Risk Factors.
−Removed: Any investment in our securities involves a high degree of risk.
−Removed: Investors should carefully consider the risks described below and all of the information contained in this Annual Report on Form 10-K before deciding whether to purchase our securities.
−Removed: Our business, financial condition or results of operations could be materially adversely affected by these risks if any of them actually occur.
−Removed: Our common stock is quoted on the OTCQB under the symbol SKYE.
−Removed: This market is extremely limited and the prices quoted are not a reliable indication of the value of our common stock.
−Removed: As of the date of this Annual Report on Form 10-K, there has been very limited trading of shares of our common stock.
−Removed: The trading price for shares of our common stock could decline due to any of these risks, and an investor may lose all or part of his or her investment.
−Removed: Some of these factors have affected our financial condition and operating results in the past or are currently affecting us.
−Removed: We have organized the description of these risks into groupings in an effort to enhance readability, but many of the risks interrelate or could be grouped or ordered in other ways, so no special significance should be attributed to the groupings or order below .
−Removed: This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties.
−Removed: Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this Annual Report on Form 10-K.
−Removed: Table of Cont ents
+Added: Investing in our common stock, involves a high degree of risk.
+Added: You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report, including our consolidated financial statements and their related notes included elsewhere in this Annual Report and Part II.
+Added: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before making an investment decision.
+Added: If any of the following risks actually occurs, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline and you could lose all or part of your investment.
+Added: The risks and uncertainties described below are not the only ones we face.
+Added: Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may materially and adversely affect our business, prospects, operating results and financial condition.
Risk Factor Summary
−Removed: • We currently have no product revenues and no products approved for marketing and need substantial additional funding in the near term to continue our operations.
−Removed: • Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
−Removed: • UM is the owner of intellectual property related to SBI-100 and SBI-200.
−Removed: • Breach of any of the License Agreements with UM could result in the loss of such license rights that are important to our business and our operations could be materially harmed.
−Removed: • We are heavily dependent on the success of our early-stage product candidates, which will require significant additional efforts to develop and may prove not to be viable for commercialization.
−Removed: • We have conducted, and continue to conduct, clinical trials for our product candidates outside of the United States and we may do so for our other product candidates.
−Removed: However, the FDA and other foreign equivalents may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business.
−Removed: • We conduct certain research and development operations through our Australian wholly owned subsidiary.
−Removed: If we lose our ability to operate in Australia, or if our subsidiary is unable to receive the research and development tax credit allowed by Australian regulations, our business and results of operations could suffer.
−Removed: • We expect to face intense competition, often from companies with greater resources and experience than we have.
−Removed: • The current volatility of global financial conditions and inflation could negatively impact our business and financial condition.
−Removed: • Adverse U.S.
−Removed: or international geopolitical or economic conditions could negatively affect our business, financial condition and results of operations.
−Removed: • If we are not able to attract and retain highly qualified personnel, we may not be able to successfully implement our business strategy.
−Removed: • Our success depends on our ability to protect our intellectual property and our proprietary technologies.
−Removed: • If we are unable to prevent disclosure of our trade secrets or other confidential information to third parties, our competitive position may be impaired.
−Removed: • We engage in transactions with related parties which present possible conflicts of interest that could have an adverse effect on us.
−Removed: • Unpredictable business disruptions could seriously harm our future revenues and financial condition, increase our costs and expenses, and impact our ability to raise capital.
−Removed: • The COVID-19 pandemic, related variants and other epidemic diseases has, and could continue to, adversely impact our business, including our drug manufacturing, nonclinical activities and clinical trials.
−Removed: • Due to our limited resources, we may be forced to focus on a limited number of development candidates which may force us to pass on opportunities that could have a greater chance of clinical success.
−Removed: • Our business and operations would be adversely affected in the event that our computer systems or those of our partners, contract research organizations, contractors, consultants or other third parties we work with were to suffer system failures, cyber-attacks, loss of data or other security incidents.
−Removed: • Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could have a material adverse effect on our business, financial condition or results of operations.
−Removed: • If we fail to enter and maintain successful collaborative arrangements or strategic alliances for our product candidates, we may have to reduce or delay our product candidate development or increase our expenditures.
−Removed: • The Company is currently subject to lawsuits, and in the future may be subject to additional lawsuits, that could divert its resources and result in the payment of significant damages and other remedies.
−Removed: • If we are unsuccessful in the resolution of the Cunning Lawsuit, our business may be materially harmed, and we may be required to take actions to reorganize, discontinue or liquidate part or all of our operations.
−Removed: • If we are not able to favorably resolve our litigation with Ms.
−Removed: Cunning, we could potentially be required to seek relief through a filing under the U.S.
−Removed: Bankruptcy Code, either through plan of reorganization or under an alternative plan, which could include liquidation.
−Removed: • Government authorities extensively regulate our activities.
−Removed: • Some of the product candidates we are developing, including SBI-100, will be subject to U.S.
−Removed: controlled substance laws and regulations, and failure to comply with or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, and our financial condition.
−Removed: • Research restrictions, product shipment delays or prohibitions could have a material adv erse effect on our business, results of operations and financial condition.
−Removed: • Our ability to research, develop and commercialize our drug product candidates is dependent on our ability to obtain and maintain the necessary controlled substance registrations from the DEA.
−Removed: Table of Cont ents
−Removed: • Laws and regulations affecting therapeutic uses of cannabinoids are constantly evolving.
−Removed: • Our product candidates may contain controlled substances, the use of which may generate public controversy.
−Removed: • We may not be able to file investigational new drug applications to commence clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed in a timely manner, or at all.
−Removed: • If we fail to demonstrate the safety and efficacy of any product candidate that we develop to the satisfaction of the regulatory authorities, we may incur additional costs or experience difficulty in completing, the development and commercialization of such product candidate.
−Removed: • Nonclinical and clinical drug development involves a lengthy and expensive process with an uncertain outcome.
−Removed: We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
−Removed: • If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
−Removed: • Our development and commercialization strategy for SBI-100 OE, may depend, in part, on published scientific literature and the FDA’s prior findings regarding the safety and efficacy of dronabinol, based on data not developed by us, but upon which the FDA may rely in reviewing our NDA.
−Removed: • Even if we receive marketing approval for a product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to restrictions, withdrawal from the market, or penalties if we fail to comply with applicable regulatory requirements or if we experience unanticipated problems with our product candidates, when and if approved.
+Added: Below is a summary of the principal factors that make an investment in our common stock speculative or risky.
+Added: This summary does not address all of the risks that we face.
+Added: 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 Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission, or the SEC, before making an investment decision regarding our common stock.
+Added: • We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future.
+Added: We may never generate any revenue or become profitable or, if we achieve profitability, we may not be able to sustain it.
+Added: • We are heavily dependent on the success of our early-stage product candidates, SBI-100 and nimacimab, which will require significant additional efforts to develop and may prove not to be viable for commercialization.
• Serious adverse events or undesirable side effects or other unexpected properties of any of our product candidates may be identified during development or after approval that could delay, prevent or cause the withdrawal of marketing approval, limit the commercial potential, or result in significant negative consequences following marketing approval.
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If one of our suppliers or manufacturers fails to perform adequately, we may be required to incur significant delays and costs to find new suppliers or manufacturers.
−Removed: • Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for us to obtain marketing approval for and commercialize our product candidates and may affect the prices we may set.
−Removed: • We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws.
−Removed: If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
−Removed: • We may be subject to requests for access to our product candidates.
−Removed: Demand for compassionate use of our unapproved therapies could strain our resources, delay our drug development activities, negatively impact our marketing approval or commercial activities, and result in losses.
−Removed: • Our stock price may be volatile, which may result in losses to our stockholders.
−Removed: • Our common shares are thinly-traded, and in the future, may continue to be thinly-traded, and you may be unable to sell at or near ask prices or at all.
−Removed: • We cannot assure you that our common stock will become eligible for listing or quotation on any exchange and the failure to do so may adversely affect your ability to dispose of our common stock in a timely fashion.
−Removed: • We do not anticipate paying any cash dividends.
−Removed: • Our common stock is subject to penny stock rules, which may make it more difficult for our stockholders to sell their common stock.
−Removed: • We will need additional capital, and the sale of additional shares or other equity securities could result in additional dilution to our stockholders.
−Removed: • Our principal stockholder owns a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.
−Removed: • We have a substantial number of authorized common shares available for future issuance that could cause dilution to our Stockholders’ interest and adversely impact the rights of the holders of our Shares.
−Removed: • The issuance of shares upon exercise of outstanding warrants, convertible debt and options may cause immediate and substantial dilution to our existing stockholders.
−Removed: • Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
−Removed: • We may face risks related to the wind-down of EHT’s operations.
−Removed: Table of Cont ents
−Removed: Risks Related to our Business and Capital Requirement
−Removed: We currently have no product revenues and no products approved for marketing and need substantial additional funding in the near term to continue our operations.
−Removed: We expect to need substantial additional funding to pursue the clinical development of our product candidates and launch and commercialize any product candidates for which we receive regulatory approval.
−Removed: We need to bring in additional capital in the near term and expect to incur additional costs associated with operating as a public company.
−Removed: We may also encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may increase our capital needs.
−Removed: As noted in our audited financial statements for the years ended December 31, 2022 and 2021, the uncertainties surrounding our ability to fund our operations raise substantial doubt about our ability to continue as a going concern.
−Removed: To date, we have financed our operations entirely through debt, equity financings and a strategic acquisition.
−Removed: We may seek additional funds through public or private equity or debt financing, via strategic transactions or collaborative arrangements.
−Removed: Additional funding from those or other sources may not be available when or in the amounts needed, on acceptable terms, or at all.
−Removed: There are no assurances that future funding will be available on favorable terms or at all.
−Removed: If additional funding is not obtained, we may need to reduce, defer or cancel preclinical and lab work, clinical trials, or overhead expenditures, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: If we are unable to raise capital when needed or on attractive terms, we could be forced to:
−Removed: • delay, reduce or eliminate our research and development programs or any future commercialization efforts;
−Removed: • enter into strategic alliances or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, or on terms that are less favorable than might otherwise be available;
−Removed: • dispose of technology assets, or relinquish or license on unfavorable terms, our rights to technologies or any future product candidates that we otherwise would seek to develop or commercialize ourselves;
−Removed: • pursue the sale of our company to a third party at a price that may result in a loss on investment for our stockholders;
−Removed: • file for bankruptcy or cease operations altogether.
−Removed: Any of these events could significantly harm our business, financial condition and prospects.
−Removed: Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
−Removed: Our historical financial statements have been prepared under the assumption that we will continue as a going concern.
−Removed: Our current independent registered public accounting firm has issued a report on our audited financial statements for the years ended December 31, 2022 that included an explanatory paragraph referring to our recurring operating losses and expressing substantial doubt in our ability to continue as a going concern Our former independent registered public accounting firm has issued a report on our audited financial statements for the years ended December 31, 2021 that included an explanatory paragraph referring to our recurring operating losses and expressing substantial doubt in our ability to continue as a going concern.
−Removed: Our ability to continue as a going concern is dependent upon our ability to obtain, among other things, the successful resolution of our litigation with Ms.
−Removed: Cunning, additional equity financing or other capital, attain further operating efficiencies, reduce expenditures, and, ultimately, generate revenue.
−Removed: Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
−Removed: We will require additional financing during the second quarter of 2023 to continue operations.
−Removed: The uncertainty as to the resolution of the Cunning Lawsuit could limit our ability to raise new capital from investors to operate our business.
−Removed: Additionally, the increased turmoil in the U.S.
−Removed: capital markets created a substantially more difficult business environment.
−Removed: Our ability to access the capital markets is expected to be extremely limited.
−Removed: If adequate funds are not available to us when we need it, we will be required to curtail or perhaps cease our operations which would, in turn, further raise substantial doubt about our ability to continue as a going concern.
−Removed: The doubt regarding our potential ability to continue as a going concern may adversely affect our ability to obtain new financing on reasonable terms or at all.
−Removed: Additionally, if we are unable to continue as a going concern, our stockholders may lose some or all of their investment in us.
−Removed: UM is the owner of intellectual property related to SBI-100 and SBI-200.
−Removed: Intellectual property rights (including any patents, non-manufacturing related know-how and improvements) for both SBI-100 and SBI-200 are owned by UM, and in the future we may need to seek UM’s consent to pursue, use, sub-license and/or enforce some of these intellectual property rights which we are entitled to use pursuant to the License Agreements.
−Removed: An unexpected deterioration in our relationship with UM may have a material adverse effect on our business, reputation, results of operations and financial condition.
−Removed: Table of Cont ents
−Removed: Breach of any of the License Agreements with UM could result in the loss of such license rights that are important to our business and our operations could be materially harmed.
−Removed: We license from UM the use, development and commercialization rights for our product candidates.
−Removed: As a result, our current business plans are dependent upon our maintenance of the License Agreements and the rights we license under them.
−Removed: If we breach the terms of our License Agreements with UM, or any future license agreement on which our business or product candidates are dependent, UM or other licensors may have the right to terminate the applicable agreement in whole or in part and thereby limit or terminate our rights to the licensed technology and intellectual property and/or any rights we have acquired to develop and commercialize certain product candidates or cause us to have to negotiate new or reinstated licenses on less favorable terms, or enable a competitor to gain access to the licensed technology.
−Removed: Moreover, disputes may arise regarding intellectual property subject to a license agreement such as our license agreements with UM, including:
−Removed: (i) the scope of the rights granted under the license agreement and other interpretation related issues, (ii) the extent to which our product candidates, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement, (iii) our diligence obligations under the license agreement and what activities satisfy those diligence obligations.
−Removed: The loss of the rights licensed to us under our License Agreements with UM, or any future license agreement that we may enter granting rights on which our business or product candidates are dependent, would harm, or even eliminate, our ability to further develop the applicable product candidates and would materially harm our business, prospects, financial condition and results of operations.
−Removed: We are heavily dependent on the success of our early-stage product candidates, which will require significant additional efforts to develop and may prove not to be viable for commercialization.
−Removed: We have no products approved for sale and all of our product candidates are in clinical and preclinical development.
+Added: • If we fail to enter and maintain successful collaborative arrangements or strategic alliances for our product candidates, we may have to reduce or delay our product candidate development or increase our expenditures.
+Added: • We expect to face intense competition, often from companies with greater resources and experience than we have.
+Added: • UM is the owner of intellectual property underlying SBI-100 OE
+Added: • Our product candidate, SBI-100 OE, will be subject to U.S.
+Added: controlled substance laws and regulations, and failure to comply with or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, and our financial condition.
+Added: Risks Related to Our Limited Operating History, Financial Position and Capital Requirements
+Added: We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future.
+Added: We may never generate any revenue or become profitable or, if we achieve profitability, we may not be able to sustain it.
+Added: Pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk.
+Added: We are a clinical-stage pharmaceutical company with a limited operating history upon which you can evaluate our business and prospects.
+Added: We commenced operations in 2011, and to date, we have focused primarily on organizing and staffing our company, business planning, raising capital, discovering potential product candidates, and conducting preclinical studies and clinical trials.
+Added: Our approach to the discovery and development of product candidates is unproven, and we do not know whether we will be able to develop any products of commercial value.
+Added: In addition, we have only two product candidates, SBI-100 and nimacimab, in clinical development.
+Added: We have not yet demonstrated an ability to obtain marketing approval for any of our product candidates, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization.
+Added: Consequently, any predictions made about our future success or viability may not be as accurate as they could be if we had a history of successfully developing and commercializing pharmaceutical products.
+Added: We have incurred significant operating losses since our inception.
+Added: If our product candidates are not successfully developed and approved, we may never generate any revenue.
+Added: We have incurred cumulative net losses since our inception and, as of December 31, 2023, we had an accumulated deficit of $ 104,382,549 .
+Added: Our losses have primarily resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.
+Added: All of our product candidates will require substantial additional development time and resources before we would be able to apply for or receive regulatory approvals and begin generating revenue from product sales.
+Added: We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase substantially as we continue our development of, seek regulatory approval for and potentially commercialize any approved products.
+Added: To become and remain profitable, we must succeed in developing and eventually commercializing or licensing products that generate significant revenue.
+Added: This will require us to be successful in a range of challenging activities, including clinical trials of our product candidates, discovering additional product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling any products for which we may obtain regulatory approval.
+Added: We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability.
+Added: In addition, we have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical industry.
+Added: Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.
+Added: Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
+Added: Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our product candidates or even continue our operations.
+Added: A decline in the value of our company could also cause you to lose all or part of your investment.
+Added: We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.
+Added: The development of biopharmaceutical product candidates and conducting preclinical studies and clinical trials are time-consuming and capital-intensive.
+Added: We expect our expenses to increase in connection with our ongoing activities, particularly as we conduct our ongoing and planned Phase 2 clinical trials of SBI-100 and nimacimab and continue our research and development activities.
+Added: Furthermore, we incur, and expect to continue to incur, additional costs associated with operating as a public company.
+Added: At the same time, our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if at all.
+Added: Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.
+Added: If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.
+Added: We believe that our existing cash, cash equivalents and investment securities will enable us to fund our operations for at least the next 12 months.
+Added: We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
+Added: Our operating plans and other demands on our cash resources may change as a result of many factors currently unknown to us.
+Added: Because the outcome of any preclinical study or clinical trial is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates.
+Added: Our future capital requirements will depend on many factors, including:
+Added: • the type, number, scope, progress, expansions, results, costs and timing of our preclinical studies and clinical trials of our product candidates which we are pursuing or may choose to pursue in the future;
+Added: • the costs and timing of manufacturing and laboratory testing for our product candidates, including clinical supplies and commercial manufacturing if any product candidate is approved;
+Added: • the costs, timing and outcome of regulatory review of our product candidates;
+Added: • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights;
+Added: • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting;
+Added: • the costs associated with hiring additional and retaining existing personnel and consultants as our preclinical and clinical activities increase;
+Added: • the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved;
+Added: • our ability to achieve sufficient market acceptance, adequate coverage and reimbursement from third-party payors and adequate market share and revenue for any approved products;
+Added: • the effect of competing technological and market developments;
+Added: • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements;
+Added: • costs associated with any products or technologies that we may in-license or acquire;
+Added: • the funding of any co-development arrangements we enter into.
