Fibrocell Science, Inc. is an autologous cell and gene therapy company, which focuses on translating personalized biologics into medical breakthroughs for diseases affecting the skin and connective tissue. The company was founded on December 28, 1995 and is headquartered in Exton, PA.
There can be no assurance that our review of strategic alternatives will result in any additional stockholder value, and speculation and uncertainty regarding the outcome of our review of strategic alternatives may adversely impact our business, financial condition and results of operations.
We need to obtain additional capital to continue as a going concern. If we are unable to obtain sufficient capital, we will need to curtail and reduce our operations and costs, and modify our business strategy.
We have incurred significant losses since our inception and anticipate that we will continue to incur losses in the future.
We do not generate significant revenues from product sales and may never be profitable.
We will seek to raise additional funds in the future, which may be dilutive to stockholders or impose operational restrictions.
We are subject to restrictive covenants that may restrict our ability to pursue business strategies that are in our long-term best interests.
Provisions of the Notes and certain of our outstanding common stock purchase warrants provide for certain potential payments to the holders of such Notes and common stock purchase warrants that could impede a sale of the Company.
We may be subject to payment of liquidated damages if we fail to file and maintain an effective registration statement with respect to the securities covered under the registration rights agreements that we entered into in connection with the 2016 Private Placement.
We have a significant number of outstanding convertible notes, convertible preferred stock, warrants and stock options, and future sales of underlying shares of our common stock may cause substantial dilution to our existing stockholders.
If our stockholders’ equity falls below $2.5 million, our common stock may be subject to delisting from Nasdaq
If our common stock becomes subject to the penny stock rules, it would become more difficult to trade our shares.
We have a limited operating history, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
We may acquire other assets or businesses, or form collaborations or make investments in other companies or technologies that could harm our operating results, dilute our stockholders’ ownership, incur debt or cause us to incur significant expense.
Our product candidates are based on novel technology, which makes it difficult to predict the time and cost of product development and subsequently obtaining regulatory approval. At the moment, only a small number of gene therapy products have been approved in the United States and the European Union.
Initial results from a pre-clinical study or clinical trial do not ensure that the study or trial will be successful and success in pre-clinical studies and early stage clinical trials does not ensure success in later-stage clinical trials.
In previous clinical trials conducted by sponsors other than us involving viral vectors for gene therapy, some patients experienced SAEs, including the development of leukemia due to vector-related insertional oncogenesis. If our vectors demonstrate a similar effect, we may be required to halt or delay further clinical development of our product candidates.
We may find it difficult to enroll patients in our clinical trials, which could delay or prevent clinical trials of our product candidates.
If physicians do not follow our established protocols, the efficacy and safety of our product candidates may be adversely affected.
Clinical trials may fail to demonstrate the safety or efficacy of our product candidates, which could prevent or significantly delay regulatory approval of our product candidates and harm our business.
Obtaining FDA and other regulatory approvals is complex, time consuming and expensive, and the outcomes are uncertain.
If we fail to obtain the necessary regulatory approvals, or if such approvals are limited, we will not be able to commercialize our product candidates at all or to the extent we expected, and we will not generate any product revenues, or the product revenues we generate may be substantially less than expected.
Our failure to comply with extensive governmental regulation may significantly affect our operating results.
We are subject to significant regulation with respect to the manufacturing of our product candidates.
If we fail to obtain or maintain orphan drug exclusivity for any of our product candidates, our competitors may sell products to treat the same conditions and our operations will be adversely impacted.
Even if we were to obtain approval for FCX-007 or FCX-013 with rare pediatric disease designation, the Rare Pediatric Disease PRV Program may no longer be in effect at the time of such approval.
We are largely dependent on the future commercial success of our product candidates.
Negative public opinion and increased regulatory scrutiny of gene therapies may damage public perception of our product candidates or adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.
