UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DCD.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended DecemberMarch 31, 20152022
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 333-179311File No. 001-38169
TYME TECHNOLOGIES, INC.
(Exact nameName of Registrant as specifiedSpecified in its charter)Its Charter)
Delaware |
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(Address of Principal Executive Offices) |
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Registrant’s Telephone Number,telephone number, including area code: (646) 205-1603
(212) 461-2315
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of | Trading Symbol(s) | Name of |
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Securities registered pursuant to Section 12(g) of the Exchange Act:None
Indicate by check mark if the Registrantregistrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o☐ No x
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Indicate by check mark if the Registrantregistrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes o☐ No x
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Indicate by check mark whether the Registrantregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrantregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x☒ No o
(Note: The registrant is a voluntary filer of reports and has filed during the preceding 12 months all reports it would have been required to
file by Section 13 or 15(d) of the Securities Exchange Act if the registrant had been subject to one of such Sections.)
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x☒ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definite proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
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Indicate by check mark whether the Registrantregistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “Smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☒ | Smaller Reporting Company | ☒ | ||
Emerging Growth Company | ☐ |
Large accelerated Filer o Accelerated Filer o Non-accelerated Filer o Smaller reporting
If an emerging growth company, x
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrantregistrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o☐ No x
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The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $177.2 million.$153,482,658.
Indicate theThe number of shares outstanding of each of the issuer’s classes ofregistrant’s common stock as of the latest practicable date.on May 20, 2022 was 172,206,894.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the documents listed below have beenCertain information required by Items 10, 11, 12, 13 and 14 is incorporated by reference into the indicated parts of this report, as specified in the responses to the item numbers involved.
DesignatedPart III hereof from portions of the Proxy Statement relating tofor the 2016registrant’s 2022 Annual Meeting of the Stockholders (the “Proxy Statement”): Part III (Items 9, 10, 11, 12, and 13), to be filed within 120 daysStockholders.
TABLE OF CONTENTS
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| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 118 | |
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PART ITable of Contents
Except for historical financial information contained herein, Tyme Technologies, Inc., including all subsidiaries (collectively referred to as “we,” “us,” “our,” or “Company”
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this report) notes that certain of the matters discussed in thisAnnual Report on Form 10-K may be considered forward-looking statementsare “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by the Securities Litigation Reform Actthereby. All statements contained in this Annual Report on Form 10-K other than statements of 1995. Suchhistorical facts, including statements include declarations regarding our intent, belief,future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. Such forward-looking statements within this report include, without limitation, statements regarding potential strategic options (and the Company’s exploration thereof) and statements regarding our drug candidates and technologies (including SM-88 and TYME-18) and their clinical potential and non-toxic safety profiles, our drug development plans and strategies, ongoing and planned preclinical or clinical trials, preliminary data results and the therapeutic design and mechanisms of our drug candidates. The words “believes,” “expects,” “hopes,” “may,” “will,” “plan,” “intends,” “estimates,” “could,” “should,” “would,” “continue,” “seeks,” “anticipates,” and similar expressions (including their use in the negative) are intended to identify forward-looking statements. Forward-looking statements can also be identified by discussions of future matters such as: the effect of the COVID-19 pandemic and the associated impact on the national and global economy as well as impacts on the Company's ongoing clinical trials and ability to analyze data from those trials; the cost of development and potential commercialization of our lead drug candidate and of other new product candidates; expected releases of interim or final data from our clinical trials; possible collaborations; and the timing, scope, status, objectives of our ongoing and planned trials; the success of management transitions and strategic initiatives; and other statements that are not historical. The forward-looking statements contained in this report are based on management’s current expectations and thoseprojections which are subject to uncertainty, risks and changes in circumstances that are difficult to predict and many of which are outside of our management. Prospective investors are cautioned that any such forward-lookingcontrol. These statements are not guarantees of future performanceinvolve known and involve a number ofunknown risks, uncertainties and other factors some of which are beyond our control;may cause the Company’s actual results, could differperformance or achievements to be materially different from those indicatedany historical results and future results, performance or achievements expressed or implied by suchthe forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statementsThese risks and uncertainties include but are not limited to: (i)the Company’s process to evaluate strategic options; the terms, timing, structure, benefits and costs of any strategic transaction and whether any transaction will be consummated at all; the impact of any strategic transaction on the Company; the outcomes of any litigation, regulatory proceedings, inquiries or investigations to which the Company may be subject; the ability to obtain financing or third-party approvals for a transaction as needed; the severity, duration, and economic impact of the COVID-19 pandemic; our ability to achieve the intended benefits of our strategic initiatives; that thecertain information is of a preliminary nature and may be subject to change; uncertainties inherent in the cost and outcomes of research and development, including the cost and availability of acceptable-quality clinical supply, and in the ability to achieve adequate start and completion dates, as well as uncertainties in clinical trial design and patient enrollment, dropout or discontinuation rates; the possibility of unfavorable study results, including unfavorable new clinical data, additional analyses of existing data and results that may lead to a discontinuation of trials; risks associated with early, initial data, including the risk that the final data from any clinical trials may differ from prior or preliminary study data or analyses and may not support further adjustment; (ii) those risksclinical development; and uncertainties identified under “Risk Factors;”that past reported data are not necessarily predictive of future patient or clinical data outcomes; whether and (iii) thewhen any applications or other risks detailed from time-to-time in our reports and registration statementssubmissions for SM-88 or other drug candidates may be filed with regulatory authorities; whether and when regulatory authorities may approve any applications or submissions; decisions by regulatory authorities regarding labeling and other matters that could affect commercial availability of SM-88 or other drug candidates; the ability of TYME and its collaborators to develop and realize collaborative synergies; competitive developments; the ability of TYME to maintain compliance with Nasdaq listing standards; and the factors described in the section captioned “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K, as well as subsequent reports we file from time to time with the U.S. Securities and Exchange Commission (available at www.sec.gov).
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements or SEC.events and circumstances reflected in the forward-looking statements will occur. Moreover, we operate in a competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from any forward-looking statements we make. We cannot assure you that forward-looking statements in this report or therein will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us to any other person that we will achieve our objectives and plans in any specified time frame, or at all. We disclaim any intent or duty to
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update any of these forward-looking statements after completion of this Annual Report on Form 10-K to conform these statements to actual results or revised expectations.
The cautionary statements made in this report are intended to be applicable to all related forward-looking statements wherever they may appear in this report. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except as required by law, we undertakeassume no obligation to revise or update publicly anyour forward-looking statements, whether as a result ofeven if new information future eventsbecomes available in the future.
GENERAL
Unless the context otherwise requires, all references in this Annual Report on Form 10-K to the “Company,” “TYME,” “we,” “us” or otherwise.“our” refer to Tyme Technologies, Inc., together with its subsidiaries.
Throughout this fiscal year 2022 Form 10-K, we have used terms which are defined below:
AE | Adverse event | GMP | Good manufacturing practices |
ANDA | Abbreviated New Drug Application | HIPAA | Health Insurance Portability and Accountability Act of 1996 |
APIs | Active Pharmaceutical Ingredients | HITECH | Health Information Technology for Economic and Clinical Health Act |
ASC | Accounting Standards Codification | HR+ | Hormone receptor positive |
ASU | Accounting Standards Update | HER2- | Human epidermal growth factor receptor 2 negative |
ATM | At-the-Market offering | HHS | United States Department of Health and Human Services |
CARES | Coronavirus Aid, Relief, and Economic Security | IEC | Independent Ethics Committee |
CBR | Clinical benefit rate | IND | Investigational New Drug |
CCPA | California Consumer Privacy Act | IIT | Investigator Initiated Trial |
CDK4/6 | A gene that makes a protein involved in the cell cycle (the process a cell goes through each time it divides). Mutations (changes) in the CDK4/6 gene may cause cells to divide too quickly or in an uncontrolled way. | IP | Intellectual Property |
cGMP | Current good manufacturing practice | IRB | Institutional Review Board |
CMBTs | Cancer metabolism-based therapies | KOLs | Key opinion leaders |
CMC | Chemistry, manufacturing and controls | LLC | Limited Liability Company |
CMOs | Contract Manufacturing Organizations | MAA | Marketing Authorization Application |
CMS | Centers for Medicare & Medicaid Services | MOA | Mechanism of action |
COSO | Committee of Sponsoring Organizations of the Treadway Commission | mOS | Median overall survival |
CR | Complete responses | mPDAC | Metastatic pancreatic ductal adenocarcinoma |
CRO | Contract/Clinical Research Organization | MPS | Methoxsalen, phenytoin, and sirolimus |
CT | Computerized Tomography | M2PS | Melanin, melanotan II, phenytoin, and sirolimus |
CTC | Circulating Tumor Cell | NDA | New Drug Application |
DCR | Disease control rate | NOL | Net Operating Loss |
DMC | Data Monitoring Committee | ORR | Objective response rate |
DO1 | Division of Oncology 1 | OS | Overall Survival |
DO2 | Division of Oncology 2 | PanCAN | Pancreatic Cancer Action Network |
DOR | Duration of response | PCAOB | Public Company Accounting Oversight Board |
DSMB | Data Safety Monitoring Board | PFS | Progression free survival |
ECOG PS | Eastern Cooperative Oncology Group Performance Status | PHSA | Public Health Service Act |
EEA | European Economic Area | PI | Principal Investigator |
EMA | European Medicines Agency | PR | Partial responses |
EORTC | European Organisation for Research and Treatment of Cancer | PSA | Prostate specific antigen |
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EPS | Earnings Per Share | R&D | Research and Development |
ESG | Environmental, social and governance | RCT | Randomized Clinical Trial |
ETASU | Elements to assure safe use | RECIST | Response Evaluation Criteria In Solid Tumors |
EU | European Union | REMS | Risk evaluation mitigation strategies |
FASB | Financial Accounting Standards Board | rPFS | Radiographic progression-free survival |
FCPA | Foreign Corrupt Practices Act | ROU | Right-of-use |
FDA | Food and Drug Administration | SAEs | Serious adverse events |
FDAMA | Food and Drug Administration Modernization Act of 1997 | SD | Stable disease |
FDCA | Federal Food, Drug, and Cosmetic Act | SEC | U.S. Security and Exchange Commission |
FIH | First in Human | SOX | Sarbanes-Oxley Act of 2002 |
FTE | Full time equivalent | SPA | Securities Purchase Agreement |
GAAP | Generally Accepted Accounting Principles | UK | United Kingdom |
GCP | Good clinical practices | US | United States |
GDPR | General Data Protection Regulation | USPTO | United States Patent and Trademark Office |
GLP | Good laboratory practices |
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SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS
Our business is subject to numerous risks and uncertainties. If any of those risks materializes, it could have a material adverse effect on our business, operating results and financial condition, and cause the trading price of our common stock to decline. You should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors” in Item 1A of this Annual Report on Form 10-K. These risks include, among others, the following:
• | Our two co-founders each hold a substantial ownership interest in our Company, which gives them the ability to influence certain decision making and Mr. Hoffman has certain rights to our intellectual property that may allow him to use our IP in ways that could be inconsistent with our use. |
• | Our share price is likely to be volatile due to factors beyond our control and may drop below prices paid by investors; investors could lose all of their investment in our Company. |
• | Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish substantial rights. |
• | We may be unable to regain and maintain compliance with Nasdaq continued listing requirements, which could cause our common stock to be delisted from Nasdaq. |
• | The novel coronavirus (COVID-19) and its impact on business and economic conditions could adversely affect our business, results of operations and financial condition, and the extent and duration of those effects will be uncertain. |
• | Our proprietary lead drug product, SM-88, is in clinical development in two principal areas. We are currently participating in the advancement of clinical trials for breast cancer and sarcoma. We are considering additional clinical trials in other solid tumors and/or hematologic malignancies. Clinical drug development is expensive, time-consuming and uncertain, and we may ultimately not be able to obtain regulatory approval for the commercialization of our lead candidate. |
• | We have limited experience with completing large-scale or pivotal Phase II or III clinical trials, obtaining FDA approvals or commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability or could result in delays or the failure to obtain required regulatory approval of our products. |
• | If we are unable to identify, recruit and retain enough qualified patients for our clinical trials, it could delay or prevent development of our drug candidates and adversely affect our future business prospects. |
• | If clinical trials for our drug candidates are prolonged, delayed or stopped, we may be unable to obtain regulatory approval and commercialize our drug on a timely basis, which would require us to incur additional costs and delay revenue. |
• | The results of previous studies may not be predictive of future results, our progress in future trials for one drug candidate may not be indicative of progress in trials for other drug candidates and the results of our current and planned clinical trials may not satisfy the requirements of the FDA, the EMA or other non-U.S. regulatory authorities. |
• | Preclinical development programs and preclinical mechanism research activities may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all. |
• | We may not be successful in our efforts to use and expand our technology platform to build a pipeline of product candidates. |
• | We have filed patent applications relating to additional product candidates based on our technology platform. However, to date, the FDA and other regulatory authorities have not approved products that utilize this technology platform. |
• | Even if we obtain marketing approval for one or more of our drug candidates in a major pharmaceutical market such as the United States or Europe, we may never obtain approval or commercialize in other major markets, which would limit our ability to realize the drug’s full market potential. |
• | SM-88, TYME-18, TYME-19 or any other drug product we may develop may have serious adverse, undesirable or unacceptable side effects, which may delay or prevent marketing approval. If such side effects are identified during the development of a product candidate we may develop or following such candidate’s approval, if any, we may need to abandon our development of such product candidate, the commercial profile of any approved label may be limited and/or we may be subject to other significant negative consequences following marketing approval, if any. |
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• | Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval and commercialization of our product candidates and may affect the prices we obtain. Our successful commercialization will depend in part on the extent to which governmental authorities and health insurers establish adequate coverage, reimbursement and pricing policies. |
• | We currently have very limited marketing, sales or distribution infrastructure. If we are unable to develop full sales, marketing and distribution capabilities on our own or through collaborations or if we fail to achieve adequate pricing and/or reimbursement, we will not be successful in commercializing our candidates. |
• | Even if SM-88 obtains regulatory approval, it will remain subject to ongoing regulatory requirements and oversight. |
• | Even if approved, if SM-88 does not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, our revenue generated from its sales will be limited. |
• | We are subject to manufacturing risks that could substantially increase our costs and limit the supply of our current drug candidates and any other drug product we may develop. |
• | The drug candidates that we may develop will face significant competition and, if competitors develop and market products that are more effective, safer or less expensive than our drug, our commercial opportunity will be negatively impacted. |
• | If any drug liability lawsuits are successfully brought against us or any of our collaborators, we may incur substantial liabilities and may be required to limit commercialization of our drug candidates and any other drug product we may develop. |
• | We have incurred significant losses since inception and anticipate that we will continue to incur losses for the foreseeable future. We have no products approved for commercial sale and to date we have not generated any revenue or profit from drug sales. We may never realize revenue or profitability. |
• | To achieve our long-term business objectives, we will require substantial additional funding, which may require us to agree to restrictions on our operations or may not be available to us on acceptable terms or at all and, if not available, may require us to delay, scale back or cease our drug development programs or operations. |
• | We rely on third parties to conduct our clinical trials and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of these trials. |
• | We intend to rely on third-party contract manufacturing organizations to manufacture and supply our drug candidates for us. If one of our suppliers or manufacturers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find new suppliers or manufacturers. We may also face delays in the development and commercialization of our drug candidates and any other drug product we may develop. |
• | We have entered into a co-promotion agreement and may enter into additional license or collaboration agreements with third parties with respect to SM-88 and any other product candidates we may develop that may place the development or promotion of our product candidates partially or entirely outside of our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us. If such collaborations are not successful, our drug candidates we may choose to develop may not reach their full market potential. |
• | Our exploration of strategic options may not achieve its intended benefits and could have a material impact on our business, results of operations and financial condition. |
• | Our internal computer systems or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our drug development program. |
• | Our ability to successfully commercialize our technology and drug candidate may be materially adversely affected if we are unable to obtain and maintain effective IP. |
• | We may not be able to protect our IP rights throughout the world. |
• | Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. |
• | Health care reform measures could hinder or prevent the commercial success of our drug candidates. |
• | If approved, the marketing for SM-88 or other drug candidate, will be limited to the specific approved cancer or antiviral indications, as applicable, and, if we want to expand the indications for which these drug candidates may be marketed, additional regulatory approvals will need to be obtained, which may not be granted. |
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PART I
ITEM 1. | BUSINESS |
ITEM 1. BUSINESS
History
Executive Summary of Our Business – General Overview
WeTYME is an emerging biotechnology company developing CMBTs that are a clinical-stage pharmaceutical company focused on discovering and developing highly targeted cancer therapeutics forintended to be effective across a broad range of oncology indications.solid tumors and hematologic cancers, while also maintaining patients’ quality of life through relatively low toxicity profiles. Unlike targeted therapies that attempt to regulate specific mutations within cancer, the Company’s therapeutic approach is designed to take advantage of a cancer cell’s innate metabolic requirements to cause cancer cell death.
The Company is currently focused on developing its novel compound, SM-88, as well as further evaluating its preclinical pipeline of novel CMBTTM programs, and TYME-19 as a potential therapeutic for SARS CoV-2 diseases. The Company believes that early clinical results demonstrated by SM-88 in multiple advanced cancers, including breast, sarcomas, pancreatic, and prostate, reinforce the potential of its emerging CMBT™ pipeline.
Exploration of Strategic Options and Diversification
On March 29, 2022, we announced that the Board of Directors of the Company (the “Board”) had decided to explore potential strategic options to enhance stockholder value and engaged outside financial and legal advisors to assist with that process.
The Company continues to believe there are additional opportunities that could enhance value for TYME stockholders, notwithstanding its announcement, in January 2022, of the discontinuation of a randomized Phase II/III trial of SM-88 in combination with MPS for patients with metastatic pancreatic cancer, the most advanced clinical trial studying SM-88, upon learning that the trial sponsor terminated the study arm due to futility. TYME believes that being well-capitalized affords it the ability to consider a wide range of strategic options and is conducting a formal evaluation process with its financial advisor Moelis & Company LLC.
The Strategic Planning Committee of the Board, which is led by TYME Board Member Timothy C. Tyson, who possesses over 35 years of biotechnology and pharmaceutical industry experience, including multiple M&A transactions, is acting as Transaction Committee in connection with this process. There can be no assurance that this process will result in any such transaction. The Company does not undertake any obligation to provide any updates with respect to these matters except as required by applicable law.
Our Pipeline
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Ongoing Studies
OASIS (Metastatic HR+/HER2- Breast Cancer After CDK4/6 Inhibitors)
In June 2021, we announced an agreement with Georgetown University to support a Phase II trial for SM-88 in patients with metastatic breast cancer who have HR+/HER2-. This represents approximately 68% of the annual breast cancer diagnosis in the US each year. According to estimates from Data Monitor and Syneos Health based on data published in 2020, there are approximately 150,000 metastatic breast cancer diagnoses in the US each year. According to Data Monitor, company reported sales figures, and Syneos Health analyses, the total 2019 U.S. market revenues for drug treatment for metastatic breast cancer were $7.7 billion.
The OASIS trial is an investigator-initiated prospective open-label Phase II trial evaluating the efficacy and safety of SM-88 with MPS for the treatment of metastatic hormone-receptor positive, HER2- breast cancer after treatment with a CDK4/6 inhibitor. This trial is designed as a two-stage trial, enrolling up to 50 patients who have failed or progressed after receiving two hormonal agents and a CDK4/6 inhibitor to receive SM-88 with MPS without additional cancer therapies. The primary endpoint of this trial is ORR, with secondary endpoints including DOR, CBR at >24 weeks, PFS, and safety. The trial is being conducted at Georgetown University at a total of five sites within the Georgetown/MEDSTAR system located in Washington DC, Maryland, and New Jersey. Patient enrollment began in 2021 with the first patient dosed in September. We plan to provide an update on the OASIS breast cancer study during the first half of calendar year 2023.
This trial is being conducted as a follow up to the encouraging anti-tumor efficacy observed from the initial trials of SM-88 in this specific patient sub-group. In the FIH study and Compassionate Use Program (each discussed below under “Completed Studies”), several heavily pretreated metastatic HR+/HER2- breast cancer patients displayed tumor responses to SM-88, including several complete responses. This trial is aimed to further explore this signal and will also collect cell-free DNA from patients from different time-points with a goal of better understanding potential biomarkers of response and other aspects of SM-88’s mechanism of action. TYME has also established an academic collaboration with an investigator at Georgetown University to explore the mechanism of SM-88 and MPS, including models of CDK 4/6 resistance.
HoPES Phase II Trial in sarcoma
In early 2020, the open-label Phase 2 investigator sponsored trial of SM-88 therapy in sarcoma, HoPES, opened. This trial has two cohorts each expecting to enroll 12 patients. The first is SM-88 with MPS as salvage treatment in patients with mixed rare sarcomas, and the other is SM-88 with MPS as maintenance treatment for patients with metastatic Ewing’s sarcoma that had not progressed on prior therapy. The primary objectives are currentlyto measure ORR and PFS. Secondary objectives include DOR, OS, CBR using RECIST, and incidence of treatment-emergent AEs. The Joseph Ahmed Foundation is sponsoring this trial, which is being conducted by Principal Investigator Dr. Chawla at the Sarcoma Oncology Center in Santa Monica, CA. We anticipate that the trial enrollment will continue through the end of calendar year 2022.
The trial was initiated after anti-tumor efficacy and other clinical benefits were observed in several patients with Ewing’s Sarcoma and other heavily pre-treated sarcomas in the FIH study and Compassionate Use Program (each discussed below under “Completed Studies”). This included objective tumor responses in two Ewing’s sarcoma patients. Upon review of the data, Dr. Chawla approached TYME with an interest in examining SM-88 in a clinical trial.
Ewing’s Sarcoma is an ultra-rare cancer that can affect adolescents and younger adults, with approximately 200 cases diagnosed in the US per year. Broadly there are over 50 types of sarcomas, totaling about 13,500 new cases diagnosed in the US each year. While there have been some recent developments for certain sarcomas, there remains a high need for additional effective therapies, especially for patients with metastatic disease.
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Preclinical Pipeline Programs
SM-88 MOA and Biomarker Research
The Company has begun a comprehensive translational preclinical program. We have engaged Evotec, a leading global research and development company, to aid in the execution of these activities, and we are also incorporating several complementary academic collaborations into this multi-faceted program. The overall goal of these activities is to potentially identify actionable biomarkers of sensitivity and activity to SM-88 in various cancers, complementary combination drugs strategies for SM-88, and other cancer metabolism targets that could benefit from treatment. Additionally, the Company intends to incorporate liquid and tumor biopsies to future clinical trials to contribute to the biomarker identification. We anticipate this engagement will have several stages, and that it is likely to last through this fiscal year and into future periods.
Georgetown Collaboration – Breast Cancer
In May 2021, TYME initiated a research collaboration with a research investigator at Georgetown University, to examine the effects of SM-88 in breast cancer. This collaboration is examining the effects of SM-88 and MPS in various breast cancer models in culture and animal models. The project is exploring metabolomics, gene expression analysis, and protein array analysis following SM-88 exposure to characterized cancer cell lines, including cell lines with acquired resistance to CDK4/6 inhibitors.
Mayo Collaboration – Pancreatic Cancer
In March 2021, TYME expanded its pancreatic cancer research collaboration with Mayo Clinic to perform in-depth analysis of pancreatic cancer cell gene expression, epigenetic, and metabolism changes from SM-88 treatment. In addition, the collaborator at Mayo has created and characterized multiple pancreatic cancer organoids that could help in the identification of biomarkers and examine the possible impact SM-88 has on the tumor microenvironment.
SM-88 Injectable
TYME has been developing an injectable form of SM-88 as an additional potential administration for use in humans SM-88, our proprietary combination drug product. Combination drug products are commonly referred to as “drug cocktails.” We believe SM-88the therapy. This formulation is a first-in-class oncology therapy that increasesdistinct drug substance to oral SM-88, however the poweractive product is ultimately the same as the oral formulation. The company is working with Evotec to conduct detailed pharmacokinetics and pharmacodynamics of this agent, as well as comprehensive in vivo xenograft studies in animals to determine the optimal dosing and composition of the body’s innate defensesproduct. These studies will also include detailed computational analysis of transcriptional, biological, and immune related markers from these studies in order to utilize oxidative stressidentify potential biomarkers that may aid in the direction of eventual clinical development. We anticipate much of this work to kill cancer cells.be complete in the calendar year 2022. The company, working with various contractors, has also begun a manufacturing campaign of GMP grade drug product for potential clinical use. We have completed the initial formulation stages of the program and anticipate we would be able to complete this campaign during the first half of calendar year 2023.
SM-88TYME-18 and TYME-19
TYME-18 is a novelCMBTTM compound under development that is delivered intratumorally. TYME-18 leverages a member of the bile acid family to create a potential treatment for inoperable tumors. Preliminary observations of the local administration of TYME-18, a combination of a proprietary novel molecule with three currently-marketed drugssurfactant system and natural sulfonic acid, suggested its potential as an important regulator of energy metabolism that are generally considered safe for their already approved indications, which are in areas other than cancer treatment.
We believe that SM-88 is capablemay impede the ability of synergistically targeting the unique metabolic features of cancer cells and selectively altering the susceptibility of cancer cells to oxidative stress. This selectivity is underscored by evidence indicating that, to date, the SM-88 drug combination drug product has been shown to be nontoxic to noncancerous cells, unlike most current anticancer drugs and treatments. SM-88’s therapeutic potential is based on its abilitytumors to increase in size, which, in addition to its lytic functionality, could prove useful in difficult-to-treat cancers The Company is assessing development priorities to determine if additional advancement of this program is warranted at this time.
TYME-19 is an oral synthetic member of the availabilitybile acid family. The Company also uses bile acids in its anti-cancer drug candidate, TYME-18. Because of free radicalsits expertise in bile acids and their effects, the Company was able to identify TYME-19 as a well-characterized bile acid with potential antiviral properties. Bile acids have primarily been used for liver disease; however, like all steroids, they are messenger molecules that modulate a number of diverse critical cellular processes. Bile acids can modulate lipid and glucose metabolism and can remediate dysregulated protein
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folding, with potentially therapeutic effects on cardiovascular, neurologic, immune, and other metabolic systems. Some agents in this class have also previously shown antiviral properties.
The Company has retained virology experts at Evotec to assess the cancer sitemechanisms of TYME-19. Evotec is a global drug development company that has the capability to access the multiple existing and promote their entry intoemerging variants of the cellCOVID-19 virus. TYME and Evotec are testing the ability of TYME-19 to interrupt the cellular pathways commonly used by strippingviruses to produce viral proteins as well as cellular responses to viral infection that cause local inflammation. Prolonged inflammation from SARS-CoV-2 can lead to some of the severe outcomes experienced by infected patients. We expect the work by Evotec will provide us with information allowing us to assess the potential path forward for the program.
Tumor Targeting Technology
TYME has developed a technology (“Tumor Targeting Technology”) by which the tyrosine isomer L metyrosine (L-α-methylparatyrosine) can be fused with a second therapeutic agent in a manner that creates a fusion compound that may allow targeted accumulation of the treatment by the cancer cells of their normal barriers to these toxic electrons.in a novel manner. The active components ofCompany is assessing potential development paths for this technology.
Completed Studies
First in Human Study
The FIH study was the initial clinical trial with SM-88, are all administeredwhich began in low doses.
We believe, based on SM-88’s mechanism of action2012 and proof-of-concept clinical data, that our drug may ultimately improve overall response rates, clinical outcomes and survival rateswas conducted in cancer patients. Based on its novel proposed mechanism of action and the factors described below, SM-88 may prove particularly beneficial to30 actively progressing metastatic cancer patients who have relapsed following traditional cancer therapies.
We consider SM-88 a type of immune-oncology drug using a metabolic pathway, although with a different mechanism than the programmed cell death protein 1,had failed or PD-1, programmed death-ligand 1, or PD-L1, and cytotoxic T-lymphocyte-associated protein 4, or CTLA-4 that have been the subjects of significant research and development by other companies and researchers within the oncology field.
SM-88 isrefused all available treatments options. The Phase I study was designed to penetrate only living cancer cells, where it introduces multiple mechanismsassess the safety of monotherapy SM-88, although the trial was extended beyond the initial six-week period based on reported treatment efficacy, with several patients remaining on treatment for over 12 months. Patients were given SM-88 with conditioning agents melanin, melanotan II, phenytoin, and sirolimus (these conditioning agents will hereafter be referred to kill cancer cells without toxic effects and without involving healthy body tissue. Based upon preliminary data and responses from a phase I clinical trialas “M2PS”).
The results of the FIH study and IRB compassionate care studies (described below), we believe that the mechanism of action for SM-88 may induce the transfer of electrons in cancer cells that allow catalyzed external free radicals to react and stress them, creating an engineered metabolic response that results in decreased mucin and decreased defense to reactive oxygen.
We have focused our research and development efforts on a proprietary platform technology, for which we retain global IP and commercial rights, for use in creating drugs to treat the unmet medical needs of oncology patients. This population includes patients with limited life expectancy and scarce therapeutic options, such as those with refractory cancer (i.e., cancer that is unresponsive to treatment with standard therapies), those who are undergoing salvage therapy or patients who have relapsed. We believe this development strategy directed at this patient population may allow for faster regulatory approval and may likely require smaller clinical trials, as compared to those indications with more therapeutic options and larger patient populations.
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Our initial proof-of-concept clinical trial, we believe, demonstrated that our drug was well-tolerated and showed preliminary activity across a number of different cancer types in terms of tumor regression, biomarker improvement, and in overall survival. Promising results were shownpublished in the 30 enrolled subjects eligible for efficacy evaluationjournal, Investigational New Drugs, in a proof-of-concept institutional review board (IRB)-approved clinical trial. We cannot predict whether such results will be shown inMarch 2019, including data from the future clinical trials and other testing we will be required to undertake in order to obtain regulatory approval of SM-88.
Commencingtrial’s initiation in January 2012 through September 2017. Patients were treated with monotherapy SM-88 and concluding in June 2014, we conductedachieved mOS of 29.8 months, median PFS of 13 months, and a single-center, open-label, proof-of-concept33% ORR. The ORR consisted of four CRs and six PRs, based on RECIST. In addition, 57% of patients (17/30) achieved RECIST SD with a median SD duration of 11 months. Five FIH study for SM-88 in 30 late-stage cancer patients with relapsed or highly refractory disease, including individuals with breast, pancreatic and primary lung cancers, as well as glioblastoma. The trial was conducted under an institutional review board (IRB)-sanctioned compassionate use protocol. In themetastatic cancer survived for over five years after commencing SM-88 treatment. All FIH study patients received one to ten cycles of treatment, each consisting of daily administration, five days per week, for six weeks. Results from the 30 patients indicated that a complete response was observed in two patients, partial response in six, stable disease in 19 and progressive disease in three. During cycle one, improvements were noted by nearly all subjects inimproved or maintained Eastern Cooperative Oncology Group Performance Status European Organization(“ECOG PS”), a measure of quality of life, after initiating SM-88 therapy, and OS was comparable for Researchpatients who entered the trial with ECOG PS ranging from 0 (asymptomatic) to 2 (unable to perform any work-related activities).
We believe that traditional RECIST response criteria, a commonly used clinical endpoint based primarily on CT images, may not fully reflect the therapeutic benefit from SM-88. This is based in part on the observation in the FIH study where a total of 17 of the 30 patients achieved SD with mOS of 29.0 months. Because we believe many patients on SM-88 experience therapeutic benefit without necessarily achieving a CR or PR under RECIST criteria, we commonly refer to “Clinical Benefit,” which includes CR, PR and TreatmentSD designations.
SM-88 used with M2PS demonstrated a favorable safety profile and was well tolerated. All related AEs for SM-88 were classified as mild or moderate. The most common treatment AEs experienced included hyperpigmentation by 100% of Cancer Qualitypatients (30/30), fatigue by 56.7% of Lifepatients (17/30) and self-reported pain scores.by 10% of patients (3/30). No dose limiting toxicities were observed.
Compassionate Use Program
In parallel with and following the FIH study, we also allowed advanced cancer patients’ access to SM-88 through a compassionate use program under IRB supervision (the “Compassionate Use Patients”). In early 2018, we performed a retrospective analysis on 53 Compassionate Use Patients who had available data and received at least six weeks of treatment. These patients had their scans reviewed by independent radiologists to determine response
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under RECIST, and 75% of these patients (40 of 53) were deemed to have experienced Clinical Benefit, consisting of 8 CRs, 16 PRs and 16 SD designations.
Through these two programs, patients being treated with SM-88 have achieved confirmed responses across 15 different cancer types, including some of the most common and difficult to treat cancers, such as pancreatic, prostate, breast, lung, glioma, ovarian, sarcoma and colon cancer. Based on preliminary data from the FIH study and the Compassionate Use Patients suggesting SM-88 may have broad potential applicability and acceptable toxicity, we believe that SM-88 may ultimately be utilized as a treatment for a wide range of cancers prior to the end-stage setting.
Phase II Prostate Trial
In 2019 we completed our Phase II clinical data for bio-marker recurrent prostate cancer and the final results were published in the peer-reviewed journal, Investigational New Drugs, on September 13, 2020.
The Phase II trial of SM-88 in patients with non-metastatic, biochemical-recurrent prostate cancer enrolled 23 patients with rising prostate-specific antigen levels, detectable CTCs and no radiographically detectable metastases. The study duration was six months, per the study protocol, although some patients were granted a waiver to remain on treatment for longer periods. Seventy-four percent (74%) of patients (17/23) had previously received androgen deprivation therapy as treatment for prostate cancer. All enrolled patients were given daily oral SM-88 with MPS for the duration of treatment.
Based on data as of September 2019, 100% of patients (23/23) on trial remained free of metastatic progression and 87% of patients (20/23) maintained radiographic progression-free survival (“rPFS”) with a median duration of 6.5 months from the initial diagnoses of PSA rise. All patients who maintained rPFS also exhibited meaningful reductions in CTCs.
All patients with available CTC results for at least 3 cycles (n=19) achieved a decrease from baseline, with a median decrease of 65.3% at the end of 3 cycles. The median baseline PSA for patients with radiographic progression was 13.4 compared to 5.6 for patients with no radiographic progression (p=0.02). 13% of patients experienced a PSA progression after commencing therapy and 52% of patients (12/23) experienced an improvement in median PSA doubling time, a positive prognostic indicator.
The SM-88 therapy was well tolerated and drug-relatedin all patients in the trial. There were no treatment-related SAEs. No adverse events (“AEs”)resulted in cycledose delay, discontinuation, or reduction. The majority of Grade 1 adverse events that were deemed possibly or probably related to the SM-88 investigational therapy were gastrointestinal in nature.
TYME-88 Pancreatic Trial Reported Results
In April 2022 we reported on the final results of our TYME-88-Panc trial, a multicenter, prospective open-label phase II/III RCT of oral SM-88 plus methoxsalen, phenytoin, and sirolimus (MPS) in patients with mPDAC who had failed at least one were mildprior line of therapy. (TYME-88-Panc Part 1) Study subjects received either 460 or 920 mg PO daily of SM-88 plus oral MPS. Patients in both arms of the study received the same dose of oral MPS. The primary endpoint of the trial was objective response rate (RECIST 1.1).
On March 12, 2019, the last trial subject was enrolled and as of September 1, 2021, 49 subjects had been randomized to moderate and self-limiting,either the 460 (n = 26) or 920 mg (n = 23) dose of SM-88, with no therapy required. Most AEs occurred within the first37 subjects deemed evaluable after completing at least one 28-day cycle of treatment and having a minimum of 23 days on treatment. Of the evaluable patients, five had failed one prior line of therapy, 18 patients had failed two prior lines and 14 patients had failed three or more prior lines. Twenty of these patients (54.0%) had received FOLFIRINOX in the first line.
The DCR, OS, and PFS did not differ significantly between the two dose levels. Stable disease was achieved in nine of 37 patients (DCR, 24.3%), and there were no complete or partial responses. In the intent to treat population of 49 patients, the mOS was 3.4 months (95% CI: 2.7- 4.9 months). Those treated in the second line had a mOS of 8.1 months and a median PFS of 3.8 months. Survival was higher for patients with stable disease than those with progressive disease (any line; median OS: 10.6 months compared to 3.9 months; p = 0.01).
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Quality of life, as measured by QOL scores as reflected in completed EORTC quality of life questionnaires (the EORTC QLQ-C30 questionnaire) was maintained or improved in 24 of 37 evaluable patients (65%) and trended in favor of the 920 mg SM-88 dose (p=ns). The SM-88 with oral MPS was well tolerated; only a single patient (1/49) experienced related grade 3 and 4 SAEs on treatment, which consisted of Grade 3 abdominal pain and Grade 4 hypotension, each of which eventually resolved.
Although the Company completed and reports the results of Part 1 of this trial, as discussed below under “-Discontinuing Programs - TYME-88-PANC (Part 2) (third-line Metastatic Pancreatic Cancer)”, the Company decided to stop enrollment in this trial and has begun the process of closing down the remaining Part 2 of this trial.
Discontinuing Programs
Precision Promise Trial- SM-88 with MPS as 2nd line therapy in metastatic pancreatic cancer
In October 2018 the Company partnered with PanCAN to study SM-88 in an adaptive randomized Phase II/III trial with registration intent known as Precision PromiseSM. The objective of Precision Promise is to expedite the study and approval of promising therapies for pancreatic cancer by bringing multiple stakeholders together, including academic, industry and regulatory entities. The trial, began in early 2020, SM-88 (with the conditioning agents MPS) was being studied as monotherapy in a treatment arm for patients who have failed one prior line of chemotherapy.
On January 26, 2022, the Company announced the discontinuation of SM-88 with MPS in the Precision Promise trial in metastatic pancreatic ductal adenocarcinomam (“mPDAC”) upon learning from PanCAN, the trial sponsor, that it terminated the arm due to futility compared to the control of standard of care chemotherapy in second-line mPDAC. Based on the information provided by PanCAN, the OS for SM-88 with MPS in monotherapy was lower compared to standard of care chemotherapies with either Gemcitabine and Abraxane or modified FOLFIRINOX. As of March 31, 2022, remaining estimated costs to close out the trial have been expensed.
TYME-88-PANC (Part 2) (third-line Metastatic Pancreatic Cancer)
In fiscal year 2020, we launched our pivotal study for SM-88 in the third-line treatment of pancreatic cancer through an amendment to our ongoing TYME-88-Panc trial (Part 2), with the exceptionfirst patient dosed in the third quarter of hyperpigmentation,the fiscal year. As described previously, the COVID-19 pandemic significantly impacted enrollment of this trial, such that it appeared it was likely to complete enrollment in a similar timeline to the second-line Precision Promise pancreatic cancer trial. There was also a higher than expected dropout of patients randomized to the chemotherapy control arm, which eventually occurredcould have potentially impacted the interpretative and regulatory utility of the data.
Following the strategic review discussed above, considering, in all subjects.part, the timeline and regulatory utility for this trial compared to the parallel Precision Promise trial and concentration of investment in this specific cancer, management concluded that it would be best to focus on the second-line Precision Promise trial that offers treatment options to patients earlier in their disease and includes tumor biopsy and biomarker analyses that align with the Company’s overall strategic focus on identifying targeted therapies.
Therefore, the Company decided to stop enrollment and begin the process of closing down the trial. Patients currently on therapy are allowed to continue treatment until progression or unacceptable toxicity. The closing of this trial is expected to require several months to complete. During the year ended March 31, 2022, the Company expensed $723,000 of estimated closeout costs. The trial’s remaining ongoing expense to the Company is approximately $400,000 and is expected to be incurred over the five months following March 31, 2022.
SM-88 Mechanism of Action
SM-88 is an orally administered cancer metabolism-based therapy that is chemically altered to be non-functional for fundamental tumor cell processes, including protein synthesis. Scientific literature has highlighted that cancer cells can have a significantly higher consumption of certain amino acids compared to healthy cells, and these amino acids are required for cancer cell growth and function. We believe that SM-88, our proprietary modified dysfunctional tyrosine is selectively consumed by cancer cells, and interrupts various cell functions, including protein synthesis,
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autophagy, and other cellular defenses, that ultimately leads to an oxidative stress-related apoptosis or cell death. We also believe this selective cancer uptake of non-essential amino acids is supported by the current safety profile for SM-88, that has shown minimal observed drug-related SAEs.
SM-88 is currently administered with the conditioning agents MPS. The conditioning agents are developingadministered at doses between 5% and 25% of their FDA approved doses in non-cancer indications. We believe, based on scientific literature of their respective biologic functions, the physiologic, but sub-therapeutic doses of these agents may augment either the uptake of SM-88 or destabilize cancer cells to increase their susceptibility to SM-88’s effects.
As a regulatoryresult of our strategic review, the Company intends to significantly increase its investment on exploring SM-88’s mechanism of action and drugthe current dosing regimen. We have engaged with the global research and development programfirm, Evotec, to aid in the execution of these activities. The Company has also expanded its academic pre-clinical research collaborations, including with the Mayo Clinic and Georgetown University. In addition, in our recently announced OASIS breast cancer trial, the investigators will be collecting cell-free DNA from patients throughout their treatment. Working with a leading diagnostics company, the Company aims to leverage these samples to better understand response dynamics for SM-88 and to begin to identify potential biomarkers for SM-88 response and sensitivity.
The overall goals of these efforts are working towards the initiation of our first phase IIto potentially identify patient subsets or disease biomarkers that could be applied to patient selection in future, clinical trial. In September of 2015, we filed an IND with the FDA for our SM-88 drug candidate. In October of 2015, the FDA accepted the IND and concluded that we may proceed with a clinical investigation of SM-88 for breast cancer. We are currently preparing protocols for a phase II breast cancer clinical trial,trials, as well as identify potential optimal combinations with other phase II trials to be initiated in 2016. anti-cancer mechanisms that could aid future clinical development.
Platform TechnologyPortfolio Development Strategy and Key Product Properties
Our approach is intended to take advantageIn the first half of calendar year 2021, the deregulated energy stateCompany undertook a comprehensive strategic review with the goal of tumors to selectively kill cancer cells using electrochemical pathways. While mechanism of action studies are being designed and tested, our IP and drug research program dealsaligning the Company’s development plans with a multi-part process. It is proposed that the high-energy needs of rapidly proliferating tumor cells may be harnessed as a means of stopping cancer cell growth, reducing the size of tumors and eventually destroying those cells. A normal cell uses a process called oxidative phosphorylation to generate approximately 32-high-energy molecules (adenosine triphosphate) from glucose to provide energy for the cell. In contrast, cancer cells use a process called glycolysis that only generates approximately two such high-energy molecules from glucose and requires the additional metabolism of lipids (fats) for energy. This results in a very high-energy requirement for the cancer cells. Cancer cells reproduce rapidly and must synthesize large amounts of proteins to drive their proliferation and, accordingly, their amino acid needs are also quite high. Our approach is to use tumor cells’ own exaggerated hunger against them. Our approach is to essentially change the metabolic uptake of the cancer cell. Our SM-88 drug is designed to exploit a cancer’s weakness in a manner that we believe has never before been exploited.
SM-88 consists of four drugs in a proprietary combination and is intended as an oral therapy. SM-88 is comprised of three approved drugs, Phenytoin, Methoxsalen, Sirolimus, and a proprietary Tyrosine isomer that we have developed. The components are SM-88 consist of:
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SM-88 utilizes a proprietary combination of non-nutritive tyrosine analogs that cannot be used in protein synthesis. We believe that the lack of functional tyrosine impairs the synthesis of tyrosine dependent molecules, e.g. mucins, and other essential moieties, making the cancer more vulnerable to cell death.
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Our Strengths
We believe we can become a leader in developing cancer therapies with our platform technology for the following reasons:
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Our Strategy
Our goal is to develop and commercialize targeted electrochemical immuno-oncology therapies in humans aimed at improving and extending patients’ lives.core strategic goals. Key elements of our strategy to achieve this goal arewere to:
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| • | Work towards identifying actionable biomarkers for patient selection or treatment response to SM-88. |
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| Continue to invest in our technology platform and expand the breadth and depth of our IP portfolio |
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| Build a balanced portfolio of proprietary and partnered |
By leveraging our confidence in SM-88’s ability to disrupt key aspects of cancer’s unique metabolism, our intention is to create an innovative therapeutic program with SM-88 that is:
Clinical Trials
Clinical trials to support New Drug Applications (“NDA”) for marketing approval are typically conducted in three sequential phases, but the phases may overlap or be combined. In phase I, the drug is initially introduced into healthy human subjects and is tested to assess pharmacokinetics, pharmacological actions, AEs associated with increasing doses and, if possible, early evidence of effectiveness. In the case of some products targeted for severe or life-threatening diseases, such as cancer treatments, initial human testing may be conducted in the intended patient population. Phase II, which we are in the process of commencing with regard to SM-88, usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication, dosage tolerance and optimum dosage, as well as identification of common adverse effects and safety risks.
If a compound demonstrates evidence of effectiveness and an acceptable safety profile in phase II, phase III trials are initiated to obtain additional information about clinical efficacy and safety in a larger number of subjects, typically at geographically dispersed clinical trial sites. Phase III clinical trials are intended to establish data sufficient to demonstrate substantial evidence of the efficacy and safety of the product to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. Trials conducted outside of the U.S. under similar, GCP-compliant conditions in accordance with local applicable laws may also be acceptable to the FDA in support of product licensing.
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Phase I Clinical Trial Study
We recently completed a 30 subject, single-center, open-label, proof-of-concept phase I clinical trial of SM-88 for the treatment of advanced metastatic cancer. The purpose of our proof-of-concept study was to determine the safety, tolerability and efficacy of SM-88 in subjects with advanced metastatic cancer. The goals of the study were to:
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| • | Highly specific to cancer – As supported by the current safety data reported for approximately 180 patients, together with recent advances in radiographic imaging that use tyrosine-based agents to selectively image cancer cells, cancer appears to have a high affinity for tyrosine uptake compared to normal healthy cells; |
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| • | Suitable for monotherapy or combination therapy – Although most of TYME’s clinical and compassionate use experience has been in monotherapy, SM-88’s differentiated mechanism of action and safety profile may also allow it to be effective in combination with other cancer therapeutics; and |
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Between JanuarySome outcomes aimed to be achieved in this pipeline review process were to: 1) assure the current clinical programs were optimally aligned with both the current data for SM-88 and December 2012, 30 subjects with stage IV cancerwere in areas that were clinically and distant metastasis, including bonestrategically relevant to the company, 2) identify any key gaps in preclinical or mechanism information that would optimally guide the clinical development of SM-88, and central nervous system involvement, were included3) assess the appropriate capital commitment to each of these areas in order to improve the trial. The patient population was comprised of patients who refused or failed all available anticancer treatments. Sixteenpotential to achieve the long-term development and strategic goals of the 30 subjects had had prior surgery, 10 had had prior radiation therapycompany. The Company’s current strategy, including ongoing studies, the Preclinical Pipeline Program and 20 had had prior chemotherapy, including six patients with 3 or more prior regimens, four patients with two prior regimens and 10 patients with one prior regimen. Cancer types, subjects and Response Evaluation Criteria In Solid Tumors 1.1 (“RECIST”) status are presented below:
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Abbreviations: NSLC = non-small cell lung cancer; SCLC = small cell lung cancer; CR = complete response; PR = partial response; SD = stable disease; PD = progressive disease
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RECIST Results for all Treated Subjects
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RECIST Results for Subjects with Breast Cancer
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Atdiversification efforts, have been developed based on the conclusion of this phase I study, as of June 9, 2014, a total of 17 patients out ofkey takeaways from the 30 treated patients were still alive, including eight of the 14 treated breast cancer patients. Breast cancer patients represented the largest patient sub-group that participated in this phase I study. Kaplan Meier survival curves and individual survival for each patient are presented below:
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Subjects received between one to ten cycles of treatment with SM-88, each cycle consisting of daily administration, five days per week for six weeks. The therapy was well-tolerated with all drug-related AEs occurring within the first cycle of treatment, with the exception of hyperpigmentation, which eventually occurred in all subjects. Drug-related AEs in Cycle 1 were mild to moderate, self-limiting and did not require therapy. They are presented in the following table:
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Virtually all subjects experienced improvements in Eastern Cooperative Oncology Group Performance Status (ECOG PS), European Organization for Research and Treatment of Cancer (EORTC) Quality of Life (“QoL”) questionnaire and self-reported pain scores during Cycle 1. A measureable improvement in self-reported pain was seen in all subjects as described below. As shown in the pain score table below for all treated subjects, at the end of Cycle 1, an additional eight subjects no longer experienced pain after treatment with SM-88.
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Pain Scores* for all Treated Subjects Following 1 Cycle of SM-88 n=30 | Pain Scores* for Subjects with Breast Cancer Following 1 Cycle of SM-88 n=14 | ||||
Number of Subjects | Number of Subjects | ||||
Score | Start | End | Score | Start | End |
0 | 4 | 12 | 0 | 1 | 7 |
1 | 6 | 7 | 1 | 3 | 2 |
2 | 3 | 7 | 2 | 2 | 3 |
3 | 5 | 2 | 3 | 2 | 0 |
4 | 3 | 1 | 4 | 0 | 1 |
5 | 2 | 0 | 5 | 1 | 0 |
6 | 3 | 1 | 6 | 2 | 1 |
7 | 3 | 0 | 7 | 2 | 0 |
8 | 0 | 0 | 8 | 0 | 0 |
9 | 0 | 0 | 9 | 0 | 0 |
10 | 1 | 0 | 10 | 1 | 0 |
*Pain score scale was the National Institutes of Health, Warren Grant Magnuson Clinical Center, Pain Intensity Instruments, July 2003. | |||||
We believe that SM-88 is a promising treatment for advanced metastatic cancer. It was well-tolerated among 30 subjects with a variety of cancers in our proof-of-concept clinical trial. We believe that our drug is not only unique, but thus far has shown no significant side effects except for cutaneous hyperpigmentation.
We believe that the results of the proof-of-concept clinical trial indicate that SM-88 holds promise as a successful monotherapy and likely has utility in combinations with both cytotoxic and current immuno-therapies. We further believe that the magnitude of the positive clinical response in this end-stage cancer population,strategic review, as well as the amelioration of disease-related symptoms, an increase in performance status and QoL, provides a solid rationale for further development of SM-88 as a potential cancer treatment.on subsequent developments.
Our IRB Compassionate Care Studies
In addition to the 30 subject phase I clinical trial, we also performed 53 individual case studies with the Institutional Review Board (“IRB”) of New York Downtown Hospital. Cancer types and RECIST status are presented below:
Primary Disease | Number of Patients | Complete Response | Partial Response | Stable Disease | Progressive Disease |
Breast Cancer | 11 | 0 | 4 | 3 | 4 |
Pancreatic Cancer | 6 | 0 | 0 | 4 | 2 |
Glioma* | 5 | 0 | 5 | 0 | 0 |
Choleangiocarcinoma | 4 | 0 | 1 | 1 | 2 |
Prostate Cancer | 4 | 2 | 1 | 1 | 0 |
Ovarian Cancer | 4 | 0 | 3 | 1 | 0 |
Colon Cancer* | 4 | 0 | 1 | 1 | 2 |
Lung Cancer | 3 | 0 | 0 | 2 | 1 |
Ewing’s Sarcoma | 2 | 1 | 1 | 0 | 0 |
Sarcoma | 1 | 0 | 1 | 0 | 0 |
Thyroid Cancer | 1 | 0 | 0 | 1 | 0 |
Urothelial Cancer | 1 | 0 | 0 | 1 | 0 |
Neuroblastoma | 1 | 0 | 0 | 1 | 0 |
Renal Cancer | 1 | 0 | 0 | 1 | 0 |
Alveolar Rhabdomyosarcoma | 1 | 0 | 0 | 1 | 0 |
Hodgkins Lymphoma | 1 | 1 | 0 | 0 | 0 |
Germ Cell Tumor | 1 | 0 | 0 | 0 | 1 |
Lymphoma | 1 | 1 | 0 | 0 | 0 |
Tonsil Squamous Cell Carcinoma | 1 | 1 | 0 | 0 | 0 |
*One patient was classified both as Complete Response and Partial Response | |||||
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RECIST Results for IRB Subjects
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Our Phase II Clinical Trial Strategies
On September 21, 2015, we initiated the next phase of our regulatory and drug development program for SM-88 by submitting an IND to the FDA for a comprehensive, closely monitored, clinical trial in patients with advanced metastatic breast cancer who have failed the usual standard-of-care therapies or have exhausted conventional treatments. On October 23, 2015, the FDA accepted the IND and authorized the phase II trial, including a pharmacokinetic (“PK”) study of the four components of SM-88.
We are currently preparing phase II protocols for the breast study as well as for other indications, most likely to include prostate, pancreatic and non-small cell lung cancer. We anticipate that the phase II clinical trials will be multicenter, open-label, randomized, clinical studies. The primary objective of the studies will be to evaluate the overall efficacy, safety, and tolerability of SM-88.
Secondary objectives of the phase II clinical trials may include:
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Pursuing FDA Fast Track Program/Breakthrough Status
The FDA’s Fast Track program, a provision of the FDA Modernization Act of 1997, is designed to facilitate interactions between a sponsoring company and the FDA before and during submission of a NDA for an investigational agent that, alone or in combination with one or more other drugs, is intended to treat a serious or life-threatening disease or condition and which demonstrates the potential to address an unmet medical need for that disease or condition. Under the Fast Track program, the FDA may consider reviewing portions of a marketing application before the sponsor submits the complete application if the FDA determines, after a preliminary evaluation of the clinical data, that a fast track product may be effective. A Fast Track designation provides the opportunity for more frequent interactions with the FDA and a fast track product could be eligible for priority review if supported by clinical data at the time of submission of the NDA. We intend to engage the FDA in future discussions concerning SM-88 qualification for FDA Fast Track designation. However, there can be no assurance that such designation will be granted.
On July 9, 2012, the Food and Drug Administration Safety and Innovation Act (“FDASIA”) was signed into law. FDASIA provides a new designation for an expedited FDA review process called Breakthrough Therapy Designation. A breakthrough therapy is a drug that is intended alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and where preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. If a drug is designated as a breakthrough therapy, the FDA will expedite the development and review of such drug for trial and market approval. All requests for Breakthrough Therapy Designation will be reviewed within 60 days of receipt and FDA will either grant or deny the request. When appropriate, we intend to hold discussions with the FDA regarding SM-88’s qualification for Breakthrough Therapy designation. However, there can be no assurance that such designation will be granted.
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Target Markets
Cancer
Cancer is a term used for a variety of diseases in which abnormal cells divide without control and are able to invade other tissues. Cancer is not just one disease but many diseases. Cancer cells can spread to other parts of the body through the blood and lymph systems. In normal tissues, the rates of new cell growth and cell death are tightly regulated and kept in balance. In cancerous tissues, this balance is disrupted as a result of mutations, causing unregulated cell growth that leads to tumor formation. While tumors can grow slowly or rapidly, the dividing cells will nevertheless accumulate and the normal organization of the tissue will become disrupted. Cancers subsequently can spread throughout the body by processes known as invasion and metastasis. Once cancer spreads to sites beyond the primary tumor, it may be incurable. Cancer cells that arise in the lymphatic system and bone marrow are referred to as hematological malignancies. Cancer cells that arise in other tissues or organs are referred to as solid tumors. The American Cancer Society (“ACS”) estimates that solid tumor cancers will account for approximately 1.5 million or 91% of new cancer cases diagnosed annually and will account for approximately 500,000 cancer-related deaths in the U.S. annually. For 2015, the ACS estimated that in the U.S. there were approximately 1.66 million new cases of cancer and 589,000 deaths related to all cancers (solid and hematological).
Despite significant improvements in cancer diagnosis and treatment, cancer rates continue to increase globally and are a leading cause of death. According to the International Agency for Research on Cancer, the specialized cancer agency of the World Health Organization, annual cancer rates around the world are projected to increase by over 56% from 14.1 million cases in 2012 to 22 million new cases in the year 2030. According to the CDC, cancer is the second leading cause of death in the U.S., exceeded only by heart disease. The overall five-year survival expectancy is currently approximately 66% and there are an estimated 13 million people currently suffering from cancer in the U.S.
Cancer cases worldwide. Source:American Cancer Society
Cancer Costs
Of the nation’s 10 most expensive medical conditions, cancer has the highest per person-estimated cost of treatment. According to a National Institutes of Health analysis, medical costs associated with cancer reached $125 billion in 2010 and are projected to increase another 27% by 2020, to approximately $158 billion in the U.S. Based upon data published by the National Cancer Institute, treatment costs increase significantly with cancer disease progression.
When estimating projections for the cost of cancer in the U.S. from 2010-2020, cancer prevalence was estimated by phase of care (initial year following diagnosis, continuing and last year of life) and tumor site, for 13 cancers in men and 16 cancers in women and projected through 2020. Cancer prevalence was calculated from cancer incidence and survival models estimated from Surveillance, Epidemiology and End Results (SEER) Program data. Annualized net costs were estimated from recent SEER Medicare linkage data, which included claims through 2006 among beneficiaries aged 65 years and older with a cancer diagnosis.
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The table below provides estimates of expenditures on cancer treatment in 2010 and projected for 2020.