+Added: Accordingly, we may need to seek additional funds sooner than planned, including through public or private equity or debt financings or other sources or through strategic collaborations.
+Added: Attempting to secure additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to develop our product candidates.
+Added: Adequate additional financing may not be available to us on acceptable terms, or at all.
+Added: We do not currently have any active grants nor do we expect grant revenues to be a material source of future revenue.
+Added: If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs, including our clinical trial programs, or any future commercialization of any product candidates, or be unable to sustain or expand our operations or otherwise capitalize on our business opportunities, as desired, any of which could materially affect our business, financial condition and results of operations.
+Added: Our ability to raise capital may be limited by applicable laws and regulations.
+Added: Using a shelf registration statement on Form S-3 to raise additional capital generally takes less time and is less expensive than other means, such as conducting an offering under a Form S-1 registration statement.
+Added: However, our ability to raise capital using a shelf registration statement may be limited by, among other things, SEC rules and regulations.
+Added: Under SEC rules and regulations, if our public float (the market value of our common stock held by non-affiliates) is less than $75,000,000, then the aggregate market value of securities sold by us or on our behalf under our Form S-3 in any 12-month period is limited to an aggregate of one-third of our public float.
+Added: While our public float is currently more than $75,000,000, we have been subject to this limitation in the past and we may be subject to it again in the future.
+Added: If our ability to utilize a Form S-3 registration statement for a primary offering of our securities is limited to one-third of our public float, we may conduct such an offering pursuant to an exemption from registration under the Securities Act or under a Form S-1 registration statement, and we would expect either of those alternatives to increase the cost of raising additional capital relative to utilizing a Form S-3 registration statement.
+Added: The sale of additional shares or other equity securities could result in additional dilution to our stockholders.
+Added: We require additional capital for the development and commercialization of our product candidates and may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue.
+Added: If our resources are insufficient to satisfy our cash requirements, we will seek to sell additional equity or debt securities or obtain a credit facility.
+Added: The sale of additional equity securities could result in additional dilution to our stockholders.
+Added: If we incur additional indebtedness it would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations.
+Added: We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
+Added: Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates
+Added: We are heavily dependent on the success of our early-stage product candidates, SBI-100 and nimacimab, which will require significant additional efforts to develop and may prove not to be viable for commercialization.
+Added: We have no products approved for sale and all of our product candidates are in clinical development.
Our business depends entirely on the successful development, clinical testing, and commercialization of these and any other product candidates we may seek to develop in the future, which may never occur.
The success of our product candidates will depend on several factors, any one of which we may not be able to successfully complete, such as:
−Removed: • receipt of necessary controlled substance registrations from the DEA;
+Added: • With respect to SBI-100, receipt of necessary controlled substance registrations from the DEA;
• successful completion of preclinical studies and clinical trials;
−Removed: • approval from regulatory agencies such as the Food and Drug Administration (the "FDA") or an Institutional Review Board ("IRB"), to conduct our clinical trials;
−Removed: • receipt of marketing approvals from the Food and Drug Administration (the "FDA") and other applicable regulatory authorities;
+Added: • approval from regulatory agencies, such as the FDA or an IRB, to conduct our clinical trials;
+Added: • receipt of marketing approvals from the FDA and other applicable regulatory authorities;
• obtaining, maintaining and protecting our intellectual property portfolio, including patents and trade secrets, and regulatory exclusivity for our product candidates;
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If we do not achieve one or more of these facto rs in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business.
−Removed: We have conducted, and continue to conduct, clinical trials for our product candidates outside of the United States and we may do so for our other product candidates.
−Removed: However, the FDA and other foreign equivalents may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business.
−Removed: We have conducted, and continue to conduct our initial Phase 1 clinical trial for SBI -100 OE in Australia.
−Removed: The acceptance of study data from clinical trials conducted outside the U.S.
−Removed: or another jurisdiction by the FDA or a comparable foreign regulatory authority may be subject to certain conditions or may not be accepted at all.
−Removed: For example, in cases where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the U.S., the FDA will generally not approve the
−Removed: Table of Cont ents
−Removed: application on the basis of foreign data alone unless (i) the data are applicable to the U.S.
−Removed: population and U.S.
−Removed: medical practice;
−Removed: (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations;
−Removed: and (iii) the data may be considered valid without the need for an on-site inspection by the FDA, or if the FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
−Removed: In addition, even where the foreign study data are not intended to serve as the sole basis for approval, the FDA will not accept the data as support for an application for marketing approval unless the study is well-designed and well-conducted in accordance with GCP requirements and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary.
−Removed: Many foreign regulatory authorities have similar approval requirements.
−Removed: In addition, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted.
−Removed: Conducting trials outside the United States also exposes us to additional risks, including risks associated with:
−Removed: • additional foreign regulatory requirements;
−Removed: • foreign exchange fluctuations;
−Removed: • compliance with foreign manufacturing, customs, shipment and storage requirements;
−Removed: • cultural differences in medical practice and clinical research;
−Removed: • diminished protection of intellectual property in some countries;
−Removed: • interruptions or delays in our trials resulting from geopolitical events, such as war or terrorism.
−Removed: We conduct certain research and development operations through our Australian wholly owned subsidiary.
−Removed: If we lose our ability to operate in Australia, or if our subsidiary is unable to receive the research and development tax credit allowed by Australian regulations, our business and results of operations could suffer.
−Removed: In August 2019, we formed a wholly owned Australian subsidiary, SKYE Bioscience Australia, to conduct various clinical activities for our product candidates in Australia.
−Removed: Due to the geographical distance and lack of employees currently in Australia, as well as our lack of experience operating in Australia, we may not be able to efficiently or successfully monitor, develop and commercialize our lead product candidate in Australia, including conducting clinical trials.
−Removed: Furthermore, we have no assurance that the results of any clinical trials that we conduct for our product candidates in Australia will be accepted by the FDA or foreign regulatory authorities for development and commercialization approvals.
−Removed: In addition, current Australian tax regulations provide for a refundable R&D tax credit equal to 48.5% of qualified expenditures.
−Removed: If our subsidiary loses its ability to operate in A ustralia, or if we are ineligible or unable to receive the R&D tax credit, or the Australian government significantly reduces or eliminates the tax incentive program, our business and results of operation may be adversely affected.
−Removed: We expect to face intense competition, often from companies with greater resources and experience than we have.
−Removed: The highly competitive pharmaceutical industry continues to rapidly expand and evolve as an increasing number of competitors and potential competitors enter the market, many of which have substantially greater financial, technological, managerial and research and development resources and experience than we have.
−Removed: Our pipeline products, if successfully developed, will compete with product offerings from large and well-established companies that have greater marketing and sales experience and capabilities than we or our collaboration partners have.
−Removed: If we are unable to compete successfully, we may be unable to grow and sustain our revenue.
−Removed: The current volatility of global financial conditions and inflation could negatively impact our business and financial condition.
−Removed: Current global financial conditions and recent market events have been characterized by increased volatility, inflation and the resulting tightening of the credit and capital markets has reduced the amount of available liquidity and overall economic activity.
−Removed: Economic factors over which the Company has no control, including changes in inflation, interest rates and foreign currency rates may have a potential adverse effect of on revenues, expenses and resulting margins.
−Removed: We cannot guarantee that debt or equity financing, and the ability to borrow funds or cash generated by operations will be available or sufficient to meet or satisfy our initiatives, objectives, or requirements.
−Removed: Our inability to access sufficient amounts of capital on terms acceptable to us for our operations will negatively impact our business, prospects, liquidity and financial condition.
−Removed: Global markets have recently experienced increased rates of inflation.
−Removed: Inflation itself, as well as certain governmental efforts to combat inflation, may have significant negative effects on any economy which the Company does business.
−Removed: Past governmental efforts to curb inflation also involved other more drastic economic measures.
−Removed: Any future economic measures to curb inflation could be expected to have similar adverse effects on the level of economic activity in the market, which the Company does business and, in turn, on the operations of the Company.
−Removed: For example, the Federal Reserve recently raised interest rates multiple times in response to concerns about inflation and it may raise them again.
−Removed: Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer spending.
−Removed: Table of Cont ents
−Removed: Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.
−Removed: Other policies and measures adopted by governments include interest rate adjustments, intervention in the currency markets or actions to adjust or fix the value of the local currency may adversely affect t he Company’s business and results of operations.
−Removed: or international economic conditions could negatively affect our business, financial condition and results of operations.
−Removed: We face risks associated with U.S.
−Removed: and international economic conditions and are subject to events beyond our control including war, public health crises (such as the COVID-19 pandemic), trade disputes, economic sanctions, and their collateral impacts.
−Removed: or international economic conditions or periods of inflation or high energy prices may contribute to higher unemployment levels, decreased consumer spending, reduced credit availability and declining consumer confidence and demand, each of which poses a risk to our business.
−Removed: In February 2022, armed conflict escalated between Russia and Ukraine.
−Removed: The sanctions imposed by the U.S.
−Removed: and other countries against Russia, following Russia’s invasion of Ukraine, to date include restrictions on selling or importing goods, services, or technology in or from affected regions and travel bans and asset freezes impacting connected individuals and political, military, business and financial organizations in Russia.
−Removed: and other countries could impose wider sanctions and take other actions should the conflict further escalate.
−Removed: It is not possible to predict the broader consequences of this conflict, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, currency exchange rates and financial markets, all of which could impact our business, financial condition and results of operations.
−Removed: If we are not able to attract and retain highly qualified personnel, we may not be able to successfully implement our business strategy.
−Removed: Our ability to compete in the highly competitive biotechnology and pharmaceuticals industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel.
−Removed: Our success depends in large measure on our key personnel, including Mr.
−Removed: Punit Dhillon, our President and Chief Executive Officer, and Ms.
−Removed: Kaitlyn Arsenault, our Chief Financial Officer.
−Removed: The loss of the services of Mr.
−Removed: Dhillon and Ms.
−Removed: Arsenault could significantly hinder our operations.
−Removed: We do not currently have key person insurance in effect for Mr.
−Removed: Dhillon and Ms.
−Removed: In addition, the competition for qualified personnel in the pharmaceutical industry is intense and there can be no assurance that we will be able to continue to attract and retain all personnel necessary for the development and operation of our business.
−Removed: We also rely on, and have relied on in the past, consultants and advisors to assist us in formulating our strategy.
−Removed: Our consultants and advisors are either self-employed or employed by other organizations, and they may have conflicts of interest or other commitments, such as consulting or advisory contracts with other organizations, that may affect their ability to contribute to us.
−Removed: Our success depends on our ability to protect our intellectual property and our proprietary technologies.
−Removed: Our commercial success depends in part on our ability to obtain and maintain patent protection and trade secret protection for our product candidates, proprietary technologies and their uses as well as our ability to operate without infringing upon the proprietary rights of others.
−Removed: We generally seek to protect our proprietary position by filing patent applications in the United States and abroad related to our product candidates, proprietary technologies and their uses that are important to our business.
−Removed: We also seek to protect our proprietary position by acquiring or in-licensing relevant issued patents or pending applications, or other intellectual property rights, from third parties.
−Removed: Pending patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless, and until, patents issue from such applications, and then only to the extent the issued claims cover the technology and/or its use.
−Removed: There can be no assurance that any of our future patent applications or the patent applications of our licensors will result in additional patents being issued or that issued patents will afford sufficient protection against competitors with similar technology, nor can there be any assurance that the patents issued will not be infringed, designed around or invalidated by third parties.
−Removed: Even issued patents may later be found invalid or unenforceable or may be modified or revoked in proceedings instituted by third parties before various patent offices or in courts.
−Removed: The degree of future protection for our and our licensors proprietary rights is uncertain.
−Removed: Only limited protection may be available and may not adequately protect our rights or permit us to gain or keep any competitive advantage.
−Removed: These uncertainties and/or limitations in our ability to properly protect the intellectual property rights relating to our product candidates could have a material adverse effect on our financial condition and results of operations.
−Removed: The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our potential future collaborators will be successful in protecting our product candidates by obtaining and defending patents.
−Removed: The patent prosecution process is also expensive and time-consuming, and we and our licensors, such as UM, may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions where protection may be commercially advantageous.
−Removed: It is also possible that we or our licensors will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.
−Removed: Table of Cont ents
−Removed: In addition, although we enter into non-disclosure and confidentiality agreements with parties who have access to patentable aspects of our research and development output, such as our employees, outside scientific collaborators, contract research organizations, third-party manufacturers, consultants, advisors and other third parties, any of these parties may breach such agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.
−Removed: Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
−Removed: As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
−Removed: In some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology or products that we license from third parties.
−Removed: Therefore, we cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent with the best interests of our business.
−Removed: In addition, if third parties who license patents to us fail to maintain such patents, or lose rights to those patents, the rights we have licensed may be reduced or eliminated.
−Removed: If we are unable to prevent disclosure of our trade secrets or other confidential information to third parties, our competitive position may be impaired.
−Removed: We also may rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable.
−Removed: Our ability to stop third parties from obtaining the information or know-how necessary to make, use, sell, offer to sell or import our products or practice our technology is dependent in part upon the extent to which we prevent disclosure of the trade secrets that cover these activities.
−Removed: Trade secret rights can be lost through disclosure to third parties.
−Removed: Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our trade secrets to third parties, resulting in loss of trade secret protection.
−Removed: Moreover, our competitors may independently develop equivalent knowledge, methods and know-how, which would not constitute a violation of our trade secret rights.
−Removed: Enforcing a claim that a third party is engaged in the unlawful use of our trade secrets is expensive, difficult and time consuming, and the outcome is unpredictable.
−Removed: In addition, recognition of rights in trade secrets and a willingness to enforce trade secrets differs in certain jurisdictions.
−Removed: We engage in transactions with related parties which present possible conflicts of interest that could have an adverse effect on us.
−Removed: We have entered, and may continue to enter, into transactions with affiliates and other related parties for financing, corporate, business development and operational services.
−Removed: For example, we currently have a sponsored research agreement with VivaCell Biotechnology España, S.L.U ("VivaCell").
−Removed: Emerald Health Sciences, Inc.
−Removed: ("Sciences"), which holds 17.44% of the outstanding shares of common stock of the Company, also owns a majority of the outstanding shares of VivaCell.
−Removed: Such transactions may not have been entered into on an arm’s-length basis, and we may have achieved more or less favorable terms because such transactions were entered into with our related parties.
−Removed: We rely, and will continue to rely, on our related parties to maintain these services.
−Removed: If the pricing for these services changes, or if our related parties cease to provide these services, including by terminating agreements with us, we may be unable to obtain replacements for these services on the same terms without disruption to our business.
−Removed: This could have a material effect on our business, results of operations and financial condition.
−Removed: The details of certain of these transactions are set forth in “Certain Relationships and Related Party Transactions”.
−Removed: Related party transactions create the possibility of conflicts of interest with regard to our management, we may enter into contracts between us, on the one hand, and related parties, on the other, that may not result in arm’s-length transactions, including that:
−Removed: • our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and
−Removed: • our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time.
−Removed: Such conflicts could cause an individual in our management to seek to advance his or her economic interests or the economic interests of certain related parties above ours.
−Removed: Further, the appearance of conflicts of interest created by related party transactions could impair the confidence of our investors.
−Removed: Our audit committee reviews these transactions.
−Removed: Notwithstanding this, it is possible that a conflict of interest could have a material adverse effect on our liquidity, results of operations and financial condition.
−Removed: Table of Cont ents
−Removed: Unpredictable business disruptions could seriously harm our future revenues and financial condition, increase our costs and expenses, and impact our ability to raise capital.
−Removed: Our operations could be subject to unpredictable events, such as earthquakes, power shortages, telecommunications failures, water shortages, medical epidemics (such as the COVID-19 outbreak) and other natural or man made disasters or business interruptions, for which we are predominantly self-insured.
−Removed: The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.
−Removed: Notably, we rely on third party manufacturers to produce our product candidates, and such third party manufacturers ability to manufacture our products could be negatively affected by such events.
−Removed: The COVID-19 pandemic, related variants and other epidemic diseases has, and could continue to, adversely impact our business, including our drug manufacturing, nonclinical activities and clinical trials.
−Removed: The COVID-19 pandemic and government measures taken in response have had a significant impact, both direct and indirect, on businesses and commerce.
−Removed: For example, the COVID-19 pandemic has in the past negatively impacted our ability to source materials that are part of the eye drop formulation, as well as negatively impacted our patient recruitment in Australia for our clinical trials.
−Removed: The extent to which the COVID-19 pandemic may impact our business, including our preclinical studies, planned clinical trials, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence.
−Removed: We continue to monitor COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of its employees and other third parties with whom the Company does business.
−Removed: In connection with the COVID-19 pandemic or an outbreak of another highly infectious or contagious disease or other health concern, we may continue to experience disruptions that could severely impact our business, drug manufacturing, nonclinical activities, and clinical trials.
Due to our limited resources, we may be forced to focus on a limited number of development candidates which may force us to pass on opportunities that could have a greater chance of clinical success.
−Removed: Due to our limited resources and capabilities, we will have to decide to focus on developing a limited number of product candidates.
+Added: Due to our limited resources and capabilities, we will have to decide to focus on developing a limited number of product candidates, currently SBI-100 and nimacimab.
As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential.
2 unchanged sentences
If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.
−Removed: Our business and operations would be adversely affected in the event that our computer systems or those of our partners, contract research organizations, contractors, consultants or other third parties we work with were to suffer system failures, cyber-attacks, loss of data or other security incidents.
