| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read with, the
accompanying unaudited condensed consolidated financial statements and notes included in Item 1 of Part I of this report, to help provide an understanding of our financial condition, the changes in our financial condition and our results of operations.
Background
On March 25, 2021, BIT Merger Sub, Inc., a wholly owned subsidiary of Brooklyn Inc. (then known as NTN Buzztime, Inc.) merged with and into Brooklyn LLC, with Brooklyn LLC surviving as a wholly owned subsidiary of Brooklyn Inc..Brooklyn. This transaction, which we refer to as the Merger, was completed in accordance with the terms of an agreement and plan of merger and reorganization dated August 12, 2020 among Brooklyn Inc. (then known as NTN Buzztime, Inc.), BIT Merger Sub, Inc. and Brooklyn LLC. In accordance with such agreement and plan of merger, on March 25, 2021 Brooklyn Inc. amended its restated certificate of incorporation in order to effect:
prior to the Merger, a reverse stock split of its common stock, par value $0.005 per share, at a ratio of one-for-two, which we refer to as the Reverse Split; and
following the Merger, a change in its corporate name from “NTN Buzztime, Inc.” to “Brooklyn ImmunoTherapeutics, Inc.”
| • | prior to the Merger, a reverse stock split of its common stock, par value $0.005 per share, at a ratio of one-for-two, which we refer to as the Reverse Split; and |
| • | following the Merger, a change in its corporate name from “NTN Buzztime, Inc.” to “Brooklyn ImmunoTherapeutics, Inc.” |
On March 26, 2021, Brooklyn Inc. sold its rights, title and interest in and to the assets relating to the business it operated prior to the Merger, which it had operated under the name “NTN Buzztime, Inc.,” to eGames.com Holdings LLC, or eGames.com, in exchange for eGames.com’s payment of a purchase price of $2.0 million and assumption of specified liabilities relating to such pre-Merger business. This transaction, which we refer to as the Asset Sale,Disposition, was completed in accordance with the terms of an asset purchase agreement dated September 18, 2020, as amended, between Brooklyn Inc. and eGames.com.
Following the completion of the Merger and the Asset Sale,Disposition, our business consists exclusively of the business conducted by Brooklyn LLC.
The Merger has been accounted for as a reverse acquisition in accordance with United States generally accepted accounting principles, or GAAP. Under this method of accounting, Brooklyn LLC was deemed the “acquiring” company and Brooklyn Inc. (then known as NTN Buzztime, Inc.) was treated as the “acquired” company for financial reporting purposes. Operations prior to the Merger are those of Brooklyn LLC, and the historical financial statements of Brooklyn LLC became the historical financial statements of Brooklyn Inc. with respect to periods prior to the completion of the Merger. The weighted average shares used in determining loss per common share were retrospectively adjusted to reflect the conversion of the outstanding Class A, Class B, Class C and common units of Brooklyn LLC that converted into shares of Brooklyn Inc.’sBrooklyn’s common stock upon the Merger, and all share and per share amounts of common stock have been retrospectively restated to reflect the Reverse Split.
Overview
We are a clinical-stage biopharmaceutical company focused on exploring the role that cytokine-based therapy can have on the immune system in treating patients with cancer, both as a single agent and in combination with other anti-cancer therapies. We are seeking to develop IRX‑2, a novel cytokine-based therapy, to treat patients with cancer. IRX‑2 active constituents, namely Interleukin-2, or IL‑2, and other key cytokines, are postulated to signal, enhance and restore immune function suppressed by the tumor, thus enabling the immune system to attack cancer cells, unlike existing cancer therapies, which rely on targeting the cancer directly. We also are exploring opportunities to advance oncology, blood disorder, and monogenic disease therapies using gene-editing cell‑therapy technology through a license with Factor BiosciencesBioscience Limited, or Factor, and through our acquisition of Novellus, Inc. and Novellus Therapeutics Limited, or Novellus, Ltd.
We also are exploring opportunities to advance oncology, blood disorders and monogenic disease therapies using gene-editing and cell therapy technology through a license with Factor and through our acquisition of Novellus, Inc. and Novellus, Ltd. in July 2021. The product candidates resulting from the acquisition will initiate with unedited (that is, not gene modified), induced pluripotent stem cells (iPSCs)-derived allogeneic mesenchymal stem cells, or iMSCs. We will begin preclinical development of iMSCs towards clinical indications where inhibiting inflammation and/or supporting recovery of bone marrow stromal cells are required. The prior work of Novellus and NoveCite, Inc., or NoveCite, with iMSCs show evidence for preclinical efficacy in inflammatory conditions (for example, acute respiratory distress syndrome, or ARDS) and interactions with the U.S. Food and Drug Administration, or FDA, provided guidance on Chemistry, Manufacturing and Controls, or CMC, and manufacturing plans which will be undertaken in a similar manner for additional iMSC applications. Second generation iMSC products will involve gene editing. Here, we referanticipate the step-wise addition of genes, using the in-licensed Factor gene editing machinery, NoveSlice, to collectively asefficiently place genes and regulatory sequences into safe harbor locations. Development of processes to advance CMC and manufacturing will follow the Licensor.experience from first generation iMSCs. Clinical indications for gene-modified iMSCs will include solid tumors and conditions associated with chronic inflammation.
29IRX-2
IRX‑2 is a mixed human cytokine product with multiple active constituents including Interleukin-2, or IL‑2, and other key cytokines. Together, these cytokines are believed to signal, enhance and restore immune function suppressed by the tumor, thus enabling the immune system to attack cancer cells, unlike existing cancer therapies, which rely on targeting the cancer directly. IRX-2 is prepared from the supernatant of pooled allogeneic peripheral blood mononuclear cells, known as PBMNCs, that have been stimulated using a proprietary process employing a specific population of cells and a specific mitogen.
While IRX‑2 is a cytokine mixture, one of its active components is IL‑2, a cytokine-signaling molecule in the immune system. IL‑2 is a protein that regulates the activities of white blood cells (leukocytes and often lymphocytes) that are responsible for immunity. IL‑2 is part of the body’s natural response to microbial infection, and in discriminating between foreign (“non-self”) and “self,” IL‑2 mediates its effects by binding to IL‑2 receptors, which are expressed by lymphocytes. The major sources of IL‑2 are activated CD4+ T cells and activated CD8+ T cells.