A Snapshot of Estimates of the National Expenditures for Cancer Care in 2010 and 2020 (Costs in 2010 U.S. Billion Dollars) | ||
Cancer Site | 2010 | 2020 Projection |
Breast | $16.50 | $20.50 |
Colorectal | $14.14 | $17.41 |
Lung | $12.12 | $14.73 |
Lymphoma | $12.14 | $15.26 |
Prostate | $11.85 | $16.34 |
Leukemia | $5.44 | $6.95 |
Ovary | $5.12 | $6.03 |
Brain | $4.47 | $5.53 |
Bladder | $3.98 | $4.91 |
Kidney | $3.80 | $5.12 |
Head/Neck | $3.64 | $4.34 |
Uterus | $2.62 | $3.05 |
Melanoma | $2.36 | $3.16 |
Pancreas | $2.27 | $2.83 |
Stomach | $1.82 | $2.26 |
Cervix | $1.55 | $1.54 |
Esophagus | $1.33 | $1.76 |
All sites | $124.57 | $157.77 |
Note: This is based on a study that estimated and projected cost of cancer care, segregated by cancer site, through the year 2020 using the most recently available U.S. population projections, cancer incidence, survival and cost of care data.
Data Source: Mariotto AB, Yabroff KR, Shao Y, Feuer EJ, Brown ML. Projections of the Cost of Cancer Care in the U.S.: 2010-2020. J Natl Cancer Inst. 2011 Jan.
Stages of Cancer
Most types of cancer are classified into four stages, with an additional Stage 0 to distinguish those forms that may later lead to cancer (“pre-cancer” stage). The diagram below illustrates the progression of the disease:
Data Source: WWW.MD-HEALTH.COM. Accessed 29 September 2014.
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Stage 0. Also known as carcinoma in situ, this is an early form of cancer where there is a flat lesion but no invasion of malignant cells into the surrounding tissue. Although this can develop into full-blown cancer, some doctors do not consider this as cancer but “pre-cancer.”
Stage I. Tumors in this stage are usually smaller than 2 centimeters (cm) and are localized to their site of origin. Lymph nodes are not affected and there is no sign of metastasis (spreading to other parts of the body).
Stage II. Tumors in this stage measure 2-5 cm, but are still localized to their site of origin since they have not invaded other tissues or metastasized. Local lymph nodes may be affected. Stage II tumors are considered to be locally advanced tumors.
Stage III. Tumors in this stage are fairly large, measuring more than 5 cm. This late, locally advanced stage affects nearby lymph nodes and it may be difficult to differentiate from stage II cancer.
Stage IV. Tumors in this stage may be of any size, affecting nearby lymph nodes and showing evidence of metastasis to other organs or regions of the body. A secondary cancer may develop during this stage. The overall physical andmental health of the patient may be affected and the historical survival rate is very low.
Survival
Stage IV cancer usually carries a grim prognosis, as compared to earlier stages of the disease. The five-year survival rate for patients in this stage may depend on different factors such as the type of cancer, age of patient, overall general health, the type of treatment used and will-power to overcome the disease.
A five-year survival rate can be expressed as the percentage of patients who will likely live up to five years after the disease, based on research performed in patients with the same type and stage of cancer. For example, a 60% five-year survival rate indicates that it is estimated that 60 out of every 100 patients will live for five years after diagnosis while the rest (40 of 100) will most likely die.
The five-year survival rate is just an estimate and not an exact number, since many factors influence the progression of one’s disease. The following table summarizes the five-year survival rates of different types of stage IV cancers:
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Cancer Treatments
The most common methods of treating patients with cancer are surgery, radiation and drug therapy. For patients with localized disease, surgery and radiation therapy are particularly effective. Drug therapies are generally used by physicians for treating patients with metastatic cancer or for cancers that cannot otherwise be treated through surgery, such as most hematological malignancies. The goal of the various drug therapies is to damage and kill cancer cells or to interfere with the molecular and cellular processes that control the development, growth and survival of cancer cells. In many cases, drug therapy entails the administration of a combination of drugs. Over the past several decades, drug therapy has evolved from non-specific drugs that kill both healthy and cancerous cells, to drugs that target specific molecular pathways involved in cancer.
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An early approach to pharmacological cancer treatment was to develop drugs, referred to as chemotherapeutic or cytotoxic drugs, that kill rapidly proliferating cancer cells through non-specific mechanisms, such as disrupting cell metabolism or causing damage to cellular components required for tumor survival and rapid growth. While these drugs have been effective in the treatment of some cancers, cytotoxic drug therapies frequently act in an indiscriminate manner, killing healthy cells along with cancerous cells. Due to their mechanism of action, many cytotoxic drugs have a relatively narrow therapeutic window or a dose range above which the toxicity causes unacceptable or even fatal levels of damage and below which the drugs are not effective in eradicating cancer cells.
The next approach to pharmacological cancer treatment was to develop drugs such as monoclonal antibodies (or targeted therapeutics) which are antibodies that are derived from a single-parental cell clone, that target specific biological molecules in the human body that play a role in rapid cell growth and the spread of cancer. Included in this category are small molecule drugs as well as large molecule drugs, also known as biologics. With heightened vigilance and new diagnostic tests, targeted therapies (including monoclonal antibodies such as Herceptin®, Rituxan®, Erbitux® and Avastin®, as well as small molecules such as Nexavar® and Tarceva®) have resulted in improvements in overall survival for many cancer patients. More recently, antibodies have been developed that are optimized regarding their effector function, also known as FC optimized antibody drugs, such as obinutuzumab. These molecules are designed to engage NK-cells and macrophages more effectively in the elimination of cancer cells.
Cancer immunotherapy plays an increasing role among emerging cancer drug therapies. The intention of the cancer immunotherapy is to harness the body’s own immune system to fight tumor cells or, in some cases, re-establish or remove certain blockades or promote certain signaling cascades. There are different approaches, such as vaccinations, checkpoint inhibitors, immunomodulators, T-cell and NK-cell engagers like bispecific antibodies or cellular therapies involving the induction of a patient’s own T-cells to express chimeric antigen receptors. Ipilimumab (Yervoy®) and sipuleucel-T (Provenge®) were the first cancer immunotherapies to enter the market.
The chart below shows the gradual evolution of cancer therapy and highlights the recent focus on developing targeted therapies or “magic bullets,” that are designed to kill cancer cells while sparing normal tissue, thus reducing toxicity.
Evolution of cancer pharmacotherapy. Source: American Association for Cancer Research (AACR)
Revenue/Payment Structure within the Healthcare Industry
Pharmaceutical Coverage, Pricing and Reimbursement
In the U.S. and other countries, the level of sales of any product for which we receive regulatory approval for commercial sale will depend in part on the availability of reimbursement from third-party payers, including government health administrative authorities, managed care providers, private health insurers and other organizations. Increasingly, third-party payers examine the medical necessity and cost effectiveness of medical products and services, in addition to their safety and efficacy and, accordingly, significant uncertainty exists as to the reimbursement status of newly approved therapeutics. Third-party reimbursement is necessary for us to adequately enable us to realize an appropriate return on our investment in research and product development, but may not be available for our products.
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Significant uncertainty exists as to the coverage and reimbursement status for SM-88 in the U.S. and international markets once the drug candidate has been approved by the applicable regulatory authorities. Commercial sale of SM-88 will depend, in part, on the availability of reimbursement from third-party payers. The process for determining whether a third-party payer will provide coverage for a drug product may be separate from the process for setting the price or reimbursement rate. Third-party payers may limit coverage to the specific drug products on an approved list or formulary, which might not include all of the FDA-approved drugs for a particular indication. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain FDA approval. It is possible that SM-88 may not be considered as medically necessary or cost-effective by one or more third party payers. A decision by a third-party payer to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved.
In 2003, the U.S. government enacted legislation providing a partial prescription drug benefit for Medicare beneficiaries, which became effective at the beginning of 2006. Government payment for some of the costs of prescription drugs may increase demand for any products for which we receive marketing approval. However, to obtain payments under this program, drug manufacturers are required to sell products to Medicare recipients through prescription drug plans operating pursuant to this legislation, which likely carry discounted prices.
The Healthcare Reform Law of 2010 substantially changed the way healthcare is financed in the U.S. by both government and private insurers. Among other cost containment measures, the Healthcare Reform Law established:
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We expect that federal, state and local governments in the U.S. will continue to consider legislation to limit the growth of healthcare costs, including the cost of prescription drugs. Future legislation could limit payments for pharmaceuticals such as SM-88.
The marketability of SM-88, if and when approved, may suffer if government and third-party payers fail to provide adequate coverage and reimbursement. In addition, an increasing emphasis on managed care in the U.S. has increased and we expect will continue to increase the pressure on pharmaceutical pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for SM-88, less favorable coverage policies and reimbursement rates could be implemented in the future.
Competition
Our competition comes from other commercial and research enterprises working in the field of cancer research. Those pharmaceutical and biotechnology companies, academic institutions and government research institutes around the globe that are working towards new treatments in the field of oncology, collectively form the competitive nature in cancer R&D.
We plan to position SM-88 to compete with products manufactured by other companies in highly competitive markets throughout the world.
Important competitive factors include patient safety, effectiveness, quality-of-life and ease of use of products; price and demonstrated cost-effectiveness; marketing effectiveness; and research and development of new products and processes. Most new products we intend to market, assuming regulatory approval, will and must compete with other products already on the market as well as products that are later developed by existing or new competitors. If competitors introduce new products or delivery systems with therapeutic or cost advantages, our products would be subject to progressive price reductions, decreased volume of sales or both. Increasingly, to obtain favorable reimbursement and formulary positioning with government payers, managed care organizations and pharmacy benefits managers, we would be required to demonstrate that our products offer not only medical benefits but also more value as compared with other treatment regimens.
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The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. While we believe that our technology, development and regulatory plans and scientific knowledge provide us with certain competitive advantages, we currently have limited financial resources and face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions, each of whom has significantly greater financial resources than us. Any drugs that we successfully develop and commercialize will compete with existing therapies and new potential therapies that may become available in the future.
Our products, if approved for sale, would eventually be subject to competition from generic drug manufacturers. Manufacturers of generic pharmaceuticals generally invest far less than R&D companies such as us. We anticipate that any manufacturer of a generic version of our drugs will invest far less than we have in the past and intend to do in the future in R&D and marketing our products, including SM-88. They therefore, have the advantage in that they can price their drugs much lower than the brand-name drugs for which we obtain approval. Additionally, in many countries outside the U.S., IP protection is weak or nonexistent and we would be forced to compete with generic or counterfeit versions of our products in such countries whether or not we hold legal exclusivity.
The most common methods of treating patients with cancer are surgery, radiation and drug therapy, including chemotherapy, hormone therapy and targeted drug therapy. Our products once approved, would compete not only with other drugs, but also with such other types of therapies and treatments.
There are a variety of available drug therapies marketed for cancer. In many cases, these drugs are administered in combination to enhance efficacy. Some of the currently approved drug therapies are branded and subject to patent protection and others are available on a generic basis. Many of these approved drugs are well-established therapies and widely accepted by physicians, patients and third-party payers. In general, although there has been considerable progress over the past few decades in the treatment of cancer with currently marketed therapies providing benefits to many patients, these therapies often are limited to some extent by a lack of efficacy and/or the significance or frequency of AEs.
In addition to currently marketed therapies, there are also a number of medicines in late-stage clinical development to treat cancer. These medicines in development may provide efficacy, safety, convenience and other benefits that are not provided by currently marketed therapies. As a result, they may provide significant, additional competition for SM-88.
Intellectual Property
We will strive to protect and enhance our proprietary technology, inventions and improvements that are commercially important to the development of our business, including through seeking, maintaining and defending patent rights (when required), whether developed internally or licensed from third parties. We also intend to rely on trade secrets related to our proprietary technology platform and our know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the fieldfields of cancer and viral infection treatment, which may be important for the development of our business. We additionally may rely on regulatory protection afforded through data exclusivity, market exclusivity and patent term extensions, where available.
Our commercial success may depend, in part, on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business, defend and enforce our patents, preserve the confidentiality of our trade secrets and operate without infringing the valid enforceable patents and proprietary rights of third parties. Our ability to stop third parties from making, using, selling, offering to sell or importing our products may depend on the extent to which we have rights under valid and enforceable licenses, patents or trade secrets that cover these activities. With respect to both our owned and licensed IP, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our commercial products and methods of manufacturing such products, as well as being held valid if challenged.
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Currently, we already have one
TYME maintains a broad intellectual property portfolio of 270 patent issued in the U.S.,applications granted or pending worldwide. The patents encompass SM-88 as well as four patent applications pending. We have beguninventions that fight cancer and aid in the processcreation of pursuing foreign patent applications correspondingnovel mechanisms to twofurther that effort, and also a new potential treatment of these patent applications and intend to pursue foreign patent applications corresponding to the others.COVID-19. Our policy is to file patent applications to protect technology, inventions and improvements to inventions that are commercially important to the development of our business. We have and will continue to seek U.S. and international patent protection for a variety of technologies, including: pharmaceutical compositions, methods for treating diseases of interest, methods for manufacturing the pharmaceutical compositions and research tools and methods. We also intend to seek patent protection or rely upon trade secret rights to protect other technologies that may be used to discover and validate targets and that may be used to identify and develop novel products. We will also seek protection, in part, through confidentiality and proprietary information agreements.
We believe we have no need to license any technologies for SM-88 to be commercially viable. We believe our Company owns all the IP necessary for our SM-88 to perform as intended and to be commercially marketed, once all applicable regulatory requirements have been obtained. Additionally, we believe the drug substances utilized in SM-88 are not covered by any patents that would impede our use of such drug substances.
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Regulatory Process
We also rely on trademark laws to protect our proprietary rights. Our trademark portfolio currently consists of one domestic trademark: CMBT (cancer metabolism-based therapies).
Government Regulation
Competition
Our business strategy is intended to effectively position SM-88 and Product Approval
Government authorities in all major pharmaceutical markets extensively regulate, amongour pipeline for competition with products manufactured by other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing and import and export of pharmaceutical products, such as those we are developing. Although our initial focus will becompanies in the U.S.highly fragmented and Europe,competitive cancer treatment market. Our competition comes from other commercial and research enterprises working in the field of cancer research. This includes pharmaceutical and biotechnology companies, academic institutions, patient advocacy groups and hospitals and government private research institutes around the globe.
Important competitive factors include patient safety, effectiveness, quality-of-life and ease of use of products; price and demonstrated cost-effectiveness; marketing effectiveness; payor access and research and development of new products and processes. Most new products we intend to market, assuming regulatory approval, will and must compete with other products already on the market as well as products that are later developed by existing or new competitors. If competitors introduce new products or delivery systems with therapeutic or cost advantages, our products would be subject to progressive price reductions, decreased volume of sales or both. Increasingly, to obtain favorable reimbursement and formulary positioning with government payers, managed care organizations and pharmacy benefits managers, we would be required to demonstrate that our products offer not only medical benefits, but also more value as compared with other treatment regimens.
The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. While we believe that our technology, development and regulatory plans in addition to proprietary scientific knowledge provide us with certain competitive advantages, we currently have limited financial resources and no revenue source and face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions, each of which has significantly greater financial resources than us. Any drugs that we successfully develop and seekcommercialize will compete with existing therapies and new potential therapies that may become available in the future.
Our products, if approved for sale, would eventually be subject to competition from generic drug manufacturers. Manufacturers of generic biopharmaceuticals generally invest far less in R&D and marketing approvalthan R&D companies such as us. We anticipate that any manufacturer of a generic version of our drugs will invest far less than we have in the past and intend to do in the future. They, therefore, have the advantage in that they can price their drugs much lower than the brand-name drugs for which we obtain approval. Additionally, in many countries outside the United States, IP protection is weak or nonexistent and we would be forced to compete with generic or counterfeit versions of our products in such countries whether or not we hold legal exclusivity.
The most common methods of treating patients with cancer are surgery, radiation and drug therapy, including chemotherapy, hormone therapy and targeted drug therapy. Our products once approved, would compete not only with other countriesdrugs, but also with such other types of therapies and territories, such as Canadatreatments.
There are a variety of available drug therapies marketed for cancer. In many cases, these drugs are administered in combination to enhance efficacy. Some of the currently approved drug therapies are branded and Japansubject to patent protection and for markets that followothers are available on a generic basis. Many of these approved drugs are well-established therapies and widely accepted by physicians, patients and third-party payers. In general, although there has been considerable progress over the leading authorities, such as Brazil and South Korea. The processes for obtaining regulatory approvalspast few decades in the U.S., Europetreatment of cancer with currently marketed therapies providing benefits to many patients, these therapies often are limited to some extent by a lack of efficacy and/or the significance or frequency of AEs.
In addition to currently marketed therapies, there are also a number of medicines in late-stage clinical development to treat cancer. These medicines in development may provide efficacy, safety, convenience and in other countries, along with subsequent compliance with applicable statutesbenefits that are not provided by currently marketed therapies. As a result, they may provide significant, additional competition for SM-88 and regulations, will require the expenditureour pipeline.
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Table of substantial time and financial resources.Contents
FDA Approval Process
SM-88 is subject to regulation in the U.S. by the FDA as a drug product. The FDA subjects drug products to extensive pre- and post-market regulation. The Public Health Service Act (“PHSA”), the Federal Food, Drug and Cosmetic Act and other federal and state statutes and regulations govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling and the import and export of drugs. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications (“NDAs”), withdrawal of approvals, clinical holds, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions and/or fines or civil or criminal penalties.
The PHSA emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The PHSA also provides authority to the FDA to immediately suspend licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and critical public health needs and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases in the U.S. and between states.
The drug development process required by the FDA before a new drug may be marketed in the U.S. is long, expensive and inherently uncertain. Drug development in the U.S. typically involves preclinical laboratory and animal testing, the submission to the FDA of an IND, which must become effective before clinical testing may commence, and adequate and well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought. Developing the data to satisfy FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease.
Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product. The conducting of the preclinical tests must comply with federal regulations and requirements, including good laboratory practices (“GLP”).GLP. The results of preclinical testing are submitted to the FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls (“CMC”)CMC and a proposed clinical trial protocol. Long-term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.
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An IND must become effective before U.S. clinical trials may begin. A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has neither commented on nor questioned the IND submission within this 30-day period, the clinical trial proposed in the IND may begin.
Clinical trials involve the administration of the investigational new drug to healthy volunteers or subjects with the condition under investigation, all under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance with federal regulations; (ii) in compliance with good clinical practices (“GCP”), an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors; and (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the ongoing IND file.
The FDA may order the temporary or permanent discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial is not being conducted in accordance with FDA requirements or presents an unacceptable risk to clinical trial subjects. The study protocol and informed consent information for subjects in clinical trials must be submitted to an IRB for review and approval. An IRB may also require the clinical trial at a clinical site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or may impose other conditions to assure subject safety. The study sponsor may also suspend a clinical trial at any time on various grounds, including a determination that the subjects are being exposed to an unacceptable health risk.
Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap or be combined. In phasePhase I, the drug is initially introduced into healthy human subjects and is tested to assess pharmacokinetics, pharmacological actions, adverse events (AEs)AEs associated with increasing doses and, if possible, early evidence of effectiveness. In the case of some products targeted for severe or life-threatening diseases, such as cancer treatments, initial human testing may be conducted in the intended patient population. Phase II usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication, dosage tolerance and optimum dosage, as well as identification of common adverse effects and safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in phasePhase II, phasePhase III trials are initiated to obtain additional information about clinical efficacy and safety in a larger number of subjects, typically
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at geographically dispersed clinical trial sites. Phase III clinical trials are intended to establish data sufficient to demonstrate substantial evidence of the efficacy and safety of the product to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. Trials conducted outside of the U.S. under similar, GCP-compliant conditions in accordance with local applicable laws may also be acceptable to the FDA in support of product licensing.
Sponsors of clinical trials for investigational drugs must publicly disclose certain clinical trial information, including detailed trial design and trial results, in FDA public databases. These requirements are subject to specific timelines and apply to most controlled clinical trials of FDA-regulated products.
After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. The FDA review and approval of the NDA is required before marketing of the product may begin in the U.S. The NDA must include the results of all preclinical, clinical and other testing and a compilation of data relating to the product’s pharmacology and CMC and must demonstrate the safety and efficacy of the product based on these results. The NDA must also contain extensive manufacturing information. The cost of preparing and submitting an NDA is substantial and is in addition to the costs of conducting clinical trials. Under federal law, the submission of most NDAs is additionally subject to a substantial application user fee, as well as annual product and establishment user fees, which may total several million dollars and are typically increased annually.
The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that the NDA is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs. Most such applications for standard review drugs are reviewed within 10 months from the date the application is accepted for filing. Although the FDA often meets its user fee performance goals, it can extend these timelines if necessary and its review may not occur on a timely basis at all. The FDA usually refers applications for novel drugs, which present complex questions of safety or efficacy, to an advisory committee -– typically a panel that includes clinicians and other experts -– for review, evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve the drug product unless it verifies that compliance with current good manufacturing practice (“cGMP”)cGMP standards is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication(s) being studied.
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After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional nonclinical or clinical testing or supplemental information in order for the FDA to reconsider the application. If or when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two orto six months depending on the type of information that was included. The FDA approval is never guaranteed, and the FDA may refuse to approve an NDA if the applicable regulatory criteria are not satisfied.
Under the PHSA, the FDA may approve a NDA if it determines that the product is safe, pure and potent and the facility where the product will be manufactured meets standards designed to ensure that it continues to be safe, pure and potent. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. The approval for a drug may be significantly more limited than requested in the application, including limitations on the specific diseases and dosages or the indications for use, which could restrict the commercial value of the product. The FDA may also require that certain contraindications, warnings or precautions be included in the product labeling. In addition, as a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy (“REMS”) to further ensure that the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals and elements to assure safe use (“ETASU”). ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring and the use of patient registries. The requirement for a REMS or use of a companion diagnostic with a drug can materially affect the potential market and profitability of the drug. Moreover, product approval may require, as a condition of approval, substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.
In September Additionally, as with an existing number of 2015, we submitted an IND topreviously approved oncology products, the FDA forwill likely require us
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to educate health care providers and patients about the proper use and administration of our SM-88 drug candidate for use in treatmentcandidates and obtain FDA approval to market.
As of breast cancer. In October of 2015,March 31, 2022, we have two active INDs with the FDA, advised usboth of which are associated with SM-88. The two INDs are active with the relevant FDA divisions within the Office of Oncologic Diseases that it had completed its 30-day safety review ofoversee our ongoing trials, the DO1 and the DO2. In addition, clinical investigators have previously and may in the future request their own INDs in order to use SM-88 or other products in IITs. For example, the HopES trial for sarcoma is an IIT where the IND and concluded that we may proceed with our proposedfor SM-88 use is held directly by the clinical investigation of SM-88 for breast cancer. The FDA further noted that it had certain comments for our consideration, including matters regarding CMC compliance and clinical pharmacology. Among such comments, the FDA requested clarification regarding a clinical batch’s identifiable impurity; notification for monitoring release and stability testing levels; specifications for impurities meeting regulatory guidelines; revisions to a proposed protocol for monitoring plasma concentrations or justification for not making revisions to applicable proposed protocols; and, in the development of SM-88, characterizing single and proportional dosage PK levels, develop valid age analytical methods used to determine concentrations of study drugs and their active metabolite(s), if any, conduct population PK analyses to evaluate intrinsic and extrinsic factors, and explore the exposure/response relationships for measures of effectiveness, toxicity and PD biomarkers. We have taken such comments under advisement. The FDA also requested stability data for the drug substance as soon as it becomes available.
trial site.
Priority Review/Standard Review (U.S.) and Accelerated Review (EU)
Related Requirements
The FDA may grant a New Drug Applicationan NDA a priority review designation based both upon the request of an applicant and based on the results of the phasePhase III clinical trial(s) submitted in the NDA. This designation sets the target date at six months for FDA action on the application. Priority review is granted where preliminary trial results indicate that a product, if approved, has the potential to provide a safe and effective therapy for a situation where no satisfactory alternative therapy exists or where the product is possibly a significant improvement over the existing marketed products. If these criteria are not met for priority review, the NDA is subject to the standard FDA review period of ten months. However, priority review designation does not change the scientific/medical standard for regulatory approval or the quality of evidence necessary to support approval.
Under the Centralized Procedure in the European Union, the maximum timeframe for the evaluation of a marketing authorization application is 210 days, which excludes clock stops when additional written or oral information needs to be provided by the applicant in response to questions asked by The Committee for Medicinal Products for Human Use (“CHMP”). Accelerated evaluation might be granted by the CHMP in exceptional cases, such as when a medicinal product is expected to be a major public health interest, as defined by three cumulative criteria: the seriousness of the disease to be treated (e.g., heavily disabling or life-threatening); the absence or insufficiency of an appropriate alternative therapeutic approach; and an anticipation of high therapeutic benefit. Under these circumstances, the European Medicines Agency ensures that the opinion of the CHMP is delivered within 150 days, excluding clock stops.
There can be no assurance that we would be able to satisfy any of these requirementsthe eligibility criteria for priority review or to conduct preclinical or clinical trials or receive any regulatory approvals including priority or accelerated evaluation.approval under either standard review.
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Breakthrough Therapy Approvals
On July 9, 2012, theThe Food and Drug Administration Safety and Innovation Act (“FDASIA”) was signed into law. FDASIA provides a newanother designation for an expedited FDA review process called Breakthrough Therapy Designation. A breakthrough therapy is a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and where preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. If aan investigational drug is designated as a breakthrough therapy, the FDAdrug will expedite thebe eligible for all fast track designation features, including expedited development and review of such drug for trial and market approval. Interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. All requests for Breakthrough Therapy Designation willare to be reviewed within 60 days of receipt and FDA will either grant or deny the request.
As with the Fast Track Program
The fast track program, promising results from early phase clinical studies indicatea provision of the Food and Drug Administration Modernization Act of 1997 (“FDAMA”), is designed to facilitate interactions between a sponsor and the FDA before and during submission of an NDA for an investigational agent that, SM-88alone or in combination with one or more drugs, that is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need for that disease or condition. Under the fast track program, the FDA may qualify as anconsider reviewing portions of a marketing application before the sponsor submits the complete application, if the FDA Breakthrough Therapy designation whiledetermines, after a preliminary evaluation of the clinical testing program continues. When appropriate, we intend to hold discussionsdata, that a fast track drug may be effective. A fast track designation provides the opportunity for more frequent interactions with the FDA regarding SM-88’s qualificationand could make the drug eligible for Breakthrough Therapy designation. There can be no assurance that such designation will be granted.accelerated approval priority review if supported by clinical data at the time of submission of the NDA.
The Hatch-Waxman Act
Under the Hatch-Waxman Act, newly approved drugs and indications may benefit from a statutory period of non-patent marketing exclusivity. The Hatch-Waxman Act provides five-year marketing exclusivity to the first applicant to gain approval of an NDA for a new chemical entity, meaning that the FDA has not previously approved any other new drug containing the same active moiety. The Hatch-Waxman Act prohibits having an effective approval date for an Abbreviated New Drug Application (“ANDA”) or a Section 505(b)(2) NDA for another version of such drug during the five-year exclusive period; however, submission of an ANDA or Section 505(b)(2) NDA containing a paragraph IV certification is permitted after four years, which may trigger a 30-month stay of approval of the ANDA or Section 505(b)(2) NDA. Protection under the Hatch-Waxman Act will not prevent the submission or approval of
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another “full” NDA; however, the applicant for the “full” NDA would be required to conduct its own preclinical studies and adequate and well-controlled clinical trials to demonstrate safety and effectiveness. The Hatch-Waxman Act also provides three years of marketing exclusivity for the approval of new and supplemental NDAs, including Section 505(b)(2) NDAs, for, among other things, new indications, dosages or strengths of an existinga currently approved drug, if new clinical investigations that were conducted or sponsored by the applicant are determined by the FDA to be essential to the approval of the application.
new or supplemental NDA.
In addition to non-patent marketing exclusivity, the Hatch-Waxman Act amended the Food, Drug and Cosmetic Act to require each NDA sponsor to submit with its application information on any patent that claims the active pharmaceutical ingredient, drug product (formulation and composition) and method-of-use for which the applicant submitted the NDA and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use or sale of the drug. Generic applicants that wish to rely on the approval of a drug listed in the Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the Orange BookBook) must certify to each listed patent. The Orange Book is a listing of all drug products that have been approved by the FDA and their generic equivalences. We intend to submit for Orange Book listing all relevant patents for SM-88 and to vigorously defend any Orange Book-listed patents for our approved products.
The Hatch-Waxman Act also permits a patent term extension of up to five years as compensation for the patent term lost during product development and the FDA regulatory review process. However, a patent term extension cannot extend the remaining term of a patent beyond a total of 14 years after the FDA approves a marketing application. The patent term extension period is generally equal to the sum of one-half the time between the effective date of an IND and the submission date of an NDA and all of the time between the submission date of an NDA and the approval of that application, up to a total of five years. Only one patent applicable to a regulatory review period that represents the first commercial marketing of that drug is eligible for the extension and it must be applied for prior to expiration of the patent. The U.S. Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for patent term extension. We will consider applying for a patent term extension for some of our patents, to add patent life beyond the expiration date, depending on our ability to meet certain legal requirements permitting such extension and the expected length of clinical trials and other factors involved in the submission of an NDA. There can be no assurance that such an extension, if applied for, will be granted.
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Advertising and Promotion
Once an NDA is approved, a product will be subject to continuing post-approval regulatory requirements. For instance,The FDA prohibits the FDApre-approved marketing and promotion of drugs and closely regulates the post-approval marketing and promotion of drugs, including through standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the internet.internet and social media. Failure to comply with these regulations can result in significant penalties, including the issuance of untitled and warning letters directing a company to correct deviations from FDA standards, a requirement that future advertising and promotional materials are pre-cleared by the FDA and federal and state civil and criminal investigations and prosecutions.
Drugs may be marketed only after initial approval and only for the approved indications and in accordance with the provisions of the approved labeling. Changes to some of the conditions established in an approved application, including changes to indications, labeling or manufacturing processes or facilities, may require a submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing original and resubmitted NDAs.
AE Reporting and cGMP Compliance
AE reporting and submission of periodic reports are required following FDA approval of an NDA. The FDA also may require post-marketing testing, known as phasePhase IV testing, REMS and surveillance to monitor the effects of an approved product or the FDA may place conditions on an approval that could restrict the distribution or use of the product. In addition, manufacturing, packaging, labeling, storage and distribution procedures must continue to conform to cGMPs after approval. Drug manufacturers and certain manufacturing subcontractors are required to register their establishments with the FDA and certain state agencies. Registration with the FDA subjectssubjects’ entities to periodic unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess
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compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality control to maintain compliance with cGMPs. Regulatory authorities may withdraw product approvals, request product recalls or impose marketing restrictions through labeling changes or product removals if a company fails to comply with regulatory standards, if the product encounters problems following initial marketing or if previously unrecognized problems are subsequently discovered.
Orphan Drug
Designation
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition; generally, a disease or condition that affects fewer than 200,000 individuals in the U.S. annually. Orphan drug designation must be requested before submitting aan NDA. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not necessarily convey any advantage in or shorten the duration of the regulatory review and approval process. The first NDA applicant to receive FDA approval for a particular product to treat a particular disease with FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the U.S. for the product for treatment of the specified indication. During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition or the same drug for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee. When appropriate, we intendOrphan drug exclusivity may be lost in the United States if the FDA determines that the request for designation was materially defective or if the manufacturer is unable to hold discussionsassure sufficient quantity of the drug to meet the needs of patients with the FDA regarding whetherrare disease or not we should pursue orphan drug designation for SM-88. There can be no assurance given that such discussions, if commenced, would result in our pursuingcondition.
In July 2020, the Company received from the FDA orphan drug designation for SM-88, or that, if pursued, the FDA would grant SM-88 an orphan drug designation.as a potential treatment for patients with pancreatic cancer.
Other Healthcare Laws and Compliance Requirements
In the U.S., our activities are potentially subject to regulation by federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of the U.S. Department of Health and Human Services (for example, the Office of Inspector General), the U.S. Department of Justice and individual U.S. Attorney offices within the Department of Justice and state and local governments.
International Regulation
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EU Approval Process
The EMA is a decentralized scientific agencyIn order to market any product outside of the EU. It coordinates the evaluation and monitoring of centrally authorized medicinal products. It is responsible for the scientific evaluation of applications for EU marketing authorizations, as well as the development of technical guidance and the provision of scientific adviceUnited States, we would need to sponsors. The EMA decentralizes its scientific assessment of medicines by working through a network of about 4,500 experts throughout the EU, nominated by the Member States. The EMA draws on resources of over 40 National Competent Authorities of European Member States.
The process regarding regulatory approval of medicinal products in the EU follows roughly the same lines as in the U.S. and likewise generally involves satisfactorily completing each of the following:
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Preclinical Studies
The conduct of the preclinical tests and formulation of the compounds for testing must comply with the relevant European regulationsnumerous and requirements. Preclinical tests include laboratory evaluationsvarying regulatory requirements of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animal studies in order to assess the potentialother countries regarding safety and efficacy of the product. The results of the preclinical tests, together with relevant manufacturing information and analytical data, are submitted as part of the CTA.
Clinical Trial Approval
Pursuant to the Clinical Trials Directive 2001/20/EC, as amended, a system for the approval ofgoverning, among other things, clinical trials, inmarketing authorization, commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the EU has been implemented through national legislation of the Member States. Under this system, approval must be obtained from the competent national authority of each European Member State in which a study is planned to be conducted. To this end, a CTA is submitted, which must be supported by an investigational medicinal product dossier (IMPD) and further supporting information prescribednecessary approvals by the Clinical Trials Directive and other applicable guidance documents. Furthermore, a clinical trial may only be started after a competent ethics committee has issued a favorable opinion on the clinical trial application in that country.
Manufacturing and import into the EU of investigational medicinal products is subject to the holding of appropriate authorizations and must be carried out in accordance with cGMPs.
Health Authority Interactions
During the development of a medicinal product, frequent interactions with the EU regulators are vital to make sure all relevant input and guidelines/regulations are taken into account in the overall program.
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Pediatric Studies
Regulation (EC) 1901/2006, which came into force in the EU on January 26, 2007, aims to facilitate the development and accessibility of medical products for use in children without subjecting children to unnecessary trials or delaying the authorization of medicinal products for use in adults. The regulation established the Pediatric Committee (“PDCO”), which is responsible for coordinating the EMA’s activities regarding medicines for children. The PDCO’s main role is to determine which studies that marketing authorization applicants need to complete in the pediatric population as part of the so-called Pediatric Investigation Plans (“PIP”). All applications for marketing authorization for new medicines that were not authorized in the EU before January 26, 2007 have to include either the results of studies carried out in children of different ages (as agreed with the PDCO) or proof that a waiver or a deferral of these studies has been obtained from the PDCO. As indicated, the PDCO determines what pediatric studies are necessary and describes them in a PIP. This requirement for pediatric studies also applies when a company wants to add a new indication, pharmaceutical form or route of administration for a medicine that is already authorized. The PDCO can grant deferrals for some medicines, allowing a company to delay development of the medicine in children until there is enough information to demonstrate its effectiveness and safety in adults and can also grant waivers when development of a medicine in children is not needed or is not appropriate, such as for diseases that only affect the elderly population.
Before an MAA can be filed or an existing marketing authorization can be varied, the EMA checks that companies are in compliance with the agreed studies and measures listed in each relevant PIP.
Regulation (EC) 1901/2006 also introduced several incentives for the development of medicines for children in the EU:
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MAA
Authorization to market a product in the EU member states proceeds under one of four procedures: a centralized authorization procedure, a mutual recognition procedure, a decentralized procedure or a national procedure.
Centralized Authorization Procedure
Certain drugs, including medicinal products developed by means of biotechnological processes, must be approved via the centralized authorization procedure for marketing authorization. A successful application under the centralized authorization procedure results in a marketing authorization from the European Commission, which is automatically valid in all EU member states. The other European Economic Area member states (namely Norway, Iceland and Liechtenstein) are also obligated to recognize the Commission decision. The EMA and the European Commission administer the centralized authorization procedure.
Under the centralized authorization procedure, the Committee for Medicinal Products for Human Use (“CHMP”) serves as the scientific committee that renders opinions about the safety, efficacy and quality of human products on behalf of the EMA. The CHMP is composed of experts nominated by each member state’s national drug authority, with one of them appointed to act as Rapporteur for the co-ordination of the evaluation with the possible assistance of a further member of the Committee acting as a Co-Rapporteur. After approval, the Rapporteur(s) continue to monitor the product throughout its life cycle. The CHMP is required to issue an opinion within 210 days of receipt of a valid application, though the clock is stopped if it is necessary to ask the applicant for clarification or further supporting data. The process is complex and involves extensive consultation with thecomparable regulatory authorities of member states and a number of experts. Once the procedure is completed, a European Public Assessment Report is produced. If the CHMP concludes that the quality, safety and efficacy of the medicinal product are sufficiently proven, it adopts a positive opinion. The CHMP’s opinion is sent to the European Commission, which uses the opinion as the basis for its decision whetherforeign countries before we can commence clinical trials or not to grant a marketing authorization. If the opinion is negative, information is given as to the grounds on which this conclusion was reached.
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After a drug has been authorized and launched, it is a condition of maintaining the marketing authorization that all aspects relating to its quality, safety and efficacy must be kept under review. Sanctions may be imposed for failure to adhere to the conditions of the marketing authorization. In extreme cases, the authorization may be revoked, resulting in withdrawal of the product in those countries. The approval process varies from sale.
Mutual Recognition Procedurecountry to country and Decentralized National Procedure
Under a Mutual Recognition Procedure (“MRP”) or a Decentralized Procedure (“DCP”), the applicant must select whichcan involve additional product testing and how many EU member statesadditional administrative review periods. The time required to obtain approval in whichother countries might differ from and be longer than that required to seekobtain FDA approval. In the case of an MRP, the applicant must initially receive nationalRegulatory approval in one EU member state. This will be the so-called reference member state (“RMS”) for the MRP. Then, the applicant seekscountry does not ensure regulatory approval for the product in other EU member states, the so-called concerned member states (“CMS”)another, but a failure or delay in a second step.
For the DCP, the applicant will approach all chosen Member States at the same time. To do so, the applicant will identify the RMS that will assess the submitted MAA and provide the other selected Member States with the conclusions and results of the assessment. In principle, the applicant can choose any EU Member State as the RMS; however,obtaining regulatory approval in almost all Member States, the applicant needs to send a request for a time slot when the applicant will be allowed to submit the application. Depending on the Member State selected as RMS, the interval between submission of the request to the actual submission date can be two years or longer.
Accelerated Assessment Procedure
When an application is submitted for a marketing authorization in respect of a drug for human use, which is of major interest from the point of view of public health and in particular, from the viewpoint of therapeutic innovation, the applicantone country may request an accelerated assessment. Under the accelerated assessment procedure, the CHMP is required to issue an opinion within 150 days of receipt of a valid application, subject to clock stops. We believe that SM-88 may qualify for this provision and we will take advantage of this provision, if appropriate.
Conditional Approval
Under EU regulations, a medicine that would fulfill an unmet medical need may, if its immediate availability is in the interest of public health, be granted a conditional marketing authorization on the basis of less complete clinical data than are normally required, subject to specific obligations being imposed on the authorization holder. These specific obligations are to be reviewed annually by the EMA. The list of these obligations is to be made publicly accessible. Such an authorization shall be valid for one year, on a renewable basis.
Period of Authorization and Renewals
A marketing authorization is initially valid for five years and may then be renewed on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the authorizing member state. To this end, the marketing authorization holder is to provide the EMA or the competent authority with a consolidated version of the file in respect of quality, safety and efficacy, including all variants introduced since the marketing authorization was granted, at least six months before the marketing authorization ceases to be valid. Once renewed, the marketing authorization shall be valid for an unlimited period, unless the Commission or the competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with one additional five-year renewal. Any authorization which is not followed by the actual placing of the drug on the European market (in case of centralized procedure) or on the market of the authorizing Member State within three years after authorization shall cease to be valid (the so-called sunset clause).
Orphan Drug Designation
EU regulations also provide for an orphan drug designation. This designation is granted if its sponsor can establish:
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An application for designation as an orphan product can be made any time prior to the filing of an application for approval to market the product. Marketing authorization for an orphan drug leads to a ten-year period of market exclusivity. This period may, however, be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan drug designation, for example because the product is sufficiently profitable not to justify continued market exclusivity. Market exclusivity can be revoked only in very selected cases, such as consent from the marketing authorization holder, inability to supply sufficient quantities of the product, demonstration of “clinically relevant superiority” by a similar medicinal product or, after a review by the Committee for Orphan Medicinal Products, requested by a Member State in the fifth year of the marketing exclusivity period (if the designation criteria are believed to no longer apply). Medicinal products designated as orphan drugs are eligible for incentives made available by the EU and by its Member States to support research into and the development and availability of orphan drugs. It is not our current intention to pursue orphan drug designation for SM-88.
Regulatory Data Protection
Without prejudice to the law on the protection of industrial and commercial property, marketing authorizations for new medicinal products in the EU benefit from an 8+2+1 year period of regulatory protection.
This regime consists of a regulatory data protection period of eight years plus a concurrent market exclusivity of ten years plus an additional market exclusivity of one further year if, during the first eight years of those ten years, the marketing approval holder obtains an approval for one or more new therapeutic indications which, during the scientific evaluation prior to their approval, are determined to bring a significant clinical benefit in comparison with existing therapies. Under the current rules, a third party may reference the preclinical and clinical data of the reference product beginning eight years after first approval, but the third party may market a generic version only after ten (or eleven) years have lapsed. Additional regulatory data protection can be applied for when an applicant has complied with all requirements as set forth in an approved PIP.
International Conference on Harmonization (ICH)
The International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (“ICH”) is a project that brings togethernegatively impact the regulatory authorities of Europe, Japan and the U.S. and experts from the pharmaceutical industryprocess in the three regions to discuss scientific and technical aspects of pharmaceutical product registration. The purpose of ICH is to reduce or obviate the need to duplicate the testing carried out during the research and development of new medicines by recommending ways to achieve greater harmonization in the interpretation and application of technical guidelines and requirements for product registration. Harmonization would lead to a more economical use of human, animal and material resources, the elimination of unnecessary delay in the global development and availability of new medicines, while maintaining safeguards on quality, safety, efficacy and regulatory obligations to protect public health.others.
ICH guidelines have been adopted as law in many countries, but are only used as guidance in the U.S. by the FDA. In many areas of drug regulation, ICH has resulted in comparable requirements, for instance with respect to the Common Technical Document, which has become the core document for filings for market authorization in several jurisdictions. In this manner, ICH has facilitated a more efficient path to markets.
Pharmaceutical Coverage, Pricing and Reimbursement
As previously noted, in the U.S. and other countries, sales of any products for which we receive regulatory approval for commercial sale will depend in part on the availability of reimbursement from third-party payers, including government health administrative authorities, managed care providers, private health insurers and other organizations. The division of competences within the EU leaves to its Member States the power to organize their own social security systems, including health care policies to promote the financial stability of their health care insurance systems.
In this context, each of the Member States’ national authorities is free to set the prices of medicinal products and to designate the treatments that they wish to reimburse under their social security system. However, the EU has defined a common procedural framework through the adoption what is generally known as the “Transparency Directive.” This directive aims to ensure that national pricing and reimbursement decisions are made in a transparent manner and do not disrupt the operation of the internal market.
The pharmaceutical pricing and reimbursement systems established by Member States are usually quite complex. Each country uses different schemes and policies, adapted to its own economic and health needs. We would have to develop or access special expertise in this field to prepare health economic dossiers on our medicinal products if we would market our products, if and when approved, in the EU.
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Manufacturing
We do not own or operate, and currently have no near termnear-term plans to establish, any manufacturing facilities. We currently rely on and expect to continue to rely on, third party contract manufacturers for supplies of SM-88 for preclinical and clinical testing, as well as for the initial commercial manufacture of any products that we may market following regulatory approval.
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We currently purchase all our drug substance and drug products from contract manufacturers and intend to continue to do so on an as-needed purchase order basis. We do not have long-termentered into limited term supply arrangements for certain SM-88 components related to supply for our clinical activities in place at this time.order to secure favorable pricing terms. We intend to identify and qualify any further necessary contract manufacturers to provide all active pharmaceutical ingredients (“API”)APIs and finished drug product services during the IND stages and prior tobefore submission of an NDA to the FDA.
We have started some focused precommercial technical development activities toward commercial manufacturing. These precommercial manufacturing activities are expected to be able to support ongoing clinical manufacturing activities as needed. Our current intention is that, during the courseongoing development of the IND program through the End-of-Phase 2 (“EOP2”),SM-88, other than our limited and focused precommercial activities, we will scale-uptransition the needed manufacturing, CMC and GMP programprograms towards commercial manufacturing.third-party manufacturing when appropriate. The overall CMCmanufacturing program includes, but is not limited to, the development of productionproduct and process specifications, producing and validating standards and the development of suitable analytical methods for test and release, as well as stability testing. Before and during the use of contract manufacturers, we (or qualified designee) will conduct audits to ensure compliance with the mutually agreed process descriptions and cGMP regulations. Our manufacturers themselves must comply with their in-house quality assurance programs and be available for inspections by regulatory agencies, including the FDA and European drug regulatory agencies. During the development of our drug candidates, we will scaleanticipate scaling the manufacturing process to a suitable size. Such scaling upIncreasing scale involves several steps and may involve modification of the process, in which case modifications to our CMC sections will occur, with continuous submissions to the FDA and EUEuropean regulatory authorities.
As we progress through the regulatory approval process, there is a possibility that our intended manufacturing process will undergo modifications, primarily based on initial manufacturing results and data generated during the manufacture of the drug substance and product to be used in our clinical trials. Such modificationsModifications could cause delays to ourin obtaining regulatory approval of SM-88, if at all, as well as an increase our research and development and manufacturing costs and couldpotentially make such product costcosts prohibitive to our intended end users and their medical insurance providers.
SM-88 is a combination drug that is comprised of four active ingredients. Three ofcurrently administered with the components of SM-88conditioning agents methoxsalen, phenytoin, and sirolimus. Methoxsalen, phenytoin, and sirolimus each previously received regulatory approval in areas other than cancer treatment. The four active ingredients that comprise SM-88 and the three agents within MPS are organic compounds of low molecular weight, generally called small molecules. They can be manufactured in reliable and reproducible synthetic processes from readily available starting materials. The chemistry is amenable to scale-up and we believe doesdo not requirebelieve unusual equipment would be required in the manufacturing process.
OneOur tyrosine-based component of SM-88 is a derivation of an existing FDA-approved drugderivative product that has been modified by a proprietary process to contribute to the functionality of SM-88.modify its functionality. This drug substance is being manufactured on an exclusive basis by ana leading, FDA-audited contract manufacturer and holder of an FDA Drug Master File.that has previously manufactured tyrosine-based products on a commercial scale. This manufacturer currently is our sole supplier of this drug substance. To our knowledge, the current manufacturer of this drug substance is the only FDA-approved supplierFDA registered and inspected manufacturer of this drug. We believe this cGMP contract manufacturer has sufficient capacity to meet our projected needs into the near future.future and we maintain inventory on hand to meet our immediate clinical needs. In the event of a catastrophic event or if this contract manufacturer is unable to meet our needs, we will need to find an alternative source. This will likely result in delays for the clinical development program.program or future commercial programs. It is not impossible to find a substitute for this supplier in the event that it becomes necessary, but it wouldmay be costly, including in terms of development time. We do not currently have arrangements in place for a redundant supply of the drug substance.
To date, we have, through an FDA-audited contract manufacturer, produced cGMP drug substance for use in our planned clinical trials. In addition, we have through-producedproduced cGMP clinical trial materials utilizing such drug substance, through aan FDA-audited contract manufacturer. Such newly produced drug substance and clinical trial materials are currently undergoing long term regulatory testing. We believe we have produced enough drug substance to create an inventory to meet our immediate needs regarding our planned clinical trials. Smaller amounts of drug substance were also produced during this time for various research and development activities. Future work involving the drug substance is planned to involve development and validation of the anticipated commercial manufacturing route. This will involve the use of a different regulatory starting material than had been utilized for the recent cGMP drug substance manufacturing campaign. This new starting material is readily available and process chemistry is well understood.
For future work involving the drug product, it is anticipated that manufacture process development work will continue, with focus offocusing on manufacturing improvements, and scale up.increasing scale. It is anticipated that future manufacturing of clinical trial materials may be required to fill clinical trial needs. In addition, additionalAdditional tyrosine derivative drug product forms may be
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variations have also been developed if necessary.for research purposes and some are being validated and tested for clinical purposes.
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The remaining three active pharmaceutical ingredients (“APIs”) in SM-88APIs for MPS are available from several contract manufacturers, each holding Drug Master Files at the FDA for their respective API’s.APIs. We believe that the loss of or the inability of any of these sourcessingle source to provide our required ingredients would not have any substantive delaying effect on our research program, clinical trials or future commercial sale of SM-88, as we believe these other sources are readily available.
TYME has started a development program focused on a new potential treatment of COVID-19, TYME-19. The Company is assessing manufacturing and clinical and service options for the TYME-19 development program.
Employees
and Human Capital
As of February 29, 2016,March 31, 2022, we had a total of nine13 employees, all full-time employees,and all located in the United States. Of this total workforce, 6 FTE employees were engaged in or directly supported our research and development activities and 7 FTE employees perform general and administrative functions. The roles of certain employees include both R&D activities and general administrative functions, and, as such, for purposes of the immediately preceding sentence they are categorized in more than one role based on time spent on each function. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relations with our employees to be good. Of the nine employees, six perform researchIn order to enable us to further develop and development activitiespotentially commercialize SM-88 and three serve in generalother pipeline candidates we will need to maintain and administrative functions. Our Chief Executive Officer, Steve Hoffman, is also our Chief Science Officer and, as such, may be considered engaged in R&D activitiescontinue to hire additional experienced personnel as well as his being categorized,to rely on third-party consultants for purposescertain activities.
We are committed to a work environment that is welcoming, inclusive and encouraging, and we believe that we can be at our best when we bring together diverse teams with different perspectives, experiences and ideas. In furtherance of our commitment to diversity and inclusion, and diverse perspectives on our Board and among our employees, our Corporate Governance Guidelines provide that, when evaluating candidates for nominations as new directors, the pool of candidates from which the nominating and governance committee of the immediately preceding sentence,Board recommends nominees will include qualified persons who reflect diverse backgrounds, including both underrepresented people of color and different genders, and if any third party search firm is used, it will be specifically instructed to include such candidates.
The success of our business is fundamentally connected to the well-being of our employees. We provide competitive compensation and benefits programs to help meet the needs of our employees. In addition to salaries, these programs include potential annual discretionary bonuses, equity awards, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and flexible work schedules, among others. We have also historically offered our employees the ability to work remotely as servingwell as in an administrative capacity. our office and expect to continue to do so in the future. These benefits provide our employees choices where possible so they can customize their benefits to meet their needs and the needs of their families, as well as access to tools and resources to help them improve or maintain their health status and encourage engagement in healthy behaviors to improve their physical and mental health.
Throughout the COVID-19 pandemic, many of our employees have worked remotely. In June 2021, our employees returned to the Company’s office in-person from time to time while also continuing to work remotely and being permitted to fully “work-from-home” if preferred, and we have relaxed our travel restrictions. For in-office work, we implemented a number of significant safety measures based on current guidelines recommended by the Centers for Disease Control.
Consultants
Where necessary, we have entered into consulting contracts to provide us with subject matter expertise. We believe there is available a sufficient number of available contractors with appropriate subject matter expertise for our current and nearnear-term needs. We retain each consultant according to the terms of a consulting agreement. Under such agreements, we generally pay them a consulting fee and reimburse them for out-of-pocket expenses incurred in performing their services for us. In addition, we have in the past and may again in the future grant options to purchase our common stock to consultants, subject to the vesting requirements contained in their consulting
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agreements. Our consultants may be employed by other entities and therefore may have commitments to their employer, or may have other consulting or advisory agreements that may limit their availability to us.
Collaboration with Eagle Pharmaceuticals
On January 7, 2020, TYME and Eagle Pharmaceuticals, Inc. (“Eagle”) entered into a Securities Purchase Agreement (the “Eagle SPA”), pursuant to which the Company issued and sold to Eagle 10,000,000 shares of common stock, at a price of $2.00 per share. The Eagle SPA provides that Eagle will, subject to certain conditions, make an additional payment of $20 million upon the occurrence of a milestone event, which is defined as the earlier of (i) achievement of the primary endpoint of overall survival in the TYME-88-Panc pivotal trial; or (ii) achievement of the primary endpoint of overall survival in the PanCAN Precision Promise SM-88 registration arm; or (iii) FDA approval of SM-88 in any cancer indication. This payment would be split into a $10 million milestone cash payment and a $10million investment in TYME at a 15% premium to the then prevailing market price. Eagle’s shares will be restricted from sale until the earlier of three months following the milestone event or the three-year anniversary of the agreement.
Also, on January 7, 2020, we entered into a Co-Promotion Agreement with Eagle (the “Co-Promote”), whereby Eagle agreed to provide sales representatives to cover 25% of the Company’s sales force requirements and will receive 15% of the net sales of all SM-88 products in the U.S. during the term needs.
of the Co-Promote. TYME will also be responsible for clinical development, regulatory approval, commercial strategy, marketing, reimbursement and manufacturing of SM-88. TYME retains the remaining 85% of net U.S. revenues and reserves the right to repurchase Eagle’s rights under the Co-Promote for $200 million.
Corporate Information
We were reincorporated on September 18, 2014 under the laws of the State of Delaware, after being incorporated in Florida as Global Group Enterprises Corp. on November 22, 2011, as discussed further below under Corporate History; Significant Organizational Events. Our principal executive offices areoffice is located at 48 Wall Street - Suite 1100, New York, New York 10005.One Pluckemin Way, Bedminster, NJ 07921. Our telephone number is 646-205-1603.212-461-2315. Our website address is www.tymetechnologiesinc.com.
www.tymeinc.com.
Corporate History; Significant Organizational Events
Overview
We were originally incorporated in Florida as Global Group Enterprises Corp. on November 22, 2011. Our initial intention was to distill, bottle, market and distribute alcoholic beverages (primarily an ultra-premium vodka), but we never acted on such intention, other than initial planning. Effective as of September 18, 2014, we reincorporated in the State of Delaware and later engaged in a merger and certain other transactions (described under the subcaptions below).transactions. As a result of these events and related transactions, among other things, we (i) changed our jurisdiction of incorporation from Florida to Delaware; (ii) changed our name from Global Group Enterprises Corp. to Tyme Technologies, Inc., and (iii) acquired our current clinical-stage pharmaceutical business.
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The effectsAt-the-Market Sales of the foregoing merger and associated financing transactions are described below.
Merger Agreement
Common Stock
On March 5, 2015, we, our wholly-owned subsidiary formed for the purposes of completing the merger (which we refer to as “Acquisition Sub”), Tyme, Inc. (“Tyme”) and certain other partiesOctober 18, 2019, TYME entered into an Open Market Sale Agreement and PlanSM (the “Sale Agreement”) with Jefferies LLC (“Jefferies”) as sales agent, pursuant to which the Company may, from time to time, sell shares of Merger and ReorganizationCommon Stock through Jefferies having an aggregate offering price of up to $30.0 million (the “Merger Agreement”“Jefferies ATM”). Simultaneous withUnder the executionSale Agreement the minimum share sales price (“Floor Price”) shall not be less than $1.00 without Jefferies prior written consent. Since its initiation, we raised approximately $7.3 million in net proceeds after commissions and other transaction expenses and sold 5,815,254 shares of the Merger Agreement, we and the other partiesCommon Stock. We have not sold any securities pursuant to the Merger Agreement consummatedJefferies ATM during fiscal year 2022 or into fiscal year 2023.
Registered Direct Offering
On February 8, 2021, the transactions contemplated by the Merger Agreement (the “Merger”). We refer to the date that the transactions contemplated by the Merger Agreement, including the Merger, were consummated as the “Closing Date.” Pursuant to the termsCompany closed its registered direct offering of the Merger Agreement, Acquisition Sub merged with and into Tyme. Tyme was the surviving corporation in the Merger and thus became our wholly-owned subsidiary.
In accordance with the Merger Agreement, we also completed a split-off transaction whereby we transferred all of our pre-Merger assets and liabilities to a newly formed subsidiary, Global Group Enterprises Corp., a Florida corporation (“Split-Off Subsidiary”), and transferred our entire equity interest in Split-Off Sub to our pre-Merger principal stockholder, who was a founder and former executive officer (the “Split-Off”). The Split-Off was effected in consideration for the surrender to us for cancellation of all of this founder’s 13,000,20040,000,000 shares of our Common Stock. As a result of the consummation of the Merger and Split-Off Transaction, our sole business became the business of Tyme, a research and development company focused on developing drug candidates for the treatment of cancer in humans.
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At the closing of the Merger, the shares of Tyme’s common stock that were issued and outstanding immediately prior to the Merger were converted into shares of our Common Stock, resulting in an aggregate of 68 million shares of our Common Stock being issued in connection with the Merger to the holders of Tyme’s common stock immediately preceding the effective time of the Merger (the “pre-Merger Tyme stockholders”).
The Merger Agreement contained representations and warranties and pre- and post-closing covenants of each party and customary closing conditions. Breaches of the representations and warranties under the Merger Agreement are subject to indemnification provisions. Each of the pre-Merger Tyme stockholders initially received in the Merger 95% of the shares to which each such stockholder was entitled under the terms of the Merger Agreement, with the remaining 5% of such shares being held in escrow for two years to satisfy post-closing claims for indemnification by the Company (“Indemnity Shares”), pursuant to an Indemnification Shares Escrow Agreement. Any of the Indemnity Shares remaining in escrow at the end of such two-year period shall be distributed to the pre-Merger Tyme stockholders on apro rata basis. The Merger Agreement also contained a provision providing for a post-Merger share issuance, as a means for which claims for indemnity may be made by the pre-Merger Tyme stockholders. Pursuant to this provision, up to one million additional shares (“R&W Shares”) of our Common Stock may be issued to the pre-Merger Tyme stockholders during the one-year period following the Merger for breaches of representations and warranties of the pre-Merger Company contained in the Merger Agreement. The foregoing mechanisms are the exclusive remedies of the Company on the one hand and the pre-Merger Tyme stockholders on the other hand for satisfying indemnification claims under the Merger Agreement, other than claims based on fraud or willful misconduct.