−Removed: Despite the implementation of security measures, our computer systems, as well as those of our partners, contract research organizations, contractors, consultants, law and accounting firms and other third parties we work with, may sustain damage from computer viruses, unauthorized access, data breaches, phishing attacks, ransomware attacks, denial-of-service attacks, cybercriminals, natural disasters, terrorism, war and telecommunication and electrical failures.
−Removed: We rely on our partners and third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or breaches.
−Removed: The risks of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber-terrorists, have increased significantly and are becoming increasingly difficult to detect.
−Removed: If a failure, accident or security breach were to occur and cause interruptions in our operations, or the operations of our partners or third-party providers, it could result in a misappropriation of confidential information, including our intellectual property or financial information or clinical trial participant personal data, a material disruption or delay in our drug development programs, and/or significant monetary losses.
−Removed: For example, during the second quarter of 2022, we were indirectly impacted by a cyberattack on our Phase 1 clinical supply contract manufacturer which delayed our production timeline and the anticipated initiation of enrollment in our Phase 1 clinical studies for SBI-100 OE to the fourth quarter of 2022.
−Removed: The loss of preclinical or clinical trial data from completed, ongoing or planned trials, or chemistry, manufacturing and controls data for our product candidates, could result in delays in regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
−Removed: Any such breach, loss or compromise of clinical trial participant personal data may also subject us to civil fines and penalties under the privacy laws of the European Union or other countries as well as state and federal privacy laws in the United States.
−Removed: We maintain cyber liability insurance;
−Removed: however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems or the systems of our service providers.
−Removed: Table of Cont ents
−Removed: Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could have a material adverse effect on our business, financial condition or results of operations.
−Removed: Privacy and data security have become significant issues in the U.S., and in many other jurisdictions where we may in the future conduct our operations.
−Removed: The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues, which may affect our business and may increase our compliance costs and exposure to liability.
−Removed: As we receive, collect, process, use and store personal and confidential data, we are or may be subject to diverse laws and regulations relating to data privacy and security.
−Removed: Compliance with these privacy and data security requirements is rigorous and time-intensive and may increase our cost of doing business, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation and reputational harm, which could materially and adversely affect our business, financial condition and results of operations.
−Removed: In the U.S., we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.
−Removed: HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, or collectively, HIPAA, impose, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information held by covered entities and their business associates.
−Removed: We may obtain health information from third parties (including research institutions from which we obtain clinical trial data) that are subject to privacy and security requirements under HIPAA.
−Removed: Depending on the facts and circumstances, we could be subject to criminal penalties if we knowingly receive individually identifiable health information from a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.
−Removed: In addition, state laws govern the privacy and security of health-related and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same requirements, thus complicating compliance efforts.
−Removed: By way of example, California enacted the California Consumer Privacy Act, or CCPA, effective January 1, 2020, which gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.
−Removed: The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that has increased the likelihood of, and risks associated with, data breach litigation.
−Removed: The CCPA may increase our compliance costs and potential liability.
−Removed: Further, the California Privacy Rights Act, or CPRA, generally went into effect on January 1, 2023, and significantly amends the CCPA.
−Removed: The CPRA imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
−Removed: It also creates a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement and additional compliance investment and potential business process changes may be required.
−Removed: Similar laws have passed in Virginia, Connecticut, Utah and Colorado, and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States.
−Removed: The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
−Removed: In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition
−Removed: If we fail to enter and maintain successful collaborative arrangements or strategic alliances for our product candidates, we may have to reduce or delay our product candidate development or increase our expenditures.
−Removed: An important element of our strategy for developing, manufacturing and commercializing our product candidates is entering into collaborative arrangements or strategic alliances with pharmaceutical companies, research institutions or other industry participants to advance our programs and enable us to maintain our financial and operational capacity.
−Removed: We face significant competition in seeking appropriate alliances.
−Removed: We may not be able to negotiate alliances on acceptable terms, if at all.
−Removed: In addition, these alliances may be unsuccessful.
−Removed: If we fail to create and maintain suitable alliances, we may have to limit the size or scope of, or delay, one or more of our research or development programs.
−Removed: In addition, these kinds of collaborative arrangements and strategic alliances may place certain aspects of the development of our product candidates outside of our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us.
−Removed: Table of Cont ents
−Removed: Dependence on collaborative arrangements or strategic alliances will subject us to several risks, including the risks that:
−Removed: • we may not be able to control the amount and timing of resources that our collaborators may devote to the product candidates;
−Removed: • our collaborators may experience financial difficulties;
−Removed: • we may be required to relinquish important rights such as marketing and distribution rights;
−Removed: • business combinations or significant changes in a collaborator’s business strategy may also adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement;
−Removed: • a collaborator could independently move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors;
−Removed: • collaborative arrangements are often terminated or allowed to expire, which would delay development and may increase the cost of developing our product candidates.
−Removed: The Company is currently subject to lawsuits, and in the future may be subject to additional lawsuits, that could divert its resources and result in the payment of significant damages and other remedies.
−Removed: From time to time, the Company may be subject to litigation claims through the ordinary course of its business operations or otherwise, regarding, among other things, intellectual property rights matters, employment matters and tax matters.
−Removed: Litigation to defend the Company against claims by third parties, or to enforce any rights that the Company may have against third parties, may be necessary, which could result in substantial costs and diversion of the Company's resources, causing a material adverse effect on its business, financial condition and results of operations.
−Removed: Given the nature of the Company's business, it is, and may from time to time in the future be, party to various, and at times numerous, legal, administrative and regulatory inquiries, investigations, proceedings and claims that arise in the ordinary course of business, as well as potential class action lawsuits.
−Removed: Because the outcome of such legal matters is inherently uncertain, if one or more of such legal matters were to be resolved against the Company for amounts in excess of management's expectations or any applicable insurance coverage or indemnification right, the Company's results of operations and financial condition could be materially adversely affected.
−Removed: Any litigation to which the Company is a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal, or in payments of substantial monetary damages or fines, the posting of bonds requiring significant collateral, letters of credit or similar instruments, or the Company may decide to settle lawsuits on similarly unfavorable terms.
−Removed: Moreover, the Company cannot be sure that the remedies available to it at law or under contract, will be sufficient in amount, scope or duration to fully or partially offset any such possible liabilities.
−Removed: Any of these factors, individually or in the aggregate, could have a material adverse effect on the Company's business, results of operations, cash flows or liquidity.
−Removed: For a description of certain currently pending legal and regulatory proceedings, see Item 3 “Consolidated Statements and Other Financial Information — Legal Proceedings” of this Annual Report and Item 3 (Legal Proceedings) of this Annual Report.
−Removed: If we are unsuccessful in the resolution of the Cunning Lawsuit, our business may be materially harmed, and we may be required to take actions to reorganize, discontinue or liquidate part or all of our operations.
−Removed: As described in more detail under the caption “Legal Proceedings – Cunning Lawsuit”, on January 18, 2023, a jury rendered a verdict in favor of Ms.
−Removed: Cunning and awarded her $512,500 in economic damages (e.g., lost earnings, future earnings and interest), $840,960 in non-economic damages (e.g., emotional distress) and $3,500,000 in punitive damages.
−Removed: The plaintiff's counsel has also filed a motion for attorney fees claiming fees of $1,351,850 and a multiplier of 1.5, for a total of $2,027,775.
−Removed: The Company intends to vigorously challenge the verdict in the trial court and appeal and pursue reimbursement under its existing insurance policies.
−Removed: However, the outcome of the litigation and the amount recoverable under its existing insurance policies, if any, is inherently uncertain.
−Removed: While we cannot currently determine the ultimate liability pursuant to this verdict, we recorded an estimate for a legal contingency of $6,205,310 related to the Cunning Lawsuit.
−Removed: If we are unable to reduce the verdict prior to the rendering of a final judgment by the court or to reach a reasonable settlement with Ms.
−Removed: Cunning, we would be liable to pay substantial damages in excess of our liquid assets.
−Removed: Any or all of the foregoing would materially harm our business, fundamentally change our business, and could result in our being required to take actions to discontinue operations, liquidate part or all of our operations or file a petition for bankruptcy in order to reorganize or liquidate.
−Removed: If we are not able to favorably resolve our litigation with Ms.
−Removed: Cunning, we could potentially be required to seek relief through a filing under the U.S.
−Removed: Bankruptcy Code, either through plan of reorganization or under an alternative plan, which could include liquidation.
−Removed: Table of Cont ents
−Removed: If we are not able to favorably resolve our litigation with Ms.
−Removed: Cunning, we could potentially be required to seek relief through a filing under the U.S.
−Removed: Bankruptcy Code.
−Removed: The announcement of a filing under the U.S.
−Removed: Bankruptcy Code could materially adversely affect the relationships between us and our employees, suppliers, third party contractors and consultants, and others.
−Removed: Substantial risks would result from any such bankruptcy filing.
−Removed: • if we were not able to develop a successful plan for reorganization, we would be forced to liquidate;
−Removed: • the equity interests of our current stockholders and employees could be completely eliminated
−Removed: Risks Related to Controlled Substances
−Removed: Government authorities extensively regulate our activities.
−Removed: Government authorities in the United States, at the federal, state and local level, and in other countries, extensively regulate, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, import and export of pharmaceutical products such as those we are developing.
−Removed: The processes for obtaining regulatory approvals in the United States and in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources.
−Removed: A failure to comply with such laws and regulations or prevail in any enforcement action or litigation related to noncompliance could have a material adverse impact on our business, financial condition and results of operations and could cause the market value of our shares to decline.
−Removed: Some of the product candidates we are developing, including SBI-100, will be subject to U.S.
−Removed: controlled substance laws and regulations, and failure to comply with or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, and our financial condition.
−Removed: Some product candidates we plan to develop will contain controlled substances as defined in the CSA.
−Removed: Controlled substances that are pharmaceutical products are subject to a high degree of regulation under the CSA, which establishes, among other things, certain registration, manufacturing quotas, security, recordkeeping, reporting, import, export and other requirements administered by the DEA.
−Removed: The DEA classifies controlled substances into five schedules:
−Removed: Schedule I, II, III, IV or V substances.
−Removed: Schedule I substances by definition have a high potential for abuse, no currently “accepted medical use” in the United States, lack accepted safety for use under medical supervision, and may not be prescribed, marketed or sold in the United States.
−Removed: Pharmaceutical products approved for use in the United States may be listed as Schedule II, III, IV or V.
−Removed: Schedule I and II drugs are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, security requirements and criteria for importation.
−Removed: In addition, dispensing of Schedule II drugs is further restricted.
−Removed: While certain cannabinoids may be classified as Schedule I controlled substances, products approved for medical use in the United States that contain certain cannabinoids must be placed on Schedules II-V, since approval by the FDA satisfies the “accepted medical use” requirement.
−Removed: The DEA has conducted a scientific review of the chemical structure of SBI-200 and determined that SBI-200 is not a regulated chemical nor controlled substance under the CSA.
−Removed: This decision by the DEA should help the Company expand the network of clinical testing sites, permit a greater cross-section of patients to participate in studies of this drug, as well as speed the initiation of clinical trials for SBI-200.
−Removed: SBI-100 remains a Schedule I controlled substance, pending a request to re-schedule SBI-100 after marketing authorization by the FDA.
−Removed: If approved by the FDA, we expect the finished dosage forms of SBI-100 OE to be reevaluated by the DEA and no longer listed as a Schedule I drug.
−Removed: Consequently, SBI-100 OE's manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use may be subject to a significant degree of regulation by the DEA, if the finished dosage form is determined to be a Schedule II drug.
−Removed: In addition, the scheduling process may take one or more years, thereby delaying the launch of the drug product in the United States.
−Removed: Furthermore, if the FDA, DEA, or any foreign regulatory authority determines that any of our drug product candidates may have potential for abuse, it may require us to generate more clinical or other data than we currently anticipate establishing whether or to what extent the substance has an abuse potential, which could increase the cost and/or delay the launch of the drug product.
−Removed: Facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be registered (licensed) to perform these activities and have the security, control, recordkeeping, reporting and inventory mechanisms required by the DEA to prevent drug loss and diversion.
−Removed: All these facilities must renew their registrations annually, except dispensing facilities, which must renew every three years.
−Removed: The DEA conducts periodic inspections of certain registered establishments that handle controlled substances.
−Removed: Obtaining the necessary registrations may result in delay of the manufacturing, development, or distribution of our product candidates.
−Removed: Furthermore, failure to maintain compliance with the CSA, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, financial condition and results of operations.
−Removed: The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations.
−Removed: In certain circumstances, violations could lead to criminal proceedings.
−Removed: Individual states may also establish controlled substance laws and regulations that
−Removed: Table of Cont ents
−Removed: may require additional regulatory approvals to conduct research and clinical trials in that state.
−Removed: As a result, we or our partners or clinical sites may also be required to obtain separate state registrations, permits or licenses in order to be able to receive, handle, and distribute controlled substances for clinical trials.
−Removed: Delay in obtaining these state registrations, permits or licenses may delay the start of our clinical trials.
−Removed: While some states automatically schedule a drug based on federal action, other states schedule drugs through rule making or a legislative action.
−Removed: State scheduling may delay commercial sale of any product for which we obtain federal regulatory approval and adverse scheduling could have a material adverse effect on the commercial attractiveness of such product.
−Removed: We or our partners or clinical sites must also obtain separate state registrations, permits or licenses to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law.
−Removed: To conduct clinical trials with our product candidates in the United States prior to approval, each of our research sites must obtain and maintain a DEA researcher registration that will allow those sites to handle and dispense the product candidate and to obtain the product.
−Removed: If the DEA delays or denies the grant of a research registration to one or more research sites, the clinical trial could be significantly delayed, and we could lose clinical trial sites.
−Removed: Manufacturing of our product candidates is, and, if approved, our commercial products will be, subject to the DEA’s annual manufacturing and procurement quota requirements, if classified as Schedule II.
−Removed: The annual quota allocated to us or our contract manufacturers for the controlled substances in our product candidates may not be sufficient to meet commercial demand or complete clinical trials.
−Removed: Consequently, any delay or refusal by the DEA in establishing our, or our contract manufacturers’, procurement and/or production quota for controlled substances could delay or stop our clinical trials or product launches, which could have a material adverse effect on our business, financial position and operations.
−Removed: If, upon approval of any of our product candidates, the product is scheduled as Schedule II or III, we would also need to identify wholesale distributors with the appropriate DEA registrations and authority to distribute the product to pharmacies and other health care providers.
−Removed: The failure to obtain, or delay in obtaining, or the loss of any of those registrations could result in increased costs to us.
−Removed: Furthermore, state and federal enforcement actions, regulatory requirements, and legislation intended to reduce prescription drug abuse, such as the requirement that physicians consult a state prescription drug monitoring program may make physicians less willing to prescribe, and pharmacies to dispense, our products, if approved.
−Removed: Research restrictions, product shipment delays or prohibitions could have a material adv erse effect on our business, results of operations and financial condition.
−Removed: Research on and the shipment, import and export of our product candidates and the API used in our product candidates will require research permits, import and export licenses by many different authorities.
−Removed: For instance, in the United States, the FDA, U.S.
−Removed: Customs and Border Protection, and the DEA;
−Removed: in Canada, the Canada Border Services Agency, and Health Canada;
−Removed: in Europe, the European Medicines Agency and the European Commission;
−Removed: in Australia and New Zealand, the Australian Customs and Border Protection Service, the Therapeutic Goods Administration, the New Zealand Medicines and Medical Device Safety Authority and the New Zealand Customs Service;
−Removed: and in other countries, similar regulatory authorities, regulate the research on and import and export of pharmaceutical products that contain controlled substances.
−Removed: Specifically, the import and export process requires the issuance of import and export licenses by the relevant controlled substance authority in both the importing and exporting country.
−Removed: We may not be granted, or if granted, maintain, such licenses from the authorities in certain countries.
−Removed: Even if we obtain the relevant licenses, shipments of API and our product candidates may be held up in transit, which could cause significant delays and may lead to product batches being stored outside required temperature ranges.
−Removed: Inappropriate storage may damage the product shipment resulting in delays in clinical trials.
−Removed: Once shipment is complete, we or the research contractors we are working with may also suffer further delays or restrictions as a result of regulations governing research on controlled substances.
−Removed: A delay in a clinical trial or, upon commercialization, a partial or total loss of revenue from one or more shipments of API or our product candidates could have a material adverse effect on our business, results of operations and financial condition.
−Removed: The aforementioned examples and lists of various authorities that may currently, or in the future, affect our ability to conduct research on or import or export our product candidates and/or API, should not be construed as exhaustive or comprehensive in any way.
−Removed: Our ability to research, develop and commercialize our drug product candidates is dependent on our ability to obtain and maintain the necessary controlled substance registrations from the DEA.
−Removed: In the United States, the DEA regulates activities relating to the synthesis, possession and supply of controlled substances for medical research and/or commercial development.
−Removed: We are partnering with multiple clinical research organizations and manufacturing organizations to research and develop our pharmaceutical drug products.
−Removed: The regulation of controlled substances is complex and subject to stringent controls.
−Removed: If our partners cannot obtain or maintain the necessary regulatory authorizations that we anticipate will be required for the contemplated development program, our business may suffer, and we may not be able to pursue the discovery, research and de velopment of cannabinoids.
−Removed: Table of Cont ents
−Removed: Laws and regulations affecting therapeutic uses of cannabinoids are constantly evolving.
−Removed: The constant evolution of laws and regulations affecting the research and development of cannabinoid-based pharmaceutical products and treatments could detrimentally affect our business.
−Removed: Laws and regulations related to the therapeutic uses of cannabinoids are subject to changing interpretations.
−Removed: These changes may require us to incur substantial costs associated with legal and compliance fees and ultimately require us to alter our business plan.
−Removed: Furthermore, violations or alleged violation of these laws could disrupt our business and result in a material adverse effect on our operations.
