EDGAR 10-K Filing

Company CIK: 1851657
Filing Year: 2023
Filename: 1851657_10-K_2023_0001562762-23-000132.json

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ITEM 1. BUSINESS
Item 1. Business.
Overview
We
are a purpose-driven
biotechnology company
committed to democratizing
healthcare across the
globe. Our vision
is to disrupt the
existing treatment paradigm for
chronic diseases, increasingly dominated by
drugs, particularly monoclonal antibodies
(“mAbs”), which
suffer
from
prohibitive
costs
and
cumbersome
administration.
We
believe
our
synthetic
peptide
vaccine
platform
(“Vaxxine
Platform”) has the
potential to
enable a
new class
of therapeutics
that will
improve the
quality and
convenience of
care, reduce
costs
and increase
access to treatments
for a wide
range of indications.
Our Vaxxine
Platform is designed
to harness the
immune system
to
convert
the body
into its
own “drug
factory,”
stimulating
the production
of antibodies
with a
therapeutic
or protective
effect.
While
traditional vaccines
have been able
to leverage this
approach against infectious
diseases, they have
historically been unable
to resolve
key challenges
in the fight
against chronic
diseases. We
believe our
Vaxxine
Platform has the
potential to
overcome these
challenges
and
has the
potential to
bring the
efficiency
of vaccines
to a
whole
new class
of medical
conditions.
Specifically,
our technology
is
designed
to
use
synthetic
peptides
to
mimic
and
optimally
combine
biological
epitopes
in
order
to
selectively
activate
the
immune
system,
producing
highly
specific
antibodies
against
only
the
desired
targets,
including
self-antigens,
making
possible
the
safe
and
effective
treatment
of
chronic
diseases
by
vaccines.
The
modular
and
synthetic
nature
of
our
Vaxxine
Platform
generally
provides
significant speed and efficiency in candidate
development and has generated multiple product candidates
that we are designing to have
safety
and
efficacy
equal
to
or
greater
than
the
standard-of-care
treatments
for
many
chronic
diseases,
with
more
convenient
administration and meaningfully lower costs. Our current pipeline consists of
five chronic disease product candidates from early to late-
stage development across multiple therapeutic areas, including Alzheimer’s Disease (“AD”), Parkinson’s Disease (“PD”), migraine and
hypercholesterolemia. Additionally,
we believe our
Vaxxine
Platform may be
used to disrupt
the treatment paradigm
for a wide
range
of other
chronic diseases,
including any
that are
or could
potentially be
successfully treated
by mAbs.
We
also will
opportunistically
pursue infectious disease treatments. When the COVID-19 pandemic struck the world in March 2020, we quickly reallocated resources
to develop a
vaccine candidate. We have
assembled an industry-leading
team with
extensive experience developing and
commercializing
successful drugs
that is
committed to
realizing our
mission of
democratizing healthcare.
Our website
address is
www.vaxxinity.com.
The information contained on, or that can be accessed through, our website
is not part of, and is not incorporated into, this Report.
Limitations of the Current Healthcare Paradigm
The current healthcare paradigm favors
the development of drugs that
are primarily intended for the
U.S. market, for niche indications
and
for
treatment
of
disease
rather
than
prevention.
Furthermore,
these
drugs
are
expected
to
be
sold
at
price
points
that
are
only
accessible to healthcare systems in developed countries. One class
of drugs in particular exemplifies the current environment: biologics,
particularly mAbs. In 2019, biologics represented eight of
the ten top selling drugs in
the United States, of which seven
were mAbs. The
global
market
for
mAbs
totaled
approximately
$163 billion
in
2019,
representing
approximately
70%
of
the
total
sales
for
all
biopharmaceutical products.
While mAbs can provide life-altering care with generally favorable safety characteristics and significant health benefits
for the patients
who receive them, regular in-office transfusions and annual treatment costs, which can exceed
hundreds of thousands of dollars, present
challenges to both
patients and payors. These
price and administration hurdles
cause mAb treatments to
be available to only
a fraction
of the population who
could benefit from them.
Furthermore, mAbs are often restricted
to moderate to severe disease
and to later lines
of
treatment
due
to
their
high
cost.
Based
on
internal
estimates,
less
than
1%
of
the
worldwide
population
is
treated
with
mAbs.
Meanwhile, the
alternative to mAbs
treatments tends
to be small
molecules, which
are sometimes more
accessible to patients,
but are
often comparatively
less effective
with more
significant side
effects.
Collectively,
this perpetuates
a profound
inequity in
healthcare
access, domestically but even more so globally,
that we believe represents a tremendous social and market opportunity.
Our Solution
Monoclonal antibodies are developed, produced and purified outside the body and then transfused into the patient on a regular basis, as
frequently as bi-weekly. Therefore, mAbs are inherently
less efficient than vaccines, which
instead stimulate antibody production within
the patient’s immune system, requiring both less active material and less frequent
treatments. However, while traditional vaccines have
historically
been
successful addressing
infectious
diseases, previous
attempts to
utilize vaccines
to address
chronic
disease have
not
achieved both acceptable safety and efficacy. This limitation is driven by a
traditional vaccine’s inability to either stimulate the requisite
antibody
response against
harmful
self-antigens,
that is,
break immune
tolerance,
or produce
acceptable levels
of reactogenicity,
the
physical manifestation of the immune
response to vaccination. Our
Vaxxine Platform technology contains modular components custom-
designed to
mimic select
biology and
activate the
immune system,
enabling our
product candidates
to break
immune tolerance
when
targeting self-antigens, a
property observed across multiple clinical
and pre-clinical studies. Our
Vaxxine
Platform depends heavily on
intellectual property licensed from UBI
and its affiliates, a related
party and a commercial partner
for us, who first
developed the peptide
vaccine
technology
utilized
by
our
Vaxxine
Platform.
The
formulation
of
our
peptide-based
product
candidates
relies
on
contract
manufacturers at this time, including both related parties as well as third-party
manufacturers.
We
believe
our
Vaxxine
Platform
has
the
potential
to
generate
product
candidates
with
attributes
that
collectively
offer
significant
advantages over
both mAbs
and small
molecule therapeutics,
and that
some of
these advantages
may allow
for use
in a first-line
or a
prevention setting:
•
Cost
:
Monoclonal
antibodies
require
costly
and
complex
biological
manufacturing
processes.
Our
manufacturing
process
is
chemically
based
and
highly
scalable
and
requires
lower
capital
expenditures.
In
addition,
we
design
our
product
candidates
to
generate
antibody
production
in
the
body,
thus
requiring
meaningfully
less
drug
substance
relative
to
mAbs,
leading to commensurately lower costs.
•
Administration
:
Our
product
candidates
are
designed
to
be
injected
in
quarterly
or
longer
intervals
via
intramuscular injection similar to a flu shot. We
believe this offers considerable
convenience compared to mAbs, which can require
up
to bi-weekly dosing via intravenous infusion or subcutaneous injections, and
small molecules, which often require daily dosing.
•
Efficacy
: In
our
clinical
trials conducted
to
date, our
product
candidates
have yielded
high
response
rates
(95% or above at target
dose levels) for UB-311,
UB-312 and UB-612, high
target-specific antibodies against
self-antigens (as seen in
UB-311 and
UB-312 clinical trials)
and long durations
of action for
UB-311 (based
on titer levels
remaining elevated
between doses)
and UB-612
(based on half-life).
See our descriptions
of these clinical
trials under
“-Our Product
Candidates.” We
also believe that
the improved convenience of our product candidates
as compared to mAbs has the potential to lead to increased
adherence by patients.
Furthermore,
our Vaxxine
Platform enables
the combining
of target
antigens into
a single
formulation.
For indications
that could
be
treated more effectively with a multivalent approach, we believe our Vaxxine
Platform would have an advantage over other modalities.
Finally,
because our
Vaxxine
Platform is
designed to
elicit endogenous
antibodies, we
believe our
product candidates
may lessen
or
avoid altogether the phenomenon of anti-drug antibodies which has limited
the efficacy of certain mAbs over time.
•
Safety
: Based on our clinical trials to date, our product
candidates have been well tolerated. We
aim to offer
product candidates with safety profiles at least comparable to the competing mAb or small molecule alternative for the relevant disease.
Our Pipeline
The following chart reflects our current product candidate pipeline:
As used in the chart above, “IND” signifies a program
has begun investigational new drug (“IND”)-enabling studies.
Our pipeline
consists of
five lead
programs focused
on chronic
disease, particularly
neurodegenerative disorders,
in addition
to other
neurology and cardiovascular indications.
Neurodegenerative Disease Programs:
•
UB-311
: Targets toxic
forms of aggregated amyloid-beta (“Aβ”) in the brain to fight AD. Phase 1, Phase 2a
and Phase 2a Long Term
Extension (“LTE”)
trials have shown UB-311 to be well tolerated in mild-to-moderate
AD subjects over
three years of repeat dosing, with a safety profile comparable to placebo, with
no cases of amyloid-related imaging abnormalities-
edema (“ARIA-E”) observed in the main Phase 2a trial, and only one case of
ARIA-E in the LTE
trial, which was clinically not
significant according to the study investigator.
UB-311 was also shown to be immunogenic, with a high
responder rate and antibodies
that bind to the desired target. We
held an End of Phase 2 meeting with the U.S. Food and Drug Administration
(“FDA”) and have
aligned upon a large scale efficacy trial, which, pending
data, could potentially support initial licensure of UB-311
for the treatment of
early AD.
The FDA granted UB-311 Fast Track
Designation in the second quarter of 2022.
The expected timing of the Phase 2b
initiation will be determined based upon the timing of a strategic partnership.
•
UB-312
: Targets toxic
forms of aggregated α-synuclein in the brain and peripheral tissues to fight PD and
other synucleinopathies, such as Lewy body dementia (“LBD”) and
multiple system atrophy (“MSA”). Part A of a Phase 1 trial in
healthy volunteers has been completed and has shown UB-312 to be well tolerated,
with no significant safety findings, and
immunogenic,
with a high responder rate and antibodies that cross the blood-brain barrier (“BBB”). No serious
adverse events were
observed in Part A of the Phase 1 trial. We
have completed an end-of-treatment analysis of the ongoing Part
B of the Phase 1 trial in
PD patients, which has similarly shown UB-312 to be well tolerated and immunogenic,
with anti-α-synuclein antibodies observed in
the serum and CSF of PD patients.
We anticipate the
completion of Part B of the trial in PD patients in mid-2023.
•
VXX-301
:
We
are
developing
an
anti-tau
product
candidate
that
has
the
potential
to
address
multiple
neurodegenerative
conditions,
including
AD,
by
targeting
abnormal
tau
proteins
alone
and
in
potential
combination
with
other
pathological proteins such as Aβ to combat multiple pathological processes at once. Our lead candidate targets multiple epitopes of tau.
Next Wave Chronic
Disease Programs:
•
UB-313
:
Targets
Calcitonin
Gene-Related
Peptide
(“CGRP”) to
fight
migraines.
We
have
completed
enrollment in a first-in-human Phase 1 clinical trial, which began in
September 2022, and anticipate a topline readout in the mid-2023.
•
VXX-401
:
Targets
proprotein
convertase
subtilisin/kexin
type
serine
protease
(“PCSK9”) to
lower
low-
density lipoprotein (“LDL”)
cholesterol and reduce
the risk of cardiac
events. As of March
2023, we have begun
dosing of subjects in
a first-in-human clinical trial of VXX-401 in Australia.
Given the global COVID-19 pandemic and our Vaxxine
Platform’s applicability to infectious disease, we also have advanced a product
candidate that addresses SARS-CoV-2.
COVID-19
•
UB-612
: Employs a “multitope” subunit protein-peptide approach to neutralizing the SARS-CoV-2
virus,
meaning the product candidate is designed to activate both antibody and
cellular immunity against multiple viral epitopes.
A Phase 3
trial evaluating UB-612 as a heterologous boost against SARS-CoV-2,
head-to-head versus homologous boosts of VNT162b2
(mRNA), ChAdOx1-S (adenovirus), and BIBP (inactivated virus), was initiated
in the first half of 2022 with funding support from the
Coalition of Epidemic Preparedness Innovations (“CEPI”).
In December 2022, we announced positive topline data: UB-612 met
primary and key secondary endpoints, eliciting non-inferior neutralizing
antibody titers and seroconversion rates (“SCR(s)”), defined
as a 4-fold or greater increase in neutralizing antibodies from baseline,
against both Wuhan and Omicron BA.5 variants as compared
to BNT162b2, and superior neutralizing antibody titers and SCRs against both variants
as compared to ChAdOx1-S and BIBP.
Preliminary safety data show that UB-612 has been generally well tolerated
with no serious adverse events reported through day 57 of
data cut-off.
The trial is ongoing, with long-term safety and immunogenicity follow-up
planned through 12 months.
Phase 1 and
Phase 2 trials of UB-612 have also shown UB-612 to be well tolerated,
with over 7,500 doses administered to over 3,750 subjects. In
March 2023 we completed rolling submissions for conditional/provisional
authorization with regulatory authorities in the United
Kingdom and Australia, who will review under their established work
share agreement.
We
believe our Vaxxine
Platform has application
across a multitude
of chronic and
infectious disease indications
beyond our
existing
pipeline. We are developing additional product candidates that we believe may address significant unmet needs both within and beyond
our current pipeline’s therapeutic areas.
Our Team
We have assembled
an experienced group of executives with deep scientific, business and leadership
expertise in pharmaceutical and
vaccine discovery and development, manufacturing, regulatory and commercialization.
Mei Mei Hu, our co-founder and Chief
Executive Officer, has been a member
of the executive committee of UBI since 2010. Our board of directors is chaired by our co-
founder Louis Reese, who has been a member of the executive committee
of UBI since 2014. Our research efforts are guided by
highly experienced scientists and physicians on our leadership team
including Dr. Ulo Palm, our Chief Medical
Officer, and Dr.
Jean-
Cosme Dodart, our Senior Vice
President of Research. Our leadership team contributes a diverse range of
experiences from leading
companies including Allergan, Amgen, Eli Lilly,
LEO, Merck, Novavax, Novartis, and Schering-Plough, and were executives in
multiple successful mAb and vaccine launches.
As of December 31, 2022, we have assembled an exceptional team of approximately
92 employees, the majority of whom hold Ph.D., M.D., J.D. or Master’s
degrees. We also have
a highly experienced scientific
advisory board consisting of leading doctors and scientists in relevant
therapeutic areas.
Our Strategy
Our mission is
to develop product candidates
that improve the
quality of care for
chronic diseases and
are accessible to
all patients across
the globe. In order to achieve this mission, we seek to:
•
Advance our chronic disease pipeline through
clinical stage development
: We plan to advance UB-311,
UB-312, UB-313, and VXX-401 through clinical stage development
for the treatment of chronic diseases, either ourselves or with a
strategic partner. We
believe that our differentiated Vaxxine
Platform will enable our product candidates, if approved and successfully
commercialized,
to potentially disrupt the treatment paradigm for their respective indications. However,
there can be no guarantee that
we will obtain regulatory approval or commercialize of any such product
candidates.
•
Expand our pipeline of product
candidates
: Chronic diseases are prevalent
globally and expected to worsen
over the next several decades. In furtherance of our mission, we plan to expand our pipeline by developing new product candidates that
address additional
indications. In
expanding our
pipeline, we rely
on our
proprietary filtering
methodology,
which evaluates potential
product
candidates
across
five
principal
criteria
-
(i)
probability
of
technical
and
regulatory
success,
(ii)
addressable
market,
(iii)
development cost, (iv) competitive dynamics and (v) disruptive potential.
•
Opportunistically develop treatments for
infectious diseases
: While
our core mission
focuses on the
treatment
of chronic diseases, we are committed to bringing accessible medicines to people around
the world and will address infectious diseases
opportunistically. For
example, when the COVID-19 pandemic struck the world,
we rapidly deployed resources in pursuit of a product
candidate currently embodied in UB-612.
•
Expand
and
scale
our
existing
capabilities
:
We
are
investing
in
our
operational
processes,
facilities
and
human capital to accelerate the speed with which we can bring
product candidates through the development pipeline, and to
strengthen
the capacity for developing more product candidates simultaneously.
•
Continue to
improve
our Vaxxine
Platform
: In
addition to,
and in
conjunction with,
our product
candidate
development
efforts,
we
are
continuously
working
to
improve
and
enhance
the
richness,
breadth
and
effectiveness
of
our
Vaxxine
Platform. As our
Vaxxine Platform further develops, we
believe that
we can
both increase the
number of product
candidates in
concurrent
development and efficiently advance product candidates
through pre-clinical and clinical development.
•
Maximize the value of
our product candidates through potential partnerships
: We currently retain worldwide
rights for the majority
of our product candidates
and will consider entering
into development and commercialization
partnerships with
third parties that align with our mission on an opportunistic basis.
Background and Limitations of Traditional
Vaccines and Monoclonal
Antibodies
The immune
system, the
body’s
mechanism for
fighting off
potential threats,
is comprised
of cells
that form
the innate
and adaptive
immune
responses.
The
main
purpose
of
the
innate
immune
system
is
to
immediately
prevent
the
spread
and
movement
of
foreign
pathogens throughout the body. The adaptive immune response is specific to the pathogen presented to T-cells
and B lymphocytes (“B-
cells”) and leads to an enhanced response upon future encounters with those antigens. Antibodies represent an important tool within the
adaptive immune system’s arsenal. Upon detection of a potential threat, B-cells produce antibodies that
recognize, bind to and eliminate
the threatening pathogen. Over time, the immune system develops the
ability to produce countless types of antibodies, each finely tuned
against a specific threat.
Generally, the immune system is able to function effectively by neutralizing
viruses, bacteria and even self-generated cells and proteins
from within our own
bodies that could cause
harm if unchecked.
However, as powerful
as the immune system
is, there are threats
that
it
cannot
overcome
on
its
own,
generating
the
need
for
medicine.
Conventional
forms
of
medicine
include
small
molecules
(e.g.,
antibiotics), which can inhibit
or promote action within
the body by, for instance,
binding to a
receptor on the surface
of a cell,
or directly
inducing toxic effects upon bacteria. These
medicines do not necessarily modulate
the immune system directly in
order to work. Instead,
they work
alongside it.
While small
molecules have
provided substantial
benefits to
human health,
they are
typically not
designed to
interact with the immune
system. They may also
have limited efficacy in cases
where an immune
response to a target can
be used against
a chronic condition.
Vaccines
In the
first part
of the
twentieth century,
vaccines revolutionized
healthcare by
directly interacting
with, and
modulating, the
immune
system - training
it to recognize
a dangerous pathogen by
introducing the immune system
to a relatively
harmless form of the
pathogen,
its toxins
or
one
of
its surface
proteins,
thereby
promoting
the
body’s
own
production
of binding
antibodies.
Once
immunized
to
a
specific pathogen, the immune system can recognize it and generate the antibodies
to fight it more quickly and robustly.
Traditional vaccine
technologies have generally
focused on the prevention
of bacterial and viral
infections and not on
chronic disease.
In
chronic
disease
settings,
the
disease-causing
agents
frequently
come
from
within
the
body.
These
self-antigens
are
proteins
that
become too abundant,
misfolded or aggregated
such that they can no
longer perform their healthy
function and even may
induce toxic
effects.
The
body
can
sometimes
produce
antibodies
against
such
proteins,
but
this
often
falls
short
of
providing
the
right
types of
antibodies in the right
concentrations to ward off
disease. Historically, vaccine technologies developed to target these
proteins have been
unable
to break
immune tolerance
- that
is, the
immune
system’s
general
avoidance
of reactivity
towards
self-antigens
- with
an
acceptable level of reactogenicity.
The challenges faced by
prior efforts to advance
vaccine technologies for chronic
diseases included
low response rates, low titer levels, off-
target responses and other
safety concerns such as T-cell
mediated inflammation.
Monoclonal Antibodies
The first
mAbs were
developed in
the later
part of
the twentieth
century.
In contrast
to vaccines,
which prompt
the body
to produce
antibodies, mAbs are antibodies manufactured outside of
the patient’s body and then
injected or infused into the body to recognize and
eliminate
harmful
targets.
Monoclonal
antibodies
have
revolutionized
the
standard-of-care
treatment
for
many
chronic
diseases.
However, manufacturing mAbs is
often an expensive
and complex
process and administering
mAbs is
cumbersome, sometimes
requiring
infusions
as frequently
as bi-weekly.
These factors
have generally
limited mAbs’
availability to
moderate-to-severe
disease, to
later
lines of therapy and to wealthier geographies, thus denying
access to a substantial portion of the patients who
could benefit from them.
Finally,
patients
on
mAbs
often
experience
a
loss
of
effectiveness
over
time
due
to
a
phenomenon
known
as
anti-drug
antibodies,
whereby the immune
system begins to
recognize therapeutic mAbs
as foreign, and
mounts a
response against them,
eventually mitigating
their efficacy.
Our Vaxxine
Platform
Our Vaxxine
Platform is designed to stimulate the patient’s own immune system to generate antibodies and overcome the limitations of
traditional
vaccines
to
target
self-antigens
safely
and
effectively
in
chronic
diseases.
Our
product
candidates
have
broken
immune
tolerance against
self-antigens consistently.
As described
in the
section titled
“Our Product
Candidates” below,
across seven
clinical
trials,
we
have
consistently
observed
that our
product
candidates have
stimulated
the
development
of
antibodies
against the
desired
target at relevant doses in clinical trial subjects, including the elderly. We have observed favorable tolerability and reactogenicity of our
product
candidates
across
studies
of
UB-311,
UB-312
and
UB-612,
with
no
significant
safety
findings
to
date.
We
aim
to
develop
product candidates that
are more convenient,
more cost-effective and
more accessible to large
patient populations, with safety
profiles
at least comparable to,
relevant mAbs and small
molecule treatments. We believe our product candidates have
the potential to eventually
not only capture meaningful market share from mAbs
and small molecules, but more importantly, to provide therapeutic benefit to
large
patient populations
who currently
receive neither
form of
treatment and
thereby open
up the
broadest access
to patients.
This would
represent
an
unprecedented
shift
in
the
treatment
paradigm,
potentially
providing
better
global
access
to
treatments
that
have
been
previously
limited
to
the
wealthiest
nations.
In
particular,
we
believe
our
treatments
for
chronic
disease
could
reflect
the
following
benefits as compared with the relevant mAbs and small molecule alternatives:
Characteristics of our Product Candidates versus Monoclonal Antibodies and Small
Molecules
History and Design
Our Vaxxine
Platform utilizes a peptide vaccine technology first developed by UBI and subsequently refined over the last two decades,
with more
than three
billion doses
of animal
vaccines
commercialized
to date.
UBI initiated
the development
of this
technology
for
human use; the business focused on human use was then separated from UBI through two separate transactions: a spin-out from UBI in
2014 of operations
focused on developing
chronic disease product
candidates that resulted
in United Neuroscience,
a Cayman Islands
exempted company (“UNS”),
and a second
spin-out from UBI
in 2020 of
operations focused on
the development of
a COVID-19 vaccine
that resulted
in C19 Corp.,
a Delaware
corporation (“COVAXX”).
Our current
company,
Vaxxinity,
Inc., was incorporated
under the
laws of the State of Delaware on February 2, 2021 for the purpose of acquiring
UNS and COVAXX
in March of 2021.
On March 2,
2021, in
accordance with
a contribution
and exchange
agreement among
Vaxxinity,
UNS, COVAXX
and the
UNS and
COVAXX
stockholders party thereto (the “Contribution and
Exchange Agreement”), the existing equity holders of
UNS and COVAXX
contributed their
equity interests in
each of
UNS and COVAXX
in exchange
for equity interests
in Vaxxinity
(the “Reorganization”).
In
connection
with
the
Reorganization,
(i) all
outstanding
shares
of
UNS
and
COVAXX
preferred
stock
and
common
stock
were
contributed to
Vaxxinity
and exchanged
for like
shares of
stock in
Vaxxinity,
(ii) the outstanding
options to
purchase shares
of UNS
and COVAXX
common stock were terminated and substituted with options
to purchase shares of Class A common stock in Vaxxinity,
(iii) the
outstanding
warrant
to
purchase
shares
of
COVAXX
common
stock
was cancelled
and
exchanged
for
a
warrant
to
acquire
Class A
common
stock
in
Vaxxinity,
and
(iv) the
outstanding
convertible
notes
and
a
related
party
not
payable
were contributed
to
Vaxxinity
and the former holders of such notes received Series A preferred stock in Vaxxinity.
On December 31, 2022, COVAXX
was
merged into Vaxxinity
in order to simplify the corporate structure.
UBI has used
its capabilities
in peptide
technology for
innovations across an
array of
business endeavors:
antibody testing
for human
diagnostics, animal health
vaccines and the manufacture
of medical products. Its
innovative products include one
of the first approved
peptide-based blood antibody tests in the world (for HIV), one of the first approved
peptide vaccines against an infectious disease in the
world in animal health (for a
food-and-mouth disease virus) and one of
the first approved peptide vaccines against
a self-antigen in the
world in
animal health
(an anti-luteinizing
hormone-releasing hormone
(“LHRH”) vaccine
used for
the immunocastration
of swine).
Grant funding from
the National Institutes
of Health supported
some of UBI’s
work in the
fields of vaccines
and antibody testing.
To
commercialize its animal health
vaccine business, UBI
and its affiliates scaled
up GMP vaccine manufacturing to
over 500 million doses
per
year
and
partnered
with
a
top-ten
animal
health
company
for
commercialization
of
its
anti-LHRH
vaccine;
all
together,
UBI’s
technology platform is utilized for the vaccination of approximately 25%
of the global swine population annually.
We are
advancing our peptide-based Vaxxine
Platform to develop product
candidates that target chronic
diseases and COVID-19.
Our
Vaxxine
Platform
comprises
a
proprietary,
custom,
rationally
designed
antigen
capable
of
evoking
an
immune
response
(an
“immunogen”)
formulated
with
a
proprietary
CpG
oligonucleotide.
The
immunogen
contains
several
advanced
synthetic
peptide
domains,
including
B-cell
epitopes,
T-helper
(“Th”)
peptide
carrier
constructs
and
peptide
linkers.
This
composition
enables
us
to
achieve
a
highly
specific
immune
response
to
the
target
antigen,
with
limited
inflammation
and
off-target
effects
that
could
cause
reactogenicity. This design process has evolved into a repeatable series of well-defined steps,
which has enabled the development of our
current pipeline of product candidates.
Key Elements of our Vaxxine
Platform Constructs and Formulations
When developing
a product
candidate, we
use publicly
available information
and sophisticated
bioinformatics tools
to investigate
the
entire protein structure of a
target in a comprehensive manner
to identify functional B-cell epitopes
that may provide optimal antigens.
We
then synthesize
peptides that
mimic these
identified antigens
to elicit
highly specific
antibodies against
these B-cell
epitopes. To
yield favorable tolerability profiles, we screen our product candidates for lack of toxicity as well as reactogenicity,
and design them not
to elicit T-cell
mediated inflammation. To
enhance effectiveness, we
seek to optimize the
size and sequence of
our custom peptides to
elicit a robust, specific antibody response when linked to a carrier molecule.
We
then attach
a proprietary
carrier molecule,
an artificial Th
carrier peptide
that delivers the
synthetic peptide
into cells.
Traditional
vaccines have
faced challenges
in achieving
specific responses
because they
rely on
conjugating
an antigen
to a
large toxoid
carrier
molecule, to which most of
the antibody response is directed,
causing off-target effects
such as inflammation.
In our pre-clinical trials
and clinical trials to date, our product candidates have displayed specific immunogenicity,
or the ability to stimulate a targeted immune
response, thereby greatly reducing potential off-target effects and increasing the potential for our
product candidates to be well tolerated
and
efficacious.
We
have
observed
that
our
carrier
molecules
have
produced
consistent
results
across
multiple
species
and
against
multiple targets in seven human clinical trials to date.
Our Product Candidate Does Not Induce an Antibody Response against its Carrier Molecule
The graph above
illustrates that our
peptide carriers induce
a strong immune response against
the target antigen, and
a minimal immune
response against themselves, as compared
to traditional vaccines formulated with other types of carrier molecules.
Our
peptide
carriers
have
short sequence
lengths;
we
design
them with
the aim
that
they are
not
antigenic on
their own
and
do not
stimulate cytotoxic T-cells.
The carriers’ sequences model
those found in natural
pathogens, so they are
recognized by T-helper
cells.
This encourages
robust T-helper
cell exposure
and promotes activation
of other
immune cells.
In turn,
B-cells are exposed
to the B-
cell antigen and begin antibody production against the antigen, while avoiding
an antibody response to the carrier.
Our library of peptide carriers enables the use of different
carrier molecules or different combinations of carrier molecules, which
allows us to potentially regulate the speed of immune response onset as well as the magnitude
and duration of that response. For
example, a longer duration of response would allow for less frequent dosing.
In the case of vaccines for infectious diseases, where T-
cell mediated activity is desirable, our Vaxxine
Platform also affords the flexibility to design immunogen constructs that specifically
promote cytotoxic T-cell
activity when warranted.
We
utilize proprietary
linker constructs
to fuse
our peptide
carriers
with our
custom peptide
antigens.
These linkers
are designed
to
promote binding of both B-cell and
T-helper epitopes to their respective receptors, contributing to a B-cell response.
They may enhance
the
immune
response
by
enabling
conformational
changes
to optimize
presentation
of
the B-cell
epitope
to
antigen-presenting
cells
(“APCs”), such as dendritic cells (“DCs”).
Our
Vaxxine
Platform
also
enables
the
construction
of
candidates
that
target
multiple
epitopes
in
a
single
formulation,
whether
on
multiple
targets
or
a
single
target.
In
certain
cases,
targeting
multiple
epitopes
of
a
single
target
could
promote
increased
target
engagement.
Combinations of therapies
targeting different molecular
mechanisms are common
in treating neurologic, cardiovascular,
psychiatric,
metabolic,
respiratory,
infectious
and
oncologic
disease.
Our
Vaxxine
Platform’s
favorable
cost
of
goods
and
efficient
manufacturing process
could allow for
viable multi-target
therapies in a
single formulation.
This concept could
be applied in
an array
of potential therapeutic
areas. Our current
pipeline has candidates
against amyloid-β, α-synuclein
and tau; targeting
of two or more
of
these at the same time might prove more effective than any single-target therapy in some patients. Pre-clinical data to date suggests that
we can elicit
antibody titers against
all three targets in
a single formulation.
In contrast, multi-target therapy
with mAbs would
compound
the cost and administration burdens as compared to single-target
mAb therapy.
Immunogenicity of Single- Versus
Multi-Target
Formulations in Guinea Pigs
Guinea pigs (three per dose)
were immunized with either single-target or
multi-target formulations, then serum was
drawn and antibody
titers compared
via enzyme immunoassays
(“EIA”). Multi-target
formulations elicited
similar titer
levels against
each target
as their
corresponding single-target
formulations. This suggests we can create product candidates with multiple neurodegenerative targets
in a
single formulation and achieve sustainable titer levels.
Product Candidate Formulations
In
addition
to
our
immunogen
construct,
each
product
candidate
formulation
includes
custom
CpG
oligonucleotides
and
adjuvant
selection. CpG oligonucleotides are
negatively charged, and we
utilize proprietary CpG configurations
to stabilize the
positively charged
peptides. This
stabilization acts
to optimize
display of
the B-cell
epitope to
the immune
system. In
this way,
the primary
function of
CpG oligonucleotides in our formulations is that of an excipient.
A potential secondary
function of CpG
is that of
an adjuvant.
Certain CpG configurations
are known
to act as
immunostimulants and
promote direct cytotoxic
T-cell activity, while others do not.
Accordingly, our selection of the
specific CpG modality
is highly
dependent
on the target
indication. For infectious
disease indications, the
T-cell
response generated by
the CpG configuration
is independent and
in addition to that of the T-cell
response generated by the peptide carrier.
The final formulation includes the addition of an adjuvant, such as a well-recognized, alum-derived Adju-Phos or Alhydrogel to further
enhance the immunogenicity of our product candidate.
Alum-derived adjuvants are commonly used in vaccines
to promote an immune
response. This is not the same adjuvant used in other companies’ failed neurodegenerative
vaccine candidates.
How our Product Candidates are Designed to Function
Our immunogens
stimulate the
body’s
adaptive immune
system to
produce antibodies
against a
variety of
antigen targets,
including
secreted
peptides
or
proteins,
degenerative
or
dysfunctional
proteins
and
membrane
proteins,
as
well
as
infectious
pathogens.
The
mechanism of action involves the following sequence of steps:
1.
The immunogen is taken up by an APC, such
as a DC. Antigen uptake leads to DC maturation and migration
to the draining lymph nodes where the DCs interact with CD4+ T-helper
cells.
2.
DCs engulf and
process the antigen
internally and present
the T-helper
epitope on major histocompatibility
complex
(“MHC”) Class
II molecules.
The presentation
activates immunogen
-specific CD4+
T-helper
cells causing
them to
mature,
proliferate and promote B-cell stimulatory activity.
3.
B-cells with receptors that
recognize the target
B-cell epitope bind, internalize
and process the immunogen.
The binding of the B-cell receptor to the immunogen provides the first activation
signal to the B-cells.
4.
When B-cells
function
as APCs
and present
the T-helper
epitope on
MHC Class
II molecules,
interaction
with immunogen-specific
CD4+ T-helper
cells provides
a second
activation signal
to B-cells,
which causes
them to
differentiate into
plasma cells.
5.
B-cell
epitope-specific
plasma
cells
produce
high
affinity
antibodies
against
the
target
B-cell
epitope.
Of
particular
importance
for
targets
located
in
the
central
nervous
system
(“CNS”),
these
antibodies
are
produced
in
sufficient
concentrations to cross the BBB.
Overview of How our Product Candidates Function
Importantly,
from both clinical trials
and pre-clinical studies,
we have observed
the rapid expansion of
antibodies upon administration
of a booster of our product candidates. Based
on the available data to date, we can infer that
while antibody titers decline with time after
administration, a small
number of memory
B-cells and antibody
secreting cells are maintained
in the lymphoid organs,
spleen or bone
marrow. We
believe this is important because if a
patient misses a dose of our
product candidate, they may be able to
recall the antibody
response, and therefore the therapeutic effect of the antibodies, with
a single booster, even after a long period of time
has passed.
Vaxxine
Platform Immunogenicity upon Re-dosing
As shown
in
the
above
graph,
a
rapid
antibody
response
is elicited
by
a
booster
dose
of
UB-311
given
weeks after
the
priming
regimen.
Furthermore, the antibodies elicited by our product candidates have different properties than those of mAbs
targeting similar pathology.
In general,
we aim
to achieve
binding affinity,
specificity and
functionality similar
or improved
compared to
mAbs targeting
similar
pathology. We
use Bio-Layer Interferometry (ForteBio
®
) to compare the binding kinetics (K
ON
, K
OFF
, and K
D
) of antibodies elicited by
our product candidates
versus mAbs. We
also use Western
blot or slot blot
to evaluate the binding
specificity of antibodies elicited
by
our product
candidates against
the normal,
toxic, misfolded
or aggregated
forms of
the target
protein. We
use immunohistochemical
analyses to observe the binding of antibodies to pathological inclusions on tissue sections, such as brain sections of patients. Moreover,
we use cell-based models and animal models to measure the induced
antibodies’ functionality. Additionally,
a major challenge in mAb
drug
discovery
is
that
mAbs
are
prone
to
induce
an
immune
response
against
themselves,
resulting
in
a
potential
inactivation/neutralization of the mAb by the host (i.e., the patient). This is not a concern
with our vaccine approach as each patient will
produce its own
antibodies against the
target. Finally,
mAbs have a
potential
for off-target
binding, which could
result in non-specific
binding leading
to safety and
toxicity issues.
We
believe that
this is unlikely
to happen
using our technology
since antibodies
elicited
by our product
candidates are designed
to break immune
tolerance against specific
targets and should
not trigger an
immune response
against other self-peptides or proteins.
Product Candidate Selection Process
Because our Vaxxine Platform may have applicability across
a range of chronic
diseases, we employ a
proprietary filtering methodology
to best identify new product candidates for development. We
evaluate potential product candidates across five principal criteria:
•
Probability
of
technical
and
regulatory
success
:
We
examine
the
probability
of
success
for
a
product
candidate based on stage of development and therapeutic area, and then make target-specific
adjustments for design difficulty,
industry
knowledge and clarity of
biological mechanism, general safety
risk and estimated
titer level required
for therapeutic effect. This
criterion
accounts for the known validity of a given target in the relevant
disease context.
•
Market
opportunity
:
We
account
for
the
prevalence,
unmet
need
and
drug
market
size
for
each
likely
indication associated with a given target, as well as the number of potential
indications.
•
Development cost
: We
estimate the
cost of
development through
BLA submission,
the time
to submission
and the number of patient-years to proof-of-concept.
•
Competitive advantages
: We
evaluate the extent to
which the advantages of
our Vaxxine
Platform compare
to the current and potential future standard of care, including convenience, dosing,
safety, efficacy
and cost.
•
Disruptive opportunities
: We evaluate the
extent to which the potential disruptive properties of our Vaxxine
Platform may play a
role in treatment paradigms,
including the ability to
“leap-frog” mAbs and treat
patients in earlier lines
of treatment,
to be used as a prophylactic, to include multiple targets in a single formulation
and to be used as an adjuvant therapy.
After assigning
values to each
criterion for
a given product
candidate, we
weight each criterion
according to a
confidential algorithm,
and thereby prioritize product candidates for development. We
update these values on a regular basis based on new scientific literature,
trial results and our Vaxxine
Platform advancements.
As an example, in light of these criteria, AD and other neurodegenerative diseases that involve misfolded proteins are an attractive area
for development. First, as the field has gained knowledge and clinical experience around the biology of targeting
aberrant proteins with
antibodies, the relative technical, safety and regulatory risk has decreased. For instance, with two FDA-approved products targeting
Aβ
for AD, Aβ
has been validated
as a target.
Both AD and
PD have high
prevalence worldwide,
and large unmet
need with no
disease-
modifying products readily
available to patients.
Moreover, the
underlying pathologies often
begin years or
decades before symptoms
may appear and as a result, early intervention in the disease state, as well as prevention or delay of onset strategies, may be optimal and
more
practically
achievable
with
a
vaccine
approach.
While
mAbs
can
target
the
pathology,
they
face
the
limitations
of
high
cost,
cumbersome and
inefficient administration
and limited
access, and
are not
suited for
early treatment
or prevention,
which we
believe
provides
a disruptive opportunity for our Vaxxine
Platform.
We
do not
currently
evaluate oncology
and infectious
diseases through
the above
framework. We
generally
do not
pursue oncology
targets
given the
hyper-segmentation
of subjects
common in
clinical development
efforts in
oncology that
leads to
relatively narrow
labels, and
due
to the
strengths of
other new
modalities such
as cell-based
therapy in
this area.
We
only consider
infectious disease
opportunistically. However,
our approach with respect to oncology and infection diseases could change
in the future.
We believe that our Vaxxine
Platform, and our strategy more generally,
will create a significant opportunity for drug development well
beyond our current pipeline
of clinical and
pre-clinical indications, in therapeutic
areas including allergy (e.g.,
atopic dermatitis,
chronic
rhinosinusitis, , food allergy), autoimmune disease
(e.g., psoriasis, psoriatic arthritis, Crohn’s disease), pain (e.g.,
peripheral neuropathy,
diabetic neuropathy) and bone and muscle atrophy (e.g., sarcopenia, osteoporosis,
osteopenia).
Underlying Drivers of Our Platform Advantages
Our Vaxxine Platform’s
properties drive the unique combination
of attributes that we
believe will be reflected in
our product candidates:
•
Cost
: Our reliance
on chemically linked,
custom peptide sequences
fuels cost efficiencies
that we expect
to
enable
broad
accessibility
to
our
product
candidates.
Foremost
among
these
relates
to
dosing.
Monoclonal
antibodies
require
more
physical material for annual dosing because the patient needs to be delivered the externally manufactured therapeutic antibodies, which
have high molecular weight. In contrast, our product candidates are designed to
stimulate the body’s immune system to produce its own
antibodies and
have relatively
low molecular
weight. While
an annual
supply of
mAbs doses
may include
grams or
tens of
grams of
drug substance, our current product candidates only
require 1 to 2 milligrams each, or even less, leading
to a relatively low annual cost
of goods. In
our development programs
to date, we
have achieved
a cost of
goods amounting to
a small fraction
of the typical
cost of
mAbs (as low as <1%).
•
Administration
: Administration of our product candidates generally requires three priming doses, each in the
range of several hundred
micrograms, followed by booster
doses of a similar
magnitude 2 to
4 times per
year. As described in the section
titled
“Our
Product
Candidates” below,
in clinical
trials we
have
observed
that our
product
candidates
elicited
a
sustained
antibody
response, with elevated antibody levels lasting six
months or longer. We believe this presents a meaningful advantage over many mAbs,
which commonly
require either bi-weekly
or monthly injections,
or monthly or
quarterly infusions, and
many small molecules,
which
commonly require a daily pill regimen.
•
Safety
: The
antibodies generated
by our
product candidates
are designed
to be
highly specific
to the
target
antigen and
to avoid an
off-target immune
response to the
peptide carrier,
thereby limiting
inflammation and
other off-target
activity.
We
believe
these characteristics
have yielded
the high
tolerability observed
in the
clinical studies
of our
product candidates
to date.
Furthermore, the
titer response
to our
product candidates
is naturally
titrated, which
may reduce
the likelihood
of an
antibody Cmax
safety side effect, and is naturally reversible, thus avoiding an uncontrolled
or permanent immune response.
•
Efficacy
: In
our
clinical
trials conducted
to date,
our
product candidates
have
yielded
comparatively
high
response rates (95%
or above at
target dose levels)
for UB-311, UB-312 and
UB-612, high target-specific
antibodies against
self-antigens
(as
seen
in
UB-311
and
UB-312
clinical
trials)
and
a
long
duration
of
action
for
UB-311
(based
on
titer
levels
remaining
elevated
between doses)
and UB-612
(based on
half-life). Furthermore,
our Vaxxine
Platform enables
the combining
of target
antigens into
a
single formulation. For indications that could be treated more effectively with a multivalent approach, we believe our Vaxxine Platform
would have an advantage over other modalities. Finally,
because our Vaxxine
Platform is designed to elicit endogenous antibodies,
we
believe our product candidates may lessen or avoid altogether the phenomenon of anti-drug antibodies which has
limited the efficacy of
certain mAbs over time.
Additionally,
we believe our
Vaxxine
Platform possesses important
benefits reflected
at the platform
level, as opposed
to the product
candidate level:
•
Product Candidate Discovery
: Our Vaxxine
Platform enables the efficient iteration of product candidates
in
the discovery
phase through
rapid, rational
design and
formulation. We
are able
to screen in
high throughput
rapidly and
at low
cost.
Upon nominating
a target
for drug
discovery,
we can
formulate several
dozen product
candidate compounds
for preliminary
in vivo
immunogenicity and cross-reactivity screening within 2 to 3
months. This process allows nonviable product candidates to
“fail fast” and
allows
us
to
carry
top
product
candidates
forward
through
subsequent
pre-clinical
development
to
lead
identification.
In
contrast,
biologics require the
maintenance and adjustment
of living cultures to
design, formulate and
iterate, and therefore
discovery and early
development is inherently less efficient.
•
Process Development
: Scaling the formulation
of a drug product from
research grade to clinical grade,
then
to commercial grade, typically consumes a great deal of resources.
This, together with the development of assays for quality
control and
quality assurance,
comprise process
development. We
leverage our
manufacturing expertise,
originally developed
alongside UBI
and
certain of
its affiliates,
to enable
rapid scale-up
of the
manufacture of
both clinical
and commercial
compounds that
use our
Vaxxine
Platform technology. Unlike process development for mAbs, which has inherent challenges such as risk of contamination in cell culture
or bioreactors
and time-consuming
adjustments to
cell lines
for any
formulation adjustment,
our peptide
platform relies
on synthetic
peptide chemistry, which
is more reproducible and scalable, and relatively quick to manipulate for any modifications.
Our Product Candidates
Neurodegenerative Disease Programs
Neurodegenerative diseases are a collection of conditions defined by progressive
nervous system dysfunction, degeneration or death of
neurons, which can cause cognitive decline, functional impairment and eventually death. Neurodegeneration represents one of the most
significant unmet medical needs of our time due to an aging population and lack of effective
therapeutic options.
Two of the most common neurodegenerative diseases are
AD and PD. In
the United States, currently
more than six million people suffer
from
AD,
and
approximately
one million
people
suffer
from
PD
according
to
estimates
from
the
Alzheimer’s
Association
and
the
Parkinson’s
Disease Foundation,
respectively.
As a
result, AD
and PD
bring a
heavy burden
on our
society’s
cost of
care. The
direct
costs of caring for
individuals with AD and other
dementias in the United
States were estimated at
$305 billion in 2020 according
to a
study
published
by
the
American
Journal
of
Managed
Care,
and
are
projected
to
increase
to
$1.1
trillion
by
according
to
the
Alzheimer’s Association. The financial
burden of PD exceeded $50 billion in
the United States in 2019. Many more
people around the
world suffer from these two diseases and their related social and
economic implications.
UB-311
An Overview of Alzheimer’s
Disease
Alzheimer’s
disease
is a
progressive
neurodegenerative
disorder
that slowly
affects
memory
and
cognitive
skills and
eventually
the
ability to carry
out simple tasks.
Its symptoms include
cognitive dysfunction, memory
abnormalities, progressive impairment
in activities
of
daily
living
and
a host
of other
behavioral
and
neuropsychiatric
symptoms.
The exact
cause
of
AD
is unknown,
but
genetic
and
environmental
factors
are
established
contributors.
AD
affects
more
than
six million
people
in
the
United
States
and
44 million
worldwide. The global economic burden of AD is expected to surpass $2.8
trillion by 2030.
Many molecular and cellular changes take place in the brain of a person with AD. Aβ plaques and
neurofibrillary tangles of tau protein
in the
brain are
the pathological
hallmarks
of the
disease. Several
pathological
or toxic
forms
of Aβ
and
tau seem
implicated
in the
disease process, leading to loss of neurons and neuronal connectivity underlying
the signs and symptoms of AD.
The Aβ protein involved in AD comes in several different pathological forms that accumulate in the brain parenchyma. Soluble species
of
Aβ
(e.g.,
oligomers)
can
directly
disrupt
normal
synaptic
and
neuronal
functions.
They
may
also
contribute
to
tau
pathology.
Research is ongoing to better understand how,
and at what stage of the disease, the various forms of Aβ influence AD.
Neurofibrillary tangles
are abnormal
accumulations of
a protein
called tau
that collect
inside neurons.
Healthy neurons
are supported
internally,
in part,
by structures
called microtubules,
which help
to guide
nutrients and
molecules from
the cell
body to
the axon
and
dendrites. In healthy neurons, tau normally binds to and stabilizes microtubules. In AD, abnormal chemical changes cause tau to detach
from microtubules
and to
stick to
other tau
molecules, forming
threads that
eventually
join to
form tangles.
These tangles
block
the
neuron’s transport system,
which harms the synaptic communication between neurons.
Converging lines of evidence suggest that AD-related brain changes may result from a complex interplay among Aβ proteins, abnormal
tau, and several other factors. It appears that abnormal tau accumulates in specific brain regions involved in memory.
Concurrently, Aβ
clumps
into plaques between
neurons. As the
level of Aβ reaches
a tipping point,
tau rapidly spreads throughout
the brain. In addition
to the spread of Aβ and tau, chronic inflammation and its effect on the cellular functions of microglia and astrocytes, as well as changes
to the vasculature, are thought to be involved in AD’s
pathology and progression.
In the last two years, the FDA has approved two different mAbs that target
Aβ for the treatment of AD.
Limitations of Current Therapies
Two
classes
of
small
molecules
approved
for
the
treatment
of
AD’s
symptoms
are
acetylcholinesterase
inhibitors
(“AChEIs”)
and
glutamatergic modulators. AChEIs are
designed to slow
the degradation of
the neurotransmitter acetylcholine,
temporarily compensating
for cholinergic
deficits.
Glutamatergic modulators
are designed
to block
sustained, low-level
activation of
the N-methyl-D-aspartate
(“NMDA”)
receptor,
without
inhibiting
the
normal
function
of
the
receptor
in
memory
and
cognition.
However,
these
therapeutic
products only address the symptoms of AD and do not modify or alter the progression
of the underlying disease.
Aducanumab, marketed under
the trade name Aduhelm,
is a mAb developed
by Biogen, Inc. (“Biogen”)
that targets aggregated
forms
of Aß. The FDA approved aducanumab in June 2021, making it the first approved immunotherapy for AD,
the first new FDA-approved
treatment since 2003 and, importantly, the first to receive accelerated approval based on a biomarker. By approving aducanumab
on the
basis of biomarker evidence, we believe the FDA set a precedent for developers
of anti-Aβ immunotherapies.
Despite the milestone
in the treatment
of AD that
aducanumab’s
approval represents,
the drug has
several limitations.
Approximately
one-third of patients experience ARIA-E related adverse events, which can manifest as symptoms ranging from headaches to confusion
to coma. In addition,
the drug must be administered
monthly via intravenous
infusion in healthcare facilities specifically
configured to
support
an
hours-long
infusion
process
with
healthcare
professionals
trained
to
administer
infusion
therapies,
creating
a
burden
for
patients and additional costs resulting from the complex administration
process. Because of the risk of developing ARIA-E, physicians
who prescribe
aducanumab
must titrate
dosing
and carefully
monitor
each patient
using magnetic
resonance
imaging (“MRI”).
This
process
is
costly
and
burdensome
The
combination
of
price,
side
effects,
extra
costs,
and
extra
administration
burden
highlight
the
challenges
of
mAbs.
The
Center
for
Medicare
&
Medicaid
Services
(“CMS”)
decided
not
to
cover
aducanumab,
leading
to
its
commercial failure.
Soon after the FDA’s
approval of aducanumab, Eli Lilly and Company (“Lilly”) announced that it would file for approval of its
anti-Aβ
mAb, donanemab, in 2022 on the basis of Phase 2 data.
In January 2023, the FDA declined accelerated approval
of donanemab due to
an insufficiently
sized safety database
in its Phase
2 trial; however,
Lilly has announced
its intention to
file for approval
later in 2023
on the basis of Phase 3 data.
In January 2023, the FDA granted
accelerated approval to lecanemab, another mAb targeting Aβ,
jointly developed by Biogen and Eisai
Co., Ltd. (“Eisai”).
Over 12.5% of patients on lecanemab
experience ARIA-E, and physicians who
prescribe lecanemab must monitor
each patient using
MRI.
Lecanemab must be
administered every two
weeks as
an intravenous
infusion in healthcare
facilities specifically
configured to
support an hours-long
infusion process with
healthcare professionals
trained to
administer infusion
therapies, creating a
burden for patients and additional costs resulting from the complex administration process.
Biogen and Eisai have announced that their
wholesale
acquisition
cost
(“WAC”)
launch
price
in
the
U.S.
will
be
$26,500
for
the
drug
product
only,
which
does
not
include
administration and
ongoing monitoring
costs.
It remains to
be seen whether
and to what
extent CMS will
reimburse treatment
of AD
patients with lecanemab.
We
believe the
above examples
signify not
only the
validity of
targeting
toxic forms
of Aβ
as a
target
in AD,
but also
the practical
limitations of mAbs, which so far despite approval have remained unable to
serve a population with high unmet need.
Our Product Candidate: UB-311
We are developing a novel product candidate, UB-311, as a potential disease-modifying therapy for the treatment of AD.
We completed
a Phase 1 open label trial (V118-AD) and a Phase 2a randomized, double-blinded, placebo-controlled
trial (the “Phase 2a Main Trial”).
We believe that
UB-311 may offer
several differentiators versus the approved mAbs, including
the preferential targeting of aggregated
Aβ
oligomers
over
monomers,
longer
durability
suggesting
greater
overall
exposure,
or
area
under
the
curve
(“AUC”),
improved
convenience in dosing and administration, a safety and tolerability profile
comparable to placebo with potentially limited ARIA-E, and
an ability
to broaden
patient access
with greater
cost-effectiveness
and
scalability.
No signs
of ARIA-E
related adverse
events were
reported in the Phase
2a Main Trial despite
more than two-thirds of
the study participants being
APOE4 carriers.
Post hoc
exploratory
analyses of UB-311’s Phase 2a clinical data also suggest that quarterly dosing of UB-311 might slow cognitive decline in some subjects
by up to 50%
when compared to placebo,
as measured by Clinical
Dementia Rating Sum of
Boxes (“CDR-SB”), Alzheimer’s
Disease
Assessment Scale - Cognitive Subscale (“ADAS-Cog”), Alzheimer’s Disease Cooperative Study - Activities of Daily Living (“ADCS-
ADL”) and Mini-Mental State Examination
(“MMSE”) scores, all clinically validated
measures of cognition or function in
AD. In this
small Phase 2a study, these were secondary measures, as the study was not designed to assess cognitive decline. Although our
Phase 2a
trial was a proof-of-concept
study, not
powered to demonstrate significant
changes in any endpoint,
we believe the data are
suggestive
of potential therapeutic efficacy and may lead to clinical benefit.
UB-311 is
formulated for
intramuscular administration
on a dosing
schedule of
every three or
six months.
In addition,
manufacturing
costs lower
than
those
of
mAbs
may
support
meaningfully
lower
pricing
and
access to
larger
patient
populations.
We
believe
such
advantages of UB-311,
if ever approved
for use, could
position it not only
to disrupt the
emerging mAb-based
treatment for early
AD
as both
a
monotherapy
and
adjuvant
therapy
to
existing
mAbs,
but
also
to
open
up a
new paradigm
for
prevention
of AD
(i.e.,
for
potential prophylactic use to delay or interrupt early disease onset).
Clinical Development
We
completed a randomized,
double-blind, placebo-controlled
Phase 2a trial of
two dosing regimens
of UB-311
in subjects with mild
AD. The primary objective of this trial
was to assess safety and immunogenicity. Secondary measures for exploratory analyses included
assessment of changes in the
CDR-SB, ADAS-Cog, ADCS-ADL and MMSE
scales, along with amyloid PET
imaging evaluations. This
study was intended
for proof-of-concept, so
no statistical hypothesis
testing was planned,
and exploratory analyses
were performed to
evaluate trends as described below.
A total of 43
patients diagnosed with
mild AD were randomized
(1:1:1) to one of
three treatment groups: UB-311
quarterly dosing, or
“Q3M,” receiving a total
of seven doses, UB-311
every six-month dosing, or
“Q6M,” receiving a total of
five doses, and placebo. The
Q3M cohort,
which included
14 subjects,
received an
initial regimen
of three
300μg injections,
one injection
at the
trial start,
one at
week 4 and the final at week 12,
followed by four single 300μg booster doses administered in
three-month intervals over the subsequent
12 months. The Q6M cohort,
which included 15 subjects, involved the
same initial schedule of three
300μg injections administered over
the first
12-week period,
followed by
the administration
of two
300μg booster
doses given
at six-month
intervals. The
placebo group
comprised 14 subjects.
In the
Phase 2a
Main Trial,
UB-311 generated
an immune
response as
measured by
ELISA in
28 out
of 29
subjects. Across
this trial
and the
Phase 1
trial, 47
of the
48 subjects
(98%) that
received
UB-311
registered an
immune response
(which we
define as
a 95%
confidence interval separation from
placebo) as measured by ELISA.
The intramuscular injection produced
appreciable antibody titers
against
Aβ.
The
antibody
titers
remained
elevated
through
the
trial’s
duration.
Moreover,
in
vitro
studies
demonstrate
that
UB-311
generated serum antibody titers against Aβ oligomers, comparable to or greater than those measured after maximum
therapeutic dosing
with an approved mAb. We
believe these results underscore the significant promise of our therapeutic
approach.
Generation of Antibodies Repeatable Across Clinical Studies, and Antibodies Bind Target
with High
Specificity as Compared to Monoclonal Antibody
Across Phase
1 and
Phase 2a
trials, UB-311
generated an
over 95%
response rates
in subjects.
In a
comparative in
vitro study
with
aducanumab, we observed that UB-311
elicited titer levels comparable to mAbs.
Phase 1
and Phase
2a trials
of UB-311
demonstrated a
repeatable anti-Aβ
titer response.
In an
in vitro
comparison of
titers in
serum
from
subjects dosed
with UB-311
versus pre
-immune serum
spiked
with aducanumab
at the
published
C
max
concentration
following
10mg/kg administration
(183μg/mL), antibodies
generated by
UB-311
bond to
Aβ oligomers
similarly to
or greater
than the
mAb as
measured by EIA.
Exploratory analyses of clinical and
imaging measures were conducted. Trends of changes in
disease assessment scores suggest slowing
of cognitive
decline. Changes
in the
CDR-SB assessment
at week
78 of
the Phase
2a Main
Trial showed
a 48%
slowing in
cognitive
decline from baseline relative to the placebo group; changes
in ADAS-Cog measurements showed a 50% slowing in decline
relative to
placebo and showed a 54% slowing in decline in ADCS-ADL relative to placebo.
UB-311 Phase 2a Suggests Slowing of
Cognitive Decline in Mild Alzheimer’s Subjects (mITT)
UB-311 Phase 2a secondary endpoint data suggested possible slowing of clinical decline by up to 50% in subjects with mild AD. These
are exploratory analyses,
and no statistical inference was performed.
In addition,
functional
MRI suggested
marginal
increases in
connectivity
in some
brain regions
and
PET imaging
showed a
modest
reduction
in amyloid
plaque burden
as measured
by standard
uptake value
ratio.
We
believe these
clinical and
biomarker
endpoints
suggest a causal
effect of UB-311 impacting the
underlying molecular pathology of
the disease and
slowing of clinical
decline. Together,
these findings offer some evidence that UB-311
may exhibit disease-modifying effects.
UB-311 Phase 2a Analysis of Clinical and
Biomarker Endpoints Suggests Overall Disease-Modifying Effect
Compared to
placebo, UB-311
low-frequency dosing
and high-frequency
dosing demonstrated
slowing of overall
disease progression
in an independent analysis conducted by Pentara Corporation.
The Phase
2a Main
Trial
recapitulated
the safety
and tolerability
profile of
UB-311
that was
observed in
an earlier
Phase 1
trial. No
subjects
discontinued trial
participation due
to a treatment
emergent adverse
effect (“TEAE”).
No ARIA-E
was observed
in quarterly
MRI
scans.
Aβ-related
imaging
abnormalities
related
to
microhemorrhages
or
hemosiderosis
seemed
similar
between
the
UB-311
treatment groups and placebo group.
In the Phase 2a Main Trial,
six serious adverse events were
observed, including three in the Q6M
dosing arm and one in the Q3M dosing arm. None were deemed related or likely related
to UB-311.
Titers generated by UB-311 ramped up gradually over the course of several months, as opposed to titers following the administration of
anti-Aβ mAbs, which reach C
max
very rapidly.
We believe this led to the relatively low rates of ARIA-E observed in our clinical studies
of UB-311 as compared to those observed in
clinical studies of mAbs. No meningoencephalitis was observed.
Summary of Safety Data from UB-311
Phase 1 and Phase 2a Trials
As depicted in
the table above,
UB-311 was well tolerated
across Phase 1 and
Phase 2a trials.
The most common
TEAE was site
injection
reactivity,
and there were no
discontinuations or withdrawals due to TEAEs
An
extension
of
the
Phase
2a
Main
Trial,
the
Phase
2a
LTE
trial,
involved
the
continued
participation
by
of
the
subjects
who
participated in
the Phase
2a Main
Trial for
an additional
78 weeks.
The objective
of the Phase
2a LTE
trial was
to assess
the longer-
term tolerability of extended treatment
with UB-311. Following a
non-treatment period of up to 26
weeks, participants in the LTE
trial
were segmented
into two
groups: those
previously on
drug in
the Phase
2a Main
Trial would
receive two
placebo doses
and a
single
300μg priming dose at the start of
the LTE
treatment period and those previously on placebo
would receive three 300μg priming doses
over
an
initial
12-week
period.
Due
to
an
error
by the
CRO responsible
for
administering
blinded
placebo
and
active doses
to
trial
subjects, which reduced the confidence of subsequently collected data, we decided to discontinue the LTE
trial, having determined that
we had collected sufficient data
on UB-311’s tolerability and immunogenicity. Analysis of the data collected before
trial discontinuation
indicated that
UB-311
was well
tolerated, with
return of
anti-Aβ antibody
titers to
peak levels
achieved after
a gap
of as
long as
months between
doses and
a continued
trend toward
evidence of
disease modification.
In the
Phase 2a
LTE
trial, six
serious adverse
events were observed. One case of ARIA-E was observed in the Phase 2a LTE
trial in a subject 10 weeks after receiving a dose of UB-
311,
which was
clinically not
significant according
to the
study investigator.
No serious
adverse event
was deemed
related or
likely
related
to
UB-311,
and
all
such
events
were
recovered/resolved
by
the
end
of
the
study.
Exploratory
analyses
of
the
clinical
data
generated in this portion of the trial suggested that subjects in the treatment cohorts showed sustained improvement, as measured by the
change in CDR-SB from baseline.
We completed
an open-label Phase 1 trial of UB-311 in 19 subjects with mild-to-moderate
AD between the ages of 51 to 78 years. The
primary
objective
of the
trial was
to
assess safety
and
tolerability.
Secondary
measures
included
UB-311
antibody
titers along
with
changes in
the ADAS-Cog, MMSE
and the Alzheimer’s
Disease Cooperative
Study-Clinician’s
Global Impression
of Change disease
assessment ratings.
The 24-week, open
label trial was
designed as three
intramuscular injections of
300μg, the first
dose administered
at the start of the trial, a second at week four and a third at week 12. An observation
study included additional follow-up visits up to 48
weeks after
the first
injection to
assess the long
-term immunogenicity
and safety
of UB-311.
In this
trial, UB-311
was well tolerated,
with the most common TEAE being injection site redness
and swelling. No TEAE resulted in the discontinuation
or withdrawal of any
study participant in the trial.
In the Phase 1
trial, one serious adverse
event was observed: a
case of herpes zoster
deemed unlikely related
to UB-311.
Anti-Aβ
antibody
titers,
recorded
among
all
study
participants,
approached
a
100-fold
increase
during
weeks
to
after
administration of the
third 300μg
injection at
week 12,
demonstrating the ability
of UB-311 to
elicit a
strong immune response.
Durability
of the response was reflected in elevated anti-Aβ antibody titers measurable
well beyond the 24-week duration of the trial.
In a Western blot assay,
we observed that UB-311 elicited antibody titers specific to toxic forms of Aβ with minimal binding to normal,
non-plaque-causing, forms of Aβ.
Pre-Clinical Data
Pre-clinical trials of
UB-311 included
multiple antibody titer
studies involving mice,
guinea pigs, macaques
and baboons. Application
of
specific
transgenic
animal
models
was
intended
to
emulate
both
therapeutic
and
preventive
treatment
paradigms.
These
trials
demonstrated that UB-311 generated high antibody titers across multiple species that
selectively target aggregated Aβ and both slow the
accumulation of and reduce existing Aβ pathology.
We also observed
the ability of UB-311 induced antibodies to
penetrate the BBB, as well as preferentially bind to toxic Aβ aggregates.
In our study of UB-311 in cynomolgus monkeys, we tested five escalating dose levels of UB-311: 0μg, 30μg, 100μg, 300μg and 900μg.
Each dose
level was administered
on weeks zero,
three and six
by intramuscular
injection and the
cerebrospinal fluid
(“CSF”): serum
ratio of
UB-311
calculated on
week eight
(two weeks
after the
last dose).
This analysis
concluded
that UB-311
antibody titers
were
detectable in the CSF in a dose-dependent manner with CSF: serum antibody ratios of 0.1% to 0.2%, ratios similar
to published data for
mAbs in development for neurodegenerative diseases.
UB-311 Shows Dependent Response in CSF in
Pre-Clinical Study
The above graphs
demonstrates that UB-311
induces enough
antibodies for BBB
penetration, across
five dose levels
in a pre
-clinical
study with cynomolgus monkeys.
Development Plans for UB-311
We have completed
a pre-Phase 3 meeting with the FDA and obtained guidance on the further development of
UB-311.
Subject to the
FDA’s
review, we
plan to conduct
a randomized, double-blinded,
placebo-controlled Phase
2b efficacy trial
of UB-311
in approximately
900 subjects
with early
AD. The
Phase 2b
trial will
include subjects
diagnosed
with early
AD with
MMSE scores
between 22 and 30. We will also screen to enrich
for positive amyloid PET, positive tau PET and positive
plasma p-tau181, in quantities
consistent with an early AD population. Subjects in the active arm will receive UB-311 as three 300μg priming
doses at weeks 0, 4 and
12, followed by
four 300μg booster
doses every three
months thereafter.
The primary objective
of this trial will
be to assess
the effect
of UB-311
on the
decline of
cognitive
and functional
performance as
measured by
the CDR-SB
over the
78-week
treatment period.
Secondary endpoints
will include
the changes
from baseline
measurements of
other validated
clinical outcomes
scores. The
effect of
UB-311 on specific AD biomarkers will also be evaluated, including neurofilament light arm (“NfL”), p-tau, total-tau, brain amyloid as
measured by PET,
Aβ-40 and Aβ-42, hippocampal volume and whole brain volume
as measured by MRI, and an assessment of certain
CSF biomarkers.
We
plan to
collaborate the
development of
UB-311
with a
strategic partner
and plan
to initiate
the Phase
2b trial
in
collaboration with such strategic partner.
Assuming positive
results in the
Phase 2b trial,
we intend to
initiate (with the
same partner) a
Phase 3 trial
in subjects with
early AD.
The Phase 3 program may involve one, but more likely two, clinical trials,
conducted at multiple international sites. Assuming
positive
results in the Phase 2b trial, we may also seek FDA approval under the accelerated approval pathway, which allows for earlier approval
of drugs that treat
serious conditions, and that
fill an unmet medical
need based on a
surrogate endpoint. If
such Phase 2b trial
and the
Phase
program
are
successful,
they
may
together provide
sufficient
data
to enable
BLA filing
with
the FDA,
but
there
can be
no
guarantee that these trials
will lead to positive data
or that we will not need
to conduct additional trials or
studies prior to a BLA
filing
with the FDA.
We believe UB-311
could also have a potential therapeutic benefit in a prophylactic setting for the prevention of AD in at-risk subjects.
We may seek to
further develop UB-311 for the prevention of AD.
UB-312
An Overview of Parkinson’s
Disease
Parkinson’s disease currently affects approximately one million people in the United
States and more than
10 million people worldwide.
The economic
burden of PD
is estimated at
$52 billion in
the United States
alone. PD is
a chronic
and progressive neurodegenerative
disorder that
affects predominately
dopamine-producing (“dopaminergic”)
neurons in the
substantia nigra
area of the
brain. Although
the
mechanisms
responsible
for
the
dopaminergic
cell
loss in
PD
are
not
fully
elucidated,
several
lines
of
evidence
suggest
that
α-
synuclein plays a central role in the neurodegenerative process.
Alpha-synuclein
is
a
protein
highly
expressed
in
neurons,
mostly
at
presynaptic
terminals,
suggesting
a
role
in
synaptic
vesicle
trafficking,
synaptic
functions
and
in
regulation
of
neurotransmitter
release
at
the
synapse.
Duplications,
point
mutations
or
single
nucleotide polymorphisms in
the gene encoding
α-synuclein are known
to cause
or increase the
risk of developing
PD or
LBD. Mutations
have been shown to
primarily alter the secondary
structure of α-synuclein, resulting
in misfolded and aggregated
forms of α-synuclein
(i.e., pathological forms). While
mutations in the
α-synuclein gene are rare,
aggregates of α-synuclein in
the form of
Lewy bodies (“LB”)
and Lewy neurites are
common neuropathological hallmarks
of both familial and
sporadic PD, suggesting a
key role of α-synuclein
in
PD
neuropathogenesis.
Moreover,
preformed
fibrils
of
α-synuclein
can
induce
the
formation
of
LB-like
inclusions
and
cellular
dysfunction in cell-based
assays as
well as
in pre-clinical animal
models. Together, these data strongly
suggest that targeting
pathological
forms of α-synuclein has therapeutic potential.
Limitations of Current Therapies
Most approved therapeutic
products are aimed
at compensating for
the dopaminergic deficits
and only provide
symptomatic relief. While
existing products can indeed provide meaningful symptomatic relief, they often produce significant side effects and lose
their beneficial
effects overtime. On the other hand, there are no currently approved
disease-modifying therapeutics for PD.
Immunotherapy approaches
targeting α-synuclein
have been shown
to ameliorate
α-synuclein pathology
as well
as functional
deficits
in mouse models
of PD and
are now being investigated
in the clinic. These
include passive immunization
therapy using humanized
or
human anti-α-synuclein mAbs or
active immunization therapy aimed
at inducing a humoral response
against pathological α-synuclein.
These approaches have thus far
demonstrated good tolerability profiles in
Phase 1 clinical trials. A Phase 2
clinical trial in PD subjects
with prasinezumab, a
mAb that
preferentially recognizes oligomeric
and fibrillar forms
of α-synuclein, suggested
reduced motor function
decline in subjects as compared with placebo; however, this Phase 2 trial
did not meet its primary or secondary endpoints.
Further trials
of prasinezumab
in different
patient
populations
remain ongoing.
Even if
approved
as therapeutic
for PD,
we expect
prasinezumab
would be burdened by the general challenges of cost and administration.
Our Product Candidate: UB-312
We are
developing UB-312, an anti-α-synuclein
product candidate, as a treatment
for PD and other synucleinopathies.
We believe
that
UB-312 has
the potential
to be
established as
a disease-modifying
treatment modality
for PD,
and possibly
for LBD
and MSA.
Pre-
clinical data indicated that UB-312 elicits
antibodies that preferentially recognize pathological forms
of a-synuclein and improves motor
performance in
mouse models
of α-synucleinopathies.
Preliminary clinical
data from
our ongoing
Phase 1
trial indicate
that UB-312
elicits antibody
levels sufficient
to cross
the BBB (i.e.,
detectable in
CSF). In
2018, the
European Medical
Agency (“EMA”)
granted
UB-312 orphan designation for MSA.
Clinical Development
We have completed
Part A of a randomized, placebo-controlled, double-blind, dose-escalating,
single- center Phase 1 clinical trial of
UB-312 in which 50 healthy volunteers between the ages of 40 and
85 years received three intramuscular doses of either UB-312 or
placebo. During this 44-week Part A trial, subjects received three doses
(on weeks 1, 5 and 13) with escalating doses ranging from
40μg to 2,000μg. Immunogenicity was evaluated by measuring changes
in serum anti-α-synuclein antibody concentrations during the
course of the study.
Data from Part A indicated that UB-312 is generally well tolerated, with no significant safety
findings. Data from
Part A also suggested that UB-312 is highly immunogenic, with all individuals
in the 300μg/dose group showing detectable anti-α-
synuclein antibodies in both serum and CSF samples. CSF: serum ratios
appeared similar to those observed in UB-311
non-human
primate studies (approximately 0.2%), and to those observed in clinical trials of
mAbs. Based on these results, we are now evaluating
two dosing regimens of UB-312 in Part B of the Phase 1 trial: three doses of 300μg,
and one dose of 300μg followed by two doses of
100μg. Part B, which began enrollment in January 2022, is evaluating
UB-312 and placebo in 20 PD subjects. In addition to the
endpoints evaluated in Part A, an exploratory endpoint involving a clinical
assessment using the Movement Disorder Society -
Unified Parkinson’s Disease Response
Score will be used.
The Michael J. Fox Foundation (“MJFF”) is funding a 2-year collaborative project
between Vaxxinity,
the Mayo Clinic, and
University of Texas Houston
using CSF collected from individuals enrolled in Part B of the Phase 1 trial of
UB-312.
This work is
evaluating the potential of protein misfolding cyclic amplification (“PMCA”) to
assess target engagement and will also aim to
characterize the anti-α-synuclein antibodies produced after immunization
with UB-312. Demonstrating whether pathological forms of
α-synuclein are detectable in the CSF of PD subjects, and whether UB-312
-derived antibodies alter CSF levels of α-synuclein seeds
measured by PMCA, might provide a meaningful surrogate marker of
target engagement.
UB-312 Demonstrated Dose-Dependent Response in Phase 1 Part A Trial
Including Penetration of Titers into CSF
Across
four cohorts,
UB-312 demonstrated
a dose-dependent
immunogenic
response.
Antibodies generated
by UB-312
were
readily
detectable in CSF,
indicating BBB penetration with a CSF: serum ratio of approximately
0.2%.
We paused dosing in high dose cohorts in Part A
of the trial after one
subject developed an adverse effect (“AE”) of special
interest (i.e.,
Grade 3 flu-like symptoms) shortly after
receiving the second 1000μg dose of
UB-312. Although this AE was
transient and not a serious
adverse event (“SAE”),
data collected until
that point suggested
that the 100μg
and 300μg dose levels
were well tolerated
and yielded
relatively high anti-α- synuclein titers. During the evaluation of the AE, the COVID-19 pandemic was becoming increasingly pervasive
throughout Europe, increasing
the risk to healthy
volunteers participating in
the trial. We
therefore did not resume
dose escalation and
selected 100μg and 300μg doses for Part B in PD subjects.
An end-of-treatment analysis of the ongoing Part B of
the Phase 1 trial in PD
patients was completed in the fourth quarter of 2022.
This
analysis has shown UB-312
to be well tolerated and immunogenic,
with anti-α-synuclein antibodies observed
in the serum and CSF of
PD patients.
Three
serious adverse
events were
observed
in Part
B, which
remains
blinded,
meaning
it remains
unknown
in which
treatment group they occurred (UB-312 or placebo).
Pre-Clinical Data
We
have
conducted
pre-clinical
studies
of
UB-312
across
multiple
animal
species,
including
mice
and
guinea
pigs.
These
trials
demonstrated
that our
product candidates,
including UB-312,
generated high
antibody titers
to α-synuclein
across animal
species. In
addition, in vitro
studies provided evidence
that anti-α-synuclein antibodies
produced after UB-312
immunization are highly
selective
to pathological α-synuclein, and do not bind to normal α-synuclein.
UB-312 Demonstrates Selective Binding Towards
α-Synuclein Fibrils and Ribbons
This in vitro slot blot analysis of sera
from guinea pigs dosed with UB-312
demonstrates that antibodies induced by UB-312 bind to
α-
synuclein fibrils
and ribbons,
the toxic
forms of
α-synuclein believed
to underlie
PD, more
strongly
than they
bind to
monomers, the
normal form of α-synuclein
in the body.
We
believe this preference
will allow UB-312 antibodies
to avoid altering normal functions
of
α-synuclein and selectively neutralize the toxic species
(Nimmo et al., Alzheimers Res Ther.
2020;12:159).
Anti-α-synuclein
antibodies
produced
by
UB-312
immunization
specifically
bind
pathogenic
species
of
α-synuclein,
including
aggregated fibrils,
oligomers and
ribbons, while
demonstrating low
affinity for
the monomer.
This species
selectivity contrasted
with
Syn-1, a commercial research mAb used as a control, which failed to differentiate
the toxic variants.
In an in vivo study of UB-312 using a transgenic mouse model of PD, we demonstrated prevention of motor deficits in treated animals,
which was associated
with significant reduction
of brain oligomeric
forms of α-
synuclein. We
believe this data
supports the potential
of UB-312 to prevent behavioral motor deficits and reduce toxic forms of
α-synuclein.
UB-312 Demonstrates Improvement in Motor Symptoms in Pre-Clinical
Study
UB-312
immunization
in
a
transgenic
mouse
model
(α-synuclein
overexpression)
demonstrates
improvement
in
beam
test
and
wire
hanging test, and reductions in α-synuclein oligomers
in various brain regions (Nimmo et al., Acta
Neuropathol. 2022;143:55-73).
We
have also observed
by immunohistochemistry
that serum antibodies
from guinea
pigs dosed with
UB-312 can
bind to aberrant
α-
synuclein in PD, LBD and MSA brain sections.
Finally,
antibodies
derived
from
UB-312
showed
no
off-target
binding
on
human
tissue
sections.
UB-312-treated
transgenic
mice
showed no signs of neuroinflammation,
and GLP toxicity studies in rats indicated a
good non-clinical safety and tolerability profile. We
believe
our
preclinical
data
suggest
that
UB-312
may
potentially
induce
a
well-tolerated,
strong
and
specific
IgG
response
against
pathological forms of
a-synuclein
in PD subjects.
Development Strategy
While certain portions of this Phase 1
trial were interrupted by the COVID-19 pandemic, Part
A in 50 healthy volunteers was
completed
in 2020, and we began dosing
PD subjects in Part B in
early 2022. In Part B
we have included exploratory endpoints potentially relevant
to PD, such
as total and
free α-synuclein
in serum and
CSF,
in addition to
T-cell
ELISpot analyses and
antibody characterization.
We
expect to complete Part B in mid-2023.
Other Neurodegeneration Programs
We are
actively engaged in additional
initiatives related to neurodegenerative
disorders. One of these programs
focuses specifically on
tau-protein pathology and
its involvement in
diseases such
as AD
and related tauopathies.
We believe that targeting different
pathological
tau variants simultaneously
may enhance treatment
efficacy,
which will most
likely require targeting
multiple epitopes concomitantly.
Using
our
Vaxxine
Platform,
we
have
constructed
multi-epitope
product
candidates
that
have
successfully
demonstrated
immunogenicity and in vitro activity in various models.
We
are also investigating
the use of a
multi-target of product
candidates targeting
Aβ, α-synuclein, and
tau, as multiple proteins
could
be implicated in neurodegenerative diseases.
Next Wave Chronic Disease
Treatments
Pathological
endogenous
proteins
(“self-proteins”)
drive
a
wide
range
of
chronic
diseases.
While
mAbs
and
small
molecules
have
provided
therapeutic
benefits in
the treatment
of these
diseases, inherent
limitations of
these drug
classes have
restricted
access and
adherence to these treatment modalities globally.
Our next
wave chronic
disease program
is initially
focused on
migraine and
hypercholesterolemia. Monoclonal
antibodies have
been
approved in both therapeutic areas; however,
their high costs have limited access and generally limited use to relatively
severe disease.
We aim to develop
product candidates in these therapeutic areas that could offer
similar efficacy as mAbs at a meaningfully lower
cost
and
improved
administrative
convenience
to
patients,
thereby
potentially
allowing
for
access
to
broader
patient
populations
versus
mAbs, and greater efficacy than small molecules.
UB-313
An Overview of Migraine
Migraine
is
a
chronic
and
debilitating
disorder
characterized
by
recurrent
attacks
lasting
four
to
hours
with
multiple
symptoms,
including
typically one
-sided, pulsating
headaches
of moderate
to severe
pain
intensity
that are
associated with
nausea
or vomiting,
sensitivity to sound
and sensitivity
to light. Over
90% of the
patients are unable
to function
normally during
a migraine attack.
Many
experience comorbid conditions such as depression, anxiety and insomnia.
The Migraine Research Foundation ranks migraine
as the world’s third most prevalent illness.
The disease affects 39 million individuals
in the
United States
and approximately
one billion individuals
globally.
Patients generally
suffer from
chronic or
episodic migraines.
Chronic migraine is defined as 15 headache days or more
per month, while episodic migraine is defined as fewer than 15
headache days
per month. Both acute and prophylactic treatments are used to address
chronic and episodic migraines.
CGRP’s
Role in Migraine
CGRP
is
a
neuropeptide
found
throughout
the
body,
including
in
the
spinal
cord.
CGRP
activates
CGRP
receptor
in
the
trigeminovascular system, which is located within pain-signaling pathways, intracranial arteries and mast cells.
Activation of the CGRP
receptor has been demonstrated to induce migraine in migraineurs. Multiple anti-CGRP therapies have been approved for the treatment
of migraine.
Limitations of Current Therapies
Since the early 1990s, there has been minimal
improvement in the standard treatment for migraine. Treatments are characterized as elite
acute or
prophylactic. Triptans
are the
current first-line
prescription therapy
for the
acute treatment
of migraine,
with over
15 million
annual prescriptions written in the United States.
Prophylactic medications approved for
migraine include beta
blockers, such as
propranolol, topiramate, sodium valproate and
botulinum
toxin,
branded
as
Botox.
However,
many
of
these
medications
provide
limited
clinical
benefit.
In
addition,
they
are
often
not
well
tolerated, with AEs such as cognitive impairment, nausea, fatigue and sleep disturbance.
Therapeutics targeting
the CGRP pathway
represent an
emerging treatment
paradigm. Three
anti-CGRP mAbs
were approved
by the
FDA in 2018
for the prophylactic
treatment of migraine in
adults. These mAbs,
erenumab-aooe (Aimovig), fremanezumab-vfrm (Ajovy)
and
galcanezumab-gnlm
(Emgality),
are
all
administered
subcutaneously.
Their
side
effects
are
generally
mild,
including
pain
and
redness at the
site of injection,
nasal congestion
and constipation.
Studies show that
these mAbs
reduce the
number of headache
days
by 50% or more in approximately 50% of patients. Sales for marketed
and clinical-stage anti-CGRP therapeutics are projected to reach
approximately $7.4 billion by 2026. Despite the
commercial success that this class represents,
many of these treatments require frequent
administration, creating inconvenience for patients.
Our Product Candidate: UB-313
We are
developing UB-313 as a prophylactic
treatment initially for chronic migraine.
We believe
UB-313 has the potential to improve
upon the current treatments for
chronic migraine in multiple aspects:
we expect UB-313 will
require administration quarterly to annually
in
contrast
to
monthly
to
quarterly
for
currently
marketed
mAbs
and
frequent
administration
for
small
molecules.
Furthermore,
a
potential long durability of
response may offer physicians
and patients the option to
administer UB-313 in an
office setting, which can
potentially improve adherence. We
expect the cost of UB-313 treatment, if approved, to be lower than that of
mAbs for migraine.
Pre-Clinical Studies
We
have completed
both in
vitro and
in vivo
pre-clinical studies
of UB-313.
We
used an
in vivo
proof-of-concept capsaicin-induced
dermal blood flow model in mice to demonstrate target engagement of the marketed CGRP-targeting mAbs. In this model, we
observed
similar rates in reduction of dermal blood flow as fremanezumab in
a head-to-head comparison against fremanezumab.
UB-313 Reduces Capsaicin-Induced Dermal Blood Flow in Mice
**Dunnett’s:
Ctl vs Vac
1p < 0.05; Ctl vs Vac
2 p < 0.05
In this preliminary study,
dermal blood flow measurements were taken 17 weeks following
the first dose of UB-313. There were 3 to 11
animals per treatment group. Reduced
dermal blood flow indicates target engagement with CGRP.
UB-313 reduced dermal blood flow
versus the control with an approximately
similar magnitude to fremanezumab,
which was administered 24 hours prior to the
capsaicin
test.
We observed
similar results in a capsaicin / dermal blood flow model in rats, comparing
a rat version of UB-313 head-to-head against
galcanezumab.
Our
in vivo
studies of
UB-313 have
involved multiple
animal species.
High immunogenicity
was observed
in all
pre-clinical species
tested. Characterization of
the antibodies produced
after immunization with UB-313
indicated that they have
limited, if any,
off-target
potential, are
primarily IgG1 and
IgG2, potently bind
to CGRP and
potently block
CGRP activity
in vitro
. We
refer to
potency as
the
amount
of
drug