Unlike existing recombinant IL‑2 therapies, IRX‑2 is naturally derived from human blood cells. This may promote better tolerance, broader targeting and a natural molecular conformation leading to greater activity, and may permit low physiologic dosing, rather than the high doses needed in other existing IL‑2 therapies.
Aside from optimizing IRX-2 manufacture, we are also modifying our manufacturing process to allow us to develop additional drugs with a variety of cytokine mixtures to expand our product offerings.
Regarding IRX-2 development, our strategy is:
| • | Advance our product candidate IRX-2 through clinical development. IRX-2 is a human blood-based IL 2 therapy being studied for multiple types of cancer, including squamous cell cancer of the head and neck. Treatment of patients in the INSPIRE trial has been completed, and patients who participated in the trial are currently being monitored for event-free survival with top-line data estimated to be available in the first half of 2022. |
| • | Advance combination trials with checkpoint inhibitors. Once INSPIRE trial data are released, we plan to use those results as a catalyst in addition to data from the other clinical trials in the program with multiple data read-outs anticipated in 2022 and later. |
| • | Pursue partnerships to advance the IRX-2 clinical program. We are pursuing partnering opportunities with leading biopharmaceutical companies for the development and commercialization of IRX-2. |
| • | Regulatory strategy. We believe that our assets may be deemed to be unique and to represent potential breakthroughs in the treatment of cancer and other indications. We will endeavor to seek breakthrough therapy designation with regulatory agencies for IRX-2 for one or more indications. We cannot, however, assure that we will receive breakthrough therapy designation for any future indications or that any breakthrough therapy designation we do receive will necessarily lead to a faster approval time. |
| • | Intellectual Property. We continue to pursue additional intellectual property based on data from IRX clinical studies. |
Pre-Clinical Results
Our findings to date from nonclinical studies of IRX‑2 include murine acute toxicology as well as acute and chronic primate studies. These studies detected circulating associated cytokines yet were associated with benign toxicological findings. A further murine study demonstrated PD/PDL‑1 synergy when additively administered with IRX‑2.
Clinical Program
IRX‑2 currently remains under development and has not yet been approved for marketing authorization in any jurisdiction. The ongoing development program is investigating use of IRX‑2 as an immunotherapeutic neoadjuvant (pre-surgical) and adjuvant (post-operative) treatment for advanced head and neck squamous cell carcinoma, or HNSCC, and other solid tumors.
HNSCC
The HNSCC development program is being conducted under FDA Investigational New Drug #11,137 filed on June 30, 2003 and is ongoing. The HNSCC program has received fast track designation, approved November 7, 2003, and orphan drug designation, conferred on July 7, 2005, from the FDA. We have not submitted a request for orphan drug designation in the European Union, although we may seek such designation in the future.
Clinical studies in humans involving IRX‑2 show immune marker activation in patients treated with IRX‑2. In a prior phase 2a clinical trial, a correlation was shown between marker activation and disease-free survival in head and neck cancer. Results from this study were used to support the initiation of the INSPIRE study, a Phase 2B study involving 105 patients with HNSCC. Details of this trial can be found at clinicaltrials.gov (NCT02609386).
Other Indications
Other than the INSPIRE study, all clinical studies using IRX-2 are investigator-sponsored studies for which we are providing IRX‑2 as study drug and financial support to conduct the trial. These studies include:
Monotherapy studies:
| • | BR-101 - A study involving 16 patients with neoadjuvant breast cancer performed at the Providence Portland Medical Center. Details of this trial can be found at clinicaltrials.gov (NCT02950259). |
| • | CIN-201 - An open label single arm Phase 2 trial of the IRX‑2 regimen in women with cervical squamous intraepithelial neoplasia 3 or squamous vulvar intraepithelial neoplasia 3. Details of this trial can be found at clinicaltrials.gov (NCT03267680). |
Combination studies:
| • | BAS-104 - A basket study originally intended to enroll 100 patients with metastatic bladder, renal, non-small cell lung cancer, or NSCLC, melanoma, and head and neck cancer being held at the Moffitt Cancer Center, using IRX‑2 in conjunction with Opdivo (Nivolumab), an immunotherapy cancer treatment marketed by Bristol-Myers Squibb Company. This trial was discontinued after 11 subjects were enrolled due to insurance reimbursement challenges. Details of this trial can be found on clinicaltrials.gov (NCT03758781). |
| • | HCC-107 - A study involving 28 patients with metastatic hepatocellular carcinoma, or HCC, being held at City of Hope Medical Center, HonorHealth Research Institute, and Texas Oncology at Baylor Charles A. Simmons Cancer Center using IRX‑2 in conjunction with Opdivo, a cancer treatment marketed by Bristol-Myers Squibb Company. Details of this trial can be found at clinicaltrials.gov (NCT03655002). |
| • | GI-106 - A study involving 20 patients with metastatic gastric and gastroesophageal junction cancers (GI) being held at City of Hope Medical Center, HonorHealth Research Institute, and Texas Oncology at Baylor Charles A. Simmons Cancer Center using IRX‑2 in conjunction with Keytruda (Pembrolizumab), an immunotherapy cancer treatment marketed by Merck. Details of this trial can be found at clinicaltrials.gov (NCT03918499). |
| • | MHN-102 - A study involving 15 patients with metastatic head and neck cancer being held at the H. Lee Moffitt Cancer Center and Research Institute and University of Michigan Health System using IRX‑2 in conjunction with Imfinzi (Durvalumab), a cancer treatment marketed by AstraZeneca plc. Details of this trial can be found at clinicaltrials.gov (NCT03381183). |
| • | BR-202 - A study involving 30 patients with neoadjuvant triple negative breast cancer, held at the Providence Portland Medical Center using IRX‑2 in conjunction with a programmed cell death protein 1, or PD1, and chemotherapy treatments. Details of this trial can be found at clinicaltrials.gov (NCT04373031). |
Impact of COVID-19 Pandemic
The development of our product candidates has been, and could continue to be, disrupted and materially adversely affected by past and continuing impacts of the continuing COVID-19 pandemic. AsThis is a result of measures imposed by the governments and hospitals in affected regions, businesses and schools have beenwere suspended due to quarantines intended to contain this outbreak. The spread of SARS CoV‑2 from China to other countries resulted in the Director General of the World Health Organization declaring COVID-19 a pandemic in March 2020. While the constraints of the pandemic are slowly being lifted, we are still assessing the longer termlonger-term impact of the COVID-19 pandemic on our development plans, and on the ability to conduct our clinical trials There can be no assurance that this analysis will enable us to avoid or remediate part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally. The extent to which the COVID-19 pandemic and ongoing global efforts to contain its spread will impact our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat the COVID‑19 pandemic. Further, the specific clinical outcomes, or future pandemic related impacts of emerging SARS-CoV-2 variants cannot be reliably predicted
The patients in our clinical trials have conditions that make them especially vulnerable to COVID-19, and as a result we have seen slowdowns in enrollment in our clinical trials. While our Phase 2b clinical study in patients with squamous cell carcinoma of the oral cavity, known as the INSPIRE study, is fully populated, our other clinical studies are likely to continue to encounter delays in enrollment as a result of the pandemic. Further, with respect to the INSPIRE study, we anticipate that the COVID-19 pandemic will slow our ability to close out trial sites and report trial data.