The Merger Agreement also called for the surrender for cancellation, effective as of the Merger Closing, of a number of shares of our Common Stock by the owners of such shares. In addition to the surrender and cancellation of 13,000,200 shares in connection with the Split-Off transaction, a further 26,276,600 shares (the “Merger Related Surrendered Shares”) were surrendered by their owners and canceled.
The Merger was treated as a recapitalization or reverse acquisition for financial accounting purposes. Tyme is considered the acquirer for accounting purposes and our historical financial statements before the Merger will be replaced with the historical financial statements of Tyme before the Merger in all future filings with the SEC.
The Merger is intended to be treated as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended.
The issuance of shares of our Common Stock to holders of Tyme’s common stock in connection with the Merger was not registered under the Securities Act, in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering. These securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement and are subject to further contractual restrictions on transfer as described below.
We also agreed, subject to one exception discussed below, not to register under the Securities Act for resale any of the shares of our Common Stock issued to the pre-Merger Tyme stockholders for the two years following the closing of the Merger. Notwithstanding the restriction on registering shares of our Common Stock received in the Merger by the pre-Merger Tyme stockholders, we did agree to register 9% of the shares of our Common Stock issued in connection with the Merger to the pre-Merger Tyme stockholders.
In addition, two of the pre-Merger Tyme stockholders who each are currently serving as executive officers and directors of our Company and are holders of 10% or more of our Common Stock (the “Restricted Stockholders”) entered into a Lock-Up and No Shorting Agreement (each, a “Lock-Up Agreement”), whereby they agreed to certain restrictions on the sale or disposition (including pledges) of shares of our Common Stock held by them for one year following the closing of the Merger. The Lock-Up Agreements exclude the shares which we agreed to register for all of the pre-Merger Tyme stockholders discussed in the immediately preceding paragraph, as well as an additional one million shares each which they are permitted to sell only in private transactions.
All descriptions of the Merger Agreement, Indemnification Shares Escrow Agreement and Lock-Up Agreements herein are qualified in their entireties by reference to the texts thereof incorporated by reference herein and listed as exhibits hereto.
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Split-Off Transaction
Immediately prior to the closing of the Merger, under the terms of a Split-Off Agreement and a General Release Agreement, we effected the Split-Off, whereby we (x) transferred all of our pre-Merger operating assets and liabilities to Split-Off Subsidiary, our wholly-owned special-purpose subsidiary and (y) transferred all of the outstanding shares of capital stock of Split-Off Subsidiary to Andrew Keck, our founder and a principal stockholder of our Company prior to the consummation of the Merger, in consideration of and in exchange for (i) the surrender for cancellation of an aggregate of 13,000,200 shares of our Common Stock owned by him and (ii) certain representations, covenants and indemnities (the “Split-Off”). Mr. Keck served as our sole executive officer and director from our initial formation through April 26, 2013.
All descriptions of the Split-Off Agreement and the General Release Agreement herein are qualified in their entireties by reference to the texts thereof incorporated by reference herein and listed as exhibits hereto.
Bridge Financing by Tyme
In July 2014, Tyme offered and sold to an accredited investor a Tyme senior subordinated secured convertible note in the principal amount of $1.1 million. The note bore interest at 10% per annum and was payable on October 11, 2015, subject to earlier conversion as described below. In November of 2014, the holder of such note loaned Tyme an additional $250,000 and the note was amended and restated to reflect a principal amount of $1.35 million. In January of 2015, the holder of such note loaned Tyme an additional $960,000 and the note was further amended and restated to reflect a principal amount of $2.31 million. In February of 2015, the note was further amended to reflect a change in its mandatory conversion feature to a fixed amount, as further discussed below. The note as amended and restated is referred to in this report as the “Bridge Note.”
Interest on the Bridge Note would have been payable at maturity; however, upon conversion of the Bridge Note as described below, accrued interest was, in accordance with the terms of the Bridge Note, forgiven. The Bridge Note was secured by a security interest on all of the assets of Tyme and its Luminant Biosciences, LLC wholly-owned subsidiary of Tyme (“Luminant”), subject to certain limited exceptions, as well as a pledge of certain shares of stock of Tyme then held by two principal stockholders of Tyme and Tyme’s membership interest in Luminant.
Upon the closing of the Merger and the PPO (described below), the outstanding principal amount of the Bridge Note was automatically converted into 2.31 million shares (the “Conversion Shares”) of our Common Stock, at a rate of one share for every $1.00 of Bridge Note principal then outstanding. The security interest and pledges terminated upon conversion of the Bridge Note.
All descriptions of the Bridge Note original and as amended and restated, herein are qualified in their entireties by reference to the texts thereof incorporated by reference herein and listed as exhibits hereto.
The PPO
Concurrently with the closing of the Merger and in contemplation of the Merger, we held a closing of a private placement offering (the “PPO”) in which we sold 2.716 million shares of our Common Stock at a purchase price of $2.50 per share forshare. The gross proceeds of $6.79 million. Only $4.29the offering were $100 million, of such grossprior to deducting placement agent’s fees and other offering expenses payable by TYME. The net proceeds was paid in cash. The remaining $2.5 million was paidto the Company, after deducting placement agent fees and other offering expenses payable by the deliveryCompany, were approximately $93.8 million.
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Exchange Agreements
On May 20, 2020, the Company entered into exchange agreements with holders (the “Holders”) of the April 2019 Warrants. The April 2019 Warrants were offered and issued pursuant to usthe Company’s previous shelf registration statement on Form S-3 (Registration No. 333-211489).
Pursuant to exchange agreements (the “Share Exchange Agreements”) with Holders of a 90-day, limited recourse promissory noteApril 2019 Warrants to purchase 5,833,333 shares of Common Stock in the principal amountaggregate, the Company issued an aggregate of $2.5 million (the “PPO Note”). The PPO Note was secured by an escrow of five million2,406,250 shares of our Common Stock, pursuantcommon stock (the “Exchange Shares”) in exchange for such April 2019 Warrants. Concurrently therewith, each such Holder executed and delivered to the Company a Subscription Note Shares Escrow Agreement among us, the purchaser in the PPO and an escrow agent (the “PPO Note Escrowleak-out agreement (a “Share Leak-Out Agreement”).
The PPO Note had an original maturity date of June 5, 2015. Under an Omnibus Amendment, dated as of June 5, 2015, among Christopher Brown, GEM Global Yield Fund LLC SCS (“GEM”) and us, among other matters, GEM made a payment to us equal to one-half of the original principal amount of the PPO Note and we extended the maturity date that contains trading restrictions with respect to the balance due underExchange Shares, which (i) for the PPO Note ($1,250,000 in principal amount)first 90 days, prohibit any sales of Exchange Shares, (ii) for the subsequent 90 days, limit sales of Exchange Shares on any day to July 6, 2015. Following such receipt2.5% of one-halfthat day’s trading volume of Common Stock, and (iii) prohibit new short positions or short sales on Common Stock for the PPO Note, 2,500,000 of such shares were released from escrow and the remaining 2,500,000 shares remained in escrow. Wecombined 180 day period.
The Company also entered into a Second Omnibus Amendment asan exchange agreement (the “Warrant Exchange Agreement”) with another Holder of July 23, 2015 (the “Second Omnibus Amendment”), pursuantApril 2019 Warrants to which, among other matters, we agreedpurchase 2,166,667 shares of Common Stock in the aggregate. Pursuant to the extension of the maturity date of the remaining $1,250,000 outstanding amount due under the PPO Note to a date which is five business days following our providing the maker of the PPO Note of written evidence that the IND for our SM-88 drug candidate has been submitted by us to the FDA. The IND was received by the FDA on September 21, 2015 and notice of such was given to the maker of the PPO Note on September 25, 2015. Subsequently, the remaining $1,250,000 PPO Note balance was paid and we authorized the release of the 2,500,000 shares then remaining in escrow.
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The PPO investor and the Bridge Note purchaser who received the Conversion Shares upon the automatic conversion of the Bridge Note, which occurred simultaneous with the closing of the PPO, were granted, pursuant to the subscription agreement for the PPO and pursuant to the Bridge Note, anti-dilution protection on the shares purchased in the PPO and the Conversion Shares (as the case may be) such that, if within two years after the closing of the Merger, our Company issues additional shares of our Common Stock or Common Stock equivalents (subject to customary exceptions, including but not limited to Exempt Securities (defined below)) for a consideration per share less than $0.50 (the “Lower Price”), the PPO investor and former Bridge Note holder would be entitled to receive fromWarrant Exchange Agreement, the Company additional shares of our Common Stockissued such Holder a new warrant (the “Lower Price Shares”“May 2020 Warrant”) in an amount such that, when added to purchase the number of shares initially purchased by such investor or received upon conversion of the Bridge Note, will equal the number of shares that such investor’s PPO subscription amount would have purchased or the Bridge Note holder would have received upon conversion of the Bridge Note at the Lower Price, respectively. “Exempt Securities” include: (a) options and other equity awards issued under our 2015 Equity Incentive Plan (as discussed below); (b) shares of our Common Stock, options or convertible securities issued pursuant to or in conjunction with a joint venture, development, technology license or similar type of collaboration or strategic partnership agreement; (c) shares issued in the Merger and (d) securities issued to financial institutions, institutional investors or lessors in connection with credit arrangements, equipment financings, lease arrangements or similarly transaction (in each case, subject to a maximum number equal to 10% of thesame number of shares of ourCommon Stock. The May 2020 Warrant has the same expiration date, April 2, 2024, as the April 2019 Warrants, but has an exercise price of $1.80 and does not include the price protection, anti-dilution provisions or other restrictions on Company action from the April 2019 Warrants. Concurrently therewith, such Holder executed and delivered to the Company a leak-out agreement that contained trading restrictions on sales of Common Stock outstanding at the time of issuance); provided, however, no such issuance shall include any type of anti-dilutive “death spiral” provision.
The PPO was exempt from registration under Section 4(2)issued upon exercise of the Securities Act. The sole investorMay 2020 Warrant that are substantially similar to the restrictions on Exchange Shares in the PPO was GEM Global Yield Fund LLC SCS, a “société en commaudite simple” formed underShare Leak-Out Agreement, provided that the laws of Luxembourg (“GEM”). The Bridge Note investor designated GEM as the party to receive the Conversion Shares. GEM was a principal stockholder of our pre-Merger company, and the purchaser of the Bridge Note is the manager of GEM.
The closing of the PPO and the closing of the Merger were conditioned upon each other.
All descriptions herein of the subscription agreement for the PPO, PPO Note and PPO Note Escrow Agreement are qualified in their entireties by referenceleak-out restrictions will only apply to the texts thereof incorporated by reference herein and listed as exhibits hereto.
Adjustment Shares Escrow Agreement
The Merger Agreement provides that, in the event we raise additional capital in a public or private offering (in one or more closings) for gross proceedsfirst 893,750 shares of at least $20 million (a “Qualified Offering”), based on a pre-money valuation of our Company of at least $200 million, within five months of the earlier of the (i) date on which the PPO Note has been fully satisfied and (ii) PPO Note Maturity Date, subject to certain conditions (the “Qualified Offering Trigger Termination Date”), we will issueCommon Stock issued pursuant to the holders of record of our Common Stock as of the Closing Date (the “Pre-Merger Company Stockholders”),pro rata, 1,333,333 additional restricted shares of our Common Stock (the “Qualified Offering Shares”).May 2020 Warrant.
The Merger Agreement further provides that:
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The Pre-Merger Company Stockholders have placed into escrow, (the “Adjustment Shares Escrow Agreement”), 3.5 million shares of our Common Stock (the “Adjustment Shares”) to secure such surrender obligations.
We had the sole authority to determine all matters relating to the Qualified Offering, including the subscription price, pre-money valuation and whether or not to accept any subscriber’s subscription offer. No Qualified Offering occurred by the Qualified Offering Trigger Termination Date and we have sought a return of the Adjustment Shares from escrow. See Item 3 – “Legal Proceedings.”
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Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the United States Securities and Exchange Commission, or the SEC, and all amendments to these filings, are available, free of charge, on our website at www.tymetechnologiesinc.comwww.tymeinc.com as soon as reasonably practicable following our filing of any of these reports with the SEC. You can also obtain copies free of charge by contacting our Investor Relations department at our office address listed above. The public may read and copySEC also maintains a website that contains all the materials we file with, or furnish to, the SEC. Its website is www.sec.gov.
The contents of our website are not incorporated by reference into this Annual Report on Form 10-K or any materialsother document we file with the SEC, at the SEC’s Public Reference Room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintainsand any reference to our website is intended to be an Internet site that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The information posted on or accessible through these websites are not incorporated into this filing.inactive textual reference only.
ITEM 1A. | RISK FACTORS |
ITEM 1A. RISK FACTORS
Our business is subject to numerous risks. You should carefully consider the following risks and all other information contained in this Annual Report, as well as general economic and business risks, together with any other documents we file with the SEC. If any of the following events actually occur or risks actually materialize, it could have a material adverse effect on our business, operating results and financial condition and cause the trading price of our common stock to decline.
INDEX TO RISK FACTORS
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54 | |
58 | |
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Risks Related to Owning Our Stock
Each of our co-founders holds a substantial ownership interest in our Company, which gives them the ability to influence certain decision making and Mr. Hoffman has certain rights to our intellectual property that may allow them to use our IP in ways that could be inconsistent with our use.
Steve Hoffman, our former Chief Science Officer and current director, owned approximately 12.2% of our outstanding common stock as of March 31, 2022. Additionally,MichaelDemurjian,ourformerChiefOperatingOfficer,alsoownedapproximately13.8% of our outstanding common stock as of March 31, 2022. As such, Mr.HoffmanandMr.Demurjianwilleachbepositionedtoexercisesignificantinfluenceoverour Company’s affairs, including, but not limited to, electing members of our Board of directors and exercising influence and voting rights in connection with structural defenses and anti-takeover measures, and fundamental corporate transactions, and they may seek action that may not reflect the best interests of all of the stockholders of ourCompany.
The Company entered into voting agreements with Messrs. Hoffman and Demurjian on March 24, 2022 and April
18, 2022 respectively. Mr. Hoffman agreed to vote all shares of TYME common stock beneficially owned by him in
accordance with the Board’s recommendation with respect to any matter presented to the stockholders for a period
of one year and Mr. Demurjian agreed to do so for a period of two years from the date of the agreement.
Additionally, the Company has granted Mr. Hoffman perpetual, exclusive non-royalty bearing license rights with respect to certain patents and patent applications that the Company uses for SM-88 in all fields other than in connection with the treatment of cancer. Further, in his employment agreement, Mr. Hoffman agreed that all IP he had developed during his employment with us that related to the Company’s or any of its affiliates’ businesses, research and development or existing products (or products under development) or services is the property of the Company, but only with respect to the treatment of cancer in humans and certain other indications. Likewise, Mr. Demurjian agreed that all IP he had developed during his employment with us is the property of the Company, but only with respect to the treatment of cancer in humans.
The license to Mr. Hoffman may limit the Company’s ability to profit from alternative uses of SM-88,weresuchusestobediscovered.Further,theuseofthepatentsorpatentapplicationsthat are used for SM-88 or that otherwise overlap with our IP could be associated with a negative event outside of the control of the Company and outside the treatment of cancer in humans, which, in either case, may have an adverse effect on ourbusiness.
Our share price is likely to be volatile due to factors beyond our control and may drop below prices paid by investors; investors could lose all of their investment in our Company.
All readers of this report should consider an investment in our common stock as speculative, involving a high degree of risk, and invest in our common stock only if the purchaser can withstand a significant loss and wide fluctuations in the market value of an investment. Potential investors should be aware that the value of an investment in our Company may go down as well as up. In addition, there can be no certainty that the market value of an investment in our Company will fully reflect its underlying value.
Investors may be unable to sell their shares of our common stock at or above the price they paid for their shares due to fluctuations in the market price of our common stock arising from factors affecting our drug discovery and development objectives as well as changes in our operating performance or prospects. In addition, the stock market is subject to significant volatility, particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks. The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. Some of the factors that may cause the market price of our common stock to fluctuate include, but are not limited to:
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• | results and timing of our clinical trials and clinical trials of our competitors’products; |
• | the failure or discontinuation of clinical trials in which our product candidates are being studied or of any of our developmentprograms; |
• | limitations on the availability of acceptable-quality clinical supplies or issues in manufacturing our drug candidates, the MPS components or any future drugs we may develop and receive governmental approval tomarket; |
• | regulatory developments or enforcement in the United States and non-U.S. countries with respect to our or our competitors’products; |
• | failure to achieve pricing and reimbursement levels expected by us or themarket; |
• | competition from existing products or new products that mayemerge; |
• | developments or disputes concerning patents or other proprietaryrights; |
• | introduction of technological innovations or new commercial products by us or our competitors; |
• | announcements by us, our collaborators or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations, capitalcommitments or strategic reviews; |
• | changes in estimates or recommendations by securities analysts, to the extent any cover our commonstock; |
• | fluctuations in the valuation of companies perceived by investors to be comparable tous; |
• | public concern over our drug candidates or any future drugs we may develop and receive governmental approval tomarket; |
• | litigation or the threat oflitigation; |
• | future issuances and sales of our commonstock; |
• | share price and volume fluctuations attributable to inconsistent trading volume levelsof ourshares; |
• | additions or departures of key personnel; |
• | changes in the structure of healthcare payment systems in the United States oroverseas; |
• | the failure of our drug candidates, if approved, or any other approved drug product we maydevelop, to achieve commercialsuccess; |
• | economic and other external factors or disasters, military conflicts or widespread health or othercrises; |
• | period-to-period fluctuations in our financial condition and results of operations, including the timing of receipt of any milestone or other payments under commercialization or licensing agreements, ifany; |
• | general market conditions and market conditions for biopharmaceutical stocks;and |
• | overall fluctuations in U.S. equitymarkets. |
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Due to these risks and the other risks described in this report, investors could lose their entire investment in our Company.
Our common stock has historically been characterized by low and/or erratic trading volume, and the intraday per share price of our common stock has fluctuated from $0.28 to $2.02 between April 1, 2021 and March 31, 2022, the date of our last completed fiscal year.
As of July 31, 2017, our common stock became quoted on the Nasdaq Capital Market under the symbol “TYME.” Historically, the public market for our common stock has been characterized by low and/or erratic trading volume, often resulting in price volatility. For the fiscal year ended March 31, 2022, the average daily trading volume for our common stock was approximately 2,883,757 shares. In addition, the price of our common stock has been volatile. Our common stock had a closing price of $1.87 on April 1, 2021, and ended fiscal year 2022 at a closing price of $0.35. During the fiscal year 2022, our common stock had a low closing price of $0.28, which occurred on March 14, 2022 and March 15, 2022, and had a high closing price of $1.87, which occurred on April 1, 2021.
The market price of our common stock is subject to wide fluctuations due to a number of factors, including the results of preclinical and clinical testing of our products under development, our strategic plans regarding product development, decisions by collaborators regarding product development, regulatory developments, market conditions in the pharmaceutical and biotechnology industries, announcements concerning our competitors, adverse developments concerning proprietary rights, public concern as to the safety or commercial value of any products, impacts of public health crises, including the ongoing COVID-19 pandemic, and general economic conditions, many of which we cannot control.
Furthermore, the stock market has experienced significant price and volume fluctuation unrelated to the operating performance of particular companies. These market fluctuations can adversely affect the market price and volatility of our common stock.
We may be unable to regain and maintain compliance with Nasdaq continued listing requirements, which could cause our common stock to be delisted from Nasdaq. This could result in the lack of a market for our common stock, cause a decrease in the value of an investment in us, and adversely affect our business, financial condition, and results of operations.
Our common stock is currently listed on The Nasdaq Capital Market. To maintain the listing of our common stock on The Nasdaq Capital Market, we are required to meet certain listing requirements, including, among others, a minimum closing bid price of $1.00 per share.
On December 22, 2021, the Company received notice from Nasdaq that the closing bid price for our common stock had been below $1.00 per share for the previous 30 consecutive business days, and that we are therefore not in compliance with the minimum bid price requirement for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (“Rule 5550(a)(2)”). Nasdaq’s notice has no immediate effect on the listing or trading of our common stock on The Nasdaq Capital Market.
The notice indicates that we will have 180 calendar days, until June 20, 2022, to regain compliance with this requirement. We can regain compliance with the $1.00 minimum bid listing requirement if the closing bid price of our common stock is at least $1.00 per share for a minimum of ten (10) consecutive business days during the 180-day compliance period.
If the Company does not regain compliance during the initial compliance period, we may be eligible for an additional 180 day period to regain compliance. To qualify, we would be required to meet the continued listing requirement for market value of our publicly held shares and all other Nasdaq initial listing standards, with the exception of the minimum bid price requirement under Rule 5550(a)(2), and we would need to provide written notice to Nasdaq of our intention to cure the deficiency during the second compliance period. If it appears to Nasdaq that we will not be able to cure the deficiency, or if we are otherwise not eligible, we expect that Nasdaq will notify us that our common stock will be subject to delisting. We will have the right to appeal a determination to delist our common stock, and our common stock would remain listed on The Nasdaq Capital Market until the completion of the appeal process.
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A delisting of our common stock could negatively impact us by, among other things, reducing the liquidity and market price of our common stock and reducing the number of investors willing to hold or acquire shares, which would further restrict our ability to obtain equity financing. A suspension or delisting could also adversely affect our reputation, our relationships with our business partners and suppliers, which would have a material, adverse impact on our business, operating results and financial condition. In addition, a suspension or delisting would impair our ability to raise additional capital through equity or debt financing as well as our ability to attract and retain employees by means of equity compensation.
As of the date hereof, we had not regained compliance with Rule 5550(a)(2). While the Company intends to seek an additional period beyond June 20, 2022 to regain compliance and to regain compliance during such additional compliance period, there can be no assurance that we will be able to do so, or to maintain compliance with any other Nasdaq continued listing requirement.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish substantial rights.
Until such time, if ever, as we can generate substantial revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, grants and licensing and development agreements in connection with any collaborations. We do not have any committed external source of funds and no revenue source. To the extent that we raise additional capital through the sale of equity, equity-linked securities or convertible debt securities, as we expect we will, then outstanding stockholders’ ownership interests in our Company will be diluted and the terms of these new securities may include liquidation or other preferences that adversely affect rights of holders of our common stock. For example, as further described above in Item 1 of this Annual Report on Form 10-K under the caption “Collaboration with Eagle,” in January 2020, we entered into a securities purchase agreement with Eagle, pursuant to which Eagle would be required, upon the Company’s achievement of certain milestone events, to purchase Series A Preferred Stock of the Company that is convertible into common stock, which, upon conversion, if any, would result in additional dilution. Debt financing, if available at all, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. We cannot give any assurance that we will be able to obtain additional funding if and when necessary or on satisfactory terms. If we are unable to obtain adequate financing on a timely basis, we could be required to delay, scale back or eliminate one or more of our development programs or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Future issuances of our common stock or rights to purchase our common stock pursuant to our equity incentive plan or outstanding options and warrants could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.
We are authorized to grant equity awards, including stock grants and stock options, to our employees, directors and consultants, covering up to 12.5% of our shares of common stock outstanding from time to time pursuant to our 2015 Equity Incentive Plan, as amended (the “2015 Plan”) and up to 5,750,000 shares of our common stock, pursuant to our amended and restated 2016 Director Plan (the “2016 Director Plan”). Future issuances, as well as the possibility of future issuances, under our 2015 Plan or 2016 Director Plan or other equity incentive plans could cause the market price of our common stock to decrease.
Investors may experience dilution of their ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.
In the future, to raise needed financing, we are likely to issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our stockholders at the time of such issuances. We are authorized to issue an aggregate of 300,000,000 shares of common stock and 10,000,000 shares of “blank check” preferred stock. We also have an effective “shelf” registration statement on Form S-3 that allows us to issue securities in registered offerings as well as an available ATM financing facility that allows us to sell shares of our common stock through a placement agent at market prices. We may issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining
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employees, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes. The future issuance of any such additional shares of our common stock may create downward pressure on the trading price of our common stock. We will need to raise additional capital in the near future to meet our working capital needs, and we regularly evaluate our capital needs and available sources of financing. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at a price (or exercise prices) below the price a stockholder at the time of such securities issuance paid for such stockholder’s stock.
The ability of our Board to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of our Company. Our Board is authorized to issue up to 10,000,000 shares of preferred stock with powers, rights and preferences designated by it. On January 7, 2020, the Board designated and reserved 10,000 shares as Series A Preferred in connection with the Eagle SPA (as further described above in Item 1 of this Annual Report on Form 10-K under the caption “Collaboration with Eagle”). Shares of Series A Preferred or other voting or convertible preferred stock could be issued or rights to purchase such shares could be issued, to create voting impediments or to frustrate persons seeking to affect a takeover or otherwise gain control of our Company. The ability of our Board to issue such additional shares of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of our Company by tender offer or other means. Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price that such an attempt could cause. Moreover, the issuance of such additional shares of preferred stock to persons friendly to our Board could make it more difficult to remove incumbent managers and directors from office even if such change were to be favorable to stockholders generally.
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.
The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us and our business. Securities and industry analysts may choose not to publish research on our Company. If an insufficient number of securities or industry analysts provide coverage of our Company, the trading price for our stock would likely be negatively impacted. If one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our stock price would likely decline. Further, if one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our corporate charter and our by-laws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board. Because our board is responsible for appointing the members of our management team, these provisions could, in turn, affect any attempt by our stockholders to replace current members of our management team. Among others, these provisions:
• | establish a board of directors having three classes of directors with a three-year term of office that expires as to one class each year, commonly referred to as a “staggered board”; |
• | limit the manner in which stockholders can remove directors from our Board; |
• | exclusively empower the Board to fill any and all vacancies on the Board; |
• | authorize the board of directors to exclusively have the power to change and set the size of the board of directors; |
• | limit who may call stockholder meetings; |
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• | include advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and for nominations to our Board, which include, among other things, requirements for proposing stockholders to disclose information about derivative or short positions; and |
• | authorize our Board to issue, without stockholder approval, shares of preferred stock; such ability to issue previously undesignated preferred stock makes it possible for our Board to establish a “poison pill” and issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. |
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. However, in connection with entering into a securities purchase agreement between the Company and Eagle in January 2020, the Board agreed to waive the provisions of Section 203 to the extent it is or could become applicable to Eagle.
Additionally, our by-laws to provide that the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) will be the exclusive forum for actions or proceedings for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of fiduciary duty owed to the Company or its stockholders; (iii) any action asserting a claim against us arising under the Delaware General Corporation Law, the Company’s certificate of incorporation, or the Company’s by-laws; or (iv) any action asserting a claim against the Company that is governed by the internal affairs doctrine. Our by-laws further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
We do not anticipate paying dividends on our common stock.
Cash dividends have never been declared or paid on our common stock and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, our stockholders will likely not receive any funds absent a sale of their shares of our common stock. If we do not pay dividends, our common stock may be less valuable because a return on an investment in shares of our common stock will only occur if our stock price appreciates. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment.
Risks Related to Our Business and the Development, Regulatory Approval, and Commercialization of Our DrugProduct Candidates.
The novel coronavirus (COVID-19) and its impact on business and economic conditions could adversely affect our business, results of operations and financial condition, and the extent and duration of those effects will be uncertain.
We continue to monitor the effect of the novel strain of coronavirus, COVID-19, which has spread worldwide and has caused significant disruptions due to the pandemic and efforts to mitigate it. We may continue to experience disruptions because of the COVID-19 pandemic that could impact our business. These disruptions may be made more likely to occur or may be exacerbated the longer the crisis continues:
In particular, our clinical trials will likely continue to be affected by the pandemic. Site initiation, participant recruitment and enrollment, participant dosing, distribution of clinical trial materials, study monitoring, data analysis, dissemination of product information and regulatory review have been disrupted and may be paused or delayed due to changes in hospital or university policies, federal, state or local regulations, prioritization of hospital resources toward pandemic efforts, or other reasons related to the pandemic.
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Although many pandemic-related restrictions have been loosened, COVID-19 continues to evolve and counter measures have also changed and been re-imposed from time to time. Should this continue or should government countermeasures become more restrictive, our business operations, results of operations and financial condition may further be affected as follows:
• | The continuation of the coronavirus pandemic may adversely impact our operations and risk a delay, default and/or nonperformance under existing agreements, which may increase our costs. These cost increases may not be fully recoverable or adequately covered by insurance. |
• | Our supply chain may be disrupted, limiting our ability to manufacture our product candidates for our clinical trials and research and development operations, if our third party suppliers are adversely impacted. |
• | Our business may experience a material economic effect due to the additional work and resource demands for our employees and vendors. |
• | Our ability to file on a routine and timely basis our periodic reports or other filings under federal securities or other laws and regulations may be adversely impacted. |
• | Our business may experience a material economic effect. Our ability to access capital either at all or on favorable terms may be reduced. In addition, a recession, depression or other sustained adverse market event resulting from the spread of the coronavirus could materially and adversely affect our business and the value of our common stock. |
The ultimate impact of the current pandemic, or any other health epidemic, is highly uncertain and subject to change. The extent to which the coronavirus further impacts our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted. We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, our research programs, healthcare systems or the global economy as a whole. Management will continue to monitor the situation closely and implement business continuity and emergency response plans as needed.
Our proprietary lead combination drug product, SM-88, is in the early stages of clinical development.development in two principal areas. We are currently finalizing our regulatoryparticipating in the advancement of clinical trials for breast cancer and drug development program for SM-88 and working towards the initiation of our first phase IIsarcoma. We are considering additional clinical trial.trials in other solid tumors and/or hematologic malignancies. Clinical drug development is expensive, time-consuming and uncertain, and we may ultimately not be able to obtain regulatory approval for the commercialization of our lead candidate.
The risk of failure for drugs in clinical development is high and it is impossible to predict whenwhether our lead drug candidate for the treatment of cancer, SM-88, will prove safe and effective or safefor use in humans or if it will receive regulatory approval.
The research, testing, manufacturing, labeling, approval, selling, marketing and distribution of drug products are subject to extensive regulation by the FDA, theEuropean Medicines Agency (the “EMA”), EMA, national competent authorities in Europe and other non-U.S. regulatory authorities, which establish regulations that differ from country to country. We are not permitted to market SM-88 and any other drug product we may develop in the U.S.United States or in other countries until we receive approval of a New Drug Application (“NDA”)an NDA from the FDA or marketing approval from applicable regulatory authorities outside the U.S.United States. Since SM-88 is in the early stages ofclinical development, it is subject to the risk of failure inherent in the drug development process. We have limited experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA or EMA. Obtaining approval of aan NDA or a Marketing Authorization Application (“MAA”)an MAA can be a lengthy, expensive and uncertain process.process, and we may experience delays as an impact of COVID-19. In addition, failure to comply with the FDA, EMA and/or other non-U.S. regulatory requirements prior to or following regulatory approval, could subject our Company to administrative or judicially imposed sanctions, which include, but are not limited to:
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| refusal to approve pending NDAs or supplements to approved NDAs in the |
The FDA, EMA and other non-U.S. regulatory authorities also have substantial discretion in the drug approval process. Generally, the number of nonclinical and clinical trials that will be required for regulatory approval varies depending on the drug candidate, the disease or condition that the drug candidate is designed to address and the regulations applicable to any particular drug candidate. Regulatory agencies can delay, limit or deny approval of a drug for many reasons, which include, but are not limited to:
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| mortality rates in clinical trials for drug candidates such as SM-88 are shown to be numerically higher, given the fact that subjects are being treated for late stage |
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| regulatory agencies may not find the data from nonclinical and clinical trials sufficient or well-controlled; |
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| regulatory agencies might not approve or might require changes to manufacturing processes or facilities; and |
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| regulatory agencies may change their approval policies or adopt new regulations. |
Any delay in obtaining or failure to obtain, required approvals could materially adversely affect our ability to generate revenue from SM-88, which would likely result in significant harm to our financial position and adversely impact our share price. Furthermore, any regulatory approval to market SM-88 may be subject to limitations on the indicated usesindications for use for which we may market the drug.drug or to restrictions or post-approval commitments that render SM-88 not commercially viable. These limitations may limit the size of the market for SM-88 and any other drug product we may develop.
We have no history of conductinglimited experience with completing large-scale or pivotal phasePhase II or III clinical trials, obtaining FDA approvals or commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our future viability.viability or could result in delays or the failure to obtain required regulatory approval of our products.
OurAlthough some members of our management team have experience in creating, seeking approval and marketing various products, our operations to date have been limited to financing and staffing our Company, developing our technology platform, SM-88, TYME-19 and our other potentialdrug candidates, conductingour small-scale completed Phase
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I or Phase II clinical trials for our drug candidates, and conducting a limited phase I clinical trialinitiating or partnering to initiate pivotal trials for SM-88. We have not yet developedinitiated our commercialization strategy and marketing plan. In additional, our executive team has no prior experience in obtaining regulatory approval forAccordingly, as a drug or commercializing an approved drug. Accordingly,company, we have not had experience completing a large-scale or pivotal clinical trial (whether phasePhase II, III, or otherwise), obtaining marketing approval, manufacturing product on a commercial scale or conducting sales and marketing activities. If a product candidate is approved, we will need to transition from a company with a research and development focus to a company capable of supporting successful commercial activities. We may not be successful in any step in such a transition. Consequently, predictions 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.
Moreover, this lack of experience could result in delays in obtaining necessary regulatory approvals, both in conducting clinical trials and final marketing approvals; additional costs; and the possibility that approvals will not be obtained due to the failure to comply with the regulatory approval process. Such delays, costs and/or failure would likely adversely affect our business, financial condition and results of operations and could possibly cause us to cease our operations in their entirety.
If we are unable to identify, recruit and retain enough qualified patients for our clinical trials, it could delay or prevent development of our drug candidates and adversely affect our future business prospects.
The timing and length of our clinical trials depends in part on the speed at which we can identify and recruit patients to participate in clinical trials of our product candidates. SM-88 is currently being studied in two investigator-initiated clinical trials, including the Phase II OASIS trial for SM-88 in patients with metastatic HR+/HER2- breast cancer, for which patient enrollment commenced in 2021. Difficulties with enrollment or finding eligible patients and retaining them may cause delays in current and future clinical trials. If patients are unwilling or unable to participate or remain in our clinical trials due to any negative publicity in the industry, interest in trials for other third-party product candidates, or for other reasons, including fears or restrictions related to the COVID-19 pandemic, our clinical trials could be delayed or terminated.
We or our clinical trial sites may not be able to identify, recruit, enroll and retain enough patients, or those with the required or desired characteristics in a clinical trial, to complete our clinical trials in a timely manner. Patient enrollment is affected by factors including the design of clinical trial protocols, size of patient populations, eligibility criteria, proximity and availability of clinical trial sites, perceived risks and benefits of the product candidate under study, and other factors. If we have difficulty enrolling and retaining enough patients to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which could have an adverse effect on our business. For example, due in part to COVID-19, we experienced slower-than-expected enrollment in our TYME-88-Panc trial, which we have since discontinued.
If clinical trials for SM-88our drug candidates are prolonged, delayed or stopped, we may be unable to obtain regulatory approval and commercialize our drug on a timely basis, which would require us to incur additional costs and delay revenue.
All our current drug candidates are in clinical development. We conducted several Phase I and Phase II trials for SM-88. We are collaborating with Georgetown University to support a Phase II trial, OASIS, to study effects of SM-88 in breast cancer. SM-88 is also being studied in the early stagesan open label Phase II investigator-sponsored trial, HoPES, to study SM-88 therapy in sarcoma. The successful completion of development. We are working towards conducting our first phase II clinicalthese and future trials and their initiation iswill be subject to numerous factors that can cause interruptions or delays, many of which may be beyond our control. For example, we also partnered with PanCAN to study SM-88 in an adaptive randomized Phase II/III trial with registration intent known as Precision Promise. In January 2022, we announced the discontinuation of the Precision Promise trial upon learning that the trial sponsor had discontinued the SM-88 arm due to futility. Should we experience any interruption, delay, or delay,discontinuation of our futurecurrent trials, our plans and expected future revenue could be adversely affected and could result in our inability to continue our operations.
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The commencement of these planned trials could be substantially delayed or prevented due to several factors, which include but are not limited to:
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Additionally, manyMany factors could substantially delay or prevent the timely completion of our planned clinical trials, due to several factors, which include, but are not limited to:to the following:
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| inability or unwillingness of subjects or clinical investigators to comply with clinical trial procedures; |
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Changes in regulatory requirements and guidance may also occur and we may need to significantly amend ongoing clinical trial protocols or revise planned prospective clinical trial protocols to reflect such changes mandated by regulatory authorities. Amendments may require us to renegotiate terms with CROs or clinical trial sites or to resubmit clinical trial protocols and other documents to IRBs or IEUsIECs for re-review, which may impact the costs, timing or successful completion of a clinical trial. Our clinical trials may be suspended or terminated at any time by the FDA, the EMA, other regulatory authorities or the IRB/IEC overseeing the clinical trial, due to a number of factors, which include, but are not limited to:
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| lack of adequate funding to continue the clinical trial due to higher or additional unforeseen costs or other business decisions; and |
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| upon a breach or pursuant to the terms of any agreement with or for any other reason by, current or future collaborators that have responsibility for the clinical development of SM-88. |
Any failure or significant delay in clinical and regulatory development plans for SM-88current or any otherfuture drug candidate we may pursuecandidates would likely adversely affect our ability to obtain regulatory approval for the drug and would diminish our ability to generate revenue.
The results of previous clinical trialsstudies may not be predictive of future results, our progress in future trials for one drug candidate may not be indicative of progress in trials for other drug candidates and the results of our current and planned clinical trials may not satisfy the requirements of the FDA, the EMA or other non-U.S. regulatory authorities.
We currently have no products approved for sale and we cannot guarantee that we will ever have marketable products. Before obtaining marketing approval from regulatory authorities any sale of SM-88. WeSM-88, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our drug in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and has a risk of uncertainty as to its outcome.
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Clinical failure can occur at any stage of clinical development and the outcome of early clinical trials may not be predictive of the success of later clinical trials. Additionally, interim results of a clinical trial do not necessarily predict final trial results. In addition, nonclinical and clinical data are often susceptible to varying interpretations and analyses. In this regard, many companies that have believed their drug performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval of their products from regulatory organizations.
Furthermore, changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application.
Drug candidates that have shown promising results in early clinical trials (such as our FIH study) and compassionate use programs (such as our Compassionate Use Patients) may still suffer significant setbacks in subsequent registration clinical trials. A number ofFor example, despite promising results in prior trials in pancreatic cancer, the Phase II/III trial with registrational intent, Precision Promise, was discontinued due to futility in January 2022. Many companies in the pharmaceutical industry, including those with greater resources and experience than us,TYME, as well as those that have conducted large-scale clinical trials under an IND (in contrast to our limited number of FIH study patients and Compassionate Use Patients, all of whom were treated outside of an IND approved clinical trial) have suffered significant setbacks in advanced clinical trials, even after obtaining promising results in earlier clinical trials. In light of these factors, and the fact that our dosage and method of delivery from our FIH study and Compassionate Use Patients differ from our current clinical trials, and may differ from future clinical trials, no assurance can be given that our ongoing or future clinical trials may produce results similar to our FIH study or those experienced by Compassionate Use Patients.
We may, from time to time, publish interim or preliminary data from our clinical trials. Adverse changes from the published data from our FIH study, Compassionate Use Patients, and interim data to the final data obtained from our future clinical trials could harm our business prospects. In the 30 patients who received SM-88 in our FIH study, treatment-related AEs were reported in all participating patients, of which hyperpigmentation was the only consistent, lasting AE. The most common treatment-related AEs were hyperpigmentation (100%), mild transient fatigue (57%), and mild transient pain (13%). Many of these patients who were treated with SM-88 were late-stage cancer patients with one or more previous treatments or existing medical conditions, which can cause AEs unrelated to SM-88. Patients may also report additional AEs that have not yet been previously experienced or otherwise predicted. Patients who will be administered SM-88 in our clinical trials are, or may be, seriously ill and as more patient data becomes available, there is a risk that future clinical outcomes may materially differ from interim or preliminary data, FIH study data or Compassionate Use Patient data. Any negative material changes could have an adverse effect on our business and product development efforts.
Clinical trials may also produce negative or inconclusive results and we may decide to, or regulators may require us to, conduct additional clinical or nonclinical testing. We will be required to demonstrate with substantial evidence through well-controlled clinical trials that SM-88 isany of our drug candidates are safe and effective for use in diverse populations before we can seek regulatory approvals for its commercial sale.
In addition, the design of a clinical trial can determine whether its results will support approval of a drug. Flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. We may be unable to design and execute a clinical trial to support regulatory approval in general, or in an efficient manner given our limited resources.
In some instances, there may be significant variability in safety and/or efficacy results between different trials of the same drug due to numerous factors, including amendment to trial protocols, variability in size and type of the patient populations, adherence to the dosing regimen and other trial procedures and the rate of dropout among clinical trial subjects. We do not know whether any of the clinical trials in our current development plans will demonstrate consistent or adequate efficacy and safety to obtain regulatory approval to market SM-88,our drug candidates, and we may need to further refine or redesign our combination drug candidate formula or modify production methodology based on such clinical trials, each of which could result in delays in the regulatory approval process.
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There is always the possibility that SM-88none of our drug candidates gain regulatory approval if they do not achieve their primary endpoints in its clinical trials, and other factors, such as product safety or nonclinical registration requirements, may not gainprevent such drug candidates from gaining regulatory approval even if it achieves its primary endpoints in its phase III clinical trials, which may only be initiated if we are successful in complying with all regulatory requirements necessary to commence phase III clinical trials.
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endpoints. The FDA, the EMA or other non-U.S.global regulatory authorities may disagree with our trial design and/or our interpretation of data from nonclinical and clinical trials. In addition, any of these regulatory authorities may change requirements for the approval of a drug even after reviewing and providing comments or advice on a protocol for a clinical trial. In addition, any of these regulatory authorities may also approve a drug for fewer or more limited indications than requested or may grant approval that is contingent on the performance of costly post-marketing clinical trials. Further, the FDA, the EMA or other non-U.S. regulatory authorities may not accept the proposed labeling or labeling claims that we believe would be necessary or desirable for the successful commercialization of SM-88.our drug candidates.
Even if SM-88 obtains regulatory approval, it could be subjectPreclinical development programs and preclinical mechanism research activities are uncertain. Our preclinical programs and activities may experience delays or may never advance to continual regulatory review.
If marketing authorization is obtained for our lead drug candidate, SM-88, the drug could continue to be under review by regulatory authorities. As a result, authorization could be subsequently withdrawn or restricted at any time for a number of reasons, including safety issues. We will be subject to ongoing obligations and oversight by regulatory authorities, including adverse event (AE) reporting requirements, marketing restrictions and, potentially, other post-marketing obligations, all ofclinical trials, which may result in significant expense and limitwould adversely affect our ability to successfullyobtain regulatory approvals or commercialize these programs on a timely basis or at all.
We are conducting a range of preclinical experiments with external CROs and academic partners to more fully understand and illustrate the mechanism of action of SM-88 in oncology and have recently expanded our activity in this area through a biomarker initiative. However, it is unknown if the impact of SM-88 on processes studied in cultured cells or animal models would be replicated in humans or provide a clinical benefit. The FDA is interested in understanding the general biologic properties of SM-88, and there is a risk that the results produced by our planned preclinical activities might not satisfy their requirements to support a regulatory approval. Therefore, additional activity may be required to address the FDA’s questions, or we might not be able to effectively address these questions.
In addition to SM-88, we are researching other drug product.
If there are changes in the application of legislation or regulatory policies or if problems are discovered with SM-88 or our manufacturer(s) or ifplatforms, such as TYME-18 and TYME-19. Before we or one of our distributors, licensees or co-marketers fails to comply with regulatory requirements, the regulators could take various actions. These include imposing fines on us, imposing restrictions on the drug or its manufacture and requiring us to recall or remove the drug from the market. The regulators could also suspend or withdraw our marketing authorizations, requiring us to conduct additionalcan commence human clinical trials change our drug labeling or submit additional applications for marketing authorization. If anya product candidate, we must complete extensive preclinical testing. Preclinical development is highly speculative and carries a high risk of these events occurs, our abilityfailure. Preclinical studies and early-stage clinical trials are primarily designed to sell SM-88test safety, to study pharmacokinetics and pharmacodynamics, to understand the side effects of product candidates at various doses and schedules, and may be impaired and we may incur substantial additional expensenot advance to comply with regulatory requirements, which could adversely affect our business, financial condition andlater-stage clinical trials. Furthermore, the results of operationspreclinical studies and early-stage clinical trials may not be predictive of the valuefuture results of our share price.later-stage, large scale efficacy clinical trials.
We may not be successful in our efforts to use and expand our technology platform to build a pipeline of drugproduct candidates.
A key element of our business strategy is to further develop and expand our technology platform so that we can build a steady pipeline that we ultimately hope will be successful in the treatment of a variety of cancers, as well as other diseases that affect health and quality of life.diseases. However, we may not be able to develop and obtain approval to market our drugs if regulators do not conclude that they are safe and effective. Furthermore, the potential drugproduct candidates that we discover may not be suitable for further clinical development, whether due to the potential that they produce harmful adverse effects or possess other characteristics that indicate that they are unlikely to receive marketing approval and/or market acceptance. In addition, unexpected technical issues involving such product candidates could be encountered that could cause the products to be prohibitively too expensive to manufacture and market. If we do not continue the steady development and commercialization of products utilizing our technology platform, we will face difficulty in achieving increased revenues in future periods, which could result in significant harm to our financial position and adversely affect our share price.
We have filed patents relating to additional drug candidates based on our technology platform. However, to date, theThe FDA and other regulatory authorities have not approved products that utilize this technology platform.
In the future, we plan to develop additional drugproduct candidates based on our proprietary technology platform. This platform incorporates novel technologies and methods and actions. Since regulators have not yet approved such a platform, the approval of the drugproduct candidates in our pipeline is less certain than approval of drugs that do not employ such novel technologies or methods of action. We intend to work closely with the FDA, the EMA and other non-U.S. regulatory authorities to perform the requisite scientific analyses and evaluation of our methods to obtain regulatory approval for these future drugproduct candidates. For example, final assays and specifications of our future drug candidates have yet to be developed and the FDA, EMA or other non-U.S. regulatory authorities may require additional analyses to evaluate this aspect of our technology. It is possible that the validation process may take time and significant expenditures of resources, require independent third-party analyses or not be accepted by the FDA, the EMA and other non-U.S. regulatory authorities. Delays or failure to obtain regulatory approval of any of our future drug product
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candidates could adversely affect our business prospects and the value of our share price.
Even if we obtain marketing approval for SM-88one or more of our drug candidates in a major pharmaceutical market such as the U.S.United States or Europe, we may never obtain approval or commercialize in other major markets, which would limit our ability to realize the drug’s full market potential.
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In order to market any products in a country or territory, we must establish and comply with numerous and varying regulatory requirements of such countries or territories regarding safety and efficacy. Clinical trials conducted in one country may not be acceptable for review by regulatory authorities in other countries and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval procedures differ among countries and can involve additional testing and validation as well as varying administrative review periods. Seeking regulatory approvals in multiple countries could result in significant delays, difficulties and costs and may require additional nonclinical or clinical trials, which would be costly and time-consuming or even delay or prevent the introduction of SM-88our drug candidates in those countries. In addition, our failure to obtain regulatory approval in one country may delay or have negative effects on the process for regulatory approval in other countries. We do not have any drug candidates approved for sale in any jurisdiction, including international markets and we therefore do not have experience in obtaining regulatory approval. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, our target market will be reduced and our ability to create shareholderstockholder value for SM-88from our drug candidates will be harmed.
In the U.S.,United States, we may seek fast track or breakthrough designation for SM-88.SM-88 or other drug candidates. There is no assurance that the FDA will grant either designation and even if it does, such designation may not actually lead to a faster development process, regulatory review or ultimate approval compared to conventional FDA procedure. Any achievement of fast track or breakthrough designation for SM-88 would not increase the likelihood that SM-88our drug candidates will receive marketing approval in the U.S.
The fast track program, a provision of the FDA Modernization Act of 1997, is designed to facilitate interactions between a sponsor and the FDA before and during submission of a NDA for an investigational agent that, alone or in combination with one or more drugs, that is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need for that disease or condition. Under the fast track program, the FDA may consider reviewing portions of a marketing application before the sponsor submits the complete application, if the FDA determines, after a preliminary evaluation of the clinical data, that a fast track drug may be effective. A fast track designation provides the opportunity for more frequent interactions with the FDA and could make the drug eligible for priority review if supported by clinical data at the time of submission of the NDA.
The FDA is authorized to designate a new drug as a breakthrough therapy if it finds that the drug is intended, alone or in combination with one or more drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For products designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Products designated as breakthrough therapies by the FDA are also eligible for accelerated approval.
United States.
The FDA has broad discretion whether or not to grant fast track or breakthrough designation.designation, which are further discussed under the captions “Fast Track Program” and “Breakthrough Therapy Approvals” in Item 1 of this Annual Report on Form 10-K. Accordingly, even if we believe SM-88 or any other drug candidate meets the criteria for fast track or breakthrough designation, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of fast track or breakthrough designation for a drug candidate may not result in a faster development process, review or approval compared to drug candidates considered for approval under conventional FDA procedures and, in any event, does not assure ultimate approval by the FDA. The FDA may even withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program. Further, in connection with fast track designation, we may be required to provide government regulators with additional manufacturing and production information, some of which we may not be able to provide in a timely manner andor to the extent required by such regulators.regulators, in particular because we are using contract manufacturers.
ShouldAlthough we choose to pursuehave obtained orphan drug designation from the FDA for SM-88 as a potential treatment for patients with pancreatic cancer, we may be unable to obtain orphan drug designation or exclusivity for SM-88 or any other drug candidate we may develop. If our competitors instead are able tocan obtain orphan drug exclusivity for their products in the same indications for which we are developing SM-88 orof any other drug candidate we may develop, we may be at a competitive disadvantage and may not be able to have our products approved by the applicable regulatory authority for a significant period of time, if at all. Conversely, if we obtain orphan drug exclusivity for SM-88 or any other drug we may develop,In addition, we may not be able to fully benefit from the associated marketing exclusivity.exclusivity of SM-88’s orphan drug designation or for any other drug we develop that is granted that designation.
RegulatoryAs further described under the captions “Orphan Drug Designation” in Item 1 of this Annual Report on Form 10-K, regulatory authorities in some jurisdictions, including the U.S.United States and Europe, may designate drugs for relatively small patient populations as orphan drugs. UnderIn July 2020, the Orphan Drug Act,Company received from the FDA may designateorphan drug designation for SM-88 as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annuallypotential treatment for patients with pancreatic cancer, however, we do not currently have any active clinical trials in the U.S. In the European Union, the European Commission may designate a drug candidate as an orphan medicinal drug if it is a medicine for the diagnosis, prevention or treatment of life-threatening or very serious conditions that affects not more than five in
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10,000 persons in the EU or it is unlikely that marketing of the medicine would generate sufficient returns to justify the investment needed for its development. Ifpancreatic cancer. Nonetheless, SM-88, or any other drug candidate we may develop were to receivethat receives orphan drug designation, we still may not have market exclusivity in particular markets. There is no assurance we will be able to receive orphan drug designation for SM-88 or any other drug candidate we are developing or may develop. Associated marketing exclusivity for SM-88 or another drug candidate for which we may receive orphan drug designation may not effectively protect it from competition because that exclusivity can be suspended under certain circumstances. Further, the granting of a request for orphan drug designation does not alter the standard
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regulatory requirements and process for obtaining marketing approval.
Generally, if a drug candidate with an orphan drug designation receives the first marketing approval for the indication for which it has such designation, the drug is entitled to a period of marketing exclusivity, which, subject to certain exceptions, precludes the FDA from approving the marketing application of another drug for the same indication for that time period or precludes the EMA and other national drug regulators in the EU, from accepting the marketing application for another medicinal drug for the same indication. The applicable period is seven years in the U.S. and ten years in the EU. The EU period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. In the EU, orphan exclusivity may also be extended for an additional two years (i.e., a maximum of 12 years’ orphan exclusivity) if the drug is approved based on a dossier that includes pediatric clinical trial data generated in accordance with an approved pediatric investigation plan. Orphan drug exclusivity may be lost in the U.S. if the FDA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.
Even if we obtain orphan drug exclusivity for SM-88, or any other drug candidate we may develop, that exclusivity may not effectively protect the drug from competition because exclusivity can be suspended under certain circumstances. In the U.S., even after an orphan drug is approved, the FDA can subsequently approve another drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. In the EU, orphan exclusivity will not prevent a marketing authorization from being granted for a similar drug in the same indication if the new drug is safer, more effective or otherwise clinically superior to the first drug or if the marketing authorization holder of the first drug is unable to supply sufficient quantities of the drug.
SM-88TYME-18, TYME-19 or any other drug product we may develop may have serious adverse, undesirable or unacceptable side effects, which may delay or prevent marketing approval. If such side effects are identified during the development of SM-88 or any other druga product candidate we may develop or following such drug product’scandidate’s approval, if any, we may need to abandon our development of SM-88 or such other drug product candidate, the commercial profile of any approved label may be limited and/or we may be subject to other significant negative consequences following marketing approval, if any.
Although SM-88 and any otherour drug products we may developcandidates will undergo safety testing to the extent possible and agreed to with regulatory authorities, not all adverse effects of drugs can be predicted or anticipated. SM-88, our proprietary combination drug product, is based on a mechanism designed to utilize oxidative stress, among other techniques, to selectively kill cancer cells, yet is powerful and could lead to serious side effects that we can only discover in clinical trials. Unforeseen side effects from SM-88 or anyour other drug product we may developcandidates could arise either during clinical development or, if such side effects are sporadic, after it has been approved by regulatory authorities and the approved drug has been marketed, resulting in the exposure of additional patients. While our proof-of-concept clinical trialtrials to date for SM-88 have generally demonstrated a favorable safety profile, the results from future trials of SM-88 may not confirm these results. Any new therapy to kill cancer tumors is risky and may have unintended consequences. We have not fully demonstrated that SM-88 or our other drug candidates is safe in humans and we may not be able to do so.
Furthermore, we are initially developing SM-88 for patients with cancer for whom no other therapies have succeeded and survival times are frequently short. Therefore, we expect that certain subjects may die during the clinical trials and it may be difficult to ascertain whether such deaths are attributable to the underlying disease, complications from the disease, SM-88 or a combination of such factors.
The results of future clinical trials may show that SM-88one of our drug candidates causes undesirable or unacceptable side effects, which could interrupt, delay or halt our clinical trials and result in delay of or failure to obtain, marketing approval from the FDA, the European Commission and other non-U.S. regulatory authorities or result in marketing approval from the FDA, the European Commission and other non-U.S. regulatory authorities with restrictive label warnings or potential drug liability claims.
If SM-88 or anyour other drug candidate we may developproduct candidates receives marketing approval and it is later identified as undesirable or has unacceptable side effects, we are at risk for the following actions:
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| regulatory authorities may require us to take |
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| regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; |
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| regulatory authorities may require post-market clinical trials to assess possible serious risks associated with |
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| we may be required to change the way |
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| we may be subject to limitations on how we may promote |
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| sales of |
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| we may be subject to litigation or drug liability claims; and |
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| our reputation may suffer. |
Any of these events could prevent us from achieving or maintaining market acceptance of SM-88 or such other drug productcandidates or could substantially increase commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenue from the sale of such drug product.
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Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval and commercialization of our product candidates and may affect the prices we obtain. Our successful commercialization will depend in part on the extent to which governmental authorities and health insurers establish adequate coverage, reimbursement and pricing policies.
In the United States, the EU, its member states and other foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes that affect the healthcare industry. These changes could prevent or delay marketing approval of our drug candidates, restrict or regulate post-approval activities and affect our ability to sell and recognize revenue. Among policy makers and payors in the United States and elsewhere, there is continued interest in promoting changes in the healthcare industry, with stated goals that include containing health care costs, improving quality and/or expanding access to health care.
In the United States, there have been a number of proposals for increased federal and state government regulation of, or involvement in, the pricing and/or purchasing of drugs. For example, the Prescription Drug Price Relief Act of 2021, introduced in the Senate in March 2021, would require the HHS Secretary to assure that Americans do not pay more for prescription drugs than the median price of five countries (Canada, UK, France, Germany and Japan). There have also been state legislative efforts to address drug costs, which generally have focused on increasing transparency about drug costs and limiting drug prices. Some such legislation has been subject to legal challenges.
In addition, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the “Medicare Modernization Act”) established the Medicare Part D program and provided authority for limiting the number of drugs that will be covered in any therapeutic class thereunder. The Medicare Modernization Act, including its cost reduction initiatives, could limit the coverage and reimbursement rate that we receive for any of our approved products. Private payors may follow Medicare coverage policies and payment limitations in setting their own reimbursement rates resulting in similar limits in payments from private payors.
Further, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, adopted in March 2010 (together, the “Health Care Reform Law”), is a far-reaching law intended to broaden access to health insurance, reduce or constrain the growth of health care spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. The law has continued the downward pressure on the pricing of medical items and services, especially under the Medicare program, and increased the industry’s regulatory burdens and operating costs.Since its enactment, there have been executive, judicial and Congressional challenges to certain aspects of the Health Care Reform Law, which are further described in this section, and we expect there will be additional challenges and amendments to the Health Care Reform Law in the future.
