What changed in this filing

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Item 1A. Risk Factors

2021-05-13 compared with 2020-11-13 · 10 added, 173 removed, 7 unchanged (96% of the section changed)

Any investment in our business involves a high degree of risk.

Before making an investment decision, you should carefully consider the information we include in this Quarterly Report

on Form 10-Q, including our unaudited interim condensed consolidated financial statements and accompanying notes, and the additional information in the other reports we file with the Securities and Exchange Commission.

These risks may result in

material harm to our business and our financial condition and results of operations.

In this event, the market price of our common stock may decline and you could lose part or all of your investment.

described below may not be the only ones relating to our company.

There have been no material changes from our risk factors as previously reported in our Annual Report on Form 10-K for the year ended December 31, 2020.

However, any investment in our business

involves a high degree of risk.

Before making an investment decision, you should carefully consider the information we include in this Quarterly Report on Form 10-Q, including our unaudited interim condensed consolidated financial statements and

accompanying notes, our Annual Report on Form 10-K for the year ended December 31, 2020 filed on March 18, 2021, including our financial statements and related notes contained therein, and the additional information in the other reports we file

with the Securities and Exchange Commission.

These risks may result in material harm to our business and our financial condition and results of operations.

In this event, the market price of our common stock may decline and you could lose part or

all of your investment.

Additional risks that we currently believe are immaterial may also impair our business operations.

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common stock could be harmed as a result of any of these risks.

Investors should also refer to the other information contained or incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 27,

2020, including our financial statements and related notes, and our other filings from time to time with the Securities and Exchange Commission or SEC.

The risk factors set forth below contain material changes from, or additions to, the risk factors previously disclosed and included in our Annual Report on Form 10-K for the year

ended December 31, 2019 filed with the SEC on March 27, 2020.

Risks Related to Our Business, Financial Position and Capital Requirements

We have incurred significant losses since our inception and expect to continue to incur significant losses for the foreseeable future and may

never achieve or maintain profitability.

We have never generated any product revenues and expect to continue to incur substantial and increasing losses as we continue to develop PDS0101 and other Versamune ® based

PDS0101 has not been approved for marketing in the United States and may never receive such approval.

As a result, we are uncertain when or if we will achieve profitability and, if so, whether we will be able to sustain it.

Our ability to

generate revenue and achieve profitability is dependent on our ability to complete development, obtain necessary regulatory approvals, and have PDS0101 manufactured and successfully marketed.

We cannot assure you that we will be profitable even if we

successfully commercialize PDS0101 or other Versamune ® Products.

If we successfully obtain regulatory approval to market PDS0101, our revenues will be dependent, in part, upon, the size of the markets in the territories for which

regulatory approval is received, the number of competitors in such markets for the approved indication, and the price at which we can offer PDS0101.

If the indication approved by regulatory authorities is narrower than we expect, or the treatment

population is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of PDS0101, even if approved.

Even if we do achieve profitability, we may not be able to sustain or increase

profitability on a quarterly or annual basis.

If we fail to become and remain profitable the market price of our common stock and our ability to raise capital and continue operations will be adversely affected.

We expect research and development expenses to increase significantly for PDS0101 and other Versamune ® Products.

In addition, even if we obtain regulatory approval,

significant sales and marketing expenses will be required to commercialize PDS0101.

As a result, we expect to continue to incur significant and increasing operating losses and negative cash flows for the foreseeable future.

These losses have had and

will continue to have an adverse effect on our financial position and working capital.

As of September 30, 2020, we had an accumulated deficit of $39.8 million.

We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the

development and commercialization of PDS0101.

Based upon our current operating plan, we believe that our cash reserves will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next

12 months from the date of this report.

Our estimate as to what we will be able to accomplish is based on assumptions that may prove to be inaccurate, and we could exhaust our available capital resources sooner than is currently expected.

length of time and activities associated with successful development of PDS0101 and other Versamune ® based products is highly uncertain, we are unable to estimate the actual funds we will require for development and any approved marketing

and commercialization activities.

Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

the initiation, progress, timing, costs and results of our planned clinical trials;

the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authority;

the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

the cost of defending potential intellectual property disputes, including any patent infringement actions brought by third parties against us now or in the future;

the effect of competing technological and market developments;

the cost of establishing sales, marketing and distribution capabilities in regions where we choose to commercialize PDS0101 on our own;

the initiation, progress, timing and results of the commercialization of PDS0101, if approved, for commercial sale.

Additional funding may not be available on acceptable terms, or at all.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to

significantly delay, scale back or discontinue the development or commercialization of PDS0101 and other Versamune ® based products or potentially discontinue operations.

In July 2019, we entered into a common stock purchase agreement, or

the Aspire Purchase Agreement, with Aspire Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, at our discretion, Aspire Capital is committed to purchase up to an aggregate of $20.0 million of

shares of our common stock, or the Purchased Shares, over the 30-month term of the Aspire Purchase Agreement.