Future sales of our products are subject to adequate coverage, pricing and reimbursement from third-party payors, which are subject to increasing and intense pressure from political, social, competitive and other sources. Our inability to obtain and maintain adequate coverage, pricing or reimbursement, could have an adverse effect on our business.
If any of our approved products were to become the subject of problems related to their efficacy, safety, or otherwise, our business would be seriously harmed.
Our product candidates for which we intend to seek approval as biological products may face competition sooner than expected.
We may be liable for product liability claims not covered by insurance.
We will incur additional expenses in connection with our exclusive channel collaboration agreements with Intrexon.
We may not be able to retain the exclusive rights licensed to us by Intrexon to develop and commercialize our product candidates.
Any manufacturing difficulties, disruptions or delays could adversely affect our ability to conduct our clinical trials.
We receive vectors from our contract manufacturers, but the majority of our research, development and manufacturing operations depend on one facility for all of our product candidates. If this facility is destroyed or is out of operation for a substantial period of time, our business may be adversely impacted.
If we or our licensors are unable to protect our intellectual property rights or if our intellectual property rights are inadequate for our technologies and product candidates, our competitive position could be harmed.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could harm our business.
Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
Changes in patent law, including recent patent reform legislation, could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful and have a material adverse effect on the success of our business.
We may be subject to claims by third parties asserting that our licensors, employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.
Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
We are dependent on our executives and other key professionals and the loss of any of these individuals could harm our business.
We may need to attract, train and retain additional experienced executives and other key professionals in the future.
Our business may be adversely affected by current and potential future healthcare reforms.
If we fail to comply with federal and state healthcare laws, including fraud and abuse and health information privacy and security laws, we could face substantial penalties and our business, results of operations, financial condition and prospects could be adversely affected.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.
Our business and operations would suffer in the event of computer system failures.
Our ability to use net operating loss carryforwards to reduce future tax payments may be limited or restricted.
The trading price of the shares of our common stock has been highly volatile, and purchasers of our common stock could incur substantial losses.
Randal J. Kirk and certain of his affiliates (including Intrexon) own a substantial percentage of our common stock and will be able to exert significant influence over matters subject to stockholder approval.
Our operating results may fluctuate significantly in the future, which may cause our results to fall below the expectations of securities analysts, stockholders and investors.
Future sales of our common stock may depress our stock price.
Holders of our outstanding preferred shares have dividend, liquidation and other rights that are senior to the rights of the holders of our common shares.
We have not declared any dividends on our common stock to date, and we have no intention of declaring dividends in the foreseeable future.
Provisions in our charter documents could prevent or delay stockholders’ attempts to replace or remove current members of our Board.
Provisions in our bylaws provide for indemnification of officers and directors, which could require us to direct funds away from our business and the development of our product candidates.
An active market for our common stock may not be sustained.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
We are a cell and gene therapy company focused on improving the lives of people with rare diseases of the skin and connective tissue. We are utilizing our proprietary autologous fibroblast technology to develop personalized biologics that target the underlying cause of disease. Fibroblasts are the most common cell in skin and connective tissue and are responsible for synthesizing extracellular matrix proteins, including collagen and other growth factors, that provide structure and support. Because fibroblasts naturally reside in the localized environment of the skin and connective tissue, they represent an ideal delivery vehicle for proteins targeted to these areas. We target the underlying cause of disease by using fibroblast cells from a patient’s skin and genetically modifying them to create localized therapies that are compatible with the unique biology of the patient (i.e., which are autologous).
Our pipeline of localized gene therapy candidates include FCX-007 for the treatment of recessive dystrophic epidermolysis bullosa (RDEB), a life-threatening genetic disorder diagnosed in infancy with no cure or treatment approved by the U.S. Food and Drug Administration (FDA). We are also developing FCX-013 for the treatment of moderate to severe localized scleroderma. Currently, all of our research and development operations and focus are on gaining regulatory approvals to commercialize our gene therapy candidates in the United States; however, we may seek to expand into international markets in the future.