−Removed: In addition, we cannot predict the nature of any future laws, regulations, interpretations or applications of laws and regulations and it is possible that new laws and regulations may be enacted in the future that will be directly applicable to our business.
−Removed: Our product candidates may contain controlled substances, the use of which may generate public controversy
−Removed: Since our product candidates may contain controlled substances, their regulatory approval may generate public controversy or scrutiny.
−Removed: Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for, our product candidates.
−Removed: These pressures could also limit or restrict the introduction and marketing of our product candidates.
−Removed: Adverse publicity from misuse or adverse side effects cannabinoid derivatives may adversely affect the commercial success or market penetration achievable by our product candidates.
−Removed: The nature of our business will likely attract a high-level of public and media interest, and in the event of any resultant adverse publicity, our reputation may be harmed.
−Removed: Risks Related to Government Regulation
−Removed: We may not be able to file investigational new drug applications to commence clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed in a timely manner, or at all.
−Removed: Prior to commencing clinical trials in territories with a regulatory authority we must obtain the necessary approvals to commence the clinical studies.
−Removed: For example, before initiating a clinical trial in the United States for any of our product candidates, we may be required to have an IND in effect for each product candidate.
−Removed: Submission of an IND may not result in the FDA allowing clinical trials to begin and, once begun, issues may arise that will require us to suspend or terminate such clinical trials.
−Removed: Once an IND is submitted, the sponsor must wait 30 calendar days before initiating the clinical trial, during which FDA will review the IND and either provide comments or allow the trial to proceed.
−Removed: Additionally, even if relevant regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or a clinical trial application (the equivalent of an IND in foreign jurisdictions), these regulatory authorities may change their requirements in the future.
If we fail to demonstrate the safety and efficacy of any product candidate that we develop to the satisfaction of the regulatory authorities, we may incur additional costs or experience difficulty in completing, the development and commercialization of such product candidate.
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The policies of the applicable regulatory agencies could also significantly change in a manner rendering our clinical data insufficient for approval.
−Removed: Table of Cont ents
Even if we eventually complete clinical testing and receive approval of a NDA or foreign regulatory filing for a product candidate, the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional clinical trials.
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Clinical testing is expensive and can take several years to complete, and its outcome is inherently uncertain.
−Removed: Moreover, obtaining sufficient quantities of product for clinical testing is subject to regulation by DEA and, in some cases, NIDA.
+Added: Moreover, obtaining sufficient quantities of certain product of SBI-100 for clinical testing is subject to regulation by DEA and, in some cases, NIDA (National Institute of Drug Abuse).
It is impossible to predict when or if any of our product candidates will prove effective or safe in humans or will receive regulatory approval.
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We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the United States.
−Removed: Our pool of suitable patients may be smaller for some of our product candidates, which will impact our ability to enroll a sufficient number of suitable patients.
In addition, some of our competitors have ongoing clinical trials for product candidates that treat the same indications as our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates.
Patient enrollment is affected by other factors including the severity of the disease under investigation, the eligibility criteria for the study in question, the perceived risks and benefits of the product candidate, the patient referral practices of physicians, the ability to monitor patients adequately during and after treatment, and the proximity and availability of clinical trial sites for prospective patients.
−Removed: Additionally, the COVID-19 pandemic may slow enrollment in our future clinical trials.
Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether, which could result in increased development costs and cause the value of our company to decline and limit our ability to obtain additional financing.
−Removed: Table of Cont ents
Our development and commercialization strategy for SBI-100 OE, may depend, in part, on published scientific literature and the FDA’s prior findings regarding the safety and efficacy of dronabinol, based on data not developed by us, but upon which the FDA may rely in reviewing our NDA.
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approval, the FDA may require us to perform additional clinical trials or measurements to support approval.
−Removed: In addition, notwithstanding the approval of many products by the FDA pursuant to Section 505(b)(2), over the last few years some pharmaceutical companies and others have objected to the FDA’s interpretation of Section 505(b)(2).
+Added: In addition, notwithstanding the approval of many products by the FDA pursuant to Section 505(b)(2), some pharmaceutical companies and others have objected to the FDA’s interpretation of Section 505(b)(2).
If the FDA changes its interpretation of Section 505(b)(2), or if the FDA’s interpretation is successfully challenged in court, this could delay or even prevent the FDA from approving any Section 505(b)(2) NDAs that we submit.
−Removed: Such a result could require us to conduct additional testing and costly clinical trials, which could substantially delay or prevent the approval and launch of our product candidates, including SBI-100.
−Removed: Even if we receive marketing approval for a product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to restrictions, withdrawal from the market, or penalties if we fail to comply with applicable regulatory requirements or if we experience unanticipated problems with our product candidates, when and if approved.
−Removed: Once regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA, DEA and/or non-U.S.
−Removed: regulatory authorities and such approval may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing follow-up studies or surveillance.
−Removed: In addition, we will be subject to extensive and ongoing regulatory requirements with regard to labeling, packaging, adverse event reporting, storage, distribution, advertising, promotion, recordkeeping and submission of safety and other post-market information.
−Removed: Manufacturers of our products and manufacturers’ facilities are required to comply with current good manufacturing practice regulations, which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.
−Removed: We will also be required to report certain adverse reactions and production problems, if any, to the FDA and to comply with requirements concerning advertising and promotion for our products.
−Removed: If we, any future collaboration partner or a regulatory authority discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the collaboration partner, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing.
−Removed: Any DEA registrations that we receive may also be subject to limitations such as the DEA’s annual manufacturing and procurement quota requirements.
−Removed: The annual quota allocated to us or our contract manufacturers for the controlled substances in our product candidates may not be sufficient to meet commercial demand.
−Removed: Our facilities that handle controlled substances, and those of our third party contractors, will also be subject to registration requirements and periodic inspections.
−Removed: Additionally, if approved by the FDA, the finished dosage forms of our drug product candidates will be subject to the DEA’s rescheduling process, which may delay product launch and impose additional regulatory burdens.
−Removed: Failure to maintain compliance with the CSA, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, financial condition and results of operations.
−Removed: The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations.
−Removed: In certain circumstances, violations could lead to criminal proceedings.
−Removed: For additional information, see Risk Factor, “ The product candidates we are developing will be subject to U.S.
−Removed: controlled substance laws and regulations, and failure to comply with or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, and our financial condition.
−Removed: Table of Cont ents
−Removed: The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling and regulatory requirements.
−Removed: If we, our product candidates or the manufacturing facilities for our product candidates fail to comply with regulatory requirements of the FDA and/or other non-U.S.
−Removed: regulatory authorities, we could be subject to administrative or judicially imposed sanctions.
−Removed: Widely publicized events concerning the safety risk of certain drug products have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and the imposition by the FDA of risk evaluation and mitigation strategies, to ensure that the benefits of the drug outweigh its risks.
−Removed: In addition, widely publicized events concerning the safety risk of certain drug products have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and the imposition by the FDA of risk evaluation and mitigation strategies to ensure that the benefits of the drug outweigh its risks.
−Removed: In addition, because of the serious public health risks of high-profile adverse safety events with certain products, the FDA may require, as a condition of approval, costly risk evaluation and mitigation strategies programs.
−Removed: We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or in other countries.
−Removed: If we or any future collaboration partner are not able to maintain regulatory compliance, we or such collaboration partner, as applicable, will not be permitted to market our future products and our business will suffer.
+Added: Such a result could require us to conduct additional testing and costly clinical trials, which could substantially delay or prevent the approval and launch of SBI-100 or future product candidates.
Serious adverse events or undesirable side effects or other unexpected properties of any of our product candidates may be identified during development or after approval that could delay, prevent or cause the withdrawal of marketing approval, limit the commercial potential, or result in significant negative consequences following marketing approval.
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If any of our product candidates are associated with serious adverse events or undesirable side effects or have properties that are unexpected, we may need to abandon their development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.
+Added: In our completed Phase 1 study of nimacimab, reported treatment emergent adverse events were diarrhea, headache, dizziness, upper respiratory tract infection, nausea and vomiting.
+Added: In our completed Phase 1 study of SBI-100, the following adverse events occurred and were considered probably or possibly related to the study drug, included discomfort and pain upon eye drop instillation and mild hyperaemia.
+Added: However, further analysis may reveal adverse events inconsistent with the safety results observed.
Many compounds that initially showed promise in clinical or earlier stage testing have later been found to cause undesirable or unexpected side effects that prevented further development of the compound.
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Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate, if approved, or could substantially increase commercialization costs and expenses, which could delay or prevent us from generating revenue from the sale of our products and harm our business and results of operations.
+Added: As an organization, we have never conducted later-stage clinical trials or submitted an NDA or BLA, and may be unable to do so for any of our product candidates.
+Added: We are early in our development efforts for our product candidates, and we will need to successfully complete pivotal clinical trials in order to seek FDA or applicable foreign authority approval to market SBI-100, nimacimab and any future product candidates we may develop.
+Added: Carrying out clinical trials and the submission of NDAs and BLAs are complicated.
+Added: Based on the stage of development of our product candidates, the Company has not conducted any later stage or pivotal clinical trials.
+Added: We also plan to conduct a number of clinical trials for multiple product candidates in parallel over the next several years.
+Added: This may be a difficult process to manage with our limited resources and may divert the attention of management.
+Added: In addition, we cannot be certain how many clinical trials of our product candidates will be required or how such trials will have to be designed to obtain marketing authorization.
+Added: Consequently, we may be unable to successfully and efficiently execute and complete necessary clinical trials in a way that leads to regulatory submission and approval of any of our product candidates.
+Added: We may require more time and incur greater costs than our competitors and may not succeed in obtaining marketing approvals of product candidates that we develop.
+Added: Failure to commence or complete, or delays in, our planned clinical trials, could prevent us from or delay us in submitting NDAs for and commercializing our product candidates.
+Added: We have conducted clinical trials for our product candidates outside of the United States and we may do so for our product candidates in the future.
+Added: However, the FDA and other foreign equivalents may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business.
+Added: We have conducted our initial Phase 1 clinical trial for SBI-100 OE in Australia.
+Added: The acceptance of study data from clinical trials conducted outside the U.S.
+Added: or another jurisdiction by the FDA or a comparable foreign regulatory authority may be subject to certain conditions or may not be accepted at all.
+Added: For example, in cases where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the U.S., the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S.
+Added: population and U.S.
+Added: medical practice;
+Added: (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations;
+Added: and (iii) the data may be considered valid without the need for an on-site inspection by the FDA, or if the FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
+Added: In addition, even where the foreign study data are not intended to serve as the sole basis for approval, the FDA will not accept the data as support for an application for marketing approval unless the study is adequately designed and well-controlled, conducted in accordance with GCP requirements and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary.
+Added: Many foreign regulatory authorities have similar approval requirements.
+Added: In addition, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted.
+Added: Conducting trials outside the United States also exposes us to additional risks, including risks associated with:
+Added: • additional foreign regulatory requirements;
+Added: • foreign exchange fluctuations;
+Added: • compliance with foreign manufacturing, customs, shipment and storage requirements;
+Added: • cultural differences in medical practice and clinical research;
+Added: • diminished protection of intellectual property in some countries;
+Added: • interruptions or delays in our trials resulting from geopolitical events, such as war or terrorism.
+Added: Preliminary, topline and interim data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
+Added: From time to time, we may publicly disclose interim, preliminary or topline data from our clinical trials, which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial.
+Added: We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data.
+Added: As a result, the topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated.
+Added: Topline and preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the topline or preliminary data we previously made public.
+Added: As a result, topline and preliminary data should be viewed with caution until the final data are available.
+Added: From time to time, we may also disclose interim data from our clinical trials.
+Added: Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available.
+Added: Adverse differences between topline, preliminary or interim data and final data could significantly harm our business prospects.
+Added: Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general.
+Added: In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product, product candidate or our business.
+Added: If the topline or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.
+Added: Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
+Added: The ability of the FDA and applicable foreign authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes.
+Added: Average review times at the FDA have fluctuated in recent years as a result.
+Added: In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
+Added: Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
+Added: For example, over the last several years, the U.S.
+Added: government shut down several times and certain regulatory agencies, such as the FDA, furloughed critical employees and ceased critical activities.
+Added: Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
+Added: Even though the FDA has since resumed standard inspection operations of domestic facilities where feasible, any resurgence of the virus or emergence of new variants may lead to further inspectional delays.
+Added: Further, regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic or any other pandemic or outbreak of a contagious disease.
+Added: If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
+Added: Third parties may obtain FDA regulatory exclusivity to our detriment.
+Added: We plan to seek to obtain market exclusivity for our drug candidates and any other drug candidates we develop in the future.
+Added: To the extent that patent protection is not available or has expired, FDA marketing exclusivity may be the only available form of exclusivity available for these proposed products.
+Added: Marketing exclusivity can delay the submission or the approval of certain marketing applications.
+Added: Potentially competitive products may also seek marketing exclusivity and may be in various stages of development, including some more advanced than our drug candidates.
+Added: We cannot predict with certainty the timing of FDA approval or whether FDA approval will be granted, nor can we predict with certainty the timing of FDA approval for competing products or whether such approval will be granted.
+Added: It is possible that competing products may obtain FDA approval with marketing exclusivity before we do, which could delay our ability to submit a marketing application or obtain necessary regulatory approvals, result in lost market opportunities with respect to our drug candidates and materially adversely affect our business, financial condition and results of operations.
+Added: Risks Related to Our Reliance on Third Parties
We expect to rely on third parties, such as CROs, to conduct some or all of our nonclinical and clinical trials.
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We expect to rely on medical institutions, clinical investigators, contract laboratories and other third parties, such as CROs, to conduct our nonclinical and clinical studies on our product candidates in compliance with applicable regulatory requirements.
−Removed: For example, we are currently engaged with Novotech, a CRO in Australia, to conduct our Phase 1 clinical trial.
+Added: For example, we are currently engaged with a CRO in the United States, to conduct our Phase 2 clinical study for SBI-100 OE .
These third parties will not be our employees and, except for restrictions imposed by our contracts with such third parties, we will have limited ability to control the amount or timing of resources that they devote to our programs.
Although we expect to rely on these third parties to conduct our preclinical studies and clinical trials, we will remain responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol and the applicable legal, regulatory, and scientific standards, and our reliance on these third parties will not relieve us of our regulatory responsibilities.
−Removed: These entities must maintain and comply with valid DEA registrations and requirements.
+Added: In the case of our Phase 2 trial for SBI-100 OE, these entities must maintain and comply with valid DEA registrations and requirements.
The FDA and regulatory authorities in other jurisdictions require us to comply with regulations and standards, commonly referred to as current good clinical practices, for conducting, monitoring, recording and reporting the results of clinical trials, in order to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.
−Removed: If we or any of our third party contractors fail to comply with applicable current
−Removed: Table of Cont ents
−Removed: good clinical practices, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
+Added: If we or any of our third party contractors fail to comply with applicable current good clinical practices, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
In addition, we are required to report certain financial interests of our third party investigators if these relationships exceed certain financial thresholds and meet other criteria.
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If the third parties conducting our preclinical studies or our clinical trials do not perform their contractual duties or obligations or comply with regulatory requirements, we may need to enter into new arrangements with alternative third parties.
−Removed: This could be costly, and our preclinical studies or clinical trials may need to be extended, delayed, terminated or repeated, and we may not be able to obtain regulatory approval in a timely fashion, or at all, for the applicable product candidate, or to commercialize such product candidate being tested in such studies or trials.
+Added: This could be costly, and our nonclinical studies or clinical trials may need to be extended, delayed, terminated or repeated, and we may not be able to obtain regulatory approval in a timely fashion, or at all, for the applicable product candidate, or to commercialize such product candidate being tested in such studies or trials.
If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third party contractors or to do so on commercially reasonable terms.
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We expect that we will not control the manufacturing process of, and will be completely dependent on, our contract manufacturing partners for compliance with current good manufacturing practice requirements, for manufacture of our drug products.
−Removed: If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA, DEA or others, they will not be able to secure and/or maintain DEA registrations and regulatory approval for their manufacturing facilities.
+Added: If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of, as applicable, the FDA, DEA or others, they will not be able to secure and/or maintain DEA registrations and regulatory approval for their manufacturing facilities.
In addition, we expect that we will have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel.
−Removed: If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates, or if DEA does not register these facilities for the manufacture of controlled substances, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.
+Added: If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates, or, with respect to SBI-100, if DEA does not register these facilities for the manufacture of controlled substances, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.
Although we have quality agreements governing our development of clinical supplies, we do not have any commercial supply agreements with our suppliers.
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The failure of third party manufacturers or suppliers to perform adequately or the termination of our arrangements with any of them may adversely affect our business.
+Added: If we fail to enter and maintain successful collaborative arrangements or strategic alliances for our product candidates, we may have to reduce or delay our product candidate development or increase our expenditures.
+Added: An important element of our strategy for developing, manufacturing and commercializing our product candidates is entering into collaborative arrangements or strategic alliances with pharmaceutical companies, research institutions or other industry participants to advance our programs and enable us to maintain our financial and operational capacity.
+Added: As of the date of this filing, we have only one collaboration agreement with Tautomer Biosciences (Pty) Limited (“Tautomer”), pursuant to which, among other things, we granted to Tautomer an exclusive license to develop, manufacture and commercialize one or more products containing our proprietary amino acid ester prodrug of delta delta-9-tetrahydrocannabinol, in the licensed field in the countries of the continent of Africa and their territories and possessions.
+Added: We face significant competition in seeking appropriate alliances.
+Added: We may not be able to negotiate alliances on acceptable terms, if at all.
+Added: In addition, these alliances may be unsuccessful.
+Added: If we fail to create and maintain suitable alliances, we may have to limit the size or scope of, or delay, one or more of our research or development programs.
+Added: In addition, these kinds of collaborative arrangements and strategic alliances may place certain aspects of the development of our product candidates outside of our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us.