We may sell an aggregate of 1,034,979 shares of our common stock (which represented 19.99% of the Company’s outstanding shares of common

stock on the date of the Aspire Purchase Agreement) without stockholder approval.

We may sell additional shares of our common stock above the 19.99% limit provided that (i) we obtain stockholder approval or (ii) stockholder approval has not been

obtained at any time the 1,034,979 share limitation is reached and at all times thereafter the average price paid for all shares issued under the Aspire Purchase Agreement, is equal to or greater than $5.76, which was the consolidated closing bid

price of our common stock on July 26, 2019.

On July 29, 2019, we issued 100,654 shares of our common stock to Aspire Capital, as consideration for entering into the Aspire Purchase Agreement, which we refer to as the Commitment Shares.

September 30, 2020, no Purchase Shares have been sold to Aspire Capital under the Aspire Purchase Agreement.

Further, our use of the Aspire Purchase Agreement is subject to certain additional limitations set forth elsewhere in this report.

our ability to use the Aspire Purchase Agreement to raise additional capital is uncertain.

We will need to expand our organization, and may experience difficulties in managing this growth, which could disrupt operations.

Our future financial performance and our ability to commercialize PDS0101 and other Versamune ® based products and compete effectively will depend, in part, on our ability

to effectively manage any future growth.

As of September 30, 2020, we had 13 employees and 4 consultants.

We expect to hire additional employees for our managerial, clinical, scientific and engineering, operational, manufacturing, sales and marketing

Additionally, as part of our material weakness remediation plan, we have hired an interim Chief Financial Officer and we intend to hire a new Chief Financial Officer and other accounting and finance personnel as needed.

We may have operational

difficulties in connection with identifying, hiring and integrating new personnel.

Future growth would impose significant additional responsibilities on our management, including the need to identify, recruit, maintain, motivate and integrate

additional employees, consultants and contractors.

Also, our management may need to divert a disproportionate amount of our attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities.

may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining

Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of PDS0101.

If we are unable to effectively manage our growth, our expenses may increase

more than expected, our ability to generate and/or grow revenues could be reduced, and we may not be able to implement our business strategy.

Many of the other pharmaceutical companies that we compete against for qualified personnel and consultants have greater financial and other resources, different risk profiles and a

longer history in the industry than us.

They also may provide more diverse opportunities and better chances for career advancement.

Some of these characteristics may be more appealing to high-quality candidates and consultants than what it has to

If we are unable to continue to attract and retain high-quality personnel and consultants, the rate and success at which we can select and develop PDS0101 and other Versamune ® based products and our business will be limited.

General Market Risk Factors

Future sales of shares by existing stockholders could cause our stock price to decline.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after certain legal restrictions on resale lapse, the

trading price of our common stock could decline.

As of September 30, 2020, we had 22,261,619 shares of common stock outstanding.

Approximately 19,153,506 of such shares are freely tradable, without restriction, in the public market.

Approximately

3,108,113 of such shares of common stock are held by directors, executive officers and other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements.

Our executive officers, directors and principal stockholders, if they choose to act together, may have the ability to control matters submitted

to stockholders for approval.

Our current executive officers and directors, combined with our stockholders who, to our knowledge, owned more than 5% of our outstanding common stock, own a substantial amount of our

common stock as of September 30, 2020.

Accordingly, if these executive officers, directors and stockholders were to choose to act as a group, they may have a significant influence over the outcome of corporate actions requiring stockholder approval,

including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transactions.

These stockholders may also delay or prevent a change of control of our company, even if

such a change of control would benefit our other stockholders.

Our business operations, financial condition, results of operations and cash flows have been adversely affected and will likely

continue to be adversely affected by the effects of health epidemics, pandemics, or outbreaks of infectious diseases, including the recent COVID-19 pandemic .

Our business could be adversely affected by health epidemics in regions where we have concentrations of clinical trial sites or other business operations and could cause significant

disruption in the operations of third-party manufacturers and CROs upon whom we rely.

For example, in December 2019, a novel strain of coronavirus, COVID-19, was identified in Wuhan, China.

This virus continues to spread globally and in March 2020, the World Health

Organization declared COVID-19 a pandemic.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets.

The COVID-19 pandemic began to have a

material adverse impact on our results of operations in the quarter ended March 31, 2020, and we expect it to continue to adversely affect our business.

In response to the COVID-19 outbreak, “shelter in place” orders and other public health guidance

measures have been implemented across much of the United States, Europe and Asia, including in the locations of our offices, clinical trial sites, key vendors and partners.