required
to
produce
a
pharmacological
effect
of
given
intensity
and
is
not
a
measure
of
therapeutic
efficacy.
In
a
comparison
of
binding
affinities
with
fremanezumab
and
galcanezumab,
UB-313-induced
IgG
antibodies
demonstrated
comparable
binding affinities.
UB-313 Demonstrated Induced Antibodies Comparable to Approved
CGRP mAbs
We evaluated UB-313 formulations with two different adjuvants in comparison to fremanezumab and galcanezumab; both formulations
demonstrated comparable IgG to these two approved CGRP mAbs.
Additional
in vitro
studies using human SK-N-MC cells
demonstrated that UB-313-induced IgG antibodies also
had comparable
in vitro
activity to CGRP-targeted mAbs.
UB-313 Induced IgGs Have Comparable In Vitro
Activities to Marketed CGRP mAbs
In a cyclic
AMP (“cAMP”) production
assay conducted in
human SK-N-MC cells,
antibodies taken
from the
serum of guinea
pigs 15
weeks following the first injection of UB-313 demonstrated similar proper
ties to two approved CGRP mAbs.
Moreover, the binding potency of
UB-313 was determined to be comparable to these mAbs.
UB-313 Induced IgGs Demonstrate Comparable Binding Potencies to Marketed
CGRP mAbs
Antibodies taken from the serum of guinea pigs 15 weeks
following the first injection of UB-313 demonstrated similar
binding potencies
to two approved CGRP mAbs as measured
by ELISA.
Development Strategy
A single-site,
randomized, placebo-controlled,
first-in-human Phase
1 clinical
trial is
underway in
40 healthy
volunteers, designed
to
measure the
safety,
tolerability,
and immunogenicity
of multiple priming
dose regimens of
UB-313, was
initiated in September
2022.
The study
is also
measuring dermal
blood flow
following a
capsaicin
challenge at
multiple timepoints,
a well-established
model for
CGRP
target
engagement
and efficacy
in
the preventive
treatment
of
migraine.
The
trial is
fully
enrolled,
and
we
expect a
topline
readout in the first half of 2023.
VXX-401
An Overview of Hypercholesterolemia
Hypercholesterolemia is the presence
of high levels
of cholesterol in
the blood and
typically results from
a combination of
environmental
and genetic
factors. Cholesterol
is transported
in the
blood plasma
within particles
called lipoproteins.
Lipoproteins are
classified by
their density: very
low-density lipoprotein, intermediate
density lipoprotein, LDL
and high-density
lipoprotein (“HDL”). All
lipoproteins
carry
cholesterol,
but
elevated
levels
of
lipoproteins
other
than
HDL,
particularly
LDL,
are
associated
with
the
development
of
cardiovascular
disease.
Approximately
2 billion
people
worldwide
have
elevated
levels
of LDL,
potentially
putting
them at
risk
for
cardiovascular disease.
Although hypercholesterolemia itself is asymptomatic, elevation of serum
cholesterol can over time lead to atherosclerosis. Over many
years, elevated
serum cholesterol
contributes to
formation of
atheromatous plaques
in the
arteries. These
plaque deposits
can in
turn
lead to progressive narrowing of the involved arteries. Smaller plaques may rupture and cause a clot to form and obstruct blood flow. A
sudden blockage of a coronary artery may result in a heart attack.
A blockage of an artery supplying the brain can cause a stroke. If
the
development
of
the
stenosis
or
occlusion
is
gradual,
blood
supply
to
the
tissues
and
organs
slowly
diminishes
until
organ
function
becomes impaired.
PCSK9 is mainly expressed in the liver and, to a lesser extent, in the small intestine, kidney,
pancreas and the CNS. The LDL receptors
(“LDLR”) at
the cell
surface bind
and initiate
ingestion of
LDL particles
from extracellular
fluid into
cells, leading
to a
reduction in
serum LDL
levels. PCSK9
protein plays
a major
regulatory role
in cholesterol
homeostasis, mainly
by reducing
LDLR levels
on the
plasma membrane,
which leads
to decreased
metabolism of
LDL by
the cells.
Inhibition of
PCSK9 prevents
this reduction
in LDLR
levels on the plasma membrane, and in consequence the cellular process of
internalizing LDL particles, resulting in a reduction of LDL.
Limitations of Current Therapies
Statins are the most
commonly used drugs to treat
hypercholesterolemia and result in a
pronounced reduction in LDL. The
unambiguous
benefits of
statins, together
with the
prevalence of
coronary heart
disease, have
made statins
the most
highly prescribed
drug class
in
developed countries.
However,
many patients
are unable
to achieve
targeted
lipid levels
despite intensive
statin therapy.
In addition,
continued patient adherence to statin
therapy,
which is necessary to maintain
a lower risk for cardiac
events, is variable but considered
to be low - as low as 30% to 40% after two years in persons following a myocardial infarction. Importantly, at the transcriptional level,
statins
up-regulate
not
only
LDLR,
but
also
PCSK9,
causing
the
so-called
paradox
of
statin
treatment.
Although
statins
induce
a
beneficial increase in LDLR, they also increase PCSK9, thus leading to LDLR degradation, which indirectly increases LDL, mitigating
the overall LDL reduction that
statins otherwise cause. Given the
limitations in efficacy and adherence, targeting PCSK9
in combination
with statins treatment is an emerging treatment paradigm
for hypercholesterolemia.
Two
mAbs
that
inhibit
activity
have
received
FDA
approval,
alirocumab
(Praluent)
and
evolocumab
(Repatha).
These
drugs
were
initially approved
to treat
the genetic
condition
heterozygous familial
hypercholesterolemia,
although
the approved
indications
were
expanded
after
the
publication
of
studies
demonstrating
that the
use
of
a
PCSK9 inhibitor
in
conjunction
with
a
statin
significantly
reduced the risk for major cardiovascular
events, including heart attack, stroke, unstable
angina requiring hospitalization or death
from
coronary heart disease. In addition, inclisiran (Leqvio), an siRNA inhibitor of PCSK9 synthesis, was
approved by the EMA in late 2020
for the treatment of heterozygous familial hypercholesterolemia in addition
to other dyslipidemia.
While alirocumab and evolucumab
have demonstrated clinical benefit,
their commercial potential has
been limited by their
pricing. Both
launched
with
a
wholesale
acquisition
price
exceeding
$14,000
annually,
but
prices
for
both
were
subsequently
reduced
in
2018.
Nevertheless, this drug class generated sales
of approximately $1.3 billion in 2020
and is expected to
grow to approximately $5.2 billion
by 2026, including the addition of inclisiran to the
market. In addition, both are administered bi-weekly (evolocumab also allows
for the
option of taking
a higher dose
monthly), which
represents what we
believe to be
a frequent and
inconvenient administration
schedule
for patients.
While inclisiran
represents an
improved administration
schedule compared
to alirocumab
and evolucumab,
as it must
be
administered twice annually,
we believe that it may encounter similar pricing challenges due to the published
cost effectiveness price.
Our Product Candidate: VXX-401
We are developing VXX-401, an anti-PCSK9
product candidate to treat
hypercholesterolemia. We are dedicated to developing a
product
candidate that has long-acting treatment duration, which we believe will offer a more convenient treatment regimen compared to the up
to
bi-weekly
dosing
required
by
some
mAbs.
We
believe
that
lower
manufacturing
costs
commensurate
with
the
requirement
of
meaningfully less drug
substance relative to
mAbs, coupled with
our ability to
achieve commercial scale
production rapidly may
promote
expanded
use
of this
drug
class as
a
first-line
therapy,
allowing
for
treating
a greater
number
of hypercholesterolemia
patients
than
currently treated with mAbs.
Pre-Clinical Studies
In August 2022 we announced
the selection of VXX-401
as our lead anti-PCSK9 vaccine candidate.
In pre-clinical studies, VXX-401
generated therapeutic
titer levels
of anti-PCSK9
antibodies, a
high response
rate among
dosed animals,
and robust
reduction in
LDL
across multiple species.
In two studies
of VXX-401 in
cynomolgus monkeys,
VXX-401 reduced LDL-c
by up to 54%,
an effect sustained
for a long
duration.
In the first study, 3 monkeys received six 300µg IM injections of VXX-401,
and 6 monkeys started on placebo with the same schedule.
At week 19 (final dose),
3 of the 6 placebo
monkeys were given 3mg/kg
evolocumab to determine the
comparability of the magnitude
of LDL reduction with
VXX-401.
LDL in monkeys treated
with evolocumab reduced
to approximately the level
of those treated with
VXX-401, then returned to near-baseline, while LDL levels in
the VXX-401-treated group remained low.
VXX-401 Reduces LDL up to 54% vs. Placebo, Comparable to a
Single Dose of an Approved MAb
The
VXX-401
group
(n=3)
received
a
non-optimized
vaccine
formulation
containing
the
same
peptide
immunogen
as
the
VXX-401
clinical vaccine
candidate and
experienced up
to a 54%
reduction in
serum LDL-c from
baseline.
The placebo
and VXX-401 groups
received IM injections at weeks 0, 3, 6, 13, 16, and 19.
The evolocumab group received
placebo IM injections at weeks 0, 3, 6, 13, and
16, and a dose of evolocumab at week 19.
In the second study we explored a range of doses in 15 cynomolgus monkeys, which received either 0, 10, 30,
100, 300, or 900µg/dose
by 0.5mL IM injection at weeks
0, 3, and 6, with follow-up
through week 24.
In this study we found that
three doses of VXX-401 could
product a sustained
reduction of serum
LDL, returning to near-baseline
after 24 weeks.
Furthermore, animals received
a booster dose
of VXX-401 at week 24, which triggered a rapid anti-PCSK9 antibody response
and a corresponding reduction in serum LDL.
Reduction in LDL Correlates with Anti-PCSK9 Antibodies Elicited by
VXX-401
The left-hand panel shows the generation of serum anti-PCSK9 antibody
titers in cynomolgus monkeys treated with 100µg VXX-401
at weeks 0, 3, 6, and 24 as measured by EIA.
These levels correlate with serum LDL level over time, as
depicted in the right-hand
panel, represented
as a difference from controls.
An adjuvant control group
(n=3, not shown), was also included in the study;
animals in the adjuvant group did not produce
an anti-PCSK9 antibody response, similar to the
PBS control group.
A GLP toxicology study was completed in monkeys, which demonstrated
that 5 doses of VXX-401 were safe and well tolerated, with
no clinical observations and no pathological findings.
Importantly, we found that LDL
reduction in VXX-401-treated monkeys in this
study was consistent with observations from preclinical efficacy
studies, and supportive of moving VXX-401 into clinical trials.
Development Strategy
We
have initiated
a first-in-human
Phase 1
clinical trial
of VXX-401
in Australia
in the
first quarter
of 2023.
In this
trial we
aim to
evaluate 48
subjects with
elevated cholesterol,
monitoring for
safety,
immunogenicity,
and relevant
biomarkers.
We
expect a
topline
readout by early 2024.
In a potential subsequent Phase 2 trial we may test VXX-401 alone and in combination
with statins.
Next Stage Development Candidates
In addition to our
initial focus on
migraines and hypercholesterolemia, we
believe our Vaxxine Platform can generate product
candidates
for a range of chronic diseases. We
are evaluating opportunities across multiple disease areas, including allergy
(e.g., atopic dermatitis,
chronic
rhinosinusitis,
food
allergy),
autoimmune
(e.g.,
psoriasis,
psoriatic
arthritis),
pain
(e.g.,
peripheral
neuropathy,
diabetic
neuropathy) and
bone and muscle
deterioration (e.g.,
sarcopenia, osteoporosis,
osteopenia) indications
as they may
apply to geriatrics
and space travel health.
COVID-19 Program
An Overview of COVID-19
COVID-19,
caused
by
SARS-CoV-2,
has
rapidly
swept
throughout
the
world.
The
World
Health
Organization
(“WHO”)
declared
COVID-19 a public health
emergency of international
concern. As of January 2023,
there have been more
than 694 million confirmed
COVID-19 cases and
more than
6.7 million deaths
worldwide. Common
symptoms of
COVID-19 are
fever,
cough, lymphocytopenia
and
chest
radiographic
abnormality.
A
proportion
of
patients
recovering
from
COVID-19
continue
shedding
virus
for
days,
and
asymptomatic carriers may also transmit SARS-CoV-2,
indicating a risk of a continuous and long-term pandemic.
SARS-CoV-2
is an
enveloped,
single-stranded,
positive-sense
RNA virus
belonging
to
the family
Coronavidae
within the
genus
β-
coronavirus. The genome of SARS-CoV-2
encodes one large Spike (“S”) protein that plays a pivotal role during viral attachment to the
host receptor,
angiotensin converting enzyme 2 (“ACE2”),
and entry into host cells. The
S protein is the major
principal antigen target
for
vaccines
against
human
coronavirus,
including
SARS-Co-V-2.
Neutralizing
antibodies
targeting
the
receptor
binding
domain
(“RBD”) subunit of
the S protein
block the virus
from binding to
host cells. Over
90% of all
neutralizing antibodies produced in
response
to infection are directed to the RBD subunit, and mAbs that have shown
therapeutic activity target epitopes on the RBD.
Fifty vaccines are authorized for use in one or more
countries around the world. Most of these vaccines are based on
the S protein of the
SARS-CoV-2,
but
rely
on
different
mechanisms
for
presentation
or
expression
of
the
S
antigen,
including
whole
inactivated
virus,
defective adenovirus
vectors, or
mRNA. All
have been
shown to
be safe
and effective
in placebo-
controlled clinical
trials. Antiviral
drugs and mAbs have limited availability and effectiveness.
COVID-19 Vaccine
Market
As of January 2023, over five billion people have been fully vaccinated against COVID-19.
Nearly all of these people received at least
one of three
types of vaccine
technologies: mRNA, adenovirus
vector, or
inactivated virus.
As SARS-CoV-2
continues to evolve
and
spread, the market for booster vaccinations has also grown, with over 2.6
billion doses sold to date.
We expect demand
for booster vaccinations that are safe and well tolerated, offer long
lasting immunity against emerging variants, and
allow
for
manageable
storage
and
shipping
conditions
will
last
for
the
foreseeable
future,
particularly
in
low-
and
middle-income
countries
(“LMICs”).
We
also
anticipate
demand
for
more
types
of
vaccine
technologies,
beyond
the
readily
available
mRNA,
adenovirus vector, and inactivated virus vaccine
options.
UB-612: Our COVID-19 Vaccine
Initiative
We are developing
UB-612 as a product candidate for boosting immunity
to COVID-19 in vaccinated individuals. UB-612 is designed
to activate both antibody
and cellular immunity against
multiple viral targets.
The vaccine is composed
of a recombinant S1-RBD-sFc
fusion
protein combined
with rationally
designed synthetic
Th and
CTL epitope
peptides selected
from
the S2
domain of
the spike,
membrane
(“M”), and
nucleocapsid
(“N”) proteins.
These peptides
bind to
MHC class
I and
II receptors
without significant
genetic
restriction, so
that they may
be recognized broadly
by the vast
majority of the
human population. Our
mixture of peptides
is designed
to elicit
T-cell
activation, memory
recall and
effector functions
similar to
those of
natural SARS-CoV-2
infection. The
S1-RBD-sFc
fusion protein incorporates
essential B-cell epitopes
that promote the generation
of neutralizing antibodies to
the RBD of SARS-CoV-
2. UB-612
is formulated
with Adju-Phos,
an adjuvant
widely used
in many
approved vaccines
globally.
For added
safety,
synthetic
peptides in UB-612 are
adsorbed by our propriety
CpG1 excipient, a Toll
-like receptor 9 agonist
molecule, known to help
to stimulate
balanced T-cell immunity in humans.
UB-612 can be
stored and shipped
at 2°
to 8°C
(conventional cold chain refrigerated
temperatures).
An EUA application for UB-612 was
denied by the TFDA in
August 2021 because the neutralizing antibody response
generated by UB-
delivered
in
an
accelerated
two-dose
primary
immunization
schedule,
as
compared
to
that
of
a
designated
adenovirus
vectored
vaccine,
did
not
meet
the
TFDA’s
specified
evaluation
criteria.
We
are
now
pursuing
a
path
to
authorization
for
UB-612
as
a
heterologous boost and have agreement with two high-income country regulators
about our development approach.
Components of the UB-612 Multitope Vaccine
Product Candidate
UB-612’s
construct contains an S1-RBD-sFc fusion protein for its B-cell epitopes, plus five synthetic Th/CTL peptides for class I and II
MHC molecules
derived from
SARS-CoV-2
S2, M
and N
proteins,
and the
UBITh1a peptide.
These components
are
formulated with
CpG1, which binds the positively charged peptides by dipolar interactions and also serves as an adjuvant, which is then bound to Adju-
Phos adjuvant to constitute the UB-612 product
candidate.
Clinical Development
In March 2022,
Vaxxinity
initiated a Phase 3
pivotal trial to compare
the immune responses stimulated
by homologous boosts
mRNA
(BNT162b2), adenovirus (ChAdOx1-S), inactivated virus (Sinopharm
BIBP) COVID-19 vaccines, to a heterologous boost of UB-612.
This is an active-controlled,
randomized trial being conducted in
the United States, Panama, and
Philippines under a platform protocol
in
subjects
years
and
older
who
completed
a
two-dose
primary
immunization
with
one
or
more
of
the
comparator
vaccines
mentioned above. Eligible subjects
have been randomized into one
of two treatment arms
to receive a single
dose of UB-612 or
an active
comparator.
The primary
objective of
the study
is to
determine
non-inferiority
of UB-612-stimulated
neutralizing
antibodies against
those of the comparator vaccines.
CEPI is co-funding this trial, which is expected to conclude in the second half of 2023.
Following
positive
topline
results
announced
in
December
2022,
we
have
completed
submissions
for
conditional/provisional
authorization
with
the
Medicines
and
Healthcare
products
Regulatory
Agency
(“MHRA”)
in
the
UK,
and
the
Therapeutic
Goods
Administration
(“TGA”)
in
Australia
in
March
2023.
We
expect
that,
if
successful,
these
authorizations
may
enable
the
commercialization of UB-612 in multiple countries including select
LMICs.
Heterologous Booster Data: Phase 3 Trial
Topline
Results
In the ongoing global pivotal Phase
3 trial, UB-612 elicited strong
neutralizing antibodies against SARS-CoV-2
when compared head-
to-head
to three
globally
authorized
platform
vaccines
administered
as homologous
boosters,
successfully
meeting
primary
and
key
secondary immunogenicity endpoints
at topline readout.
The primary endpoints
of the trial
are safety and
live virus
neutralizing antibody
titers against
the Wuhan
strain of
SARS-CoV-2
at day
29.
Secondary immunogenicity
endpoints include
neutralizing antibody
titers
against Omicron
BA.5 at
day 29,
SCRs at
day 29,
and kinetics
of neutralizing
and RBD
binding IgG
antibody responses
through 12
months.
The primary objective of the
study is to determine non-inferiority
of UB-612-stimulated neutralizing
antibodies against those
of the comparator vaccines, where statistical non-inferiority is defined by the lower bound
of the 95% confidence interval (“CI”) of the
geometric mean titer ratio (“GMR”)
> 0.67.
When delivered as a
heterologous booster in populations previously
vaccinated with Pfizer-
BioNTech’s
BNT162b2, AstraZeneca’s ChAdOx1-S, or Sinopharm’s BIBP,
UB-612 was shown to generate
neutralizing antibody titers
28 days after administration that were:
●
Statistically
non-inferior
to,
and
directionally
higher
than,
BNT162b2:
1.04
GMR
against
Wuhan
(95%
CI:
0.89,
1.21;
p=0.6147), 1.11 GMR against Omicron
BA.5 (95% CI: 0.94, 1.31; p=0.2171)
●
Statistically superior
to ChAdOx1-S:
1.92-fold higher
geometric mean
titers against
Wuhan
with UB-612
(GMR=1.92; 95%
CI: 1.44, 2.56; p<0.0001), 2.85-fold higher against Omicron BA.5 (GMR=2.85;
95% CI: 2.00, 4.05; p<0.0001)
●
Statistically superior to BIBP: 5.77-fold higher geometric mean titers against Wuhan with UB-612 (GMR=5.77; 95% CI: 4.62,
7.20; p<0.0001), 5.93-fold higher against Omicron BA.5 (GMR=5.93; 95%
CI: 4.60, 7.65; p<0.0001)
Neutralizing Antibodies Against Wuhan
(left panel) and Omicron BA.5 (right panel) at Day 29
The above results from a live virus neutralization assay at day 29
suggests that the immune response of UB-612 as a
heterologous boost
is non-inferior to that
of BNT162b2 as a
homologous boost, superior to
ChAdOx1-S, and superior to
BIBP.
The relative performance
of UB-612 versus the comparators against Omicron
BA.5 is better than that against Wuh
an.
SCR as measured
against Wuhan
and Omicron BA.5 are
key secondary endpoints
in the Phase 3
trial.
Seroconversion was defined
as
a ≥4-fold increase of neutralizing antibody titers from baseline.
SCR non-inferiority was defined by the lower bound of the 95% CI for
the difference of the UB-612 SCR minus the comparator SCR > -10%.
SCR superiority was defined by the lower bound of the 95% CI
for the difference
of the UB-612
SCR minus the
comparator SCR >
0%.
UB-612 SCR at
day 29 was
statistically non-inferior to,
and
directionally higher than, BNT162b2 against both Wuhan and Omicron
BA.5, statistically superior to ChAdOx1-S with 1.9-fold higher
SCR against Wuhan (23.6% absolute difference, p=0.0009) and 2.0-fold higher SCR
against Omicron BA.5 (29.2% absolute difference,
p<0.0001), and statistically superior to BIBP,
with 8.3-fold higher SCR against Wuhan
(56.8% absolute difference, p<0.0001) and 5.8-
fold higher SCR against Omicron BA.5 (58.0% absolute difference,
p<0.0001).
Preliminary safety data from the
Phase 3 trial shows that UB-612
continues to be generally well tolerated; no
serious adverse reactions
were reported.
The trial remains ongoing, and the long term safety profile
continues to be evaluated.
The trial is expected to conclude
in the second half of 2023.
2-Dose Clinical Data
In early 2021, we completed an open-label dose escalation
Phase 1 clinical trial to evaluate the safety,
tolerability and immunogenicity
of UB-612
in healthy volunteers
between the
ages of 20
and 55 in
Taiwan.
This six-month trial
consisted of
three 20-subject
cohorts,
each receiving
an initial
dose at
the start
of the
trial and
a second
dose on
day 28:
one
cohort received
two 10µg
doses, the
second
received two
30µg doses,
and the
third received
two 100µg
doses.
The mean
titer of
antigen-specific
antibodies to
UB-612 and
the
seroconversion rate
was evaluated
throughout the
duration of
the trial
to determine
the humoral
immune response
and persistence
of
immunogenicity. In addition, T-cell
responses were evaluated
by interferon-γ ELISpot assay and intracellular cytokine staining by flow
cytometry.
The Phase 1
clinical trial was
sponsored by
UBIA. UBIA conducted
the trial on
our behalf in
accordance with one
of our
related party master services agreements.
After one and
two doses,
UB-612 was considered
to be
generally safe and
well tolerated, with
a low
frequency of
solicited and unsolicited
AEs, which
were all
Grade 1
(mild) in
severity.
After each
vaccination,
the most
common AE
was injection
site pain,
with no
clear
difference in reactogenicity between dose levels. In all dose groups, there was a trend towards increased reactogenicity
with increase in
dose.
Three
cases
of
mild
allergic
reactions
were
reported
(e.g.,
itching
at
vaccine
site),
which
were
all
resolved
within
1-3
days.
Importantly,
and in distinction
to certain vaccines
authorized for emergency
use, no other
increase in AEs
was seen at
second dose as
compared to first injection. We
selected the highest dose (100μg) to take into a Phase 2 trial.
In an
anti-S1-RBD ELISA
assay,
we observed
that all
three dose
levels of
UB-612 induced
titer levels
comparable to
or greater
than
those in sera from patients hospitalized with COVID-19. Furthermore, in
a cytopathic effect viral neutralization assay (CPE VNT
), we
observed neutralizing titers comparable to those in sera from patients hospitalized
with COVID-19.
Neutralizing activities of sample sera from the Phase 1 trial
were assessed against live virus variants at the Viral and Rickettsial Disease
Laboratory of
the California
State Department
of Public
Health. The
results indicate
that UB-612
induces viral
neutralizing antibody
titers against the Alpha, Gamma and Delta variants of SARS-CoV-2,
close to the neutralizing titer level against the original (wild-type,
WT)
Wuhan
strain,
while
the
titer
level
against
the
Beta variant
is lower
in
comparison.
The
latter
finding
is anticipated
by
results
published for other COVID-19 vaccines, as pointed out above.
Viral-neutralizing
antibody titers
(VNT
) up
to 154
days after
the second
dose (day
196) in
the Phase
1 trial
of UB-612
remained at
52% of the maximum level
observed following the second dose,
on average. Based on
the interim six-month cutoff, the
UB-612-specific
neutralizing antibody half-life was estimated to be 195 days using
an exponential model.
Time Course of SARS-CoV-2 Antibody Neutralization
Responses after Vaccination
Data from a micro-neutralization assay
of sera from subjects
who received two 100μg
doses of UB-612
yielded an estimated
neutralizing
titer half-life of 195 days (CI: 136, 349) using an exponential model.
A randomized,
placebo-controlled,
multi-center Phase
2 trial
of UB-612
in 3,850
healthy volunteers
aged 12
to 85
was conducted
in
Taiwan.
Subjects in
this trial
receive two
doses of
100μg UB-612,
or placebo,
28 days
apart. The
objectives of
this trial
include the
analysis of safety and immunogenicity of UB-612, in particular, antigen-specific antibodies to UB-612, the seroconversion rate and lot-
to-lot consistency
of antibody
responses. An
interim analysis
of data
from this
Phase 2
trial in
healthy volunteers
18 years
and older
based on
the data
cut-off date
of June 27,
2021 was
submitted to
the TFDA
as part
of a
filing for
an EUA
in Taiwan.
The EUA
was
denied in August 2021 by the TFDA.
In data from the Phase 2 trial, UB-612 appears well tolerated.
AEs were generally mild, and no UB-612-related SAEs were
observed. Local injection site AEs occurred
in half of the subjects, the most frequent being injection
site pain. Systemic AEs
occurred in less than half of the subjects, and the
incidence was similar in the active and placebo groups,
except for muscle pain
which was more frequent in the active group.
Aside from muscle pain, systemic reactions were comparable
across the active and
placebo groups, with less than 10% of subjects in
either group experiencing fever or chills. Systemic
AEs were similar after the first
and second doses. The vast majority of AEs were mild (Grade 1),
and all were self-limited. No subject had a severe (Grade
3) local
reaction. The incidence of severe (Grade
3) systemic reactions was <0.1%.
The Phase 2 interim analysis suggests that
Phase 1 observations on immunogenicity, neutralizing titers and tolerability are reproducible,
with an overall seroconversion rate of 94.7% one month after the second dose. In a live virus
(Wuhan) neutralization test, sera collected
from UB-612 vaccinated younger adults (19-64
years, n=322), 28 days after
the second dose (day 57)
were estimated to reach geometric
mean titers (“GMT”) of 102 of
50% virus-neutralizing antibodies (VNT
).
Sera collected from a subset of
subjects (n=48) 28 days after
the second
immunization was shown
to neutralize several
SARS-CoV-2
variants, with
the loss of
neutralization activity
against Delta
estimated at 1.39-fold when compared to the neutralizing antibodies against the parental Wuhan
virus.
Immunization with UB-612
in both Phase 2
and Phase 1
studies led to
detectable T-cell
responses observed
in a subset
of subjects. In
Phase 2, a total
of 88 subjects
receiving UB-612
and 12 receiving
placebo were tested
for T cell responses
at baseline and
on Day 57.
Preliminary results
of ELISpot (Interferon
-γ and IL-4)
and intracellular
cytokine staining indicate
robust responses
to UB-612,
with a
strong
Th1
orientation.
Intracellular
cytokine
staining
(ICS)
confirmed
the
Th1
orientation
of
T
cell
responses.
UB-612
induced
measurable CD8+ T cell responses and CD107a+/Granzyme secreting cells, which
are putative cytotoxic T cells.
3-Dose Clinical Data
In a Phase 1 extension trial, 50 subjects from Phase 1 received a third booster dose
of UB-612 approximately 7-9 months after their
second dose (100µg).
In this
extension trial, UB-612 was generally well tolerated after a third dose, with no
vaccine-related SAEs
reported.
Immunogenicity and safety data from the Phase
1 extension suggests that UB-612 elicits a multi-fold
increase in neutralizing
antibody titers upon third dose, significantly
exceeding those observed in human convalescent sera,
and that the third dose is well
tolerated with no vaccine-related SAEs reported.
Published studies have shown a correlation between
efficacy in randomized
controlled trials and the ratio of neutralizing
titers in sera from vaccinated subjects to titers
in human
convalescent sera.
In collaboration with University College London and VisMederi,
we analyzed sera from subjects immunized with three doses of UB-
612. Data demonstrated that UB-612 elicited a broad IgG antibody response
against multiple SARS-CoV-2
variants of concern,
including, Alpha, Beta, Delta, and Gamma, and Omicron, and higher levels of neutralizing
antibodies against Omicron than three
doses of an approved mRNA vaccine.
Third immunization with UB-612 Produces Neutralizing
Antibodies Against Omicron
Phase 1 extension subjects (n=15) received primary
series with UB-612 100µg. Serum is taken 28 days after the second dose and 14
days after the third booster immunization
administered 7-9 months after the primary series. Live virus neutralization
test against
Wuhan and Omicron
are performed at VisMederi;
results are expressed
as virus neutralization antibody GMT ± 95% CI.
An extension of the Phase 2, observer-blind, multicenter,
randomized, placebo-controlled trial was sponsored by UBIA to evaluate the
immunogenicity,
safety, tolerability,
and lot consistency of a homologous booster dose of UB-612 in
adolescents, younger adults, and
elderly adults.
Adult subjects who completed the primary 2-dose UB-612 series in the main Phase 2
trial were unblinded around and
offered a third dose of UB-612.
The third dose of UB-612 stimulated both arms of adaptive immunity in subjects.
The frequency of
solicited and unsolicited adverse events following the third dose was consistent with the
safety profile observed after the first and
second doses.
Development Strategy
Based on our
belief in UB-612’s
potential utility
as a heterologous
booster dose (boosting
the immunity
of a subject
who has already
received
a
different
vaccine),
we
have
completed
rolling
submissions
for
conditional/provisional
authorization
with
regulatory
authorities in the United Kingdom and Australia, who will review under their
established work share agreement.
We expect to complete the ongoing Phase 3 trial
of UB-612 as a heterologous booster
in the second half of
2023, with continued support
from CEPI.
Competition
The
pharmaceutical
industry
is
characterized
by
rapidly
advancing
technologies,
intense
competition
and
a
strong
emphasis
on
proprietary
products.
While
we
believe
that
our
technology,
the
expertise
of
our
executive
and
scientific
teams,
research,
clinical
capabilities, development experience and scientific knowledge provide us with competitive advantages, we face increasing competition
from multiple sources,
including pharmaceutical and
biotechnology companies, academic institutions,
governmental agencies and
public
and private research institutions both in the United States and abroad.
Many of our competitors may have significantly greater
financial resources and expertise in research and development, manufacturing,
preclinical
testing,
conducting
clinical
trials,
obtaining
regulatory
approvals
and
marketing
approved
products
than
we
do.
These
competitors
also compete
with us
in recruiting
and retaining
qualified scientific
and management
personnel and
establishing clinical
trial sites and
patient enrollment for
clinical trials, as
well as in
acquiring technologies complementary to,
or necessary for, our
programs.
Smaller or
early stage
companies may
also prove
to be
significant competitors,
particularly through
collaborative arrangements
with
larger or more established companies.
Vaccines
The global
vaccine market
is highly
concentrated among
a small
number of
multinational pharmaceutical
companies: Pfizer,
Merck,
GlaxoSmithKline and Sanofi
together control most of
the global vaccine
market. Other pharmaceutical
and biotechnology companies,
academic institutions, governmental
agencies and public and private
research institutions are also working
toward new solutions given
the continuing global unmet need.
Neurodegenerative Disorders
We
expect
that,
if
approved,
our
product
candidates
will
compete
with
currently
approved
therapies
for
management
of
neurodegenerative diseases, such as
AD and PD.
In AD, four drugs are currently
approved by the FDA for the treatment
of symptoms
of AD, based
on acetylcholinesterase (“AChE”)
inhibition and NMDA
receptor antagonism. In
addition to the
marketed therapies, we
are aware of
several companies
currently developing
therapies for AD,
including Eisai,
Lilly,
Hoffman-LaRoche, Abbvie,
Johnson &
Johnson, and Novartis.
Biogen’s aducanumab
was approved by
the FDA in June
2021 under the
accelerated approval pathway,
which
allows for
earlier approval
of drugs
that treat
serious conditions,
and that
fill an
unmet medical
need based
on a
surrogate endpoint.
Aducanumab failed to achieve approval in Europe and
Japan.
Eisai and Biogen’s lecanemab was approved by the FDA in
January 2023
under an accelerated approval pathway.
Pharmaceutical treatments for PD address its symptoms only and do not treat the underlying causes of PD. The majority of prescription
drugs
are
dopaminergic
medications
and
act
by
increasing
dopamine,
a
neurotransmitter.
We
are
aware
of
several
companies
with
product
candidates
at
various
stages
of
clinical
development,
including
Sanofi,
Kyowa
Kirin,
Cerevel
Therapeutics
and
Hoffman-
LaRoche. Hoffman-LaRoche is developing prasinezumab,
a mAb, as a potential treatment for PD.
CGRP-Directed Migraine Treatments
Six migraine treatments have been
approved by the FDA that target
CGRP.
Four of these therapeutics are
mAbs and were approved to
prevent or
reduce the
number of
migraine episodes.
These medications
are galcanezumab
(Emgality), which
was developed
by Lilly;
erenumab (Aimovig),
which was
developed by
Amgen in
collaboration with
Novartis; fremanezumab
(Ajovy), which
was developed
by
Teva;
and
eptinezumab
(Vyepti),
which
was
developed
by
Alder,
acquired
by
Lundbeck.
Ubrogepant
(Ubrelvy),
developed
by
Allergan,
was approved
for
the treatment
of acute
migraine episodes;
rimegepant
(Nurtec),
also approved
for
the treatment
of acute
migraine,
is sold
by Pfizer
following
its acquisition
of Biohaven.
Atogepant
(Qulipta), developed
by AbbVie,
was approved
for
the
preventive treatment of episodic migraine.
PCSK-9 Inhibitors
Three companies
currently have
PCSK-9 inhibitors
approved by
the FDA
to treat
hypercholesterolemia:
Regeneron Pharmaceuticals
developed alirocumab (Praluent), a mAb, in
collaboration with Sanofi, and Amgen developed
evolocumab (Repatha), another mAb, and
Novartis is commercializing inclisiran, an RNAi construct, to down-regulate
synthesis of PCSK-9.
Collaborations
From
time to
time, we
may
enter
into licensing
and
commercialization
agreements
when they
align with
our mission,
including
the
Platform
License
Agreement
described
under
“-Intellectual
Property-Platform
License
Agreement”
and
the
agreement
with
our
partner Aurobindo.
Aurobindo License Agreement
In
December
2020,
we
entered
into
an
exclusive
license
agreement
with
Aurobindo
(as
amended,
the
“Aurobindo
Agreement”)
to
develop
and
commercialize
UB-612
to India
and
other
territories.
Pursuant
to
the Aurobindo
Agreement,
we
granted
Aurobindo
an
exclusive license
(with certain
rights reserved
to us) to
develop, manufacture
and commercialize UB-612
in India
and other countries
through
UNICEF
and
a
non-exclusive
license
to
develop,
manufacture
and
commercialize
UB-612
in
other
selected
emerging
and
developing markets.
The Aurobindo Agreement may be terminated (i) by Aurobindo, without
cause at any time after three years following the effective
date or prior to such time if UB-612 fails to meet clinical endpoints or fails in development,
(ii) by us, (a) if Aurobindo disputes the
patentability, enforceability
or validity of our patent rights related to the UB-612 technology,
(b) in case of a suit alleging Aurobindo’s
use of the licensed intellectual property infringes a third party’s
intellectual property rights if we reasonably believe the license is no
longer commercially reasonable in light of such claim or (c) without cause
at any time after four years following the effective date,
(iii) by either party in the event of the other party’s
material breach of its obligations under the Aurobindo Agreement (subject to
a
cure period) or (iv) by either party in the event of the other party’s
insolvency.
Manufacturing
The manufacture of our
product candidates encompasses both
the manufacture of custom
components and the
formulation, fill and finish
of the final
product. We
do not currently
own or operate
manufacturing facilities
for these processes.
We
currently rely upon
contract
manufacturing organizations, including those mentioned below,
to produce our product candidates for both pre-clinical and clinical use
and
will continue
to rely
upon
these
relationships
for
commercial
manufacturing
if any
of
our
product
candidates
obtain
regulatory
approval.
Although
we rely
upon contract
manufacturers,
we also
have
personnel
with extensive
manufacturing
experience that
can
oversee the relationships with our manufacturing partners.
Historically,
we
have
depended
heavily
on
UBI
and
its
affiliates
for
our
business
operations,
including
the
provision
of
research,
development
and
manufacturing
services.
Currently,
UBIA
provides
testing
services
for
UB-312
and
UB-612,
UBI
Pharma
Inc.
(“UBIP”)
provides
testing
relating
to
formulation-fill-finish
services
for
UB-312,
and
United
BioPharma,
Inc.
(“UBP”)
is
the
sole
manufacturer of protein for UB-612. Our commercial arrangements with UBI and
its affiliates are described in more detail below.
Formulation-fill-finish services for UB-612 are provided by
multiple contract manufacturers to ensure adequate capacity
and minimize
supply
chain
risks.
For
supply
of
our
other
custom
components,
in
addition
to
protein
manufacturing
conducted
by
UBP,
we
have
engaged third party
CMOs, including C
S Bio Co. (“CSBio”)
as our primary
peptide supplier for
UB-612 peptides and Wuxi
STA
for
process development and manufacturing services of oligonucleotides.
UBI Group Manufacturing Partnership
We
primarily
rely
on
our
relationships
with
third-party
contract
manufacturing
organizations
to
produce
product
candidates for
our
clinical trials. Historically, we have heavily depended on UBI as a manufacturing partner for these efforts. In support of our COVID-19
program (UB-612), we have entered into a master services agreement with UBP and an additional master services agreement with UBI,
UBIA and UBP.
Pursuant to these
agreements, UBI and
its affiliates have
provided research, development,
testing and manufacturing
services to
us and
continue to provide
manufacturing services
for our
protein. Payment
terms are
mutually agreed
in connection
with
each work order
relating to services
rendered. Our
agreement with UBP
will expire on
the later of
March 2024 and
the completion of
all services
under the
last work
order executed
prior to
such scheduled
expiration and
our agreement
with UBI,
UBIA and
UBP will
expire on
the later
of September
2023 and
the completion
of all
services under
the last
work order
executed prior
to such
scheduled
expiration. We also have a management
services agreement with
UBI pursuant to
which UBI has
provided research and prior
back office
administrative services to us and acts as our agent with respect to certain matters relating our COVID-19 program. UBI is compensated
for its services on a cost-plus basis. The agreement terminates upon mutual
agreement between the parties.
In support of our chronic disease pipeline, we
have entered into master service agreements with
each of UBI, UBIA and UBIP. Pursuant
to these agreements, UBI currently provides limited research services to us on a cost-plus
basis, UBIA provides testing services related
to UB-312 clinical trial material already manufactured and UBIP has provided manufacturing, quality control, testing, validation, GMP
warehousing
and supply
services to
us for
UB-312 on
payment terms
agreed in
connection with
work orders
relating to
the services
rendered. UBI
and its affiliates
no longer provide
clinical or manufacturing
services for other
programs. These agreements
may all be
terminated for convenience upon 180 days’ notice or less.
We have
also entered into a research
and development services agreement
with UBI. Pursuant to
this agreement, UBI and
its affiliates
may
provide
research
and
development
services
to
us.
Service
fees
payable
by
us
to
UBI
for
research
and
development
projects
undertaken in accordance with the research and development
plan would be determined by a joint steering committee
and set forth in a
research and development plan. Any aggregate
services fees payable by us under the research and
development services agreement are
subject to
a quarterly
cap throughout
the term of
the agreement.
The research
and development
services agreement
expires in
August
2026.
Intellectual Property
Our ability
to obtain
and maintain
intellectual property
protection for
our product
candidates and
core technologies
is fundamental
to
the
long-term
success
of
our
business.
We
rely
on
a
combination
of
intellectual
property
protection
strategies,
including
patents,
trademarks, trade secrets, license agreements,
confidentiality policies and procedures, nondisclosure
agreements, invention assignment
agreements and technical measures designed to
protect the intellectual property and
commercially valuable confidential information and
data used in our business.
In summary, our patent estate includes issued patents and patent applications
which claims cover our Vaxxine
Platform and each of our
product candidates. As of December 31, 2022 our patent estate include
d
three U.S. issued patents, twelve U.S. patent applications, five
U.S. provisional
patent applications,
four pending
Patent Cooperation
Treaty (“PCT”)
patent applications,
60 issued
non-U.S. patents
and 158 pending non-U.S. patent applications.
For our
product
candidates targeting
the prevention
and treatment
of neurodegenerative
disease, including
claims covering
UB-311,
UB-312, and
anti-tau patent
rights are
provided by
patents and
patent applications,
the majority
of which
are being
prosecuted in
the
United States, Australia,
Brazil, Canada, China,
the EPO, Hong
Kong, Indonesia, India,
Israel, Japan, the
Republic of Korea,
Mexico,
Russia, Singapore, South Africa, Taiwan and
the United Arab Emirates directed to peptide vaccines for the prevention and treatment of
neurodegenerative
diseases.
These
issued
patents
and
patent
applications,
if
issued,
are
expected
to
expire
between
and
2043,
excluding any patent term adjustments or patent term extensions.
For our product candidates directed
to peptide immunogens targeting
CGRP and formulations thereof for
the prevention and treatment
of migraine, including UB-313,
patent rights may be
provided by a
patent family being prosecuted
in the United
States, Australia, Brazil,
Canada, China, India, Indonesia,
Japan, Mexico, Russia,
the Republic of
Korea, Singapore, Taiwan and the United
Arab Emirates. These
patent applications, if issued, are expected to expire in 2039, excluding
any patent term adjustments or patent term extensions.
For
our
product
candidates
targeting
cholesterol
and
cardiovascular
disease,
including
our
anti-PCSK9
product
candidate
targeting
PCSK9 and
formulations thereof
for prevention
and treatment
of PCSK9-mediated
disorders, we
have pending
patent applications
in
the United States,
Australia, Brazil, Canada,
India, Indonesia, Japan,
Mexico, the Philippines,
the Republic of
Korea, Taiwan,
and the
United
Arab Emirates.
These patent
applications,
if issued,
are expected
to expire
in 2041,
excluding any
patent
term adjustment
or
patent term extension.
For our product
candidates targeting SARS-CoV-2, including UB-612 for COVID-19, we
have pending patent applications
in the United
States,
Australia,
Brazil,
Canada,
India,
Indonesia,
Japan,
Pakistan,
the
Philippines,
the
Republic
of
Korea,
Russia,
Saudi
Arabia,
Taiwan, United Arab Emirates, and Vietnam, four pending
PCT patent applications and
one provisional patent applications
in the United
States. These patent applications, if issued, and any U.S. or non-U.S. patent issuing
from the PCT or provisional patent applications, are
expected to expire between 2041 and 2042, excluding any patent term adjustments
or patent term extensions.
For each product
candidate utilizing the
Vaxxine
platform, additional patent
rights directed to
artificial T helper
cell epitopes and
to a
CpG delivery system
are provided by patents
and patent applications, the
majority of which
are being prosecuted
in the United States,
Australia, Austria,
Belgium, Brazil,
Canada, Chile,
China, Colombia,
Denmark,
the EPO,
France, Germany,
Hong Kong,
Indonesia,
India, Ireland, Israel, Italy, Japan, Mexico,
the Netherlands, New Zealand, Peru, Philippines, the Republic of Korea, Russia, Singapore,
South
Africa,
Spain,
Sweden,
Switzerland/Liechtenstein,
Taiwan,
Thailand,
the
United
Arab
Emirates,
the
United
Kingdom
and
Vietnam.
These issued patents
and patent applications,
if issued, are
expected to expire
between 2023
and 2039, excluding
any patent
term adjustments or patent term extensions.
The term of
individual patents depends on
the countries in
which they are obtained.
The patent term
is 20 years
from the earliest
effective
filing date of
a non-provisional patent
application in most
of the countries
in which we
file, including the
United States. In
the United
States, a
patent’s
term may
be lengthened
by patent
term adjustment,
which compensates
a patentee
for administrative
delays by
the
USPTO in
examining and
granting a
patent, or
may be
shortened if
a patent
is terminally disclaimed
over an
earlier filed
patent. The
term of a patent
that covers a drug
or biological product
may also be eligible
for patent term extension
when FDA approval
is granted
for a
portion of
the term
effectively
lost as
a result
of the
FDA regulatory
review period,
subject to
certain limitations
and provided
statutory and regulatory requirements are met.
In addition to our reliance on patent protection for our inventions, products and technologies, we also seek to protect our brand
through
the procurement of
trademark rights. We
own registered trademarks
and pending trademark
applications for our
brands, including our
“Vaxxinity”, “United Neuroscience” and “COVAXX”
brands and other related
names and logos, in
the United States
and certain foreign
jurisdictions.
Furthermore, we rely
upon trade secrets
and know-how and
continuing technological innovation
to develop and
maintain our competitive
position. However,
trade secrets and
know-how can be
difficult to protect.
We
generally control access
to and use
of our trade
secrets
and know-how, through the use
of internal and
external controls, including
by entering into
nondisclosure and confidentiality agreements
with
our
employees
and
third
parties.
We
cannot
guarantee,
however,
that
we
have
executed
such
agreements
with
all
applicable
counterparties, that such agreements will not be breached or that these
agreements will afford us adequate protection of our intellectual
property and proprietary rights.
Furthermore, although we take
steps to protect
our proprietary information
and trade secrets,
third parties
may independently develop substantially equivalent proprietary information and
techniques or otherwise gain access
to our trade secrets
or disclose our technology.
As a result, we may not be able to meaningfully protect our trade secrets. For further discussion of the risks
relating to intellectual property,
see “Risk Factors-Risks Related to Our Intellectual Property Rights.”
Platform License Agreement
In August 2021,
Vaxxinity
entered into a
license agreement (the
“Platform License Agreement”)
with UBI and
certain of its
affiliates
(collectively, the “Licensors”) that expanded intellectual
property rights previously licensed
under the Original UBI
Licenses (as defined
below).
Pursuant to
the Platform
License Agreement,
Vaxxinity
obtained
a worldwide,
sublicensable
(subject to
certain conditions),
perpetual, fully paid-up, royalty-free (i) exclusive license (even
as to the Licensors) under all patents owned or otherwise controlled
by
the Licensors or
their affiliates existing
as of the effective
date of the
Platform License Agreement,
(ii) exclusive license
(except as to
the Licensors) under all patents owned
or otherwise controlled by the
Licensors or their affiliates arising
after the effective date during
the term of the Platform
License Agreement, and (iii)
non-exclusive license under all
know-how owned or otherwise
controlled by the
Licensors or their affiliates existing as of the effective date or arising during the term of the Platform License Agreement, in each of the
foregoing
cases,
to
research,
develop,
make,
have
made,
utilize,
import,
export,
market,
distribute,
offer
for
sale,
sell,
have
sold,
commercialize or otherwise exploit
peptide-based vaccines in the field
of all human prophylactic and
therapeutic uses, except for
such
vaccines related
to human immunodeficiency
virus (HIV), herpes
simplex virus (HSE)
and Immunoglobulin
E (IgE). The
patents and
patent applications licensed under the Platform License Agreement include claims directed to a CpG delivery system, artificial T helper
cell
epitopes
and
certain
designer
peptides
and
proteins
utilized
in
UB-612.
As
partial
consideration
for
the
rights
and
licenses
we
received pursuant to the Platform License Agreement,
we granted UBI a warrant to purchase 1,928,020
shares of our Class A common
stock (“UBI Warrant”). The UBI Warrant is exercisable at an exercise price
of $12.45 per share
(subject to adjustment pursuant thereto),
is not subject to vesting, and has a term of five years.
Vaxxinity
has the first right to control
the filing, prosecution, maintenance and
enforcement of the licensed patents
at Vaxxinity’s
own
expense, subject to
the Licensors’ right
to comment on
and review any
patent filings. The
Platform License Agreement
shall continue
until the parties mutually consent in writing to terminate the agreement. Upon such termination,
all licenses granted under the Platform
License Agreement
shall terminate
and Vaxxinity
will assign any
regulatory documentation
previously assigned
to Vaxxinity
back to
the Licensors.
Pricing, Coverage and Reimbursement
Sales of our product
candidates in the United
States will depend, in
part, on the
extent to which third-party
payors, including government
health programs
such as Medicare
and Medicaid,
commercial insurance
and managed
health care organizations
provide coverage
and
establish
adequate
reimbursement
levels
for
such
product
candidates.
The
process
for
determining
whether
a
third-party
payor
will
provide coverage for a pharmaceutical or biological product is typically separate from the process for setting the price of
such a product
or for establishing
the reimbursement rate
that the payor
will pay for the
product once coverage
is approved, and
we may also need
to
provide
discounts
to
purchasers,
private
health
plans
or
government
healthcare
programs,
as
increasingly,
third-party
payors
are
requiring that
drug companies
provide them
with predetermined
discounts from
list prices
and are
challenging the
prices charged
for
medical products.
As a
result, a
third-party payor’s
decision to
provide coverage
for a
pharmaceutical or
biological product
does not
imply that the reimbursement rate will be adequate for commercial
viability, and inadequate reimbursement
rates, including significant
patient
cost
sharing
obligations,
may
deter
patients
from
selecting
our
product
candidates.
Obtaining
coverage
and
reimbursement
approval of
a product
from a third-party
payor is
a time-consuming
and costly
process that
could require
us to
provide to
each payor
supporting scientific,
clinical and
cost-effectiveness data
for the use
of our product
on a payor
-by-payor basis,
with no
assurance that
coverage and adequate reimbursement will be obtained. Third-party payors may limit coverage to specific products on an approved list,
also known as a formulary,
which might not include all of the approved products for a particular indication.
Further,
no uniform
policy
for coverage
and
reimbursement
exists in
the United
States, and
coverage
and reimbursement
can differ
significantly from payor to
payor. In general, factors a
payor considers in
determining coverage and reimbursement
are based on
whether
the product is a covered
benefit under its health plan;
safe, effective, and medically
necessary, including
its regulatory approval status;
medically appropriate for the specific patient; cost-effective; and neither experimental nor investigational. Third-party payors often rely
upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and
approval process apart
from Medicare determinations.
As such, one
third-party payor’s
decision to
cover a particular
medical product
or service does not ensure that other payors will also provide coverage for the medical product or service, and the level of coverage and
reimbursement can differ significantly from
payor to payor. Even if favorable
coverage and reimbursement status is attained for
one or
more products for which we receive
regulatory approval, less favorable coverage policies and reimbursement rates
may be implemented
in the future.
Product Approval and Government Regulation
Government authorities in the
United States, at the federal,
state and local level, and
other countries extensively
regulate, among other
things,
the
research,
development,
testing,
manufacture,
quality
control,
approval,
labeling,
packaging,
storage,
record-keeping,
promotion, advertising, distribution, post-approval monitoring and reporting, marketing and
export and import of products such
as those
we are
developing.
Any product
candidate
that we
develop
must be
approved
by the
FDA before
it may
be legally
marketed
in the
United States and by the appropriate foreign regulatory agency before
it may be legally marketed in foreign countries.
U.S. Drug Development Process
In the United
States, the development,
manufacturing and marketing
of human drugs
and vaccines are
subject to extensive
regulation.
The FDA
regulates
drugs
under the
Federal
Food,
Drug and
Cosmetic Act
(“FDCA”)
and
implementing
regulations,
and biological
products, including vaccines, under provisions of
the FDCA and the Public Health Service Act (“PHSA”). Drugs and
vaccines are also
subject
to
other
federal,
state
and
local
statutes
and
regulations.
The
process
of
obtaining
regulatory
approvals
and
the
subsequent
compliance
with appropriate
federal, state,
local and
foreign
statutes and
regulations
require the
expenditure
of substantial
time and
financial
resources.
Failure
to
comply
with
the
applicable
U.S.
requirements
at
any
time
during
the
product
development
process,
approval process or after approval, may subject an
applicant to administrative or judicial sanctions. FDA sanctions
could include refusal
to approve
pending applications,
withdrawal
of an
approval, clinical
hold,
warning letters,
product
recalls,
product
seizures, total
or
partial
suspension
of
production
or
distribution,
injunctions,
fines,
refusals
of
government
contracts,
debarment,
restitution,
disgorgement or civil
or criminal penalties. Any
agency or judicial enforcement
action could have a
material adverse effect on
us. The
process required by the FDA before a
drug or biological product may be marketed in
the United States generally involves the following:
•
completion of
nonclinical laboratory
tests, animal
studies and
formulation and
stability studies
according to
good laboratory
practices, or GLPs and other applicable regulations;
•
submission to the FDA of an application for an IND, which must become
effective before human clinical trials may begin;
•
performance of
adequate and
well-controlled human
clinical trials according
to the
FDA’s
good clinical
practice regulations
commonly
referred to
as GCPs,
among
other requirements,
to establish
the safety
and efficacy
of the
proposed drug
for
its
intended uses;
•
submission to the FDA of an NDA or BLA for a new drug;
•
satisfactory completion
of an FDA
inspection of
the manufacturing
facility or
facilities where
the drug
is produced
to assess
compliance
with
the
FDA’s
cGMP,
to
assure
that
the
facilities,
methods
and
controls
are
adequate
to
preserve
the
drug’s
identity, strength, quality
and purity;
•
potential FDA audit of the nonclinical and clinical trial sites that generated the
data in support of the NDA or BLA; and
•
FDA review and approval of the NDA or BLA.
The
lengthy
process of
seeking
required
approvals
and
the continuing
need
for
compliance
with
applicable
statutes
and
regulations
require the expenditure of substantial resources and approvals are inherently
uncertain.
Before testing any compounds with potential therapeutic value in humans, the product
candidate enters the pre-clinical study stage. Pre-
clinical tests,
also referred
to as
nonclinical studies,
include laboratory
evaluations of
product chemistry,
toxicity and
formulation, as
well as animal studies
to assess the potential safety
and activity of the
product candidate. The Consolidated Appropriations Act
for 2023,
signed into law on December 29, 2022, (P.L.
117-328) amended both the FDCA and PHSA to specify that nonclinical testing for drugs
and biologics, respectively,
may,
but is not
required to, include
in vivo animal
testing. According to
the amended language,
a sponsor
may
fulfill
nonclinical
testing
requirements
by
completing
various
in
vitro
assays
(e.g.,
cell-based
assays,
organ
chips,
or
microphysiological
systems),
in
silico
studies
(i.e.,
computer
modeling),
other
human
or
non-human
biology-based
tests
(e.g.,
bioprinting), or in vivo animal tests.
The conduct of
the pre-clinical tests
must comply with
federal regulations
and requirements including
GLP.
The sponsor must
submit
the results of the pre-clinical tests, together with manufacturing information, analytical data, any available clinical data or literature and
a proposed clinical protocol, to the FDA as
part of the IND. The IND automatically becomes effective 30 days after receipt
by the FDA,
unless the FDA imposes a
clinical hold within that 30-day
time period. In such a case,
the IND sponsor and the
FDA must resolve any
outstanding concerns
before the
clinical trial
can begin.
The FDA
may also
impose clinical
holds on
a product
candidate at
any time
before or
during clinical
trials due
to safety
concerns or
non-compliance. Accordingly,
we cannot
be sure
that submission
of an
IND
will result in the FDA allowing clinical trials to begin, or that, once begun,
issues will not arise that suspend or terminate such trial.
Clinical trials
involve the
administration of
the product
candidate to
healthy volunteers
or patients
under the
supervision of
qualified
investigators,
generally
physicians
not
employed
by
or
under
the
trial
sponsor’s
direct
control.
Clinical
trials
are
conducted
under
protocols detailing,
among other things,
the objectives of
the clinical trial,
dosing procedures,
subject selection
and exclusion
criteria,
and the parameters to be used to monitor subject safety.
Each protocol must be submitted to the FDA as part of the IND. Congress also
recently amended the FDCA, as part of the Consolidated Appropriations Act for 2023, in order to require sponsors of a Phase 3 clinical
trial, or
other “pivotal
study” of
a new
drug to
support marketing
authorization, to
design and
submit a
diversity action
plan for
such
clinical
trial.
The
action
plan
must
include
the
sponsor’s
diversity
goals
for
enrollment,
as
well
as
a
rationale
for
the
goals
and
a
description of how the sponsor
will meet them. Sponsors must
submit a diversity action plan
to the FDA by
the time the sponsor submits
the
relevant
clinical
trial protocol
to the
agency for
review.
The FDA
may
grant
a
waiver
for
some
or all
of the
requirements
for a
diversity
action
plan.
It is
unknown
at this
time how
the diversity
action
plan
may
affect
Phase 3
trial planning
and
timing
or what
specific information
FDA will
expect in
such plans,
but if
the FDA
objects to
a sponsor’s
diversity action
plan or
otherwise requires
significant changes to be made,
it could delay initiation of
the relevant clinical trial. Clinical
trials must be conducted in
accordance with
the FDA’s
regulations comprising the
good clinical practices requirements.
Further, each clinical
trial must be reviewed
and approved
by an independent
IRB at or servicing
each institution at which
the clinical trial
will be conducted.
An IRB is charged
with protecting
the welfare and rights of trial participants and considers
such items as whether the risks to individuals participating
in the clinical trials
are minimized and are
reasonable in relation to
anticipated benefits. The IRB
also approves the form
and content of the
informed consent
that
must
be
signed
by
each
clinical
trial
subject
or
his
or
her
legal
representative
and
provide
oversight
for
the
clinical
trial
until
completed.
Human clinical trials are typically conducted in three sequential phases that may
overlap or be combined:
•
Phase 1
. The drug is initially introduced into healthy human subjects and tested for
safety, dosage
tolerance, absorption, metabolism, distribution and excretion. In the
case of some products for severe or life-threatening diseases,
especially when the product may be too inherently toxic to ethically administer
to healthy volunteers, the initial human testing may be
conducted in patients;
•
Phase 2
. The drug is evaluated in a limited patient population to identify possible adverse effects
and safety
risks, to preliminarily evaluate the efficacy of the product
for specific targeted diseases and to determine dosage tolerance, optimal
dosage and dosing schedule; and
•
Phase 3
. Clinical trials are undertaken to further evaluate dosage, clinical efficacy
and safety in an
expanded patient population at geographically dispersed clinical trial sites. These
clinical trials are intended to establish the overall
risk/benefit ratio of the product and provide an adequate basis for product labeling.
Generally, a well-controlled
Phase 3 clinical trial is
required by the FDA for approval of an NDA or BLA.
Post-approval clinical
trials, sometimes referred
to as Phase
4 clinical trials,
may be conducted
after initial marketing
approval. These
clinical trials are used to gain additional experience from the treatment of patients
in the intended therapeutic indication.
During all phases
of clinical development,
regulatory agencies require extensive
monitoring and auditing
of all clinical
activities, clinical
data and clinical trial investigators. Annual progress reports detailing
the results of the clinical trials must be submitted to the FDA and
written IND safety
reports must be
promptly submitted to
the FDA and the
investigators for serious
and unexpected adverse
events or
any finding
from tests in
laboratory animals
that suggests a
significant risk
for human
subjects. Phase 1,
Phase 2
and Phase 3
clinical
trials may
not be
completed successfully
within any
specified period,
if at
all. The
FDA or
the sponsor
or its
data safety
monitoring
board may
suspend a
clinical trial
at any
time on
various grounds,
including a
finding that
the research
subjects or
patients are
being
exposed to
an unacceptable
health risk.
Similarly,
an IRB
can suspend
or terminate
approval of
a clinical
trial at
its institution
if the
clinical trial is
not being conducted in
accordance with the
IRB’s requirements or if the
drug has been
associated with unexpected serious
harm to patients.
Concurrently with clinical
trials, companies usually
complete additional nonclinical
studies and
must also
develop additional information
about the chemistry
and physical characteristics
of the drug
as well as
finalize a process
for manufacturing the
product in commercial
quantities in accordance with
cGMP requirements. The
manufacturing process must be
capable of consistently
producing quality batches
of the product candidate and, among other things, must develop methods for testing the identity, strength, quality
and purity of the final
drug. For biological products in particular, the PHSA
emphasizes the importance of manufacturing control for
products whose attributes
cannot be precisely
defined in
order to help
reduce the
risk of
the introduction of
adventitious agents. Additionally, appropriate
packaging
must
be
selected
and
tested,
and
stability
studies
must
be
conducted
to
demonstrate
that
the
product
candidate
does
not
undergo
unacceptable deterioration over its shelf life.
U.S. Review and Approval Processes
Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product
development, nonclinical studies and clinical trials, along with descriptions
of the manufacturing process, analytical tests conducted on
the
chemistry
of
the
drug,
proposed
labeling
and
other
relevant
information
are
submitted
to
the
FDA
as
part
of
an
NDA
or
BLA
requesting approval to market the product. The submission of an NDA or BLA is subject to the payment of substantial fees; a waiver of
such fees may be obtained under certain limited circumstances.
In addition, under the
Pediatric Research Equity Act (“PREA”),
an NDA or BLA or
supplement to an NDA or
BLA must contain data
to
assess the
safety
and
effectiveness
of
the
drug for
the
claimed
indications
in all
relevant
pediatric
subpopulations
and
to
support
dosing and administration for each pediatric subpopulation for which the product is safe
and effective. The FDA may grant deferrals for
submission of data or full
or partial waivers. Unless
otherwise required by regulation, PREA does
not apply to any
drug for an indication
for which orphan designation has been granted.
The FDA reviews
all NDAs or
BLAs submitted to
determine if they
are substantially complete
before it accepts
them for filing.
If the
FDA determines that an NDA or BLA is incomplete or the application is found to be non-navigable, the filing may be refused and must
be re-submitted for consideration.
Once the submission is accepted
for filing, the FDA begins an
in-depth review of the NDA or
BLA.
Under the goals and policies agreed to by the
FDA under the Prescription Drug User Fee Act
(“PDUFA”), the FDA has 10 months from
acceptance of filing in which to
complete its initial review of
a standard NDA or BLA
and respond to the applicant, and
six months from
acceptance of
filing for
a priority
NDA or
BLA. The
FDA does
not always
meet its
PDUFA
goal dates.
The review
process and
the
PDUFA
goal date
may be
extended by
three months
or longer
if the
FDA requests
or the
NDA or
BLA sponsor
otherwise provides
additional information or clarification regarding information already
provided in the submission before the PDUFA
goal date.
After the NDA or BLA submission is accepted for filing, the FDA reviews the NDA or BLA
to determine, among other things, whether
the proposed product is safe and effective for
its intended use, and whether the
product is being manufactured in accordance with
cGMP
to assure and preserve the
product’s identity,
strength, quality and purity.
The FDA may refer applications
for novel drug or biological
products or drug or
biological products which present difficult 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
and
under
what
conditions.
The
FDA
is
not
bound
by
the
recommendations
of
an
advisory
committee,
but
it
considers
such
recommendations
carefully
when
making
decisions.
During
the
drug
approval
process,
the
FDA
also
will
determine
whether
a
risk
evaluation and mitigation strategy, or REMS is necessary to ensure that the benefits of the drug outweigh its risks and to assure the safe
use
of
the
drug.
The
REMS could
include
medication
guides, physician
communication
plans,
assessment
plans
and/or
elements
to
assure
safe
use,
such
as restricted
distribution
methods,
patient
registries
or
other
risk
minimization
tools.
The FDA
determines
the
requirement for a
REMS, as well as
the specific REMS
provisions, on a
case-by-case basis. If
the FDA concludes
a REMS is needed,
the
sponsor
of
the NDA
or BLA
must
submit
a proposed
REMS; the
FDA will
not
approve
the NDA
or
BLA without
a
REMS,
if
required.
Before approving an NDA or BLA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve
the product unless it
determines that the manufacturing processes
and facilities are in
compliance with cGMP requirements
and adequate
to assure consistent
production of
the product
within required specifications.
The FDA requires
vaccine manufacturers
to submit data
supporting
the
demonstration
of
consistency
between
manufacturing
batches,
or
lots.
The
FDA
works
together
with
vaccine
manufacturers to develop a lot
release protocol, the tests conducted on
each lot of vaccine post-approval. Additionally, before approving
an NDA or
BLA, the FDA
will typically inspect the
sponsor and one
or more clinical
sites to assure
that the clinical
trials were conducted
in
compliance
with
IND
study
requirements
and
with
GCPs.
If
the
FDA
determines
that
the
application,
manufacturing
process
or
manufacturing facilities are
not acceptable it
will outline the deficiencies
in the submission and
often will request
additional testing or
information.
The NDA
or BLA
review and
approval process
is lengthy
and difficult
and the
FDA may
refuse to
approve an
NDA or
BLA if
the
applicable regulatory
criteria are
not satisfied
or may
require additional
clinical data
or other
data and
information. Even
if such
data
and
information
is submitted,
the FDA
may
ultimately
decide
that the
NDA or
BLA does
not satisfy
the criteria
for
approval.
Data
obtained from clinical
trials are not always
conclusive and the
FDA may interpret
data differently
than we interpret
the same data. An
approval
letter
authorizes
commercial
marketing
of
the
drug
with
specific
prescribing
information
for
specific
indications,
while
a
complete response
letter indicates
that the
review cycle
of the
application is
complete and
the application
will not
be approved
in its
present form. The complete response letter usually describes all of
the specific deficiencies in the NDA or BLA identified by the
FDA.
The deficiencies identified may
be minor,
for example, requiring labeling
changes, or major,
for example, requiring additional
clinical
trials. Additionally, the complete response letter may include
recommended actions that the applicant might
take to place the
application
in a condition
for approval. If
a complete response
letter is issued,
the applicant
may either submit
new information,
addressing all of
the deficiencies identified in the letter, or withdraw
the application.
If a product
receives regulatory approval,
the approval may be
significantly limited to
specific diseases and
dosages or the
indications
for use may
otherwise be limited,
which could restrict
the commercial value
of the product. Further,
the FDA may require
that certain
contraindications, warnings or precautions be included in
the product labeling. In addition,
the FDA may require
post-marketing clinical
trials, sometimes referred to as Phase 4 clinical trials, which are designed to further assess a product’s safety and effectiveness and
may
require testing and
surveillance programs to
monitor the safety
of approved products
that have been
commercialized. In addition,
new
government requirements, including those resulting from new legislation, may be established,
or the FDA’s
policies may change, which
could impact the timeline for regulatory approval or otherwise impact ongoing
development programs.
Expedited Development and Review Programs
The
FDA is
authorized
to designate
certain
products
for
expedited
development
or review
if
they
are intended
to address
an
unmet
medical
need
in
the
treatment
of
a
serious
or
life-threatening
disease
or
condition.
These
programs
include
fast
track
designation,
breakthrough therapy designation and priority review designation.
The FDA has a fast track program
that is intended to expedite or facilitate
the process for reviewing new drugs
and biologics that meet
certain criteria. Specifically, new drugs
and biologics are eligible for fast track designation if they are intended to treat a serious or life-
threatening condition
and preclinical or
clinical data demonstrate
the potential
to address unmet
medical needs
for the condition.
Fast
track designation
applies to
the combination
of the
product and
the specific
indication for
which it
is being
studied. The
sponsor can
request the FDA to designate the product for fast track status any time before receiving NDA or BLA approval, but ideally no later than
the pre-NDA or pre-BLA meeting.
Additionally,
a
drug
or
biologic
may
be
eligible
for
designation
as
a
breakthrough
therapy
if
the
product
is
intended,
alone
or
in
combination with one or more other drugs or biologics, to treat a serious or life-threatening condition and preliminary clinical evidence
indicates
that
the
product
may
demonstrate
substantial
improvement
over
currently
approved
therapies
on
one
or
more
clinically
significant endpoints. The
benefits of breakthrough
therapy designation include
the same
benefits as fast
track designation, plus
intensive
guidance from the FDA to facilitate an efficient drug development
program.
Any product
submitted to
the FDA
for marketing,
including under
a fast
track or
breakthrough therapy
designation program,
may be
eligible for other
types of FDA
programs intended to
expedite development and
review, such as priority review
and accelerated approval.
Any product is eligible for priority review if it
treats a serious or life-threatening condition and, if approved, would provide
a significant
improvement
in
safety
and
effectiveness
compared
to
available
therapies.
Priority
review
reduces
the
review
time
for
an
initial
or
supplemental marketing application by four months.
Even if a product qualifies for one or more of these programs, the FDA may later
decide that the product no longer meets the conditions
for qualification or decide that the time
period for FDA review or approval
will not be shortened. Fast
track designation, priority review,
and breakthrough therapy designation do not change the standards for approval
but may expedite the development or approval process.
Accelerated Approval Pathway
A product may be eligible
for accelerated approval if it treats
a serious or life-threatening condition and generally
provides a meaningful
advantage over available therapies based on an effect on a surrogate endpoint
that is reasonably likely to predict clinical benefit or on a
clinical endpoint
that can
be measured
earlier than
irreversible morbidity
or mortality
("IMM") that
is reasonably
likely to
predict an
effect on
IMM or other
clinical benefit. As
a condition
of accelerated approval,
the FDA requires
that a sponsor
of a drug
or biologic
receiving
accelerated
approval
subsequently
provide
additional
data
confirming
the
anticipated
clinical
benefit,
for
example
by
performing adequate and well-controlled post-marketing clinical trials. If clinical benefit is not confirmed, accelerated approval may be
revoked.
In addition, as part of the Consolidated Appropriations Act for
2023, Congress provided FDA additional statutory authority to
mitigate
potential risks
to patients
from continued
marketing of
ineffective drugs
previously granted
accelerated approval.
Under these
recent
amendments
to the
FDCA, the
agency may
require a
sponsor of
a product
granted
accelerated approval
to have
a confirmatory
trial
underway prior
to approval.
The sponsor
must also
submit progress
reports on
a confirmatory
trial every
six months
until the
trial is
complete, and
such reports
will be
published on
FDA’s
website. Failure
to conduct
required post-approval
studies, or
to confirm
the
predicted clinical
benefit of
the product
during post-marketing
studies, allows
the FDA
to withdraw
approval of
the drug
or biologic.
Congress also
recently
amended the
law to
give FDA
the option
of using
expedited procedures
to withdraw
product
approval if
the
sponsor’s confirmatory trial fails to verify the claimed clinical benefits
of the product.
Granting of an EUA
The Commissioner
of the
FDA, under
delegated authority
from the
Secretary of
the U.S.
Department of
Health and
Human Services
(“DHHS”)
may,
under
certain
circumstances,
issue
an
Emergency
Use
Authorization,
or
EUA
that
would
permit
the
use
of
an
unapproved drug product or unapproved use of an approved drug product. Before an EUA may be issued, the Secretary must declare an
emergency based on one of the following grounds:
•
a
determination
by
the
Secretary
of
the
Department
of
Homeland
Security
that
there
is
a
domestic
emergency,
or
a
significant potential for a domestic emergency, involving a heightened risk of attack with a specified biological, chemical,
radiological or nuclear agent or agents;
•
a determination by the Secretary of the Department of
Defense that there is a military emergency, or a significant potential
for a military
emergency, involving a heightened risk to
U.S. military forces
of attack with
a specified biological, chemical,
radiological or nuclear agent or agents; or
•
a determination by the
Secretary of the DHHS that
a public health emergency
that affects, or has
the significant potential
to affect, national
security and that involves
a specified biological, chemical,
radiological or nuclear agent
or agents, or a
specified disease or condition that may be attributable to such agent or
agent.
In order to be the subject of an EUA, the FDA Commissioner
must conclude that, based on the totality of scientific evidence
available,
it is
reasonable
to believe
that the
product
may be
effective
in diagnosing,
treating or
preventing a
disease attributable
to the
agents
described above,
that the product’s
potential benefits
outweigh its potential
risks and that
there is no
adequate approved alternative
to
the product.
Although an EUA cannot be issued until after
an emergency has been declared by the Secretary
of DHHS, the FDA strongly encourages
an entity with a possible candidate product,
particularly one at an advanced stage of
development, to contact the FDA center responsible
for the candidate product before a determination
of actual or potential emergency. Such an entity may submit a
request for consideration
that includes data
to demonstrate that,
based on the
totality of scientific
evidence available, it
is reasonable to
believe that the
product
may
be effective
in diagnosing,
treating
or preventing
the
serious or
life-threatening
disease
or
condition.
This
is called
a
pre-EUA
submission and
its purpose
is to
allow FDA
review considering
that during
an emergency,
the time
available for
the submission
and
review of an EUA request may be severely limited.
Post-Approval Requirements
Any drug
or biological
products for
which we
or our collaborators
receive FDA
approvals are
subject to
continuing regulation
by the
FDA, includi
ng,
among
other things,
record-keeping
requirements, reporting
of adverse
experiences
with the
product, providing
the
FDA with updated
safety and efficacy
information, product sampling
and distribution requirements,
complying with certain
electronic
records and
signature requirements
and complying
with FDA
promotion and
advertising requirements,
which include,
among others,
standards
for
direct-to-consumer
advertising,
promoting
drugs for
uses or
in patient
populations
that are
not described
in the
drug’s
approved
labeling
(known
as
“off-label
use”),
industry-sponsored
scientific
and
educational
activities,
and
promotional
activities
involving the internet.
Failure to
comply with
FDA requirements
can have
negative consequences,
including adverse
publicity,
enforcement letters
from the
FDA,
mandated
corrective
advertising
or
communications
with
doctors,
and
civil
or
criminal
penalties.
Although
physicians
may
prescribe legally available drugs for off-label uses, manufacturers
may not market or promote such off-label uses.
Manufacturers
of
our
product
candidates
are
required
to
comply
with
applicable
FDA manufacturing
requirements
contained
in
the
FDA’s
cGMP
regulations.
cGMP
regulations
require,
among
other
things,
quality
control
and
quality
assurance
as
well
as
the
corresponding maintenance of
records and documentation.
Following approval, the FDA continues
to monitor vaccine quality
through
real-time monitoring of lots by requiring manufacturers to submit certain
information for each vaccine lot. Vaccine
manufacturers may
only distribute a lot
following release by the
FDA. Drug manufacturers and
other entities involved in
the manufacture and distribution
of
approved
drugs
are
required
to
register
their
establishments
with
the
FDA and
certain
state agencies,
and
are
subject to
periodic
unannounced inspections by the FDA and certain state
agencies for compliance with cGMP and other laws.
Accordingly, manufacturers
must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Discovery
of problems with a product after approval may result in restrictions on a product, manufacturer
or holder of an approved NDA or BLA,
including withdrawal
of the
product from
the market.
In addition,
changes to
the manufacturing
process generally
require prior
FDA
approval before being implemented, and other types of changes to the approved product, such as adding new indications and additional
labeling claims, are also subject to further FDA review and approval.
U.S. Patent-term Extension
Depending upon the timing, duration and specifics of
FDA approval of our product candidates,
some 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, commonly referred to as
the Hatch-Waxman
Amendments to
the FDCA.
The Hatch-Waxman
Amendments
permit extension
of the
patent
term of
up to
five
years
as compensation
for
patent
term
lost during
product
development
and
FDA regulatory
review
process.
Patent-term
extension,
however,
cannot extend
the remaining
term of
a patent
beyond a
total of
14 years
from the
product’s
approval date.
The patent-term
extension period is
generally one-half the
time between the effective
date of an IND
and the submission
date of an
NDA or BLA plus
the time between the submission date of an NDA or
BLA and the approval of that application, except
that the review period is reduced
by any time
during which the applicant
failed to exercise
due diligence. Only
one patent applicable
to an approved drug
is eligible for
the extension and
the application for
the extension must
be submitted prior
to the expiration
of the patent.
The U.S. Patent
and Trademark
Office, or USPTO,
in consultation with the
FDA, reviews and approves
the application for any patent
term extension or restoration.
In
the future, we
may apply for
extension of patent
term for our
currently owned or
licensed patents to
add patent life
beyond its current
expiration date,
depending on
the expected
length of
the clinical trials
and other factors
involved in
the filing of
the relevant
NDA or
BLA.
U.S. Foreign Corrupt Practices Act
In general, the Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, prohibits
offering to pay, paying, promising
to pay, or
authorizing
the payment
of money
or anything
of value
to a
foreign
official
in order
to influence
any act
or decision
of the
foreign
official in
his or her
official capacity
or to secure
any other improper
advantage in order
to obtain or
retain business for
or with, or
in
order to direct business to, any person. The prohibitions apply not only to payments made to “any foreign official,” but also those made
to “any foreign political party or official thereof,” to “any candidate for foreign
political office” or to any person, while knowing that all
or a portion of
the payment will be
offered, given, or
promised to anyone
in any of the
foregoing categories. “Foreign
officials” under
the FCPA include officers or employees of
a department, agency, or instrumentality
of a foreign
government. The term
“instrumentality”
is broad and can include state-owned or state-controlled entities.
Importantly, United States authorities
that enforce the FCPA,
including the Department of Justice, deem most health care professionals
and other employees
of foreign hospitals,
clinics, research facilities
and medical schools
in countries with
public health care
or public
education systems to be “foreign officials” under the FCPA.
When we interact with foreign health care professionals and researchers in
testing and marketing our products abroad,
we must have policies and procedures in place
sufficient to prevent us and agents
acting on
our behalf
from providing
any bribe,
gift or
gratuity,
including excessive
or lavish
meals, travel
or entertainment
in connection
with
marketing our future
products and services or securing
required permits and approvals
such as those needed
to initiate clinical trials in
foreign jurisdictions.
The FCPA
also obligates
companies whose
securities are
listed in
the United
States to
comply with
accounting
provisions requiring the maintenance of books and records that
accurately and fairly reflect all transactions of the
corporation, including
international subsidiaries, and the development and maintenance of an adequate system of internal accounting controls for international
operations. The Securities and Exchange Commission is involved with the books
and records provisions of the FCPA.
Regulation in Europe and Other Regions
In addition
to regulations
in the
United
States, we
and
our collaborators
are subject
to a
variety
of regulations
in other
jurisdictions
governing, among other things, clinical trials and any commercial sales and distribution
of our products.
Whether
or not
we or
our collaborators
obtain
FDA approval
for
a product,
we must
obtain the
requisite
approvals
from regulatory
authorities
in
foreign
countries prior
to
the
commencement
of
clinical
trials or
marketing
of
the
product
in
those
countries.
Certain
countries outside
of the
United States
have a
similar process
that requires
the submission
of a
clinical trial
application much
like the
IND
prior
to
the
commencement
of
human
clinical
trials.
In
the
European
Union,
for
example,
a
CTA
must
be
submitted
to
each
country’s
national health
authority and
an independent
ethics committee, much
like the FDA
and IRB, respectively.
Once the CTA
is
approved in accordance with a country’s
requirements, clinical trial development may proceed.
The requirements and process governing the conduct
of clinical trials, product licensing, pricing and reimbursement
vary from country
to country.
In all
cases, the
clinical trials
are conducted
in accordance
with GCPs and
the applicable
regulatory requirements
and the
ethical principles on human subjects research that have their origin in
the Declaration of Helsinki.
To
obtain regulatory
approval of
an investigational
drug or
biological product
under European
Union regulatory
systems, we
or our
strategic partners must
submit a marketing
authorization application. The
application in the European
Union is similar to
that required
in the United States, with the exception of, among other things, country-specific
document requirements.
For other
countries outside
of the European
Union, such as
countries in
Asia, Europe
and Latin America,
the requirements
governing
the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical
trials are conducted in accordance with GCPs
and the applicable regulatory requirements and the ethical principles that
have their origin
in the Declaration of Helsinki.
Employees and Human Capital Resources
As of December 31, 2022,
we employed 87 full-time
employees and 2 part-time
employees. Of these 87
full-time employees, 83
were
located in the United States, 2 were located in Ireland, 1 was located in
Taiwan and 1 was located in the UK.
As of March 15, 2023, we
employed 76 full-time
employees and 1
part-time employee.
Of these 76
full-time employees,
72 were located
in the United
States, 2
were located in Ireland, 1 was located in Taiwan and 1 was located in the UK.
None of our employees are represented by a labor union
or are party to a collective bargaining agreement,
and we have had no labor-related work stoppages.
Compensation, Benefits, Recruitment and Retention Strategy
We aim to focus on attracting, motivating and retaining
talented employees with relevant experience who
can contribute to the sustained
performance of the Company and its day-to-day operations.
We believe our total compensation package helps recruit and retain our employees. We strive to provide compensation and benefits that
are competitive to market and create
incentives to attract and retain employees. Our
compensation package includes market-competitive
pay,
broad-based
stock grants,
health
care and
401(k) plan
benefits,
paid
time off
and family
leave,
among
others. We
also provide
annual incentive bonus
opportunities that are
tied to both
company performance as
well as individual
performance to foster
a pay-for-
performance culture.
Scientific Advisory Board
We have assembled a highly qualified scientific advisory board composed of advisors who have deep expertise in
the fields of biologics
and vaccine development, as well as in the relevant therapeutic areas for our
product candidates.
Immunology & Vaccinology
●
Thomas P.
Monath, M.D.
●
Wayne Koff,
Ph.D.
●
Stanley A. Plotkin, M.D.
Neurology
●
Brad Boeve, M.D.
●
Richard Mohs, Ph.D.
●
Jeffrey Cummings, M.D.
●
Eric Reiman, M.D.
●
Nick Fox, M.D.
●
Stephen D. Silberstein, M.D.
Cardiovascular
●
Kausik K. Ray, M.D.
●
Stephen Nicholls, Ph.D.
●
Frederick Raal, Ph.D.
●
Dirk von Lewinski, M.D.
●
Thomas Fleming, Ph.D.
●
Parviz Ghahramani, Ph.D.

