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Item 1A. Risk Factors

2021-03-18 compared with 2020-02-18 · 200 added, 180 removed, 526 unchanged (42% of the section changed)

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You should carefully consider the risks described below as well as other information and data included in this report.

Summary of Risk Factors

Below is a summary of the principal factors that make an investment in our common stock speculative or risky.

This summary does not address all of the risks that we face.

Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.

if we are not able to successfully develop, obtain FDA approval for, and provide for the commercialization of rNAPc2 or Gencaro in a timely manner, we may not be able to continue our business operations;

if we encounter difficulties enrolling patients in our clinical trials, any potential enrollment milestones or potential regulatory approvals could be delayed or otherwise adversely affected;

our clinical trials for our product candidates may not yield results that will enable us to further develop our products and obtain regulatory approvals necessary to sell them;

we may not achieve our projected development goals in the time frames we announce and expect;

we expect the PRECISION-AF clinical trial will require substantially more capital to complete, and we cannot guarantee when or if we will be able to secure such additional financing;

we will need to raise substantial additional funds through public or private equity or debt transactions and/or complete one or more strategic transactions, to continue development of rNAPc2, Gencaro or any of our other product candidates.

If we are unable to raise such financing or complete such a transaction, we may not be able to continue operations;

if we are not able to maintain the requirements for listing on the Nasdaq Capital Market, we could be delisted, which could have a material adverse effect on our ability to raise additional funds as well as the price and liquidity of our common stock;

our business could be adversely affected by the effects of health epidemics, including the ongoing COVID-19 global pandemic, in regions where we or third parties on which we rely may have clinical trial sites or other business operations.

we depend or may depend on third parties to conduct clinical trials and provide diagnostic information, as well as to develop, commercialize and/or manufacture our product candidates;

unless we are able to generate sufficient product revenue, we will continue to incur losses from operations and will not achieve or maintain profitability.

We are years away from commercializing a product and generating product revenue;

our product candidates are subject to extensive regulation, which can be costly and time-consuming, and unsuccessful or delayed regulatory approvals could increase our future development costs or impair our future revenue;

if our product candidates receive regulatory approval, we would be subject to ongoing regulatory obligations and restrictions, which may result in significant expenses and limit our ability to develop and commercialize other potential products;

transitioning from a clinical development stage company will require successful completion of a number of steps, many of which are outside of our control and, consequently, we can provide no assurance of our successful and timely transition from a clinical development stage company;

if approved by the FDA, rNAPc2 or Gencaro will be entering a competitive marketplace and may not succeed;

if we fail to identify and license or acquire other products or product candidates, then we may be unable to expand our business, and the acquisition or licensing of other products or product candidates may put a strain on our operations and will likely require us to seek additional financing;

the loss of any rights to market key products would significantly impair our operating results;

third parties may own or control patents or patent applications that we may be required to license to commercialize our product candidates or that could result in litigation that would be costly and time consuming;

our intellectual property rights may not preclude competitors from developing competing products and our business may suffer .

Risks Related to Our Business and Financial Condition

We will need to raise substantial additional funds through public or private equity transactions and/or complete one or more strategic transactions, to continue development of Gencaro or any of our other product candidates.

If we are not able to successfully develop, obtain FDA approval for, and provide for the commercialization of rNAPc2 or Gencaro in a timely manner, we may not be able to continue our business operations.

We currently have no products that have received regulatory approval for commercial sale.

The process to develop, obtain regulatory approval for and commercialize potential product candidates is long, complex and costly.

Failure to demonstrate that a product candidate, including rNAPc2 or Gencaro, is safe and effective, or significant delays in demonstrating such safety and efficacy, would adversely affect our business.

Failure to obtain marketing approval of rNAPc2 or Gencaro from appropriate regulatory authorities, or significant delays in obtaining such approval, would also adversely affect our business and could, among other things, preclude us from completing a strategic transaction or obtaining additional financing necessary to continue as a going concern.

Even if approved for sale, a product candidate must be successfully commercialized to generate value.

We do not currently have the capital resources or management expertise to commercialize rNAPc2, Gencaro or any of our other product candidates and, as a result, will need to complete a strategic transaction, or, alternatively, raise substantial additional funds to enable commercialization of rNAPc2, Gencaro or any of our other product candidates, if approved.

Failure to successfully provide for the commercialization of rNAPc2, Gencaro or any other product candidate, if approved, would damage our business.

If we encounter difficulties enrolling patients in our clinical trial of rNAPc2, any potential enrollment milestones or potential regulatory approvals could be delayed or otherwise adversely affected.

We may encounter difficulty enrolling a sufficient number of patients in the trial, due to circumstances which are outside our control, including improvements in the COVID-19 pandemic resulting from the development of vaccines and therapies, as well as other clinical trials or capacity constraints at potential COVID-19 clinical trial sites, that may limit the availability of study participants.

As a result, we may need to delay or terminate our trial, which would have a negative impact on our business.

Delays in enrolling patients in the clinical trial of rNAPc2 would also adversely affect our ability to meet projected enrollment milestones or timelines for completing the study and obtaining regulatory approval.

Development of other COVID-19 targeted therapies may mean there are no patients who need rNAPc2 as a therapy.

rNAPc2 may not yield results that will enable us to further develop it as a therapy and obtain regulatory approvals necessary to be used as a drug.

We will receive regulatory approval for our product candidates only if we can demonstrate, in carefully designed and conducted clinical trials, that the product candidate is safe and effective.

We do not know whether any future clinical trials for rNAPc2, Gencaro or any other product candidate will demonstrate sufficient safety and efficacy to obtain the requisite regulatory approvals or will result in marketable products.

rNAPc2 has never been tested for safety or efficacy in any pre-clinical COVID-19 models or any patients diagnosed with COVID-19.

It may not be effective for any COVID-19 associated diseases.

The results from preclinical testing and early clinical trials may not be predictive of results from later studies, including our studies of rNAPc2 .

We may suffer significant setbacks in advanced clinical trials, even after seeing promising results in earlier studies.

Based on results at any stage of clinical trials, we may decide to repeat or redesign a trial or discontinue development of one or more of our product candidates, including rNAPc2 .

If we fail to adequately demonstrate the safety and efficacy of our rNAPc2, or other product candidates, we will not be able to obtain the required regulatory approvals to commercialize it and our business, results of operations and financial condition would be materially adversely affected.

In addition, administering rNAPc2, or other product candidates, to humans may produce undesirable side effects.

These side effects could interrupt, delay or halt clinical trials of rNAPc2, or other product candidates, and could result in the FDA or other regulatory authorities denying approval of rNAPc2, or other product candidates , for any or all targeted indications.

We may not achieve our projected development goals in the time frames we announce and expect.

We set goals for, and make public statements regarding, the timing of certain accomplishments, such as the initiation of our clinical trials, including rNAPc2 , the duration of the planned rNAPc2 Phase 2b clinical trial, the steps for commencing and continuing our clinical trials, the disclosure of trial results, the obtainment of regulatory approval and the sale of drug products, which we sometimes refer to as milestones.

These milestones may not be achieved, and the actual timing of these events can vary dramatically due to a number of factors such as delays or failures in our clinical trials, disagreements with any collaborative partners, the uncertainties inherent in the regulatory approval process and manufacturing scale-up, delays in achieving manufacturing or marketing arrangements sufficient to commercialize our products or our inability to obtain sufficient financing in a timely manner.

There can be no assurance that we will make regulatory submissions or receive regulatory approvals as planned.

If we fail to achieve one or more of these milestones as planned, our business will be materially adversely affected .

We expect the PRECISION-AF clinical trial will require substantially more capital to complete, and we cannot guarantee when or if we will be able to secure such additional financing.

We have put the potential initiation of the PRECISION-AF trial on hold due to the ongoing COVID-19 pandemic and prioritizing the development of rNAPc2.

Initiation of the PRECISION-AF clinical trial will depend on receiving additional funding and an abatement of the COVID-19 pandemic to the point of being able to recruit patients for a cardiovascular clinical trial.

We will need to secure additional financing in order to initiate enrollment of our Phase 3 PRECISION-AF clinical trial.