IRX‑2 is a therapy based onproduct containing among others, IL‑2, a typeas well as IL-6 and IL-8, IL-10 and TNF-a types of cytokine-signaling moleculemolecules in the immune system. While many of the mechanisms of action of COVID-19 are still unknown, there is evidence that for some patients with severe COVID-19 patientscases may result inexperience “cytokine storm syndrome,release syndrome” or “cytokine storm.” in whichIn these cases, the body releases cytokines into the body too quickly, which can create symptoms such as high fever, inflammation, severe fatigue and nausea and can lead to severe or life-threatening symptoms. In addition, a paper published in the British Medical Journal in 2020 reported increased proinflammatory and anti-inflammatory cytokines, including IL-2R, IL-6, IL-8, TNF and IL-10, and an obvious association with both COVID-19 severity and in-hospital mortality.
In June 2020 the Journal of Medical Virology published a letter submitted by Wen Luo, Jia-Wen Zhang, Wei Zhang, Yuan-Long Lin and Qi Wang, supported by grants from the State Key Laboratory of Veterinary Technology, Harbin Veterinary Research Institute, stating that, based on a review of 25 patients admitted to intensive care units with a confirmed infection of COVID-19, cytokine storm of a number of interleukins, including IL‑2, was absent. The letter therefore suggested that the severity of COVID-19 symptoms is not directly associated with circulating levels of IL‑2. There can be no assurance, however, that further study will bear this out or that patients treated with IRX‑2, who are already at higher risk for COVID-19 due to their underlying diagnosis, will not be adversely affected.
IRX‑2 is a primary human cell-derived biological medicinal product containing multiple active cytokine components acting as immunomodulators. It is prepared from the supernatant of pooled allogeneic peripheral blood mononuclear cells, known as PBMNCs, that have been stimulated using a proprietary process employing a specific population of cells and a specific mitogen.
While IRX‑2 is a cytokine mixture, one of its principal active components is IL‑2, a cytokine-signaling molecule in the immune system. IL‑2 is a protein that regulates the activities of white blood cells (leukocytes and often lymphocytes) that are responsible for immunity. IL‑2 is part of the body’s natural response to microbial infection, and in discriminating between foreign (“non-self”) and “self,” IL‑2 mediates its effects by binding to IL‑2 receptors, which are expressed by lymphocytes. The major sources of IL‑2 are activated CD4+ T cells and activated CD8+ T cells.
Unlike existing recombinant IL‑2 therapies, IRX‑2 is naturally derived from human blood cells. This potentially may promote better tolerance, broader targeting and a natural molecular conformation leading to greater activity, and may permit low physiologic dosing, rather than the high doses needed in other existing IL‑2 therapies. Our ongoing development program is specifically investigating use of IRX‑2 in neoadjuvant (pre-surgical) and adjuvant (post-operative) treatment for advanced head and neck squamous cell carcinoma, or HNSCC. IRX‑2 has received both fast track designation and orphan drug designation from the U.S. Food and Drug Administration, or FDA, for this indication. Potential use of our product candidate in other cancer indications is also being evaluated in several investigator-sponsored trials. Finally, we are currently modifying our manufacturing process to allow us to develop additional drugs with a variety of cytokine mixtures to expand our product offerings.
Our product candidate IRX‑2 currently remains under development and has not yet been approved for marketing authorization in any jurisdiction. The ongoing development program is investigating use of IRX‑2 as an immunotherapeutic neoadjuvant (pre-surgical) and adjuvant (post-operative) treatment for advanced HNSCC and other indications.
The HNSCC development program is being conducted under FDA Investigational New Drug #11,137 filed on June 30, 2003 and is ongoing. Potential use of IRX‑2 in other cancer indications is also being conducted by independent clinical researchers as investigator‑initiated trials.
The HNSCC program has received fast track designation, approved November 7, 2003, and orphan drug designation, conferred on July 7, 2005, from the FDA. We have not submitted a request for orphan drug designation in the European Union, though we may seek such designation in the future.
Our findings to date from nonclinical studies of IRX‑2 include murine acute toxicology as well as acute and chronic primate studies. These studies detected circulating associated cytokines yet were associated with benign toxicological findings. A further murine study demonstrated PD/PDL‑1 synergy when additively administered with IRX‑2.
Clinical studies in humans involving IRX‑2 show immune marker activation in patients treated with IRX‑2. In a prior clinical trial, a correlation was shown between marker activation and disease-free survival in head and neck cancer.
Our clinical pipeline of therapeutic studies focused on oncology indications of high unmet medical need includes:
Monotherapy studies:
INSPIRE, a Phase 2B study involving 105 patients with HNSCC. Details of this trial can be found at clinicaltrials.gov (NCT02609386).
BR-101 - A study involving 16 patients with neoadjuvant breast cancer performed at the Providence Portland Medical Center. Details of this trial can be found at clinicaltrials.gov (NCT02950259).
CIN-201 - An open label single arm Phase 2 trial of the IRX‑2 regimen in women with cervical squamous intraepithelial neoplasia 3 or squamous vulvar intraepithelial neoplasia 3. Details of this trial can be found at clinicaltrials.gov (NCT03267680).
