recruitment and enrollment, participant dosing, availability and distribution of clinical
trial materials, study monitoring and data analysis may be paused or delayed due to changes in hospital or university policies, federal,
state or local regulations, prioritization of hospital resources toward pandemic efforts, or other reasons related to the COVID-19 pandemic.
If the coronavirus continues to spread, some participants and clinical investigators may not be able to execute clinical trial protocols
per the expected timelines. The new mutations of the virus may also make it harder for us to predict the exact impact (if any) on the
progression of COVID-19 on our development programs. For example, quarantines or other travel limitations (whether voluntary or required)
may impede participant movement, affect sponsor access to study sites, or interrupt healthcare services, and we may be unable to conduct
our clinical trials. Further, if the spread of the COVID-19 pandemic continues and our operations are adversely impacted, we risk a delay,
default and/or nonperformance under existing agreements which may increase our costs. These cost increases may not be fully recoverable
or adequately covered by insurance.
Infections and deaths related to the pandemic may
disrupt the United States’ healthcare and healthcare regulatory systems. Such disruptions could divert healthcare resources
away from, or materially delay FDA review or review by other regulatory agencies and/or approval with respect to, our clinical trials.
It is unknown how long these disruptions could continue, were they to occur. Any elongation or de-prioritization of our clinical
trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of our product
candidates.
The spread of the coronavirus, which has caused
a broad impact globally, including restrictions on travel and quarantine policies put into place by businesses and governments, may have
a material economic effect on our business. While the potential economic impact brought by and the duration of the pandemic may be difficult
to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial markets, which
may reduce our ability to access capital either at all or on favorable terms. In addition, a recession, depression or other sustained
adverse market event resulting from the spread of the coronavirus could materially and adversely affect our business and the value of
our common stock.
The ultimate impact of the current pandemic, or
any other health epidemic, is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts
on our business, our clinical trials, our research programs, healthcare systems or the global economy as a whole. However, these effects
could have a material impact on our operations, and we will continue to monitor the situation closely.
Our reliance on third parties heightens the risks faced by our
business.
We rely on suppliers, vendors and partners for certain
key aspects of our business, including support for information technology systems and certain human resource functions. We do not control
these partners, but we depend on them in ways that may be significant to us. If these parties fail to meet our expectations or fulfill
their obligations to us, we may fail to receive the expected benefits. In addition, if any of these third parties fails to comply with
applicable laws and regulations in the course of its performance of services for us, there is a risk that we may be held responsible for
such violations as well. This risk is particularly serious in emerging markets, where corruption is often prevalent and where many of
the third parties on which we rely do not have internal compliance resources comparable to our own. Any such failures by third parties,
in emerging markets or elsewhere, could adversely affect our business, reputation, financial condition or results of operations.
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We rely on, and intend to continue to rely on third parties to
conduct our pre-clinical testing, research and clinical trials, and those third parties may not perform satisfactorily, including failing
to meet deadlines for the completion of such trials, research or testing.
We have been relying on third parties for our preclinical
studies, and we expect to continue to rely on third parties, such as CROs, contract manufacturers of clinical supplies, clinical data
management organizations, medical institutions and clinical investigators, to conduct our clinical trials and to conduct some aspects
of our research and pre-clinical testing. These third parties may terminate their engagements with us at any time. If these third parties
do not successfully carry out their duties, meet expected deadlines or conduct our studies in accordance with regulatory requirements
or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates
and will not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates. Furthermore, these third
parties may also have relationships with other entities, some of which may be our competitors. If we are required to enter into alternative
arrangements, it could delay our product development activities.
Our reliance on third parties for research and development
activities will reduce our control over these activities but will not relieve us of our responsibilities. For example, we will remain
responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols
for the trial. Moreover, the FDA and other international regulatory authorities require us to comply with GCP standards for conducting,
recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the
rights, integrity and confidentiality of trial participants are protected. We also are required to register ongoing clinical trials and
post the results of completed clinical trials on a government-sponsored database, available at www.clinicaltrials.gov , within certain
timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.
Upon commercialization of our products, we may be dependent on
third parties to market, distribute and sell our products.
Our ability to receive revenues may be dependent
upon the sales and marketing efforts of any future co-marketing partners and third-party distributors. At this time, we have not entered
into an agreement with any commercialization partner and only plan to do so prior to commercialization. If we fail to reach an agreement
with any commercialization partner, or upon reaching such an agreement that partner fails to sell a large volume of our products, it may
have a negative impact on our business, financial condition and results of operations.
We have no experience manufacturing product candidates on a clinical
or commercial scale and will be dependent on third parties for the manufacture of our product candidates. If we experience problems with
any of these third parties, they could delay clinical development or marketing approval of our product candidates or our ability to sell
any approved products.
We do not have any manufacturing facilities. We
expect to rely on third-party manufacturers for the manufacture of our product candidates for clinical trials and for commercial supply
of any product candidate for which we obtain marketing approval.
We may be unable to establish agreements with third-party
manufacturers for clinical or commercial supply on terms favorable to us, or at all. Even if we are able to establish agreements with
third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:
● reliance on the third party for regulatory compliance and
quality assurance;
● the possible breach of the manufacturing agreement by the
third party, including the inability to supply sufficient quantities or to meet quality standards or timelines; and
● the possible termination or nonrenewal of the agreement by
the third party at a time that is costly or inconvenient for us.
Third-party manufacturers may not be able to comply
with U.S. cGMPs or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party
manufacturers, to comply with cGMPs or other applicable regulations, even if such failures do not relate specifically to our product candidates
or approved products, could result in sanctions being imposed on us or the manufacturers, including fines, injunctions, civil penalties,
delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates, operating restrictions and
criminal prosecutions, any of which could adversely affect supplies of our product candidates and harm our business and results of operations.
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Any product that we develop may compete with other
product candidates and products for access to these manufacturing facilities. There are a limited number of manufacturers that operate
under cGMPs and that might be capable of manufacturing for us.
Any performance failure on the part of our manufacturers,
including a failure that may not relate specifically to our product candidates or approved products, could delay clinical development
or marketing approval or adversely impact our ability to generate commercial sales. If our contract manufacturers cannot perform as agreed,
we may be required to replace that manufacturer.
Our anticipated future dependence upon others for
the manufacture of our current and future product candidates or products may adversely affect our future profit margins and our ability
to commercialize any product candidates that receive marketing approval on a timely and competitive basis.
Furthermore, we expect to rely on third parties
to release, label, store and distribute drug supplies for our clinical trials. Any performance failure on the part of these third parties,
including a failure that may not relate specifically to our product candidates, could delay or otherwise adversely impact clinical development
or marketing approval of our product candidates or commercialization of our drug, producing losses and depriving us of potential revenue.
Moreover, our manufacturers and suppliers may experience
difficulties related to their overall businesses and financial stability, which could result in delays or interruptions of supply of our
product candidates.
Manufacturing risks may adversely affect our ability to
manufacture our product and could reduce our gross margin and profitability.