Even if we can begin enrolling patients, we expect to have to raise significant additional capital to continue enrollment.

If we are not able to obtain financing in the future or on acceptable terms, we may have to terminate the clinical trial early, which could adversely affect our business.

We will need to raise substantial additional funds through public or private equity or debt transactions and/or complete one or more strategic transactions, to continue development of rNAPc2, Gencaro or any of our other product candidates.

If we are unable to raise such financing or complete such a transaction, we may not be able to continue operations.

In light of the expected development timeline to potentially obtain FDA approval for Gencaro, if at all, the substantial additional costs associated with the development of Gencaro and our other product candidates, including the costs associated with clinical trials related thereto, and the substantial cost of commercializing Gencaro, if it is approved, we will need to raise substantial additional funding through public or private equity or debt transactions or a strategic combination or partnership.

If we are delayed in obtaining funding or are unable to complete a strategic transaction, we may discontinue our development activities on Gencaro and our other product candidates or discontinue our operations.

Even if we are able to fund continued development and Gencaro or any of our other product candidates is approved, we expect that we will need to complete a strategic transaction or raise substantial additional funding through public or private debt or equity securities to successfully commercialize Gencaro or any other product candidate.

We believe our cash and cash equivalents balance as of December 31, 2019 will be sufficient to fund our operations, at our projected cost structure, after giving effect to potential cost reductions, through the end of the third quarter of 2020.

In 2017, we entered into a sales agreement with an agent to sell, from time to time, our common stock pursuant to which we have sold an aggregate of 1,087,858 shares of our common stock, for aggregate gross proceeds of approximately $17.4 million.

Net proceeds received in this offering were approximately $16.4 million, after deducting initial expenses for executing the “at the market offering” and commissions paid to the placement agent.

In light of the expected development timeline to potentially obtain FDA approval for rNAPc2 or Gencaro, if at all, the substantial additional costs associated with the development of our product candidates, including the costs associated with clinical trials related thereto, and the substantial cost of commercializing rNAPc2 or Gencaro, if approved, we will need to raise substantial additional funding through public or private equity or debt transactions or a strategic combination or partnership.

If we are delayed in obtaining funding or are unable to complete a strategic transaction, we may discontinue our development activities on rNAPc2, Gencaro and our other product candidates or discontinue our operations.

Even if we are able to fund continued development of rNAPc2, Gencaro or any of our other product candidates is approved, we expect that we will need to complete a strategic transaction or raise substantial additional funding through public or private equity or debt securities to successfully commercialize rNAPc2, Gencaro or any other product candidate.

We believe our cash and cash equivalents as of December 31, 2020 , together with the $23.3 million of net proceeds raised through February 2021 from sales of our common stock, will be sufficient to fund our operations through the end of fiscal year 2022.

Conducting a Phase 3 rNAPc2 clinical trial or the Phase 3 PRECISION-AF trial would likely require additional financing .

On July 22, 2020, we entered into a new sales agreement with a placement agent to sell, from time to time, our common stock having an aggregate offering price of up to $54.0 million, in an “at the market offering.” As of December 31, 2020, we sold an aggregate of 5,066,279 shares of our common stock pursuant to the terms of such sales agreement for aggregate gross proceeds of approximately $29.9 million.

Net proceeds received in this offering were approximately $28.9 million, after deducting expenses for executing the “at the market offering” and commissions paid to the placement agent.

Sales of our common stock dilute the ownership interest of our stockholders and may cause the price per share of our common stock to decrease.

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We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available financial resources sooner than we currently anticipate .

Additionally, in March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic.

This outbreak is causing major disruptions to businesses and markets worldwide as the virus spreads.

The economic uncertainty surrounding the COVID-19 pandemic may dramatically reduce our ability to secure equity or debt financing necessary to support our operations.

We are unable to currently estimate the financial effect of the pandemic.

If the pandemic continues to be a severe worldwide crisis, economic conditions may cause capital not to be available to us, or not be available on acceptable terms, regardless of our business efforts.

We have put the potential initiation of the PRECISION-AF clinical trial on hold due to the ongoing COVID-19 pandemic and prioritizing the development of rNAPc2.

Our liquidity, and our ability to raise additional capital or complete any strategic transaction, depends on a number of factors, including, but not limited to, the following:

the costs and timing for potential additional clinical trials in order to gain possible regulatory approval for Gencaro and our other product candidates;

the costs and timing for potential additional clinical trials in order to gain possible regulatory approval for rNAPc2, Gencaro and our other product candidates;

the market price of our stock and the availability and cost of additional equity capital from existing and potential new investors;

our ability to retain the listing of our common stock on the Nasdaq Capital Market;

general economic and industry conditions affecting the availability and cost of capital;

general economic and industry conditions affecting the availability and cost of capital, including as a result of the COVID‑19 pandemic;

our ability to control costs associated with our operations;

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Should strategic alternatives or additional capital not be available to us, or not be available on acceptable terms, we may be unable to realize value from our assets and discharge our liabilities in the normal course of business which may, among other alternatives, cause us to further delay, substantially reduce or discontinue operational activities to conserve our cash resources.

Our management and our independent registered public account ing firm , in their report on our financial statements as of and for the fiscal year ended December 31, 201 9 , have concluded that due to our need fo r additional capital, and the uncertainties surrounding our ability to raise such funding, substantial doubt exists as to our ability to continue as a going concern .

Our audited financial statements for the fiscal year ended December 31, 2019 were prepared assuming that we will continue as a going concern.

The going concern basis of presentation assumes that we will continue in operation for the foreseeable future and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from our inability to continue as a going concern.

Our management and our independent registered public accounting firm concluded as of December 31, 2019 that due to our need for additional capital and the uncertainties surrounding our ability to raise such funding, substantial doubt exists as to our ability to continue as a going concern for a period from one year after our financial statements have been issued.

We cannot be certain that we will be able to make any other sale of our common stock in any future offering to cover our future capital needs, or at all.

Changing circumstances may cause us to consume capital significantly faster or slower than we currently anticipate.

If we are delayed in completing or are unable to complete additional funding and/or a strategic transaction, we may discontinue our development activities or operations, but there are no assurances that these reductions would be sufficient to allow us to continue to operate as a going concern.

Therefore, even if we resolve this uncertainty, our independent registered public accountants and/or management could conclude that uncertainty as to our ability to continue as a going concern could exist at a future date.

We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available financial resources sooner than we currently anticipate.

We may be forced to reduce our operating expenses and raise additional funds to meet our working capital needs, principally through the additional sales of our securities or debt financings.

However, we cannot guarantee that we will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to us.

If we are unable to raise sufficient additional capital or complete a strategic transaction, we may be unable to continue to fund our operations, develop Gencaro or our other product candidates, or realize value from our assets and discharge our liabilities in the normal course of business.

If we cannot raise sufficient funds, we may have to liquidate our assets, and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock.

If we are not able to successfully develop, obtain FDA approval for, and provide for the commercialization of Gencaro in a timely manner, we may not be able to continue our business operations.

We currently have no products that have received regulatory approval for commercial sale.

The process to develop, obtain regulatory approval for and commercialize potential product candidates is long, complex and costly.

For instance, we began screening patients for our Phase 2B GENETIC-AF clinical trial in April 2014 and enrolled our first patient in June 2014.

Enrollment was completed in August 2017 having randomized 267 HF patients with AF.

The Phase 2B clinical trial completed the patient treatment phase in December 2017 and we reported top-line data in February 2018 .

We received guidance from the FDA following an End-of-Phase 2 meeting regarding the Phase 3 program for Gencaro as a potential genetically-targeted treatment for AF patients with HF with the beta‑1 389 arginine homozygous genotype.

While, in consultation with the FDA, we developed key elements of the Phase 3 clinical trial needed to support a potential NDA, details of which were confirmed via the FDA SPA process, there is no guarantee that any Phase 3 clinical trial for Gencaro will not be subject to similar enrollment periods as GENETIC‑AF .

Any future development of Gencaro, including initiating the Phase 3 clinical trial, is dependent on obtaining additional financing, even if we enter into a strategic collaboration.