Combination studies:
BAS-104 - A basket study originally intended to enroll 100 patients with metastatic bladder, renal, non-small cell lung cancer (NSCLC), melanoma, and head and neck cancer being held at the Moffitt Cancer Center, using IRX‑2 in conjunction with Opdivo (Nivolumab), an immunotherapy cancer treatment marketed by Bristol-Myers Squibb Company. Details of this trial can be found on clinicaltrials.gov (NCT03758781).
HCC-107 - A study involving 28 patients with metastatic hepatocellular carcinoma, HCC, being held at HonorHealth Research Institute, City of Hope Medical Center and Texas Oncology at Baylor Charles A. Simmons Cancer Center using IRX‑2 in conjunction with Opdivo, a cancer treatment marketed by Bristol-Myers Squibb Company. Details of this trial can be found at clinicaltrials.gov (NCT03655002).
GI-106 - A study involving 20 patients with metastatic gastric and gastroesophageal junction cancers (GI) being held at HonorHealth Research Institute, City of Hope Medical Center and Texas Oncology at Baylor Charles A. Simmons Cancer Center using IRX‑2 in conjunction with Keytruda (Pembrolizumab), an immunotherapy cancer treatment marketed by Merck. Details of this trial can be found at clinicaltrials.gov (NCT03918499).
MHN-102 - A study involving 15 patients with metastatic head and neck cancer being held at the H. Lee Moffitt Cancer Center and Research Institute and University of Michigan Health System using IRX‑2 in conjunction with Imfinzi (Durvalumab), a cancer treatment marketed by AstraZeneca plc. Details of this trial can be found at clinicaltrials.gov (NCT03381183).
BR-202 - A study involving 30 patients with neoadjuvant triple negative breast cancer, held at the Providence Portland Medical Center using IRX‑2 in conjunction with a programmed cell death protein 1 (PD1) and chemotherapy treatments. Details of this trial can be found at clinicaltrials.gov (NCT04373031).
Other than the INSPIRE study, each of the studies described above is an investigator-sponsored study for which we are providing IRX‑2 as study drug and financial support to conduct the trial.
Our strategy is twofold: to rapidly advance our IRX 2 platform to become a leader in immunologic therapy for various types of cancer as both a first-line therapy and in combination with other cancer treatments, and to commercialize the gene editing technology licensed from the Licensor:
Pursue commercialization of gene-editing technology. Develop analog mRNA based technology and proprietary delivery system licensed from the Licensors for gene therapy, and cellular engineering in the treatment of indications of high unmet medical need in oncology and other conditions.
Advance our product candidate IRX 2 through clinical development. IRX 2 is a human blood-based IL 2 therapy being studied for multiple types of cancer, including squamous cell cancer of the head and neck. Treatment of patients in the INSPIRE trial has been completed, and patients who participated in the trial are currently being monitored for event-free survival with top-line data estimated to be available in the first half of 2022.
Advance combination trials with checkpoint inhibitors. Once INSPIRE trial are released, we plan to use those results as a catalyst in addition to six other clinical trials with multiple data read-outs anticipated in 2022 and later.
Pursue partnerships to advance our clinical program. We are pursuing partnering opportunities with leading biopharmaceutical companies for the development and commercialization of IRX 2.
Opportunistically in-license/acquire complementary programs. We may seek additional products to license or acquire in order to expand our product pipeline. This includes products that we may seek to develop if we exercise our option to exclusively license certain additional technology from the Licensors.
Regulatory Strategy. We believe that our assets may be deemed to be unique and to represent potential breakthroughs in cancer treatment. We will endeavor to seek breakthrough therapy designation with regulatory agencies for IRX 2 for one or more indications and for any other product we may acquire or in license that could potentially lead to accelerated clinical development timelines. We cannot, however, assure you that we will receive breakthrough therapy designation for any indications or that any breakthrough therapy designation we do receive will necessarily lead to a faster approval time.
Intellectual Property. We continue to pursue additional intellectual property based on data from IRX clinical studies.
For additional information regarding our business, please see Item 8.01 of our Current Report on Form 8-K filed with the Securities and Exchange Commission, or SEC, on May 11, 2021.
Second Quarter 2021 and Recent Developments
License Agreements with the Licensor
On April 26, 2021, , Brooklyn LLC entered into an exclusive license agreement, or the License Agreement, with Novellus, Ltd. and Factor, or the LicensorLicensors, to license the Licensor’s IPLicensors’ intellectual property and mRNA cell reprogramming and gene editing technology for use in the development of certain cell-based therapies to be evaluated and developed for treating human diseases, including certain types of cancer, sickle cell disease, and beta thalassemia. Through the License Agreement, Brooklyn LLC acquired an exclusive worldwide license to develop and commercialize certain cell-based therapies to treat cancer and rare blood disorders, including sickle cell disease, based on patented technology and know-how of Novellus, Therapeutics Limited.Ltd.
The License Agreement provides that Brooklyn LLC is obligated to pay the LicensorLicensors a total of $4,000,000 in connection with the execution of the License Agreement, all of which $2,500,000 has been paid and the remaining $1,500,000 is expected to be paid in July 2021.paid. Brooklyn LLC is obligated to pay to the LicensorLicensors additional fees of $5,000,000 in October 2021 and $7,000,000 in October 2022.
The completion of our acquisition of Novellus, Inc., formerly the sole equity holder of Novellus, Ltd., on July 16, 2021 relieves us from potential obligations to pay Novellus, Ltd. certain upfront fees, clinical development milestone fees and post-registration royalties under the License Agreement. The agreements with Factor under the License Agreement remains unchanged. Brooklyn LLC is obligated to pay Factor $2,500,000 in October 2021 and $3,500,000 in October 2022.
Under the terms of the License Agreement, Brooklyn LLC is required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory milestones and specified commercialization milestones. In general, upon its achievement of these milestones, Brooklyn LLC will be obligated, in the case of development and regulatory milestones, to make milestone payments to Licensor in specified amounts and, in the case of commercialization milestones, to specified royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers. In the event Brooklyn LLC fails to timely achieve certain delineated milestones, the LicensorLicensors may have the right to terminate the rights of Brooklyn LLC under provisions of the License Agreement relating to those milestones.