---

ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
Investing in our Class A
common stock involves a high degree
of risk.
The following information sets forth risk
factors that could cause
our actual results to differ materially from those contained in forward-looking statements we have made in this Annual Report on Form
10-K
and
those
we
may
make
from
time
to
time.
You
should
carefully
consider
the
risks described
below,
in
addition
to
the
other
information contained
in this Report
and our other
public filings, before
you decide to
purchase shares of
our Class A
common stock.
Our business, financial
condition or results
of operations could
be harmed by
any of these
risks. The risks
and uncertainties described
below are not the
only ones we face.
Additional risks not presently
known to us or
other factors not perceived
by us to
present significant
risks to our business at this time also may impair our business operations.
Summary Risk Factors
Our business is
subject to a
number of risks, including
risks that may
prevent us from achieving
our business objectives or
may adversely
affect our business, financial condition, results of operations and prospects. These risks are discussed more fully under Part II, Item 1A.
“Risk Factors.” The following is a summary of some of the principal risks we face:
•
clinical drug development
involves a lengthy and expensive
process, and if our
pre-clinical development or clinical
trials
are prolonged or delayed or do not achieve expected results, we may be unable
to commercialize our product candidates;
•
we depend on intellectual property licensed from UBI and its affiliates, the termination of which could result in the loss of
significant rights;
•
even if we obtain regulatory approval of, or commercialize, any of our product candidates in one
or more jurisdictions, we
may never obtain approval for, or commercialize
,
our product candidates in other jurisdictions;
•
after receipt
of regulatory
approval for
a product
candidate, our
products will
remain subject
to regulatory
scrutiny and
post-marketing
requirements, which
may include
burdensome post-approval
trial or
risk management
requirements that
may
adversely
impact
the
financial
results
of
any
future
commercialization
efforts
or
cause
us
to
choose
not
to
commercialize the product candidate;
•
if we
are able
to commercialize
any product
candidate, the
successful commercialization
of such
product candidate
will
depend
on
the
extent
governmental
authorities,
private
health
insurers
and
other
third-party
payors
provide
coverage,
adequate reimbursement levels and favorable pricing policies;
•
the manufacture of peptide-based medicines is complex and manufacturers
often encounter difficulties in production;
•
we have no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for
our future viability;
•
the regulatory landscape that
will govern our
product candidates is
uncertain, and changes in
regulatory requirements could
result in delays or discontinuation of development of our product candidates or
unexpected costs;
•
developments by competitors may render our products or technologies obsolete or non-competitive or may reduce
the size
of our markets;
•
our capital resources may
not be sufficient to
successfully complete the development
and commercialization of our
product
candidates, which could delay,
limit, reduce or terminate our development or commercialization efforts;
•
we have incurred significant losses since inception, and we expect to incur losses for the foreseeable future
and may never
achieve or maintain profitability;
•
conflicts of interest and disputes exist and may further
arise between us and UBI and its affiliates, and
these conflicts and
disputes might ultimately be resolved in a manner unfavorable to us;
•
we will need to expand our organization, and we
may experience difficulties in managing this growth, which could
disrupt
our operations;
•
the
dual-class
structure
of
our
common
stock
and
the
Voting
Agreement
(as
defined
below)
will
have
the
effect
of
concentrating voting power, which will significantly
limit your ability to influence significant corporate decisions;
•
we rely on contract manufacturers for the manufacture of raw materials
for our research programs, pre-clinical studies and
clinical trials and we
do not have long-term contracts
with many of these
parties, which could impact our
ability to develop
and commercialize our products;
•
undetected errors or defects in our production could harm our reputation
or expose us to product liability claims;
•
we rely on
in-licensed intellectual property
and technology,
and the loss
of such rights,
our licensors’ inability
or refusal
to enforce or defend
such rights, and any requirement
to pay amounts under
current or future agreements
could harm our
business;
•
the
degree of
protection
afforded
by our
intellectual
property
rights is
uncertain
because
such rights
offer
only limited
protection and may not adequately protect our rights or permit us to gain or keep a competitive
advantage;
•
we have previously
identified and remediated
material weaknesses, in
our internal control
over financial reporting
and if
we
are
unable
to
maintain
an
effective
system
of
internal
control
over
financial
reporting,
or
if
we
discover
material
deficiencies in
the future,
we may
not be
able to
accurately report
our financial
results or
prevent fraud,
and as
a result,
shareholders
could lose
confidence in
our financial
and other
public reporting,
which would
harm our
business and
the
trading price of our Class A common stock;
•
cyberattacks
or
other
failures
in
our
or
our
third-party
vendors’,
contractors’
or
consultants’
telecommunications
or
information
technology
systems
could
result
in
information
theft,
compromise,
or
other
unauthorized
access,
data
corruption and significant disruption of our business
operations, and could harm our reputation and subject
us to liability,
lawsuits and actions from governmental authorities; and
•
we are
subject to
privacy,
tax, anti-corruption
and other
stringent laws,
regulations, policies
and contractual
obligations
across multiple jurisdictions and changes in, or our failure to comply with, such laws,
regulations, policies and contractual
obligations could adversely affect our business, financial
condition, results of operations and prospects.
Risks Related to the Discovery and Development of Product Candidates
Clinical drug development
involves a
lengthy and expensive
process with uncertain
timelines and
uncertain outcomes,
and results
of earlier studies and trials may not be predictive of future results. If our pre-clinical development or clinical trials are prolonged or
delayed,
or if
we do
not or
cannot achieve
the results
we expect,
we may
be unable
to obtain
required regulatory
approvals,
and
therefore be unable to commercialize our product candidates on a timely basis or at
all.
Our business is
dependent on
the successful development,
regulatory approval
and commercialization
of product
candidates based on
our
Vaxxine
Platform.
If
we
and
our
collaborators
are
unable
to
obtain
approval
for
and
effectively
commercialize
our
product
candidates, our
business would
be significantly
harmed. Even
if we
complete the
necessary pre-clinical
studies and
clinical trials,
the
regulatory
approval
process
is
expensive,
time-consuming
and
uncertain,
and
we
may
not
be
able
to
obtain
approvals
for
the
commercialization of any product candidates we may develop.
Changes in regulatory approval policies, changes in or the enactment
of
additional statutes
or regulations,
or changes
in regulatory
review processes,
may cause delays
in the
approval of
a particular
product
candidate or
rejection of
an application
for a
particular product
candidate. We
have not
obtained regulatory
approval for
any product
candidate to date,
and it is
possible that none
of our existing
product candidates
or any product
candidates we may
seek to develop
in
the future will ever
obtain regulatory approval.
Any regulatory approval we
ultimately obtain may be
limited or subject to restrictions,
including labeling
requirements, or
post-approval commitments
that render
the approved
product not
commercially viable.
While our
enzyme-linked
immunosorbent assay
(“ELISA”)
test has
received an
EUA from
the FDA,
there can
be no
assurance that
any of
our
product candidates will receive an EUA or regulatory approval
or that there will not be changes
in formulation, whether required by any
regulatory
authority
or
at
our
determination
for
operational
or
scientific
reasons,
affecting
the
use
of
our
products.
Further,
some
countries may not rely on an EUA or regulatory approval issued by another jurisdiction, and we may be required
to seek separate EUAs
or regulatory approval from different regulatory authorities in different jurisdictions. See “Risk Factors-Even
if we obtain approval of
any
of our
product
candidates
in
one
jurisdiction,
we
may never
obtain
approval
for or
commercialize
any
of our
products
in
other
jurisdictions, which would limit our ability to realize their full market potential.”
To
obtain the requisite
regulatory approvals to
market and sell
any of our
product candidates, we
must demonstrate through
extensive
pre-clinical studies and clinical trials that our products are safe and effective in humans. Clinical testing is
expensive and can take many
years to complete, and its outcome
is inherently uncertain. Failure can occur
at any time during the clinical trial process.
The results of
pre-clinical studies and early clinical trials of our product candidates may not be
predictive of the results of later-stage clinical trials and
results from post-hoc
data analysis may not
be predictive of
final results and
may not support
product approval.
Product candidates in
later
stages
of
clinical
trials may
fail
to
show
the desired
safety
and
efficacy
characteristics
despite
having
progressed
through
pre-
clinical
studies
and
initial
clinical
trials.
For
example,
an
EUA
for
UB-612
was
denied
by
the
TFDA
in
August
because
the
neutralizing antibody response
generated by UB-612,
as compared
to a
designated adenovirus vectored
vaccine, did not
meet the
TFDA’s
specified evaluation
criteria.
If results
from our
clinical trials
differ from
previous reports
or market
expectations, such
as a
potential
development of
market expectations
that COVID-19
boosters or
vaccines be
developed specifically
to address
certain variants
which
we
fail
to
satisfy,
or
if
we
fail
to
obtain
a
required
regulatory
approval,
the
price
of
our
Class
A
common
stock
could
decrease
substantially. Several
companies in the biopharmaceutical
industry have suffered
significant setbacks in advanced
clinical trials due to
lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier
trials. Our ongoing and future clinical trials may
not be successful.
Further,
while
we
have
conducted
limited
head-to-head
comparisons
in
pre-clinical
studies
of
UB-313
and
VXX-401,
we
have
not
conducted a head-to-head
comparison of any
competing products to
any of our
chronic disease product
candidates in any
clinical trial
to date. We have compared the
published data for certain
of our competitors’ products
to the clinical
trial results of certain
of our product
candidates. Accordingly,
the value
of comparisons
of our
product candidates
to any
alternative products
in this report
may be
limited
because they are not derived from a head-to-head clinical trial, rather they are from trials that were conducted under different protocols,
at different sites,
with different patient
populations, at different
times and results
were analyzed using
non-standardized assays performed
internally or by different clinical
research organizations (“CROs”). Without
head-to-head data, we will be unable
to make comparative
claims for our product candidates, if
any such product candidate is approved. Future
clinical trials may not confirm the comparisons
or
analyses we have made to date.
Clinical trials must be conducted in accordance with applicable regulatory authorities’ legal requirements, regulations or guidelines and
are
subject
to oversight
by these
governmental
agencies
as well
as Institutional
Review Boards
(“IRBs”)
at
the
medical
institutions
where the clinical
trials are conducted.
In addition, clinical
trials must be conducted
with supplies of
our product candidates
produced
in
accordance
with
current
good
manufacturing
practices
(“cGMP”)
and
other
legal
and
regulatory
requirements.
Defects
in
manufacturing
of
a
clinical
trial
batch
or
a
failure
of
a
batch
to
meet
all quality
control
test
specifications
could
result
in
delays
to
initiation
of our
clinical
trials.
We
depend
on medical
institutions
and
CROs to
conduct
our
clinical
trials in
compliance
with
good
clinical
practice
(“GCP”),
and
other
applicable
laws
and
regulations.
Failure
to
follow
and
document
adherence
to
such
laws
and
regulations may
lead to
significant delays
in the
availability of
product for
our clinical
trials, result
in the
termination of
or a
clinical
hold being
placed on
one or
more of
our clinical
trials, or
delay or
prevent submission
or approval
of marketing
applications for
our
product candidates.
To the extent our CROs fail to enroll participants for
our clinical trials, fail to conduct the
trial in accordance with the trial
protocol GCP
or are
delayed for
a significant
time in
the execution
of trials,
including
achieving full
enrollment, we
may be
affected
by increased
costs, program
delays or
both, which
may harm
our business
and
delay
our
ability to
seek approval
for our
product
candidates. For
example,
due
in part
to an
error by
the CRO
responsible
for administering
blinded placebo
and active
doses to
trial subjects,
which
reduced the confidence
of subsequently collected
data, we decided
to discontinue a
Phase 2a LTE trial for
UB-311. In that case,
however,
we determined that we had collected sufficient data on UB-311’s
tolerability and immunogenicity.
The completion of clinical trials
for our clinical product
candidates may be delayed, suspended or
terminated because of many factors,
including but not limited to:
•
the delay or refusal of regulators or IRBs to authorize us to commence a clinical trial
at a prospective trial site;
•
changes in regulatory requirements, policies and guidelines;
•
delays or failure to reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which
can be subject to extensive negotiation and may vary significantly among
different CROs and trial sites;
•
delays in patient enrollment and variability in the number and types of patients
available for clinical trials;
•
negative or
inconclusive results,
which may
require us
to conduct
additional pre-clinical
or clinical
trials or
to abandon
product candidates that we expect to be promising;
•
delays in manufacturing and control of clinical trial materials;
•
shortages of materials required for the production of our product candidates;
•
disruptions from events surrounding the Russia-Ukraine conflict
•
the timing, scope and effectiveness of U.S. and international
governmental, regulatory,
fiscal, monetary and public health
responses to the COVID-19 pandemic;
•
safety or tolerability
concerns causing us
to suspend or
terminate a trial
if it is
determined that
the participants are
being
exposed to unacceptable health risks;
•
lower than anticipated retention rates of patients and volunteers in clinical trials and difficulty in maintaining contact with
patients after treatment, resulting in incomplete data;
•
failure of us, our CROs or clinical trial sites to comply with regulatory requirements;
•
failure of our CROs or clinical trial sites to meet their contractual
obligations to us in a timely manner,
or at all, deviating
from the clinical trial protocol or dropping out of a trial;
•
delays relating to adding new clinical trial sites;
•
delays in establishing necessary pre-clinical or clinical data;
•
the occurrence of unexpected severe or serious product-related adverse
events in a clinical trial;
•
the quality or stability of the product candidate falling below acceptable standards;
•
the inability to produce or obtain sufficient quantities of the
product candidate to complete clinical trials on time,
or delays
in sufficiently developing, characterizing or controlling
a manufacturing process suitable for clinical trials;
•
supply chain constraints and inflationary pressures;
•
the lack of adequate funding to continue the clinical trial;
•
developments
observed
in
trials
conducted
by
competitors
for
related
technology
that
raises
general
concerns
from
regulatory authorities about risk to patients of similar vaccine technology;
•
the determination that a product candidate will not be producible in relevant quantities
at the manufacturing stage;
•
the failure of regulatory authorities such as the FDA, MHRA or TGA to approve our manufacturing processes or facilities
or those of contract manufacturers with which we contract for clinical and commercial
supplies; and
•
the transfer
of manufacturing processes
to larger-scale
facilities operated
by contract manufacturers
or by us,
and delays
or failure by our contract manufacturers or us to make any necessary changes to
such manufacturing process.
In addition,
pre-clinical and
clinical data
are often
susceptible to
varying interpretations
and analyses
and results
from post-hoc
data
analysis
may
not
be
predictive
of
final
results
and
may
not
support
product
approval.
Many
companies
that
believed
their
product
candidates performed
satisfactorily in
pre-clinical studies
and clinical
trials have
nonetheless failed
to obtain
marketing approval
for
their product candidates. Regulatory authorities have substantial discretion in the approval process and in determining when or whether
regulatory approval
will be obtained
for any of
our product candidates.
Additionally,
the FDA typically
does not accept
post-hoc data
analyses
as support
for
regulatory
approval.
Even
if
we
believe
the
data
collected
from
clinical
trials of
our
product
candidates
are
promising, such data
may not be sufficient
to support approval by
regulatory authorities. Regulatory
authorities may disagree
with the
design or implementation of our clinical
trials and may disagree with
our interpretation of data from pre-clinical
studies or clinical trials.
In some instances, there can be significant variability in safety or efficacy results between different trials of the same product candidate
due
to
numerous
factors,
including
changes
in
trial
procedures
set forth
in
protocols,
differences
in
the
size and
type
of
the
patient
populations, adherence to the dosing
regimen and other trial
procedures and the rate of
dropout among clinical trial participants.
Further,
none
of
our
trials
to
date
of
UB-311
have
been
large
enough
to
determine
whether
their
assessments
of
efficacy
were
statistically
significant. Therefore, we are
able to report
potential trends on
such measures, but
we will
not be able
to make more
definitive statements
about
the
efficacy
of
our
product
candidates
until
we
complete
clinical
trials
that
are
adequately
powered
to
demonstrate
statistical
significance of clinically meaningful results.
Moreover, for AD,
given the difficulties in assessing
whether a product candidate is disease-modifying
in terms of interrupting disease
pathology and delaying cognitive decline,
we plan to include in our
trial designs for UB-311 biomarker endpoints and, if
our trial results
warrant, may apply
for regulatory approval
based on biomarker
data. While the
FDA recently approved
aducanumab based on biomarker
data, there is no assurance that the FDA will accept biomarker data for other product
candidates, including UB-311, in the future.
Even if
we obtain
approval
of
any
of our
product
candidates
in one
or
more
jurisdictions,
we may
never obtain
approval
for or
commercialize any
of our
products in
other jurisdictions,
which would
limit our
ability to
realize the
full market
potential
of our
product candidates.
To
market
any
products,
we
must
establish
and
comply
with
numerous
and
varying
regulatory
requirements
in
different
countries
regarding safety and efficacy and obtain relevant approvals to market
our product candidates. As discussed in another risk factor above
(“
Clinical drug
development involves
a lengthy
and expensive
process…
”) an
EUA for
UB-612 was
denied by
the TFDA
in August
2021. Approval by a
foreign regulatory authority in any
other jurisdiction does not ensure
approval by comparable regulatory authorities
in other countries or jurisdictions, including approval by the FDA in the United States. The failure to
obtain approval in one jurisdiction
may delay or otherwise negatively
impact our ability to obtain approval elsewhere.
In addition, clinical trials conducted in
one country
may
not
be
accepted
by
regulatory
authorities
in
other
countries.
Approval
procedures
vary
among
countries
and
even
if
we
have
obtained
approval
in
one
country,
approval
in
other
countries
can
involve
additional
product
testing
and
validation
and
additional
administrative review periods.
Seeking
regulatory
approvals
in
different
countries
could
result
in
additional
and
unexpected
costs
for
us,
including
as
a
result
of
additional required pre-clinical studies or clinical trials which would be costly and time-consuming.
Satisfying regulatory requirements
is costly,
time-consuming, uncertain
and may be
subject to unanticipated
delays. In addition,
our failure to
obtain regulatory
approval
in any country may delay or have negative effects on the process for regulatory approval in other countries. Apart from our ELISA test,
which
has
been
approved
for
sale
by
the
FDA
through
an
EUA,
we
do
not
have
any
product
candidates
approved
for
sale
in
any
jurisdiction, including international
markets. We
do not have experience
in obtaining regulatory approval
in international markets, and
we
will
be
relying
on
our
collaboration
partners
such
as
UBIA
to
assist
us
in
this
process.
If
we
fail
to
comply
with
regulatory
requirements in international markets or to obtain and maintain required approvals, our ability to realize the full market potential
of our
products will be harmed.
Interim, “top-line” and preliminary data from our clinical trials that we
announce or publish from time to time may change as more
patient data become available
and are also subject
to audit and verification
procedures that could result
in material changes in
the
final data.
From time to time,
we may publicly disclose
preliminary or top-line data from
our pre-clinical studies and
clinical trials, which are
based
on a preliminary analysis
of then-available data, and
the results and related findings
and conclusions are subject
to change following a
more comprehensive review of the data related to the particular study
or trial. We also may make assumptions, estimations, calculations
and conclusions as part of our analyses of data, and
we may not have received or had the opportunity to
fully and carefully evaluate all
data.
As
a
result,
the
top-line
or
preliminary
results
that
we
report
may
differ
from
future
results
of
the
same
studies,
or
different
conclusions or considerations may qualify such
results, once additional data have been received and fully
evaluated. Top-line data
also
remain subject to audit and verification procedures that may result in the final
data being materially different from the preliminary
data
we previously published. As a result, top-line data should be viewed with
caution until the final data are available.
From time
to time,
we may
also disclose
interim data
from our
pre-clinical studies
and clinical
trials. Interim
data from
clinical trials
that we
may complete
are subject
to the
risk that
one or
more of
the clinical
outcomes may
materially
change as
patient enrollment
continues
and
more
patient
data
become
available
or
as
patients
from
our
clinical
trials continue
other
treatments
for
their
disease.
Adverse
differences
between
preliminary
or
interim
data
and
final
data
could
significantly
harm
our
business
prospects.
Further,
disclosure of interim data by us or by our competitors could result in volatility
in the price of our Class A common stock.
For instance,
in the fourth
quarter of 2022
we announced conclusions
from an end-of-treatment
analysis of Part
B of our
Phase 1 trial
of UB-312 in PD patients, and top-line results of our Phase 3 trial of
UB-612.
These conclusions remain subject to change following a
more comprehensive
review of
the data,
or following
additional data
which from
the same
respective trials
or programs
that support
different conclusions.
Further, others,
including regulatory authorities,
may not accept or
agree with our assumptions,
estimates, calculations, conclusions
or
analyses
or
may
interpret
or
weigh
the
importance
of
data
differently,
which
could
impact
the
value
of
the
particular
program,
the
approvability
or
commercialization
of
the
particular
product
candidate
or
product
and
the
Company
in
general.
In
addition,
the
information
we
choose
to
publicly
disclose
regarding
a
particular
study
or
clinical
trial
is
based
on
what
is
typically
extensive
information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our
disclosure.
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed and result in
increased costs and longer development periods or otherwise be adversely affected.
We
will be
required
to identify
and enroll
a sufficient
number of
patients for
our planned
clinical trials.
Trial
participant
enrollment
could be
limited in
future trials
given
that many
potential participants
may be
ineligible because
of pre-existing
conditions, medical
treatments or other reasons.
For example, the next
phase of our UB-311
development could be affected
by worldwide effects resulting
from the
Russia-Ukraine conflict
and other
geopolitical factors.
We
may not
be able
to initiate
or continue
clinical trials
required by
applicable
regulatory authorities
or any
of our
other product
candidates
that we
pursue if
we are
unable to
locate and
enroll
enough
eligible patients or volunteers to participate in these clinical trials. Patient
enrollment is affected by other factors, as
well, including the
incidence
and
severity
of the
disease
under
investigation;
the
design
of
the
clinical
trial
protocol;
the
size and
nature
of
the
patient
population;
the
eligibility
criteria
for
the
trial
in
question;
the
perceived
risks
and
benefits
of
the
product
candidate
under
trial;
the
perceived safety
and tolerability
of the product
candidate; the proximity
and availability of
clinical trial sites
for prospective
patients;
the availability
of competing
therapies and
clinical trials;
effects of
the COVID-19
pandemic on
our clinical
trial sites;
our ability
to
monitor patients adequately
during and after
treatment; patient referral
practices of physicians; clinicians’
and patients’ perceptions
as
to the
potential advantages
of the
drug being
studied in
relation to
other available
therapies, including
standard-of-care and
any new
drugs that may be approved for the indications we are investigating; and efforts
to facilitate timely enrollment in clinical trials.
We
also may
encounter
difficulties
in identifying
and enrolling
such patients
with a
stage of
disease appropriate
for our
ongoing or
future clinical
trials. In
addition, the
process of
finding and
diagnosing patients
may prove
costly.
Our inability
to enroll
a sufficient
number of
patients for
any of
our clinical
trials would
result in
significant delays
or may
require us
to abandon
one or
more clinical
trials.
Even if
we obtain
regulatory approval
for a
product candidate,
our products
will remain
subject to
regulatory scrutiny
and post-
marketing requirements.
Any regulatory approvals that we may receive for our product candidates will
require the submission of reports to regulatory authorities
and ongoing surveillance to
monitor the safety and
efficacy of the product
candidate, may contain significant
limitations related to use
restrictions for
specified age gro
ups, warnings,
precautions or
contraindications, and
may include
burdensome post-approval
study or
risk management
requirements. For
example, the
FDA may
require a
Risk Evaluation
and Mitigation
Strategy (“REMS”)
to approve
our
product
candidates,
which
could
entail
requirements
for
a
medication
guide,
physician
training
and
communication
plans
or
additional elements
to ensure
safe use,
such as
restricted distribution
methods, patient
registries and
other risk
minimization tools.
In
addition, if one
of our product
candidates is approved
in the
United States or
abroad, it will
be subject to
ongoing regulatory requirements
for manufacturing,
labeling, packaging,
storage, advertising,
promotion, sampling,
record-keeping, conduct
of post-marketing
studies
and
submission
of
safety,
efficacy
and
other
post-
market
information.
Manufacturers
and
manufacturers’
facilities
are
required
to
comply
with extensive
requirements by
regulatory authorities,
including
ensuring that
quality control
and manufacturing
procedures
conform to cGMP regulations. As such, we and our contract manufacturers will be subject to continual review and inspections to assess
compliance with cGMP and adherence to commitments
made in any approved marketing application. Accordingly,
we and others with
whom
we
work
must
continue
to
expend
time,
money
and
effort
in
all
areas
of
regulatory
compliance,
including
manufacturing,
production and quality control.
If a
regulatory authority such
as the
FDA discovers previously
unknown problems with
a product, such
as adverse
events of
unanticipated
severity
or
frequency,
or
problems
with
product
quality
or
the
facility
where
the
product
is
manufactured,
or
disagrees
with
the
promotion,
marketing
or
labeling
of
a
product,
such
regulatory
authorities
may
impose
restrictions
on
that
product
or us,
including
requiring withdrawal of the
product from the market.
If we fail
to comply with applicable
regulatory requirements, a regulatory authority
or
enforcement
authority
may,
among
other
things:
issue
warning
letters;
impose
civil
or
criminal
penalties;
suspend
or
withdraw
regulatory approval; suspend any of
our clinical trials; refuse to approve
pending applications or supplements to
approved applications
submitted
by
us;
impose
restrictions
on
our
operations,
including
closing
our
contract
manufacturers’
facilities;
or
seize
or
detain
products, or require a product recall.
Any government
investigation of
alleged violations
of law
could require
us to
expend significant
time and
resources in
response and
could
generate
negative
publicity.
Any
failure
to
comply
with
ongoing
regulatory
requirements
may
adversely
affect
our
ability
to
commercialize and generate
revenue from our products.
If regulatory sanctions
are applied or if
regulatory approval is withdrawn,
our
business will be seriously
harmed. Further,
if a regulatory authority
identifies previously unknown
problems with our platform,
any or
all of our product candidates may also be affected.
Furthermore, the burden of these requirements may outweigh any benefit or revenue that we could generate from product sales. Even if
we obtain
regulatory approval
for a
product candidate
,
compliance with
the many
post-approval regulations
may be
so costly
that it
becomes
financially
prudent
to
abandon
the
product
or
sell
ownership
of
the
underlying
intellectual
property
at
prices
that
are
not
sufficient to recoup our investment in developing the product.
Moreover, the policies of regulatory authorities may change, and additional government
regulations may be enacted that could prevent,
limit or delay regulatory
approval of our product
candidates. We cannot predict the likelihood, nature
or extent of government
regulation
that may arise from
future legislation or administrative or
executive action, either in
the United States
or abroad. If we
are slow or unable
to adapt to changes in existing requirements or the adoption
of new requirements or policies, or if we
are not able to maintain regulatory
compliance, we may lose any marketing approval that we may have obtained
and we may not achieve or sustain profitability.
We have no history of commercializing pharmaceutical products, which
may make it difficult to
evaluate the prospects for our
future
viability.
We commenced operations through
UNS and
COVAXX in 2014 and 2020,
respectively, and as Vaxxinity in March
2021. Our operations
to date
have been
limited to
organizing
and staffing
Vaxxinity,
business planning,
raising capital,
developing our
Vaxxine
Platform,
identifying
and
testing
potential
product
candidates
and
conducting
clinical
trials.
We
have
a
limited
track
record
of
successfully
conducting late-stage clinical trials, obtaining marketing approvals, manufacturing a commercial-scale product
or arranging for a third-
party
to
do
so
on
our
behalf,
or
conducting
sales
and
marketing
activities
necessary
for
successful
product
commercialization.
Accordingly,
you should consider
our prospects considering
the costs, uncertainties,
delays and difficulties
frequently encountered
by
companies in the early stages of development, especially clinical-stage biopharmaceutical companies such as ours. Any predictions you
make about our
future success or
viability may not
be as accurate
as they could
be if we had
a longer operating
history or a
history of
successfully developing and commercializing pharmaceutical products.
We
may
encounter
unforeseen
expenses,
difficulties,
complications,
delays
and
other
known
or
unknown
factors
in
achieving
our
business objectives. We will eventually need to
transition from a
company with a
development focus to a
company capable of
supporting
commercial activities. We
may not be successful in such a transition.
We
expect our
financial condition
and operating
results to
continue to
fluctuate significantly
from quarter
to quarter
and year
to year
due to a variety of factors, many of which are beyond our control. Accordingly,
you should not rely upon the results of any quarterly or
annual periods as indications of future operating performance.
Our product candidates
may cause undesirable
side effects that
could delay or
prevent their regulatory
approval, limit the
commercial
profile of an approved label or result in significant negative consequences following
regulatory approval, if any.
Undesirable
side
effects
that
may
be
caused
by
our
product
candidates
could
cause
us,
our
collaboration
partners
or the
regulatory
authorities
to
interrupt,
delay
or
halt
clinical
trials and
could
result
in
a more
restrictive
label
or
the delay
or
denial
of
approval
by
regulatory authorities. Results of our
trials could reveal a
high and unacceptable severity and
prevalence of side effects. In
such an event,
our trials could be
suspended or terminated and regulatory
authorities could order us to
cease further development of
or deny approval
of our
product candidates
for any
or all
targeted
indications. The
product-related
side effects
could
affect
patient
recruitment
or the
ability of enrolled
patients to complete
the trial or
result in potential
product liability
claims. Any of
these occurrences
may harm
our
business, financial condition, results of operations and prospects significantly.
Clinical trials assess a sample
of the potential patient
population. With a
limited number of patients
and duration of exposure,
rare and
severe side effects of
our product candidates
may only be
uncovered with a
significantly larger number of
patients exposed to
the product
candidate. If our product candidates receive an EUA or regulatory approval and we or others identify undesirable side effects caused by
such product candidates (or
any other similar products)
after such approval, a
number of potentially significant
negative consequences
could result, including:
•
regulatory authorities may withdraw or limit their approval of such
product candidates and require us to take our approved
product(s) off the market;
•
regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a contraindication, or
submission of field alerts to physicians and pharmacies;
•
we may be required to create a medication guide outlining the risks of such
side effects for distribution to patients;
•
we may be required to change the way such product candidates are distributed or administered, conduct additional clinical
trials or change the labeling of the product candidates;
•
actual or potential drug-related side effects could negatively affect patient recruitment or
the ability of enrolled patients to
complete a trial for our products or product candidates;
•
market
acceptance
of
our
products
by
patients
and
physicians
may
be
reduced
and
sales
of
the
product
may
decrease
significantly;
•
regulatory
authorities
may
require
a
REMS
plan
to
mitigate
risks,
which
could
include
medication
guides,
physician
communication plans,
or elements to
assure safe use,
such as restricted
distribution methods,
patient registries
and other
risk minimization tools;
•
we may be subject to regulatory investigations and government enforcement actions;
•
we may decide or be required to remove such product candidates from
the marketplace;
•
we could be sued and potentially held liable for injury caused to individuals exposed
to or taking our product candidates;
•
sales of the product(s) may decrease substantially; and
•
our reputation may suffer.
Any of
these events
could prevent
us from
achieving or
maintaining market
acceptance of
the affected
product candidates
and could
substantially increase
the costs
of commercializing
our product
candidates, if
approved, and
therefore could
have a
material adverse
effect on our business, financial condition, results of operations
and prospects.
The regulatory landscape that will
govern our product candidates
is uncertain. Regulations that impact
our product candidates are
still
developing,
and changes
in regulatory
requirements could
result in
delays or
discontinuation
of development
of our
product
candidates or unexpected costs in obtaining regulatory approval.
The regulatory requirements
to which our product
candidates will be subject
are complex and
uncertainties exist. Even with
respect to
more established vaccine products, the regulatory landscape is still evolving, especially as it relates to novel adjuvants in vaccines, such
as
CpG1,
which
we
use
at
low
concentration
in
our
product
candidates.
Although
regulatory
authorities
decide
whether
individual
clinical trial protocols may proceed, the review process and determinations of other reviewing bodies can impede or delay the initiation
of a
clinical trial,
even if
another regulatory
authority has
reviewed the
trial and
authorizes its
initiation. The
FDA, for
example, can
place an IND on clinical hold even if other regulatory agencies have provided a favorable review.
In addition, adverse developments in
clinical trials involving novel adjuvants in vaccines, such as CpG1, conducted
by others may cause regulatory authorities to change the
requirements for approval of any of our product candidates.
Complex regulatory environments exist
in other jurisdictions in which
we might consider seeking regulatory approvals
for our product
candidates, further complicating
the regulatory landscape.
For example,
in the
European Union a
special committee called
the Committee
for Advanced Therapies
was established within the
European Medicines Authority
in accordance with Regulation
(EC) No 1394/2007
on
advanced-therapy
medicinal
products
(“ATMPs”),
to
assess
the
quality,
safety
and
efficacy
of
ATMPs,
and
to
follow
scientific
developments in the field.
These various regulatory review committees and advisory groups and new or revised guidelines that they promulgate from time to time
may lengthen the
regulatory review process,
require us to perform
additional studies or
analyses, increase our development
costs, lead
to changes
in regulatory
positions and
interpretations, delay
or prevent
approval and
commercialization
of our
product candidates
or
lead to
significant post-approval
limitations or
restrictions. We
may face
even more
cumbersome and
complex regulations
than those
emerging for
novel adjuvants.
Furthermore, even
if our
product candidates
obtain required
regulatory approvals,
such approvals
may
later be withdrawn because of changes in regulations or the interpretation of
regulations by applicable regulatory authorities.
Even if we receive regulatory
approval to market any of
our product candidates, we will
be subject to ongoing obligations and
continued
regulatory review, which may materially adversely affect
our business, financial condition, results of operations and prospects. Further,
other
jurisdictions
may
consider
our
product
candidates
to be
new
drugs,
not biologics
or
medicinal
products,
and
require
different
marketing applications.
Even if a
regulatory authority
approves any
of our product
candidates, the
manufacturing processes,
labeling,
packaging, distribution,
product sampling,
adverse event
reporting, storage,
advertising, marketing,
promotion and
recordkeeping for
the product
will be
subject to
extensive and
ongoing regulatory
requirements. These
requirements include
submissions of
safety and
other post-marketing information and
reports and registration, as well as
continued compliance with cGMPs and
GCPs for any clinical
trials that we conduct post-approval, all of which may result
in significant expense and limit our ability to commercialize such products.
There also are
continuing, annual program
user fees for
any marketed products.
In the United States,
biologic manufacturers
and their
subcontractors
are
required
to
register
their
establishments
with
the
FDA
and
certain
state
agencies
and
are
subject
to
periodic
unannounced
inspections
by
the
FDA
and
certain
state
agencies
for
compliance
with
cGMP,
which
impose
certain
procedural
and
documentation requirements upon us and our contract manufacturers.
Changes to the manufacturing process are strictly regulated,
and,
depending on the significance of the change, may require prior
FDA approval before being implemented. FDA regulations also require
investigation and correction of
any deviations from cGMP and
impose reporting requirements upon
us and any contract manufacturers
that we may
decide to use.
Accordingly, manufacturers must continue to
expend time, money
and effort in
production and quality
control
to maintain compliance with cGMP and other aspects of regulatory compliance.
Any regulatory approvals
that we receive
for our product candidates
may also be subject
to limitations on the
approved indicated uses
for which the
product may be marketed
or to the conditions
of approval, or
contain requirements for
potentially costly post-marketing
testing and surveillance to monitor the safety and efficacy of the product. For example, the FDA has the authority to require a REMS as
part of a BLA
or after approval, which may
impose further requirements or restrictions
on the distribution or
use of an approved
product,
such
as
limiting
prescribing
to
certain
physicians
or
medical
centers
that
have
undergone
specialized
training,
limiting
treatment
to
patients who meet certain
safe-use criteria and requiring
treated patients to enroll in
a registry.
Later discovery of previously
unknown
problems
with
a
product,
including
adverse
events
of
unanticipated
severity
or
frequency,
or
with
our
contract
manufacturers
or
manufacturing processes, or failure to comply with regulatory requirements
may result in, among other things:
•
restrictions on the marketing or manufacturing of the product,
withdrawal of the product from the market, or voluntary
or
mandatory product recalls;
•
fines, warning letters, untitled letters or holds on clinical trials;
•
refusal by regulatory
authorities to approve
pending applications or
supplements to approved
applications, or suspension
or revocation of product approvals;
•
requirements
to
conduct
additional
clinical
trials,
change
our
product
labeling
or
submit
additional
applications
or
application supplements;
•
product seizure or detention, or refusal to permit the import or export of products;
•
mandated modification of promotional materials and labeling and
the issuance of corrective information;
•
consent decrees, corporate integrity agreements, debarment or exclusion
from federal healthcare programs;
•
the
issuance
of
safety
alerts,
Dear
Healthcare
Provider
letters,
press
releases
and
other
communications
containing
warnings or other safety information about the product; or
•
injunctions or the imposition of civil or criminal penalties.
In addition, regulatory policies may change or additional government regulations or legislation may be enacted that could prevent, limit
or delay regulatory
approval of our
product candidates,
particularly in
countries where
elections may result
in changes in
government
administration. If we
fail to comply
with existing requirements,
are slow or
unable to adapt
to changes in
existing requirements or
the
adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any regulatory approval
that we
may have
obtained
or face
regulatory or
enforcement
actions,
which may
materially adversely
affect our
business, financial
condition, results of operations and prospects.
The FDA
strictly regulates
the promotional
claims that
may be made
about prescription
products in
the United States.
In particular,
a
product may not
be promoted for
uses that are not
approved by the
FDA as reflected in
the product’s
approved labeling. If
we receive
marketing approval
for a
product candidate,
physicians may
nevertheless prescribe
it to
their patients
in a
manner that
is inconsistent
with the approved label. If we are found to have promoted such off-label uses, we may become subject to significant liability. The FDA
and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to
have improperly
promoted off
-label uses
may be
subject to
significant sanctions
.
Federal and
state government
agencies have
levied
large civil and criminal
fines against companies for
alleged improper promotion and
has enjoined several companies
from engaging in
off-label
promotion.
The
FDA
has
also
requested
that
companies
enter
into
consent
decrees
or
permanent
injunctions
under
which
specified promotional conduct is changed or curtailed.
Any government
investigation of
alleged violations
of law
could require
us to
expend significant
time and
resources in
response and
could generate negative
publicity. Any
failure to comply
with ongoing regulatory
requirements may significantly
and adversely affect
our ability to commercialize our product candidates.
A
breakthrough
therapy
designation
or
fast
track
designation
by
the
FDA
for
a
product
candidate
may
not
lead
to
a
faster
development or regulatory review
or approval process, and
it would not
increase the likelihood that
the product candidate will
receive
marketing approval.
In 2022 the FDA
granted fast track designation
to UB-311. We
may in the future
seek a fast track designation
for other of our product
candidates, or
a breakthrough
therapy designation
for any
of our
product candidates.
A breakthrough
therapy is
defined as
a product
candidate that is
intended, alone or
in combination with
one or
more other drugs,
to treat
a serious or
life-threatening disease or
condition,
and preliminary clinical evidence indicates that the product candidate 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 product
candidates that
have been
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. Product candidates designated as breakthrough therapies by the FDA are also eligible for priority review if supported
by clinical data at the time of the submission of the BLA.
Designation
as a
breakthrough
therapy is
within the
discretion of
the FDA.
Accordingly,
even if
we believe
that one
of our
product
candidates meets the criteria for
designation as a breakthrough therapy,
the FDA may disagree and instead
determine not to make such
designation. In any
event, the
receipt of
a breakthrough therapy
designation for a
product candidate may
not result in
a faster
development
process, review or approval compared
to product candidates considered for approval
under conventional FDA procedures and
it would
not assure ultimate approval by
the FDA. In addition, even
if one or more of our
product candidates qualify as breakthrough
therapies,
the FDA may later
decide that the product
candidate no longer meets
the conditions for qualification
or it may
decide that the time
period
for FDA
review or
approval will
not be
shortened. Further,
certain of
our product
candidates, including
UB-612, are
not eligible
for
breakthrough therapy designation, and we will be unable to take advantage
of such designation for such product candidates.
Fast track designation
is designed to facilitate
the development and
expedite the review of
therapies to treat
serious conditions and
fill
an
unmet
medical
need.
Programs
with
fast
track
designation
may
benefit
from
early
and
frequent
communications
with
the
FDA,
potential priority review
and the ability to submit
a rolling application for
regulatory review.
Fast track designation
applies to both the
product
candidate and
the specific
indication for
which
it is
being studied.
However,
even if
one or
more of
our product
candidates
qualify for fast track designation, we
may not be able to
meet the criteria of the
fast track designation, or if our
clinical trials are delayed,
suspended or terminated, or put on clinical hold due to unexpected adverse events or issues with clinical supply, we will not receive the
benefits associated
with the
fast track
program. Furthermore,
fast track
designation does
not change
the standards
for approval.
Fast
track designation alone does not
guarantee qualification for the FDA’s
priority review procedures.
Fast track designation also does not
guarantee our product candidate will be approved in a timely manner,
if at all.
We
plan to
seek approval
of certain
product candidates
through the
use of
an accelerated
approval pathway.
If we
are unable
to
obtain
such
approval,
we
may
be
required
to
conduct
additional
pre-clinical
studies
or
clinical
trials
beyond
those
that
we
contemplate, which
could increase
the expense
of obtaining,
and delay
the receipt
of, necessary
marketing approvals.
Even if
our
product candidates receive accelerated approval from regulatory authorities, if our confirmatory
trials do not verify clinical benefit,
or if
we do
not comply
with rigorous
post-marketing
requirements, such
regulatory authorities
may seek
to withdraw
accelerated
approval.
We are developing certain product
candidates for the
treatment of serious
or life-threatening conditions, including
UB-311, and therefore
may decide to seek approval
of such product candidates under
the FDA’s
accelerated approval pathway.
A product may be eligible
for
accelerated
approval
if
it is
designed
to
treat
a
serious
or
life-threatening
disease
or
condition
and
generally
provides
a
meaningful
advantage over available therapies upon a determination that the
product candidate has an effect on a surrogate endpoint or
intermediate
clinical endpoint
that is
reasonably likely
to predict
clinical benefit.
The FDA
considers a
clinical benefit
to be
a positive
therapeutic
effect
that is
clinically meaningful
in the
context of
a given
disease, such
as irreversible
morbidity or
mortality.
For the
purposes of
accelerated approval,
a surrogate
endpoint is
a marker,
such as a
laboratory measurement,
radiographic image,
physical sign
or other
measure that
is thought
to predict
clinical benefit
but is
not itself
a measure
of clinical
benefit. An
intermediate clinical
endpoint is
a
clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is reasonably likely to predict an
effect on irreversible morbidity or mortality or other clinical benefit.
The accelerated approval pathway may be used
in cases in which the advantage
of a new drug over
available therapy may not be a direct
therapeutic
advantage but
is a
clinically important
improvement from
a patient
and public
health perspective.
If granted,
accelerated
approval is usually
contingent on the
sponsor’s agreement to
conduct, in a
diligent manner, additional post-approval
confirmatory studies
to verify and describe the
drug’s clinical benefit. If the sponsor fails
to conduct such studies in
a timely manner, or if such
post- approval
studies fail to validate the drug’s predicted
clinical benefit, the FDA may withdraw its approval of the drug on an expedited basis.
If we decide
to submit a
BLA seeking accelerated
approval or receive
an expedited regulatory
designation for our
product candidates,
there can be
no assurance that
such submission or
application will be
accepted or that
any expedited development,
review or approval
will be granted on a timely basis, or at all. Failure to obtain accelerated approval or
any other form of expedited development, review or
approval for a product candidate would result in a longer time period to commercialization of such product candidate,
if any, and could
increase the cost of development of such product candidate, which could harm
our competitive position in the marketplace.
Because we are developing product candidates for the treatment or prevention
of diseases in which there is little clinical experience
using new technologies, there is increased risk that the FDA or other foreign
regulatory authorities may not consider the endpoints
of our clinical trials to provide clinically meaningful results and that these results may
be difficult to analyze.
As we are developing
novel treatments and preventative
measures for diseases in which
we believe there is
limited clinical experience
with new endpoints and
methodologies, there is heightened
risk that the applicable
regulatory authorities may
not consider the clinical
trial endpoints to provide clinically
meaningful results, and the resulting
clinical data and results may be more
difficult to analyze. It is
difficult to determine
how long it will
take, if ever,
or how much it
will cost to obtain
regulatory approvals for
our product candidates
in the
United States
or other
jurisdictions, if
ever.
Further, approvals
by one
regulatory authority
may not
be indicative
of what
other
regulatory authorities may require for approval.
During the regulatory review process, we
will need to identify success
criteria and endpoints such that
regulatory authorities will be able
to determine the
clinical efficacy and
safety profile of any
product candidates we
may develop. Because
our initial focus is
to identify
and develop product
candidates to treat
or prevent diseases
in which there
is little clinical
experience using new
technologies, there is
heightened risk that regulatory authorities may not consider the clinical trial endpoints that we propose to provide clinically meaningful
results. In addition, the resulting clinical data and results may be difficult
to analyze.
In the United
States, the FDA also
weighs the benefits
of a product against
its risks, and the
FDA may view
the efficacy results
in the
context of safety as
not being supportive of
regulatory approval. Foreign regulatory authorities
may make similar comments
with respect
to these endpoints and data.
Any product candidate we may
develop will be based on
a novel technology that
makes it difficult to predict
the time and cost of development and of subsequently obtaining regulatory
approval.
We and our collaboration partners have conducted and intend to conduct additional clinical trials for selected product candidates at
sites outside the United States, and for any of our product candidates for which we seek approval in the United States, the FDA may
not accept data from trials conducted in such locations or may require additional U.S.-based
trials.
We
and our
collaboration partners have
conducted, currently
are conducting
and intend in
the future to
conduct, clinical trials
outside
the United States, including but not limited to Australia, Belgium, Netherlands,
Panama, Philippines and Taiwan
.
Although the FDA may accept data from
clinical trials conducted outside the United States,
acceptance of these data is subject
to certain
conditions imposed by the FDA. For
example, the clinical trial must be conducted
by qualified investigators in accordance with
GCPs,
and the FDA must be able to validate the trial data through an on-site inspection, if necessary.
Generally, the patient population for any
clinical trial conducted outside of the United States must be representative of the population for which we
intend to seek approval in the
United States. There
can be no assurance
that the FDA will
accept data from
trials conducted outside
of the United
States. If the FDA
does not accept the
data from any clinical trials
that we or our collaboration
partners conduct outside the
United States, it would likely
result in the need
for additional clinical
trials, which would be
costly and time-consuming
and delay or permanently
halt our ability to
develop and
market these
or other
product candidates
in the
United States.
In other
jurisdictions, there
is a
similar risk
regarding the
acceptability of clinical trial data conducted outside of that jurisdiction.
In addition,
there are risks
inherent in
conducting clinical
trials in multiple
jurisdictions, inside
and outside
of the United
States, such
as:
•
regulatory and
administrative requirements
of the jurisdiction
where the
trial is conducted
that could
burden or limit
our
ability to conduct our clinical trials;
•
foreign exchange fluctuations;
•
manufacturing, customs, shipment and storage requirements;
•
cultural differences in medical practice and clinical research; and
•
the risk that
the patient populations
in such trials are
not considered representative
as compared to
the patient population
in the target markets where approval is being sought.
If
any
of
our
product
candidates
receive
EUA
or
regulatory
approval,
such
products
may
not
achieve
broad
market
acceptance
among government agencies, physicians,
patients, the medical community
and third-party payors, in which case
revenue generated
from their sales would be limited.
The
commercial
success
of
our
product
candidates
and
our
ability
to
generate
revenues
from
our
products
will
depend
upon
their
acceptance
among government
agencies, physicians,
patients,
the medical
community,
and third-party
payors.
The degree
of market
acceptance of our product candidates will depend on a number of
factors, including:
•
limitations
or
warnings
contained
in
the
approved
labeling
for
a
product
candidate
and
any
other
product
insert
requirements of regulatory authorities;
•
changes in the standard of care for the targeted indications for
any of our product candidates;
•
limitations in the approved clinical indications for our product candidates;
•
demonstrated clinical safety and efficacy compared
to other products;
•
the impact of disease variants, such as the Delta or Omicron variant of SARS-CoV-2,
on the efficacy and marketability of
our product candidates targeting such diseases;
•
presence of significant adverse side effects, and the prevalence
and severity of any side effects;
•
sales, marketing and distribution support;
•
availability of coverage and extent of reimbursement from managed
care plans and other third-party payors;
•
timing of market introduction and perceived effectiveness of our
products as well as competitive products;
•
continued projected growth of the markets in which our products compete;
•
the degree of cost-effectiveness of our product candidates;
•
the impact of past product price increases and limitations on future price
increases for our products;
•
availability of alternative therapies;
•
whether the product
is designated under
physician treatment guidelines
as a first-line
therapy or
as a second or
third-line
therapy for particular diseases;
•
whether the product can be used effectively with other therapies to achieve
higher response rates;
•
adverse publicity about our product candidates or favorable publicity about
competitive products;
•
if and when we are able to obtain regulatory approvals for indications for our
products;
•
our ability to establish and maintain a continuous supply of our products for
commercial sale;
•
potential or perceived advantages or disadvantages of our products
over alternative treatments;
•
convenience and ease of administration of our products; and
•
the effect of current and future healthcare laws.
If any
of our product
candidates are approved,
but do
not achieve an
adequate level of
acceptance by
government agencies
as well as
physicians, patients and the medical community,
we may not generate sufficient
revenue from these products, and we
may not become
or
remain
profitable.
In
addition,
efforts
to
educate
the
medical
community
and
third-party
payors
on
the
benefits
of
our
product
candidates may require significant resources and may never be
successful.
We
may
focus
on
potential
product
candidates
that
may
prove
to
be
unsuccessful
and
such
focus
may
require
us
to
forego
opportunities to develop other product candidates that may prove to
be more successful.
We may choose to focus
our efforts and resources
on a potential
product candidate that ultimately
proves to be
unsuccessful, or to license
or purchase
a marketed
product that
does not
meet our
financial expectations.
Furthermore, we
have limited
financial and
personnel
resources
and
are placing
significant
focus
on the
development
of our
lead product
candidates, and
as such,
we may
forgo
or delay
pursuit
of opportunities
with other
future product
candidates that
later prove
to have
greater commercial
potential.
Our spending
on
current and
future research
and development
programs and
other future
product candidates
for specific
indications may
not yield
any
commercially viable
future product candidates
and could result
in spending on
raw materials that cannot
be repurposed. As
a result of
our resource allocation decisions,
we may fail
to capitalize on
viable commercial products or
profitable market opportunities, be
required
to forego or
delay pursuit of
opportunities with other
product candidates or
other diseases
that may later
prove to have
greater commercial
potential,
fail
to
identify
novel
product
candidates
that
may
be
successful,
or
relinquish
valuable
rights
to
such
product
candidates
through
collaboration,
licensing
or
other
arrangements
in
cases
in
which
it
would
have
been
advantageous
for
us
to
retain
sole
development
and
commercialization
rights.
If
we
are
unable
to
identify
and
successfully
commercialize
additional
suitable
product
candidates, or if the
additional product candidates we
do identify and develop
prove to be
ineffective, incapable of being commercialized
on a large scale or
otherwise fail to achieve market
success, this would adversely impact
our business strategy and our
financial position.
Risks Related to Our Financial Position and Need for Additional Capital
We
cannot
assure
you
of
the
adequacy
of
our
capital
resources
to
successfully
complete
the
development,
and
if
approved,
commercialization
of
our product
candidates,
and a
failure to
obtain
additional
capital, could
force
us to
delay,
limit, reduce
or
terminate one or more of our product development programs or commercialization
efforts.
As of
December 31, 2022,
the Company
had $87.9
million of
highly liquid
assets to fund
operations, including
$33.5 million
of cash
and
cash
equivalents,
$53.4
million
of
short-term
investments,
and
a
$1.1
million
restricted
cash
balance
of
which
$1.0
million
is
restricted for the reimbursement of certain research and development expenses related to our UB-612 COVID-19 vaccine program. We
believe that we
will continue to expend
substantial resources for
the foreseeable future developing
our proprietary product
candidates.
These
expenditures
will
include
costs
associated
with
research
and
development,
conducting
pre-clinical
studies
and
clinical
trials,
seeking
regulatory
approvals,
as
well
as
launching
and
commercializing
products
approved
for
sale
and
costs
associated
with
manufacturing
products. In
addition,
other unanticipated
costs may
arise. Because
the outcomes
of our
anticipated
clinical trials
are
highly
uncertain,
we
cannot
reasonably
estimate
the
actual
amounts
necessary
to
successfully
complete
the
development
and
commercialization of our proprietary product candidates.
Our future funding requirements will depend on many factors, including but not
limited to:
•
the numerous risks and uncertainties associated with developing
product candidates and maintaining our platform;
•
the number and characteristics of product candidates that we pursue;
•
the rate
of enrollment,
progress, cost
and outcomes
of our clinical
trials, which
may or may
not meet their
primary end-
points;
•
the timing of, and cost involved in, conducting non-clinical studies that are regulatory
prerequisites to conducting clinical
trials of sufficient duration for successful product registration;
•
the cost of manufacturing clinical supply and establishing commercial supply
of our product candidates;
•
the costs
and timing
of preparing,
filing and
prosecuting patent
applications, maintaining
and enforcing
our intellectual
property rights and defending any intellectual property-related claims;
•
tax and other
compliance costs associated
with operating in
foreign jurisdictions (including
any withholding requirements);
•
the
timing
of,
and
the
costs involved
in, obtaining
regulatory
approvals
for
our product
candidates
if clinical
trials are
successful;
•
the timing of, and costs involved in, conducting post-approval studies that may
be required by regulatory authorities;
•
the cost of commercialization activities for
our product candidates, including product
manufacturing, pharmacovigilance,
marketing and distribution of product candidates
generated from our platform and any
other product opportunity for which
we receive marketing approval in the future;
•
the terms and timing of any
collaborative, licensing and other arrangements that we are
currently party to or may establish,
including any required milestone and royalty payments thereunder
and any non-dilutive funding that we may receive;
•
the costs
involved in preparing,
filing, prosecuting, maintaining,
defending and enforcing
patent claims,
including litigation
costs, if any, and the outcome
of any such litigation;
•
the timing, receipt
and amount of sales
of, or royalties
or milestones on,
our future products,
if any,
including the risk
of
potential nonpayment by buyers of our future products, if any;
•
the costs to recruit and build the organization including key executives needed to transform to a commercial organization;
and
•
the costs of operating as a public company,
including hiring additional personnel.
In addition,
our operating
plan may
change as
a result
of many
factors currently
unknown to
us. As
a result
of these
factors, we
may
need additional funds sooner than planned. We
expect to finance future cash needs primarily through public or private equity offerings,
strategic collaborations and debt financing. If sufficient funds on acceptable terms are not available
when needed, or at all, we could be
forced to significantly reduce
operating expenses and delay, limit,
reduce or terminate one
or more of
our product development programs
or
commercialization
efforts,
which
would
have
a
negative
impact
on
our
business,
financial
condition,
results
of
operations
and
prospects.
We
have
incurred significant
losses since
our
inception,
and we
expect
to incur
losses for
the foreseeable
future and
may
never
achieve or maintain profitability.
We
have incurred
significant losses
since our
inception. We
had net
losses of
approximately $75.2
million, $137.2
million and
$40.0
million for the years ended December 31, 2022,
2021 and 2020, respectively.
As of December 31, 2022, our consolidated accumulated
deficit was $304.7 million. Our expectation is that we will
continue to incur losses as we continue our research and
development of, and
seek regulatory approvals for, our product candidates and maintain and develop new platforms,
prepare for and begin to commercialize
any approved
product candidates and
add infrastructure
and personnel to
support our product
development efforts
and operations
as a
public company.
We
have devoted
substantially all of
our financial
resources and
efforts to
research and
development, including
pre-
clinical studies and clinical trials
and we anticipate that our
expenses will continue to increase
over the next several years as
we continue
these activities. The
net losses and
negative cash flows
incurred to date,
together with expected
future losses, have
had, and may
continue
to have, an
adverse effect on
our 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 biopharmaceutical
product development,
we are unable
to accurately
predict the timing
or amount of
increased expenses or
when, or if,
we will be
able to achieve
profitability.
For example, our
expenses
could increase if we are required by
regulatory authorities such as the FDA to
perform trials in addition to those that
we currently expect
to perform, or
if there are
any delays in
completing our currently
planned clinical trials,
the partnering process
for our proprietary
product
candidates or in the development of any of our proprietary product candidates.
Our revenue
to date
has been
generated
from the
sales of
our ELISA
test and
the sale
of an
option to
negotiate a
license with
UNS
(which option has
expired). Our ability
to generate revenue
and achieve profitability
in the future
depends in large
part on our
ability,
alone or with our collaborators, to achieve milestones and to successfully complete the development of, obtain the necessary regulatory
approvals for,
and commercialize,
our product
candidates and
Vaxxine
Platform. We
may never
succeed in
these activities
and may
never generate revenue from
product sales that is significant
enough to achieve profitability.
Even if we successfully obtain
regulatory
approvals to market one or
more of our product candidates, our revenues
will be dependent, in part, upon
the size of the markets in the
territories for which we gain regulatory approval and have commercial rights. If the markets for patient subsets that we are targeting are
not as significant as we estimate, we may
not generate significant revenues from sales of such products, if approved. Even
if we achieve
profitability in the future,
we may not be able to
sustain profitability in subsequent
periods. Our failure to become
or remain profitable
could depress our
market value and
could impair our
ability to raise capital,
expand our business,
develop other product
candidates or
continue our operations. A decline in our value could also cause you to lose all or
part of your investment.
Raising additional
capital may
cause dilution
to our
shareholders, restrict
our operations
or require
us to
relinquish rights
to our
technology or product candidates.
We expect our expenses to continue to increase in connection with our planned operations. To the extent that we raise additional capital
through the sale of our Class A common stock, convertible securities
or other equity securities, your ownership interest will be diluted,
and the
terms of
these securities
could restrict
our operations
or include
liquidation or
other preferences
and anti-dilution
protections
that could adversely affect your rights as a stockholder.
The issuance of additional equity securities, or the possibility of such
issuance,
may cause the
market price of
our Class A
common stock to
decline. In addition,
debt financing, if
available, may result
in fixed payment
obligations and may involve agreements that
include restrictive covenants that limit our
ability to take specific
actions, such as incurring
additional debt,
making capital expenditures,
creating liens, redeeming
shares or declaring
dividends, that
could adversely impact
our
ability to conduct our
business. Securing financing could
require a substantial amount
of time and attention from
our management and
may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s
ability to oversee the development of our product candidates.
If we raise additional funds through collaborations or marketing, distribution or licensing arrangements with third parties, we may have
to relinquish valuable
rights to our
technologies, future revenue
streams or product
candidates or grant
licenses on terms
that may not
be favorable to us. If
we are unable to raise
additional funds when needed,
we may be required
to delay,
limit, reduce or terminate
our
product
development
or
future
commercialization
efforts
or
grant
rights
to
develop
and
market
product
candidates
that
we
would
otherwise prefer to develop and market ourselves.
We cannot
be certain that additional funding
will be available on acceptable terms,
or at all. If we are unable
to raise additional capital
in sufficient
amounts or
on terms
acceptable to
us, we
may have
to significantly
delay,
scale back
or discontinue
the development
or
commercialization
of our
product candidates
or other
research and
development
initiatives. Our
current or
future license
agreements
may also be terminated if we are unable to meet the payment or other obligations
under the agreements.
Changes in
or reinterpretations
of tax
laws and regulations,
including their
application to
us or our
customers as
reviewed by
the
relevant tax authorities, may have a material adverse
effect on our business, results of operations, financial condition
and prospects.
We are
subject to complex and evolving
tax laws and regulations. New
income, sales, use or other
tax laws, statutes, rules, regulations
or ordinances could be enacted at any
time, which could affect the tax treatment of
any of our future domestic and
foreign earnings. Any
new
taxes
could
adversely
affect
our
domestic
and
international
business
operations,
and
our
business
and
financial
performance.
Further,
existing tax laws,
statutes, rules, regulations
or ordinances could
be interpreted, changed,
modified or applied
adversely to us
or our customers.
Future changes in
applicable tax laws
and regulations, or
their interpretation and
application, could have
an adverse
effect on our business, financial conditions, results of operations
and prospects.
In addition,
our determination
of our
tax liability
is subject
to review
by applicable
tax authorities.
Any adverse
outcome
of
such a
review could harm our
results of operations, cash
flow and overall financial condition.
The determination of our tax
liabilities requires
significant
judgment
and,
in
the
ordinary
course
of
business,
there
are
many
transactions
and
calculations
where
the
ultimate
tax
determination is complex and uncertain.
Our ability
to use
our net
operating loss
carryforwards and
other tax
attributes to
offset future
taxable income
may be
subject to
certain limitations.
As of December 31, 2022, we had U.S. federal net operating loss
carryforwards (“NOLs”) of $165.1 million, which may be available to
offset future
taxable income, if
any,
and have no
expiration date but
are limited in
their usage to
an annual deduction
equal to 80%
of
annual
taxable
income.
In general,
under
Sections 382
and
of
the Internal
Revenue
Code
of 1986,
as amended
(the “Code”),
a
corporation that
undergoes
an “ownership
change,” generally
defined as
a greater
than 50%
change by
value in
its equity
ownership
over a three-year period, is subject to limitations on its ability
to utilize its pre-change NOLs and its research and other
tax attributes to
offset
future
taxable
income.
Our
existing
NOLs
and
tax
attributes
may
be
subject
to
limitations
arising
from
previous
ownership
changes, and if we
undergo future ownership changes, our ability
to utilize NOLs and
research and tax attributes could
be further limited
by Sections 382
and 383 of
the Code. For
these reasons, we
may not be
able to utilize
a portion of
our existing NOLs
or research and
tax attributes.
Adverse
developments
affecting
financial
institutions,
companies
in
the
financial
services
industry
or
the
financial
services
industry generally,
such as
actual events
or concerns
involving liquidity,
defaults or
non-performance,
could adversely
affect
our operations and liquidity.
Actual events involving
limited liquidity,
defaults, non-performance or
other adverse developments
that affect financial
institutions or
other companies
in the financial
services industry or
the financial services
industry generally,
or concerns or
rumors about any
events
of these kinds, have in the past and may in the future
lead to market-wide liquidity problems. For example, on
March 10, 2023, Silicon
Valley
Bank, or
SVB, was
closed by
the California
Department of
Financial Protection
and Innovation,
which appointed
the Federal
Deposit
Insurance
Corporation,
or
the
FDIC,
as
receiver.
As
of
March
10,
2023,
we
had
approximately
11%
of
our
cash
and
cash
equivalent balances
on deposit
with SVB.
Since then,
we have
moved substantially
all of
our cash
and cash
equivalent deposits
that
were at SVB to another major U.S. financial institution.
Although a statement by the
U.S. Department of the Treasury, the Federal Reserve and
the FDIC stated that
all depositors of SVB would
have
access to
all of
their
money
after
only
one
business
day
following
the
date
of
closure
and
we
and
other
depositors
with
SVB
received such access on March
13, 2023, uncertainty and liquidity
concerns in the broader financial
services industry remain. Inflation
and rapid
increases in
interest rates
have led
to a decline
in the trading
value of
previously issued
government securities
with interest
rates below current market
interest rates. The
U.S. Department of
Treasury, FDIC and Federal Reserve Board
have announced a
program
to provide
up to
$25 billion
of loans
to financial
institutions secured
by such
government securities
held
by financial
institutions to
mitigate the risk
of potential losses
on the sale
of such instruments.
However, widespread
demands for customer
withdrawals or other
needs of
financial institutions
for immediate
liquidity may
exceed the
capacity of
such program.
There is
no guarantee
that the
U.S.
Department of Treasury, FDIC and Federal Reserve Board will
provide access to uninsured
funds in the future
in the event of
the closure
of other banks or financial institutions in a timely fashion or at all.
Our
access
to
our
cash
and
cash
equivalents
in
amounts
adequate
to
finance
our
operations
could
be
significantly
impaired
by
the
financial institutions
with which
we have
arrangements directly
facing liquidity
constraints or
failures. For
example, as
we expect
to
continue to maintain
balances at one
or more banks
and financial institutions
that exceed federally insured
limits, in the
event of a
closure
of any such
banks or institutions
we may not
be able to
recover our uninsured
balances. Even if
the U.S. Department
of the Treasury,
the Federal Reserve and the FDIC provide that depositors would have access to all of their balances, there may be a delay in our ability
to access such funds.
In addition, investor concerns
regarding the U.S. or
international financial systems could
result in less favorable
commercial financing terms, including
higher interest rates
or costs and
tighter financial and
operating covenants, or
systemic limitations
on access to credit and liquidity
sources, thereby making it more
difficult for us to acquire financing
on acceptable terms or at all. Any
material decline
in available
funding or our
ability to access
our cash
and cash equivalents
could adversely
impact our ability
to meet
our operating
expenses, result in
breaches of our
contractual obligations
or result in
violations of federal
or state wage
and hour laws,
any of which could have material adverse impacts on our operations and
liquidity.
Risks Related to the Manufacturing of Our Product Candidates
The formulation of peptide-based medicines is complex and manufacturers often encounter difficulties in production. If we, UBI or
any
of
our
other
contract
manufacturers
encounter
difficulties,
our
ability
to
provide
product
candidates
for
clinical
trials
or
products, if approved, to patients or future customers could be delayed
or halted.
The
formulation
of
peptide-based
medicines
is
complex
and
requires
significant
expertise
and
capital
investment,
including
the
development
of advanced
manufacturing techniques
and analytics.
We
are currently
dependent on
contract manufacturers,
including
UBI, its affiliates,
CSBioa, Pii, and
WuXi STA
,
to conduct the manufacturing
and supply activities for
our product candidates and
the
underlying
component
parts,
but
may
choose
to
conduct
these
manufacturing
activities
ourselves
in
the
future.
If
our
contract
manufacturers are unable to manufacture our product candidates in clinical quantities or,
when necessary, in commercial quantities
and
at
sufficient
yields,
then
we
will
need
to
identify
and
reach
supply
arrangements
with
additional
third
parties.
Further,
our
product
candidates may
be in competition
with other products
for access to
these facilities and
may be subject
to delays in
manufacture if
our
contract manufacturers
give other
products higher
priority.
We
and our
contract manufacturers
must comply
with cGMP,
regulations
and guidelines for the manufacturing of our product candidates used in pre-clinical studies and clinical trials and, if approved, marketed
products. If we
or our contract
manufacturers do not
receive any regulatory
approvals, or lose
existing approvals, required
to manufacture
our
product
candidates,
production
and
fulfilment
of
orders
will
be
delayed,
which
may
materially
adversely
affect
our
business.
Manufacturers
of
biotechnology
products
often
encounter
difficulties
in
production,
particularly
in
scaling
up
and
validating
initial
production. Furthermore,
if microbial,
viral or other
contaminations are
discovered in
our product
candidates or
in the manufacturing
facilities
where
our
product
candidates
are
made,
such
manufacturing
facilities
may
be
closed
for
an
extended
period
of
time
to
investigate and remedy the
contamination. Shortages of raw
materials may also
extend the period
of time required
to develop our
product
candidates.
Manufacturing
these
products
requires
facilities
specifically
designed
for
and
validated
for
this
purpose
and
sophisticated
quality
assurance
and
quality
control
procedures
are
necessary.
Slight
deviations
anywhere
in
the
manufacturing
process,
including
filling,
labeling, packaging, storage and shipping and quality control and testing, may result in lot failures, product recalls or spoilage.
Further,
delays in our clinical trials or in
any regulatory approvals may result in the expiration of
manufactured product, which could in turn lead
to further
delays. When
changes are
made to
the manufacturing
process, we
may be
required to
provide pre-clinical
and clinical
data
showing
the
comparable
identity,
strength,
quality,
purity
or
potency
of
the
products
before
and
after
such
changes.
The
use
of
biologically
derived ingredients
can also
lead to
allegations
of harm,
including infections
or allergic
reactions, or
closure of
product
facilities due to possible contamination.
In addition,
there are
risks associated
with large
scale manufacturing
for clinical
trials or
commercial
scale including,
among others,
cost overruns, potential problems
with process scale-up, process
reproducibility, stability issues, compliance with cGMP, lot consistency
and timely availability of
raw materials. Even if we
obtain marketing approval for any
of our product candidates,
there is no assurance
that we or our manufacturers will be
able to manufacture the approved product
to specifications acceptable to regulatory authorities,
to
produce it in sufficient quantities to meet the requirements for the
potential commercial launch of the product or to meet
potential future
demand.
If we
or our
manufacturers are
unable to
produce sufficient
quantities for
clinical trials,
advance
purchase commitments
or
commercialization, more
generally,
our development and
commercialization efforts
would be impaired,
which would have
an adverse
effect on our business, financial condition, results of operations
and prospects.
We cannot assure
you that any disruptions or other issues relating to the manufacture of any of our product candidates will not occur in
the future. Any delay or interruption in the supply of
clinical trial supplies could delay the completion of planned clinical trials,
increase
the costs
associated
with maintaining
clinical trial
programs and,
depending
upon the
period of
delay,
require us
to commence
new
clinical trials at
additional expense or
terminate clinical trials
completely.
Any adverse developments
affecting clinical
or commercial
manufacturing
of
our
product
candidates
or
products
may
result
in
shipment
delays,
inventory
shortages,
lot
failures,
product
withdrawals or recalls or other interruptions in the supply of our product candidates. We may also have to take inventory write-offs
and
incur other
charges and
expenses for
product candidates
that fail
to meet
specifications, undertake
costly remediation
efforts
or seek
more costly manufacturing alternatives. Accordingly, failures or difficulties
faced at any level
of our supply chain
could delay or impede
the development
and commercialization
of any
of our
product candidates
and could
have an
adverse effect
on our
business, financial
condition, results of operations and prospects.
We
and our
contract manufacturers
and suppliers
could be
subject to
liabilities, fines,
penalties or
other sanctions
under federal,
state,
local
and
foreign
environmental,
health
and
safety
laws
and
regulations
if
we
or
they
fail
to
comply
with
such
laws
or
regulations or otherwise incur costs that could have a material adverse effect
on our business.
We currently rely on and
expect to continue
to rely on
contract manufacturers for
the manufacturing and
supply of our
product candidates
and custom
components.
We
and these
contract manufacturers
are subject
to various
federal, state,
local and
foreign
environmental,
health
and
safety
laws
and
regulations,
including
those
governing
laboratory
procedures
and
the
generation,
handling,
labeling,
transportation, use,
manufacture, storage,
treatment and disposal
of hazardous
materials and wastes
and worker
health and safety.
We
do
not
have
control
over
a
manufacturer’s
or
supplier’s
compliance
with
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, financial
condition, results of operations and prospects.
With
respect to
any hazardous
materials or
waste which
we are
currently,
or in
the future
will be,
generating, handling,
transporting,
using, manufacturing, storing,
treating or disposing of,
we cannot eliminate the
risk of contamination or
injury from these materials
or
waste, including
at third-party
disposal sites.
In the
event of
such contamination
or injury,
we could
be held
liable for
any resulting
damages and liability. We
also could be subject to significant civil or criminal fines and penalties, cessation of operations, investigation
or remedial
costs or
other sanctions
for failure
to comply
with applicable
environmental, health
and safety
laws. In
addition, we
may
incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or
future laws and regulations
may impair our research,
development or production efforts
or otherwise have a material
adverse effect on
our business.
Undetected errors or defects in our production could harm our reputation or expose us to
product liability claims.
Undetected errors and defects in the cGMP materials used in the production of our product candidates could
result in a lower quality of
any products we produce,
and could give rise to
reputational harm to us
and to the contract manufacturers
with whom we work.
If any
such
errors
or defects
are discovered,
we may
incur
significant
costs,
the attention
of our
key
personnel
could
be diverted,
or other
significant
problems
may
arise. We
may
also
be
subject
to warranty
and
liability
claims
for
damages
related
to errors
or
defects
in
products made with our cGMP
materials. In addition, if
we do not meet industry or
quality standards, if applicable,
such products may
be subject
to recall.
A material
liability claim,
recall or
other occurrence
that harms our
reputation or
decreases market
acceptance of
such products could harm our business and operating results.
Risks Related to Our Reliance on UBI, Collaborators and Other Third Parties
Conflicts of interest
and disputes have
and may arise
between us and
UBI and its
affiliates, and
these conflicts and
disputes might
ultimately be resolved in a manner unfavorable to us.
UBI is
our
largest
stockholder,
the licensor
of certain
of our
intellectual
property and
is a
commercial
partner for
the Company.
In
addition, Dr. Chang Yi
Wang, UBI’s
founder, holds shares of our common stock.
Our co-founders (Mei Mei Hu and Louis Reese), one
of their affiliates and UBI
(collectively, our “principal stockholders”), are party to a
voting agreement (the “Voting Agreement,”), which
provides Mei
Mei Hu with
the authority (and
irrevocable proxies)
to vote the
shares of capital
stock held
by the stockholders
party to
the Voti
ng Agreement at her
discretion on all matters to
be voted upon by
stockholders.
Our CEO, Mei Mei Hu,
our Chairman, Louis
Reese and
our shareholder
and former
director James
Chui, also
serve on
and constitute
a majority
of the
board of
directors of
UBI.
UBI’s
equity interests
in the Company,
and the overlapping
directorships, could
give rise
to conflicts
of interest,
in particular
when a
decision could favor the
interests of UBI (or its affiliates)
or us over the other.
Further, we have
historically depended heavily on
UBI
and its affiliates
for our business operations,
including the provision of
research, development and
manufacturing services.
While we
have taken steps to separate our operations from those of UBI and currently anticipate taking additional steps to lessen our dependence,
we still have ongoing relationships with
UBI and its affiliates. With
respect to our UB-612 program,
we have partnered with UBIA for
the
development
of
UB-612
in Taiwan,
UBIP for
the
formulation-fill-finish
services,
and
UBP as
the
sole
manufacturer
of
protein.
Relating to our
chronic disease pipeline,
we continue to
work with UBIP
and UBIA for
the production
and testing of
clinical material
for our UB-312 program.
Conflicts of
interest may
arise with
respect to
existing or
possible future
commercial arrangements
between us
and UBI
or any
of its
affiliates in which the
terms and conditions of the
arrangements are subject to negotiation
or dispute. For example, conflicts
of interest
could arise over matters such as:
•
disputes over the
cost or
quality of the
manufacturing and testing
services provided to
us by UBI
with respect to
our product
candidates;
•
the allocation of UBI’s resources as between
our business objectives and UBI’s
own objectives;
•
a
decision
whether
to
engage
UBI
or
its
affiliates
in
the
future
to
manufacture,
test
and
supply
of
additional
custom
components or product candidates for us;
•
decisions as to which particular product candidates we will commit sufficient
development efforts to; or
•
business opportunities unrelated to our current products that may be attractive both
to us and to the other company.
We
also cannot
guarantee conflicts
of interest
will not
arise in
connection with
the negotiation
or execution
of any
future agreement
with UBI, its affiliates or any other related party.
Further, we have
been advised that there is currently
an ongoing dispute within UBI between
Dr. Wang
and the other four members
of
UBI’s board of directors relating to certain corporate governance matters, including the overall management and
control of UBI, as well
as its relationship with the Company. Specifically,
we have been advised that Dr. Wang
attempted to replace the UBI board of directors
in July and August 2021 and asserted that she is the majority shareholder of UBI, which we understand UBI’s other directors dispute as
invalid and incorrect, respectively.
This dispute has created
risks and uncertainties for
us, and this dispute or
any resolution of it
could
negatively impact us, including, without limitation, by impairing our ability to work with UBI and its affiliates
as a commercial partner
in the future and/or otherwise adversely affecting other existing
arrangements with or involving UBI or its affiliates. Late
in the day on
November 9,
2021,
counsel
to
the
Company
received
correspondence
on
behalf
of
Dr.
Wang
(the
“Correspondence”).
The
Correspondence
outlined
Dr.
Wang’s
concerns
that the
preliminary
prospectus
for
our initial
public
offering,
subject to
completion,
dated November 5, 2021 did
not accurately describe the relationship
between the Company and UBI,
namely the Company’s
ability to
operate independently
from UBI. The
Correspondence also relayed
Dr. Wang’s
concerns that the
preliminary prospectus did
not fully
describe
the
disruption
to
the
Company’s
business
that
could
result
from
the
abovementioned
dispute,
including
with
respect
to
intellectual property
agreements among
the Company
and UBI
and its
affiliates. Various
other claims
have been
made by
Dr.
Wang
regarding
UBI’s
corporate
governance,
the
operations
of
the
Company
and
the
disclosures
for
our
initial
public
offering,
and
the
Company cannot
predict the
course of this
dispute. However,
the Company
has carefully considered
Dr.
Wang’s
concerns and,
based
on the disclosures
included in the
preliminary prospectus and
in the final
prospectus for our
initial public offering
and the Company’s
diligence efforts, the Company remains confident
in the appropriateness and accuracy of its disclosures.
We
will
rely
on
contract
manufacturers
for
the
manufacture
of
raw
materials
for
our
research
programs,
pre-clinical studies and clinical
trials and we do not
have long-term contracts with many
of these parties. This reliance
on contract
manufacturers increases
the risk
that we
will not
have sufficient
quantities of
such materials
or product
candidates that
we may
develop and commercialize, or that such supply will not
be available to us at an acceptable cost or on
an acceptable timeline, which
could delay, prevent or impair our development
or commercialization efforts.
We rely on
contract manufacturers, including UBI and its affiliates,
for the manufacture of raw materials for our clinical
trials and pre-
clinical and clinical
development. We
do not have a
long-term agreement with some
of the contract manufacturers
we currently use to
provide
pre-clinical
and
clinical
raw
materials.
Certain
of
these
manufacturers
are
critical
to
our
production,
and
the
loss
of
these
manufacturers to one
of our competitors
or otherwise, or
an inability to
obtain quantities at
an acceptable cost
or quality,
could delay,
prevent
or
impair
our
ability
to
timely
conduct
pre-clinical
studies
or
clinical
trials,
and
would
materially
adversely
affect
our
development and commercialization efforts.
We expect to continue to rely on contract
manufacturers for the commercial supply of
any of our product
candidates for which we obtain
marketing approval, if any. We may be unable to maintain or establish long-term agreements with contract manufacturers or to do so on
acceptable terms.
Even if
we are
able to
establish agreements
with contract
manufacturers, reliance
on contract
manufacturers entails
additional risks, including:
•
the failure
of the
contract manufacturer to
manufacture our product
candidates according to
our schedule, or
at all,
including
if our contract manufacturers give greater priority to the supply
of other products over our product candidates or otherwise
do not satisfactorily perform according to the terms of the agreements between
us and them;
•
the reduction or termination of production or deliveries by suppliers, or
the raising of prices or renegotiation of terms;
•
the termination
or nonrenewal
of arrangements
or agreements
by our
contract manufacturers
at a
time that
is costly
or
inconvenient for us;
•
the breach by the contract manufacturers of our agreements with them;
•
the failure of contract manufacturers to comply with applicable regulatory
requirements;
•
the failure of the contract manufacturer to manufacture our product
candidates according to our specifications;
•
the
mislabeling
of
clinical
supplies,
potentially
resulting
in
the
wrong
dose
amounts
being
supplied
or
active
drug
or
placebo not being properly identified;
•
clinical supplies not being delivered
to clinical sites on time, leading
to clinical trial interruptions, or of
drug supplies not
being distributed to commercial vendors in a timely manner,
resulting in lost sales; and
•
the misappropriation or unauthorized disclosure of
our intellectual property or other
proprietary information, including our
trade secrets and know-how.
We
do not
have complete
control over
all aspects
of the
manufacturing process
of, and
are dependent
on, our
contract manufacturing
partners
for
compliance
with
cGMP
regulations
for
manufacturing
both
custom
components
and
finished
products.
Contract
manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside of the United States. If our
contract
manufacturers
cannot
successfully
manufacture
material
that
conforms
to
our
specifications
and
the
strict
regulatory
requirements of applicable
regulatory authorities, they
will not be able
to secure and/or maintain
authorization for their manufacturing
facilities. In
addition, we
do not
have full
control over
the ability
of our
contract manufacturers
to maintain
adequate quality
control,
quality assurance and qualified
personnel. Further, our manufacturing partners may
be unable to
successfully increase the manufacturing
capacity
for any of
our product candidates
in a timely or
cost-effective manner,
or at all, and
quality issues may
arise during any
such
scale-up
activities. If
regulatory authorities
do not
authorize these
facilities for
the manufacture
of our
product candidates
or if
they
withdraw
any
such
authorization
in
the
future,
we
may
need
to
find
alternative
manufacturing
facilities,
which
would
significantly
impact our ability to develop, obtain marketing approval for or market our product candidates, if approved. Our failure, or the failure of
our
contract
manufacturers,
to
comply
with
applicable
regulations
could
result
in
sanctions
being
imposed
on
us,
including
fines,
injunctions, civil penalties, delays,
suspension or withdrawal of
approvals, license revocation, seizures
or recalls of product candidates
or drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our
product
candidates or drugs and harm our business and results of operations.
We
depend
on
strategic
partnerships,
collaborations
and
license
agreements
in
connection
with
the
research,
development
and
commercialization of our Vaxxine
Platform and product candidates. If our existing or future partners, collaborators or licensees do
not perform
as expected,
if we fail
to maintain any
of these strategic
partnerships, collaborations
or license
agreements, or
if they
are
not
successful, our
ability
to
commercialize
our product
candidates
successfully and
to generate
revenues may
be materially
adversely affected.
We
have
established
and
intend
to
continue
to
establish
strategic
partnerships,
collaborations,
licensing
agreements,
or
other
arrangements with third parties.
For our research, development
and commercialization activities, we
have depended, and will
continue
to depend, on our partners to design and conduct their own clinical studies. As a result, these activities may not be able to be conducted
in the manner or on the time schedule we currently
contemplate, which may negatively impact our business operations.
While we have
certain contractual rights to information
about pre-clinical and clinical developments
and results under certain of our
collaboration and
license
agreements,
including
our
agreements
with
UBIA
and
Aurobindo,
we
cannot
be
certain
that
clinical
trials
conducted
in
connection with such collaboration
programs will be
conducted in a
manner consistent with
the best interests
of our business.
In addition,
if any
of our
partners, collaborators
or licensees
withdraw support
for these
programs or
proposed products
or otherwise
impair their
development, our business could be negatively affected.
Also, our inability to find
a partner for any of
our product candidates may result
in our termination of that specific product candidate program or evaluation of a product candidate in a particular
indication. Because of
contractual restraints
and the limited
number of contract
manufacturers with the
expertise, required regulatory
approvals and facilities
to
manufacture
our
product
candidates
on
a
commercial
scale,
replacement
of
a
contract manufacturer
may
be expensive
and
time-
consuming and
may cause
interruptions in
the production
of our
product candidates,
which could
delay our
clinical trials or
interrupt
our potential
future commercial
sales. Even
if we
find or
establish a
strategic partner,
collaborator or
licensee for
one or
more of
our
product candidates, there is no assurance that upon the approval of one or more of such product candidates that such product candidates
will be successfully commercialized.
Furthermore, our licenses
and collaboration agreements
impose, and any
future agreement we
enter into may
also impose, restrictions
on our ability to license certain of our intellectual property to third parties or to develop or commercialize
certain product candidates or
technologies ourselves.
In the future, we may
enter into additional collaborations or
license agreements to fund our
development programs or to gain
access to
sales, marketing or
distribution capabilities of
other parties. While
certain of our
existing collaboration and
license agreements, including
our agreements with Aurobindo, impose development or commercialization obligations
on our collaborators or licensees, we cannot be
certain that our collaboration partners
will allocate sufficient resources or
attention to our collaboration
programs, that they will
progress
our collaboration
programs consistent
with the
best interests
of our
business or
that they
will otherwise
meet their
obligations under
these agreements
in a timely
manner or
at all. Our
existing collaborations
and licenses,
and any future
collaborations and
licenses we
enter into, therefore may pose a number of risks, including the following:
•
collaborators or licensees
may have significant
discretion in determining
the efforts and
resources that they
will apply to
developing
or
commercializing
our
product
candidates,
and
they
may
not
sufficiently
fund
the
development
or
commercialization of a product candidate;
•
collaborators and licensees may
not perform their obligations as expected
by us or by health authorities,
such as the FDA
or comparable foreign regulatory authorities;
•
collaborators and licensees may
dissolve, merge, be bought or
may otherwise become unwilling to fulfill
the initial terms
of the collaboration with us, or we may be unwilling to continue our arrangement
following such an occurrence;
•
collaborators and licensees may fail
to perform their obligations
under their agreements or
may be slow in
performing their
obligations;
•
collaborations and licensees
may be terminated
for the convenience of
the collaborator or licensee
and, if terminated, we
could be required to raise additional capital to pursue further development or commercialization of the
applicable product
candidates;
•
collaborators and licensees may not pursue commercialization of any
product candidates that achieve regulatory approval
or may elect not to continue or renew development or commercialization programs
based on clinical trial results, changes
in the collaborators’ or
licensees’ strategic focus or available
funding, or external factors, such
as an acquisition, that
divert
resources or create competing priorities, or due to the actual or perceived
competitive situation in a specific indication;
•
collaborators and licensees may delay clinical trials, stop a clinical trial or abandon a product candidate, repeat or conduct
additional clinical trials or may require a new formulation of a product candidate
for clinical testing;
•
collaborators and
licensees could independently
develop, or develop
with third parties,
products that compete
directly or
indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to
be successfully developed or can be commercialized under terms that are more
economically attractive than ours;
•
product candidates discovered in collaboration with us may be viewed
by our collaborators as competitive with their own
product candidates
or products,
which may
cause collaborators
to cease
to devote
resources to
the commercialization
of
our product candidates;
•
disagreements with collaborators or licensees, including disagreements over proprietary rights, contract interpretation and
breach of contract claims, payment obligations or the preferred course
of development, might cause delays or termination
of
the
research,
development
or
commercialization
of
products
or
product
candidates,
might
lead
to
additional
responsibilities,
including
financial
obligations
for
us
with
respect
to
products
or
product
candidates,
or
delays
or
withholding of payments due to us or might result in litigation or arbitration, any of which would be time- consuming and
expensive, and could
limit our ability
to execute on
our strategies and
delay or prevent
our ability to
devote resources to
other product candidates;
•
collaborators or
licensees may
not properly
obtain, maintain,
enforce or
defend our
intellectual property
or may
use our
proprietary
information
in
such
a
way
that
could
jeopardize
or
invalidate
our
intellectual
property
or
proprietary
information or expose us to potential litigation; and
•
collaborators may infringe, misappropriate or
otherwise violate the intellectual property
of third parties, which
may expose
us to litigation and potential liability.
If our collaborations and licenses related to the research, development
and commercialization of product candidates do not result in the
successful
development
and
commercialization
of
our
product
candidates,
or
if
one
of
our
collaborators
or
licensees
terminates
its
agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration or license,
and we may be unable to continue the development and commercialization of the product candidate.
Further, even if our collaborations
and licenses do result in successful development and commercialization of products, if one of our collaborators breaches its obligations
under its
agreement with
us or
enters bankruptcy
or insolvency,
there may
be a
material delay
in our
receipt of
payments under
such
agreements, or
we may
never receive
such payments.
If we
do not
receive the
payments we
expect under
these agreements,
our own
development and commercialization activities could be delayed
or prevented altogether, and we may need
to secure additional resources
to develop our proprietary product candidates. Moreover, maintaining our relationships with
our collaborators and licensees may divert
significant time and effort of our scientific staff and management team, which may harm our
ability to effectively allocate our resources
to
multiple
internal
and
other projects.
All of
the
risks
relating
to
product
development,
regulatory
approval
and
commercialization
described in this report also apply to the activities of our collaborators and
licensees.
Additionally,
subject to its contractual
obligations to us,
if one of our
collaborators or licensors
is involved in
a business combination,
merger,
acquisition
or
other
similar
transaction,
the
collaborator
or
licensor
might
deprioritize
or
terminate
the
development
or
commercialization of
any product candidate
licensed to it
by us. If
one of our
collaborators or licensors
terminates its agreement
with
us, we
may be
unable to
attract new
collaborators in
a timely
manner or
at all,
which may
delay or
prevent our
ability to
develop or
commercialize one or more of our product candidates.
We rely on third parties to conduct our pre-clinical studies and clinical trials and perform other tasks for us. If these third parties do
not successfully
carry out
their contractual
duties, meet
expected deadlines,
or comply with
legal and
regulatory requirements,
we
may not be able to
obtain regulatory approval for
or commercialize our product candidates
and our business could be
substantially
harmed.
We have relied upon and plan to continue to rely upon CROs to execute certain of our pre-clinical and
clinical trials, and to monitor and
manage data for our ongoing pre-clinical
and clinical programs and to provide
us with significant data and other
information related to
our projects, pre-clinical studies and clinical trials. If such third parties provide inaccurate, misleading or incomplete data, our business,
financial condition and results of operations and prospects could be materially adversely affected. We
have control over limited aspects
of our CROs’
activities; nevertheless, we
are responsible for,
and our reliance
on CROs does
not relieve us
of our responsibilities
for,
ensuring that each of
our trials is
conducted in accordance with the
applicable protocol, legal, regulatory, scientific and
ethical standards.
We
and
our CROs
and
other vendors
are required
to comply
with cGMP,
GCP,
Good
Laboratory
Practice (“GLP”)
and other
laws,
regulations and
guidelines enforced
by applicable
regulatory authorities
for all
of our
product candidates
during both
pre-clinical and
clinical
development.
Regulatory
authorities
enforce
these
regulations
through
periodic
inspections
of
study
sponsors,
principal
investigators, trial sites and other
contractors. If we or any
of our CROs or vendors
fail to comply with applicable
regulations, the data
generated in our pre-clinical and
clinical trials may be
deemed unreliable and regulatory authorities
may require us to
perform additional
pre-clinical
and
clinical
trials
before
approving
our
marketing
applications.
We
cannot
assure
you
that
upon
inspection
by
a
given
regulatory
authority,
such
regulatory
authority
will
determine
that
all
of
our
clinical
trials
comply
with
cGCP
regulations
or
other
applicable laws and regulations.
Our failure to
comply with applicable
laws and regulations
may require us
to repeat clinical
trials, which
would delay the regulatory approval process and require significant additional
expenditures, which we may be unable to meet.
If any of our
relationships with these
CROs terminates, we may
not be able to
enter into arrangements with
alternative CROs or
do so
on commercially reasonable terms or in a timely manner.
We would also incur
additional costs and delays while engaging a new CRO,
which we
may not
be able
to engage
on commercially
reasonable terms
or at
all. In
addition, our
CROs are
not our
employees, and
except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time
and
resources
to
our
ongoing
pre-clinical
and
clinical
programs.
If
CROs
do
not
successfully
carry
out
their
contractual
duties
or
obligations,
meet
expected
deadlines,
conduct
our
studies
in accordance
with
regulatory
requirements
or
our
stated
study
plans
and
protocols, if they need to be replaced or if the quality or accuracy
of the data they obtain is compromised due to the failure to adhere
to
our protocols, regulatory requirements,
or for other reasons, our clinical
trials may be extended, delayed or
terminated and we may not
be able to obtain
regulatory approval for or
successfully commercialize our product candidates
in a timely manner or
at all. For example,
due to an
error by the
CRO responsible for
administering blinded placebo
and active doses
to trial subjects,
which reduced the
confidence
of subsequently collected
data, we decided
to discontinue a Phase
2a LTE
trial for UB-311.
In that case,
however, we
determined that
we had collected
sufficient data on UB-311’s tolerability and immunogenicity. CROs or
any of our
other collaborators may
also generate
higher costs
than anticipated.
As a
result, our
results of
operations and
the commercial
prospects for
our product
candidates could
be
harmed, our costs could increase and our ability to generate revenue
could be delayed.
Though we carefully manage our
relationships with our CROs, there
can be no assurance that
we will not encounter challenges
or delays
in the
future or
that these
delays or challenges
will not have
a material
adverse impact
on our business,
financial condition,
results of
operations and prospects.
We
do not have
multiple sources of
commercial supply for
some of the
components used in
our product candidates,
nor long-term
supply contracts with our
existing suppliers, and
certain of our suppliers
are critical to our
production. If we were
to lose a critical
supplier or if an approved supplier experiences delays due to raw material constraints, it could have a material adverse effect on our
ability to complete
the development of
our product candidates.
If we obtain
regulatory approval for
any of our
product candidates,
we cannot guarantee that our suppliers will be able to meet our increased demands for
supply.
We do not have multiple sources of commercial supply for
each of the components used in
the manufacturing of our product
candidates,
nor do we have long-term supply agreements with all of our component suppliers. Manufacturing suppliers are subject to
cGMP quality
and regulatory requirements, covering manufacturing, testing, quality control and record keeping relating to our product candidates and
are
subject
to
ongoing
inspections
by
applicable
regulatory
authorities.
Manufacturing
suppliers
are
also
subject
to
licensing
requirements as well as local, state and federal regulations and regulations in foreign jurisdictions in which they operate. Failure by any
of our suppliers to comply with all applicable regulations and requirements
may result in long delays and interruptions in supply.
The number of suppliers of the raw material components of our product candidates is limited. In the event it is necessary or desirable to
acquire supplies
from alternative
suppliers, we
might not be
able to
obtain such
supply on commercially
reasonable terms,
if at
all. It
could also require significant time and expense to redesign our manufacturing processes to work with another company and redesign of
processes can trigger
the need for conducting
additional studies such
as comparability or
bridging studies. Additionally,
certain of our
suppliers are critical to our production, and the loss
of these suppliers to one of our competitors
or otherwise would materially adversely
affect our
development and commercialization
efforts. Further,
if such critical
suppliers experience
delays in their
ability to
supply of
components due to limited
availability of raw
materials or other
difficulties which may be
beyond our or
their control, our
manufacturing
efforts may be materially adversely affected.
As part of any marketing approval, regulatory authorities conduct inspections
that must be successful prior to the approval of a product
candidate. Failure of manufacturing suppliers to successfully complete these regulatory inspections will result in delays. If supply
from
the approved supplier is interrupted, an
alternative vendor would need to be
qualified through an NDA amendment
or supplement, and
this could
result
in
significant
disruption
in
commercial
supply.
Regulatory
authorities
may
also
require
additional
studies
if
a
new
supplier is relied upon
for commercial production. Switching
vendors may involve substantial
costs and is likely
to result in a delay
in
our desired clinical and commercial timelines.
If we are unable to obtain the supplies we need at a reasonable
price or on a timely basis, it could have a material
adverse effect on our
ability
to
complete
the
development
of
our
product
candidates
or,
if
we
obtain
regulatory
approval
for
our
product
candidates,
to
commercialize them.
Risks Related to Our Intellectual Property Rights
We depend on intellectual property
licensed from UBI
and its affiliates, the
termination of which
could result in
the loss of
significant
rights, which would harm our business.
We
are dependent
on technology,
patents, know-how
and proprietary
information, both
our own
and those
licensed from
UBI and
its
affiliates. We
entered into the Platform
License Agreement in August
2021 pursuant to which
we obtained a worldwide,
sublicensable
(subject to
certain conditions),
perpetual, fully
paid-up, royalty-free
(i) exclusive
license (even
as to
the Licensors)
under all
patents
owned or otherwise
controlled by
the Licensors or
their affiliates existing
as of the
effective date
of the Platform
License Agreement,
(ii) exclusive
license (except
as to
the Licensors)
under all
patents owned
or otherwise
controlled by
the Licensors
or their
affiliates
arising after the
effective date during
the term of the
Platform License Agreement,
and (iii) non-exclusive
license under all know
-how
owned
or
otherwise
controlled
by
the
Licensors
or
their
affiliates
existing
as
of
the
effective
date
or
arising
during
the
term
of
the
Platform License
Agreement, in
each of
the foregoing
cases, to
research, develop,
make, have
made, utilize,
import, export,
market,
distribute, offer for sale,
sell, have sold,
commercialize or otherwise
exploit peptide-based vaccines in
the field of
all human prophylactic
and therapeutic uses, except for such vaccines related
to human immunodeficiency virus, herpes simplex virus
and Immunoglobulin E.
The patents licensed to us
under the Platform License Agreement
include patents directed to a CpG
delivery system, artificial T helper
cell epitopes and
certain designer peptides
and proteins that
are used in
our product candidates.
Any termination of
these licenses will
result in the loss of significant rights and will restrict our ability to develop
and commercialize our product candidates.
Our
reliance
on
in-licensed
intellectual
property
and
technology
results
in
a
number
of
risks
to
the
development
and
commercialization of our product
candidates, including the loss
of such rights, our
licensors’ inability or refusal
to enforce or
defend
such rights, and the requirement to pay royalties, milestones, and other amounts.
Agreements under
which we license
intellectual property
or technology
to or from
UBI, its affiliates
and from other
third parties may
be complex,
and certain
provisions in
such agreements
may be
susceptible to
multiple interpretations.
The resolution
of any
contract
interpretation disagreement that may arise
could narrow what we
believe to be the
scope of our
rights to the relevant
intellectual property
or technology or
increase what we believe
to be our
financial or other
obligations under the
relevant agreement, either
of which could
have
a
material
adverse
effect
on
our
business,
financial
condition,
results
of
operations
and
prospects.
Moreover,
if
disputes
over
intellectual property that we have licensed prevent or impair
our ability to maintain our current licensing arrangements on
commercially
acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates. Our business may
also
suffer if
any current or
future licensors fail
to abide by
the terms of
the license, if
the licensors fail
to enforce licensed
patents against
infringing third parties,
if the licensed patents
or other rights are
found to be invalid
or unenforceable, or
if we are unable to
enter into
necessary licenses on
acceptable terms or at
all. In the event of
a bankruptcy by one
of our licensors, our
intellectual property licenses
could
also
be
affected.
For
example,
while
the
U.S.
Bankruptcy
Code
allows
a
licensee
to
retain
its
rights
under
its
license
notwithstanding
the bankrupt
licensor’s
rejection of
such license,
such protections
may not
be available
to us
in the
event a
licensor
declares bankruptcy in
a foreign jurisdiction.
Our licensors may
also own or
control intellectual property
that has not
been licensed to
us and,
as a
result, we
may be
subject to
claims, regardless
of their
merit, that
we are
infringing or
otherwise violating
the licensors’
rights.
Furthermore, while we cannot currently determine the amount of the royalty obligations
we would be required to pay on sales of future
products,
if
any,
the
amounts
may
be
significant.
The
amount
of
our
future
royalty
obligations
will
depend
on
the
technology
and
intellectual
property
we use
in products
that we
successfully
develop
and commercialize,
if any.
Therefore,
even
if we
successfully
develop and commercialize products, we may be unable to achieve
or maintain profitability.
We believe
the growth of our business may
depend in part on our ability
to acquire or in-license additional
intellectual property rights,
including to advance
our research or allow
commercialization of our
product candidates. If
we are unable to
obtain additional licenses
we need to develop
and commercialize our product
candidates, or if we
obtain such licenses and
they are terminated, we
may be required
to expend considerable time
and resources in an attempt
to develop or license replacement
technology.
We may
also need to cease use
of the compositions or methods covered by such third-party intellectual property rights, and our ability to license or develop alternative
approaches that do not infringe on such intellectual property rights may entail
significant additional costs and development delays, even
if we were able to develop or license such alternatives, which may not be feasible.
The
licensing
and
acquisition
of
third-party
intellectual
property
rights
is
a
competitive
practice,
and
companies
that
may
be
more
established, or have greater resources
than we do, may also be pursuing
strategies to license or acquire
third-party intellectual property
rights that we may consider necessary or attractive in order to commercialize our product
candidates. More established companies may
have a competitive advantage over us due to their larger size and cash resources or greater clinical development
and commercialization
capabilities. There can be no assurance that we will be able to successfully complete such negotiations and ultimately acquire the rights
to the intellectual
property surrounding
the additional product
candidates that
we may seek
to acquire. Even
if we are
able to obtain
a
license under such intellectual property rights, any
such license may be non-exclusive, which may allow our
competitors’ access to the
same technologies licensed to us.
Licensing of intellectual property is of critical importance to
our business and involves complex legal, business and scientific issues
and
is complicated by the rapid pace of scientific discovery in our industry.
Disputes may also arise between us and our licensors regarding
intellectual property subject to a license agreement, including those relating
to:
•
the scope of rights granted under the license agreement and other interpretation
-related issues;
•
whether and
the extent to
which our technology
and processes infringe
on intellectual property
of the licensor
that is not
subject to the license agreement;
•
our right to sublicense patent and other rights to third parties under
collaborative development relationships;
•
our compliance with reporting, financial or other obligations under the license
agreement;
•
the amount and timing of payments owed under license agreements; and
•
the allocation of ownership of inventions
and know-how resulting from
the creation or use of intellectual property
by our
licensors and by us and our partners.
We
may
also
not
be
able
to
fully
protect
our
licensed
intellectual
property
rights
or
maintain
our
licenses
under
our
licensing
arrangements. Our existing and future
licensors could retain the
right to prosecute, maintain,
defend and enforce the
intellectual property
rights licensed to us, in
which case we would
depend on the ability and
will of our licensors to
do so. Our licensors
may take different
approaches
to prosecuting
patents than
we would,
and
it is
possible our
inability to
control such
activities could
harm our
business.
Furthermore, our licensors
may determine not
to pursue litigation
against other companies
or may pursue
such litigation less
aggressively
than we would.
We
may also rely
upon obtaining the
consent of our
licensors to settle
legal claims. If
our licensors do
not adequately
protect or enforce such licensed intellectual property, competitors
may be able to use such intellectual property and erode or negate any
competitive advantage we may have, which could materially harm our business, negatively affect
our position in the marketplace, limit
our ability to commercialize our products and product candidates and delay or
render impossible our achievement of profitability.
If disputes over intellectual property that we have
licensed prevent or impair our ability to maintain our
current licensing arrangements
on acceptable
terms or
at all,
we may
be unable
to successfully
develop
and commercialize
the affected
product candidates.
We
are
generally also subject to all of the same risks with respect to protection of intellectual property that we license as we are for intellectual
property that we own,
which are described below.
If we or our licensors
fail to adequately protect
this intellectual property,
our ability
to develop or commercialize our products could suffer.
Furthermore, our existing license agreements may impose, and we expect that future license agreements will impose, various diligence,
milestone payment,
royalty and other
obligations on us
and if our
licensors, licensees or
collaborators conclude
that we have
failed to
comply with our obligations under
these agreements, including due
to the impact of
the COVID-19 pandemic on
our business operations
or our use of the intellectual property licensed to us in a manner the licensor believe
is unauthorized, or we are subject to a bankruptcy,
we may be required to pay damages and the licensor may have the right to terminate the license. Any of the foregoing could result in us
being unable to develop, manufacture and
sell products that are
covered by the licensed technology
or enable a competitor to
gain access
to the
licensed technology.
We
might not
have the
necessary rights
or the
financial resources
to develop,
manufacture or
market our
current or future product candidates without the rights granted under our licenses, and the loss of sales or potential sales in
such product
candidates could have a material adverse effect on our
business, financial condition, results of operations and prospects.
Moreover,
our rights
to our
in-licensed patents
and patent
applications may
depend, in
part, on
inter-
institutional or
other operating
agreements between the
joint owners of
such in-licensed patents
and patent applications
or the owners
of such in-licensed
patents and
patent applications and their affiliates. We may not be aware of each
party’s rights and obligations under such inter-institutional or other
operating agreements and, as such, the ownership of our in-licensed patents and patent applications may be uncertain. If one or more of
these
owners
breaches
such
inter-institutional
or
other
operating
agreements,
our
rights
to
such
in-licensed
patents
and
patent
applications may be adversely affected. In
addition, the development of certain of our product candidates may
be funded by grants that
impose
certain pricing
limitations on
such product
candidates and
limit our
ability to
commercialize such
product
candidates
and
to
achieve
or
maintain
profitability.
Any
of
the
foregoing
could
have
a
material
adverse
effect
on
our
competitive
position,
business,
financial conditions, results of operations and prospects.
We
may
be
required
to
license
or
obtain
rights
to
use
third
party
intellectual
property
or
technology
in
connection
with
the
development and commercialization of our product candidates.
We
may
not be
aware of
all technologies
developed
or under
development
by third
parties, and
other
pharmaceutical
companies
or
academic institutions may also have filed or may be planning to file patent applications potentially relevant to our business and product
candidates. The
technologies used
in connection
with the
formulations of
our product
candidates may
also be
covered by
intellectual
property rights held
by others. From
time to time,
in order to
avoid infringing these
third-party patents, we
may be required
to license
technology from additional
third parties to further
develop, manufacture, use,
sell or commercialize our
product candidates, or that
we
otherwise deem
necessary for
our business
operations. We
may fail
to obtain
any such
licenses at
a reasonable
cost or
on reasonable
terms, if
at all,
and as
a result
we may
be unable
to develop
or commercialize
the affected
product candidates,
and we
may have
to
abandon development of the relevant research programs or product candidates,
which would harm our business.
If we are unable to obtain and maintain intellectual property protection for our products or product candidates, or if the duration or
scope of our
intellectual property protection
is not sufficiently
broad, our ability
to commercialize our
product candidates successfully
and to compete effectively may be materially adversely affected.
Our success depends on our ability
to obtain and maintain patent and
other intellectual property protection in the
United States and other
countries
with respect
to our
current
and future
proprietary product
candidates. We
rely upon
a combination
of patents,
trade
secret
protection
and
confidentiality
agreements
to
protect
the
intellectual
property
related
to
our
technology,
manufacturing
processes,
products and
product candidates.
We,
UBI and
our other
collaborators and
licensors have
primarily sought
to protect
our proprietary
positions by
filing patent
applications in
the United
States and
abroad related
to our proprietary
technology,
manufacturing processes
and product
candidates that
are important
to our business.
Despite our
or our
third party
collaborators’ or
licensors’ efforts
to protect
these proprietary rights, unauthorized parties may be able to obtain and use information that
we regard as proprietary. Third parties may
also seek to invalidate our patents or those of our licensors. If we are unable to obtain rights to required third-party intellectual property
rights or
maintain
the existing
intellectual
property
rights we
have,
we may
be required
to expend
significant
time and
resources
to
redesign our
technology,
product candidates
or the methods
for manufacturing
them or to
develop or
license replacement
technology,
all of which may not be feasible on a technical or