Other legislative changes have been proposed and adopted since the Health Care Reform Law was enacted. In August 2011, President Obama signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee on Deficit Reduction did not achieve a targeted deficit reduction, which triggered the legislation’s automatic reduction to several government programs. This includes aggregate reductions to Medicare payments to providers of 2% per fiscal year through 2030 due to subsequent legislative amendments to the statute, with the exception of a temporary suspension from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic, unless additional Congressional action is taken. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several providers (including hospitals and cancer treatment centers), and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Further, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law in March 2020. The CARES Act is aimed at providing emergency assistance and health care for individuals, families and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The effects of the COVID-19 pandemic may introduce temporary or permanent healthcare reform measures, which could have negative financial implications on our business.
There has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed federal and
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state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives. For example, on July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to implement several of the administration’s proposals. As a result, the FDA released a final rule on September 24, 2020, effective November 30, 2020, providing guidance for states to build and submit importation plans for drugs from Canada. Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law. The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in response to ongoing litigation. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed pending review by the Biden administration. On November 20, 2020, the CMS issued an interim final rule implementing the Trump administration’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021. On December 28, 2020, the U.S. District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule. It is unclear whether the Biden administration will work to reverse these measures or pursue similar policy initiatives. In addition, there have been and continue to be similar initiatives at the state level to reduce drug costs. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of SM-88 or suchour other existing or future product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.
The Health Care Reform Law and other healthcare reform measures adopted in the future may result in more rigorous coverage criteria new payment methodologies and additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.
Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products to purchase and which suppliers will be included in their prescription drug product.and other healthcare programs. Furthermore, there has been increased interest by third party payors and governmental authorities in reference to pricing systems and publication of discounts and list prices. These reforms could also reduce the ultimate demand for our product candidates or put pressure on our product pricing.
In the European Union, similar political, economic and regulatory developments may affect our ability to profitably commercialize our product candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union or member state level may result in significant additional requirements or obstacles that may increase our operating costs. The delivery of healthcare in the European Union, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than European Union, law and policy. National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most European Union member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing European Union and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize our product
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candidates, if approved. In markets outside of the United States and European Union, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.
There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. 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. Such reforms could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates.
We depend on continued patient enrollment intocannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to new requirements or policies, or if we are not able to maintain regulatory compliance, our clinical trials.product candidates may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.
We currently have very limited marketing, sales or distribution infrastructure. If we are unable to enroll patientsdevelop full sales, marketing and distribution capabilities on our own or through collaborations or if we fail to achieve adequate pricing and/or reimbursement, we will not be successful in commercializing our candidates.
We currently have very limited marketing, sales and distribution capabilities because our lead drug candidate, SM-88, is still in clinical development and initial trials and our researchother drug candidates are only in the initial stages of development. If any of our drug candidates is approved, we intend either to have established a sales and development efforts couldmarketing organization with technical expertise and supporting distribution capabilities to commercialize our drug or to have outsourced this function or portions, to one or more experienced third parties. Either of these options is expensive and time-consuming. Some of these costs may be materially adversely affected.
Successful and timely completionincurred well in advance of clinical trials will requireany regulatory approvals for such drug candidate. In addition, we may not be able to hire a sales force that is sufficient in size or has adequate expertise in the medical markets that we enrollintend to target. Any failure or delay in the development of our internal sales, marketing and completedistribution capabilities or to outsource these functions, in whole or part, would adversely affect the trialscommercialization of our products.
To the extent that we enter into collaborative agreements for marketing, sales and/or distribution, our revenue may be lower than if we directly marketed and sold an approved drug product. For example, as further discussed in Item 1 of this Annual Report on Form 10-K, under the Co-Promote, Eagle will receive 15% of the net sales of all SM-88 products in the U.S. during the term of the agreement. In addition, any revenue we receive will depend in whole or in part upon the efforts and success of these third-party collaborators, which are likely not to be entirely within our control. If we are unable to enter into these arrangements on acceptable terms or at all, we may not be able to successfully commercialize SM-88 or other drug candidates. If we are not successful in commercializing our drug candidates, either on our own or through collaborations with a sufficient number of evaluable subjects. Our clinical trialsone or more third parties, our future revenues will suffer, we may incur significant and additional losses and we may be forced to curtail operations. These factors would have an adverse effect on our share price.
Even if SM-88 obtains regulatory approval, it will remain subject to ongoing regulatory requirements and oversight.
If marketing authorization is obtained for our lead drug candidate, SM-88, it will continue to be under review by regulatory authorities and be subject to delays resulting from the trials’ slower enrollmentregulatory requirements. As a result, authorization could be subsequently withdrawn or restricted at any time for many reasons, including safety issues. We will be subject withdrawal. Subject enrollment depends on many factors,to ongoing obligations and oversight by regulatory authorities, including the sizeAE reporting requirements, marketing restrictions and, naturepotentially, other post-marketing obligations, all of the patient population, eligibility criteria for the clinical trial, the proximity of patients to clinical sites, the design of the clinical protocol, the availability of competing clinical trials for the same population of subjects, the availability of new drugs approved for the drug candidate that is the subject of the clinical trial,which may result in significant expense and clinicians’ and patients’ perceptions as to the potential advantages of SM-88 and any other drug product we may develop in relation to other available therapies.
These factors may make it difficult for us to enroll enough patients to complete our clinical trials in a timely and cost-effective manner. Delays in the completion of any clinical trial for SM-88 and any other drug product we may develop will increase our costs, slow down our drug development and delay or potentially jeopardizelimit our ability to commencesuccessfully commercialize our drug salesproduct and generate revenue. In addition, some of the factors that cause or lead to, a delay
If there are changes in the completionapplication of legislation or regulatory policies or if problems are discovered with SM-88 or our manufacturer(s) or if we or one of our distributors, licensees or co-marketers fails to comply with regulatory requirements, the regulators could take various actions. These include imposing fines on us, imposing restrictions on
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the drug or its manufacture and requiring us to recall or remove the drug from the market. The regulators could also suspend or withdraw our marketing authorizations, requiring us to conduct additional clinical trials, change our drug labeling or submit additional applications for marketing authorization. If any of these events occurs, our ability to sell SM-88 may also ultimately lead to the denial of regulatory approval of SM-88be impaired and any other drug product we may develop.incur substantial additional expense to comply with regulatory requirements, which could adversely affect our business, financial condition and the results of operations and the value of our share price.
Even if approved, if SM-88 does not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, our revenue generated from its sales will be limited.
The commercial success of our SM-88 and any other drug product we may developcandidates will depend upon its acceptance among physicians, patients and the overall medical community. The degree of market acceptance of SM-88, which would be applicable to any otherthe drug productcandidates we may develop will depend on a number of factors, which include, but are not limited to:
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| limitations or warnings contained in the approved labeling for |
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| changes in the standard of care for the targeted therapy; |
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| limitations in the approved clinical indications for |
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| demonstrated clinical safety and efficacy of |
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| lack of significant adverse effects; |
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| limitations on how we promote |
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| sales, marketing and distribution support; |
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| availability and extent of reimbursement from managed care plans and other third-party payors; |
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| timing of market introduction and perceived effectiveness of competitive drugs; |
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| the degree of cost-effectiveness of |
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| availability of alternative therapies, whether or not at a similar or lower cost, including generic and over-the-counter drugs; |
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| the extent to which |
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| whether |
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| adverse publicity about |
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| convenience and ease of administration; and |
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| potential drug liability claims. |
If SM-88 or any otherof our drug candidate we may developcandidates is approved but does not achieve an adequate level of acceptance by physicians, patients and the overall medical community, we may not generate sufficient revenue to become profitable or to sustain operations. In addition, efforts to educate the medical community and third-party payors on the benefits of SM-88 or any othersuch drug candidate we may develop may require significant resources and may never be successful.
We are subject to manufacturing risks that could substantially increase our costs and limit the supply of SM-88our current drug candidates and any other drug product we may develop.
As is likely to be common with any other drugproduct candidate we may develop, the process of manufacturing SM-88, TYME-18 and TYME-19 is complex, highly regulated and subject to several risks, which include, but are not limited to the following risks:
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| We do not have experience in manufacturing |
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should we pursue participation in such trials. We expect to do the same for our other current drug candidates. We may not succeed in the scaling up of our process or we may need a larger manufacturing process for |
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| The process of manufacturing drugs, such as SM-88, is extremely susceptible to loss due to contamination, equipment failure or improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in drug characteristics and difficulties in scaling the production process. Even minor deviations from normal manufacturing processes could result in reduced production yields, drug defects and other supply disruptions. If microbial, viral or other contaminations are discovered in |
| • | A shortage of drug product and/or the agents used with our drug candidates. |
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| The manufacturing facilities in which |
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| An unforeseen increase in ingredients procurement or other manufacturing costs. |
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| An unforeseen production shortage resulting from any events, including interruptions to business operations and supply chain disruption as a result of worldwide economic and political disruptions including the impacts of military conflict between Russia and Ukraine, and widespread health crises, such as the COVID-19 pandemic, affecting raw material and or intermediate supply or manufacturing capabilities abroad and domestically. |
• | The manufacturing facilities in which |
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| We and our manufacturing partners must comply with applicable |
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| Any adverse developments affecting manufacturing operations for |
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| Drug products that have been produced and stored for later use may degrade, become contaminated or suffer other quality defects, which could cause the affected products to no longer be suitable for its intended use in clinical trials or other development activities. If the defective drug cannot be replaced in a timely fashion, we may incur significant delays in our development programs that could adversely affect the value of |
• | As further described under the caption “Manufacturing” in Item 1 of this Annual Report on Form 10-K, SM-88 drug substance is being manufactured by a FDA registered and inspected third party and to date that manufacturer is our sole supplier of this drug substance. We believe that replacement for this supplier, in the event it becomes necessary, is not impossible, but would cause us to lose time that could otherwise be devoted to development. Currently, we do not have an arrangement in place for a secondary supplier for this drug substance. |
• | Third parties may hold IP rights that impact, restrict or inhibit manufacturing or sale of a commercial version of any of our drug candidates. |
One component of SM-88 is a derivation of an existing FDA-approved drug that has been modified to contribute to the functionality of SM-88. This drug substance is being manufactured by a FDA-approved, third party and to date that manufacturer is our sole supplier of this drug substance. Even though the drug substance is currently being manufactured, its modification and the modified drug’s manufacturing and use in our combination drug product must still undergo regulatory review and approval. To our knowledge, the current manufacturer of this drug substance is the only FDA-approved supplier of the existing drug in the U.S. We believe this cGMP manufacturer has sufficient capacity to meet our projected needs into the near future. In the event of a catastrophic event or this manufacturer is unable to meet our needs, we will, due to the nature of the drug substance and the modifications required for this drug substance, need to find an alternative source of supply, which will likely result in time delays in the clinical development process. We believe that replacement for this supplier, in the event it becomes necessary, is not impossible, but would cost us in development time. Currently, we do not have an arrangement in place for a secondary supplier for this drug substance.
We currently have no marketing, sales or distribution infrastructure. If we are unable to develop sales, marketing and distribution capabilities on our own or through collaborations or if we fail to achieve adequate pricing and/or reimbursement, we will not be successful in commercializing SM-88 and any other drug product we may develop.
We currently have no marketing, sales and distribution capabilities because our lead drug candidate, SM-88, is still in clinical development and initial trials and our otherThe drug candidates are only in the initial stages of development. If SM-88 is approved, we intend either to have established a sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize our drug or to have outsourced this function or portions, to one or more experienced third parties. Either of these options is expensive and time-consuming. Some of these costs may be incurred well in advance of any regulatory approvals for SM-88. In addition, we may not be able to hire a sales force that is sufficient in size or has adequate expertise in the medical markets that we intend to target. Any failure or delay in the development of our internal sales, marketing and distribution capabilities or to outsource these functions, in whole or part, would adversely affect the commercialization of our products.
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To the extent that we enter into collaborative agreements for marketing, sales and/or distribution, our revenue may be lower than if we directly marketed and sold SM-88. In addition, any revenue we receive will depend in whole or in part upon the efforts and success of these third-party collaborators, which are likely not to be entirely within our control. If we are unable to enter into these arrangements on acceptable terms or at all, we may not be able to successfully commercialize SM-88. If we are not successful in commercializing SM-88, either on our own or through collaborations with one or more third parties, our future revenues will suffer, we may incur significant and additional losses and we may be forced to curtail operations. These factors would have an adverse effect on our share price.
SM-88 and any other drug product we may develop will face significant competition and, if competitors develop and market products that are more effective, safer or less expensive than our drug, our commercial opportunity will be negatively impacted.
The anticanceranti-cancer and antiviral treatment industry isindustries are highly competitive and subject to rapid and significant technological changes. We are currently developing SM-88 to compete with other drugs that currently exist or are being developed. Drugs we may develop in the future are also likely to face competition from other drugs, some of which we may not be currently be aware of. In marketing our products, we will have domestic and international competitors, including major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, universities and other research institutions. Many of our competitors have significantly greater financial, manufacturing, marketing, drug development, technical and human resources than we do. Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining regulatory approvals, patient recruitment and manufacturing pharmaceutical products. These companies also have significantly greater research and marketing capabilities than we do and may also have products that have been approved or are in more advanced stages of development or collaborative arrangements in our target markets with leading companies and research institutions. Established pharmaceutical companies also may invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make SM-88our drug candidates and any other drug product we may develop obsolete. Some or all of these factors may contribute to our competitors succeeding in obtaining patent protection and/or marketing approval or developing and commercializing products in our field before we do.
There are a large number of companies working to develop and/or market various types of anticanceranti-cancer treatments. These treatments consist both of small molecule drugs, as well as biological drugs that work by using next-generation technology platforms to address specific cancer targets. These treatments are often combined with one another in an attempt to maximize a response rate. In addition, several companies are developing drugs that work by targeting additional specificities using a single recombinant molecule.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe effects, are more convenient or are less expensive than SM-88.our drug candidates. Our competitors also may obtain FDA, EU or other non-U.S. regulatory approval for their products more rapidly than we may, which could result in our competitors establishing a strong market position before we are able to enter the market. If third parties obtain regulatory approval for their products before we do, such products may change the treatment landscape for our product candidates and affect our ability to successfully launch and commercialize any products for which we receive regulatory approval. Even if SM-88 achieves our drug candidates achieve
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marketing approval, itthey may be priced at a significant premium over competitive products, if any have been approved by then, resulting in our product’s reduced competitiveness.
In addition, the costs and restrictions effected by the Health Care Reform Law may impact our competitiveness or availability opportunity.
Further, our future ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of similargeneric or biosimilar products.
In addition, in March 2010, President Obama signed into law the Patient Protectionproducts if and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act or collectively, the Health Care Reform Law, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of health care spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. The Health Care Reform Law also created a new regulatory scheme authorizing the FDA to approve biosimilars. Under the Health Care Reform Law, a manufacturer may submit an application for licensure of a biologic product that is “biosimilar to” or “interchangeable with” a previously approved biological product or “reference product,” without the need to submit a full package of nonclinical and clinical data. Under this new statutory scheme, an application for a biosimilar product may not be submitted to the FDA until four years following approval of the reference product. The FDA may not approve a biosimilar product until 12 years from the date on which the reference product was approved. Even if a product is considered to be a reference product eligible for exclusivity, another company could market a competing version of that product if the FDA approves a full NDA for such product containing the sponsor’s own nonclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product. Furthermore, recent legislation has proposed that the 12-year exclusivity period for each a reference product may be reduced to seven years. when they become available.
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Smaller and other early-stage companies also may prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, recruiting clinical trial sites and patient registrationrecruiting subjects for clinical trials, as well as in acquiring technologies complementary to or necessary for, SM-88.our drug candidates. In addition, the biopharmaceutical industry is characterized by rapid technological changes. If we fail to stay at the forefront of technological change, we may be unable to compete effectively. Technological advances or products developed by our competitors may render our technologies or product candidates obsolete, less competitive or not economical.
Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval and commercialization of SM-88 or any other drug candidate we may develop and may affect the price we set. Our successful commercialization will depend in part on the extent to which governmental authorities and health insurers establish adequate coverage, reimbursement and pricing policies.
In the U.S., the EU, its Member States and some other foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system. These changes could prevent or delay marketing approval of SM-88 or any other drug product we may develop, restrict or regulate post-approval activities and affect our ability to sell and recognize revenue from SM-88 or any other drug product we may develop. Among policy makers and payors in the U.S. and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing health care costs, improving quality and/or expanding access to health care.
In the U.S., the Medicare Prescription Drug, Improvement and Modernization Act of 2003 or the Medicare Modernization Act, changed the way Medicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based on average sale prices for physician-administered drugs. In addition, this legislation provided authority for limiting the number of drugs that will be covered in any therapeutic class. Cost-reduction initiatives and other provisions of this legislation could decrease the coverage and price that we receive for any approved products. While the Medicare Modernization Act applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from the Medicare Modernization Act may result in a similar reduction in payments from private payors.
In addition, the Health Care Reform Law, among other things, increased rebates a manufacturer must pay to the Medicaid program, addressed a new methodology by which rebates owed by manufacturersgeneric therapies, as further discussed under the Medicaid Drug Rebate Programcaption “Competition” in Item 1 of this Report, are calculated for drugstypically sold at lower prices than branded therapies and are generally preferred by hospital formularies and managed care providers of health services. We anticipate that, if approved, our product candidates will face increasing competition in the form of generic versions of branded products of competitors, including those that have lost or will lose their patent exclusivity. In the future, we may face additional competition from a generic form of our own candidates when the patents covering them begin to expire, or earlier if the patents are inhaled, infused, instilled, implanted or injected, established a new Medicare Part D coverage gap discount program in which manufacturers must provide 50% point-of-sale discounts on products covered under Part D and implemented payment system reforms including a national pilot program on payment bundlingsuccessfully challenged. If we are unable to encourage hospitals,demonstrate to physicians and other providerspayers that the key differentiating features of our product candidates translate to improve the coordination, quality and efficiency of certain health care services through bundled payment models. Further, the new law imposed a significant annual fee on companies that manufactureoverall clinical benefit or import branded prescription drug products. Substantial new provisions affecting compliance were enacted, which may affect our business practices with health care practitioners. The goal of the Health Care Reform Law is to reduce thelower cost of health care, and substantially change the way health care is financed by both governmental and private insurers. While we cannot predict what impact on federal reimbursement policies this legislation will have in general or on our business specifically, the Health Care Reform Law may result in downward pressure on pharmaceutical reimbursement, which could negatively affect market acceptance of and the price we may charge for, any products we develop that receive regulatory approval. We also cannot predict the impact of the Health Care Reform Law on our business or financial condition, as many of the Health Care Reform Law reforms require the promulgation of detailed regulations implementing the statutory provisions, which has not yet occurred.be able to compete with generic alternatives.
Moreover, other legislative changes have also been proposed and adopted in the U.S. since the Health Care Reform Law was enacted. On September 2, 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012 or the ATRA, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other health care funding, which could have a material adverse effect on our customers and accordingly, our future results from operations.
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The delivery of health care in the EU, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than EU, law and policy. National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the health care budgetary constraints in most EU Member States have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing EU and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of SM-88 and any other drug product we may develop, restrict or regulate post-approval activities and affect our ability to commercialize any products for which we obtain marketing approval.
If any drug liability lawsuits are successfully brought against us or any of our collaborators, we may incur substantial liabilities and may be required to limit commercialization of SM-88our drug candidates and any other drug product we may develop.
We face an inherent risk of drug liability lawsuits related to the testing of SM-88, TYME-18, TYME-19 and any other drugproduct candidate we may develop that is intended to treat seriously ill patients. In addition, we face risk of liability lawsuits if SM-88 or any of other drug product of ourspatients and that is approved by regulatory authorities and introduced commercially. Drug liability claims may be brought against us or our collaborators, if any, by subjects enrolled in our clinical trials, patients, health care providers or others using, administering or selling SM-88 or such other drug product.products. If we cannot successfully defend ourselves against any such claims, we may incur substantial liabilities. Regardless of their merit or eventual outcome, liability claims may result in, but are not limited to:
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| decreased demand for |
| • | injury to our reputation; |
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| withdrawal of subjects in our clinical trials; |
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| withdrawal of clinical trial sites or entire trial programs; |
| • | increased regulatory scrutiny; |
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| substantial monetary awards to or costly settlements with patients or other claimants; |
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| drug recalls or a change in the indications for which they may be used; |
| • | loss of revenue; |
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| diversion of management and scientific resources from our business operations; and |
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| the inability to commercialize SM-88 or such other drug product. |
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Adverse results, side effects of injuries may happen and may lead to product liability claims. Liability claims could divert management’s attention from our core business, be expensive to defend, result in sizable damage awards against us that may not be covered by liability insurance, and could harm our reputation in the marketplace among physicians and patients. Any of these events could harm our business and results of operations and cause our stock price to decline.
If SM-88any of our drug candidates is approved for commercial sale, we will be highly dependent upon consumer perception and the safety, effectiveness and quality of SM-88.such drug candidate. We could be adversely affected if we are subject to negative publicity or if SM-88such drug candidate proves to be or is asserted to be, harmful to patients. Because of our dependence upon consumer perceptions, any adverse publicity associated with illness or other adverse effects resulting from patients’ use or misuse of SM-88our drug candidates could have a material adverse impact on our financial condition or results of operations. This would also be true with respect to any other drug product we may develop, receive regulatory approval of and, thereafter, seek to market.
When necessary, we intend to obtainWe hold clinical trial insurance for the SM-88 phase IIour ongoing clinical trial.trials. We also intend to obtain drug liability insurance coverage at appropriate levels for our operations, which will vary as the level of our operations vary during our growth from a R&D company to a company manufacturing and/or marketing drugs to the public. Our current and planned insurance coverage may not be adequate to cover all liabilities that we may incur. We also may need to increase our insurance coverage when we begin the commercialization of SM-88.SM-88, TYME-18 or TYME-19. Insurance coverage can be expensive for pharmaceutical products and candidates. As a result, we may be unable to obtain or maintain sufficient liability insurance at a reasonable cost to protect us against losses, which could have a material adverse effect on our business. A successful drug liability claim or series of claims brought against us, particularly if judgments exceed any insurance coverage we may have, could decrease our cash resources and adversely affect our business, financial condition and results of operations and could possibly cause us to cease our operations in their entirety.
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Our management lacks experience in obtaining FDA approval of products, which could result in delays or the failure to obtain required regulatory approval of our products.
Although they have experience in creating and marketing various products, our chief executive and chief operation officers have never previously organized, managed or completed FDA-required submissions and clinical trials concerning new drug products. While we intend to retain employees, advisors and consultants with experience in the FDA approval process and have retained and utilized a number of such advisors and consultants currently and in the past, the lack of experience by our chief executive and operating officers could result in: delays in obtaining necessary regulatory approvals, both in conducting clinical trials and final marketing approvals; additional costs; and the possibility that approvals will not be obtained due to the failure to comply with the regulatory approval process; such delays, costs and/or failure would likely adversely affect our business, financial condition and results of operations and could possibly cause us to cease our operations in their entirety.
Risks Related to our Financial Condition and Need for Additional Capital
We have incurred significant losses since inception and anticipate that we will continue to incur losses for the foreseeable future. We have no products approved for commercial sale and to date we have not generated any revenue or profit from drug sales. We may never realize revenue or profitability.
We are a clinical-stage pharmaceutical company with a limited operating history. We have incurred significant losses since our inception. As of DecemberMarch 31, 2015,2022, our accumulated deficit was approximately $15,904,000.$160,420,062. Our losses have resulted principally from expenses incurred in the discovery and development of SM-88 and from general and administrative expenses incurred while building our business infrastructure. We expect to continue to incur losses for the near future. Furthermore, we expect these losses to increase as we continue our research and development of and seek regulatory approval for our drug candidate SM-88,candidates and any other product candidates we may develop, prepare for and begin to commercialize SM-88our drug candidates or any other regulatory-approved products and add infrastructure and personnel to support our drug development efforts and operations as a public company. The net losses and negative cash flows from operations incurred to date, together with expected future losses, have had and likely will continue to have, an adverse effect on our stockholders’ equity and working capital. The amount of future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue.
Because of the numerous risks and uncertainties associated with drug development, we are unable to accurately predict the timing or amount of increased expenses or when or if, we will be able to realize revenue or achieve profitability. For example, our expenses could increase if FDA or EMA require us to conduct supplemental clinical trials not included in our current development plan or if there are any delays in completing our planned clinical trials or in the development of SM-88 or any other drug product we may pursue.
To become and remain profitable, we must succeed in the development and commercialization of drug products with significant market potential. This will require us to be successful in a range of challenging activities for which we are only in the preliminary stages, including, with respect to the near term, developing SM-88,our drug candidates, obtaining regulatory approval and manufacturing, marketing and selling SM-88.our drug candidates. We may never succeed with these activities or generate revenue from drug sales that is significant enough to achieve profitability. Our ability to generate future revenue from drug sales depends heavily on our success in many areas, which include, but are not limited to:
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| completing research and clinical development of |
| • | obtaining marketing approval for our drug candidates; |
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| developing a sustainable and scalable manufacturing process for |
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| launching and commercializing |
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| establishing sales, marketing and distribution capabilities in the |
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| obtaining market acceptance of |
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| addressing any competing technological and market developments; |
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| identifying, assessing, acquiring and/or developing new |
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| negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; |
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| maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and |
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| attracting, hiring and retaining qualified personnel. |
These factors applicable to SM-88 would likely be applicable to any other drugproduct candidate we may develop.
Even if SM-88 or another druga product candidate that we develop is approved for commercial sale, we anticipate incurring significant costs associated with commercialization. Because of the numerous risks and uncertainties with drug development, we are unable to accurately predict the timing or amount of increased expenses orand when or if we will be able to achieve profitability. For example, our expenses could increase if the FDA or EMA require us to conduct supplemental clinical trials not included in our current development plan or if there are any delays in completing our planned clinical trials or in the development of our drug candidates or any other drug product we may pursue. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to realize revenue or become or remain profitable could depress our market value and could impair our ability to raise capital, expand our business, develop other drugproduct candidates or continue our operations. A decline in the value of our shares could also cause investors in our common stock (or other securities we may issue in the future) to lose all or part of their investment.
WeTo achieve on our long-term business objectives, we will require substantial additional funding, which may require us to agree to restrictions on our operations or may not be available to us on acceptable terms or at all and, if not available, may require us to delay, scale back or cease our drug development programs or operations.
In addition to SM-88, we seek to advance multiple drugproduct candidates through our research and clinical development process. The completion of the development, regulatory approval and the potential commercialization of SM-88 or any otherour drug candidatecandidates will require substantial funds. We believe that our available cash and cash equivalents will be sufficient to fund our anticipated level of operations for the next six-to-nine months, but there can be no assurance that this will be the case. Our future financing requirements will depend on many factors, some of which are beyond our control, which include, but are not limited to:
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| the number and characteristics of |
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| the scope, progress, timing, cost and results of nonclinical and clinical development and research; |
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| the costs, timing and outcome of our seeking and obtaining FDA, EMA and other non-U.S. regulatory approvals; |
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| the costs associated with manufacturing SM-88, as well as other potential |
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| our ability to maintain, expand and defend the scope of our IP portfolio, including the amount and timing of any payments we may be required to make in connection with the licensing, filing, defense |
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and enforcement of any patents or other IP rights; |
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| the extent to which we acquire or in-license other products or technologies; |
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| our need and ability to increase our overall capacity and hire additional administrative, managerial, scientific, operational and medical personnel; |
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| the effect of competing products that may limit market penetration of |
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| the amount and timing of revenues, if any, we receive from commercial sales of |
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| our need to implement additional internal systems and infrastructure, including financial and reporting systems; and |
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| the economic and other terms, timing of and ultimate success of any future collaboration, licensing or other arrangements, including the timing of achievement of milestones and receipt of any milestone or royalty payments under such agreements. |
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Until we can generate sufficient drug and royalty revenue to finance our cash requirements, which we may never do,achieve, we expect to finance future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements, royalty agreements and other marketing and distribution arrangements. AdditionalThe demand for the equity and debt of biotechnology companies like ours is dependent upon many factors, including the general state of the financial markets. During times of extreme market volatility, capital may not be available on favorable terms, if at all. Any additional fundraising efforts may divert management’s attention from day-to-day activities and financing may not be available to us when we need it or financings may not be available on favorable terms. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, royalty rights or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our drugproduct candidates, technologies, future revenue streams or research programs and/or grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, as we expect to do, the ownership interests of our then existing stockholders could be diluted and the terms of these securities may include liquidation or other preferences that adversely affect stockholders’ rights. In addition, certain holders
While we regularly consider options and opportunities to raise additional capital and obtain financing and will continue to seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, and our outstanding securities have anti-dilution protection that could resultnegotiating position in additional dilution to our stockholders generally. These provisions provide thatcapital generating efforts may worsen as existing resources are used. Additionally, if we raise certain funds before March 2018 at a per share price less than $.050 per share, anti-dilution protections will apply. See Item 1 – “Business – Corporate History; Significant Organizational Events.” If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences, which are not favorable to us or our stockholders. If we are unable to obtain adequate financing when needed and on favorable terms,raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to delay, reducerelinquish valuable rights to our technologies, product candidates or future revenue streams or have to grant licenses on terms that are not favorable to us. For example, as described under the scopeheading “Collaboration with Eagle” in Item 1 of this Annual Report on Form 10-K, under the Co-Promote, Eagle will receive 15% of the net sales of all SM-88 products in the U.S. during the term of the agreement. The transactions with Eagle are further discussed under the heading “Collaboration with Eagle” in Item 1 of this Annual Report on Form 10-K. In addition, general market conditions, as well as market conditions for companies in our financial and business position, as well as the ongoing issues arising from the COVID-19 pandemic, may make it difficult for us to seek financing from the capital markets, and the terms of any financing may adversely affect the holdings or suspend one or morethe rights of our clinical trialsstockholders. Should the financing we require to sustain our working capital needs be unavailable or researchprohibitively expensive when we require it, our business, operating results, financial condition and development programs orprospects could be materially and adversely affected, and we may be unable to continue our commercialization efforts.operations.
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We may expend our limited resources to pursue SM-88 forapproval of our drug candidates to treat certain indications that may not be the most profitable or do not have the greatest likelihood of success.
Because we have limited financial and managerial resources, we currently are focusing our research programs on SM-88 for the treatment of specified cancer therapies.therapies and on the pre-clinical development of TYME-19. We are also engaged in a biomarker initiative in an effort to better inform our development activities and areas of focus. As a result of our limited returns, we may forego or delay pursuit of opportunities with other drugproduct candidates or other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. For example, in June 2021, we announced the discontinuation of our TYME-88-Panc trial. Our spending on current and future research and development programs and drugproduct candidates for specific indications may not yield any commercially viable products.
If we do not accurately evaluate the commercial potential or target market for SM-88 or any other drugproduct candidate, we may relinquish valuable rights through collaboration, licensing or other royalty arrangements in cases where it would have been advantageous for us to retain sole development and commercialization rights.
If we do not achieve our projected development goals in the periods we announce and expect, the commercialization of our products may be delayed and, as a result, our stock price may decline.
Over the course of our development efforts, we will estimate the successful completion of various scientific, clinical, regulatory and other drug development goals, which we refer to as milestones. These milestones may include the commencement or completion of clinical trials and the submission of planned regulatory filings. Occasionally, we may publicly announce the expected timing of some of these milestones. For example, throughout this report, we state that we plan to begin phase II trials during 2016. All of these milestonesprojected milestone timelines will be based on a variety of assumptions. The actual timing of achieving these milestones can vary dramatically compared to our estimates, in some cases for reasons beyond our control. If we do not meet these milestones as publicly announced, the commercialization of our products may be delayed and, as a result, our stock price may decline.
Risks Related to our Reliance on Third Parties
We rely on third parties to conduct our clinical trials and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of these trials.
We currently rely on, and will not independently conduct clinical trials for SM-88 and may not do so for any other drug product we may develop. We will and maylikely continue to rely on, third parties, such as CROs, clinical data management organizations, medical institutions and clinical investigators to perform these functions.study our product candidates in clinical trials. We may independently conduct future clinical trials for any drug product we may develop, including SM-88, but will continue to collaborate with such parties to study SM-88 in their clinical trials of SM-88 or other drug candidates. This strategy necessarily relies upon clinical data and other results obtained by third parties that may ultimately prove to be inaccurate or unreliable. For example, we partnered with PanCAN to study SM-88 in its adaptive randomized Phase II/III trial with registration intent known as Precision Promise, but the trial sponsor terminated the SM-88 arm of the trial due to futility, as described below under the heading “Discontinued Programs.” Also, HopES is a Phase II investigator-initiated trial evaluating SM-88 monotherapy in late-stage sarcomas, under the direction of principal investigator Dr. Sant Chawla and in collaboration with The Joseph Ahmed Foundation. We are collaborating with Georgetown University to support a clinical trial evaluating SM-88 in breast cancer. Our reliance on these third parties for clinical development activities reduces our control over these activities, relieves us of certain rights we otherwise would have and puts us at risk for the acts or omissions of these third parties, but it does not relieve us of our responsibilities. For example, the FDA requires us to comply with standards, commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of subjects in clinical trials are protected even though we are not in control of these processes. If the third-party data and results we rely upon prove to be inaccurate, unreliable or not applicable to our product candidates or future product candidate, we could make inaccurate assumptions and conclusions about our product candidates and our research and development efforts could be compromised. These third parties also may have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated
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protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for SM-88 or other products we may developour drug candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize SM-88 andour drug candidates.
In addition, if any other drug productof our relationships with third-party CROs or site management organizations terminate, we may develop.not be able to enter into arrangements with alternative CROs or site management organizations or to do so on commercially reasonable terms. Switching or adding additional CROs or site management organizations involves additional cost and requires management time and focus. Further, there is a natural transition period when a new CRO or site management organization commences work. As a result, delays could occur, which could compromise our ability to meet our desired development timelines. Though we carefully manage our relationships with our CROs or site management organizations, there can be no assurance that we will not encounter similar challenges or delays in the future. Forces beyond our control, including the impacts of COVID-19, could disrupt the ability of our third-party CROs, site management organizations, clinical data management organizations, medical institutions and clinical investigators to conduct our preclinical studies and our clinical trials for our product candidates and for any future product candidate.
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We also will rely on other third parties to store and distribute supplies for our clinical trials. Any performance failure on the part of our existing or future distributors could delay clinical development or regulatory approval of SM-88, producing additional losses and depriving us of potential revenue.
We intend to rely on third-party contract manufacturing organizations to manufacture and supply SM-88our drug candidates for us. If one of our suppliers or manufacturers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find new suppliers or manufacturers. We may also face delays in the development and commercialization of SM-88our drug candidates and any other drug product we may develop.
We currently have limited experience in and we do not own facilities for, clinical-scale manufacturing of SM-88, TYME-18 and TYME-19, and we willexpect to rely upon third-party contract manufacturing organizations to manufacture and supply drug for our clinical trials. TheHowever, we may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including the possible breach of the manufacturing agreement by the third party or the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. In addition, the manufacture of pharmaceutical products in compliance with the FDA’s cGMP requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, including difficulties with production costs and yields, quality control, including drug stability, quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced cGMP requirements and other federal and state regulatory requirements and foreign regulations. If our manufacturers were to encounter any of these difficulties or otherwise fail to comply with their obligations to us or under applicable regulations, it would jeopardize our ability to supply investigational drug for our clinical trials. Any delay or interruption in the supply of clinical trial materials, including as a result of restrictions put in place because of the COVID-19 pandemic or other supply chain disruptions, could delay the completion of our clinical trials, increase the costs associated with maintaining our clinical development programs and, depending upon the period of delay, require us to commence new trials at significant additional expense or terminate the ongoing trials.
All manufacturers used to formulate the components of SM-88our drug candidates must comply with cGMP requirements, which are enforced by the FDA through its facilities inspection program. These requirements include, among other things, quality control, quality assurance and the documentation and maintenance of records. Manufacturers of our drugproduct candidates may be unable to comply with cGMP requirements and/or with other FDA, state and foreign regulatory requirements. The FDA or similar foreign regulatory agencies may also implement new standards at any time or change their interpretation and enforcement of existing standards for the manufacture, packaging or testing of drug products. We have little control over our manufacturers’ compliance with these regulations and standards and a failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in drug approval, drug seizure or recall or withdrawal of a drug approval. If the safety of any drug supplied is compromised due to a manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize SM-88 and as a result, may be held
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liable for any injuries sustained. Any of these factors could cause a delay of clinical trial completion, regulatory submission, approval or commercialization of SM-88,our drug candidates, increase our costs or impair our reputation.
We currently rely on single-sourcethird party suppliers for eachour drug candidates, including for the components of the drug components inMPS used with SM-88. Supplies are obtained through limited term supply agreements under individual purchase orders and we do not have any long-termorders. At this time, no supply agreements in place at this time.exceed 18 months. Although we believe alternative sources of supplies exist, the number of third-party suppliers with the necessary manufacturing and regulatory expertise and facilities is limited, could be more expensive and it could take a significant amount of time to source, any of which would adversely affect our business. New suppliers of SM-88 would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicable IP laws to the method of manufacturing the drug candidate. Obtaining the necessary FDA approvals or other qualifications under applicable regulatory requirements and ensuring non-infringement of third-party IP rights could result in a significant interruption of supplies and could require the new manufacturer(s) to bear significant additional costs which may be passed on to us.
Our reliance on third parties may require us to share our trade secrets, which increaseincreases the possibility that a competitor could discover them or that our trade secrets could be misappropriated or disclosed.
Because we rely on third parties to assist in the research, development and manufacture of SM-88, TYME-18 and TYME-19, and may do so with any other drugproduct candidate we may develop, we must, at times, share trade secrets with such third parties. We will seek to protect our proprietary technology in part by initially entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees and third-party contractors prior to disclosing any proprietary information. These agreements typically limit the rights of third parties to use or disclose our confidential information, which include our trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets could become known by our competitors, are inadvertently incorporated into the technology of others or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s independent discovery of our trade secrets or other unauthorized use or disclosure could impair our competitive position and could have a material adverse effect on our business.
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In addition, these agreements would typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data that could potentially relate to our trade secrets, even though our agreements may contain certain limited publication rights. For example, any academic institution that we may collaborate with in the future can be, based on customary practice, expected to be granted rights to publish data arising out of such collaboration, provided that we are notified in advance and given the opportunity to delay publication for a limited time period in order for us to secure patent protection of IP rights arising from the collaboration, in addition to the opportunity to remove confidential or trade secret information from any such publication. In the future, we may also conduct joint research and develop programs that may require us to share trade secrets under the terms of such research. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties, independent development, publication of information by any of our third-party collaborators or otherwise. A competitor’s discovery of our trade secrets could impair our competitive position and could have an adverse impact on our business.
We have entered into a co-promotion agreement and may enter into additional license or collaboration agreements with third parties with respect to SM-88 and any other drugproduct candidates we may develop that may place the development or promotion of SM-88 and any other drugour product candidates partially or entirely outside of our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us. If oursuch collaborations are not successful, SM-88 and any otherour drug candidates we may choose to develop may not reach their full market potential.
ForAs described under the heading “Collaboration with Eagle” in Item 1 of this Annual Report on Form 10-K, we entered into a co-promotion agreement with Eagle Pharmaceuticals, whereby Eagle agreed to provide sales representatives to cover 25% of the Company’s sales force requirements and will receive 15% of the net sales of all SM-88 products in the U.S. during the term of the agreement. TYME remains responsible for the remaining promotional effort. The co-promotion of SM-88 in the United States will be supervised by a joint sales operations committee composed of representatives from the Company and Eagle. Under the agreement, the Company will remain responsible for clinical development and commercial strategy and for the costs of seeking regulatory
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approval, manufacturing and distribution of SM-88. TYME has the ability to purchase back the Eagle 15% share of the net U.S. sales for $200 million.
The co-promotion agreement provides parameters and sales requirements, but certain specific requirements related to promotional activities and requirements will be defined in more detail and finalized as any product nears commercialization. If we and Eagle disagree on these matters, it could lead to disputes or be disruptive to sales efforts. Additionally, Eagle may change its strategic focus or pursue alternative technologies or treatments in a manner that results in reduced or delayed revenue to us. If Eagle fails to effectively promote and assist in the commercialization of our SM-88 products, our business, financial condition, results of operations and efficiency reasons,prospects could be harmed. In addition, any material alteration of the collaboration agreements, or dispute or litigation proceedings we may have with Eagle in the future could delay development programs, distract management from other business activities and generate substantial expense.
We may in the future enter into licensingadditional license or collaboration agreementsarrangements with other third parties. Collaborations, if any are entered into, involving SM-88 and any otherparties with respect to our drug candidates that may place the development or promotion of our product candidates partially or entirely outside of our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us, and could be subject to similar types of risks as described above. In particular, we may develop,expect to seek partners for activities related to our TYME-18 and TYME-19 product candidates. In addition, any collaborations are and will be and are subject to numerous risks, which may include, but are not limited to:
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| collaborators may have significant discretion in determining the efforts and resources that they will apply to collaborations; |
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| collaborators may not perform their obligations as expected; |
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| collaborators may not pursue development and commercialization of |
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| collaborators may delay clinical trials, provide insufficient funding for a clinical program, stop a clinical trial, abandon |
| • | collaborators may be more established companies with a competitive advantage due to their larger size and cash resources or greater clinical development and commercialization capabilities and, as a result, we may not be able to obtain favorable terms for our arrangements; |
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| collaborators could independently develop or develop with third parties, products that compete directly or indirectly with |
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| a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; |
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| we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; |
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| collaborators may not properly maintain or defend our IP rights or may use our IP or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our IP or proprietary information or expose us to potential liability; |
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| collaborators may not aggressively or adequately pursue litigation against |
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| • | |
|
| |
| collaborations may be terminated, sometimes at-will, without penalty; |
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| collaborators may own or co-own IP covering our products that results from our collaborating with them and, in such cases, we would not have the exclusive right to commercialize such IP; |
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| a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws and could result in civil or criminal |
• | disputes may arise between us and a collaborator that causes the delay or termination of the research, development or commercialization of our drug candidates or any other product candidate we may develop or results in costly litigation or arbitration that diverts management attention and resources. |
If our collaborations are not successful, or we are unable to reach agreement with a collaboration partner or disputes arise under collaboration arrangements, our drug candidates may not reach their full market potential, and our business, financial condition, results of operations and prospects could be harmed.
Risks Related to the Operation of our Company
Our exploration of strategic options may not achieve its intended benefits and could have a material impact on our business, results of operations and financial condition.
In early calendar year 2022, we completed a strategic review to evaluate the Company’s opportunities and implemented several initiatives related to our clinical trials, resource allocations and development strategy. The Company is currently conducting a formal evaluation process with its financial advisor Moelis & Company LLC. As part of this process, we may consider pursuing strategic options, such as mergers, acquisitions, divestitures, joint ventures, partnerships and collaborations. We cannot be certain when or if any type of transaction will occur. Any strategic option involves risks and uncertainties, and we cannot guarantee that any completed or potential transaction or other strategic option, if identified, evaluated and consummated, will provide greater value to our stockholders than that reflected in our current stock price. In addition, the process of negotiating any corporate transaction could be time-consuming and disruptive, and any transaction would be dependent on a number of factors that are beyond our control, including, among other things, regulatory or other approvals, the availability of financing to potential buyers on reasonable terms, market conditions, industry trends and the interest of third parties in our business. We also could incur substantial expenses associated with identifying and evaluating potential strategic alternatives, including those related to employee retention payments, equity compensation, severance pay and legal, accounting and financial advisory fees. Moreover, this process could divert our resources and require significant management time and attention that would otherwise be available for ongoing development of our business. It also could disrupt our relationships with third-party collaborators, impair our ability to recruit and retain key personnel, increase our costs, and lead to legal disputes in connection with this process or any resulting transaction. Any of these factors could have an adverse effect on our business and financial condition.
Our future operational success depends on our ability to retain our key executives and to attract, retain and motivate qualified personnel.
We are highly dependent on our chief executive officer chief operating officer, chief financial officer and the other members of our executive and scientific teams. Our executives may terminate their employment with us at any time. The loss of the services of any of these peopletheir services could impede the achievement of our research, development and commercialization objectives.
We do not currently maintain “key person” insurance on any of our executives or employees. While we may, in the future, seek to obtain key person insurance , we may not be able to obtain the insurance at favorable rates or at all. Any insurance proceeds we may receive under such “key person” insurance may not adequately compensate us for the loss of the insured’s services.
Recruiting and retaining qualified scientific, clinical, administrative, operations, manufacturing and sales and marketing personnel will also be critical to our success. An overall tightening and increasingly competitive labor market has been observed in the U.S. employment market generally, especially in response to the COVID-19 pandemic. Specific to the biotechnology industry, there is significant demand and competition for the highly specialized talent that we require. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. In addition,
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we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development, preparing filings and communicating with the FDA and other regulatory authorities, preparing for and the conducting of clinical trials and formulating commercialization strategies. Our consultants and advisors may be employed or contracted by other businesses in addition to ours and may have commitments with other entities that may limit their availability to us.
To date,Until March 21, 2022, our drug discovery process and development program hashad been led by Steve Hoffman, our former chief science offer and former chief executive andofficer. Mr. Hoffman continues to serve as a member of our Board. As chief science officer. He hasofficer, he had been instrumental in providing scientific, technical and business expertise. We do not currently maintain “key person” insurance on Mr. Hoffman or any of our other executives or employees. While we may, in the future, seek to obtain keyman insurance on Mr. Hoffman and/or such other executives and employees, we may not be able to obtain the insurance at favorable rates or at all. Any insurance proceeds we may receive under such “key person” insurance may not adequately compensate us for the loss of Mr. Hoffman’s or other insured’s services. Development of SM-88 could ultimatelywill continue without Mr. Hoffman’s or others’direct contributions, but future development of SM-88 and all other drug products in our pipeline wouldmay be adversely affected without his continued active involvement.
We are highly reliant on our executives, but certain of them, including our acting chief medical officer, Jan M Van Tornout, have other business interests to which they devote their attention. From time to time, these other interests may distract their attention from our company, generate reputational risk for our company or give rise to conflicts of interest that must be resolved through the exercise of sound judgment consistent with their fiduciary duties to us. Our ability to attract and retain investors, collaborators, and employees could be adversely affected by damage to our reputation resulting from various sources, such as our executives’ other business interests, employee misconduct, litigation, or regulatory outcomes.
We expect to expand our development, regulatory and marketing capabilities and, as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
As of February 29, 2016,March 31, 2022, we had nine 13full-time employees. Over the next several years, we expect to experience significant growth in the number of our employees and the scope of our operations. To manage our anticipated future growth, including the potential development of new products, we must continue to:to implement and improve our managerial, operational and financial systems, expand our facilities and recruit and train additional qualified personnel. Future growth would impose significant added responsibilities on management. Due to our limited financial resources and the limited experience of our management team in managing a life sciences company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. OurSome members of our current management hashave limited experience in managing a company that had the life sciences research and development and operational growth we anticipate for our Company. The physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.
Business disruptions (domestic and/or international) could seriously harm our future revenue and financial condition and increase our costs and expenses.
Our operations could be subject to equipment failures, labor shortages, labor strikes, earthquakes, power shortages, telecommunications failures, floods, hurricanes, typhoons, fires, extreme weather conditions, terrorist activities, medical epidemics, riots, crime, actacts of foreign enemies, war, nationalization, government sanction, blockage, embargo, widespread public health crises, economic and political disruptions including the impacts of military conflict between Russia and Ukraine and other natural or manmadehuman-caused disasters or business interruptions. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and could increase our costs and expenses.
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Our corporate headquarters is located in New York.
Our current and future, third-party collaborators, future partners, supplies, CROs and investigational sites are or will be, located throughout the U.S.United States or internationally and may be located near major high-risk terrorist targets, earthquake faults, flood and fire zones. The ultimate impact on us, our significant partners and suppliers as well as our and their general infrastructures being located near major high-risk terrorist targets, earthquake faults, flood and fire zones and being consolidated in certain geographical areas is unknown, but our operations and financial condition could suffer in the event of a major terrorist attack, earthquake, fire, flood or other natural or manmade disaster.
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Our business is also subject to risks associated with conducting international business. If we conduct clinical trials outside of the United States, or pursue and/or obtain approval to commercialize any approved products outside of the U.S.,United States, a variety of risks associated with international operations could materially adversely affect our business. Some of our third-party collaborators, future partners, suppliers, CROs and investigational sites could be located outside the U.S.United States. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. We may not obtain foreign regulatory approvals for our product candidates on a timely basis, if at all. Accordingly, our future success could be harmed by a variety of factors, which include, but are not limited to:
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| economic weakness, including inflation or political instability in particular non-U.S. economies and markets; |
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| differing regulatory requirements for drug approvals in non-U.S. countries; |
| • | differing, and in some cases, more stringent data protection requirements in non-U.S. countries, such as the EU General Data Protection Regulation; |
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| potentially reduced protection for IP rights; |
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| difficulties in compliance with non-U.S. laws and regulations; |
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| changes in non-U.S. regulations and customs, tariffs and trade barriers; |
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| changes in non-U.S. currency exchange rates and currency controls; |
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| changes in a specific country’s or region’s political or economic environment; |
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| trade protection measures, import/export licensing requirements or other restrictive actions by U.S. or non-U.S. governments; |
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| negative consequences from changes in tax laws; |
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| compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; |
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| workforce uncertainty in countries where labor unrest is more common than in the |
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| difficulties associated with staffing and managing international operations, including differing labor relations; |
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| production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and |
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| business interruptions resulting from geo-political actions, including war and terrorism, such as the current conflict between Ukraine and Russia, widespread public health crises or pandemics, such as COVID-19, and related government responses, or natural disasters including earthquakes, typhoons, floods and fires. |
We may seek approvals of our product candidates in the EU and United Kingdom. On June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the EU, commonly referred to as Brexit. Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the EU, the United Kingdom was subject to a transition period until December 31, 2020 (the “Transition Period”) during which EU rules continued to apply. A trade and cooperation agreement (the “Trade and Cooperation Agreement”), which outlines the future trading relationship between the United Kingdom and the EU, was agreed upon in December 2020.
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The Trade and Cooperation Agreement provides details on how some aspects of the United Kingdom’s and EU’s relationship will operate going forwards, however, there are still many uncertainties. Brexit has already and may continue to adversely affect European and/or worldwide regulatory conditions and increase regulatory complexities. Brexit could lead to legal uncertainty and potentially divergent national laws and regulations in Europe, including those related to the pricing of prescription pharmaceuticals, as the United Kingdom determines which EU laws to replicate or replace, which could impair our ability to transact business in the EU and the United Kingdom in the future, if we elect to seek regulatory approval and commercialize any of our products there, if approved. The impact of Brexit on the regulatory regime with respect to the approval of our product candidates in the United Kingdom or the EU remains uncertain, and could prevent or delay us from commercializing our product candidates in the United Kingdom or the EU and restrict our ability to generate revenue and achieve and sustain profitability. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the United Kingdom and/or EU for our product candidates.
We may be party to legal proceedings that could have a material adverse effect on the Company’s liquidity, financial position, and results of operations, as well as its reputation.
The Company has limited experience in litigation and other legal proceedings, but any lawsuit brought against us or legal proceeding that we may bring to enforce our rights could result in substantial costs, divert the time and attention of our management, result in counterclaims (whether meritorious or as a litigation tactic), result in substantial monetary judgments or settlement costs and harm our reputation, any of which could seriously harm our business. For example, during the fourth quarter of fiscal year 2019, we, along with our CEO and CFO, were named in a securities lawsuit by a purported stockholder, in which the plaintiff alleged to represent a class of stockholders and asserted claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Though such complaint was voluntarily dismissed by the plaintiff, we could be subject to lawsuits in the future and any litigation or claim against us, even without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business, and harm our reputation.
In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. The threat of these types of lawsuits is particularly pronounced in the biotechnology and pharmaceuticals industry. Any lawsuit brought against us by one or more of our stockholders, could result in substantial costs to defendthelawsuit,divertthetimeandattentionofourmanagement,resultinsubstantialmonetary judgments or settlement costs and harm our reputation, any of which could seriously harm our business.
Further, as we continue to seek to expand, raise capital, and develop and commercialize products, we have entered into, and expect to enter into in the future, agreements and instruments, such as our outstanding warrants and co-promotion agreement, which are subject to interpretation and the potential for dispute. If we and the counterparty to any such agreements or holders of such instruments are unable to resolve our disagreements, such disagreements may result in lawsuits, other legal proceedings and/or protracted negotiations, including those whereby we seek to enforce our rights. Even if successful, litigation, other legal proceedings or protracted negotiations could be expensive and time consuming and could divert management’s attention from managing our business and could result in significant adverse judgments or costs of settlement, amendments to agreements or adjustments to instruments, any of which may have a material adverse effect on our liquidity, financial position, business, reputation or prospects.
Our internal computer systems or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our drug development program.
Despite the implementation of security measures, our internal computer systems and those of our CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we believe we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development program. For example, the loss of clinical data from completed or ongoing clinical trials for SM-88 could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach was to result in a loss of or damage to our data or applications or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of SM-88 could be delayed.
Substantial amounts of information concerning our products, employees, consultants, vendors, service providers and ongoing business are stored digitally and are subject to threats of theft, tampering, or other intrusion.
We collect and maintain information in digital form that is necessary to conduct our business. This digital information includes, but is not limited to, confidential and proprietary information as well as personal information regarding our employees, consultants, CROs, CMOs, patients participating in our clinical trials and others. Data maintained in digital form is subject to the risk of intrusion, tampering, and theft. We have established physical, electronic, and organizational measures to safeguard and secure our systems to prevent a data compromise, and rely on commercially available systems, software, tools and monitoring to provide security for the processing, transmission and storage of digital information. We are monitoring the abilities of such measures and will seek
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additional enhancements of the measures as necessary. However, the development and maintenance of these systems is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly more sophisticated. Despite our efforts, the possibility of a future data compromise cannot be eliminated entirely, and risks associated with intrusion, tampering and theft remain. In addition, we provide confidential, proprietary and personal information to third parties when it is necessary to pursue our business objectives. While we obtain assurances that these third parties will protect this information and, where appropriate, monitor the protections employed by these third parties, there is a risk the confidentiality of data held by third parties may be compromised. If our data systems are compromised, our business operations may be impaired, we may lose profitable opportunities or the value of those opportunities may be diminished, and we may lose revenue as a result of unlicensed use of our intellectual property. If personal information of our employees, consultants, CROs, CMOs, patients participating in our clinical trials and such others is misappropriated, our reputation with our employees, consultants, CROs, CMOs, patients participating in our clinical trials and others may be injured resulting in loss of business and/or morale, and we may incur costs to remediate possible injury to such parties or be required to pay fines or take other action with respect to judicial or regulatory actions arising out of such incidents.
Our business and operations would suffer in the event of system failures.
Despite the implementation of security measures, our internal computer systems, and those of our CROs and other third parties on which we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our product candidates could be delayed.
We rely significantly on information technology
Cyber-attacks are increasing in their frequency, sophistication and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our abilityintensity, and have become increasingly difficult to operate our business effectively.
Cybersecurity attacks are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, misappropriation of our confidential or otherwise protected information and corruption of data.detect. Cybersecurity incidents resulting in the failure of our systems to operate effectively or to integrate with other systems, including those of third-parties with whom we rely on for research, clinical trial services or other business and administrative services, or a breach in security or other unauthorized access of these systems, may affect our ability to manage and maintain our operations. A breach in security, unauthorized access resulting in misappropriation, theft, or sabotage with respect to our proprietary and confidential information, including research or clinical data, could require significant investments of capital and time to remediate and could adversely affect our business, financial condition and results of operations. For example, any such event that leads to unauthorized access, use or disclosure of personal information, including personal information regarding patients in our clinical trials or other studies or our employees, could harm our reputation, require us to comply with federal and/or state breach notification laws, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information. Security breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above. Potential vulnerabilities can be exploited through inadvertent or intentional actions of our employees, third-party vendors, and business partners, or by malicious third parties. There can be no assurance that the security measures we have implemented to protect our information technology systems and infrastructure will prevent service interruptions or security breaches that could adversely affect our business.
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Use of social media could give rise to liability, breaches of data security, or reputational harm.
We and our employees use social media to communicate externally. There is risk that the use of social media by us or our employees to communicate about our product candidates or business may give rise to liability, lead to the loss of trade secrets or other intellectual property, or result in public exposure of personal information of our employees, clinical trial patients, customers, and others. Furthermore, negative posts or comments about us or our product candidates in social media could seriously damage our reputation, brand image, and goodwill. Any of these events could have a material adverse effect on our business, prospects, operating results, and financial condition and could adversely affect the price of our common stock.
Risks Related to Intellectual Property
Our ability to successfully commercialize our technology and drug candidate may be materially adversely affected if we are unable to obtain and maintain effective IP.
Our success is largely dependent on our ability to obtain and maintain patent and other IP protection in the U.S.United States and in other countries with respect to our proprietary technology and drug candidates. In some circumstances, we may not have the right or ability to control the preparation, filing and prosecution of patent applications or to maintain or enforce the patents covering technology or products that we license to third parties or, conversely, that we may license from third parties. Therefore, if we are subject tobecome aware of any patent infringement, 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. In addition, if third parties who license patents to us or from us fail to maintain such patents or lose rights to those patents, licensing rights or the protection afforded by those patents may be reduced or eliminated.