Our business strategy depends on our ability to
manufacture our product candidates in sufficient quantities and on a timely basis so as to meet our obligations with respect to our clinical
trials and upon marketing approval, to meet consumer demand, while adhering to product quality standards, complying with regulatory requirements
and managing manufacturing costs. We are subject to numerous risks relating to our manufacturing capabilities, including:
● quality or reliability defects in product components that
we source from third-party suppliers, including manufacturing compliance with federal and state regulations;
● our inability to secure product components in a timely manner,
in sufficient quantities or on commercially reasonable terms;
● our failure to increase production of products to meet demand;
● our inability to modify production lines to enable us to
efficiently produce future products or implement changes in current products in response to regulatory requirements; and
● Potential damage to or destruction of our manufacturing equipment
or manufacturing facility.
If demand for our product candidates increases in
the future, we will have to invest additional resources to purchase components, hire and train employees, and enhance our manufacturing processes.
If we fail to increase our production capacity efficiently, our sales may not increase in line with our forecasts and our operating margins
could fluctuate or decline. In addition, although we expect some of our product candidates in development to share product features and
components, manufacturing of some of our product candidates may require the modification of our production lines, the hiring
of specialized employees, the identification of new suppliers for specific components, or the development of new manufacturing technologies.
It may not be possible for us to manufacture these product candidates at a cost or in quantities sufficient to make these product candidates
commercially viable. Any of these factors may affect our ability to manufacture our product and could reduce our gross margin and profitability.
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We maintain single supply relationships for certain key components,
and our business and operating results could be harmed if supply is restricted or ends or the price of raw materials used in its manufacturing process
increases.
We are dependent on sole suppliers or a limited
number of suppliers for certain components that are integral to its finished products. If these or other suppliers encounter financial,
operating or other difficulties or if our relationship with them changes, we may be unable to quickly establish or qualify replacement
sources of supply and could face production interruptions, delays and inefficiencies. In addition, technology changes by our vendors could
disrupt access to required manufacturing capacity or require expensive, time consuming development efforts to adapt and integrate
new equipment or processes. Our growth may exceed the capacity of one or more of these suppliers to produce the needed equipment and materials
in sufficient quantities to support our growth. Any one of these factors could harm our business and growth prospects.
We may not be able to manage our manufacturing and
supply chain effectively, which would harm our results of operations.
We must accurately forecast our clinical trial obligations,
and, in the future, market demand, for our product candidates in order to have adequate product inventory available to fulfil our timeline
and customer orders timely. Our forecasts will be based on multiple assumptions that may cause our estimates to be inaccurate, and thus
affect our ability to ensure adequate manufacturing capability to satisfy product candidate needs or market demand. Any material delay
in our ability to obtain timely product inventories from our manufacturing facility and our ingredient suppliers could prevent us from
satisfying increased consumer demand for our products, resulting in material harm to our clinical trials, brand and business. In addition,
we will need to continuously monitor our inventory and product mix against forecasted demand to avoid having inadequate product inventory
or having too much product inventory on hand. If we are unable to manage our supply chain effectively, our operating costs may increase
materially.
We may in the future have conflicts with our current or future
partners or third party providers that could delay or prevent the development or commercialization of our current and future product candidates.
We may in the future have conflicts with our current
or future partners or third party providers, such as conflicts concerning the interpretation of pre-clinical or clinical data, the achievement
of milestones, the interpretation of contractual obligations, payments for services, development obligations or the ownership of intellectual
property developed during our collaboration. If any conflicts arise with any of our partners, such partner may act in a manner that is
adverse to our best interests. Any such disagreement could result in one or more of the following, each of which could delay or prevent
the development or commercialization of our current and future product candidates, and in turn prevent us from generating revenues:
● unwillingness on the part of a partner to pay us milestone
payments or royalties we believe are due to us under a collaboration;
● uncertainty regarding ownership of intellectual property
rights arising from our collaborative activities, which could prevent us from entering into additional collaborations;
● unwillingness by the partner to cooperate in the development
or manufacture of the product, including providing us with product data or materials;
● unwillingness on the part of a partner to keep us informed
regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities;
● initiating of litigation or alternative dispute resolution
options by either party to resolve the dispute; or
● attempts by either party to terminate the agreement.
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Our product candidates may face competition sooner than anticipated
from biosimilar products.
Even if we are successful in achieving regulatory
approval to commercialize a product candidate faster than our competitors, our product candidates may face competition from biosimilar
products. In the United States, our product candidates are regulated by the FDA as biologic products and we intend to seek approval
for these product candidates pursuant to the BLA pathway. The Biologics Price Competition and Innovation Act of 2009, or BPCIA,
created an abbreviated pathway for the approval of biosimilar and interchangeable biologic products. The abbreviated regulatory pathway
establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar
as “interchangeable” based on its similarity to an existing brand product. Under the BPCIA, an application for a biosimilar
product cannot be approved by the FDA until 12 years after the original branded product was approved under a BLA. The law is
complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning
are subject to uncertainty.
There is a risk that any exclusivity we may be afforded
if any of our product candidates are approved as a biologic product under a BLA could be shortened due to congressional action, the results
of recent litigation, or otherwise, or that the FDA will not consider our product candidates to be reference products for competing products,
potentially creating the opportunity for generic or biosimilar competition sooner than anticipated. Moreover, the extent to which a biosimilar
product, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution
for non-biologic products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.
In addition, a competitor could decide to forego the biosimilar approval path and submit a full BLA after completing its own preclinical
studies and clinical trials. In such cases, any exclusivity to which we may be eligible under the BPCIA would not prevent the competitor
from marketing its product as soon as it is approved.
In addition, critics of the 12-year exclusivity
period in the biosimilar pathway law will likely continue to seek to shorten the data exclusivity period and/or to encourage the FDA to
interpret narrowly the law’s provisions regarding which new products receive data exclusivity. In December 2019, the US agreed
to remove from the United States-Mexico-Canada Agreement a requirement for at least 10 years of data exclusivity for biologic
products. Also, the FDA is considering whether subsequent changes to a licensed biologic would be protected by the remainder of the reference
product’s original 12-year exclusivity period (a concept known in the generic drug context as “umbrella exclusivity”).
If the FDA were to decide that umbrella exclusivity does not apply to biological reference products or were to make other changes to the
exclusivity period, this could expose us to biosimilar competition at an earlier time. There also have been, and may continue to be, legislative
and regulatory efforts to promote competition through policies enabling easier generic and biosimilar approval and commercialization,
including efforts to lower standards for demonstrating biosimilarity or interchangeability, limit patents that may be litigated and/or
patent settlements and implement preferential reimbursement policies for biosimilars.
If competitors are able to obtain marketing approval
for biosimilars referencing our product candidates, if approved, such products may become subject to competition from such biosimilars,
with the attendant competitive pressure and potential adverse consequences. Such competitive products may be able to immediately compete
with us in each indication for which our product candidates may have received approval.
Our primary competitors have significantly greater resources
and experience than we do, which may make it difficult for us to successfully develop our vaccine candidates, or may result in others
discovering, developing or commercializing products before or more successfully than us.
The vaccine market is intensely competitive and
is dominated by a small number of multinational, globally established pharmaceutical corporations with significant resources; Pfizer,
Merck, GlaxoSmithKline and Sanofi together control approximately 75% of the global vaccine market. We may also face competition from many
different sources, including pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private
research institutions. For example, Sanofi and SK Chemicals have partnered to develop a PCV, and Affinivax and Astellas have partnered
to develop an affinity-bound pneumococcal vaccine.