Failure to demonstrate that a product candidate, including Gencaro, is safe and effective, or significant delays in demonstrating such safety and efficacy, would adversely affect our business.

Failure to obtain marketing approval of Gencaro from appropriate regulatory authorities, or significant delays in obtaining such approval, would also adversely affect our business and could, among other things, preclude us from completing a strategic transaction or obtaining additional financing necessary to continue as a going concern.

Even if approved for sale, a product candidate must be successfully commercialized to generate value.

We do not currently have the capital resources or management expertise to commercialize Gencaro or any of our other product candidates and, as a result, will need to complete a strategic transaction, or, alternatively, raise substantial additional funds to enable commercialization of Gencaro or any of our other product candidates, if approved.

Failure to successfully provide for the commercialization of Gencaro or any other product candidate, if approved, would damage our business.

We have re ceive d a n SPA agreement from the FDA relating to our planned Phase 3 program for Gencaro .

We have received an SPA agreement from the FDA relating to our planned Phase 3 program for Gencaro.

This SPA agreement does not guarantee approval of Gencaro or any other particular outcome from regulatory review.

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Even though we obtained an agreement on our SPA, we cannot assure you that our planned Phase 3 clinical trial will succeed, will be deemed binding by the FDA under our SPA agreement, or will result in any FDA approval for Gencaro.

We may also alter the design of the trial to focus on endpoints that are not covered by the SPA.

Moreover, if the FDA revokes or alters its agreement under our SPA, or interprets the data collected from the clinical trial differently than we do, the FDA may not deem the data sufficient to support an application for regulatory approval, which could materially adversely affect our business, financial condition and results of operations.

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In future periods, if we do not meet the minimum stockholders’ equity, minimum closing bid price requirements, or any other listing requirements, we would be subject to delisting from the Nasdaq Capital Market.

As of February 13, 2020, the closing price of our common stock was $5.48 per share, and the total market value of our listed securities was approximately $8.7 million.

As of March 16, 2021, the closing price of our common stock was $4.21 per share, and the total market value of our listed securities was approximately $60.7 million.

As of December 31, 2020, we had stockholders’ equity of $46.5 million.

Our audited financial statements for the fiscal year ended December 31, 2020 were prepared assuming that we will continue as a going concern.

Our management has concluded that due to our need for additional capital, and the uncertainties surrounding our ability to raise such funding, there may be uncertainty about our ability to continue as a going concern in future years.

Our audited financial statements for the fiscal year ended December 31, 2020 were prepared assuming that we will continue as a going concern.

As of December 31, 2019, our management and our independent registered public accounting firm concluded that, due to our need for additional capital and the uncertainties surrounding our ability to raise such funding, substantial doubt existed as to our ability to continue as a going concern for a period from one year after our annual financial statements had been issued.

Conducting a Phase 3 rNAPc2 clinical trial or the Phase 3 PRECISION-AF trial would likely require additional financing .

We cannot be certain that we will be able to make any other sale of our common stock in any future offering to cover our future capital needs, or at all.

Changing circumstances may cause us to consume capital significantly faster or slower than we currently anticipate.

We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available financial resources sooner than we currently anticipate.

We may be forced to reduce our operating expenses and raise additional funds to meet our working capital needs, principally through the additional sales of our securities or debt financings.

However, we cannot guarantee that we will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to us.

If we are unable to raise sufficient additional capital or complete a strategic transaction, we may be unable to continue to fund our operations, develop rNAPc2, Gencaro or our other product candidates, or realize value from our assets and discharge our liabilities in the normal course of business.

Our business could be adversely affected by the effects of health epidemics, including the ongoing COVID-19 global pandemic, in regions where we or third parties on which we rely may have clinical trial sites or other business operations.

We anticipate having clinical trial sites in countries that have been directly affected by COVID-19 and depend on third party manufacturing operations for various stages of our supply chain.

Our business could be adversely affected by health epidemics, including the ongoing COVID-19 pandemic, in regions where we may have concentrations of future clinical trial sites or other business operations.

If the recent COVID-19 outbreak continues to spread, we may need to further limit operations or implement limitations, including work-from-home policies.

There is a risk that other countries or regions may be less effective at containing COVID-19, or it may be more difficult to contain if the outbreak reaches a larger population or broader geography, in which case the risks described herein could be elevated significantly.

In addition, third party manufacturing of our drug product candidates and suppliers of the materials used in the production of our drug product candidates may be impacted by significant delays or restrictions resulting from the COVID-19 outbreak which may disrupt our supply chain or limit our ability to manufacture drug product candidates for our clinical trials.

The ultimate impact of the COVID-19 outbreak or a similar future 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, 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 COVID-19 situation closely.

If we encounter difficulties enrolling patients in any future clinical trials, our future trials could be delayed or otherwise adversely affected.

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Delays in enrolling patients in any future clinical trials would also adversely affect our ability to generate any product, milestone and royalty revenues under collaboration agreements, if any, and could impose significant additional costs on us or on any future collaborators.

Development beyond our control may impact our ability to enroll patients in an rNAPc2 (AB201) Phase 2b clinical trial, such as the development of vaccines for the SARS-CoV-2 virus or the development of other therapies for COVID-19 disease.

The GENETIC-AF clinical trial required that we identify and enroll a large number of patients with the condition under investigation and the trial enrolled only those patients having a specific genotype, and certain patients who have or are willing to have a Medtronic device implanted for monitoring and recording AFB data.

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We anticipate that any future Phase 3 clinical trial of Gencaro, including PRECISION-AF, may have similar enrollment criteria, and we cannot guarantee that we will not have similar enrollment issues in any future clinical trials.

Our clinical trials for our product candidates may not yield results that will enable us to further develop our products and obtain regulatory approvals necessary to sell them.

We will receive regulatory approval for our product candidates only if we can demonstrate in carefully designed and conducted clinical trials that the product candidate is safe and effective.

We do not know whether any current or future clinical trials for Gencaro or any other product candidate will demonstrate sufficient safety and efficacy to obtain the requisite regulatory approvals or will result in marketable products.

For example, GENETIC-AF was designed as an adaptive trial.

The DSMB conducted a pre-specified interim analysis of study endpoints for efficacy, safety and futility.

Based on the efficacy and safety data of the interim analysis, the DSMB recommended completing the Phase 2B clinical trial with no changes to the trial design, rather than transition GENETIC-AF to a Phase 3 clinical trial.

In February 2018, we announced top-line results of the Phase 2B clinical trial, which indicated that Gencaro demonstrated a similar treatment benefit compared to the active comparator, metoprolol succinate (TOPROL-XL).

We have not determined if these results of GENETIC-AF, and cannot predict if the results from a future Phase 3 clinical trial, even with a SPA agreement, would allow us to obtain regulatory approval for Gencaro.

Clinical trials are lengthy, complex and expensive processes with uncertain results.

We have spent, and expect to continue to spend, significant amounts of time and money in the clinical development of our product candidates.

We have never conducted a Phase 3 clinical trial and have limited staff with the requisite experience to do so.

We therefore rely on contract research organizations, or CROs, to conduct certain aspects of our clinical trial.

While certain of our employees have experience in designing and administering clinical trials, these employees have no such experience as employees of ARCA.

The results we obtain in preclinical testing and early clinical trials may not be predictive of results that are obtained in later studies.

We may suffer significant setbacks in advanced clinical trials, even after seeing promising results in earlier studies.

Based on results at any stage of clinical trials, we may decide to repeat or redesign a trial or discontinue development of one or more of our product candidates.

If we fail to adequately demonstrate the safety and efficacy of our products under development, we will not be able to obtain the required regulatory approvals to commercialize our product candidates, and our business, results of operations and financial condition would be materially adversely affected.

Administering our product candidates to humans may produce undesirable side effects.

These side effects could interrupt, delay or halt clinical trials of our product candidates and could result in the FDA or other regulatory authorities denying approval of our product candidates for any or all targeted indications.

If clinical trials for a product candidate are unsuccessful, we will be unable to commercialize the product candidate.

If one or more of our clinical trials are delayed, we will be unable to meet our anticipated development timelines.

Either circumstance could cause the market price of our common stock to decline.