+Added: Dependence on collaborative arrangements or strategic alliances will subject us to several risks, including the risks that:
+Added: • we may not be able to control the amount and timing of resources that our collaborators may devote to the product candidates;
+Added: • a significant change in the senior management team, a change in the financial condition or a change in the business operations, including a change in control or internal corporate restructuring, of any of our collaborators, could result in delayed timelines, re-prioritization of our programs, decreasing resources or funding allocated to support our programs, or termination of the collaborations;
+Added: • we may be required to relinquish important rights such as marketing and distribution rights;
+Added: • business combinations or significant changes in a collaborator’s business strategy may also adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement;
+Added: • a collaborator could independently move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors;
+Added: • collaborative arrangements are often terminated or allowed to expire, which would delay development and may increase the cost of developing our product candidates;
+Added: • collaborators may not comply with all applicable regulatory and legal requirements
+Added: Risks Related to Commercialization of Our Product Candidates
+Added: Even if we receive marketing approval for a product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to restrictions, withdrawal from the market, or penalties if we fail to comply with applicable regulatory requirements or if we experience unanticipated problems with our product candidates, when and if approved.
+Added: Once regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA, the DEA (with respect to SBI-100 OE) and/or non-U.S.
+Added: regulatory authorities and such approval may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing follow-up studies or surveillance.
+Added: In addition, we will be subject to extensive and ongoing regulatory requirements with regard to labeling, packaging, adverse event reporting, storage, distribution, advertising, promotion, recordkeeping and submission of safety and other post-market information.
+Added: Manufacturers of our products and manufacturers’ facilities are required to comply with current good manufacturing practice regulations, which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.
+Added: We will also be required to report certain adverse reactions and production problems, if any, to the FDA and to comply with requirements concerning advertising and promotion for our products.
+Added: If we, any future collaboration partner or a regulatory authority discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the collaboration partner, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing.
+Added: Any DEA registrations that we receive for SBI-100 may also be subject to limitations such as the DEA’s annual manufacturing and procurement quota requirements.
+Added: The annual quota allocated to us or our contract manufacturers for the controlled substances in our product candidates may not be sufficient to meet commercial demand.
+Added: Our facilities that handle controlled substances, and those of our third party contractors, will also be subject to registration requirements and periodic inspections.
+Added: Additionally, if approved by the FDA, the finished dosage forms of certain of SBI-100 OE will be subject to the DEA’s rescheduling process, which may delay product launch and impose additional regulatory burdens.
+Added: Failure to maintain compliance with the CSA, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, financial condition and results of operations.
+Added: The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations.
+Added: In certain circumstances, violations could lead to criminal proceedings.
+Added: For additional information, see Risk Factor, “ Our product candidate, SBI-100 OE, will be subject to U.S.
+Added: controlled substance laws and regulations, and failure to comply with or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, and our financial condition.
+Added: The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling and regulatory requirements.
+Added: If we, our product candidates or the manufacturing facilities for our product candidates fail to comply with regulatory requirements of the FDA and/or other non-U.S.
+Added: regulatory authorities, we could be subject to administrative or judicially imposed sanctions.
+Added: Widely publicized events concerning the safety risk of certain drug products have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and the imposition by the FDA of risk evaluation and mitigation strategies, to ensure that the benefits of the drug outweigh its risks.
+Added: In addition, widely publicized events concerning the safety risk of certain drug products have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and the imposition by the FDA of risk evaluation and mitigation strategies to ensure that the benefits of the drug outweigh its risks.
+Added: In addition, because of the serious public health risks of high-profile adverse safety events with certain products, the FDA may require, as a condition of approval, costly risk evaluation and mitigation strategies programs.
+Added: We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or in other countries.
+Added: If we or any future collaboration partner are not able to maintain regulatory compliance, we or such collaboration partner, as applicable, will not be permitted to market our future products and our business will suffer.
+Added: We expect to face intense competition, often from companies with greater resources and experience than we have.
+Added: The highly competitive pharmaceutical industry continues to rapidly expand and evolve as an increasing number of competitors and potential competitors enter the market, many of which have substantially greater financial, technological, managerial and research and development resources and experience than we have.
+Added: Our competitors have developed, are developing or may develop products, product candidates and processes competitive with our product candidates.
+Added: Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.
+Added: We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may attempt to develop product candidates.
+Added: In particular, there is intense competition in the field of metabolic disorders and glaucoma.
+Added: Our competitors include larger and better funded pharmaceutical, biopharmaceutical, biotechnological and therapeutics companies.
+Added: Moreover, we may also compete with universities and other research institutions who may be active in metabolic disorders and glaucoma research and could be in direct competition with us.
+Added: We also compete with these organizations to recruit management, scientists and clinical development personnel, which could negatively affect our level of expertise and our ability to execute our business plan.
+Added: We will also face competition in establishing clinical trial sites, enrolling subjects for clinical trials and in identifying and in-licensing new product candidates.
+Added: Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
+Added: If we successfully obtain approval for any product candidate, we will face competition based on many different factors, including the safety and effectiveness of our products, the ease with which our products can be administered and the extent to which patients accept relatively new routes of administration, the timing and scope of regulatory approvals for these products, the availability and cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage and patent position.
+Added: Competing products could present superior treatment alternatives, including by being more effective, safer, more convenient, less expensive or marketed and sold more effectively than any products we may develop.
+Added: Competitive products may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing our product candidates.
+Added: For additional information about our competitors and competitive products, see the section entitled "Competition" in Part I, Item 1 of this Annual Report on Form 10-K.
+Added: If we are unable to compete effectively, our opportunity to generate revenue from the sale of our products we may develop, if approved, could be material and adversely affected, which would materially adversely affect our results of operations, financial condition and business.
+Added: Even if our current or future product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success.
+Added: Even if our current or future product candidates receive marketing approval, they may fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community.
+Added: If they do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable.
+Added: The degree of market acceptance of our current or future product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to:
+Added: • t he clinical indications for which the product candidate is approved;
+Added: • the efficacy and potential advantages compared to alternative treatments and therapies;
+Added: • the timing of market introduction of the product as well as competitive products;
+Added: • effectiveness of sales and marketing efforts;
+Added: • the strength of our relationships with patient communities;
+Added: • the cost of treatment in relation to alternative treatments and therapies, including any similar generic treatments;
+Added: • our ability to offer such product for sale at competitive prices;
+Added: • the convenience and ease of administration compared to alternative treatments and therapies;
+Added: • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
+Added: • the availability of third-party coverage and adequate reimbursement;
+Added: • the willingness of patients to pay out-of-pocket in the absence of coverage and adequate reimbursement by third-party payors and government authorities;
+Added: • the strength of marketing and distribution support;
+Added: • the prevalence and severity of any side effects;
+Added: • any restric tions on the use of the product together with other medications.
+Added: Our efforts to educate physicians, patients, third-party payors and others in the medical community on the benefits of our product candidates may require significant resources and may never be successful.
+Added: Such efforts may require more resources than are typically required due to the complexity and uniqueness of our product candidates.
+Added: Because we expect sales of our product candidates, if approved, to generate substantially all of our revenues for the foreseeable future, the failure of our product candidates, if approved, to find market acceptance would harm our business and could require us to seek additional financing.
+Added: Coverage and adequate reimbursement may not be available for our current or any future product candidates, which could make it difficult for us to sell profitably, if approved.
+Added: Market acceptance and sales of any product candidates that we commercialize, if approved, will depend in part on the extent to which coverage and adequate reimbursement for these drugs and related treatments will be available from third-party payors, including government health administration authorities, managed care organizations and other private health insurers.
+Added: Third-party payors decide which therapies they will pay for and establish reimbursement levels.
+Added: Commercial payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies.
+Added: However, decisions regarding the extent of coverage and amount of reimbursement to be provided for any product candidates that we develop will be made on a payor-by-payor basis.
+Added: One third-party payor’s determination to provide coverage for a drug does not assure that other payors will also provide coverage, and adequate reimbursement, for the drug.
+Added: Additionally, a third-party payor’s decision to provide coverage for a therapy does not imply that an adequate reimbursement rate will be approved.
+Added: Each third-party payor determines whether or not it will provide coverage for a therapy, what amount it will pay the manufacturer for the therapy, and on what tier of its formulary it will be placed.
+Added: The position on a third-party payor’s list of covered drugs, or formulary, generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of such therapy by patients and physicians.
+Added: Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs.
+Added: Patients are unlikely to use our drugs unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our drugs.
+Added: A primary trend in the U.S.
+Added: healthcare industry, and elsewhere, is cost containment.
+Added: Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications.
+Added: We cannot be sure that coverage and reimbursement will be available for any drug that we commercialize and, if reimbursement is available, what the level of reimbursement will be.
+Added: Inadequate coverage and reimbursement may impact the demand for, or the price of, any drug for which we obtain marketing approval.
+Added: If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize our current and any future product candidates that we develop, which could have an adverse effect on our operating results and our overall financial condition.
+Added: Further, coverage policies and third-party payor reimbursement rates may change at any time.
+Added: Therefore, even if favorable coverage and reimbursement status is attained for one or more products for which we receive marketing approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
+Added: If the market opportunities for any of our product candidates are smaller than we estimate, even assuming approval of a product candidate, our revenue may be adversely affected, and our business may suffer.
+Added: The precise incidence and prevalence for all the conditions we aim to address with our product candidates are unknown.
+Added: Our projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our product candidates, are based on our beliefs and estimates.
+Added: These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations or market research, and may prove to be incorrect.
+Added: Further, new information may change the estimated incidence or prevalence of these diseases.
+Added: The total addressable market across all of our product candidates will ultimately depend upon, among other things, the diagnosis criteria included in the final label for each of our product candidates approved for sale for these indications, the availability of alternative treatments and the safety, convenience, cost and efficacy of our product candidates relative to such alternative treatments, acceptance by the medical community and patient access, drug pricing and reimbursement.
+Added: The number of patients in the United States and other major markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our products or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business.
+Added: We currently have no marketing and sales organization and have no experience as a company in commercializing products, and we may invest significant resources to develop these capabilities.
+Added: If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our products, we may not be able to generate product revenue.
+Added: We have no internal sales, marketing or distribution capabilities, nor have we as a company commercialized a product.
+Added: If any of our product candidates ultimately receive marketing approval, we will be required to build a marketing and sales organization with technical expertise and supporting distribution capabilities to commercialize each such product in the markets that we target, which will be expensive and time consuming, or collaborate with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems.
+Added: We have no prior experience as a company in the marketing, sale and distribution of biopharmaceutical products and there are significant risks and costs involved in building and managing a sales organization, including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training (e.g., about our products and compliance with applicable laws) to sales and marketing personnel and effectively manage a geographically dispersed sales and marketing team.
+Added: Any failure or delay in the development of our internal sales, marketing and distribution capabilities or implementation of adequate controls and monitoring to ensure that our sales and marketing activities are in compliance with applicable laws would adversely impact the commercialization of these products.
+Added: We may not be able to enter into collaborations or hire consultants or external service providers to assist us in sales, marketing and distribution functions on acceptable financial terms, or at all.
+Added: In addition, our product revenues and our profitability, if any, may be lower if we rely on third parties for these functions than if we were to market, sell and distribute any products that we develop ourselves.
+Added: We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively or in compliance with applicable laws.
+Added: If we are not successful in commercializing our products, either on our own or through arrangements with one or more third parties, we may not be able to generate any future product revenue and we would incur significant additional losses.
+Added: Our future growth may depend, in part, on our ability to commercialize products in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.
+Added: Our future growth may depend, in part, on our ability to develop and commercialize our product candidates in foreign markets.
+Added: We are not permitted to market or promote any of our product candidates before we receive regulatory approval from applicable regulatory authorities in foreign markets, and we may never receive such regulatory approvals for any of our product candidates.
+Added: To obtain separate regulatory approval in many other countries we must comply with numerous and varying regulatory requirements regarding safety and efficacy and governing, among other things, clinical trials, commercial sales, pricing and distribution of our product candidates.
+Added: If we obtain regulatory approval of our product candidates and ultimately commercialize our products in foreign markets, we would be subject to additional risks and uncertainties, including:
+Added: • differe nt regulatory requirements for approval of drugs in foreign countries;
+Added: • reduced protection for intellectual property rights;
+Added: • the existence of additional third-party patent rights of potential relevance to our business;
+Added: • unexpected changes in tariffs, trade barriers and regulatory requirements;
+Added: • economic weakness, including inflation, or political instability in particular foreign economies and markets;
+Added: • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
+Added: • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;
+Added: • foreign reimbursement, pricing and insurance regimes;
+Added: • workforce uncertainty in countries where labor unrest is common;
+Added: • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
+Added: • business int erruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
+Added: Risks Related to Our Business Operations and Industry
+Added: If we are not able to attract and retain highly qualified personnel, we may not be able to successfully implement our business strategy.
+Added: Our ability to compete in the highly competitive biotechnology and pharmaceuticals industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel.
+Added: Our success depends in large measure on our key personnel, including Mr.
+Added: Punit Dhillon, our Chair and Chief Executive Officer, Ms.
+Added: Kaitlyn Arsenault, our Chief Financial Officer, Mr.
+Added: Tuan Tu Diep, our Chief Development Officer and Dr.
+Added: Christopher Twitty, our Chief Scientific Officer as well as other members of our senior management team.
+Added: The loss of the services of any of these individuals could significantly hinder our operations.
+Added: We do not currently have "key person" insurance in effect for Mr.
+Added: Arsenault, Mr.
+Added: Twitty or other members of our senior management team.
+Added: In addition, the competition for qualified personnel in the pharmaceutical industry is intense and there can be no assurance that we will be able to continue to attract and retain all personnel necessary for the development and operation of our business.
+Added: We also rely on, and have relied on in the past, consultants and advisors to assist us in formulating our strategy.
+Added: Our consultants and advisors are either self-employed or employed by other organizations, and they may have conflicts of interest or other commitments, such as consulting or advisory contracts with other organizations, that may affect their ability to contribute to us.
+Added: Our future performance will also depend, in part, on our ability to successfully integrate newly hired executive officers into our management team and our ability to develop an effective working relationship among senior management.
+Added: Our failure to integrate these individuals and create effective working relationships among them and other members of management could result in inefficiencies in the development and commercialization of our product candidates, harming future marketing approvals, sales of our product candidates and our results of operations.
Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for us to obtain marketing approval for and commercialize our product candidates and may affect the prices we may set.
2 unchanged sentences
federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare.
−Removed: Table of Cont ents
For example, in March 2010, the ACA was enacted in the United States.
11 unchanged sentences
The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.
+Added: It is unclear how any such challenges and the healthcare reform measures of the Biden administration, or any future presidential administration, will impact the ACA or our business.
In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
−Removed: On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, included reductions to Medicare payments to providers, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.
+Added: On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, included reductions to Medicare payments to providers, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032, unless additional Congressional action is taken.
On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
7 unchanged sentences
The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
+Added: On June 30, 2023 the Centers for Medicare and Medicaid Services, or CMS, issued new guidance detailing the requirements and parameters of the first round of price negotiations, to take place during 2023 and 2024, for products subject to the “maximum fair price” provision that would become effective in 2026.
+Added: On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges.
+Added: CMS and HHS will continue to issue and update guidance as these programs are implemented.
For that and other reasons, it is currently unclear how the IRA will be effectuated.
+Added: At the state level, individual states in the United States are also increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including prescription drug affordability boards, price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
+Added: Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects.
+Added: In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.
+Added: This could reduce the ultimate demand for our product candidates, if approved, or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.
+Added: We expect that these new laws and other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product.
+Added: Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.
+Added: The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates, if approved, which could have a material adverse effect on our results of operations and financial condition.
+Added: If product liability or state consumer protection act lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our products.
+Added: We face an inherent risk of product liability as a result of the clinical trials of our product candidates and will face an even greater risk if we commercialize our product candidates.
+Added: For example, we may be sued if our product candidates allegedly cause injury or are found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.
+Added: Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product candidate, negligence, strict liability and a breach of warranties.
+Added: Claims may be brought against us by clinical trial participants, patients or others using, administering or selling products that may be approved in the future, and could be asserted as product liability claims or under state consumer protection acts.
+Added: If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit or cease the commercialization of our products.
+Added: Even a successful defense would require significant financial and management resources.
+Added: Regardless of the merits or eventual outcome, liability claims may result in:
+Added: • decreased demand for our products;
+Added: • injury to our reputation and significant negative media attention;
+Added: • withdrawal of clinical trial participants and potential termination of clinical trial sites or entire clinical programs;
+Added: • costs to defend the related litigation;
+Added: • a diversion of management’s time and our resources;
+Added: • substantial monetary awards to trial participants or patients;
+Added: • product recalls, withdrawals or labeling, marketing or promotional restrictions;
+Added: • initiation of investigations and enforcement actions by regulators;
+Added: • significant negative financial impact;
+Added: • the inability to commercialize our product candidates;
+Added: • a decline in our stock price.
+Added: We currently hold $3,000,000 in product liability insurance coverage in the aggregate.
+Added: We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our product candidates.
+Added: Insurance coverage is increasingly expensive.
+Added: Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of our product candidates.
+Added: Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage.
+Added: Our insurance policies will also have various exclusions, and we may be subject to a product liability claim for which we have no coverage.
+Added: We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts, which could have a material adverse effect on our business, results of operations and financial condition.
We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws.
2 unchanged sentences
These laws may impact, among other things, our proposed sales, marketing, and education programs.
−Removed: In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business.
+Added: In addition, we may be subject to privacy and security obligations, including federal and state laws, regulations, guidance, and industry standards related to data privacy, security, and protection.