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Vaccine candidates that we successfully develop
and commercialize may compete with existing vaccines and new vaccines that may become available in the future. Many of our competitors
have substantially greater financial, lobbying, technical, human and other resources than we do and may be better equipped to develop,
manufacture and market technologically superior vaccines, including the potential that our competitors may develop chemical processes
or utilize novel technologies for developing vaccines that may be superior to those we employ. In addition, many of these competitors
have significantly greater experience than we have in undertaking preclinical testing and clinical trials of new products and in obtaining
regulatory approvals, including for many vaccine franchises. Accordingly, our competitors may succeed in obtaining FDA approval or a preferred
recommendation for their products. For example, Prevnar 13 obtained FDA approval for the prevention of invasive pneumococcal disease,
or IPD, in infants based on non-inferior IgG antibody responses relative to Prevnar, using the surrogate immune endpoints established
by the prior Prevnar field efficacy study. Pfizer is currently implementing a similar approach to development of its 20-valent PCV vaccine
candidate, and may have a more efficient path to regulatory approval given Pfizer’s and the FDA’s previous experience with
Prevnar 13.
Many of our competitors have established distribution
channels for the commercialization of their vaccine products, whereas we have no such established channels or capabilities. In addition,
many competitors have greater name recognition, more extensive collaborative relationships or the ability to leverage a broader vaccine
portfolio. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize vaccines that are safer,
more effective, more convenient, less expensive or with a more favorable label than any vaccine candidates that we may develop.
As a result of these factors, our competitors may
obtain regulatory approval of their products before we are able to, which may limit our ability to develop or commercialize our vaccine
candidates. Our competitors may also develop vaccines that are safer, more effective, more widely accepted or less expensive than ours,
and may also be more successful than we are in manufacturing and marketing their products. These advantages could render our vaccine candidates
obsolete or non-competitive before we can recover the costs of such vaccine candidates’ development and commercialization.
Mergers and acquisitions in the pharmaceutical and
biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and early-stage
companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
These third parties compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing
clinical trial sites and subject enrollment for clinical trials, as well as in acquiring technologies complementary to, or necessary for,
our programs.
Product liability lawsuits against us could cause us to incur
substantial liabilities and to limit commercialization of any products that we may develop.
We face an inherent risk of product liability exposure
related to the testing of our current product candidates or future product candidates in human clinical trials and will face an even greater
risk if we commercially sell any products that we may develop. Product liability claims may be brought against us by subjects enrolled
in our clinical trials, patients, healthcare providers or others using, administering or selling our product. If we cannot successfully
defend ourselves against claims that our product candidates or product caused injuries, we could incur substantial liabilities. Regardless
of merit or eventual outcome, liability claims may result in:
● decreased demand for any product candidates or products that
we may develop;
● termination of clinical trial sites or entire clinical trial
programs;
● injury to our reputation and significant negative media attention;
● withdrawal of clinical trial participants;
● significant costs to defend the related litigation;
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● substantial monetary awards to trial subjects or patients;
● loss of revenue;
● diversion of management and scientific resources from our
business operations; and
● the inability to commercialize any products that we may develop.
Prior to engaging in future clinical trials, we
intend to obtain product liability insurance coverage at a level that we believe is customary for similarly situated companies and adequate
to provide us with insurance coverage for foreseeable risks; however, we may be unable to obtain such coverage at a reasonable cost, if
at all. If we are able to obtain product liability insurance, we may not be able to maintain insurance coverage at a reasonable cost or
in an amount adequate to satisfy any liability that may arise and such insurance may not be adequate to cover all liabilities that we
may incur. Furthermore, we intend to expand our insurance coverage for products to include the sale of commercial products if we obtain
regulatory approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability
insurance for any products that receive regulatory approval. Large judgments have been awarded in class action lawsuits based on
drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if
judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.
We may engage in acquisitions that could disrupt our business,
cause dilution to our stockholders or reduce our financial resources.
In the future, we may enter into transactions to
acquire other businesses, products or technologies. If we do identify suitable candidates, we may not be able to make such acquisitions
on favorable terms, or at all. Any acquisitions we make may fail to strengthen our competitive position and these transactions may be
viewed negatively by customers or investors. We may decide to incur debt in connection with an acquisition or issue our common stock or
other equity securities to the stockholders of the acquired company, which would reduce the percentage ownership of our existing stockholders.
We could incur losses resulting from undiscovered liabilities of the acquired business that are not covered by the indemnification we
may obtain from the seller. In addition, we may not be able to successfully integrate the acquired personnel, technologies and operations
into our existing business in an effective, timely and non-disruptive manner. Acquisitions may also divert management attention from day-to-day
responsibilities, increase our expenses and reduce our cash available for operations and other uses. We cannot predict the number, timing
or size of future acquisitions or the effect that any such transactions might have on our operating results.
Security threats to our information technology infrastructure
and/or our physical buildings could expose us to liability and damage our reputation and business.
It is essential to our business strategy that our
technology and network infrastructure and our physical buildings remain secure and are perceived by our customers and corporate partners
to be secure. Despite security measures, however, any network infrastructure may be vulnerable to cyber-attacks by hackers and other security
threats. We may face cyber-attacks that attempt to penetrate our network security, sabotage or otherwise disable our research, products
and services, misappropriate our or our customers’ and partners’ proprietary information, which may include personally identifiable
information, or cause interruptions of our internal systems and services. Despite security measures, we also cannot guarantee security
of our physical buildings. Physical building penetration or any cyber-attacks could negatively affect our reputation, damage our network
infrastructure and our ability to deploy our products and services, harm our relationship with customers and partners that are affected,
and expose us to financial liability.
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Additionally, there are a number of state, federal
and international laws protecting the privacy and security of health information and personal data. For example, the Health Insurance
Portability and Accountability Act of 1996, or HIPAA, imposes limitations on the use and disclosure of an individual’s
healthcare information by healthcare providers, healthcare clearinghouses, and health insurance plans, or, collectively, covered entities,
and also grants individuals rights with respect to their health information. HIPAA also imposes compliance obligations and corresponding
penalties for non-compliance on individuals and entities that provide services to healthcare providers and other covered entities.
As part of the American Recovery and Reinvestment Act of 2009, or ARRA, the privacy and security provisions of HIPAA were amended.
ARRA also made significant increases in the penalties for improper use or disclosure of an individual’s health information under
HIPAA and extended enforcement authority to state attorneys general. As amended by ARRA and subsequently by the final omnibus rule adopted
in 2013, HIPAA also imposes notification requirements on covered entities in the event that certain health information has been inappropriately
accessed or disclosed, notification requirements to individuals, federal regulators, and in some cases, notification to local and national
media. Notification is not required under HIPAA if the health information that is improperly used or disclosed is deemed secured in accordance
with encryption or other standards developed by the U.S. Department of Health and Human Services. Most states have laws requiring
notification of affected individuals and/or state regulators in the event of a breach of personal information, which is a broader class
of information than the health information protected by HIPAA. Many state laws impose significant data security requirements, such
as encryption or mandatory contractual terms, to ensure ongoing protection of personal information. Activities outside of the U.S. implicate
local and national data protection standards, impose additional compliance requirements and generate additional risks of enforcement for non-compliance. We may
be required to expend significant capital and other resources to ensure ongoing compliance with applicable privacy and data security laws,
to protect against security breaches and hackers or to alleviate problems caused by such breaches.