The Licensor is responsible for preparing, filing, prosecuting and maintaining all patent applications and patents under the License Agreement. If, however, the Licensor determinesLicensors determine not to maintain a particular licensed patent or not to prepare, file and prosecute a licensed patent, Brooklyn LLC will have the right, but not the obligation, to assume those responsibilities in the territory at its expense.
Novellus, Ltd. is a pre-clinical development, manufacturing, and technology licensing entity focused on engineered cellular medicines. Novellus, Ltd. has created, developed, and patented mRNA-based cell reprogramming and gene editing technologies to create engineered cellular medicines. The synthetic mRNA developed by Novellus, Ltd. is non-immunogenic—it is capable of successfully evading the immune system while being recognized by cellular processes. The synthetic mRNA is then capable of expressing high levels of proteins for cell reprogramming and gene editing. The mRNA may be formulated for injection into target tissues for cellular uptake and therapeutic treatment.
The synthetic mRNA technology may be used to edit gene mutations through mRNA chemistry or expressed gene-editing proteins to treat genetic and rare diseases. It may also be used to reprogram human non-pluripotent cells and induce human pluripotent stem cells, or IPSCs. The IPSCs may then be differentiated into pure populations of varying therapeutic cell types. The reprogramming technology offers a rapid, cost-effective and patient specific therapy using the engineered stem cells created from IPSCs.
Novellus, Ltd. has licenses from Factor to use over 45 granted patents throughout the world covering synthetic mRNA, RNA-based gene editing, and RNA-based cell reprogramming, in addition to specific patents covering methods for treating specific diseases. There are also greatermore than 50 pending patent applications throughout the world focused on these and other aspects of the technology. The patent coverage includes granted patents and pending patent applications in the United States, Europe, and Japan, along with other major life sciences markets.
There can be no assurance that Brooklyn LLC can successfully develop and commercialize the technology licensed under the License Agreement.
Purchase AgreementAgreements
On April 26, 2021, we entered into a purchase agreement, or the Purchase Agreement, withBrooklyn and Lincoln Park Capital Fund, LLC, or Lincoln Park, under which, subject to specified terms and conditions, we may sell to Lincoln Park up to $20.0 million of shares of common stock from time to time during the term of the Purchase Agreement.
Additionally, on April 26, 2021, we entered intoexecuted a registration rightspurchase agreement, or the Registration RightsFirst Purchase Agreement, with Lincoln Park, pursuant to which we agreed to fileand a related registration statement with the Securities and Exchange Commission, or the SEC, covering the resale of shares of common stock issued to Lincoln Park under the Purchase Agreement.
Under the terms and subjectrights agreement. Pursuant to the conditions of theFirst Purchase Agreement, we haveBrooklyn had the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park iswould be obligated to purchase, up to $20.0 million of shares of Brooklyn’s common stock. Any such saleSales of common stock will beby Brooklyn, if any, were subject to specifiedcertain limitations, and maycould occur from time to time, at our discretion, over a 36-month period commencing after the date that a registration statement covering the resale of shares of common stock issued under the Purchase Agreement, which we agreed to file with the SEC pursuant to the Registration Rights Agreement, is declared effective by the SEC and a final prospectus in connection therewith is filed and the other conditions set forth in the Purchase Agreement are satisfied. Lincoln Park has no right to require us to sell any common stock to Lincoln Park, but Lincoln Park is obligated to make purchases as we direct, subject to conditions set forth in the Purchase Agreement.
UponBrooklyn’s sole discretion. For entering into the First Purchase Agreement, weBrooklyn issued and soldto Lincoln Park 56,041 shares of common stock, or the Commitment Shares, to Lincoln Parkshares as consideration for Lincoln Park’s commitment to purchase up to $20.0 million in shares of common stock. During the three months ending June 30, 2021, Brooklyn issued and sold to Lincoln Park a total of 1,127,736 shares of common stock for gross proceeds of $20,000,000, and no further shares may be sold to Lincoln Park under the First Purchase Agreement.
UnderOn May 26, 2021, Brooklyn executed a purchase agreement, or the Second Purchase Agreement, weand a related registration rights agreement. Pursuant to the Second Purchase Agreement,Brooklyn has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park would be obligated to purchase, up to $40,000,000 of shares of Brooklyn’s common stock. Sales of common stock by Brooklyn, if any, are subject to certain limitations, and may electoccur from time to time, subjectat Brooklyn’s sole discretion. For entering into the Second Purchase Agreement, Brooklyn issued to specified conditions, to require the selling stockholderLincoln Park 50,000 shares of common shares as consideration for Lincoln Park’s commitment to purchase up to $40,000,000 in shares of common stock.
Under the Second Purchase Agreement, on any single business day on which the closing priceselected by Brooklyn, Brooklyn may direct Lincoln Park to purchase up to 60,000 shares of common stock is equal to or greater than $1.00,on such business day, which we refer to as a Regular Purchase, (a)provided, however, that (i) the Regular Purchase may be increased to up to 60,00080,000 shares, of common stock, (b) ifprovided that the closing sale price of the common stock is not below $5.50 on the NYSE American is at least $5.50 per share,purchase date, and (ii) the Regular Purchase may be increased to up to 80,000120,000 shares, of common stock or (c) ifprovided that the closing sale price of the common stock is not below $7.00 on the NYSE American is at least $7.00 per share, up to 120,000 shares of common stock.purchase date. In noeach case, however, will the selling stockholder’sLincoln Park’s maximum commitment with respect toin any single Regular Purchase may not exceed $1,000,000. The foregoing share amounts and per share prices will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring after$1,000,000 under the date of theFirst Purchase Agreement with respect to common stock.and $2,000,000 under the Second Purchase Agreement. The purchase price per share for each such Regular Purchase will be based onoff of prevailing market prices of the common stock immediately preceding the time of sale, as determined under the Purchase Agreement.
sale. In addition to Regular Purchases, weBrooklyn may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases onif the terms and subject toclosing sale price of the conditionscommon stock exceeds certain threshold prices as set forth in the Second Purchase Agreement.