The laws that may affect our ability to operate include:
−Removed: • the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;
+Added: • the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a government healthcare program, such as the Medicare and Medicaid programs;
• federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third party payors that are false or fraudulent;
−Removed: Table of Cont ents
−Removed: • the Health Insurance Portability and Accountability Act, which created federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters, and as amended by the Health Information Technology and Clinical Health Act and its implementing regulations, which imposes certain requirements relating to the privacy, security, and transmission of individually identifiable health information;
+Added: • HIPAA, which imposes certain requirements relating to the privacy, security, and transmission of PHI;
• the federal physician sunshine requirements under the ACA, which require manufacturers of drugs, devices, biologics, and medical supplies to report annually to the U.S.
1 unchanged sentence
• state law equivalents of each of the above federal laws, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
−Removed: Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
+Added: Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities, or those of our third-party collaborators or service providers, could be subject to challenge under one or more of such laws.
In addition, recent health care reform legislation has strengthened these laws.
−Removed: If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
−Removed: We may be subject to requests for access to our product candidates.
−Removed: Demand for compassionate use of our unapproved therapies could strain our resources, delay our drug development activities, negatively impact our marketing approval or commercial activities, and result in losses.
−Removed: We are developing product candidates to treat conditions for which there are currently limited therapeutic options.
−Removed: If we experience requests for access to unapproved drugs, we may experience significant disruption to our business which could result in losses.
−Removed: We are a small company with limited resources, and any unanticipated trials or access programs resulting from requests for access could deplete our drug supply, increase our capital expenditures, and otherwise divert our resources from our primary goals.
−Removed: In addition, legislation referred to as “Right to Try” laws have been introduced at the local and national levels, which are intended to give patients access to unapproved therapies.
−Removed: Patients who receive access to unapproved drugs through compassionate use or expanded access programs have life-threatening illnesses and generally have exhausted all other available therapies.
−Removed: The risk for serious adverse events in this patient population is high and could have a negative impact on the safety profile of our product candidate, which could cause significant delays or an inability to successfully commercialize our product candidate and could materially harm our business.
−Removed: In addition, in order to perform the controlled clinical trials required for regulatory approval and successful commercialization of our product candidates, we may also need to restructure or pause any ongoing compassionate use and/or expanded access programs, which could prompt adverse publicity.
+Added: If our operations, or those of our third-party collaborators or service providers, are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
+Added: Our business and operations would be adversely affected in the event that our computer systems or those of our partners, contract research organizations, contractors, consultants or other third parties we work with were to suffer system failures, cyber-attacks, loss of data or other security incidents.
+Added: Despite our efforts to implement security measures on our computer systems, as well as those of our partners, contract research organizations, contractors, consultants, law and accounting firms and other third parties we work with, may sustain damage from security vulnerabilities, unauthorized access, data breaches, phishing attacks, ransomware attacks, denial-of-service attacks, cybercriminals, natural disasters, terrorism, war and telecommunication and electrical failures.
+Added: We rely on our partners and third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or breaches.
+Added: The risks of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, nation state actors and cyber-terrorists, have increased significantly and are becoming increasingly difficult to detect.
+Added: If a cybersecurity-related incident or security breach were to occur, it may cause interruptions in our operations, or the operations of our partners or third-party providers, it could result in a the misuse of sensitive information, including personal data (including health data), our intellectual property or financial information, trade secrets, or clinical trial participant personal data, a material disruption or delay in our drug development programs, and/or significant monetary losses.
+Added: For example, during the second quarter of 2022, we were indirectly impacted by a cyberattack on our Phase 1 clinical supply contract manufacturer which delayed our production timeline and the initiation of enrollment in our Phase 1 clinical studies for SBI-100 OE to the fourth quarter of 2022.
+Added: Unauthorized access, compromise, damage to, or loss of preclinical or clinical trial data from completed, ongoing or planned trials, or chemistry, manufacturing and controls data for our product candidates, could result in delays in regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
+Added: Any such breach, loss or compromise of clinical trial participant personal data may also subject us to civil fines and penalties under the privacy laws of the European Union or other countries as well as state and federal privacy laws in the United States.
+Added: We maintain cyber liability insurance;
+Added: however, this insurance may only partly cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems or the systems of our service providers.
+Added: Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could have a material adverse effect on our business, financial condition or results of operations.
+Added: Privacy and data security have become a significant area of focus in the U.S., and in many other jurisdictions where we may in the future conduct our operations.
+Added: The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues, which may affect our business and may increase our compliance costs and exposure to liability.
+Added: As we receive, collect, process, use and store personal and confidential data, we are or may be subject to multiple laws and regulations relating to data privacy and security.
+Added: Compliance with these privacy and data security requirements is rigorous and time-intensive and may increase our cost of doing business, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation and reputational harm, which could materially and adversely affect our business, financial condition and operations.
+Added: In the U.S., we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.
+Added: HIPAA imposes, among other things, requirements relating to the privacy, security, transmission and breach reporting of PHI held by covered entities and their business associates.
+Added: We may obtain health information from third parties (including research institutions from which we obtain clinical trial data) that are subject to privacy and security requirements under HIPAA.
+Added: Depending on the facts and circumstances, we could be subject to criminal penalties if we knowingly receive individually identifiable health information from a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.
+Added: In addition, state laws govern the privacy and security of health-related and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same requirements, thus complicating compliance efforts.
+Added: Several states, including California, Colorado, Connecticut, Utah and Virginia, have adopted generally applicable and comprehensive privacy laws, although most have an exception for information regulated by HIPAA.
+Added: These aws provide a number of individual privacy rights and impose corresponding obligations on organizations doing business in these states.
+Added: By way of example, California enacted the California Consumer Privacy Act (“CCPA”), effective January 1, 2020 and amended by the California Privacy Rights Act, effective January 1, 2023, which imposes obligations on covered businesses to provide specific disclosures related to a business’s collecting, using, and disclosing personal data and to respond to certain requests from California residents related to their personal data.
+Added: The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that has increased the likelihood of, and risks associated with, data breach litigation.
+Added: The CCPA may increase our compliance costs and potential liability.
+Added: It also created a new California data protection agency, the California Privacy Protection Agency, which is authorized to issue substantive regulations and could result in increased privacy and information security enforcement and additional compliance investment and potential business process changes may be required Similar laws have passed in Colorado, Connecticut, Delaware, Indiana, Iowa, Montana, Oregon, Tennessee, Texas, Utah, and Virginia and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States.
+Added: Further states have also enacted consumer health data privacy laws, including states without comprehensive consumer privacy laws, such as Nevada and Washington state.
+Added: Such laws could have different requirements that would make compliance challenging.
+Added: In the event that we are subject to HIPAA, the CCPA, the CPRA or other privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition as a result of fines, penalties, litigation or other liabilities.
+Added: Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.
+Added: We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners.
+Added: Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in other jurisdictions, provide accurate information to the FDA and applicable foreign authorities, comply with healthcare fraud and abuse laws, and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us or comply with other applicable law.
+Added: In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
+Added: These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.
+Added: Such misconduct also could involve the improper use of information obtained in the course of clinical trials or interactions with the FDA or applicable foreign authorities, which could result in regulatory sanctions and cause serious harm to our reputation.
+Added: It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
+Added: If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could have a negative impact on our business, financial condition, results of operations and prospects, including the imposition of significant fines or other sanctions.
+Added: The Company is currently subject to lawsuits, and in the future may be subject to additional lawsuits, that could divert its resources and result in the payment of significant damages and other remedies.
+Added: From time to time, the Company may be subject to litigation claims through the ordinary course of its business operations or otherwise, regarding, among other things, intellectual property rights matters, employment matters and tax matters.
+Added: Litigation to defend the Company against claims by third parties, or to enforce any rights that the Company may have against third parties, may be necessary, which could result in substantial costs and diversion of the Company's resources, causing a material adverse effect on its business, financial condition and results of operations.
+Added: Given the nature of the Company's business, it is, and may from time to time in the future be, party to various, and at times numerous, legal, administrative and regulatory inquiries, investigations, proceedings and claims that arise in the ordinary course of business, as well as potential class action lawsuits.
+Added: Because the outcome of such legal matters is inherently uncertain, if one or more of such legal matters were to be resolved against the Company for amounts in excess of management's expectations or any applicable insurance coverage or indemnification right, the Company's results of operations and financial condition could be materially adversely affected.
+Added: Any litigation to which the Company is a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal, or in payments of substantial monetary damages or fines, the posting of bonds requiring significant collateral, letters of credit or similar instruments, or the Company may decide to settle lawsuits on similarly unfavorable terms.
+Added: Moreover, the Company cannot be sure that the remedies available to it at law or under contract, will be sufficient in amount, scope or duration to fully or partially offset any such possible liabilities.
+Added: Any of these factors, individually or in the aggregate, could have a material adverse effect on the Company's business, results of operations, cash flows or liquidity.
+Added: For a description of certain currently pending legal and regulatory proceedings, including the Cunning Lawsuit, see Note 13 to the Notes to the Consolidated Financial Statements of the Company included in Part IV, Item 15 of this Annual Report on Form 10-K.
+Added: The increasing use of social media platforms presents new risks and challenges.
+Added: Social media is increasingly being used to communicate about our product candidates, technologies and programs, and the diseases our product candidates are designed to treat.
+Added: Social media practices in the biopharmaceutical industry continue to evolve and regulations relating to such use are not always clear.
+Added: This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business.
+Added: For example, patients may use social media channels to comment on the effectiveness of a product candidate or to report an alleged adverse event.
+Added: When such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend ourselves or the public’s legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our product candidates.
+Added: There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website.
+Added: If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face overly restrictive regulatory actions or incur other harm to our business.
+Added: Risks Related to Our Intellectual Property
+Added: Our success depends on our ability to protect our intellectual property and our proprietary technologies.
+Added: Our commercial success depends in part on our ability to obtain and maintain patent protection and trade secret protection for our product candidates, proprietary technologies and their uses as well as our ability to operate without infringing upon the proprietary rights of others.
+Added: We generally seek to protect our proprietary position by filing patent applications in the United States and abroad related to our product candidates, proprietary technologies and their uses that are important to our business.
+Added: We also seek to protect our proprietary position by acquiring or in-licensing relevant issued patents or pending applications, or other intellectual property rights, from third parties.
+Added: Pending patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless, and until, patents issue from such applications, and then only to the extent the issued claims cover the technology and/or its use.
+Added: There can be no assurance that any of our future patent applications or the patent applications of our licensors will result in additional patents being issued or that issued patents will afford sufficient protection against competitors with similar technology, nor can there be any assurance that the patents issued will not be infringed, designed around or invalidated by third parties.
+Added: Even issued patents may later be found invalid or unenforceable or may be modified or revoked in proceedings instituted by third parties before various patent offices or in courts.
+Added: The degree of future protection for our and our licensors proprietary rights is uncertain.
+Added: Only limited protection may be available and may not adequately protect our rights or permit us to gain or keep any competitive advantage.
+Added: These uncertainties and/or limitations in our ability to properly protect the intellectual property rights relating to our product candidates could have a material adverse effect on our financial condition and results of operations.
+Added: The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our potential future collaborators will be successful in protecting our product candidates by obtaining and defending patents.
+Added: The patent prosecution process is also expensive and time-consuming, and we and our licensors, such as UM, may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions where protection may be commercially advantageous.
+Added: It is also possible that we or our licensors will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.
+Added: In addition, although we enter into non-disclosure and confidentiality agreements with parties who have access to patentable aspects of our research and development output, such as our employees, outside scientific collaborators, contract research organizations, third-party manufacturers, consultants, advisors and other third parties, any of these parties may breach such agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.
+Added: Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
+Added: As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
+Added: In some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology or products that we license from third parties.
+Added: Therefore, we cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent with the best interests of our business.
+Added: In addition, if third parties who license patents to us fail to maintain such patents, or lose rights to those patents, the rights we have licensed may be reduced or eliminated.
+Added: We may be involved in lawsuits to protect or enforce our patents, which could be expensive, time consuming and unsuccessful.
+Added: Further, our issued patents could be found invalid or unenforceable if challenged in court.
+Added: Competitors may infringe our intellectual property rights.
+Added: To prevent infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming.
+Added: In addition, in a patent infringement proceeding, a court may decide that a patent we own is not valid, is unenforceable and/or is not infringed.
+Added: If we or any of our potential future collaborators were to initiate legal proceedings against a third party to enforce a patent directed at one of our product candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable in whole or in part.
+Added: In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
+Added: Grounds for a validity challenge include an alleged failure to meet any of several statutory requirements, including but not limited to lack of novelty, obviousness, written description or non-enablement.
+Added: Grounds for an unenforceability assertion could include an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution.
+Added: Third parties may also raise similar invalidity claims before the USPTO or patent offices abroad, even outside the context of litigation.
+Added: Such mechanisms include re-examination, PGR, IPR, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings).
+Added: Such proceedings could result in the revocation of, cancellation of or amendment to our patents in such a way that they no longer cover our technology or platform, or any product candidates that we may develop.
+Added: The outcome following legal assertions of invalidity and unenforceability is unpredictable.
+Added: With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution.
+Added: There is also no assurance that there is not prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim in our patents and patent applications, which may, nonetheless, ultimately be found to affect the validity or enforceability of a patent claim.
+Added: If a third party were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates or other intellectual property that we may develop.
+Added: In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.
+Added: Such a loss of patent protection would have a material adverse impact on our business, financial condition, results of operations and prospects.
+Added: Even if resolved in our favor, litigation or other legal proceedings relating to our intellectual property rights may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.
+Added: Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or other legal proceedings relating to our intellectual property rights, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or other proceedings.
+Added: In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
+Added: Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.
+Added: We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately.
+Added: Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources.
+Added: Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.
+Added: Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
+Added: The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage.
+Added: • others may be able to develop products that are similar to our product candidates but that are not covered by the claims of the patents that we own;
+Added: • we might not have been the first to make the inventions covered by the issued patents or patent application that we own;
+Added: • we might not have been the first to file patent applications covering certain of our inventions;
+Added: • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;
+Added: • it is possible that our pending patent applications will not lead to issued patents;
+Added: • issued patents that we own may be held invalid or unenforceable, as a result of legal challenges by our competitors;
+Added: • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;
+Added: • we may not develop additional proprietary technologies that are patentable;
+Added: • the patents of others may have an adverse effect on our business.
+Added: Should any of these events occur, it could significantly harm our business, results of operations and prospects.
+Added: Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.
+Added: Claims by third parties that we infringe their proprietary rights may result in liability for damages or prevent or delay our developmental and commercialization efforts.
+Added: Our commercial success depends in part on avoiding infringement of the patents and proprietary rights of third parties.
+Added: However, our research, development and commercialization activities may be subject to claims that we infringe or otherwise violate patents or other intellectual property rights owned or controlled by third parties.
+Added: Other entities may have or obtain patents or proprietary rights that could limit our ability to make, use, sell, offer for sale or import our product candidates and products that may be approved in the future, or impair our competitive position.
+Added: There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biopharmaceutical industry, including patent infringement lawsuits, oppositions, reexaminations, IPR proceedings and PGR proceedings before the USPTO and/or corresponding foreign patent offices.
+Added: Numerous third-party U.S.
+Added: and foreign issued patents and pending patent applications exist in the fields in which we are developing product candidates.
+Added: There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates.
+Added: As the biopharmaceutical industry expands and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.
+Added: Because patent applications are maintained as confidential for a certain period of time, until the relevant application is published, we may be unaware of third-party patents that may be infringed by commercialization of any of our product candidates, and we cannot be certain that we were the first to file a patent application related to a product candidate or technology.
+Added: Moreover, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe.
+Added: In addition, identification of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims.
+Added: There is also no assurance that there is not prior art of which we are aware, but which we do not believe is relevant to our business, which may, nonetheless, ultimately be found to limit our ability to make, use, sell, offer for sale or import our products that may be approved in the future, or impair our competitive position.
+Added: In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.
+Added: Any claims of patent infringement asserted by third parties would be time consuming and could:
+Added: • result in costly litigation that may cause negative publicity;
+Added: • divert the time and attention of our technical personnel and management;
+Added: • cause development delays;
+Added: • prevent us from commercializing any of our product candidates until the asserted patent expires or is held finally invalid or not infringed in a court of law;
+Added: • require us to develop non-infringing technology, which may not be possible on a cost-effective basis;
+Added: • subject us to significant liability to third parties;
+Added: • require us to enter into royalty or licensing agreements, which may not be available on commercially reasonable terms, or at all, or which might be non-exclusive, which could result in our competitors gaining access to the same technology.
+Added: Although no third party has asserted a claim of patent infringement against us as of the date of this Annual Report on Form 10-K, others may hold proprietary rights that could prevent our product candidates from being marketed once approved.
+Added: Any patent-related legal action against us claiming damages and seeking to enjoin commercial activities relating to our products or processes could subject us to potential liability for damages, including treble damages if we were determined to willfully infringe, and require us to obtain a license to manufacture or market our product candidates.
+Added: Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.
+Added: We cannot predict whether we would prevail in any such actions or that any license required under any of these patents would be made available on commercially acceptable terms, if at all.
+Added: Moreover, even if we or our future strategic partners were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property.
+Added: In addition, we cannot be certain that we could redesign our product candidates or processes to avoid infringement, if necessary.
+Added: Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could delay or prevent us from developing and commercializing our product candidates, which could harm our business, financial condition and operating results.
+Added: In addition, intellectual property litigation, regardless of its outcome, may cause negative publicity and could prohibit us from marketing or otherwise commercializing our product candidates and technology.
+Added: Parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.
+Added: Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure.
+Added: In addition, any uncertainties resulting from the initiation and continuation of any litigation could have material adverse effect on our ability to raise additional funds or otherwise have a material adverse effect on our business, results of operations, financial condition and prospects.
+Added: Intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our common shares to decline.
+Added: During the course of any intellectual property litigation, there could be public announcements of the initiation of the litigation as well as results of hearings, rulings on motions, and other interim proceedings in the litigation.
