Item
1. Business.
Background
DelMar
Pharmaceuticals, Inc. (the “Company,” “we,” “us,” or “our”) is a clinical stage,
biopharmaceutical company focused on the development and commercialization of new cancer therapies. Our mission is to benefit
patients by developing and commercializing anti-cancer therapies for patients whose solid tumors exhibit features that make them
resistant to, or unlikely to respond to, currently available therapies, with particular focus on orphan cancer indications.
As
of June 30, 2019, we have spent approximately $40.5 million of shareholder capital in developing VAL-083, a novel, validated,
DNA-targeting agent, for the treatment of drug-resistant solid tumors such as glioblastoma multiforme (“GBM”) and
potentially other solid tumors, including ovarian cancer, non-small cell lung cancer (“NSCLC”), and diffuse intrinsic
pontine glioma (“DIPG”). VAL-083 is a first-in-class, small-molecule, DNA-targeting chemotherapeutic that has demonstrated
activity against a range of tumor types in prior Phase 1 and Phase 2 clinical studies sponsored by the US National Cancer Institute
(“NCI”). As part of our business strategy, we leverage and build upon these prior NCI investments and data from more
than 40 NCI- Phase 1 and Phase 2 clinical studies, which includes an estimated 1,000 patient safety database, added to our own
research to identify and target unmet medical needs in modern cancer care. DNA-targeting agents are among the most successful
and widely used treatments for cancer. Their efficacy is based on the ability to bind with a cancer cell’s DNA and interfere
with the process of protein production required for growth and survival of cancer cells. “First-in-class” means that
VAL-083 embodies a unique molecular structure which is not an analogue or derivative of any approved product, or product under
development, for the treatment of cancer.
Prior
studies of VAL-083 have shown increased median overall survival benefits versus radiation alone, validating the tumor affecting
properties of VAL-083. Our recent research has highlighted the opportunities afforded by VAL-083’s unique mechanism of action
and its potential to address unmet medical needs in a well-defined and acknowledged biomarker selected population within the larger
GBM population. We are thus focusing our initial development efforts on patients whose tumors exhibit biological features that
make them resistant to, or unlikely to respond to, currently available therapies as identified by National Comprehensive Cancer
Network (“NCCN”). For example, our research demonstrating VAL-083’s activity in GBM independent of the O6-methyl
guanine methyltransferase (“MGMT”) methylation status allows us to focus patient selection based on this important
biomarker and thus improve the probability of success in our current and future clinical studies.
We
are currently conducting two open-label, biomarker driven Phase 2 studies in MGMT-unmethylated GBM. MGMT is a DNA-repair
enzyme that is associated with resistance to temozolomide (“TMZ”), the current standard-of-care chemotherapy used in the treatment
of GBM. Greater than 60% of GBM patients have MGMT-unmethylated tumors and exhibit a high expression of MGMT, which is
correlated with TMZ treatment failure and poor patient outcomes as indicated in the NCCN guidelines for GBM
treatment published in September, 2017. Our research demonstrates that VAL-083’s anti-tumor activity is independent of
MGMT expression. In our current Phase 2 studies we are using MGMT as a biomarker to identify patients for treatment with
VAL-083 in three distinct GBM patient populations:
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First-line
in combination with radiation
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As
adjuvant therapy immediately following chemoradiation and initial TMZ treatment,
and
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In
the recurrent treatment setting.
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If
successful, the results of these studies could position VAL-083 for advancement to pivotal clinical studies as a potential
replacement for TMZ in MGMT-unmethylated GBM. As both of our clinical studies are open label studies, we
anticipate presenting data from these studies at peer reviewed scientific meetings during the latter part of calendar year
2019 as well as during the first half of calendar year 2020.
With
respect to our STAR-3, Phase 3 study, we have finalized the decision to discontinue this clinical study due to patient
enrollment rates, potential ability to measure positive results in a study that did not pre-select a biomarker identified
patient population, and potential risk of success assessment. As importantly, terminating the study has allowed us to focus
on more rapid enrollment of GBM patients in our two biomarker-driven Phase 2 studies.
With
the US Food and Drug Administration (“FDA”) approval for our investigational new drug application (“IND”),
we have future plans for a phase 1/2, open-label, multicenter study of VAL-083 in patients with Recurrent Platinum
Resistant Ovarian Cancer (“REPROVe”). Platinum-based chemotherapy is the standard-of-care
in the treatment of ovarian cancer. Nearly all ovarian cancer patients eventually become resistant to platinum (“Pt”)
based chemotherapy leading to treatment failure and poor patient outcomes. We have demonstrated that VAL-083 is active against
Pt-resistant ovarian cancer in vitro. However, based on ongoing evaluation and input from our ovarian cancer advisory board,
we are reassessing the development of VAL-083 for the treatment of ovarian cancer. We are in the process of evaluating the best
path forward in ovarian cancer and are evaluating strategic options, including the potential combination of VAL-083 with PARP
inhibitors. At the American Association for Cancer Research (“AACR”) Annual Meeting in 2018 we presented preclinical
data showing that VAL-083 can synergize PARP inhibitors in both a BRACA-proficient and -deficient setting.
In
addition to our clinical development activities in the United States, pursuant to our collaboration with Guangxi Wuzhou Pharmaceutical
(Group) Co. Ltd. (“Guangxi Wuzhou Pharmaceutical Company”), we have provided Guangxi Wuzhou Pharmaceutical Company
certain commercial rights to VAL-083 in China where it is approved as a chemotherapy for the treatment of chronic myelogenous
leukemia (“CML”) and lung cancer. Guangxi Wuzhou Pharmaceutical Company is the only manufacturer presently licensed
by the China Food and Drug Administration (“CFDA”) to produce the product for the China market.
We
have a broad patent portfolio to protect our intellectual property. Our patent applications claim composition of matter and methods
of use of VAL-083 and related compounds, synthetic methods, and quality controls for the manufacturing process of VAL-083. We
believe that our portfolio of intellectual property rights provides a defensible market position for the commercialization of
VAL-083. In addition, VAL-083 has been granted protection under the Orphan Drug Act by the FDA and the European Medicines Agency
(“EMA”) for the treatment of gliomas, including GBM. The FDA has also granted Orphan Drug protection to VAL-083 for
the treatment of medulloblastoma and ovarian cancer.
Our
corporate development strategy is to advance VAL-083 on an indication-by-indication basis, and then to consider out-licensing
our products when they have matured enough to warrant proper licensing valuations. In addition to VAL-083’s applicability
to multiple solid tumor indications, we are also constantly evaluating licensing, or acquiring additional product candidates,
in order to establish a product pipeline and to position us for long-term sustainability and growth of shareholder value. We believe
the experience of our clinical development team will position us to efficiently develop possible drug candidates that we may acquire,
or license, in the future.
We
intend to continue to evaluate options for our strategic direction. These options may include raising additional capital, the
acquisition of another company and/or complementary assets, our sale, or another type of strategic partnership.
Recent
Highlights
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As
of September 1, 2019, we relocated our headquarters from Vancouver, British Columbia to San Diego, California. The Vancouver office
will remain open as an administrative office.
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On
August 16, 2019, we closed on the sale of (i) 4,895,000 shares of our common stock, par value $0.001 per share, (ii) pre-funded
warrants to purchase an aggregate of 2,655,000 shares of common stock and (iii) common warrants to purchase an aggregate
of 7,762,500 shares of common stock, including 800,000 shares of common stock and warrants to purchase an aggregate of
1,012,500 shares of common stock sold pursuant to a partial exercise by the underwriters of the underwriters’ option
to purchase additional securities. Each share of common stock or pre-funded warrant, as applicable, was sold together
with a common warrant to purchase one share of common stock at a combined effective price to the public of $1.00 per share
and accompanying common warrant.
We
believe the net proceeds from this offering of approximately $6.7 million will be sufficient to complete full enrollment in
all three patient groups of our two ongoing Phase 2 clinical studies for our drug development candidate, VAL-083,
expected to occur by the fourth quarter of calendar year 2020.
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As of August 1, 2019, we provided an update
on the first 20 patients enrolled in our ongoing Phase 2 clinical study investigating the first-line treatment of VAL-083
in combination with radiation therapy in newly-diagnosed, MGMT-unmethylated GBM. The study, which is being conducted
at the Sun Yat-sen University Cancer Center (“SYSUCC”) is designed to enroll up to 30 patients to determine whether
first-line therapy with VAL-083 treatment improves progression free survival (“PFS”). The current standard of
care is first-line TMZ with radiation.
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As
of August 1, 2019, of the first 20 enrolled patients, 17 have received at least their first assessment (two patients have not
been enrolled long enough to receive their first assessment and one patient died before their first assessment). “Best Overall
Response” for these patients per Investigator Assessment were:
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Nine
have been assessed as having achieved a complete response (CR) (9/17, or 53%)
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Seven have been
assessed with stable disease (SD), (7/17, or 41%); and
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One has been assessed
as disease progression (PD) (1/17, or 6%).
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As
of August 1, 2019, of the 20 patients enrolled, 17 (85%) have received their two-month (post-third cycle) MRI and investigator
assessment, 13 (65%) have received their five-month MRI and investigator assessment, and seven (35%) have received their eight-month
MRI and investigator assessment. Two patients (10%) have not been on the study long enough to reach their first assessment, and
one patient (5%) died before their first assessment. Importantly, 16 of the 20 patients enrolled (80%) were still alive as of
the data cut-off date.
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On July 24, 2019 we announced the enrollment
of the first patient in the adjuvant (pre-temozolomide maintenance) arm of our Phase 2, open label study of VAL-083 in MGMT-unmethylated
GBM being conducted at the University of Texas MD Anderson Cancer Center (“MDACC”). The MDACC Institutional Review
Board (“IRB”) had previously approved the addition of up to 24 patients in the pre-TMZ maintenance setting (i.e.
the adjuvant setting). The up to 24 newly-diagnosed patients will have undergone surgery and chemoradiation with TMZ but will
now receive VAL-083 in place of standard of care TMZ for adjuvant therapy.
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As of July 24, 2019, we have enrolled 56 of
the planned up to 83 patients in the recurrent arm of our Phase 2, open-label clinical study of VAL-083 in bevacizumab (Avastin®)-naïve,
recurrent GBM (“rGBM”) patients with MGMT-unmethylated status. This study is being conducted at MDACC and is designed
to determine the impact of VAL-083 treatment on overall survival compared to historical reference control. We previously announced
that the MDACC IRB had approved the addition of up to 35 patients to our rGBM study at a dose of 30 mg/m2. As previously
disclosed, we had lowered the dose in this study from 40 mg/m2 to 30 mg/m2 to improve tolerance in this
patient population and thereby to potentially increase overall exposure to VAL-083 by increasing the number of cycles of drug
patients are able to receive. Upon completion of the initial 48 patients in this study, 13 will have had the 30 mg/m2
dose and 35 will have had the 40 mg/m2. Therefore, potentially adding an additional 35 patients at 30 mg/m2
would result in a total of 48 patients receiving the 30 mg/m2 dose.
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On June 26, 2019,
we amended our articles of incorporation, as amended, to increase the number of authorized shares of common stock from 7,000,000
to 95,000,000 shares.
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On June 3, 2019,
we entered into a securities purchase agreement for the issuance and sale of an aggregate of 1,170,000 shares of common stock
in a registered direct offering (the “RD Offering”) and warrants to purchase 760,500 shares of common stock in
a concurrent private placement, at a combined purchase price of $3.10 per share and related warrant. The warrants have an
exercise price of $3.10 per share, are immediately exercisable, and have a term of exercise of five years. The closing of the
issuance and sale of these securities was consummated on June 5, 2019. The net proceeds from the offering, after deducting
offering expenses and placement agent fees and expenses payable by us, were approximately $3.2 million.
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On May 22, 2019, the Nasdaq Staff notified us that we did not meet the stockholders’ equity requirements as of March 31, 2019. We submitted a plan to regain compliance with The Nasdaq Capital Market on May 29, 2019. On June 13, 2019, the Nasdaq Hearings Panel issued a decision granting our request for continued listing, subject to the condition that on or before October 15, 2019, we shall have issued public disclosure on Form 8-K that we have met the stockholders’ equity requirement and have demonstrated compliance with all other requirements for continued listing. On September 6, 2019, the Nasdaq Hearings Panel confirmed that, as a result of our recent financing, we have regained compliance with the Nasdaq stockholders’ equity requirements. Accordingly, the Nasdaq Hearing Panel has determined to continue the listing of our securities on Nasdaq and closed the matter.
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On May 20, 2019 we announced the expansion of
our Scientific Advisory Board (“SAB”) with the addition of the following neuro-oncologists:
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Dr. David Reardon, clinical director of the
Center for Neuro-Oncology at the Dana-Farber Cancer Institute and a Professor of Medicine at the Harvard Medical School
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Dr. Timothy Cloughesy, professor of neurology
at the David Geffen School of Medicine at the University of California, Los Angeles and a member of the UCLA Brain Research
Institute and Jonsson Comprehensive Cancer Center
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Dr. Nicholas Butowski, a neuro-oncologist practicing
at UCSF Medical Center in San Francisco, CA, and director of translational research in neuro-oncology and a researcher
at the Brain Tumor Center
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On April 4, 2019,
we announced the formation of an SAB. Its inaugural members are Drs. Napoleone Ferrara and John de Groot. Dr. John de Groot,
Chairman, ad interim of the Department of Neuro-Oncology at the MD Anderson Cancer Center is an expert in glioma biology and
angiogenesis which is the key area of clinical development for VAL-083. Dr. Ferrara is a world-renowned molecular biologist
whose pioneering work on the identification of VEGF, a signal protein produced by cells that stimulates the formation of blood
vessels, led to the development of Genentech Inc.’s Avastin® for the treatment of certain types of cancer,
including ovarian cancer and GBM. Dr. Ferrara is also a member of our Board of Directors and he will serve as the SAB’s
Chairman. The SAB will work closely with our management team to optimize the development of VAL-083.
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Underwritten
Offering
On
August 16, 2019, we closed on the sale of (i) 4,895,000 shares of our common stock, par value $0.001 per share (the “Common
Stock”), (ii) pre-funded warrants (“PFW”) to purchase an aggregate of 2,655,000 shares of Common Stock and
(iii) common warrants to purchase an aggregate of 7,762,500 shares of Common Stock, including 800,000 shares of Common Stock and
warrants to purchase an aggregate of 1,012,500 shares of Common Stock sold pursuant to a partial exercise by the underwriters
of the underwriters’ option to purchase additional securities, in our previously announced underwritten public offering
(the “Offering”). Each share of Common Stock or pre-funded warrant, as applicable, was sold together with a
common warrant to purchase one share of Common Stock at a combined effective price to the public of $1.00 per share and accompanying
common warrant.