We have sought to protect our proprietary position by filing patent applications in the U.S.United States and abroad related to our novel technologies and products that are important to our business. This process is expensive and time-consuming and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, we may not pursue or obtain patent protection in all relevant markets. It is also possible that we fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Our pending and future patent applications may be insufficient to protect our technology or products, completely or in part. In addition, existing and any future patents we obtain may not be extensive enough to prevent others from using our technologies or from developing competing drugs and technologies.
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The patent position of specialty pharmaceutical and biotechnology companies generally is highly uncertain and involves complex legal and factual questions for which many legal principles remain unresolved. In recent years, patent rights have been the subject of significant litigation and, as a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent
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applications may result in patents not being issued to us in the U.S.United States or in other countries. Changes in either the patent laws or interpretation of patent laws in the U.S.United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the U.S.United States. Publications of discoveries in scientific literature often lag behind the actual discoveries and patent applications in the U.S.United States and other countries are typically not published until 18 months after filing or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents or pending patent applications or that we were the first to file for patent protection of such inventions. In addition, the United States Patent and Trademark Office or USPTO,(the “USPTO”), might require that the term of a patent issuing from a pending patent application be disclaimed and limited to the term of another patent that is commonly owned or names a common inventor. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights is highly uncertain.
Recent or future 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. In March of 2013, under the recently enacted Leahy-Smith America Invents Act or America Invents Act, the U.S. moved from a “first to invent” to a “first-to-file” system. Under a “first-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to a patent on the invention regardless of whether another inventor had made the invention earlier. The America Invents Act includes a number of other significant changes to U.S. patent law, including provisions that affect the way patent applications are prosecuted, redefine prior art and establish a new post-grant review system. The effects of these changes are currently unclear as the USPTO only recently developed new regulations and procedures in connection with the America Invents Act and many of the substantive changes to patent law, including the “first-to-file” provisions, only became effective in 2013. In addition, the courts have yet to address any of these provisions and the applicability of the Act and new regulations on specific patents discussed this report have not been determined and would need to be reviewed. However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition. We may become involved in opposition, interference, derivation, inter partiespartes review or other proceedings that challenge our patent rights or the patent rights of others and the outcome of any proceedings are highly uncertain. An adverse determination in any such proceeding could reduce the scope of or invalidate our patent rights, allowing third parties to commercialize our technology or drug products and compete directly with us, without payment to us or result in our inability to manufacture or commercialize products without infringing third-party patent rights.
Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or drugs in a non-infringing manner. The issuance of a patent is not conclusive as to its scope, validity or enforceability and our owned and licensed patents may be challenged in the courts or patent offices in the U.S.United States and abroad. Such challenges may result in the patent claims of our owned or licensed patents being narrowed, invalidated or held unenforceable.unenforceable and may cost significant time and resources to defend. This could limit our ability to stop or prevent us from stopping others from using or commercializing similar or identical technology and drugs or limit the duration of the patent protection of our technology and drugs. Given the amount of time required for the development, testing and regulatory review of new drug candidates, patents protecting use of our drug might expire before or shortly after SM-88 or any other drug product we developcandidate is commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to our drug products or otherwise provide us with a competitive advantage. Furthermore, changes to patent laws could diminish the value of patents in general, thereby impairing our ability to protect our rights in our product candidates.
We may not be able to protect our IP rights throughout the world.
Filing, prosecuting and defending patents for SM-88 or any otherour drug product we may developcandidates throughout the world would be prohibitively expensive. Competitors may use our technologies in countries where we have not obtained patent protection to develop their own drugs and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as in the U.S.United States. These products may compete with our drug products in countries where we do not have any issued patents and our patent claims or other IP rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending IP rights in foreign countries. The legal systems of a number of countries, particularly a number of developing countries, do not favor the enforcement of patents and other IP protection, including those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products against third parties in violation of our proprietary rights. Even if we do secure patents in foreign jurisdictions, the legal systems in certain of those countries might require us, as examples, to do business through an entity that is partially owned by a local investor, or to grant license rights to local partners in a manner not required by the jurisdictions in which we currently operate. Additionally, governmental actions, such as the potential waiver of intellectual property protection or imposition of compulsory licenses related to COVID-19 vaccines, or other potential waivers of intellectual property during emergencies, if applicable to any of our product candidates could harm our ability to successfully and profitably commercialize our product candidates. Requirements such as the foregoing could limit our ability to fully exploit and in the future monetize our product candidates and patents, as well as placing potential additional difficulties on our enforcement efforts in those
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jurisdictions. Further, the initiation of proceedings to enforce or protect our patent rights in foreign countries could result in substantial cost and divert our efforts and attention from other aspects of our business.
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Obtaining and maintaining our patent protection depends upon compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies. Our patent protection could be reduced or eliminated for noncompliance with these requirements.
The USPTO and various non-U.S. patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during and following the patent prosecution process. Our failure to comply with such requirements could result in abandonment or lapse of a patent or patent application, which would result in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would have been the case if our patents were in force.
We may become involved in lawsuits or other proceedings to protect or enforce our patents or other IP, which could be expensive, time-consuming and unsuccessful.
Competitors or other third parties may infringe or otherwise violate our patents, trademarks, copyrights or other IP. To counter infringement or unauthorized use, we or our licensees may be required to file infringement claims, which can be expensive and time-consuming. For example, if we need to file patent infringement lawsuits in the future against manufacturers of generic pharmaceuticals that have filed ANDAs with the FDA seeking approval to manufacture and sell generic versions of SM-88 or any otherour drug product we may develop,candidates, we anticipate that the prosecution of such lawsuits will require a significant amount of time and attention from our chief executive officer, chief financialscience officer and other senior executives. In addition, in a patent infringement proceeding, a court may decide that our patent is invalid or unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in the litigation or proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. Such a result could limit our ability to prevent others from using or commercializing similar or identical technology and drugs, limit our ability to prevent others from launching generic versions of our drug products and could limit the duration of patent protection for our products, all of which could have a material adverse effect on our business. A successful challenge to our patents could reduce or eliminate our right to receive royalties. Furthermore, because of the substantial amount of discovery required in connection with IP litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation.
Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.
Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. Other entities may have or obtain patents or proprietary rights that could limit our ability to make, use, sell, offer for sale or import/export SM-88, or any other approved drug candidate, or impair our competitive position.
Patents could be issued to third parties that we may ultimately be found to infringe. Third parties may have or obtain valid and enforceable patents or proprietary rights that could block us from developing drugproduct candidates using our technology. Our failure to obtain a license to any technology that we require or on commercially reasonable terms may materially harm our business, financial condition and results of operations. Moreover, our failure to maintain a license to any technology that we require for our drug products or their manufacture may also materially harm our business, financial condition and results of operations. Furthermore, we would be exposed to a threat of litigation.
In the pharmaceutical industry, significant litigation and other proceedings regarding patents, patent applications, trademarks and other IP rights have become commonplace. The types of situations in which we may become a party to such litigation or proceedings include:
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| we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties or to obtain a judgment that our drugs or processes do not infringe those third parties’ patents; |
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| if our competitors file patent applications that claim technology also claimed by us or our licensors or collaborators, we or our licensors or collaborators may be required to participate in interference |
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or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third-party with a dominant patent position; |
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| if third parties initiate litigation claiming that our processes or products infringe their patent or other IP rights, we and our licensors or collaborators will need to defend against such proceedings; and |
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| if a license to necessary drug technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe or misappropriate their patent or other IP rights and/or that we breached our obligations under the license agreement and we and our collaborators would need to defend against such proceedings. |
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These lawsuits would likely be costly and could affect our results of operations and divert the attention of our management and scientific personnel. There is a risk that a court would decide that we or our collaborators are infringing the third party’s patents and would order us or our collaborators to stop the activities covered by the patents. In that event, we or our collaborators may not have a viable alternative to the technology protected by the patent and may need to halt work on the affected drugproduct candidate or cease commercialization of an approved product. In addition, there is a risk that a court will order us or our collaborators to pay the other party damages. An adverse outcome in any litigation or other proceeding could subject us to significant liabilities to third parties and require us to cease using the technology that is at issue or to license the technology from third parties. We may not be able to obtain any required licenses on commercially acceptable terms or at all. Any of these outcomes could have a material adverse effect on our business.
The pharmaceutical and biotechnology industries have produced a significant number of patents and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts and the interpretation is not always uniform or predictable. If we are sued for patent infringement, we would need to demonstrate that our products or methods do not infringe the patent claims of the relevant patent or that the patent claims are invalid. We may not be able to do this because proving invalidity is difficult. For example, in the U.S.,United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings, we may incur substantial costs and divert management’s time and attention in pursuing these proceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or have infringed patents declared invalid, we may incur substantial monetary damages, encounter significant delays in bringing SM-88 or any otherour drug candidatecandidates to market and be precluded from manufacturing or selling one or more of our drug products.
As noted previously, the cost of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the cost of such litigation and proceedings more effectively than we can because of their substantially greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.For example:
• | patent litigation and other proceedings initiated by or against us may also absorb significant management time; |
• | if proceedings are initiated by or against the Company to determine the priority of invention, they could jeopardize our patent rights and potentially provide a third-party with a dominant patent position; |
• | if third parties initiate litigation claiming that our processes or products infringe their patent or other IP rights, we and our licensors or collaborators will need to defend against such proceedings; and |
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We may not be successful in obtaining or maintaining necessary rights to IP through acquisitions and in-licenses.
Because our drugs may require the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to acquire, in-license, maintain or use these proprietary rights. In addition, our drug products may require specific formulations to work effectively and efficiently and the rights to these formulations may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party IP rights from third parties that we identify as necessary for one or more of our drug candidates. The licensing and acquisition of third-party IP rights is a competitive area and a number of more established companies are also pursuing strategies to license or acquire third-party IP rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.
• | if a license to necessary drug technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe or misappropriate their patent or other IP rights and/or that we breached our obligations under the license agreement and we and our collaborators would need to defend against such proceedings. |
For example, we may sometimes need to collaborate with U.S. and non-U.S. academic institutions to accelerate our nonclinical research or development under written agreements with these institutions. Typically, these institutions could provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from our collaboration. Regardless of such option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us. If we are unable to do so, the institution may offer the IP rights to other parties, potentially blocking our ability to pursue the applicable drug candidate or program.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party IP rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtain a license to third-party IP rights necessary for the development of our drug products, we may have to abandon its development and therefore, our business and financial condition could suffer.
We may be unable to protect the confidentiality of our trade secrets, thus harming our business and competitive position.
In addition to our patented technology, and drug, we rely upon trade secrets, including unpatented know-how, technology and other proprietary information to develop and maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our current and future employees, as well as our collaborators and consultants. We also have agreements with our
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employees and selected consultants that obligate them to assign their inventions to us. However, while it is our policy to require our employees and contractors who may be involved in the conception or development of IP to execute such agreements, we may be unsuccessful in executing such an agreement with each party who in fact conceives or develops IP that we regard as our own. In addition, it is possible that technology relevant to our business will be independently developed by a person that is not a party to such an agreement. While to our knowledge the confidentiality of our trade secrets has not been compromised, if the employees, consultants or collaborators that are parties to these agreements breach or violate the terms of these agreements, we may not have adequate remedies for any such breach or violation and we could lose our trade secrets through such breaches or violations. Further, our trade secrets could be disclosed, misappropriated or otherwise become known or be independently discovered by our competitors. In addition, IP laws in foreign countries may not protect our IP to the same extent as the laws of the U.S.United States. If our trade secrets are disclosed or misappropriated, it would harm our ability to protect our rights and adversely affect our business.
We may be subject to claims that our employees and outside contractors have wrongfully used or disclosed IP from their former employers and clients. IP litigation or proceedings could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Although we will try to ensure that our employees and outside contractors do not use the proprietary information or the know-how of others in their work for us and we have no knowledge of any instances of wrongful use or disclosure by our employees and outside contractors to date, we may be subject to claims that we or these employees and outside contractors have used or disclosed IP, including trade secrets or other proprietary information from their former employers or clients. Litigation may be necessary to defend our Company against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable IP rights, personnel or consulting services. Even if we are successful in defending against such claims, litigation or other legal proceedings relating to IP claims may cause us to incur significant expenses and could distract our scientific and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. Should this occur and securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. This type of litigation or proceeding could substantially increase our operating losses and reduce resources available to us for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties
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resulting from the initiation and continuation of patent litigation or other IP-related proceedings could adversely affect our ability to compete in the marketplace.
If we do not obtain protection under the Hatch-Waxman Amendments and similar non-U.S. legislation for extending the term of patents covering SM-88 and any otherour drug product we may develop,candidates, our business may be materially harmed.
Depending upon the timing, duration and conditions of FDA marketing approval of SM-88 and any other drug product we may develop in the future, one or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 referred to as the Hatch-Waxman Amendments(the “Hatch-Waxman Amendments”) and similar legislation in the EU. The Hatch-Waxman Amendments permit a patent term extension of up to five years for a patent covering an approved drug as compensation for effective patent term lost during drug development and the FDA regulatory review process. However, we may not receive an extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the length of the extension could be less than we request. If we are unable to obtain patent term extension or the term of any such extension is less than we request, the period during which we can enforce our patent rights for that drug will be shortened and our competitors may obtain approval to market competing products sooner. As a result, our revenue could be materially reduced.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Our registered or unregistered trademarks or trade names, to the extent we obtain and use them, may be challenged, infringed, circumvented, declared generic, unregisterable or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.confusion or trademark dilution. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively, and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other IP may be ineffective and could result in substantial costs and a diversion of resources and could adversely affect our financial condition or results of operations.
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Risks Related to Government Regulations and Agencies
Health care reform measures could hinder or prevent the commercial success of SM-88 any otherour drug product we may develop.
candidates.
In the U.S.,United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect our future revenue and profitability and the future revenue and profitability of our potential customers. Federal and state lawmakers regularly propose and, at times, enact legislation that would result in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services. For example, one of the most significant health care reform measures in decades, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act was enacted in 2010 (“PPACA”). PPACAReform Law contains a number of provisions, including those governing enrollmentenrollments in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which will affecthave affected existing government healthcare programs and will resultresulted in the development of new programs. PPACA, among other things:Among the provisions of the Health Care Reform Law of importance to our current and potential product candidates are the following:
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| • | an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively; |
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• | extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations; |
• | expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, which include, among other things, new government investigative powers and enhanced penalties for non-compliance; |
• | expansion of eligibility criteria for Medicaid programs in certain states; |
• | expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; |
• | a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; |
• | a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and |
• | an independent payment advisory board that will submit recommendations to Congress to reduce Medicare spending if projected Medicare spending exceeds a specified growth rate. |
WhileAdditionally, various initiatives continue to increase pathways for patients to seek treatment of investigational products outside of clinical trials, including the U.S. Supreme Court upheld mostTrickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017, state right to try laws, and the constitutional elementsFDA’s Expanded Access program. These initiatives could potentially impact patient enrollment in clinical trials. These pathways do not currently include any obligations for a manufacturer to make its investigational products available to patients. The future direction and impact of PPACA in June 2012, other legal challenges are still pending final adjudication in several jurisdictions. In addition, Congress has also proposed a numberthese initiatives is unknown.
There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of legislativehealthcare and containing or lowering the cost of healthcare, including initiatives including possible repeal of PPACA. At this time, it remains unclear whether there willdesigned to control or influence product pricing. We cannot predict the initiatives that may be any changes made to PPACA, whether to certain provisions or its entirety. We can provide no assurance that PPACA, as currently enacted or as amendedadopted in the future, will not adversely affect our business and financial results and we cannot predict how future federal or state legislative or administrative changes relating to health care reform will affect our business.
future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of health care services to contain or reduce costs of health care may, among other things, adversely affect:
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| our ability to set a price we believe is fair for our drug products; |
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| our ability to generate revenue and achieve or maintain profitability; and |
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| the availability of capital. |
Judicial challenges, executive orders and legislative repeal measures relating to the Health Care Reform Law may create regulatory uncertainty with respect to the pharmaceutical, biotechnology and other life sciences industries and may materially harm our business, financial condition and results of operations.
Since its enactment, there have been executive, judicial and Congressional challenges to certain aspects of the Health Care Reform Law.
Although Congress has not passed comprehensive repeal legislation, several bills affecting the implementation of certain taxes under the Health Care Reform Law have been signed into law. The federal Tax Cuts and Jobs Act of 2017, or the Tax Act, includes a provision that became effective on January 1, 2019 and repealed the tax-based shared responsibility payment imposed by the Health Care Reform Law on certain individuals who fail to maintain qualifying health coverage for all or part of a year, which payment is commonly referred to as the “individual mandate.” In addition, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the Health Care Reform Law-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminated the health insurer tax. The Bipartisan Budget Act of 2018,
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or the BBA, among other things, amended the Health Care Reform Law, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” On December 14, 2018, a Texas U.S. District Court judge ruled that the Health Care Reform Law is unconstitutional in its entirety because the individual mandate was repealed by Congress as part of the Tax Act. Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the Health Care Reform Law are also invalid. On June 17, 2021, the Supreme Court ruled that the plaintiffs (consisting of the state of Texas, as well as other states and individuals) did not have proper standing and accordingly vacated the Fifth Circuit’s decision and instructed the district court to dismiss the case. As a result, the Affordable Care Act will remain in its current form for the foreseeable future, but we cannot predict when, or whether, additional challenges may arise and what the outcome of such challenge may be. The Biden administration has also introduced various measures in 2021 focusing on healthcare and drug pricing. On January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the Health Care Reform Law marketplace. The executive order also instructs 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 Health Care Reform Law. On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which, in relevant part, eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source drugs and innovator multiple source drugs, beginning January 1, 2024. In July 2021, the Biden administration released an executive order entitled, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs. In response, HHS released a “Comprehensive Plan for Addressing High Drug Prices” that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions that HHS can take to advance these principles. In November 2021, President Biden announced the “Prescription Drug Pricing Plan” as part of the Build Back Better Act (H.R. 5376) passed by the House of Representatives on November 19, 2021, which aims to lower prescription drug pricing by, among other things, allowing Medicare to negotiate prices for certain high-price prescription drugs covered under Medicare Part D and Part B after the drugs have been on the market for a certain number of years and imposing tax penalties on drug manufacturers that refuse to negotiate pricing with Medicare or increase drug prices “faster than inflation.” If passed, this bill could have a substantial impact on our business, particularly when we have commercially available products on the U.S. market, if ever.
Continued judicial challenges to the Health Care Reform Act and other executive action and legislation, could result in increased uncertainty with respect to the pharmaceutical, biotechnology and other life science industries and may materially harm our business, financial condition and results of operations. Further, we can provide no assurance that the Health Care Reform Law, as currently enacted or as amended in the future, or other related laws will not adversely affect our business, financial condition or results of operations. Nor can we predict how future federal or state legislative or administrative changes relating to health care reform will affect our business, financial condition or results of operations.
If we fail to comply with healthcare and privacy laws and regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
Certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are, and other healthcare issues and will be, applicable to our business. We could be subject to healthcare fraud and abuse, privacy and patient privacysecurity, and transparency regulation by both the federal government and the states in which we conduct our business. The regulations that may affect our ability to operate include, but are not limited to:
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| the federal healthcare program Anti-Kickback Statute, which prohibits knowingly and willfully offering, soliciting, receiving or providing any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, in exchange for or to induce either the referral of an individual for or the purchase order, lease or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under federal healthcare programs, such as the Medicare and Medicaid programs; |
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| the federal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting or causing to be presented, false or fraudulent claims for payment or approval or knowingly using false statements, to obtain payment from the federal government and which may apply to entities like us which provide coding and billing advice to customers; |
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| the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) which created new federal criminal statutes that prohibit knowingly and willfully executing or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of or payment for, healthcare benefits, items or services relating to healthcare matters; |
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| the federal physician self-referral law, commonly known as the Stark Law, which prohibits a physician from making a referral to an entity for certain designated health services reimbursed by Medicare or Medicaid if the physician or a member of the physician’s family has a financial relationship with the entity and which also prohibits the submission of any claims for reimbursement for designated health services furnished pursuant to a prohibited referral; |
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| the federal transparency requirements under |
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| HIPAA, |
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| state, local and foreign law equivalents of each of the above federal laws, such as anti-kickback, false claims and transparency laws, which may be broader in scope and apply to items or services reimbursed by any third-party payor, including commercial |
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PPACA,
data protection and data security laws are designed to be consistent with the GDPR, uncertainty remains regarding how data transfers to and from the U.K. will be regulated notwithstanding Brexit. |
The Health Care Reform Law, among other things, amended the intent standard of the federal Anti-Kickback Statute and criminal healthcare fraud statutes to a stricter standard such that a person or entity no longer needs to have actual knowledge of a violation of this statute or specific intent to violate it.it to be convicted. In addition, PPACAthe Health Care Reform Law codified case law held that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act.
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, criminal and/or administrative penalties, damages, fines, disgorgement and possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results. Any action against us for violation of these or other laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security, fraud and fraudabuse, and transparency laws may prove costly.
Changes in tax laws or regulations that are applied adversely to us may have a material adverse effect on our business, financial condition or results of operations.
New tax laws or regulations could be enacted at any time, and existing tax laws or regulations could be interpreted, modified or applied in a manner that is adverse to us, which could adversely affect our business and financial condition. For example, the Tax Act resulted in many significant changes to the U.S. tax laws, including changes in corporate tax rates, the utilization of our net operating loss carryforwards, or NOLs, and other deferred tax assets, the deductibility of expenses, and the taxation of foreign earnings. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified by future legislation. For example, The Coronavirus Aid, Relief, and Economic Security (CARES) Act modified certain provisions of the Tax Act. In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act, or any newly enacted federal tax legislation. The impact of changes under the Tax Act, the CARES Act, or future reform legislation could increase our future U.S. tax expense and could have a material adverse impact on our business and financial condition. We urge our stockholders to consult with their legal and tax advisors with respect to these legislations and the potential tax consequences of investing in or holding our common stock.
We are subject to anti-corruption laws, as well as export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures and legal expenses, which could adversely affect our business, results of operations and financial condition.
Our operations are subject to anti-corruption laws, including the Foreign Corrupt Practices Act (“FCPA”) and other anti-corruption laws that apply in countries where we operate or may do business in the future. The FCPA and these other laws generally prohibit us, our officers and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. We may in the future operate in jurisdictions that pose a high risk of potential FCPA violations, and we may participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under the FCPA or local anti-corruption laws. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted.
Because our business is heavily regulated, it therefore involves significant interaction with public officials. We have or will have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations. Additionally, in many other countries, the healthcare providers who prescribe pharmaceuticals are employed by their government and the purchasers of pharmaceuticals
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are government entities; therefore, any dealings with these prescribers and purchasers are subject to regulation under the FCPA.
We are also subject to other laws and regulations, including regulations administered by the governments of the United States, United Kingdom, and authorities in the EU, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange regulations, which we collectively refer to as Trade Control Laws.
There is no assurance that we will be completely effective in ensuring our compliance, or the compliance of our employees, agents, suppliers, manufacturers, contractors, or collaborators, with all applicable anti-corruption laws, including the FCPA or other legal requirements, including Trade Control Laws. If we are not in compliance with the FCPA, the Bribery Act and other anti-corruption laws or Trade Control Laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA’s accounting provisions. Any of the foregoing could have an adverse impact on our reputation in the industry as well as our business, financial condition, results of operations and liquidity.
Because we and our suppliers are subject to environmental, health and safety laws and regulations, we may become exposed to liability and substantial expenses in connection with environmental compliance or remediation activities, which may adversely affect our business and financial condition.
Our operations, including our discovery, development, testing, research and manufacturing activities, are subject to numerous environmental, health and safety laws and regulations. These laws and regulations govern, among other things, the controlled use, handling, release and disposal of and the maintenance of a registry for, hazardous materials and biological materials, such as chemical solvents, human cells, carcinogenic compounds, mutagenic compounds and compounds that have a toxic effect on reproduction, laboratory procedures and exposure to blood-borne pathogens. If we fail to comply with such laws and regulations, we could be subject to fines or other sanctions.
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As with other companies engaged in activities similar to ours, we face a risk of environmental liability inherent in our current and historical activities, including liability relating to release of or exposure to, hazardous or biological materials. Environmental, health and safety laws and regulations are becoming more stringent. We may be required to incur substantial expenses in connection with future environmental compliance or remediation activities, in which case, our production and development efforts may be interrupted or delayed and our financial condition and results of operations may be materially adversely affected.
The third parties with whom we contract to manufacture SM-88 or any otherour drug products we may developcandidates are also subject to these and other environmental, health and safety laws and regulations. Liabilities they incur pursuant to these laws and regulations could result in significant costs or, in certain circumstances, an interruption in operations, any of which could adversely affect our business and financial condition if we are unable to find an alternate supplier in a timely manner.
Changes in funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal functions on which the operation of our business may rely, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. FDA review time and communications with the FDA may be delayed, prolonged and otherwise negatively impacted by the FDA’s response to the COVID-19 pandemic. With many FDA staff working on COVID-19 activities, it is possible the FDA may need to reprioritize work in order to appropriately address the ongoing pandemic. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is
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inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including most recently beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
Our employees, consultants, collaborators and other third parties may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees, couldconsultants, collaborators and other third parties include intentional failures to comply with FDA or EMA regulations, to provide accurate information to the FDA or EMA or intentional failures to report financial information or data accurately or to disclose unauthorized activities to us. Employee misconductMisconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation and subjects. 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 governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. 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 significant impact on our business, including the imposition of significant fines or other sanctions.
If generic manufacturers use litigation and regulatory means to obtain approval for generic versions of products on which our future revenue depends, our business will suffer.
Under the U.S.Federal Food, Drug, and Cosmetic Act (“FDCA”(the “FDCA”), the FDA can approve an ANDA for a generic version of a branded drug without the ANDA applicant undertaking the clinical testing necessary to obtain approval to market a new drug. In place of such clinical trials, an ANDA applicant usually needs only to submit data demonstrating that its drug has the same active ingredient(s) and is bioequivalent to the branded product, in addition to any data necessary to establish that any difference in strength, dosage form, inactive ingredients or delivery mechanism does not result in different safety or efficacy profiles, as compared to the reference drug.
The FDCA requires that an applicant for approval of a generic form of a branded drug certify either that its generic drug does not infringe any of the patents listed by the owner of the branded drug in the Approved Drug Products with Therapeutic Equivalence Evaluations, also known as the Orange Book, or that those patents are not enforceable. This process is known as a Paragraph IV Challenge. Upon receipt of the Paragraph IV notice, the owner has 45 days to bring a patent infringement suit in federal district court against the company seeking ANDA approval of a drug covered by one of the owner’s patents. The discovery, trial and appeals process in such suits can take several years. If this type of suit is commenced, the FDCA provides a 30-month stay on the FDA’s approval of the competitor’s application. This type of litigation is often time-consuming, costly and may result in generic competition if the patents at issue are not upheld or if the generic competitor is found not to infringe upon the owner’s patents. If the litigation is resolved in favor of the ANDA applicant or the challenged patent expires during the 30-month stay period, the stay is lifted and the FDA may thereafter approve the application based on the usual standards for approval of ANDAs.
For various strategic and commercial reasons, manufacturers of generic medications frequently file ANDAs shortly after FDA approval of a branded drug regardless of the perceived strength and validity of the patents associated with such products. Based on these past practices, we believe it is likely that one or more such generic manufacturers will file ANDAs with respect to SM-88, if approved by the FDA, prior to the expiration of the patents related to those compounds.
The filing of an ANDA as described above with respect to any of our products could have an adverse impact on our stock price. Moreover, if any such ANDAs were to be approved and the patents covering the relevant products were
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not upheld in litigation or if a generic competitor were found not to infringe these patents, the resulting generic competition would negatively affect our business, financial condition and results of operations.
The
If approved, the marketing offor SM-88 if approved,or other drug candidates, will be limited to use for the treatment of specific approved cancer or antiviral indications, as applicable, and, if we want to expand the indications for which these drug candidates may be marketed, additional regulatory approvals will need to be obtained, which may not be granted.
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If SM-88 is approvedIn addition to other areas of regulatory oversight, we will also need to comply with a variety of laws and regulations concerning the advertising and promotion of our products. For instance, the FDA closely regulates the post-approval labeling, marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, product-specific risk evaluation mitigation strategies (REMS), industry-sponsored scientific and educational activities and promotional activities involving the internet. Drugs may be marketed only for the first indication that we decide to pursue to an NDA, the FDA will restrict our ability to market or advertise SM-88 for other indications, which could limit physician and patient adoption. We may attempt to develop, promote and commercialize new treatmentapproved indications and protocols forin accordance with the provisions of the approved labeling. If we desire to market additional indications for SM-88, butour drug candidates, we cannot predict when or if the approval requiredwill need to do so will be received. In addition, we would be required to conductseek additional regulatory approvals requiring additional clinical trials to support approvals for additionalthe new indications, for SM-88, which would be time-consuming and expensive and may produce results that do not support regulatory approvals. If we do not obtain additional regulatory approvals, our ability to expand our business will be limited.
If SM-88 is approvedWhile physicians may choose to prescribe drugs for marketing and we are found to have improperly promoted off-label uses or if physicians misuse our products or use our products off-label, we may become subject to prohibitions on the sale or marketing of our products, significant fines, penalties, sanctions and drug liability claims.Additionally, our image and reputation within the industry and marketplace could be harmed.
The FDA and other regulatory agencies strictly regulate the marketing and promotional claims that are made aboutnot described in a product’s labeling and for uses that differ from those tested in clinical studies and approved drugs. In particular, a drug may not be promoted for use orby the regulatory authorities, our ability to promote products is limited to those indications that are notspecifically approved by the FDA, or such othersimilar regulatory agencies as reflectedauthorities outside the United States. These “off-label” uses are common across medical specialties and may constitute an appropriate treatment for some patients in certain circumstances. Regulatory authorities in the product’s approved labeling. For example, if we receive marketing approval for SM-88 forU.S. generally do not regulate the first indication we are pursuing, we cannot preventbehavior of physicians from using SM-88 forin their patients in a manner that is inconsistent withchoice of treatments. Regulatory authorities do, however, restrict promotion by pharmaceutical companies on the approved label.subject of off-label use. If we are found to have promoted suchour products for off-label uses prior toafter FDA approval for the applicable indication(s), or to have engaged in inappropriate pre-approval promotion of any approved drug candidate, we may receive untitled or warning letters and become subject to significant liability, which would materially harm our business. The federal government hasand states’ attorneys general have levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. If we become the target of such an investigation or prosecution based on our marketing and promotional practices, we could face similar sanctions, which would materially harm our business. In addition, management’s attention could be diverted from our business operations, significant legal expenses could be incurred and our reputation could be damaged. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If we are deemed by the FDA to have engaged in the promotion of our products for off-label use or engage in improper pre-approval promotion, we could be subject to FDA prohibitions on the sale or marketing of our products or significant fines and penalties and the imposition of these sanctions could also affect our reputation and position within the industry.
Physicians may also misuse our products, potentially leading to adverse results, side effects or injury, which may lead to drug liability claims. If our products are misused, we may become subject to costly litigation by our customers or their patients. Drug liability claims could divert management’s attention from our core business, be expensive to defend and result in sizable damage awards against us that may not be covered by liability insurance. Furthermore, the use of our products for indications other than those approved by the FDA may not effectively treat such conditions, which could harm our reputation in the marketplace among physicians and patients. Any of these events could harm our business and results of operations and cause our stock price to decline.
Additionally, as with an existing number of previously approved therapeutics to treat cancer, the FDA may require us to educate health care providers and patients about the proper use and administration of SM-88 or any other drug products we develop in the future and obtain FDA approval to market.
Being a public company is expensive and administratively burdensome.
As a public reporting company, we are subject to the information and reporting requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act and other federal securities laws, rules and regulations related thereto, including compliance with the Sarbanes-Oxley Act.SOX. Complying with these laws and regulations requires the time and attention of our board of directorsBoard and management and increases our expenses. Among other things, we are required to:must:
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The costscost of preparing and filing annual, quarterly and quarterlycurrent reports, and Forms 8-K, proxy statements and other information with the SEC and furnishing annual reports containing audited financial statements to stockholders is expensive and much greater than that of a privately-held company and compliancecompany. Compliance with these rules and regulations may require us to hire additional financial reporting, internal controls and other finance personnel and will involve a material increase insignificant regulatory, legal and accounting expenses and the attention of management.management, including as a result of changing laws, regulations and standards. There can be no assurance that we will be able to comply with the applicable regulations in a timely manner, if at all. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
Additionally, there continues to be public interest and increased legislative pressure related to public companies’ ESG activities. We risk negative stockholder reaction, including from proxy advisory services, as well as damage to our brand and reputation, if we do not act responsibly in a number of key areas, including diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency and employing ESG strategies in our operations. A growing number of states are requiring organizations to report their board composition and/or mandating gender diversity, including New York and California. Beginning with our 2022 Proxy Statement, we will be required to publicly disclose consistent, transparent diversity statistics regarding our Board and, in subsequent years, we will be required to have, or disclose why we do not have, a minimum of two diverse board members.
In addition, being a public company makes it more expensive for us to obtain director and officer liability insurance. Premiums for director and officer insurance can vary substantially from year-to-year and have recently been increasing due to the growth in threatened and actual suits across public companies, which is even more pronounced in biotechnology. In the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage. These factors could also make it more difficult for us to attract and retain qualified executives and members of our board of directors,Board, particularly directors willing to serve on an audit committee that we expect to establish in the future.
We will continue to incur relatively outsized costs as a result of recently becoming a public company and in the administration of our organizational structure.
As a newly public company, we will incur significant legal, accounting, insurance and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the SEC. We will continue to incur ongoing periodic expenses in connection with the administration of our organizational structure. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. In estimating these costs, we took into account expenses related to insurance, legal, accounting, and compliance activities, as well as other expenses not currently incurred. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
Any failure to maintain effective internal control over our financial reporting could materially adversely affect us.
Section 404 of the Sarbanes-Oxley Act of 2002 requires us to include in our Annual Reports on Form 10-K an assessment by management of the effectiveness of our internal control over financial reporting. Based upon an evaluation conducted in connection with the preparation of Tyme’s audited consolidated financial statements as of December 31, 2015, our current management concluded that our disclosure controls and procedures were not effective as of such date. Specifically, our management determined that there were control deficiencies constituting material weaknesses, including those relating to segregation of duties over cash disbursements, oversight of our outside accounting firm by management, disclosures and the preparation of financial statements. In addition, at the present time, we do not have an audit committee.
We intend to implement a number of changes in our internal control over financial reporting. With the additional recent funding provided and the recent retention of a full-time Chief Financial Officer, we intend to conduct a full analysis of our controls and procedures, segregate duties regarding processing disbursements, enact procedures aimed at timely and effectively maintaining our books and records and financial statement preparations, establish further procedures for analyzing both financial and transactional activities including verifying that all amounts are properly recorded, and take other appropriate steps aimed at giving us reasonable assurance that required disclosures are properly included and amounts properly presented in our financial statements.
We must perform system and process evaluation and testing of our internal control over financial reporting to allow management and (when required in future) our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404. Our compliance with Section 404 may require that we incur substantial accounting expenses and expend significant management efforts. We currently do not have an internal audit group and we will need to retain the services of additional accounting and financial staff or consultants with appropriate public company experience and technical accounting knowledge to satisfy the ongoing requirements of Section 404. We intend to review the effectiveness of our internal controls and procedures and make any changes management determines appropriate, including those intended to assure that we achieve full compliance with Section 404 by the date on which we are required to so comply.
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While we intend to diligently and thoroughly document, review, test and improve our internal control over financial reporting in order to ensure compliance with Section 404 in the future, management may not be able to conclude that our internal control over financial reporting is effective. Furthermore, even if management were to reach such a conclusion, if our independent registered public accounting firm is not satisfied with the adequacy of our internal control over financial reporting or if the independent auditors interpret the requirements, rules or regulations differently than we do, then they may decline to attest to management’s assessment or may issue an auditor’s report that is qualified. Any of these events could result in a loss of investor confidence in the reliability of our financial statements, which in turn could negatively affect the price of our common stock.
We are an “emerging growth company,” and we cannot be certain whether the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act or the JOBS Act, which was enacted in April 2012. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 or the Sarbanes-Oxley Act’s reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of our initial public offering of securities, which occurred in March 2012, (b) in which we have total annual gross revenue of at least $1,000,000,000 or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700,000,000 as of a preceding measurement date, and (2) the date on which we have issued more than $1,000,000,000 in non-convertible debt securities during the prior three-year period. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may suffer or be more volatile.
Risks Related to Ownership of Our Common Stock
Our share price is likely to be volatile due to factors beyond our control. There is the possibility that the market price of our common stock may drop below the price paid by investors.
All readers of this report should consider an investment in our common stock as risky and invest in our common stock only if the investor can withstand a significant loss and wide fluctuations in the market value of an investment. Investors may be unable to sell their shares of our common stock at or above the price they paid for their shares due to fluctuations in the market price of our common stock arising from changes in our operating performance or prospects. In addition, the stock market has recently experienced significant volatility, particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks. The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. Some of the factors that may cause the market price of our common stock to fluctuate include, but are not limited to:
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In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit and divert the time and attention of our management, which could seriously harm our business.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish substantial rights.
Until such time, if ever, as we can generate substantial revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, grants and licensing and development agreements in connection with any collaborations. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, then outstanding stockholders’ ownership interests in our Company will be diluted and the terms of these new securities may include liquidation or other preferences that adversely affect rights of holders of our common stock. Debt financing, if available at all, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, drug candidates, future revenue streams or grant licenses on terms that are not favorable to us. We cannot give any assurance that we will be able to obtain additional funding if and when necessary or on satisfactory terms. If we are unable to obtain adequate financing on a timely basis, we could be required to delay, scale back or eliminate one or more of our development programs or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.
Future issuances of our common stock or rights to purchase our common stock pursuant to our equity incentive plan or outstanding options and warrants could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.
We are authorized to grant equity awards, including stock grants and stock options, to our employees, directors and consultants, covering up to 10,000,000 shares of our common stock, pursuant to our 2015 Equity Incentive Plan (the “2015 Plan”). We plan to register the shares available for issuance or subject to outstanding awards under our 2015 Plan. Future issuances, as well as the possibility of future issuances, under our 2015 Plan or other equity incentive plans could cause the market price of our common stock to decrease.
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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.
The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us and our business. Securities and industry analysts may choose not to publish research on our Company. If no, or an insufficient number of, securities or industry analysts provide coverage of our Company, the trading price for our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our stock price would likely decline. Further, if one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Because our board is responsible for appointing the members of our management team, these provisions could, in turn, affect any attempt by our stockholders to replace current members of our management team. Among others, these provisions include that:
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Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Investors could lose all of their investment in our Company.
An investment in our securities is speculative and involves a high degree of risk. Potential investors should be aware that the value of an investment in our Company may go down as well as up. In addition, there can be no certainty that the market value of an investment in our Company will fully reflect its underlying value. Due to these risks and the other risks described in this report, investors could lose their entire investment in our Company.
Investors may experience dilution of their ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.
In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our stockholders at the time of such issuances. We are authorized to issue an aggregate of 300,000,000 shares of common stock and 10,000,000 shares of “blank check” preferred stock. We may issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining employees, future
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acquisitions, future sales of our securities for capital raising purposes or for other business purposes. The future issuance of any such additional shares of our common stock may create downward pressure on the trading price of our common stock. We will need to raise additional capital in the near future to meet our working capital needs and there can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at a price (or exercise prices) below the price a stockholder at the time of such securities issuance paid for such stockholder’s stock.
The ability of our board of directors to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of our Company. Our board is authorized to issue up to 10,000,000 shares of preferred stock with powers, rights and preferences designated by it. (See “Preferred Stock” in “Description of Securities.”) Shares of voting or convertible preferred stock could be issued or rights to purchase such shares could be issued, to create voting impediments or to frustrate persons seeking to affect a takeover or otherwise gain control of our Company. The ability of our board to issue such additional shares of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of our Company by tender offer or other means. Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price that such an attempt could cause. Moreover, the issuance of such additional shares of preferred stock to persons friendly to our board could make it more difficult to remove incumbent managers and directors from office even if such change were to be favorable to stockholders generally.
There currently is a limited public trading market for our common stock and there can be no assurance that an active trading market will ever develop. Failure to develop or maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for a holder of shares of our common stock to sell such shares.
There is currently a limited public trading market for shares of our common stock and an active one may never develop. Our common stock currently is quoted on the QM Tier of OTC Markets. The OTC Markets, generally, is a thinly traded market and lacks the liquidity of certain other public markets with which some investors may have more experience. We may not ever be able to satisfy the listing requirements for our common stock to be listed on a national securities exchange, which is often a more widely-traded and liquid market. Some, but not all, of the factors that may delay or prevent the listing of our common stock on a more widely-traded and liquid market include the following:
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Should we fail to satisfy the initial listing standards of the national exchanges or our common stock is otherwise rejected for listing and remains listed on the OTC Markets or is suspended from the OTC Markets, the trading price of our common stock could decline and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility.
Our common stock may be subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.
Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” which, for the purposes relevant to us, is any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
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In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
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Sets forth the basis on which the broker or dealer made the suitability determination; and
Confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.
While our common stock currently has a market price in excess of $5.00, such may not remain the case and our common stock may, in the future, become subject to the “penny stock” rules.
Our stock may be traded infrequently and in low volumes, so investors may be unable to sell their shares at or near the quoted bid prices if they need to sell their shares.
Until our common stock is listed on a national securities exchange such as the New York Stock Exchange or the Nasdaq Stock Market, we expect our common stock to remain eligible for quotation on the OTC Markets or on another over-the-counter quotation system. In those venues, however, the shares of our common stock may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small or non-existent. An investor may find it difficult to obtain accurate quotations as to the market value of our common stock or to sell the investor’s shares at or near bid prices or at all. In addition, if we fail to meet the criteria set forth in SEC regulations, including those relating to “penny stocks,” various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling our common stock, which may further affect the liquidity of our common stock. This would also make it more difficult for us to raise capital.
We do not anticipate paying dividends on our common stock.
Cash dividends have never been declared or paid on our common stock and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, our stockholders will likely not receive any funds absent a sale of their shares of our common stock. If we do not pay dividends, our common stock may be less valuable because a return on an investment in shares of our common stock will only occur if our stock price appreciates. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment.
The ownership interests in our Company held by two of our executive officers and directors could allow them to significantly influence corporate decision-making in a manner that may not reflect the interests of all of our stockholders.
Steve Hoffman, our Chief Executive Officer, Chief Science Officer and a director, and Michael Demurjian, our Chief Operating Officer, Executive Vice President and a director, each own of record approximately 31.3% of our outstanding common stock as of February 1, 2016. As a result, these individuals are positioned to exercise significant influence over our Company’s management and affairs, including, but not limited to, electing our board of directors and exercising managerial influence and voting rights in connection with fundamental corporate transactions, and take action that may not reflect the best interests of all of the stockholders of our Company.
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Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and pose challenges for our management.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations promulgated thereunder, the Sarbanes-Oxley Act and SEC regulations have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the U.S. public markets. Our management team will need to devote significant time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.
We will need to raise substantial additional capital in the future to fund our operations and we may be unable to raise such funds when needed and on acceptable terms.
When we elect to raise additional funds or additional funds are required, we may raise such funds from time to time through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives. Additional equity or debt financing or corporate collaboration and licensing arrangements may not be available on advantageous or reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms advantageous or reasonable to us, we will be prevented from our ability to generate revenues and achieve or sustain profitability will be substantially harmed.
If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences, which are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, our business, operating results, financial condition and prospects could be materially and adversely affected and we may be unable to continue our operations. These factors raise substantial doubt about our ability to continue as a going concern.
Our common stock is subject to price volatility unrelated to our operations.
The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or ourselves. In addition, the OTC Market Group, Inc.’s OTC QB tier is subject to extreme price and volume fluctuations in general. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
We are a smaller reporting company as defined in Regulation S-K of the Securities Act, and are not required to provide the information under this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
ITEM 2. | PROPERTIES |
Our principal executive offices are located at 48 Wall Street -1 Pluckemin Way – Suite 1100, New York, New York 10005,103, Bedminster, NJ 07921 where we lease and occupy approximately 1,1001,962 square feet of office space. We lease these offices under a three-month lease that provides for automatic renewals, unless either party gives notice of non-renewal. The current term of our lease expires on March 31, 2016 and we anticipate renewing the lease for an additional three-month term. Historically, our costs for this office are approximately $46,000 per year.
We also maintain an office in Red Bank, New Jersey, where we lease and occupy approximately 150 square feet of office space. We lease this office under a lease, expiring in March of 2016. We estimate our total annual costs for this office at approximately $6,600$43,200 per year.year plus utilities and other expenses.
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We believe that our existing facilities areoffice space is adequate for our current and near-term growth of our administrative needs. When our current lease term expires, we may exercise our renewal option or look for additional or alternate space for our operations. We believe that suitable additional or alternative space will be available in the future on commercially reasonable terms. We will rely on clinical research centers, hospitals, contract research organizations and other parties for suitable space and facilities to conduct our clinical trials. We will explore, in the future, establishing a dedicated technical facility, when we believe the need for such a facility has arisen. No assurance can be given that such a facility can be located without difficulty or at a cost favorable to us.
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 3. LEGAL PROCEEDINGS
Except as set forth below, weWe are not currently a party to any material legal proceedings and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on us, our business, operating results or financial condition.
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As described in greater detail under “Business – Corporate History; Significant Organizational Events,” on March 5, 2015, we entered into a Merger Agreement and certain associated transactions, including capitalized terms used below that are detailed and defined under such caption. Pursuant to the Merger Agreement, we, Acquisition Sub and Tyme entered into a reverse triangular merger pursuant to which (a) Acquisition Sub merged into Tyme with Tyme as the surviving entity, (b) Tyme became a wholly-owned subsidiary of us, and (c) the former shareholders of Tyme collectively acquired approximately 79% of our outstanding shares of Common Stock after giving effect to the Merger and the other transactions contemplated by the Merger Agreement.
The shares allocated to our respective stockholders were subject to a number of post-closing adjustments based upon future contingencies. The Merger Agreement required that certain shares then owned by GEM (equal to 3,500,000) would be subject to contingencies and, as a result, they were placed in escrow by GEM pursuant to an escrow agreement and are referred to in this report as Adjustment Shares.
As part of such contingencies and commitments under the Merger Agreement, no Qualified Offering occurred by the Qualified Offering Trigger Termination Date. As a result, as contemplated by the Merger Agreement, the Adjustment Shares are required to be surrendered to us for cancellation under the Adjustment Shares Escrow Agreement.
On November 10, 2015, we made demand of the escrow agent holding the Adjustment Shares for their surrender for cancellation. On November 17, 2015, GEM challenged such demand. On December 2, 2015, we filed a complaint against GEM with the Supreme Court of New York, seeking, among other things, a declaratory judgment directing GEM to deliver to us the 3,500,000 Adjustment Shares for cancellation.
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
Our executive officers and their positions as of May 25, 2022 were:
Title and Business Experience | Age | |||
Richard Cunningham | Mr. Cunningham has served as Chief Executive Officer since November 2020. | 51 | ||
James Biehl | Mr. Biehl has served as our Chief Legal Officer and Secretary since September 2018 and served on our Board from 2017 until September 2018. | 58 | ||
Dr. Jonathan Eckard, PH.D. | Dr. Eckard has served as Chief Scientific Affairs Officer since August 2017 and assumed the role of Chief Business Officer in March 2019. | 48 | ||
Barbara C. Galaini | Ms. Galaini has served as our Principal Accounting Officer since August 2018 and our Corporate Controller since April 2018. | 64 | ||
Frank Porfido | Mr. Porfido has served as our Chief Financial Officer since June 14, 2021. | 58 | ||
Jan Van Tornout | Mr. Tornout has served as our acting Chief Medical Officer since April 1, 2021. | 66 |
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PART II
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Public market for our common stock
Our common stock is currently quotedhas been traded on the OTC Markets, QB Tier,Nasdaq Capital Market under the symbol “TYMI.” OTC Markets securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Markets securities transactions are conducted through a telephone and computer network connecting dealers. OTC Markets issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
Previously and until September 26, 2014,“TYME” since July 27, 2017. Prior to July 27, 2017, our common stock was quoted on the OTC Markets,over-the counter market, QB Tier, under the symbol “GGET.“TYME.” Prior to March 12, 2015, there were no reported sales of our common stock on the OTC Market. Since such date, there have been only a limited number of shares of our common stock reported by OTC Markets as having been traded. There can be no assurance given that a regularOur transfer agent is Continental Stock and active trading market for our common stock will ever develop. Transfer and Trust Company.
The following table sets forth, for the periods indicated, the pricesclosing price of the common stock in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown, or commission and may not represent actual transactions. There is an absence of an established trading market for our commonTYME stock as the market is limited, sporadic and highly volatile, which may affect the prices listed below.of May 20, 2022 was $0.27.
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Quarter Ended |
| High |
| Low |
March 31, 2015 |
| $6.75 |
| $0.10 |
June 30, 2015 |
| $8.35 |
| $6.75 |
September, 2015 |
| $8.50 |
| $7.50 |
December 31, 2015 |
| $11.25 |
| $8.48 |
Holders
Holders; Shares Outstanding
We had a total of 87,611,370172,206,894 shares of our common stock outstanding on March 23, 2016,May 20, 2022, held by 41approximately 170 stockholders of record. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in “street name” by brokers and other nominees.
Dividend Policy
We have never paid any cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements. Any future determination to pay cash dividends will be at the discretion of our board of directorsBoard and will be dependent upon financial condition, results of operations, capital requirements and such other factors as our boardBoard deems relevant. Further, in the event that we issue any shares of a class or series of our preferred stock, the designation of such class or series could limit our ability to pay dividends on our common stock.
Securities Authorized for Issuance underUnder Equity Compensation PlansPlan
TheReference is made to the information requiredin Item 12 of this report under the caption “Equity Compensation Plans in effect as of March 31, 2022,” which is incorporated herein by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from our definitive proxy statement to be filed pursuant to Regulation 14A.reference.
Recent Sales of Unregistered SecuritiesShare Repurchases
We issued, effective as of February 2, 2016, to a total of two individuals, forDuring the aggregate consideration of $3,100,000, (i) 775,000twelve months ended March 31, 2022, we did not repurchase any shares of our common stock and (ii) 461,384 ten-year common stock purchase warrants entitling its holder to purchase one share of our common stock at a purchase price of $5.00 per share. stock.
We also issued, effective as of December 31, 2015, an aggregate of 9,999 shares of our common stock to our three independent directors, an advisor to our board of directors and the five members of our scientific and medical advisory board, in accordance with our independent director compensation policy, our agreement with such advisor and our scientific and medical advisory board compensation policy.
We also issued, effective December 23, 2015, to a total of three individuals and entities, for the aggregate consideration of $3,000,000, (i) 750,000 shares of our common stock and (ii) 466,500 ten-year common stock purchase warrants entitling its holder to purchase one share of our common stock at a purchase price of $5.00 per share.
Effective December 21, 2015, we issued to a law firm, in satisfaction of $200,000 of outstanding fees for services rendered, (i) 50,000 shares of our common stock and (ii) 29,767 ten-year common stock purchase warrants entitling its holder to purchase one share of our common stock at a purchase price of $5.00 per share.
We believe that the issuance of these shares was exempt from the registration requirements of the Securities Act of 1933 under Section 4(2) of the Securities Act as such issuance did not involve any public offering.
Use of Proceeds from Registered Securities
None.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. | [RESERVED] |
Not applicable.
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ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Annual Report. Some of the informationcontained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. As used in this report, unless the context suggests otherwise, “we,” “us,” “our,” “the Company”Company,” “TYME” or “Tyme Technologies” refer to Tyme Technologies, Inc., together with its subsidiaries.
Overview
We were originally formedTYME is an emerging biotechnology company developing CMBTs that are intended to be effective across a broad range of solid tumors and hematologic cancers, while also maintaining patients’ quality of life through relatively low toxicity profiles. Unlike targeted therapies that attempt to regulate specific mutations within cancer, the Company’s therapeutic approach is designed to take advantage of a cancer cell’s innate metabolic requirements to cause cancer cell death through oxidative stress and exposure to the body’s natural immune system.
The Company is currently focused on developing its novel compound, SM-88, as well as further evaluating its preclinical pipeline of novel CMBTTM programs, and TYME 19 as a potential therapeutic for SARS Co V-2 diseases. The Company is also exploring options to further diversify its product candidate pipeline. The Company believes that early clinical results demonstrated by SM-88 in Floridamultiple advanced cancers, including breast, sarcomas, pancreatic, and prostate, reinforce the potential of our emerging CMBT™ pipeline.
Exploration of Strategic Options and Diversification
On March 29, 2022, we announced that the Board of Directors of the Company (the “Board”) had decided to explore potential strategic options to enhance stockholder value and engaged outside financial and legal advisors to assist with that process.
The Company continues to believe there are additional opportunities that could enhance value for TYME stockholders, notwithstanding its announcement, in January 2022, of the discontinuation of a randomized Phase II/III trial of SM-88 in combination with MPS for patients with metastatic pancreatic cancer, the most advanced clinical trial studying SM-88, upon learning that the trial sponsor terminated the study arm due to futility. TYME believes that being well-capitalized affords it the ability to consider a wide range of strategic options and is conducting a formal evaluation process with its financial advisor Moelis & Company LLC.
The Strategic Planning Committee of the Board, which is led by TYME Board Member Timothy C. Tyson, who possesses over 35 years of biotechnology and pharmaceutical industry experience, including multiple M&A transactions, is acting as Transaction Committee in connection with this process. There can be no assurance that this process will result in any such transaction. The Company does not undertake any obligation to provide any updates with respect to these matters except as required by applicable law.
Strategic Review
In the first half of calendar year 2021, the Company undertook a comprehensive strategic review with the goal of aligning the Company’s development plans with core strategic goals.
The strategic review was extensive and involved internal and external assessments by industry experts, KOLs and advisors with considerable experience in the various areas we sought to probe and explore.
The strategic review process resulted in several key takeaways including, but not limited to:
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• | broad activity across 15 cancer types as seen in the First in Human study and Compassionate Use program and confirmation of strong IP portfolio provides us extra development opportunities, for which focus is critical; |
• | the second-line Precision Promise trial was the priority in pancreatic cancer; |
• | breast cancer is a priority indication for development as part of pipeline diversification beyond pancreatic cancer; |
• | there is a need to refine our understanding of the MOA and identify biomarkers to enhance targeting of patient populations; and |
• | the rapidly changing COVID-19 landscape requires a reevaluation of the market potential and development pathway for |
TYME-19.
The Company’s current strategy, including ongoing studies, the Preclinical Pipeline Programs and diversification efforts, has been developed based on November 22, 2011,the takeaways from the strategic review, as well as on subsequent developments. Key elements of the Company’s strategy include to produce, market and sell an ultra-premium vodka product(i) successfully advance the development of SM-88 across a broad range of cancers, (ii) work towards identifying actionable biomarkers for patient selection or treatment response to retailers. We were not successfulSM-88, (iii) continue to invest in our effortstechnology platform and we turned our efforts towards seeking, investigatingexpand the breadth and if such investigation warranted, engaging in a business combination with a private entity whose business presented an opportunity for our stockholders.
Effective as of September 18, 2014, we (then constituting a Florida corporation with the name Global Group Enterprises Corp.) reincorporated in the State of Delaware by merging into our wholly-owned Delaware subsidiary, Tyme Technologies, Inc., which was formed on August 22, 2014 specifically for this purpose (the “Reincorporation”). Tyme Technologies, Inc. was the surviving corporation in such merger. As a result of the Reincorporation, among other things, (i) we changed our name to Tyme Technologies, Inc., (ii) we changed our jurisdiction of incorporation from Florida to Delaware, (iii) we increased our authorized capital stock from 250,000,000 shares of common stock, $0.0001 par value per share, to 300,000,000 shares of common stock, $0.0001 par value per share, and 10,000,000 shares of “blank check” preferred stock, $0.0001 par value per share, (iv) each share of Global Group Enterprises Corp.’s common stock outstanding at the time of the Reincorporation was automatically converted into 4.3334 shares of Tyme Technologies, Inc.’s common stock, with the result that the 12,000,000 shares of common stock outstanding immediately prior to the Reincorporation were converted into 52,000,800 shares of common stock outstanding immediately thereafter. All share and per share numbers in this Annual Report on Form 10-K relating to our common stock prior to the Reincorporation have been adjusted to give effect to this conversion, unless otherwise stated. Subsequent to the Reincorporation, Global Group Enterprises Corp. ceased to exist.
As discussed in “Item 1; Business – Corporate History; Significant Organizational Events.” the notes to the consolidated financial statements included in this Annual Report on Form 10-K and in “Recent Developments” below, on March 5, 2015 we entered into a “reverse triangular merger” and related transactions with Tyme Inc., a Delaware corporation (“Tyme”), and other parties that resulted in, among other matters, a change in controldepth of our CompanyIP portfolio, and (iv) build a change inbalanced portfolio of proprietary and partnered programs. For more information about our fiscal year from a fiscal year ending on November 30th of each calendar year to one ending on December 31st of each calendar year, which is the fiscal year basis for the financial statements presented herewith.strategy, see Item 1. Business–- “Portfolio Development Strategy and Key Product Properties.”