We will need to grow the size of our organization in the future,
and we may experience difficulties in managing this growth.
As of March 15, 2022, we had 5 full-time and
6 subcontracted employees. We will need to grow the size of our organization in order to support our continued development and potential
commercialization of our product candidates. As our development and commercialization plans and strategies continue to develop, our need
for additional managerial, operational, manufacturing, sales, marketing, financial and other resources may increase. Our management, personnel
and systems currently in place may not be adequate to support this future growth. Future growth would impose significant added responsibilities
on members of management, including:
● managing our clinical trials effectively;
● identifying, recruiting, maintaining, motivating and integrating
additional employees;
● managing our internal development efforts effectively while
complying with our contractual obligations to licensors, licensees, contractors and other third parties;
● improving our managerial, development, operational, information
technology, and finance systems; and
● expanding our facilities.
If our operations expand, we will also need to manage
additional relationships with various strategic partners, suppliers and other third parties. Our future financial performance and our
ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth
effectively, as well as our ability to develop a sales and marketing force when appropriate. To that end, we must be able to manage our
development efforts and pre-clinical studies and clinical trials effectively and hire, train and integrate additional management, research
and development, manufacturing, administrative and sales and marketing personnel. The failure to accomplish any of these tasks could prevent
us from successfully growing our company.
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Our future success depends on our ability to retain our executive
officers and to attract, retain and motivate qualified personnel.
We are highly dependent upon our personnel, including
Joseph Hernandez, our Chief Executive Officer and members of our board of directors. The loss of Mr. Hernandez’s services could
impede the achievement of our research, development and commercialization objectives. We have not obtained, do not own, nor are we the
beneficiary of, key-person life insurance. Our future growth and success depend on our ability to recruit, retain, manage and motivate
our employees. The loss of any member of our senior management team or the inability to hire or retain experienced management personnel
could compromise our ability to execute our business plan and harm our operating results. Because of the specialized scientific and managerial
nature of our business, we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel.
The competition for qualified personnel in the biotechnology field is intense and as a result, we may be unable to continue to attract
and retain qualified personnel necessary for the development of our business.
Our Chief Executive Officer, Joseph Hernandez, and our Chief
Financial Officer, Jon Garfield, also hold certain management positions and directorships of other companies and may allocate their time
to such other businesses, thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This
could have a negative impact on our ability to implement our plan of operation.
Our Chief Executive Officer, Joseph Hernandez is
engaged in other business endeavors for which he may be entitled to substantial compensation, which may result in a conflict of interest
in allocating his time between our operations and his other businesses. Pursuant to Mr. Hernandez’s employment agreement, Mr. Hernandez
shall be employed with the Company on a full-time basis, but shall be permitted to participate in certain limited business activities.
Subject to our Board’s prior approval, Mr. Hernandez may serve as an officer, stakeholder, or member of the board of directors
or advisory board (or the equivalent in the case of a non-corporate entity) of non-competing for-profit businesses and charitable organizations,
provided, however, that such activities do not materially interfere, individually or in the aggregate, with the performance of his duties
and responsibilities to Blue Water Vaccines Inc. Accordingly, although Mr. Hernandez’s primary occupation is his service to
Blue Water Vaccines Inc., he also holds certain management positions and directorships of other companies, and may allocate his time to
such other businesses, thereby causing conflicts of interest in his determination as to how much time to devote to our affairs.
Additionally, our Chief Financial Officer, Jon Garfield,
is engaged in other business endeavors for which he may be entitled to substantial compensation, which may result in a conflict of interest
in allocating his time between our operations and his other businesses. Pursuant to Mr. Garfield’s employment agreement, Mr. Garfield
shall be employed with the Company on a full-time basis, but shall be permitted to participate in certain limited business activities,
subject to the restrictions imposed on Mr. Hernandez as described above. Accordingly, Mr. Garfield holds certain management
positions and directorships of other companies, and may allocate his time to such other businesses, thereby causing conflicts of interest
in his determination as to how much time to devote to our affairs
Each of Messrs. Hernandez and Garfield may also
have competitive fiduciary obligations and pecuniary interests relating to their other business ventures that conflict with our interests.
Each of Messrs. Hernandez and Garfield’s employment agreement contains certain restrictive covenants while they are employed at
Blue Water Vaccines Inc. These restrictive covenants, generally, restrict Messrs. Hernandez and Garfield from engaging in any other business
or occupation that (x) conflicts with the interests of the Company, (y) interferes with the proper and efficient performance
of his duties for the Company, or (z) interferes with his exercise of judgment in the Company’s best interests. Messrs. Hernandez
and Garfield are further subject to general restrictions regarding the solicitation of employees, certain customers, as well as the use
or disclosure of any confidential information, of the business of Blue Water Vaccines Inc. Notwithstanding the foregoing, to the extent
that these additional activities may have a conflict between their interests and ours, this could have a negative impact on our ability
to implement our plan of operations.
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Certain significant personnel may allocate their time to other
businesses, which may cause conflicts of interest in their determination as to how much time to devote to our affairs and potentially
competitive fiduciary and pecuniary interests that conflict with our interests.
Our executive officers are supported by Ronald Cobb,
Brian Price and Andrew Skibo, who provide valuable technical and strategic capabilities to us. They are not currently required to commit
their full time to our affairs. As such, they may allocate their time to other businesses. From time to time, those other commitments
may limit the nature of services that Messrs. Cobb, Price and Skibo provide to our Company, for instance, where such activities may involve
overlapping industries and products. If these individuals’ other business affairs require them to devote substantial amounts of
time to such affairs in excess of their current commitment levels, it could limit their ability to devote time or resources to our affairs,
which may have a negative impact on our ability to complete our plan of operations.
Members of our management team and board of directors have significant
experience as founders, board members, officers or executives of other companies. As a result, certain of those persons have been and
may become involved in proceedings, investigations and litigation relating to the business affairs of the companies with which they were,
are, or may in the future be, affiliated. This may have an adverse effect on us, could damage our reputation and business.
During the course of their careers, members of our
management team and board of directors have had significant experience as founders, board members, officers or executives of other companies.
As a result of their involvement and positions in these companies, certain persons were, are now, or may in the future become, involved
in litigation, investigations or other proceedings relating to the business affairs of such companies or transactions entered into by
such companies. Any such litigation, investigations or other proceedings may divert our management team’s and board’s attention
and resources away from our affairs and may negatively affect our reputation and our business.
Inadequate funding for the FDA, the SEC and other government
agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being
developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which
the operation of our business may rely, which could negatively impact our business.
The ability of the FDA to review and approve new
products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel
and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated
in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may
rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and
unpredictable.
Disruptions at the FDA and other agencies may also
slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our
business. For example, over the last several years, including beginning on December 22, 2018, the U.S. government has shut
down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government
employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA
to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations
as a public company, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in
order to properly capitalize and continue our operations.
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We may be adversely affected by natural disasters, pandemics
and other catastrophic events, some possible related to the increasing effects of climate change, and by man-made problems such as terrorism
and acts of war, that could disrupt our business operations and our business continuity and disaster recovery plans may not adequately
protect us from a serious disaster.