As
The Second Purchase Agreement also prohibits Brooklyn from directing Lincoln Park to purchase any shares of May 14, 2021, we had issuedcommon stock if those shares, when aggregated with all other shares of common stock then beneficially owned by Lincoln Park and sold an aggregateits affiliates, would result in Lincoln Park and its affiliates having beneficial ownership, at any single point in time, of 302,358more than 4.99% of the then total outstanding shares of common stock. Brooklyn has the right to terminate the Second Purchase Agreement at any time, at no cost or penalty.
Actual sales of shares of common stock to Lincoln Park pursuantunder the Second Purchase Agreements depend on a variety of factors to be determined by Brooklyn from time to time, including, among others, market conditions, the trading price of the common stock and determinations by Brooklyn as to the Purchase Agreement, resulting in grossappropriate sources of funding for Brooklyn and its operations. We expect that any net proceeds of $6.3 million.received by Brooklyn from such sales to Lincoln Park will be used for research and development, working capital and general corporate purposes.
As of June 30, 2021, Brooklyn had issued and sold 3,211,942 shares of common stock under the First Purchase Agreement and the Second Purchase Agreement for total net proceeds of $48.5 million.
Acquisition of Novellus
On July 16, 2021, Brooklyn and its newly formed, wholly owned subsidiary Brooklyn Acquisition Sub, Inc. entered into an agreement and plan of acquisition, or the Acquisition Agreement, with (a) Novellus LLC, (b) Novellus, Inc., the sole equity holder of Novellus, Ltd. and, prior to the closing under the Acquisition Agreement, a wholly owned subsidiary of Novellus, LLC, and (c) a seller representative. Novellus, Ltd. is a pre-clinical stage biotechnology company organized under the laws of Ireland that is developing engineered cellular medicines using its licensed, patented non-immunogenic mRNA, high-specificity gene editing, mutation-free and footprint-free cell reprogramming and serum-insensitive mRNA lipid delivery technologies.
The closing of the transaction contemplated by the Acquisition Agreement, or the Acquisition, was held contemporaneously with the execution and delivery of the Acquisition Agreement. At the closing:
| • | Brooklyn acquired all of the outstanding equity interests of Novellus, Inc. as the result of the merger of Brooklyn Acquisition Sub, Inc. with and into Novellus, Inc., following which Novellus, Inc., as the surviving corporation, became Brooklyn’s wholly owned subsidiary and Novellus Ltd. became Brooklyn’s indirectly owned subsidiary. |
| • | Brooklyn acquired 25.0% of the total outstanding equity interests of NoveCite, Inc., a corporation focused on bringing an allogeneic mesenchymal stem cell, or MSC, product to patients with acute respiratory distress syndrome, including from COVID-19. |
Brooklyn delivered consideration for the Acquisition totaling approximately $124.0 million, which consisted of (a) $22.8 million in cash and (b) 7,022,230 shares of common stock, which under the terms of the Acquisition Agreement were valued at a total of $102.0 million, based on a price of $14.5253 per share.
The Acquisition Agreement contains customary representations, warranties and certain indemnification provisions. A total of 740,766 of the shares issued as consideration have been placed in escrow for a period of up to 12 months in order to secure indemnification obligations to Brooklyn under the Acquisition Agreement. The Acquisition Agreement also contains non-competition and non-solicitation provisions pursuant to which Novellus LLC has agreed not to engage in certain competitive activities for a period of five years following the closing, including customary restrictions relating to employees. No employees of Novellus Ltd. or Novellus, Inc. prior to the Acquisition continued their employment, or were otherwise engaged by Brooklyn, following the Acquisition.
In connection with the Acquisition, the co-founders of Novellus, Ltd. entered into lock-up agreements with respect to 3,377,690 of the shares received in the Acquisition, and Brooklyn’s Chair of the Board of Directors and its Chief Executive Officer and President entered into identical lock-up agreements with respect to their current holdings of Brooklyn stock. Each lock-up agreement extends for a period of three years, provided that up to 75% of the shares of common stock subject to the lock-up agreement may be released from the lock-up restrictions earlier if the price of common stock on the NYSE American stock exchange exceeds specified thresholds. The lock-up agreements include customary exceptions for transfers during the applicable lock-up period.
We expect the Acquisition will advance our evolution into a platform company with a pipeline of next-generation engineered cellular, gene editing and cytokine programs. In addition, the acquisition of Novellus, Ltd. builds on the License Agreement. (See “__Second Quarter 2021 and Recent Developments—License Agreements” above.) The completion of the acquisition of Novellus, Ltd. relieves Brooklyn LLC from potential obligations to pay Novellus, Ltd. certain upfront fees, clinical development milestone fees and post-registration royalties under the License Agreement. The agreement with Factor under the License Agreement, which grants Brooklyn LLC exclusive rights to develop certain next-generation mRNA gene editing and cell therapy products, remains unchanged.
Basis of Presentation
Revenues
We are a development stage company and have had no revenues from product sales to date. We will not have revenues from product sales until such time as we receive regulatory approval of our drug candidates, successfully commercialize our products or enter into a licensing agreement which may include up-front licensing fees, of which there can be no assurance.
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries, benefits and other costs, including stock-based compensation, for our executive and administrative personnel, legal and other professional fees; travel, insurance, and other corporate costs.
Research and Development Expenses
We expense our research and development costs as incurred. Our research and development expenses consist of costs incurred for company-sponsored research and development activities, as well as support for selected investigator-sponsored research. Upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred if the technology is not expected to have any alternative future uses other than the specific research and development project for which it was intended. The major components of research and development costs include preclinical study costs, clinical manufacturing costs, clinical study and trial expenses, insurance coverage for clinical trials, expensed licensed technology, consulting, scientific advisors and other third-party costs, salaries and employee benefits, stock-based compensation expense, supplies and materials (required capital equipment) and allocations of various overhead costs related to our product development efforts. To date, all
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In the normal course of our business, we contract with third parties to perform various clinical study and trial activities in the on-going development and testing of potential products. The financial terms of these agreements are subject to negotiation and vary from contract to contract and may result in uneven payment flows. Payments under the contracts depend on factors such as the achievement of certain events or milestones, the successful enrollment of patients, the allocation of responsibilities among the parties to the agreement, and the completion of portions of the clinical study or trial or similar conditions. Preclinical and clinical study and trial associated activities such as production and testing of clinical material require significant up-front expenditures. We anticipate paying significant portions of a studystudy’s or trial’s cost before such begins and incurring additional expenditures as the study or trial progresses and reaches certain milestones.