We will rely on contract research organizations to conduct substantial portions of our clinical trials, including any future clinical trial of Gencaro, and as a result, we will be unable to directly control the timing, conduct and expense of all aspects of our clinical trials .

We may also encounter difficulty enrolling a sufficient number of patients in any future clinical trial, due to circumstances which are outside our control, including as a result of the ongoing COVID-19 pandemic.

See “Our business could be adversely affected by the effects of health epidemics, including the ongoing COVID-19 global pandemic, in regions where we or third parties on which we rely have clinical trial sites or other business operations.

We anticipate having clinical trial sites in countries that have been directly affected by COVID-19 and depend on third party manufacturing operations for various stages of our supply chain” for a discussion of the risks that the COVID-19 pandemic poses to, among other things, our anticipated clinical trials.

We will rely on contract research organizations to conduct substantial portions of our clinical trials, including any future clinical trial of rNAPc2 or Gencaro, and as a result, we will be unable to directly control the timing, conduct and expense of all aspects of our clinical trials.

We do not currently have sufficient staff with the requisite experience to conduct our clinical trials and therefore will rely on third parties to conduct certain aspects of any future clinical trials.

We previously contracted with a CRO to conduct components of our GENETIC-AF clinical trial and anticipate contracting with a CRO to conduct components of any future clinical trial for Gencaro or any future clinical trials for our other product candidates.

We previously contracted with a CRO to conduct components of our GENETIC-AF clinical trial and anticipate contracting with a CRO to conduct components of any future clinical trial for Gencaro and components of the clinical study of rNAPc2 or any future clinical trials for our other product candidates.

As a result, we will have less control over many details and steps of any clinical trial, the timing and completion of any clinical trial, the required reporting of adverse events and the management of data developed through any clinical trial than would be the case if we were relying entirely upon our own staff.

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Due to our limited experience in managing clinical trials, we cannot guarantee our employees will do so effectively.

We may not achieve our projected development goals in the time frames we announce and expect.

We set goals for, and make public statements regarding, the timing of certain accomplishments, such as, the commencement and completion of clinical trials, particularly with respect to steps for commencing and continuing our clinical trials, the disclosure of trial results, the obtainment of regulatory approval and the sale of drug product, which we sometimes refer to as milestones.

For instance, we previously planned to initiate PRECISION-AF in the first quarter of 2020, subject to securing additional financing.

We now plan to initiate enrollment of PRECISION-AF in the fourth quarter of 2020 due to our continued financing needs.

We cannot guarantee if we will be able to secure such financing in order to initiate PRECISION-AF in a timely fashion.

FDA approval of Gencaro or any other product candidate, if it occurs, is expected to require years of additional clinical development, including the completion of genetic trials.

There can be no assurance that we will make regulatory submissions or receive regulatory approvals as planned.

If we fail to achieve one or more of these milestones as planned, our business will be materially adversely affected.

We expect to depend on existing and future collaborations with third parties for the development of some of our product candidates.

If those collaborations are not successful, we may not be able to complete the development of these product candidates.

We intend to collaborate with one or more clinical trial networks in our development program for rNAPc2.

As a result, we will lack direct control over certain aspects of the development program and the amount and timing of resources that these collaborators devote to the project.

We had a collaboration agreement with Medtronic that supported our GENETIC-AF clinical trial.

If our arrangement with Medtronic, as amended, is continued as part of our future development of Gencaro, we will have limited control over the amount and timing of resources that they dedicate to the development of Gencaro.

This is also likely to be true in any future collaboration with third parties and we may seek additional third party collaborators for the development of Gencaro or other product candidates.

This is also likely to be true in any future collaboration with third parties and we may seek additional third party collaborators for the development of rNAPc2, Gencaro or any other product candidates.

Our ability to benefit from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements .

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collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our pro duct candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation;

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We entered into an agreement with LabCorp to provide the diagnostic services of the genetic test needed to support our GENETIC-AF clinical trial.

To provide those services, LabCorp obtained from the FDA an IDE for the companion diagnostic test being used in our GENETIC-AF clinical trial.

To provide those services, LabCorp obtained from the FDA an investigational device exemption, or IDE, for the companion diagnostic test being used in our GENETIC-AF clinical trial.

We would expect a similar agreement and approval would be necessary for any companion diagnostic used in any future clinical trials for Gencaro.

The FDA and similar regulatory authorities outside the United States regulate companion diagnostics.

Companio n diagnostics require separate or coordinated regulatory approval prior to commercialization.

Companion diagnostics require separate or coordinated regulatory approval prior to commercialization.

Changes to regulatory advice could delay our development programs or delay or prevent eventual marketing approval for our product candidates that may otherwise be approvable.

In July 2011, the FDA issued draft guidance that stated that if safe and effective use of a therapeutic depends on an in vitro diagnostic, the FDA generally will not approve the therapeutic unless the FDA approves or clears this “ in vitro comp anion diagnostic device” at the same time that the FDA approves the therapeutic.

In July 2011, the FDA issued draft guidance that stated that if safe and effective use of a therapeutic depends on an in vitro diagnostic, the FDA generally will not approve the therapeutic unless the FDA approves or clears this “ in vitro companion diagnostic device” at the same time that the FDA approves the therapeutic.

The approval or clearance of the companion diagnostic would occur through the FDA’s Center for Devices and Radiological Health.

In 2014, the FDA issued guidance on in vitro co mpanion diagnostic devices.

T he guidance allows for flexibility by the FDA in the case of therapeutic products to treat serious conditions for which no alternative treatment exists and the benefits of using the companion diagnostic outweigh the risk, but i t is unclear how this discretion may be applied by the agency with respect to the companion diagnostic test related to any Gencaro clinical trials .

The FDA’s evolving position on the topic of companion diagnostics could affect our clinical development prog rams that utilize companion diagnostics.

In particular, the FDA may limit our ability to use retrospective data, otherwise disagree with our approaches to trial design, biomarker qualification, clinical and analytical validity, and clinical utility, or mak e us repeat aspects of a trial or initiate new trials.

In 2014, the FDA issued guidance on in vitro companion diagnostic devices.

The guidance allows for flexibility by the FDA in the case of therapeutic products to treat serious conditions for which no alternative treatment exists and the benefits of using the companion diagnostic outweigh the risk, but it is unclear how this discretion may be applied by the agency with respect to the companion diagnostic test related to any Gencaro clinical trials.

The FDA’s evolving position on the topic of companion diagnostics could affect our clinical development programs that utilize companion diagnostics.

In particular, the FDA may limit our ability to use retrospective data, otherwise disagree with our approaches to trial design, biomarker qualification, clinical and analytical validity, and clinical utility, or make us repeat aspects of a trial or initiate new trials.

Given our limited experience in developing diagnostics, we expect to rely primarily on third parties for the design and manufacture of the companion diagnostics for our product candidates.

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Any one of these factors could affect prescriber behavior, which in turn may substantially impede market acceptance of the genetic test, which could cause significant harm to Gencaro’s ability to compete, and in turn harm our business.

Our failure to raise substantial additional funding or enter into a strategic transaction may materially and adversely affect our business.

Unless we are able to raise substantial additional funding for the development of Gencaro through other means, we will need to complete a strategic transaction to continue the development of Gencaro through its next phase of clinical development, the regulatory submission process, the commercialization phase, and to continue our other operations.

The strategic transactions that we may consider include a potential combination or partnership.

Our board of directors and management team have and will continue to devote substantial time and resources to obtaining additional capital or the consideration and implementation of any such strategic transaction.

In addition, conditions in the financial markets may lead to an increased number of biotechnology companies that are also seeking to enter into strategic transactions, which may limit our ability to negotiate favorable terms for any such transaction.

Further, our current employees do not have experience in the strategic transaction process, and our previous efforts to enter into a strategic transaction have not been successful.

As a result of these and other factors, there is substantial risk that we may not be able to complete a strategic transaction on favorable terms, or at all.

The failure to complete such a strategic transaction may materially and adversely affect our business.

We may be limited in our ability to access sufficient funding through a public or private equity offering or convertible debt offering .