We are vulnerable to the increasing impact of climate
change and other natural disasters. If a disaster, power outage or other event occurred that prevented us from using all or a significant
portion of our headquarters, that damaged critical infrastructure, such as enterprise financial systems, manufacturing resource planning
or enterprise quality systems, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to
continue our business for a substantial period of time. Our contract manufacturers’ and suppliers’ facilities are located
in multiple locations, where other natural disasters or similar events, such as blizzards, tornadoes, fires, explosions or large-scale
accidents or power outages, and other public health emergencies could severely disrupt our operations and have a material adverse effect
on our business, financial condition, operating results and prospects. For example, the recent COVID-19 pandemic may cause significant
disruption to our business operations, the operations of our third-party contractors and suppliers and the operations of our clinical
trials, including as a result of significant restrictions or bans on travel into and within the geographic areas in which our manufacturers
product our product candidates or where we conduct our clinical trials. A public health emergency could also affect the operations of
the FDA and other regulatory or public health authorities, resulting in delays to meetings related to planned or completed clinical trials
and ultimately of reviews and approvals of our product candidates. Such disruption could impede, delay, limit or prevent our employees
and third-party contractors from beginning or continuing research and development or clinical trial-related activities, which may impede,
delay, limit or prevent initiation or completion of our ongoing clinical trials and preclinical research and ultimately lead to the delay
or denial of regulatory approval of our product candidates, which could seriously harm our operations and financial condition.
Our employees, independent contractors, principal investigators,
consultants, vendors and clinical research organizations, or CROs, may engage in misconduct or other improper activities, including noncompliance
with regulatory standards and requirements.
We are exposed to the risk that our employees, independent
contractors, principal investigators, consultants, vendors and CROs may engage in fraudulent or other illegal activity. Misconduct by
these persons could include intentional, reckless or negligent conduct or unauthorized activity that violates: laws or regulations, including
those laws requiring the reporting of true, complete and accurate information to the FDA or foreign regulatory authorities; manufacturing
standards; federal, state and foreign healthcare fraud and abuse laws and data privacy; or laws that require the true, complete and accurate
reporting of financial information or data. In particular, sales, marketing and other business arrangements in the healthcare industry
are subject to extensive laws intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws may restrict
or prohibit a wide range of business activities, including research, manufacturing, distribution, pricing, discounting, marketing and
promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws also involve
the improper use of information obtained in the course of clinical trials, or illegal misappropriation of drug product, which could result
in regulatory sanctions or other actions or lawsuits stemming from a failure to comply with such laws or regulations, and serious harm
to our reputation. In addition, federal procurement laws impose substantial penalties for misconduct in connection with government contracts
and require certain contractors to maintain a code of business ethics and conduct. If any such actions are instituted against us, we may
have to terminate employees or others involved and the impact of such termination can result in our experiencing delays and additional
costs associated with replacing the services being provided. If we are not successful in defending ourselves or asserting our rights,
those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties,
damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, FDA debarment,
contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could
adversely affect our ability to operate our business and our operating results.
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Macroeconomic pressures in the markets in which we operate, including,
but not limited to, the effect of the COVID-19 pandemic and the current conflict between Ukraine and Russia may alter the ways in which
we conduct our business operations and manage our financial capacities.
To varying degrees, the ways in which we conduct
our business operations and manage our financial capacities are influenced by macroeconomic conditions that affect companies directly
involved in or providing services related to the drug and biological product development. For example, real GDP growth, business and investor
confidence, the COVID-19 pandemic, the conflict between Ukraine and Russia, inflation, employment levels, oil prices, interest rates,
tax rates, availability of consumer and business financing, housing market conditions, foreign currency exchange rate fluctuations, costs
for items such as fuel and food and other macroeconomic trends can adversely affect not only our decisions and ability to engage in research
and development and clinical trials, but also those of our management, employees, third-party contractors, manufacturers and suppliers,
competitors, stockholders and regulatory authorities. In addition, geopolitical issues around the world and how our markets are positioned
can also impact the macroeconomic conditions and could have a material adverse impact on our financial results.
Economic uncertainty may adversely affect our access to capital,
cost of capital and ability to execute our business plan as scheduled.
Generally, worldwide economic conditions remain
uncertain. Access to capital markets is critical to our ability to operate. Traditionally, biotechnology companies have funded their research
and development expenditures through raising capital in the equity markets. Declines and uncertainties in these markets in the past have
severely restricted raising new capital and have affected companies’ ability to continue to expand or fund existing research and
development efforts. We require significant capital for research and development for our vaccine candidates and clinical trials. The general
economic and capital market conditions, both in the U.S. and worldwide, have been volatile in the past and at times have adversely
affected our access to capital and increased the cost of capital. There is no certainty that the capital and credit markets will be available
to raise additional capital on favorable terms. If economic conditions become worse, our future cost of equity or debt capital and access
to the capital markets could be adversely affected. In addition, if we are unable to access the capital markets on favorable terms, our
ability to execute our business plan as scheduled would be compromised. Moreover, we rely and intend to rely on third-parties, including
clinical research organizations, contract manufacturing organizations and other important vendors and consultants. Global economic conditions
may result in a disruption or delay in the performance of our third-party contractors and suppliers. If such third-parties are unable
to adequately satisfy their contractual commitments to us in a timely manner, our business could be adversely affected.
Risks Related to Our Intellectual Property
It is difficult and costly to protect our proprietary rights,
and we may not be able to ensure their protection. If our patent position does not adequately protect our product candidates, others could
compete against us more directly, which would harm our business, possibly materially.
Our commercial success will depend in part on obtaining
and maintaining patent protection and trade secret protection of our current product candidates and future product candidates, the processes
used to manufacture them and the methods for using 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 product candidates is dependent upon
the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.
The patent positions of biotechnology and pharmaceutical
companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved.
No consistent policy regarding the breadth of claims allowed in pharmaceutical patents has emerged to date in the U.S. or in foreign
jurisdictions outside of the U.S. Changes in either the patent laws or interpretations of patent laws in the U.S. and other
countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be enforced
in the patents that may be issued from the applications we currently license or may in the future own or license from third parties. Further,
if any patents we obtain or license are deemed invalid and unenforceable, our ability to commercialize or license our product candidates
or technology could be adversely affected.
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Others may file patent applications covering products
and technologies that are similar, identical or competitive to ours or important to our business. We cannot be certain that any patent
application owned by a third party will not have priority over patent applications filed or in-licensed by us, or that we or our
licensors will not be involved in interference, opposition, re-examination, review, reissue, post grant review or invalidity proceedings
before U.S. or non-U.S. patent offices. Such proceedings are also expensive and time consuming.
The degree of future protection for our proprietary
rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain
or keep our competitive advantage. For example:
● others may be able to make compounds that are similar to
our product candidates, but that are not covered by the claims of our licensed patents;
● any patents that we obtain from licensing or otherwise may
not provide us with any competitive advantages;
● any granted patents that we rely upon may be held invalid
or unenforceable as a result of legal challenges by third parties; and
● the patents of others may have an adverse effect on our business.
We are dependent on licensed intellectual property. If we were
to lose our rights to licensed intellectual property, we may not be able to continue developing or commercializing our product candidates,
if approved. If we breach any of the agreements under which we license the use, development and commercialization rights to our product
candidates or technology from third parties or, in certain cases, we fail to meet certain development deadlines, we could lose license
rights that are important to our business.