+Added: If securities analysts or investors regard these announcements as negative, the perceived value of our existing products, programs or intellectual property could be diminished.
+Added: Accordingly, the market price of shares of our common stock may decline.
+Added: Such announcements could also harm our reputation or the market for our future products, which could have a material adverse effect on our business.
+Added: Derivation proceedings may be necessary to determine priority of inventions, and an unfavorable outcome may require us to cease using the related technology or to attempt to license rights from the prevailing party.
+Added: Derivation proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions with respect to our patents or patent applications.
+Added: An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party.
+Added: Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms.
+Added: Our defense of derivation proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.
+Added: In addition, the uncertainties associated with such proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties or enter into development or manufacturing partnerships that would help us bring our product candidates to market.
+Added: Changes in U.S.
+Added: patent law, or laws in other countries or jurisdictions, could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
+Added: As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.
+Added: Obtaining and enforcing patents in the pharmaceutical industry involve a high degree of technological and legal complexity.
+Added: Therefore, obtaining and enforcing pharmaceutical patents is costly, time consuming and inherently uncertain.
+Added: Changes in either the patent laws or in the interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property and may increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.
+Added: We cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.
+Added: In addition, Congress or other foreign legislative bodies may pass patent reform legislation that is unfavorable to us.
+Added: For example, the U.S.
+Added: Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.
+Added: In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.
+Added: Depending on decisions by the U.S.
+Added: Congress, the U.S.
+Added: federal courts, the USPTO, or similar authorities in foreign jurisdictions, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents we might obtain in the future.
+Added: We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.
+Added: We may also be subject to claims that former employees or other third parties have an ownership interest in our patents or other intellectual property.
+Added: Litigation may be necessary to defend against these and other claims challenging inventorship or ownership.
+Added: If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights.
+Added: Such an outcome could have a material adverse effect on our business.
+Added: Even if we are successful in defending against such claims, litigation could result in substantial costs and distraction to management and other employees.
+Added: Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
+Added: Patents have a limited lifespan.
+Added: In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S.
+Added: non-provisional filing date.
+Added: Various extensions may be available, but the life of a patent, and the protection it affords, is limited.
+Added: Even if patents covering our product candidates are obtained, once the patent life has expired, we may be open to competition from competitive products.
+Added: Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
+Added: As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
+Added: If we do not obtain patent term extension for our product candidates, our business may be materially harmed.
+Added: Depending upon the timing, duration and specifics of FDA marketing approval of our product candidates, one or more of our U.S.
+Added: patents may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments.
+Added: The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.
+Added: A maximum of one patent may be extended per FDA approved product as compensation for the patent term lost during the FDA regulatory review process.
+Added: A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended.
+Added: Patent term extension may also be available in certain foreign countries upon regulatory approval of our product candidates.
+Added: However, we may not be granted an extension because of, for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements.
+Added: Moreover, the applicable time period or the scope of patent protection afforded could be less than we request.
+Added: If we are unable to obtain patent term extension or restoration or the term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our revenue could be reduced, possibly materially.
+Added: Further, if this occurs, our competitors may take advantage of our investment in development and trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case.
+Added: We may not be able to protect our intellectual property rights throughout the world.
+Added: Patents are of national or regional effect.
+Added: Filing, prosecuting and defending patents in all countries throughout the world could be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States.
+Added: In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.
+Added: Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
+Added: Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.
+Added: These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
+Added: Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
+Added: The legal systems of many foreign countries do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights.
+Added: As an example, as of June 2023, European patent applications have the option, upon grant of a patent, of becoming a Unitary Patent which will be subject to the jurisdiction of the Unitary Patent Court, or UPC.
+Added: Patents granted before the implementation of the UPC will have the option of opting out of the jurisdiction of the UPC and remaining as national patents in the UPC countries.
+Added: Patents that remain under the jurisdiction of the UPC may be potentially vulnerable to a single UPC-based revocation challenge that, if successful, could invalidate the patent in all countries who ratified the Unitary Patent Court Agreement.
+Added: The option of a Unitary Patent will be a significant change in European patent practice.
+Added: As the UPC is a new court system, there is no precedent for the court, increasing the uncertainty.
+Added: Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us.
+Added: We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful.
+Added: Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
+Added: Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties.
+Added: In addition, many countries limit the enforceability of patents against government agencies or government contractors.
+Added: In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent.
+Added: If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.
+Added: Further, the standards applied by the USPTO and foreign patent offices in granting patents are not always applied uniformly or predictably.
+Added: As such, we do not know the degree of future protection that we will have on our product candidates, proprietary technologies, and their uses.
+Added: While we will endeavor to try to protect our product candidates, proprietary technologies, and their uses, with intellectual property rights such as patents, as appropriate, the process of obtaining patents is time consuming, expensive, and unpredictable.
+Added: Further, geo-political actions in the United States and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future licensors.
+Added: Accordingly, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.
+Added: Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirements imposed by regulations and governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
+Added: Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to the USPTO and various foreign patent offices at various points over the lifetime of our patents and/or applications.
+Added: We have systems in place to remind us to pay these fees, and we rely on our outside patent annuity service to pay these fees when due.
+Added: Additionally, the USPTO and various foreign patent offices, require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process.
+Added: We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction.
+Added: However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
+Added: If such an event were to occur, it could have a material adverse effect on our business.
+Added: If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
+Added: In addition, we rely on the protection of our trade secrets, including unpatented know-how, technology and other proprietary information to maintain our competitive position.
+Added: Although we have taken steps to protect our trade secrets and unpatented know-how, including entering into confidentiality agreements with third parties, and confidential information and inventions agreements with employees, consultants and advisors, we cannot provide any assurances that all such agreements have been duly executed, and any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.
+Added: Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable.
+Added: In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.
+Added: Moreover, third parties may still obtain this information or may come upon this or similar information independently, and we would have no right to prevent them from using that technology or information to compete with us.
+Added: If any of these events occurs or if we otherwise lose protection for our trade secrets, the value of this information may be greatly reduced, and our competitive position would be harmed.
+Added: If we do not apply for patent protection prior to such publication or if we cannot otherwise maintain the confidentiality of our proprietary technology and other confidential information, then our ability to obtain patent protection or to protect our trade secret information may be jeopardized.
+Added: We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers.
+Added: As is common in the pharmaceutical industry, in addition to our employees, we engage the services of consultants to assist us in the development of our product candidates.
+Added: Many of these consultants, and many of our employees, were previously employed at, or may have previously provided or may be currently providing consulting services to, other pharmaceutical companies including our competitors or potential competitors.
+Added: We may become subject to claims that we, our employees or a consultant inadvertently or otherwise used or disclosed trade secrets or other information proprietary to their former employers or their former or current clients.
+Added: Litigation may be necessary to defend against these claims.
+Added: If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely affect our business.
+Added: Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management team and other employees.
+Added: UM is the owner of intellectual property underlying SBI-100 OE
+Added: Intellectual property rights (including any patents, non-manufacturing related know-how and improvements) for SBI-100 is owned by UM, and in the future we may need to seek UM’s consent to pursue, use, sub-license and/or enforce some of these intellectual property rights which we are entitled to use pursuant to the UM 5050 license agreement.
+Added: An unexpected deterioration in our relationship with UM may have a material adverse effect on our business, reputation, results of operations and financial condition.
+Added: Breach of the License Agreement with UM could result in the loss of such license rights that are important to our business and our operations could be materially harmed.
+Added: We license from UM the use, development and commercialization rights for SBI-100.
+Added: As a result, our current business plans are dependent upon our maintenance of the UM 5050 license agreement and the rights we license under them.
+Added: If we breach the terms of our License Agreement with UM, or any future license agreement on which our business or product candidates are dependent, UM or other licensors may have the right to terminate the applicable agreement in whole or in part and thereby limit or terminate our rights to the licensed technology and intellectual property and/or any rights we have acquired to develop and commercialize certain product candidates or cause us to have to negotiate new or reinstated licenses on less favorable terms, or enable a competitor to gain access to the licensed technology.
+Added: Moreover, disputes may arise regarding intellectual property subject to a license agreement such as our license agreements with UM, including:
+Added: (i) the scope of the rights granted under the license agreement and other interpretation related issues, (ii) the extent to which our product candidates, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement, (iii) our diligence obligations under the license agreement and what activities satisfy those diligence obligations.
+Added: The loss of the rights licensed to us under our License Agreements with UM, or any future license agreement that we may enter granting rights on which our business or product candidates are dependent, would harm, or even eliminate, our ability to further develop the applicable product candidates and would materially harm our business, prospects, financial condition and results of operations.
+Added: Risks Related to Controlled Substances
+Added: Our product candidate, SBI-100 OE, will be subject to U.S.
+Added: controlled substance laws and regulations, and failure to comply with or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, and our financial condition.
+Added: Our product candidate, SBI-100 OE, contains a controlled substance as defined in the CSA.
+Added: Controlled substances that are pharmaceutical products are subject to a high degree of regulation under the CSA, which establishes, among other things, certain registration, manufacturing quotas, security, recordkeeping, reporting, import, export and other requirements administered by the DEA.
+Added: The DEA classifies controlled substances into five schedules:
+Added: Schedule I, II, III, IV or V substances.
+Added: Schedule I substances by definition have a high potential for abuse, no currently “accepted medical use” in the United States, lack accepted safety for use under medical supervision, and may not be prescribed, marketed or sold in the United States.
+Added: Pharmaceutical products approved for use in the United States may be listed as Schedule II, III, IV or V.
+Added: Schedule I and II drugs are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, security requirements and criteria for importation.
+Added: In addition, dispensing of Schedule II drugs is further restricted.
+Added: While certain cannabinoids may be classified as Schedule I controlled substances, products approved for medical use in the United States that contain certain cannabinoids must be placed on Schedules II-V, since approval by the FDA satisfies the “accepted medical use” requirement.
+Added: SBI-100 remains a Schedule I controlled substance, pending a request to re-schedule SBI-100 after marketing authorization by the FDA.
+Added: If approved by the FDA, we expect the finished dosage forms of SBI-100 OE to be reevaluated by the DEA and no longer listed as a Schedule I drug.
+Added: Consequently, SBI-100's manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use may be subject to a significant degree of regulation by the DEA, if the finished dosage form is determined to be a Schedule II drug.
+Added: In addition, the scheduling process may take one or more years, thereby delaying the launch of the drug product in the United States.
+Added: Furthermore, if the FDA, DEA, or any foreign regulatory authority determines that any of our drug product candidates may have potential for abuse, it may require us to generate more clinical or other data than we currently anticipate establishing whether or to what extent the substance has an abuse potential, which could increase the cost and/or delay the launch of the drug product.
+Added: Facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be registered (licensed) to perform these activities and have the security, control, recordkeeping, reporting and inventory mechanisms required by the DEA to prevent drug loss and diversion.
+Added: All these facilities must renew their registrations annually, except dispensing facilities, which must renew every three years.
+Added: The DEA conducts periodic inspections of certain registered establishments that handle controlled substances.
+Added: Obtaining the necessary registrations may result in delay of the manufacturing, development, or distribution of our product candidates.
+Added: Furthermore, failure to maintain compliance with the CSA, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, financial condition and results of operations.
+Added: The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations.
+Added: In certain circumstances, violations could lead to criminal proceedings.
+Added: Individual states may also establish controlled substance laws and regulations that may require additional regulatory approvals to conduct research and clinical trials in that state.
+Added: As a result, we or our partners or clinical sites may also be required to obtain separate state registrations, permits or licenses in order to be able to receive, handle, and distribute controlled substances for clinical trials.
+Added: Delay in obtaining these state registrations, permits or licenses may delay the start of our clinical trials for such products, including SBI-100 OE.
+Added: While some states automatically schedule a drug based on federal action, other states schedule drugs through rule making or a legislative action.
+Added: State scheduling may delay commercial sale of any product for which we obtain federal regulatory approval and adverse scheduling could have a material adverse effect on the commercial attractiveness of such product.
+Added: We or our partners or clinical sites must also obtain separate state registrations, permits or licenses to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law.
+Added: To conduct clinical trials with SBI-100 OE in the United States, prior to approval, each of our research sites must obtain and maintain a DEA researcher registration that will allow those sites to handle and dispense the product candidate and to obtain the product.
+Added: If the DEA delays or denies the grant of a research registration to one or more research sites, the clinical trial could be significantly delayed, and we could lose clinical trial sites.
+Added: Manufacturing of SBI-100 OE is, and, if approved, will be, subject to the DEA’s annual manufacturing and procurement quota requirements, if classified as Schedule II.
+Added: The annual quota allocated to us or our contract manufacturers for the controlled substances in our product candidates may not be sufficient to meet commercial demand or complete clinical trials.
+Added: Consequently, any delay or refusal by the DEA in establishing our, or our contract manufacturers’, procurement and/or production quota for controlled substances could delay or stop our clinical trials or product launches, which could have a material adverse effect on our business, financial position and operations.
+Added: If, upon approval of SBI-100 OE, the product is scheduled as Schedule II or III, we would also need to identify wholesale distributors with the appropriate DEA registrations and authority to distribute the product to pharmacies and other health care providers.
+Added: The failure to obtain, or delay in obtaining, or the loss of any of those registrations could result in increased costs to us.
+Added: Furthermore, state and federal enforcement actions, regulatory requirements, and legislation intended to reduce prescription drug abuse, such as the requirement that physicians consult a state prescription drug monitoring program may make physicians less willing to prescribe, and pharmacies to dispense, our products, if approved.
+Added: Research restrictions, product shipment delays or prohibitions could have a material adv erse effect on our business, results of operations and financial condition.
+Added: Research on and the shipment, import and export of SBI-100 OE and the API used in SBI-100 OE will require research permits, import and export licenses by many different authorities.
+Added: For instance, in the United States, the FDA, U.S.
+Added: Customs and Border Protection, and the DEA;
+Added: in Canada, the Canada Border Services Agency, and Health Canada;
+Added: in Europe, the European Medicines Agency and the European Commission;
+Added: in Australia and New Zealand, the Australian Customs and Border Protection Service, the Therapeutic Goods Administration, the New Zealand Medicines and Medical Device Safety Authority and the New Zealand Customs Service;
+Added: and in other countries, similar regulatory authorities, regulate the research on and import and export of pharmaceutical products that contain controlled substances, such as SBI-100 OE.
+Added: Specifically, the import and export process requires the issuance of import and export licenses by the relevant controlled substance authority in both the importing and exporting country.
+Added: We may not be granted, or if granted, maintain, such licenses from the authorities in certain countries.
+Added: Even if we obtain the relevant licenses, shipments of API and our product candidates may be held up in transit, which could cause significant delays and may lead to product batches being stored outside required temperature ranges.
+Added: Inappropriate storage may damage the product shipment resulting in delays in clinical trials.
+Added: Once shipment is complete, we or the research contractors we are working with may also suffer further delays or restrictions as a result of regulations governing research on controlled substances.
+Added: A delay in a clinical trial or, upon commercialization, a partial or total loss of revenue from one or more shipments of API or our product candidates could have a material adverse effect on our business, results of operations and financial condition.
+Added: The aforementioned examples and lists of various authorities that may currently, or in the future, affect our ability to conduct research on or import or export our product candidates and/or API, should not be construed as exhaustive or comprehensive in any way.
+Added: Laws and regulations affecting therapeutic uses of cannabinoids are constantly evolving.
+Added: The constant evolution of laws and regulations affecting the research and development of cannabinoid-based pharmaceutical products and treatments could detrimentally affect our business.
+Added: Laws and regulations related to the therapeutic uses of cannabinoids are subject to changing interpretations.
+Added: These changes may require us to incur substantial costs associated with legal and compliance fees and ultimately require us to alter our business plan.
+Added: Furthermore, violations or alleged violation of these laws could disrupt our business and result in a material adverse effect on our operations.
+Added: In addition, we cannot predict the nature of any future laws, regulations, interpretations or applications of laws and regulations and it is possible that new laws and regulations may be enacted in the future that will be directly applicable to our business.
+Added: SBI-100 OE and our potential future product candidates may contain controlled substances, the use of which may generate public controversy
+Added: Since SBI-100 OE and our potential product candidates may contain controlled substances, their regulatory approval may generate public controversy or scrutiny.
+Added: Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for, our product candidates.
+Added: These pressures could also limit or restrict the introduction and marketing of our product candidates.
+Added: Adverse publicity from misuse or adverse side effects cannabinoid derivatives may adversely affect the commercial success or market penetration achievable by our product candidates.
+Added: The nature of our business will likely attract a high-level of public and media interest, and in the event of any resultant adverse publicity, our reputation may be harmed.
Risks Related to Our Common Stock
−Removed: Our stock price may be volatile, which may result in losses to our stockholders.
−Removed: The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies quoted on the OTCQB, where our shares of common stock will be quoted, generally have been very volatile and have experienced sharp share-price and trading-volume changes.
−Removed: The trading price of our common stock is likely to be volatile and could fluctuate widely in response to factors which may be out of our control, such as variations in our operating results, changes in expectations of our future financial performance, changes in operating and stock price performance of other companies in our industry, additions or departures of key personnel, and future sales of our common stock.
−Removed: Domestic and international stock markets often experience significant price and volume fluctuations.
−Removed: These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock.
−Removed: In the past, following periods of volatility in the market price of a public company’s securities, securities class action litigation has often been initiated.
−Removed: Table of Cont ents
−Removed: Our common shares are thinly-traded, and in the future, may continue to be thinly-traded, and you may be unable to sell at or near ask prices or at all.
−Removed: Our common shares are quoted on the OTCQB and are thinly traded.
−Removed: We cannot predict whether, and the extent to which, an active public market for our common stock will develop or be sustained due to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and may be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.
−Removed: As a consequence, there have been, and may continue to be, periods of several days or more when trading activity in our shares is minimal or non-existent.
−Removed: We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.