Nasdaq rules impose restrictions on our ability to raise funds through a private offering of our common stock, convertible debt or similar instruments without obtaining stockholder approval.

Under Nasdaq rules, an offering of more than 20% of our total shares outstanding at a price per share less than (i) the closing price of our common stock on the Nasdaq Capital Market immediately preceding the signing of the binding agreement, or (ii) the average closing price of our common stock on the Nasdaq Capital Market for the five trading days immediately preceding the signing of the binding agreement requires stockholder approval unless the offering qualifies as a “public offering” for purposes of the Nasdaq rules.

As of December 31, 2019, we had approximately 1.6 million shares of common stock outstanding, 20% of which is approximately 319,000 shares.

SEC rules impose restrictions on our ability to raise funds through the registered offering of our securities pursuant to a “shelf” registration statement on Form S-3.

Under SEC rules, we are prohibited from selling securities under such a registration statement if the aggregate market value of the securities sold thereunder in any twelve-month period exceeds one-third of the market value of our outstanding common stock held by non-affiliates.

In the twelve-months prior to February 13, 2020, we sold an aggregate of 804,328 shares of our common stock pursuant to the terms of such sales agreement, as amended, for aggregate gross proceeds of approximately $7.2 million.

Due to these sales, we may be limited in our ability to sell securities registered on Form S-3 over the next 12 months, which may substantially limit our ability to effect future financings.

In addition, we are currently subject to certain contractual rights of investors arising from our public and private equity financing transactions that limit the nature and price of future public and private financing transactions that we may effect.

Unless we are able to generate sufficient product revenue, we will continue to incur losses from operations and will not achieve or maintain profitability.

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As a result, we expect to continue to incur significant operating losses for the foreseeable future.

Even if we ultimately receive regulatory approval for Gencaro or our other product candidates, sales of such products may not generate sufficient revenue for it to achieve or maintain profitability.

Even if we ultimately receive regulatory approval for rNAPc2, Gencaro or our other product candidates, sales of such products may not generate sufficient revenue for it to achieve or maintain profitability.

Because of the numerous risks and uncertainties associated with developing therapeutic drugs, we may experience larger than expected future losses and may never reach profitability.

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We are not permitted to market a potential drug in the United States until we receive approval of an NDA from the FDA for such drug.

We have not received an NDA approval from the FDA for Gencaro or any of our other product candidates.

We have not received an NDA approval from the FDA for rNAPc2, Gencaro or any of our other product candidates.

There can be no guarantees with respect to our product candidates that clinical studies will adequately support an NDA, that the products will receive necessary regulatory approvals, or that they will prove to be commercially successful.

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In 2009, the FDA issued a Complete Response Letter, or CRL, in which the FDA stated that it could not approve the Gencaro NDA in its current form and specified actions required for approval of the NDA, including conducting an additional Phase 3 clinical trial of Gencaro in patients with HF.

We completed a Phase 2B clinical study of Gencaro in HFrEF patients to assess its efficacy in reducing or preventing AF.

We enrolled 267 HFrEF patients with AF in the Phase 2B clinical trial.

We completed a Phase 2B clinical study of Gencaro in HF patients to assess its efficacy in reducing or preventing AF.

We enrolled 267 HF patients with AF in the Phase 2B clinical trial.

We reported top-line Phase 2B data in February 2018.

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Even if we conduct additional studies in accordance with our SPA agreement or further FDA guidance and submit or file a new or amended NDA, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval.

In the event that we or our collaborators conduct preclinical studies that do not comply with Good Laboratory Practices, or GLP, or incorrectly design or carry out human clinical trials in accordance with Good Clinic al Practices, or GCP, or those clinical trials fail to demonstrate clinical significance, it is unlikely that we will be able to obtain FDA approval for product development candidates.

Our inability to successfully initiate and effectively complete clinica l trials for any product candidate on schedule, or at all, will severely harm our business.

Significant delays in clinical development could materially increase product development costs or allow our competitors to bring products to market before we do, im pairing our ability to effectively commercialize any future product candidate.

In the event that we or our collaborators conduct preclinical studies that do not comply with Good Laboratory Practices, or GLP, or incorrectly design or carry out human clinical trials in accordance with Good Clinical Practices, or GCP, or those clinical trials fail to demonstrate clinical significance, it is unlikely that we will be able to obtain FDA approval for product development candidates.

Our inability to successfully initiate and effectively complete clinical trials for any product candidate on schedule, or at all, will severely harm our business.

Significant delays in clinical development could materially increase product development costs or allow our competitors to bring products to market before we do, impairing our ability to effectively commercialize any future product candidate.

We do not know whether planned clinical trials will begin on time, will need to be redesigned or will be completed on schedule, if at all.

Clinical trials can be delayed for a v ariety of reasons, including:

Clinical trials can be delayed for a variety of reasons, including :

delays or failures in obtaining regulatory authorization to commence a trial because of safety concerns of regulators relating to our product candidates or similar product candidates of our competitors or failure to follow regulatory guidelines;

delays or failures in obtaining clinical materials and manufacturing sufficient quantities of the product candidates for use in trials;

failure of clinical materials to meet pre-established specifications at product release or during ongoing stability studies;

delays or failures in reaching agreement on acceptable terms with prospective study sites;

delays or failures in obtaining approval of our clinical trial protocol from an IRB to conduct a clinical trial at a prospective study site;

delays or failures in obtaining approval of our clinical trial protocol from an institutional review board to conduct a clinical trial at a prospective study site;

delays in recruiting patients to participate in a clinical trial, which may be due to the size of the patient population, eligibility criteria, protocol design, perceived risks and benefits of the drug, availability of other approved and standard of care therapies or, availability of clinical trial sites;

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Finally, an approval could be conditioned on our commitment to conduct further clinical trials, which we may not have the resources to conduct or which may negatively impact our financial situation.

The manufacture and tableting of Gencaro is done by third party suppliers, who must also meet cGMP requirements and pass a pre-approval inspection of their facilities before we can obtain marketing approval.

The manufacture and analytical testing of rNAPc2 and Gencaro is performed by third party suppliers, who must also meet cGMP requirements and pass a pre-approval inspection of their facilities before we can obtain marketing approval.

All of our product candidates are prone to the risks of failure inherent in drug development.

The results from preclinical animal testing and early human clinical trials may not be predictive of results obtained in later human clinical trials.

Further, although a new product may show promising results in preclinical or early human clinical trials, it may subsequently prove unfeasible or impossible to generate sufficient sa fety and efficacy data to obtain necessary regulatory approvals.

The data obtained from preclinical and clinical studies are susceptible to varying interpretations that may delay, limit or prevent regulatory approval, and the FDA and other regulatory autho rities in the United States and elsewhere exercise substantial discretion in the drug approval process.

The numbers, size and design of preclinical studies and clinical trials that will be required for FDA or other regulatory approval will vary depending o n the product candidate, the disease or condition for which the product candidate is intended to be used and the regulations and guidance documents applicable to any particular product candidate.

The FDA or other regulators can delay, limit or deny approva l of any product candidate for many reasons, including, but not limited to:

Further, although a new product may show promising results in preclinical or early human clinical trials, it may subsequently prove unfeasible or impossible to generate sufficient safety and efficacy data to obtain necessary regulatory approvals.

The data obtained from preclinical and clinical studies are susceptible to varying interpretations that may delay, limit or prevent regulatory approval, and the FDA and other regulatory authorities in the United States and elsewhere exercise substantial discretion in the drug approval process.

The numbers, size and design of preclinical studies and clinical trials that will be required for FDA or other regulatory approval will vary depending on the product candidate, the disease or condition for which the product candidate is intended to be used and the regulations and guidance documents applicable to any particular product candidate.

The FDA or other regulators can delay, limit or deny approval of any product candidate for many reasons, including, but not limited to:

side effects;

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We and our third-party manufacturers will also be subject to ongoing FDA requirements for submission of safety and other post-market information.

The marketing and advertisi ng of our drug products by our collaborators or us will be regulated by the FDA, certain state agencies or foreign regulatory authorities.