Ongoing Studies
OASIS (Metastatic HR+/HER2- Breast Cancer After CDK4/6 Inhibitors)
We are collaborating with Georgetown University to support a Phase II trial, OASIS, for SM-88 in patients with metastatic breast cancer who have HR+ and HER2- disease (“HR+/HER2-“). This represents approximately 68% of the annual breast cancer diagnose in the processUS each year. The OASIS trial is an investigator-initiated prospective open-label Phase II trial evaluating the efficacy and safety of evaluating our short-SM-88 with MPS for the treatment of metastatic HR+/ HER2- breast cancer after treatment with a CDK4/6 inhibitor. This trial is designed as a two-stage trial, enrolling up to 50 patients who have failed or progressed after receiving two hormonal agents and long-term financing requirementsa CDK4/6 inhibitor to receive SM-88 with MPS without additional cancer therapies. The primary endpoint of this trial is ORR, with secondary endpoints including DOR, CBR at >24 weeks, PFS, and safety. The trial is being conducted at Georgetown University at a total of five sites within the Georgetown/MEDSTAR system located in orderWashington DC, Maryland, and New Jersey. Patient enrollment began in 2021 with the first patient dosed in September. We plan to effectuate our business plan.provide an update on the OASIS breast cancer study during the first half of calendar year 2023.
HoPES Phase II Trial in sarcoma
In early 2020, the open-label Phase 2 investigator sponsored trial of SM-88 therapy in sarcoma, HoPES, opened. This trial has two cohorts, each expecting to enroll 12 patients. The first is SM-88 with MPS as salvage treatment in patients with mixed rare sarcomas, the other is SM-88 with MPS as maintenance treatment for patients with metastatic Ewing’s sarcoma that had not progressed on prior therapy. The primary objectives are to measure ORR and PFS. Secondary objectives include DOR, OS, CBR using RECIST, and incidence of treatment-emergent AEs. The Joseph Ahmed Foundation is sponsoring this trial, which is being conducted by Principal Investigator Dr. Chawla at the Sarcoma Oncology Center in Santa Monica, CA. We anticipate that wethe trial enrollment will seek to raise required capital bycontinue through the issuanceend of equity or debt securities, through private or public offerings or by other means.calendar year 2022.
Preclinical Pipeline Programs
SM-88 MOA and Biomarker Research
The Company has begun a comprehensive translational preclinical program. We have no such arrangements or plans currently in effect and our inability to raise funds could haveengaged Evotec, a severe adverse effect on our ability to become a viable company. In addition, no assurance can be given that we will be able to obtain funds on favorable terms, if at all.
Recent Developments
On March 5, 2015, we entered into and completed the Merger and associated transaction. For further details concerning these transactions, see “Item 1; Business – Corporate History; Significant Organizational Events.”
As a result of the Split-Off Transaction and Merger, we discontinued our pre-Merger business and acquired the business of Tyme, aleading global research and development company focusedto aid in the execution of these activities, and we are also incorporating several complementary academic collaborations into this multi-faceted program. The overall goal of these activities is to potentially identify actionable biomarkers of sensitivity and activity to SM-88 in various cancers,
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complementary combination drugs strategies for SM-88, and other cancer metabolism targets that could benefit from treatment. Additionally, the Company intends to incorporate liquid and tumor biopsies to future clinical trials to contribute to the biomarker identification. We anticipate this engagement will have several stages, and that it is likely to last through this fiscal year and into future periods.
TYME-18 and TYME-19
TYME-18 is a CMBTTM compound under development that is delivered intratumorally. TYME-18 leverages a member of the bile acid family to create a potential treatment for inoperable tumors. Preliminary observations of the local administration of TYME-18, a combination of a proprietary surfactant system and natural sulfonic acid, suggested its potential as an important regulator of energy metabolism that may impede the ability of tumors to increase in size, which, in addition to its lytic functionality, could prove useful in difficult-to-treat cancers. The Company is assessing development priorities to determine if additional advancement of this program is warranted at this time.
TYME-19 is an oral synthetic member of the bile acid family. The Company also uses bile acids in its anti-cancer drug candidate, TYME-18. Because of its expertise in bile acids and their effects, the Company was able to identify TYME-19 as a well-characterized bile acid with potential antiviral properties. Bile acids have primarily been used for liver disease; however, like all steroids, they are messenger molecules that modulate a number of diverse critical cellular processes. Bile acids can modulate lipid and glucose metabolism and can remediate dysregulated protein folding, with potentially therapeutic effects on developingcardiovascular, neurologic, immune, and other metabolic systems. Some agents in this class have also previously shown antiviral properties. In in vitro preclinical testing, TYME-19 prevented COVID-19 viral replication at doses without meaningful cytotoxicity to the treated cells. Previous independent preclinical research has also shown select bile acids may have had broad antiviral activity.
The Company has retained virology experts at Evotec to assess the mechanisms of TYME-19. Evotec is a global drug candidatesdevelopment company that has the capability to access the multiple existing and emerging variants of the COVID-19 virus. TYME and Evotec are testing the ability of TYME-19 to interrupt the cellular pathways commonly used by viruses to produce viral proteins as well as cellular responses to viral infection that cause local inflammation. Prolonged inflammation from SARS-CoV-2 can lead to some of the severe outcomes experienced by infected patients. We expect the work by Evotec will provide us with information allowing us to assess the potential path forward for the program.
Tumor Targeting Technology
TYME has developed a technology (“Tumor Targeting Technology”) by which the tyrosine isomer L metyrosine (L-α-methylparatyrosine) can be fused with a second therapeutic agent in a manner that creates a fusion compound that may allow targeted accumulation of the treatment by the cancer cells in a novel manner. The Company is assessing potential development paths for this technology.
Discontinuing Programs
Precision Promise Trial- SM-88 with MPS as 2nd line therapy in metastatic pancreatic cancer
In October 2018 the Company partnered with PanCAN to study SM-88 in an adaptive randomized Phase II/III trial with registration intent known as Precision PromiseSM. The objective of Precision Promise is to expedite the study and approval of promising therapies for pancreatic cancer by bringing multiple stakeholders together, including academic, industry and regulatory entities. The trial, began in early 2020, SM-88 (with the conditioning agents MPS) is being studied as monotherapy in a treatment arm for patients who have failed one prior line of chemotherapy.
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On January 26, 2022, the Company announced the discontinuation of SM-88 with MPS in the Precision Promise trial in mPDAC upon learning from PanCAN, the trial sponsor, that it terminated the arm due to futility compared to the control of standard of care chemotherapy in second-line mPDAC. Based on the information provided by PanCAN, the OS for SM-88 with MPS in monotherapy was lower compared to standard of care chemotherapies with either Gemcitabine and Abraxane or modified FOLFIRINOX. As of March 31, 2022, remaining estimated costs to close out the trial have been expensed.
TYME-88-PANC (Part 2) (third-line Metastatic Pancreatic Cancer)
In fiscal year 2020, we launched our pivotal study for SM-88 in the third-line treatment of pancreatic cancer through an amendment to our ongoing TYME-88-Panc trial (Part 2), with the first patient dosed in humans. We intendthe third quarter of the fiscal year. As described previously, the COVID-19 pandemic significantly impacted enrollment of this trial such that it appears it is likely to complete enrollment in a similar timeline to the second-line Precision Promise pancreatic cancer trial. There has also been a higher than expected dropout of patients randomized to the chemotherapy control arm, which could potentially impact the interpretative and regulatory utility of the data.
Following the strategic review discussed above, considering, in part, the timeline and regulatory utility for this trial compared to the parallel Precision Promise trial and concentration of investment in this specific cancer, management concluded that it would be best to focus on the second-line Precision Promise trial which offers treatment options to patients earlier in their disease and includes tumor biopsy and biomarker analyses that aligns with the Company’s overall strategic focus on targeted identifying therapies.
Therefore, the Company decided to stop enrollment and begin the process of closing down the trial. Patients currently on therapy are allowed to continue treatment until progression or unacceptable toxicity. The closing of this trial may require several months to complete. During the existing business operationsyear ended March 31, 2022, the Company expensed $723,000 of Tyme as our wholly-owned subsidiary. Atestimated closeout costs. The trial’s remaining ongoing expense to the present time, we do not intendCompany is approximately $400,000, and is expected to operate any other business other than Tyme, although such operations may be conducted through one or more direct and/or indirect subsidiaries as we believe appropriate.incurred over the five months following March 31, 2022.
COVID-19 Update
In connectionMarch 2020, the World Health Organization categorized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency. The COVID-19 pandemic, and actions taken by governments and others to reduce its spread, including travel restrictions, shutdowns of businesses deemed non-essential, and stay-at-home or similar orders, has negatively impacted the global economy, financial markets, and our industry and has disrupted day-to-day life and business operations. We continue to closely monitor the impact of COVID-19 on all aspects of our business, our clinical trials, and the safety of patients as the situation continues to evolve. We will continue to work closely with our clinical trial sites during the pandemic and are committed to working with them to assure appropriate access for patients who are seeking clinical trial options for these advanced cancers for which the patients have limited or no other treatment options.
We have also taken important steps to protect the health and welfare of our employees, consultants and board members, by continuing to provide a fully “work-from-home” option. Although we have operated in the COVID-19 environment for approximately two years, there remains substantial uncertainty about the extent to which COVID-19 will impact our product candidates and business, including patients’ willingness to participate and remain in clinical trials, the timing of meeting enrollment expectations, the ability of our third-party partners to remain operational and our access to capital markets and financing sources and depends on numerous evolving factors that are highly uncertain and cannot be accurately predicted, including those identified under “Risk Factors” in this report, many of which are beyond our control. Management continues to monitor the situation closely and intends to continue to adapt and implement process adjustments as needed.
Recent Developments
Nasdaq Notice
On December 22, 2021, the Company received notice from The Nasdaq Stock Market (“Nasdaq”) that the closing bid price for our common stock had been below $1.00 per share for the previous 30 consecutive business days, and
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that we are therefore not in compliance with the consummationminimum bid price requirement for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). Nasdaq’s notice has no immediate effect on the listing or trading of the Merger, we changed our fiscal year from a fiscal year ending on November 30th of each calendar year to one ending on December 31st of each calendar year, which is the historical fiscal year of Tyme and which is the fiscal year basis for the financial statements presented herewith.
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At the point of Merger and since inception, we were essentially a “public reporting shell” with no substantive business operations. As such, we had negligible revenues and operating profits that require separate identification.
common stock. The transaction costs associatedCompany can regain compliance with the Merger relate$1.00 minimum bid listing requirement if the closing bid price of our common stock is at least $1.00 per share for a minimum of ten (10) consecutive business days. We are actively monitoring the minimum bid price of our common stock and are considering available options to professional fees incurred in respectregain compliance, including potentially seeking stockholder approval to amend our certificate of legal, investor relations and accounting and audit of Tyme’s financial statements. All of such transaction costs, being associated with the final Merger, have been expensed as incurred and total approximately $1,000,000.
For accounting purposes, the acquisition of Tyme by our Company was consideredincorporation to effectuate a reverse acquisition, an acquisition transaction where the acquired company, Tyme, is considered the acquirer for accounting purposes, notwithstanding the form of the transaction. The primary reason the transaction was treatedstock split and exploring strategic options, as a purchase by Tyme rather than a purchase by our Company was because we were a public reporting shell company with limited operations and Tyme’s stockholders gained majority control of the outstanding voting power of our equity securities through their collective ownership of a majority of the outstanding shares of Company common stock. Consequently, reverse acquisition accounting will be applied to the transaction. No goodwill or intangible assets were recognized in conjunction with the completion of the Merger.
well as diversification initiatives as described above.
Critical Accounting Policies and Estimates and Recent Accounting Pronouncements
Critical accounting estimates are those made in accordance with generally accepted accounting principles in the United States of America (“GAAP”) that involve a significant level of estimation and have had or are reasonably likely to have a material impact on the Company’s financial condition or results of operations. In preparing these financial statements, management has used available information in forming its estimates, assumptions and judgments. Actual performance may differ from estimates and the Company’s estimates may differ from those of other companies. While our significant accounting policies are more fully described in Note 2 to the Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies and estimates are critical to the preparation of our financial statements. The financial information presented in this section is in conformity with GAAP.
Research and Development Expenses
Research and development costs are expensed as incurred and are primarily comprised of, but not limited to, external research and development expenses incurred under arrangements with third parties, such as contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”)CROs, CMOs and consultants that conduct clinical and preclinical studies, costs associated with preclinical and development activities, costs associated with regulatory operations, depreciation expense for assets used in research and development activities and employee related expenses, including salaries and benefits for research and development personnel. Costs for certain development activities, such as clinical studies, are accrued, over the service period specified in the contract and recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the patterns of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued expense, which are reported in prepaid assets or accounts payable and other current liabilities. expense.
Income Taxes
Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. We are subject to federal income taxes in the United States, for Federal andas well as in various StateU.S. state jurisdictions. Significant judgments and estimates are required in the determination of the income tax expense.
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income (loss).
We believeA valuation allowance is provided when, after consideration of available positive and negative evidence, that it is not more likely than not that the benefit from Federal and State NOLsdeferred tax assets will be realized.realizable. In recognition of this risk, we have provided a full valuation allowance onagainst the net deferred tax assets related to these NOL carryforwards.
assets.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various jurisdictions. ASC 740 “Income Taxes” states that a tax benefit from an uncertain tax position
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may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.
As of March 31, 2022, the Company had gross U.S. federal net operating loss carryforwards of approximately $119.1 million, which may be available to offset future income tax liabilities and will begin to expire at various dates starting in 2033. As of March 31, 2022, the Company had gross federal research and development tax credit carryforwards of $5.9 million available to reduce future tax liabilities, which will begin to expire at various dates starting in 2030. As of March 31, 2022, none of the Company’s state net operating losses have value due to the apportionment rule in the states where state income tax returns are currently filed. We had no unrecognized tax benefits of $890,000 and $559,000 at DecemberMarch 31, 20152022 and 2014. The increases2021, respectively. Increases or decreases in such benefits would be reflected as increases or decreases tonot have an effect on the effective tax rate.
The Company files federal income tax expensereturns in the period in which new information is available.United States, and various state jurisdictions. The federal and state income tax years, which currently remainreturns are generally subject to examination by major tax jurisdictions as of December 31, 2015, are the years ended December 31, 2015 and 2014 andexaminations for the period from July 26, 2013January 1, 2017 through March 31, 2022. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to December 31, 2013.the extent utilized in a future period. In addition, we had no income tax related penalties or interest for periods presented in these consolidated financial statements. When and if we were to recognize interest and penalties related to unrecognized tax benefits, they would be reported in tax expense.
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Stock-Based Compensation
We follow the authoritative guidance for accounting for stock-based compensation in ASC 718, “Compensation-Stock Compensation.” The guidance requires that stock-based payment transactions be recognized in the financial statements based on their fair value at the grant date and recognized as compensation expense over the vesting period as services are being provided.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, using a blend of the Company’s expected volatility and those of similar companies, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. For awards subject to time-based vesting conditions, we recognize stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are requiredThe Company accounts for forfeitures as they occur, rather than estimating forfeitures as of an award’s grant date.
The Company adopted ASU 2018-07 and, as such, the fair value of options granted to benon-employees is estimated at the timedate of grant only, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
We accountthe expected term is determined using the simplified method for stock-based awards issuedoptions granted to non-employees and consultants.
Derivative Warrant Liability
Certain freestanding common stock warrants that are related to the issuance of common stock are classified as liabilities and recorded at fair value due to characteristics that require liability accounting, primarily the obligation to issue registered shares of common stock upon notification of exercise and certain price protection provisions. Warrants of this type are subject to re-measurement at each balance sheet date and any change in accordance with ASC Topic 505-50 “Equity-Based Paymentfair value is recognized as a component of other income (expense) in the consolidated statement of operations.
As noted in Note 8, Stockholders’ Equity, the Company classifies a warrant to Non-Employees”purchase shares of its Common Stock as a liability on its consolidated balance sheet if the warrant is a free-standing financial instrument that contains certain price protection features that cause the warrants to be treated as derivatives or requires the issuance of registered common shares upon exercise. Each warrant of this type is initially recorded at fair value on date of grant using the Monte Carlo simulation model or the Black Scholes model and accordingly theis subsequently re-measured to fair value at each subsequent balance sheet date. Changes in fair value of the stock compensationwarrant are recognized as a component of other income (expense) in the consolidated statement of operations. The Company will continue to non-employees is measured onadjust the liability for changes in fair value until the earlier of: a)of the performance commitment date,exercise or b)expiration of the datewarrant. The Company utilizes Level 3 fair value criteria to measure the services required underfair value of the arrangement have been completed.warrants.
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Refer to Note 2 to our Consolidated Financial Statements for a discussion of Recent Accounting Pronouncements.
Preparation of Financial Statements; Going Concern
Our financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplates our continuation as a going concern. We have incurred losses and negative cash flows from operations since inception (July 26, 2013) and have an accumulated deficit of approximately $15,904,000 as of December 31, 2015. We anticipate incurring additional losses until such time, if ever, that we can generate significant revenues from our products currently in development. Our primary sources of liquidity to date have been the issuance of shares of our common stock, convertible promissory notes and contributed capital by our founders. Substantial additional financing will be needed to fund our operations and to commercially develop our product candidates. There is no assurance that such financing will be available when needed or on acceptable terms. These factors raise substantial doubt about our ability to continue as a going concern.
The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Results of Operations
Year ended DecemberMarch 31, 20152022 Compared to DecemberYear Ended March 31, 2014
2021
Net loss for the year ended DecemberMarch 31, 20152022 was $11,726,818,$23,626,000 or $0.14 per share compared to $2,649,826$28,979,000 or $0.22 per share for the year ended DecemberMarch 31, 2014.2021. The increasedecrease in the net loss compared to the prior year was due to the non-cash favorable variance of $5,722,000 in the change in fair value of the warrant liability and decreased operating costs, offset by $2,229,000 prior years gain on the warrant exchange. The decrease in operating costs for the current year of $1,703,000 related to decreased research and development costs of $3,264,000 and decreased general and administrative costs of $554,000, partially offset by $2,115,000 increased severance expenses, explained below under “Operating Expenses.”
Cash used in operating activities for the year ended DecemberMarch 31, 2014, as2022 was $21,243,000 compared to $23,564,000 for the year ended March 31, 2021. See “Cash Flows” section below for further details.
Adjusted net loss, which excludes the change in fair value of warrant liability, amortization of employees, directors and consultants stock options and gain on warrant exchange, was $22,981,000 or $0.13 per share for 2014 is duethe year ended March 31, 2022 compared to increased operating costs$23,836,000 or $0.18 per share for the year ended March 31, 2021. Adjusted net loss and expenses in 2015, as highlighted below.adjusted net loss per share are non-GAAP measures. See “Use of Non-GAAP Measures” below for a reconciliation to the comparable GAAP measures.
Revenues and Other Income
Revenue
During the years ended DecemberMarch 31, 20152022 and 2014,March 31, 2021, we did not realize any revenues from operations. We do not anticipate recognizing any revenues until such time as one of our products has been approved for marketing by appropriate regulatory authorities or we enter into collaboration or licensing arrangement,arrangements, none of which is anticipated to occur in the near future.
Operating Costs and Expenses
For the year ended DecemberMarch 31, 2015,2022, operating costs and expenses totaled $8,599,772,$25,514,000, compared to $2,584,116$27,217,000 for the year ended DecemberMarch 31, 2014,2021, representing an increasea decrease of $6,015,656.$1,703,000. Operating costs and expenses by function were comprised of the following:
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| Research and development expenses were |
| • | Study and consulting expenses were $11,022,000 for the year ended March 31, 2022, compared to $12,637,000 for the year ended March 31, 2021 representing a decrease of $1,615,000 between the comparable periods. The decrease is mainly attributable to lower ongoing trial costs due to the discontinued TYME-88-Panc Part 2 third-line Metastatic Pancreatic Cancer and Precision Promise trials, partially offset by costs incurred related to the OASIS clinical trial as well as mechanism of action and biomarker preclinical studies. |
| • |
| Salary |
• | Included in research and development expense for the year ended March 31, 2022 is $577,000 of stock based compensation related to stock options granted to research and development personnel compared to $1,379,000 for the year ended March 31, 2021, |
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representing a decrease of $802,000 between the comparable periods, primarily |
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| Stock based compensation |
| • | Legal, professional services, accounting and auditing expenses for the year ended March 31, 2022, were $2,668,000, compared to $3,150,000 for the year ended March 31, 2021, representing a decrease of $482,000. |
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• | Other general and administrative expenses for the year ended March 31, 2022 were $1,788,000, compared to $1,723,000 for the year ended March 31, 2021, an increase of $65,000. |
• | Severance expense |
Other Income/Expenses
Other
For the year ended March 31, 2022, the Company had $1,807,000 non-cash income (expense)
Interest chargesrelating to the change in fair value of the warrant liability during the period compared to $3,915,000 of non-cash expense for the year ended December 31, 2015 was $3,503,301, compared to $76,561 for the year ended December 31, 2014. Contemporaneous with the closing of the Merger, the Bridge Note in the principal amount of $2,310,000 was converted into 2,310,000 shares of Company common stock. On March 5, 2015, the mandatory conversion feature of the Bridge Note was amended to a set fixed conversion amount such that, upon conversion, the Bridge Note purchaser would receive one share of Company common stock for each $1.00 of principal of the Bridge Note outstanding as of the date of the mandatory conversion. We evaluated the modification to the conversion rate as an inducement to convert the Bridge Note and concluded that it provided the purchaser of the Bridge Note an incremental value of $3,465,000, which is included as interest expense on the consolidated statement of operations for year ended December 31, 2015. We recorded interest expense of $38,301 on the Bridge Note during the year ended December 31, 2015.
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Other income for the year ended December 31, 2015 was $376,255, which primarily represents a gain recorded on the remeasurement of a derivative liability to $0 as of December 31, 2015. The derivative was originally recorded during the quarter ended March 31, 2015 and based on updated inputs to2021, resulting in a $5,722,000 variance between the valuation model used, we have determined that the derivative liability has no value at December 31, 2015. Changesperiods. See Item 8, Note 7 for details regarding changes in the fair value of the derivative are recognized in earningswarrant liability.
For the year ended March 31, 2021, the Company had a non-cash gain on warrant exchanges of $2,229,000 pursuant to the Share Exchange Agreements and the Warrant Exchange Agreement (See Historical Financings – Exchange Agreements below.)
For the year ended March 31, 2022, the Company incurred $70,000 of interest expense as compared to $97,000 in the current period.year ended March 31, 2021 primarily related to the amortization of severance payable discount.
Investment and interest income for the year ended March 31, 2022 was $151,000 as compared to $22,000 in the year ended March 31, 2021, due to the establishment of our investment portfolio.
Income Tax
Our effective income tax rate for the years ended DecemberMarch 31, 20152022 and 20142021 was zero percent.
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Use of Non-GAAP Measures
Adjusted net loss and adjusted net loss per share as presented in this report are non-GAAP measures. The adjustments relate to the change in fair value of warrant liability, amortization of employees, directors and consultants stock options and gain on warrant exchange. These financial measures are presented on a basis other than in accordance with U.S. generally accepted accounting principles (“Non-GAAP Measures”). In the reconciliation tables that follow, we present adjusted net loss and adjusted net loss per share, reconciled to their comparable GAAP measures, net loss and net loss per share. These items are adjusted because they are not operational or because they are significant noncash charges and management believes these adjustments are meaningful to understanding the Company’s performance during the periods presented. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP. Our taxdefinitions of adjusted net loss and adjusted loss per share may not be comparable to similar measures reported by other companies.
Reconciliation of Net Loss to Adjusted Net Loss |
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| For the Year Ended March 31, |
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| 2022 |
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| 2021 |
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Net loss (GAAP) |
| $ | (23,626,000 | ) |
| $ | (28,979,000 | ) |
Adjustments: |
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Change in fair value of warrant liability |
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| (1,807,000 | ) |
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| 3,915,000 |
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Gain on warrant exchange |
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| — |
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| (2,229,000 | ) |
Amortization of employees, directors and consultants stock options |
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| 2,452,000 |
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| 3,457,000 |
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Adjusted net loss (non-GAAP) |
| $ | (22,981,000 | ) |
| $ | (23,836,000 | ) |
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Reconciliation of Net Loss Per Share to Adjusted Basic and Diluted Net Loss Per Share |
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| For the Year Ended March 31, |
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| 2022 |
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| 2021 |
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Net loss per share (GAAP) |
| $ | (0.14 | ) |
| $ | (0.22 | ) |
Adjustments: |
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Change in fair value of warrant liability |
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| (0.01 | ) |
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| 0.03 |
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Gain on warrant exchange |
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| — |
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| (0.02 | ) |
Amortization of employees, directors and consultants stock options |
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| 0.02 |
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| 0.03 |
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Adjusted basic and diluted net loss per share (non-GAAP) |
| $ | (0.13 | ) |
| $ | (0.18 | ) |
The Non-GAAP Measures for the year ended March 31, 2022 and 2021 provide management with additional insight into the Company’s results of operations from period to period by excluding certain non-operational and non-cash charges, and are calculated using the following adjustments to net loss:
a) | The warrants issued as part of an equity offering on April 2, 2019 were measured at fair value using a Monte Carlo model which takes into account, as of the valuation date, factors including the current exercise price, the remaining contractual term of the warrant, the current price of the underlying stock, its expected volatility, the risk-free interest rate for the term of the warrant and the estimates of the probability of fundamental transactions occurring. |
The May 2020 Warrant issued as part of the warrant exchange as described under the subheading “Historical Financings” below was measured at fair value using a Black-Scholes model which takes into account, as of the valuation date, factors including the current exercise price, the remaining contractual term of the warrant, the current price of the underlying stock, its expected volatility and the risk-free interest rate for the term of the warrant.
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The warrant liability is affected primarilyrevalued at each reporting period or upon exercise. Changes in fair value are recognized in the consolidated statements of operations and are excluded from adjusted net loss and adjusted net loss per share.
b) | The Company uses the Black-Scholes option pricing model to determine fair value of stock options granted. For employees and non-employees, the compensation expense is amortized over the requisite service period which approximates the vesting period. The expense is excluded from adjusted net loss and adjusted net loss per share. |
c) | Gain on warrant exchange resulted from the difference in fair value of the warrants issued as part of the equity offering on April 2, 2019 before their exchange (as described under the subheading “Historical Financings” below) and the fair value of the common stock exchange shares and the May 2020 Warrant granted pursuant to the Share Exchange Agreements and the Warrant Exchange Agreement, respectively. |
Adjusted basic net loss per share is computed by state income taxesdividing adjusted net loss by the weighted average number of shares of Company common stock outstanding for the period, and changes in valuation allowance.
adjusted diluted loss per share is computed by also including common stock equivalents outstanding for the period. During the periods presented, the calculation excludes any potential dilutive common shares and any equivalents as they would have been anti-dilutive as the Company incurred losses for the periods then ended.
Liquidity and Capital Resources
At December 31, 2015, we had cash of $4,446,284, working capital of $3,002,737 and stockholders’ equity of $3,015,615.
Net cash used in or provided by operating, investing and financing activities from continuing operations were as follows:
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Net cash used in operating activities |
| $ | (6,610,156 | ) | $ | (1,515,586 | ) |
Net cash used in investing activities |
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| — |
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| (2,710 | ) |
Net cash provided by financing activities |
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| 11,046,716 |
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| 1,435,400 |
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Operating Activities
Our cash used in operating activities in the year ended December 31, 2015 totaled $6,610,156 which is the sum of (i) our net loss before noncontrolling interests of $11,726,818, adjusted for non-cash expenses totaling $4,728,851 (which includes adjustments for equity-based compensation, depreciation and amortization, a gain on the remeasurement of a derivative liability and noncash conversion), and (ii) changes in operating assets and liabilities of $387,811.
Our cash used in operating activities in the year ended December 31, 2014 totaled $1,515,586, which is the sum of (i) our net loss before noncontrolling interests of $2,660,667, adjusted for non-cash expenses totaling $6,969 (which includes adjustments for depreciation and amortization and a loss on disposal of fixed assets), and (ii) changes in operating assets and liabilities providing $1,138,122.
Investing Activities
During the year ended December 31, 2015, we spent $0 for property and equipment.
During the year ended December 31, 2014, we spent $2,710 for property and equipment.
Financing Activities
During the year ended December 31, 2015, our financing activities consisted of the following:
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During the year ended December 31, 2014, our financing activities consisted primarily of the following:
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Liquidity and Capital Requirements Outlook
On February 8, 2021, the Company closed on a registered direct offering of 40,000,000 shares of its common stock, par value $0.0001 per share, at a purchase price of $2.50 per share. The gross proceeds of the offering were $100 million, prior to deducting placement agent’s fees and other offering expenses payable by TYME, which were approximately $6.2 million.
Liquidity
We anticipate requiring additional capital in orderThe Company intends to fundcontinue to use the net proceeds of this offering for the development of our clinical and preclinical assets and for general corporate purposes, capital expenditures, working capital and general and administrative expenses. We may also use a portion of the net proceeds to acquire or invest in businesses, products and technologies that are complementary to our own to further diversify our product candidates,pipeline and are exploring various strategic options as well asdescribed above. In addition, we may also use the proceeds, and may require additional capital, to engage in strategic transactions.potential partnerships or collaborations. The Company’s most significant funding needs are anticipated to be in connection with preparing(i) participating in the investigator-initiated HoPES clinical trial of SM-88 in sarcoma, (ii) participating in OASIS, our investigator-initiated prospective open-label Phase II trial, evaluating the efficacy and safety of SM-88 with MPS for the treatment of metastatic HR+, HER2- breast cancer after treatment, (iii) conducting preclinical studies of an injectable form of SM-88, (iv) conducting preclinical studies in connection with our other preclinical pipeline products, TYME-19, TYME-18 and Tumor Targeting Technology, and (v) conducting oneadditional or more phase IIrelated studies of other potential drug candidates. If we determine to move beyond the preclinical stage for any of our preclinical product candidates or if we pursue studies in other cancer types, our liquidity requirements will be increased. Additionally, if the Company completes a material transaction resulting from its strategic evaluation process, the Company will, among other potential payment obligations, be obligated to pay each of its executive officers a retention bonus within 20 days of such transaction.
Primarily as a result of its active clinical trials, including timing of our SM-88 drug candidateenrollment, as well as other business developments, and based on its current operating plan, but not taking into consideration to the execution or completion of any transaction that may result from the evaluation of strategic options and diversification initiatives as described above, the Company currently anticipates that its quarterly cash operating expense will approximate $4.0 million to $6.0 million per quarter during fiscal year 2023. Management expects that the Company’s net cash usage or net “cash burn” will be less than its operating costs.
As of March 31, 2022, the Company had cash on hand of approximately $13.7 million and a working capital of approximately $71.5 million. In the first quarter of fiscal year 2022, the Company established an investment policy and invested approximately $74.1 million in a portfolio of highly liquid investments and marketable securities. As of
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March 31, 2022 the Company had marketable securities of $69.7 million and accrued interest of $0.6 million classified in other current assets. The primary objectives of the Company’s policy are to preserve capital and diversify risk, while maintaining sufficient liquidity to meet cash flow needs.
Management has concluded that substantial doubt does not exist regarding the Company’s ability to satisfy its obligations as they come due during the twelve-month period following the issuance of these financial statements. This conclusion is based on the Company’s assessment of qualitative and quantitative conditions and events, considered in aggregate as of the date of issuance of these financial statements that are known and reasonably knowable. Among other relevant conditions and events, including the ongoing COVID-19 pandemic and related studiesgovernment and investigations. The IND for SM-88 for a study involving breast cancer patients was accepted byeconomic responses, the FDA in October of 2015. We are evaluatingCompany has considered its operational plans, liquidity sources, obligations due or expected, funds necessary to maintain the expansionCompany’s operations, and potential adverse conditions or events as of the phase II programissuance date of these financial statements.
The Company has historically funded its operations primarily through equity offerings of its common stock.As a clinical-stage entity, without product revenues and ongoing needs to other forms of cancer.
fund our clinical development activities and general operations, we regularly evaluate opportunities to raise capital and obtain necessary, as well as opportunistic financing. To meet our short and long-term liquidity needs, we currently expect to use existing cash balances and marketable securities in the short term, and a variety of other means as longer term funding sources, including potential issuances of debt or equity securities in public or private financings, option exercises, and partnerships and/or collaborations. The demand for the equity and debt of biopharmaceutical and biotechnology companies like ours is dependent upon many factors, including the general state of the financial markets. During times of extreme market volatility, capital may not be available on favorable terms, if at all. Our inability to obtain such additional capital could materially and adversely affect our business operations. In addition, we expect to seek as appropriate grants for scientific and clinical studies. There can be no assurance that we will be successful in qualifying for or obtaining such grants
We believe that our current cash balances will be sufficient to fund the business through the next six to nine months.
While we will continue to seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, and our negotiating position in capital generating efforts may worsen as existing resources are used.
Moreover, as discussed above, should the Company be unable to maintain compliance with Nasdaq listing requirements, our ability to raise funds and, therefore, our liquidity, could be negatively impacted. See Item 1A – Risk Factors for additional information.
Additional equity financing, which we expect to raise, may be dilutive to our stockholders; debt financing, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate as a business; and our stock price may not reach levels necessary to induce option exercises. If we are unable to raise the funds necessary to meet our long-term liquidity needs, we may have to delay or discontinue the development of certain or all of our drug candidates or raise funds on terms that we currently consider unfavorable. These factors
From time to time, we may also restructure our outstanding securities or seek to repurchase or redeem them if we
believe doing so would provide us with additional flexibility to raise substantial doubt aboutcapital or is otherwise in the best interests of the Company.
Historical Financings
As further described above under the heading “Liquidity and Capital Requirements Outlook”, on February 8, 2021, the Company closed on a registered direct offering of 40,000,000 shares of its common stock.
On January 7, 2020, the Company and Eagle Pharmaceuticals, Inc. (“Eagle”) entered into a Securities Purchase Agreement (the “Eagle SPA”), pursuant to which the Company issued and sold to Eagle 10,000,000 shares of common stock, at a price of $2.00 per share. The Eagle SPA provides that Eagle will, subject to certain conditions, make an additional payment of $20 million upon the occurrence of a milestone event, which is defined as the earlier of (i) achievement of the primary endpoint of overall survival in the TYME-88-Panc pivotal trial; (ii) achievement of the primary endpoint of overall survival in the PanCAN Precision PromiseSM SM-88 registration arm; or (iii) U.S. FDA approval of SM-88 in any cancer indication. This payment would be split into a $10 million milestone cash payment and a $10 million investment in TYME at a 15% premium to the then prevailing market price. Eagle’s shares will be restricted from sale until the earlier of three months following the milestone event or the three-year anniversary of the agreement.
84
On October 18, 2019, the Company entered into an Open Market Sale AgreementSM which was amended on August 12, 2020 (the “Sale Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which the Company may, from time to time, sell shares of Common Stock, having an aggregate offering price of up to $30 million through Jefferies, as the Company’s sales agent (the “Jefferies ATM”). Under the Sale Agreement the minimum share sales price (“Floor Price”) shall not be less than $1.00 without Jefferies prior written consent. As indicated in an amendment to the Sale Agreement, the shares will be offered and sold by the Company pursuant to its currently effective Registration Statement on Form S-3, as amended (Reg. No. 333-245033). Any sales of Common Stock pursuant to the Sales Agreement will be made by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. Jefferies will use commercially reasonable efforts to sell the shares from time to time, based on the instructions of the Company. The Company will pay Jefferies a commission rate of three percent (3%) of the gross proceeds from the sales of shares of Common Stock sold pursuant to the Sale Agreement. Under the Sale Agreement, the Company is not required to use the full available amount authorized and it may, by giving notice as specified in the Sale Agreement, terminate the Sale Agreement at any time. During the year ended March 31, 2022, the Company did not raise any proceeds under the Jefferies ATM. During the year ended March 31, 2021, the Company raised approximately $6.1 million in gross proceeds via the sale of 4,453,939 shares of common stock under the Jefferies ATM and incurred $0.3 million of related costs which offset such proceeds. As of March 31, 2022, there remained approximately $22.2 million of availability in the Jefferies ATM subject to the terms of the Sale Agreement.
Exchange Agreements
In May 20, 2020, the Company entered into exchange agreements (the “Share Exchange Agreements”) with the Holders of the warrants issued in April 2019 (“the April 2019 Warrants”). Pursuant to the Share Exchange Agreements with Holders of April 2019 Warrants to purchase 5,833,333 shares of Common Stock in the aggregate, the Company issued an aggregate of 2,406,250 shares of Common stock (the “Exchange Shares”) in exchange for such April 2019 Warrants. Concurrently therewith, each such Holder executed and delivered to the Company a leak-out agreement (a “Share Leak-Out Agreement”) that contained trading restrictions with respect to the Exchange Shares, which (i) for the first 90 days, prohibit any sales of Exchange Shares, (ii) for the subsequent 90 days, limit sales of Exchange Shares on any day to 2.5% of that day’s trading volume of Common Stock, and (iii) prohibit new short positions or short sales on Common Stock for the combined 180 day period.
The Company also entered into an exchange agreement (the “Warrant Exchange Agreement”) with another Holder of April 2019 Warrants to purchase 2,166,667 shares of Common Stock in the aggregate. Pursuant to the Warrant Exchange Agreement, the Company issued such Holder a new warrant (the “May 2020 Warrant”) to purchase the same number of shares of Common Stock. The May 2020 Warrant has the same expiration date, April 2, 2024, as the April 2019 Warrants, but has an exercise price of $1.80 and does not include the price protection, anti-dilution provisions or other restrictions on Company action from the April 2019 Warrants. Concurrently therewith, such Holder executed and delivered to the Company a leak-out agreement that contains trading restrictions on sales of Common Stock issued upon exercise of the May 2020 Warrant that are substantially similar to the restrictions on Exchange Shares in the Share Leak-Out Agreement, provided that the leak-out restrictions will only apply to the first 893,750 shares of Common Stock issued pursuant to the May 2020 Warrant.
After such exchanges, the April 2019 Warrants no longer remained outstanding.
Cash Flows
Net cash used in or provided by operating, investing and financing activities from continuing operations were as follows:
|
| 2022 |
|
| 2021 |
| ||
Net cash used in operating activities |
| $ | (21,243,000 | ) |
| $ | (23,564,000 | ) |
Net cash used in investing activities |
| $ | (72,541,000 | ) |
| $ | — |
|
Net cash provided by financing activities |
| $ | 6,000 |
|
| $ | 104,380,000 |
|
85
Operating Activities
Our cash used in operating activities in the year ended March 31, 2022 totaled $21.2 million which is the sum of (i) our abilitynet loss of $23.6 million, adjusted for $2.5 million expense amortization of stock-based compensation and $1.6 million net amortization of premiums and discounts on marketable securities, partially offset by $1.8 million non-cash change in fair value of the warrant liability, and (ii) changes in operating assets and liabilities of $0.1 million.
Our cash used in operating activities in the year ended March 31, 2021 totaled $23.6 million which is the sum of (i) our net loss of $29.0 million, adjusted for non-cash expenses totaling $3.9 million related to continue aschange in fair value of the warrant liability and $3.5 million expense amortization of stock-based compensation, partially offset by $2.2 million non-cash gain on warrant exchange, and (ii) changes in operating assets and liabilities of $0.3 million.
Investing Activities
During the year ended March 31, 2022, our investing activities consisted of the purchase of $95.2 million of marketable securities and the receipt of approximately $22.7 million of proceeds from maturities of marketable securities. There were no investing activities in the year ended March 31, 2021.
Financing Activities
During the year ended March 31, 2022, our financing activities consisted of the receipt of $6,000 in proceeds from the exercise of stock options.
During the year ended March 31, 2021, our finance activities consisted of the receipt of $100 million gross proceeds from a going concern.
registered direct offering of 40,000,000 shares of the Company’s common stock, at a purchase price of $2.50 per share net of $6.2 million of related costs which offset such proceeds, $6.1 million in gross proceeds via sale of 4,453,939 shares of common stock under the Jefferies ATM, net of $0.3 million of related costs which partially offset such proceeds and $5.4 million proceeds through the exercise of the stock options. The Company made payments of $518,000 on the insurance note payable related to premiums for its Director and Officer liability insurance coverage.
Seasonality
The Company does not believe that its operations are seasonal in nature.
JOBS Act
For as long as we remain an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), we will, among other things:
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| |
|
| |
|
|
- 72 -
Although we are still evaluating the JOBS Act, we currently intend to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an “emerging growth company.” Among other things, this means that our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected. Likewise, so long as we qualify as an emerging growth company, we may elect not to provide in our public reports and filings with the SEC certain information, including financial information and information regarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate our Company. As a result, investor confidence in our Company and the market price of our common stock may be materially and adversely affected.
Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Contractual Obligations and Commitments
At our current stageIn the course of the Company’s normal business operations, it enters into agreements and arrangements with contract service providers to assist in the performance of its research and development and at a stage where we have yetclinical research activities. At March 31, 2022, the Company’s obligations to secure material and recurring amounts of financial funding, we do not have any significant contractual obligations. We plan to enter into longer term obligations once we have a credible level of clarity on the financial resources consistently available to us.
Purchase Commitments
We have no material non-cancelable purchase commitments with contract manufacturers or service providers as wewere $0.2 million in the aggregate.
Contract Service Providers
On April 1, 2020, the Company amended the Clinical Research Funding and Drug Supply Agreement dated October 9, 2018, with PanCAN, to enroll individuals diagnosed with pancreatic cancer in a platform style clinical research study. Stage 1 of the study was initiated in the fourth quarter of fiscal year 2020. On January 26, 2022, the Company announced the discontinuation of SM-88 with MPS in the Precision Promise trial in mPDAC upon learning from PanCAN, the trial sponsor, that it terminated the arm due to futility compared to the control of standard of care chemotherapy in second-line mPDAC. As of March 31, 2022, remaining estimated costs to close out the trial have generally contractedbeen expensed.
Purchase Commitments
The Company has entered into contracts with manufacturers to supply certain components used in SM-88 in order to achieve favorable pricing on a cancelable basis.supplied products. These contracts have non-cancellable elements related to the scheduled deliveries of these products in future periods. Payments are made by us to the manufacturer when the products are delivered and of acceptable quality. The outstanding future contract obligations structured to match
86
Off-Balance Sheet Arrangements
clinical supply needs for the Company’s ongoing trials and registration activity are approximately $0.9 million and $2.5 million, respectively, at March 31, 2022. The Company expects the timing of associated payments to predominately occur through fiscal year 2023.
Through December 31, 2015, we do not have any off-balance sheet arrangements, as defined by applicable SEC regulations.Leases
The Company leases office space in New Jersey. The New Jersey lease expires in February 2023. The Company’s future minimum remaining lease payments for the New Jersey lease are approximately $39,200 due in fiscal 2023.
ITEM 7A. QUANTITATIVEQUALITATIVE AND QUALITATIVEQUANTITATIVE DISCLOSURES ABOUT MARKET RISK
AsWe are a “smallersmaller reporting company”company as defined by Item 10 ofin Regulation S-K weof the Securities Exchange Act of 1934, as amended, and are not required to provide the information required by Item 7A.under this item.
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- 73 -87
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Tyme Technologies, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheetsheets of Tyme Technologies, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of DecemberMarch 31, 2015,2022 and 2021, the related consolidated statements of operations, changes in stockholders’ equity, (deficit), and cash flows for each of the yeartwo years in the period ended DecemberMarch 31, 2015. 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audit.
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditaudits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Wemisstatement, whether due to error or fraud. The Company is not required to have, nor were notwe engaged to perform, an audit of the Company’sits internal control over financial reporting. Our audit included considerationAs part of our audits we are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.
InCritical audit matter
The critical audit mattercommunicated below is a matterarising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relatesto accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, referred to above present fairly, in all material respects, the financial position of Tyme Technologies, Inc. and subsidiaries as of December 31, 2015, and the results of their operations and their cash flows for the year ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continuetaken as a going concern. whole, and we are not, by communicating the critical audit matterbelow, providing a separate opinionon the critical audit matter or on the accounts or disclosures to which itrelates.
Stock-based compensation
As discusseddescribed further in Note 1Notes 7 and 12 to the consolidated financial statements, the Company has incurred recurring losses from operation, negative cash flowsstock-based compensation that is based on fair value measurements. We identified the computation of stock-based compensation as a critical audit matter.
The principal consideration for our determination that stock-based compensation estimates is a critical audit matter is that the model used to determine the grant date fair value includes a significant unobservable input of volatility, which is subject to estimation uncertainty and an accumulated deficit asrequires significant auditor subjectivity in evaluating that input and estimate. Volatility is based on a blend of December 31, 2015. These conditions, along with other matters described in Note 1, raise substantial doubt about the Company’s abilityexpected volatility and those of similar companies.
88
Our audit procedures related to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do notstock-based compensation estimates include any adjustments that might result from the outcome of this uncertainty.following, among others:
a) | We agreed the inputs of the grant date fair value calculation to the key terms of the underlying agreements and read such agreements to assess the completeness of the inputs utilized; |
b) | We assessed the appropriateness of the similar companies used in the volatility calculation, recomputed expected volatility of the Company and volatility of the similar companies using the changes in the respective stock prices over the term; and with the assistance of our valuation professionals with specialized skills and knowledge, we assessed the methodology used in determining the volatility; |
c) | We recomputed the fair value of each grant using management’s inputs and compared to the fair value calculated by management. |
We also have audited the adjustments to the 2014 consolidated financial statements to retrospectively apply the impact of the reverse merger, as described in Note 1 to the consolidated financial statements. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2014 consolidated financial statements of the Company other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2014 financial statements taken as a whole.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2015.
New York, New York
March 30, 2016May 25, 2022
- 74 -89
ReportTable of Independent Registered Public Accounting FirmContents
To the Board of Directors and Shareholders of
Tyme Technologies, Inc. and Subsidiaries (formerly Tyme Inc. and Subsidiary)
We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 1, the consolidated balance sheet Tyme Technologies, Inc. and Subsidiaries (formerly Tyme Inc. and Subsidiary) (the “Company”) as of December 31, 2014, and the related consolidated statement of operations, stockholders’ equity (deficit), and cash flows for the year then ended (the 2014 financial statements before the effects of the adjustments discussed in Note 1 are not presented herein). The 2014 consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2014 consolidated financial statements, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 1, present fairly, in all material respects, the financial position of Tyme Technologies, Inc. and Subsidiaries (formerly Tyme Inc. and Subsidiary) as of December 31, 2014, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.
We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting described in Note 1 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by Grant Thornton LLP.
The fiscal year 2014 consolidated financial statements before the effects of the adjustments to retrospectively apply the change in accounting described in Note 1, were prepared assuming that the Company will continue as a going concern. As of and for the year ended December 31, 2014, the Company incurred losses and negative cash flows since inception and had a stockholders’ deficit of $2,473,316. The Company continues to anticipate incurring additional losses until such time, if ever, that it can generate significant revenues from its product candidates currently in development. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regards to these matters is described in Note 1. The 2014 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ WithumSmith+Brown, PC
New Brunswick, New Jersey
April 15, 2015
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Tyme Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
| December 31, |
| December 31, |
| ||
| 2015 |
| 2014 |
| ||
|
|
|
|
| ||
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents | $ | 4,446,284 |
| $ | 9,724 |
|
Prepaid and other assets |
| 30,784 |
|
| 140,205 |
|
Total current assets |
| 4,477,068 |
|
| 149,929 |
|
|
|
|
|
|
|
|
Property and equipment, net |
| 12,878 |
|
| 17,170 |
|
Total assets | $ | 4,489,946 |
| $ | 167,099 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit) |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable and other current liabilities | $ | 1,474,331 |
| $ | 1,290,415 |
|
Current maturities of senior secured bridge notes |
| — |
|
| 1,350,000 |
|
Total current liabilities |
| 1,474,331 |
|
| 2,640,415 |
|
Total liabilities |
| 1,474,331 |
|
| 2,640,415 |
|
|
|
|
|
|
|
|
Commitments and contingencies (See Note 10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit) |
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 10,000,000 and 0 shares authorized at December 31, 2015 and December 31, 2014, respectively, 0 shares issued and outstanding at December 31, 2015 and December 31, 2014 |
| — |
|
| — |
|
Common stock, $0.0001 par value, 300,000,000 shares authorized, 86,836,370 shares issued and outstanding at December 31, 2015, and 71,400,000 shares issued and 68,000,000 shares outstanding at December 31, 2014 |
| 8,685 |
|
| 6,800 |
|
Additional paid in capital |
| 18,911,110 |
|
| 2,053,012 |
|
Accumulated deficit |
| (15,904,180 | ) |
| (4,177,362 | ) |
Due from stockholders/members |
| — |
|
| (355,766 | ) |
Total stockholders’ equity (deficit) |
| 3,015,615 |
|
| (2,473,316 | ) |
Total liabilities and stockholders’ equity (deficit) | $ | 4,489,946 |
| $ | 167,099 |
|
|
| March 31, |
|
| March 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 13,738,931 |
|
| $ | 107,516,420 |
|
Marketable securities |
|
| 60,611,961 |
|
|
| — |
|
Prepaid clinical costs |
|
| 480,623 |
|
|
| 987,470 |
|
Prepaid expenses and other current assets |
|
| 4,064,770 |
|
|
| 1,152,970 |
|
Total current assets |
|
| 78,896,285 |
|
|
| 109,656,860 |
|
Prepaid clinical costs, net of current portion |
|
| — |
|
|
| 530,989 |
|
Operating lease right-of-use asset |
|
| 38,229 |
|
|
| 75,471 |
|
Marketable securities |
|
| 9,080,671 |
|
|
| — |
|
Total assets |
| $ | 88,015,185 |
|
| $ | 110,263,320 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities (including $153,000 and $87,000 of related party accounts payable, respectively) |
| $ | 3,803,427 |
|
| $ | 3,842,390 |
|
Severance payable |
|
| 2,611,857 |
|
|
| 726,027 |
|
Accrued bonuses |
|
| 933,082 |
|
|
| 1,040,710 |
|
Operating lease liability |
|
| 37,332 |
|
|
| 34,658 |
|
Total current liabilities |
|
| 7,385,698 |
|
|
| 5,643,785 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
Severance payable, net of current portion |
|
| 421,575 |
|
|
| 850,709 |
|
Operating lease liability, net of current portion |
|
| — |
|
|
| 41,256 |
|
Warrant liability |
|
| 124,480 |
|
|
| 1,931,921 |
|
Total liabilities |
|
| 7,931,753 |
|
|
| 8,467,671 |
|
Commitments and contingencies (See Note 9) |
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding |
|
| — |
|
|
| — |
|
Common stock, $0.0001 par value, 300,000,000 shares authorized, 172,206,894 issued and outstanding at March 31, 2022, and 300,000,000 authorized, 172,200,644 issued and outstanding at March 31, 2021 |
|
| 17,223 |
|
|
| 17,222 |
|
Additional paid in capital |
|
| 241,030,535 |
|
|
| 238,572,442 |
|
Accumulated other comprehensive loss |
|
| (544,264 | ) |
|
| — |
|
Accumulated deficit |
|
| (160,420,062 | ) |
|
| (136,794,015 | ) |
Total stockholders’ equity |
|
| 80,083,432 |
|
|
| 101,795,649 |
|
Total liabilities and stockholders’ equity |
| $ | 88,015,185 |
|
| $ | 110,263,320 |
|
The Notes to the Consolidated Financial Statements are an integral part of these statements.
- 76 -90
Tyme Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
| Years Ended March 31, |
| |||||||||||||
|
| Year ended December 31, |
| ||||||||||||
|
| 2015 |
| 2014 |
| ||||||||||
|
|
|
|
|
|
|
| ||||||||
Revenues |
| $ | — |
| $ | — |
| ||||||||
|
|
|
|
|
|
|
|
| 2022 |
|
| 2021 |
| ||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
| 3,823,966 |
|
| 761,359 |
|
| $ | 13,444,101 |
|
| $ | 16,709,649 |
|
General and administrative |
|
| 4,775,806 |
|
| 1,822,757 |
| ||||||||
General and administrative (including $507,000 and $517,000 of related party legal expenses, respectively) |
|
| 9,632,103 |
|
|
| 10,185,537 |
| |||||||
Severance expense |
|
| 2,437,379 |
|
|
| 321,825 |
| |||||||
Total operating expenses |
|
| 8,599,772 |
|
| 2,584,116 |
|
|
| 25,513,583 |
|
|
| 27,217,011 |
|
Loss from operations |
|
| (8,599,772 | ) |
| (2,584,116 | ) |
|
| (25,513,583 | ) |
|
| (27,217,011 | ) |
|
|
|
|
|
|
|
| ||||||||
Other income (expense): |
|
|
|
|
|
|
|
| |||||||
Change in fair value of warrant liability |
|
| 1,807,441 |
|
|
| (3,915,393 | ) | |||||||
Gain on warrant exchange |
|
| — |
|
|
| 2,228,697 |
| |||||||
Other income |
|
| 150,339 |
|
|
| 22,077 |
| |||||||
Interest expense |
|
| 3,503,301 |
|
| 76,561 |
|
|
| (70,244 | ) |
|
| (97,133 | ) |
Other income |
|
| (376,255 | ) |
| — |
| ||||||||
|
|
|
|
|
|
|
| ||||||||
Total other income (expense) |
|
| 1,887,536 |
|
|
| (1,761,752 | ) | |||||||
Loss before income taxes |
|
| (11,726,818 | ) |
| (2,660,677 | ) |
|
| (23,626,047 | ) |
|
| (28,978,763 | ) |
Income tax expense |
|
| — |
|
| — |
| ||||||||
Net loss |
|
| (11,726,818 | ) |
| (2,660,677 | ) |
| $ | (23,626,047 | ) |
| $ | (28,978,763 | ) |
Loss attributable to noncontrolling interests |
|
| — |
|
| (10,851 | ) | ||||||||
Loss attributable to controlling interests |
| $ | (11,726,818 | ) | $ | (2,649,826 | ) | ||||||||
|
|
|
|
|
|
|
| ||||||||
Basic and diluted loss per common share |
| $ | (0.15 | ) | $ | (0.04 | ) |
| $ | (0.14 | ) |
| $ | (0.22 | ) |
|
|
|
|
|
|
|
| ||||||||
Basic and diluted weighted average shares outstanding |
|
| 77,848,850 |
|
| 68,000,000 |
|
|
| 172,206,534 |
|
|
| 134,250,722 |
|
Statements of Comprehensive Loss |
|
|
|
|
|
|
|
| |||||||
Net loss |
| $ | (23,626,047 | ) |
| $ | (28,978,763 | ) | |||||||
Other comprehensive loss |
|
|
|
|
|
|
|
| |||||||
Unrealized loss on marketable securities, net of tax |
|
| (544,264 | ) |
|
| — |
| |||||||
Comprehensive loss |
| $ | (24,170,311 | ) |
| $ | (28,978,763 | ) | |||||||
The Notes to the Consolidated Financial Statements are an integral part of these statements.