The
net proceeds from the Offering, including from the partial exercise of the underwriters’ option to purchase additional securities,
were approximately $6.7 million, after deducting underwriting discounts and commissions and other estimated offering expenses
payable by us. We intend to use the net proceeds from the Offering for our clinical studies and for general corporate purposes,
which may include working capital, capital expenditures, research and development and other commercial expenditures. In addition,
we may use the net proceeds from the Offering for investments in businesses, products or technologies that are complementary to
our business.
We
granted the underwriters a 45-day option, ending September 28, 2019, to purchase up to an additional 1,012,500 shares of Common
Stock and/or common warrants to purchase up to 1,012,500 shares of Common Stock, at the public offering price less discounts and
commissions. On August 15, 2019, the underwriters partially exercised this option by purchasing 800,000 shares of Common Stock
and common warrants to purchase an aggregate of 1,012,500 shares of Common Stock.
The
common stock purchase warrants are exercisable at $1.00 per share and the PFW are exercisable at $0.01 per share until their expiry
on August 16, 2024. We also issued 377,500 warrants to the underwriters of the Offering. The underwriter warrants are exercisable
at $1.15 per share commencing 180 days from August 16, 2019 until their expiry on August 16, 2022.
Subject
to certain ownership limitations, the warrants are exercisable commencing on the issuance date at an exercise price equal to $1.00
per share of common stock, subject to adjustments as provided under the terms of the warrants.
Each
pre-funded warrant is exercisable for one share of our common stock (subject to adjustment as provided for therein) at any time
at the option of the holder until such pre-funded warrant is exercised in full, provided that the holder will be prohibited from
exercising pre-funded warrants for shares of our common stock if, as a result of such exercise, the holder, together with its
affiliates, would own more than 4.99% of the total number of shares of our common stock then issued and outstanding. However,
any holder may increase such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage
shall not be effective until 61 days after such notice to us.
Registered
Direct Offering and Private Placement
On
June 3, 2019, we entered into a securities purchase agreement for the issuance and sale of an aggregate of 1,170,000 shares of
common stock in a registered direct offering (the “RD Offering”) and, in a concurrent private placement, warrants
to purchase 760,500 shares of common stock at a combined purchase price of $3.10 per share and related warrant. The warrants have
an exercise price of $3.10 per share, are immediately exercisable and have a term of exercise of five years. The closing of the
issuance and sale of these securities was consummated on June 5, 2019. The gross proceeds from the offering, prior to deducting
offering expenses and placement agent fees and expenses payable by us, were $3.6 million.
Subject
to certain ownership limitations, the warrants are exercisable commencing on the issuance date at an exercise price equal to $3.10
per share of common stock, subject to adjustments as provided under the terms of the warrants.
China
Clinical Study Update
In
August, 2019, we provided an update on the first 20 patients enrolled in our ongoing Phase 2 clinical study investigating the
first-line treatment of VAL-083 in combination with radiation therapy in newly-diagnosed, MGMT-unmethylated GBM. The study,
which is being conducted at the Sun Yat-sen University Cancer Center (“SYSUCC”) is designed to enroll up to 30 patients
to determine whether first-line therapy with VAL-083 treatment improves progression free survival (“PFS”). The current
standard of care is first-line temozolomide (“TMZ”) with radiation.
As
of August 1, 2019, of the first 20 enrolled patients, 17 have received at least their first assessment (two patients have not
been enrolled long enough to receive their first assessment and one patient died before their first assessment). “Best Overall
Response” for these patients per Investigator Assessment were:
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Nine have been assessed as having achieved a
complete response (CR) (9/17, or 53%)
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Seven have been assessed with stable disease
(SD), (7/17, or 41%); and
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One has been assessed as disease progression
(PD) (1/17, or 6%).
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Of
the 20 patients enrolled, 17 (85%) have received their two-month (post-third cycle) MRI and investigator assessment, 13 (65%)
have received their five-month MRI and investigator assessment, and seven (35%) have received their eight-month MRI and investigator
assessment. Two patients (10%) have not been on the study long enough to reach their first assessment, and one patient (5%) died
before their first assessment. Importantly, 16 of the 20 patients enrolled (80%) were still alive as of the data cut-off date.
Clinical
Updates Presented at 2019 American Society of Clinical Oncology
On
May 31, 2019, we provided clinical study updates from our ongoing first-line and recurrent studies in patients with MGMT-unmethylated
GBM at a Key Opinion Leader (“KOL”) presentation during the 2019 American Society of Clinical Oncology (“ASCO”)
annual meeting in Chicago, IL.
At
the KOL presentation, we provided an update on the ongoing Phase 2 clinical study investigating the front-line treatment of VAL-083
with radiation therapy in newly diagnosed MGMT-unmethylated GBM. This study is being conducted at SYSUCC in Guangzhou, China in
collaboration with Guangxi Wuzhou Pharmaceutical Company. The study is designed to enroll up to 30 patients to determine if first-line
therapy with VAL-083 treatment, in lieu of first-line temozolomide, improves PFS.
As
of May 17, 2019, eighteen patients have been enrolled in the study. Of these patients, fifteen have received their post-cycle
3 MRI and investigator assessment, and ten have received their post-cycle 7 MRI and investigator assessment. Two patients have
not been on the study long enough to reach their first assessment, and one patient died before their first assessment. Assessments
are based on the study investigator’s clinical and radiologic assessment, according to the RANO criteria. For the fifteen
patients who have received at least one assessment, eight patients were assessed with a “Best Overall Response” of
“Complete Response” (8/15, 53.3% CR) and seven patients were assessed with a “Best Overall Response” of
“Stable Disease” (7/15, 46.7% SD). Fourteen of the eighteen patients were still alive at the data cut-off date.
We
also provided an update on the ongoing recurrent arm of the Phase 2 clinical study of VAL-083 in patients with MGMT-unmethylated,
Bevacizumab-naïve recurrent GBM. This study is being conducted in collaboration with MDACC. This biomarker-driven study (testing
for MGMT methylation status) has been amended to enroll up to 83 patients (35 with a starting dose of 40 mg/m2; 48
with a starting dose of 30 mg/m2) to determine the potential of VAL-083 treatment to improve overall survival compared
to historical reference control of 7.2 months with lomustine.
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As of May 5, 2019, 51 patients have been enrolled,
35 patients at a starting dose of 40 mg/m2, and 16 patients at a starting dose of 30 mg/m2.
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For the 47 patients who have been on study long
enough to be assessed at the post-cycle 2 MRI:
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9/35 (25.7%) patients initially receiving 40
mg/m2 exhibited “Stable Disease” per investigator assessment at the end of cycle 2
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4/12 (33.3%) patients initially receiving 30
mg/m2 exhibited “Stable Disease” per investigator assessment at the end of cycle 2
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Additionally,
the study protocol has been amended to include enrollment of up to 24 newly-diagnosed GBM patients who have completed chemoradiation
treatment with TMZ and received no subsequent TMZ maintenance therapy but will receive VAL-083 instead (the adjuvant arm). The
adjuvant arm of the study has been included to explore whether earlier intervention with VAL-083 instead of TMZ maintenance therapy
offers clinical benefit and extends the time to recurrence as compared to TMZ maintenance therapy.
Consistent
with prior studies, myelosuppression (primarily thrombocytopenia and neutropenia) is the most common adverse event in both ongoing
clinical studies.
VAL-083
Clinical Studies
We
are currently developing VAL-083, a novel DNA-targeting agent for the treatment of GBM and potentially other solid tumors, including
ovarian cancer. Our recent research has highlighted the opportunities afforded by VAL-083’s unique mechanism of action and
its potential to address unmet medical needs by focusing our development efforts on patients whose tumors exhibit biological features
that make them resistant to, or unlikely to respond to, currently available therapies. For example, our research demonstrating
VAL-083’s activity in GBM is independent of the MGMT methylation status allows us to focus patient selection based on this
important biomarker.
The
evaluation of MGMT promotor methylation status has increasingly become common practice in the diagnostic assessment of GBM. In
September 2017, the National Comprehensive Cancer Network (“NCCN”) updated guidelines for the standard treatment of
GBM based on MGMT methylation status. We believe these recently published guidelines provide for enhanced opportunities for us
to capitalize on VAL-083’s unique mechanism of action by utilizing MGMT methylation as a biomarker to optimize patient selection
for our novel DNA-targeting agent to target the majority of GBM patients who are diagnosed with MGMT-unmethylated tumors.
Our
current priority is to leverage this research and VAL-083’s unique mechanism of action to efficiently advance our drug candidate
for the most promising indications, including:
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MGMT-unmethylated GBM, currently comprising
two ongoing separate Phase 2 clinical studies for:
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GBM patients in two study arms at MDACC:
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as
adjuvant therapy immediately following chemoradiation; and
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in
Avastin®-naïve rGBM patients;
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Newly
diagnosed GBM patients (ongoing study at SYSUCC); and
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Potential
future indications include ovarian cancer, NSCLC, and other solid tumor indications.
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MGMT-unmethylated
GBM
GBM
is the most common and the most lethal form of glioma. According to the Central Brain Tumor Registry of the United States, GBM
occurs with an incidence of 3.20 per 100,000 person-years. Approximately 13,000 new cases of GBM were diagnosed in the United
States and 16,000 in Europe during 2017. Within the GBM patient population, approximately two-thirds of patients are unmethylated
with respect to their MGMT status.
Measurement
of MGMT (O6-methyl guanine methyltransferase) methylation status has become routine in clinical practice as a biomarker that correlates
with resistance to the standard-of-care chemotherapy with temozolomide (Temodar® “TMZ”), and patient
outcomes in GBM. Greater than 60% of GBM patients’ tumors are characterized as “MGMT-unmethylated” and exhibit
a high expression of MGMT, a naturally occurring DNA-repair enzyme, the activity of which nullifies the chemotherapeutic activity
of TMZ. The development of new therapies for MGMT-unmethylated GBM is a significant unmet medical need. Importantly, the most
recent update to NCCN guidelines states that the treatment benefit of TMZ is likely to be lower in GBM patients with an unmethylated
MGMT promoter, and therefore, allows for withholding of TMZ in the treatment of newly diagnosed GBM patients with MGMT-unmethylated
tumors due to lack of efficacy.
We
have demonstrated that VAL-083’s anti-tumor mechanism is active independent from the MGMT status in vitro. We believe
this suggests the potential of VAL-083 as a replacement for the current standard-of-care chemotherapy, temozolomide, in MGMT-unmethylated
GBM. We are therefore utilizing MGMT-methylation status to identify GBM patients who are unlikely to respond to temozolomide and
instead treat them with VAL-083.
We
believe that our research, in the context of the recent amendment to NCCN guidelines, highlights this unmet need and the opportunity
for VAL-083 as a potential new standard-of-care in the treatment of MGMT-unmethylated GBM.
Phase
2 Study in MGMT-unmethylated GBM in Collaboration with University of Texas MD Anderson Cancer Center
In
February 2017, we initiated a biomarker driven, open-label, single-arm Phase 2 study in collaboration with MDACC. This biomarker-driven
study (testing for MGMT methylation status) has been amended to enroll up to 83 patients (35 with a starting dose of 40 mg/m2;
48 with a starting dose of 30 mg/m2) to determine the potential of VAL-083 treatment to improve overall survival in
GBM patients whose tumors have recurred following treatment with temozolomide. These patients will not have been treated previously
with Avastin®. In addition, this study has been amended to include 24 patients in the adjuvant patient population.
The GBM patients in the adjuvant arm of the study will have had treatment with TMZ in combination with radiation but rather than
then being treated with additional cycles of TMZ, these patients will begin treatment with VAL-083.
Recurrent
Study Arm
As
of July 24, 2019, 56 patients had been enrolled in the recurrent arm of this Phase 2 study. The original starting dose of 40 mg/m2
of VAL-083 on days 1, 2 and 3, of a 21-day cycle, which was based on the results from our previous Phase 1/2 safety study
of VAL-083 in patients with recurrent glioma (clinicaltrials.gov identifier: NCT01478178), has continued to demonstrate myelosuppression
as the principal side effect of VAL-083, as per prior clinical experience. The safety profile has been well within the existing
safety monitoring guidelines described in the present study protocol. However, in consultation with the principal investigator
at MDACC, we have amended the protocol for this clinical study to modify the starting dose of VAL-083 to 30 mg/m2 on
days 1, 2 and 3, of a 21-day cycle for this specific population previously treated with temozolomide. This modification may improve
tolerance in this patient population and thereby potentially increase overall exposure to VAL-083 by increasing the number of
cycles of drug patients may be able to receive. We have modified the patient screening platelet count, from 100,000/µL to
125,000/µL, for the same reasons.
The
historical comparison survival data for the recurrent arm of the study is lomustine based on a median overall survival of 7.2
months in unmethylated patients. Safety data from this study will become part of the overall safety dossier to support future
filings with the FDA and other regulatory agencies.
On
May 31, 2019, we provided a clinical study update on the recurrent study arm of our MDACC clinical study at a KOL presentation
during the 2019 ASCO annual meeting in Chicago, IL.
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As of May 5, 2019, 51 patients have been enrolled,
35 patients at a starting dose of 40 mg/m2, and 16 patients at a starting dose of 30 mg/m2.
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For the 47 patients who have been on study long
enough to be assessed at the post-cycle 2 MRI:
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9/35 (25.7%) patients initially receiving 40
mg/m2 exhibited “Stable Disease” per investigator assessment at the end of cycle 2
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4/12 (33.3%) patients initially receiving 30
mg/m2 exhibited “Stable Disease” per investigator assessment at the end of cycle 2
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It
is important for this GBM patient population, which has been heavily pre-treated with temozolomide, to be able to be treated with
multiple cycles of VAL-083 without significant hematological toxicities. We believe the modified dose of VAL-083, in addition
to the change in patient eligibility platelet counts, should help provide for enhanced patient safety. We believe a positive outcome
from this study can establish a position for VAL-083 in the treatment of MGMT-unmethylated rGBM.
A
detailed description of this study can be found at clinicatrials.gov, Identifier Number: NCT02717962.
Adjuvant
Study Arm
On
July 24, 2019, we announced the enrollment of the first patient in the adjuvant arm of the Phase 2 study being conducted at MDACC.
As
noted above, patients in the recurrent arm of the MDACC clinical study have been heavily pre-treated with temozolomide. Based
on published data from our MDACC and SYSUCC clinical studies, we believe there is a significant opportunity to treat GBM patients
in the pre-temozolomide maintenance stage (i.e., adjuvant). At the AACR’s annual meeting in April 2019, we reported that
myelosuppression (thrombocytopenia and neutropenia) is the most common adverse event associated with VAL-083. The higher potential
for myelosuppression with the 40 mg/m2/day of VAL-083 in this study appears to be correlated with the number of cycles
of prior TMZ maintenance therapy (> 5 cycles). These patients will have had an initial cycle of TMZ following radiation
but will not have yet started subsequent cycles of TMZ (i.e. maintenance stage TMZ patients). The MDACC IRB has approved the addition
of up to 24 patients to the adjuvant setting. These patients will have had an initial cycle of temozolomide following radiation
but will not have yet started subsequent cycles of TMZ (i.e. maintenance stage TMZ patients). The comparison survival data for
this study is survival data from Tanguturi et al (2017 Nero-Oncology) for MGMT-unmethylated patients of 6.9 months.