Critical Accounting Policies and Estimates
There were no significant changes in our critical accounting estimates during the three and analysissix months ended June 30, 2021 to augment the critical accounting estimates disclosed under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations--Critical Accounting Policies and Estimates” in Part I of our financial condition and results of operations are basedQuarterly Report on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make judgments, estimates, and assumptions that affectForm 10-Q for the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue and expenses during the reporting periods. We continually evaluate our judgments, estimates and assumptions. We base our estimates on the terms of underlying agreements, our expected course of development, historical experience and other factors we believe are reasonable based on the circumstances, the results of which form our management’s basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The accounting policies described below are not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP. There are also areas in which our management’s judgment in selecting any available alternative would not produce a materially different result. Our consolidated financial statements and the notes thereto included elsewhere in this report contain accounting policies and other disclosures as required by GAAP.
Use of Estimates
We are required under GAAP to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities, (b) disclosure of contingent assets and liabilities at the date of the financial statements, (c) the reported amounts of revenues and expenses during the reportingquarterly period and (d) the reported amount of the fair value of assets required in connection with our business combination with IRX Therapeutics, LLC in 2018. Our actual results could differ, possibly significantly, from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents are a measure of our cash on hand and any highly liquid investments with maturity dates within the next three months. At December 31, 2020 andended March 31, 2021, we had cash of $1.6 million and $8.4 million, respectively.2021.
Property and Equipment
Property and equipment are recorded at cost on our balance sheets, and then are depreciated over their useful lives. Laboratory and manufacturing equipment are depreciated over an estimated 7-year life span. Leasehold improvements are depreciated over the shorter of their useful life, or the end of the lease term. When these assets are disposed of, the cost and related accumulated depreciation are removed from our balance sheet and the resulting gain or loss is recognized.
In-Process Research and Development
In-process research and development, or IPR&D, assets represent the fair value of the technologies acquired in connection with the business combination with IRX Therapeutics, LLC have not reached technological feasibility and likely have no alternative future use. IPR&D assets are considered to be indefinite lived until the associated research is completed or abandoned. If IPR&D assets are deemed to be indefinite, they are tested for impairment on an annual basis, or more frequently if we become aware of any events or changes that result in the fair value of these assets being decreased. In such a case, where we are able to commercialize IPR&D assets, the lives of the assets are reduced and the amounts are amortized based on the estimated useful lives beginning at that point in time. Where development is terminated or abandoned, there may be a small impairment charge related to the IPR&D assets.
Research and Development
Research and development expenses are charged to operations as incurred. These assets include costs related to clinical and preclinical trials such as payments to coordinators and hospitals, costs of testing and other medical procedures provided to patient test subjects, site visits, and other costs related to our clinical trials.
Income Taxes
We were not directly subject to federal, state or local income taxes through December 31, 2018, as any tax liability was passed on to our members. In the year ended December 31, 2019, we recorded taxable income related to the New York City Unincorporated Business Tax. We expect this to continue in the future.
The benefits from uncertain tax positions are recognized only if it is more likely than not that the position will be sustained upon examination by local, state or federal taxing authorities. Any tax benefits recognized in our financial statements are measured based on the largest benefit that has at least a 50% likelihood of being realized. At this time, we have no material uncertain tax positions for any recording period.
Results of Operations
Comparison of Three and Six Months Ended March 31,June 30, 2021 and 2020
| | | For the three months ended March 31, | | | | | | | |
| | | 2021 | | | 2020 | | | Change $ | | | Change % | |
| | | | | | | | | | | | | |
| Operating Expenses: | | | | | | | | | | | | |
| Research and development | | $ | 1,519,633 | | | $ | (38,971 | ) | | | 1,558,604 | | | | -3999 | % |
| General and administrative | | | 1,636,557 | | | | 1,053,505 | | | | 583,052 | | | | 55 | % |
| Transaction costs | | | 5,765,407 | | | | - | | | | 5,765,407 | | | | N/A | |
| Change in fair value of contingent consideration | | | (820,000 | ) | | | - | | | | (820,000 | ) | | | N/A | |
| Total operating expenses | | | 8,101,597 | | | | 1,014,534 | | | | | | | | | |
| Loss from operations | | | (8,101,597 | ) | | | (1,014,534 | ) | | | | | | | | |
| Other Expenses: | | | | | | | | | | | | | | | | |
| Other expense, net | | | (2,564 | ) | | | (4,678 | ) | | | 2,114 | | | | -45 | % |
| Loss on sales of NTN assets | | | (9,598,173 | ) | | | - | | | | (9,598,173 | ) | | | N/A | |
| Total other expenses | | | (9,600,737 | ) | | | (4,678 | ) | | | | | | | | |
| Net loss attributable to common stockholders | | $ | (17,702,334 | ) | | $ | (1,019,212 | ) | | | | | | | | |
| | | Three months ended June 30, | | | | | | | |
| | | 2021 | | | 2020 | | | Change | | | % Change | |
| | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | |
| Research and development | | | 5,392,777 | | | | 985,081 | | | | 4,407,696 | | | | 447 | % |
| General and administrative | | | 4,620,353 | | | | 1,034,120 | | | | 3,586,233 | | | | 347 | % |
| Total operating expenses | | | 10,013,130 | | | | 2,019,201 | | | | 7,993,929 | | | | 396 | % |
| Loss from operations | | | (10,013,130 | ) | | | (2,019,201 | ) | | | (7,993,929 | ) | | | 396 | % |
| | | | | | | | | | | | | | | | | |
| Other expenses: | | | | | | | | | | | | | | | | |
| Loss on sale of NTN assets | | | (50,000 | ) | | | - | | | | (50,000 | ) | | | N/A | |
| Other expense, net | | | (22,187 | ) | | | (14,245 | ) | | | (7,942 | ) | | | 56 | % |
| Total other expenses | | | (72,187 | ) | | | (14,245 | ) | | | (57,942 | ) | | | 407 | % |
| Net loss | | | (10,085,317 | ) | | | (2,033,446 | ) | | | (8,051,871 | ) | | | 396 | % |