−Removed: The market for our common shares can be characterized by significant price volatility when compared to other more well-known issuers, and we expect that our share price will continue to be more volatile than a well-known issuer for the indefinite future.
−Removed: The volatility in our share price is attributable to a number of factors.
−Removed: First, as noted above, our common shares have been, and may continue to be, sporadically and/or thinly traded.
−Removed: As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction.
−Removed: Secondly, an investment in us is a speculative or “risky” investment due to our lack of revenues or profits to date.
−Removed: You should not invest in our common shares unless you have the ability to tolerate a thinly traded and volatile market for the shares.
−Removed: We cannot assure you that our common stock will become eligible for listing or quotation on any exchange and the failure to do so may adversely affect your ability to dispose of our common stock in a timely fashion.
−Removed: We have, and may in the future, consider actions that make us eligible to list our common shares on a stock exchange.
−Removed: For example, we previously applied to list our shares of common stock on the Canadian Stock Exchange ("CSE"), but after consideration, we have determined that we do not currently meet the applicable listing requirements.
−Removed: We have have decided not to continue with the CSE listing application process for now and we do not anticipate having our shares of common stock listed on the CSE in the foreseeable future.
−Removed: We may not be able satisfy the initial standards for listing or quotation on any exchange in the foreseeable future or at all.
−Removed: Even if we are able to become listed or quoted on an exchange, we may not be able to maintain a listing of the common stock on such stock exchange.
−Removed: We do not anticipate paying any cash dividends.
−Removed: We presently do not anticipate that we will pay any dividends on any of our capital stock in the foreseeable future.
+Added: The trading price of our common stock has been volatile with substantial price fluctuations on heavy volume, which could result in substantial losses for purchasers of our common stock and existing stockholders.
+Added: Our stock price has been and, in the future, may be subject to substantial volatility.
+Added: During the fiscal year ended December 31, 2023 through March 20, 2024, the price per share of our common stock has ranged as low as $1.44 and as high as $18.00.
+Added: Furthermore, the stock market in general and the market for biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
+Added: As a result of this volatility, investors may not be able to sell their common stock at or above the price paid for the shares.
+Added: The market price for our common stock may be influenced by many factors, including:
+Added: • announcements relating to development, regulatory approvals or commercialization of our product candidates or those of competitors;
+Added: • results of clinical trials of our product candidates or those of our competitors;
+Added: • announcements by us or our competitors of significant strategic partnerships or collaborations or terminations of such arrangements;
+Added: • actual or anticipated variations in our operating results and whether we have achieved key business targets;
+Added: • sales of our common stock, including sales by our directors and officers or specific stockholders;
+Added: • changes in, or our failure to meet, financial estimates by us or by any securities analysts who might cover our stock;
+Added: • changes in securities analysts’ buy and/or sell recommendations;
+Added: • general economic, political, or stock market conditions;
+Added: • conditions or trends in our industry;
+Added: • changes in laws or other regulatory actions affecting us or our industry;
+Added: • stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the biopharmaceutical industry;
+Added: • announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;
+Added: • capital commitments;
+Added: • investors’ general perception of our company, our business, and our prospects;
+Added: • disputes concerning our intellectual property or other proprietary rights;
+Added: • recruitment or departure of key personnel.
+Added: In the past, stockholders have initiated class action lawsuits against pharmaceutical and biotechnology companies following periods of volatility in the market prices of these companies’ stock.
+Added: Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources from our business.
+Added: We effected the Reverse Stock Split on September 8, 2023 and the liquidity of our common stock may be continue to be adversely effected.
+Added: On September 6, 2023, we filed a Certificate of Change and Certificate of Correction with the Secretary of State of the State of Nevada, which effected a reverse stock split (the “Reverse Split”), at a ratio of one-for-250, of the Company’s issued and outstanding shares of common stock, par value $0.001 per share (the “Common Stock”).
+Added: The Reverse Split became effective on September 8, 2023.
+Added: The liquidity of the shares of our common stock may continue to be affected adversely by the Reverse Stock Split given the reduced number of shares of our common stock that are outstanding following the Reverse Stock Split, particularly if the market price of our common stock does not increase from its recent decline partly as a result of the Reverse Stock Split.
+Added: Following the Reverse Stock Split, the market price of our common stock may not attract new investors and may not satisfy the investing requirements of those investors.
+Added: There can be no assurance that our share prices will attract new investors, including institutional investors.
+Added: In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors.
+Added: As a result, the trading liquidity of our common stock may not necessarily improve.
+Added: We have never declared dividends and do not anticipate paying any cash dividends.
+Added: We have not declared or paid any dividends on any of our capital stock to date.
The payment of dividends, if any, would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition.
2 unchanged sentences
accordingly, we do not anticipate the declaration of any dividends in the foreseeable future.
−Removed: Our common stock is subject to penny stock rules, which may make it more difficult for our stockholders to sell their common stock.
−Removed: Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC.
−Removed: Penny stocks generally are equity securities with a price of less than $5.00 per share.
−Removed: The penny stock rules require a broker-dealer, prior to a purchase or sale of a penny stock not otherwise exempt from the rules, to deliver to the customer a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market.
−Removed: The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.
−Removed: In addition, the penny stock rules generally require that prior to a transaction in a penny stock the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.
−Removed: These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.
−Removed: Table of Cont ents
−Removed: We will need additional capital, and the sale of additional shares or other equity securities could result in additional dilution to our stockholders.
−Removed: We require additional capital for the development and commercialization of our product candidates and may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue.
−Removed: If our resources are insufficient to satisfy our cash requirements, we will seek to sell additional equity or debt securities or obtain a credit facility.
−Removed: The sale of additional equity securities could result in additional dilution to our stockholders.
−Removed: If we incur additional indebtedness it would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations.
−Removed: We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
−Removed: Our principal stockholder owns a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.
−Removed: Our principal stockholder, Sciences, owns a significant percentage of our outstanding capital stock.
−Removed: As of March 29, 2023, Sciences owned 17.44% of our outstanding shares of common stock.
−Removed: As such, Sciences may be able to exert significant influence over elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.
−Removed: This concentration of ownership may prevent or discourage unsolicited acquisition proposals or offers for our common stock that some of our stockholders may believe is in their best interest.
+Added: Unless and until we pay dividends, stockholders may not receive a return on their shares of common stock.
+Added: Our executive officers, directors and principal stockholders, if they choose to act together, have the ability to control or significantly influence all matters submitted to stockholders for approval.
+Added: Our executive officers, directors and greater than 5% stockholders, in the aggregate, own approximately 64% of our outstanding common stock as of March 20, 2024.
+Added: As a result, such persons, acting together, have the ability to control or significantly influence all matters submitted to our stockholders for approval, including the election and removal of directors and approval of any significant transaction, as well as our management and business affairs.
+Added: This concentration of ownership may have the effect of delaying, deferring or preventing a change in control, impeding a merger, consolidation, takeover or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our business, even if such a transaction would benefit other stockholders.
+Added: Additionally, u nder the terms of the securities purchase agreement (the "January PIPE SPA") entered into in connection with the January PIPE Financing, so long as the investors in the January PIPE Financing continue to beneficially own in the aggregate at least 40% of the securities issued in the January PIPE Financing (such securities, the "Closing Securities"), the Company may not transfer, license (other than in the ordinary course of business), encumber, or sell a royalty interest in any intellectual property relating to nimacimab unless Skye obtains the written consent of Qualified Investors that, together with their respective affiliates, beneficially own at least a majority of the then outstanding Closing Securities owned by the Qualified Investors and their respective affiliates.
+Added: The term "Qualified Investors" means any investor that, together with its affiliates, continues to own at least 80% of the securities originally purchased by it under the January PIPE SPA.
+Added: This restriction may have the effect of delaying, deferring or preventing a change in control, impeding a merger, consolidation, takeover or other business combination involving us, or discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of our business, even if such a transaction would benefit other stockholders.
We have a substantial number of authorized common shares available for future issuance that could cause dilution to our Stockholders’ interest and adversely impact the rights of the holders of our Shares.
14 unchanged sentences
As of March 20, 2024, we had outstanding (i) warrants to purchase up to 13,259,679 shares of our common stock at exercise prices ranging from $0.001 to $1,250 per share, (ii) options to purchase up to 1,201,398 shares of our common stock at exercise prices ranging from $1.69 to $750.00 per share, (iii) 1,127,777 unreleased restricted stock units exchangeable for shares of our common stock upon vesting.
+Added: Additionally, we have an outstanding convertible secured promissory note in the principal amount of $ 5,000,000 with a conversion price of $5.16.
Further, any additional financing that we secure may require the granting of rights, preferences or privileges senior to those of our common stock and which result in additional dilution of the existing ownership interests of our common stockholders.
3 unchanged sentences
Similar rules may apply under state tax laws.
−Removed: During 2018, pursuant to the Emerald Financing transaction, the Company underwent a significant ownership change which likely triggered a limitation under Section 382.
−Removed: If we experience ownership changes as a result of future transactions in
−Removed: Table of Cont ents
−Removed: our stock, our ability to use our net operating loss carryforwards and other tax attributes to offset U.S.
+Added: If we experience ownership changes as a result of future transactions in our stock, our ability to use our net operating loss carryforwards and other tax attributes to offset U.S.
federal taxable income may be subject to further limitations, which could potentially result in increased future tax liability to us.
−Removed: Risks Related to the EHT Acquisition
−Removed: We may face risks related to the wind-down of EHT’s operations.
−Removed: On May 11, 2022, we entered into an Arrangement Agreement (as amended, the “Arrangement Agreement”) with EHT pursuant to which we agreed to acquire all of the issued and outstanding common shares of EHT (the “EHT Shares”) pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the “Acquisition”).
−Removed: As previously mentioned, the Acquisition of EHT and its subsidiaries was consummated on November 10, 2022.
−Removed: As of the date of this Annual Report on Form 10-K, We intend to continue to continue to wind down the operations of EHT and its subsidiaries and focus on the business of SKYE we have divested both of EHT's former operating entities, VDL and EHTC, and are in the process of closing EHT’s legacy tax matters with the Canadian tax authorities.
−Removed: The ability to realize the benefits of the Acquisition may depend in part on successfully winding down the operations of EHT, including, but not limited to:
−Removed: the sale of EHT's remaining facilities at terms favorable to us, the timely termination of obsolete contracts, the implementation of cost-cutting measures necessary to maximize the remaining asset balances, the effective management of the termination of remaining personnel and related severance payments, and the implementation of a successful transition plan, which includes the effective cessation of regulatory requirements related to operating in the cannabis industry.
−Removed: Other risks resulting from the EHT assets and discontinued operations that could diminish the assets being acquired by us include unforeseen expenses, liabilities, or potential off-balance sheet liabilities, including litigation and tax related liabilities.
−Removed: The difficulties that we encounter in the transition, integration and wind-down processes could have an adverse effect on the level of expenses, and operating results of our business.
−Removed: As a result of these factors, it is possible that any anticipated benefits from the Acquisition will not be realized.
−Removed: Unresolved Staff Comments.
+Added: Sales of a substantial number of shares of our common stock by our existing stockholders in the public market could cause our stock price to fall.
+Added: Sales of a substantial number of shares of our common stock by our existing stockholders in the public market or the perception that these sales might occur could significantly reduce the market price of our common stock and impair our ability to raise adequate capital through the sale of additional equity securities.
+Added: The holders of 24,140,023 shares of our outstanding common stock, or approximately 86% of our total outstanding common stock as of March 20, 2024 , are entitled to rights with respect to the registration of their shares under the Securities Act.
+Added: Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by affiliates, as defined in Rule 144 under the Securities Act.
+Added: Sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.
+Added: We cannot assure you that our common stock will become eligible for listing or quotation on any exchange and the failure to do so may adversely affect your ability to dispose of our common stock in a timely fashion.
+Added: We have, and may in the future, consider actions that make us eligible to list our common shares on a stock exchange, such as NASDAQ.
+Added: We may not be able satisfy the initial standards for listing or quotation on any exchange in the foreseeable future or at all.
+Added: Even if we are able to become listed or quoted on an exchange, we may not be able to maintain a listing of the common stock on such stock exchange.
+Added: Our common shares are thinly-traded, and in the future, may continue to be thinly-traded, and you may be unable to sell at or near ask prices or at all.
+Added: Our common shares are quoted on the OTCQB and are thinly traded.
+Added: We cannot predict whether, and the extent to which, an active public market for our common stock will develop or be sustained due to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and may be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.
+Added: As a consequence, there have been, and may continue to be, periods of several days or more when trading activity in our shares is minimal or non-existent.
+Added: We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.
+Added: The market for our common shares can be characterized by significant price volatility when compared to other more well known issuers, and we expect that our share price will continue to be more volatile than a well-known issuer for the indefinite future.
+Added: The volatility in our share price is attributable to a number of factors.
+Added: First, as noted above, our common shares have been, and may continue to be, sporadically and/or thinly traded.
+Added: As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction.
+Added: Secondly, an investment in us is a speculative or “risky” investment due to our lack of revenues or profits to date.
+Added: You should not invest in our common shares unless you have the ability to tolerate a thinly traded and volatile market for the shares.
+Added: General Risk Factors
+Added: If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline.
+Added: The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competitors.
+Added: We currently have limited research coverage by securities and industry analysts.
+Added: If securities or industry analysts do not continue coverage of our company, the trading price for our stock would be negatively impacted.
+Added: In the event one or more of the analysts who covers us downgrades our stock, our stock price would likely decline.
+Added: If one or more of these analysts ceases to cover us or fails to regularly publish reports on us, interest in our stock could decrease, which could cause our stock price or trading volume to decline.
+Added: We engage in transactions with related parties which present possible conflicts of interest that could have an adverse effect on us.
+Added: We have entered, and may continue to enter, into transactions with affiliates and other related parties for financing, corporate, business development and operational services.
+Added: Such transactions may not have been entered into on an arm’s-length basis, and we may have achieved more or less favorable terms because such transactions were entered into with our related parties.
+Added: We rely, and will continue to rely, on our related parties to maintain these services.
+Added: If the pricing for these services changes, or if our related parties cease to provide these services, including by terminating agreements with us, we may be unable to obtain replacements for these services on the same terms without disruption to our business.
+Added: This could have a material effect on our business, results of operations and financial condition.
+Added: The details of certain of these transactions are set forth in “Certain Relationships and Related Party Transactions”.
+Added: Related party transactions create the possibility of conflicts of interest with regard to our management, we may enter into contracts between us, on the one hand, and related parties, on the other, that may not result in arm’s-length transactions, including that:
+Added: • our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and
+Added: • our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time.
+Added: Such conflicts could cause an individual in our management to seek to advance his or her economic interests or the economic interests of certain related parties above ours.
+Added: Further, the appearance of conflicts of interest created by related party transactions could impair the confidence of our investors.
+Added: Our audit committee reviews these transactions.
+Added: Notwithstanding this, it is possible that a conflict of interest could have a material adverse effect on our liquidity, results of operations and financial condition.
+Added: Unpredictable business disruptions could seriously harm our future revenues and financial condition, increase our costs and expenses, and impact our ability to raise capital.
+Added: Our operations could be subject to unpredictable events, such as earthquakes, power shortages, telecommunications failures, water shortages, medical epidemics and other natural or man made disasters or business interruptions, for which we are predominantly self-insured.
+Added: The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.
+Added: Notably, we rely on third party manufacturers to produce our product candidates, and such third party manufacturers ability to manufacture our products could be negatively affected by such events.
+Added: The current volatility of global financial conditions and inflation could negatively impact our business and financial condition.
+Added: Current global financial conditions and recent market events have been characterized by increased volatility, inflation and the resulting tightening of the credit and capital markets has reduced the amount of available liquidity and overall economic activity.
+Added: Economic factors over which the Company has no control, including changes in inflation, interest rates and foreign currency rates may have a potential adverse effect of on revenues, expenses and resulting margins.
+Added: We cannot guarantee that debt or equity financing, and the ability to borrow funds or cash generated by operations will be available or sufficient to meet or satisfy our initiatives, objectives, or requirements.
+Added: Our inability to access sufficient amounts of capital on terms acceptable to us for our operations will negatively impact our business, prospects, liquidity and financial condition.
+Added: Global markets have recently experienced increased rates of inflation.
+Added: Inflation itself, as well as certain governmental efforts to combat inflation, may have significant negative effects on any economy which the Company does business.
+Added: Past governmental efforts to curb inflation also involved other more drastic economic measures.
+Added: Any future economic measures to curb inflation could be expected to have similar adverse effects on the level of economic activity in the market, which the Company does business and, in turn, on the operations of the Company.
+Added: For example, the Federal Reserve recently raised interest rates multiple times in response to concerns about inflation and it may raise them again.
+Added: Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer spending.
+Added: Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.
+Added: Other policies and measures adopted by governments include interest rate adjustments, intervention in the currency markets or actions to adjust or fix the value of the local currency may adversely affect t he Company’s business and results of operations.
+Added: or international economic conditions could negatively affect our business, financial condition and results of operations.
+Added: We face risks associated with U.S.
+Added: and international economic conditions and are subject to events beyond our control including war, public health crises, trade disputes, economic sanctions, and their collateral impacts.
+Added: or international economic conditions or periods of inflation or high energy prices may contribute to higher unemployment levels, decreased consumer spending, reduced credit availability and declining consumer confidence and demand, each of which poses a risk to our business.
+Added: In February 2022, armed conflict escalated between Russia and Ukraine.
+Added: The sanctions imposed by the U.S.
+Added: and other countries against Russia, following Russia’s invasion of Ukraine, to date include restrictions on selling or importing goods, services, or technology in or from affected regions and travel bans and asset freezes impacting connected individuals and political, military, business and financial organizations in Russia.
+Added: and other countries could impose wider sanctions and take other actions should the conflict further escalate.
+Added: It is not possible to predict the broader consequences of this conflict, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, currency exchange rates and financial markets, all of which could impact our business, financial condition and results of operations.
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.