Phase
2 Study in Newly Diagnosed MGMT-unmethylated GBM
In
September 2017, we initiated a single arm, biomarker driven, open-label Phase 2 study in newly diagnosed MGMT-unmethylated GBM
patients at SYSUCC in Guangzhou, China. The study is being conducted under our collaboration
agreement with Guangxi Wuzhou Pharmaceutical Company.
In
this Phase 2 study, VAL-083 is being combined with radiotherapy as a potential replacement for standard-of-care chemoradiation
with temozolomide in patients with MGMT-unmethylated GBM. One goal of the study will be to confirm the safety of the three-day
VAL-083 dosing regimen in combination with radiotherapy and to investigate outcomes of the combination of VAL-083 and radiotherapy
in MGMT-unmethylated GBM patients.
We
plan to enroll up to 30 newly-diagnosed, MGMT-unmethylated GBM patients in this study. The efficacy endpoints of the study include
tumor response, as assessed by the Response Assessment in NeuroOncology (“RANO”), and progression-free survival (“PFS”),
progression-free survival at six months (“PFS6”), and overall survival (“OS”), compared to historical
results in the target population. The study is being conducted in two parts: (1) Dose-confirmation: VAL-083 in cohorts (20, 30
and 40 mg/m2/day IV daily x 3 every 21 days) to assess safety and activity when administered concurrently with x-ray
therapy (“XRT”) to confirm the maximum tolerated dose (“MTD”), and (2) Expansion: VAL-083 will be studied
in up to 20 additional patients at the target dose, as determined by the dose-confirmation part of the study, administered concurrently
with XRT. Assessments of safety and tolerability will be used to support further clinical development of VAL-083 in combination
with radiotherapy. Pharmacokinetic assessments of VAL-083 in plasma and cerebral spinal fluid (“CSF”) will be used
to correlate drug exposure in the central nervous system with patient outcomes.
Dose
confirming cohorts studying 20, 30, and 40 mg/m2/day x three every 21 days have been completed. Based on the dose confirmation
phase of the study, we have selected 30 mg/m2 for combination with irradiation for the treatment of newly-diagnosed
MGMT-unmethylated GBM patients.
As
of August 1, 2019, of the first 20 enrolled patients, 17 have received at least their first assessment (two patients have not
been enrolled long enough to receive their first assessment and one patient died before their first assessment). “Best Overall
Response” for these patients per Investigator Assessment were:
|
●
|
Nine have been assessed as having achieved a
complete response (CR) (9/17, or 53%)
|
|
●
|
Seven have been assessed with stable disease
(SD), (7/17, or 41%); and
|
|
●
|
One has been assessed as disease progression
(PD) (1/17, or 6%).
|
Of
the 20 patients enrolled, 17 (85%) have received their two-month (post-third cycle) MRI and investigator assessment, 13 (65%)
have received their five-month MRI and investigator assessment, and seven (35%) have received their eight-month MRI and investigator
assessment. Two patients (10%) have not been on the study long enough to reach their first assessment, and one patient (5%) died
before their first assessment. Importantly, 16 of the 20 patients enrolled (80%) were still alive as of the data cut-off date.
Through
our research, and that of the NCI, we have previously demonstrated that VAL-083 crosses the blood brain barrier. New preliminary
data from the SYSUCC study indicate that the concentration of VAL-083 is generally higher in CSF than in plasma at two hours post-infusion.
Concentration
of VAL-083 — Two Hours Post Dose
|
|
|
|
Mean
Concentrations (ng/mL)
|
|
Conc.
Ratio @ 2 hours
|
Dose
(mg/m2)
|
|
n
|
|
Plasma
(2 hours post dose)
|
|
CSF
(2 hours post dose)
|
|
CSF/Plasma
|
20
|
|
1
|
|
110
|
|
154
|
|
1.40
|
30
|
|
3
|
|
97
|
|
134
|
|
1.41
|
40
|
|
3
|
|
170
|
|
190
|
|
1.13
|
By
comparison, temozolomide is typically 80% lower in the CSF than the plasma (Schreck et al. 2018, Oncology (Williston Park)). The
reason this is important is that accumulation of VAL-083 in the CSF further validates that VAL-083 crosses the blood-brain-barrier
and demonstrates that therapeutic drug concentrations in the CSF are achievable for extended periods of time.
Ovarian
Cancer
In
April 2016, the FDA granted orphan drug designation for the use of VAL-083 in the treatment of ovarian cancer.
In
September 2017, we filed an IND for the use of VAL-083 in ovarian cancer, along with a protocol for a Phase 1/2, open-label,
multicenter, study of VAL-083 in patients with Recurrent Platinum Resistant Ovarian
Cancer (the REPROVe study).
The
FDA has allowed this study to begin enrolling patients, but based on ongoing evaluation and input from our ovarian advisory board,
we are reassessing the ovarian cancer program. We are in the process of evaluating the best path forward in ovarian cancer and
are looking at various strategic options including combination with PARP inhibitors.
Fast
Track Designation
In
December 2017, the FDA granted Fast Track designation for VAL-083 in rGBM.
Fast
Track designation is designed to expedite the review of drugs that show promise in treating life-threatening diseases and address
unmet medical needs, with the goal of getting new treatments to patients earlier. Fast Track designation provides sponsors with
an opportunity for increased frequency for communication with the FDA to ensure an optimal development plan and to collect appropriate
data needed to support drug approval. Additional benefits of the Fast Track designation may include an Accelerated Approval, a
Priority Review, and a Rolling Review. Accelerated Approval is granted to drugs that demonstrate an effect on a surrogate, or
intermediate endpoints, reasonably likely to predict clinical benefit. Priority Review shortens the FDA review process for a new
drug from ten months to six months and is appropriate for drugs that demonstrate significant improvements in both safety and efficacy
of an existing therapy. Rolling Review provides a drug company the opportunity to submit completed sections of its New Drug Application
(“NDA”) for review by the FDA. Typically, NDA reviews do not commence until the drug company has submitted the entire
application to the FDA. Through the Fast Track designation, the FDA attempts to ensure that questions raised during the drug development
process are resolved quickly, often leading to earlier approval and increased access for patients.
Current
Treatments for Gliomas and Glioblastoma Multiforme
Gliomas
are a type of Central Nervous System (“CNS”) tumor that arises from glial cells in the brain or spine. Glial cells
are the cells surrounding nerves. Their primary function is to provide support and protection for neurons in the CNS.
GBM
is the most common and the most lethal form of glioma. According to the Central Brain Tumor Registry of The United States, GBM
occurs with an incidence of 3.20 per 100,000 person-years. Approximately 13,000 new cases of GBM were diagnosed in the United
States and 16,000 in Europe during 2017.
Common
symptoms of GBM include headaches, seizures, nausea, weakness, paralysis and personality or cognitive changes such as loss of
speech or difficulty in thinking clearly. GBM progresses quickly and patients’ conditions deteriorate rapidly progressing
to death. The outlook for GBM patients is generally poor. The overall median survival in newly diagnosed GBM patients with best
available treatments is less than 15 months, and two-year and five-year survival rates are approximately 30% and 10%, respectively.
Median overall survival in newly-diagnosed, unmethylated GBM patients is 12.2 months.
In
September 2017, the National Comprehensive Cancer Network (“NCCN”), updated treatment guidelines for GBM. The recommended
treatment regimen for GBM includes surgical resection to remove as much of the tumor as possible (“debulking”) followed
by radiotherapy with concomitant and adjuvant chemotherapy with temozolomide with or without tumor treating fields (“TTF”).
GBM patients whose tumors exhibit an unmethylated promotor for the gene encoding the DNA repair enzyme MGMT, a biomarker correlated
with resistance to temozolomide, may be treated with radiation alone following surgery.
Patients
with an unmethylated MGMT promotor have high levels of MGMT, a naturally-occurring DNA repair enzyme that repairs tumor-fighting
lesions induced by TMZ thus allowing a patient’s tumor to continue to grow despite treatment which leads to poor outcomes.
Measurement of MGMT methylation status has become routine in clinical practice as biomarker that correlates with response to TMZ
and patient outcomes in GBM.
Probability
of GBM Patient Survival Correlated to Expression of MGMT Enzyme
(Unmethylated promoter = High MGMT Expression and Significantly Shorter Survival)
TTF
(Optune®) is a non-invasive technique for adults with GBM. TTF uses alternating electrical fields to disrupt tumor
cell division, or cause cell death, thereby preventing the tumor from growing or spreading as quickly. A clinical study reported
that GBM patients treated with TTF combined with TMZ experienced longer survival than those treated with TMZ alone.
The
majority of GBM patients’ tumors recur within 6 – 12 months of initial treatment. Experimental therapy through clinical
studies is recommended under NCCN guidelines for eligible patients. NCCN guidelines also recommend treatment with systemic chemotherapy,
such as lomustine (“CCNU”). For patients who are eligible for additional surgical debulking, local chemotherapy with
carmustine (“BCNU”) wafers may be employed. CCNU and BCNU target the same DNA-site as TMZ and are also subject to
MGMT-related resistance.
Avastin
(Avastin®, an anti-VEGF antibody) recently received full approval in the US, Canada, Australia, and Japan as a
single agent for patients with recurrent GBM following prior therapy. Avastin carries an FDA “black-box warning” related
to severe, sometimes fatal, side effects such as gastrointestinal perforations, wound healing complications and hemorrhage. There
are no data demonstrating an improvement in disease-related symptoms or increased survival for GBM patients treated with Avastin.
Recurrent
GBM patients, especially those whose tumors progress following treatment with Avastin, have limited or no treatment options and
a very poor prognosis. According to published literature, the median survival for GBM patients whose tumors progress following
Avastin is less than five months.
VAL-083
Mechanism of Action and the Opportunity in the Treatment of Cancer
Chemotherapy
forms the basis of treatment in nearly all cancers. We believe that VAL-083 may be effective in treating tumors exhibiting biological
features that cause resistance to currently available chemotherapy, particularly for patients who have failed, or become resistant
to, other treatment regimens.
Based
on published research and our own data, the cytotoxic functional groups, and the mechanism of action of VAL-083 are functionally
different from alkylating agents commonly used in the treatment of cancer. VAL-083 has previously demonstrated activity in cell-lines
that are resistant to other types of chemotherapy. No evidence of cross-resistance has been reported in published clinical studies.
Our
research suggests that VAL-083 attacks cancer cells via a unique mechanism of action which is distinct from other chemotherapies
used in the treatment of cancer. Our data indicate that VAL-083 forms inter-strand crosslinks at the N7 position of
guanine on the DNA of cancer cells. Our data also indicate that this crosslink forms rapidly and is not easily repaired by the
cancer cell resulting in cell-cycle arrest and lethal double-strand DNA breaks in cancer cells. VAL-083 readily crosses the blood
brain barrier. Published preclinical and clinical research demonstrate that VAL-083 is absorbed more readily in tumor cells than
in normal cells.
In
vitro, our data also demonstrate that VAL-083’s distinct mechanism may be able to overcome drug resistance against a
range of cancers. For example, VAL-083 is active against MGMT-unmethylated GBM cells which are resistant to treatment with temozolomide
and nitrosoureas. VAL-083 also retains a high level of activity in p53 mutated non-small cell lung cancer (“NSCLC”),
ovarian cancer and medulloblastoma cell lines that are resistant to platinum-based chemotherapy.
Importantly,
clinical activity against each of the tumors mentioned above was established in prior NCI-sponsored Phase 2 clinical studies.
We believe that these historical clinical data and our own research support the development of VAL-083 as a potential new treatment
for multiple types of cancer.
The
main dose-limiting toxicity (“DLT”) related to the administration of VAL-083 in previous NCI-sponsored clinical studies
and our own clinical studies is myelosuppression, particularly thrombocytopenia. Myelosuppression, including thrombocytopenia,
is a common side effect of chemotherapy. Myelosuppression is the decrease in cells responsible for providing immunity, carrying
oxygen, and causing normal blood clotting. Thrombocytopenia is a reduction in platelet counts which assist in blood clotting.
Modern medicine allows for better management of myelosuppressive side effects. We believe this offers the potential opportunity
to improve upon the drug’s already established efficacy profile by substantially increasing the dose of VAL-083 that can
be safely administered to cancer patients.
There
is no evidence of lung, liver, or kidney toxicity even with prolonged treatment by VAL-083. Data from the Chinese market where
the drug has been approved for more than 15 years supports the safety findings of the NCI studies.
VAL-083
Historical Data
VAL-083
is first-in-class DNA targeting agent that readily crosses the blood-brain-barrier. Data from prior NCI-sponsored clinical studies
with VAL-083 demonstrate activity against GBM and other CNS tumors. In general, historical NCI-sponsored studies demonstrate that
tumor regression in brain cancer was achieved in 40% of patients treated and stabilization was achieved in an additional 20% to
30% of brain tumor patients following treatment with VAL-083. In these studies, VAL-083 demonstrated statistically significant
improvement in the median survival of high-grade glioma brain tumors, including GBM when combined with radiation versus radiation
alone (p < 0.05) with results similar, or superior to, other chemotherapies approved for the treatment of GBM.
A
Summary of Published Data adapted from Separate Sources Comparing the Efficacy of VAL-083
and Other Therapies in the Treatment of GBM
|
|
Comparative
Therapy
|
|
Median Survival
Benefit
vs.
|
Chemotherapy
|
|
Radiation
(XRT) Alone
|
|
Radiation
+ Chemotherapy
|
|
XRT
alone
|
VAL-083
(Eagan 1979)
|
|
8.4 months
|
|
16.8 months
|
|
8.4 months
|
Temozolomide (Temodar®)
(Stupp 2005)
|
|
12.1 months
|
|
14.6 months
|
|
2.5 months
|
Lomustine (CCNU)
(Walker 1976)
|
|
11.8 months
|
|
13 months
|
|
1.2 months
|
Carmustine (BCNU)
(Reagan 1976)
|
|
10 months
|
|
12.5 months
|
|
2.5 months
|
Semustine (ACNU)
(Takakura 1986)
|
|
12 months
|
|
14 months
|
|
2.0 months
|
VAL-083
is Active Independent of MGMT
We
have presented data at several peer reviewed meetings demonstrating that VAL-083 is active independent of MGMT resistance in GBM
cell lines and other CNS tumor cells. Our research, along with that of others, demonstrates that VAL-083’s unique cytotoxic
mechanism forms DNA cross-links at the N 7 position of guanine and retains cytotoxic activity independent of MGMT expression
in vitro. Our studies demonstrate that VAL-083 has more potent activity against brain tumor cells in comparison to TMZ
and overcomes resistance associated with MGMT, suggesting the potential to surpass the current standard-of-care in the treatment
of GBM.