Our clinical development program timelines have been and continue to be

negatively affected by COVID-19, as evidenced by the delay in the initiation of our planned Phase 2 study of PDS0101 in combination with KEYTRUDA ® in first-line treatment of recurrent/metastatic head and neck cancer and initiation of the

Phase 2 clinical study at The MD Anderson Cancer Center in combination with CRT.

Even though both of these studies have since been initiated despite the pandemic challenges, the evolving COVID-19 pandemic has also impacted the pace of enrollment in

clinical trials and we may be affected by similar delays as patients may avoid or may not be able to travel to healthcare facilities and physicians’ offices unless due to a health emergency and clinical trial staff can no longer get to the clinic.

Such facilities and offices have been and may continue to be required to focus limited resources on non-clinical trial matters, including treatment of COVID-19 patients, thereby decreasing availability, in whole or in part, for clinical trial

Further, due to “shelter in place” orders and other public health guidance measures, we have implemented a work-from-home policy for all staff members excluding those necessary to maintain minimum basic operations.

Our increased reliance on

personnel working from home may negatively impact productivity, or disrupt, delay or otherwise adversely impact our business.

In addition, the COVID-19 pandemic has affected and may continue to affect the operations of the FDA and other health

authorities, which could result in delays of reviews and approvals.

As a result of the COVID-19 outbreak, or similar pandemics, and related “shelter in place” orders and other public health guidance measures, we have and may in the future experience

disruptions that materially and adversely impact our clinical trials, business, financial condition and results of operations.

Potential disruptions include but are not limited to:

delays or difficulties in enrolling patients in our clinical trials;

delays or difficulties in initiating or expanding clinical trials, including delays or difficulties with clinical site initiation and recruiting clinical site investigators and clinical site staff;

increased rates of patients withdrawing from our clinical trials following enrollment as a result of contracting COVID-19 or other health conditions or being forced to quarantine;

diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical

interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or

interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;

interruption or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines;

delays or disruptions in preclinical experiments and investigational new drug application-enabling studies due to restrictions of on-site staff and unforeseen circumstances at contract research organizations

interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery

limitations on our ability to recruit and hire key personnel due to our inability to meet with candidates because of travel restrictions and “shelter in place” orders;

limitations on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including because of sickness of employees or their families or the desire of

employees to avoid contact with large groups of people;

interruption or delays to our sourced discovery and clinical activities.

Further, on March 25, 2020, the FDA issued Guidance on Conduct of Clinical Trials of Medical Products during the COVID-19 pandemic for Industry, Investigators, and Institutional

Review Boards to assist sponsors in assuring the safety of trial participants, maintaining compliance with good clinical practices, and minimizing risks to trial integrity during the COVID-19 pandemic, or the COVID-19 Guidelines.

The policy is

intended to remain in effect only for the duration of the public health emergency related to COVID-19 declared by the Department of Health and Human Services on January 31, 2020.

We have implemented several procedures in accordance with the COVID-19

Guidelines to address patient safety and clinical trial conduct during the COVID-19 pandemic, including remote monitoring of patients through telemedical visits, remote monitoring of sites by our clinical trial monitors, remote data entry, and

follow-up visits at sites other than the site where the patient was initially treated.

Our implementation of the COVID-19 Guidelines and potential disruptions to patient follow up, site monitoring or the timely completion of our trials may have a

negative effect on our ability to complete trials and associated regulatory filings.

While the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global

financial markets has reduced and may continue to reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity.

We do not yet know the full extent of potential delays or impacts on our business, financing or clinical trial activities or on healthcare systems or the global economy as a whole.

However, these effects have had and may continue to have a material impact on our liquidity, capital resources, operations and business and those of the third parties on which we rely and a recession or market correction resulting from the spread of

COVID-19 could materially affect our business and the value of our common stock.

In addition, the trading prices for our common stock and other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic.

continue to monitor the COVID-19 situation closely.

We qualify as an emerging growth company, and any decision on our part to comply with reduced reporting and disclosure requirements

applicable to emerging growth companies could make our common stock less attractive to investors.

We are an “emerging growth company,” and, we currently intend to take advantage of exemptions from various reporting requirements applicable to other public companies but not

to “emerging growth companies,” including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced

disclosure obligations regarding executive compensation in our registration statements, periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder

approval of any golden parachute payments not previously approved.

As of December 31, 2020, we will no longer be an “emerging growth company”.

Even after we no longer qualify as an emerging growth company we may still qualify as a “smaller

reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act and

reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.

irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other

public companies.

We cannot predict whether investors will find our common stock less attractive if we choose to rely on these exemptions while we are an emerging growth company.

If some investors

find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of the Company’s equity securities during the three months ended September 30, 2020.

There were no unregistered sales of the Company’s equity securities during the three months ended March 31, 2021.

DEFAULTS UPON SENIOR SECURITIES

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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-Q

Item 1A. Risk Factors