Violations of these laws and regulations, including promotion of our products for unapproved uses or failing to discl ose risk information, are punishable by criminal and civil sanctions and may result in the issuance of enforcement letters or other enforcement action by the FDA, U.S.

Department of Justice, state agencies, or foreign regulatory authorities that could jeop ardize our ability to market the product.

The marketing and advertising of our drug products by our collaborators or us will be regulated by the FDA, certain state agencies or foreign regulatory authorities.

Violations of these laws and regulations, including promotion of our products for unapproved uses or failing to disclose risk information, are punishable by criminal and civil sanctions and may result in the issuance of enforcement letters or other enforcement action by the FDA, U.S.

Department of Justice, state agencies, or foreign regulatory authorities that could jeopardize our ability to market the product.

In addition to the FDA, state or foreign regulations, the marketing of our drug products by us or our collaborators will be regulated by federal, state or foreign laws pertaining to health care “fraud and abuse,” such as the federal anti-kickback law prohibiting bribes, kickbacks or other remuneration for the order or recommendation of items or services reimbursed by federal health care programs.

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impose civil or criminal penalties.

Reliance on third parties to commercialize Gencaro or our other product candidates could negatively impact our business.

Reliance on third parties to commercialize rNAPc2, Gencaro or our other product candidates could negatively impact our business.

If we are required to establish a direct sales force in the United States and are unable to do so, our business may be harmed.

Commercialization of Gencaro or any other product candidate, if approved, particularly the establishment of a sales organization, will require substantial additional capital resources.

We currently intend to pursue a strategic partnership alternative for the commercialization of Gencaro, if it is approved, and we have suspended our efforts to build internal sales, marketing and distribution capabilities.

If we elect to rely on third parties to sell Gencaro and any other products, then we may receive less revenue than if we sold such products directly.

Commercialization of rNAPc2, Gencaro or any other product candidate, if approved, particularly the establishment of a sales organization, will require substantial additional capital resources.

We currently intend to pursue a strategic partnership alternative for the commercialization of rNAPc2 or Gencaro, if it is approved, and we have suspended our efforts to build internal sales, marketing and distribution capabilities.

If we elect to rely on third parties to sell rNAPc2, Gencaro and any other products, then we may receive less revenue than if we sold such products directly.

In addition, we may have little or no control over the sales efforts of those third parties.

If we are unable to complete a strategic transaction, we would be unable to commercialize Gencaro or any other product candidate without substantial additional capital.

Even if such capital were secured, we would be required to build internal sales, marketing and distribution capabilities to market Gencaro in the United States.

If we are unable to complete a strategic transaction, we would be unable to commercialize rNAPc2, Gencaro or any other product candidate without substantial additional capital.

Even if such capital were secured, we would be required to build internal sales, marketing and distribution capabilities to market rNAPc2 or Gencaro in the United States.

None of our current employees have experience in establishing and managing a sales force.

In the event we are unable to sell Gencaro and other selected product candidates, either directly or through third parties via a strategic transaction, the commercialization of Gencaro, if it is approved, may be delayed indefinitely.

In the event we are unable to sell rNAPc2, Gencaro and other selected product candidates, either directly or through third parties via a strategic transaction, the commercialization of rNAPc2 or Gencaro, if approved, may be delayed indefinitely.

We are dependent on our key personnel.

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We have no manufacturing capacity which puts us at risk of lengthy and costly delays of bringing our products to market.

We do not currently operate manufacturing facilities for clinical or commercial production of our product candidates, including their active pharmaceutical ingredients, or API.

We do not currently operate manufacturing facilities for clinical or commercial production of our product candidates, including their drug substance or active pharmaceutical ingredients, or API.

We have no experience in drug formulation or manufacturing, and we lack the resources and the capabilities to manufacture any of our product candidates on a clinical or commercial scale.

We do not intend to develop facilities for the manufacture of product candidates for clinical trials or commercial purposes in the foreseeable future.

We have contracted with Groupe Novasep to manufacture the API for Gencaro.

For drug product, we previously contracted with Patheon, Inc.

to manufacture the Gencaro tablets.

In addition, we contracted with a separate service provider for packaging and distribution of our clinical trial materials.

We may also need to contract with similar manufacturers for similar services in connection with any Phase 3 clinical trial of Gencaro.

We have contracted with several third-party manufacturing organizations for production and analytical testing of our product candidates.

These contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to successfully produce, store and distribute our products.

In addition, these manufacturers may have staffing difficulties, may not be able to manufacture our products on a timely basis or may become financially distressed.

In addition, these manufacturers may have staffing difficulties, may experience delays due to key material or component availability, may not be able to manufacture our products on a timely basis or may become financially distressed.

In the event of errors in forecasting production quantities required to meet demand, natural disaster, equipment malfunctions or failures, technology malfunctions, strikes, lock-outs or work stoppages, regional power outages, product tampering, war or terrorist activities, actions of regulatory authorities, business failure, strike or other difficulty, we may be unable to find an alternative third-party manufacturer in a timely manner and the production of our product candidates would be interrupted, resulting in delays and additional costs, which could impact our ability to commercialize and sell our product candidates.

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If our contract manufacturers fail to comply with applicable governmental regulations, such as quality control, quality assurance and the maintenance of records and documentation, we may not be able to continue production of the API or finished product.

If the safety of any API or product supplied is compromised due to failure to adhere to applicable laws or for other reasons, this may jeopardize our regulatory approval for Gencaro and other product candidates, and we may be held liable for any injuries sustained as a result.

If the safety of any API or product supplied is compromised due to failure to adhere to applicable laws or for other reasons, this may jeopardize our regulatory approval for rNAPc2, Gencaro and other product candidates, and we may be held liable for any injuries sustained as a result.

Upon the occurrence of one of the aforementioned events, the ability to switch manufacturers may be difficult for a number of reasons, including:

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the FDA must approve any replacement prior to manufacturing, which requires new testing and compliance inspections.

Transitioning from a clinical development stage company will require successful completion of a number of steps, many of which are outsid e of our control and, consequently, we can provide no assurance of our successful and timely transition from a clinical development stage company .

Transitioning from a clinical development stage company will require successful completion of a number of steps, many of which are outside of our control and, consequently, we can provide no assurance of our successful and timely transition from a clinical development stage company.

We are a clinical development stage biopharmaceutical company with a limited operating history.

To date we have not generated any product revenue and have historically funded our operations through investment capital.

Our future growth depends on our ability to emerge from the clinical development stage and successfully commercialize or provide for the commercialization of Gencaro and our other product candidates which in turn, will depend, among other things, on our ability to:

conduct additional clinical trials and develop and obtain regulatory approval for Gencaro or other product candidates;

successfully partner a companion genetic test with the commercial launch of Gencaro;

enter into a strategic transaction enabling the continued development and commercialization of Gencaro, or alternatively, raise significant additional capital to enable these activities;

pursue additional indications for Gencaro and develop other product candidates, including other cardiovascular therapies;

obtain commercial quantities of Gencaro or other product candidates at acceptable cost levels.

Our future growth depends on our ability to emerge from the clinical development stage and successfully commercialize or provide for the commercialization of rNAPc2, Gencaro and our other product candidates which in turn, will depend, among other things, on our ability to:

conduct additional clinical trials and develop and obtain regulatory approval for rNAPc2, Gencaro or other product candidates;

successfully partner a companion genetic test with the commercial launch of rNAPc2 or Gencaro;

enter into a strategic transaction enabling the continued development and commercialization of rNAPc2 or Gencaro, or alternatively, raise significant additional capital to enable these activities;

pursue additional indications for rNAPc2 or Gencaro and develop other product candidates, including other cardiovascular therapies;

obtain commercial quantities of rNAPc2, Gencaro or other product candidates at acceptable cost levels.

Any one of these factors or other factors discussed in this report could affect our ability to successfully commercialize Gencaro and other product candidates, which could impact our ability to earn sufficient revenues to transition from a clinical development stage company and continue our business.

If approved by the FDA, Gencaro will be entering a competitive marketplace and may not succeed.

If approved by the FDA, rNAPc2 or Gencaro will be entering a competitive marketplace and may not succeed.

We do not yet know what the commercial opportunity will be, if any, for rNAPc2 if it is approved for treating COVID-19 disease.