A
Summary of Our Data Demonstrating that VAL-083’s Anti-Tumor Mechanism is
Distinct from, and can Overcome, MGMT-Related Chemo resistance in the Treatment of GBM
In
addition, historical NCI clinical study data and our own research support the activity of VAL-083 as a potentiator of radiotherapy.
Radiotherapy in combination with temozolomide is the current standard of care in the treatment of newly diagnosed GBM. Our research
demonstrates that temozolomide and radiotherapy are ineffective against GBM cells exhibiting a high expression of MGMT, whereas
VAL-083 potentiates the tumor-killing effect of radiation independent of MGMT expression. Furthermore, the combination of VAL-083
and radiation has been demonstrated to be active against GBM cancer stem cells (“CSCs”) in vitro. CSCs are often resistant
to chemotherapy and form the basis for tumor recurrence and metastasis. GBM CSCs display strong resistance to TMZ, even where
MGMT expression is low. However, our data demonstrates that GBM CSCs are susceptible to VAL-083 independent of MGMT expression.
A
Summary of Our Data Demonstrating that VAL-083 Maintains Activity in Both Temozolomide-resistant
GBM Cell Lines and Matched Cancer
Stem Cells and Potentiates Radiotherapy
We
believe that VAL-083’s more potent activity against brain tumor cells in comparison to TMZ, VAL-083’s ability to overcome
MGMT-mediated resistance, and its activity against GBM CSCs suggests the potential of VAL-083 to surpass the current standard-of-care
in the treatment of GBM.
Phase
1 – 2 Clinical Study Overview and Summary of Results
In
an open-label, single arm dose-escalation study designed to evaluate the safety, tolerability, pharmacokinetics, and anti-cancer
activity of VAL-083, we enrolled forty-eight GBM patients whose disease progressed following prior treatment with temozolomide
and Avastin. The study was conducted at five centers in the United States: the Mayo Clinic in Rochester, Minnesota; the Brain
Tumor Center at University of California, San Francisco; the Sarah Cannon Cancer Research Center in Nashville, Tennessee and Denver,
Colorado; and the SCRI affiliate site at the Florida Cancer Specialist Research Institute in Sarasota, Florida.
Patients
received VAL-083 on days 1, 2 and 3 on a 21-day treatment cycle. The Phase 1 portion of the study involved dose escalation cohorts
until a maximum tolerated dose (“MTD”) was established at 40mg/m2. A further 14-patient, Phase 2 expansion
was then enrolled at the MTD to gather further safety data at our chosen therapeutic dose and to further explore the outcomes
in this patient population.
In
May 2016, we held an end of Phase 2 meeting with the FDA in which we discussed with the FDA the design of a Phase 3, registration-directed
clinical program for VAL-083 in refractory GBM. Based on the input we received from the FDA, the agency confirmed that it would
consider the totality of data available, including data obtained from our other planned clinical studies in related GBM populations,
when assessing the NDA. The FDA also noted that we may be able to rely on prior NCI studies and historical literature to support
nonclinical data required for an NDA filing under a 505(b)(2) strategy which allows a sponsor to rely on already established safety
and efficacy data in support of an NDA.
In
summary, the data from our previous Phase 1/2 study are as follows:
Safety
and Tolerability
In
the Phase 1 dose escalation regimen, no serious adverse events (“SAE”) related to VAL-083 were encountered at doses
up to 40 mg/m2/day.
Increasing
frequency of, and higher grade, hematologic toxicities were observed at doses above 40 mg/m2/day. Consistent with the
published literature, the observed dose limiting toxicity for VAL-083 is primarily thrombocytopenia (low platelets). Observed
platelet nadir occurred at approximately day 18, and recovery was rapid and spontaneous following treatment.
Based
on Phase 1 observations, fourteen additional patients were enrolled in a Phase 2 expansion cohort at 40mg/m2 which
was established as the MTD. Consistent with Phase 1, the dose of VAL-083 of 40 mg/m2 on days 1, 2 and 3 of a 21-day
cycle was generally well tolerated in Phase 2. At this dose, one subject previously treated with CCNU, a nitrosourea agent, reported
severe (Grade 4) thrombocytopenia. As a result of this observation, the protocol inclusion criterion for platelet count was increased
from 100,000/μL to 150,000/μL for patients receiving prior nitrosoureas within 12 weeks preceding enrollment. No other dose
limiting toxicities were observed.
VAL-083
Safety Observations from Phase 1/2 Clinical Study
Hematologic
parameter and CTCAE grade
|
|
dose
|
|
≤30
mg/m2
|
|
|
40
mg/m2
|
|
|
45
mg/m2
|
|
|
50
mg/m2
|
|
|
|
n
=
|
|
20
|
|
|
17
|
|
|
4
|
|
|
7
|
|
Anemia
|
|
≤G2
|
|
|
11
|
|
|
|
55
|
%
|
|
|
2
|
|
|
|
12
|
%
|
|
|
2
|
|
|
|
50
|
%
|
|
|
6
|
|
|
|
86
|
%
|
|
|
G3
|
|
|
2
|
|
|
|
10
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
G4
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leukopenia
|
|
≤G2
|
|
|
5
|
|
|
|
25
|
%
|
|
|
2
|
|
|
|
12
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
5
|
|
|
|
71
|
%
|
|
|
G3
|
|
|
1
|
|
|
|
5
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
3
|
|
|
|
43
|
%
|
|
|
G4
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
2
|
|
|
|
50
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neutropenia
|
|
≤G2
|
|
|
4
|
|
|
|
20
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
G3
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
3
|
|
|
|
43
|
%
|
|
|
G4
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
2
|
|
|
|
50
|
%
|
|
|
1
|
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thrombocytopenia
|
|
≤G2
|
|
|
9
|
|
|
|
45
|
%
|
|
|
3
|
|
|
|
18
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
3
|
|
|
|
43
|
%
|
|
|
G3
|
|
|
—
|
|
|
|
0
|
%
|
|
|
—
|
|
|
|
0
|
%
|
|
|
1
|
|
|
|
25
|
%
|
|
|
3
|
|
|
|
43
|
%
|
|
|
G4
|
|
|
—
|
|
|
|
0
|
%
|
|
|
1
|
|
|
|
6
|
%
|
|
|
2
|
|
|
|
50
|
%
|
|
|
1
|
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DLT Observed
|
|
|
|
|
nil
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
Doses
Achieved
Based
the results of our Phase 1/2 study, we confirmed that we achieved doses of VAL-083 that are higher than were utilized in the original
published NCI-sponsored clinical studies. A summary in comparison to the NCI’s historical regimen is as follows:
Dosing
Regimen & Study
|
|
Single
Dose
|
|
Acute
Regimen
(single cycle)
|
|
Comparative
Cumulative Dose
(@ 35 days)
|
|
Dose
Intensity
(dose per week)
|
NCI
GBM historical regimen
(Eagan et al)
daily x 5 q 5wks
(cycle = 35 days)
|
|
25 mg/m2
|
|
x5 days = 125 mg/m2
|
|
125 mg/m2
|
|
25 mg/m2/wk.
|
DelMar
VAL-083 achieved
regimen daily x 3 q 3wks
(cycle = 21 days)
|
|
40 mg/m2
|
|
x 3 days = 120 mg/m2
|
|
240 mg/m2
|
|
40 mg/m2/wk.
|
Daily
x 5 q 5wks refers to a dosing regimen of once per day for five consecutive days every five weeks (35-day cycle while daily x 3
q 3wks refers to a dosing regimen of once per day for three consecutive days every three weeks (21-day cycle).
Our
achieved dosing regimen increased the amount of VAL-083 delivered to the CNS over historical regimens without increased toxicity.
Thus, our regimen achieved both a higher maximum concentration and higher overall exposure, which we believe may increase the
likelihood of successful treatment outcomes in glioblastoma and other brain tumors.
Based
on our ongoing Phase 2 study at MDACC, we believe that the safety profile of the 40 mg/m2 is within the existing safety
monitoring guidelines described in the present study protocol. However, in consultation with the principal investigator at MDACC,
we have amended the protocol for the study to modify the starting dose of VAL-083 to 30 mg/m2 on days 1, 2 and 3, of
a 21-day cycle for this specific study population which has been previously treated with temozolomide. We believe this modification
may improve tolerance in this patient population and maximize overall exposure to VAL-083 thereby increasing the number of cycles
of drug patients are able to receive. The 30 mg/m2 dosing regimen is 20% over the historical regimen.
Pharmacokinetics
Pharmacokinetic
(“PK”) analyses showed dose-dependent linear systemic exposure with a short (1-2h) plasma terminal half-life; average
Cmax at 40 mg/m2/day was 781 ng/mL (5.3µM). The observed PK profile is comparable to published literature. Prior
NCI-sponsored studies demonstrated that VAL-083 readily crosses the blood brain barrier and has a long (>20 hour) half-life
in the CNS.
We
believe that this PK profile is optimal for the treatment of brain tumors: A long CNS half-life is expected to maximize exposure
of the drug in the brain increasing the likelihood of successful treatment outcomes, while a short plasma half-life is desirable
to minimize systemic side effects.
Observed
pharmacokinetics from VAL-083 Phase 1 clinical study dose vs. AUC
Based
on observed and previously published pharmacokinetics, we believe that therapeutic doses equal to, or above, 20 mg/m2
daily on days 1, 2 and 3 of a 21-day cycle should deliver sufficient levels of VAL-083 to brain tumors to achieve a therapeutic
benefit. We are currently using a dose of 30 mg/m2 daily on days 1, 2 and 3 of a 21-day cycle in our two Phase 2 studies
that are currently ongoing.
MGMT
& IDH1
High
expression of MGMT and wild-type form of the enzyme isocitrate dehydrogenase (“IDH1”) have been previously shown to
be diagnostic markers that correlate with resistance to currently available chemotherapies (e.g. temozolomide or nitrosourea)
in the treatment of GBM and poor patient outcomes. Measurement of these biomarkers has become routine in clinical practice.
Notably,
we have previously demonstrated that VAL-083’s anti-tumor mechanism is active independent from the MGMT status in vitro.
We believe we will ultimately be able to use such biomarkers in a prognostic fashion to select the patients most likely to respond
to treatment as we expand the clinical development of VAL-083.
Biomarker
|
|
Observation
in
Phase 1/2
clinical study
|
|
High MGMT (n=19)
|
|
|
84
|
%
|
IDH-WT (n=11)
|
|
|
90
|
%
|
Tumor
Response and Outcomes
GBM
patients in our Phase 1/2 clinical study were not re-resected prior to treatment with VAL-083 and therefore had a growing recurrent
GBM tumor at the time of enrollment. Patients were monitored for tumor response by MRI.
Consistent
with un-resected GBM, median progression free survival (“PFS”) was short at 1.2 months (range: 0.2 – 20.1 months).
Five GBM patients treated with VAL-083 were reported to have stable disease as their best response following treatment; the remainder
reported progressive disease.
Disease
progression is typical in a refractory GBM population with non-resected tumors. However, we believe that slowed progression may
provide meaningful clinical benefit in this patient population through prolonged overall survival and improved quality of life.
According
to published literature, GBM patients failing Avastin have a poor prognosis with expected survival under five months.
Analysis
of twenty-two patients receiving an assumed therapeutic dose of VAL-083 (≥20mg/m2) demonstrated median survival
of 8.35 months following Avastin failure.
VAL-083
compared to published literature
Reference
|
|
|
Post
Avastin Salvage Therapy
|
|
Median
Survival following
Avastin Failure
|
Shih
(2016)
|
|
|
VAL-083
|
|
8.35
months
|
Rahman
(2014)
|
|
|
nitrosourea
|
|
4.3
months
|
Mikkelson
(2011)
|
|
|
TMZ
+ irinotecan
|
|
4.5
months
|
Lu
(2011)
|
|
|
dasatinib
|
|
2.6
months
|
Reardon
(2011)
|
|
|
etoposide
|
|
4.7
months
|
Reardon
(2011)
|
|
|
TMZ
|
|
2.9
months
|
Iwomoto
(2009)
|
|
|
various
|
|
5.1
months
|
While
recognizing these data are representative of a relatively small, non-controlled Phase 1/2 clinical study, we believe these outcomes
support the potential of VAL-083 to offer meaningful clinical benefit to GBM patients who have failed Avastin, compared to currently
available therapy.
VAL-083
Historical Data and Our Research in Ovarian Cancer
Ovarian
cancer is the fifth most common cancer in women and is the leading cause of death among women diagnosed with gynecological malignancies.
In 2016, approximately 22,300 women in the US were diagnosed with ovarian cancer and 14,300 died from their disease.
Without
treatment, ovarian cancer spreads within the pelvic region and metastasizes to distant sites such as the lungs, liver, spleen
and, rarely, the brain. The initial symptoms of ovarian cancer such as abdominal bloating, indigestion, pelvic pain, or nausea
are often attributed to symptoms caused by a less serious condition. Therefore, in most cases, ovarian cancer is not diagnosed
until it has progressed to an advanced stage when it is no longer possible to surgically remove all tumor tissue.
When
diagnosed at an advanced stage the 5-year survival rate is less than 40%. Women with ovarian cancer receive chemotherapy following
surgery to treat residual disease.
VAL-083’s
activity against ovarian epithelial adenocarcinoma (“OEA”) and squamous cell carcinoma of the cervix (“SCC”)
was reported in prior NCI-sponsored clinical studies. Importantly, NCI-researchers recommended VAL-083 for further advanced studies
in the treatment of ovarian cancer.
Pt-based
chemotherapy is employed in the treatment of nearly 50% of all cancer patients and is employed in the treatment regimen of nearly
all advanced-stage ovarian cancer patients. Ovarian cancer patients whose tumors are sensitive to Pt-based chemotherapy have the
most favorable outcome. Recently, the approval of PARP inhibitors in the treatment of ovarian cancer patients demonstrated improved
outcomes, particularly patients whose tumors remain sensitive to Pt-based treatments.
Pt-based
chemotherapies function by causing extensive damage to a cancer cell’s DNA. Cancer cells are adept at overcoming DNA damage
or employing mechanisms to repair DNA damage induced by Pt-based chemotherapy. One of the most common obstacles to DNA-damaging
chemotherapy is mutations to a gene called p53. Cellular processes governed by the p53 gene are critical in assessing DNA damage
and determining if a cell should cease from dividing or self-destruct. When p53 does not function properly, cancer cells continue
to divide despite the treatment with DNA-damaging chemotherapy, making these drugs ineffective and leading to treatment resistance.
This occurs in nearly all cases of the most difficult ovarian cancer to treat — high grade serous ovarian cancer (HGSOC)
— which accounts for up to 70% of ovarian cancer cases and approximately 90% of ovarian cancer deaths. P53 mutations are
associated with resistance to Pt-based chemotherapy, which leads to treatment failure and increased mortality. Solving this problem
is a major goal in the development of new treatments for ovarian cancer.