We do not currently own any patents, and we are
heavily reliant upon a number of license agreements under which we are granted rights to intellectual property that are important to our
business and we may need or choose to enter into additional license agreements in the future. Our existing license agreements impose,
and we expect that future license agreements will impose on us, various development, regulatory and/or commercial diligence obligations,
payment of milestones and/or royalties and other obligations. If we fail to comply with our obligations under these agreements, or we
are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to market products
covered by the license. Our business could suffer, for example, if any current or future licenses terminate, if the licensors fail to
abide by the terms of the license, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable
to enter into necessary licenses on acceptable terms.
Licensing of intellectual property is of critical
importance to our business and involves complex legal, business and scientific issues. Disputes may arise between us and our licensors
regarding intellectual property subject to a license agreement, including:
● the scope of rights granted under the license agreement and
other interpretation-related issues;
● whether and the extent to which our technology and processes
infringe on intellectual property of the licensor that is not subject to the licensing agreement;
● our right to sublicense patent and other rights to third
parties;
● our diligence obligations with respect to the use of the
licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those
diligence obligations;
● our obligation to pursue or license others to pursue development
of indications we are not currently pursuing;
● the ownership of inventions and know-how resulting from the
joint creation or use of intellectual property by our licensors and us and our partners;
● our right to transfer or assign the license; and
● the effects of termination.
If disputes over intellectual property that we have
licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully
develop and commercialize the affected product candidates.
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We have entered into several licenses to support
our various programs. Termination of any of these license agreements would have a material adverse impact on our ability to develop and
commercialize derived products under each respective agreement.
We may enter into additional licenses to third-party
intellectual property that are necessary or useful to our business. Our current licenses and any future licenses that we may enter into
impose various royalty payment, milestone, and other obligations on us. Under some license agreements, we may not control prosecution
of the licensed intellectual property, or may not have the first right to enforce the intellectual property. In those cases, we may not
be able to adequately influence patent prosecution or enforcement, or prevent inadvertent lapses of coverage due to failure to pay maintenance
fees. If we fail to comply with any of our obligations under a current or future license agreement, the licensor may allege that we have
breached our license agreement, and may accordingly seek to terminate our license. Termination of any of our current or future licenses
could result in our loss of the right to use the licensed intellectual property, which could materially adversely affect our ability to
develop and commercialize a product candidate or product, if approved, as well as harm our competitive business position and our business
prospects. Under some license agreements, termination may also result in the transfer of or granting in rights under certain of our intellectual
property and information related to the product candidate being developed under the license, such as regulatory information.
The agreements under which we license intellectual
property or technology to or from third parties are complex, and certain provisions in such agreements may be susceptible to multiple
interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope
of our rights to the relevant intellectual property or technology or increase what we believe to be our financial or other obligations
under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations
and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current
licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product
candidates
In addition, if our licensors fail to abide by the
terms of the license, if the licensors fail to prevent infringement by third parties, if the licensed patents or other rights are found
to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms, our business could suffer. Moreover,
our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims,
regardless of their merit, that we are infringing, misappropriating or otherwise violating the licensor’s rights.
Similarly, if we are unable to successfully obtain
rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may have
to seek alternative options, such as developing new product candidates with design-around technologies, which may require more time and
investment, or abandon development of the relevant research programs or product candidates and our business, financial condition, results
of operations and prospects could suffer.
Some of the intellectual property covered by our licenses concerns
patent applications and provisional applications. We cannot assure investors that any of the currently pending or future patent applications
will result in granted patents, nor can we predict how long it will take for such patents to be granted.
Some of intellectual property covered by our licenses
concerns certain, specified patent rights (including patent applications, provisional patent applications and PCT patent applications).
While in some instances, the licensors have agreed to assume responsibility for the preparation, filing, prosecution and maintenance of
patent applications covered by the licensed patent rights, we cannot be certain as to when or if final patents will be issued for those
patent applications covered by the licensed patent rights. However, the licensors may not successfully prosecute certain patent applications,
the prosecution of which they control, under which we are only a licensee and on which our business substantially depends. Even if patents
issue from these applications, there is no assurance that the patents will be free from defects or survive validity or enforceability
challenges, the licensors may fail to maintain these patents, may decide not to pursue litigation against third-party infringers, may
fail to prove infringement or may fail to defend against counterclaims of patent invalidity or unenforceability.
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Moreover, it is possible that the licensed pending
patent applications will not result in granted patents, and even if such pending patent applications grant as patents, they may not provide
a basis for intellectual property protection of commercially viable vaccine products or may not provide us with any competitive advantages.
Further, it is possible that, for any of the patents that may be granted in the future, others will design around the licensed patent
rights or identify methods for preventing or treating infectious diseases that do not concern the rights covered by our licenses. Further,
we cannot assure investors that other parties will not challenge any patents granted to the licensors or that courts or regulatory agencies
will hold licensor’s patents to be valid or enforceable. We cannot guarantee investors that, if required to defend the covered patents,
we will have the funds to or be successful in defending challenges made against the licensed patents and patent applications. Any successful
third-party challenge to the licensed patents could result in the unenforceability or invalidity of such patents, or to such patents being
interpreted narrowly or otherwise in a manner adverse to our interests. Our ability to establish or maintain a technological or competitive
advantage over our competitors may be diminished because of these uncertainties.
Even if patents are issued based on patent applications to which
we have been granted a license, because the patent positions of pharmaceutical and biotechnology products are complex and uncertain, we
cannot predict the scope and extent of patent protection for our product candidates.
Any patents that may be issued based on patent applications
that we have been granted licenses to will not ensure sufficient protection with respect to our activities for a number of reasons, including
without limitation the following:
● any issued patents may not be broad or strong enough to prevent
competition from other vaccine products including identical or similar products;
● if patents are not issued or if issued patents expire, there
would be no protections against competitors making generic equivalents;
● there may be prior art of which we are not aware that may
affect the validity or enforceability of a patent claim;
● there may be other patents existing, now or in the future,
in the patent landscape for our product candidates that we seek to commercialize or develop, if any, that will affect our freedom to
operate;
● if patents that we have been granted licenses to are challenged,
a court could determine that they are not valid or enforceable;
● a court could determine that a competitor’s technology
or product does not infringe patents that we have been granted licenses to;
● patents to which we have been granted licenses could irretrievably
lapse due to failure to pay fees or otherwise comply with regulations, or could be subject to compulsory licensing; and
● if we encounter delays in our development or clinical trials,
the period of time during which we could market our products under patent protection would be reduced.
Obtaining and maintaining patent protection depends on compliance
with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and patent protection
could be reduced or eliminated for noncompliance with these requirements.
Periodic maintenance fees on any issued patent are
due to be paid to the United States Patent and Trademark Office (USPTO) and foreign Intellectual Property Offices in several stages
over the term of the patent. Maintenance fees are also due for pending patent applications in some countries. The USPTO and various foreign
governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during
the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance
with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application,
resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment
or lapse of a patent or patent application include, but are not limited to, failure to respond to office actions within prescribed time
limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, our competitors might be able
to enter the market, which would have a material adverse effect on our business.