We do not know how and to whom rNAPc2 would be marketed and what the commercial arrangements would be for its sales and reimbursement.

While we anticipate that rNAPc2, if approved, could potentially be used in combination with antiviral drugs and other therapies, there are other vaccines and therapies under development .

Gencaro is a new type of beta-blocker and vasodilator being developed for AF.

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Future sales of our products may suffer if they are not accepted in the marketplace by physicians, patients and the medical community.

Gencaro or our other product candidates may not gain market acceptance among physicians, patients and the medical community.

The degree of market acceptance of Gencaro or our other product candidates will depend on a number of factors, such as its effectiveness and tolerability, as compared with competitive drugs.

For instance, the top-line results of our Phase 2B GENETIC-AF clinical trial indicated that Gencaro demonstrated a similar treatment benefit compared to the active comparator, metoprolol succinate (TOPROL‑XL).

If our future clinical trials in Gencaro do not show that Gencaro has a clear therapeutic benefit as compared to other drugs in the beta-blocker class currently on the market, then prescribers may be unlikely to prescribe Gencaro to patients, even if approved.

Also, prevalence and severity of side-effects could negatively affect market acceptance of Gencaro or our other product candidates.

Failure to achieve market acceptance of Gencaro would significantly harm our business.

If we are unable to obtain acceptable prices or adequate reimbursement from third-party payors for Gencaro, or any other product candidates that we may seek to commercialize, then our revenues and prospects for profitability will suffer.

Our or any strategic partner’s ability to commercialize Gencaro, or any other product candidates that we may seek to commercialize, is highly dependent on the extent to which coverage and reimbursement for these product candidates will be available from:

rNAPc2, Gencaro or our other product candidates may not gain market acceptance among physicians, patients and the medical community.

The degree of market acceptance of rNAPc2, Gencaro or our other product candidates will depend on a number of factors, such as its effectiveness and tolerability, as compared with competitive drugs.

For instance, if rNAPc2 is approved, by that time there may be superior alternatives in terms of vaccines and/or therapeutics that may significantly impact the relative medical benefits offered by rNAPc2.

If our future clinical trials for rNAPc2 do not show that rNAPc2 has a clear therapeutic benefit as compared to other therapies or vaccines that are approved in the interim, then there may be a limited or no commercial market for rNAPc2.

Also, prevalence and severity of side-effects could negatively affect market acceptance of rNAPc2.

Failure to achieve market acceptance of rNAPc2 or Gencaro would significantly harm our business.

If we are unable to obtain acceptable prices or adequate reimbursement from third-party payors for rNAPc2, Gencaro, or any other product candidates that we may seek to commercialize, then our revenues and prospects for profitability will suffer.

Our or any strategic partner’s ability to commercialize rNAPc2, Gencaro, or any other product candidates that we may seek to commercialize, is highly dependent on the extent to which coverage and reimbursement for these product candidates will be available from:

governmental payors, such as Medicare and Medicaid;

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It is likely that federal and state legislatures and health agencies will continue to focus on additional health care reform in the future although we are unable to predict what additional legislation or regulation, if any, relating to the health care industry or third-party coverage and reimbursement may be enacted in the future or what effect such legislation or regulation would have on our business.

We or any strategic partner’s ability to commercialize Gencaro, or any other product candidates that we may seek to commercialize, is highly dependent on the extent to which coverage and reimbursement for these product candidates will be available from government payors, such as Medicare and Medicaid, private health insurers, including managed care organizations, and other third-party payors, and any change in reimbursement levels could materially and adversely affect our business.

We or any strategic partner’s ability to commercialize rNAPc2, Gencaro, or any other product candidates that we may seek to commercialize, is highly dependent on the extent to which coverage and reimbursement for these product candidates will be available from government payors, such as Medicare and Medicaid, private health insurers, including managed care organizations, and other third-party payors, and any change in reimbursement levels could materially and adversely affect our business.

Further, the pendency or approval of future proposals or reforms could result in a decrease in our stock price or limit our ability to raise capital or to obtain strategic partnerships or licenses.

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If we undertake any additional acquisitions, whether of product candidates or other biopharmaceutical companies, the process of integrating an acquired product candidate or complementary company into our business may put a strain on our operations, divert personnel, financial resources and management’s attention.

In 2019, our research and development activities were dedicated to Gencaro and non-clinical development activities with AB171.

We expect our research and development activities for 2020, subject to obtaining additional financing, will be focused on regulatory activities related to Gencaro, initiating the PRECISION‑AF clinical trial and non-clinical development activities with AB171.

In 2020, our research and development activities were dedicated to initiating the clinical trial of rNAPc2.

If we are not able to substantially expand our research and development efforts, or identify, or license or acquire other products or product candidates or complete future acquisitions, then we will likely be unable expand our pipeline of product candidates.

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New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could affect the tax treatment of our domestic and foreign earnings.

Any new taxes could adversely affect our domestic and international bu siness operations, and our business and financial performance.

Any new taxes could adversely affect our domestic and international business operations, and our business and financial performance.

Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.

For example, legislation enacted in 2017, informally t itled the Tax Cuts and Jobs Act, significantly revised the Internal Revenue Code of 1986, as amended, or the Code.

For example, legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act, significantly revised the Internal Revenue Code of 1986, as amended, or the Code.

Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Cuts and Jobs Act may affect us, and certain aspects of the Tax Cuts and Jobs Act could be repealed or modified in future legislation.

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Under the Tax Cuts and Jobs Act, U.S.

federal NOLs incurred in tax years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of federal NOLs generated in tax years beginning after December 31, 2017, is limited.

In general, under Section 382 of the Code, a corporation that undergoes an “ownership change” (as defined under Section 382 of the Code and applicable Treasury Regulations) is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income.

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Any one of these events could cause our business to be materially harmed and our results of operations would be adversely impacted.

Failure to comply with data protection laws and regulatio ns could lead to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business.

Failure to comply with data protection laws and regulations could lead to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business.

We and our partners may be subject to federal, state, and foreign data protection laws and regulations (i.e., laws and regulations that address privacy and data security).

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Risks Related to Intellectual Property and Other Legal Matters

If product liability lawsuits are successfully brought against us, then we will incur substantial liabilities and may be required to limit commercialization of Gencaro or other product candidates.

If product liability lawsuits are successfully brought against us, then we will incur substantial liabilities and may be required to limit commercialization of rNAPc2, Gencaro or other product candidates.

We face product liability exposure related to the testing of our product candidates in human clinical trials, and may face exposure to claims by an even greater number of persons once we begin marketing and distributing our products commercially.

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The loss of any rights to market key products would significantly impair our operating results.

We have licensed from CPEC, who has licensed rights to all preclinical and clinical data from development of bucindolol through the BEST trial from Bristol Meyers Squibb, or BMS, the exclusive rights to Gencaro for all therapeutic and diagnostic uses in any country until the later of (i) 10 years from the first commercial sale of Gencaro in such country, or (ii) the termination of our commercial exclusivity in such country.

This license includes a sublicense to us from BMS.

We are obligated to use commercially reasonable efforts to develop and commercialize Gencaro, including obtaining regulatory approvals.

Our ability to develop and commercialize Gencaro is dependent on numerous factors, including some factors that are outside of our control.

CPEC has the right to terminate our license if we materially breach our obligations under the license agreement and fail to cure any such breach within the terms of the license.

In October 2017, we entered into an agreement with Aeolus pursuant to which we acquired Aeolus’ minority membership interest in CPEC.

The transaction effectively buys-out Aeolus’ royalty interest thereby reducing or eliminating the stated milestone and royalty obligations that could be payable by us, if Gencaro receives regulatory approval and is commercialized.

If our license agreement with CPEC is terminated for reasons related to non-payment of fees, or for any other breach, then we would have no further rights to develop and commercialize Gencaro for any indication.

The termination of this license, or of any other agreement which enables us to market a key product or product candidate, could significantly and adversely affect our business.

Our patent portfolios relating to Gencaro, including a patent that issued in 2021, are either owned by us or are subject to licenses that impose no royalty obligations or milestone payments relating to the further development, approval and commercialization of Gencaro.