Unfortunately,
the development of resistance to Pt-based agents is nearly inevitable, leading to disease recurrence and increased mortality.
Ultimately, most women with advanced ovarian cancer develop recurrent disease with progressively shorter disease-free intervals.
Those whose tumors recur within 6 months of Pt-based therapy are considered Pt-resistant/refractory and have a very poor prognosis.
The
response rate to second line therapy for Pt-resistant ovarian cancer patients is in the 10-15% range and overall survival is approximately
12 months. The development of new chemotherapies and targeted agents to overcome Pt resistance in ovarian cancer is a significant
unmet medical need.
We
have presented data demonstrating that VAL-083’s distinct mechanism of action allows activity in tumors that are resistant
to other therapies. We have shown that cytotoxicity of VAL-083 against ovarian cancer is independent of sensitivity to cisplatin
or p53 status in vitro. We have demonstrated that VAL-083 is active in Pt-resistant ovarian cells harboring a range of
p53-mutations.
Our
research has demonstrated that VAL-083 not only overcomes Pt resistance, but the combination of VAL-083 with Pt-based chemotherapy
displays synergy in multiple models in vitro and in vivo. This further suggests a distinct mechanism of action and
potential use as part of a VAL-083/Pt-combination therapy.
The
combination of VAL-083 with either cisplatin (A) or oxaliplatin (B) in the human H460 (WT p53) NSCLC model demonstrated
significant super additivity (p≤0.05) and/or synergism (CI<1) for both combinations. This cytotoxic effect of VAL-083 in
combination with either platinum drug was observed also in A549 (WT p53) and H1975 (mutant p53) NSCLC cells, independently of
p53 status (not shown). Data, where applicable, are shown as mean ± SE; N=7.
While
Pt-based chemotherapy is the standard treatment for ovarian cancer, PARP inhibitors have recently provided a new treatment option
for a subset of patients with platinum-sensitive recurrent ovarian cancer. VAL-083 also demonstrates synergistic activity with
certain PARP inhibitors, including olaparib (Lynparza) and talazoparib in vitro, suggesting VAL-083 may have utility in
the treatment of ovarian cancer in combination with PARP inhibitors.
We
believe that these data demonstrate the potential of VAL-083 to treat platinum-resistant ovarian cancers as a single-agent against
platinum-resistant tumors in combination with platinum-based chemotherapeutic regimens or in combination with PARP inhibitors.
Other
Indications for VAL-083 — Potential Future Opportunities
VAL-083
in Lung Cancer
Lung
cancer is a leading cause of cancer death around the world and effective treatment for lung cancer remains a significant global
unmet need despite advances in therapy. Incidence of lung cancer in the United States is approximately 47 per 100,000 with the
majority (85%) being NSCLC, the most common type of lung cancer. Globally, the market for lung cancer treatment may exceed $24
billion by 2033 according to a report published by Evaluate Pharma.
The
activity of VAL-083 against solid tumors, including lung cancer, has been established in both preclinical and human clinical studies
conducted by the NCI. DelMar has developed new nonclinical data to support the utility of VAL-083 in the modern treatment of lung
cancer. In an established murine xenograft model of NSCLC, the activity of VAL-083 was compared to standard platinum-based therapy
with cisplatin against human NSCLC cell lines A549 (TKI-sensitive) and H1975 (TKI-resistant). In the study, VAL-083 demonstrated
superior efficacy and safety in the treatment of TKI-susceptible (A549) tumors and in TKI-resistant (H1975) tumors.
Central
Nervous System Metastases of Solid Tumors
The
successful management of systemic tumors by modern targeted therapies has led to increased incidence of mortality due to CNS metastases
of lung cancer and other solid tumors. In June 2013, we split our Phase 1/2 clinical study protocol into two separate studies:
one focusing solely on refractory GBM and the other focusing on secondary brain cancers caused by other tumors that have spread
to the brain.
Based
on historical clinical activity and our own research, we believe that VAL-083 may be suitable for the treatment of patients with
CNS metastases who currently have limited treatment options. Subject to the availability of financial and operating resources,
we plan to develop a separate protocol for the continued exploration of VAL-083 in patients with secondary brain cancer caused
by a solid tumor spreading to the brain.
Pediatric
Brain Tumors
Tumors
of the brain and spine make up approximately 20 percent of all childhood cancers and they are the second most common form of childhood
cancer after leukemia.
The
activity of VAL-083 against childhood and adolescent brain tumors has been established in both preclinical and human clinical
studies conducted by the NCI. We have presented data indicating that VAL-083 offers potential therapeutic alternatives for the
treatment of pediatric brain tumors including SHH-p53 mutated medulloblastoma. In March 2016, the FDA granted orphan drug designation
for the use of VAL-083 in the treatment of medulloblastoma. Subject to the availability of resources, we intend to collaborate
with leading academic researchers for the continued exploration of VAL-083 as a potential treatment of childhood brain tumors.
Additional
Indications for VAL-083
In
historical studies sponsored by the NCI in the United States, VAL-083 exhibited clinical activity against a range of tumor types
including central nervous system tumors, solid tumors, and hematologic malignancies. We have established new nonclinical data
supporting the activity of VAL-083 in different types of cancer that are resistant to modern targeted therapies and we believe
that the unique cytotoxic mechanism of VAL-083 may provide benefit to patients in a range of indications. We intend to continue
to research these opportunities, and if appropriate, expand our clinical development efforts to include additional indications.
VAL-083
Target Markets
DNA-targeting
agents such as alkylating agents or platinum-based chemotherapy form the mainstay of chemotherapy treatments used in the treatment
of cancers. For example, TMZ had peak annual sales of $1.1 billion in 2010, while bendamustine, had peak annual sales of $0.8
billion in 2014.
Our
product candidate, VAL-083, is a first-in-class DNA targeting agent with a novel mechanism of action. VAL-083’s anti-cancer
activity was established in a range of tumor types in prior NCI-sponsored clinical studies. Based on this novel mechanism, we
have demonstrated that the anti-cancer activity is maintained against tumor cells that are resistant to other DNA-targeting agents.
We believe this positions VAL-083 as a potential chemotherapy-of-choice for patients whose tumors are resistant to current standard-of-care
chemotherapy in orphan and major cancer indications.
Our
ongoing research and development activities are focused on indications where VAL-083 demonstrated promising activity in prior
NCI-sponsored studies and where our research suggests an opportunity to address significant unmet medical needs due to the failure
of existing treatments.
VAL-083
target markets
|
|
2024
Estimated
Global Sales
|
|
Glioblastoma multiforme (GBM)
|
|
$
|
1.5B
|
|
Ovarian Cancer
|
|
$
|
4.2B
|
|
Non-small cell lung cancer (NSCLC)
|
|
$
|
32.6B
|
|
|
|
|
|
|
Source: Evaluate Pharma
|
|
|
|
|
Glioblastoma
Multiforme
GBM
is the most common and the most lethal form of glioma. According to the Central Brain Tumor Registry of The United States, GBM
occurs with an incidence of 3.20 per 100,000 person-years. Approximately 13,000 new cases of GBM were diagnosed in the United
States and 16,000 in Europe during 2017.
Newly
diagnosed patients suffering from GBM are initially treated through invasive brain surgery, although disease progression following
surgical resection is nearly 100%. Temozolomide (Temodar®) in combination with radiation is the front-line therapy
for GBM following surgery. Global revenues of branded Temodar reached $1.1 billion in 2010. Approximately 60% of GBM patients
treated with Temodar® experience tumor progression within one year. Median overall survival in newly-diagnosed,
unmethylated GBM patients is 12.2 months.
Bevacizumab
(Avastin®) has been approved for the treatment of GBM in patients failing Temodar®. In clinical
studies, approximately 20% of patients failing Temodar® respond to Avastin® therapy and no improvement
in median survival was reported.
The
market for refractory (Avastin-failed) GBM is limited to those jurisdictions where Avastin is approved for the treatment of GBM.
The United States, Canada, Australia, Japan and Switzerland represent the major markets where Avastin is used in the treatment
of GBM.
Ovarian
Cancer
The
American Cancer Society estimates that approximately 22,000 women will receive a new diagnosis of ovarian cancer and approximately
14,000 women will die from ovarian cancer in the United States each year. Ovarian cancer ranks fifth in cancer deaths among women,
accounting for more deaths than any other cancer of the female reproductive system.
The
potential of VAL-083 in the treatment of ovarian cancer has been established in prior NCI-sponsored clinical studies and by our
recent research. The FDA has granted orphan drug status to VAL-083 as a potential treatment for ovarian cancer and we have recently
received notice of allowance for our IND to initiate a Phase 1-2 clinical study to investigate the safety and effectiveness of
VAL-083 in patients with recurrent platinum resistant ovarian cancer (VAL-083 REPROVe study).
Ovarian
cancers are commonly treated with a platinum-based chemotherapy regimen. Initial tumor response rates are relatively high. However,
the development of resistance to Pt-based chemotherapy in ovarian cancer patients is nearly inevitable. Our research suggests
that VAL-083 may offer a potential treatment option for ovarian cancer patients who are resistant to platinum-based chemotherapy
and as a potential combination therapy with other agents. We believe the profile of VAL-083 offers the potential to capture meaningful
market share in the multi-billion ovarian cancer market.
Lung
Cancer
Lung
cancer is the most common cancer in the world with 1.8 million cases in 2012, representing 13% of all cancers. According to the
American Lung Association, lung cancer is the leading cancer killer in both men and women in the U.S. During 2018, an estimated
234,030 new cases of lung cancer were expected to be diagnosed.
The
potential of VAL-083 in the treatment of NSLSC has been established in both human clinical studies conducted by the NCI and by
the drug’s commercial approval in China. We believe the profile of VAL-083 offers the potential to capture meaningful market
share in the multi-billion NSCLC market.
VAL-083
Manufacturing
VAL-083
is a small-molecule chemotherapeutic. Chemical synthesis of the active pharmaceutical ingredient (“API”) was initially
established by the NCI. We have made improvements to this process and have obtained patents on these improvements. The current
manufacturing process involves fewer than five synthetic steps.
VAL-083
drug product is a lyophilized (freeze-dried) formulation that is reconstituted for intravenous injection. We anticipate that overall
cost of goods for an eventual commercial product will be similar to other injectable, small-molecule pharmaceuticals.
Until
recently, supply of VAL-083 for our clinical studies has been provided through our collaboration with Guangxi Wuzhou Pharmaceutical
Company. Guangxi Wuzhou Pharmaceutical Company as a manufacturer has established a commercial-scale manufacturing process based
on the North American process originally developed for the NCI that has been licensed by the CFDA for commercial supply of VAL-083
in China. However, to-date, they have not achieved the quality of systems necessary to meet FDA manufacturing standards.
To
address the need to meet FDA standards, we have engaged third-party contract manufacturers with the capabilities to establish
the processes, procedures and quality systems necessary to meet U.S., Canadian, E.U. and other international manufacturing requirements
in accordance with Good Manufacturing Practice (“cGMP”) regulations. We have now received drug supply manufactured
under full cGMP conditions. We intend to use this drug supply for all future clinical studies.
We
have developed and patented certain intellectual property related to quality controls that are used in the release of VAL-083
for our clinical studies in the United States. This intellectual property is also required for product release under CFDA guidelines
and we have granted access to our intellectual property for this purpose.
Research
& Development Collaborations
Guangxi
Wuzhou Pharmaceutical Company
Pursuant
to a memorandum of understanding and collaboration agreement, dated October 25, 2012, we have established a strategic collaboration
with Guangxi Wuzhou Pharmaceutical Company, a subsidiary of publicly traded Guangxi Wuzhou Zhongheng Group Co., Ltd. (SHG: 600252)
(the “Guangxi Agreement”). VAL-083 is approved for the treatment of chronic myelogenous leukemia (“CML”)
and lung cancer in China and Guangxi Wuzhou Pharmaceutical Company is the only manufacturer licensed by the CFDA to produce the
product for the China market. Through the Guangxi Agreement, we have been provided drug product at the production price for our
VAL-083 clinical studies in the United States and China and we have also secured certain commercial rights in China.
Pursuant
to the Guangxi Agreement, we granted to Guangxi Wuzhou Pharmaceutical Company a royalty-free license to certain of our intellectual
property, as it relates to quality control and drug production methods for VAL-083, and we agreed that Guangxi Wuzhou Pharmaceutical
Company will be our exclusive supplier of VAL-083 for clinical studies and commercial sales, subject to Guangxi Wuzhou Pharmaceutical
Company obtaining and maintaining cGMP certification by the FDA, EMA or other applicable regulatory agencies, and Guangxi Wuzhou
Pharmaceutical Company being able to meet volumes ordered by us. We will continue to work with Guangxi Wuzhou Pharmaceutical Company
to achieve US FDA compliance in order to potentially have them as our future supplier for global sales of VAL-083.
This
Guangxi Agreement also provides us with certain exclusive commercial rights related to drug supply. Specifically, the Guangxi
Agreement establishes an exclusive supply relationship between us and Guangxi Wuzhou Pharmaceutical Company for the Chinese market
and all markets outside China. Guangxi Wuzhou Pharmaceutical Company agreed that it may not sell VAL-083 for markets outside of
China to any other purchaser other than us, provided that, during the first three years following regulatory clearance for marketing
of VAL-083 in a particular country or region, we meet proposed sales volumes set by Guangxi Wuzhou Pharmaceutical Company for
the country or region. In addition, Guangxi Wuzhou Pharmaceutical Company granted us a pre-emptive right in China (subject to
our acceptance of proposed sales volume and prices) to purchase VAL-083 produced by Guangxi Wuzhou Pharmaceutical Company.
The
term of the Guangxi Agreement (except as it relates to the exclusive rights in the China market) is indefinite, subject to termination
upon written agreement of all parties, or if either party breaches any material term and fails to remedy such breach within 30
days of receipt of notice of the breach, or if any action to be taken thereunder is not agreed to by both parties, provided that
such matter is referred to the chief executive officer of both parties, and they are unable to resolve such matter within 90 days.
No payments have been made to date under the Guangxi Agreement.
Duke
University Collaboration
In
April 2017, we entered into a three-year collaboration with Duke University to evaluate VAL-083 as a front-line treatment for
newly diagnosed patients with GBM. Under the terms of the collaboration, we will fund a series of preclinical studies to be conducted
by Duke University’s Glioblastoma Drug Discovery Group to identify molecular characteristics of GBM tumors that are more
likely to respond to VAL-083, and not the standard of care, temozolomide, as a front-line treatment or through combination therapies.
Patents
and Proprietary Rights
Our
success will depend in part on our ability to protect our existing product candidate and the products we acquire or license by
obtaining and maintaining a strong proprietary position. To develop and maintain our position, we intend to continue relying upon
patent protection, orphan drug status, Hatch-Waxman exclusivity, trade secrets, know-how, continuing technological innovations
and licensing opportunities.
We
have filed patent applications claiming the use of, and improvements related to VAL-083. Our patent filings also include proposed
treatment regimens, improvements to the manufacturing process, formulation and composition of the active pharmaceutical ingredient,
and finished dosage forms of VAL-083. We are prosecuting our patent applications in the United States and other jurisdictions
which we deem important for the potential commercial success of VAL-083.
Our
patents and patent applications can be summarized in fourteen series as follows:
|
●
|
Series I is generally directed to synthesis
of VAL-083.
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
No. 8,563,758
|
|
Method Of Synthesis
Of Substituted Hexitols Such As Dianhydrogalactitol
|
|
|
United States Patent
No. 8,921,585
|
|
Method Of Synthesis
Of Substituted Hexitols Such As Dianhydrogalactitol
|
|
|
United States Patent
No. 9,085,544
|
|
Method Of Synthesis
Of Substituted Hexitols Such As Dianhydrogalactitol
|
|
|
United States Patent
No. 9,630,938
|
|
Method Of Synthesis
Of Substituted Hexitols Such As Dianhydrogalactitol
|
|
|
PCT Patent Application
Serial No. PCT/US2011/048032
|
|
Method Of Synthesis
Of Substituted Hexitols Such As Dianhydrogalactitol. National phase applications pending and granted in various countries.
|
|
2031
|
|
●
|
Series II is generally directed to use of VAL-083
to treat a range of diseases and conditions, including but not limited to malignancies.
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
No. 9,066,918
|
|
Compositions And
Methods To Improve The Therapeutic Benefit Of Suboptimally Administered Chemical Compounds Including Substituted Hexitols
Such As Dianhydrogalactitol And Diacetyldianhydrogalactitol
|
|
|
United States Patent
No. 9,901,563
|
|
Compositions And
Methods To Improve The Therapeutic Benefit Of Suboptimally Administered Chemical Compounds Including Substituted Hexitols
Such As Dianhydrogalactitol And Diacetyldianhydrogalactitol
|
|
|
|
●
|
Series III is generally directed to analytical
methods for VAL-083.
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
No. 9,759,698
|
|
Improved Analytical
Methods For Analyzing And Determining Impurities In Dianhydrogalactitol
|
|
|
United States Patent
No. 10,145,824
|
|
Improved Analytical
Methods For Analyzing And Determining Impurities In Dianhydrogalactitol
|
|
|
United States Patent
No. 9,029,164
|
|
Improved Analytical
Methods For Analyzing And Determining Impurities In Dianhydrogalactitol
|
|
|
PCT Patent Application
Serial No. PCT/IB2013/000793
|
|
Improved Analytical
Methods For Analyzing And Determining Impurities In Dianhydrogalactitol. National phase applications pending and granted in
various countries.
|
|
2033
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
PCT
Patent Application Serial No. PCT/US2014/066087
|
|
Improved
Analytical Methods For Analyzing And Determining Impurities In Dianhydrogalactitol.
|
|
2034
|
|
●
|
Series IV is generally directed to the use of
VAL-083 to treat GBM or medulloblastoma.
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
Application Serial No. 16/242,752
|
|
Use Of Substituted
Hexitols Including Dianhydrogalactitol And Analogs To Treat Neoplastic Disease And Cancer Stem Cells Including Glioblastoma
Multiforme And Medulloblastoma
|
|
|
United States Patent
No. 9,687,466
|
|
Use Of Substituted
Hexitols Including Dianhydrogalactitol And Analogs To Treat Neoplastic Disease And Cancer Stem Cells Including Glioblastoma
Multiforme And Medulloblastoma
|
|
|
United States Patent
No. 10,201,521
|
|
Use Of Substituted
Hexitols Including Dianhydrogalactitol And Analogs To Treat Neoplastic Disease And Cancer Stem Cells Including Glioblastoma
Multiforme And Medulloblastoma
|
|
|
PCT Patent Application
Serial No. PCT/US2013/022505
|
|
Use Of Substituted
Hexitols Including Dianhydrogalactitol And Analogs To Treat Neoplastic Disease And Cancer Stem Cells Including Glioblastoma
Multiforme And Medulloblastoma. National phase applications pending in various countries.
|
|
2033
|
|
●
|
Series V is generally directed to the veterinary
use of VAL-083.
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
No. 9,814,693
|
|
Veterinary Use
Of Dianhydrogalactitol, Diacetyldianhydrogalactitol, And Dibromodulcitol To Treat Malignancies
|
|
|
|
●
|
Series VI is generally directed to the use of
VAL-083 to treat tyrosine-kinase-inhibitor-resistant malignancies.
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
Application Serial No. 14/409,909
|
|
Methods For Treating
Tyrosine-Kinase-Inhibitor-Resistant Malignancies In Patients With Genetic Polymorphisms Or Ahi1 Dysregulations Or Mutations
Employing Dianhydrogalactitol, Diacetyldianhydrogalactitol, Dibromodulcitol, Or Analogs Or Derivatives Thereof
|
|
|
PCT Patent Application
Serial No. PCT/US2013/047320
|
|
Methods For Treating
Tyrosine-Kinase-Inhibitor-Resistant Malignancies In Patients With Genetic Polymorphisms Or Ahi1 Dysregulations Or Mutations
Employing Dianhydrogalactitol, Diacetyldianhydrogalactitol, Dibromodulcitol, Or Analogs Or Derivatives Thereof. National phase
applications pending in various countries.
|
|
2033
|
|
●
|
Series VII is generally directed to the use
of VAL-083 to treat recurrent malignant glioma and progressive secondary brain tumor.
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
Application Serial No. 14/682,226
|
|
Use Of Dianhydrogalactitol
And Analogs And Derivatives Thereof To Treat Recurrent Malignant Glioma Or Progressive Secondary Brain Tumor
|
|
|
PCT Application
Serial No. PCT/US2014/040461
|
|
Use Of Dianhydrogalactitol
And Analogs And Derivatives Thereof To Treat Recurrent Malignant Glioma Or Progressive Secondary Brain Tumor. National phase
applications pending and granted in various countries.
|
|
2034
|
|
●
|
Series VIII is generally directed to the use
of VAL-083 to treat non-small-cell lung cancer.
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
Application Serial No. 14/710,240
|
|
Use of Dianhydrogalactitol
and Analogs or Derivatives Thereof in Combination With Platinum-Containing Antineoplastic Agents to Treat Non Small-Cell Carcinoma
of the Lung and Brain Metastases
|
|
|
PCT Patent Application
Serial No. PCT/US2015/024462
|
|
Use of Dianhydrogalactitol
and Analogs or Derivatives Thereof to Treat Non-Small Cell Carcinoma of the Lung and Ovarian Cancer. National phase applications
pending in various countries.
|
|
2035
|
|
●
|
Series IX is generally directed to the use of
VAL-083 and radiation to treat NSCLC and GBM.
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
Application Serial No. 15/525,933
|
|
Dianhydrogalactitol
Together with Radiation to Treat Non-Small-Cell Carcinoma of the Lung and Glioblastoma Multiforme.
|
|
|
PCT Patent Application
Serial No. PCT/US2015/059814
|
|
Dianhydrogalactitol
Together with Radiation to Treat Non-Small-Cell Carcinoma of the Lung and Glioblastoma Multiforme. National phase applications
pending in various countries.
|
|
2035
|
|
●
|
Series X is generally directed to the use of
VAL-083 in NSCLC and ovarian cancer:
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
Application Serial No. 15/759,104
|
|
Use of Dianhydrogalactitol
And Derivatives Thereof in the Treatment of Glioblastoma, Lung Cancer and Ovarian Cancer.
|
|
|
|
●
|
Series XI is generally directed to the use of
VAL-083 in the treatment of CNS malignancies:
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
Application Serial No. 15/624,200
|
|
Use of Dianhydrogalactitol
or Derivatives and Analogs Thereof for Treatment of Pediatric Central Nervous System Malignancies.
|
|
|
United States Patent
Application Serial No. 15/771,631
|
|
Use of Dianhydrogalactitol
or Derivatives and Analogs Thereof for Treatment of Pediatric Central Nervous System Malignancies.
|
|
|
|
●
|
Series XII is generally
directed to the analysis and resolution of VAL-083 preparations:
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
United States Patent
Application Serial No. 15/778,546
|
|
Methods for analysis
and Resolution of Preparations of Dianhydrogalactitol and Derivatives and Analogs Thereof.
|
|
|
PCT Patent Application
Serial No.
PCT/US2016/063362
|
|
Methods for analysis
and Resolution of Preparations of Dianhydrogalactitol and Derivatives and Analogs Thereof. National phase applications pending
in various countries.
|
|
2036
|
|
●
|
Series XIII is
generally directed to combinations:
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
PCT Patent Application
Serial No. PCT/US2018/030391
|
|
Use of Dianhydrogalactitol
and Analogs and Derivatives in Combination VEGF inhibitors to Treat Cancer
|
|
2038
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
PCT Patent Application
Serial No. PCT/US2018/020314
|
|
Use of Dianhydrogalactitol
and Analogs and Derivatives in Combination with a P53 Modulator or a PARP Inhibitor
|
|
2038
|
|
●
|
Series XIV is generally
directed to DIPG:
|
Patent
or Patent Application No.
|
|
Title
|
|
Expiry
|
PCT Patent Application
Serial No. PCT/IB2018/001357
|
|
Dianhydrogalactitol
for the Treatment of Diffuse Intrinsic Pontine Gliomas
|
|
2038
|
One
of the inventors listed in our Series IX applications is an employee of the University of California, San Francisco. If a patent
issues from a patent application in this series with a claim that the University of California employee conceived of, in whole
or in part, then the Regents of the University of California will share ownership of any such patent with us. Our research agreements
with the University of California address this issue by providing us with an exclusive option, for a limited period of time, to
negotiate a royalty-bearing exclusive license for commercialization of the invention covered by that patent.
In
addition to patent protection, we may also seek orphan drug status whenever it is available. If a product which has an orphan
drug designation subsequently receives the first regulatory approval for the indication for which it has such designation, the
product is entitled to orphan exclusivity, meaning that the applicable regulatory authority may not approve any other applications
to market the same drug for the same indication, except in very limited circumstances, for a period of seven years in the U.S.
and Canada, and 10 years in the E.U. Orphan drug designation does not prevent competitors from developing or marketing different
drugs for the same indication or the same drug for a different clinical indication.
VAL-083
has been granted protection under the Orphan Drug Act by the FDA and the European Medicines Agency for the treatment of gliomas,
including GBM. The FDA has also granted Orphan Drug protection to VAL-083 for the treatment of medulloblastoma and ovarian cancer.
In
February 2012, the FDA granted orphan drug status to VAL-083 for the treatment of glioma. In January 2013, the EMA also granted
orphan drug protection to VAL-083 for the treatment of glioma. In the spring of 2016, the FDA Office of Orphan Products Development
granted orphan drug designations to VAL-083 for the treatment of ovarian cancer and medulloblastoma.
In
addition to our patents and orphan drug protection, we intend to rely on the Hatch-Waxman Amendments for five years of data exclusivity
for VAL-083.Under the Hatch-Waxman Amendments, newly approved drugs and indications benefit from a statutory period of non-patent
marketing exclusivity. These amendments provide five-year data exclusivity to the first applicant to gain approval of an NDA for
a new chemical entity, meaning that the FDA has not previously approved any other new drug containing the same active ingredient.
The Hatch-Waxman Amendments prohibit the approval of an abbreviated new drug application, also known as an ANDA or generic drug
application, during the five-year exclusive period if no patent is listed. If there is a patent listed and the ANDA applicant
certifies that the NDA holder’s listed patent for the product is invalid or will not be infringed, the ANDA can be submitted
four years after NDA approval. Protection under the Hatch-Waxman Amendments will not prevent the filing or approval of another
full NDA; however, the applicant would be required to conduct its own pre-clinical studies and adequate and well-controlled clinical
studies to demonstrate safety and effectiveness. The Hatch-Waxman Amendments also provide three years of data exclusivity for
the approval of NDAs with new clinical studies for previously approved drugs and supplemental NDAs, for example, for new indications,
dosages or strengths of an existing drug, if new clinical investigations were conducted by or on behalf of the sponsor and were
essential to the approval of the application. This three-year exclusivity covers only the new changes associated with the supplemental
NDA and does not prohibit the FDA from approving ANDAs for drugs containing the original active ingredient.
We
also rely on trade secret protection for our confidential and proprietary information. We believe that the substantial costs and
resources required to develop technological innovations, such as the manufacturing processes associated with VAL-083, will help
us to protect the competitive advantage of our product candidate.
The
protection of intellectual property rights in China (where our clinical product candidate, VAL-083, is manufactured pursuant to
a collaboration agreement with the only manufacturer presently licensed by the CFDA to produce the product for the China market,
and where VAL-03 is approved for the treatment of CML and lung cancer) is relatively weak compared to the United States, which
may negatively affect our ability to generate revenue from VAL-083 in China.
Our
policy is to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to
execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide
that all confidential information developed or made known to the individual during the course of the individual’s relationship
with us is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of employees
and consultants, the agreements provide that all inventions conceived by the individual shall be our exclusive property.
Government
Regulation and Product Approval
Regulation
by governmental authorities in the U.S. and other countries is a significant factor, affecting the cost and time of our research
and product development activities, and will be a significant factor in the manufacture and marketing of any approved products.
Our product candidates will require regulatory approval by governmental agencies prior to commercialization. In particular, our
products are subject to rigorous preclinical and clinical testing and other approval requirements by the FDA and similar regulatory
authorities in other countries. Various statutes and regulations also govern or influence the manufacturing, safety, reporting,
labeling, transport and storage, record keeping and marketing of our products. The lengthy process of seeking these approvals,
and the subsequent compliance with applicable statutes and regulations, require the expenditure of substantial resources. Any
failure by us to obtain, or any delay in obtaining, the necessary regulatory approvals could harm our business.
The
regulatory requirements relating to the testing, manufacturing and marketing of our products may change from time to time and
this may impact our ability to conduct clinical studies and the ability of independent investigators to conduct their own research
with support from us.
The
clinical development, manufacturing and marketing of our products are subject to regulation by various authorities in the U.S.,
the E.U. and other countries, including, in the U.S., the FDA, in Canada, Health Canada, and, in the E.U., the EMA. The Federal
Food, Drug, and Cosmetic Act, the Public Health Service Act in the U.S. and numerous directives, regulations, local laws and guidelines
in Canada and the E.U. govern the testing, manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising
and promotion of our products. Product development and approval within these regulatory frameworks takes a number of years and
involves the expenditure of substantial resources.