- 77 -
91
Tyme Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
For the Years Ended DecemberMarch 31, 20152022 and 20142021
|
| Common Stock |
|
| Additional |
|
|
|
|
|
| Accumulated Other |
|
| Total |
| ||||||||
|
| Shares |
|
| Amount |
|
| Paid-in capital |
|
| Accumulated Deficit |
|
| Comprehensive Loss |
|
| Stockholders' Equity |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020 |
|
| 123,312,252 |
|
| $ | 12,333 |
|
| $ | 126,828,055 |
|
| $ | (107,815,252 | ) |
| $ | - |
|
| $ | 19,025,136 |
|
Issuance of common stock from securities purchase agreement, net of associated expenses of $6,228,135 |
|
| 40,000,000 |
|
|
| 4,000 |
|
|
| 93,767,865 |
|
|
| — |
|
|
| — |
|
|
| 93,771,865 |
|
Issuance of common stock from at-the-market financing facility, net of associated expenses of $318,425 |
|
| 4,453,939 |
|
|
| 445 |
|
|
| 5,774,973 |
|
|
| — |
|
|
| — |
|
|
| 5,775,418 |
|
Proceeds from the exercise of stock options |
|
| 2,028,203 |
|
|
| 203 |
|
|
| 5,351,120 |
|
|
| — |
|
|
| — |
|
|
| 5,351,323 |
|
Warrant to share exchange |
|
| 2,406,250 |
|
|
| 241 |
|
|
| 3,393,534 |
|
|
| — |
|
|
| — |
|
|
| 3,393,775 |
|
Stock based compensation |
|
| — |
|
|
| — |
|
|
| 3,456,895 |
|
|
| — |
|
|
| — |
|
|
| 3,456,895 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (28,978,763 | ) |
|
| — |
|
|
| (28,978,763 | ) |
Balance, March 31, 2021 |
|
| 172,200,644 |
|
| $ | 17,222 |
|
| $ | 238,572,442 |
|
| $ | (136,794,015 | ) |
| $ | — |
|
| $ | 101,795,649 |
|
Proceeds from the exercise of stock options |
|
| 6,250 |
|
|
| 1 |
|
|
| 6,187 |
|
|
| — |
|
|
| — |
|
|
| 6,188 |
|
Stock based compensation |
|
| — |
|
|
| — |
|
|
| 2,451,906 |
|
|
| — |
|
|
| — |
|
|
| 2,451,906 |
|
Unrealized gain (loss) on available-for-sale securities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (544,264 | ) |
|
| (544,264 | ) |
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (23,626,047 | ) |
|
| — |
|
|
| (23,626,047 | ) |
Balance, March 31, 2022 |
|
| 172,206,894 |
|
| $ | 17,223 |
|
| $ | 241,030,535 |
|
| $ | (160,420,062 | ) |
| $ | (544,264 | ) |
| $ | 80,083,432 |
|
The Notes to the Consolidated Financial Statements are an integral part of these statements
|
| Common Stock |
| Additional |
| Subscription |
| Accumulated |
|
| Non-Controlling |
| Due from |
| Total |
| ||||||||
|
| Shares |
| Amount |
| capital |
| receivable |
| deficit |
|
| Interests |
| Members |
| (Deficit) |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2014 |
| 68,000,000 |
| $ | 6,800 |
| $ | — |
| $ | — |
| $ | (1,527,536 | ) | $ | 1,976,693 |
| $ | (1,306,238 | ) | $ | (850,281 | ) |
Conversion of $1.126 million convertible debt plus accrued interest of $26,242 into 3,624,400 shares of common stock |
| 3,624,400 |
|
| — |
|
| 1,152,242 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,152,242 |
|
Surrender of 3,624,400 common stock by two principal stockholders of the Company |
| (3,624,400 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Capital contributions |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 35,000 |
|
| — |
|
| 35,000 |
|
Advances to stockholders/members |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (149,600 | ) |
| (149,600 | ) |
Luminant stockholder loans assigned in buyout of noncontrolling interests by certain stockholders of Tyme |
| — |
|
| — |
|
| (1,100,072 | ) |
| — |
|
| — |
|
| — |
|
| 1,100,072 |
|
| — |
|
Contribution of noncontrolling interests |
| — |
|
| — |
|
| 2,000,842 |
|
| — |
|
| — |
|
| (2,000,842 | ) |
| — |
|
| — |
|
Net Loss attributable to noncontrolling interests prior to contribution of noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (10,851 | ) |
| — |
|
| (10,851 | ) |
Net loss |
| — |
|
| — |
|
| — |
|
| — |
|
| (2,649,826 | ) |
| — |
|
| — |
|
| (2,649,826 | ) |
Balance, January 1, 2015 |
| 68,000,000 |
| $ | 6,800 |
| $ | 2,053,012 |
| $ | — |
| $ | (4,177,362 | ) | $ | — |
| $ | (355,766 | ) | $ | (2,473,316 | ) |
Repayment of stockholder loans |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 355,766 |
|
| 355,766 |
|
Common stock issued as part of the Merger |
| 12,724,000 |
|
| 1,272 |
|
| (1,272 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Issuance of common stock and warrants for services |
| 300,000 |
|
| 30 |
|
| 824,970 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 825,000 |
|
Issuance of common stock and warrants in private placement offering for cash, net of associated expense |
| 2,466,000 |
|
| 247 |
|
| 7,230,703 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 7,230,950 |
|
Issuance of common stock in private placement offering in exchange for subscription receivable |
| 1,000,000 |
|
| 100 |
|
| 2,499,900 |
|
| (2,500,000 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
Issuance of common stock upon conversion of Bridge Note and accrued interest |
| 2,310,000 |
|
| 231 |
|
| 2,404,243 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,404,474 |
|
Incremental value of the modification to Bridge Note conversion rate as an inducement to convert |
| — |
|
| — |
|
| 3,465,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,465,000 |
|
Stock based compensation |
| 36,370 |
|
| 5 |
|
| 324,995 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 325,000 |
|
Fair value of price protection feature associated with shares issued under the PPO and Bridge Note conversion |
| — |
|
| — |
|
| (376,300 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
| (376,300 | ) |
Amortization of employee stock options |
| — |
|
| — |
|
| 485,859 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 485,859 |
|
Proceeds from the collection of stock subscription receivable |
| — |
|
| — |
|
| — |
|
| 2,500,000 |
|
| — |
|
| — |
|
| — |
|
| 2,500,000 |
|
Net loss |
| — |
|
| — |
|
| — |
|
| — |
|
| (11,726,818 | ) |
| — |
|
| — |
|
| (11,726,818 | ) |
Balance, December 31, 2015 |
| 86,836,370 |
| $ | 8,685 |
| $ | 18,911,110 |
| $ | — |
| $ | (15,904,180 | ) | $ | — |
| $ | — |
| $ | 3,015,615 |
|
Tyme Technologies, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
|
| Years Ended, March 31 |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
| $ | (23,626,047 | ) |
| $ | (28,978,763 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
| — |
|
|
| 5,181 |
|
Amortization of employees, directors and consultants stock options |
|
| 2,451,906 |
|
|
| 3,456,895 |
|
Change in fair value of warrant liability |
|
| (1,807,441 | ) |
|
| 3,915,393 |
|
Gain on warrant exchange |
|
| — |
|
|
| (2,228,697 | ) |
Net amortization of premiums and discounts on marketable securities |
|
| 1,615,332 |
|
|
| — |
|
Loss on call redemption of marketable securities |
|
| 1,416 |
|
|
| — |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid clinical costs |
|
| 1,037,836 |
|
|
| 144,528 |
|
Prepaid expenses and other assets |
|
| (2,224,512 | ) |
|
| (171,021 | ) |
Operating lease right-of-use asset |
|
| 37,242 |
|
|
| 150,269 |
|
Accounts payable and other current liabilities |
|
| (38,963 | ) |
|
| 1,015,088 |
|
Severance payable |
|
| 1,456,696 |
|
|
| (58,896 | ) |
Accrued bonuses |
|
| (107,628 | ) |
|
| (760,269 | ) |
Operating lease liability |
|
| (38,582 | ) |
|
| (54,186 | ) |
Net cash used in operating activities |
|
| (21,242,745 | ) |
|
| (23,564,478 | ) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of marketable securities |
|
| (95,244,730 | ) |
|
| — |
|
Proceeds from maturities of marketable securities |
|
| 22,703,798 |
|
|
| — |
|
Net cash used in investing activities |
|
| (72,540,932 | ) |
|
| — |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Insurance note payments |
|
| — |
|
|
| (518,124 | ) |
Proceeds from registered offerings, net of issuance costs |
|
| — |
|
|
| 99,547,283 |
|
Proceeds from exercise of stock options |
|
| 6,188 |
|
|
| 5,351,323 |
|
Net cash provided by financing activities |
|
| 6,188 |
|
|
| 104,380,482 |
|
Net (decrease) increase in cash |
|
| (93,777,489 | ) |
|
| 80,816,004 |
|
Cash and cash equivalents — beginning of year |
|
| 107,516,420 |
|
|
| 26,700,416 |
|
Cash and cash equivalents — end of year |
| $ | 13,738,931 |
|
| $ | 107,516,420 |
|
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
|
Cash paid for interest and income taxes are as follows: |
|
|
|
|
|
|
|
|
Interest |
| $ | 70,244 |
|
| $ | 97,133 |
|
Income taxes |
| $ | — |
|
| $ | — |
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Cashless exchange of April 2019 Warrants to purchase 5,833,333 shares of common stock for 2,406,250 shares in May 2020. |
| $ | — |
|
| $ | — |
|
Cashless exchange of April 2019 Warrants to purchase 2,166,667 shares of common stock for May 2020 Warrant to purchase the same number of shares common stock. |
| $ | — |
|
| $ | — |
|
Operating lease right-of-use asset obtained in exchange for lease liabilities |
| $ | — |
|
| $ | 75,439 |
|
The Notes to the Consolidated Financial Statements are an integral part of these statements.
- 78 -
Tyme Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
|
| Year Ended December 31, |
| ||||
|
| 2015 |
| 2014 |
| ||
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net loss |
| $ | (11,726,818 | ) | $ | (2,660,677 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
Depreciation |
|
| 4,292 |
|
| 4,293 |
|
Issuance of common stock for services |
|
| 825,000 |
|
| — |
|
Stock-based compensation |
|
| 325,000 |
|
| — |
|
Amortization of employee stock options |
|
| 485,859 |
|
| — |
|
Inducement for conversion of Bridge Note to common shares |
|
| 3,465,000 |
|
| — |
|
Gain on remeasurement of derivative liability |
|
| (376,300 | ) |
| — |
|
Loss on disposal of fixed assets |
|
| — |
|
| 2,676 |
|
Changes in operating assets and liabilities - |
|
|
|
|
|
|
|
Prepaid and other assets |
|
| 109,421 |
|
| (30,025 | ) |
Accounts payable and other current liabilities |
|
| 278,390 |
|
| 1,168,147 |
|
Net cash used in operating activities |
|
| (6,610,156 | ) |
| (1,515,586 | ) |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
| — |
|
| (2,710 | ) |
Net cash used in investing activities |
|
| — |
|
| (2,710 | ) |
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Capital contributions - noncontrolling interest |
|
| — |
|
| 35,000 |
|
Repayment from (advances to) stockholders/members |
|
| 355,766 |
|
| (149,600 | ) |
Proceeds from Bridge Note |
|
| 960,000 |
|
| 1,350,000 |
|
Proceeds from private placement offering of common stock and warrants, net |
|
| 7,230,950 |
|
| — |
|
Proceeds from issuance of convertible notes |
|
| — |
|
| 200,000 |
|
Proceeds from the collection of stock subscription receivable |
|
| 2,500,000 |
|
| — |
|
Net cash provided by financing activities |
|
| 11,046,716 |
|
| 1,435,400 |
|
Net increase (decrease) in cash |
|
| 4,436,560 |
|
| (82,896 | ) |
Cash and cash equivalents - beginning of period |
|
| 9,724 |
|
| 92,620 |
|
Cash and cash equivalents - end of period |
| $ | 4,446,284 |
| $ | 9,724 |
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
Cash paid for interest and income taxes are as follows: |
|
|
|
|
|
|
|
Interest |
| $ | — |
| $ | — |
|
Income taxes |
| $ | 675 |
| $ | — |
|
|
|
|
|
|
|
|
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
Conversion of the Bridge Note and all accrued interest into shares of common stock |
| $ | 2,404,474 |
| $ | — |
|
Issuance of subscription receivable for shares issued in conjunction with private placement offering |
| $ | 2,500,000 |
| $ | — |
|
Inducement for conversion of Bridge Note to common shares |
| $ | 3,465,000 |
| $ | — |
|
Derivative liability associated with the price protection feature of shares of common stock issued in PPO and Bridge Note conversion |
| $ | 376,300 |
| $ | — |
|
Conversion of $1.126 million of convertible debt into 3,624,400 shares of common stock; simultaneously, stockholders surrendered an equal amount of their own common stock, thereby having no change in the total number of shares outstanding |
| $ | — |
| $ | 1,152,242 |
|
Luminant member advances assigned in buyout of noncontrolling interest |
| $ | — |
| $ | 1,100,072 |
|
Contribution of noncontrolling interests by stockholders of Tyme Inc. |
| $ | — |
| $ | 2,000,842 |
|
The Notes to the Consolidated Financial Statements are an integral part of these statements.
- 79 -
Tyme Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1. Nature of Business and Basis of Presentation.
The accompanying consolidated financial statements include the results of operations of Tyme Technologies, Inc. (“Tyme Tech”) and itsis a Delaware corporation headquartered in Bedminster, New Jersey, with a wholly owned subsidiaries,subsidiary, Tyme Inc. (“Tyme”) and Luminant Biosciences, LLC (“Luminant”) (collectively,(together, “TYME” or the “Company”). Luminant conducted the initial research and development of the Company’s therapeutic platform. Since January 1, 2014, theThe majority of the Company’s research, and development activities and other business efforts have beenactivities are conducted by Tyme and all of the Company’s patent and patent application rights are held by Tyme.
Tyme Tech was incorporated in the State of Florida on November 22, 2011, to engage in the business of producing, marketing and selling an ultra-premium vodka product to retailers. Management determined to cease the ultra-premium vodka business and attempt to acquire other assets or business operations that would maximize shareholder value. Effective as of September 18, 2014, the Company (then constituting a Florida corporation with the name Global Group Enterprises Corp.) reincorporated in the State of Delaware by merging into its wholly-owned Delaware subsidiary, Tyme Technologies, Inc., which was formed on August 22, 2014 specifically for this purpose (the “Reincorporation”). Tyme Technologies, Inc. was the surviving corporation in such merger.
On March 5, 2015, Tyme Tech consummated a reverse triangular merger with Tyme (the “Merger”). (See Reverse Triangular Merger below.) The Merger resulted in Tyme becoming a wholly-owned subsidiary of Tyme Tech. Tyme is a clinical-stage biopharmaceutical company focused on the development and commercialization of highly targeted cancer therapeutics with a broad range of oncology indications. Tyme was incorporated in Delaware in 20132013.
TYME is an emerging biotechnology company developing CMBTs that are intended to be effective across a broad range of solid tumors and its operationshematologic cancers, while also maintaining patients’ quality of life through relatively low toxicity profiles. Unlike targeted therapies that attempt to date have been directed primarily toward developing business strategies, research and development activities and preparing for clinical trials for its product candidates. Tyme, and nowregulate specific mutations within cancer, the Company, has focused its research and development efforts onCompany’s therapeutic approach is designed to take advantage of a proprietary platform technology for which it retains global intellectual property (“IP”) and commercial rights. cancer cell’s innate metabolic requirements to cause cancer cell death.
The Company is currently formulatingfocused on developing its regulatorynovel compound, SM-88, its preclinical pipeline of novel CMBTTMprograms, and drug development programTYME-19 as a potential therapeutic for its lead drug candidate,SARS CoV-2 diseases. The Company believes that early clinical results demonstrated by SM-88 in multiple advanced cancers including breast, sarcomas, pancreatic, and working towardsprostate, reinforce the initiationpotential of its first phase II clinical trial. Subsequent to December 31, 2015, the Company’s Investigational New Drug Application for its SM-88 drug candidate foremerging CMBTTM pipeline.
Ongoing Studies
OASIS Trial in metastatic HR+/HER2- breast cancer patients (the “IND”) was accepted by the United States Food and Drug Administration (the “FDA”).
The Company is alsocollaborating with Georgetown University to support a Phase II trial, OASIS, for SM-88 in patients with metastatic breast cancer who have HR+ and HER2- disease (“HR+/HER2-”). This represents approximately 68% of the annual breast cancer diagnoses in the US each year. The OASIS trial is an investigator-initiated prospective open-label Phase II trial evaluating the expansionefficacy and safety of its phase II program to other types of cancer.
Reverse Triangular Merger
On March 5, 2015, Tyme Tech consummated a reverse triangular merger whereby a newly formed subsidiary formed specificallySM-88 with MPS for the transaction mergedtreatment of metastatic HR+/HER2- breast cancer after treatment with a CDK4/6 inhibitor. This trial is designed as a two-stage trial, enrolling up to 50 patients who have failed or progressed after receiving two hormonal agents and into Tyme.a CDK4/6 inhibitor to receive SM-88 with MPS without additional cancer therapies. The Merger resulted in Tyme becoming a wholly-owned subsidiaryprimary endpoint of Tyme Techthis trial is ORR, with secondary endpoints including DOR, CBR at >24 weeks, PFS, and the stockholders of Tyme as of immediately prior to the effective time of the Merger, receiving, in the aggregate, common stock of the Company equal to approximately 79% of the total number of shares of Company common stock outstanding immediately following such issuance to such former Tyme stockholders (34,000 shares of Company common stock for every one share of Tyme common stock outstanding as of the closing of the Merger).safety. The Merger resulted in the Company issuingtrial is being conducted at Georgetown University at a total of 68,000,000 shares of common stock tofive sites within the Pre-Merger Tyme stockholdersGeorgetown/MEDSTAR system located in Washington DC, Maryland, and 12,724,000 shares to the Tyme Tech stockholders as of the date of the Merger. (See Note 8. Stockholders’ Equity.)
The Merger Agreement contained representations and warranties and pre- and post-closing covenants of each party and customary closing conditions. Breaches of the representations and warranties under the Merger Agreement are subject to indemnification provisions. Each of the pre-Merger Tyme stockholders initially receivedNew Jersey. Patient enrollment began in the Merger 95% of the shares to which each such stockholder was entitled under the terms of the Merger Agreement,2021 with the remaining 5%first patient dosed in September.
HoPES Trial in sarcoma
In early 2020, the open-label Phase 2 investigator-sponsored trial of such sharesSM-88 therapy in sarcoma, HoPES, opened. This trial has two cohorts, each expecting to enroll 12 patients. The first is SM-88 with MPS as salvage treatment in patients with mixed rare sarcomas, and the other is SM-88 with MPS as maintenance treatment for patients with metastatic Ewing’s sarcoma who had not progressed on prior therapy. The primary objectives are to measure ORR and PFS. Secondary objectives include DOR, OS, CBR using RECIST, and incidence of treatment-emergent AEs. The Joseph Ahmed Foundation is sponsoring this trial, which is being held in escrow for two years to satisfy post-closing claims for indemnificationconducted by the Company (“Indemnity Shares”), pursuant to an Indemnification Shares Escrow Agreement. Any of the Indemnity Shares remaining in escrowPrincipal Investigator Dr. Chawla at the end of such two-year period shall be distributed to the pre-Merger Tyme stockholders on a pro rata basis.Sarcoma Oncology Center in Santa Monica, CA.
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Contemporaneous with the closing of the Merger, among other matters, the Company completed a private placement offering (the “PPO”) of 2,716,000 shares of Company common stock (the “PPO Shares”) for gross proceeds of $6,790,000 (of which, $4,264,000 was tendered in cash and the remaining subscription price paid by the delivery of a three-month promissory note in the principal amount of $2,500,000 (“PPO Note”). In addition, a Tyme convertible promissory note in the principal amount of $2,310,000 (the “Bridge Note”) was converted into 2,310,000 shares (the “Bridge Note Shares”) of Company common stock. The foregoing aggregate 79% ownership of the post-Merger Company by the former Tyme stockholders was calculated giving effect to the issuances of Company common stock in the PPO, the conversion of the Bridge Note and surrender of stock for cancellation by certain stockholders of the Pre-Merger Company. The purchaser of the PPO Shares and party receiving the Bridge Shares upon conversion of the Bridge Note were granted certain registration rights with respect to such shares (such shares being collectively referred to as the PPO/Bridge Note Conversion Registrable Shares”). The PPO Note was originally secured by the escrow of 5,000,000 shares of Company common stock pursuant to a Subscription Note Shares Escrow Agreement, dated as of March 5, 2015 (the “Subscription Note Escrow Agreement”). As originally provided in the Subscription Note Escrow Agreement, to the extent that the PPO Note was not paid at or prior to its maturity date of June 5, 2015, the escrowed shares would be forfeited for cancellation at the rate of one share for every $0.50 of PPO Note principal not paid. The Company received a payment of $1,250,000 in June 2015 and the maturity date on the remaining principal amount of the PPO Note was extended to July 6, 2015 pursuant to an Omnibus Amendment, dated as of June 5, 2015 (the “First Omnibus Amendment”). The Company entered into a Second Omnibus Amendment as of July 23, 2015 (the “Second Omnibus Amendment”), pursuant to which the terms of certain agreements entered into in connection with the Merger were modified and amended. Under the Second Omnibus Amendment, (x) the Company agreed to the extension of the maturity date of the remaining $1,250,000 outstanding amount due under the PPO Note to a date five business days following the Company providing the maker of the PPO Note of written evidence that an Investigational New Drug Application for the Company’s SM-88 drug candidate has been submitted by the Company to the FDA, (y) the holder of all of the PPO/Bridge Note Conversion Registrable Shares irrevocably waived any right to damages, including any liquidated damages, with respect to the date of filing or the effective date of the registration statement contemplated by a Registration Rights Agreement entered into in connection with the consummation of the Merger and PPO and (z) the amount of shares that the former-Tyme stockholders may include in such registration statement was increased to 15% of the total number of shares such stockholders received in connection with the Merger. (See Note 8. Stockholders’ Equity - Subscription Receivable.)Preclinical Pipeline Programs
At the point of Merger and since inception, Tyme Tech was essentially a “public reporting shell” with no substantive business operations. As such, Tyme Tech had no revenues and operating profits that require separate identification.
The Merger established a public forum for the Company. Subject to executing on the Company’s goals, management envisages that the public forum may help the Company secure necessary future funding in the public markets as the Company further develops its business as a clinical-stage biopharmaceutical enterprise focused on the development and commercialization of highly targeted cancer therapeutics for humans with a broad range of oncology indications.
The transaction costs associated with the Merger relate to professional fees incurred in respect of legal, investor relations, accounting and audit. All such transaction costs total approximately $1,000,000 and are included in general and administrative expense.
For accounting purposes, the acquisition of Tyme by Tyme Tech was considered a reverse acquisition, an acquisition transaction where the acquired company, Tyme, is considered the acquirer for accounting purposes, notwithstanding the form of the transaction. The primary reason the transaction was treated as a purchase by Tyme rather than a purchase by Tyme Tech was because Tyme Tech was a public reporting shell company with limited operations and Tyme’s stockholders gained majority control of the outstanding voting power of the Company’s equity securities through their collective ownership of a majority of the outstanding shares of Company common stock. Consequently, reverse acquisition accounting has been applied to the transaction.
In conjunction with the reverse acquisition, Tyme Tech changed its fiscal year-end from November 30 to December 31, the historical fiscal year-end of Tyme. The capital structure, including the number and type of shares issued appearing in the consolidated balance sheets for the periods presented, reflects that of the legal parent or accounting acquiree, Tyme Tech, including the shares issued to effect the reverse acquisition after the Merger and the capital structure of Tyme modified by the 34,000-for-1 exchange ratio in the Merger for the periods prior to the consummation of the Merger. As a result of the Merger and its accounting treatment as a reverse acquisition, stockholders’ equity has been retrospectively adjusted as of the earliest period presented in these consolidated financial statements. These adjustments include an increase of $6,798 to the par value of common stock issued, a decrease of $2,008 to additional paid-in capital and an increase in accumulated deficit of $4,790 as of January 1, 2014. There was no change to total stockholders’ equity (deficit) as a result of the Merger.
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Going Concern
The Company has incurred lossesbegun a comprehensive translational preclinical program focused on SM-88 MOA and negative cash flowsBiomarker Identification/Validation. We have engaged Evotec, a leading global research and development company, to aid in the execution of these activities and we are also incorporating several complementary academic collaborations into this multi-faceted program. The overall goal of these activities is to potentially identify actionable biomarkers of sensitivity and activity to SM-88 in various cancers, complementary combination drugs strategies for SM-88, and other cancer metabolism targets that could benefit from operations since inception (July 26, 2013)treatment.
TYME-18 is a CMBTTM compound under development that is delivered intratumorally. TYME-18 leverages a member of the bile acid family to create a potential treatment for inoperable tumors. Preliminary observations of the local administration of TYME-18, a combination of a proprietary surfactant system and hasnatural sulfonic acid, suggested its potential as an accumulated deficitimportant regulator of approximately $15,904,000 asenergy metabolism that may impede the ability of December 31, 2015.tumors to increase in size, which, in addition to its lytic functionality, could prove useful in difficult-to-treat cancers. The Company anticipates incurringis assessing development priorities to determine if additional losses until such time, if ever,advancement of this program is warranted at this time.
TYME-19 is an oral synthetic member of the bile acid family. The Company also uses bile acids in its anti-cancer drug candidate, TYME-18. Because of its expertise in bile acids and their effects, the Company was able to identify TYME-19 as a well-characterized bile acid with potential antiviral properties. Bile acids have primarily been used for liver disease; however, like all steroids, they are messenger molecules that modulate a number of diverse critical cellular processes. Bile acids can modulate lipid and glucose metabolism and can remediate dysregulated protein folding, with potentially therapeutic effects on cardiovascular, neurologic, immune, and other metabolic systems. Some agents in this class have also previously shown antiviral properties.
The Company has retained virology experts at Evotec to assess the MOAs of TYME-19 to assist the Company in assessing the path forward for the TYME-19 program. Evotec is a global drug development company with the capability to access the multiple existing and emerging variants of the COVID-19 virus. TYME and Evotec are testing the ability of TYME-19 to interrupt the cellular pathways commonly used by viruses to produce viral proteins as well as cellular responses to viral infection that cause local inflammation. Prolonged inflammation from SARS-CoV-2 can lead to some of the severe outcomes experienced by infected patients.
Tumor Targeting Technology
TYME has developed a technology (“Tumor Targeting Technology”) by which the tyrosine isomer L metyrosine (L-α-methylparatyrosine) can be fused with a second therapeutic agent in a manner that creates a fusion compound that may allow targeted accumulation of the treatment by the cancer cells in a novel manner. The Company is assessing potential development paths forward for this technology.
Discontinuing Programs
Precision Promise Trial- SM-88 with MPS as 2nd line therapy in metastatic pancreatic cancer
In October 2018 the Company partnered with PanCAN to study SM-88 in an adaptive randomized Phase II/III trial with registration intent known as Precision PromiseSM. The objective of Precision Promise is to expedite the study and approval of promising therapies for pancreatic cancer by bringing multiple stakeholders together, including academic, industry and regulatory entities. The trial began in early 2020, with SM-88 (with the conditioning agents MPS) being studied as monotherapy in a treatment arm for patients who have failed one prior line of chemotherapy.
On January 26, 2022, the Company announced the discontinuation of SM-88 with MPS in the Precision Promise trial in mPDAC upon learning from PanCAN, the trial sponsor, that it can generate significant revenues from its products currentlyterminated the arm due to futility compared to the control of standard of care chemotherapy in development. The Company’s primary sourcessecond-line mPDAC. Based on the information provided by PanCAN, the OS for SM-88 with MPS in monotherapy was lower compared to standard of liquiditycare chemotherapies with either Gemcitabine and Abraxane or modified FOLFIRINOX. As of March 31, 2022, remaining estimated costs to dateclose out the trial have been expensed.
TYME-88-PANC (Part 2) (third-line Metastatic Pancreatic Cancer)
In fiscal year 2020, we launched our pivotal study for SM-88 in the issuancethird-line treatment of common stock, convertible promissory notespancreatic cancer through an amendment to our ongoing TYME-88-Panc trial (Part 2), with the first patient dosed in the third quarter of the fiscal year. As described previously, the COVID-19 pandemic significantly impacted enrollment of this trial such that it appears it is likely to complete enrollment in a similar timeline to the second-line Precision Promise pancreatic cancer trial. There was also a higher than expected dropout of patients randomized to the chemotherapy control arm, which could have potentially impacted the interpretative and contributed capital by its founders. Substantial additional financing willregulatory utility of the data.
Following the strategic review, considering, in part, the timeline and regulatory utility for this trial compared to the parallel Precision Promise trial and concentration of investment in this specific cancer, management concluded that it would be needed bybest to focus on the second-line Precision Promise trial which offers treatment options to patients earlier in their disease and includes tumor biopsy and biomarker analyses that align with the Company’s overall strategic focus on identifying targeted therapies.
Therefore, the Company decided to fund its operationsstop enrollment and to seek applicable FDA and foreign governmental authorization to commercially market its product candidates. There is no assurance that such financing will be available when needed orbegin the process of closing down the trial. Patients currently on acceptable terms. These factors raise substantial doubt about the Company’s abilitytherapy are allowed to continue as a going concern.treatment until progression or unacceptable toxicity. The closing of this trial is expected to require several months to complete. During the year ended March 31, 2022, the Company expensed $723,000 of estimated close out costs. The trial’s remaining ongoing expense to the Company is approximately $400,000 and is expected to be incurred over the five months following March 31, 2022.
Liquidity
The consolidated financial statements have been prepared on a going concerngoing-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has historically funded its operations primarily through equity offerings.
In February 2021, the Company raised $100 million in gross proceeds through a registered direct offering of 40,000,000 shares of its common stock, at a purchase price of $2.50 per share. The Company incurred $6.2 million of related costs which offset such proceeds.
On January 7, 2020, the Company entered into a Securities Purchase Agreement with Eagle Pharmaceuticals, (“Eagle”), pursuant to which the Company raised $20,000,000 through the issuance and sale to Eagle of 10,000,000 shares of common stock, at a price of $2.00 per share.
On October 18, 2019, TYME entered into an Open Market Sale AgreementSM (as amended, the “Sale Agreement”) with Jefferies LLC (“Jefferies”) as sales agent, pursuant to which the Company may, from time to time, sell shares of Common Stock through Jefferies having an aggregate offering price of up to $30.0 million (the “Jefferies ATM”). Under the Sale Agreement the minimum share sales price (“Floor Price”) shall not be less than $1.00 without Jefferies prior written consent. During the year ended March 31, 2022, the Company did 0t sell any shares through the Jefferies ATM. In the year ended March 31, 2021, the Company raised approximately $6.1 million in aggregate gross proceeds before commissions and expenses through the Sale Agreement and paid commissions and expenses of $0.3 million. At March 31, 2022, there remained approximately $22.2 million of availability to sell shares through the Jefferies ATM subject to the terms of the Sale Agreement.
The proceeds of the aforementioned offerings are being used by the Company for continued clinical studies, drug commercialization and development activities and other general corporate and operating expenses.
For the year ended March 31, 2022, the Company had negative cash flow from operations of $21.2 million and net loss of $23.6 million, which included$2.5 million non-cash equity compensation and $1.6 million net amortization expense of premiums and discounts on marketable securities, offset by $1.8 million income change in fair value of warrant liability. As of March 31, 2022, the Company had working capital of approximately $71.5 million.
Management has concluded that substantial doubt does not exist regarding the Company’s ability to satisfy its obligations as they come due during the twelve-month period following the issuance of these financial statements. This conclusion is based on the Company’s assessment of qualitative and quantitative conditions and events, considered in aggregate as of the date of issuance of these financial statements that are known and reasonably knowable. Among other relevant conditions and events, the Company has considered its operational plans, liquidity sources, obligations due or expected, funds necessary to maintain the Company’s operations, and potential adverse conditions or events as of the issuance date of these financial statements.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in conformity with GAAP. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the ASC and ASU of the FASB.
Significant Accounting Policies
Principles of Consolidation
The Company’s consolidated financial statements do not include any adjustments relatingthe accounts of Tyme Technologies, Inc. and its subsidiary, Tyme, Inc. All intercompany transactions and balances have been eliminated in consolidation.
Reclassifications
Certain prior year amounts, primarily severance expense which was broken out to a separate line item on the Consolidated Statements of Operations and Comprehensive Loss, have been reclassified to conform to the recoverabilitycurrent year presentation. These reclassifications have no effect on the previously reported net loss or cash flows.
Risks and classification of recorded assets amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Management is evaluating different strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, additional funding from current or new investors, officers and directors; borrowings of debt; a public offering of the Company’s equity or debt securities; partnerships and/or collaborations. There can be no assurance that any of these future-funding efforts will be successful.
Uncertainties
The Company is subject to those risks associated with any specialty pharmaceuticalbiotechnology company that has substantial expenditures for research and development. There can be no assurance that the Company’s research and development projects will be successful, that products developed will obtain necessary regulatory approval or that any approved product will be commercially viable. In addition, the Company operates in an environment of rapid technological change and is largely dependent on the services of its employees and consultants, as well as third party contractors.
Current Economic Conditions
Note 2. Summary
The novel COVID-19 pandemic and actions taken by governments and others to reduce its spread, has negatively impacted the global economy, financial markets, and the Company’s industry and has disrupted day-to-day life and business operations. Although we have operated within the COVID-19 environment for approximately two years, outbreaks of Significant Accounting Policies.infections (including the spread of the new variants) continue to be experienced as conditions evolve and fluctuate around the world. The extent to which the continuing COVID-19 pandemic impacts our product candidates and business, including patients’ willingness to participate and remain in clinical trials, the timing of meeting enrollment expectations, the ability of our third-party partners to remain operational and our access to capital markets and financing sources, depends on numerous evolving factors that are highly uncertain, cannot be accurately predicted, and may be significant.
Principles of Consolidation
The Company’s consolidated financial statements include the accounts of Tyme Tech and its subsidiaries, Tyme and Luminant. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimation include the fair valuecalculation of the Company underlying the conversion feature of the senior secured bridge notes, derivative value associated with the price protection feature of shares of Company common stock issued in connection with the PPOstock-based compensation and Bridge Note conversion and stock-based compensation.warrant valuation. Actual results could differ from such estimates.
Cash and Cash Equivalents
The Company considers all highly-liquid investments that have maturities of three months or less when acquired to be cash equivalents. As of December 31, 2015, theCash equivalents are stated at fair value. The Company’s cash and cash equivalents consisted of $4,446,284 deposited in two checking accounts$13.7 million at two financial institutions.March 31, 2022 and $107.5 million at March 31, 2021.
Concentration of Credit Risk
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash.cash and marketable securities. Cash is deposited with major banks and, at times, such balances with any one financial institution may be in excess of FDIC insurance limits. The Company exceeded the FDIC limit of $250,000 by approximately $3,946,284$10.1 million at DecemberMarch 31, 2015.2022 and $107.3 million at March 31, 2021. Although the Company has exceeded the federally insured limit, it has not incurred losses related to these deposits. Management monitors the Company’s accounts with these institutions to minimize credit risk.
Marketable Securities
In the first quarter of fiscal year 2022, the Company established an investment policy and invested in a portfolio of highly liquid investments and marketable securities. The primary objectives of the Company’s policy are to preserve capital and diversify risk, while maintaining sufficient liquidity to meet cash flow requirements.
All of the Company's marketable securities are debt securities and are classified as available-for-sale in accordance with the ASC Topic 320, “Investments - 82 -Debt and Equity Securities.” Available for sale securities are carried at fair value and reported in cash equivalents and marketable securities. Marketable securities are further classified as short-term or long-term based on maturity dates and the Company’s intent in line with its investment policy to hold the securities to scheduled maturity. Unrealized gains and losses on available-for-sale securities are excluded from net loss and reported in accumulated other comprehensive loss as a separate component of stockholders' equity. Other income includes interest, dividends, amortization of purchase premiums and discounts, gain and losses on sale (or redemptions) of securities and other-than-temporary declines in the fair value of securities, if any.
For individual debt securities classified as available-for-sale securities where there has been a decline in fair value below amortized cost, the Company determines whether the decline resulted from a credit loss or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for a credit loss is recorded on our consolidated balance sheet, limited by the amount that the fair value is less than the amortized cost basis. Impairment that has not been recorded through an allowance for credit losses is recorded through other comprehensive loss, net of applicable taxes.
Fair Value of Financial Instruments
The carrying amounts of the Company’sCompany records certain financial instruments, including cash, accounts payableassets and other current liabilities approximatesat fair value given their short-term nature. The carrying amountin accordance with the provisions of the senior secured bridge notes payable as of December 31, 2014 approximated fair value because the interest rates on these instruments were reflective of rates that the Company could obtain on unaffiliated third party debt with similar termsASC Topic 820, Fair Value Measurements and conditions.
Disclosures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Fair value should be based on the assumptions that market participants would use when pricing an asset or liability and is based on a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets (observable inputs) and the lowest priority to the Company’s assumptions (unobservable inputs). Fair value measurements should be disclosed separately by level within the fair value hierarchy. For assets and liabilities recorded at fair value, it is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with established fair value hierarchy.
Fair value measurements for assets and liabilities where there exists limited or no observable market data are based primarily upon estimates, and often are calculated based on the economic and competitive environment, the characteristics of the asset or liability and other factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values.
Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as assets held for sale and certain other assets. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets.
Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
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Level 3 valuations are for instruments that are not traded in active markets or are subject to transfer restrictions and may be adjusted to reflect illiquidity and/or non-transferability, with such adjustment generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. The Company’s derivative liability is classified as a Level 3 instrument. (See Note 7. Derivative Liability.)
An adjustment to the pricing method used within either Level 1 or Level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy.
The Company had no assets orcarrying amounts of the Company’s financial instruments, including cash, accounts payable and other current liabilities classified as Level 1 or Level 2 during the years ended December 31, 2015 and 2014 and there were no material re-measurements ofapproximates fair value with respect to financial assetsgiven their short-term nature. The fair value of the severance payable approximates the carrying value, which represents the present value of future severance payments. Cash equivalents, marketable securities and liabilities, during those years, other than those assets and liabilities thatthe derivative warrant liability are measuredrecorded at fair value on a recurring basis. There were no transfers between Level 1value. See Note 7.
Prepaid Expenses and Level 2 in any of the periods reported.
PrepaidOther Current Assets
Prepaid assetsexpenses represent expenditures made in advance of when the economic benefit of the cost will be realized, and which will be expensed in future periods with the passage of time or whentime. As of March 31, 2022, prepaid expenses and other current assets includes $1.1 million of prepaid insurance, $0.6 million accrued interest receivable on marketable securities and a triggering event occurs.$2.1 million deposit with our payroll vendor to satisfy the Chief Science Officer severance payment. As of March 31, 2021, prepaid expenses and other current assets includes $1.0 million of prepaid insurance.
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Property and Equipment, Net
Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives. The Company estimates a life of five to seventhree years for equipment and furniture and fixtures. Upon sale or retirement, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is includedreflected in operating expenses.results of operations. Repairs and maintenance costs are expensed as incurred.
Impairment of Long-Lived Assets
The Company assesses the recoverability of its long-lived assets, which include fixed assets and operating lease right of use assets, whenever significant events or changes in circumstances indicate impairment may have occurred. If indicators of impairment exist, projected future undiscounted cash flows associated with the asset are compared to its carrying amount to determine whether the asset’s value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For the years ended DecemberMarch 31, 20152022 and 2014,2021, the Company determined that there were no triggering events requiring an impairment analysisanalysis.
Research and Development
Research and development costs are expensed as incurred and are primarily comprised of, but not limited to, external research and development expenses incurred under arrangements with third parties, such as contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”)CROs, CMOs and consultants that conduct clinical and preclinical studies, costs associated with preclinical and development activities, costs associated with regulatory operations, depreciation expense for assets used in research and development activities and employee related expenses, including salaries and benefits for research and development personnel. Costs for certain development activities, such as clinical studies, are accrued, over the service period specified in the contract and recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to the Companyus by itsour vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the patterns of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued expense, which are reported in prepaid assets or accounts payable and other current liabilities.expense.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition ofIncome tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. The Company is subject to income taxes in the expected futureUnited States, for federal and various state jurisdictions. Significant judgments and estimates are required in the determination of the income tax consequencesexpense.
Deferred income taxes arise from temporary differences between the tax basis of events that have been includedassets and liabilities and their reported amounts in the financial statements. Under this method,statements, which will result in taxable or deductible amounts in the Company determinesfuture. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities on the basis of the differences between the financial statements and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers allA valuation allowance is provided when, after consideration of available positive and negative evidence including future reversalsthat it is not more likely than not that the benefit from deferred tax assets will be realizable. In recognition of existing taxable temporary differences, projectedthis risk, we have provided a full valuation allowance against the net deferred tax assets. The assumptions about future taxable income tax-planning strategies,require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of recent operations. If the Company determines that it would be able to realize our deferredcumulative operating income (loss).
The calculation of tax assetsliabilities involves dealing with uncertainties in the futureapplication of complex tax laws and regulations in excess of their net recorded amount, the Company would makevarious jurisdictions. ASC 740 “Income Taxes” states that a tax benefit from an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whetherposition may be recognized when it is more likely than not that the tax positionsposition will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits of the positionmerits. When and (2) for those tax positions that meet the more-likely-than-not recognition threshold,if the Company recognizes the largest amount of tax benefit that is more than 50 percent likelywere to be realized upon ultimate settlement with the related tax authority.
The Company recognizesrecognize interest and penalties related to unrecognized tax benefits, on the incomethey would be reported in tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet.expense.
The Company had no unrecognized tax benefits at December 31, 2015 and 2014. The tax years which currently remain subject to examination by major tax jurisdictions as of December 31, 2015, December 31, 2015 and 2014 and for the period from July 26, 2013 to December 31, 2013. In addition, the Company had no income tax related penalties or interest for periods presented in these consolidated financial statements.
- 84 -
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views theirits operations and manages theirits business in one1 segment.
Derivative Warrant Liability
Derivative Liabilities
Accounting standards require presentationCertain freestanding common stock warrants that are related to the issuance of derivativecommon stock are classified as liabilities and recorded at fair value. Derivative liabilitiesvalue due to characteristics that require liability accounting, primarily the obligation to issue registered shares of common stock upon notification of exercise and certain price protection provisions. Warrants of this type are adjustedsubject to reflectre-measurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense) in the consolidated statement of operations. The Company
will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrant. The Company utilizes Level 3 fair value criteria to measure the fair value of the warrants.
As noted in Note 8, Stockholders’ Equity, the Company classifies a warrant to purchase shares of its common stock as a liability on its consolidated balance sheet if the warrant is a free-standing financial instrument that contains certain price protection featuresor requires issuance of registeredcommon shares upon exercise which cause the warrants to be treated as derivatives. Each warrant of this type is initially recorded at fair value on date of grant using the Monte Carlo simulation modelor the Black-Sholes model and is subsequently re-measured to fair value at each subsequent balance sheet date. Changes in fair value of the endwarrant are recognized as a component of each reporting period, with any changeother income (expense) in the fair value being recorded in resultsconsolidated statement of operations as other income or expense.operations.
Basic and Diluted Loss Per Share
The Company calculates net loss per share in accordance with ASC Topic 260, Earning per Share.Share (Topic 260). Basic net loss per share is computed by dividing net loss attributable to the Company by the weighted average number of shares of Company common stock outstanding for the period, and diluted earnings per share is computed by including common stock equivalents outstanding for the period. At December 31, 2015 and 2014,During the periods presented, the calculation excludes any potential dilutive common shares and any equivalents as they would have been anti-dilutive as the Company hadincurred losses for the periods then ended.
Stock-based Compensation
The Company follows the authoritative guidance for accounting for stock-based compensation in ASC 718, Compensation-Stock Compensation. The guidance requires that stock-based payment transactions be recognized in the financial statements based on their fair value at the grant date and recognized as compensation expense over the vesting period as services are being provided. (See Note 12.12, Equity Incentive Plan.)
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expectedterm of the option, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. For awards subject to time-based vesting conditions, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
The Company accounts for stock-based awards issued to non-employees in accordance with ASC Topic 505-50 “Equity-Based Payment to Non-Employees”forfeitures as they occur. The Company adopted ASU 2018-07 and, accordinglyas such, the fair value of the stock compensationoptions granted to non-employees is measured on the earlier of: a) the performance commitment date, or b)estimated at the date the services required under the arrangement have been completed.of grant only.
RecentRecently Adopted Accounting Pronouncements
In February 2016,December 2019, the Financial Accounting Standards Board (“FASB”)FASB issued ASU No. 2016-02,Leases2019-12, Income Taxes (Topic 842)740): Simplifying the Accounting for Income Taxes (“ASU 2016-02”2019-12”). The new standard establishes, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Amendments include removal of certain exceptions to the general principles of ASC 740, Income Taxes and simplification in several other areas such as accounting for a right-of-use (ROU) modelfranchise tax (or similar tax) that requires a lessee to record a ROU asset and a lease liabilityis partially based on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.income. ASU 2016-022019-12 is effective for public business entities for annual reporting periods beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements.
In January 2016, the FASB issued ASU No. 2016-01,Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-1”), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 will be effective for the Company for annual periods and interim periods within those annual periods beginning after December 15, 2018 and early adoption is not permitted.reporting periods. The Company does not anticipate thatadopted the pronouncement as of April 1, 2021 and the adoption of this standard will have a material impact on its consolidated financial statements.
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In November 2015, the FASB issued ASU No. 2015-17,Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. ASU 2015-17 will be effective for the Company for annual periods beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018, with early adoption permitted. The Company doesdid not anticipate that the adoption of this standard will have a material impact on its consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15,Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” This guidance is effective for annual reporting periods ending after December 15, 2016, and for annual periods and interim periods thereafter, with early adoption permitted. The Company does not anticipate that the adoption of this standard will have a material impact on its consolidated financial statements other than potentially on the footnoteand disclosures.
In June 2014,2016, the FASB issued ASU No. 2014-12,Compensation - Stock Compensation2016-13, Financial Instruments-Credit Losses (Topic 718)326): Accounting for Share-Based Payments When the TermsMeasurement of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period,Credit Losses on Financial Instruments (“ASU 2014-12”2016-13”) and has since modified the standard with several ASUs (collectively, “Topic 326”). Topic 326 requires companies to present a financial asset (or a group of financial assets) measured at amortized cost and available for sale debt securities net of the amounts expected to be collected. Prior U.S. GAAP delayed recognition of the full amount of credit losses until the loss was probable of occurring. Under this ASU, 2014-12 requiresthe income statement will reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses will be based upon historical experience, current conditions, and reasonable and supportable forecasts that a performance target that affects vesting, and that couldaffect the collectability of the reported amount. Credit losses relating to available-for-
sale debt securities will be achieved after the requisite service period, be treatedrecorded through an allowance for credit losses rather than as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair valuedirect write-down of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. ASU 2014-12security. Early adoption is permitted. The guidance is effective for annual periods andfiscal years beginning after December 15, 2022, including interim periods within those annual periods beginning after December 15, 2015. fiscal years. The Company does not anticipate thatadopted the pronouncement as of April 1, 2021 and the adoption of this standard willdid not have a material impact on its consolidated financial statements.statements and disclosures.
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). ASU No. 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in ASU No. 2020-06 are effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. FASB also specified that an entity should adopt the guidance as of the beginning of its annual fiscal year and is not permitted to adopt the guidance in an interim period. The Company adopted the pronouncement as of April 1, 2021 and the adoption of this standard did not have a material impact on its consolidated financial statements and disclosures.
Note 3. Net Loss Per Common Share
Share.
The following table sets forth the computation of basic and diluted net loss per common share for the periods indicated:
|
| Year Ended |
| Year Ended |
| ||
Basic and diluted net loss per common share calculation: |
|
|
|
|
| ||
Net loss attributable to controlling interests |
| $ | (11,726,818 | ) | $ | (2,649,826 | ) |
Weighted average common shares outstanding |
|
| 77,848,850 |
|
| 68,000,000 |
|
Net loss per share of common stock—basic and diluted |
| $ | (0.15 | ) | $ | (0.04 | ) |
|
| Year Ended |
| |||||
|
| March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Basic and diluted net loss per common share calculation |
|
|
|
|
|
|
|
|
Net loss |
| $ | (23,626,047 | ) |
| $ | (28,978,763 | ) |
Weighted average common shares outstanding — basic and diluted |
|
| 172,206,534 |
|
|
| 134,250,722 |
|
Net loss per share of common stock — basic and diluted |
| $ | (0.14 | ) |
| $ | (0.22 | ) |
There are 3,500,000 sharesThe Company calculates net loss per share in escrow, subjectaccordance with ASC Topic 260, “Earnings per Share.” Basic net loss per share is computed by dividing net loss attributable to cancellation, that have not been included in basicthe Company by the weighted average number of shares of Company Common Stock outstanding for the period, and diluted earnings per share is computed by including common stock equivalents outstanding for the period. During the periods presented, the calculation excludes any potential dilutive common shares and any equivalents as they would have been anti-dilutive.
Warrants issued in April 2019, discussed further in Note 8, participated on a 1-for-one basis with common stock in the distribution of dividends, if and when declared by the Board of Directors (the “Board”) on the Company’s Common Stock. For purposes of computing EPS, these warrants were, when outstanding, considered to participate with common stock in the earnings of the Company and, therefore, the Company calculates basic and diluted EPS using the two-class method. Under the two-class method, net income for the period is allocated between common stockholders and participating securities according to dividends declared and participation rights in undistributed earnings. NaN income was allocated to the warrants for the year ended DecemberMarch 31, 2015 (See2021 as results of operations was a loss for the period. In May 2020, these warrants were all exchanged for Common Stock or new warrants without such participation rights and are no longer outstanding (see Note 8. Stockholders’ Equity.)8).
The following outstanding securities at DecemberMarch 31, 20152022 and 20142021 have been excluded from the computation of diluted weighted average shares outstanding, as they would have been anti-dilutive:
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- 86 -
Note 4. PropertyAvailable-for-Sale-Securities.
The following table summarizes available-for-sale securities recorded in cash and Equipment, Net.cash equivalents or marketable securities as of March 31, 2022:
|
| March 31, 2022 |
| |||||||||||||
|
| Amortized cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Loss |
|
| Fair Value |
| ||||
Money market funds |
| $ | 3,409,178 |
|
| $ | — |
|
| $ | — |
|
| $ | 3,409,178 |
|
Corporate debt securities |
|
| 32,831,174 |
|
|
| — |
|
|
| (343,134 | ) |
|
| 32,488,040 |
|
Municipal debt securities |
|
| 37,405,722 |
|
|
| — |
|
|
| (201,130 | ) |
|
| 37,204,592 |
|
Total |
| $ | 73,646,074 |
|
| $ |
|
|
| $ | (544,264 | ) |
| $ | 73,101,810 |
|
Property and equipment, net consistedThe following table summarizes the classification of the following:available-for-sale securities:
|
| December 31, |
| December 31, |
| ||
|
|
|
|
|
| ||
Machinery and equipment |
| $ | 21,463 |
| $ | 21,463 |
|
Less: accumulated depreciation |
|
| 8,585 |
|
| 4,293 |
|
|
| $ | 12,878 |
| $ | 17,170 |
|
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
Cash and cash equivalents |
| $ | 3,409,178 |
|
| $ | — |
|
Marketable securities |
|
| 69,692,632 |
|
|
| — |
|
Total |
| $ | 73,101,810 |
|
| $ | — |
|
Depreciation expense was $4,292 and $4,293 for the years ended December 31, 2015 and 2014, respectively.The following table summarizes our portfolio of available-for-sale securities by contractual maturity:
|
| Less than 12 months |
|
| 12 months or Longer |
|
| Total |
| |||||||||||||||
|
| Fair Value |
|
| Net Unrealized Losses |
|
| Fair Value |
|
| Net Unrealized Losses |
|
| Fair Value |
|
| Net Unrealized Losses |
| ||||||
Money market funds |
| $ | 3,409,178 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 3,409,178 |
|
| $ | — |
|
Corporate debt securities |
|
| 26,195,025 |
|
|
| (227,300 | ) |
|
| 6,293,015 |
|
|
| (115,834 | ) |
|
| 32,488,040 |
|
|
| (343,134 | ) |
Municipal debt securities |
|
| 34,416,936 |
|
|
| (153,855 | ) |
|
| 2,787,656 |
|
|
| (47,275 | ) |
|
| 37,204,592 |
|
|
| (201,130 | ) |
Total |
| $ | 64,021,139 |
|
| $ | (381,155 | ) |
| $ | 9,080,671 |
|
| $ | (163,109 | ) |
| $ | 73,101,810 |
|
| $ | (544,264 | ) |
Note 5. Accounts Payable and Other Current Liabilities.
Accounts payable (including accounts payable to a related party – see Note 11) and other current liabilities consisted of the following:
| March 31, 2022 |
|
| March 31, 2021 |
| ||||||||||
|
| December 31, |
| December 31, |
| ||||||||||
|
|
|
|
|
| ||||||||||
Interest |
| $ | — |
| $ | 56,174 |
| ||||||||
Legal |
| 781,933 |
|
| 844,602 |
|
| $ | 263,111 |
|
| $ | 454,139 |
| |
Consulting |
| 50,947 |
|
| 43,314 |
| |||||||||
Consultant and professional services |
|
| 300,051 |
|
|
| 176,957 |
| |||||||
Accounting and auditing |
| 157,129 |
|
| 272,913 |
|
|
| 14,410 |
|
|
| 55,349 |
| |
Research and development |
| 241,259 |
|
| 58,750 |
|
|
| 2,776,594 |
|
|
| 2,657,202 |
| |
Board of Directors and Scientific Advisory Board compensation |
| 225,000 |
|
| — |
| |||||||||
Board of Directors and Scientific Advisory Board Compensation |
|
| 418,389 |
|
|
| 435,594 |
| |||||||
Other |
|
| 18,063 |
|
| 14,662 |
|
|
| 30,872 |
|
|
| 63,149 |
|
|
| $ | 1,474,331 |
| $ | 1,290,415 |
|
| $ | 3,803,427 |
|
| $ | 3,842,390 |
|
Note 6. Debt.Severance Payable.
Convertible/Bridge Notes Payable
On August 2, 2013, TymeThe Company entered into a Convertible Promissory NoteRelease Agreement, (the “Convertible Note Agreement”)dated March 24, 2022, pursuant to which the Chief Science Officer resigned and will receive severance that would be fundedpayable under his employment agreement in a serieslump sum payment of loans up to a maximum principal amount of $997,000 (“Convertible Notes”). As of December 31, 2013, Tyme had received $997,000 in proceeds under the Convertible Notes.$2.1 million. The Convertible Notes accrued interest at a rate of 2.5% per year. Principal repayments were to commence on April 30, 2014 equal to 1/24th of the then outstanding balance, with the entire principal amount due and payable on April 30, 2016. The lender opted not to collect principal payments in anticipation of converting the Convertible Notes.
The Convertible Note Agreement provided that if, prior to April 30, 2014, TymeCompany also entered into any financing transactionSeparation and General Release Agreement with the lender or an affiliate thereof, upon the closing of such transaction, the outstanding principal balance of the Convertible Notes would automatically convert on a dollar-for-dollar basis into the securities being issued and sold at a conversion price equal to the purchase price per share implied by a pre-investment valuation of Tyme equal to $20,000,000 (“Conversion Price”).3 other employees. The Convertible Note Agreement further provided that if Tyme entered into an agreement with a third party, other than the lender or affiliate thereof, into any debt or equity financing, exclusive license of any portion of the IP Rights, a sale of substantially all of the assets of Tyme, or subsidiary thereof, or any transaction or series of transactions resulting in the current stockholders holding less than a majority of the voting interests, then, at the lender’s option, effective immediately prior to closing of the third party transaction, the outstanding principal balance of the Convertible Notes would have been converted on a dollar-for-dollar basis into shares of common stock. The Convertible Note Agreement provided that in the case of conversion of principal under either scenario, Tyme would have no further obligations or liabilities under the Convertible Notes.
In January 2014, the lender increased the aggregate principal amount of the Convertible Notes from $997,000 to $1,126,000 and advanced funds to Tyme to that effect, such that the total amount funded to the Company was equal to the increased principal amount of the Convertible Notes.
- 87 -
On August 28, 2014, the lender converted the Convertible Notes in the aggregate principal amount of $1,126,000 plus accrued interest of $26,242, into shares of Tyme common stock (3,624,400 shares of the Company common stock). Simultaneous with the issuance of shares to the lender, the two principal stockholders of the Company, as capital contributions, surrendered to Tyme for cancellation an equal number of shares. The net effect of such issuance and cancellations resulted in no change in the total number of shares of Company common stock issued (71,400,000) and outstanding (68,000,000) at such time.
For the years ended December 31, 2015 and 2014,agreements provide separation benefits which the Company recorded interest expense onas severance expense.
In April 2021, the Convertible Notes amounting to $0Company entered into a Separation and $20,387, respectively.
On July 11, 2014, Tyme received $1,100,000 in proceeds from the issuance of a convertible promissory note (the “Bridge Note”) from an affiliate of GEM Global Yield Fund, LLC SCS (“GEM”). The Bridge Note bears interest at a rate of 10% per year, maturing fifteen months from the date of issue and was secured by all assets of Tyme. The Bridge Note was mandatorily convertible into Company common stock upon the closing of the PPO. To secure certain obligations relatingGeneral Release Agreement related to the Bridge Note and the then proposed merger, Tyme issued in the nameseparation of the purchaseremployment of the Bridge Note but placed into escrow 3,400,000 shares of Company common stock. These shares were not deemed outstanding, but would either be delivered to the Bridge Note purchaser or returned to Tyme for cancellation pursuant to the terms of a Termination Shares Escrow Agreement, datedits Chief Medical Officer as of July 11, 2014, among Tyme,March 31, 2021. The agreement provides for separation benefits which the purchaser of the Bridge Note and the escrow agent.
On November 24, 2014, the purchaser of the Bridge Note loaned Tyme an additional $250,000. In connection with the funding of such loan, the Bridge Note was amended and restated to reflect a principal amount of $1,350,000.
On January 15, 2015, the purchaser of the Bridge Note loaned Tyme a further $960,000. In connection with the funding of such further loan, the Bridge Note was amended and restated to reflect a principal amount of $2,310,000. On March 5, 2015, the Bridge Note was further amended and restated to effect that the mandatory conversion feature be amended to a set fixed conversion amount such that, upon mandatory conversion, the Bridge Note purchaser would receive one share of Company common stock (each, a “Bridge Note Conversion Share”) for each $1.00 of principal of the Bridge Note outstandingrecorded as of the date of the mandatory conversion. The Bridge Note, including accrued interest, was converted at the time of the Merger. The Company evaluated the modification to the conversion rate as an inducement to convert the Bridge Note and concluded that it provided the purchaser of the Bridge Note an incremental value of $3,465,000, which is included as interestseverance expense on the consolidated statement of operations for the year ended DecemberMarch 31, 2015.2021.
On March 15, 2019 the Company entered into a Release Agreement related to the separation of employment of their Chief Operating Officer, which provides for salary continuance for five years, reimbursement of health benefits for three years and a modification to his outstanding stock options to extend the post-termination exercise period for his vested options from three months to five years. The Company recorded severance expense at its present value of $2.5 million, (using a discount rate of 6%) for the year ended March 31, 2019, including $0.4 million relating to the stock option modification.
The aggregate severance liability payable was $3.0 million and $1.6 million as of March 31, 2022 and March 31, 2021.
Note 7. Fair Value Measurements.
The Company recorded interest expensehas segregated all financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. Transfers are calculated on values as of $38,301the transfer date. There were no transfers between Levels 1, 2 and $56,1743 during the years ended DecemberMarch 31, 20152022 and 2014, respectively, on the Bridge Note. The aggregate outstanding principal and accrued interest balance at DecemberMarch 31, 2015 and 2014 was $0 and $1,406,174, respectively.2021.
Note 7. Derivative Liability.
The investor in the PPO and the Bridge Note holder has been granted anti-dilution protection with respect to the PPO Shares and Bridge Note Conversion Shares such that, if within two years after the closing of the Merger, the Company shall issue additional shares of Company common stock or common stock equivalents, for a consideration per share less than $0.50 per share (the “Lower Price”), each such investor and holder will be entitled to receive from the Company additional shares (“Lower Price Shares”) of Company common stock in an amount such that, when added to the number of shares initially purchased by such investor or received upon conversion of the Bridge Note, will equal the number of shares that such investor’s PPO subscription amount would have purchased or the Bridge Note holder would have received upon conversion of the Bridge Note at the Lower Price. GEM was the sole investor in the PPO and designee of the Bridge Note holder who received the Bridge Note Conversion Shares.