commercial basis. We could also lose expected revenues under license agreements we
maintain
with
third
parties.
If
we
are
unable
to
obtain
or
maintain
our
intellectual
property,
we
may
be
unable
to
develop
or
commercialize the affected technology and product candidates or could lose revenue, either of which could
harm our business, financial
condition, results of operations and prospects significantly.
The patent prosecution 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 or
in all jurisdictions
where protection may be
commercially advantageous.
It is also
possible that we
may fail to
identify patentable aspects
of our research
and development output
before it is
too late to
obtain
patent protection.
In addition, we, UBI or our other collaborators and licensors, may only pursue, obtain or maintain patent protection in a limited number
of countries. Because
patent applications in
the United States,
Europe and many
other foreign jurisdictions
are typically not
published
until 18 months after filing, or
in some cases not at all,
and because publications of discoveries
in scientific literature lag behind
actual
discoveries, we cannot be
certain that we or our
licensors were the first to
make the inventions claimed
in any of our owned
or any in-
licensed issued patents
or pending patent
applications, or
that we or
our licensors were
the first to
file for protection
of the inventions
set forth in our patents or patent
applications. As a result, we may not
be able to obtain or maintain protection for
certain inventions, and
there
can
be
no
assurance
that
the
patents
we
file,
or
those
that
are
issued,
will
not
be
vulnerable
to
claims
of
invalidity
or
unenforceability.
Even if
patents do
successfully issue,
our owned
or in-licensed
patents may
not adequately
protect our
intellectual property,
provide
exclusivity
for
our products
or product
candidates,
prevent
others
from
designing
around our
claims or
otherwise
provide
us with
a
competitive advantage. Competitors
may use our technologies
in jurisdictions where we
have not obtained or
are unable to adequately
enforce patent protection
to develop their
own products and,
further, may
export otherwise infringing
products to territories
where we
have patent protection, but enforcement
is not as strong as that in
the United States and Europe.
These products may compete with
our
products, and our patents or other intellectual property rights may not
be effective or sufficient to prevent them from competing with us.
We also cannot offer any assurances about
which, if any, patents will
issue, the breadth of
any such patents or
whether any issued patents
will
be
found
invalid
or
unenforceable
or
will
be
threatened
by
third
parties.
In
addition,
third
parties
may
challenge
the
validity,
enforceability, ownership, inventorship or scope of any of our patents. Any successful challenge to any of our patents or our in-licensed
patents could
deprive us
of rights
necessary for
the successful
commercialization
of any
product candidate
that we
may develop
and
could impair or eliminate our ability to collect future
revenues and royalties with respect to such products or product
candidates. If any
of our
patent
applications
with
respect to
our
product
candidates fail
to issue
as patents,
if
their breadth
or strength
of protection
is
narrowed
or
threatened,
or
if they
fail
to
provide
meaningful
exclusivity
or
competitive
position,
it could
dissuade
companies
from
collaborating with us or otherwise adversely affect our
competitive position.
In addition,
patents have
a limited
lifespan. In
the United
States, for
example, the
natural expiration
of a
patent is
generally 20
years
after its effective
filing date. Various
extensions may be available,
however, the
life of a patent and
the protection it affords
is limited.
Given the amount of time required for the development, testing, regulatory review
and approval of new product candidates, our patents
protecting such candidates might expire before or shortly after such candidates are commercialized. If we encounter delays in obtaining
regulatory approvals, the period of time during which we
could market a product under patent
protection could be further reduced. Even
if patents covering
our product candidates
are obtained, once
such patents expire,
or if such patents
are waived or
suspended, we may
be vulnerable to competition from
similar or biosimilar products.
Any expiration, waiver or suspension
of our patent or
other intellectual
property protection
by the U.S.
or other
foreign governments
could lead
to the launch
of a
similar or
biosimilar version
of one
of our
products and would likely result
in an immediate and substantial reduction
in the demand for our product, which
could have a material
adverse effect on our business, financial condition, results of operations
and prospects.
We may not be able to protect or enforce our intellectual property rights in all jurisdictions, and
we cannot guarantee that the patent
rights we have will prevent others from competing with us.
The
patent
position
of
pharmaceutical
companies
is
generally
uncertain
because
it
involves
complex
legal,
scientific
and
factual
considerations
for which
legal principles
remain unsolved.
The standards
applied by
the United
States Patent
and Trademark
Office
(“USPTO”) and foreign patent offices in
granting patents are not
always applied uniformly or predictably, and can
change. Additionally,
the laws
of some
foreign countries
do not
protect intellectual
property rights
to the
same extent
as the
laws of
the United
States, and
many companies have encountered significant challenges in protecting
and defending such rights in foreign jurisdictions. We
may face
similar challenges.
The legal
systems of
certain countries,
particularly
certain developing
countries, do
not favor
the enforcement
of
patents and
other intellectual
property rights,
particularly those
relating to
biotechnology,
which could
make it
difficult for
us to
stop
the
infringement,
misappropriation
or
other
violation
of
our
patents
or
other
intellectual
property,
including
the
unauthorized
reproduction of our manufacturing
or other know-how or
the marketing of competing
products in violation of
our intellectual property
rights generally.
Any of these outcomes
could impair our
ability to prevent
competition from third
parties, which may
have a material
adverse effect on our business, financial condition, results
of operations and prospects.
Further,
the existence
of issued
patents does
not guarantee
our right
to practice
the patented
technology or
commercialize a
patented
product candidate.
Third parties
may design
around our
patents, or
have or
obtain rights
to patents
which they
may use
to prevent
or
attempt to prevent
us from practicing our
patented technology or commercializing
any of our patented product
candidates. As a result,
we could be prevented from selling
our products unless we were able
to obtain a license under such third-party patents,
which may not
be available on commercially reasonable
terms or at
all. In addition, third
parties may seek approval
to market their
own products similar
to
or otherwise
competitive
with
our
products
and
such products
may not
violate
our
patent
rights.
We
may
also need
to assert
our
patents against third parties, including by filing lawsuits alleging patent
infringement. In any such proceeding, a third party may assert,
and a court or
agency of competent jurisdiction may
find, our asserted patents
to be invalid or
unenforceable. Any of the foregoing
could
have a material adverse effect on our business, financial condition,
results of operations and prospects.
There is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and
we may become
party to, or
threatened with, litigation
or other adversarial
proceedings regarding
intellectual property rights.
Proceedings to defend
or
enforce our patent rights,
whether or not successful
and whether or
not meritorious, could result
in substantial costs and
divert our efforts
and attention from other aspects of our business, could
put our patents at risk of being invalidated or held
unenforceable, or interpreted
more narrowly. There can be no assurance that we will have sufficient financial or other resources to file and pursue such claims, which
often last for years before they are
concluded. Some claimants may have substantially
greater resources than we do and
may be able to
sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. In addition,
patent holding companies
that focus solely
on extracting royalties
and settlements by
enforcing patent rights
may target us,
especially
as we gain greater visibility and market exposure
as a public company.
In addition, our enforcement of our patent rights could
provoke
third parties
to assert
counterclaims against
us. Third
parties also
may raise
similar claims
before administrative
bodies in
the United
States or abroad, even outside the context
of litigation. We may not prevail in any lawsuits or
administrative proceedings that we initiate
and the
damages or
other remedies
awarded, if
any,
may not
be commercially
meaningful. If
a third
party were
to prevail
on a
legal
assertion of invalidity
or unenforceability,
we could lose
part or all
of the patent
protection on one
or more of
our product candidates,
which could result in
our competitors and other
third parties using our
technology to compete with
us. An adverse outcome
in a litigation
or administrative proceeding
involving our patents could
limit our ability to assert our
patents against competitors, affect
our ability to
receive royalties or other licensing consideration from
our licensees, and may curtail
or preclude our ability to
exclude third parties from
making, using and
selling similar or
competitive products. Any
of these occurrences
could have a
material adverse effect
on our business,
financial condition,
results of operations
and prospects.
Accordingly,
our efforts
to enforce our
intellectual property
rights around
the
world may be inadequate to
obtain a significant commercial advantage
from the intellectual property that
we develop, acquire or license.
Many countries, including certain
countries in Asia, have compulsory
licensing laws under which a patent
owner may be compelled
to
grant licenses to third parties. In
addition, many countries limit the enforceability of
patents against government agencies or government
contractors. In these countries,
the patent owner may
have limited remedies, which
could materially diminish the
value of such patent.
If we
or any
of our
licensors is
forced to grant
a license
to third
parties with respect
to any patents
relevant to
our business,
our competitive
position
may be
impaired,
and our
business, financial
condition, results
of operations
and prospects
may be
adversely affected.
Our
owned and in-licensed patents may be subject to a reservation of rights by one or more third parties. For example, the research resulting
in certain
of our
licensors’
patents and
technology,
including
patents and
technology
relating to
UB-612,
was funded
in part
by the
Taiwanese government.
As a result, the Taiwanese government
may have certain rights to such patent rights and technology.
Furthermore, certain of our patents and technology,
including patents and technology relating to UB-312, were funded in part by grants
from nonprofit
third parties,
including the
MJFF and
CEPI. We
are required
to fulfill
certain contractual
obligations with
respect to
products
created
using
such
grant
funding,
including
certain
reporting
requirements.
If
these
grant
proposals
are
awarded,
or
if
we
receive
funding
from
other
nonprofit
third
parties
in
the
future,
we
may
be
required
to fulfill
other
contractual
obligations,
such
as
publishing the
results of our
scientific studies, making
certain products available
at an affordable
price in a
list of clearly
defined low
and
lower-middle
income
countries
and
ensuring
that
certain
products
are
available
in
geographic
regions
where
there
has
been
an
outbreak of an infectious disease at certain reduced economic rates.
If we or our
licensors infringe, misappropriate, or otherwise violate intellectual property
of third parties, we
may face increased costs
or we may be unable to commercialize our product candidates.
Many of our current and former employees, consultants and
independent contractors including our senior management, were previously
employed at universities or at other biotechnology or pharmaceutical companies, including some
which may be competitors or potential
competitors.
Although
we
try
to
ensure
that
our
employees,
consultants
and
independent
contractors
do
not
use
the
proprietary
information
or
know-how
of
others
in
their
work
for
us,
we
may
be
subject
to
claims
that
we
or
these
employees,
consultants
or
independent contractors
have used
or disclosed
intellectual property,
including trade
secrets or
other proprietary
information, of
such
individual’s current
or former employers, or that patents and
applications we have filed to protect
inventions of these individuals, even
those related to one or more of our current or future
product candidates, are rightfully owned by their former or concurrent employer. In
addition, while we
typically require our employees,
consultants and independent
contractors who may be
involved in the development
of intellectual property
to execute agreements
assigning such intellectual
property to us, we
may be unsuccessful
in executing such
an
agreement with each
party who in
fact develops intellectual
property that we
regard as our
own, or such
agreements may be
breached
or alleged
to be
ineffective, and
the assignment
may not
be self-executing,
which may
result in
claims by
or against
us related
to the
ownership of such intellectual property or may result in such intellectual property
becoming assigned to third parties.
Third parties have, and may in the
future have, U.S. and non-U.S. issued patents
and pending patent applications relating to compounds,
methods of manufacturing
compounds or methods
of use for
the treatment of
the disease indications
for which we
are developing
our
product candidates that
may cover our product
candidates. For example,
we are aware of
certain third-party U.S.
and non-U.S. patents
and patent applications, including those of our competitors,
that relate to anti-alpha synuclein binding molecules that may be construed
to cover
the technology used
in our anti-alpha
synuclein vaccine product
candidate. We
are also aware
of certain third-party
U.S. and
non-U.S.
patents
and
patent
applications,
including
those of
our
competitors,
that
relate to
coronavirus
vaccines
and
treatments
and
vaccines against other
infectious diseases and we
expect such third
parties to have filed
additional patent applications,
which have not
yet been published and to file additional patent applications in the future.
In the event that any of these patent rights were asserted against us, we believe that we have defenses against any such action, including
that such patents
would not be
infringed by our
product candidates and/or
that such patents are
not valid. However,
if any such
patent
rights were to
be asserted against
us and our
defenses to such
assertion were
unsuccessful, unless
we obtain a
license to such
patents,
we could be liable
for damages, which could
be significant and include
treble damages and attorneys’
fees if we are
found to willfully
infringe such
patents. We
could also
be precluded
from commercializing
any product candidates
that were ultimately
held to
infringe
such patents, any of which could have a material adverse effect on our business,
financial condition, results of operations and prospects.
Uncertainties resulting from our participation in patent litigation or
other proceedings could have a material adverse
effect on our ability
to
compete
in
the
marketplace.
Furthermore,
because
of
the
substantial
amount
of
discovery
required
in
certain
jurisdictions
in
connection
with
intellectual
property
litigation,
there
is
a
risk
that
some
of
our
confidential
information
could
be
compromised
by
disclosure during this
type of litigation.
There could also
be public announcements
of the results of
hearings, motions or
other interim
proceedings or developments. If securities analysts or investors perceive these results to be negative, the perceived value of our product
candidates
or intellectual
property
could be
diminished.
Accordingly,
the market
price of
our Class
A common
stock could
decline.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect
on our business, financial condition, results of operations and prospects.
Changes to
the patent
law in
the United
States and
other jurisdictions
could increase
the uncertainties
and costs
surrounding the
prosecution of our patent applications and the enforcement or defense of our issued patents, thereby impairing our ability to protect
our technologies and product candidates.
As is the case
with other biopharmaceutical
companies, our success
is heavily dependent
on intellectual property,
particularly patents.
Obtaining and
enforcing patents
in the
biopharmaceutical industry
involves both
technological and
legal complexity
and is
therefore
costly,
time-consuming
and inherently
uncertain. Changes
in either
the patent
laws or
interpretation of
the patent
laws in
the United
States or
abroad could
increase the
uncertainties and
costs surrounding
the prosecution
of patent
applications and
the enforcement
or
defense of
issued patents.
For example,
recent U.S.
Supreme Court
rulings have
narrowed the
scope of
patent protection
available in
certain
circumstances
and
weakened
the
rights
of
patent
owners
in
certain
situations.
Specifically,
these
decisions
stand
for
the
proposition that patent
claims that
recite laws
of nature are
not themselves
patentable unless those
patent claims have
sufficient additional
features
that
provide
practical
assurance
that
the
processes
are
genuine
inventive
applications
of
those
laws.
What
constitutes
a
“sufficient” additional
feature is
uncertain. Furthermore,
in view
of these
decisions, since
December 2014,
the USPTO
has published
and continues
to publish
revised guidelines
for patent
examiners to
apply when
examining process
claims for
patent eligibility.
This
combination of
events has
created uncertainty
with respect
to the
validity and
enforceability of
patents, even
once they
are obtained.
Depending on future actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could
change in
unpredictable ways.
In addition,
the complexity
and uncertainty
of European
and Asian
patent laws
have also
increased in
recent years.
Complying with
these laws and
regulations could
have a material
adverse effect
on our existing
patent portfolio and
our
ability to protect and enforce our intellectual property in the future.
Obtaining and maintaining our patent protection, including patents licensed from
third parties, depends on compliance with various
procedural, documentary, fee payment and other requirements imposed by governmental
patent agencies, and our patent protection
could be reduced or eliminated for noncompliance with these requirements.
Periodic maintenance
fees, renewal
fees, annuity
fees and
various other
governmental fees
on patents
and patent
applications will
be
due to
be paid
to the
USPTO and
various government
patent agencies
outside the
United States
over the
lifetime of
our patents
and
patent applications and any patent rights we may own or license in the future. Additionally,
the USPTO and various government patent
agencies
outside
the
United
States
require
compliance
with
a
number
of
procedural,
documentary,
fee
payment
and
other
similar
provisions during the patent application process. In certain cases, an inadvertent lapse can be cured by payment of a late fee or by other
means in accordance with
rules applicable to the
particular jurisdiction. However, there are situations
in which noncompliance
can result
in
abandonment
or
lapse
of
the
patent
or
patent
application,
resulting
in
partial
or
complete
loss
of
patent
rights
in
the
relevant
jurisdiction. For example, certain of
our patents which include claims
utilized in our UB-311 anti-Aβ vaccine product candidate
recently
lapsed in certain European and Asian countries due to non-payment of fees. Noncompliance events that could result in abandonment or
lapse of a patent or patent application include failure to respond to official communications within prescribed
time limits, non-payment
of
fees
and
failure
to
properly
legalize
and
submit
formal
documents.
If
we
or
our
licensors fail
to
maintain
the
patents
and
patent
applications
covering
or
otherwise
protecting
our
technologies
or
our
product
candidates,
our
competitors
may
be
able
to
enter
the
market with
similar or
identical products
or technology
without infringing
our patents,
which could have
a material
adverse effect
on
our business.
In addition,
to the
extent that
we have
responsibility for
taking any
action related
to the
prosecution or
maintenance of
patents or patent applications in-licensed
from a third party, any failure
on our part to
maintain the in-licensed intellectual property
could
jeopardize our rights
under the relevant
license and may
have a material
adverse effect
on our business,
financial condition,
results of
operations and prospects.
If we do not
obtain patent term extensions
and data exclusivity
for each of
our product candidates,
our business may be
materially
harmed.
Depending upon
the timing, duration
and specifics of
any FDA marketing
approval in the
United States of
any product candidates
we
may develop, 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 Action of 1984 (“Hatch-Waxman Amendments”). The Hatch-Waxman
Amendments permit a patent extension
term of up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot
extend the
remaining term
of a
patent beyond
a total
of 14
years from
the date
of product
approval, only
one patent
applicable to
an
approved drug may be extended and
only those claims covering the approved
drug, a method for using it,
or a method for
manufacturing
it may be extended. The
length of the patent term
extension is typically calculated as
one half of the
clinical trial period plus the
entire
period of time
during the review of
the NDA or
BLA by the
FDA, minus any
time of delay
by the applicant
during these periods.
We
might not be granted a
patent term extension at all,
because of, for example, failure
to apply within the
applicable period, failure to apply
prior to the expiration of relevant patents or otherwise failure to satisfy any
of the numerous applicable requirements.
In the
European Union,
a maximum
of five
and a
half years
of supplementary
protection can
be achieved
for an
active ingredient
or
combinations of active
ingredients of a
medicinal product protected
by a basic
patent, if a
valid marketing
authorization exists (which
must be
the first
authorization to
place the
product on
the market
as a
medicinal product)
and if
the product
has not
already been
the
subject of
supplementary protection.
Although all
countries in
Europe must
provide supplementary
protection certificates,
there is
no
unified legislation among European countries and
so supplementary protection certificates must
be applied for and
granted on a country-
by-country basis. This can lead
to a substantial cost to
apply for and receive
these certificates, which may vary
among countries or not
be provided at all. Further, we may not receive an extension because of, for example, failing to exercise due diligence during the testing
phase or regulatory review
process, failing to apply within applicable
deadlines, failing to apply prior
to expiration of relevant patents,
or otherwise
failing 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 if the term of any such extension is less than we request, our competitors may obtain approval
of competing products earlier than expected following our patent expiration, and our business, financial condition, results of operations
and prospects could be materially harmed.
If we
are
unable to
protect
the confidentiality
of our
proprietary
information
and trade
secrets, the
value
of our
technology
and
products could be materially adversely affected.
In addition to patent protection, we also
rely on trade secrets and confidentiality agreements
to protect other proprietary information that
is not patentable or that we elect
not to patent. To maintain the confidentiality of trade secrets and proprietary information, we enter into
confidentiality agreements with our
employees, consultants, independent contractors,
collaborators, contract manufacturers, CROs and
others upon the commencement of
their relationships with us. These agreements
require that all confidential information developed
by
the individual or entity or made known to the
individual or entity by us during the course of
the individual’s or entity’s relationship with
us be kept confidential
and not disclosed to
third parties. Our
agreements with employees as
well as our personnel
policies also generally
provide that any inventions conceived
by the individual in the course
of rendering services to us shall
be our exclusive property or that
we may obtain full
rights to such inventions
at our election. However,
we cannot guarantee that
we have entered into
such agreements
with each party that may
have or has had access to
our trade secrets or proprietary technology
and processes and cannot guarantee
that
individuals with
whom we
have these
agreements will
comply with
their terms.
In the
event of
unauthorized use
or disclosure
of our
trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful protection, particularly for our
trade secrets.
We may not have adequate remedies in the event of unauthorized use
or disclosure of our proprietary information in
the case of a breach
of
any
such
agreements
and
our
trade
secrets
and
other
proprietary
information
could
be
disclosed
to
third
parties,
including
our
competitors. Many
of our partners
also collaborate
with our competitors
and other
third parties. The
disclosure of
our trade
secrets to
our competitors,
or more
broadly,
would impair
our competitive
position and
may materially
harm our
business, financial
condition,
results of operations and prospects. Costly and time-consuming
litigation could be necessary to enforce and determine
the scope of our
proprietary
rights,
and
failure
to
maintain
trade
secret
protection
could
adversely
affect
our
competitive
business
position.
The
enforceability of confidentiality
agreements may vary from
jurisdiction to jurisdiction. Courts
outside the United States
are sometimes
less willing
to protect
proprietary information,
technology and
know-how.
In addition,
others may
independently discover
or develop
substantially
equivalent
or
superior
proprietary
information
and
techniques,
and
the
existence
of
our
own
trade
secrets
affords
no
protection against such independent discovery.
If our
trademarks and
trade names
are not
adequately protected,
we may
not be
able to
build name
recognition in
our markets
of
interest and our business, financial condition, results of operations and prospects may
be adversely affected.
We rely on our trademarks for
name recognition by potential
partners and customers in
our markets of interest.
However, our trademarks
or trade names may be challenged, infringed, circumvented or declared generic or determined
to be infringing on other marks. We
may
not be
able to
protect our
rights to
these trademarks
and
trade names
or may
be forced
to stop
using
these names
or marks.
During
trademark registration
proceedings, we
may receive
rejections that
we may
be unable
to overcome.
In addition,
in the USPTO
and in
comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and
to seek to cancel registered trademarks. Opposition
or cancellation proceedings may be filed
against our trademarks, and our trademarks
or trademark
applications may
not survive
such proceedings.
If we
are unable
to establish
name recognition
based on
our trademarks
and trade
names, we may
not be able
to compete
effectively and
our business, financial
condition, results of
operations and
prospects
may be adversely affected.
Intellectual property rights do not necessarily address all potential threats.
The degree of
future protection afforded
by our proprietary
and intellectual
property rights is
uncertain because
such rights offer
only
limited protection and may not adequately protect our rights or permit us to
gain or keep our competitive advantage. For example:
•
others may be able
to develop products
that are similar
to, or better
than, our product candidates
in a way
that is not
covered
by the claims of the patents we license or may own currently or in the future;
•
we,
or
our
licensing
partners
or
current
or
future
collaborators,
might
not
have
been
the
first
to
make
or
file
patent
applications
for
the
inventions
covered
by
issued
patents
or
pending
patent
applications
that
we
license
or
may
own
currently or in the future;
•
we may
not have
the financial
or other
resources necessary
to enforce
a patent
infringement or
other proprietary
rights
violation action;
•
we may choose not to file
a patent for certain trade secrets
or know-how,
and a third party may subsequently
file a patent
covering such intellectual property;
•
our trade
secrets or
proprietary know-how
may be
unlawfully disclosed,
thereby losing
their trade
secret or
proprietary
status;
•
our competitors or other third
parties might conduct research and
development activities in countries where
we do not have
patent
rights and
then
use
the information
learned from
such activities
to
develop
competitive
products
for
sale in
our
major commercial markets;
•
it is possible that there are prior public disclosures that could invalidate our
or our licensors’ patents;
•
the patents of
third parties or
pending or future
applications of third
parties, if issued,
may have an
adverse effect on
our
business;
•
third parties could design around our patents, or independently
develop trade secrets that provide them with an advantage
over us;
•
any patents that
we obtain may
not provide us
with any competitive
advantages or may ultimately
be found not
to be owned
by us, or to be invalid or unenforceable; or
•
we may not develop additional proprietary technologies that are patentable.
Should any of these events occur, they could significantly
harm our business, financial conditions, results of operations and prospects.
Risks Related to Our Business and Industry
Even if
we, or
any current
or future
collaborators,
are able
to commercialize
any product
candidate that
we or
they develop,
the
successful commercialization of our product candidates will depend in part on the extent to which governmental authorities, private
health insurers
and other
third-party payors
provide coverage
and adequate
reimbursement levels
and implement
pricing policies
favorable
for
our
product
candidates.
Failure
to
obtain
or
maintain
coverage
and
adequate
reimbursement
for
our
product
candidates, if approved, could limit our ability to market those products and decrease
our ability to generate revenue.
The healthcare
industry is
acutely focused
on cost
containment, both
in the
United States
and elsewhere.
Government authorities
and
third-party payors have attempted
to control costs by limiting coverage
and the amount of reimbursement. The
insurance coverage and
reimbursement status of
newly approved products
is uncertain and failure
to obtain or maintain
adequate coverage and
reimbursement
for
our product
candidates could
limit our
ability to
generate revenue.
Our business
model is
also focused
on lowering
the cost
and
increasing the accessibility of healthcare. Even if we are successful in
driving down the cost of healthcare, third- party payors
may still
not view our product candidates, if approved, as cost-effective, and coverage and reimbursement may not be available to our patients or
may
not
be
sufficient
to
allow
our
products,
if
any,
to
be
marketed
on
a
competitive
basis.
If
coverage
and
reimbursement
are
not
available, or reimbursement is available only to limited
levels, patient subpopulations of labeled indications, or otherwise
restricted, we,
or any collaborators, may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved
reimbursement amount may not be high enough
to allow us, or any collaborators, to establish or maintain pricing
sufficient to realize a
sufficient return on our or their investments. Cost-control initiatives could also
cause us to decrease any price we might
establish for our
product candidates,
which could
result in
lower than
anticipated product
revenues. Moreover,
eligibility for
reimbursement
does not
imply that any product will be
paid for in all cases or
at a rate that covers
our costs, including our costs related to
research, development,
manufacture,
sale and
distribution.
Reimbursement
rates may
vary,
by way
of example,
according
to the
use of
the product
and the
clinical setting
in which
it is
used. For
products administered
under the
supervision of
a physician,
obtaining coverage
and adequate
reimbursement may be difficult because of the higher costs often associated with administering such drugs. If the prices for our product
candidates, if approved,
decrease or if governmental
and other third-party payors
do not provide adequate
coverage or reimbursement,
our business, financial condition, results of operations and prospects will suffer,
perhaps materially.
There is significant uncertainty related to the insurance
coverage and reimbursement of newly approved products.
In the United States,
the CMS,
the federal
agency responsible
for administering
the Medicare
program, makes
the principal
decisions about
coverage
and
reimbursement for new treatments under Medicare. Private
payors may follow CMS to
a substantial degree. It is
difficult to predict what
CMS will decide with
respect to reimbursement
for novel products such
as ours. In addition,
certain Affordable Care
Act marketplace
and other
private payor
plans are required
to include
coverage for
certain preventative
services, including
vaccinations recommended
by the U.S. Centers
for Disease Control’s Advisory Committee on Immunization Practices
(“ACIP”) without cost share obligations (i.e.,
co-
payments,
deductibles
or
co-insurance)
for
plan
members.
For
Medicare
beneficiaries,
some
of
our
product
candidates
may
be
covered
for
reimbursement
under
either
the
Part
B
program
or
Part
D
program
depending
on
several
criteria,
including
the
type
of
vaccine
and
the
beneficiary’s
coverage
eligibility.
If
our
product
candidates,
once
approved,
are
reimbursed
only
under
the
Part
D
program, physicians
may be
less willing
to use
our products
because
of the
claims adjudication
costs and
time related
to the
claims
adjudication process
and collection
of copayments
associated with
the Part
D program.
If our
product candidates,
once approved,
are
reimbursed only under the Part B
program, certain potential drawbacks
associated with the Part B program,
such as the time and effort
required to seek reimbursement
after purchase, may make our
product candidates less attractive to
clinics or other potential customers.
Outside of Medicare, private
insurance is likely
to raise similar
claims adjudication and copayment
considerations, which may also
make
our product candidates less attractive to potential customers using private
insurance.
Outside the United
States, certain countries
set prices and
reimbursement for pharmaceutical
products, with limited
participation from
the marketing authorization holders. We cannot be sure that such
prices and reimbursement will be acceptable to
us or our collaborators.
If the
regulatory authorities
in these
jurisdictions set
prices or
reimbursement levels
that are
not commercially
attractive for
us or
our
collaborators,
our
revenues
from
sales
by
us
or
our
collaborators,
and
the
potential
profitability
of
our
product
candidates,
in
those
countries would
be negatively
affected.
Additionally,
some countries
require approval
of the
sale price
of a
product before
it can
be
marketed. In many countries, the pricing
review period begins after marketing or product
licensing approval is granted. As a
result, we
might obtain marketing approval for a product in a particular country, but then may experience delays in the reimbursement approval of
our product or be subject to price regulations that would delay our commercial launch of the product, possibly for lengthy time periods,
which could negatively impact the revenues we are able to generate from the
sale of the product in that particular country.
Moreover,
an increasing
number of
countries are
taking initiatives
to attempt
to reduce
large budget
deficits by
focusing cost-cutting
efforts on pharmaceuticals
for their state-run
healthcare systems. These
international price control
efforts have impacted
all regions of
the world, notably in
the European Union. In
some countries, in particular
in many Member States
of the European Union,
we may be
required
to
conduct
a
clinical
trial
or
other
studies
that
compare
the
cost-effectiveness
of
our
product
candidates
to
other
available
therapies in order to
obtain or maintain reimbursement
or pricing approval. In
addition, publication of discounts
by third- party payors
or authorities may lead to further pressure on the prices or reimbursement
levels within the country of publication and other countries.
If reimbursement of our products is
unavailable or limited in scope
or amount, or if pricing is set
at unsatisfactory levels, our business,
financial condition, results of operations
or prospects could be materially adversely
affected. Cost-control initiatives
could cause us, or
any collaborators,
to decrease the
price we, or
they, might
establish for products,
which could result
in lower than
anticipated product
revenues. Further, our competitors have
more experience dealing with and contracting with payors for preferred coverage, which could
potentially
put
us
at
a
competitive
disadvantage.
An
inability
to
promptly
obtain
coverage
and
adequate
payment
rates
from
both
government-funded
and private
payors for
any of
our product
candidates for
which we,
or any
future collaborator,
obtain marketing
approval could
significantly harm
our operating
results, our
ability to
raise capital
needed to
commercialize products
and our
overall
financial condition.
Our business
and current
and future
relationships with
third-party
payors, healthcare
professionals and
customers in
the United
States and elsewhere will be subject to applicable healthcare laws and regulations, which
could expose us to significant penalties.
Healthcare
providers,
physicians
and
third-party
payors
in
the
United
States
and
elsewhere
will
play
a
primary
role
in
the
recommendation
and
prescription
of
any
product
candidates
for
which
we
obtain
marketing
approval.
Our
current
and
future
arrangements with healthcare professionals, third-party payors and customers expose us to
broadly applicable fraud and abuse and other
healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal civil False Claims Act,
that may constrain the business or
financial arrangements and relationships through which we
conduct clinical research, sell, market and
distribute any products for which we obtain marketing
approval. In addition, we may be
subject to physician payment transparency laws
and
patient
privacy
regulation
by
the
federal
government
and
by
the
U.S.
states
and
foreign
jurisdictions
in
which
we
conduct
our
business.
Efforts
to ensure
that our
business arrangements
with third
parties will
comply
with applicable
healthcare laws
and regulations
may
involve substantial costs.
It is
possible that governmental authorities
will conclude that
our business
practices, including our
relationships
with
physicians
and
other
healthcare
providers,
some
of
whom
may
recommend,
purchase
or
prescribe
our
product
candidate,
if
approved,
may
not
comply
with
current
or
future
statutes,
regulations
or
case
law
involving
applicable
fraud
and
abuse
or
other
healthcare laws and regulations.
If our operations are
found to be in violation
of any of these laws
or any other governmental
regulations that may
apply to us, we
may
be
subject
to
significant
civil,
criminal
and
administrative
penalties,
including,
without
limitation,
damages,
fines,
disgorgement,
individual imprisonment, exclusion
from participation in government
healthcare programs, such as
Medicare and Medicaid, additional
reporting requirements and oversight if
we become subject to a
corporate integrity agreement or similar
agreement to resolve allegations
of noncompliance with these laws and the curtailment or restructuring
of our operations, which could have a material adverse effect
on
our business. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found not to be in
compliance
with
applicable
laws,
they
may
be
subject
to
criminal,
civil
or
administrative
sanctions,
including
exclusions
from
participation in government healthcare programs, which could also materially
affect our business.
Cyberattacks or
other failures
in our
or our
third-party vendors’,
contractors’ or
consultants’ telecommunications
or information
technology
systems could
result
in information
theft, compromise,
or other
unauthorized
access, data
corruption and
significant
disruption
of
our
business
operations,
and
could
harm
our
reputation
and
subject
us
to
liability,
lawsuits
and
actions
from
governmental authorities.
The success of our research and development programs depends on data which is stored and transmitted digitally, the corruption or loss
of which could cause significant setback to one or all of our programs. We face a number of risks related to our use, processing, storage
and security of this critical information, including loss of access, inappropriate use or disclosure, inappropriate modification corruption,
unauthorized access or processing. Because we use third-party vendors and subcontractors
to manage our sensitive information, we also
may
not
have
the
ability
to
adequately
monitor,
audit
or
modify
the
security
controls
over
this
critical
information.
Despite
the
implementation of security measures, given the size and complexity of our internal information technology (“IT”) systems and those of
our
third-party
vendors,
contractors
and
consultants,
such
IT
systems
are
potentially
vulnerable
to
breakdown
or
other
damage
or
interruption
from
service
interruptions,
system
malfunction,
natural
disasters,
terrorism,
war,
and
telecommunication
and
electrical
failures.
Cyber threats are persistent
and constantly evolving.
Such threats, which may
include ransomware or other
malware, phishing attacks,
denial of services attacks, man-in-the-middle attacks
and others, have increased in
frequency, scope and potential impact in recent
years,
which increase the difficulty of detecting and successfully
defending against them. We may not be able to anticipate
all types of security
threats, and,
despite our
efforts, we may
not be able
to implement
preventive measures
effective against
all such security
threats. The
techniques used by
cyber criminals change frequently,
may not be recognized
until launched, and
can originate from a
wide variety of
sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations or hostile foreign
governments
or agencies.
There
can be
no assurance
that
we or
our
third-party
service
providers,
contractors
or
consultants will
be
successful
in
preventing
cyberattacks
or
successfully
mitigating
their
effects.
Our
IT
systems
and
those
of
our
third-party
service
providers,
contractors
or
consultants
are
additionally
vulnerable
to
security
breaches
from
inadvertent
or
intentional
actions
by
our
employees,
third-party vendors,
contractors,
consultants, business
partners and/or
other third
parties. These
threats pose
a risk
to the
security of
our systems
and networks,
the confidentiality
and the
availability,
security and
integrity of
our data,
and these
risks apply
both to us and to third parties
on whose systems we rely for the conduct of
our business. If the IT systems of
our third-party vendors and
other contractors
and consultants
become subject
to disruptions
or security
breaches, we
may have
insufficient
recourse against
such
third parties
and we may
have to
expend significant
resources to
mitigate the
impact of
such an event,
and to develop
and implement
protections to prevent
future events of
a similar nature
from occurring.
Any cyberattack or
destruction or
loss of, unauthorized
access
to, processing of,
or exfiltration of
data could have
a material adverse
effect on our
business, financial condition,
results of operations
and prospects. For example, if such an event were to occur and cause interruptions in our operations, or those
of our third-party vendors
and other contractors and
consultants, it could result in
a material disruption or delay
of the development of
our product candidates. In
addition, we may suffer reputational harm or face litigation or adverse regulatory action as
a result of cyberattacks or other data security
breaches, particularly those involving
personal information or
protected health information,
and may incur
significant additional expense
to implement
further data
protection measures.
As cyber
threats continue
to evolve,
we may
be required
to incur
material additional
expenses in order to enhance our protective measures or to remediate any
information security vulnerability.
We are
subject to stringent privacy laws,
information security laws, regulations, policies
and contractual obligations related
to data
privacy and security and changes in such laws, regulations, policies and contractual obligations could
adversely affect our business,
financial condition, results of operations and prospects.
We
are subject
to data
privacy
and security
laws and
regulations
that apply
to the
collection, transmission,
storage, use,
processing,
destruction, retention and security of personal
information, which among other things,
including additional laws or regulations relating
to
health
information.
The
legislative
and
regulatory
landscape
for
privacy
and
data
protection
continues
to
evolve
in
jurisdictions
worldwide, and these laws may
at times be conflicting. It
is possible that these laws may
be interpreted and applied
in a manner that is
inconsistent with our practices and
our efforts to comply
with the evolving data protection rules
may be unsuccessful. We
must devote
significant
resources
to
understanding
and
complying
with
this
changing
landscape.
Failure
to
comply
with
federal,
state
and
international laws regarding privacy and security of personal information could expose us to penalties
under such laws, orders requiring
that we
change our
practices, claims
for damages
or other
liabilities, regulatory
investigations and
enforcement action,
litigation
and
significant
costs for remediation, any of which could adversely affect our
business. Even if we are not determined to
have violated these
laws,
government
investigations
into
these
issues
typically
require
the
expenditure
of
significant
resources
and
generate
negative
publicity, which have a
material adverse effect
on our
business, financial condition,
results of
operations and prospects.
Failure to comply
with any of these laws and
regulations could result in enforcement action against
us, including fines, criminal prosecution of employees,
claims
for
damages
by affected
individuals
and damage
to our
reputation
and
loss of
goodwill,
any
of which
could have
a material
adverse effect on our business, financial condition,
results of operations and prospects. Additionally, if we are
unable to properly protect
the
privacy
and
security
of
personal
information,
including
protected
health
information,
we
could
be
found
to
have
breached
our
contracts with certain third parties.
There are numerous U.S. federal and state laws
and regulations related to the privacy and security of
personal information. In particular,
HIPAA,
as
amended
by
the
Health
Information
Technology
for
Economic
and
Clinical
Health
Act
of
(“HITECH”)
and
their
respective implementing regulations, establish
privacy and security
standards that limit
the use
and disclosure of
individually identifiable
health
information,
or
protected
health
information,
and
require
the
implementation
of
administrative,
physical
and
technological
safeguards to protect
the privacy of
protected health information
and ensure the
confidentiality,
integrity and availability
of electronic
protected health information. Determining
whether protected health information
has been handled in
compliance with applicable privacy
standards
and
our
contractual
obligations
can
be
complex
and
may
be
subject
to
changing
interpretation.
If
we
fail
to
comply
with
applicable privacy
laws, including
applicable HIPAA
privacy and
security standards,
we could
face civil
and criminal
penalties. The
HHS has
the discretion to
impose penalties
without attempting to
first resolve
violations. HHS
enforcement activity can
result in
financial
liability
and
reputational
harm,
and
responses
to
such
enforcement
activity
can
consume
significant
internal
resources.
Even
when
HIPAA
does not
apply,
failing to
take appropriate
steps to
keep consumers’
personal information
secure can
constitute unfair
acts or
practices in or affecting commerce and be construed as a violation of Section 5(a) of the Federal Trade Commission
Act (the “FTCA”),
15 U.S.C § 45(a). The FTC
expects a company’s
data security measures to be reasonable
and appropriate in light of the
sensitivity and
volume of consumer information it holds, the size and complexity of
its business, and the cost of available tools to
improve security and
reduce vulnerabilities.
Individually identifiable
health information
is considered
sensitive data
that merits
stronger safeguards
and the
FTC’s guidance for appropriately securing consumers’ personal information
is similar to what is required by the HIPAA Security Rule.
In addition, state
attorneys general are authorized
to bring civil actions
seeking either injunctions
or damages in response
to violations
that
threaten
the privacy
of state
residents.
We
cannot
be sure
how
these
regulations
will be
interpreted,
enforced
or applied
to our
operations.
In addition
to the
risks associated
with
enforcement
activities and
potential
contractual
liabilities, our
ongoing
efforts
to
comply with evolving laws and
regulations at the federal and
state level may be
costly and require ongoing modifications
to our policies,
procedures and systems.
Internationally,
laws,
regulations
and
standards
in
many
jurisdictions
apply
broadly
to
the
collection,
transmission,
storage,
use,
processing, destruction, retention and
security of
personal information. For
example, in the
European Union, the
collection, transmission,
storage, use, processing, destruction, retention and
security of personal data
is governed by
the provisions of the
General Data Protection
Regulation (the “GDPR”) in addition to other applicable laws and
regulations. The GDPR came into effect in May 2018, repealing
and
replacing the European Union Data Protection Directive, and imposing revised data privacy and security requirements on companies in
relation to the processing
of personal data of
European Union data subjects.
The GDPR, together with
national legislation, regulations
and
guidelines
of
the
European
Union
Member
States
governing
the
collection,
transmission,
storage,
use,
processing,
destruction,
retention
and
security
of
personal
data,
impose
strict
obligations
with
respect
to,
and
restrictions
on,
the
collection,
use,
retention,
protection, disclosure, transfer
and processing of
personal data. The
GDPR also imposes strict
rules on the
transfer of personal data
to
countries outside the European Union that are
not deemed to have protections for
personal information, including the United States. The
GDPR authorizes fines
for certain violations
of up
to 4%
of the
total global annual
turnover of
the preceding financial
year or
€20 million,
whichever is greater.
Such fines are in addition to
any civil litigation claims by
data subjects. Separately,
Brexit has led and could
also
lead to legislative and regulatory
changes and may increase our compliance
costs. As of January 1, 2021, and
the expiry of transitional
arrangements agreed to between
the United Kingdom and
the European Union, data processing
in the United Kingdom
is governed by
a United Kingdom version of the GDPR (combining the GDPR and the Data Protection Act 2018), exposing us to two parallel regimes,
each of which authorizes similar fines and other
potentially divergent enforcement actions for certain
violations. On June 28, 2021, the
European Commission
adopted an
adequacy decision
for the
United Kingdom,
allowing for
the relatively
free exchange
of personal
information
between
the
European
Union
and
the
United
Kingdom.
Other
jurisdictions
outside
the
European
Union
are
similarly
introducing or enhancing privacy and data security laws, rules and regulations, which could increase our compliance costs and the risks
associated with noncompliance. We cannot
guarantee that we are, or will be, in compliance with all applicable international regulations
as they are enforced now or as they evolve.
We face potential
liability related to the privacy of health information we obtain from clinical trials sponsored by
us.
Most healthcare providers,
including research
institutions from which
we obtain patient
health information, are
subject to privacy
and
security regulations promulgated
under HIPAA,
as amended by the
Health Information Technology
for Economic and
Clinical Health
Act. We
do not believe that we are currently
classified as a covered entity or business
associate under HIPAA
and thus are not directly
subject to its requirements
or penalties. However,
any person may be
prosecuted under HIPAA’s
criminal provisions either
directly or
under aiding-and-abetting or conspiracy principles. Consequently,
depending on the facts and circumstances, we could
face substantial
criminal penalties
if we knowingly
receive individually
identifiable health
information from
a HIPAA
-covered healthcare
provider or
research
institution
that
has
not
satisfied
HIPAA’s
requirements
for
disclosure
of
individually
identifiable
health
information.
Even
when HIPAA
does not
apply,
according to
the FTC
failing to
take appropriate
steps to
keep consumers’
personal information
secure
constitutes
unfair
acts or
practices in
or affecting
commerce
in violation
of
the FTCA.
The
FTC expects
a company’s
data
security
measures
to
be
reasonable
and
appropriate
in
light
of
the
sensitivity
and
volume
of
consumer
information
it
holds,
the
size
and
complexity of its business, and the cost of available tools to
improve security and reduce vulnerabilities. Individually identifiable health
information is considered sensitive data that merits stronger safeguards.
In addition, we may maintain sensitive personally identifiable information, including health information, that we receive throughout the
clinical
trial
process,
in
the
course
of
our
research
collaborations.
As
such,
we
may
be
subject
to
state
laws,
including
the
CCPA,
requiring notification
of affected
individuals and
state regulators
in the
event of
a breach
of personal
information, which
is a broader
class of information
than the health
information protected by
HIPAA. Our clinical trial programs outside
the United States
may implicate
international data protection laws, including the GDPR and legislation of
the EU member states implementing it.
Our activities
outside the
United States
impose additional
compliance
requirements and
generate additional
risks of
enforcement
for
noncompliance. Failure by our CROs and other contractors to comply with the strict rules on the transfer of personal data outside of the
EU
into
the
United
States may
result
in
the imposition
of criminal
and
administrative
sanctions
on such
collaborators, which
could
adversely affect
our business.
Furthermore,
certain health
privacy laws,
data breach
notification laws,
consumer
protection laws
and
genetic testing laws may apply
directly to our operations
and/or those of our
collaborators and may impose restrictions
on our collection,
use and dissemination of individuals’ health information.
Moreover, patients
about whom we or
our collaborators obtain health
information, as well as
the providers who share
this information
with us, may have statutory or
contractual rights that limit our ability to
use and disclose the information. We may be required to expend
significant capital
and other
resources to
ensure ongoing
compliance with
applicable privacy
and data
security laws.
Claims that
we
have violated
individuals’ privacy
rights or
breached our
contractual obligations,
even if
we are
not found
liable, could
be expensive
and time-consuming to defend and could result in adverse publicity that could harm
our business.
If
we
or
our
contract
manufacturers,
CROs or
other
contractors
or
consultants
fail
to
comply
with
applicable
federal,
state
or
local
regulatory privacy requirements, we could
be subject to a range of regulatory
actions that could affect our or
our contractors’ ability to
develop
and
commercialize
our
product
candidates
and
could
harm
or
prevent
sales
of
any
affected
products
that
we
are
able
to
commercialize, or could substantially increase the costs and expenses of developing, commercializing and marketing our products. Any
threatened
or
actual
government
enforcement
action
could
also
generate
adverse
publicity
and
require
that
we
devote
substantial
resources
that
could
otherwise
be
used
in
other
aspects
of
our
business.
Increasing
use
of
social
media
could
give
rise
to
liability,
breaches of data
security or reputational
damage. Any of
the foregoing could
have a material adverse
effect on our
business, financial
condition, results of operations and prospects.
We
face substantial
competition, which
may result
in others
discovering, developing
or commercializing
products before
or more
successfully than we do.
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong
emphasis on proprietary products. We
face and will continue to face competition from
third parties that use similar platforms and from
third parties focused on developing and commercializing other peptide and peptide-based product candidates. The competition
is likely
to
come
from
multiple
sources,
including
large
and
specialty
pharmaceutical
and
biotechnology
companies,
academic
research
institutions, government agencies and public and private research institutions.
Many
of
our
potential
competitors,
alone
or
with
their
strategic
partners,
have
substantially
greater
financial,
technical
and
other
resources
than
we
do,
such
as
larger
research
and
development,
clinical,
marketing
and
manufacturing
organizations.
Mergers
and
acquisitions in the biotechnology
and pharmaceutical industries may
result in even greater
concentration of resources among
a smaller
number of competitors. Our commercial opportunity could be
reduced or eliminated if competitors develop and
commercialize products
that are safer,
more effective,
have fewer
or less severe
side effects,
are more
convenient or are
less expensive than
any products
that
we may develop.
Our competitors also
may obtain
FDA or other
regulatory approvals
for their products
faster or earlier
than we may
obtain approval
for ours,
which could
result in
our competitors
establishing a
strong market
position before
we are
able to
enter the
market. For example, some of our competitors have already received approval from regulatory authorities for their COVID-19 vaccines
and
boosters
to address
variants
of
SARS-CoV-2.
Additionally,
technologies
developed
by our
competitors
may
render
our product
candidates uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors’ products.
In addition, the
availability of our
competitors’ products and
the lack of complementary
products offered
by our sales and
distribution
team as compared to competitors with more extensive product lines, could limit the
demand and the prices we are able to charge for any
products that we may develop and commercialize.
Developments by
competitors may
render our
products or
technologies obsolete
or non-competitive
or may
reduce the
size of
our
markets.
Our
industry
has
been
characterized
by
extensive
research
and
development
efforts,
rapid
developments
in
technologies,
intense
competition and a strong
emphasis on proprietary products.
We expect our product candidates to face
intense and increasing competition
as new
products
enter
the relevant
markets
and
advanced technologies
become
available. We
face
potential
competition
from many
different
sources,
including
pharmaceutical,
biotechnology
and
specialty pharmaceutical
companies.
Academic research
institutions,
governmental
agencies
and
public
and
private
institutions
are
also
potential
sources
of
competitive
products
and
technologies.
Our
competitors may
have or
may develop
superior technologies
or approaches
and have
different business
models from
us which
do not
focus
on
democratizing
healthcare
and
on
lower
cost,
all of
which
may
provide
them
with
competitive
advantages.
Many
of
these
competitors may also have
compounds already approved or in development
in the therapeutic categories that
we are targeting with
our
product candidates. The
global vaccine market
is highly concentrated
among a small
number of multinational
pharmaceutical companies:
Pfizer,
Merck, GlaxoSmithKline
and Sanofi
together control
most of
the global
vaccine market.
While we
are not
aware of all
of our
competitors’ efforts, there
are approximately fifty
COVID-19 vaccines currently
approved for use in one
or more countries around
the
world. We also face substantial competition in therapeutic areas outside of COVID-19. For example, the FDA approved aducanumab in
June 2021
as the first FDA-approved immunotherapy for AD, and lecanemab
in January 2023, and multiple approved products exist in
the fields of migraine
and hypercholesterolemia,
including products that
act on the same
therapeutic targets as
our vaccine candidates.
In
addition,
many
of
our
competitors,
either
alone
or
together
with
their
collaborative
partners,
may
operate
larger
research
and
development programs or have substantially greater financial resources than
we do, as well as greater experience in:
•
developing product candidates;
•
undertaking pre-clinical testing and clinical trials;
•
obtaining BLA approval by the FDA;
•
obtaining comparable foreign regulatory approvals of product candidates;
•
formulating and manufacturing products;
•
launching, marketing and selling products; and
•
competing for market share, obtaining reimbursement and securing payor
contractors for preferential coverage.
If these competitors
access the marketplace
with safer, more effective,
or less
expensive therapeutics, our
product candidates, if
approved
for commercialization,
may not be
profitable to sell
or worthwhile to
continue to develop.
Technology
in the pharmaceutical
industry
has undergone rapid and significant change, and we expect that it will
continue to do so. Any compounds, products or processes that we
develop may
become obsolete
or uneconomical
before we
recover any
expenses incurred
in connection
with their
development. The
success of
our product
candidates will
depend upon
factors such
as product
efficacy,
safety,
reliability,
availability,
timing, scope
of
regulatory
approval,
acceptance
and
price,
among
other
things.
Other
important
factors
to
our
success
include
speed
in
developing
product
candidates,
completing
clinical
development
and
laboratory
testing,
obtaining
regulatory
approvals
and
manufacturing
and
selling commercial quantities of potential products.
Our product
candidates are
intended to
compete directly
or indirectly
with existing
products and
products currently
in development.
Even if approved and commercialized,
our product candidates may fail to
achieve market acceptance with hospitals, physicians, patients
or
third-party
payors.
Hospitals,
physicians
or
patients
may
conclude
that
our
products
are
less
safe
or
effective
or
otherwise
less
attractive than existing
drugs. If our
product candidates
do not receive
market acceptance for
any reason, our
revenue potential would
be diminished, which would materially adversely affect our ability
to become profitable.
Many of
our competitors
have substantially
greater capital
resources, robust
product candidate
pipelines, established
presence in
the
market and expertise
in research and development,
manufacturing, pre-clinical and
clinical testing, obtaining regulatory
approvals and
reimbursement and
marketing approved
products than
we do.
As a
result, our
competitors may
achieve product
commercialization or
patent or
other intellectual
property protection
earlier than
we can. Smaller
or early-stage
companies may
also prove
to be significant
competitors,
particularly
through collaborative
arrangements
with large
and
established
companies.
These competitors
also compete
with us in recruiting and retaining qualified clinical, regulatory, scientific, sales, marketing and management personnel and establishing
clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for,
our
programs. 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 side
effects, are more
convenient, or are less expensive
than any products that
we may
develop or that would render any products that we may develop obsolete
or noncompetitive.
We
are subject to
anti-corruption laws, including
the U.S. Foreign
Corrupt Practices Act
(“FCPA”),
and similar laws
of non-U.S.
jurisdictions where we conduct business. 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,
financial
condition,
results of
operations
and
prospects.
We are currently
subject to anti-corruption laws, including the FCPA.
The FCPA, the
U.K. Bribery Act 2010 and other applicable anti-
bribery and
anti-corruption laws
generally prohibit
us, 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
other
business
advantages.
In
furtherance of our
goal to democratize healthcare,
we intend to distribute
any product candidates that
are approved or receive
an EUA
in various countries around the world, including countries with a heightened corruption risk. This may raise the risk of non-compliance
with anti-corruption laws and other rules and regulations prohibiting bribery and other crimes. We also participate in collaborations and
relationships
with
third
parties
whose
actions
could
potentially
subject
us
to
liability
under
the
FCPA
or
other
jurisdictions’
anti-
corruption laws, which in turn
could result in internal and
external investigations, associated legal costs
and even civil fines
and criminal
charges, any of which would divert
time and resources away from
our core business operations even
if we and our
employees and agents
do not violate laws and regulations. The FCPA
also requires public companies to make and keep books and records
that accurately and
fairly
reflect the
transactions of
the corporation
and to
devise and
maintain
an adequate
system of
internal
accounting controls.
Our
business
is
heavily
regulated
and
therefore
involves
significant
interaction
with
public
officials,
including
officials
of
non-U.S.
governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are (directly or indirectly)
employed
by
their
government,
and
the
purchasers
of
pharmaceuticals
are
government
entities;
therefore,
our
dealings
with
these
prescribers and
purchasers are
subject to
regulation under,
but not
limited to,
the FCPA.
In recent
years, the
SEC and
Department of
Justice have also increased their FCPA
enforcement activities with respect to pharmaceutical companies.
We are in the process of establishing a program to govern the
compliance of any potential sales or marketing operations
of our products,
should any of them be approved or receive an EUA. To
date, we have not had a robust compliance program. We
cannot ensure that our
operations to date
have complied, and
that our future
operations will comply, with our
compliance program or
laws, rules and
regulations
governing the sales and marketing
of pharmaceutical products, government contracting and
other aspects of our
business. We have used,
and plan to use, a network of agents in countries around the world to conduct our sales and marketing operations. These agents will not
be our employees,
and while we intend
to have a robust
diligence program in connection
with engaging agents,
our diligence program
and compliance program may not be sufficient to prevent
wrong-doing.
There
is also
no assurance
that we
will be
completely effective
in ensuring
our compliance
with all
applicable anti-corruption
laws,
including the FCPA,
particularly given the high level of complexity of these laws. We
have adopted a code of conduct applicable to all
of our employees and contractors, but it is not always
possible to identify and deter misconduct by
these parties and other third parties,
and the precautions we take to detect
and prevent this activity may not be effective in
controlling unknown or unmanaged risks or losses
or in protecting
us from governmental investigations
or other actions, claims
or lawsuits stemming from
a failure to comply
with such
laws or regulations.
If we are
not in compliance
with the FCPA
or other anti-corruption
laws, we may
be subject to
criminal and civil
penalties, disgorgement
and other
sanctions and
remedial measures,
and legal
expenses, which
could have
an adverse
impact on
our
business, financial
condition, results of
operations and
prospects. Similarly,
any investigation
of any potential
violations of the
FCPA
or other
anti-corruption laws
by authorities
in the
United States
or other
jurisdictions where
we conduct
business could
also have
an
adverse impact on our reputation, business, financial condition, results
of operations and prospects.
As a result of our geographically diverse operations, we are more susceptible to
certain risks.
We
have
operation
in multiple
countries.
We
have
also used,
and
plan
to use,
a network
of agents
in countries
around the
world
to
conduct
our sales
and marketing
operations.
If we
are unable
to manage
the risks
of our
global operations,
including fluctuations
in
foreign exchange
and inflation
rates, international
hostilities such
as the
Russia-Ukraine conflict,
natural disasters,
security breaches,
our ability to
supply our
product candidates on
a timely
and large scale
basis in
local markets, lead
times for shipping,
accounts receivable
collection times,
import or
export licensing
requirements,
language barriers,
failure to
maintain compliance
with our
clients’ control
requirements
and
multiple
legal and
regulatory
systems,
our
results
of
operations
and
ability to
grow
could
be
materially
adversely
affected.
In particular,
our business
and stock
price may
be affected
by fluctuations
in foreign
exchange rates
between currencies
in
different jurisdictions in which operate or in which we may have
sales in the future.
Certain
legal
and
political
risks
are
also
inherent
in
foreign
operations.
Foreign
sales
of
our
product
candidates
could
be
adversely
affected by the imposition of governmental controls, political and economic
instability, trade restrictions and changes in tariffs. In many
countries, the
pricing of
prescription pharmaceuticals
is subject to
governmental control.
In these
countries, pricing
negotiations with
governmental
authorities
can
take
considerable
time
after
the
receipt
of
marketing
approval
for
a
drug.
There
is
a
risk
that
foreign
governments
may nationalize
private enterprises
in certain
countries where
we may
operate. In
certain countries
or regions,
terrorist
activities and
the response
to such
activities may
threaten our
operations more
than in the
United States.
Social and cultural
norms in
certain countries may not support compliance with our corporate
policies, including those that require compliance with substantive laws
and regulations. Also, changes in
general economic and political conditions in
countries where we may
operate are a risk
to our financial
performance and
future growth. Additionally,
the need to
identify financially and
commercially strong partners
for commercialization
outside the United
States who will comply
with the high manufacturing
and legal and regulatory
compliance standards we requir
e
is a
risk to our financial performance. As we operate our business globally,
our success will depend, in part, on our ability to anticipate and
effectively manage these
and other related risks. There
can be no assurance that the
consequences of these and other
factors relating to
our international operations will not have an adverse effect on our
business, financial condition, results of operations and prospects.
We
are
exposed
to
potential
product
liability
and
professional
indemnity
risks
that
are
inherent
in
the
research,
development,
manufacturing, marketing and use of pharmaceutical products.
The use of
our investigational medicinal
products in clinical
trials, past sales
of our ELISA
test and the sale
of any approved
products
in the
future may
expose us
to liability
claims. These
claims might
be made
by patients
who use
the product,
health care
providers,
pharmaceutical companies or others selling such products. Any claims against us, regardless of their merit, could be difficult and costly
to defend
and could
materially adversely
affect
the market
for our
product candidates
or any
prospects for
commercialization
of our
product candidates.
In addition, regulations vary significantly across jurisdictions regarding
the clinical trial sponsor’s responsibility to provide free
medical
care and
compensation to
clinical trial
participants who
experience an
injury or
illness during
the trial.
For example,
there is
no legal
requirement in the United States for sponsors to provide free medical treatment or compensation to a participant injured during a study;
as a result, sponsors usually agree
to pay for the medical care
to diagnose and treat participant injuries to
the extent related to the clinical
trial and
typically do
not pay
unless the
injury is
determined to
be related
to participation
in the
trial. In
contrast, India
requires free
medical care
until it
is established
that the
injury is
not related
to the
study and
compensation for
any injury
that is
determined to
be
related
to the
study.
In 2019,
India’s
Ministry
of Health
and Family
Welfare
published
the “New
Drugs
and
Clinical
Trials
Rules,”
which increased a
clinical trial sponsor’s
liability for injuries
related to clinical
trial trials. Under
the regulation, sponsors
are required
to (i)
provide “free
medical management”
to participants
that experience
an injury
that, in
the investigator’s
opinion, is
related to
the
study or until
it is established
that the injury
is not related
to the study
and (ii) “compensate”
clinical trial participant
s
for trial-related
injuries.
Clinical
trials
conducted
in
jurisdictions
with
broad
compensation
and
medical
care
requirements
could
result
in
increased
overall research costs and adversely affect our ability to
conduct clinical trials.
Although the clinical trial process is designed to identify and assess potential side effects, it is always possible that a product, even after
regulatory approval,
may exhibit
unforeseen side
effects, including
rare side
effects more
likely to
be seen
in commercial use
than in
clinical studies. If any of our product candidates were to cause adverse side effects during clinical trials or after approval of the product
candidate, we may be exposed to substantial liabilities. Physicians and patients
may not comply with any warnings that identify known
potential adverse effects and patients who should not use
our product candidates.
To
cover such
liability claims,
we purchase
clinical trial
insurances in
the conduct
of each
of our
clinical trials
(typically conducted
through our CROs).
It is
possible that our
liabilities could exceed
our insurance coverage
or that
our insurance will
not cover
all situations
in which a claim against us could be made. We also intend to expand our insurance coverage to include the sale of commercial products
if we receive marketing approval for any of our proprietary products. However, we may not be able to maintain insurance coverage at a
reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise. If a successful product liability
claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient
to cover such claims and our business
operations could be impaired. Should
any of the events described above
occur, this could have
a
material adverse effect on our business, financial condition,
results of operations and prospects, including, but not limited to:
•
decreased demand for our future product candidates;
•
adverse publicity and injury to our reputation;
•
withdrawal of clinical trial participants;
•
initiation of investigations by regulators;
•
costs to defend the related litigation;
•
a diversion of management’s
time and our resources;
•
compensation in response to a liability claim;
•
product recalls, withdrawals or labeling, marketing or promotional restrictions;
•
loss of revenue;
•
exhaustion of any available insurance and our capital resources; and
•
the inability to commercialize our products or product candidates.
We could be adversely affected if we are subject to negative publicity. We could also be adversely affected if any of our products or any
similar products distributed by other companies prove to be, or are asserted to be, harmful to patients. Any adverse publicity associated
with illness or other
adverse effects resulting
from patients’ use
or misuse of
our products or any
similar products distributed
by other
companies could have a material adverse impact on our business, financial condition,
results of operations or prospects.
If we need to expand our organization, we may experience difficulties in managing this growth, which could disrupt our operations.
If we expand
our organization, we
may encounter difficulties
in managing our
growth, which could
disrupt our operations.
We
expect
to experience
significant growth
in the
number of
our employees
and the
scope of
our operations,
particularly in
the areas
of clinical
development and regulatory affairs,
as well as to support
our public company operations. For
example, we may build our
own focused
sales,
distribution
and
marketing
infrastructure
to
market
our
product
candidates,
if
approved,
in
markets
around
the
world,
which
involves significant expenses and risks.
To manage these growth activities, we
must continue to implement and
improve our managerial,
operational and financial systems, expand
our facilities and continue
to recruit and train
additional qualified personnel. Our
management
may need to devote a significant amount of its attention to managing these growth activities. Due to our
limited financial resources and
the limited experience of our management team in
managing a company with such anticipated
growth, we may not be
able to effectively
manage
the expansion of our operations, retain key employees or identify, recruit
and train additional qualified personnel. Our inability
to manage the
expansion or relocation
of our
operations effectively may
result in
weaknesses in
our infrastructure, give
rise to operational
mistakes, loss of business opportunities, loss of
employees and reduced productivity among remaining employees. Our
expected growth
could also
require significant
capital expenditures
and may divert
financial resources
from other
projects, such
as the development
of
additional
product
candidates.
If
we
are
unable
to
effectively
manage
our
expected
growth,
our
expenses
may
increase
more
than
expected, our ability
to generate revenues
could be reduced
and we may
not be able
to implement our
business strategy,
including the
successful development and commercialization of our product candidates. Any of the foregoing could have a material adverse effect on
our business, financial condition, results of operations and
prospects. Future growth would impose significant additional responsibilities
on our management, including:
•
the need to identify, recruit,
maintain, motivate and integrate additional employees, consultants and contractors;
•
managing our internal development efforts effectively, including the clinical and
regulatory review process for
our product
candidates, while complying with our contractual obligations to contractors
and other third parties; and
•
improving our operational, financial
and management controls, reporting
systems and procedures. We
currently rely,
and
for the
foreseeable future
will continue
to rely,
in substantial
part on
certain related
parties, independent
organizations,
advisors and consultants to provide certain services, including
substantially all aspects of regulatory approval, clinical trial
management and
manufacturing. There
can be no
assurance that the
services of independent
organizations, advisors
and
consultants will continue to
be available to us on
a timely basis when needed,
or that we can find
qualified replacements.
In addition,
if we
are unable
to effectively
manage our
outsourced activities
or if
the quality
or accuracy
of the
services
provided by consultants is compromised for any reason, our clinical
trials may be extended, delayed or terminated, and we
may not be able
to obtain regulatory approval of
our product candidates or otherwise
advance our business. There
can be
no
assurance
that
we
will
be
able
to
manage
our
existing
consultants
or
find
other
competent
outside
contractors
and
consultants on economically reasonable terms, or at all. If we are not able to effectively expand our organization by hiring
new employees and
expanding our groups
of consultants and
contractors, or we
are not able to
effectively build
out new
facilities to
accommodate
this expansion,
we may
not be
able to
successfully
implement
the tasks
necessary
to further
develop
and
commercialize
our
product
candidates
and,
accordingly,
may
not
achieve
our
research,
development
and
commercialization goals.
Many of the biotechnology and pharmaceutical companies that we compete against for qualified personnel and consultants have greater
financial and other resources, different risk
profiles and a longer
history in the industry
than we do. If
we are unable to
continue to attract
and retain
high-quality personnel
and consultants,
the rate
and success
at which
we can
discover and
develop product
candidates and
operate our business will be limited.
We only have a limited
number of employees to manage and operate our business, which may lead to certain
operational issues.
As of
March 15, 2023
we had 76
full-time employees
and 1 part
-time employee.
Our focus on
the development
of UB-612,
UB-312,
UB-313, VXX-401 and other product candidates requires us
to manage and operate our business in a highly efficient
manner. We
have
a
limited
number
of
employees upon
which
we
rely
to
effectively
manage
and
operate
our
business
and
we
cannot
assure you
that
operational issues will not arise.
While we intend
to identify,
recruit, maintain, motivate
and integrate additional
employees, consultants and
contractors to support
our
growth, we cannot assure you that we will be able to hire and/or retain adequate staffing levels to develop our product candidates or run
our operations and/or to accomplish all of the objectives that we otherwise would
seek to accomplish.
If
we
lose
key
management
or
scientific
personnel,
cannot
recruit
qualified
employees,
directors,
officers
or
other
significant
personnel or experience increases in our compensation costs, our business may
materially suffer.
We
are highly dependent on
our management and directors.
Due to the specialized
knowledge each of our
officers and key
employees
possesses with respect to our product candidates and our operations, the loss of service of any of our officers or directors could delay or
prevent
the successful
enrollment and
completion of
our clinical
trials. We
do not
carry key
person life
insurance on
any officers
or
directors. In general, the employment arrangements that we have with our executive officers do not prevent them from terminating their
employment with us at any time. Our agreements with our employees generally
provide for at-will employment.
In addition,
our future
success and
growth will
depend in
part on
the continued
service of
our directors,
employees and
management
personnel
and
our
ability
to
identify,
hire
and
retain
additional
personnel.
If
we
lose
one
or
more
of
our
executive
officers
or
key
employees,
our ability
to implement
our business
strategy successfully
could be
seriously
harmed. Furthermore,
replacing
executive
officers
and
key
employees
may
be
difficult
or
costly
and
may
take
an
extended
period
of
time
because
of
the
limited
number
of
individuals in our industry with the breadth of skills and experience required to develop, gain regulatory approval of and
commercialize
product candidates
successfully.
Competition to
hire from
this limited
pool is
intense, and
we may
be unable
to hire,
train, retain
or
effectively incentivize
these additional key
personnel on acceptable
terms given the competition
among numerous pharmaceutical
and
biotechnology companies for similar personnel. We
also experience competition for the hiring of
scientific and clinical personnel from
universities and research institutions. In addition, we
rely on consultants and advisors,
including scientific and clinical advisors, to
assist
us in formulating our
research, development and commercialization
strategy. Our
consultants and advisors may
be engaged by entities
other than us
and may have
commitments under consulting
or advisory contracts
with other entities
that may limit
their availability to
us. If we are unable to continue to
attract and retain high quality personnel, our ability to develop and
commercialize product candidates
will be limited.
Many of our employees have become or will soon become vested in a substantial amount of our Class A common
stock or a number of
common stock
options. Our
employees may
be more
likely to
leave us
if the
shares they
own have
significantly appreciated
in value
relative to
the original
purchase prices
of the
shares, or
if the
exercise prices
of the
options that
they hold
are significantly
below the
market price
of Class A
our common
stock. Our future
success also depends
on our ability
to continue
to attract and
retain additional
executive officers and other key employees.
If we engage in future acquisitions, joint ventures or strategic collaborations, this may increase our capital requirements, dilute our
stockholders, cause us to incur debt or assume contingent liabilities and subject us to other
risks.
We may evaluate various acquisitions
and collaborations, including licensing
or acquiring complementary
products, intellectual
property
rights, technologies, or businesses. Any potential acquisition, joint venture,
or collaboration may entail numerous risks, including:
•
increased operating expenses and cash requirements;
•
the assumption of additional indebtedness or contingent liabilities;
•
assimilation
of
operations,
intellectual
property
and products
of
an acquired
company,
including
difficulties
associated
with integrating new personnel;
•
the diversion of our
management’s attention from our existing product
programs and initiatives in
pursuing such a strategic
merger or acquisition;
•
retention of key
employees, the loss
of key personnel
and uncertainties in
our ability to
maintain key business
relationships;
•
risks and uncertainties associated with the other party to
such a transaction, including the prospects of that party and
their
existing products or investigational medicines and regulatory approvals;
and
•
our inability to generate revenue from acquired technology or
products sufficient to meet our objectives in undertaking the
acquisition or even to offset the associated acquisition and
maintenance costs.
In addition, if we undertake acquisitions, we may utilize our cash, issue dilutive securities, assume or incur debt obligations, incur large
one-time expenses and acquire intangible assets that could result in significant
future amortization expense.
Moreover, we may
not be able to locate suitable
acquisition or strategic collaboration opportunities,
and this inability could impair
our
ability to grow or obtain access to technology or products that may be important
to the development of our business.
We
or
the
third
parties
upon
whom
we
depend
may
be
adversely
affected
by
natural
disasters
or
pandemics
and
our
business
continuity and disaster recovery plans may not adequately protect
us from a serious disaster.
Natural disasters or
pandemics, other than
or in addition
to COVID-19 and
including any potential
future waves of
COVID-19, could
severely
disrupt
our
operations
and
have
a
material
adverse
effect
on
our
business,
results
of
operations,
financial
condition
and
prospects. For
example, our
headquarters and
main laboratory
is located
on the
Eastern coast
of Florida,
a location
that is at
a higher
risk of exposure to hurricanes. If a hurricane
or natural disaster causes us to
sustain significant damage to our Florida
headquarters and
main laboratory,
or if we must shut down
our operations there for an
extended period of time, our business
and financial results would
be adversely impacted.
If a natural
disaster, power
outage, pandemic, such
as the COVID-19
pandemic, or other
event occurred
that prevented us
from using
all or
a significant
portion of
our headquarters,
that damaged
critical infrastructure,
such as
the manufacturing
facilities on
which we
rely,
or that
otherwise
disrupted
operations,
it may
be difficult
or,
in certain
cases,
impossible for
us to
continue
our business
for
a
substantial period of time. The disaster recovery and business continuity
plans we have in place may prove inadequate in the event of a
serious disaster or similar
event. We may incur substantial expenses as
a result of
the limited nature of
our disaster recovery and
business
continuity plans, which could have a material adverse effect
on our business.
Unstable market and economic conditions have had and may
have further serious adverse consequences on our business, financial
condition and share price.
The
global
economy,
including
credit
and
financial
markets,
has
experienced
extreme
volatility
and
disruptions,
including
severely
diminished liquidity and credit availability,
declines in consumer confidence, declines in economic growth, increases in unemployment
rates and
uncertainty about
economic stability.
For example,
the COVID-19
pandemic has
resulted in
widespread unemployment,
an
economic slowdown and extreme volatility in the capital markets. While these
effects of COVID-19 have abated as countries, including
the United States, have re-opened and the rate of vaccinations have increased, COVID-19 may cause further disruptions globally.
If the
equity and
credit markets
further deteriorate,
it may
make any
necessary debt
or equity
financing more
difficult to
obtain in
a timely
manner or on favorable terms, more costly or more dilutive. In
addition, there is a risk that one or more of
our CROs, suppliers, contract
manufacturers
or other
third-party
providers
may
not
survive
an
economic
downturn,
or that
industry
trends
with respect
to
pricing
models, supply chains and delivery mechanisms, among other things, deviate from our expectations. As a
result, our business, results of
operations and price of our Class A common stock may be adversely affected.
Our insurance policies are expensive and protect us
only from some business risks, which leaves
us exposed to significant uninsured
liabilities.
Though
we
have
insurance
coverage
for
clinical
trial
product
liability,
we
do
not
carry
insurance
for
all
categories
of
risk
that
our
business may encounter. Some of the policies we currently maintain include general liability, auto, renters’, workers’ compensation and
directors’ and officers’ insurance.
Any additional product
liability insurance coverage
we acquire in the
future may not be
sufficient to reimburse
us for any expenses
or
losses we may
suffer. Moreover, insurance coverage is becoming
increasingly expensive and
in the future
we may not
be able to
maintain
insurance
coverage
at a
reasonable
cost or
in sufficient
amounts to
protect
us against
losses due
to liability.
If we
obtain
marketing
approval for any
of our product
candidates, we intend
to acquire insurance
coverage to include
the sale
of commercial products;
however,
we may be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts. A successful product
liability
claim
or
series
of
claims
brought
against us
could
cause
our
stock
price
to decline
and,
if
judgments
exceed
our
insurance
coverage,
could
adversely
affect
our
results
of
operations
and
business,
including
preventing
or
limiting
the
development
and
commercialization of
any product candidates
we develop. We
do not carry
specific biological or
hazardous waste insurance
coverage,
and our renters’ and
general liability insurance policies
specifically exclude coverage
for damages and fines
arising from biological
or
hazardous waste exposure or contamination.
Accordingly, in
the event of contamination or injury,
we could be held liable for damages
or be penalized with fines in an amount exceeding our resources, and our clinical trials or
regulatory approvals could be suspended.
Operations as a public company have made it more difficult and more expensive for us to obtain director and officer liability insurance,
and we and have incurred substantially higher costs since becoming a public company. As a result, it has become more expensive for us
to
obtain
the
coverage
needed
to
attract
and
retain
qualified
people
to
serve
on
our
board
of
directors,
our
board
committees
or
as
executive officers.
We
do not know,
however, if
we will be able
to maintain existing
insurance with adequate
levels of coverage.
Any
significant uninsured
liability may require
us to pay
substantial amounts,
which would
adversely affect
our cash
and cash equivalents
position and results of operations.
The
coronavirus
pandemic
has
caused
interruptions
or
delays
of
our
business
plan
and
could
continue
to
adversely
affect
our
business.
The COVID-19
pandemic and related
federal, state and
local government
responses to COVID-19
and our responses
to the pandemic
and such restrictions has and
may continue to have
a material adverse effect on
our business, results of
operations, liquidity and financial
condition. Our business has been disrupted and could be further disrupted to the extent our business partners
are adversely impacted by
the COVID-19 pandemic.
The full extent
to which the
COVID-19 pandemic will continue
to impact our
business, development plans,
business partners and
clinical
trials will depend on future developments, which are highly uncertain and cannot be predicted. To
the extent the pandemic continues to
adversely affect our business and financial condition, it
may also have the effect of
exacerbating many of the other risk
factors discussed
herein,
which could have a material adverse effect on us.
Due to the vaccination rate, the demand for our COVID-19 product candidate
may decrease significantly or disappear entirely.
We are pursuing
a path to conditional and provisional approval of UB-612
as a heterologous boost (boosting the immunity of a subject
who has already received a different vaccine) in the United Kingdom and Australia, respectively. Other companies have also responded
to the
pandemic
at a
faster pace,
and
to date
approximately
fifty
COVID-19
vaccines are
currently
in use
around the
world.
As our
competitors
continue
to
develop,
receive
regulatory
approval
for
and
commercialize
their
own
COVID-19
vaccines
and
boosters,
demand for our COVID-19 product candidate may materially decrease
or disappear entirely, along with a corresponding decrease in our
potential
revenues.
Further,
the existence
and
significance
of
the
opportunity
to provide
COVID-19
boosters
in
the
future
is highly
uncertain, and there can be no assurance that we will commercially benefit from
the development of a COVID-19 booster vaccine.
Risks Related to Our Class A Common Stock
An active trading market for our Class A common stock may not continue to be
developed or sustained.
Prior to our initial public offering,
there was no public market for
our Class A common stock.
Although our Class A common
stock is
now listed on
The Nasdaq Global
Market, an active
trading market for
our shares of
Class A common
stock may never
develop or
be
sustained.
If an
active market
for our
Class A
common stock
does not
develop or
is not
sustained, it
may be
difficult for
you to
sell
shares of our
Class A common stock
at an attractive price
or at all.
An inactive market may
also impair our ability
to raise capital by
selling shares of
our common stock,
our ability to
motivate our employees
through equity incentive
awards, and our
ability to acquire
other companies, products or technologies by using our common stock
as consideration for such acquisitions.
The price of our Class A common stock has been volatile and may be further affected by market conditions beyond
our control, and
purchasers of our Class A common stock could incur substantial losses.
Our results of operations
have fluctuated and are likely
to continue to fluctuate
in the future. In addition,
securities markets worldwide
have experienced, and
are likely to continue to
experience, significant price
and volume fluctuations. This
market volatility,
as well as
general economic, market
or political conditions,
could subject the
market price of
our shares of
Class A common
stock to wide
price
fluctuations
regardless of
our operating
performance,
which has
caused and
could further
cause a
decline
in the
market price
of our
common stock.
Price volatility
may be
greater if
the public
float and
trading volume
of shares
of our
Class A
common stock
is low.
Some factors that may cause the market price of our Class A common stock to fluctuate, in addition to the other risks mentioned
in this
Report, include:
•
our operating and financial performance and prospects;
•
our
announcements
or
our
competitors’
announcements
regarding
new
products
or
services,
enhancements,
significant
contracts, acquisitions or strategic investments;
•
any delay in our
development or regulatory
filings for our product
candidates and any adverse
development or perceived
adverse development with respect to the applicable regulatory authority’s
review of such filings;
•
if any of
our product candidates
receives an EUA
or regulatory approval, the
terms of such
approval and market acceptance
and demand for such product candidates;
•
the success of any efforts to acquire or in-license additional technologies,
products or product candidates;
•
changes in earnings estimates or recommendations by securities analysts who
cover our Class A common stock;
•
fluctuations in
our financial
results or,
in the
event we
provide it
from time
to time,
earnings guidance,
or the
financial
results or earnings guidance of companies perceived by investors to be
similar to us;
•
changes
in
our
capital
structure,
such
as
future
issuances
of
securities,
sales
of
large
blocks
of
common
stock
by
our
stockholders, including our principal stockholders, or the incurrence of
additional debt;
•
additions and departure of key personnel;
•
any disputes
relating to
our intellectual
property,
including any
intellectual property
infringement lawsuit
or opposition,
interference or cancellation proceeding in which we may become involved;
•
reputational issues, including reputational issues involving our competitors
and their products;
•
actions by institutional stockholders;
•
changes in general economic and market conditions, including related to
the COVID-19 pandemic;
•
changes
in industry
conditions or
perceptions
or changes
in the
market
outlook
for
the industry
in
which
we compete,
including changes in the structure of healthcare payment systems; and
•
changes in applicable laws, rules or regulations or regulatory actions affecting
us or our clients and other dynamics.
These
and
other
factors
have
caused
and
may
further
cause
the
market
price
for
shares
of
our
Class
A
common
stock
to
fluctuate
substantially, which may further limit or prevent investors from readily selling their shares
of our Class A common stock
and negatively
affect the liquidity of our Class A common stock. In addition, in the past, when the market price of
a stock has been volatile, holders of
that
stock
sometimes
have
instituted securities
class
action
litigation
against
the
company
that
issued
the
stock. Securities
litigation
against us,
regardless of
the merits
or outcome,
could result
in substantial
costs and
divert the
time and
attention of
our management
from the business, which could significantly harm our business, results of operation,
financial condition or reputation.
The dual-class structure of
our common stock and
the Voting
Agreement will have the
effect of concentrating voting
power, which
will significantly limit stockholders’ ability to
influence the outcome of matters
submitted to our stockholders for
approval, including
the election
of
our board
of directors,
the adoption
of
amendments
to
our Charter
and
Bylaws and
the approval
of any
merger,
consolidation, sale of all or substantially all of our assets or other major corporate
transaction.
Our Class A common
stock has one vote
per share, and our Class
B common stock has
ten votes per share.
Our principal stockholders
have entered into the
Voting
Agreement. As of March
15, 2023 on a fully
diluted basis, Mei Mei Hu, as
proxyholder under the
Voting
Agreement, controls
approximately 65.8% of
the total voting
power of our
outstanding capital stock.
The Voting
Agreement provides
Mei Mei Hu with the authority (and irrevocable proxies) to direct the
vote and vote the shares of capital stock held by the parties to the
voting agreement at her discretion on all matters to be voted upon by stockholders. The voting power covered by the Voting Agreement
may
increase
over
time
as the
UBI Warrant
is exercised
and
as our
principal
stockholders
exercise
or vest
equity
awards that
were
outstanding at the time of the completion
of our initial public offering.
If all such equity awards held by
our principal stockholders had
been exercised or vested and exchanged for shares of common stock and the UBI Warrant had been
exercised in full for shares of Class
A common
stock as of
March 15, 2023,
assuming no other
equity awards
had been exercised
or vested,
the Voting
Agreement would
have covered, in the aggregate as of the completion of our initial public
offering, approximately 68.2% of the total voting
power of our
outstanding capital stock.
As a
result, if
our principal stockholders
retain all
or a
large portion their
common stock, including
the common
stock issuable upon
the exercise or
vesting of
such principal stockholders’
outstanding equity
awards or upon
the exercise of
the UBI
Warrant,
our
principal
stockholders
will
be
able
to
significantly
influence
(if
not
control)
any
action
requiring
the
approval
of
our
stockholders, including
the election
of our
board of
directors, the
adoption of
amendments to
our amended
and restated
certificate of
incorporation (the “Charter”) and our amended
and restated bylaws (the “Bylaws”) and the approval
of any merger, consolidation, sale
of
all or
substantially
all of
our
assets or
other
major
corporate
transaction.
Assuming
our
principal
stockholders
retain their
equity
interests and the
Voting
Agreement remains
in effect,
our principal stockholders
will effectively
control all
such matters submitted
to
the stockholders for the foreseeable future.
Our principal stockholders will also have
the voting power to determine the composition
of
our board of directors, which in turn will be able to determine matters affecting
us, including, among others:
•
any determination with respect to our business direction and policies,
including the appointment and removal of officers;
•
the adoption of amendments to our Charter and Bylaws;
•
determinations with respect to mergers, business combinations
or disposition of assets;
•
compensation and benefit programs and other human resources policy
decisions;
•
the payment of dividends on our common stock; and
•
determinations with respect to tax matters.
Our principal stockholders may have interests that differ from yours and may vote in a way with which you disagree and which may be
adverse to your
interests. This concentrated
control may have the
effect of delaying,
preventing or deterring
a change in control
of the
Company, could deprive our stockholders of an opportunity to receive a premium for their
capital stock as part of a sale
in the Company
and
might
ultimately
affect
the
market
price
of
our
Class
A
common
stock.
In
addition,
each
share
of
Class
B
common
stock
will
automatically convert
into one
share of
Class A
common stock
upon any
transfer,
whether or
not for
value and
whether voluntary
or
involuntary or by operation of
law, except
for certain transfers described
in our Charter,
including, without limitation, certain
transfers
for tax and estate planning purposes. Such issuances will be dilutive to
holders of our Class A common stock.
We are an “emerging growth company” and a “smaller reporting company” and will be
able to avail ourselves of reduced disclosure
requirements applicable to
emerging growth companies
and smaller reporting
companies, which could
make our Class
A common
stock less attractive to investors and adversely affect the market price
of our Class A common stock.
We are an “emerging
growth company,” as defined
in the JOBS Act. We will remain an emerging
growth company until the earliest of
(i) the last day of
the fiscal year in which
we have annual gross revenues
of $1.235 billion or more; (ii) the
date on which we have
issued
more than $1.0 billion
in non-convertible debt
in the previous
three years; (iii)
the date we
qualify as a
“large accelerated
filer” under
the Exchange
Act, which
would occur
at the
end of
a given
fiscal year
if the
market value
of our
common stock
that is
held by
non-
affiliates
is $700 million or more
as of the
last business day
of the second fiscal
quarter of such
year (and we have
been a public
company
for at
least 12
months and
have filed
one annual
report on
Form 10-K);
and (iv)
the last
day of
the fiscal
year ending
after the
fifth
anniversary of our
initial public offering.
For so long as
we remain an
emerging growth
company,
we are permitted
and intend to
rely
on
exemptions
from
certain
disclosure
requirements
that
are
applicable
to
other
public
companies
that
are
not
emerging
growth
companies. These exemptions include:
•
not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act;
•
not being
required to
comply with
any requirement
that may
be adopted
by the
Public Company
Accounting Oversight
Board regarding
mandatory audit
firm rotation
or a
supplement to
the auditor’s
report providing
additional information
about the audit and the financial statements;
•
being
required
to provide
only
two
years
of audited
financial
statements
in
addition
to
any
required
unaudited
interim
financial statements;
•
permitting
an
extended
transition
period
for
complying
with
new
or
revised
accounting
standards,
which
allows
an
emerging
growth company
to delay
the adoption
of certain
accounting
standards until
those standards
would otherwise
apply to private companies;
•
reduced disclosure obligations regarding executive compensation; and
•
exemptions
from
the
requirements
of
holding
a
nonbinding
advisory
vote
on
executive
compensation
and
shareholder
approval of any golden parachute payments not previously approved.
We
may
choose to
take advantage
of some,
but not
all, of
the available
exemptions.
We
have elected
to use
the extended
transition
period for new or revised accounting
standards during the period in which
we remain an emerging growth
company. To
the extent that
we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange
Act, after we cease
to qualify as an emerging growth company, we will continue to be permitted to make certain reduced disclosures in our periodic reports
and other documents that we file with the SEC. We cannot predict whether investors will find our Class A common stock less attractive
as a result
of our reliance
on these exemptions.
If some investors
find our Class
A common stock
less attractive as
a result, there
may
be a less active trading market for our Class A common stock and our stock price
may be more volatile.
As long
as our
principal stockholders
hold a
majority of
the voting power
of our
capital stock,
we may
rely on certain
exemptions
from the corporate governance requirements of the Nasdaq available for
“controlled companies.”
We
are
a
“controlled
company”
within
the
meaning
of
the
corporate
governance
requirements
of
the
Nasdaq
because
our
principal
stockholders will continue to hold more than 50% of the voting power
of our outstanding shares of capital stock as a result of our dual-
class
common
stock
structure
and
the
Voting
Agreement.
A
controlled
company
may
elect
not
to
comply
with
certain
corporate
governance
requirements of
the Nasdaq.
Accordingly,
our board
of directors
will not
be required
to have
a majority
of independent
directors
and
our
Compensation
Committee
and
Nominating
and
Governance
Committee
will
not
be
required
to
meet
the
director
independence
requirements
to
which
we
would
otherwise
be
subject
until
such
time
as
we
cease
to
be
a
“controlled
company.”
Accordingly,
you will not
have certain of the
protections afforded
to stockholders of
companies that are subject
to all of the
corporate
governance requirements of the Nasdaq.
Your percentage ownership in us may be diluted by
future issuances of capital stock,
which could reduce your
influence over matters
on which stockholders vote.
Pursuant to our Charter
and Bylaws, our board
of directors has the
authority, without
action or vote of
our stockholders, to
issue all or
any part of our authorized but unissued shares of common stock, including shares issuable upon the
exercise of options, or shares of our
authorized but
unissued preferred
stock. Issuances
of shares
of common
stock or
shares of
voting preferred
stock would
reduce your
influence over matters
on which our stockholders
vote and, in the
case of issuances
of shares of preferred
stock, would likely result
in
your interest in us being subject to the prior rights of holders of that preferred stock.
Future sales of a substantial number of shares of our Class A common stock may
depress the price of our shares.
If our stockholders
sell a large number
of shares of our
Class A common stock,
or if we issue
a large number
of shares of our
Class A
common
stock
in
connection
with
future
acquisitions,
financings
or
other
circumstances,
the
market
price
of
shares
of
our
Class
A
common stock could decline significantly.
Moreover, the perception in the
public market that our stockholders might sell shares of
our
Class A common
stock could depress
the market price of
those shares. In
addition, sales of
a substantial number of
shares of our
common
stock by our principal stockholders could adversely affect the market
price of our Class A common stock.
We
do not
anticipate declaring
or paying
regular dividends
on our
Class A
common stock
in the near
term, and
any indebtedness
could limit our ability to pay dividends on our Class A common stock.
We have never declared and do not anticipate declaring or paying
regular cash dividends on our Class
A common stock in the near term.
We currently
intend to use our future earnings, if any, to pay any debt obligations,
to fund our growth and develop our business and for
general corporate purposes. Therefore, you are not likely to receive any cash dividends on
your Class A common stock in the near term,
and the success of an investment in shares of our Class A common stock will depend upon any future appreciation in their value, which
is not certain to
occur. There is no guarantee that shares of
our Class A common stock
will appreciate in value or even
maintain the price
at which they are initially
offered. Any future
declaration and payment
of cash dividends or other
distributions of capital will
be at the
discretion of our board of
directors and the payment
of any future cash dividends
or other distributions of capital
will depend on many
factors, including our financial
condition, earnings, cash needs,
regulatory constraints, capital requirements
(including requirements of
our subsidiaries) and any other factors that our board of
directors deems relevant in making such a determination. We cannot assure you
that we
will establish
a dividend
policy or
pay cash
dividends in
the future
or continue
to pay
any cash
dividend if
we do
commence
paying cash dividends pursuant to a dividend policy or otherwise.
Our Charter designates courts in the State of Delaware as the sole and exclusive forum for certain types of
actions and proceedings
that may be
initiated by our
stockholders, and
also provide that
the federal district
courts will be
the exclusive forum
for resolving
any complaint
asserting a
cause of
action arising
under the
Securities Act,
each of
which could
limit our
stockholders’
ability to
choose the judicial forum for disputes with us or our directors, officers,
stockholders or employees.
Our Charter provides that, subject to limited exceptions, the Court of Chancery for the State
of Delaware or other specified courts in the
State of Delaware will be the sole and exclusive forum to the fullest extent of the law for:
•
any derivative action or proceeding brought on our behalf;
•
any action asserting a
claim of breach of
a fiduciary duty owed by
any of our directors,
officers or other
employees to us
or our stockholders;
•
any action
asserting a
claim against
us arising
pursuant to
any provision
of the
Delaware General
Corporation Law
(the
“DGCL”), our Charter or our Bylaws;
•
any action to interpret, apply,
enforce or determine the validity of our Charter or Bylaws; and
•
any other action asserting a claim against us that is governed by the internal affairs
doctrine.
Our Charter also provides
that the federal district
courts of the United
States of America will
be the exclusive forum
for the resolution
of
any
complaint
asserting
a
cause
of
action
against
us
or any
of
our
directors,
officers,
employees
or
agents and
arising
under
the
Securities Act. However, Section 22
of the Securities
Act provides that
federal and state
courts have concurrent
jurisdiction over lawsuits
brought pursuant to the
Securities Act or the rules and
regulations thereunder.
To the
extent the exclusive forum provision
restricts the
courts in which claims arising under the Securities Act may
be brought, there is uncertainty as to whether a court would enforce
such a
provision. We
note that
investors cannot
waive compliance
with the
federal securities
laws and
the rules
and regulations
thereunder.
This provision does not apply to claims brought under the Exchange Act.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice
of and
to have consented to these provisions. These provisions may limit
a stockholder’s ability to bring a claim in a judicial forum
that it finds
favorable
for disputes
with us
or our
directors, officers
or other
employees,
which may
discourage
such lawsuits
against
us and
our
directors, officers and employees. Alternatively,
if a court were to find these provisions of our Charter inapplicable to, or
unenforceable
in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such
matters in other jurisdictions, which could adversely affect
our business or financial condition.
Delaware law and provisions in our Charter and
Bylaws might discourage, delay or prevent a change
in control of the Company or
changes in our management and, therefore, depress the trading price of our Class A common
stock.
Provisions of
our Charter
and Bylaws
and of
state law
may delay,
deter,
prevent or
render more
difficult a
takeover attempt
that our
stockholders might consider in their best interests, including the following
provisions:
•
our
dual-class
common
stock
structure
and
the
Voting
Agreement,
which
provide
our
principal
stockholders
with
a
majority of the voting power
of our capital stock will
enable our principal stockholders to
influence the outcome of matters
submitted to our
stockholders for approval
even if they
own significantly less
than a majority
of the number
of shares of
our outstanding common stock;
•
our Charter does not provide for cumulative voting in the election of directors;
•
vacancies on our board of directors may be filled only by our board of directors
and not by stockholders;
•
our
stockholders
may
act
by
written
consent
only
so
long
as
the
Voting
Agreement
is
in
effect
and
our
principal
stockholders hold a majority of the voting power of then-outstanding shares
of our capital stock;
•
a special meeting of our stockholders may only be called by the chairperson of
our board of directors, our Chief Executive
Officer, our President, a majority
of our board
of directors or, so
long as the
Voting
Agreement is in
effect and our principal
stockholders hold a majority of the voting power of then-outstanding shares
of our capital stock, our stockholders;
•
amendments
to
certain
provisions
of
our
Charter
and
stockholder-proposed
amendments
to
our
Bylaws
require
the
affirmative vote
of the holders
of at least
66 2/3% in
voting power of
all the then
outstanding shares of
our capital stock
entitled to vote thereon at any time
the Voting
Agreement is not in effect or our
principal stockholders do not hold, in the
aggregate, a majority of the voting power of then-outstanding shares of
our capital stock;
•
our Charter authorizes
our board of directors,
subject to the limitations
imposed by Delaware
law or the
Nasdaq’s listing
rules, without any
further vote or
action by our stockholders,
to issue preferred
stock in one or
more series and
to fix the
designations, powers, preferences, limitations and rights of the shares of
each series; and
•
advance notice procedures apply
for stockholders to
nominate candidates for election
as directors or
to bring matters
before
an annual meeting of stockholders.
Such provisions or laws may prevent our stockholders from
receiving the benefit from any premium to the market
price of our Class A
common stock
offered by
a bidder
in a takeover
context. Even
in the
absence of
a takeover attempt,
the existence
of these provisions
may adversely affect the prevailing
market price of our Class A common
stock if they are viewed as discouraging
takeover attempts in
the future.
Provisions
in
our
Charter
and
Bylaws,
including
the
dual-class
structure
of
our
common
stock,
might
discourage
or
prevent
institutional investors from purchasing or holding our Class A common stock, and, therefore, depress the trading price of
our Class
A common stock.
Our governance structure and our Charter may negatively affect the
decision by certain institutional investors to purchase or hold
shares
of
our
Class
A
common
stock.
The
holding
of
low-voting
stock,
such
as
our
Class
A
common
stock,
may
not
be
permitted
by
the
investment policies of certain institutional investors or may be less attractive to the portfolio managers of certain institutional investors.
In addition, in July 2017, FTSE Russell and Standard & Poor’s announced that they would cease to allow
most newly public companies
utilizing dual-
or multi-class
capital structures
to be
included in
their indices.
Affected indices
include the
Russell 2000
and the
S&P
500, S&P MidCap
400 and S&P
SmallCap 600, which together
make up the
S&P Composite 1500. Our
dual-class common stock capital
structure may make
us ineligible for inclusion
in any of these and
certain other indices, and
as a result, mutual
funds, exchange-traded
funds
and other
investment
vehicles that
attempt
to passively
track
these indices
would
not
invest in
our
stock. These
policies
may
depress our valuation compared to those of other similar companies that are
included in such indices.
If securities
or industry
analysts do
not publish
research or
publish inaccurate
or unfavorable
research about
us, our business
or
our market, or
if they change
their recommendation regarding
our Class A common
stock adversely,
the trading price
and trading
volume of our Class A common stock could decline.
The trading
market for
our Class
A common
stock will
depend in
part on
the research
and reports
that securities
or industry
analysts
publish about us, our business, our market or our competitors. If no or few securities or industry analysts cover us, the price and trading
volume of
our Class
A common
stock likely
would be
negatively impacted.
If one
or more
of the
securities or
industry analysts
who
cover us downgrade our Class A common stock or publish inaccurate or unfavorable research about us, the trading price of our Class A
common
stock would
likely decline.
If analysts
publish target
prices for
our Class
A common
stock that
are below
our then-current
public price of our
Class A common
stock, it could
cause the trading
price of our
Class A common stock
to decline significantly. Further,
if
one
or
more of
these
analysts cease
coverage
of the
Company
or fail
to
publish
reports on
us
regularly,
demand
for
our
Class A
common stock could decrease, which might cause our Class A common
stock trading price and trading volume to decline.
General Risk Factors
We
incur increased costs
as a result
of operating as
a public company,
and our management
is required to
devote substantial time
to new compliance initiatives.
As a public company,
and particularly after we are no longer an
“emerging growth company” or
“smaller reporting company,”
we will
incur significant legal,
accounting and other expenses
that we did not
incur as a private
company.
In addition, the Sarbanes-Oxley
Act
and
rules
subsequently
implemented
by
the
SEC
and
the
Nasdaq
impose
various
requirements
on
public
companies,
including
establishment and maintenance of effective disclosure and financial controls
and corporate governance practices. Our management and
other personnel need to devote a substantial amount of
time to these compliance initiatives. Moreover,
these rules and regulations have
increased our legal and financial compliance costs and will make some
activities more time- consuming and costly.
For example, these
rules and regulations have made it more difficult and more expensive
for us to obtain director and officer liability insurance.
Pursuant to Section
404, we are
required to furnish
a report by
our management on
our internal control
over financial reporting, including
an attestation report on internal control over financial reporting
issued by our independent registered public accounting firm.
However,
while we remain an emerging growth company, we will not be required to include an
attestation report on internal control over financial
reporting issued
by our independent
registered public accounting
firm. To
achieve compliance with
Section 404 within
the prescribed
period, we
are engaged
in a
process to
document and
evaluate our
internal control
over financial
reporting, which
is both
costly and
challenging. Further,
despite our
efforts, there
is a
risk that
neither we
nor our
independent registered
public accounting
firm will
be
able to
conclude within
the prescribed
timeframe that
our internal
control over
financial reporting
is effective
as required
by Section
404.
This
could
result
in
an
adverse
reaction
in
the
financial
markets
due
to
a
loss
of
confidence
in
the
reliability
of
our
financial
statements. In addition, if we are not able to continue to meet these requirements,
we may not be able to remain listed on the Nasdaq.
Our independent
registered public
accounting firm
may not
be able
to certify
as to
the effectiveness
of our
internal controls
over
financial reporting, which could have a significant and adverse effect
on our business and reputation.
As a public company,
we are now required to comply
with the SEC’s rules
implementing Sections 302 and
404 of the Sarbanes-Oxley
Act, which will require management to certify financial and
other information in our quarterly and annual reports and provide an
annual
management
report
on
the
effectiveness
of
internal
control
over
financial
reporting.
However,
we
are
not
required
to
have
our
independent
registered
public
accounting
firm
formally
assess
our
internal
controls
for
as long
as
we
remain
an
“emerging
growth
company” as defined in the JOBS Act.
When formally evaluating
our internal controls
over financial reporting,
we have identified
and may identify
further material weaknesses
that we may not be able to remediate
in time to meet the applicable deadline
imposed upon us for compliance with the
requirements of
Section 404
of the
Sarbanes-Oxley Act.
In addition,
if we
fail to
achieve and
maintain the
adequacy of
our internal
controls, as
such
standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing
basis that
we have
effective internal
controls over
financial reporting
in accordance
with Section
404 of
the Sarbanes-Oxley
Act. We
cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the
same on our
operations.
If we
are not
able to
implement the
requirements
of
Section 404
of the
Sarbanes-Oxley
Act
in a
timely manner
or with
adequate compliance, our
independent registered public
accounting firm may
issue an
adverse opinion due
to ineffective internal
controls
over financial
reporting, and
we may
be subject
to sanctions
or investigation
by regulatory
authorities, such
as the
SEC. As
a result,
there could
be a negative
reaction in
the financial
markets due
to a
loss of confidence
in the reliability
of our
financial statements.
In
addition, we may
be required to incur
additional costs in improving
our internal control
system and the
hiring of additional
personnel.
Any such action could have a significant and adverse effect on our business and reputation, which could negatively affect our
results of
operations or cash flows.
Further, we believe
that any disclosure controls
and procedures or internal controls and
procedures, no matter how well-conceived
and
operated,
can
provide
only
reasonable,
not
absolute,
assurance
that
the
objectives
of
the
control
system
are
met.
These
inherent
limitations include the facts that judgments in decision-making
can be faulty and that breakdowns can occur because
of simple error or
mistake. Additionally,
controls can be
circumvented by
the individual acts
of some persons,
by collusion of
two or more
people or by
an unauthorized
override of the
controls. Accordingly,
because of the
inherent limitations in
our control system,
misstatements due
to
error or fraud may occur and not be detected.
We
have
in
the
past
identified
material
weaknesses
in
our
internal
control
over
financial
reporting,
which
have
since
been
remediated. If we
are unable to
develop and maintain
an effective system
of internal control
over financial reporting,
or if we
discover
material deficiencies
in the future,
we may
not be
able to accurately
report our
financial results
or prevent
fraud, and
as a
result,
shareholders
could lose
confidence in
our financial
and other
public reporting,
which would
harm our
business and
the trading
price of our Class A common stock.
Effective internal controls over financial
reporting are necessary for us to provide reliable financial
reports and, together with adequate
disclosure
controls
and
procedures,
are
designed
to
prevent
fraud.
Any
failure
to
implement
required
new
or
improved
controls,
or
difficulties
encountered
in
their
implementation,
could
cause
us
to
fail
to
meet
our
reporting
obligations.
A
material
weakness
is
a
deficiency or a
combination of deficiencies
in internal control
over financial reporting
such that there is
a reasonable possibility
that a
material misstatement of our financial statements will not be prevented
or detected on a timely basis.
During the
preparation of
our audited
consolidated financial
statements for
the year
ended December
31, 2021,
we identified
certain
errors
in
our
previously
issued financial
statements
that
were
determined
not
to be
material.
Further,
as disclosed
in Item
of our
Quarterly Reports on Form 10-Q during
2022, we identified material weaknesses
in the design and operation of
our internal control over
financial
reporting
relating
to
maintaining
and
performing
our
financial
close
process,
ensuring
that
formal
processes
exist
for
identifying, analyzing and accounting for complex, non-routine transactions and proper segregation of duties
and responsibilities within
our finance department.
We have invested resources
and taken
measures to improve
internal control over
financial reporting to
remediate
the control deficiencies that led to these material
weaknesses. Although we have successfully remediated
these material weaknesses, we
cannot assure you that we will be able to successfully remediate other material weaknesses that we may discover additional weaknesses
in the future. If
we are unable to
successfully prevent or remediate
any future issues or
if the design and
operation of our internal
controls
fails, it could result in material misstatements or omissions in our financial
statements and potentially require us to restate our financial
statements, which may result in the trading value of our Class A common stock being
materially adversely affected.
If
our
estimates
or
judgments
relating
to
our
critical
accounting
policies
are
based
on
assumptions
that
change
or
prove
to
be
incorrect,
our operating
results
could
fall
below
our publicly
announced
guidance
or
the expectations
of
securities
analysts
and
investors, resulting in a decline in the market price of our Class A common stock.
The
preparation
of
financial
statements
in
conformity
with
U.S.
generally
accepted
accounting
principles
(“GAAP”)
requires
management
to
make
estimates
and
assumptions
that
affect
the
amounts
reported
in
our
consolidated
financial
statements
and
accompanying notes. We base our
estimates on historical experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form
the basis for making judgments about the
carrying values of assets, liabilities, equity,
revenue and expenses that are not readily apparent from other sources. If our assumptions change or if actual circumstances differ from
our
assumptions,
our
operating
results
may
be
adversely
affected
and
could
fall
below
our
publicly
announced
guidance
or
the
expectations of securities analysts and investors, resulting in a decline
in the market price of our Class A common stock.