Regulatory
approval will be required in all the major markets in which we seek to develop our products. At a minimum, approval requires the
generation and evaluation of data relating to the quality, safety, and efficacy of an investigational product for its proposed
use. The specific types of data required and the regulations relating to this data will differ depending on the territory, the
drug involved, the proposed indication and the stage of development.
In
general, new chemical entities are tested in animals until adequate evidence of safety is established to support the proposed
clinical study protocol designs. Clinical studies for new products are typically conducted in three sequential phases that may
overlap. In Phase 1, the initial introduction of the pharmaceutical into either healthy human volunteers or patients with the
disease (20 to 50 subjects), the emphasis is on testing for safety (adverse effects), dosage tolerance, metabolism, distribution,
excretion and clinical pharmacology. Phase 2 involves studies in a limited patient population (50 to 200 patients) to determine
the initial efficacy of the pharmaceutical for specific targeted indications, to determine dosage tolerance and optimal dosage
and to identify possible adverse side effects and safety risks. Once a compound shows preliminary evidence of some effectiveness
and is found to have an acceptable safety profile in Phase 2 evaluations, Phase 3 studies are undertaken to more fully evaluate
clinical outcomes in a larger patient population in adequate and well-controlled studies designed to yield statistically sufficient
clinical data to demonstrate efficacy and safety.
In
the U.S., specific preclinical data, manufacturing and chemical data, as described above, need to be submitted to the FDA as part
of an IND application, which, unless the FDA objects, will become effective 30 days following receipt by the FDA. Phase 1 studies
in human volunteers may commence only after the application becomes effective. Prior regulatory approval for human healthy volunteer
studies is also required in member states of the E.U. Currently, in each member state of the E.U., following successful completion
of Phase 1 studies, data are submitted in summarized format to the applicable regulatory authority in the member state in respect
of applications for the conduct of later Phase 2 studies. The regulatory authorities in the E.U. typically have between one and
three months in which to raise any objections to the proposed study, and they often have the right to extend this review period
at their discretion. In the U.S., following completion of Phase 1 studies, further submissions to regulatory authorities are necessary
in relation to Phase 2 and 3 studies to update the existing IND.
Authorities
may require additional data before allowing the studies to commence and could demand that the studies be discontinued at any time
if there are significant safety issues. In addition to the regulatory review, studies involving human subjects must be approved
by an independent body. The exact composition and responsibilities of this body will differ from country to country. In the U.S.,
for example, each study will be conducted under the auspices of an independent institutional review board (IRB) at each institution
at which the study is conducted. The IRB considers among other things, the design of the study, ethical factors, the privacy of
protected health information as defined under the Health Insurance Portability and Accountability Act, the safety of the human
subjects and the possible liability risk for the institution. Equivalent rules to protect subjects’ rights and welfare apply
in each member state of the E.U. where one or more independent ethics committees, which typically operate similarly to an IRB,
will review the ethics of conducting the proposed research. Other regulatory authorities around the rest of the world have slightly
differing requirements involving both the execution of clinical studies and the import/export of pharmaceutical products. It is
our responsibility to ensure we conduct our business in accordance with the regulations of each relevant territory.
In
order to gain marketing approval, we must submit a dossier to the relevant authority for review, which is known in the U.S. as
a new drug application (NDA) and in the E.U. as a marketing authorization application (MAA). The format is usually specific and
laid out by each authority, although in general it will include information on the quality of the chemistry, manufacturing and
pharmaceutical aspects of the product as well as the nonclinical and clinical data. Once the submitted NDA is accepted for filing
by the FDA, it undertakes the review process that currently takes on average 10 months, unless an expedited priority review is
granted which takes six months to complete. Approval can take several months to several years, if multiple 10-month review cycles
are needed before final approval is obtained, if at all.
The
approval process can be affected by a number of factors. The NDA may require additional preclinical, manufacturing data or clinical
studies which may be requested at the end of the 10-month NDA review cycle, thereby delaying approval until additional data are
submitted and may involve substantial unbudgeted costs.
In
addition to obtaining approval for each product, in many cases each drug manufacturing facility must be approved. The regulatory
authorities usually will conduct an inspection of relevant manufacturing facilities, and review manufacturing procedures, operating
systems and personnel qualifications. Further inspections may occur over the life of the product. An inspection of the clinical
investigation sites by a competent authority may be required as part of the regulatory approval procedure. As a condition of marketing
approval, the regulatory agency may require post-marketing surveillance to monitor for adverse effects or other additional studies
as deemed appropriate. After approval for the initial indication, further clinical studies may be necessary to gain approval for
any additional indications. The terms of any approval, including labeling content, may be more restrictive than expected and could
affect the marketability of a product.
The
FDA offers a number of regulatory mechanisms that provide expedited or accelerated approval procedures for selected drugs in the
indications on which we are focusing our efforts. These include accelerated approval under Subpart H of the agency’s NDA
approval regulations, fast track drug development procedures, breakthrough drug designation and priority review. At this time,
we have not determined whether any of these approval procedures will apply to our current drug candidate.
By
leveraging existing preclinical and clinical safety and efficacy data, we seek to build upon an existing knowledge base to accelerate
our research. In addition, through our focus on end-stage population which has no current treatment options, regulatory approval
for commercialization may sometimes be achieved in an accelerated manner. Accelerated approval by the FDA in this category may
be granted on objective response rates and duration of responses rather than demonstration of survival benefit. As a result, studies
of drugs to treat end-stage refractory cancer indications have historically involved fewer patients and generally have been faster
to complete than studies of drugs for other indications. We are aware that the FDA and other similar agencies are regularly reviewing
the use of objective endpoints for commercial approval and that policy changes may impact the size of studies required for approval,
timelines and expenditures significantly.
The
U.S., E.U. and other jurisdictions may grant orphan drug designation to drugs intended to treat a “rare disease or condition,”
which, in the U.S., is generally a disease or condition that affects no more than 200,000 individuals. In the E.U., orphan drug
designation can be granted if: the disease is life threatening or chronically debilitating and affects no more than 50 in 100,000
persons in the E.U.; without incentive, it is unlikely that the drug would generate sufficient return to justify the necessary
investment; and no satisfactory method of treatment for the condition exists or, if it does, the new drug will provide a significant
benefit to those affected by the condition. If a product that has an orphan drug designation subsequently receives the first regulatory
approval for the indication for which it has such designation, the product is entitled to orphan exclusivity, meaning that the
applicable regulatory authority may not approve any other applications to market the same drug for the same indication, except
in very limited circumstances, for a period of seven years in the U.S. and 10 years in the E.U. Orphan drug designation does not
prevent competitors from developing or marketing different drugs for the same indication or the same drug for different indications.
Orphan drug designation must be requested before submitting an NDA or MAA. After orphan drug designation is granted, the identity
of the therapeutic agent and its potential orphan use are publicly disclosed. Orphan drug designation does not convey an advantage
in, or shorten the duration of, the review and approval process. However, this designation provides an exemption from marketing
and authorization fees charged to NDA sponsors under the Prescription Drug Act (PDUFA Fees).
Maintaining
substantial compliance with appropriate federal, state and local statutes and regulations requires the expenditure of substantial
time and financial resources. Drug manufacturers are required to register their establishments with the FDA and certain state
agencies, and after approval, the FDA and these state agencies conduct periodic unannounced inspections to ensure continued compliance
with ongoing regulatory requirements, including cGMPs. In addition, after approval, some types of changes to the approved product,
such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval.
The FDA may require post-approval testing and surveillance programs to monitor safety and the effectiveness of approved products
that have been commercialized. Any drug products manufactured or distributed by us pursuant to FDA approvals are subject to continuing
regulation by the FDA, including:
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record-keeping requirements;
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reporting of adverse experiences with the drug;
|
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|
providing the FDA with updated safety and efficacy
information;
|
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|
reporting on advertisements and promotional
labeling;
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drug sampling and distribution requirements;
and
|
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●
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complying with electronic record and signature
requirements.
|
In
addition, the FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed
on the market. There are numerous regulations and policies that govern various means for disseminating information to health-care
professionals as well as consumers, including to industry sponsored scientific and educational activities, information provided
to the media and information provided over the Internet. Drugs may be promoted only for the approved indications and in accordance
with the provisions of the approved label.
The
FDA has very broad enforcement authority and the failure to comply with applicable regulatory requirements can result in administrative
or judicial sanctions being imposed on us or on the manufacturers and distributors of our approved products, including warning
letters, refusals of government contracts, clinical holds, civil penalties, injunctions, restitution and disgorgement of profits,
recall or seizure of products, total or partial suspension of production or distribution, withdrawal of approvals, refusal to
approve pending applications, and criminal prosecution resulting in fines and incarceration. 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 liability. In addition, even after regulatory approval is obtained, later discovery
of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product
from the market.
Sales
of our product candidates, if approved, will depend, in part, on the extent to which such products will be covered by third-party
payors, such as government health care programs, commercial insurance and managed healthcare organizations. These third-party
payors are increasingly limiting coverage or reducing reimbursements for medical products and services. In addition, the U.S.
government, state legislatures and foreign governments have continued implementing cost-containment programs, including price
controls, restrictions on reimbursement and requirements for substitution of generic products. Third-party payors decide which
therapies they will pay for and establish reimbursement levels. Third-party payors often rely upon Medicare coverage policy and
payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverage
and amount of reimbursement to be provided for any drug candidates that we develop will be made on a payor-by-payor basis. Each
payor determines whether or not it will provide coverage for a therapy, what amount it will pay the manufacturer for the therapy,
and on what tier of its formulary it will be placed. The position on a payor’s list of covered drugs, or formulary, generally
determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of such
therapy by patients and physicians. Adoption of price controls and cost-containment measures, and adoption of more restrictive
policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Decreases in third-party
reimbursement for our product candidates or a decision by a third-party payor to not cover our product candidates could reduce
physician usage of our product candidates, once approved, and have a material adverse effect on our sales, results of operations
and financial condition.
Because
of our current and future arrangements with healthcare professionals, principal investigators, consultants, customers and third-party
payors, we will also be subject to healthcare regulation and enforcement by the federal government and the states and foreign
governments in which we will conduct our business, including our clinical research, proposed sales, marketing and educational
programs. Failure to comply with these laws, where applicable, can result in the imposition of significant civil penalties, criminal
penalties, or both. The U.S. laws that may affect our ability to operate, among others, include: the federal Health Insurance
Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical
Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected
health information; certain state laws governing the privacy and security of health information in certain circumstances, some
of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same
effect, thus complicating compliance efforts; the federal healthcare programs’ Anti-Kickback Statute, which prohibits, among
other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly,
in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or
service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs; federal false
claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented,
claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent; federal criminal laws that
prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
the Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report
annually to the U.S. Department of Health and Human Services information related to payments and other transfers of value to physicians
(defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and ownership and
investment interests held by physicians and their immediate family members; and state law equivalents of each of the above federal
laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including
commercial insurers.
In
addition, many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope
and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs. Additionally,
to the extent that our product is sold in a foreign country, we may be subject to similar foreign laws.
We
are also subject to numerous environmental and safety laws and regulations, including those governing the use and disposal of
hazardous materials. The cost of compliance with and any violation of these regulations could have a material adverse effect on
our business and results of operations. Although we believe that our safety procedures for handling and disposing of these materials
comply with the standards prescribed by state and federal regulations, accidental contamination or injury from these materials
may occur. Compliance with laws and regulations relating to the protection of the environment has not had a material effect on
our capital expenditures or our competitive position. However, we are not able to predict the extent of government regulation,
and the cost and effect thereof on our competitive position, which might result from any legislative or administrative action
pertaining to environmental or safety matters.
Competition
The
development and commercialization of new drug products is highly competitive. We expect that we will face significant competition
from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide with respect to
VAL-083 and any other product candidates that we may seek to develop or commercialize in the future. Specifically, due to the
large unmet medical need, global demographics and relatively attractive reimbursement dynamics, the oncology market is fiercely
competitive and there are a number of large pharmaceutical and biotechnology companies that currently market and sell products
or are pursuing the development of product candidates for the treatment of cancer. Our competitors may succeed in developing,
acquiring or licensing technologies and drug products that are more effective, have fewer or more tolerable side effects or are
less costly than any product candidates that we are currently developing or that we may develop, which could render our product
candidates obsolete and noncompetitive.
All
of the top ten global pharmaceutical companies and many of the mid-size pharmaceutical companies have a strong research and development
and commercial presence in oncology. Smaller companies also focus on oncology, including companies such as ARIAD Pharmaceuticals,
Inc., Agios Pharmaceuticals, Inc., BIND Therapeutics, Inc., Clovis Oncology, Inc., Endocyte, Inc., Epizyme, Inc., ImmunoGen, Inc.,
Incyte Corporation, Infinity Pharmaceuticals, Inc., MacroGenics, Inc., Merrimack Pharmaceuticals, Inc., OncoMed Pharmaceuticals,
Inc., Onconova Therapeutics, Inc., Pharmacyclics, Inc., Puma Biotechnology, Inc., Seattle Genetics, Inc. and TESARO, Inc.
Several
companies are marketing and developing oncology immunotherapy products. Companies with approved marketed oncology products for
GBM are Merck (Temodar ® ) and Genentech (Avastin ® ). Companies with oncology immunotherapy product
candidates in clinical development include, but are not limited to, Northwest Biotherapeutics (DCVax-L), Celldex Therapeutics
(Rindopepimut (CDX-110)) and ImmunoCellular Therapeutics (ICT-107).
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.
Our competitors also may obtain FDA or other marketing approval for their products before we are able to obtain approval for ours,
which could result in our competitors establishing a strong market position before we are able to enter the market.
Many
of our existing and potential future competitors have significantly greater financial resources and expertise in research and
development, manufacturing, preclinical testing, conducting clinical studies, obtaining marketing approvals and marketing approved
products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources
being concentrated among a smaller number of our competitors. 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 scientific and management personnel and establishing clinical study sites and patient
registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs.
We
expect that our ability to compete effectively will depend upon our ability to:
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successfully and rapidly complete adequate and
well-controlled clinical studies that demonstrate statistically significant safety and efficacy and to obtain all requisite
regulatory approvals in a cost-effective manner;
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maintain a proprietary position for our manufacturing
processes and other technology;
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produce our products in accordance with FDA
and international regulatory guidelines;
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attract and retain key personnel; and
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build or access an adequate sales and marketing
infrastructure for any approved products.
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Failure
to do one or more of these activities could have an adverse effect on our business, financial condition or results of operations.
Corporate
History
We
are a Nevada corporation formed on June 24, 2009 under the name Berry Only Inc. On January 25, 2013, we entered into and closed
an exchange agreement (the “Exchange Agreement”), with Del Mar Pharmaceuticals (BC) Ltd. (“Del Mar (BC)”),
0959454 B.C. Ltd. (“Callco”), and 0959456 B.C. Ltd. (“Exchangeco”) and the security holders of Del Mar
(BC). Upon completion of the Exchange Agreement, Del Mar (BC) became a wholly-owned subsidiary of ours (the “Reverse Acquisition”).