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The life of patent protection is limited, and third parties could
develop and commercialize products and technologies similar or identical to ours and compete directly with us after the patent licensed
to us expires, which could materially and adversely affect our ability to commercialize our products and technologies.
The life of a patent and the protection it affords
is limited. For example, in the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally
20 years from its earliest U.S. non-provisional filing date. In Europe, the expiration of an invention patent is 20 years
from its filing date. Even if we successfully obtain patent protection for an approved vaccine candidate, it may face competition from
biosimilar medications. Manufacturers of biosimilar drugs may challenge the scope, validity or enforceability of the patents underlying
our technology in court or before a patent office, and the patent holder may not be successful in enforcing or defending those intellectual
property rights and, as a result, we may not be able to develop or market the relevant product candidate exclusively, which would materially
adversely affect any potential sales of that product.
Given the amount of time required for the development,
testing and regulatory review of new vaccine candidates, patents protecting such vaccine candidates might expire before or shortly after
such vaccine candidates are commercialized. As a result, the patents and patent applications licensed to us may not provide us with sufficient
rights to exclude others from commercializing products similar or identical to ours. Even if we believe that the patents involved are
eligible for certain (and time-limited) patent term extensions, there can be no assurance that the applicable authorities, including the
FDA and the USPTO, and any equivalent regulatory authority in other countries, will agree with our assessment of whether such extensions
are available, and such authorities may refuse to grant extensions to such patents, or may grant more limited extensions than requested.
For example, depending upon the timing, duration and specifics of any FDA marketing approval of any product candidates we may develop,
one or more of the U.S. patents licensed to us may be eligible for limited patent term extension under the Drug Price Competition
and Patent Term Restoration Action of 1984, or Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent extension term of
up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot extend
the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and
only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. However, we may
not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process,
failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy
applicable requirements.
Moreover, the applicable time period or the scope
of patent protection afforded could be less than requested. If we are unable to obtain patent term extension or term of any such extension
is less than requested, our competitors may obtain approval of competing products following our patent expiration, and our business could
be harmed. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish
the value of our patents or narrow the scope of our patent protection.
The patents and pending patent applications licensed
to us for our product candidates are expected to expire on various dates. Upon the expiration, we will not be able to assert such licensed
patent rights against potential competitors, which would materially adversely affect our business, financial condition, results of operations
and prospects.
We may need to license intellectual property from third parties,
and such licenses may not be available or may not be available
on commercially reasonable terms or at all.
There may be intellectual property rights existing
now, or in the future, relevant to our product candidates that we seek to commercialize or develop, if any, that may affect our ability
to commercialize such product candidates. Although the Company is not aware of any such intellectual property rights, a third-party may
hold intellectual property rights, including patent rights, that are important or necessary to the development or manufacture of our product
candidates. Even if all our main product candidates are covered by patents, it may be necessary for us to use the patented or proprietary
technology of third parties to commercialize our product candidates, in which case we would be required to obtain a license from these
third parties. Such a license may not be available on commercially reasonable terms, or at all, and we could be forced to accept unfavorable
contractual terms. In that event, we may be required to expend significant time and resources to redesign our technology, product candidates,
or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical
or commercial basis. If we are unable to do so, our business could be harmed.
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The licensing or acquisition of third-party intellectual
property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third party
intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage
over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies
that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third
party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all. If we are unable
to successfully obtain rights to required third party intellectual property rights or maintain the existing intellectual property rights
we have, we may have to abandon development of the relevant program or product candidate, which could have a material adverse effect on
our business, financial condition, results of operations, and prospects.
We may infringe the intellectual property rights of others, which
may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing our product
candidates.
Our success will depend in part on our ability to
operate without infringing the proprietary rights of third parties. We are not aware of any third party proprietary rights that our planned
products will infringe or misappropriate, but we have not conducted any freedom to operate study as we are in the earliest stages of development.
We thus cannot guarantee that our product candidates, or manufacture or use of our product candidates, will not infringe third-party patents.
Furthermore, a third party may claim that we are using inventions covered by the third party’s patent rights and may go to court
to stop us from engaging in our normal operations and activities, including making or selling our product candidates. These lawsuits are
costly and could affect our results of operations and divert the attention of managerial and scientific personnel. Some of these third
parties may be better capitalized and have more resources than us. There is a risk that a court would decide that we are infringing the
third party’s patents and would order us to stop the activities covered by the patents. In that event, we may not have a viable
way around the patent and may need to halt commercialization of our product candidates. In addition, there is a risk that a court will
order us to pay the other party damages for having violated the other party’s patents. In addition, we may be obligated to indemnify
our licensors and collaborators against certain intellectual property infringement claims brought by third parties, which could require
us to expend additional resources. The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is
not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage
of patents is subject to interpretation by the courts, and the interpretation is not always uniform.
If we are sued for patent infringement, we would
need to demonstrate that our product candidates or methods either do not infringe the patent claims of the relevant patent or that the
patent claims are invalid, and we may not be able to do this. Proving invalidity is difficult. For example, in the U.S., proving invalidity
requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are
successful in these proceedings, we may incur substantial costs and diversion of management’s time and attention in pursuing these
proceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may
be required to seek a license, which may not be available, defend an infringement action or challenge the validity of the patents in court.
Patent litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion.
In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully
or have infringed patents declared invalid, we may incur substantial monetary damages, encounter significant delays in bringing our product
candidates to market and be precluded from manufacturing or selling our product candidates.
Some of our competitors may be able to sustain the
costs of complex patent litigation more effectively than us or the third parties from whom we license intellectual property because they
have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation
could have a material adverse effect on our ability to raise the funds necessary to continue our operations.
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We may become involved in lawsuits to protect or enforce our
intellectual property, which could be expensive, time consuming and unsuccessful.
In addition to the possibility of litigation relating
to infringement claims asserted against it, we may become a party to other patent litigation and other proceedings, including inter
partes review proceedings, post-grant review proceedings, derivation proceedings declared by the USPTO and similar proceedings in
foreign countries, regarding intellectual property rights with respect to our current or future technologies or product candidates or
products. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our
competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially
greater financial resources. Patent litigation and other proceedings may also absorb significant management time. Uncertainties resulting
from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace.
Competitors may infringe or otherwise violate our
intellectual property, including patents that may issue to or be licensed by us. As a result, we may be required to file claims in an
effort to stop third-party infringement or unauthorized use. Any such claims could provoke these parties to assert counterclaims against
us, including claims alleging that we infringe their patents or other intellectual property rights, and/or that any of our intellectual
property, including licensed intellectual property, is invalid and/or unenforceable. This can be prohibitively expensive, particularly
for a company of our size, and time-consuming, and even if we are successful, any award of monetary damages or other remedy we may receive
may not be commercially valuable. In addition, in an infringement proceeding, a court may decide that our asserted intellectual property
is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our intellectual
property does not cover its technology. An adverse determination in any litigation or defense proceedings could put our intellectual property
at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.
If the breadth or strength of our patent or other
intellectual property rights is compromised or threatened, it could allow third parties to exploit and, in particular, commercialize our
technology or products or result in our inability to exploit and/or commercialize our technology and products without infringing third-party
intellectual property rights. Further, third parties may be dissuaded from collaborating with us.
Interference or derivation proceedings brought by
the USPTO or its foreign counterparts may be necessary to determine the priority of inventions with respect to our patent applications,
and we may also become involved in other proceedings, such as re-examination proceedings, before the USPTO or its foreign counterparts.
Due to the substantial competition in the pharmaceutical space, the number of such proceedings may increase. This could delay the prosecution
of our pending patent applications or impact the validity and enforceability of any future patents that we may obtain. In addition, any
such litigation, submission or proceeding may be resolved adversely to us and, even if successful, may result in substantial costs and
distraction to our management.
If we are not able to adequately prevent disclosure of trade
secrets and other proprietary information, the value of our technology and product could be significantly diminished.
We also rely on trade secrets to protect our proprietary
technologies, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult
to protect. We rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsored
researchers and other advisors to protect our trade secrets and other proprietary information. These agreements may not effectively prevent
disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential
information. In addition, others may independently discover our trade secrets and proprietary information. For example, the FDA, as part
of its transparency initiative, is currently considering whether to make additional information publicly available on a routine basis,
including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time
how the FDA’s disclosure policies may change in the future, if at all. Costly and time-consuming litigation could be necessary
to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely
affect our competitive business position.
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We may be subject to claims that our employees or consultants
have wrongfully used or disclosed alleged trade secrets.
As is common in the biotechnology and pharmaceutical
industries, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors
or potential competitors. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of
others in their work for us, we may be subject to claims that we or our employees or consultants have inadvertently or otherwise used
or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these
claims. If we fail in defending any such claims, in addition to paying monetary damages, we could lose valuable intellectual property
rights or personnel, which could adversely impact our business. Even if we are successful in defending against these claims, litigation
could result in substantial costs and be a distraction to management.
Our intellectual property may not be sufficient to protect our
product candidates from competition, which may negatively affect our business as well as limit our partnership or acquisition appeal.
We may be subject to competition despite the existence
of intellectual property we license or may in the future own. We can give no assurances that our intellectual property claims will be
sufficient to prevent third parties from designing around patents we own or license and developing and commercializing competitive products.
The existence of competitive products that avoid our intellectual property could materially adversely affect our operating results and
financial condition. Furthermore, limitations, or perceived limitations, in our intellectual property may limit the interest of third
parties to partner, collaborate or otherwise transact with us, if third parties perceive a higher than acceptable risk to commercialization
of our product candidates or future product candidates.
We may elect to sue a third party, or otherwise
make a claim, alleging infringement or other violation of patents, trademarks, trade dress, copyrights, trade secrets, domain names or
other intellectual property rights that we either own or license from a third party. If we do not prevail in enforcing our intellectual
property rights in this type of litigation, we may be subject to:
● paying monetary damages related to the legal expenses of
the third party;
● facing additional competition that may have a significant
adverse effect on our product pricing, market share, business operations, financial condition, and the commercial viability of our product;
and
● restructuring our company or delaying or terminating select
business opportunities, including, but not limited to, research and development, clinical trial, and commercialization activities, due
to a potential deterioration of our financial condition or market competitiveness.
A third party may also challenge the validity, enforceability
or scope of the intellectual property rights that we license or own and the result of these challenges may narrow the scope or claims
of or invalidate patents that are integral to our product candidates in the future. There can be no assurance that we will be able to
successfully defend patents we own or license in an action against third parties due to the unpredictability of litigation and the high
costs associated with intellectual property litigation, amongst other factors.
Intellectual property rights may be less extensive
and enforcement more difficult in jurisdictions outside of the U.S. Therefore, we may not be able to protect our intellectual property
and third parties may be able to market competitive products that may use some or all of our intellectual property.
Changes to patent law, including the Leahy-Smith America
Invests Act of 2011 and the Patent Reform Act of 2009 and other future article of legislation, may substantially change
the regulations and procedures surrounding patent applications, issuance of patents and prosecution of patents. We can give no assurances
that the patents of our licensor can be defended or will protect us against future intellectual property challenges, particularly as they
pertain to changes in patent law and future patent law interpretations.
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Risks Related to Healthcare Compliance and Other Regulations
If we fail to comply with healthcare regulations, we could face
substantial enforcement actions, including civil and criminal penalties and our business, operations and financial condition could be
adversely affected.
We could be subject to healthcare fraud and abuse
laws and patient privacy laws of both the federal government and the states in which we conduct our business. The laws include:
● the federal healthcare program anti-kickback law, which prohibits,
among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral
of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal
healthcare programs such as the Medicare and Medicaid programs;
● federal false claims laws which prohibit, among other things,
individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party
payers that are false or fraudulent, and which may apply to entities like us which provide coding and billing information to customers;
● HIPAA which prohibits executing a scheme to defraud any healthcare
benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating to the
privacy, security and transmission of individually identifiable health information;
● the FDCA which among other things, strictly regulates drug
manufacturing and product marketing, prohibits manufacturers from marketing drug products for off-label use and regulates
the distribution of drug samples; and
● state law equivalents of each of the above federal laws,
such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial
insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from
each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts.
If our operations are found to be in violation of
any of the laws described above or any governmental regulations that apply to us, we may be subject to penalties, including civil and
criminal penalties, damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment
or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Although compliance
programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated.
Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal
expenses and divert management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with
applicable federal and state privacy, security and fraud laws may prove costly.
Healthcare reform in the United States has been implemented
in the past, and we expect further changes to be proposed in the future, leading to potential uncertainty in the healthcare industry.
Violations of healthcare laws can have an adverse impact on our ability to advance our product candidates and our operating results.
In the United States, there have been, and
continue to be, a number of legislative and regulatory changes and proposed changes to the healthcare system that could affect the future
results of pharmaceutical manufactures’ operations. In particular, there have been and continue to be a number of initiatives at
the federal and state levels that seek to reduce healthcare costs. For example, the Affordable Care Act, or the ACA, which was originally
enacted in March 2010 and subsequently amended, includes measures to significantly change the way healthcare is financed by both
governmental and private insurers. Among the provisions of the ACA of greatest importance to the pharmaceutical and biotechnology industry
are the following:
● an annual, nondeductible fee on any entity that manufactures
or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in
certain government healthcare programs;
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● implementation of the federal physician payment transparency
requirements, sometimes referred to as the “Physician Payments Sunshine Act”;
● a licensure framework for follow-on biologic products;
● a new Patient-Centered Outcomes Research Institute to oversee,
identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;
● establishment of a Center for Medicare Innovation at the
Centers for Medicare & Medicaid Services to test innovative payment and service delivery models to lower Medicare and Medicaid
spending, potentially including prescription drug spending;
● an increase in the statutory minimum rebates a manufacturer
must pay under the Medicaid Drug Rebate Program, to 23.1% and 13% of the average manufacturer price for most branded and generic drugs,
respectively and capped the total rebate amount for innovator drugs at 100% of the Average Manufacturer Price;
● a new methodology by which rebates owed by manufacturers
under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics, including our product candidates, that are inhaled,
infused, instilled, implanted or injected;
● extension of manufacturers’ Medicaid rebate liability
to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;
● 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 individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid
rebate liability;
● 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 the manufacturer’s outpatient drugs to be covered under Medicare
Part D; and
● expansion of the entities eligible for discounts under the
Public Health program.
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