The Company has determined that this anti-dilution protection is a freestandingCompany’s financial instrument that will be carried as a liability at fair value. At the time of the merger, in the quarter ended March 31, 2015, managementinstruments measured this derivative at fair value and recognizedon a derivative liabilityrecurring basis are as follows:
|
| Total |
|
| Quoted prices in active markets |
|
| Significant other observable inputs |
|
| Significant unobservable inputs |
| ||||
March 31, 2022 |
|
|
|
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
| |||
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
| $ | 3,409,178 |
|
| $ | 3,409,178 |
|
| $ | — |
|
| $ | — |
|
Marketable Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
|
| 26,195,025 |
|
|
| — |
|
|
| 26,195,025 |
|
|
| — |
|
Municipal debt securities |
|
| 34,416,936 |
|
|
| — |
|
|
| 34,416,936 |
|
|
| — |
|
Long-term |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
|
| 6,293,015 |
|
|
| — |
|
|
| 6,293,015 |
|
|
| — |
|
Municipal debt securities |
|
| 2,787,656 |
|
|
| — |
|
|
| 2,787,656 |
|
|
| — |
|
|
| $ | 73,101,810 |
|
| $ | 3,409,178 |
|
| $ | 69,692,632 |
|
| $ | — |
|
Financial liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability |
| $ | 124,480 |
|
| $ | — |
|
| $ | — |
|
| $ | 124,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability |
| $ | 1,931,921 |
|
|
| — |
|
|
| — |
|
| $ | 1,931,921 |
|
Fair values of $376,300 on the consolidated balance sheet, with the offset recorded against additional paid-in capital. The derivative is valued primarily using modelsavailable-for-sale securities are generally based on unobservable inputs that represent management’s best estimateprices obtained from commercial pricing services. The fair value of whatcash equivalents held in money market participants would use in pricing the liability at the measurement date and thus arefunds is determined based on “Level 1” inputs. Marketable securities classified as Level 3. The model incorporates various assumptions related to2 within the Company’s stock pricevaluation hierarchy consist of corporate debt securities and ascribes a probability based on management’s expectation that such assumptions would occur. Changes inmunicipal debt securities. We estimate the fair values of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include market pricing based on real-time trade data for the derivative are recognizedsame or similar securities, issuer credit spreads, benchmark yields, and other observable inputs.
The fair value measurement for the warrant issued in earningsconjunction with the Exchange Agreements (see Note 8 for transaction details) (the “May 2020 Warrant”) is based on significant inputs not observable in the current period. Asmarket and is classified as Level 3 liability as of DecemberMarch 31, 2015, the Company determined that the likelihood2022 and March 31, 2021.The fair value of the anti-dilution provisions being metMay 2020 Warrant was remote baseddetermined using a Black Scholes model and included significant unobservable inputs such as volatility. The model also incorporated several observable assumptions at each valuation date including: the price of the Company’s common stock on the Company’s current stock pricedate of valuation, the remaining contractual term of the warrant and the length of time remaining until maturity,risk free interest rate over the term.
The following table details key inputs and therefore,assumptions used to estimate the anti-dilution protection had no value. As a result, a gain of $376,300 was recorded in Other income in the Consolidated Statements of Operations to reflect the remeasurementfair value of the derivative liability to $0.May 2020 Warrant as of March 31, 2022 and March 31, 2021 using a Black Scholes model:
|
| May 2020 Warrant |
|
| May 2020 Warrant |
| ||
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
Stock price |
| $ | 0.35 |
|
| $ | 1.78 |
|
Volatility |
|
| 98 | % |
|
| 78 | % |
Remaining term (years) |
| 2.01 |
|
| 3.01 |
| ||
Expected dividend yield |
|
| — |
|
|
| — |
|
Risk-free rate |
|
| 2.28 | % |
|
| 0.35 | % |
- 88 -
The following table summarizes activity for liabilities measured at fair value using Level 3 significant unobservable inputs:
|
| Warrant liability |
| |
Beginning balance, March 31, 2021 |
| $ | 1,931,921 |
|
Change in fair value of May 2020 Warrant liability |
|
| (1,807,441 | ) |
Ending balance, March 31, 2022 |
| $ | 124,480 |
|
Note 8. Stockholders’ Equity.
Preferred Stock
The Company is authorized to issue up to 10,000,000 shares of preferred stock, each with a par value of $0.0001. Shares of Company preferred stock may be issued from time to time in one or more series and/or classes, each of which will have such distinctive designation or title as shall be determined by the Company’s board of directorsBoard prior to the issuance of any shares of such series or class. The Company preferred stock will have such voting powers, full or limited or no voting powers and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such series or class of Company preferred stock as may be adopted from time to time by the Company’s board of directorsBoard prior to the issuance of any shares thereof. No
NaN shares of Company preferred stock are currently issued or outstandingoutstanding. In connection with the Securities Purchase Agreement, dated January 7, 2020, between the Company and Eagle (the “Eagle SPA”), the Company designated and reserved 10,000 shares as Series A Preferred Stock. The Series A Preferred Stock shares rank senior to the Company’s boardcommon stock and have no voting rights. The shares, if issued, would be convertible into common stock and will have a conversion ratio equal to the quotient of directors has not designated any class or series$1,000 divided by an amount equal to 1.15 times the average of Company preferred stockthe volume weighted average price of the Company’s Common Stock for usethe 7 trading days immediately following announcement of the Milestone Event (as defined in the future.SPA).
Common Stock
Authorized, Issued and Outstanding
The Company is authorized to issue 300,000,000 shares of common stock, each with a par value of $0.0001, of which 86,836,370 shares were issued and outstanding at December 31, 2015 and 71,400,000 shares were issued and 68,000,000 shares were outstanding at December 31, 2014. Included in the shares issued and outstanding at December 31, 2015 are 3,500,000 shares that are in escrow, subject to cancellation, as discussed further below. The 3,400,000 shares issued but not outstanding at December 31, 2014 were held in escrow to secure certain obligations of Tyme to the holder of the Bridge Note.
Prior to the Merger, the Company conducted a 4.3334-for-1 forward stock split. The Merger resulted in the Company issuing a total of 68,000,000 shares of Company common stock to the Pre-Merger Tyme stockholders and 12,274,000 shares to the Tyme Tech stockholders as of the date of the Merger. As a result of the Merger and its accounting treatment as a reverse acquisition, stockholders’ equity (deficit) has been presented to reflect such stock split and stock issuances as of the earliest period presented in these consolidated financial statements. (See Note 1. Nature of Business and Basis of Presentation - Reverse Triangular Merger.)
Voting
Each holder of Company common stock is entitled to one vote for each share thereof held by such holder at all meetings of stockholders (and written action in lieu of meetings). The number of authorized shares of Company common stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of majority of the combined number of issued and outstanding shares of the Company.
In connection with the Release Agreement, dated March 24, 2022, the Company and Mr. Hoffman also entered into a Voting Agreement, pursuant to which Mr. Hoffman agreed to vote all shares of TYME common stock beneficially owned by him in accordance with the Board’s recommendation with respect to any matter presented to the stockholders for a period of one year.
Dividends
The Company and Michael Demurjian entered into a Voting Agreement, dated April 18, 2022, pursuant to which Mr. Demurjian agreed to vote all shares of TYME common stock beneficially owned by him in accordance with the board of directors of the Company’s recommendation with respect to any matter presented to the Company’s stockholders for a period of two years from the date of the agreement.
Dividends
Dividends may be declared and paid on the Company common stock from funds lawfully available therefore, as and when determined by the boardBoard.
Liquidation
In the event of the liquidation, dissolution, or winding-up of the Company, holders of Company common stock will be entitled to receive all assets of the Company available for distribution to its stockholders.
Subscription ReceivableExchange Agreements
Contemporaneous with the closing of the Merger, the Company completed a private placement of 2,716,000 shares of Company common stock for gross proceeds of $6,765,000 of which $4,265,000 was paid in cash. The remaining subscription price was paid by the delivery of a three-month promissory note in the principal amount of $2,500,000 (the “PPO Subscription Note”). (See Note 1. Nature of Business and Basis of Presentation - Reverse Triangular Merger.) On June 5, 2015, in accordance with the First Omnibus Amendment, the Company received $1,250,000, representing one-half of the principal amount of the PPO Subscription Note, and the maturity date of the PPO Subscription Agreement was extended to July 6, 2015. The First Omnibus Amendment, among other matters, also made corresponding adjustments to the Subscription Note Escrow Agreement and authorized the release of 2,500,000 of the 5,000,000 shares of Company common stock initially placed into escrow under such agreement.
- 89 -
Effective as of July 23, 2015 and pursuant to a Second Omnibus Amendment (the “Second Omnibus Amendment”), the maturity date of the PPO Subscription Note was further extended to the fifth business day following the date on which the Company notifies the maker of the PPO Subscription Note that the Company had filed with the United States Food and Drug Administration (the “FDA”) an Investigational New Drug Application (an “IND”) for the Company’s SM-88 drug candidate. Such IND was received by the FDA on September 21, 2015, and notice of such was given on September 25, 2015. The Company received the balance of the PPO Subscription Note on October 16, 2015 and the remaining 2,500,000 shares were released from escrow.
Escrow shares
Pursuant to the Merger Agreement, the Company would have been required to issue 1,333,333 shares of Company common stock to the Pre-Merger Company stockholders in the event that the Company conducts an offering of at least $20,000,000 at a pre-money Company valuation between $200,000,000 and $400,000,000 with such offering proceeds placed in escrow on or before the date which was five months following the consummation of the Merger. As this offering did not occur, these 1,333,333 shares were not issued. The Merger Agreement further provided that, if the pre-money valuation on which the raised funds were placed into escrow was less than $200,000,000, or if no money was raised within such five month period, up to 3,500,000 shares of Company common stock were required to be surrendered for cancellation. Such 3,500,000 shares were placed into escrow pursuant to an Adjustment Shares Escrow Agreement entered into at the time of Merger Closing (the “Adjustment Shares Escrow Agreement”). The date on which the offering funds were required to be placed into escrow was extended under the terms of the Second Omnibus Amendment to November 5, 2015. No offering was consummated, nor were any offering funds placed into escrow. On November 10, 2015, the Company advised the escrow agent of such facts and demanded the surrender for cancellation of the 3,500,000 shares placed into escrow under the Adjustment Shares Escrow Agreement. Under the Adjustment Shares Escrow Agreement, the depositor of such escrowed shares had until November 18, 2015 to challenge the Company’s demand for surrender of the Escrowed Shares. On November 17, 2015, the Company received notice from the depositor of such 3,500,000 shares disputing the grounds for the surrender for cancellation of those shares. Until resolved, by court order or otherwise, the 3,500,000 shares shall remain in escrow. On December 2, 2015, the Company filed a complaint against the depositor with the Supreme Court of New York, seeking, among other things, a declaratory judgment directing the depositor to deliver to the Company the 3,500,000 Adjustment Shares for cancellation.
Registration Rights Agreement
In connection with the PPO,May 20, 2020, the Company entered into exchange agreements with holders (the “Holders”) of the warrants issued in April 2019 (the “April 2019 Warrants’). The April 2019 Warrants were offered and issued pursuant to the Company’s previous shelf registration statement on Form S-3 (File No. 333-211489).
Pursuant to exchange agreements (the “Share Exchange Agreements”) with Holders of the April 2019 Warrants to purchase 5,833,333 shares of Common Stock in the aggregate, the Company issued an aggregate of 2,406,250 shares of common stock (the “Exchange Shares”) in exchange for such April 2019 Warrants. Concurrently therewith, each such Holder executed and delivered to the Company a Registration Rights Agreementleak-out agreement (a “Share Leak-Out Agreement”) that contained trading restrictions with respect to the Exchange Shares, which (i) for the first 90 days, prohibit any sales of Exchange Shares, (ii) for the subsequent 90 days, limit sales of Exchange Shares on any day to 2.5% of that day’s trading volume of Common Stock, and (iii) prohibit new short positions or short sales on Common Stock for the combined 180 day period.
The Company also entered into an exchange agreement (the “Registration Rights“Warrant Exchange Agreement”) with the purchaseranother Holder of April 2019 Warrants to purchase 2,166,667 shares of Common Stock in the PPOaggregate. Pursuant to the Warrant Exchange Agreement, the Company issued such Holder a new warrant (the “May 2020 Warrant”) to purchase the same number of shares of Common Stock. The May 2020 Warrant has the same expiration date, April 2, 2024, as the April 2019 Warrants, but has an exercise price of $1.80 and does not include the price protection, anti-dilution provisions or other restrictions on Company action from the April 2019 Warrants. Concurrently therewith, such Holder executed and delivered to the Company a leak-out agreement that contained trading restrictions on sales of Common Stock issued upon exercise of the May 2020 Warrant that are substantially similar to the restrictions on Exchange Shares in the Share Leak-Out Agreement, provided that the leak-out restrictions will only apply to the first 893,750 shares of Common Stock issued pursuant to the May 2020 Warrant.
The April 2019 Warrants were remeasured as of May 20, 2020, before the exchange, using the Monte Carlo pricing simulation resulting in a fair value of approximately $7.3 million, and the holderchange in fair value from March 31, 2020 to the fair value before the exchange of approximately $3.7 million expense was recorded as a component of other income (expense) within the consolidated statement of operations for the year ended March 31, 2021. The key assumptions in applying the Monte Carlo simulation model were as follows: $1.70 stock price, 73% volatility, 3.87 years remaining term, 0.28% risk free rate and the probability of fundamental transactions occurring.
At May 20, 2020, the fair value of the Bridge Note,2,406,250 shares issued under the Share Exchange Agreements was approximately $3.4 million, which resulted in a gain on exchange of approximately $1.9 million.
The exercise price of the May 2020 Warrant is subject to adjustment upon the occurrence of specific events, including stock dividends, stock splits, combinations and reclassifications of the Company’s Common Stock.
The Company determined that the May 2020 Warrant should be recorded as a derivative liability on the consolidated balance sheet due to the May 2020 Warrant’s contractual provisions requiring issuance of registered common shares upon exercise. At May 20, 2020, the May 2020 Warrant was recorded at the fair value of $1.7 million as determined using the Black Scholes model and the change in fair value before and after the exchange of $0.3 million was recorded as a gain on warrant exchange as a component of other income (expense) within the consolidated statement of operations. The key assumptions in applying the Black Scholes model were as follows: $1.64 stock price, 73% volatility, 3.87 years remaining term, 0.27% risk free rate and 7% discount for lack of marketability. The change in fair value of the May 2020 Warrant for the year ended March 31, 2022 of $1.8 million income and for the period from May 20, 2020 through March 31, 2021 of $0.3 million expense was recorded as a component of other income (expense) within the consolidated statement of operations.
The following summarizes the common stock warrant activity for the years ended March 31, 2022 and March 31, 2021:
|
| Warrant Shares of Common Stock |
|
| Weighted Average Exercise Price |
| ||
Outstanding at March 31, 2020 |
|
| 8,937,651 |
|
| $ | 2.31 |
|
Granted |
|
| 2,166,667 |
|
|
| 1.80 |
|
Exchanged |
|
| (8,000,000 | ) |
|
| 2.00 |
|
Outstanding at March 31, 2021 |
|
| 3,104,318 |
|
| $ | 2.77 |
|
Granted |
|
| 0 |
|
|
| 0 |
|
Exchanged |
|
| 0 |
|
|
| 0 |
|
Outstanding at March 31, 2022 |
|
| 3,104,318 |
|
| $ | 2.77 |
|
In May 2020, April 2019 Warrants to purchase 5,833,333 shares of common stock were exchanged on a cashless basis for 2,406,250 shares and April 2019 Warrants to purchase 2,166,667 of common stock were exchanged for a May 2020 Warrant to purchase the same number of shares.
At March 31, 2022 and March 31, 2021, 3,074,551 of common stock purchase warrants relating to securities purchase agreements were outstanding and exercisable.
Issued |
| Classification |
| Warrants Outstanding |
|
| Exercise Price |
|
| Expiration | ||
December 2015 |
| Equity |
|
| 446,500 |
|
| $ | 5.00 |
|
| December 2025 |
February 2016 |
| Equity |
|
| 461,384 |
|
| $ | 5.00 |
|
| February 2026 |
July 2016 |
| Equity |
|
| 29,767 |
|
| $ | 5.00 |
|
| June 2026 |
May 2020 |
| Liability |
|
| 2,166,667 |
|
| $ | 1.80 |
|
| April 2024 |
At-the-Market Financing Facility
On October 18, 2019, the Company entered into the Sale Agreement with Jefferies, pursuant to which the Company agreedmay, from time to promptly, but no later than 90 days following the maturity date of the PPO Note (such maturity date initially being 90 calendar days after the closing of the PPO), file a registration statement with the SEC (the “Registration Statement”) covering (a) all of the PPO Shares issued in the PPO, (b) the Bridge Note Conversion Shares issued upon conversion of the Bridge Note, (c) the Lower Price Shares, if any, and (d) anytime, sell shares of Common Stock, having an aggregate offering price of up to $30 million through Jefferies, as the Company’s sales agent. Under the Sale Agreement the minimum share sales price (“Floor Price”) shall not be less than $1.00 without Jefferies prior written consent. As indicated in an amendment, the shares will be offered and sold by the Company common stock issued or issuable with respectpursuant to the PPO Shares, Conversion Shares and Lower Price Shares upon any stock split, dividend or other distribution, recapitalization or similar event. The Merger Agreement provided that theits currently effective Registration Statement may also cover 9%on Form S-3, as amended (Reg. No. 333-245033). Any sales of the total number of shares issued to the former stockholders of Tyme in connection with the Merger. The required filing date of the Registration Statement to avoid the imposition of liquidated damages was extended by an additional 31 dayscommon stock pursuant to the First Omnibus Amendment.Sales Agreement will be made by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act, as amended. Jefferies will use commercially reasonable efforts to sell the shares from time to time, based on the instructions of the Company. The Company will pay Jefferies a commission rate of three percent (3%) of the gross proceeds from the sales of shares of Common Stock sold pursuant to the Sale Agreement. Under the Sale Agreement, the Company is not required to use the full available amount authorized and it may, by giving notice as specified in the Sale Agreement, terminate the Sale Agreement at any time.
The Registration Rights Agreement was further modified byCompany did not sell any shares through the Second Omnibus AmendmentJefferies ATM during the year ended March 31, 2022. During the year ended March 31, 2021, the Company raised approximately $6.1 million of gross proceeds via sale of 4,453,939 shares of Common Stock under the Jefferies ATM and incurred $0.3 million of related costs which offset the proceeds. At March 31, 2022, there remained approximately $22.2million of availability to sell shares through the Jefferies ATM subject to the effect of (x) the holder of allterms of the PPO/Bridge Note Conversion Registrable Shares agreeing to irrevocable waive any right to damages for the late filing and/or effectiveness of the registration statement contemplated by the Registration Rights Agreement and (y) the total number of shares that can be registered by the former Tyme stockholders was increased to 15% of the total number of shares issued to them in connection with the Merger.Sale Agreement.
Securities Purchase Agreement
On December 23, 2015,January 7, 2020, the Company and Eagle entered into the Eagle SPA, pursuant to a Securities Purchase Agreement, dated as of December 18, 2015, for the aggregate consideration of $3,000,000, before deducting offering costs of $34,000,which the Company issued and sold and issued in a private placement an aggregate of: (i) 750,000to Eagle 10,000,000 shares of the Company’s common stock, par value $0.0001 per share, and (ii) 446,500 common stock purchase warrants. Each Warrant entitles its holder to purchase one share of common stock, at an initial exercisea price of $5.00$2.00 per share. The Eagle SPA provides that Eagle will, subject to certain conditions, make an additional payment of $20 million upon the occurrence of a milestone event, which is defined as the earlier of (i) achievement of the primary endpoint of overall survival in the TYME-88-Panc pivotal trial; (ii) achievement of the primary endpoint of overall survival in the PanCAN Precision Promise SM-88 registration arm; or (iii) FDA approval of SM-88 in any cancer indication. This payment would be split into
a $10 million milestone cash payment and a $10 million investment in TYME at any time duringa 15% premium to the period commencing on December 23, 2015 and terminating onthen prevailing market price. Eagle’s shares will be restricted from sale until the tenthearlier of three months following the milestone event or the three-year anniversary of such date. No registration rights were grantedthe agreement.
Registered Direct Offering
On February 8, 2021, the Company closed on its registered direct offering with several healthcare-focused
institutional and other institutional investors (the “Purchasers”), pursuant to which the Company sold to the purchasers of these shares or warrants. The warrants are included within additional paid-in capital on the statement of stockholders’ equity and will not be subject to remeasurement.
- 90 -
Securities Issued for Services
On March 5, 2015, asPurchasers, in a condition of the Merger Agreement, pursuant to a Consulting Agreement, the Company issued 250,000 fully vested, non-forfeitable shares to an Investor Relations firm for services provided in conjunction with the merger. The value of these shares was $625,000, based on the price of the shares issued as part of the Merger. No registration rights were granted related to these shares.
On December 21, 2015, pursuant to a Securities Acquisition Agreement, dated as of December 18, 2015, the Company issued to a law firm, in satisfaction of $200,000 of payables due such law firm,registered direct offering, an aggregate of (i) 50,00040,000,000 shares of the Company’s common stock, par value $0.0001 per share, and (ii) 29,767 Warrants. Each Warrant entitles its holder to purchase one share(the “Shares”) of common stock, $0.0001 par value per share. The Shares were sold at an initial exercisea purchase price of $5.00 at any time during$2.50 per share for aggregate gross proceeds to the period commencing on December 18, 2015Company of $100 million, prior to deducting placement agent’s fees and terminating on the tenth anniversary of such date. No registration rights were granted related to these shares or warrants. The warrants are included within additional paid-in capital on the statement of stockholders’ equity and will not be subject to remeasurement.
Note 9. Income Taxes.
other offering expenses payable by TYME. The Company provides for income taxes under ASC 740. Under ASC 740,incurred $6.2 million of related costs which offset such proceeds. The Shares were offered by the liability method is used in accounting for income taxes. Under this method, deferred tax assetsCompany pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the Securities and liabilities are determined basedExchange Commission on differences between financial reportingAugust 12, 2020 and tax bases of assets and liabilities, and are measured usingwas declared effective on September 2, 2020 (Reg. No. 333-245033). H.C. Wainwright & Co. acted as the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
The Company has not recorded a current or deferred income tax expense or benefit since its inception.
The Company’s loss before income taxes was $11,726,818 and $2,660,677exclusive placement agent for the years ended December 31, 2015 and 2014, respectively, and was generated entirely in the United States.offering.
Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets are comprised of the following:
|
| Year Ended |
| Year Ended |
| ||
|
|
|
|
|
| ||
Net operating loss carryforward |
| $ | 4,316,110 |
| $ | 1,330,660 |
|
Research and development credit carryforward |
|
| 198,490 |
|
| — |
|
Other temporary differences |
|
| 62,928 |
|
| — |
|
Gross deferred tax assets |
|
| 4,577,528 |
|
| 1,330,660 |
|
Deferred tax valuation allowance |
|
| (4,577,528 | ) |
| (1,330,660 | ) |
|
| $ | — |
| $ | — |
|
The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of operating losses since inception, the Company has concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2015 and 2014. The valuation allowance increased by $3,246,868 and $1,064,660 for the years ended December 31, 2015 and 2014, respectively, due primarily to the generation of net operating losses during the periods.
A reconciliation of income tax benefit computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows:
|
| December 31, 2015 |
| December 31, 2014 |
|
|
|
|
|
|
|
U.S. statutory income tax rate |
| 34.0 | % | 35.0 | % |
State income taxes, net of federal benefit |
| 7.9 |
| 5.0 |
|
Permanent differences |
| (12.8 | ) | — |
|
Rate change and provision to return true-up |
| 8.0 |
| — |
|
R&D credit carryforwards |
| 1.8 |
| — |
|
Valuation allowance |
| (38.9 | ) | (40.0 | ) |
Effective tax rate |
| — | % | — | % |
- 91 -
As of December 31, 2015 and 2014, the Company had U.S. federal net operating loss carryforwards of $10,005,274 and $3,312,651, respectively, which may be available to offset future income tax liabilities and will begin to expire at various dates starting in 2033. As of December 31, 2015 and 2014, the Company also had U.S. state net operating loss carryforwards of $17,467,895 and $0, respectively, which may be available to offset future income tax liabilities and will begin to expire at various dates starting in 2033.
Under the provisions of the Internal Revenue Code, the NOL carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. This could limit the amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financing transactions since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future.
The Company files income tax returns in the United States, and various state jurisdictions. The federal and state income tax returns are generally subject to tax examinations for the years ended December 31, 2015 and 2014 and for the period from July 26, 2013 through December 31, 2013. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period.
Note 10.9. Commitments and Contingencies.
Contract Service Providers
In the course of the Company’s normal business operations, it enters into agreements and arrangements with contract service providers to assist in the performance of its research and development and clinical research activities. Substantially allAt March 31, 2022, the Company’s obligations to contract service providers were $0.2 million in the aggregate.
On April 1, 2020, the Company amended the Clinical Research Funding and Drug Supply Agreement, dated October 9, 2018, with PanCAN, to enroll individuals diagnosed with pancreatic cancer in a platform style clinical research study. Stage 1 of the study was initiated in the fourth quarter of fiscal year 2020. On January 26, 2022, the Company announced the discontinuation of SM-88 with MPS in the Precision Promise trial in mPDAC upon learning from PanCAN, the trial sponsor, that it terminated the arm due to futility compared to the control of standard of care chemotherapy in second-line mPDAC. As of March 31, 2022, remaining estimated costs to close out the trial have been expensed.
Purchase Commitments
The Company has entered intocontracts with manufacturers to supply SM-88 and certain related conditioning agents, in order to achieve favorable pricing on supplied products. These contracts have non-cancellable elements related to the scheduled deliveries of these agreementsproducts in future periods. Payments are made by us to the manufacturer when the products are delivered and arrangementsof acceptable quality. The outstanding future contract obligations structured to match clinical supply needs for the Company’s ongoing trials and registration activity are on an as needed basis.approximately $0.9 million and $2.5 million, respectively at March 31, 2022.
Employment AgreementsLegal Proceedings
On March 5, 2015,The Company is not currently a party to any material legal proceedings and is not aware of any pending or threatened legal proceeding against it that it believes could have a material adverse effect on the Company, entered into employment agreements with its Chief Executive Officer and Chief Operating Officer. Under these agreements, each of such two executive officers will be entitled to an annual base salary of $450,000 and such performance bonuses as the Company’s board of directors may determine, frombusiness, operating results or financial condition. From time to time, the Company may be involved in its sole discretion.litigation, claims or other contingencies arising in the ordinary course of business. The base salaries willCompany would accrue a liability when a loss is considered probable and the amount can be reviewed annually (commencingreasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company would not record a liability, but instead would disclose the nature and the amount of the claim, and an estimate of the loss or range of loss, if such estimate can be made. Legal fees are expensed as incurred.
Note 10. Leases.
The Company has a lease for office space in 2016) byNew Jersey, which expires in February 2023.
Total Company rent expense, including short term rentals, was approximately $62,000 and $165,000 for the Company’s board of directors; provided that the base salaries may not be decreased from their then current levels due to any board review. The employment agreements each have a term of five years; provided, however, that, commencingyears ended March 31, 2022 and 2021, respectively.
Operating lease ROU assets and liabilities on the first anniversaryconsolidated balance sheet represents the present value of the dates of the agreements and on each anniversary thereafter, the term shall automatically be extended by one year, such that, at any time during the term of the agreement,remaining lease payments over the remaining employment term shall never belease terms. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less than four yearslease incentives received. Payments for additional monthly fees to cover the Company's share of certain facility expenses are not included in operating lease ROU assets and one day. Ifliabilities. The Company used its estimated incremental borrowing rate of 11.0% to calculate the executive is terminated without “Cause” (as definedpresent value of its lease payments, as the implicit rate in the agreements) orlease was not readily determinable.
As of March 31, 2022, the future minimum lease payments under non-cancellable operating lease agreements for “Good Reason” (as defined in the agreements), the executive will be entitled to receive his base salary plus any accrued but unpaid performance bonus, with the base salary payable at the same intervals as the base salary would have been payable if the termination had not occurred. If the employment is terminated for “Cause,” or in the case of the executive’s death or disability, the executive will only be entitled to his base salary through the termination date, plus any accrued and unpaid performance bonus as of the termination date.
On May 15, 2015,which the Company appointed a new Chief Financial Officer. The new officer has entered into an employment agreement with the Company that requires the officer to expend one-third of his working time to the Company for which he will be compensated at the rate of $80,000 per annum. The new officer was also granted a five-year option to purchase 150,000 shares of Company common stock at $7.75 per share. The option vested with respect to 75,000 shares on November 15, 2015recognized operating lease ROU assets and the remaining 75,000 shares will vest on May 15, 2016. Vesting is dependent upon the new officer being in the Company’s employment on the applicable vesting date. (See Note 12. Equity Incentive Plan – Stock Options.) On January 27, 2016, the Company entered into a new employment agreement with the Chief Financial Officer. (See Note. 13. Subsequent Events).lease liabilities were as follows:
Legal Proceedings
Other than discussed below, the Company is not involved in any legal proceeding that it expects to have a material effect on its business, financial condition, results of operations or cash flows.
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As described in Note 8. Stockholders’ equity, the Merger Agreement further provided that, if the pre-money valuation on which the raised funds were placed into escrow was less than $200,000,000, or if no money was raised within such five month period, up to 3,500,000 shares of Company common stock were required to be surrendered for cancellation. Such 3,500,000 shares were placed into escrow pursuant to an Adjustment Shares Escrow Agreement entered into at the time of Merger Closing (the “Adjustment Shares Escrow Agreement”). The date on which the offering funds were required to be placed into escrow was extended under the terms of the Second Omnibus Amendment to November 5, 2015. No offering was consummated, nor were any offering funds placed into escrow. On November 10, 2015, the Company advised the escrow agent of such facts and demanded the surrender for cancellation of the 3,500,000 shares placed into escrow under the Adjustment Shares Escrow Agreement. Under the Adjustment Shares Escrow Agreement, the depositor of such escrowed shares had until November 18, 2015 to challenge the Company’s demand for surrender of the Escrowed Shares. On November 17, 2015, the Company received notice from the depositor of such 3,500,000 shares disputing the grounds for the surrender for cancellation of those shares. On December 2, 2015, the Company filed a complaint against the depositor with the Supreme Court of New York, seeking, among other things, a declaratory judgment directing the depositor to deliver to the Company the 3,500,000 Adjustment Shares for cancellation.
|
| March 31, 2022 |
| |
Fiscal year 2023 |
| $ | 39,240 |
|
Total remaining lease payments |
|
| 39,240 |
|
Less: present value adjustment |
|
| (1,908 | ) |
Total operating lease liabilities |
|
| 37,332 |
|
Less: current portion |
|
| 37,332 |
|
Operating lease liabilities, net of current portion |
| $ | — |
|
Note 11. Related Party Transactions.
Legal
Due from Stockholders/Members
Tyme and Luminant obtained from and granted cash advancesFaegre Drinker Biddle & Reath (“Faegre Drinker”), formerly Drinker Biddle & Reath LLP (“DBR”), has provided legal services to certain of their stockholders/members. These net advances were non-interest bearing and had no terms for repayment. At December 31, 2015 and 2014, amounts due to the Company totaled $0 and $355,766 and were reflected as a reduction of stockholders equity.
Effective as of the consummation of and in anticipation of the Merger, the non-interest bearing advances of $355,766 made to such stockholders/members were settled by payments received from such stockholders.
Sale of Excess Ingredient Materials
On December 17, 2015, the Company’s board of directors approved a future sale of certain excess ingredient materials which the Company believes will expire, terminate and/or lose potency prior to any anticipated use by the Company. The sale of such excess ingredients will be madeCompany’s Chief Legal Officer and Corporate Secretary held the consulting role “Senior Counsel” with the Faegre Drinker until December 31, 2021. During the years ended March 31, 2022 and 2021, approximately $0.5 million and $0.6 million ($0.1 million was capitalized into equity in prior year), respectively, have been incurred as legal expenses associated with Faegre Drinker, and the Company had approximately $153,000 and $87,000 in accounts payable and accrued expenses payable to Steve Hoffman, the Company’s PresidentFaegre Drinker at March 31, 2022 and Chief Executive Officer, at the pro rata cost of obtaining such items. In his capacity as a director, Mr. Hoffman abstained from voting on this matter. (See Note. 13 Subsequent Events.)March 31, 2021, respectively.
Note 12. Equity Incentive Plan.
On March 5, 2015, the Company’s Board of Directors adopted and the Company’s stockholders approved, the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). A reserve of 10,000,000 shares of Company common stock has been established for issuance under the 2015 Plan. No more than an aggregate of 3,333,333 shares of common stock may be awarded during the twelve months following the 2015 Plan adoption. Awards under the 2015 Plan may include, but need not be limited to, one or more of the following: options, stock appreciation rights, restricted stock, performance grants, stock bonuses, and any other type of award deemed by the administrator to be consistent with the purposes of the 2015 Plan. The exercise price of all options awarded under the 2015 Plan must be no less than 100% of the fair market value of the Company common stock as determined on the date of the grant and have a term of no greater than ten years from the date of grant. In February 2018, the 2015 Plan was amended making available 12.5% of shares of common stock issued and outstanding. As of DecemberMarch 31, 2015,2022, there were 9,813,6307,223,029 shares available for grant under the 2015 Plan.
On August 24, 2021 the stockholders approved the Amended and Restated 2016 Option Plan for Non-Employee Directors (the “2016 Director Plan”), which increased the total number of shares of Common Stock authorized and reserved for issuance the 2016 Director Plan by 3,000,000 shares to 5,750,000 shares. On August 24, 2021 the Board of Directors approved: (i) “Initial Grants” upon a director’s initial appointment to the Board consisting of an immediate stock option grant of 176,000 shares at fair market value and the shares will vest in equal quarterly increments over a three-year period from the date of grant; and (ii) “Annual Grants” for members who continue in service as members of the Board subsequent to each annual meeting of stockholders occurring subsequent to an Initial Grant, an annual stock option grant of 88,000 shares at fair market value and the shares will vest in equal quarterly increments over a one-year period from the date of grant. The Initial Grants and Annual Grants have a ten year term, subject to applicable termination or forfeiture provisions. As of March 31, 2022, there were 3,411,279 shares available for grant under the 2016 Director Plan.
Stock Options
As of DecemberMarch 31, 2015,2022, and 2021, there was $281,841approximately $4.5 million and $3.6 million, respectively, of total unrecognized compensation related to non-vested stock options. The cost is expected to be recognized over the remaining weighted average remaining amortization period of the options which are expected to vest through May 2016.
2.8 years.During the years ended DecemberMarch 31, 20152022 and 2014, $485,8592021, the Company had stock compensation expense of $2.5 million and $0, respectively, has been$3.5 million, respectively. For the year ended March 31, 2022, stock compensation expense is recognized as stock based compensation$1.9 million in general and administrative expense, $0.6 million in research and development expense.
For the year ended March 31, 2021, stock compensation expense recognized was $2.1 million in general and administrative expense and $1.4 million in research and development expense.
The Company uses the Black-Scholes option pricing model to determine the fair value of stock options granted. In accordance with ASC 718 forFor employees and non-employees, the compensation expense is amortized on a straight-line basis over the requisite service period, which approximates the vesting period. The Company accounts for forfeitures as they occur, rather than estimating forfeitures as of an award’s grant date.
The expected volatility of options granted has been determined using the method described under ASC 718 using a blend of the Company’s expected volatility and those of similar companies. The expected term of options granted to employees, non-employees and consultants in the current fiscal period has been based on the term by using the simplified “plain-vanilla” method as allowed under SAB No. 110 and ASU 2018-7.
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The assumptions utilized to determine such valuesestimate the fair value of stock options granted are presented in the following table:
|
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Risk-free interest rate—Based on the daily yield curve rates for U.S. Treasury obligations with maturities which correspond to the expected term of the Company’s stock options.
Expected volatility—Because the Company has a limited trading history in its common stock, expected volatility is based on that of comparable public development stage biotechnology companies.
Expected term—The expected option term represents the period that stock-based awards are expected to be outstanding. The Company is currently using the contractual term of five years as the expected term due to its limited history of granting stock options.
Dividend yield—The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.
Forfeitures—ASC 718 requires forfeitures to be estimated at the time of grant and revised if necessary, in subsequent periods if actual forfeitures differ from those estimates. Due to its limited history of granting stock options, the Company is not applying any forfeiture rate.
The following is a summary of the statusactivity of the Company’s stock options under the 2015 Plan and 2016 Director Plan as of DecemberMarch 31, 2015:2022:
|
| Number of Options |
|
| Weighted Average Exercise Price |
| ||
Outstanding at March 31, 2021 |
|
| 12,588,068 |
|
| $ | 2.92 |
|
Granted |
|
| 3,862,388 |
|
|
| 1.30 |
|
Exercised |
|
| (6,250 | ) |
|
| 0.99 |
|
Cancelled/Forfeited |
|
| (1,939,935 | ) |
|
| 3.83 |
|
Outstanding at March 31, 2022 |
|
| 14,504,271 |
|
|
| 2.36 |
|
Options exercisable at March 31, 2022 |
|
| 9,329,798 |
|
| $ | 2.99 |
|
| Number of |
| Weighted Average | |
|
|
|
|
|
Outstanding at December 31, 2014 | — |
| $ | — |
Granted | 150,000 |
|
| 7.75 |
Exercised | — |
|
| — |
Forfeited/Cancelled | — |
|
| — |
Outstanding at December 31, 2015 | 150,000 |
| $ | 7.75 |
Grant date fair value | $ 5.12 |
|
|
|
|
| Stock Options Outstanding |
| Stock Options Vested | ||||||||||
Range of |
| Number |
| Weighted |
| Weighted |
| Aggregate |
| Number |
| Weighted |
| Aggregate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 7.75 |
| 150,000 |
| $ 7.75 |
| 4.4 |
| $ 525,500 |
| 75,000 |
| $ 7.75 |
| $262,500 |
Weighted-average grant date fair value of options granted during the years ended March 31, 2022 and 2021 was $1.00 and $0.89, respectively.
During the year ended March 31, 2022, holders of options issued under the equity incentive plans exercised their right to acquire an aggregate of 6,250 shares of common stock at a weighted average exercise price of $0.99 resulting in $6,000 total proceeds to the Company. During the year ended March 31, 2021, holders of options issued under the equity incentive plans exercised their rights to acquire an aggregate of 2,028,203 shares of common stock at a weighted average exercise price of $2.64 resulting in $5.4 million total proceeds to the Company.
|
| Stock Options Outstanding |
|
| Stock Options Vested |
| ||||||||||||||||||||||||||
Range of Exercise Price |
| Number Outstanding at March 31, 2022 |
|
| Weighted Average Exercise Price |
|
| Weighted Average Remaining Life (Years) |
|
| Aggregate Intrinsic Value |
|
| Number Vested at March 31, 2022 |
|
| Weighted Average Exercise Price |
|
| Weighted Average Remaining Life (Years) |
|
| Aggregate Intrinsic Value |
| ||||||||
$0.29 - $8.75 |
|
| 14,504,271 |
|
| $ | 2.36 |
|
|
| 7 |
|
| $ | 4,610 |
|
|
| 9,329,798 |
|
| $ | 2.99 |
|
|
| 6 |
|
| $ | — |
|
The intrinsic value is calculated as the excess of the market value as of DecemberMarch 31, 20152022 over the exercise price of the option.options is $4,610. The market value as of DecemberMarch 31, 20152022 was $11.25$0.35 as reported by the OTC Market, Inc.
- 94 -
Stock Grants
On March 10, 2015, the Company adopted an independent director compensation policy and also adopted a compensation policy with respect to a special advisor to the Company’s boardNASDAQ Capital Market. The total intrinsic value of directors. Under such independent director compensation policy, each of those directors meeting the NASDAQ stock market definition of independent director is entitled to receive annual compensation in the amount of $100,000, one-half to be paid in cash on a quarterly basis, in arrears, and the remaining one-half of the compensation to be paid in the form of Company common stock on a quarterly basis, in arrears, with the shares valued at the closing sale price of the Company common stock on the last trading day of the applicable quarterly period. The special advisor is being compensated in the same manner as the independent directors. Effective as of September 30, 2015, the Company established a Scientific and Medical Advisory Board, five individuals were appointed as members of such advisory board and a compensation policy for the advisory board’s members, substantially identical to the compensation policy for the Company’s independent directors, was adopted.
Accordingly, as compensation with respect tooptions exercised during the year ended DecemberMarch 31, 2015,2022 was $3,500.
|
| Options |
|
| Weighted Average Grant Date Fair Value Per Share |
| ||
Non-vested options at March 31, 2021 |
|
| 4,355,171 |
|
| $ | 0.91 |
|
Granted |
|
| 3,862,388 |
|
|
| 1.00 |
|
Vested |
|
| (446,522 | ) |
|
| 0.95 |
|
Cancelled/Forfeited |
|
| (2,596,564 | ) |
|
| 0.99 |
|
Non-vested options at March 31, 2022 |
|
| 5,174,473 |
|
| $ | 0.93 |
|
The fair value of options vested during the years ended March 31, 2022 and 2021 was $2.6 million and $3.7 million, respectively.
Note 13. Income Taxes.
The Company provides for income taxes under ASC 740. Under ASC 740, the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
The Company has not recorded a current or deferred income tax expense or benefit since its inception.
The Company’s loss before income taxes was $23.6 million and $29.0 million for the years ended March 31, 2022 and 2021, respectively, and was generated entirely in the United States. Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets are comprised of the following:
|
| March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net operating loss carryforward |
| $ | 27,564,077 |
|
| $ | 20,123,621 |
|
Research and development credit carryforward |
|
| 884,130 |
|
|
| 1,164,895 |
|
Orphan Drug Credit |
|
| 4,157,360 |
|
|
| 2,002,559 |
|
Stock options - NQSOs |
|
| 4,765,662 |
|
|
| 5,267,351 |
|
Accruals and other temporary differences |
|
| 662,754 |
|
|
| 595,418 |
|
Gross deferred tax assets |
|
| 38,033,983 |
|
|
| 29,153,844 |
|
Deferred tax valuation allowance |
|
| (38,033,983 | ) |
|
| (29,153,844 | ) |
Net deferred taxes |
| $ | 0 |
|
| $ | 0 |
|
Based on the Company’s history of operating losses since inception and consideration of available positive and negative evidence, the Company issuedhas concluded that it is not more likely than not that the benefit of its deferred tax assets will be realized. Accordingly, the Company continues to maintain a full valuation allowance against its three independent directors, special advisor and five advisory board members an aggregate of 36,370 shares of Company common stock (7,248 sharesnet deferred tax assets as of March 31, 2015, 5,884 shares as of June 30, 2015, 13,239 shares as of September 30, 2015 and 9,999 shares as of December 31, 2015), which were valued at the closing sale price of the Company common stock on the last trading day of each of the quarters ended during 2015 ($6.90 per share with respect to the quarter ended March 31, 2015, $8.50 per share with respect to the quarters ended June and September 30, 2015 and $11.25 with respect to the quarter ended December 31, 2015). Total stock compensation expense related to these stock grants was $325,0002022. The valuation allowance increased by $8.9 million for the year ended DecemberMarch 31, 2015.2022 primarily due to the increase in the net operating loss carryforward and Orphan Drug credit.
Note 13.A reconciliation of income tax benefit computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows:
|
| Year Ended |
| |||||
|
| March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
U.S. statutory income tax rate |
|
| 21.00 | % |
|
| 21.00 | % |
State taxes, net of federal benefit |
|
| 11.59 | % |
|
| 0 |
|
Permanent differences |
|
| 0 |
|
|
| (0.02 | )% |
Tax credit carryforwards |
|
| 7.93 | % |
|
| 4.70 | % |
Valuation allowance |
|
| (37.08 | )% |
|
| (20.98 | )% |
Stock compensation |
|
| (5.05 | )% |
|
| (3.41 | )% |
Warrants |
|
| 1.61 | % |
|
| (1.29 | )% |
Effective tax rate |
|
| 0 | % |
|
| 0 | % |
As of March 31, 2022, the Company had gross U.S. federal net operating loss carryforwards of approximately $119.1 million, which may be available to offset future income tax liabilities and will begin to expire at various dates starting in 2033. As of March 31, 2022, none of the Company’s state net operating losses have value due to the apportionment rule in the states where state income tax returns are currently filed. As permitted under the Protecting Americans Against Tax Hikes Act, which allows the Research and Development tax credit to be applied to Form 941 quarterly payroll tax returns, the Company reduced payroll taxes by $120 thousand and $177 thousand for the years ended March 31, 2022 and March 31, 2021, respectively. As of March 31, 2022, the Company had gross federal research and development tax credit carryforwards of $5.9 million, available to reduce future tax liabilities which will begin to expire at various dates starting in 2030.
Under the provisions of the Internal Revenue Code, the NOL carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of a 50% cumulative change in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, as well as similar state tax provisions. This could limit the amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent Events.ownership changes may further affect the limitation in future years. The Company has completed several financing transactions since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Employment Agreement
|
| Year Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Gross unrecognized tax benefits at beginning of year |
| $ | 558,962 |
|
| $ | 318,394 |
|
Increases (decreases) for tax positions in prior period |
|
| — |
|
|
| (99,063 | ) |
Increase for tax positions in current period |
|
| 330,712 |
|
|
| 339,631 |
|
Gross unrecognized tax benefits at end of year |
| $ | 889,674 |
|
| $ | 558,962 |
|
As of March 31, 2022, the Company had $890,000 of unrecognized tax benefits, which were offset with the net operating loss and valuation allowance on the consolidated balance sheets. None of the gross unrecognized tax benefits would affect the effective tax rate at March 31, 2022, if recognized. In addition, the Company did not record any penalties or interest related to uncertain tax positions for the periods presented in these consolidated financial statements. The Company does not have any positions for which it is reasonably possible that there will be significant increase or decrease in the amounts of unrecognized tax benefits within twelve months of the reporting date.
The Company entered into a new employment arrangement, set forthfiles income tax returns in the United States, and various state jurisdictions. The federal and state income tax returns are generally subject to tax examinations for the period January 1, 2017 through March 31, 2022. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a letter agreement, dated asfuture period.
Securities Purchase Agreement
Pursuant to a Securities Purchase Agreement, dated as of February 2, 2016, for the aggregate consideration of $3,100,000, the Company sold and issued to a total of two individuals an aggregate of: (i) 775,000 shares of the Company’s common stock, par value $0.0001 per share, and (ii) 461,384 common stock purchase warrants. Each Warrant entitles its holder to purchase one share of common stock at an initial exercise price of $5.00 at any time during the period commencing on February 2, 2016 and terminating on the tenth anniversary of such date. No registration rights were granted to the purchasers of these shares or warrants.
Sale of Excess Ingredient Materials
On March 24, 2016, Steve Hoffman, the Company’s President and Chief Executive Officer, purchased excess ingredient materials from the Company for a cost of $170,000, which was the pro rata cost of obtaining items. The income from this will be recorded as an offset to Research and Development expense on the Consolidated Statements of Operations, where the cost of such materials was originally recorded.
- 95 -
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On November 13, 2015, we engaged Grant Thornton LLP as our new independent registered public accounting firm to audit our financial statements, commencing with our fiscal year ending December 31, 2015. We previously reported in our Current Report on Form 8-K (Date of Report: October 8, 2015), as filed with the Securities and Exchange Commission on October 14, 2015, our termination of our prior independent registered public accounting firm, WithumSmith+Brown, PC.
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
There were no disagreements with either Grant Thornton LLP or WithumSmith+Brown, PC.LLP.
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2015 as required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a companythe Company that are designed to ensure that information required to be disclosed by a companythe Company in the reports that itthe Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our Principalmanagement, with the participation of our Chief Executive Officer and PrincipalChief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that due to the material weaknesses in our internal control over financial reporting noted below,as of March 31, 2022, our disclosure controls and procedures were not effective. We intend to implement remedial measures designed to address these material weaknesses.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. reporting as such term is defined under Rule 13a-15(f) under the Exchange Act.
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the board of directors of the Company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because of declines in the degree of compliance with policies or procedures.
Management assessed the effectiveness of our internal control over financial reporting as of DecemberMarch 31, 2015.2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)(“COSO”) in Internal Control—Integrated Framework issued in 2013.Based on the evaluation of our disclosure controls and proceduresinternal control over financial reporting as of DecemberMarch 31, 2015,2022, our Chief Executive Officer and Chief Financial Officer concluded that as of such date, due to the material weakness described below, our disclosure controls and procedures were not effective for the reasons set forth below. A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting such that there is a reasonably possibility that a material misstatement of the Company’s annual or interim financial statements will not be presented or detected on a timely basis.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:
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The aforementioned material weaknesses were identified by Messrs. Hoffman and Dickey in connection with their review of our financial statements as of December 31, 2015. In addition, our management noted further internal control deficiencies, including those relating to segregation of duties over cash disbursements and the prompt analysis of the financial impact of all transactions to which we are a party.
Our management believes that the material weaknesses set forth above did not have an effect on our financial results.
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Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
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was effective.
This annual reportAnnual Report on Form 10-K does not include an attestation report of ourthe Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by ourthe Company’s registered public accounting firm pursuant to exemptions provided to issuers that are non-accelerated filers or qualify as an “emerging growth company,” as defined in Section 2(a)the rules of the Securities ActSEC that permit the Company to provide only management’s report in this Annual Report on Form 10-K.
Changes in Internal Control overOver Financial Reporting
There have been no changes in ourthe Company’s internal control over financial reporting that occurred during our fourth fiscalthe quarter ended DecemberMarch 31, 20152022 that have materially affected, or are reasonably likely to materially affect, ourthe Company’s internal control over financial reporting.
As noted above, we intend to form an audit committee. We anticipate that such audit committee will discuss with management, including our Chief Financial Officer, and our independent registered public accounting firm, the status
ITEM 9B. | OTHER INFORMATION |
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE |
Directors
The Proxy StatementSet forth below are the names of and certain information as of May 25, 2021 regarding our Board of Directors:
Name | Age | Position(s) with the Company/Principal Occupation | Date Elected to Our Board of Directors | |||
Steve Hoffman | 59 | Director | March 5, 2015* | |||
Dr. Gerald Sokol | 79 | Director/Chief of Radiation Oncology, University of South Florida’s Tampa General Hospital | March 10, 2015 | |||
Timothy C. Tyson | 70 | Director/Chairman and Chief Executive Officer, TriRx Pharmaceutical Services LLC | March 10, 2015 | |||
David Carberry | 69 | Director/Former Chief Financial Officer of Excellis Health Solutions, LLC (Retired) | March 30, 2017 | |||
Donald W. DeGolyer | 61 | Director/Former Chief Executive Officer, Vertice Pharma LLC | May 24, 2018 | |||
Douglas A. Michels | 65 | Director/Former President and CEO OraSure Technologies | October 1, 2018 | |||
Richard Cunningham | 51 | Director, Chief Executive Officer of the Company | November 24, 2020 | |||
Christine D. Baker | 56 | Director/Chief Operating Officer of Hookipa Pharma | March 21, 2022 | |||
* | Mr. Hoffman served as director of Tyme, Inc. (or Tyme, our subsidiary) since its formation on July 26, 2013 and served as director of the Company since the completion of a merger on March 5, 2015 whereby we acquired our current clinical-stage pharmaceutical business. |
Executive Officers
See Part I, Additional Item of this Form 10-K under the heading “Executive Officers of the Registrant.”
Other Information
Other information required by this Item 10 is incorporated by reference to, and will be contained in, our definitive proxy statement, which will be filed with the SEC within 120 days after the endMarch 31, 2022.
Table of the fiscal year covered by this Annual Report.Contents
ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. | EXECUTIVE COMPENSATION |
The information required by this Item 11 is incorporated by reference to, the informationand will be contained in, our definitive Proxy Statement.proxy statement, which will be filed within 120 days after March 31, 2022.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The information required by this Item 12 is incorporated by reference to, the informationand will be contained in, our Proxy Statement.definitive proxy statement, which will be filed within 120 days after March 31, 2022.
The following table provides certain information with respect to all of our equity compensation plans in effect as of March 31, 2022:
Plan Category |
| Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
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| Weighted Average Exercise Price |
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| Number of Securities Remaining Available for Issuance Under Equity Compensation Plans (3) |
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Equity compensation plans approved by stockholders prior to March 31, 2022 |
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| (1) | $ | 2.36 |
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| 10,634,308 |
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| 29,767 |
| (2) | $ | 5.00 |
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(1) | Includes 14,504,271 shares of our common stock issuable under option awards made prior to March 31, 2022 under our 2015 Equity Incentive Plan and our 2016 Director Plan, each approved by stockholders; these option awards carry a weighted average exercise price of $2.36 per share. For a description of the terms of the 2015 Equity Incentive Plan and 2016 Director Plan, please see Note 12 to the consolidated financial statements presented elsewhere herein. |
(2) | Includes 29,767 shares of our common stock issuable upon the exercise of certain warrants to purchase common stock as of March 31, 2022 at a weighted average exercise price $5.00 per share; the warrants described in this sentence are limited to warrants issued in return for goods or services provided and do not include warrants issued in connection with capital raising transactions, consistent with applicable SEC disclosure obligations. |
(3) | Includes 10,634,308 shares of our common stock issuable under awards eligible to be made (and not outstanding) as of March 31, 2022 under our 2015 Equity Incentive Plan and 2016 Director Plan. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
The information required by this Item 13 is incorporated by reference to, the informationand will be contained in, our Proxy Statement.definitive proxy statement, which will be filed within 120 days after March 31, 2022.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
The information required by this Item 1413 is incorporated by reference to, the informationand will be contained in, our Proxy Statement.definitive proxy statement, which will be filed within 120 days after March 31, 2022.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a) | DOCUMENTS FILED AS PART OF THIS REPORT |
The following is a list of our financial statements includedfiled in this Annual Report on Form 10-K under Item 8 of Part II hereof:
1. | FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA |
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2015 and 2014
Consolidated Statements of Operations for the years ended December 31, 2015 and 2014
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2015 and 2014
Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014
Notes to Consolidated Financial Statements as of December 31, 2015 and 2014
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92 | ||
Consolidated Statements of Cash Flows for the years ended March 31, 2022 and 2021 | 93 | |
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(b) | EXHIBITS |
See Exhibit Index.
ITEM 16. | FORM 10-K SUMMARY |
Omitted at the company’s option.
Exhibit Number | Description | |
3.1 | ||
3.2 |
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3.3 | ||
3.4 |
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4.3 | ||
4.4 | ||
4.5 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4† | ||
10.5† | ||
10.6† | ||
10.7† | ||
10.8† | ||
10.9† | ||
10.10† | ||
10.11† | ||
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10.13† | ||
10.14† | ||
10.15† | ||
10.16† | ||
10.17† | ||
10.18† | ||
10.19†* | ||
10.20* | Voting Agreement, effective March 24, 2022, by and between Steve Hoffman and Tyme Technologies, Inc. | |
10.21† | ||
10.22* | ||
10.23†* | ||
10.24† | ||
10.25†* | Letter Agreement, dated May 11, 2021, by and between Frank Porfido and Tyme Technologies, Inc.**** | |
10.26† | ||
10.27† | ||
10.28† | ||
10.29† | ||
10.30 | ||
10.31 | ||
10.32 | ||
10.33 | ||
10.34 | ||
21.1* | ||
23.1* | ||
24.1* | Power of Attorney (Included in Signature Page of Form 10-K). | |
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31.1* | Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive Officer. | |
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31.2* | Rule 13(a)-14(a)/15(d)-14(a) Certifications of Principal Financial Officer. | |
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101.INS* | Inline XBRL Instance Document. | |
101.SCH* | Inline XBRL Schema Document. | |
101.CAL* | Inline XBRL Calculation Linkbase Document. | |
101.DEF* | Inline XBRL Definition Linkbase Document. | |
101.LAB* | Inline XBRL Label Linkbase Document. | |
101.PRE* | Inline XBRL Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File, formatted in Inline XBRL (contained in Exhibit 101.INS) | |
† Management contract or compensatory plan or arrangement
*Filed herewith
† | Management contract or compensatory plan or arrangement |
* | Filed herewith |
** | Furnished herewith |
*** Certain exhibits have been omitted and the Company agrees to furnish supplementally to the SEC a copy of
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**** The personal addresses of the counterparties has been redacted from each of these exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: May 25, 2022
Dated: March 30, 2016
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TYME TECHNOLOGIES, INC. | |||
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By: |
| /s/ | Richard Cunningham |
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| Richard Cunningham | ||
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| Chief Executive Officer | |
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| (Principal Executive Officer) | |
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KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Steve HoffmanRichard Cunningham or Robert Dickey IVFrank Porfido as his true and lawful attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on Form 10-K and to file same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature |
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/s/ Richard Cunningham |
| Chief Executive Officer and Director |
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| (Principal Executive Officer) |
| May 25, 2022 | |||
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/s/ Barbara C. Galaini |
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/s/ Frank Porfido | Chief Financial Officer (Principal Financial Officer) | May 25, 2022 | ||||
/s/ Steve Hoffman Steve Hoffman |
| Director |
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/s/ Gerald Gerald Sokol |
| Director |
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/s/ David Carberry | Director | May 25, 2022 | ||||
/s/ Timothy C. Tyson Timothy C. Tyson |
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/s/ Douglas A. Michels Douglas A. Michels | Director | May 25, 2022 | ||||
/s/ Donald W. DeGolyer Donald W. DeGolyer | Director | May 25, 2022 | ||||
/s/ Christine D. Baker Christine D. Baker | Director | May 25, 2022 | ||||
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