| Series A preferred stock dividend | | | (7,806 | ) | | | - | | | | (7,806 | ) | | | N/A | |
| Net loss attributable to common stockholders | | $ | (10,093,123 | ) | | $ | (2,033,446 | ) | | $ | (8,059,677 | ) | | | 396 | % |
| | | Six months ended June 30, | | | | | | | |
| | | 2021 | | | 2020 | | | Change | | | % Change | |
| | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | |
| Research and development | | | 6,912,410 | | | | 1,376,140 | | | | 5,536,270 | | | | 402 | % |
| General and administrative | | | 6,256,910 | | | | 1,657,595 | | | | 4,599,315 | | | | 277 | % |
| Transaction costs | | | 5,765,407 | | | | - | | | | 5,765,407 | | | | N/A | |
| Change in fair value of contingent consideration | | | (820,000 | ) | | | - | | | | (820,000 | ) | | | N/A | |
| Total operating expenses | | | 18,114,727 | | | | 3,033,735 | | | | 15,080,992 | | | | 497 | % |
| Loss from operations | | | (18,114,727 | ) | | | (3,033,735 | ) | | | (15,080,992 | ) | | | 497 | % |
| | | | | | | | | | | | | | | | | |
| Other expenses: | | | | | | | | | | | | | | | | |
| Loss on sale of NTN assets | | | (9,648,173 | ) | | | - | | | | (9,648,173 | ) | | | N/A | |
| Other expense, net | | | (24,751 | ) | | | (18,923 | ) | | | (5,828 | ) | | | 31 | % |
| Total other expenses | | | (9,672,924 | ) | | | (18,923 | ) | | | (9,654,001 | ) | | | 51017 | % |
| Net loss | | | (27,787,651 | ) | | | (3,052,658 | ) | | | (24,734,993 | ) | | | 810 | % |
| Series A preferred stock dividend | | | (7,806 | ) | | | - | | | | (7,806 | ) | | | N/A | |
| Net loss attributable to common stockholders | | $ | (27,795,457 | ) | | $ | (3,052,658 | ) | | $ | (24,742,799 | ) | | | 811 | % |
Revenues
We had no revenues for the three and six months ended March 31,June 30, 2021 or 2020.
General and Administrative Expenses
General
The increase in general and administrative expenses include corporateexpense for the three and office expenses,six months ended June 30, 2021 was primarily related to increased legal, accounting and consulting fees and travel expenses. Our general and administrative expenses increased due to additional fees for professional and legal fees associated with merger and acquisition activity, costs associated with being a publicly traded company and increased stock-based compensation resulting from the Merger.issuance of equity awards when compared to the same periods in 2020.
We expect general and administrative expenses to increase in future periods as we increase our business activities following completion of the Merger and incur costs associated with being a publicly traded company.
Research and Development Expenses
Research
For the three and development expenses insix months ended June 30, 2021, relate to the support of our investigator-sponsored studies.
Expenses related to our research and development activitiesexpenses increased duringdue to upfront payments associated with licensed technology, increased clinical trial expenses and stock-based compensation for the three months ended March 21, 2021issuance of equity awards when compared againstto the same periodperiods in 2020 due to stock-based compensation modification for the conversion of common units into common shares and increase in clinical trials for new trial initiation.2020.
We expect research and development expenses to grow as we expand our clinical trial activities.
Transaction Costs
There were no transaction costs for the three months ended March 31, 2020.June 30, 2021. For the threesix months ended March 31, 2020,June 30, 2021, transaction costs related to the issuance of common stock to our financial advisor upon consummation of the Merger.
Change in Fair Value of Contingent Consideration
Change
There were no changes to the fair value of contingent consideration for the three and six months ended June 30, 2020. For the three and six months ended June 30, 2021, change in fair value of contingent consideration was $0 and $820,000, for the three months ended March 31, 2021 and $0 for the three months ended March 31, 2020.respectively.
Other Expense, Net
Other
For the three and six months ended June 30, 2021, other expense, net for the three months ended March 31, 2021 and 2020 mainly relatedincreased primarily due to payments of interest accrued on notes in the principal amountpayable of $410,000 that we assumed as part of the acquisition of the assets of IRX Therapeutics, LLC in 2018. The notes bear interest at the rate of 14% and were due on December 31, 2019. On January 27, 2020, the notes were amended to extend the maturity date to the earlier of (i) a change of control and (ii) December 31, 2021, whichever comes first.
Loss on Sales of NTN Assets
Loss on sales of NTN assets for the three and six months ended March 31,June 30, 2021 was incurred when we completed the Asset Sale.Disposition.
Liquidity and Capital Resources
Since our inception, we have financed our operations primarily with capital calls to our members.
At March 31,June 30, 2021, we had cash and cash equivalents of $8.4$50,164,673. During the second quarter of 2021, we entered into the First Purchase Agreement and Second Purchase Agreement with Lincoln Park, pursuant to which we have the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to an aggregate of $60,000,000 in shares of our common stock. Future sales of common stock by us, if any, are subject to certain limitations, and may occur from time to time, at our sole discretion. As of August 12, 2021, we had issued and sold 3,211,942 shares of common stock for total gross proceeds of $50.5 million principally derived from contributions by our members. and net proceeds of $48.5 million. For further information, see “—Recent Developments—Purchase Agreements.”
We have to date incurred operating losses, and we expect these losses to increase in the future as we expand our drug development programs and operate as a publicly traded company. We anticipate using current cash on hand and our net proceeds from sales of common stock under the Second Purchase Agreement to finance these activities. It will likely be some years before we obtain the necessary regulatory approvals to commercialize one or more of our drug candidates. Based on our current financial condition and forecasts of available cash, including as mentioned above, we believe we have sufficient funds to fund our operations throughfor the first quarter of 2022.next twelve months. There can be no assurance that we will ever be in a position to commercialize IRX-2 or any other drug candidate we may acquire, or that we will obtain any additional financing that we require in the future or, even if such financing is available, that it will obtainable on terms acceptable to us.
In that regard, our future funding requirements will depend on many factors, including:
the scope, rate of progress and cost of our clinical trials and other product development activities;
| • | the scope, rate of progress and cost of our clinical trials and other product development activities; |
| • | future clinical trial results; |
future clinical trial results;