---

ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

---

ITEM 2. PROPERTIES
Item 2. Properties.
Facilities
Our principal executive offices
are located in Merritt
Island, Florida,
where we sublease approximately
9,900 square feet of
office and
lab space
from Space
Florida.
In April
2022, we
entered into
a facility
lease agreement
for 4,419
square feet
of office
space in
New
York,
New York,
which will expire
in March 2029.
We
do not
currently own
any real property.
We
believe that
our current
facilities
are adequate
to meet
our immediate
needs and
believe that
we should
be able
to renew
each of
our leases
and subleases
without
an
adverse impact on our
operations. In addition, we
believe that if we require
additional office space
or manufacturing facilities, we
will
be able to obtain additional facilities on commercially reasonable terms.

---

ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
From time
to time we
are a party
to various
litigation matters
incidental to
the conduct
of our business.
We
are not presently
party to
any
legal proceedings
the resolution
of which
we believe
would
have a
material
adverse effect
on our
business, prospects,
financial
condition, liquidity, results
of operation, cash flows or capital levels.

---

ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
The disclosure required by this item is not applicable.
PART
II

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Market Price for the Common Stock
Our Class A
common stock
is listed on
the Nasdaq
Global Market
under the
symbol “VAXX
.” As of
March 15, 2023,
the number
of
shares
of
our
Class
A
common
stock
outstanding
was
112,188,911
held
by
approximately
shareholders
of
record,
not
including
shareholders whose shares are held in securities position listings.
Our Class B common stock is not listed on any exchange nor traded on any public market. As of
March 15, 2023, the number of shares
of our Class B common stock outstanding was 13,874,132 held by
approximately 4 shareholders of record.
Dividends
We
have never declared
or paid, and do
not anticipate declaring
or paying in
the foreseeable future,
any cash dividends
on our capital
stock. Any future determination to declare and pay cash dividends will be
at the discretion of our board of directors in accordance
with
applicable laws
and will
depend on,
among other
things, our
financial condition,
results of
operations, cash
requirements, contractual
restrictions and such
other factors as
our board of
directors deems relevant.
Our ability to
pay dividends may
also be limited
by covenants
of any future outstanding indebtedness we or our subsidiaries incur.
Issuer Purchases of Equity Securities
We did not
repurchase any shares during the years ended December 31, 2022 and 2021.
Unregistered Sales of Equity Securities
There were no unregistered sales of equity securities during the fourth quarter
of 2022.
Use of Proceeds
On November 15, 2021, the Company closed its IPO, as discussed in Note 1 of our consolidated financial statements for the year ended
December 31, 2022.
The aggregate net
proceeds to us
from the offering,
after deducting underwriting
discounts and commissions
and
other offering expenses
payable by us, were
approximately $71.1 million.
The proceeds from
our IPO have been
invested primarily in
U.S. Treasury
securities and money
market accounts. There
has been no
material change in
the expected use
of the net
proceeds from
our IPO as described in our prospectus filed pursuant to Rule 424(b)(4) under the Securities Act with the
SEC on November 12, 2021.

---

ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved].

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion and analysis of our financial condition and
results of operations should be read
together with our
consolidated financial statements and related
notes and other financial information appearing elsewhere in
this Report. We
intend for
this discussion to provide you with information
that will assist you in understanding our consolidated financial statements,
the
changes in key items in those consolidated financial statements from
year to year and the primary factors that accounted for those
changes.
Some of the information contained in this discussion and analysis or set forth elsewhere
in this Report, including information
with respect to our plans and strategy for our business and related
financing, includes forward-looking statements that
involve risks,
uncertainties and assumptions. See the section of this Report titled “Special Note
Regarding Forward-Looking
Statements” for a
discussion of forward-looking statements. As a result
of many factors, including those factors set forth in the “Risk Factors” section of
this Report, our actual results could differ
materially from management’s
expectations and the results described in or implied
by the
forward-looking statements contained
in the following discussion and analysis.
Overview
Vaxxinity
is engaged in the development of
rationally designed prophylactic and
therapeutic vaccines to combat
chronic disorders and
infectious diseases with large patient populations and
unmet medical needs. While vaccines
have traditionally been unable to effectively
and
safely combat
such disorders,
we believe
our platform
could overcome
the traditional
hurdles facing
vaccines
in this
area.
Our
Vaxxine
Platform relies
on a synthetic
peptide vaccine
technology first
developed by
UBI and
subsequently refined
over the
last two
decades. We
believe our
vaccines have
the potential
to combat
conditions that
have not
yet been
successfully treated,
or which
have
primarily been addressed with
monoclonal antibodies (mAbs) which,
while generally effective,
are extremely costly and
cumbersome,
and
thus
have
limited
accessibility.
Our
pipeline
primarily
consists
of
five
programs
focused
on
chronic
disease,
spanning
neurodegenerative disorders in
addition to other
neurology and cardiovascular
indications. Given the globa
l
COVID-19 pandemic and
our Vaxxine
Platform’s
applicability to
infectious disease,
we are also
opportunistically advancing
a product candidate
that addresses
SARS-CoV-2.
We separated our business
from UBI
through two separate
transactions: a
spin-out from UBI
in 2014
of operations focused
on developing
chronic
disease
product
candidates
that
resulted
in
UNS,
and
a
second
spin-out
from
UBI
in
of
operations
focused
on
the
development of a
COVID-19 vaccine that
resulted in COVAXX.
On February 2,
2021, Vaxxinity
was incorporated for
the purpose of
reorganizing
and
combining UNS
and
COVAXX
and
did
so
on
March
2, 2021
through
the
Reorganization.
In connection
with
the
Reorganization, (i) all outstanding shares of UNS and COVAXX
preferred stock and common stock were contributed to Vaxxinity
and
exchanged for
an aggregate of
57,702,458 shares
of our Class A
common stock, 10,999,149
shares of our
Class B common
stock and
58,175,751
shares of our Series A preferred stock, (ii) the
outstanding options to purchase shares of UNS and COVAXX common stock
were terminated
and substituted
with options
to purchase
an aggregate
of 19,712,504
shares of
our Class
A common
stock, (iii)
the
outstanding warrant to
purchase shares of COVAXX
common stock was
cancelled and exchanged
for a warrant that
is exercisable for
112,373
shares of
our Class
A common
stock, and
(iv) the
outstanding
Convertible Notes
and
the Related
Note were
contributed
to
Vaxxinity
and the former holders of such notes received an aggregate of
4,047,344
shares of our Series A preferred stock. As a result of
the Reorganization,
COVAXX
and UNS became
our wholly-owned
subsidiaries. All shares
of our Series
A preferred stock
converted
into shares of
our Class A
common stock concurrently with the
closing of our initial
public offering. The Reorganization was
determined
to be a common control transaction, so the carrying values of all contributed assets and assumed liabilities remained unchanged and the
financial information
for all
periods in
this section
of the
financial statements
presented prior
to the
Reorganization
are presented
on
consolidated basis. Unless the context requires otherwise, in this section we use the terms “Vaxxinity,”
“we,” “us” and “our” to refer to
our operations (including through UNS and COVAXX)
both prior to and after the Reorganization.
Since our spin-out transactions
from UBI, we have
focused on organizing
and staffing our business,
business planning, raising
capital,
developing
our
Vaxxine
Platform,
identifying
and
testing
potential
product
candidates
and
conducting
clinical
trials.
We
have
also
developed a SARS CoV-2
antibody ELISA test, which received an EUA from the FDA in January 2021.
Our current pipeline consists of six programs from early to
late-stage development, including five programs focused on chronic disease:
UB-311,
our leading
neurology product
candidate, which
targets AD;
UB-312, which
targets PD
and other
synucleinopathies; VXX-
301, an
anti-tau product
candidate which
has the
potential to
address multiple
neurodegenerative conditions,
including AD;
UB-313,
which
targets
CGRP
to
prevent
migraines;
and
VXX-401,
which
targets
PCSK9
to
reduce
LDL
cholesterol,
a
risk
factor
for
atherosclerotic
heart
disease.
Through
our
Vaxxine
Platform,
we
believe
we
may
be
able
to
address
a
wide
range
of
other
chronic
diseases,
including
chronic
diseases that
are
or
could
potentially be
successfully
treated
by
mAbs,
which
increasingly
dominate
the
treatment paradigm but remain accessible only to a small proportion of patients who
could potentially benefit from them.
In addition
to our
chronic disease
pipeline, given
our Vaxxine
Platform’s
applicability to
infectious disease
and the
ongoing need
for
vaccines to address SARS-CoV-2, we are advancing an infectious disease
product candidate, UB-612, as a heterologous booster against
COVID-19.
We
have
reported
topline
results
of
a
pivotal
Phase
trial
of
UB-612,
and
have
completed
rolling
submissions
for
conditional/provisional authorization with regulatory authorities in the United
Kingdom and Australia, respectively,
in March of 2023.
To
date, our revenue
has been generated
from the modest
sales of our
ELISA test and
the sale of
an option to
negotiate a license
with
UNS (which option
has expired). As
a result,
our ability to
generate revenue sufficient to
achieve profitability will
depend on the
eventual
regulatory approval, and
commercialization of one
or more of
our product candidates.
We have not yet
obtained any regulatory
approvals
for our product candidates or conducted sales and marketing activities for
our product candidates.
We have principally funded our operations through
financing transactions. Through December 31, 2022, we received gross proceeds of
$306.4
million
in
connection with
various
financial
instruments,
including
the
sale of
preferred
and
common
stock, the
issuance
of
promissory notes (including convertible promissory notes
(“Convertible Notes”)), and the entry
into simple agreements for future
equity
(“SAFEs”).
Costs associated with research and development are the most significant component of our expenses. These costs can vary greatly from
period to period depending on the timing
of various trials for our
product candidates. We expect our allocated research and development
costs and
general
and
administrative
expenses
could
increase
over
time if
we expand
the number
of product
candidates that
we
are
advancing and
incur increased
costs as
a result
of operating
as a
public company.
Further,
we anticipate
incurring greater
selling and
marketing expenses if we commercialize any of our product candidates in the future. Our product candidates are
in clinical stage or pre-
clinical stage development.
We
have generated limited
revenue to date,
and have incurred significant
operating losses since
inception.
Net losses were $75.2
million and $137.2 million
for the years ended
December 31, 2022 and 2021,
respectively.
As of December 31,
2022,
we had an accumulated deficit of $304.7 million. We
anticipate
our expenses and capital requirements may increase over time in
connection with expanding our operations,
which could include:
•
continuing pre-clinical studies, existing clinical trials, or initiating new
clinical trials for product candidates UB-312, UB-313,
VXX-401, UB-612, and other product candidates;
•
hiring additional
clinical, quality
control, medical,
scientific and
other technical
personnel to
support additional
clinical and
research and development programs;
•
expanding operational, financial and management systems
and infrastructure, expanding our facilities
and increasing personnel
to support operations;
•
undertaking actions to meet the requirements and demands of being
a public company;
•
maintaining, expanding and protecting our intellectual property portfolio;
•
seeking regulatory approvals for any product candidates that successfully complete
clinical trials, including UB-612; and
•
undertaking pre-commercialization activities to establish sales, marketing
and distribution capabilities for any product
candidates for which we may receive regulatory approval in regions where
we elect to commercialize products on our own or
jointly with third parties.
As of
the date
of this
Report, we
expect our
existing cash
and cash
equivalents will
be sufficient
to fund
our operating
expenses and
capital expenditure requirements
for at least the
next 12 months. We
also believe that cash
and cash equivalents will
enable us to fund
our operating expenses and capital expenditure requirements into mid-2024. Thereafter, our viability will be dependent on our ability to
raise additional capital to finance operations, to successfully commercialize
our product candidates,
or to enter into collaborations with
third parties for
the development of
our product candidates.
If we are
unable to do
any of the
foregoing, we would
be forced to
delay,
limit, reduce or terminate our product
candidate development or future commercialization
efforts. Our estimates are
based on a variety
of assumptions that
may prove to
be wrong, and
we could exhaust
our available capital
resources sooner than
expected. See “-
Liquidity
and Capital Resources.”
Business Update Regarding COVID-19 Pandemic
In March
2020, the
World
Health Organization
declared the
COVID-19
outbreak
a pandemic.
The onset
of the
pandemic led
to our
institutional
prioritization
of
COVID-19
vaccine
development
efforts,
which
correlated
with
a
relative
decline
in
research
and
development expenditures for our chronic disease product candidates. To date, our operations have not been negatively impacted by the
COVID-19 pandemic in
a material manner. While
the pandemic has
subsided around the
world since 2020,
we cannot
predict the
specific
extent, duration
or full
impact that
future outbreaks
associated with
new variants
of the
COVID-19
virus may
have on
our financial
condition
and
operations.
Potential impacts
could
include delays
of the
development
of clinical
supply
materials,
and
enrollment
of
patients in our
studies may be delayed
or suspended, as hospitals
and clinics in
areas where we are
conducting trials may
need to shift
resources to
cope with
COVID-19 and
may limit
access or
close clinical
facilities. Additionally,
if our
trial participants
are unable
to
travel to our clinical study sites
as a result of quarantines or other restrictions
resulting from COVID-19 outbreaks, we
may experience
higher drop-out rates or delays in our clinical studies. The
impact of the COVID-19 pandemic on our financial performance will depend
on future developments, including the duration and spread of future outbreaks and related
governmental advisories and restrictions. The
impact of
future outbreaks
on the financial
markets and
the overall
economy are
also highly
uncertain and
cannot be
predicted. If
the
financial markets and/or the overall economy are impacted for an
extended period, our results may be materially adversely
affected. See
“Risk Factors-Risks Related to Our Business and Industry-The ongoing
coronavirus pandemic has caused interruptions or delays of
our business plan. Delays caused by the coronavirus pandemic may have a significant
adverse effect on our business.”
Components of Our Consolidated Results of Operations
Revenue
We recorded no revenues for the year ended December 31, 2022. Revenue for the year ended December 31, 2021 was $0.1 million, and
consisted of
commercial sales
of our
ELISA tests.
We
do not
expect to
generate any
meaningful revenue
unless and
until we
obtain
regulatory approval of and commercialize or out-license our product candidates,
and we do not know when, or if, this will occur. If our
development efforts
for our product
candidates are successful
and result in
commercialization, we may
generate additional revenue
in
the future from a combination
of product sales or payments
from collaboration or license agreements
that we have entered into
or may
enter
into
with
third
parties.
See
Risk
Factors-Risks
Related
to
the
Discovery
and
Development
of
Product
Candidates.
We
have
incurred significant losses
since our inception.
We
expect to incur losses
for the foreseeable future
and may never achieve
or maintain
profitability.
Cost of Revenue
We recorded no cost of revenue for the year ended December 31, 2022.
Cost of revenue for the year ended December 31, 2021 consists
of kit production costs consisting of materials, labor and overhead expenses directly related to ELISA tests
sold and the costs of expired
ELISA tests, which are not available for commercial sale.
If our development
efforts in respect
of our current
pipeline of product
candidates are successful and
result in regulatory
approval, we
expect our
cost of revenue
will increase in
relative proportion
to the level
of our revenue
as we commercialize
the applicable
product
candidate. We
expect that
cost of
revenue will
increase in
absolute dollars
as and
if our
revenue grows
and will
vary from
period to
period as a percentage of revenue.
Research and Development Expenses
The design, initiation and execution of candidate discovery and development programs of our potential future product candidates is key
to our
success and
involves significant
expenses. Prior
to initiating
these programs,
project teams
incorporating individuals
from the
essential disciplines within Vaxxinity scope out the activities, timing, requirements, inclusion and exclusion
criteria and the primary and
secondary endpoints. Once we have decided to proceed,
our Vaxxine
Platform enables the iteration of drug candidates in the discovery
phase through rapid, rational design
and formulation. After we have
identified drug candidates, the costs
of scaling the formulation from
research grade
to clinical
grade, then
to commercial
grade, typically
consumes significant
resources. In
addition, to
internal research
and development, we utilize service providers, including related parties, to
complete activities we lack the internal resources to handle.
Research and development expenses consist primarily of costs incurred
for research activities, including drug discovery efforts
and the
development of our product candidates. We
expense research and development costs as incurred, which include:
•
expenses incurred to conduct the necessary preclinical studies and clinical
trials required to obtain regulatory approval;
•
expenses incurred under agreements with CROs that are primarily engaged in
the oversight and conduct of our clinical trials,
preclinical studies and drug discovery efforts and contract
manufacturers that are primarily engaged to provide preclinical
and clinical drug substance and product for our research and development programs;
•
other costs related to acquiring and manufacturing materials in connection
with our drug discovery efforts and preclinical
studies and clinical trial materials, including manufacturing validation
batches;
•
costs related to investigative sites and consultants that conduct our clinical
trials, preclinical studies and other scientific
development services;
•
employee-related expenses, including salaries and benefits, travel and
stock-based compensation expense for employees
engaged in research and development functions;
•
costs related to compliance with regulatory requirements; and
•
facilities-related costs, depreciation and other expenses, which include
rent and utilities.
We
recognize
external
development
costs
based
on
an
evaluation
of
the
progress
to
completion
of
specific
tasks
using
information
provided to us by
service providers. This process
involves reviewing open contracts and
purchase orders, communicating with
personnel
to identify services that
have been performed on
our behalf and
estimating the level
of service performed and
the associated cost
incurred
for the service when we have not yet been invoiced or otherwise notified of actual costs. Any nonrefundable advance payments that
we
make for goods or services to be received in the future for use in research
and development activities are recorded as prepaid expenses.
Such amounts are expensed as the related goods are delivered or the related services are performed, or until it is no longer expected that
the goods will be delivered,
or the services rendered, at which point the net remainder is expensed.
We continue to work with related parties for
the advancement of our research and development programs, including for manufacturing,
quality control, testing, validation,
supply services, as well as the
winding down of some previously
initiated clinical initiatives. While
this related party work has significantly diminished over the last year, and we expect this trend to continue, we are still reliant on UBIA
to provide
certain manufacturing-related
data that
will be
needed for
inclusion in
our regulatory
applications for
UB-612. During
the
years
ended
December 31,
and
2021,
related
party
expenses
were
approximately
6%
and
29%
of
our
operating
expenses,
respectively.
Where appropriate,
we allocate
our third-party
research
and development
expenses on
a program-by-program
basis. These
expenses
primarily
relate
to
outside
consultants,
CROs,
contract
manufacturers
and
research
laboratories
in
connection
with
pre-clinical
development, process
development, manufacturing
and clinical
development activities.
We
do not
allocate our
internal costs,
such as
employee costs,
costs associated
with our discovery
efforts, laboratory
supplies and
facilities, including
depreciation or
other indirect
costs, to
specific programs because
these costs often
relate to platform
development, to multiple
programs simultaneously or
to discovery
of new
programs, and
any such
allocation would
necessarily involve
significant estimates
and judgments
and, accordingly,
would be
imprecise. When we
refer to the
research and development
expenses associated with
a specific program,
these refer exclusively
to the
allocated
third-party
expenses
associated
with
that
product
candidate.
All
other
research
and
development
costs
are
referred
to
as
unallocated costs.
Product candidates in later
stages of clinical development
generally have higher development costs
than those in earlier
stages of clinical
development,
primarily
due
to
the
increased
size
and
duration
of
later-stage
clinical
trials.
Additionally,
greater
research
and
development overhead is required to support
broader and more rapid
development of our Vaxxine Platform and new product candidates.
As a result, we expect that our research and development expenses could increase if we continue our existing and planned clinical trials
and conduct
increased pre-clinical
and clinical
development activities,
including submitting
regulatory filings
for product
candidates,
and focus more generally on the development of our chronic disease product
candidates.
At this
time, we
cannot reasonably
estimate or know
the nature,
timing and
costs of
the efforts
that will be
necessary to
complete the
pre-clinical and clinical development of any of our
product candidates or when, if ever,
material net cash inflows may commence from
any of our product candidates.
General and Administrative Expenses
General
and
administrative
expenses
consist
primarily
of
salaries
and
benefits,
travel
and
stock-based
compensation
expense
for
personnel
in
executive,
business
development,
finance,
human
resources,
legal,
information
technology,
public
relations,
communications and
administrative functions.
General and administrative
expenses also include
insurance costs and
professional fees
for
legal,
patent,
consulting,
investor
and
public
relations,
accounting
and
audit
services
and
other
general
operating
expenses
not
otherwise classified as research and development expenses. We
expense general and administrative costs as incurred.
In the event UB-612 obtains regulatory approval and we subsequently commence commercialization of this product, we expect general
and administrative
expenses will
increase. We
will continue
to incur
public company-related
expenses, including
services associated
with maintaining compliance with Nasdaq listing and SEC requirements, director and officer liability insurance and investor and public
relations costs.
Other Expense (Income)
Interest Expense
Interest expense consists
of (i) interest expense
recognized on the note
payable entered into during
June 2020 for the
acquisition of an
airplane (the
“2025 Note”),
(ii) interest
expense accrued
on the related
party promissory
note, (iii)
interest expense
recognized on
the
Convertible
Notes
and
(iv)
interest expense
recognized
on other
promissory
notes,
including
$0.1
million
borrowed
from
our
Chief
Executive Officer (the “Executive
Note”) and a related party Convertible
Note payable for $2.0 million in aggregate
proceeds that was
received in three tranches (the
“2018 Related Notes”). The Executive
Note was repaid in
full in August 2021
and the 2018
Related Notes
were converted into Series A preferred stock concurrently with the Reorganization.
Interest Income
Interest income consists of income earned on our cash and cash equivalents,
money market holdings, and short-term investments.
Change in Fair Value
of Convertible Notes, SAFEs and Series A-1 Warrant
Liability
We
issued a series
of Convertible Notes
during the years
ended December 31,
2018 through 2021,
a series of SAFEs
during the
years
ended December 31, 2020 and 2021,
and warrants to purchase shares of our Series A-1 preferred
stock (“Series A-1 Warrants”)
during
the year ended December 31, 2020, each of which were measured and accounted for at fair value. We remeasured
the fair value of each
of
the
Convertible
Notes,
SAFEs
and
Series
A-1
Warrants
at
each
reporting
date
and
recognize
changes
in
the
fair
value
in
our
consolidated statements of operations.
Inputs to the calculation of fair
value generally include market and acquisition
comparable(s) as
well as other variables. In
connection with the Reorganization, all outstanding
Convertible Notes, SAFEs, and
Series A-1 Warrants were
exchanged
for
shares
of
Series
A
preferred
stock,
which
were
subsequently
exchanged
into
shares
of
Class
A
common
stock
upon
closing of the IPO in November 2021.
Loss on Foreign Currency
Translation, Net
Our foreign
subsidiaries, which are
wholly-owned by Vaxxinity,
use the U.S.
dollar as their
functional currency
and maintain records
in
the
local
currency.
Nonmonetary
assets
and
liabilities
are
remeasured
at
historical
rates
and
monetary
assets
and
liabilities
are
remeasured at exchange rates in
effect at the end
of the reporting period. Income
statement accounts are remeasured at
average exchange
rates for the reporting
period. The resulting gains or
losses are included in
foreign currency (losses) gains in
the consolidated financial
statements.
Provision for Income Taxes
We have not recorded any significant amounts related to income tax but have reserved $0.7 million of unrecognized tax
benefits against
NOLs. We have not
recorded any income tax benefits for the majority of our net losses we incurred
to date.
We
account for
income taxes
using the
asset and
liability method,
which requires
the recognition of
deferred tax
assets and
liabilities
for the expected future tax consequences of events that have been included
in the consolidated financial statements or our tax returns.
Deferred tax assets and liabilities are
determined based on the difference between the
financial statement carrying amounts and tax basis
of existing assets and liabilities and for loss and credit carryforwards, which are measured using the enacted tax rates and laws in effect
in the years in which the differences are expected to reverse. The realization of our deferred tax assets is dependent upon the generation
of future taxable
income, the amount
and timing of which
are uncertain. Valuation
allowances are provided,
if, based upon the
weight
of available evidence, it is more likely than not that some or all
of the deferred tax assets will not be realized. As of December 31, 2022,
we continue to
maintain a full
valuation allowance
against all of
our deferred tax
assets based on
evaluation of all
available evidence.
We
file income
tax returns in
the U.S. federal
and state jurisdictions
and may become
subject to income
tax audit and
adjustments by
related tax authorities.
Our tax return
periods (for entities then
in existence) for
U.S. federal income
taxes for the tax
years since 2017
remain open to examination under the statute of limitations
by the Internal Revenue Service and state jurisdictions. We
record
reserves
for potential
tax payments
to various
tax authorities
related to
uncertain tax
positions, if
any.
The nature
of uncertain
tax positions
is
subject
to
significant
judgment
by
management
and
subject
to
change,
which
may
be
substantial.
These
reserves
are
based
on
a
determination of
whether and how
much a tax
benefit taken by
us in our
tax filings or
positions is more
likely than
not to be
realized
following the resolution of any potential contingencies related to the tax benefit. We
develop our assessment of uncertain tax positions,
and the associated
cumulative probabilities, using
internal expertise and assistance
from third-party experts.
As additional information
becomes
available,
estimates
are
revised
and
refined.
Differences
between
estimates
and
final
settlement
may
occur
resulting
in
additional tax
expense. Potential
interest and
penalties associated
with such uncertain
tax positions is
recorded as
a component
of our
provision for income taxes.
Factors Affecting the Comparability of Our Consolidated Results of
Operations
On March 2, 2021, Vaxxinity entered into the Contribution
and Exchange Agreement, pursuant to
which the outstanding equity interests
of
UNS
and
COVAXX
were
contributed
to
Vaxxinity
in
return
for
equity
interests
in
Vaxxinity,
resulting
in
UNS
and
COVAXX
becoming wholly owned subsidiaries of Vaxxinity.
Accordingly, all share and per share amounts prior to the Reorganization
have been
adjusted to reflect the Reorganization. In addition, we formed COVAXX,
and commenced our COVAXX business,
on March 23, 2020.
As a result,
the historical financial
information between
March 23, 2020
and March 2,
2021 described
in this Annual
Report refers
to
the combined historical financial information of UNS and COVAXX. Our operations for the year ended December 31, 2022 reflects the
operations of Vaxxinity
and its subsidiaries. Our
operations for the
year ended December
31, 2021 reflects
the operations of
UNS and
COVAXX
businesses on a consolidated basis
for the period from January
1, 2021 to March
1, 2021 and of Vaxxinity and its subsidiaries
for the remainder of that twelve-month period. See Note 1 to our consolidated financial statements included elsewhere
in this Form 10-
K filing.
Consolidated Results of Operations
The following is a summary of our consolidated results of operations
:
Years
Ended December 31,
2022 vs. 2021
(In thousands)
Change $
Change %
Revenue
$
-
$
$
(66)
(100)
%
Cost of revenue
-
1,937
(1,937)
(100)
%
Gross (loss) profit
-
(1,871)
1,871
(100)
%
Operating expenses:
Research and development
47,627
71,379
(23,752)
(33)
%
General and administrative
28,352
51,825
(23,473)
(45)
%
Total operating
expenses
75,979
123,204
(47,225)
(38)
%
Loss from operations
(75,979)
(125,075)
49,096
(39)
%
Other (income) expense:
Interest and other expense
(326)
(39)
%
Interest and other income
(1,259)
(9)
(1,250)
13,889
%
Change in fair value of convertible notes
-
2,667
(2,667)
(100)
%
Change in fair value of simple agreement for future equity
-
8,365
(8,365)
(100)
%
Change in fair value of warrant liability
-
(214)
(100)
%
(Gain) loss on foreign currency translation, net
(12)
(35)
(152)
%
Other (income) expense
(757)
12,100
(12,857)
(106)
%
Net loss
$
(75,222)
$
(137,175)
$
61,953
(45)
%
Comparison of the Years
Ended December 31, 2022 and 2021
Revenue
We did not record any revenues for the
year ended December 31, 2022. Total revenue was $0.1 million
for the year ended
December 31,
2021.
All revenues
were due
to sales
of our
ELISA tests.
We
are not
actively pursuing
commercialization
of our
ELISA tests
at this
time.
Gross Margin
All gross
margin and comparable
decreases were due
to sales
of our ELISA
tests. Gross
margin was zero
for the
year ended
December 31,
2022.
The gross
margin
for the
year ended
December 31, 2021
was negative,
however the
sales volume
was de
minimis. During
the
year ended December 31, 2021, we wrote off,
to cost of revenue, $1.9 million in expired ELISA tests that had no commercial value.
Research and Development Expenses
Research
and
development
expenses
were
$47.6
million
and
$71.4
million
for
the
years
ended
December 31,
and
2021,
respectively.
The $23.8 million
decrease was comprised
of a $38.3
million decrease in
allocated costs (i.e.,
costs that can be
directly attributed
to a
specific clinical program),
offset by a $14.6
million increase in unallocated
costs. The decrease in allocated
costs was primarily due
to
a decrease
of $47.7
million in
costs related
to our
UB-612 Covid
vaccine program,
including a
$1.8 million
expense in
2022 for
raw
materials
acquired
by
UBP,
a
related
party
contract
manufacturer.
See
Note
17,
“Commitments
and
Contingencies”,
for
more
information
about
this
expense.
The
decrease
in
allocated
costs
was
offset
by
increases
in
spend
of
$4.7
million
on
our
VXX-401
hypercholesterolemia program,
$2.1 million on
our UB-313 CGRP program,
and $0.5 million on
our UB-312 PD
program. The $14.6
million increase in unallocated costs was driven by increased salaries and personnel-related costs of $9.6 million, including stock-based
compensation expense of $1.8 million, a $3.2
million increase in rent, lab supplies, logistics
and travel costs, and a $1.8
million increase
in external professional services supporting research and development
activities across the pipeline.
General and Administrative Expenses
General
and
administrative
expenses
were
$28.4
million
and
$51.8
million
for
the
years
ended
December 31,
and
2021,
respectively.
The $23.5
million decrease
was primarily
due to
a decrease
of $23.6
million in
stock-based compensation
expense; we
recorded a $23.1 million expense in 2021 related to performance-based grants that vested upon the successful completion of our IPO in
November 2021.
There were also
decreases of
$0.7 million
in legal
spend, and
$1.0 million
in consulting
spend versus
the prior
year
when we were
preparing for our
initial public offering
,
and $0.8 million
in spending on
external recruiters. These
cost decreases were
partially offset by an increase in director and officer
insurance expense of $3.0 million in 2022 versus 2021.
Interest and Other Expense
Interest
and
other
expense
was
$0.5
million
and
$0.8
million
for
the
years
ended
December 31,
and
2021,
respectively.
The
decrease was due to the conversion of Convertible Notes for Series A preferred
stock in connection with the Reorganization.
Interest and Other Income
Interest
and
other
income
on
cash
and
short-term
investments
was
$1.3
million
and
less
than
$0.1
million
for
the
years
ended
December 31, 2022 and 2021, respectively.
Change in Fair Value
of Convertible Notes, SAFEs and Series A-1 Warrant
Liability
The
$2.7
million
change
in fair
value
of
the Convertible
Notes
recognized
during
the year
ended
December 31,
related
to the
revaluation of the Convertible Notes
upon conversion to equity.
The $8.6 million change in
fair value of SAFEs recognized
during the
year
ended December
31, 2021
related
to insight
into the
pricing of
Vaxxinity’s
next stock
issuance at
a higher
valuation.
The $0.2
million change in fair value of Series A-1 Warrants recognized during the year ended December 31, 2021 related to an increase in
value
of the Series A-1 preferred stock.
In connection with the Reorganization, all outstanding Convertible Notes,
SAFEs and Series A-1 Warrants
were exchanged into shares
of Series A preferred
stock, which were
subsequently exchanged
into shares of
Class A common
stock upon the
closing of the
IPO in
November 2021 as described in Note 9 to our consolidated financial statements
included elsewhere in this Report.
(Gain) Loss on Foreign Currency Translation, Net
The
net
gain
(loss)
of
foreign
currency
translation
reflects
de
minimis
fluctuations
in
the
foreign
exchange
rate
for
the
year
ended
December 31, 2022 compared to the year ended December 31, 2021.
Liquidity and Capital Resources
Sources of Liquidity
We have generated limited
revenue from sales of our ELISA tests and have not yet obtained regulatory approval for or commercialized
any
of
our
product
candidates,
which
are
in
various
phases
of
pre-clinical
and
clinical
development.
We
have
financed
operations
primarily through the issuance
of common stock, convertible
preferred stock, borrowings under
promissory notes (including Convertible
Notes) and the execution of SAFEs. Through December 31, 2022, we received gross proceeds of $306.4
million in connection with the
issuance of various financial instruments, including
the sale of preferred and
common stock, the issuance of
promissory notes (including
Convertible Notes), and the execution of SAFEs. In addition,
we also generated revenue from the sale of an
option to negotiate a license
with UNS (which
option has expired)
and the sales of
ELISA tests in 2020
and 2021. At December
31, 2022, we had
$33.5 million in
cash
and
cash
equivalents,
$53.4
million
of
short-term
investments,
and
a
$1.1
million
restricted
cash
balance,
compared
to
$145.1
million as of
December 31, 2021. The
decrease in cash
and cash equivalents
balances for the periods
reported are primarily
due to the
factors described under “Cash Flows” below.
Cash Flows
The following table provides information regarding our cash flows for the years
ended December 31, 2022 and 2021 (in thousands):
December 31,
Balance Sheet Data:
Cash and cash equivalents
$
33,475
$
144,885
Short-term investments, net
53,352
-
Restricted cash
1,095
Total assets
106,399
166,673
Total liabilities
44,222
38,054
Total stockholders' equity
$
62,177
$
128,619
Years
Ended December 31,
Statement of Cash Flow Data:
Net cash used in operating activities
$
(55,928)
$
(80,990)
Net cash used in investing activities
(54,392)
(1,318)
Net cash used in financing activities
(167)
196,167
Net increase (decrease) in cash, cash equivalents and restricted cash
$
(110,487)
$
113,859
Operating Activities
Net cash used in operating activities for the year ended December 31, 2022 was $55.9 million, primarily due to a $75.2 million net loss,
offset by a favorable $9.8 million change in operating assets and liabilities and total non-cash items of $9.5 million. The favorable
cash
flow impact from changes
in net operating assets and
liabilities was primarily due to
$9.0 million related to
accrued expense, accounts
payable and
other liabilities
and $3.3
million in
prepaid expenses
for UB-612
production, partially
offset by
$2.4 million
in amounts
due to related parties. The primary non-cash adjustments to
net loss included addbacks of $8.7 million of
stock-based compensation and
$1.7 million in depreciation,
offset by a reduction of $1.0 million for amortization of discounts on
short-term investments.
Net cash
used in
operating activities
for the
year ended
December 31, 2021
was $81.0
million, primarily
due to
a $137.2
million net
loss, offset
by a favorable
$12.9 million
change in
operating assets and
liabilities and
total non-cash
items of $43.3
million. The cash
flow impact from changes in net operating assets and liabilities were primarily due to $11.4 million in amounts due to related parties as
well as
$3.9 million
related to accrued
expense, accounts
payable and
other liabilities.
These increases
were offset
by $4.7
million in
prepaid expenses
for UB-612
production. The
primary non-cash
adjustments to
net loss
included an
$11.2
million change
in the
fair
market value of financial instruments as well as $30.4
million of stock-based compensation and $1.1 million in depreciation.
Investing Activities
Net cash used in
investing activities totaled $54.4
million for the year
ended December 31, 2022.
The cash used in
investing activities
consisted primarily of the net impact of the acquisition and redemption of short-term investments, and the acquisition
of laboratory and
computer equipment, and leasehold improvements.
Net cash
used in
investing activities
totaled $1.3
million for
the year
ended December 31,
2021. The
cash used
in investing
activities
consisted primarily of the acquisition of equipment.
Financing Activities
Net cash
used by
financing activities
was $0.2
million for
the year ended
December 31, 2022.
We
repaid $0.4
million in relation
to a
note payable and received $0.3 million from the exercise of stock options.
Net cash provided by financing activities totaled $196.2 million for the
year ended December 31, 2021. We raised capital to support our
operations
through
the
issuance of
Class A
common
stock in
the
IPO,
with net
proceeds of
$71.1
million,
the
issuance prior
to the
Reorganization of SAFEs and
Convertible Notes, with net
proceeds of $2.9
million and $2.0
million, respectively,
as well as
the issuance
of Series
B convertible
preferred stock,
with net
proceeds of
$122.8 million.
We
also repaid
$2.0 million
in relation
to a Convertible
Note, $0.1 million in relation to a note payable with
related party, $0.3 million in repayment for Paycheck Protection Program, and $0.4
million in relation to a note payable entered into for the acquisition of an airplane.
Funding Requirements
We
have generated
approximately $3.7
million in revenue
since inception
and have
incurred net
losses in each
reporting period
since
inception. We
do not expect to
generate any meaningful
revenue unless and
until we obtain regulatory
approval of and
commercialize
our product
candidates,
or enter
into collaboration
or licensing
deals with
one or more
third-party strategic
partners. We
do not
know
when, or if, this will occur. If we do not receive regulatory approval for any of our product candidates, or if we receive approval but our
commercialization results
fall short of
our expectations, we
will continue
to incur significant
losses for the
foreseeable future,
and we
expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates and begin to
commercialize any approved products.
As of the date of this Annual Report, we expect our existing cash and cash equivalents will be sufficient to fund our operating expenses
over the next 12 months. As of December 31, 2022, other than our 2025
Note and the 2022 Promissory Note, we have no material debt
obligations.
We have
based our projections of operating capital
requirements on assumptions that may
prove to be incorrect, and we may
use all of
our available capital resources sooner than we expect. Our future capital
requirements will depend on many factors, which include:
•
the scope, number, progress, initiation,
duration, cost, results and timing of pre-clinical programs and nonclinical
studies of
our current or future product candidates;
•
the outcomes and timing of regulatory reviews, approvals or othe
r
actions;
•
the timing and manner in which we manufacture our pre-clinical and clinical
drug material, the terms on which we can have
such manufacturing completed, and the extent to which we undertake commercialization
of any drug products, if approved;
•
the extent to which we establish sales, marketing, medical affairs
and distribution infrastructure to commercialize any product
candidates;
•
the timing and extent to which we expand our operational, financial and management
systems and infrastructure, and
facilities;
•
the timing and extent to which we increase our personnel to support operations,
including necessary increases in headcount to
conduct and expand our clinical trials, commercialize any approved products and support
our operations as a public
company;
•
the number of patent applications we must file and claims we must defend in order
to maintain, expand and protect our
intellectual property portfolio, and the costs of preparing, filing and prosecuting
patent applications, maintaining and
protecting
our intellectual property rights;
•
our ability to obtain marketing approval for our product candidates;
•
our ability to establish and maintain additional licensing, collaboration or
similar arrangements on favorable terms and
whether and to what extent we retain development or commercialization responsibilities
under any new licensing,
collaboration or similar arrangement;
•
the success of any other business, product or technology that we acquire or in
which we invest;
•
our ability to maintain, expand and defend the scope of our intellectual property
portfolio;
•
the current and potential impacts of the COVID-19 pandemic on our
business;
•
the costs of acquiring, licensing or investing in businesses, product candidates
and technologies;
•
market acceptance of our product candidates, to the extent any are approved for
commercial sale; and
•
the effect of competing technological and market developments.
Until such time, if ever, as we
can generate positive cash flows from operations,
we expect to finance our cash needs through public
or
private equity offerings, strategic collaborations and debt financing. To the extent that we raise additional capital through the sale
of our
Class A common
stock, convertible securities or
other equity securities,
shareholders’ ownership interest
will be diluted and
the terms
of these securities
could include liquidation
or other preferences
and anti-dilution protections.
In addition, debt
financing, if available,
may
result in
fixed
payment
obligations
and
may
involve agreements
that include
restrictive
covenants
that limit
our
ability to
take
specific actions, such as incurring additional debt, making capital expenditures, creating liens, redeeming shares or declaring dividends.
If we raise additional
funds through strategic collaborations
or marketing, distribution
or licensing arrangements
with third parties, we
may have to relinquish valuable rights to our technologies,
future revenue streams or product candidates or grant licenses on
terms that
may
not
be
favorable
to
us.
If
we
are
unable
to
raise
additional
funds
when
needed,
we
may
be
required
to
delay,
limit,
reduce
or
terminate our product
candidate development or
future commercialization efforts
or grant rights to
third parties to develop
and market
product candidates that we would otherwise prefer to develop and market
ourselves.
Contract Research and Manufacturing Organizations
We
recorded accrued
expenses of
$4.3 million
and $4.5
million in our
balance sheet
for expenditures
incurred by
CROs and
contract
manufacturers as of December 31, 2022 and 2021, respectively.
Tax
-Related Obligations
We have reserved $0.7 million of unrecognized
tax benefits against NOLs.
Additionally, as of December 31, 2022 and 2021,
we accrued
$0.2 million and $0.2 million, respectively,
in interest and penalties related to prior year tax filings.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and do not
currently have, any off-balance sheet arrangements, as defined in
the rules and
regulations of the SEC.
Critical Accounting Policies and Estimates
The preparation of financial statements
in accordance with GAAP requires
management to make estimates and
assumptions that affect
the amounts
reported in
our consolidated
financial statements
and accompanying
notes. Management
bases its estimates
on historical
experience, market and other conditions, and various other assumptions it believes to be reasonable. Although these estimates are based
on management’s best knowledge of current events and actions that may impact us in the future, the estimation process is, by its nature,
uncertain given that
estimates depend on
events over which
we may not
have control. In
addition, if our
assumptions change, we
may
need to revise
our estimates, or
take other corrective
actions, either of
which may also
have a
material effect on
our consolidated financial
statements. Significant estimates contained
within these consolidated financial
statements include, but are
not limited to, the estimated
fair
value
of
our
common
stock,
convertible
notes
payable
and
SAFEs,
stock-based
compensation,
warrant
liabilities,
income
tax
valuation
allowance and
the accruals
of research
and development
expenses. We
base our
estimates on
historical experience,
known
trends and other market-specific or other
relevant factors that we
believe to be reasonable under the
circumstances. On an ongoing basis,
management evaluates its estimates,
as there are changes in facts
and circumstances. If market
and other conditions change from
those
that we anticipate, our consolidated financial statements may be materially
affected.
While our
significant accounting
policies are
described in
more detail
in the
notes to
our consolidated
financial statements
appearing
elsewhere in this
Annual Report, we believe
that the following
critical accounting policies and
estimates have a
higher degree of inherent
uncertainty and require our most significant judgments.
Accrued Research and Development Expenses
As part of the process of preparing our consolidated financial statements,
we are required to estimate accrued research and development
expenses.
As we
advance
our
programs,
we
anticipate
more
complex
clinical
studies
resulting
in
greater
research
and development
expenses, which will
place even greater emphasis
on the accrual. This
process involves reviewing
open contracts and purchase
orders,
communicating with
our applicable
personnel to
identify services
that have
been performed
on our
behalf and
estimating the
level of
service performed
and the associated
cost incurred for
the service when
we have not
yet been invoiced
or otherwise notified
of actual
costs. In the past years, UBI and its affiliated companies performed and administered a significant amount of research and development
work on our
behalf.
Having UBI and
its affiliated
company act as
intermediaries added
to the complexity
of determining appropriate
accruals,
and
we have
largely moved
away from
this model.
Certain accruals
and
amounts owed
to the
UBI entities
are still
under
review, and these amounts may
change as a result of this review.
The
majority
of
our
service
providers
invoice
in
arrears
for
services
performed,
on
a
pre-determined
schedule
or
when
contractual
milestones are met; however, some require advance payments. We
make estimates of accrued expenses as of each balance sheet date in
the consolidated financial statements
based on facts and circumstances
known to us at that
time. We
periodically confirm the accuracy
of the estimates with
the service providers and
make adjustments if necessary. Examples of estimated
accrued research and development
expenses include fees paid to:
•
vendors, including research laboratories, in connection with pre-clinical
development activities;
•
CROs and investigative sites in connection with pre-clinical studies and
clinical trials; and
•
contract manufacturers in connection with drug substance and drug
product formulation of pre-clinical studies and clinical
trial materials.
We
base our
expenses related
to pre-clinical
studies and
clinical trials
on our
estimates of
the services
received and
efforts expended
pursuant to quotes and contracts with multiple
research institutions and CROs that supply, conduct and manage
pre-clinical studies and
clinical trials on our behalf.
The financial terms of these
agreements are subject to negotiation,
vary from contract to
contract and may
result
in
uneven
payment
flows.
There
may
be
instances
in
which
payments
made
to
our
vendors
will
exceed
the
level
of
services
provided and result
in a prepayment
of the expense.
Payments under some
of these contracts
depend on factors
such as the
successful
enrollment of patients
and the completion of
clinical trial milestones. In
accruing service fees, we
estimate the time period
over which
services will be performed
and the level of
effort to be
expended in each period.
If the actual timing
of the performance of
services or
the level
of effort
varies from
the estimate,
it adjusts
the accrual
or the
prepaid expense
accordingly.
Although we
do not
expect our
estimates to
be materially
different from
amounts actually
incurred, our
understanding of
the status
and timing
of services performed
relative to the actual status and timing of services performed may vary and may result in reporting amounts
that are too high or too low
in any particular period. To
date, our estimated accruals have not differed materially from actual costs incurred
.
Stock-Based Compensation
We measure all stock-based awards granted to employees, directors and non-employees based on their fair
value on the date of the
grant
and recognize the corresponding compensation expense of those awards over the requisite service period, which is
generally the vesting
period of the respective award.
Forfeitures are accounted for as
they occur.
We grant
stock options and restricted stock
awards that are
subject to service vesting conditions.
We
classify stock-based
compensation
expense in
our consolidated
statements of
operations in
the same
manner in
which the
award
recipient’s payroll costs are classified
or in which the award recipient’s
service payments are classified.
We estimate the fair value of each stock
option grant using the Black-Scholes
option-pricing model, which requires the use
of subjective
assumptions
that
could
materially
impact
the
estimation
of
fair
value
and
related
compensation
expense
to
be
recognized.
These
assumptions include (i) the expected volatility of our stock
price, (ii) the periods of time over
which recipients are expected to hold their
options prior to exercise (expected lives), (iii) expected dividend yield on our common stock, and (iv) risk-free interest rates, which
are
based
on
quoted
U.S.
Treasury
rates
for
securities
with
maturities
approximating
the
options’
expected
lives.
Developing
these
assumptions requires the use of judgment. Both prior to and after the IPO, we lacked company-specific historical and implied
volatility
information.
Therefore,
we
estimate
our
expected
stock
volatility
based
on
the
historical
volatility
of
a
publicly
traded
set
of
peer
companies. The expected term of the Company’s options has been determined
utilizing the “simplified” method for awards that qualify
as “plain-vanilla” options. The expected term of options granted to non-employees
is equal to the contractual term of the option award.
The expected dividend yield is
zero as we have
never paid dividends and do
not currently anticipate paying any
in the foreseeable future.
Determination of the Fair Value
of Common Stock
Before there was a public market for our common stock, the estimated fair value of common stock was determined by its most recently
available third-party valuations of
common stock. These third-party
valuations were performed in
accordance with the
guidance outlined
in
the
American
Institute
of Certified
Public
Accountants’
Accounting
and
Valuation
Guide,
Valuation
of Privately
-Held-Company
Equity Securities Issued as Compensation. Our common stock valuations
were prepared using an option pricing method (“OPM”). The
OPM treats common stock and preferred stock as call options on
the total equity value of a company,
with exercise prices based on the
value thresholds at which the allocation among the various holders
of a company’s securities changes. Under
this method, the common
stock
has
value
only
if
the
funds
available
for
distribution
to
stockholders
exceeded
the
value
of
the
preferred
stock
liquidation
preferences at the
time of the
liquidity event,
such as a
strategic sale or
a merger.
A discount for
lack of marketability
of the common
stock is then applied to arrive at an indication of value for the common stock.
In addition to considering the
results of these third-party
valuations, our board of directors
considered various objective and
subjective
factors to determine the fair value of our common stock as of each grant date, including:
•
the prices at which we sold shares of preferred stock and the superior rights and preferences
of the preferred stock relative to
our common stock at the time of each grant;
•
the progress of our research and development programs, including the status and
results of pre-clinical studies and clinical
trials for our product candidates;
•
our stage of development and commercialization and our business strategy;
•
external market conditions affecting the biopharmaceutical
industry and trends within the biopharmaceutical industry;
•
our financial position, including cash on hand, and our historical and forecasted
performance and results of operations;
•
the lack of an active public market for our common stock and our preferred
stock;
•
the likelihood of achieving a liquidity event, such as an initial public offering
or our sale in light of prevailing market
conditions; and
•
the analysis of initial public offerings and the market performance
of similar companies in the biopharmaceutical industry.
The assumptions
underlying these
valuations represented
management’s
best estimate,
which involved
inherent uncertainties
and the
application of management’s judgment. As a result, if we had used significantly different assumptions or estimates, the fair value of our
common stock and our stock-based compensation expense could
have been materially different.
Once a public trading
market for our common
stock has been established
for a sufficient
period of time, it
will no longer be
necessary
to estimate the fair
value of our
common stock in
connection with our
accounting for granted
stock options and
other such awards
we
may grant, as the fair value of our common stock will be determined based on
the quoted market price of our common stock.
Awards Granted
The following table sets forth information on stock options awarded to employees
and board members since January 1, 2019:
Grant Date
Number of
shares subject
to award
Per share
exercise price
of options
Per share fair value
of common stock on
grant date
Per share estimated
fair value of award
on grant date
December 30, 2019
1,139,717
$0.57
$0.64
$0.40
August 22, 2020
1,984,553
$1.21
$1.65
$0.75
August 24, 2020
521,406
$1.21
$1.65
$0.75
September 2, 2020
160,161
$0.57
$1.43
$1.18
January 26, 2021
9,043,916
$4.12
$4.12
$2.26
February 11, 2021
1,404,291
$4.01
$4.01
$2.53
June 16, 2021
690,266
$4.81
$4.81
$3.59
July 16, 2021
282,776
$4.81
$4.81
$3.63
July 28, 2021
562,605
$10.07
$10.07
$7.47
November 11, 2021
1,499,085
$13.00
$13.00
$9.77
January 3, 2022
183,238
$5.96
$5.96
$4.47
March 1, 2022
25,662
$4.99
$4.99
$3.73
March 31, 2022
94,186
$4.30
$4.30
$3.22
April 1, 2022
32,900
$4.30
$4.30
$3.24
May 1, 2022
14,600
$6.95
$6.95
$5.26
June 1, 2022
27,700
$4.22
$4.22
$3.21
June 21, 2022
645,935
$2.09
$2.09
$1.54
July 1, 2022
2,300
$1.57
$1.57
$1.36
August 1, 2022
3,900
$1.92
$1.92
$1.46
August 8, 2022
20,000
$2.27
$2.27
$1.73
September 1, 2022
54,500
$2.48
$2.48
$1.90
October 3, 2022
254,600
$2.04
$2.04
$1.57
November 1, 2022
12,300
$1.40
$1.40
$1.10
December 1, 2022
15,400
$2.38
$2.38
$1.90
Simple Agreement for Future
Equity
During the year ended December 31, 2021, we entered into SAFEs. The SAFEs
were not mandatorily redeemable, nor did they require
us
to
repurchase
a
fixed
number
of
shares.
We
determined
that
the
SAFEs
contained
a
liquidity
event
provision
that
embodied
an
obligation indexed to the fair value of the equity shares and
could require us to settle the SAFE obligation by transferring assets
or cash.
Our SAFEs represented
a recurring measurement that
is classified within Level
3, discussed and defined
in Note 2 to our
consolidated
financial
statements
included
elsewhere
in
this
Report,
of
the
fair
value
hierarchy
wherein
fair
value
is
estimated
using
significant
unobservable inputs, including
an estimate of the
number of months to
a liquidity event, volatility
rates and the estimation
of the most
likely conversion feature for converting the SAFE.
The fair value of the SAFEs
on the date of issuance was
determined to equal the proceeds we
received. The value of the SAFEs
on the
date of conversion
into Series A
preferred stock
was determined to
be equal to
the fair value
of the Series
A preferred
stock issued in
connection with the Reorganization.
Convertible Notes
Beginning in 2018, we issued Convertible Notes that
bore simple interest at annual rates
ranging from 4.8% to 6%. All
unpaid principal,
together with
the accrued
interest thereon,
for the
Convertible Notes
were payable
upon the
event of
default or
upon maturity,
which
ranged from one to three years. The Convertible Notes contained a number of
provisions addressing automatic and optional conversion,
events
of
default
and
prepayment
provisions.
We
determined
that
a
portion
of
the
Convertible
Notes
contained
a
liquidity
event
provision, requiring them
to be measured and
accounted for at fair
value at each
reporting date. We
determined the Convertible
Notes
requiring a measurement to fair value represented
a recurring measurement that was classified within Level 3, disclosed
and defined in
Note 4 to our consolidated financial statements included elsewhere in this Annual Report, of the fair value hierarchy
wherein fair value
is estimated using significant unobservable inputs.
Coalition for Epidemic Preparedness
(“CEPI”) Grant
In April 2022, we entered into an agreement with the Coalition for Epidemic
Preparedness Innovations (“CEPI”) whereby CEPI
agreed to provide funding of up to $9.3 million to co-fund a Phase 3 clinical trial of
our UB-612 COVID-19 vaccine candidate as a
heterologous - or ‘mix-and-match’ - booster dose. The Phase 3 trial, which began
in early 2022, is evaluating the ability of UB-612 to
boost COVID-19 immunity against the original strain and multiple variants
of concern including Omicron - in people aged 16 years or
older, who have been previously immunized
with an authorized COVID-19 vaccine.
We will also be performing
further manufacturing scale-up work to enable readiness for potential commercialization.
Under the terms
of the agreement with CEPI, if successful, a portion of the released doses of the commercial
product will be delivered to the COVID-
19 Vaccines
Global Access (“COVAX”)
consortium for distribution to developing countries at low cost.
Cash payments received in advance under the CEPI Funding Agreement are restricted as to their use until expenditures contemplated in
the funding agreement are incurred. As funds are received they are included within restricted cash offset
by a corresponding short-term
accrued liability.
We
recognize payments
from CEPI
as a
reduction of
research and
development expenses,
in the
same period
as the
expenses that the grant is intended to reimburse are incurred.
Taiwan
Centers for Disease Control Grant
UBIA, which is responsible for applying for
and managing grants on our behalf, was
awarded a grant by the Taiwan Centers for Disease
Control (“TCDC”) for COVID-19
vaccine development. The
grant provides that costs
incurred to complete the
two phases of
the clinical
trial will be reimbursed
based on the achievement
of certain milestones as
defined in the agreement.
We
are entitled to reimbursement
under the TCDC
grant. At each
reporting date,
we assess the
status of all
of the activities
involved in
completing the
clinical study
in
relation
to
the
milestones.
We
account
for
the
amounts
that
have
been
received
from
the TCDC
to
reimburse
costs
incurred
on
the
clinical study
and not
expected to
be refunded
back to
the TCDC
as contra
research and
development expenses
in the
accompanying
consolidated statements of operations.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.
We
are exposed
to market
risk in
the ordinary
course of
our business.
These risks
primarily relate
to foreign
currency,
inflation and
changes in interest rates.
Inflation Risk
Inflation generally
may affect
us by increasing
our cost of
labor, clinical
trial costs, and
other outsourced
activities. To
date, inflation
has not had a material impact on our business, but if
the global inflationary trends continue, we expect appreciable
increases in clinical
trial,
selling,
labor,
and
other
operating
costs.
If
our
costs
were
to
become
subject
to
significant
inflationary
pressures,
this
would
adversely affect our business, financial condition
and results of operations.
Foreign Currency Exchange
Risk
We
have
limited
exposure
to
foreign
currency
exchange
risk
as
most
of
our
operating
activities
are
primarily
denominated
in
U.S.
dollars. We believe actual foreign
exchange gains and
losses did not
have a significant
impact on our
results of operations
for any periods
presented herein. The results of the analysis based on our financial position as of December 31, 2022, indicated that a hypothetical 10%
increase or decrease in applicable foreign currency exchange rates would not
have a material effect on our financial results.
Interest Rate Risk
We
are exposed to
market risk related
to changes in
interest rates. As
of December 31,
2022 and 2021,
our cash equivalents
consisted
of
interest-bearing
checking
accounts
and
money
market
accounts.
We
issued
Convertible
Notes,
which
Convertible
Notes
were
exchanged for Series A preferred stock in connection with the Reorganization. The Convertible Notes bore simple interest at the annual
rates ranging from
4.8% to 6%, with
redemption terms payable
at the earlier
of one year,
or upon the
event of default. In
addition, the
Convertible Notes contained provisions addressing automatic and optional
conversion. Given the redemption of the Convertible Notes,
and the short-term nature and fixed interest rate, we believe there
is no material exposure to interest rate risk. The
2025 Note we entered
into for the year ended December
31, 2020 bears a fixed annual
interest rate of 3.4% and matures
in June 2025. Additionally,
the 2022
Promissory Note we
entered into for the
year ended December 31,
2022 bears a
fixed annual interest
rate of 7.0%
and matures in
October
2026. Given that
the 2025 Note
and the 2022
Promissory Note bear
fixed rates of
interest, we believe
there is no
material exposure to
interest rate risk. The results
of the analysis based on our
financial position as of December 31,
2022, indicated that a hypothetical
basis point increase or decrease in risk-free rates would not have a material
effect on our financial results.
Our measurement of
interest rate risk involves
assumptions that are
inherently uncertain and,
as a result, cannot
precisely estimate the
impact of
changes in interest
rates on net
interest revenues.
Actual results may
differ from
simulated results due
to balance
growth or
decline and
the timing,
magnitude, and
frequency of
interest rate
changes, as
well as
changes in
market conditions
and management
strategies, including changes in asset and liability mix.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
VAXXINITY,
INC.
Audited Consolidated Financial Statements as of and for the years ended
December 31, 2022 and 2021
Report of Independent Registered Public Accounting Firm
(PCAOB ID:
)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Vaxxinity,
Inc. Merritt Island, Florida
Opinion on the Consolidated Financial Statements
We have audited
the accompanying consolidated balance sheets of Vaxxinity,
Inc. and Subsidiaries (collectively the “Company”) as of
December 31, 2022
and 2021,
the related
consolidated statements
of operations,
convertible preferred
stock and
stockholders’ equity
(deficit), and cash flows
,
for each of the
two years in the
period ended December 31,
2022, and the related
notes (collectively referred
to as the “financial statements”).
In our opinion, the consolidated financial
statements present fairly,
in all material respects, the financial position
of the Company as of
December 31,
2022 and
2021, and
the results
of
their operations
and
their cash
flows for
each of
the two
years in
the period
ended
December 31, 2022, in conformity with U.S. generally accepted accounting
principles.
Basis for Opinion
The Company’s
management is responsible
for these consolidated
financial statements. Our
responsibility is to
express an opinion
on
the Company’s
consolidated
financial statements.
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 audits in accordance with the
standards of the PCAOB. Those standards require
that we plan and perform the audits
to obtain
reasonable assurance
about whether
the consolidated
financial statements
are free
of material
misstatement, whether
due to
error or
fraud. The
Company is
not required
to have,
nor were
we engaged
to perform,
an audit
of its
internal control
over financial
reporting. As part
of our
audits, we are
required to
obtain an
understanding of
internal control
over financial
reporting 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.
Our audits
of the consolidated
financial statements
included performing procedures
to assess the
risks of material
misstatement of
the
consolidated 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 regarding
the amounts and disclosures in the consolidated financial statements.
Our audit
also included evaluating the accounting principles
used and significant estimates made
by management, as well as
evaluating the overall
presentation
of
the
consolidated
financial
statements.
Our
audit
also
included
performing
such
other
procedures
as
we
considered
necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinion.
We have served
as the Company’s auditor since 2018.
/s/
Armanino LLP
San Ramon, California
March 27, 2023
VAXXINITY,
INC.
CONSOLIDATED
BALANCE SHEETS
(in thousands, except share and per share amounts)
December 31,
Assets
Current assets:
Cash and cash equivalents
$
33,475
$
144,885
Short-term investments
53,352
-
Restricted cash
1,095
Amounts due from related parties
Prepaid expenses and other current assets
5,551
8,851
Total current assets
93,887
154,301
Property and equipment, net
12,512
12,372
Total assets
$
106,399
$
166,673
Liabilities
and stockholders’ equity
Current liabilities:
Accounts payable
$
5,295
3,192
Amounts due to related parties
12,772
19,407
Accrued expenses and other current liabilities
11,370
4,519
Notes payable
Notes payable to related party
1,113
-
Total current liabilities
30,941
27,494
Other liabilities:
Notes payable, net of current portion
9,933
10,323
Notes payable to related party, net of current portion
3,112
-
Other long-term liabilities
Total liabilities
44,222
38,054
Commitments and contingencies (Note 17)
(nil)
(nil)
Preferred stock: $
0.0001
par value,
50,000,000
shares authorized at December 31, 2022 and 2021
-
-
Stockholders’ equity:
Class A common stock, $
0.0001
par value;
1,000,000,000
shares authorized,
112,182,750
and
111,518,094
shares issued and
outstanding at December 31, 2022 and 2021, respectively
Class B common stock, $
0.0001
par value;
100,000,000
shares authorized,
13,874,132
and
13,874,132
shares issued and
outstanding at December 31, 2022 and 2021, respectively
-
-
Additional paid-in capital
366,799
357,822
Accumulated other comprehensive income (loss)
(197)
-
Accumulated deficit
(304,703)
(229,481)
Total stockholders’ equity
62,177
128,619
Total liabilities and stockholders’ equity
$
106,399
$
166,673
The accompanying notes are an integral part
of the consolidated financial statements.
VAXXINITY,
INC.
CONSOLIDATED STATEMENTS
OF OPERATIONS
(in thousands, except share and per share amounts)
Years
Ended December 31,
Revenue
$
-
$
Cost of revenue
-
1,937
Gross (loss) profit
-
(1,871)
Operating expenses:
Research and development
47,627
71,379
General and administrative
28,352
51,825
Total operating expenses
75,979
123,204
Loss from operations
(75,979)
(125,075)
Other (income) expense:
Interest and other expense
Interest and other income
(1,259)
(9)
Change in fair value of convertible notes
-
2,667
Change in fair value of simple agreement for future equity
-
8,365
Change in fair value of warrant liability
-
(Gain) loss on foreign currency translation, net
(12)
Other (income) expense
(757)
12,100
Loss before income taxes
(75,222)
(137,175)
Provision for income taxes
-
-
Net loss
$
(75,222)
$
(137,175)
Net loss per share, basic and diluted
$
(0.60)
$
(1.79)
Weighted average
common shares outstanding, basic and diluted
125,939,050
76,586,842
Other comprehensive loss:
Unrealized loss (gain) on investments
-
Other comprehensive loss
$
$
-
The accompanying notes are an integral part
of the consolidated financial statements.
VAXXINITY,
INC.
CONSOLIDATED STATEMENTS
OF CONVERTIBLE PREFERRED STOCK
(in thousands, except share amounts)
Convertible Preferred Stock
Series Seed
Series Seed-1
Series Seed-2
Series A-1
Series A-2
Series A
Series B
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Total
Balance at December 31, 2020
7,831,528
$
10,383
22,876,457
$
20,903
14,615,399
$
11,315
1,871,511
$
4,640
6,307,690
$
15,234
-
$
-
-
$
-
$
62,475
Exchange of Series Seed, Series Seed-1, Series Seed-2, Series
A-1 and Series A-2 for Series A
(7,831,528)
(10,383)
(22,876,457)
(20,903)
(14,615,399)
(11,315)
(1,871,511)
(4,640)
(6,307,690)
(15,234)
53,502,585
62,475
-
-
-
Conversion of convertible notes to Series A preferred stock,
net of debt issuance costs
-
-
-
-
-
-
-
-
-
-
3,624,114
27,545
-
-
27,545
Conversion of notes payable with related parties to Series A
convertible preferred
-
-
-
-
-
-
-
-
-
-
423,230
2,205
-
-
2,205
Conversion of Simple Agreement for Future Equity to Series A
convertible preferred
-
-
-
-
-
-
-
-
-
-
4,539,060
35,600
-
-
35,600
Conversion of warrant liability
to Series A convertible
preferred
-
-
-
-
-
-
-
-
-
-
134,106
-
-
Issuance of Series B convertible preferred stock, net of
issuance costs of $
-
-
-
-
-
-
-
-
-
-
-
-
15,365,574
122,791
122,791
Conversion of Series A and Series B to Class A common stock
concurrently with initial public offering
-
-
-
-
-
-
-
-
-
-
(62,223,095)
(128,439)
(15,365,574)
(122,791)
(251,230)
Balance at December 31, 2021
-
$
-
-
$
-
-
$
-
-
$
-
-
$
-
-
$
-
-
$
-
$
-
The accompanying notes are an integral part
of the consolidated financial statements.
VA
XXINITY,
INC.
CONSOLIDATED STATEMENTS
OF STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share amounts)
Stockholders’ Deficit
Common Stock
Common Stock-Class A
Common Stock-Class B
Treasury Stock
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Additional Paid-
in Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Stockholders’
Equity (Deficit)
Balance at December 31, 2020
-
$
-
60,360,523
$
10,999,149
$
-
(3,169,093)
$
(23)
$
4,682
$
-
$
(92,306)
$
(87,375)
Issuance of common stock upon exercise of stock options
-
-
186,202
-
-
-
-
-
-
-
Vesting of restricted stock
-
-
15,405
-
-
-
-
-
-
-
-
-
Reclassification of Class A common stock to Class B common stock
-
-
(2,874,983)
-
2,874,983
-
-
-
-
-
-
-
Issuance of common stock upon stock grant
-
-
485,836
-
-
-
-
-
-
-
Retirement of treasury stock upon reorganization
-
-
(3,169,093)
-
-
-
3,169,093
(23)
-
-
-
Proceeds from initial public offering, net of offering expenses of $
-
-
6,537,711
-
-
-
-
71,076
-
-
71,077
Exercise of warrants concurrently with initial public offering
-
-
112,373
-
-
-
-
-
-
-
Conversion of Series A and Series B to Class A common stock concurrently with
initial public offering
-
-
49,864,120
-
-
-
-
251,225
-
-
251,230
Stock-based compensation expense
-
-
-
-
-
-
-
-
30,412
-
-
30,412
Net loss
-
-
-
-
-
-
-
-
-
-
(137,175)
(137,175)
Balance at December 31, 2021
-
$
-
111,518,094
$
13,874,132
$
-
-
$
-
$
357,822
$
-
$
(229,481)
$
128,619
Issuance of common stock upon exercise of stock options
-
-
664,656
-
-
-
-
-
-
-
Stock-based compensation expense
-
-
-
-
-
-
-
-
8,714
-
-
8,714
Unrealized loss on investments
-
-
-
-
-
-
-
-
-
(197)
-
(197)
Net loss
-
-
-
-
-
-
-
-
-
-
(75,222)
(75,222)
Balance at December 31, 2022
-
$
-
112,182,750
$
13,874,132
$
-
-
$
-
$
366,799
$
(197)
$
(304,703)
$
62,177
The accompanying notes are an integral part
of the consolidated financial statements.
VAXXINITY,
INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands)
Years Ended December 31,
Cash flows from operating activities:
Net loss
$
(75,222)
$
(137,175)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation expense
1,684
1,102
Amortization of debt issuance costs
Amortization of discount on short-term investments
(1,022)
-
Stock-based compensation expense
8,714
30,412
Non-cash consulting expense
-
Non-cash loss on disposal
Change in fair value of convertible notes
-
2,667
Change in fair value of warrant liability
-
Change in fair value of simple agreement for future equity
-
8,365
Change in operating assets and liabilities:
Accounts receivable
-
Amounts due from related parties
(21)
(31)
Prepaid expenses and other current assets
3,300
(4,704)
Deferred offering costs
-
2,254
Accounts payable
2,103
2,174
Amounts due to related parties
(2,410)
11,402
Accrued expenses and other current liabilities
6,851
1,775
Other long-term liabilities
(1)
(12)
Net cash used in operating activities
(55,928)
(80,990)
Cash flows from investing activities:
Purchase of short-term investments
(107,526)
-
Redemption of short-term investments
55,000
-
Purchase of property and equipment
(1,866)
(1,318)
Net cash used in investing activities
(54,392)
(1,318)
Cash flows from financing activities:
Proceeds from initial public offering, net of offering expenses of $
13,913
-
71,077
Proceeds from issuance of convertible note payable
-
2,000
Repayment of convertible notes payable
-
(2,000)
Repayment of notes payable
(430)
(414)
Repayment of note payable with related party
-
(100)
Proceeds from issuance of Series B convertible preferred stock,
net of issuance costs
-
122,791
Proceeds from issuance of simple agreement for future equity
-
2,900
Repayment of Paycheck Protection Program
-
(257)
Proceeds from exercise of stock options
Net cash (used in) provided by financing activities
$
(167)
$
196,167
Change in cash, cash equivalents and restricted cash
(110,487)
113,859
Cash, cash equivalents and restricted cash at beginning of period
145,057
31,198
Cash, cash equivalents and restricted cash at end of period
34,570
145,057
Supplemental Disclosure
Cash paid for interest
$
$
Noncash Financing Activities
Conversion of amounts due to related party into note payable
$
4,225
$
-
Conversion of Series A and Series B to Class A common
stock concurrently with initial public offering
$
-
$
251,230
Exchange of Series Seed, Series Seed-1, Series Seed-2, Series
A-1 and Series A-2 for Series A
$
-
$
62,475
Conversion of simple agreement for future equity into Series A
preferred stock
$
-
$
35,600
Conversion of convertible notes into Series A preferred stock
$
-
$
27,545
Conversion of notes payable with related party to Series A
convertible preferred
$
-
$
2,205
Conversion of warrant liability into Series A preferred stock
$
-
$
Cashless exercise of warrant into Class A common stock
concurrently with initial public offering
$
-
$
Retirement of treasury stock upon reorganization
$
-
$
The accompanying notes are an integral part
of the consolidated financial statements.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. Nature of the Business
Vaxxinity,
Inc.,
a
Delaware
corporation
(“Vaxxinity
,”
and
together
with
its
subsidiaries,
the
“Company”),
was
formed
through
the
combination of
two separate businesses
that originated
from United Biomedical,
Inc. (“UBI”)
in two separate
transactions: a
spin-out
from UBI in
2014 of
operations focused on
developing chronic disease
product candidates that
resulted in United
Neuroscience (“UNS”),
and a second spin-out
from UBI in 2020 of
operations focused on the
development of a COVID-19
vaccine that resulted in
C19 Corp.
(“COVAXX”).
On February 2, 2021,
Vaxxinity
was incorporated for the
purpose of reorganizing
and combining UNS and
COVAXX
and on March 2, 2021, did so by
acquiring all of the outstanding equity interests
of UNS and COVAXX
pursuant to a contribution and
exchange
agreement
(the
“Contribution
and
Exchange
Agreement”)
whereby
the
existing
equity
holders
of
UNS
and
COVAXX
contributed their equity interests in each of UNS and COVAXX
in exchange for equity in Vaxxinity
(the “Reorganization”).
The Company is a
biotechnology company currently focused on
developing product candidates for human
use in the fields
of neurology,
pain, cardiovascular diseases
and coronaviruses utilizing
its “Vaxxine Platform”-a synthetic peptide
vaccine technology first
developed
by
UBI
and
subsequently
refined
over
the
last
two
decades.
The
Company
is
engaged
in
the
development
of
rationally
designed
prophylactic and therapeutic vaccines to combat common chronic diseases with large global unmet
medical need. The Company is also
developing a heterologous booster
vaccine for SARS-Cov-2.
UBI is a
significant shareholder of the
Company and, therefore,
considered
a related party.
The Company
is subject
to risks and
uncertainties common
to early-stage
companies in
the biotechnology
industry including,
but not
limited
to,
uncertainty
of
product
development
and
commercialization,
lack
of
marketing
and
sales
history,
development
by
its
competitors of new
technological innovations, dependence on
key personnel, market
acceptance of products,
product liability, protection
of proprietary technology,
ability to raise additional
financing, and compliance
with government regulations. If
the Company does not
successfully commercialize any of its
product candidates, it will
be unable to generate
recurring product revenue or
achieve profitability.
The
Company’s
product
candidates
are
in
development
and
will
require
significant
additional
research
and
development
efforts,
including extensive pre-clinical and clinical testing and
regulatory approval prior to commercialization. These efforts require significant
amounts of
additional capital, adequate
personnel and infrastructure
and extensive compliance
-reporting capabilities.
There can be
no
assurance that
the Company’s
research and
development will
be successfully
completed, that
adequate protection
for the
Company’s
intellectual property
will be
obtained, that
any products
developed will
obtain necessary
government regulatory
approval or
that any
approved products will be commercially viable.
Even if the Company’s product development efforts are
successful, it is uncertain when,
if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in
technology and is dependent upon the services of its employees and consultants.
Contribution and Exchange Agreement
On March
2, 2021,
in accordance
with the
Contribution and
Exchange Agreement,
(i) all
outstanding shares
of UNS
and COVAXX
preferred stock and
common stock were
contributed to Vaxxinity and exchanged for
like shares
of stock in
Vaxxinity,
(ii) the outstanding
options to
purchase shares
of UNS and
COVAXX
common stock
were terminated
and substituted
with options
to purchase
shares of
common stock in Vaxxinity,
(iii) the outstanding warrant to purchase shares of COVAXX
common stock was cancelled and exchanged
for a warrant to acquire common stock in Vaxxinity
and (iv) each outstanding Reorganization Convertible Note (as defined below) was
contributed to Vaxxinity
and the holders of such notes received Series A preferred stock in Vaxxini
ty. In particular:
•
Each UNS common share and convertible preferred share was exchanged
for
0.2191
shares of Vaxxinity
common stock or
Series A preferred stock, as applicable;
•
Each share of COVAXX
common and convertible preferred stock was exchanged for
3.4233
shares of Vaxxinity
common
stock or Series A preferred stock, as applicable (and prior to the closing of the Reorganization,
all the holders of outstanding
COVAXX
SAFEs agreed to convert such SAFEs into shares of Series A-3 preferred
stock of COVAXX,
which shares were
then exchanged for shares of Vaxxinity’s
Series A preferred stock);
•
The Reorganization Convertible Notes were exchanged
for an aggregate of
4,047,344
shares of Vaxxinity’s
Series A
preferred stock; and
•
Each outstanding option of both UNS and COVAXX
to purchase common shares of UNS or COVAXX
was terminated and
substituted with an option to purchase shares of Class A common stock of
Vaxxinity.
Each outstanding UNS option was
exchanged based on a conversion ratio of
0.2191
. Each outstanding COVAXX
option was exchanged based on a conversion
ratio of
3.4233
.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
All parties
to the
Contribution
and
Exchange
Agreement
intend that
the contribution
of outstanding
equity interests
to Vaxxinity
in
exchange
for Vaxxinity’s
common stock
and preferred
stock will
be treated
as an
integrated transaction
for U.S.
federal income
tax
purposes that is governed by Section 351(a) of the Internal Revenue Code of
1986, as amended.
The Reorganization
was determined
to be a
common control
transaction, so
the carrying
values of all
contributed assets
and assumed
liabilities
remained
unchanged
and
the
financial
information
for
all
periods
in
the
financial
statements
presented
prior
to
the
Reorganization are presented on a consolidated basis.
Reverse Stock Split
On October 29,
2021, the
Company effectuated
a reverse stock
split of 1-for-
1.556
(the “Stock Split”)
of the Company’s
Class A and
Class B common
stock pursuant to
an amendment to
the Company’s
Amended and Restated
Certificate of Incorporation
approved by
the Company’s
board of directors
and stockholders.
As a result
of the Stock
Split, the Company
also adjusted the
share and per
share
amounts
associated
with
its
options
and
warrants
to
purchase
shares
of
its
common
stock.
These
consolidated
financial
statements
including the notes have been retroactively adjusted to reflect the Stock Split for all periods presented. Any fractional shares that would
have resulted from the Stock Split have been rounded down to the
nearest whole share.
Initial Public Offering
On November 15, 2021, the Company closed its IPO of
6,000,000
shares of Class A common stock at a public offering price of $
13.00
per share. On
November 18, 2021
the Company held
a subsequent closing for
the issuance of an
additional
537,711
shares of Class A
common stock pursuant
to a
30-day option granted
to the
underwriters to purchase
up to an
additional
900,000
shares of Class
A common
stock at
the IPO
price, less
underwriting
discounts and
commissions. The
aggregate net
proceeds to
the Company
from the
offering,
after deducting underwriting discounts
and commissions and
other offering expenses payable
by the Company, was approximately
$
71.1
million. Upon the closing
of the IPO, all previously
outstanding shares of the Company’s
redeemable convertible preferred
stock were
automatically converted at the same ratio used for the Stock Split (1-for-
1.556
) into shares of its Class A common stock.
Liquidity
As of
December 31, 2022,
the Company
had $
87.9
million of
highly liquid
assets to fund
operations, including
$
33.5
million of
cash
and
cash
equivalents,
$
53.4
million
of
short-term
investments,
and
a
$
1.1
million
restricted
cash
balance
of
which
$
1.0
million
is
restricted for the reimbursement of
certain research and development expenses
related to our UB-612 COVID-19
vaccine program. To
date, the Company has primarily financed its operations through the
sale of convertible preferred stock and common stock, borrowings
under promissory
notes (including
Convertible Notes),
a portion of
which has been
raised from
related party entities,
and grants
from
foundations
such
as
the
Coalition
of
Epidemic
Preparedness
Innovations
(CEPI)
and
the
Michael
J.
Fox
Foundation
(MJFF).
The
Company has experienced
significant negative cash flows
from operations since inception,
and incurred a net
loss of $
75.2
million for
the year ended
December 31, 2022. Net
cash used in
operating activities
for the year
ended December 31, 2022
was $
55.9
million. In
addition, as of
December 31, 2022, the
Company has an
accumulated deficit of
$
304.7
million. The Company
expects to incur
substantial
operating
losses
and
negative
cash
flows
from
operations
for
the
foreseeable
future.
As
of
the
date
these
financial
statements
were
available to
be issued,
the Company
expects its existing
cash and
cash equivalents
to be
sufficient to
fund its
operating expenses
and
capital expenditure requirements for at least the next 12 months.
Unless and
until the
Company is
able to
obtain regulatory
approval for,
and generate
significant revenues
from commercialization
of
our product candidates, the
Company will need to seek
additional capital in order
to continue to fund future
research and development
activities.
This
may
occur
through
strategic
alliances,
licensing
arrangements,
grants
and/or
future
public
or
private
debt
or
equity
financings. Additional funding may not be available on
terms the Company finds acceptable or at
all. If the Company is unable
to obtain
sufficient
capital to
continue
to advance
its programs,
the Company
would be
forced to
delay,
limit, reduce
or terminate
its product
development
or
future
commercialization
efforts
or
grant
rights
to
third
parties
to
develop
and
market
product
candidates
that
the
Company would otherwise prefer to develop and market itself.
The accompanying consolidated
financial statements have been
prepared on a going
concern basis, which contemplates
the realization
of
assets
and
satisfaction
of
liabilities
in
the
ordinary
course
of
business.
The
consolidated
financial
statements
do
not
include
any
adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and
classification of liabilities that
might result from the outcome of the uncertainties described above.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Impact of COVID-19 Pandemic
In March 2020, the World Health Organization declared
the outbreak of a COVID-19 pandemic. The COVID-19 pandemic is evolving,
and to date, has led to
the implementation of various responses, including government-imposed quarantines, travel
restrictions and other
public health safety measures.
While the
pandemic
has significantly
subsided since
2020, the
Company
continues to
monitor how
COVID-19 outbreaks
associated
with new variants impact all aspects of its business, including our operations and the operations of its customers, suppliers, vendors and
business partners.
The extent
to which
COVID-19 impacts
the Company’s
business, results
of operation
and financial
condition will
depend on future
developments, which are
highly uncertain and
cannot be
predicted with confidence,
such as
the duration
of the outbreak,
new information
that may emerge
concerning the
severity of COVID-19
or the effectiveness
of actions to
contain COVID-19
or treat
its impact,
among others.
If the
Company or
any of
the third
parties with
whom the
Company engages,
however,
were to
experience
shutdowns or other
business disruptions, its
ability to conduct
its business in
the manner and
on the timelines
presently planned
could
be materially
and negatively
affected,
which could
have a
material adverse
impact on
its business,
results of
operation and
financial
condition.
The Company
has not
incurred impairment
losses in
the carrying
values of
its assets
as a
result of
the COVID-19
pandemic and
the
Company
is
not
aware
of
any
specific
related
event
or
circumstance
that
would
require
it
to
revise
estimates
reflected
in
these
consolidated financial statements.
2. Summary of Significant Accounting Policies
Basis of presentation
The accompanying consolidated
financial statements have
been prepared using
generally accepted accounting
principles in the United
States of America (GAAP) and pursuant to the
rules and regulations of the United States
Securities and Exchange Commission (“SEC”)
for financial reporting. The consolidated financial statements for the periods presented include the accounts of UNS and COVAXX that
were parties to the Contribution and Exchange Agreement. All share and per share amounts, as originally recorded by each entity,
have
been converted to
a number
of shares
and per share
amounts using
the conversion ratios
determined under the
Contribution and Exchange
Agreement and the Stock Split ratio.
Foreign currency translation
The
Company’s
consolidated
financial
statements
are
prepared
in
U.S.
dollars.
Its
foreign
subsidiaries
use
the
U.S.
dollar
as
their
functional
currency and
maintain their
records in
the local
currency.
Nonmonetary
assets and
liabilities are
re-measured at
historical
rates and monetary assets and liabilities are re-measured at exchange rates in effect at the end of the reporting period. Income statement
accounts are re-measured
at average
exchange rates
for the
reporting period. The
resulting gains
or losses
are included in
foreign currency
(losses) gains in the consolidated statements of operations.
Segment information
Operating segments
are defined
as components
of an
entity for
which separate
financial information
is available
and that
is regularly
reviewed by
the Chief
Operating
Decision Maker
(“CODM”) in
deciding how
to allocate
resources to
an individual
segment and
in
assessing performance. The
Company’s CODM
is its Chief Executive
Officer (“CEO”). The
Company has determined
that it operates
as a single operating segment and has one reportable segment.
Use of estimates
The preparation of consolidated financial statements in accordance with GAAP requires the Company’s 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 the reported amounts of expenses during the reporting period. Significant estimates contained
within these consolidated financial
statements include, but are not limited
to, the estimated fair value of the
Company’s common
stock
and
convertible
notes
payable,
simple
agreements
for
future
equity,
warrant
liabilities,
stock-based
compensation,
prepaid
expense
recognition, income tax valuation
allowance and the accruals of research
and development expenses. The Company
bases its estimates
on historical
experience, known
trends and
other market-specific
or other
relevant factors
that it
believes to
be reasonable
under the
circumstances. On an ongoing basis, management evaluates its estimates, as
there are changes in facts and circumstances. Actual results
may differ materially from those estimates or assumptions.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Related party transactions
The
Company
has
a
policy
governing
related
party
transactions
that
defines
related
parties,
and
assigns
oversight
responsibility
for
related party transactions to the Company's Audit
Committee. The Audit Committee reviews in advance
related party transactions, and
considers
multiple
factors,
including
the proposed
aggregate value
of the
transaction,
or,
in the
case of
indebtedness,
the amount
of
principal that would
be involved, the
benefits to the
Company of the
proposed transaction, the
availability of other
sources of comparable
products or services, and an assessment of whether the proposed transaction is on terms that are comparable to the terms available to or
from, as the case may be, unrelated third parties. Under
the policy, related party transactions
are approved only if the Audit Committee
determines in good faith that the transaction is not inconsistent with the interests of
the Company and its shareholders.
Cash and cash equivalents
The Company considers all highly liquid investments with an
original maturity of three months or less at the time of initial purchase
to
be
cash
equivalents,
including
balances
held
in
the
Company’s
money
market
accounts.
The
Company
maintains
its
cash
and
cash
equivalents with financial institutions, in which balances from time to time may exceed the
U.S. federally insured limits. The objectives
of the Company’s
cash management policy are
to safeguard and preserve funds to
maintain liquidity sufficient
to meet the Company’s
cash flow requirements, and to attain a market rate of return.
Restricted cash
As of
December
31, 2022
and 2021
a deposit
of $
1.1
million
and $
0.2
million, respectively,
was restricted
from withdrawal.
These
restrictions related to cash payments received in advance under the CEPI Funding Agreement and securing credit card obligations as of
December 31, 2022 and securing credit card obligations as of December 31, 2021. These balances are included in restricted cash on the
accompanying consolidated balance sheets.
Short Term
Investments
The
Company
determines
the
appropriate
classification
of
its
investments
at
the
time
of
purchase.
Currently,
all
of
the
Company’s
investments are
classified as
available-for-sale in
accordance with
ASC Topic
320. The
Company classifies
investments available
to
fund
current
operations
as
current
assets
on
its
consolidated
balance
sheets.
Investments
are
classified
as
long-term
assets
on
the
consolidated balance sheets if (i) the Company has the intent and ability to hold the investments for a period of at least one year and (ii)
the contractual maturity date of the investments is greater than one year.
Available-for-sale
investments are recorded at fair value, with unrealized gains
or losses included in accumulated other comprehensive
income
or
loss.
Realized
gains
and
losses,
interest
income
earned
on
the
Company’s
cash,
cash
equivalents
and
investments,
and
amortization or accretion of
discounts and premiums on investments
are included within other
income (expense) on the
accompanying
consolidated statements of operations.
Available-for-sale
debt securities are reviewed for possible impairment at least quarterly,
or more frequently if circumstances arise that
may indicate impairment.
When the fair
value of the
securities declines below
the amortized cost
basis, impairment is
indicated and it
must be determined whether it is other than temporary. Impairment is considered to be other than temporary if the Company: (i) intends
to sell the security, (ii) will
more likely than not
be forced to sell
the security before recovering its
cost, or (iii) does
not expect to recover
the security’s amortized cost basis.
If the decline
in fair value
is considered other than
temporary, the cost basis of
the security is adjusted
to its fair market value
and the
realized loss is reported
in earnings. Subsequent increases or
decreases in fair value are
reported within
equity as accumulated other comprehensive income on the accompanying
consolidated statement of stockholder’s equity (deficit).
The Company did
no
t record any such impairments during the year ended December 31, 2022 and 2021.
Concentration of credit risk
Financial instruments that potentially
expose the Company
to concentrations of
credit risk consist
primarily of cash
and cash equivalents.
Cash equivalents
are occasionally
invested in
money market
accounts.
The Company
maintains each
of its
cash balances
with high-
quality and accredited financial institutions and accordingly, such funds are not exposed to unusual credit risk beyond the normal credit
risk associated with commercial banking relationships. The Company maintains a
portion of its cash and cash
equivalent balances in the
form of a money market account with a financial institution that management
believes to be creditworthy.
The Company is dependent on contract manufacturers, several of whom
are considered to be related parties, for manufacturing, quality
control, testing, validation and supply services, including production, research and development
and clinical activities. The Company’s
future revenue as well as research and development programs could be adversely affected by a significant supply interruption by one or
more of its contract manufacturers.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Leases
At
inception
of
a
contract,
the
Company
determines
whether
an
arrangement
is
or
contains
a
lease.
For
all
leases,
the
Company
determines the classification as either operating leases or financing leases. Operating leases are included in Operating lease right-of-use
assets and Operating lease liabilities in our consolidated balance sheets.
Lease recognition occurs
at the commencement date
and lease liability amounts
are based on the present
value of lease payments
over
the lease term. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will
exercise that
option. If
a lease
does not
provide information
to determine
an implicit
interest rate,
the Company
uses its
incremental
borrowing rate in determining the
present value of lease payments. Right-of-use
(ROU) assets represent the Company’s
right to use an
underlying asset
for the
lease term,
and lease
liabilities represent
the Company’s
obligation to
make lease
payments under
the lease.
ROU assets
also include
any lease
payments made
prior to
the commencement
date and
exclude lease
incentives received.
Operating
lease expense is recognized
on a straight-line
basis over the
lease term. The
depreciable life of
assets and leasehold
improvements are
limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Lease agreements
with both lease and non-lease components, are generally accounted for together as a single lease component. The Company has
elected
to
apply
the
practical
short-term
expedient
to
leases
with
a
lease
term
of
months
or
less,
which
does
not
subject
the
leases
to
capitalization.
Property and equipment
Property and
equipment are
stated at cost,
less accumulated
depreciation. Depreciation
is computed on
the straight-line basis
over the
estimated useful life of the assets.
The estimated useful life of property and equipment is as follows:
Estimated
Useful
Life
Airplane
15 years
Facilities
5 years
Furniture and fixtures
5 years
Vehicles
5 years
Laboratory and computer equipment
3 years
Software
3 years
Leasehold improvements
Shorter of the useful life of improvement or the remaining lease term
Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any
resulting gain
or loss is
included in gain
or loss
from operations.
Expenditures for
repairs and
maintenance are
charged to
expense as
incurred
.
Impairment of long-lived assets
Long-lived
assets,
comprised
of
property
and
equipment,
are
tested
for
recoverability
whenever
events
or
changes
in
business
circumstances
indicate
that
the
carrying
amount
of
the
assets
may
not
be
fully
recoverable.
Factors
that
the
Company
considers
in
deciding
when
to
perform
an
impairment
review
include
significant
underperformance
of
the
business
in
relation
to
expectations,
significant negative
industry or economic
trends and significant
changes or planned
changes in the
use of the
assets. If an
impairment
review
is
performed
to
evaluate
a
long-lived
asset
for
recoverability,
the
Company
compares
forecasts
of
undiscounted
cash
flows
expected
to
result
from
the
use and
eventual
disposition
of the
long-lived
asset to
its carrying
value.
An
impairment
loss would
be
recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount.
The impairment loss
would be based
on the excess of
the carrying value
of the impaired asset
over its fair
value, determined based
on
discounted cash flows. To
date, the Company has not recorded any impairment losses or disposals on long-lived
assets.
Deferred offering costs
The Company capitalizes certain legal, audit, accounting and
other third-party fees that are directly associated with
an in-process capital
financing effort
as deferred
offering costs
until such
financing is
consummated. After
consummation of
the financing,
these costs are
recorded
as
a
reduction
of
additional
paid-in
capital
generated
as
a
result
of
the
financing.
Should
the
financing
be
abandoned,
the
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
deferred offering
costs are
expensed immediately
as a
charge to
operating expenses
in the
accompanying
consolidated statements
of
operations.
Fair value measurements
Certain assets and
liabilities are carried
at fair value
under U.S. GAAP. Fair value is
defined as the
exchange price that would
be received
for an asset or
paid to transfer a
liability (an exit price)
in the principal or
most advantageous market for
the asset or
liability in an
orderly
transaction between market
participants on the measurement
date. Valuation
techniques used to measure
fair value must maximize
the
use
of observable
inputs
and minimize
the use
of unobservable
inputs.
Financial
assets and
liabilities
carried
at fair
value
are
to be
classified and disclosed in one of the following three levels of the fair value hierarchy,
of which the first two are considered observable
and the last is considered unobservable:
Level 1-Quoted prices in active markets that are identical assets or liabilities.
Level 2-Observable inputs
(other than Level 1
quoted prices), such as
quoted prices in active
markets for similar
assets or liabilities,
quoted
prices in
markets that
are not
active for
identical
or similar
assets or
liabilities, or
other inputs
that are
observable
or can
be
corroborated by observable market data.
Level 3-Unobservable inputs
that are supported
by little or no
market activity that
are significant to determining
the fair value of
the
assets or liabilities, including pricing models, discounted cash flow methodologies
and similar techniques.
Prior to the conversion in accordance with the Contribution and Exchange Agreement, the majority of the Company’s convertible notes
and all of the simple agreement for future equity (“SAFE”) and warrant liabilities were carried at fair
value and were classified as Level
3 liabilities.
Convertible notes payable
The Company
issued convertible
notes payable
at various
times from
2014 to
2021. The Company
accounts for
the convertible
notes
payable at fair value in accordance with ASC 480, Distinguishing Liabilities
from Equity (“ASC 480”). The notes payable with related
parties are
accounted for
as straight
debt under
ASC 470,
Debt (“ASC
470”). The
Company has
elected to
separate interest
expense
from the full
change in fair
value of the
convertible notes. Debt
issuance costs incurred
by the Company
are amortized to interest
expense
over the term of the convertible notes using the effective interest method
in the accompanying consolidated statements of operations.
On March 2, 2021, each convertible note that was outstanding was exchanged
for shares of Series A preferred stock (see Note 9).
Debt issuance costs
The Company
records debt
issuance costs
as a
reduction to
the carrying
value of
the debt.
The debt
discounts are
amortized over
the
term of the debt using the effective interest method
and recognized as interest expense in the accompanying consolidated
statements
of
operations.
Simple Agreement for Future Equity-SAFE
The Company accounts
for SAFEs at fair
value in accordance
with ASC 480.
The SAFEs are subject
to revaluation at the
end of each
reporting period, with changes in fair value recognized in the accompanying
consolidated statements of operations.
On March 2, 2021, each SAFE
that was outstanding was converted into shares
of the Company’s Series A preferred stock (see Note
12).
Classification of convertible preferred stock
The Company records
all convertible preferred
stock at
its original
issuance price, less
direct and incremental
issuance costs,
as stipulated
by its terms. The Company’s convertible preferred stock is classified outside of stockholders’ deficit because the holders of such shares
have liquidation rights in the event of a deemed liquidation that, in certain situations,
are not solely within the control of the Company.
All shares
of the
Company’s
Series A
and Series
B preferred
stock converted
into shares
of the
Company’s
Class A
common
stock
concurrently with the closing of the initial public offering (see
Note 11).
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Revenue recognition
The Company accounts for revenue in accordance with ASC Topic 606,
Revenue from Contracts With Customers (“ASC 606”). Under
ASC 606, an entity recognizes
revenue when its customer
obtains control of promised goods
or services, in an amount
that reflects the
consideration that the entity
expects to be
entitled to in
exchange for those
goods or services.
The Company applies ASC
606 to contracts
with customers only when it is probable that the entity will collect
the consideration to which it is entitled in exchange for the
goods or
services it transfers to the customer.
The Company
assesses the goods
or services promised
within each contract
and determines those
that are performance
obligations by
evaluating
whether
each
promised
good
or
service
is
distinct.
This
assessment
involves
subjective
determinations
and
requires
management to make judgments about the individual promised goods or services, the intended benefit of the contract and whether each
good or
service is
separately identifiable
from the
other aspects
of the
contractual
relationship.
If a
promised
good or
service is
not
distinct, an entity is required to combine that good or service with other promised goods or services until it identifies a
bundle of goods
or services that is distinct.
If the consideration promised in
a contract includes a variable
amount, the Company estimates the
amount of consideration to
which it
will be
entitled in
exchange
for transferring
the promised
goods
or services
to a
customer.
The Company
determines the
amount of
variable consideration by using the most likely amount
method and applies the constraint on variable consideration,
which requires the
amount included in the transaction price to
be constrained to the amount for which
it is probable that a significant
reversal of cumulative
revenue recognized
will not
occur.
At the
end of
each subsequent
reporting period,
the Company
re-evaluates the
estimated variable
consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction
price.
The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when
(or as) each performance
obligation is satisfied, either at
a point in time
or over time, and, if
over time, recognition is based
on the use
of an output or input method.
For its sales of ELISA tests, the Company recognizes revenue once control
is transferred upon delivery to the customer.
Coalition for Epidemic Preparedness (“CEPI”) grant
In April
2022, the
Company entered
into an
agreement with
the Coalition
for Epidemic
Preparedness Innovations
(“CEPI”) whereby
CEPI has
agreed to
provide
funding of
up to
$
9.3
million to
co-fund a
Phase 3
clinical trial
of Vaxxinity’s
next generation
UB-612
COVID-19 vaccine candidate
as a heterologous
- or ‘mix-and-match’
- booster dose. The
Phase 3 trial, which
began in early
2022, is
evaluating the
ability of
UB-612 to
boost COVID-19
immunity against
the original
strain and
multiple variants
of concern
including
Omicron - in people aged 16 years or older, who
have been previously immunized with an authorized COVID-19 vaccine.
Cash payments received in advance under the CEPI Funding Agreement are restricted as to their use until expenditures contemplated in
the funding agreement are incurred. As funds are received they are included within restricted cash offset
by a corresponding short-term
accrued
liability.
The Company
recognizes
payments
from CEPI
as a
reduction
of research
and development
expenses,
in
the same
period as the expenses that the grant is intended to reimburse are incurred.
Taiwan
Centers for Disease Control grant
United
Biomedical,
Inc.,
Asia
(“UBI-Asia”),
a
related
party
through
common
ownership
which
is
responsible
for
applying
for
and
managing
grants
on
the
Company’s
behalf,
was
awarded
a
grant
by
the
Taiwan
Centers
for
Disease
Control
(“Taiwan
CDC”)
for
COVID-19 vaccine development. UBI-Asia contracted with the Company to conduct
a two-phase clinical trial of a COVID-19 vaccine
candidate in Taiwan.
The grant provides that costs incurred to complete the two phases of
the clinical trial will be reimbursed based on
the achievement
of certain
milestones as
defined in
the agreement.
At each
reporting date,
the Company
assesses the status
of all
the
activities involved in completing the clinical trials in relation
to the milestones. The Company accounts for the
amounts that have been
received from
the Taiwan
CDC to reimburse
costs incurred
on the
clinical trials
and not
expected to
be refunded
back to
the Taiwan
CDC as contra research and development expenses in the accompanying
consolidated statements of operations.
Research and development
Research
and
development
expenses
include
employee
related
costs,
consulting,
contract
research,
depreciation,
rent,
stock-based
compensation and other corporate costs attributable to research and development
activities and are expensed as incurred.
The Company has entered into various research, development and
manufacturing contracts, some of which are with related parties (see
Note 19).
These agreements
are generally
cancelable by
either party,
and related payments
are recorded
as research
and development
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
expenses as incurred. The
Company records accruals for
estimated ongoing research costs.
When evaluating the adequacy
of the accrued
liabilities, the
Company analyzes
progress of
the studies
or trials,
including the
phase or
completion of
events, invoices
received and
contracted costs. The Company’s
historical accrual estimates have not been materially different
from the actual costs.
Patent costs
Patent-related costs incurred in
connection with filing
and prosecuting patent
applications are expensed
as incurred due
to the uncertainty
relating to the recovery of the expenditure. Amounts incurred are classified as general
and administrative expenses.
Stock-based compensation
The Company measures all
stock-based awards granted to
employees, directors and non-employees
based on the fair value on
the date
of grant and
recognizes compensation expense
of those awards
over the requisite
service period, which
is generally the vesting
period
of the respective award. Forfeitures are accounted for as they occur.
The Company
classifies stock-based
compensation expense
in its
consolidated statements
of operations
in the
same manner
in which
the award recipient’s payroll costs are
classified or in which the award recipient’s
service payments are classified.
Prior to
the Company's
IPO in
November 2021,
there was
no public
market for
the Company’s
common stock
and the
estimated fair
value of its common stock was determined by its most recently
available third-party valuations of common stock.
There are significant
judgments
and
estimates
inherent
in
the
determination
of
the
fair
value
of
the
Company’s
common
stock.
These
estimates
and
assumptions include a
number of objective
and subjective factors,
including external market
conditions, the prices
at which the
Company
sold shares of
preferred securities, the
superior rights and
preferences of securities
senior to the
common securities at
the time of,
and
the likelihood of, achieving a
liquidity event, such as an IPO
or sale. Significant changes to the
key assumptions used in the valuations
could result in different fair values of common stock
at each valuation date.
The fair value of each
restricted stock award is estimated
on the date of grant
based on the fair value
of the Company’s
common stock
on that
same date.
The fair
value of
each option
grant is
estimated on
the date of
grant using
the Black-Scholes
option pricing
model
(“Black-Scholes”),
which
requires
inputs
based
on
certain
subjective
assumptions,
including
the
expected
stock
price
volatility,
the
expected term of
the award, the
risk-free interest rate
and expected dividends.
The Company, both prior
to and after
the IPO in
November
2021, lacks sufficient
company-specific historical
and implied volatility
information for its
stock, and therefore
estimates its expected
stock volatility based
on the historical
volatility of a
publicly traded set
of peer companies
and expects to
continue to do
so until such
time as it has adequate historical data regarding the
volatility of its own traded stock price.
The expected term of the Company’s options
has been determined utilizing
the “simplified” method for
awards that qualify as “plain-vanilla”
options. The expected term
of options
granted to non-employees
is equal to the
contractual term of the
option award. The risk-free
interest rate is determined
by reference to
the U.S. Treasury yield curve in effect at the time of grant of the award for
time periods approximately equal to the expected term of the
award. Expected
dividend yield
is based
on the
fact that
the Company
has never
paid cash
dividends on
common stock
and does
not
expect to pay any cash dividends in the foreseeable future.
Performance-based options
The Company accounts for performance-based
options according to the ASC 718,
Compensation - Stock Compensation ("ASC
718"),
which are subject to different accounting depending on whether they meet
the definition of performance conditions, market conditions,
or other conditions. The conditions present in the
Company's grants contain both performance and market conditions. The
effect of each
condition
is
reflected
in
the
grant-date
fair
value
and
the
performance-based
options
are
measured
considering
the
probability
of
satisfying the performance
and market conditions.
The Company has used
a Monte Carlo Simulation
Model to calculate the
fair value
of the
performance condition
(the completion
of the
IPO) and
market condition
(the 25%
higher value
after the
IPO condition).
The
performance condition
was determined
to not be
probable at the
time of the
grant date,
and the recognition
of compensation
cost was
deferred
until the
IPO was
consummated
in November
2021. The
recognition of
expense for
the portion
of the
grant-date fair
value
assigned to the market condition will be recognized as expense according to
the derived service period in the valuation model.
Income taxes
The Company
accounts for
income taxes according
to the ASC 740,
Income Taxes
(“ASC 740”) using
the asset and
liability method,
which requires
the recognition
of deferred
tax assets
and liabilities
for the
expected future
tax consequences
of events
that have
been
recognized
in
the
consolidated
financial
statements
or
in
the
Company’s
tax
returns.
Deferred
taxes
are
determined
based
on
the
difference between
the financial statement
and tax basis
of assets and
liabilities using enacted
tax rates in
effect in
the years in
which
the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The
Company
assesses the
likelihood
that its
deferred
tax assets
will be
realized
and, to
the extent
it believes,
based upon
the
weight of
available evidence, that it is more
likely than not that all
or a portion of the
deferred tax assets will not
be realized, a valuation allowance
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
is established through a charge to income tax expense. In evaluating its ability to recover its deferred tax assets, the Company considers
all available positive and negative evidence, including projected future taxable income, prudent and feasible tax planning strategies and
recent financial operations.
The
Company
accounts
for
uncertainty
in
income
taxes
recognized
in
the
consolidated
financial
statements
by
applying
a
two-step
process to
determine the
amount of
tax benefit
to be
recognized. First,
the tax
position must
be evaluated
to determine
the likelihood
that it
will be
sustained upon
external examination
by the
taxing authorities.
If the
tax position
is deemed
more-likely-than-not to
be
sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The
amount of the benefit that
may be recognized is
the largest amount that
has a greater than
50% likelihood of being realized
upon ultimate
settlement. To
the extent the
Company determines
that such tax
positions will not
be sustained,
the provision
for income taxes
would
include
the effects
of any
resulting income
tax reserves,
or unrecognized
tax benefits,
that are
considered
appropriate as
well as
the
related net interest and penalties.
Net loss per share
Basic earnings
per common
share is
computed by
dividing net
income
(loss) by
the weighted-average
number of
shares of
common
stock outstanding
during the
period. Diluted
earnings per
common share
is computed
by dividing
net income
(loss) by
the weighted-
average number of
shares of common
stock outstanding during
the period, plus
the potential dilutive
effect of other
securities if those
securities were converted or exercised. During periods in which the Company incurs net losses, both basic and diluted loss per common
share
is
calculated
by
dividing
the
net
loss
by
the
weighted-average
shares
of
common
stock
outstanding
and
potentially
dilutive
securities
are
excluded
from
the
calculation
because
their
effect
would
be
antidilutive.
For
purpose
of
this
calculation,
outstanding
options, unvested restricted stock and convertible preferred stock are
considered potential dilutive common stock and
are excluded from
the computation of net loss per share if their effect is anti-dilutive.
The Company’s
convertible
preferred
stock contractually
entitles the
holders
of such
shares to
participate
in dividends
but does
not
contractually require the holders of such shares to participate in losses of the Company.
Accordingly, in periods in which the Company
reports
a net
loss, such
losses are
not allocated
to such
participating
securities. In
periods in
which
the Company
reports a
net loss,
diluted net loss per share is the same as basic net loss per
share attributable to common stockholders, since dilutive
common shares are
not assumed to be outstanding if their effect is anti-dilutive.
Emerging growth company status
The Company is an “emerging growth company” (“EGC”),
as defined in the Jumpstart Our Business Startups Act (“JOBS Act”) and is
permitted to and
plans to take advantage
of certain exemptions
from various reporting
requirements that are
applicable to other
public
companies that are not EGCs. The Company may take advantage of these exemptions until it is no longer an EGC under Section 107 of
the
JOBS Act,
which
provides
that
an
EGC can
take
advantage
of the
extended
transition
period afforded
by the
JOBS Act
for
the
implementation of new
or revised accounting standards.
The Company has elected
to avail itself of the
extended transition period
and,
therefore, as long as
the Company remains
an EGC, it will not
be subject to new
or revised accounting
standards at the same
time that
they become applicable to other public companies that are not EGCs.
Reclassifications
The Company reclassified certain prepaid expenses from prepaid materials and supplies to clinical prepayments within the
consolidated
balance
sheet
to provide
more current
information
on
the components
of
this account.
Prior
year
amounts
have
been
reclassified
to
conform to
the current year
presentation.
Additionally,
certain expenses were
reclassified between the
research and development
and
general and administrative expenses within the consolidated statements
of operations. These changes have no impact on our previously
reported consolidated net loss, financial position or net increase in cash, cash equivalents, and restricted cash.
Prior year amounts were
not reclassified to conform to the current year presentation in the consolidated
statements of operations.
Recently issued accounting pronouncements
From time
to time,
new accounting
pronouncements are
issued by
the FASB
or other
standard setting
bodies and
are adopted
by the
Company
as
of
the
specified
effective
date.
Unless
otherwise
discussed,
the
Company
believes
that
the
impact
of
recently
issued
standards that are not yet effective will not have a material impact on
its financial position or results of operations upon adoption.
Recently adopted accounting standards
In
July
2018,
the
FASB
issued
ASU
No.
2018-11,
Leases
(Topic
842):
Targeted
Improvements
(“ASU
2018-11”).
ASU
11provided
an
alternative
method
in
addition
to
the
modified
retrospective
transition
method
for
ASU
No.
2016-02,
Leases:
Amendments
to the
FASB
Accounting
Standards Codification
(“ASU 2016-02”),
issued in
February 2016.
Under ASU
2018-11,
an
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
entity may elect
to initially apply
the new lease
standard at the
adoption date and
recognize a cumulative-effect adjustment
to the
opening
balance of retained
earnings in the
period of adoption.
Under ASU 2016-02,
a lease is
required to recognize
assets and liabilities
with
lease
terms
of more
than
twelve months.
ASU 2016-02
is effective
for nonpublic
business entities
and
public
entities eligible
to be
smaller reporting
companies for fiscal years beginning after December 15, 2021.
The Company
adopted the
new standard
on January
1, 2022
using the
modified retrospective
approach. The
Company has
elected to
apply the
transition method
that allows companies
to continue
applying the
guidance under the
lease standard
in effect
at that time
in
the comparative
periods presented
in the
financial statements
and recognize
a cumulative-effect
adjustment to
the opening
balance of
accumulated deficit on the date of adoption. The Company has elected to combine lease components (for example fixed rent payments)
with non-lease
components (for
example, common-area
maintenance costs)
on our
facility,
lab equipment
and CRO
embedded lease
asset classes.
The Company
also elected
the “package
of practical
expedients”, which
permits the
Company not
to reassess under
the
new standard
the Company’s
prior conclusions
about lease
identification,
lease classification
and initial
direct costs.
In addition,
the
Company
also
elected
the
short-term
lease
practical
expedients
allowed
under
the
standard.
Lastly,
the
Company
did
not
elect
the
practical expedient allowing the use-of-hindsight which would require
the Company to reassess the lease term of its leases based on all
facts and circumstances through the effective date.
Results for reporting
period beginning after
January 1, 2022
are presented under
the new standard,
while prior period
amounts are not
adjusted
and
continue
to
be
reported
under
the
accounting
standards
in
effect
for
the
prior
period.
Upon
adoption
of the
new
lease
standard, on January 1, 2022, the Company did not enter into any leases subject to ASC 842 and did not capitalize a ROU asset or lease
liability.
3. Short Term
Investments
As of December 31, 2022, the Company’s
short-term investments consist of the following (in thousands):
As of December 31, 2022
Amortized Cost
Unrealized
Gains (Losses),
Net
Recorded Basis
U.S. Treasury Securities
$
53,549
$
(197)
$
53,352
Total
$
53,549
$
(197)
$
53,352
4. Fair Value
Measurements
The Company's money
market accounts and
short-term investments are
shown at fair
value based on
unadjusted quoted market
prices
in active markets for identical assets.
The value for the Convertible
Notes, SAFE and warrant
liability balances during 2021
were based on significant inputs
not observable
in
the
market,
which
represents
a
Level
measurement
within
the
fair
value
hierarchy.
In
accordance
with
the
Contribution
and
Exchange Agreement, on March 2, 2021 the Convertible Notes, SAFEs and warrants
were all converted into Series A preferred stock.
The following
table presents
information about
the Company’s
financial instruments
measured at
fair value
on a
recurring basis
and
indicate the level of the fair value hierarchy used to determine such fair
values (in thousands):
December 31, 2022
Level 1
Level 2
Level 3
Total
Assets:
Short-term investments
$
53,352
$
-
$
-
$
53,352
Money market account
27,724
-
-
27,724
Total assets
$
81,076
$
-
$
-
$
81,076
December 31, 2021
Level 1
Level 2
Level 3
Total
Assets:
Money market account
$
139,794
$
-
$
-
$
139,794
Total assets
$
139,794
$
-
$
-
$
139,794
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
During the years ended December 31, 2022 and 2021, there were
no
transfers between Level 1, Level 2 and Level 3.
Convertible Notes
During
the
year
ended
December 31,
2021,
the
Company
issued
Convertible
Notes.
In
accordance
with
ASC
480,
a
portion
of
the
Convertible Notes
were required
to be
measured and
accounted for
at fair
value at each
reporting date.
The Company
determined the
Convertible Notes requiring
a measurement to fair
value represent a recurring
measurement that is classified
within Level 3 of
the fair
value hierarchy wherein fair value is estimated using significant unobservable
inputs.
Convertible Notes requiring a measurement to fair value are as follows (in
thousands):
Convertible
Notes
Balance at December 31, 2020
$
24,680
Issuance of convertible notes
2,000
Repayments
(2,000)
Change in fair value
2,667
Amortization of issuance costs
Accrued interest
Interest paid
(187)
Conversion to Series A preferred stock
(27,545)
Balance at December 31, 2021
$
-
The
fair
value
of
the
Convertible
Notes
was
estimated
using
a
straight
debt
and
conversion
feature
valuation
model
consisting
of
probability assumptions on multiple conversion scenarios, discount rates and
interest rates.
In accordance with the
Contribution and Exchange Agreement,
on March 2, 2021, the
Convertible Notes were converted into
Series A
preferred stock.
Simple Agreement for Future Equity-SAFE
During the
year ended
December 31, 2021,
the Company
executed SAFE
arrangements.
The fair
value of
the SAFEs
on the
date of
issuance was
determined to equal
the proceeds received
by the
Company. The value of
the SAFEs
on the date
of conversion into
preferred
stock was determined
to be equal
to the fair
value of the
preferred stock issued,
or $
35.6
million during
the year ended
December 31,
2021.
The following table sets forth a summary of the
activities of the SAFE arrangements, which represents a
recurring measurement that is
classified within Level 3 of the fair value hierarchy wherein
fair value is estimated using significant unobservable inputs (in thousands):
SAFE
Liability
Balance at December 31, 2020
$
24,335
Change in fair value
8,365
Issuance of SAFEs
2,900
Conversion to Series A preferred stock
(35,600)
Balance at December 31, 2021
$
-
In accordance
with the Contribution
and Exchange
Agreement, on March
2, 2021,
the SAFEs were
converted into
Series A preferred
stock.
Warrants to Purchase Series
A-1 Convertible Preferred Stock & Common Stock
In connection with the 2020 Series A-1 convertible preferred stock (“Series
A-1 preferred”) financing transactions, the Company issued
fully
vested warrants
to purchase
205,970
shares of
Series A-1
preferred.
The warrants
were issued
to advisors
as consideration
for
assistance with
the sale
and issuance
of the
Series A-1
preferred. The
warrants were
determined to
represent issuance
costs and
were
recorded as a reduction in the proceeds received from the sale.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The warrants were issued to
advisors of the company and represented
non-variable contingently redeemable
instruments.
As such, the
warrants were accounted for as liabilities and adjusted to fair value at each reporting
period.
The warrants are exercisable on the date of issuance and
have an exercise price of $
0.003
per share and a contractual term of
ten years
.
In December 2020, warrants were exercised for
71,862
shares of Series A-1 at $
0.003
per share, resulting in cash proceeds of less than
$
1,000
.
As
of
December
31,
2020,
warrants
to
purchase
134,106
shares
of
Series
A-1
preferred
were
outstanding.
The
Company
continued to re-measure
the fair value of
the liability associated
with the warrant
to purchase shares of
Series A-1 preferred
at the end
of
each
reporting
period
until
the
Reorganization,
when
the
warrant
converted
into
Series
A
preferred
stock
and
subsequently,
in
connection with the IPO, converted into Class A common stock.
The
following
table
sets
forth
a
summary
of
the
activity
of
the
warrant
liability
which
represented
a
recurring
measurement
that
is
classified within Level 3 of the fair value hierarchy wherein fair
value is estimated using significant unobservable inputs (in thousands):
Warrant
Liability
Balance at December 31, 2020
$
Change in fair value
Conversion to warrants for shares of Series A preferred stock
(614)
Balance at December 31, 2021
$
-
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
December 31,
Clinical prepayments
$
2,679
$
Prepaid insurance
1,870
3,510
Prepaid materials and supplies
3,517
Deposits
Other
$
5,551
$
8,851
Clinical
prepayments
consisted
of
amounts
paid
in
advance
to
clinical
research
organizations
(“CROs”)
for
expenses
related
to
our
clinical trials, primarily UB-612,
and included $
1.9
million on deposit as of
December 31, 2022 that will
be credited against final
UB-
612 trial expenses. The remaining clinical prepayment amounts are
amortized to expense as earned by the CRO and clinical trial sites.
Prepaid
insurance
consisted
primarily
of
$
1.6
million
and $
3.3
million
for
the
unamortized
portion
of
the
Company’s
annual
D&O
insurance fee as of December 31, 2022 and 2021, respectively.
Prepaid materials and
supplies consisted of
amounts paid in advance
related to the procurement
and/or production of
materials for use
in the Company’s clinical trials, primarily UB-612. Amounts held by related parties totaled $
0.2
million at December 31, 2022 and $
3.5
million at December 31, 2021.
Deposits consist of amounts
held by the Company’s aircraft management
company and the leaseholder
for the Florida lab. Other
prepaid
expenses and current
assets consist of
various sales tax
credits and receivables
totaling $
0.3
million and $
0.3
million, as of
December
31, 2022 and 2021, respectively and other prepaid expenses incurred
in the normal course of business.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
6. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
December 31,
Airplane
$
11,983
$
11,983
Laboratory and computer equipment
3,146
1,831
Leasehold improvements
-
Software
Facilities, furniture and fixtures
Vehicles
Construction in progress
Total property
and equipment
16,136
14,353
Less: accumulated depreciation
(3,624)
(1,981)
Property and equipment, net
$
12,512
$
12,372
Depreciation expense for the years ended December 31, 2022 and 2021
was $
1.7
million and $
1.1
million, respectively.
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in
thousands):
December 31,
Accrued external research and development
$
6,904
$
1,501
Accrued bonuses
2,568
2,294
Accrued professional fees and other
1,722
Accrued interest
$
11,370
$
4,519
8. Other Long-Term
Liabilities
Other long-term liabilities consisted of the following (in thousands):
December 31,
Accrued tax provision
$
$
Accrued rent
-
$
$
As of
December 31, 2022
and 2021, approximately
$
0.2
million of
the accrued tax
provision relates
to penalties and
interest the
Company
may be subject to paying for late filing fees related to a foreign
subsidiary. The
Company expects these amounts to be forgiven
but has
accrued for them until the statute of limitations expires and it is appropriate to write them off.
9. Convertible Notes Payable
Beginning in April 2018, the Company issued several Convertible Notes, some of which were issued to related
parties. The Convertible
Notes bore
simple interest
at annual
rates ranging
from
4.8
% to
%. All
unpaid principal,
together with
the accrued
interest thereon,
were payable
upon an
event of
default
or upon
maturity,
which
ranged
from one
to three
years.
The Convertible
Notes contained
a
number of provisions addressing automatic and optional conversion,
events of default, and prepayment provisions.
The Company
accounted for
the Convertible
Notes at
fair value,
in accordance
with ASC
480, with
any changes
in fair
value being
included in other (income)
expense, net in the accompanying statements of operations.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
In
accordance
with
the
Contribution
and
Exchange
Agreement,
on
March
2,
each
Reorganization
Convertible
Note
that
was
outstanding was
exchanged for
shares of
Series A
preferred stock,
as set forth
in the
applicable Convertible
Note agreements
and the
Contribution and Exchange Agreement.
During the year ended
December 31, 2021, the Company
recognized interest expense of
$
0.2
million related to the
Convertible Notes.
In
addition,
during
the
year
ended
December 31,
2021,
the
Company
recognized
a
change
in
fair
value
of
$
2.7
million
in
the
accompanying consolidated statements of operations related to the Convertible
Notes.
The following table shows the activity of the Convertible Notes (in thousands):
Convertible Notes
Principal Amount Payable
Change in Fair Value
Accrued Interest
Issuance
Conversion
to
Standard
Related
Party
Standard
Related
Party
Standard
Related
Party
Costs
Series A
Balance
December 31, 2020
$
7,710
$
10,510
$
1,972
$
3,848
$
$
$
(217)
$
-
$
24,680
Additions
-
2,000
1,855
-
-
4,835
Settlements
(2,000)
-
-
-
(187)
-
-
-
(2,187)
Amortization
-
-
-
-
-
-
-
Conversion of Convertible
Notes to Series A preferred
stock
(5,710)
(12,510)
(2,784)
(5,703)
(545)
(293)
-
(27,545)
(27,545)
December 31, 2021
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
(27,545)
$
-
10. Notes Payable
Notes Payable with Related Parties
In December 2018,
the Company entered
into related party convertible
notes payable (the “2018
Related Notes” and together
with the
Convertible Notes, the “Reorganization Convertible
Notes”) for $
2.0
million in aggregate proceeds,
received in three tranches.
The 2018
Related
Notes
bore
simple
interest
at
an
annual
rate
of
%
and
contain
a
number
of
provisions
addressing
events
of
default
and
prepayment. In accordance with the Contribution and Exchange Agreement, on March 2, 2021, the 2018 Related Notes were converted
into Series A preferred stock.
During
the year
ended December
31, 2021,
the Company
recognized
interest expense
of less
than $
0.1
million on
the 2018
Related
Notes.
2019 Executive Note
In November 2019, the Company borrowed $
0.1
million from its Chief Executive Officer (the “2019 Executive Note”). No formal loan
agreement was
executed. However,
the Company
has elected to
accrue interest
at an annual
rate of
%, consistent with
the terms
and
conditions of the Convertible Notes and 2018 Related Notes, which
was the closest benchmark the Company could evaluate. The 2019
Executive Note was repaid in August 2021.
The activity of the 2018 Related Notes and 2019 Executive Note is as follows (in thousands):
2018 Related Notes and 2019 Executive Note
Related Party
Principal
Accrued
Interest
Balance
December 31, 2020
$
2,100
$
$
2,294
Accrued interest
-
Repayment
(100)
-
(100)
Interest paid
-
(8)
(8)
Conversion
(2,000)
(205)
(2,205)
December 31, 2021
$
-
$
-
$
-
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Note Payable-Airplane
In connection with
the acquisition of
an airplane, the Company
entered into a note
payable agreement (the
“2025 Note”) in
June 2020
for $
11.5
million, with an annual interest rate of
3.4
% and a maturity date of June 9,
2025. Principal and interest payments are
payable
monthly in the amount
of $
0.07
million with a
final payment of $
9.4
million at maturity. The 2025 Note
is guaranteed by the
co-founders
of the Company. In addition, the Company
incurred debt issuance costs of $
0.3
million, which are being amortized over the term of the
loan. There are no financial covenants associated with the 2025 Note.
The carrying value of the 2025 Note is as follows (in thousands):
December 31,
Principal
$
10,455
$
10,883
Unamortized debt issuance cost
(131)
(184)
Carrying amount
10,324
10,699
Less: current portion
(391)
(376)
Note payable, net of current portion and debt issuance cost
$
9,933
$
10,323
As of December 31, 2022, the remaining principal payments for
the 2025 Note, are as follows (in thousands
):
Amount
$
9,553
$
10,455
Interest expense
associated with
the 2025
Note was
$
0.4
million and
$
0.4
million for
the years
ended December
31, 2022
and 2021,
respectively. As of December 31, 2022,
accrued interest of less than $
0.1
million was included in accrued expenses and other liabilities
in the accompanying consolidated balance sheets.
Note Payable-Paycheck Protection Program
The Company
applied for
and received
a loan,
which is
in the
form of
a note
dated May
5, 2020,
from HSBC
Bank USA,
National
Association (“HSBC”)
in the aggregate
amount of approximately
$
0.3
million (the “PPP
Loan”), pursuant
to the Paycheck
Protection
Program (“PPP”).
The PPP,
established as
part of
the Coronavirus
Aid, Relief
and Economic
Security Act
(“CARES Act”),
provides
for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. As of
December 31, 2021, there were no events of default under the PPP Loan.
The Company paid off the PPP Loan in full, including all accrued
but unpaid interest to the repayment date, in August 2021.
Promissory Note with Related Party
In October 2022, the Company entered into a related party unsecured promissory note (the “2022 Promissory Note”) with UBI for $
4.2
million. The
2022 Promissory
Note accrues
interest at
7.0
% per
annum and
is due
October 1, 2026
. The
2022 Promissory
Note was
issued
to
satisfy
accounts
payable
to
UBI totaling
$
4.2
million.
As of
December 31,
2022 the
outstanding
principal
under
the 2022
Promissory Note was
$
4.2
million. During the
year ended December 31,
2022 the Company
incurred less than
$
0.1
million in interest
expense and
no
interest was paid related to the Promissory Note.
The carrying value of the 2022 Promissory Note is as follows (in thousands):
December 31,
Principal
$
4,225
Less: current portion
(1,113)
Note payable, net of current portion
$
3,112
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
As of December 31, 2022, the remaining principal payments for
the 2022 Promissory Note, are as follows (in thousands):
Amount
$
1,113
1,029
1,103
$
4,225
11.
Convertible Preferred Stock
In connection with
the Reorganization, each
UNS convertible preferred share
was exchanged for
0.2191
shares of Vaxxinity
preferred
stock and
each share of
COVAXX
convertible preferred
stock was exchanged
for
3.4233
shares of Vaxxinity
preferred stock.
During
the first
and second
quarters of
2021, the
Company raised
gross proceeds
of $
122.8
million in
connection with
its Series
B preferred
stock financing. The
Company issued a total
of
15,365,574
shares at a price
of $
8.00
per share. All shares
of the Company’s
Series B
preferred stock converted
into shares
of the Company’s Class
A common stock
concurrently with
the closing
of the
initial public offering.
As of
December 31, 2022
and 2021,
Vaxxinity’s
Amended and
Restated Certificate
of Incorporation
authorized
50,000,000
shares of
preferred stock with a par value of $
0.0001
per share. There were
no
shares of preferred stock outstanding as of December 31, 2022 and
2021.
The table
below details
the Company's Class
A common
stock which
was issued upon
conversion of
Series A
and Series B
preferred
stock concurrently
with the closing
of the IPO
in November 2021.
The common stock
issued upon conversion
reflects the application
of the stock split described in Note 1.
As of December 31, 2021
Issuance Dates
Shares Issued and
Outstanding Prior to IPO
Class A Common Stock
Issued
Upon IPO Conversion
Series A preferred stock
March 2021
62,223,095
39,989,083
Series B preferred stock
March 2021
5,441,863
3,497,338
Series B preferred stock
June 2021
9,923,711
6,377,699
77,588,669
49,864,120
12. Simple Agreement for Future Equity-SAFE
During the
years ended December
31, 2021 and
2020, the Company
executed SAFE arrangements.
The SAFEs were
not mandatorily
redeemable,
nor
did
they
require
the
Company
to
repurchase
a
fixed
number
of
shares.
The
Company
determined
that
the
SAFEs
contained a
liquidity event
provision that
embodied an
obligation indexed
to the fair
value of
the Company’s
equity shares
and could
require the Company to settle the
SAFE obligation by transferring assets or
cash. For this reason, the Company recorded
the SAFEs as
a liability
under ASC
480 and
re-measured
the fair
value at
the end
of each
reporting period,
with changes
in fair
value reported
in
earnings.
In
March
2020,
the
Company
issued
a
SAFE
(“SAFE
1”)
for
$
0.4
million,
which
converted
into
463,162
shares
of
Series
Seed-2
convertible preferred stock at
$
0.7773
per share in April 2020.
In June, July,
and August 2020, the Company
issued a series of SAFEs
(“SAFE 2”) for $
14.7
million, which converted into
6,307,690
shares of Series A-2 convertible preferred stock (“Series A-2 preferred”)
at
$
2.3241
per share in August 2020.
The Company determined the fair value of the SAFE 2 investment on the date of conversion and recognized the difference between the
fair value on the date of conversion and the initial fair value of SAFE 2 investment
in the consolidated statements of operations.
In December 2020,
the Company issued
a series of SAFEs
(collectively,
“SAFE 3”) for
$
24.3
million. In January
2021, the Company
issued additional SAFEs for $
2.9
million which had the same terms as SAFE 3. Key provisions of SAFE 3 are as follows:
Equity Financing
-Upon initial closing
of a qualified
financing of at
least $
50.0
million, SAFE 3 will
automatically convert
into the
greater of (1) the number of shares of SAFE 3 preferred stock equal to the purchase amount divided by the
SAFE 3 price, defined as the
price per share equal to the
post-money valuation divided by all shares
outstanding, all convertible securities, all issued, outstanding
and
promised options,
and the unissued
option pool,
or (2)
the number
of shares of
SAFE 3 preferred
stock equal
to the purchase
amount
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
divided by the
discount price, defined
as the price per
share of the
standard preferred stock
sold in a qualified
financing multiplied
by
eighty percent (80%).
Liquidity Event
-If there is a
liquidity event, as
defined, before the
termination of SAFE 3,
SAFE 3 will automatically
be entitled to
receive a
portion of
proceeds, subject
to the
liquidation priority
set forth
in the
agreement, due
and payable
immediately prior
to, or
concurrent with, the consummation of such liquidity event, equal to the greater of (i) the purchase amount or (ii) the amount payable on
the number of shares of common stock equal to the purchase amount divided
by the liquidity price, as outlined in the agreements.
Dissolution Event
-If there is a dissolution
event, as described in
the agreements, before the termination
of SAFE 3, the investor will
automatically
be entitled,
subject to
the liquidation
priority set
forth
in the
agreement,
to receive
a portion
of proceeds
equal
to the
purchase amount, due and payable to the investor immediately prior to the consummation
of the dissolution event.
Termination
-SAFE 3 will automatically
terminate immediately following
the earliest to occur
of: (i) the issuance
of capital stock to
the investor
pursuant to
the automatic
conversion provisions
of SAFE
3 or
(ii) the
payment, or
setting aside
for payment,
of amounts
due the investor.
In connection with
the Contribution
and Exchange
Agreement, the
holders of SAFEs
agreed to
convert such
SAFEs
into shares of Series A-3 preferred stock of COVAXX,
which shares were then exchanged for shares of Vaxxinity’s
preferred stock.
The
SAFEs
were
converted
into
shares
of
the
Company’s
Series
A
preferred
stock
pursuant
to
the
Contribution
and
Exchange
Agreement. Prior to
the Reorganization, all
the holders of outstanding
COVAXX
SAFEs agreed to
convert such SAFEs into
shares of
Series
A-3
preferred
stock of
COVAXX,
which
shares
were then
exchanged
for
shares of
the Company’s
Series
A preferred
stock,
which were converted into Series A Common Stock in connection with the Company’s
IPO.
13. Common Stock
As explained
in Note
1, in
accordance with
the Contribution
and Exchange
Agreement, on
March 2,
2021,
all outstanding
shares of
common
stock
of
UNS
and
COVAXX
were
contributed
to
Vaxxinity
and
exchanged
for
an
aggregate
of
60,360,523
shares
of
Vaxxinity’s
Class A common
stock and
10,999,149
shares of Vaxxinity’s
Class B common
stock. Each
UNS share of
common stock
was exchanged
for
0.2191
shares of Vaxxinity
common stock and
each share of
COVAXX
common stock
was exchanged for
3.4233
shares of Vaxxinity
common stock.
In June 2021, the Company converted
2,874,983
shares of Class A common stock held by the Company’s
Chief Executive Officer and
Executive Chairman on a one-to-one basis for shares of Class B common
stock.
Vaxxinity’s
Amended and Restated Certificate of Incorporation dated November 15, 2021 authorized
1,100,000,000
shares of common
stock
with
a
par
value
of
$
0.0001
per
share,
of
which
1,000,000,000
shares
have
been
designated
as
Class
A
common
stock
and
100,000,000
shares have been designated as Class B common stock.
Holders of Class
A common stock and
Class B common
stock have identical rights,
except with respect
to voting and conversion.
Except
as otherwise expressly provided in Vaxxinity’s
Amended and Restated Certificate of Incorporation or Bylaws, or
required by applicable
law,
holders
of Class
A common
stock will
be entitled
to one
vote per
share on
all matters
submitted
to a
vote
of stockholders
and
holders of our Class B common stock will be entitled to ten votes per share on all matters submitted
to a vote of stockholders.
Holders
of
Class A
common
stock
and
Class B
common
stock
vote
together
as a
single class
on
all matters
submitted
to
a
vote
of
stockholders, except (i) amendments
to Vaxxinity’s
Amended and Restated Certificate of
Incorporation to increase
or decrease the par
value
of
a
class
of
capital
stock,
in
which
case
the
applicable
class
would
be
required
to
vote
separately
to
approve
the
proposed
amendment
and (ii)
amendments to
Vaxxinity’s
Amended and
Restated Certificate
of Incorporation
that alter
or change
the powers,
preferences or special rights
of a class of capital
stock in a manner
that affects its holders adversely,
in which case the applicable
class
would be required to vote separately to approve the proposed amendment.
Holders of common
stock are entitled to
receive, ratably,
dividends as may
be declared by
Vaxxinity’s
board of directors out
of funds
legally available therefor if the board of directors, in its discretion, determines to issue dividends.
The
voting,
dividend,
and
liquidation
rights of
the holders
of
common
stock
are
subject to
and
qualified
by
the rights,
powers,
and
preferences of the holders of Vaxxinity’s
preferred stock.
The Company has reserved shares of common stock for issuance for the following
purposes:
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
December 31,
Options and RSU issued and outstanding
20,716,760
21,387,909
Options available for future grants
6,064,003
7,209,538
Warrants issued and
outstanding
1,928,020
1,928,020
28,708,783
30,525,467
14. Equity Incentive Plan
Stock Options
In March
2021, the
Company replaced
the 2017
and 2020
Stock Option
and Grant
Plans with
the 2021
Stock Option
and Grant
Plan
(the “Existing 2021 Plan”), which provided for the Company to
grant qualified incentive options, nonqualified options, restricted stock
awards,
unrestricted
stock
awards,
and
restricted
stock
units
to
employees
and
non-employees
to
purchase
the
Company’s
Class
A
common stock. The Existing
2021 Plan authorized the
issuance of up
to
21,593,830
shares of Class
A common stock pursuant
to awards.
In
August
2021,
the
Company
canceled
existing
options
to
purchase,
in
aggregate,
6,362,455
shares
of
Class
A
common
stock
in
exchange for an equal number of options to purchase shares
of Class B common stock. The Company accounted
for this exchange as a
stock option modification.
In November 2021, the
Company replaced the Existing 2021
Plan with the 2021
Omnibus Incentive Compensation Plan (the
“New 2021
Plan”),
which
provides
for
the Company
to
grant
nonqualified
stock
options,
incentive
(qualified)
stock
options,
stock
appreciation
rights,
restricted
share
awards,
restricted
stock
units,
performance
awards,
cash
incentive
awards
and
other
equity-based
awards
(including fully vested
shares). The New
2021 Plan replaced
the Existing 2021
Plan and no
further grants will
be made under
the Existing
2021 Plan. The following is a summary of certain terms and conditions of the
New 2021 Plan.
At its
inception in
November 2021,
the maximum
number of
shares of
common stock
that could
be issued
under the
New 2021
Plan
was
8,700,000
shares of Class A equity. This number
increases automatically on January 1 of each year,
commencing January 1, 2023,
by the
number of
shares equal
to the
lesser of
(i)
% of
the outstanding
shares of
the Company’s
common stock
on the
immediately
preceding December 31, (ii) the number of shares determined by the Compensation Committee,
if any such determination is made, and
(iii)
the
number
of
shares
underlying
any
awards
granted
during
the
preceding
calendar
year,
net
of
the
shares
underlying
awards
canceled or forfeited under the New 2021
Plan. On January 1, 2023, in accordance with
the automatic “evergreen” provision of the New
2021 Plan, the maximum number of shares that can be issued under the
plan was increased to
11,886,306
.
As of December 31,
2022,
6,064,003
shares were available
for future grant.
Shares issued under
the New 2021
Plan that are forfeited,
canceled, reacquired by the Company prior to vesting, satisfied without the issuance
of stock, withheld to cover the exercise price or tax
withholdings, or
otherwise terminated,
other than by
exercise, shall be
added back
to the shares
available for
issuance under
the New
2021 Plan.
The exercise
price for
grants made
pursuant to
the terms
of the
New 2021
Plan is
determined in
the applicable
grant by
the board
of
directors. Any incentive options granted to persons
possessing less than 10% of the total combined
voting power of all classes of stock
may not have an exercise price of less than 100% of the fair market value of the common stock on the grant date.
Any incentive options
granted to persons possessing more than 10% of the total combined
voting power of all classes of stock may not have an exercise price
of less than 110% of the fair market value of
the common stock on the grant date.
The option term for incentive awards
may not be greater than ten years
from the date of the grant. Incentive
options granted to persons
possessing more than
10% of the total
combined voting power
of all classes of
stock may not
have an option
term of greater than
five
years from the date of the grant. The vesting period for equity-based awards
is determined at the discretion of the board of directors.
As
of
December 31,
there
were
options
to
purchase
14,054,305
shares
of
Class
A
common
stock
outstanding
and
options
to
purchase
6,362,455
shares of Class
B common stock
outstanding, of which
9,830,751
Class A and
4,968,437
Class B
shares, respectively
were exercisable.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Stock Option Activity
The following table summarizes stock option activity for the year ended
December 31, 2022:
Number of Stock
Options
Outstanding
Weighted Price
Per Share
Weighted
Contractual
Term
(years)
Aggregate
Intrinsic Value
(in thousands)
Balance at December 31, 2021
21,387,909
$
5.25
7.4
$
49,684
Granted
1,387,221
2.96
Exercised
(1,066,586)
(3.26)
Forfeited
(1,291,784)
(7.14)
Balance at December 31, 2022
20,416,760
$
5.07
6.8
$
7,166
Options vested and exercisable at December 31, 2022
14,799,188
$
4.62
6.5
$
6,923
The aggregate intrinsic value of options is calculated as the difference between the exercise price of the options and the fair value of the
common stock for those options that had exercise prices lower than the fair
value of the common stock.
The intrinsic
value of
options exercised
during each
of the
years ended
December 31,
2022 and
2021 was
$
4.5
million and
less than
$
0.1
million, respectively.
The weighted-average grant-date fair value per share of options granted during the years ended December 31,
2022 and 2021 was $
2.21
and $
4.21
, respectively.
The
total
fair
value
of
options
vested
during
the
years
ended
December
31,
and
was
$
8.8
million
and
$
24.5
million,
respectively.
Valuation
of Stock Options Granted that Contain Service Conditions Only
The fair
value of
each option
award granted
with service-based
vesting is
estimated on
the date
of the
grant using
the Black-Scholes
option valuation
model based on
the assumptions
noted in
the table below
for those
options granted
in the years
ended December
31,
2022 and 2021:
December 31,
Risk-free interest rate
1.46
% -
4.22
%
0.59
% -
1.35
%
Expected term (in years)
5.5
-
6.1
5.0
-
6.3
Expected volatility
90.01
% -
97.82
%
71.6
% -
93.4
%
Expected dividend yield
0.00
%
0.00
%
In August 2021, the Company canceled
378,786
existing Class A common stock options with
service-based conditions held by Mei Mei
Hu in exchange for an equal
number of options to purchase shares
of Class B common stock. The
Company accounted for this exchange
as a stock option modification.
There was no incremental stock-based compensation expense as a result of this modification as the fair-
value-based
measures of
the modified
award immediately
after the
modification were
less than
the fair-value-based
measures
of the
original award immediately before the modification.
Stock Options Granted to Employees that Contain Performance and Market Conditions
Included
in the
stock options
granted
during the
year ended
December 31,
2021 were
stock options
to purchase
6,799,625
shares of
Class A
common stock
that contain
performance-
and market-based
vesting conditions
granted to
the Mei
Mei Hu,
Louis Reese,
and
Peter Diamandis.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
In August 2021, the stock option awards for the Mei Mei Hu and Louis Reese totaling
5,983,670
shares were cancelled in exchange for
an equal number of
options to purchase shares
of Class B common
stock. The Company accounted
for this exchange as a
stock option
modification. The fair
value of the awards
granted to Mei Mei
Hu and Louis
Reese at the modification
date was $
23.8
million, valued
using the Monte-Carlo simulation model. The assumptions used in the Monte-Carlo
simulation model were as follows:
Time to expiration (in years)
4.5
Volatility
%
Risk-free interest rate
%
Cost of equity
%
Fair value of underlying common stock (as of valuation date)
$
10.07
The stock option awards for Peter Diamandis totaling
815,955
shares had a grant date fair value of $
0.3
million. The assumptions used
in the Monte-Carlo simulation model were as follows:
Time to expiration (in years)
Volatility
%
Risk-free interest rate
0.09
%
Cost of equity
%
Fair value of underlying common stock (as of valuation date)
$
4.12
The compensation
expense for
these awards
is recognized
when the
vesting condition
is met
for the
performance-based
criteria, and
over the derived service period for the market-based criteria.
The
condition
for
the
performance-based
criteria
in
the
stock
options
was
based
on
the
Company's
completion
of
its
IPO,
and
the
condition for the market-based criteria in the stock options
was based on the future price of the Company's common
stock trading at or
above a specified
threshold. During the
year ended December 31,
2021, stock options
for an
aggregate of
5,439,700
of the total
6,799,625
shares containing
performance- and
market-based vesting
conditions were
vested following
the satisfaction
of the
performance-based
condition achieved through
the Company’s
completion of its IPO.
As of December 31,
2022, the market-based
vesting conditions had
not been achieved.
Restricted Stock
The following table summarizes the Company’s
restricted stock activity for the year ended December 31, 2022:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Per Share
Unvested at December 31, 2021
-
$
-
Issued
300,000
3.76
Unvested at December 31, 2022
300,000
$
3.76
The aggregate fair value
of restricted stock that vested
was less than $
0.1
million for the year ended
December 31, 2021.
No
restricted
stock vested during the year ended December 31, 2022.
Stock-Based Compensation Expense
The
Company
recorded
stock-based
compensation
expense
in
the
following
expense
categories
in
the
accompanying
consolidated
statements of operations (in thousands):
Years
Ended December 31,
Research and development
$
3,276
$
1,343
General and administrative
5,438
29,069
Total stock-based
compensation expense
$
8,714
$
30,412
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
As of December 31,
2022, total unrecognized
compensation cost related
to the unvested
stock-based awards was $
16.2
million, which
is expected to be recognized over a weighted average period of
2.7
years.
15. Income Taxes
The sources of losses from
continuing operations, before income taxes, classified between
domestic entities and those entities domiciled
outside of the U.S., are as follows (in thousands):
Years
Ended December 31,
Losses before taxes
Domestic entities
$
(69,943)
$
(128,538)
Entities outside the U.S.
(5,477)
(8,636)
$
(75,420)
$
(137,174)
Tax
Expense (Benefit)
The components of the provision for income taxes are as follows for the years ended
December 31, 2022 and 2021 (in thousands):
Years
Ended December 31,
Current:
Federal
$
-
$
-
State and local
-
-
Foreign
-
-
Total current
tax expense
-
-
Deferred tax (benefit):
Federal
-
-
State and local
-
-
Foreign
-
-
Total deferred tax
(benefit)
-
-
Provision for income taxes
$
-
$
-
Tax
Rate Reconciliation
The Company’s effective
tax rate for the years ended December 31, 2022 and 2021 was
0.00
% and
0.00
%, respectively.
A reconciliation of
the provision for
income taxes
at the
statutory rate to
the amount reflected
in the
consolidated statements of
operations
is as follows (in thousands):
Years
Ended December 31,
Income taxes at statutory rate
21.00
%
21.00
%
State income taxes, net of federal benefit
(1.17)
%
0.50
%
Stock compensation
(0.68)
%
(3.65)
%
Foreign rate differential
(0.59)
%
(0.74)
%
Uncertain tax positions
0.0
%
0.0
%
Other
1.41
%
(1.90)
%
Change in valuation allowance
(19.98)
%
(15.21)
%
Provision for income taxes
0.0
%
0.0
%
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Deferred Tax
Assets (Liabilities)
The Company computes income taxes using the liability method. This method requires recognition of deferred tax assets and liabilities,
measured by enacted rates, attributable to temporary differences between the financial statements and the income tax basis
of assets and
liabilities. In
assessing the
realizability of
deferred tax
assets, the
Company
considers whether
it is
more likely
than not
that certain
deferred tax
assets will
be realized.
The ultimate
realization of
deferred tax
assets is
dependent upon
the generation
of future
taxable
income
in
those
specific
jurisdictions
prior
to
the
dates
on which
such
net
operating
losses expire.
The
Company
maintained
a
full
valuation allowance against
its net deferred
tax assets as of
December 31, 2022 and
2021 because the
Company has determined
that it
is more likely
than not that
these assets will
not be fully
realized based on
a current evaluation
of expected future
taxable income
and
the Company is in a cumulative loss position. The valuation allowance increased
by $
15.0
million during the year ended December 31,
2022 and
$
20.9
million during
the year
ended December 31,
2021, primarily
as a
result of
net operating
losses generated
during the
periods. The Company reevaluates the positive and negative evidence
at each reporting period.
Significant components of the Company’s
deferred tax assets and liabilities are as follows (in thousands):
As of December 31,
Deferred tax assets:
Net operating loss carryforwards
$
39,184
$
32,405
Stock Compensation
2,090
1,735
Section 174 Costs
7,424
-
Other
Total deferred tax
assets
49,257
34,167
Less: valuation allowance
(49,173)
(34,106)
Net deferred tax assets
$
$
Deferred tax liabilities:
Depreciation
$
(84)
$
(61)
Net deferred tax liabilities
(84)
(61)
Net deferred income taxes
$
-
$
-
Net Operating Losses
The Company had total net operating loss carryforwards
for U.S. federal income tax purposes of $
165.1
million, and $
134.6
million as
of December 31, 2022 and 2021, respectively, that have no expiration
date and foreign net operating loss
carryforwards of $
29.2
million
and $
24.0
million, respectively, that
have no expiration date.
Utilization
of
the
NOL
carryforwards
and
credits
may
be
subject
to
a
substantial
annual
limitation
due
to
the
ownership
change
limitations provided
by the Internal
Revenue Code
Sections 382
and 383 (the
“Code”), as amended,
and similar state
provisions. The
Company has not completed
a study to
assess whether an ownership
change has occurred or
whether there have been
multiple ownership
changes since
the Company’s
formation due
to the
complexity and
cost associated
with such
a study,
and the
fact that
there may
be
additional ownership changes in the future. If
the Company experienced an ownership change at
any time since its formation, utilization
of the
NOL or
tax credit
carryforwards to
offset future
taxable income
and taxes,
respectively,
would be
subject to
annual limitation
under the Code. The annual
limitation may result in
the expiration of the NOL and
credits before utilization. If impaired,
the NOL and
credit carryforwards would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance.
On March 27, 2020, the President
of the United States signed into law
the CARES Act, which, along with
earlier issued IRS guidance,
contains numerous
provisions that
may benefit
the Company,
including the
deferral of
certain taxes.
The CARES
Act did
not have
a
material impact on the Company’s
tax provision for the years ended December 31, 2022 and 2021.
The Consolidated Appropriations Act, 2021, which was enacted on December
27, 2020, has expanded, extended, and clarified selected
CARES Act provisions,
specifically on Paycheck Protection
Program loan and Employee
Retention Tax
Credit, 100% deductibility
of
business meals as well
as other tax
extenders. The Consolidated
Appropriations Act did
not have a material
impact on the
Company’s
tax provision for the year ended December 31, 2022 and 2021.
The Inflation Reduction Act (IRA) was signed into law on August 16, 2022. The IRA introduces a 15% corporate alternative minimum
tax
(CAMT)
for
corporations
whose
average
annual
adjusted
financial
statement
income
(AFSI)
for
any
consecutive
three-tax-year
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
period ending after December 31, 2021 and preceding the tax year exceeds $1.0
billion and a 1% excise tax on stock repurchases
made
by publicly traded
U.S. corporations. Since the
Company does not meet
the book income threshold
to be subject to
CAMT,
the excise
tax is not
an ASC 740
tax, they are
not expected to
have any impact.
The other tax
law updates are
not expected
to have any
material
impact to the Company's consolidated financial statements and related disclosures.
The CHIPS
and Science
Act was
signed into
law on
August 9,
2022. The
Act introduces
the advanced
manufacturing investment
tax
credit, a 25% tax credit for investments in semiconductor manufacturing. It also includes incentives for manufacturing semiconductors,
as well as specialized tooling equipment required
in the semiconductor manufacturing process. The Company is not
currently claiming
any such tax credits, as
such the tax law updates
are not expected to have
any material impact to the
Company's consolidated financial
statements and related disclosures.
Enacted in 2017,
the Tax
Cuts and Jobs Act
(“TCJA”) included significant
changes in tax law
including a change
to Internal Revenue
Code section
regarding the
deductibility
of research
and experimentation
expenses (“R&E
expenses”).
The section
174 tax
law
change had a delayed effective date and became effective for the Company in 2022. New section 174 requires that companies capitalize
and amortize R&E expenses
performed in the U.S.
over five years and further
provides for a fifteen-year amortization
period for R&E
expenses
incurred
outside
the
U.S.
The
Company
has
factored
any
impact
of
section
in
the
Company’s
consolidated
financial
statements and related disclosures.
The Company
is subject
to tax
in the
United States
and many
state and
local jurisdictions.
The Company,
with certain
exceptions,
is
subject to income tax examinations by U.S. federal, state and local for tax years 2017 and future periods. The Company is not currently
under audit for any US federal or state or foreign income tax audits.
Uncertain Tax
Positions
A summary of the Company’s unrecognized
tax benefits activity and related information is presented as follows (in thousands):
Years
Ended December 31,
Uncertain tax position liability at the beginning of the year
$
$
Increases (decreases) related to tax positions taken during current period
-
-
Uncertain tax position liability at the end of the year
$
$
The unrecognized tax benefits for U.S. jurisdiction of $
0.7
million, if recognized, would not have an impact
on the Company’s effective
tax
rate
assuming
the
Company
continues
to
maintain
a
full
valuation
allowance
position
against
its
U.S.
deferred
tax
assets.
The
remaining unrecognized tax benefits of less than $
0.1
million, if recognized, will have an impact
on the effective tax rate. The Company
recognizes accrued interest and penalties related
to unrecognized tax benefits in
income tax expense. We accrued $
0.2
million in interest
and penalties related to prior year’s tax filings, as of
December 31, 2022.
The
Company
is subject
to
U.S. federal
income
tax
as well
as income
tax
of various
foreign
jurisdictions.
Generally,
the
statute
of
limitations for examination
of the Company’s
U.S. federal and
foreign income tax
filings are open
for the years
ending December 31,
2017 and future periods.
16. Net Loss Per Share
The Company’s unvested restricted
common shares have been excluded from the computation of basic net loss per
share.
The
Company’s
potentially
dilutive
securities,
which
include
options,
unvested
restricted
stock,
convertible
notes
payable
and
convertible
preferred stock, have been excluded
from the computation of diluted net
loss per share as the effect
would be to reduce the
net loss per share.
Therefore, the weighted average
number of common
shares outstanding used to
calculate both basic and
diluted net
loss per share is the
same. The Company excluded
the following potential common
shares, presented based on
amounts outstanding at
each period end, from the computation of diluted net loss per share for the years ended December 31, 2022 and 2021 because including
them would have had an anti-dilutive effect:
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
December 31,
Unvested restricted stock
300,000
-
Options issued and outstanding
20,416,760
21,387,909
Warrants issued and
outstanding
1,928,020
1,928,020
22,644,780
23,315,929
17. Commitments and Contingencies
Contractual Obligations
The Company
enters into
agreements with
contract research
organizations
(“CROs”) to
conduct clinical
trials and
preclinical studies
and contract manufacturing organizations
(“CMOs”) to produce vaccines and other
potential product candidates. Contracts with
CROs
and CMOs are generally cancellable, with notice, at the Company’s
option.
As of December 31, 2022, the Company
had remaining prepayments to CROs of
$
2.9
million and remaining prepayments to
CMOs of
less than
$
0.1
million for
activities associated
with the
conduct of
its clinical
trials and
for the
production of
the Company’s
product
candidates.
Michael J. Fox Foundation Grant
On November 3,
2021, the Company
was awarded a
grant from the
Michael J. Fox
Foundation for Parkinson’s
Research (“MJFF”) in
the amount of $
0.8
million to be used
in a project for
the exploration of markers
for target engagement
in individuals immunized
with
UB-312, an
active
a
-Synuclein immunotherapy.
The Company
will oversee
sample management,
sample preparation
(IgG fractions)
and
distribution,
as
well
as
characterize
the
binding
properties
of
the
antibodies
against
pathological
forms
of
aSyn.
As
funding
is
expected to be
utilized over a
two-year period, as
cash is
received, the amount
expected to the
utilized within twelve
months is
recognized
to short-term
restricted cash/deposits,
with a
corresponding short-term
accrued liability,
which is
released as
the related
expenses are
offset. The Company recognizes
payments from MJFF as a
reduction of research and development
expenses, in the same period
as the
expenses that the
grant is
intended to
reimburse are incurred.
The remaining balance
of cash
received is recognized
to long-term
restricted
cash/deposits, with a
corresponding long-term accrued liability. As
of December 31, 2022,
there was
no
balance remaining in
the accrued
liability related to this grant. For
the years ended December 31, 2022 and 2021,
the Company recognized $
0.1
million and less than $
0.1
million, respectively,
as a reduction of research and development expenses for amounts reimbursed through
the grant.
Coalition for Epidemic Preparedness Innovations (“CEPI”) Grant
In April
2022, the
Company entered
into an
agreement with
the Coalition
for Epidemic
Preparedness Innovations
(“CEPI”) whereby
CEPI has
agreed to
provide
funding of
up to
$
9.3
million to
co-fund
a Phase
3 clinical
trial of
Vaxxinity’s
next generation
UB-612
COVID-19
vaccine
candidate
as
a
heterologous
-
or
‘mix-and-match’
-
booster
dose.
The
Phase
trial,
which
began
in
2022,
is
evaluating the
ability of
UB-612 to
boost COVID-19
immunity against
the original
strain and
multiple variants
of concern
including
Omicron - in people aged 16 years or older, who
have been previously immunized with an authorized COVID-19
vaccine.
The Company will also be performing further manufacturing scale-up
work to enable readiness for potential commercialization. Under
the terms of the
agreement with CEPI, if
successful, a portion
of the released doses
of the commercial
product will be delivered
to the
COVID-19 Vaccines
Global Access (“COVAX”)
consortium for distribution to developing countries at low cost.
Cash payments received in advance under the CEPI Funding Agreement are restricted as to their use until expenditures contemplated in
the funding agreement are
incurred. As funding is expected
to be received in tranches
over an eighteen month period,
and the amounts
received in each tranche are expected to the utilized within twelve months, the funds received are reflected within restricted cash with a
corresponding short-term accrued liability.
The Company recognizes payments from
CEPI as a reduction of research
and development
expenses, in the same period as the expenses that the grant is intended to reimburse are incurred. As of December 31, 2022, the balance
of the restricted cash and
short-term accrued liability was
$
1.0
million. For the year ended
December 31, 2022, the Company recognized
a reduction of $
7.5
million of research and development expenses.
Lease Agreements
The Company has
two
operating lease agreements for
office and laboratory space.
The Company is
also required to
pay certain operating
costs under its leases.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
In August 2022, the Company entered into a lease for
9,839
square feet of lab and office space with Space Florida in
Exploration Park,
Florida commencing August 12,
2022. The lease
has an initial
one-year
term with an
annual lease obligation of
$
0.5
million, after Lessee
credits. Additionally,
the lease requires the Company to provide a security deposit in the amount of less than
$
0.1
million.
In April 2022, the
Company entered into a
facility lease agreement for
4,419
square feet of office
space in New York,
New York.
The
lease commenced in April 2022
and will expire March 2029 with
no option to renew.
This lease and its terms were
reviewed using the
guidance found in ASC 842. Since the lease has a non-cancellable period of
one year
, and after the first year both the Company and the
landlord have the
option to early
terminate the lease
for any or
no reason, the
Company has elected
to apply the
short-term expedient,
which does not subject the New York
lease to capitalization.
Rent expense for each
of the years
ended December 31, 2022 and
2021 amounted to
$
0.5
million and less
than $
0.1
million, respectively.
License Agreements
In October 2014, the Company entered into a contribution agreement with
UBI, whereby UBI contributed and assigned to the Company
assets and granted
a non-exclusive license
to certain technologies deemed
necessary or reasonably
useful in the
utilization of the licensed
intellectual
property.
In consideration,
the Company
issued
32,505,306
shares of
common stock
to UBI.
The agreement
allowed for
exploitation of all diagnostic, prophylactic, and therapeutic
uses and indications in humans in
the field of neurology. The agreement was
amended in
August 2019
to provide
the Company
with exclusivity
(except as
to UBI)
in the
field of
neurology and
the flexibility
to
pursue indications outside the initial field limitations.
In connection with
the amendment, the
Company agreed to execute
an exclusive, worldwide
license agreement for
any product that
is
developed by the
Company outside the original
field. The terms and
conditions are to be
negotiated in good
faith and mutually
agreed
upon. The
Company anticipates
that if
it is required
to enter into
an exclusive
license agreement,
it will be
able to negotiate
financial
terms for the license
at prevailing market
rates within the pharmaceutical
industry.
Accordingly,
the Company may
be required to pay
UBI upfront fees, revenue royalties, development milestones, commercial
milestones, sublicense fees, and other related fees.
Vaxxinity’s
COVAXX
subsidiary was
formed in March
2020 through
a transfer of
technology from
UBI, UBI IP
Holdings, and
UBI
US Holdings, LLC,
all related parties
of the Company,
whereby the Company,
pursuant to an
April 2020 license
agreement, obtained
exclusive
rights to
intellectual
property
and
technology
related
to the
discovery
of vaccines,
diagnostic
assays,
and
antigens
for
use
against all coronaviruses including,
without limitation, SARS,
MERS, and COVID-19 in
all strains in
humans. The license is
worldwide,
perpetual, exclusive and fully paid-up. There are no future royalty or milestone
payment obligations associated with the agreement. The
Company has the right to grant sublicenses.
The
Company
considered
ASC
805,
“Business
Combinations”
and
ASC
730,
“Research
and
Development”
in
determining
how
to
account for the
issuance of common
stock. The license
agreement is considered
to be a common
control transfer; however,
the related
party did not have any basis in the assets licensed, so there was no accounting impact for
the Company.
In August 2021,
Vaxxinity
entered into a
license agreement (the
“Platform License
Agreement”) with UBI
and certain of
its affiliates
that
expanded
intellectual
property
rights
previously
licensed
under
previously
issued
license
agreements
with
UBI.
As
part
of
the
agreement, Vaxxinity
obtained a worldwide, sublicensable
(subject to certain conditions), perpetual,
fully paid-up, royalty-free license
to
research,
develop,
make,
have
made,
utilize,
import,
export,
market,
distribute,
offer
for
sale,
sell,
have
sold,
commercialize
or
otherwise exploit peptide-based vaccines in the field of all human prophylactic and therapeutic uses, except for such vaccines related to
human immunodeficiency
virus (HIV), herpes
simplex virus (HSE)
and Immunoglobulin E
(IgE). The patents
and patent applications
licensed under the
Platform License Agreement
include claims directed
to a CpG delivery
system, artificial T
helper cell epitopes
and
certain designer
peptides and
proteins utilized
in UB-612.
As described
above, in
consideration for
the Platform
License Agreement,
the Company issued to UBI a warrant to purchase Class A common stock (the
“UBI Warrant”).
The Company considered ASC 805, “Business Combinations” (“ASC 805”) and ASC 730,
“Research and Development” (“ASC 730”)
in determining how to account
for the issuance of the
Class A common stock warrants. The
Class A common stock warrants
were issued
to a related party in exchange for a license agreement.
The majority of the voting interests in the related party
and that of the Company
were held
by a
group of
immediate family
members, at
the time
of the
transaction, and
as such the
transaction constitutes
a common
control transaction,
which requires
the license
to be
accounted for
at the
carrying value
in the
books of
the transferor.
As the
related
party did not have any basis in the assets licensed, there was no accounting impact for
the Company.
Indemnification Agreements
In the
ordinary course
of business,
the Company
may provide
indemnification of
varying scope
and terms
to employees,
consultants,
vendors, lessors,
business partners
and other
parties with
respect to
certain matters
including, but
not limited
to, losses
arising out
of
breach of such agreements
or from intellectual property
infringement claims made by
third parties. In addition,
the Company has entered
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
into indemnification
agreements with
members of
its board
of directors
and executive
officers that
will require
the Company,
among
other things, to indemnify them
against certain liabilities that may
arise by reason of their status or
service as directors or officers.
The
maximum potential amount
of future payments the
Company could be
required to make under
these indemnification agreements
is, in
many cases, unlimited.
To
date, the Company
has not incurred
any material
costs as a
result of
such indemnification
obligations. The
Company
is
not
aware
of
any
indemnification
arrangements
that
could
have
a
material
effect
on
its
financial
position,
results
of
operations, or cash flows, and it has not accrued any liabilities related to such obligations
as of December 31, 2022 or 2021.
Legal Proceedings
From
time
to
time,
the
Company
may
become
involved
in
legal
proceedings
arising
in
the
ordinary
course
of
business.
As
of
December 31, 2022 and 2021, the Company was not a party to any material legal matters
or claims.
In December 2022,
the Board became
aware of pending
litigation filed by
the Company’s
CEO against a
significant stockholder,
Ask
America, LLC (“Ask America”).
The CEO filed the lawsuit in Texas in May 2022 regarding an alleged private agreement
between the
CEO,
the
Company’s
Chairman,
and
Ask
America,
relating
to
the
potential
purchase
of
stock
by
Ask
America
in
the
Company’s
November 2021
initial public offering,
on behalf of
a former director.
Ask America asserts
that the CEO
and Chairman guaranteed
a
loan
by
Ask
America
to
fund
the
former
director’s
contemplated
purchase.
The
lawsuit
seeks
a
declaration
that
no
enforceable
transaction was
ever completed
or consummated.
Although the
Company is
not a
party to
the litigation,
the Board
formed a
special
committee, comprised
of independent
directors who
are being
advised by
independent legal
counsel, to
conduct an
investigation into
the
circumstances
of
the
litigation
and
the
purported
transaction.
The
investigation
concluded
in
the
first
quarter
of
2023,
and
the
company is
evaluating certain
additional control
measures, including
(i) additional
training for
executives and
directors on
securities
regulations,
(ii)
additional
internal
reporting
requirements
regarding
transactions
between
Company
insiders,
stockholders,
or
other
related
parties,
and
(iii)
retention
of
a
consultant
or
other
advisor
with
public
company
and
capital
markets
experience
to
assist
management in connection with capital markets strategy and activity.
Loss Contingency
In April 2021, the Company engaged United Biopharma, Inc. (UBP) to begin
acquiring raw materials for use in the production of
GMP grade recombinant protein for UB-612, our Covid vaccine candidate.
It was anticipated that $
7.2
million in raw materials would
be needed to produce the initial 30kg of protein. An Authorization to Proceed (ATP)
agreement authorized UBP to acquire the first $
million of materials using an advance payment from Vaxxinity,
pending execution of a final supply agreement between the parties.
Through August 2021, $
7.2
million of materials were ordered, $
million of materials were received by UBP and paid for with the
advance payment, and the Company expensed $
1.2
million as these raw materials were used to produce proteins.
During 2022,
Vaxxinity
recognized an additional $
1.8
million in expense related to the materials UBP had taken possession of but had not yet
used
in production.
When Vaxxinity
asked to pause further manufacture of protein upon rejection of the EUA by Taiwan
in August 2021, UBP requested
that its suppliers cancel the remaining $
4.2
million in orders where it had not taken possession of the materials. In the fourth
quarter of
2022, the Company learned that most of the suppliers refused to cancel
the orders, although some agreed to seek other buyers for the
materials. For these orders, management has not yet concluded that
a loss for Vaxxinity
for this entire amount is probable, since they
were not originally authorized by the ATP,
and UBP’s suppliers may be able to dispose
of some amount to other buyers. Hence, an
expense has not been recognized for them.
18. Benefit Plans
In
March
2018,
the
Company
established
a
defined
contribution
savings
plan
under
Section
401(k)
of
the
Code.
This
plan
covers
substantially all
U.S. employees
who meet
minimum age
and service
requirements and
allows participants
to defer
a portion
of their
annual compensation on a pre-tax basis. The Company does not make matching
contributions to the Plan.
The Company offers
its Ireland-based employees
a Personal Retirement Savings
Account (“PRSA”) that allows
participants to defer a
portion of their annual compensation. The Company provides contributions
equal to
% of each participant’s annual
salary. During the
years ended December 31, 2022 and 2021, the Company contributed
less than $
0.1
million per year to the PRSA accounts.
19. Related Party Transactions
The Company has a Related
Party policy which defines related parties,
and assigns oversight responsibility for related party
transactions
to
the
Company's
Audit
Committee.
The
Committee
reviews
in
advance
related
party
transactions,
and
considers
multiple
factors,
including the proposed aggregate
value of the
transaction, or, in the
case of indebtedness,
the amount of
principal that would
be involved,
the benefits
to the
Company of
the proposed
transaction, the
availability of
other sources
of comparable
products or
services, and
an
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
assessment of
whether the
proposed transaction
is on terms
that are comparable
to the terms
available to
or from, as
the case may
be,
unrelated third parties.
Under the policy,
related party transactions
are approved only
if the Audit Committee
determines in good
faith
that the transaction is not inconsistent with the interests of the Company
and its shareholders.
The Company has related party arrangements with UBI
and a number of its
affiliated companies listed namely, United Biomedical, Inc.,
Asia (“UBI-Asia”), UBI Pharma, Inc. (“UBI-P”), United BioPharma,
Inc (“UBP”) and UBI IP Holding (“UBI-IP”).
As of December 31, 2022 UBI and its affiliated companies
owned
% of the Company’s stock. The majority
of the voting interests in
both UBI and the Company were held by a group of immediate family members
,
and as such the entities are under common control.
These related parties are governed by various Master Services Agreement
s
(“MSA”) detailed below.
UBI MSA - UBI provides research, development and clinical functions to the Company. There is also a purchase arrangement with
UBI for the production and shipment of the Company’s
diagnostic test kits.
UBIA MSA - UBI-Asia for manufacturing, quality control, testing, validation,
and supply services.
UBP MSA - United BioPharma, Inc provide the Company with manufacturing,
testing and validation.
COVID MSA (“COVID
MSA”) -
COVID MSA provides
that UBI acts
as COVAXX’s
agent with respect
to matters relating
the
Company’s COVID-19 program and provides research,
development, manufacturing and back office administrative services to the
Company.
COVID-19
Relief
MSA
-
A
four-company
MSA
with
UBI,
UBI-Asia
and
UBP.
The
Company
is
an
exclusive
licensee
of
technologies related to diagnostics, vaccines, and therapies for COVID-19.
The MSA established the terms under which UBI-Asia
provides research, development,
testing and manufacturing services
to the Company and
UBP provides contract
development and
manufacturing services to the Company.
Total
amounts
due
to
related
parties
were
$
12.8
million
and
$
19.4
million
as
of
December 31,
and
2021,
respectively.
Total
amounts due
from related
parties were
$
0.4
million and
$
0.4
million as
of December 31,
2022 and
2021, respectively.
Total
service
fees incurred were $
4.2
million and $
35.4
million for the years ended December 31, 2022 and 2021, respectively.
Taiwan
Centers for Disease Control Grant (“Taiwan
CDC”)
UBI-Asia, which is responsible for applying for and managing grants on our behalf under the
COVID-19 program, was awarded a grant
by the Taiwan CDC for COVID-19 vaccine development. The Company contracted with UBI-Asia to conduct a two-phase clinical trial
of a COVID-19 vaccine candidate in Taiwan,
which was completed in 2021. Costs that were incurred to complete the two phases of the
clinical trial were reimbursed based on the achievement of certain milestones
as provided in the agreement.
Total related party operating
activity, including the activity described
above is as follows (in thousands):
December 31,
Consolidated balance sheet
Assets
Prepaid expenses and other current assets
$
$
3,517
Property and equipment, net
-
Amounts due from related parties
Liabilities
Accrued expenses
-
-
Amounts due to related parties
12,772
19,407
Current portion of note payable
1,113
-
Note payable
3,112
-
Accrued interest payable
$
$
-
VAXXINITY,
INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Years
Ended December 31,
Consolidated statements of operations
Revenue
$
-
$
-
Cost of revenue
-
-
Operating expenses
Research and development
Services provided by related parties
4,172
41,430
Taiwan CDC grant reimbursement
from related party
-
(7,199)
General and administrative
Services provided by related parties
-
1,173
Other (income) expense
Related party interest expense
$
$
-
20. Subsequent Events
On March 9, 2023, the Company completed its rolling submission of a conditional authorization
application to the UK MHRA for UB-
612 based on the Phase 3 study results.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management,
with the
participation of
our principal
executive officer
and principal
financial officer,
evaluated, as
of and
for the
year ended of the
period covered by this
Annual Report on Form
10-K, the effectiveness
of our disclosure
controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). In designing and evaluating our disclosure controls
and procedures,
management
recognizes
that
any
controls
and
procedures,
no
matter
how
well
designed
and
operated,
can
provide
only
reasonable
assurance of achieving the desired control objectives. In addition,
the design of disclosure controls and procedures must reflect the fact
that there
are resource
constraints, and
that management
is required
to apply
judgment in
evaluating the
benefits of
possible controls
and procedures relative to their costs. Based on management’s
evaluation our principal executive officer
and principal financial officer
concluded that, as of December 31, 2022, our disclosure controls and procedures
were effective at the reasonable assurance level.
Report on Internal Control Over Financial Reporting
The
Company’s
management
is responsible
for
establishing
and
maintaining
adequate
internal
control over
financial
reporting.
The
internal control process has been designed under management’s supervision
to provide reasonable assurance regarding the reliability of
financial reporting and the
preparation of the
Company’s consolidated financial statements for external
reporting purposes in
accordance
with U.S. GAAP.
Management conducted an
assessment of
the effectiveness of
the Company’s internal control
over financial reporting
as of
December 31,
2022 utilizing
the framework
established in
Internal Control
- Integrated
Framework (2013)
issued by
the Committee
of Sponsoring
Organizations
of
the
Treadway
Commission
(COSO).
Based
on
this
assessment,
management
has
determined
that
the
Company’s
internal control over financial reporting as of December 31, 2022
is effective.
The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that
accurately and
fairly reflect,
in reasonable
detail, transactions
and dispositions
of assets;
and provide
reasonable assurances
that: (1)
transactions are
recorded as
necessary to
permit preparation
of financial
statements in
accordance with
U.S. GAAP;
(2) receipts
and
expenditures
are
being
made
only
in
accordance
with
authorizations
of
management
and
the
directors
of
the
Company;
and
(3)
unauthorized acquisition, use,
or disposition of the
Company’s assets
that could have a
material effect on
the Company’s
consolidated
financial statements are prevented or timely detected.
All internal
control systems,
no matter
how well
designed, have
inherent limitations.
Therefore, even
those systems
determined to
be
effective can
provide only
reasonable assurance
with respect
to financial
statement preparation
and presentation.
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 that the degree of compliance with the policies or procedures
may deteriorate.
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to an
exemption established by the JOBS Act for “emerging growth
companies.”
Changes in Internal Control Over Financial Reporting
A material
weakness is
a deficiency,
or combination
of deficiencies,
in internal
control over
financial reporting,
such that
there
is a
reasonable
possibility
that
a material
misstatement
of
a
company’s
annual and
interim
consolidated
financial
statements
will not
be
detected or prevented on a timely basis.
During
2022,
we
invested
resources
to
remediate
the
material
weaknesses
identified
in
the
preparation
of
our
audited
consolidated
financial statements for the year ended December 31, 2021 and in the
preparation of our unaudited consolidated financial statements for
the quarter ended March 31, 2022. These remediation activities involved
the following:
•
hiring additional accounting
personnel with the
appropriate level of
skill and experience
for public company
financial reporting;
•
designing and implementing a formal financial close process
that includes multiple levels of reviews of accounting
entries; and
•
supplementing our resources for evaluating and
accounting for complex transactions and
stock options through the use
of third-
party advisors.
Other
than
the
measures
described
in
“Remediation
Measures”
above,
there
were
no
changes
in
our
internal
control
over
financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) during the quarter ended December 31, 2022
that have
materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

---

ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
None.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

---

ITEM 11. EXECUTIVE COMPENSATION

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents
filed as part of this Report:
(1)
Financial Statements
.
The following
consolidated
financial statements
and the
notes thereto,
and the
Reports of
Independent
Registered Public Accounting Firm are incorporated by reference
as provided in Item 8 and Item 9A of this Report:
Audited Consolidated Financial Statements as of and for the years ended
December 31, 2022 and 2021
Report of Independent Registered Public Accounting Firm
(PCAOB ID: 32)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Convertible Preferred Stock
Consolidated Statements of Stockholders’ Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2)
Financial Statement Schedules.
(b) Exhibits:
The following exhibits
required by Item 601
of Regulation S-K
are filed herewith
or have been
filed previously with
the SEC as
indicated
below:
Exhibit
No.
Index to Exhibits
3.1
Amended and Restated Certificate of Incorporation of Vaxxinity, Inc. (incorporated by reference to Exhibit 3.1 of our
Current Report on Form 8-K (File No. 001-41058) filed on November 17, 2021).
3.2
Amended and Restated Bylaws of Vaxxinity, Inc. (incorporated by reference to Exhibit 3.2 of our Current Report on
Form 8-K (File No. 001-41058) filed on November 17, 2021).
4.1
Warrant to Purchase Shares of Class A Common Stock of Vaxxinity, Inc. (incorporated by reference to Exhibit 4.1 of
our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).
4.2
Description of Registered Securities*
10.1
Form of Indemnification Agreement between Vaxxinity, Inc. and each of its directors and executive officers
(incorporated by reference to Exhibit 10.1 of our Registration Statement on Form S-1 (File No. 333-260163) filed on
October 8, 2021).
10.2
Registration Rights Agreement (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No.
001-41058) filed on November 17, 2021).
10.3
Voting Agreement, dated as of October 1, 2021, among Mei Mei Hu, Louis Reese, Blackfoot Healthcare Ventures LLC
and United Biomedical, Inc. (incorporated by reference to Exhibit 10.3 of our Registration Statement on Form S-1 (File
No. 333-260163) filed on October 8, 2021).§
10.4
Platform License Agreement, dated as of August 5, 2021, among Vaxxinity, Inc., United Biomedical, Inc., UBI IP
Holdings and UBI US Holdings, LLC (incorporated by reference to Exhibit 10.4 of our Registration Statement on Form
S-1 (File No. 333-260163) filed on October 8, 2021).§
10.5
United Neuroscience 2017 Share Option and Grant Plan (incorporated by reference to Exhibit 10.5 of our Registration
Statement on Form S-1 (File No. 333-260163) filed on October 8, 2021).+
10.6
C19 Corp. 2020 Stock Option and Grant Plan (incorporated by reference to Exhibit 10.6 of our Registration Statement
on Form S-1 (File No. 333-260163) filed on October 8, 2021).+
10.7
Vaxxinity, Inc. 2021 Stock Option and Grant Plan (incorporated by reference to Exhibit 10.7 of our Registration
Statement on Form S-1 (File No. 333-260163) filed on October 8, 2021).+
10.8
Letter agreement by and between United Neuroscience, LLC and Dr. Farshad Guirakhoo, dated May 4, 2020
(incorporated by reference to Exhibit 10.8 of our Registration Statement on Form S-1 (File No. 333-260163) filed on
October 8, 2021).+
10.9
Vaxxinity, Inc. 2021 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit 10.9 of our
Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).+
10.10
Vaxxinity, Inc. 2021 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.10 of our Registration
Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).+
10.11
Form of Incentive Stock Option Grant Notice under the 2021 Stock Option and Grant Plan (incorporated by reference to
Exhibit 10.11 of our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).+
10.12
Form of Non-Qualified Stock Option Grant Notice under the 2021 Stock Option and Grant Plan (incorporated by
reference to Exhibit 10.12 of our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5,
2021).+
10.13
Form of Restricted Stock Award Notice under the 2021 Stock Option and Grant Plan (incorporated by reference to
Exhibit 10.13 of our Registration Statement on Form S-1/A (File No. 333 -260163) filed on November 5, 2021).+
10.14
Form of Notice of Stock Option Award 2021 Omnibus Incentive Compensation Plan (incorporated by reference to
Exhibit 10.14 of our Registration Statement on Form S-1/A (File No. 333 -260163) filed on November 5, 2021).+
10.15
Form of Notice of Restricted Stock Unit Award 2021 Omnibus Incentive Compensation Plan (incorporated by reference
to Exhibit 10.15 of our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).+
21.1
Subsidiaries of Vaxxinity, Inc.*
24.1
Power of attorney (included on signature page)
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1
Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002*‡+
101.INS
Inline XBRL Instance Document*
101.SCH
Inline XBRL Taxonomy
Extension Schema Document*
101.CAL
Inline XBRL Taxonomy
Extension Calculation Linkbase Document*
101.DEF
Inline XBRL Taxonomy
Extension Definition Linkbase Document*
101.LAB
Inline XBRL Taxonomy
Extension Label Linkbase Document*
101.PRE
Inline XBRL Taxonomy
Extension Presentation Linkbase Document*
Cover Page Interactive Data File (the cover page XBRL tags are embedded
within the Inline XBRL document).*
__________________________
*
Filed herewith.
+
Indicates management contract or compensatory plan, contract or arrangement.
§
Portions of
the exhibit,
marked by
brackets, have
been omitted
because the
omitted information
(i) is not
material and (ii)
is
the type of information that the Company treats as private or confidential.
‡ The certifications attached as Exhibits 32.1 that accompany this Form 10-K
are deemed furnished and not filed with the
Securities and Exchange Commission and are not to be incorporated by reference
into any filing of Vaxxinity,
Inc. under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, whether made before or after the date of this
Form 10-K, irrespective of any general incorporation language contained
in such filing.
(c) Schedules:
None