Termination of our license agreements could result in the loss of our further rights to develop and commercialize Gencaro for any indication.

The termination of any such license, or of any other agreement which enables us to market a key product or product candidate, could significantly and adversely affect our business.

Certain intellectual property licensed by us is the subject of additional licensing arrangements to which the party that has licensed rights to us is subject.

If such parties were to breach the terms of such licenses or such licenses were otherwise to terminate, our and our partners’ rights to use such technology and develop and commercialize their products such as the genetic test may terminate and our business would be materially harmed.

Third parties may own or control patents or patent applications tha t we may be required to license to commercialize our product candidates or that could result in litigation that would be costly and time consuming.

Our or any strategic partner’s ability to commercialize Gencaro and other product candidates depends upon our ability to develop, manufacture, market and sell these drugs without infringing the proprietary rights of third parties.

Third parties may own or control patents or patent applications that we may be required to license to commercialize our product candidates or that could result in litigation that would be costly and time consuming.

Our or any strategic partner’s ability to commercialize rNAPc2, Gencaro and other product candidates depends upon our ability to develop, manufacture, market and sell these drugs without infringing the proprietary rights of third parties.

A number of pharmaceutical and biotechnology companies, universities and research institutions have or may be granted patents that cover technologies similar to the technologies owned by or licensed to us.

We may choose to seek, or be required to seek, licenses under third party patents, which would likely require the payment of license fees or royalties or both.

We may also be unaware of existing patents that may be infringed by Gencaro, the genetic testing we intend to use in connection with Gencaro or our other product candidates.

Because patent applications can take many years to issue, there may be other currently pending applications that may later result in issued patents that are infringed by Gencaro or our other product candidates.

We may also be unaware of existing patents that may be infringed by rNAPc2 or Gencaro, the genetic testing we intend to use in connection with Gencaro or our other product candidates.

Because patent applications can take many years to issue, there may be other currently pending applications that may later result in issued patents that are infringed by rNAPc2, Gencaro or our other product candidates.

Moreover, a license may not be available to us on commercially reasonable terms, or at all.

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An adverse outcome could subject us to significant liabilities to third parties, require disputed rights to be licensed from third parties or require us to cease using such technology.

We own the clinical development program of rNAPc2, including Phase 2 clinical trials.

If rNAPc2 is successfully developed, we believe it will have intellectual property protection, including 12 years of market exclusivity as an innovative biologic product under FDA law in the United States, 10 years data protection exclusivity in the EU, and potentially patent protection in addition to this.

However, another competitor could develop a compound with similar biological properties to rNAPc2 that may not be barred by our exclusivity.

We have also filed a provisional patent application for rNAPc2 and its use for COVID-19 disease, but there is no assurance that this provisional application will ultimately result in an issued patent.

Regardless of merit, the listing of patents in the FDA Orange Book for Gencaro may be challenged as being improperly listed.

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We may not be able to effectively protect our intellectual property rights in some foreign countries, as our patents are limited by jurisdiction and many countries do not offer the same level of legal protection for intellectual property as the United States.

We require our employees, consultants, b usiness partners and members of our scientific advisory board to execute confidentiality agreements upon the commencement of employment, consulting or business relationships with us.

These agreements provide that all confidential information developed or m ade known during the course of the relationship with us be kept confidential and not disclosed to third parties except in specific circumstances.

In the case of employees, the agreements provide that all inventions resulting from work performed for us, uti lizing the property or relating to our business and conceived or completed by the individual during employment shall be our exclusive property to the extent permitted by applicable law.

We require our employees, consultants, business partners and members of our scientific advisory board to execute confidentiality agreements upon the commencement of employment, consulting or business relationships with us.

These agreements provide that all confidential information developed or made known during the course of the relationship with us be kept confidential and not disclosed to third parties except in specific circumstances.

In the case of employees, the agreements provide that all inventions resulting from work performed for us, utilizing the property or relating to our business and conceived or completed by the individual during employment shall be our exclusive property to the extent permitted by applicable law.

Third parties may breach these and other agreements with us regarding our intellectual property and we may not have adequate remedies for the breach.

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Any issued patent may not be sufficient to prevent others from competing with us.

Further, we have trade secrets relating to Gencaro, and such trade secrets may become known or independently discovered.

Further, we have trade secrets relating to rNAPc2 and Gencaro, and such trade secrets may become known or independently discovered.

Our issued patents and those that may issue in the future, or those licensed to us, may be challenged, opposed, invalidated or circumvented, which could allow competitors to market similar products or limit the patent protection term of our product candidates.

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Some of the factors that may cause the market price of our common stock to fluctuate include:

the regulatory status of Gencaro and the genetic test, and whether and when they are approved for sale, if at all, and the labeling or other conditions of use imposed by the FDA;

our ability to secure additional funding or complete a strategic transaction or to complete development of and commercialize Gencaro;

progress of any future clinical trials for Gencaro or our other product candidate, including enrollment and any data that may become available;

the regulatory status of rNAPc2, Gencaro and the genetic test, and whether and when they are approved for sale, if at all, and the labeling or other conditions of use imposed by the FDA;

our ability to secure additional funding or complete a strategic transaction or to complete development of and commercialize rNAPc2 or Gencaro;

progress of any future clinical trials for rNAPc2, Gencaro or our other product candidate, including enrollment and any data that may become available;

the results of our future clinical trials and any future NDAs of our current and future product candidates;

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the results of clinical trials conducted by others on drugs that would compete with our product candidates;

issues in manufacturing our product candidates or any approved products;

issues in manufacturing or testing our product candidates or any approved products;

the initiation of or material developments in or the conclusion of litigation to enforce or defend any of our intellectual property rights;

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our ability to retain the listing of our common stock on the Nasdaq Capital Market.

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies.

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies, including as a result of the ongoing COVID-19 pandemic.

These broad market fluctuations may also adversely affect the trading price of our common stock.

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Sales in the public market of substantial amounts of our common stock could depress prevailing market prices of our common stock.

As of December 31, 2019, approximately 1.6 million shares of common stock were outstanding, and all of these shares are freely transferable without restriction or further registration under the Securities Act, except for shares held by our directors, officers and other affiliates and unregistered shares held by non-affiliates.

As of December 31, 2020, approximately 9.5 million shares of common stock were outstanding, and all of these shares are freely transferable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for shares held by our directors, officers and other affiliates and unregistered shares held by non-affiliates.

The sale of these additional shares, or the perception that such sales may occur, could depress the market price of our common stock.

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If these registration rights, or similar registration rights that may apply to securities we may issue in the future, are exercised, it could result in additional sales of our common stock in the market, which may have an adverse effect on our stock price.

As of December 31, 2019, there were approximately 31,000 shares of our common stock which may be issued upon the exercise of outstanding stock options, and we anticipate that we will continue to issue stock option and restricted stock unit awards to our employees and consultants in the fiscal year ended December 31, 2020 and thereafter.

As of December 31, 2020, there were approximately 531,000 shares of our common stock which may be issued upon the exercise of outstanding stock options, and we anticipate that we will continue to issue stock option awards to our employees and consultants in the fiscal year ended December 31, 2021 and thereafter.

If and when these options are exercised, such shares will be available for sale in the open market without further registration under the Securities Act.

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The exercise of those options, and the prompt resale of shares of our common stock received, may also result in downward pressure on the price of our common stock.

In the absence of a significant strategic transaction, we will need to raise significant additional capital to finance the research, development and commercialization of Gencaro and our other product candidate.

In the absence of a significant strategic transaction, we will need to raise significant additional capital to finance the research, development and commercialization of rNAPc2, Gencaro and our other product candidate.

If future securities offerings occur, they would dilute our current stockholders’ equity interests and could reduce the market price of our common stock.

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Not applicable.

Our headquarters facility consists of approximately 5,300 square feet of office space in Westminster, Colorado, which is leased until March 2020.

Our headquarters facility consists of approximately 5,200 square feet of office space in Westminster, Colorado, which is leased until March 2024 and includes an option to renew for an additional 36 month term.

We believe that this facility is adequate to meet our current needs.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors