EDGAR 10-K Filing

Company CIK: 1851657
Filing Year: 2024
Filename: 1851657_10-K_2024_0001562762-24-000071.json

---

ITEM 1. BUSINESS
Item 1. Business.
Overview
We
are a purpose-driven biotechnology company
committed to positively impacting humanity
by democratizing healthcare across the
globe. Our metric for success is simple:
amount of human suffering alleviated. We doggedly pursue this as our north
star, and aim to be
number one in the world at this metric. Our vision is to redefine the paradigm for tackling the global epidemic of chronic diseases, and
provide cheaper, safer, more convenient and effective medicines to all.
There are many inventions that have served thousands
of lives, and some that have benefited
a million lives, but only a select
few that
have saved billions
lives. These include
the innovations of
fertilizer of the
green revolution to
feed an exponentially
growing population,
hygienic plumbing to
control cholera and
typhoid, and vaccines
to prevent over
20 dangerous or
deadly diseases. We
believe that we
have a technological innovation in medicine with the potential for a billion-person impact within the chronic disease
epidemic.
Today’s
approach to
treating patients
suffering from
chronic disease
is focused
on and
increasingly dominated by
drugs, particularly
monoclonal antibodies (“mAbs”), which can be
highly efficacious but remain limited by prohibitive costs,
cumbersome administration,
and
restricted scale.
We
believe our
synthetic peptide-based
Active
Immunotherapy Medicines
Platform (“AIM
Platform” formerly
called the Vaxxine Platform) has the potential to enable a new class of
medicines that will improve the quality
and convenience of care,
reduce costs and increase access to
treatments for a wide range of indications.
Moreover, we believe that
due to the unique features of
our AIM Platform, these new medicines can
enable an expansion from treating sick patients
to prevention of illness in healthy people.
Medicine
is
only
as
effective
as
its
access,
and
we
believe
there
is
a
path
to
increasing
the
number
of
people
who
have
access
to
immunotherapies from less than 1% of the world today to nearly anyone that could benefit.
Our AIM
Platform is
designed to
harness the
immune system
to convert
the body
into its
own “mAb
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 AIM Platform
has the potential
to overcome these challenges
and to bring
the efficiency of vaccines
to a whole new
class of medical
conditions. Our technology has
been commercialized independently in
billions of doses
of animal health
vaccines, tested in
over four
thousand human
subjects across
multiple candidates
and clinical
trials, including
the company’s
first completed
Phase 3
study.
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, diseases
that collectively
affect billions
of people
in the
world today
and of
which hundreds
of millions
more are
at high
risk of
contracting. Additionally,
we
believe our AIM 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
have
assembled
an
industry-leading
team
with
extensive
experience
developing successful
drugs that
is committed
to realizing
our mission
of alleviating
the greatest
amount of
suffering we
can in
the
world. 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.
The Chronic Disease Epidemic
More people today are suffering from
a chronic disease than ever before. Chronic diseases
kill 41 million people each year,
or 74% of
all deaths globally.
These diseases are
ongoing, generally incurable illnesses
or conditions that
gradually onset and
tend to be
of long
duration such as heart disease, cancer and AD.
Less than a century ago, the chronic
disease and disability prevalence was about 7.5% in
adults in the U.S. By 2000,
the proportion of
Americans with at least
one chronic disease had
grown to 45%, and
today, only two decades later, it has grown
to 60% of all
adults. The
proportion with multiple
chronic diseases
has similarly skyrocketed
to 40% of
adults in the
U.S. today. Overall, chronic
disease accounts
for 70% of deaths and nearly 90% of overall healthcare expenditure in the U.S.
The epidemic
is not
limited to
the U.S.
or the
developed world.
To
the contrary,
chronic diseases
disproportionately affect
low- and
middle-income countries (LMICs) where 77% of all
chronic disease deaths occur. Each year, 17 million people die of a chronic disease
before age
70, and
86% of
these premature
deaths occur
in LMICs.
According to
the World
Health Organization
(“WHO”), chronic
disease
is
closely
linked
with
poverty
in
what
can
become
a
vicious
cycle.
More
limited
access
to
health
services
by
socially
disadvantaged people
underlies increased
incidence of
chronic disease.
Meanwhile, healthcare
costs for
treatment of
these diseases,
which often become lengthy and expensive,
can quickly drain household resources. The WHO
estimates millions of people are forced
into poverty annually due to chronic disease.
Limitations of the Current Healthcare Paradigm
Since 2000, there have
been over 700 new
medicines approved by
the FDA, mostly to
treat chronic illnesses,
and yet the chronic
disease
epidemic continues to grow.
We believe that medicine is only as effective as its access, and many of the newest medicines are limited to less than 1% of the world’s
patient population. 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, and even within those systems, to a small subset of patients.
One class of drugs in particular exemplifies the current environment: biologics, especially mAbs. In
2022, biologics represented seven
of
the
fifteen top
selling drugs,
of
which
six were
mAbs. The
global
market for
mAbs totaled
approximately $202 billion
in
2022,
representing over 60%
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,
rather than
prevention or early intervention in disease.
Thus, due to their cost and administrative burden, mAbs account for less than 2% of all
prescriptions in the U.S., and, based on internal
estimates, less
than 1%
worldwide. Meanwhile, the
alternative to
mAb 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 Scalable AIM Platform Solution
Our vision is to disrupt the existing
paradigm of chronic disease treatment
with a new class of active immunotherapeutic
medicines that
can potentially improve the health of more people, more conveniently, for less money.
Our AIM Platform
is designed to
harness the immune
system to convert
the body into
its own “drug
factory,” to stimulate
the production
of
antibodies
with
a
therapeutic
or
protective
effect,
and
to
be
scaled
to
supply
millions
or
even
billions
of
persons.
In
contrast,
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
active immunotherapies,
or 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 at
addressing infectious
diseases, previous
attempts to
utilize vaccines
to
address
chronic
disease
have
not
achieved
both
acceptable
safety
and
efficacy.
Our
AIM
Platform
technology
contains
modular
components
that
can
be
rapidly
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 AIM 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
synthetic peptide
vaccine technology
utilized by
our AIM
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
AIM
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 for population health level diseases:
•
Cost and Scalability
: Whereas monoclonal antibodies require
costly and complex biological manufacturing
processes,
our
manufacturing
process
is
chemically
based
and
highly
scalable,
and
requires
lower
capital
expenditures.
Our
AIM
Platform has
been designed
and tested
to produce
on a scale
of hundreds
of millions
of doses
of GMP manufactured
material. 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 and Convenience
: 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. We
are also
in the
early stages
of exploring
additional modes
of administration,
including intradermal
delivery that
may be
administered in an at-home setting, potentially offering enhanced convenience to patients.
•
Efficacy
: In
our clinical
trials conducted
to date,
our product
candidates have
yielded high
response rates
(90% or above
at target
dose levels for
UB-311, UB-312,
UB-313, and UB-612),
high target-specific
antibodies against self-antigens
(as
seen
in
UB-311,
UB-312,
and
UB-313 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). We have observed target engagement in patient CSF in a Phase 1 clinical trial
of our UB-312
program.
See our descriptions
of these clinical
trials under “-Our Product
Candidates.” Our AIM
Platform also enables
the
combining
of
multiple
target
antigens
into
a
single
formulation.
For
indications
that
could
be
treated
more
effectively
with
a
multivalent approach, we
believe our AIM
Platform would have
an advantage over
other modalities. Further, because
our AIM 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.
Finally,
we believe
that the
improved convenience
of our
product candidates
as compared
to mAbs
has the
potential to
lead to
increased adherence
by patients
and therefore
improve overall
effectiveness of our candidates.
•
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 relevant mAb or small molecule alternative for the relevant disease.
Our Targeted Impact
Our current
pipeline addresses
leading areas
of unmet
medical need,
from AD
to heart
disease, impacting
nearly 3.5
billion persons
worldwide, and resulting
in over 8
million annual deaths
and $4 trillion
dollars in economic
impact globally. The following table
depicts
our R&D 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.
For each
candidate, we
believe the
targeted biology
has been
validated or
de-risked either
through published genetic evidence or by a successfully licensed mAb against the same target.
Neurodegenerative Disease Programs:
•
UB-311
: Targets toxic forms of aggregated amyloid-beta (“Aβ”) in the brain to fight AD, a disease
affecting 44 million people worldwide, resulting in 1.6 million annual deaths and over $3 trillion in estimated economic cost. 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. Although not powered for statistical significance, the Phase 2a trial showed dose-
dependent trends of slowing of cognitive decline by 48% versus placebo, as measured by CDR-SB. 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 next clinical trial will be determined based upon the timing of additional
financing or a strategic partnership.
•
UB-312
: Targets toxic forms of aggregated α-synuclein (“aSyn”) in the brain and peripheral tissues to fight
PD and other synucleinopathies, such as Lewy body dementia (“LBD”) and multiple system atrophy (“MSA”), diseases
together
affecting 16 million people worldwide, resulting in 400,000 annual deaths and over $80 billion in estimated economic cost. Part A and
Part B of a Phase 1 trial in healthy volunteers and Parkinson’s patients, respectively, have been completed and have 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”).
UB-312-induced antibodies were observed in the serum and CSF of both healthy volunteers and PD patients,
and showed preferential binding to aggregated aSyn and almost no binding to normal monomeric aSyn. Two exploratory biomarkers
were evaluated as measures of target engagement: aggregated aSyn as measured by a semi-quantitative seed amplification assay
(“SAA”), and phosphorylated aSyn (pS129 aSyn).
PD patients with UB-312-induced antibodies in the CSF showed a significant
reduction from baseline in pathological aSyn in the CSF compared to the placebo group as measured by both SAA and pS129 aSyn.
A
post hoc
analysis showed that patients with detectable UB-312-induced antibodies in the CSF exhibited improvement in activities of
daily living versus placebo, as measured by the MDS-UPDRS II clinical scale. We believe UB-312 is the first immunotherapy
candidate to show data of reduction of pathological aSyn in CSF of PD patients. The next step will be to conduct a Phase 2 trial to
optimize a dose regimen and to confirm target engagement in PD patients.
•
VXX-301
:
We
are
developing
an
anti-tau
product
candidate
that
has
the
potential
to
address
multiple
neurodegenerative conditions,
including AD,
traumatic brain
injury (“TBI”)
and chronic traumatic
encephalopathy (“CTE”)
by targeting
abnormal tau proteins alone and
in potential combination with other pathological
proteins such as Aβ to
address multiple pathological
processes at once. TBI is estimated to affect 56 million people worldwide and is attributed to approximately 2 million deaths
annually.
Our
lead
candidate targets
multiple epitopes
of
tau
and
has
been
shown in
preclinical studies
to
reduce tau
spreading
and
improve
survival in
animal models.
In an
effort to
focus internal
resources, we
have decided
to continue
the development
of VXX-301
only
through a
preclinical research
collaboration with
the University
of Florida,
which has
received a
grant from the
state of
Florida in support
of this project.
Next Wave Chronic
Disease Programs:
•
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. Today,
cardiovascular disease is the leading killer in the
world, accounting
for over
18 million
annual deaths,
affecting both
developed and
developing countries.
Over 2
billion people
have
high cholesterol globally.
As of October 2023, we have expanded
the ongoing first-in-human clinical trial of VXX-401
in Australia to
include two higher
dose cohorts due
to its favorable
safety and tolerability
profile to that
point, for
a total of
six cohorts.
In the
first
quarter of 2024, we submitted a protocol amendment to add a booster dose to these
two higher dose cohorts. We expect to report initial
topline data from this trial in mid-2024, with results from the booster dose later in the second half of 2024.
•
UB-313
: Targets
Calcitonin Gene-Related Peptide
(“CGRP”) to fight migraines,
a disease affecting
over 1
billion people worldwide, resulting in an estimated over
45 million years lived with disability annually.
In 2023, we completed a first-
in-human Phase 1 clinical trial in healthy volunteers in which UB-313 was generally well tolerated and immunogenic: all subjects who
received
three
doses
of
UB-313
(31
out
of
31)
developed
anti-CGRP
antibodies;
however,
serum
antibody
titers
were
lower
than
expected, and due
to this lower
immunogenicity, UB-313 did not meet
the trial’s secondary objective of
capsaicin-induced dermal blood
flow inhibition.
We believe this
was the
result of
a suboptimal
drug product
made by
a new
contract manufacturer, and
we have
identified
the necessary steps to
manufacture a more immunogenic
product consistent with prior
lots and the known immunogenic
potential of our
platform candidates.
In an
effort to
focus internal
resources, we
have deprioritized
this program
and are
not currently
planning on
running
another Phase 1 at this time.
Given the
global COVID-19
pandemic and
our AIM
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.
UB-
612 was well tolerated with balanced reactogenicity and no additional safety risks evoked over the licensed COVID-19 comparators.
There were no serious adverse events (“SAEs”) related to UB-612 reported through 12 months of safety follow-up.
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 are reviewing under their established work share agreement. In November 2023, the MHRA conducted GMP
inspections of our overseas CMO facilities responsible for UB-612 manufacture.
We believe a decision on authorization will be made
in 2024.
We
believe
our
AIM
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. Jean-Cosme Dodart, our Senior Vice President of
Research. Our leadership team contributes a diverse range of experiences from leading companies including AstraZeneca, Eli Lilly,
Genentech, Merck, and Pharmacyclics, and were executives in multiple successful mAb and vaccine launches.
As of December 31,
2023, we have assembled an exceptional team of 53 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 alleviate the
most human suffering possible by developing active
immunotherapy 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, and VXX-401 through clinical stage development for the treatment or prevention of chronic diseases, either ourselves or with
a strategic partner. We
believe that our differentiated AIM Platform will enable our product candidates, if approved and successfully
commercialized, to potentially disrupt the current 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.
•
Continue
to
improve
our
AIM
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 AIM
Platform.
As our AIM Platform further develops,
we believe that we can both
increase the speed and efficiency of
developing product candidates,
improve the
probability of
technical success
of our
product candidates,
and increase
the number
of product
candidates in
concurrent
development.
•
Maximize the value
of our product candidates
through potential partnerships
: We currently retain
worldwide
rights for all
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 AIM Platform
Our AIM
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, UB-313,
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 AIM
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 AIM
Platform to develop
product candidates that target
chronic diseases and COVID-19.
Our AIM
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 AIM 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 AIM 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 AIM 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
AIM
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.
AIM 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 72
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 AIM 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
AIM 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 AIM
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 AIM 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 limited or 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 AIM Platform.
We
believe that
our AIM
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 AIM Platform’s properties drive the unique combination of attributes that we believe will be reflected in our product candidates:
•
Cost and Scalability
: Whereas monoclonal antibodies require
costly and complex biological manufacturing
processes,
our
manufacturing
process
is
chemically
based
and
highly
scalable,
and
requires
lower
capital
expenditures.
Our
AIM
Platform has
been designed
and tested
to produce
on a scale
of hundreds
of millions
of doses
of GMP manufactured
material. 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 and Convenience
: 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. We
are also
exploring additional
modes of
administration, including
intradermal delivery
that may
be administered
in an
at-
home setting, potentially offering enhanced convenience to patients.
•
Efficacy
: In
our clinical
trials conducted
to date,
our product
candidates have
yielded high
response rates
(90% or above
at target
dose levels for
UB-311, UB-312,
UB-313, and UB-612),
high target-specific
antibodies against self-antigens
(as
seen
in
UB-311,
UB-312,
and
UB-313 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). We have observed target engagement in patient CSF in a Phase 1 clinical trial
of our UB-312
program.
See our descriptions
of these clinical
trials under “-Our Product
Candidates.” Our AIM
Platform also enables
the
combining
of
multiple
target
antigens
into
a
single
formulation.
For
indications
that
could
be
treated
more
effectively
with
a
multivalent approach, we
believe our AIM
Platform would have
an advantage over
other modalities. Further, because
our AIM 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.
Finally,
we believe
that the
improved convenience
of our
product candidates
as compared
to mAbs
has the
potential to
lead to
increased adherence
by patients
and therefore
improve overall
effectiveness of our candidates.
•
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 relevant mAb or small molecule alternative for the relevant disease.
Additionally,
we
believe
our
AIM
Platform
possesses
important
benefits
reflected
at
the
platform
level,
as
opposed
to
the
product
candidate level:
•
Product Candidate Discovery
: Our AIM 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
AIM 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
AD treatment
in the
United States
were
estimated at
$321 billion in
2022 according
to a
study published
by
the American
Journal of Managed
Care, and are
projected to exceed
$1 trillion by
2050. 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 three 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 neurodegeneration immunotherapies.
Despite
the
milestone
in
the
treatment
of
AD
that
aducanumab’s
approval
represents,
the
drug
has
several
limitations,
and
Biogen
announced
its
discontinuation
in
2024.
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 hour-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 filed 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
hour-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 set
the wholesale
acquisition cost (“WAC”)
price of lecanemab in
the U.S. at $26,500
for the drug product
only, which
does not include administration
and ongoing monitoring costs.
CMS has decided to cover lecanemab under
Medicare Part B with a 20% coinsurance
after a patient has
met their Part B deductible.
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 the 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 SAEs 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
SAEs
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 SAE 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 SAE 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 an End of Phase 2 meeting with the FDA and obtained guidance on the further development of UB-311.
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. Clinical data from our
Phase 1 trial, which we
completed in 2023, indicate that
UB-312 is well tolerated and elicits antibody levels sufficient to
cross the BBB (i.e., detectable in CSF) in both healthy volunteers
and
PD patients. Antibodies showed preferential
binding to aggregated aSyn.
Two
exploratory biomarkers were evaluated as
measures of
disease progression: aggregated α-synuclein
as measured by
a semi-quantitative SAA, and
phosphorylated aSyn (pS129 α-synuclein).
A
post hoc
analysis showed that
PD patients with UB-312-induced
antibodies in CSF had
significantly less α-synuclein aggregation
and
pS129 α-synuclein
as compared
to placebo.
PD patients
with UB-312-induced
antibodies in
CSF also
showed improvement
in the
clinical Movement Disorder Society - Unified
Parkinson’s Disease Response
Score (“MDS-UPDRS”) Part II activities of
daily living
scale as compared to placebo.
In 2018, the European Medical Agency (“EMA”) granted UB-312 orphan designation for MSA.
Clinical Development
In
Part
B of
a randomized,
placebo-controlled, double-blind,
dose-escalating, single-center
Phase 1
clinical trial
of
UB-312, 20
PD
patients between the ages of 40 and
85 years received three intramuscular
doses of either UB-312 or placebo.
During this 44-week Part
B of the trial, subjects received one of
two different three-dose priming regimens ("Group A" and "Group
B"), with doses on weeks 1,
5, and 13.
Immunogenicity was evaluated by
measuring changes in
serum and CSF
anti- α-synuclein antibody
concentrations during
the course of the
study.
In addition, an exploratory
endpoint was included involving
a clinical assessment
using the MDS-UPDRS.
The
Michael J. Fox Foundation (“MJFF”) has funded 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 an SAA to assess target engagement, and aims to characterize
the anti-α-synuclein antibodies produced after immunization
with UB-312.
UB-312 was
generally safe
and well-tolerated
in PD
patients, with
19 of
20 patients
completing dosing.
The most
common TEAEs
were headache, procedural pain, fatigue, and orthostatic hypotension.
The majority of TEAEs was considered either mild or moderate,
and UB-312 was
comparable to placebo.
Two patients experienced SAEs,
of which one
was deemed possibly
related by the
investigator
due to the
timing of onset.
This SAE was a
deep venous thrombosis of
the left leg 50
days after administration of
the second dose of
UB-312.
There were no apparent trends in safety signals,
including ECG, vital signs, and blood and urine assessments.
There was no
difference in
either physician
or participant
reported tolerability
within seven
days after
each administration
of UB-312
compared to
placebo.
UB-312 generated robust
levels of anti-α-synuclein
antibody titers detectable
in the serum
and CSF of
PD patients.
12 out of
13 patients
who completed dosing
had anti-α-synuclein antibodies
detectable in
the serum.
In Group A,
4 out
of 6
patients had
anti-α-synuclein
antibodies
detectable
in
CSF;
in
Group
B,
out
of
patients
had
anti-α-synuclein antibodies
detectable
in
CSF.
Of
patients
with
detectable
anti-α-synuclein
titers
in
CSF,
the
CSF:serum
antibody
ratio
was
approximately
0.35%.
Antibodies
were
selective
to
aggregated forms of α-synuclein over monomeric α-synuclein as measured by dot blot.
Results
from
a
SAA
performed
at
Mayo
Clinic
suggest
that
UB-312-induced
antibodies
functionally
inhibit
the
aggregation
of
α-
synuclein when spiked into PD patient CSF.
Spiking UB-312 Antibodies into PD Patient CSF Slows Down Alpha-Synuclein Aggregation
This
α-synuclein SAA
performed at
Mayo Clinic
used
antibodies purified
from
subjects in
the
Phase
trial of
UB-312.
It
suggests
slowing of the aggregation of α-synuclein in
PD patient CSF samples seeded
with α-synuclein monomers, as measured by
fluorescence
intensity.
We also
directly measured α-synuclein aggregates in the CSF of the PD
patients who participated in the Phase 1 trial of UB-312
using
fluorescence max in a SAA.
This showed up to a
20% reduction of aggregated
α-synuclein in PD patient CSF
in Group A, as compared
to a 3% increase in the placebo group (p = 0.024), over the 44-week trial period.
Reduction of Alpha-Synuclein Aggregates in CSF of PD Patients
This α-synuclein SAA performed at Amprion showed a significant reduction
in the pathological species of α-synuclein with UB-312 as
compared to placebo.
*Placebo vs. Group A, two-way RM ANOVA: F
2,19
= 4.047; p = 0.034
An exploratory
post hoc
analysis comparing
patients with detectable
anti-α-synuclein antibodies
in CSF to
those without
was performed.
Patients with detectable anti-α-synuclein
antibodies in CSF showed
significant reduction in aggregated
α-synuclein in CSF (28%
versus
placebo, p = 0.0183), as well as improvement in MDS-UPDRS Part II), the activities of daily living clinical scale (p = 0.0062).
This exploratory
post hoc
analysis also
examined differences
in levels
of phosphorylated
α-synuclein (pS129)
between patients
with
and without detectable
anti-α-synuclein antibodies in
CSF.
Patients with detectable
anti-α-synuclein antibodies in
CSF showed a
27.2%
reduction in pS129 α-synuclein, as compared to a 19.5% increase observed in the placebo group (p = 0.0351).
Reduction of Phosphorylated Alpha-Synuclein in PD Patient CSF
This assay performed at Magqu demonstrates
a statistically significant reduction in
phosphorylated pS129 α-synuclein in PD patients
with detectable
anti-α-synuclein antibody
titers in
CSF.
*Placebo vs.
UB-312 with CSF
titers at
the end
of the study, Bonferroni
multiple
comparison test p = 0.0351.
Correlations between changes in titers and changes in aggregated α-synuclein were observed.
In Part A of the Phase 1 clinical trial of UB-312, 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 of the trial, subjects received three priming doses on the
same schedule as described for Part B, with escalating doses ranging from 40μg to 2,000μg. 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.
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 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 SAEs 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
An investigator-initiated
Phase 1 trial
of UB-312 in
PD and
MSA patients
is ongoing at
New York University.
Based on
the encouraging
results from the 20-patient Phase 1 Part B completed in 2023, we plan to take UB-312 into a Phase 2 trial.
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 AIM
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 Programs
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 programs are initially focused on hypercholesterolemia and migraine. 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.
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 $1.5 billion
in 2021 and
is expected to
grow to approximately
$2.1 billion
by 2030, including
the addition of inclisiran
to the market. In
addition, both are administered
bi-weekly or 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 Data
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.
Results from
three separate
pre-clinical studies
of VXX-401
in non-human
primates, including
a GLP
toxicity study, have
been published
in the
Journal of
Lipid Research
(Vroom
et al.
2024).
This paper
reported that
VXX-401 triggers
a safe
humoral immune
response
against PCSK9,
consistently "resulting
in the
production of
antibodies and
a subsequent
30-40% reduction
in blood
LDL-C.”
These
effects are sustained over time.
Anti-PCSK9 antibodies generated by VXX-401 bind human
PCSK9 “with high affinity and block
the
inhibitory effects of PCSK9 on LDL-C uptake in a hepatic cell model.”
The GLP toxicology study demonstrated that 5 doses of VXX-401 were safe and well tolerated, with no clinical observations and no
pathological findings.
Development Strategy
We
have
initiated
a
first-in-human Phase
clinical
trial
of
VXX-401 in
Australia
in
the
first quarter
of
2023.
In
October 2023
we
expanded
this
trial
from
subjects
with
elevated
cholesterol
to
subjects,
monitoring
for
safety,
immunogenicity,
and
relevant
biomarkers.
We
expect a
topline readout
by mid-2024.
In a
potential subsequent
Phase 2
trial we
may test
VXX-401 alone
and in
combination with statins.
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. In
2020, the
FDA approved
eptinezumab-jjmr (Vyepti),
an intravenously
infused
anti-CGRP mAb
for the
preventive treatment
of migraine.
The FDA
has also
approved small
molecule anti-CGRP
drugs, including
atogepant (Qulipta)
for the
preventive treatment
of episodic
migraine, ubrogepant
(Ubrelvy) for
the acute
treatment of
migraine, and
rimegepant (Nurtec) for both acute
and preventive treatment of migraine.
Sales for marketed and clinical-stage
anti-CGRP therapeutics
are projected
to reach
approximately $10.1 billion
by 2033.
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 preventive treatment for
migraine. We
believe UB-313 has
the potential to improve
upon the current
preventive treatments for 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.
Clinical Development
In 2023, we completed
a first-in-human Phase 1
clinical trial in 40
healthy volunteers in which
UB-313 was generally well
tolerated and
immunogenic:
all
subjects
who
received
three
doses
of
UB-313
(31
out
of
31)
developed
anti-CGRP
antibodies;
however,
serum
antibody titers were lower than expected,
and due to this lower immunogenicity, UB-313 did not meet
the trial’s secondary objective of
capsaicin-induced dermal blood flow
inhibition.
We
believe this was the
result of a suboptimal
drug product made by
a new contract
manufacturer, and we have identified the
necessary steps to manufacture
a more immunogenic product
consistent with prior lots
and the
known immunogenic potential of our platform candidates.
Pre-Clinical Data
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 properties 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.
Next Stage Development Candidates
In addition to our
initial focus on migraines
and hypercholesterolemia, we believe
our AIM 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.
As of
February 2024,
there have
been more
than 700
million confirmed COVID-19 cases and more than 6.9 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 February 2024, over 5.1
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 2.8 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
may
last
for
the
foreseeable
future,
particularly
in
low-
and
middle-income
countries
(“LMICs”), similar
to
the
influenza
vaccine
market.
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 conditional/provisional authorization for
UB-612 as
a heterologous boost
with the Medicines
and Healthcare products
Regulatory Agency (“MHRA”)
and Therapeutic Goods
Administration (“TGA”), the regulatory authorities of the United Kingdom and Australia, respectively.
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 was an
active-controlled, randomized trial 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
were 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 was to
determine non-inferiority of UB-612-stimulated neutralizing antibodies against
those of the comparator vaccines.
CEPI co-funded this trial, which concluded in 2023.
Following positive topline
results announced in
December 2022, we
completed submissions for
conditional/provisional authorization
with the MHRA in the UK and the 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 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.
The primary endpoints of the trial were
safety and live virus neutralizing antibody
titers against the Wuhan
strain of SARS-CoV-2 at day 29.
Secondary immunogenicity endpoints included 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
trial was
to determine
non-inferiority of
UB-612-stimulated neutralizing
antibodies against
those of
the comparator
vaccines,
where statistical non-inferiority was 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
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)
SCR as measured against Wuhan and Omicron BA.5
were 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).
Safety data from the Phase 3 trial suggested that UB-612 was generally well tolerated; no vaccine-related SAEs were reported.
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.
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%.
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.
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 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 are reviewing under their established work share agreement.
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.
In
January
2024,
Biogen
announced
its
intention
to
discontinue
aducanumab.
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.
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.
CGRP-Directed Migraine Treatments
Seven 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),
approved
for
both
the
acute
treatment
migraine and the
preventive treatment of
episodic migraine, is
sold by Pfizer
following its acquisition
of Biohaven. Atogepant
(Qulipta),
developed by AbbVie, was approved for the preventive treatment of episodic migraine.
Collaborations
From time to time, we enter into licensing and commercialization agreements when they
align with our mission, including the Platform
License Agreement described under
“-Intellectual Property-Platform License Agreement.”
Current collaboration partners include,
the
University of
Central Florida,
the University
of
Florida, and
the University
of
Southampton.
For more
information see
Recent
Developments section.
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, CPC Scientific
as
our primary peptide
supplier for VXX-401,
Wuxi STA
for process development
and manufacturing services
of oligonucleotides, and
Pharmaceuticals International, Inc (“Pii”) for additional fill-finish services.
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 AIM
Platform and
each of
our
product candidates.
As of
December 31, 2023,
our patent
estate included
four U.S.
issued patents,
ten U.S.
patent applications,
three
U.S. provisional patent applications, seven pending Patent Cooperation Treaty (“PCT”) patent applications, 34 issued non-U.S. patents
and 153 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,
and
three
pending
PCT
applications
and
one
provisional
application in the
U.S., directed to
peptide vaccines for
the prevention and
treatment of neurodegenerative
diseases. These issued
patents
and 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 2033 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
are provided
by a
patent and
patent applications
being prosecuted
in the
United States,
Australia, Brazil, Canada, China, the EPO, India, Indonesia, Japan, Mexico, Russia, the Republic of Korea, Singapore, Taiwan and the
United Arab Emirates. The
issued patent and 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, the EPO, India, Indonesia, Japan, Mexico, the Philippines, the Republic of Korea, Russia,
Saudi Arabia,
Taiwan,
the United
Arab Emirates,
and Vietnam.
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
an issued
patent and
pending patent
applications
in
the
United
States,
Argentina,
Australia,
Brazil,
Canada,
the
EPO,
India,
Indonesia,
Japan,
Mexico,
Pakistan,
the
Philippines, the Republic of
Korea, Russia, Saudi Arabia,
Taiwan,
United Arab Emirates,
and Vietnam,
and four pending
PCT patent
applications.
The
issued
patent
and
these
patent
applications,
if
issued,
and
any
U.S.
or
non-U.S.
patent
issuing
from
the
PCT
applications, are expected to expire between 2041 and 2043, excluding any patent term adjustments or patent term extensions.
For each product candidate utilizing the AIM 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, Brazil,
Canada, Chile,
China, Colombia,
the EPO,
Indonesia, India,
Israel, Japan,
Mexico, New
Zealand, Philippines,
the
Republic of Korea, Russia,
Singapore, South Africa, Taiwan, Thailand, Ukraine,
the United Arab Emirates,
and Vietnam. The members
of one family of patents expired
in 2023, except for two U.S.
patents that will expire in 2025
and 2026. With regards to
the rest of the
families that cover the
AIM Platform, the issued
patents and patent applications,
if issued, are expected
to expire in 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 agents.
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, including,
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, 2023, we employed 57 full-time
employees and 8 part-time employees. Of these 57
full-time employees, 54 were
located in the
United States, 2
were located in
Ireland and 1
was located in
the UK.
As of March
1, 2024, we
employed 50 full-time
employees and 9 part-time employees. Of these 50 full-time employees, 47 were located in the United States, 2 were located in Ireland
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.
●
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 our inception, we expect to incur losses for the foreseeable future and may
never achieve or maintain profitability and there exists substantial doubt as to our ability to continue as a going
concern
over the next twelve months;
•
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;
•
while our Class A common stock is expected to continue listing on The Nasdaq Global Market, there is no guarantee as
to how long such listing will be maintained;
•
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 AIM 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.
See “-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 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
2021 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 ongoing conflicts between Russia and Ukraine or Israel and Hamas and
increased tension between Taiwan and China;
•
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.
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.
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 ongoing conflicts between Russia and Ukraine or Israel and Hamas, increased tension between Taiwan and China 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 groups, 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 AIM
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. We also expect competition from existing approved and market accepted products, such as the Moderna and
Pfizer-BioNTech vaccines, to impact our ability to generate revenues. 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, 2023, the Company had $4.9 million of cash and cash equivalents and $25.5 million of short-term investments to
fund operations. 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. There exists substantial doubt as to our ability to continue as a going concern over the next
twelve months.
We have incurred significant losses since our inception. We
had net losses of approximately $56.9 million and $75.2 million for the
years ended December 31, 2023 and December 31, 2022 respectively. As of December 31, 2023, our consolidated accumulated deficit
was $361.6 million. Our recurring losses from operations together with the factors described below raise substantial doubt about our
ability to continue as a going concern, and our independent public accounting firm included an explanatory paragraph regarding the
same in its report to our Annual Report on Form 10-K for the year ended December 31, 2023. Substantial doubt about our ability to
continue as a going concern may create negative reactions to the price of our Class A common stock and may have adverse
consequences on our ability to raise financing in the future. While we have implemented cost reductions, our finite cash resources
available to execute our business plan present the risk that we will not have sufficient cash available in the amount or at the time we
need it to fund our ongoing operations and execute our business plans on our timeliness.
We will need to raise additional capital and
may need to undertake additional cost saving measures to expand our cash runway. This additional capital could be raised through a
combination of non-dilutive financings (including collaborations, strategic alliances, monetization of non-core assets, marketing,
distribution or licensing arrangements), dilutive financings (including equity, equity-linked and/or debt financings) and, potentially,
from revenue related to product sales, to the extent our product candidates receive marketing approval and can be commercialized.
There can be no assurance that new financings or other capital raising transactions will be available to us on commercially
acceptable
terms, or at all. See also Note 1 - Nature of Business to our consolidated financial statements for the year ended December 31, 2023
included elsewhere in this Annual Report for additional discussion of our liquidity and ability to continue as a going concern.
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 AIM 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.
We need additional funding to fully execute our business plan. Raising additional capital may cause dilution to our shareholders,
restrict our operations or require us to relinquish rights to our technology or product candidates.
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, strategic alliances, monetization of non-core assets or marketing, distribution or
licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, including geographic and
regional agreements, 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, 2023, we had U.S. federal net operating loss carryforwards (“NOLs”) of $178.8 million,
which may be available
to offset future taxable income, if any, but are limited in their usage to an annual deduction equal to 80% of annual taxable income. In
general, under Sections 382 and 383 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.
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 qualities and 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. This may
delay or halt our clinical trials. For example, we believe that UB-313 did not meet the Phase 1 clinical trial’s secondary objective of
capsaicin-induced dermal blood flow inhibition due to a suboptimal drug product made by a new contract manufacturer. 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 Voting
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 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. In April 2023, a judgment from a Texas court confirmed the management and control structure of UBI,
adjudicating that Dr. Wang
has no authority to manage or control UBI. Dr. Wang
filed litigation against UBI and its Directors that is
currently pending in New York state court. 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 AIM 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 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. The
members of one family of patents covering aspects of our platform expired in 2023, except for two US patents that will expire in 2025
and 2026.
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, certain U.S. Supreme Court rulings provide 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 remains uncertain. 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. 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.
We
, our management and directors are or may become involved in or subject to legal proceedings that are uncertain, costly and
time-consuming and could have an adverse effect on our business, financial condition, results of operations and prospects.
We
, our management and directors are involved, or may become involved, from time to time in litigation matters
incidental to the
conduct of our business. In December 2022, our board of directors became aware of pending litigation filed by our CEO against a
significant stockholder, Ask America, LLC (“Ask America”). For more information regarding legal proceedings, see Note 14 -
Commitments and Contingencies to our consolidated financial statements for the year ended December 31, 2023 included elsewhere
in this Annual Report.
Legal proceedings can become complex and divert the time and attention of our management and certain of our employees from our
business. These matters are inherently uncertain and there is no guarantee that we will be successful in prosecuting or defending
ourselves or that our assessment of the materiality of these matters and the likely outcome or potential losses will be consistent
with
the ultimate outcome of such matters. Responding to these matters, even those that are ultimately non-meritorious, may require us to
incur significant expense and devote significant resources. Defending against or settling such claims and any
unfavorable legal
decisions, settlements or orders could have a material adverse effect on our business, financial condition, results of operations and
prospects.
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 2009 (“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, Moderna, 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 ongoing conflicts between Russia and Ukraine or Israel and
Hamas, increased tension between Taiwan and China, 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. For example, we have partnered with UBIA for the development of UB-612 in Taiwan,
which was also funded in part by the Taiwanese government.
In addition, we have in the past relied upon, and may in the future,
continue to be dependent on contract manufacturers from China or Taiwan or affiliated with Chinese or Taiwanese entities, including
UBI, it affiliates and WuXi STA
.
Geopolitical tension, such as a deterioration in the relationship between the United States and China,
including any potential resulting sanctions, export controls, or other restrictive actions that may be imposed by the United States
against governmental or other entities in, for example, China or Taiwan, also could have an adverse impact on our product
development programs. If any of our contract manufacturers encounter difficulties as a result, our ability to provide product candidates
for clinical trials or products, if approved, to patients or future customers could be delayed or halted. 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 require 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 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
participants 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, 2024, we had 51 employees. 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,
including any lingering effects of the COVID-19 pandemic, 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 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, destabilization of a regional or national banking system, declines in consumer confidence,
continuing inflation, rising interest rates, declines in economic growth, increases in unemployment rates and uncertainty about
economic stability. 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.
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 and as demand for the vaccine and boosters has significantly declined, demand for our COVID-19 product candidate may
materially decrease or disappear entirely, along with a corresponding decrease in any future potential revenues. Further, the existence
and significance of the opportunity to provide COVID-19 boosters in the future and patient uptake 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;
•
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.
While our Class A common stock is expected to continue listing on The Nasdaq Global Market, there
is no guarantee as to how
long such listing will be maintained.
On February 9, 2024, we received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating
that the Company was no longer in compliance with Listing Rule 5450(a)(1) (the “Minimum Bid Requirement) with respect
to its
Class A Common Stock, which requires the Company to maintain a minimum bid price of $1.00 per share for continued listing on The
Nasdaq Global Market (the “Notice”). The Company has until August 7, 2024, which is 180 calendar days from the date of the Notice
(the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement. The Company can regain compliance
if
the closing bid price of the Class A Common Stock closes at least $1.00 per share for a minimum of ten consecutive business days.
The Company intends to actively monitor the bid price of its Class A Common Stock and will consider available
options to regain
compliance with the Minimum Bid Price Requirement. However, there can be no assurance that the Company will be able to regain
compliance with the Minimum Bid Price Requirement or remain in compliance with other continued listing requirements.
In addition, delisting or a potential delisting event could harm our ability to raise capital through alternative financing sources on
terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and business
development
opportunities. Such a delisting likely would impair your ability to sell or purchase our Class A common stock when you wish to do so.
Further, if we were to be delisted from Nasdaq, our Class A common stock may no longer be recognized as a “covered security” and
we would be subject to regulation in each state in which it offers securities. As a result, delisting from Nasdaq could adversely affect
our ability to raise additional financing through the public or private sale of equity securities, would significantly impact the ability of
investors to trade our securities and would negatively impact the value and liquidity of our Class A common stock.
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 1, 2024 on a fully diluted basis, Mei Mei Hu, as proxyholder under the Voting
Agreement, controls approximately 64.4% 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 1, 2024, assuming no other equity awards had been exercised or vested, the Voting
Agreement would have covered, in the aggregate, approximately 66.1% 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 4 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. See Note 14 to our consolidated
financial
statements
for
the
year
ended
December 31,
included
elsewhere
in
this
Annual
Report
for
a
discussion
of
legal
proceedings.

---

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 25, 2024, the
number of
shares
of
our Class
A
common
stock outstanding
was 112,873,552
held
by
approximately 74
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 25, 2024, 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, 2023 and 2022.
Unregistered Sales of Equity Securities
There were no unregistered sales of equity securities during the fourth quarter of 2023.
Use of Proceeds
On November 15, 2021, the Company closed its initial public offering (“IPO”). 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.
All of the proceeds from our IPO have been used to fund operations, or invested in U.S. Treasury securities and money market
accounts.

---

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
for
chronic
disorders
and
infectious diseases with
large patient populations
and unmet medical
needs. While vaccines
have traditionally been
unable to effectively
and safely combat chronic disorders, we believe
our platform could overcome the traditional hurdles
facing vaccines in this area.
Our
AIM
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,
particularly
neurodegenerative disorders, in addition to other neurology and cardiovascular indications. Given the global COVID-19 pandemic and
our AIM
Platform’s applicability to
infectious disease,
we are
also opportunistically
advancing a
product candidate
that addresses
SARS-
CoV-2.
Our Neurodegeneration
pipeline consists
of UB-311,
which targets
the primary
pathological process
of Alzheimer’s
disease (“AD”);
UB-312, which targets the pathological process of
Parkinson’s disease (“PD”) and other so-called synucleinopathies; and
VXX-301, an
anti-tau protein product
candidate which has
the potential to
address multiple neurodegenerative
conditions, including AD.
Our Next
Wave Chronic pipeline consists of VXX-401, which targets proprotein convertase subtilisin/kexin type 9 serine protease (“PCSK9”) to
reduce low-density lipoprotein
(“LDL”) cholesterol, a
risk factor for
atherosclerotic heart disease,
and UB-313, which
targets Calcitonin
Gene-Related Peptide (“CGRP”) to prevent migraines. Through our AIM Platform, we believe we may be able
to address a wide range
of other chronic diseases, including 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.
Given our AIM
Platform’s applicability
to infectious disease
and the ongoing
need for booster
vaccines to address
SARS-CoV-2,
we
have developed
an infectious
disease product
candidate, UB-612,
as a
heterologous booster
against COVID-19.
We have reported
topline
results of a pivotal Phase 3 trial
of UB-612 and completed rolling submissions for
conditional/provisional authorization with regulatory
authorities in the United Kingdom and Australia in March 2023.
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, 2023, we received
gross proceeds of
$306.8 million
in connection
with various
financing transactions,
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 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,
advance any of the current pipeline candidates to later stage clinical trials which typically have more subjects
and higher costs, or 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 and prepare
for such commercialization.
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
$57.8 million
and $75.2
million for
the twelve
months ended
December 31, 2023
and 2022,
respectively.
As
of
December 31,
2023,
we
had
an
accumulated
deficit
of
$362.5
million.
We
expec
t
our
expenses
and
capital
requirements may increase over time in connection with our planned operations, which include:
•
continuing pre-clinical studies, existing clinical trials, or initiating new clinical trials for product candidates UB-311, 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; and
•
undertaking pre-commercialization and 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.
The Company has taken several
steps to reduce our rate of
cash burn, including reducing
headcount
through attrition and organizational
restructuring,
limiting
use
of
external
consultants
and
other
professional
services,
and
deferring
certain
research
and
development
activities.
As a result of these efforts, 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
through late
2024. See Note
1 to the
consolidated financial
statements.
Thereafter, our
viability will depend
on our ability
to raise additional
capital to finance
operations, to successfully
commercialize our
product candidates, if approved,
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.”
Recent Developments
In January 2024 we announced a collaboration with the
University of Central Florida (“UCF”) to conduct research funded by
the state
of Florida to further the development
of our active immunotherapies to prevent
and mitigate muscle and bone wasting, which
are well
known health challenges related
to long-term spaceflight, and
which share biological mechanisms
implicated in highly prevalent
age-
related diseases.
In the same month, we
announced a collaboration with the University of
Florida’s Center for
Translational Research
in Neurodegenerative Disease (“CTRND”) to support our development of vaccines for neurodegenerative diseases.
Components of Our Consolidated Results of Operations
Revenue
We recorded no revenues for
the years ended
December 31, 2023 and
December 31, 2022. 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 years ended December 31,
2023 and December 31, 2022. 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 AIM
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
2022,
related
party
expenses
were
approximately
5.6%
and
6.0%
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 AIM 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 2022 related party promissory note (the “2022 Promissory
Note”), (iii)
interest expense recognized on the 2023 related party promissory note (the “2023 Promissory Note”).
Interest Income
Interest income consists of income earned on our cash and cash equivalents, money market holdings, and short-term investments.
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, and 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, 2023,
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 as well as foreign 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. income taxes for the
tax years since 2016 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.
Consolidated Results of Operations
The following is a summary of our consolidated results of operations:
Years
Ended December 31,
2023 vs. 2022
(In thousands)
Change $
Change %
Operating expenses:
Research and development
$
35,899
$
47,627
$
(11,728)
(25)
%
General and administrative
22,386
28,352
(5,966)
(21)
%
Total operating expenses
58,285
75,979
(17,694)
(23)
%
Loss from operations
(58,285)
(75,979)
17,694
(23)
%
Other (income) expense:
Interest and other expense
%
Interest and other income
(2,090)
(1,259)
(831)
%
(Gain) loss on foreign currency translation, net
(12)
(459)
%
Other (income) expense
(1,351)
(757)
(594)
%
Net loss
$
(56,934)
$
(75,222)
$
18,288
(24)
%
Comparison of the Years Ended December 31, 2023 and 2022
Research and Development Expenses
Research and development expenses were $35.9 million and $47.6 million for the twelve months ended December 31, 2023 and 2022,
respectively.
Allocated external research and development expenses decreased from $23.5 million for the twelve months ended December 31, 2022
to $17.8 million for the twelve months ended December 31, 2023.
Neurodegenerative Disease
Program expenses
decreased from
$2.9 million
for the
twelve months
ended December 31,
2022 to
$1.5
million for the twelve months ended December 31, 2023. This decrease primarily resulted from a $1.0 million decrease in expenses for
UB-312 primarily attributable to our Phase 1 trial entering the completion phase.
Next Wave Chronic Program expenses decreased from
$7.6 million for the
twelve months ended December 31,
2022 to $7.4 million for
the twelve months ended December 31, 2023. This decrease primarily resulted from a $0.7 million decrease in expenses for UB-313 as
the trial became fully enrolled
in late 2022, partially offset by
a $0.5 million increase in expenses
for VXX-401 primarily attributable to
active patient enrollment in the Phase 1 trial during 2023.
Infectious Disease Program expenses decreased
from $12.6 million for the twelve
months ended December 31, 2022 to
$8.3 million for
the twelve
months ended
December 31, 2023.
This decrease
primarily resulted
from a
$4.3 million
decrease in
expenses for
UB-612
primarily attributable to the Phase 3 trial entering the completion phase as all patient visits were completed in Q3 2023.
Unallocated research and
development expenses
decreased from $24.1
million for the
twelve months ended
December 31, 2022 to
$18.1
million for the
twelve months ended
December 31, 2023. This
decrease primarily resulted
from a $4.2
million decrease in
personnel-
related expenses (including $0.7 million in stock-based compensation) primarily attributable
to attrition and internal restructuring, and
a $1.8 million decrease in external consulting services.
General and Administrative Expenses
General and administrative expenses decreased from $28.4 million for the twelve months ended December 31, 2022 to $22.4 million
for the twelve months ended December 31, 2023.
The decrease was due to decreases of $1.8 million in director and officer insurance expense, $1.2 million in external professional
services and consulting services, $2.0 million in payroll-related expenses (including $0.5 million in stock-based compensation)
primarily attributable to attrition and internal restructuring, and $0.3 million in travel expenses.
Interest and Other Expense
Interest and
other expense
was $0.7
million and
$0.5 million
for the
years ended
December 31, 2023
and 2022,
respectively. The increase
was due to the conversion of related party payables to notes payable in late 2022 and again in late 2023.
Interest and Other Income
Interest on cash and short-term
investments and other income was
$2.1 million and $1.3 million
for the years ended December 31,
and 2022, respectively.
The increase was primarily
due to higher returns earned
on the Company’s short-term investments in 2023,
due
to increasing short-term interest rates.
(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, 2023 compared to the year ended December 31, 2022.
Liquidity and Capital Resources
Sources of Liquidity
We 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, 2023,
we
received gross
proceeds of
$306.8 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, 2023, we had $30.4 million
in cash and cash equivalents and
short-term investments compared to
$86.8 million as of December 31,
2022. The decrease in cash
and cash equivalents balances for
the periods reported are primarily due
to the factors described under “Cash Flows” below.
At-the-Market Offerings
On August 9, 2023,
we entered into an
Open Market Sale
Agreement with Jefferies LLC,
as sales agent, pursuant
to which we
may offer
and sell shares of our
Class A common stock, par
value $0.0001 per share, having
an aggregate offering price
of up to $100.0
million
from time to time through
the sales agent in
“at-the-market” offerings, in accordance with
the terms and conditions
set forth in the
Open
Market Sale Agreement. The Open Market
Sale Agreement will remain in full force
and effect until terminated by either party pursuant
to
the
terms
of
the
agreement
or
such
date
that
the
maximum
program
amount
has
been
sold
in
accordance
with
the
terms
of
the
agreement. We
did not
sell or
issue any
shares of
our Class
A common
stock during
the year
ended December 31,
2023, and
as of
December 31, 2023, all $100.0 million remained available for sale.
Cash Flows
The following table provides information regarding our cash flows for the years ended December 31, 2023 and 2022 (in thousands):
December 31,
Balance Sheet Data:
Cash and cash equivalents
$
4,931
$
33,475
Short-term investments, net
25,464
53,352
Restricted cash
1,095
Total assets
44,311
106,399
Total liabilities
30,902
44,222
Total stockholders' equity
$
13,409
$
62,177
Years
Ended December 31,
Statement of Cash Flow Data:
Net cash used in operating activities
$
(57,238)
$
(55,928)
Net cash provided by (used in) investing activities
28,844
(54,392)
Net cash used in financing activities
(1,140)
(167)
Net (decrease) in cash, cash equivalents and restricted cash
$
(29,534)
$
(110,487)
Operating Activities
Net cash used in operating activities for the year ended December 31, 2023 was $57.2 million, primarily due to a $56.9 million net loss
and an unfavorable $8.5
million change in operating
assets and liabilities, partially offset
by total non-cash items
of $8.2 million. The
unfavorable cash flow impact from changes in net operating assets and liabilities was primarily due to $11.8
million related to accrued
expense,
accounts payable
and other
liabilities, partially
offset
by
$3.2
million
in prepaid
expenses for
UB-612
trial expenses.
The
primary
non-cash
adjustments
to
net
loss
included
addbacks
of
$7.5
million
of
stock-based
compensation
and
$2.2
million
in
depreciation, offset by a reduction of $1.5 million for amortization of discounts on short-term investments.
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 cash
flow
impact from changes in net operating
assets and liabilities were primarily due to
$2.4 million in amounts due to
related parties as well
as $9.0 million related to accrued expense,
accounts payable and other liabilities.
These increases were offset by a $3.3 million
increase
in prepaid expenses. 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.
Investing Activities
Net cash provided by investing activities
totaled $28.8 million for the year
ended December 31, 2023. The cash provided
by investing
activities
consisted
primarily
of
the
net
impact
of
the
acquisition
and
redemption
of
short-term
investments,
partially
offset
by
the
acquisition of laboratory and computer equipment, and leasehold improvements.
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.
Financing Activities
Net cash used in financing activities was $1.1 million for the year ended December 31,
2023. We repaid $1.6
million in relation to our
outstanding notes payable and received $0.5 million from the exercise of stock options.
Net cash used in
financing activities totaled $0.2
million for the year
ended December 31, 2022. We
repaid $0.4 million in
relation to
our outstanding notes payable and received $0.3 million from the exercise of stock options.
Funding Requirements
We 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
through late 2024. As of
December 31, 2023, other than our
2025 Note, the 2022 Promissory Note,
and the 2023 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 other 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 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.
Tax-Related Obligations
We have
reserved less than $0.1 million of unrecognized tax benefits
against NOLs. Additionally, as
of December 31, 2023 and 2022,
we accrued less than $0.1 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, accrued
of
research and development expenses, stock-based compensation, determination of the fair
value of our common stock prior to our initial
public offering, and grant accounting. 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.
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 and ended in late 2023, evaluated
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 were restricted as to their use until expenditures contemplated
in the
funding agreement
were incurred.
As funds
were received
they were
included within
restricted cash
offset by
a corresponding
short-term accrued
liability.
We
recognized payments
from CEPI
as a
reduction of
research and
development expenses,
in the
same
period as the expenses that the grant was intended to reimburse were incurred.

---

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
currently 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,
2023,
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,
2023 and 2022, our
cash equivalents consisted
of interest-bearing
checking accounts
and money
market accounts.
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 in
October 2022
bears a
fixed annual
interest rate
of 7.0%
and matures
in October
2026. The
2023 Promissory
Note we
entered into
in
December 2023 bears a fixed annual interest rate of 9.25% and matures in November 2027.
Given that the 2025 Note,
the 2022 Promissory Note and
the 2023 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, 2023,
indicated that
a hypothetical 100 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, 2023 and 2022
Report of Independent Registered Public Accounting Firms
(FORVIS PCAOB ID:
, Armanino PCAOB ID:
)
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Vaxxinity,
Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying
consolidated balance sheet
of Vaxxinity, Inc. (the “Company”) as of
December 31, 2023,
the related
consolidated statements of operations and other comprehensive loss, stockholders’ equity, and cash flows for the year ended December
31, 2023, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements referred
to above present
fairly,
in all material
respects, the financial
position of the
Company as of
December 31, 2023,
and the results
of its
operations and its cash flows for the year
ended December 31, 2023, in conformity
with accounting principles generally accepted in the
United States of America.
Going Concern
The accompanying financial statements have been prepared
assuming that the Company will continue as
a going concern. As discussed
in Note 1
to the financial
statements, the Company
has incurred substantial
operating losses and
negative cash flows
from operations
since inception that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter
are
also
described
in
Note
1.
The
financial
statements
do
not
include
any
adjustments
that
might
result
from
the
outcome
of
this
uncertainty.
Basis for Opinion
These financial
statements are
the responsibility
of the
Company’s
management.
Our responsibility
is to
express an
opinion on
the
Company’s financial statements based on our audit.
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 audit in accordance
with the standards of
the PCAOB.
Those standards require that we
plan and perform the
audit
to obtain reasonable assurance about whether
the financial statements are free of
material misstatement, 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 audit, 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 audit included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error
or fraud, and performing
procedures that respond to
those risks.
Such procedures include examining,
on a test basis,
evidence regarding
the amounts
and disclosures
in the
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 financial
statements.
We
believe that
our audit
provides a reasonable basis for our opinion.
/s/
FORVIS, LLP
We have served as the Company’s
auditor since 2023.
New York
, New York
March 27, 2024
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Vaxxinity,
Inc.
Merrit Island, Florida
Opinion on the Consolidated Financial Statements
We
have audited the accompanying consolidated balance
sheet of Vaxxinity,
Inc. and Subsidiaries (collectively the "Company")
as of
December 31,
2022, the
related consolidated
statements of
operations, convertible
preferred stock
and stockholders’
equity (deficit),
and cash flows, for the year 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 the results of
their operations and their cash flows for the
year 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 based
on our
audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement, whether due to error
or fraud.
Our audit
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 audit provides a reasonable basis for our opinion.
We began serving as the Company's auditor in 2018. In 2023, we became the predecessor auditor.
/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
$
4,931
$
33,475
Short-term investments
25,464
53,352
Restricted cash
1,095
Amounts due from related parties
Prepaid expenses and other current assets
2,316
5,551
Total current assets
33,230
93,887
Property and equipment, net
11,081
12,512
Total assets
$
44,311
$
106,399
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
1,783
5,295
Amounts due to related parties
10,575
12,772
Accrued expenses and other current liabilities
3,341
11,370
Notes payable
Notes payable to related party
1,500
1,113
Total current liabilities
17,605
30,941
Other liabilities:
Notes payable, net of current portion
9,527
9,933
Notes payable to related party, net of current portion
3,735
3,112
Other long-term liabilities
Total liabilities
30,902
44,222
Commitments and contingencies (Note 14)
(nil)
(nil)
Stockholders’ equity:
Class A common stock, $
0.0001
par value;
1,000,000,000
shares authorized,
112,872,672
and
112,182,750
shares issued and
outstanding at December 31, 2023 and 2022, 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, 2023 and 2022, respectively
-
-
Additional paid-in capital
374,760
366,799
Accumulated other comprehensive income (loss)
(197)
Accumulated deficit
(361,637)
(304,703)
Total stockholders’ equity
13,409
62,177
Total liabilities and stockholders’ equity
$
44,311
$
106,399
The accompanying notes are an integral part of the consolidated financial statements.
VAXXINITY,
INC.
CONSOLIDATED STATEMENTS
OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
Years
Ended December 31,
Operating expenses:
Research and development
$
35,899
$
47,627
General and administrative
22,386
28,352
Total operating expenses
58,285
75,979
Loss from operations
(58,285)
(75,979)
Other (income) expense:
Interest and other expense
Interest and other income
(2,090)
(1,259)
(Gain) loss on foreign currency translation, net
(12)
Other (income)
(1,351)
(757)
Loss before income taxes
(56,934)
(75,222)
Net loss
$
(56,934)
$
(75,222)
Net loss per share, basic and diluted
$
(0.45)
$
(0.60)
Weighted average common shares outstanding, basic and diluted
126,508,917
125,939,050
Other comprehensive loss:
Unrealized loss (gain) on investments
$
(205)
$
Other comprehensive loss (income)
(205)
Comprehensive loss
$
(56,729)
$
(75,419)
The accompanying notes are an integral part of the consolidated financial statements.
VAXXINITY,
INC.
CONSOLIDATED STATEMENTS
OF STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
Stockholder's Deficit
Common Stock-Class A
Common Stock-Class B
Shares
Amount
Shares
Amount
Additional Paid-in
Capital
Accumulated Other
Comprehensive Income
(Loss)
Accumulated Deficit
Stockholders’ Equity
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
Issuance of common stock upon exercise of stock options
689,922
-
-
-
-
-
Stock-based compensation expense
-
-
-
-
7,508
-
-
7,508
Unrealized gain on investments
-
-
-
-
-
-
Net loss
-
-
-
-
-
-
(56,934)
(56,934)
Balance at December 31, 2023
112,872,672
$
13,874,132
$
-
$
374,761
$
$
(361,637)
$
13,409
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
$
(56,934)
$
(75,222)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense
2,234
1,684
Amortization of debt issuance costs
Amortization of discount on short-term investments
(1,554)
(1,022)
Stock-based compensation expense
7,508
8,714
Non-cash loss on disposal
-
Change in operating assets and liabilities:
Amounts due from related parties
(1)
(21)
Prepaid expenses and other current assets
3,236
3,300
Accounts payable
(3,512)
2,103
Amounts due to related parties
(36)
(2,410)
Accrued expenses and other current liabilities
(8,029)
6,851
Other long-term liabilities
(201)
(1)
Net cash used in operating activities
(57,238)
(55,928)
Cash flows from investing activities:
Purchase of short-term investments
(63,942)
(107,526)
Redemption of short-term investments
93,589
55,000
Purchase of property and equipment
(803)
(1,866)
Net cash provided by (used in) investing activities
28,844
(54,392)
Cash flows from financing activities:
Repayment of notes payable
(444)
(430)
Repayment of note payable with related party
(1,150)
-
Proceeds from exercise of stock options
Net cash used in financing activities
(1,140)
(167)
Change in cash, cash equivalents and restricted cash
(29,534)
(110,487)
Cash, cash equivalents and restricted cash at beginning of period
34,570
145,057
Cash, cash equivalents and restricted cash at end of period
$
5,036
$
34,570
Reconciliation of cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash at end of period
$
5,036
$
34,570
Less restricted cash
1,095
Cash and cash equivalents end of period
$
4,931
$
33,475
Supplemental Disclosure
Cash paid for interest
$
$
Noncash Financing Activities
Conversion of amounts due to related party into note payable to related party
$
2,161
$
4,225
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.
Liquidity and Going Concern Assessment
As of December 31, 2023, the
Company had $
4.9
million of cash and cash
equivalents and $
25.5
million of short-term investments to
fund operations. 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
$
56.9
million for the year
ended December 31, 2023. Net
cash used in operating
activities for the year
ended December 31, 2023 was
$
57.2
million. In
addition, as
of December 31,
2023, the
Company has
an accumulated
deficit of
$
361.6
million. The
Company expects
to
incur substantial operating losses and negative cash flows from operations for the foreseeable future.
In accordance
with ASC
205-40, Presentation
of Financial
Statements-Going Concern,
management is
required to
evaluate whether
there are
conditions or
events, considered
in the
aggregate, that
raise substantial
doubt about
the Company's
ability to
continue as
a
going concern within one year after the date that the financial statements are issued. When management
identifies conditions or events,
considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern, management must
consider whether its plans to mitigate those relevant conditions or events will alleviate the substantial doubt.
Given that the Company has incurred substantial operating losses and negative cash flows from operations since inception and expects
to continue
to incur
substantial operating
losses and
negative cash
flows from
operations for
the foreseeable
future, management
assessed
that there are conditions or events, considered
in the aggregate, as of the issue
date of these financial statements, which
raise substantial
doubt about the Company's ability to continue as a going concern.
Management considered whether its plans
to mitigate those relevant conditions
or events will alleviate
the substantial doubt about
the
Company’s ability
to continue as
a going concern.
These plans include
raising new capital
through public or
private equity offerings,
strategic collaborations, debt
financing and other
capital sources or
combinations thereof, and
as needed cost
reduction through attrition,
organization restructuring, and curtailment of certain research and development activities.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
However, there are significant risks and uncertainties as to whether these plans will be achieved or additional funding will be available
on terms acceptable to the Company, or at all.
Due to
the risks
and uncertainties,
management cannot
conclude that
substantial doubt
about the
Company's ability
to continue
as a
going concern has been
alleviated. As such, there
is substantial doubt about
the entity's ability to
continue as a going
concern within one
year after the
date that these
financial statements are
issued. However, since liquidation
is not imminent,
the accompanying consolidated
financial statements
have been
prepared assuming
that the
Company will
continue as
a going
concern, 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.
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.
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.
Statement of
operations accounts
are re-measured
at average
exchange rates
for the
reporting period.
The resulting
gains or
losses are
included in
foreign currency translation (gains) losses 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
stock-based compensation,
prepaid expense recognition, income tax valuation allowance and 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.
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 consistent 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
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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,
2023 and
2022 a
deposit of
$
0.1
million and
$
1.1
million, respectively,
was restricted
from withdrawal.
These
restrictions related to securing credit card obligations
as of December 31, 2023, and cash payments
received in advance under the CEPI
Funding Agreement and securing credit
card obligations as of December 31,
2022. 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, Investments
- Debt
Securities (“ASC
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 and other comprehensive loss.
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 (loss) on the accompanying consolidated statements of stockholder’s equity.
The Company did
no
t record any such impairments during the years ended December 31, 2023 and 2022.
Concentration of credit risk
Financial instruments
that potentially
expose the
Company to
concentrations of
credit risk
consist primarily
of cash
and cash
equivalents.
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.
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
or financing.
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
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
deferred offering
costs are
expensed immediately
as a
charge to
operating expenses
in the
accompanying consolidated
statements of
operations and other comprehensive loss.
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 and other comprehensive loss.
Fair value measurements
Certain assets and liabilities
are carried at fair value
under 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:
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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 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 were restricted as to their use until expenditures contemplated
in the
funding agreement
were incurred.
As funds
were received
they were
included within
restricted cash
offset by
a corresponding
short-term accrued liability.
The Company recognized
payments from CEPI
as a reduction
of research and
development expenses, in
the same period as the expenses that the grant was intended to reimburse were incurred.
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 16). These
agreements are generally
cancelable by either
party,
and related payments
are recorded as
research and development
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
and other comprehensive loss
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 have resulted 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
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
market condition is reflected in the grant-date fair value
and the performance-based options are recognized 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 grant
considering the
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 has
been
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
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
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 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 warrants
are considered
potential dilutive
common stock
and are
excluded from
the computation
of net
loss per
share 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
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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
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
The Company’s short-term investments consist of the following (in thousands):
As of December 31, 2023
Amortized Cost
Unrealized Gains
(Losses), Net
Recorded Basis
U.S. Treasury Securities
$
25,456
$
$
25,464
Total
$
25,456
$
$
25,464
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 fair values of
our cash and certain
cash equivalents, accounts payable, and
other current assets and current
liabilities approximate
their carrying values due to their short-term maturities.
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 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):
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Level 1
Level 2
Level 3
Total
Assets:
Short-term investments
$
25,464
$
-
$
-
$
25,464
Money market account
1,029
-
-
1,029
Total assets
$
26,493
$
-
$
-
$
26,493
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
During the years ended December 31, 2023 and 2022, there were
no
transfers between Level 1, Level 2 and Level 3.
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
December 31,
Prepaid insurance
$
1,235
$
1,870
Deposits
Clinical prepayments
-
2,679
Prepaid materials and supplies
-
Other
$
2,316
$
5,551
Prepaid
insurance
consists
primarily
of
$
1.2
million
and
$
1.6
million
for
the
unamortized
portion
of
the
Company’s
annual
D&O
insurance premiums as of December 31, 2023 and 2022, respectively.
Deposits consist of amounts held by the Company’s travel and logistics company and the leaseholder for the Florida lab.
Clinical prepayments consist
of amounts paid
in advance to clinical
research organizations (“CROs”) for
expenses related to
our clinical
trials, primarily UB-612, that are amortized to expense as earned by the CRO and clinical trial sites.
Prepaid materials and supplies consist 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.
Other prepaid
expenses and
current assets
consist primarily of
prepaid expenses
incurred in
the normal course
of business,
including
software subscriptions and prepaid maintenance.
Costs related to the establishment
of the Company’s
at-the-market offering program
during 2023 were recorded as prepaid expense and will be charged against equity raised under the program.
As of December 31, 2023,
no shares have been sold under the program.
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
3,649
3,146
Leasehold improvements
Software
Facilities, furniture and fixtures
Vehicles
Construction in progress
Total property and equipment
16,948
16,136
Less: accumulated depreciation
(5,867)
(3,624)
$
11,081
$
12,512
Depreciation expense for the years ended December 31, 2023 and 2022 was $
2.2
million and $
1.7
million, respectively.
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
December 31,
Accrued compensation
$
1,558
$
2,568
Accrued external research and development
1,202
6,904
Accrued professional fees and other
1,722
Accrued interest
$
3,341
$
11,370
8. Other Long-Term Liabilities
Other long-term liabilities consisted of the following (in thousands):
December 31,
Accrued tax provision
$
$
$
$
As of December 31, 2023 and 2022, less than $
0.1
million and $
0.2
million of the accrued tax provision relates to penalties and interest
the Company
may be
subject to
on transfer
pricing related
exposures for
its foreign
subsidiaries. During
2023, statute
of limitations
expirations enabled the Company to write off approximately $
0.2
million of accrued penalties and interest.
The Company has accrued
for the remaining exposures until the statute of limitations expires and it is appropriate to write them off.
9. Notes Payable
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
$
0.1
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.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The carrying value of the 2025 Note is as follows (in thousands):
December 31,
Principal
$
10,011
$
10,455
Unamortized debt issuance cost
(78)
(131)
Carrying amount
9,933
10,324
Less: current portion
(406)
(391)
Note payable, net of current portion and debt issuance cost
$
9,527
$
9,933
As of December 31, 2023, the remaining principal payments for the 2025 Note, are as follows (in thousands):
Amount
$
9,553
$
10,011
Interest expense
associated with
the 2025
Note was
$
0.4
million and
$
0.4
million for
the years
ended December 31,
2023 and
2022,
respectively.
2022 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. Interest
expense associated
with the
2022 Promissory
Note was
$
0.2
million and less than $
0.1
million for the years ended December 31, 2023 and 2022, respectively.
The carrying value of the 2022 Promissory Note is as follows (in thousands):
December 31,
Principal
$
3,112
$
4,225
Less: current portion
(1,029)
(1,113)
Note payable, net of current portion and debt issuance cost
$
2,083
$
3,112
As of December 31, 2023, the remaining principal payments for the 2022 Promissory Note, are as follows (in thousands):
Amount
1,029
1,103
$
3,112
2023 Promissory Note with Related Party
In December 2023,
the Company entered
into a related
party unsecured promissory
note (the
“2023 Promissory Note”)
with UBI
for
$
2.2
million. The 2023 Promissory Note accrues
interest at
9.25
% per annum and is due
November 1, 2027
. The 2023 Promissory Note
was issued to satisfy
accounts payable to UBI totaling
$
2.2
million. During the year ended
December 31, 2023 the Company incurred
less than $
0.1
million in interest expense related to the 2023 Promissory Note.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The carrying value of the 2023 Promissory Note is as follows (in thousands):
December 31,
Principal
$
2,124
Less: current portion
(472)
Note payable, net of current portion
$
1,652
As of December 31, 2023, the remaining principal payments for the 2023 Promissory Note, are as follows (in thousands):
Amount
$
2,124
10. 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, if any.
The Company has reserved shares of common stock for issuance for the following purposes:
December 31,
Options and RSUs issued and outstanding
22,123,762
20,716,760
Options available for future grants
6,266,663
6,064,003
Warrants issued and outstanding
1,928,020
1,928,020
30,318,445
28,708,783
11. 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 “2021 Pre-IPO Plan”), which provided for the Company to grant qualified incentive options, nonqualified options, restricted stock
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
awards,
unrestricted
stock
awards,
and
restricted
stock
units
to
employees and
non-employees
to
purchase
the
Company’s
Class
A
common stock. The
2021 Pre-IPO Plan
authorized the issuance
of up to
21,593,830
shares of Class
A common stock
pursuant to awards.
In November 2021, our stockholders approved
replacing the 2021 Pre-IPO Plan with
the 2021 Omnibus Incentive Compensation Plan
(the “Omnibus 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 Omnibus Plan replaced the
2021 Pre-IPO Plan and no further grants will be made under the
2021 Pre-IPO Plan. The following is a summary of certain terms and conditions of the Omnibus Plan.
At its inception in November 2021, the maximum number of shares
of common stock that could be issued under the Omnibus 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
Omnibus
Plan. On
January
1,
2024,
in accordance
with
the
automatic “evergreen”
provision
of
the
Omnibus Plan, the maximum number of shares that can be issued under the plan was increased to
16,401,213
.
As of
December 31, 2023,
6,266,663
shares were
available for future
grant. Shares
issued under the
Omnibus 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
Omnibus
Plan.
The exercise
price for
grants made
pursuant to
the terms
of the
Omnibus Plan
is determined
in the
applicable grant
by the
board of
directors. Any incentive options granted to persons possessing less than
% of the total combined voting power of all classes of stock
may not have an exercise price
of less than
% of the fair market value of
the common stock on the grant
date. Any incentive options
granted to persons possessing more than
% of the total combined voting power of all classes of stock may not have an exercise price
of less than
% 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
% 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
15,561,307
shares
of
Class
A
common
stock
outstanding
and
options
to
purchase
6,362,455
shares
of
Class
B
common
stock
outstanding,
of
which
11,389,851
Class
A
and
5,063,133
Class
B
shares,
respectively were exercisable.
Stock Option Activity
The following table summarizes stock option activity for the year ended December 31, 2023:
Number of Stock
Options
Outstanding
Weighted Price
Per Share
Weighted
Contractual
Term (years)
Aggregate
Intrinsic Value
(in thousands)
Balance at December 31, 2022
20,416,760
$
5.07
6.8
$
7,166
Granted
4,573,829
2.02
Exercised
(689,922)
0.66
Forfeited
(2,376,905)
6.55
Balance at December 31, 2023
21,923,762
$
4.42
6.0
$
3,158
Options vested and exercisable at December 31, 2023
16,452,984
$
4.37
5.6
$
3,155
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, 2023
and 2022 was $
0.2
million and $
4.5
million,
respectively.
The weighted-average grant-date fair
value per share of options
granted during the years ended
December 31, 2023 and 2022
was $
1.41
and $
2.21
, respectively.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The
total
fair
value
of
options
vested
during
the
years
ended
December
31,
and
was
$
9.2
million
and
$
8.8
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,
2023 and 2022:
December 31,
Risk-free interest rate
3.46
% -
5.58
%
1.46
% -
4.22
%
Expected term (in years)
0.12
-
6.11
5.5
-
6.1
Expected volatility
47.64
% -
83.09
%
90.01
% -
97.82
%
Expected dividend yield
0.00
%
0.00
%
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.
As
of
December 31,
2023,
5,983,670
options
with
performance-
and
market-based
vesting
conditions
remain
outstanding.
The rest have either been exercised or expired.
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
75%
Risk-free interest rate
0.58%
Cost of equity
25%
Fair value of underlying common stock (as of valuation date)
$10.07
In connection with preparing its
financial statements for the fiscal
year ended December 31, 2023,
the Company identified an error
with
how the risk-free
interest rate
was reported in
the financial
statements for
the fiscal
year ended
December 31,
2022.
The risk-free
interest
rate was reported as
58.00
% when it should have been reported as
0.58
%.
This error has been corrected in the table above.
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
90%
Risk-free interest rate
0.09%
Cost of equity
25%
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
shares 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,
2023,
the
market-based
vesting conditions had not been achieved.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restricted Stock
The following table summarizes the Company’s restricted stock activity for the year ended December 31, 2023:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Per Share
Unvested at December 31, 2022
300,000
$
3.76
Issued
-
-
Forfeited
(100,000)
3.76
Unvested at December 31, 2023
200,000
$
3.76
No
restricted stock vested during the years ended December 31, 2023 and 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
$
2,565
$
3,276
General and administrative
4,943
5,438
Total stock-based compensation expense
$
7,508
$
8,714
As of December 31, 2023, total unrecognized compensation cost related to the unvested stock-based awards was $
8.0
million, which is
expected to be recognized over a weighted average period of
2.2
years.
12. 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
$
(54,850)
$
(69,745)
Entities outside the U.S.
(2,084)
(5,477)
$
(56,934)
$
(75,222)
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tax Rate Reconciliation
The Company’s effective tax rate for the years ended December 31, 2023 and 2022 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
2.29
%
(1.17)
%
Stock compensation
(1.08)
%
(0.68)
%
Foreign rate differential
(0.31)
%
(0.59)
%
Uncertain tax positions
0.00
%
0.00
%
Plane expense
(1.15)
%
0.00
%
Other
0.67
%
1.41
%
Change in valuation allowance
(21.42)
%
(19.98
)
%
Provision for income taxes
0.00
%
0.00
%
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, 2023
and 2022 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 $
12.2
million during the year ended December 31,
2023 and
$
15.0
million during
the year
ended December 31,
2022, 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
$
42,170
$
39,184
Section 174 costs
15,631
7,424
Stock compensation
3,385
2,090
Other
Total deferred tax assets
61,411
49,257
Less: valuation allowance
(61,369)
(49,173)
Net deferred tax assets
$
$
Deferred tax liabilities:
Depreciation
$
(42)
$
(84)
Net deferred tax liabilities
(42)
(84)
Net deferred income taxes
$
-
$
-
Net Operating Losses
As of
December 31, 2023,
the Company
had
total net
operating loss
carryforwards for
U.S. federal
income tax
purposes of
$
178.8
million, of
which $
175.7
million have
no expiration
date, and
foreign net
operating loss
carryforwards of
$
31.2
million that
have no
expiration date.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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
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
and 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
% 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
174 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, many state
and local, and foreign jurisdictions. The
Company is currently not under
audit in
any US
federal, state
and local
or foreign
jurisdictions. Tax
years starting
from 2016
remain open
to examination
due to
the
carryover of unused net operating losses and tax credits.
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
$
$
Decreases during current period
(617)
-
Uncertain tax position liability at the end of the year
$
$
In 2023, $
0.6
million of liabilities were reversed since the Company
filed late returns for tax years 2016 and
2017 in October of 2020,
and as such, the statute of limitations expired 3 years from that date, in October 2023.
13. Net Loss Per Share
The Company’s potentially dilutive securities, which include options,
unvested restricted stock, and warrants,
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, 2023 and 2022 because including them would
have had an anti-dilutive effect:
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
Unvested restricted stock
200,000
300,000
Options issued and outstanding
21,923,762
20,416,760
Warrants issued and outstanding
1,928,020
1,928,020
24,051,782
22,644,780
14. 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, 2023, the Company had
no
remaining prepayments to CROs or CMOs for activities associated with the conduct
of
its clinical trials or 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
explore markers
for target
engagement in
individuals immunized
with UB-312,
an active
a
-Synuclein
immunotherapy. The
Company used the funds to
oversee sample management, sample preparation (IgG
fractions) and distribution, as
well as characterize the binding properties of the antibodies against pathological forms of aSyn. Since funding was utilized over a two-
year period,
as cash
was received,
the amount
expected to
be utilized
within twelve
months was
recognized as
short-term restricted
cash/deposits, with
a corresponding
short-term accrued
liability, which was
released as
the related
expenses were
incurred. The
Company
recognized payments from MJFF
as a reduction of
research and development expenses,
in the same period
as the expenses that
the grant
was intended to reimburse were incurred. The
remaining balance of cash received was recognized
to long-term restricted cash/deposits,
with a
corresponding long-term
accrued liability.
As of
December 31, 2023,
there was
no
balance remaining
in the
accrued liability
related
to
this
grant.
For
the
year
ended
December 31,
2022,
the
Company
recognized
$
0.1
million
as
a
reduction
of
research
and
development
expenses
for
amounts
reimbursed
through
the
MJFF
grant,
and
did
no
t
recognize
any
reduction
in
research
and
development expenses for the year ended December 31, 2023.
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 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 2023, 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. Funding
tranches received are
expected to the
utilized within twelve
months, thus 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, 2023, there was
no
remaining balance of restricted cash and short-term accrued liability related to CEPI
funds. For
the years ended
December 31, 2023 and
2022, the Company
recognized $
1.8
million and $
7.5
million, respectively,
as a reduction
of
research and development expenses for amounts reimbursed through the CEPI grant.
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 2023,
the Company renewed
its lease for
9,839
square feet of
lab and office
space with Space
Florida in Exploration
Park,
Florida commencing August 12,
2023. The lease has a
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, 2023 and 2022 amounted to $
0.6
million and $
0.5
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. 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
license agreement
acquired and
the
issuance
of the
UBI Warrant. The
majority
of
the Voting
interests in UBI and in 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 and the excess of consideration paid over the carrying value as a capital transaction.
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
into indemnification agreements
with members of
its board of
directors and executive
officers that
will require
the Company,
among
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
no
t accrued any liabilities related to such obligations as of December 31, 2023 or 2022.
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, 2023 and 2022, the Company was not a party to any material legal matters or claims, except as discussed below.
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 was not a party to the litigation initially, 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 implemented certain additional control measures.
On November 10,
2023, Ask America
LLC (“Ask
America”) filed
counterclaims against the
Company in
connection with
a pending
legal matter
between Ask
America and
the Company’s
co-founders. The
case is
styled Hu
v.
Ask America
LLC, Case
No. 3:22-cv-
02432-X, and is pending in the U.S. District Court for the Northern District of Texas. The counterclaims name the Company as a third-
party defendant and alleges, among other things, certain violations of the Texas Securities Act and common law fraud.
The Company accrues liability
for this and other
such matters when it
is probable that future
expenditures will be made
and that such
expenditures can
be reasonably
estimated. At
this time,
since the
Ask America
litigation is
at an
early stage,
the Company
does not
consider a loss probable and no loss amount is estimable, hence no accrual for loss has been made.
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, the Company’s COVID-19 vaccine candidate under an Authorization to Proceed
(“ATP”)
agreement for $
million of materials. Through August 2021, $
7.2
million of materials were ordered by UBP, $
3.0
million of
materials were received by UBP and paid for with a $
3.0
million advance payment from the Company. The Company has recognized
$
3.0
million in expense for these materials purchases authorized under the ATP.
When the Company asked to pause further manufacture of protein upon rejection of the Emergency Use Authorization application by
Taiwan in August 2021, UBP requested that its suppliers cancel the remaining $
4.2
million in orders for which 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 concluded that a loss for the
Company is probable, or that one amount of loss is a better estimate than any other amount, since UBP 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
no
t been recognized
for them.
There is no claim against the Company by UBP related to these orders, no settlement or other agreement has been reached between the
Company and UBP or, to the Company’s knowledge, between UBP and its suppliers. Therefore, the range of the potential loss is still
$
to $
4.2
million.
15. 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
matches employee contributions to
the Plan at
% up to
% of the employee’s
base salary. During the
years ended December 31,
2023 and 2022,
the Company contributed
$
0.5
million and $
0.4
million to employees’
401(k) accounts.
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2023 and 2022, the Company contributed less than $
0.1
million per year to the PRSA accounts.
16. Related Party Transactions
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, 2023, 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 Agreements (“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. provides 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.
In August
2021, Vaxxinity
entered into
a license
agreement with
UBI and
certain of
its affiliates
(collectively,
the “Licensors”)
that
expanded
intellectual
property
rights
previously
licensed
under
the
Original
UBI
Licenses
in
exchange
for
a
warrant
to
purchase
1,928,020
shares of Vaxxinity Class A common stock. 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
(see Note 14).
The Company also considers
Destination Systems, its travel and
logistics firm, a related
party since its Chief Executive
Officer, Landon
Ogilvie, is on the Company’s board of directors.
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
$
-
$
Amounts due from related parties
Liabilities
Accrued expenses
-
-
Amounts due to related parties
10,575
12,772
Current portion of note payable
1,500
1,113
Note payable
3,735
3,112
Accrued interest payable
$
-
$
VAXXINITY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31,
Operating expenses
Research and development
Services provided by related parties
$
$
4,172
General and administrative
Services provided by related parties
2,725
-
Other expense
Related party interest expense
$
$
17. Subsequent Events
On March 8, 2024,
a Special Committee (the “Committee”)
of the Board of
Directors of Vaxxinity,
Inc. approved an option
repricing
(the “Repricing”).
The Repricing generally applied to
continuing employees and officers with
(a) underwater options to purchase
shares of the Company’s
Class A
common stock
that were
granted to
employees (such
options, the
“Employee Options”)
and to
Louis Reese,
the Company’s
Executive Chairman,
and Mei
Mei Hu,
the Company’s
Chief Executive
Officer (together
with Mr.
Reese, the
“Founders”) under
the
Company’s Omnibus Plan and the
2021 Pre-IPO Plan
and (b) underwater
options to purchase
shares of the
Company’s Class B common
stock granted
pursuant to stock
option agreements
governed by
the terms
of the 2021
Pre-IPO Plan
(together with
the Employee
Options,
the
“Eligible
Options”).
The
total
number
of
shares
of
Class
A
and
Class
B
common
stock
underlying
all
Eligible
Options
was
approximately
10,105,140
shares.
The Eligible Options were repriced such that the exercise price
per share for such options was reduced to $
0.70
, the closing price of the
Company’s Class
A common stock
on the Nasdaq
Global Market on
March 8, 2024,
the most recent
closing price of
the Company’s
Class A common stock prior to the Repricing.
In order to exercise the Employee
Options at the reduced exercise price,
holders are required to remain in
service with the Company (or
otherwise
be
eligible
to
exercise
their
options
pursuant
to
any
applicable
post-termination
exercise
period)
through
the
end
of
a
“Retention Period” that ends on the earlier
of: (a) December 31, 2024 and (b)
a Change of Control, as defined in
the Omnibus Plan. If
an employee exercises an Employee Option prior to the end of the Retention Period, such employee will be required to pay
a premium
exercise price
equal to
the original
exercise price
per share
of such
Employee Option.
Options subject
to the
Repricing held
by the
Founders will be
exercisable in accordance
with their terms,
and shares of
Class B common
stock acquired upon
exercise of such
options
will be subject to
a lock-up restriction prohibiting
sales for a period
of two years from the
Repricing Date. In addition,
the Founders will
not be eligible to receive annual equity grants in 2024 and 2025.
The Company is evaluating the impact of the Repricing and will disclose this impact in its Quarterly Report on Form 10-Q for the first
quarter of fiscal year 2024.

---

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.
Based on management’s evaluation
our principal executive officer and principal
financial
officer
concluded
that,
as
of
December 31,
2023,
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, including the principal executive
officer and principal financial
officer, conducted
an assessment of the effectiveness
of
the Company’s internal control over
financial reporting as
of December 31, 2023 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,
2023 is
effective.
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.
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
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, 2023 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.
On March 25, 2024, Peter
Powchik, MD notified the Company
of his intention to resign
from the board of directors
effective March 31,
2024.
Dr.
Powchik’s
resignation
is
not
the
result
of
a
disagreement
with
the
Company
on
any
matter
relating
to
the
Company’s
operations, policies or practices.

---

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, 2023 and 2022
Report of Independent Registered Public Accounting Firm
s (PCAOB ID: 686, 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
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).+
10.9
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).+
10.10
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).+
10.11
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).+
10.12
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).+
10.13
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).+
10.14
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).+
10.15
Open Market Sale Agreement, dated as of August 9, 2023, between Vaxxinity, Inc. and Jefferies LLC (incorporated by
reference to Exhibit 1.2 of our Registration Statement on Form S-3 (File No. 333-273822) filed on August 9, 2023).
21.1
Subsidiaries of Vaxxinity, Inc.*
23.1
Consent of Independent Registered Public Accounting Firm (FORVIS, LLP)
23.2
Consent of Independent Registered Public Accounting Firm (Armanino LLP)
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*‡+
97.0
Vaxxinity, Inc. Compensation Recoupment Policy
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