DelMar
Pharmaceuticals, Inc. is the parent company of Del Mar (BC), a British Columbia, Canada corporation incorporated on April 6, 2010,
which is a clinical stage company with a focus on the development of drugs for the treatment of cancer. We are also the parent
company to Callco and Exchangeco which are British Columbia, Canada corporations. Callco and Exchangeco were formed to facilitate
the Reverse Acquisition.
On
May 20, 2016, we effected a 1-for-4 reverse split of our common stock. All share amounts in this report give effect to the reverse
split unless otherwise indicated.
On
May 8, 2019, we effected a one-for-ten reverse stock split (the “Reverse Stock Split”) of our issued and outstanding
and authorized common stock. All per share amounts and number of shares of common stock in this report on Form 10-K reflect the
Reverse Stock Split. The Reverse Stock Split does not affect the our authorized preferred stock of 5,000,000 shares; except that,
pursuant to the terms of the Certificate of Designations of Series B Convertible Preferred Stock for the issued and outstanding
shares of our Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), the
conversion price at which shares of Series B Preferred Stock may be converted into shares of common stock will be proportionately
adjusted to reflect the Reverse Stock Split.
On
June 26, 2019, we amended our articles of incorporation, as amended, to increase the number of authorized shares of common
stock from 7,000,000 to 95,000,000 shares.
Research
and Development
During
the years ended June 30, 2019 and 2018, we recognized $3,662,056 and $7,132,952, respectively, in research and development expenses.
Employees
We
have two full-time employees and retain the services of approximately 15 persons on an independent contractor/consultant and contract-employment
basis. As such, we currently operate in a “virtual” corporate structure in order to minimize fixed personnel costs.
Available
Information
We
maintain an internet website at www.delmarpharma.com. We do not incorporate the information on our website into this report and
you should not consider it part of this report.
Item
1A. Risk Factors
An
investment in our common stock involves a high degree of risk. In determining whether to purchase our common stock, an investor
should carefully consider all of the material risks described below, together with the other information contained in this report
before making a decision to purchase our securities. An investor should only purchase our securities if he or she can afford to
suffer the loss of his or her entire investment.
Risks
Related to Our Business
We
have a limited operating history and a history of operating losses and expect to incur significant additional operating losses.
We
are an early stage company and there is limited historical financial information upon which to base an evaluation of our performance.
Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies
in their early stages of operations. We expect to incur substantial additional net expenses over the next several years as our
research, development and commercial activities increase. The amount of future losses and when, if ever, we will achieve profitability
are uncertain. Our ability to generate revenue and achieve profitability will depend on, among other things, successful completion
of the preclinical and clinical development of our product candidate; obtaining necessary regulatory approvals from the FDA and
international regulatory agencies; successful manufacturing, sales and marketing arrangements; and raising sufficient funds to
finance our activities. If we are unsuccessful at some or all of these undertakings, our business, prospects and results of operations
may be materially adversely affected.
We
will need to raise additional capital, which may cause dilution to our stockholders, restrict our operations or require us to
relinquish rights to technologies or product candidates.
Until
such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination
of public or private equity offerings, debt financings and/or license and development agreements with collaboration partners.
As of June 30, 2019, we had cash and cash equivalents of $3,718,758. Taking into consideration the net proceeds from the financing
we closed on August 16, 2019 of approximately $6.7 million we expect to fund our operations into the fourth quarter of calendar
2020. We will also need to raise additional capital to fund our operations. We do not have any committed external source of funds.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, then-existing stockholders’
interests may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely
affect their rights as common stockholders. Debt financing and preferred equity financing, if available, may involve agreements
that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making
capital expenditures or declaring dividends. In addition, debt financing would result in fixed payment obligations.
In
addition, we have retained Oppenheimer & Co. Inc. as a financial advisor to assist us in our evaluation of a broad range of
strategic alternatives to enhance stockholder value, including additional capital raising transactions, an acquisition, merger,
business combination, licensing and/or other strategic transaction involving us. There is no assurance that the review of strategic
alternatives will result in us changing our business plan, pursuing any particular transaction, or, if we pursue any such transaction,
that it will be completed. We do not expect to make further public comment regarding the strategic review until our Board of Directors
has approved a specific transaction or otherwise deems disclosure of significant developments is appropriate.
If
we raise funds through collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates
or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt
financings 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.
Our
inability to obtain additional financing could adversely affect our ability to meet our obligations under our planned clinical
studies and could negatively impact the timing of our clinical results.
Our
ability to meet our obligations and continue the research and development of our product candidate is dependent on our ability
to continue to raise adequate financing. We may not be successful in obtaining such additional financing in the amount required
at any time, or for any period, or, if available, that it can be obtained on terms satisfactory to us. In the event that we are
unable to obtain such additional financing, we may be unable to meet our obligations under our planned clinical studies and we
may have to tailor our drug candidate development programs based on the amount of funding we raise which could negatively impact
the timing of our clinical results. In addition, we could be required to cease our operations.
Our
exploration and pursuit of strategic alternatives may not be successful.
In
September 2018, we announced that we had retained Oppenheimer & Co. Inc. as a financial advisor to assist us in our evaluation
of a broad range of strategic alternatives. Potential strategic alternatives that may be explored or evaluated as part of this
process include the potential for capital raising transactions, an acquisition, merger, business combination, licensing and/or
other strategic transaction involving us. Despite devoting efforts to identify and evaluate potential strategic transactions,
the process may not result in any definitive offer to consummate a strategic transaction, or, if we receive such a definitive
offer, the terms may not be as favorable as anticipated or may not result in the execution or approval of a definitive agreement.
Even if we enter into a definitive agreement, we may not be successful in completing a transaction or, if we complete such a transaction,
it may not enhance stockholder value or deliver expected benefits.
If we fail to maintain compliance with the requirements
of The Nasdaq Capital Market LLC (“Nasdaq”) for continued listing, our common stock may be delisted and the price of
our common stock and our ability to access the capital markets could be negatively impacted.
Our common stock is listed for trading on The Nasdaq Capital Market.
As
previously disclosed, on June 28, 2018, the Staff of the Listing Qualifications Department of The Nasdaq Stock Market (the “Nasdaq
Staff”) notified us that it did not comply with the minimum $1.00 per share bid price requirement for continued listing,
as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”), and we were therefore granted 180 calendar
days, through December 26, 2018, to regain compliance. On December 27, 2018, the Nasdaq Staff notified us that we had not regained
compliance with the Bid Price Requirement, that our stockholders’ equity as reported in our Quarterly Report on Form 10-Q
for the quarter ended September 30, 2018 did not qualify us for an additional 180 calendar day extension period for compliance
and that we would therefore be subject to delisting unless we requested a hearing before a Nasdaq Hearings Panel. Accordingly,
we requested a hearing, which was held on January 31, 2019, at which we presented our plan of compliance. On February 4, 2019,
the Nasdaq Hearings Panel issued a decision granting our request for continued listing of our common stock on The Nasdaq Capital
Market pursuant to an extension through June 25, 2019, subject to the condition that we shall have demonstrated a closing bid
price of $1.00 per share or more for a minimum of ten consecutive business days by June 25, 2019. As a result of our previously
disclosed one-for-ten reverse stock split effected on May 8, 2019, on May 23, 2019, we received written notice from Nasdaq that
we have regained compliance with the Bid Price Requirement. However, our common stock has recently traded below the Bid Price
Requirement, and we may be subject to an additional notice from Nasdaq if we do not satisfy the Bid Price Requirement.
Notwithstanding, there can be no assurance that we will be able
to maintain compliance, and if we are unable to maintain compliance with the continued listing requirements, including the Bid
Price Requirement, our securities may be delisted from Nasdaq, which could reduce the liquidity of our common stock materially
and result in a corresponding material reduction in the price of our common stock. In addition, delisting 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 common stock when you wish to do so. Further, if we were to be delisted from Nasdaq, our common stock may
no longer be recognized as a “covered security” and we would be subject to regulation in each state in which we offer
our securities. Thus, 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 common stock.
If
we are unable to effectively implement or maintain a system of internal control over financial reporting, we may not be able to
accurately or timely report our financial results and our stock price could be adversely affected.
Section
404 of the Sarbanes-Oxley Act of 2002 and related regulations require us to evaluate the effectiveness of our internal control
over financial reporting as of the end of each fiscal year, and to include a management report assessing the effectiveness of
our internal control over financial reporting in our Annual Report on Form 10-K for that fiscal year. Management determined that
as of June 30, 2019 and in past periods, our disclosure controls and procedures and internal control over financial reporting
were not effective due to material weaknesses in our internal control over financial reporting related to our limited number of
employees in our accounting department and inadequate segregation of duties over authorization, review and recording of transactions,
as well as the financial reporting of such transactions. Any failure to implement new or improved controls necessary to remedy
the material weaknesses described above, or difficulties encountered in the implementation or operation of these controls, could
harm our operations, decrease the reliability of our financial reporting, and cause us to fail to meet our financial reporting
obligations, which could adversely affect our business and reduce our stock price.
We
are an early-stage company and may never achieve commercialization of our candidate products or profitability.
We
are at an early stage of development and commercialization of our technologies and product candidate. We have not yet begun to
market any products and, accordingly, have not begun or generate revenues from the commercialization of our product. Our product
will require significant additional clinical testing and investment prior to commercialization. A commitment of substantial resources
by ourselves and, potentially, our partners to conduct time-consuming research and clinical studies will be required if we are
to complete the development of our product candidate. There can be no assurance that our product candidate will meet applicable
regulatory standards, obtain required regulatory approvals, be capable of being produced in commercial quantities at reasonable
costs or be successfully marketed. Our product candidate is not expected to be commercially available for several years, if at
all.
We
are currently focused on the development of a single product candidate.
Our
product development efforts are currently focused on a single product, VAL-083, for which we are researching multiple indications.
If VAL-083 fails to achieve clinical endpoints or exhibits unanticipated toxicity or if a superior product is developed by a competitor,
our prospects for obtaining regulatory approval and commercialization may be negatively impacted. In the long-term, we hope to
establish a pipeline of product candidates, and we have identified additional product candidates that we may be able to acquire
or license in the future. However, at this time we do not have any formal agreements granting us any rights to such additional
product candidates.
Even
if we are able to commercialize any product candidate that we develop, the product may become subject to unfavorable pricing regulations,
third-party payor reimbursement practices or healthcare reform initiatives that could harm our business.
The
commercial success of our current or future product candidates will depend substantially, both domestically and abroad, on the
extent to which the costs of our product candidate will be paid by health maintenance, managed care, pharmacy benefit and similar
healthcare management organizations, or reimbursed by government health administration authorities (such as Medicare and Medicaid),
private health coverage insurers and other third-party payors. If reimbursement is not available, or is available only to limited
levels, we may not be able to successfully commercialize our products. Even if coverage is provided, the approved reimbursement
amount may not be high enough to allow us to establish and maintain pricing sufficient to realize a meaningful return on our investment.
There
is significant uncertainty related to third-party payor coverage and reimbursement of newly approved drugs. Marketing approvals,
pricing and reimbursement for new drug products vary widely from country to country. Some countries require approval of the sale
price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing
approval is granted. In some non-U.S. markets, prescription pharmaceutical pricing remains subject to continuing governmental
control even after initial approval is granted. As a result, we might obtain marketing approval for a product in a particular
country, but then be subject to price regulations that delay commercial launch of the product, possibly for lengthy time periods,
which may negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing
limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates
obtain marketing approval.
Our
ability to commercialize VAL-083 or any other product candidates will depend in part on the extent to which coverage and reimbursement
for these products and related treatments will be available from government health administration authorities, private health
insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance
organizations, decide which medications they will cover and establish reimbursement levels. 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 for particular medications, which could affect our ability
to sell our product candidate profitably. These payors may not view our products, if any, as cost-effective, and coverage and
reimbursement may not be available to our customers, or may not be sufficient to allow our products, if any, to be marketed on
a competitive basis. Cost-control initiatives could cause us to decrease the price we might establish for products, which could
result in lower than anticipated product revenues. If the prices for our products, if any, decrease or if governmental and other
third-party payors do not provide adequate coverage or reimbursement, our prospects for revenue and profitability will suffer.
There
may also be delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the
indications for which the drug is approved by the FDA or comparable non-U.S. regulatory authorities. Moreover, eligibility for
reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research,
development, manufacture, sale and distribution. Reimbursement rates may vary, by way of example, according to the use of the
drug and the clinical setting in which it is used. Reimbursement rates may also be based on reimbursement levels already set for
lower cost drugs or may be incorporated into existing payments for other services.
In
addition, increasingly, third-party payors are requiring higher levels of evidence of the benefits and clinical outcomes of new
technologies and are challenging the prices charged. We cannot be sure that coverage will be available for any product candidate
that we, or they, commercialize and, if available, that the reimbursement rates will be adequate. Further, the net reimbursement
for drug products may be subject to additional reductions if there are changes to laws that presently restrict imports of drugs
from countries where they may be sold at lower prices than in the United States. 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 obtain marketing
approval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products
and our overall financial condition.
We
are dependent on obtaining certain patents and protecting our proprietary rights.
Our
success will depend, in part, on our ability to obtain patents, maintain trade secret protection and operate without infringing
on the proprietary rights of third parties or having third parties circumvent our rights. We have filed and are actively pursuing
patent applications for our products. The patent positions of biotechnology, biopharmaceutical and pharmaceutical companies can
be highly uncertain and involve complex legal and factual questions. Thus, there can be no assurance that any of our patent applications
will result in the issuance of patents, that we will develop additional proprietary products that are patentable, that any patents
issued to us or those that already have been issued will provide us with any competitive advantages or will not be challenged
by any third parties, that the patents of others will not impede our ability to do business or that third parties will not be
able to circumvent our patents. Furthermore, there can be no assurance that others will not independently develop similar products,
duplicate any of our products not under patent protection, or, if patents are issued to us, design around the patented products
we developed or will develop.
We
may be required to obtain licenses from third parties to avoid infringing patents or other proprietary rights. No assurance can
be given that any licenses required under any such patents or proprietary rights would be made available, if at all, on terms
we find acceptable. If we do not obtain such licenses, we could encounter delays in the introduction of products or could find
that the development, manufacture or sale of products requiring such licenses could be prohibited.
A
number of pharmaceutical, biopharmaceutical and biotechnology companies and research and academic institutions have developed
technologies, filed patent applications or received patents on various technologies that may be related to or affect our business.
Some of these technologies, applications or patents may conflict with our technologies or patent applications. Such conflict could
limit the scope of the patents, if any, that we may be able to obtain or result in the denial of our patent applications. In addition,
if patents that cover our activities are issued to other companies, there can be no assurance that we would be able to obtain
licenses to these patents at a reasonable cost or be able to develop or obtain alternative technology. If we do not obtain such
licenses, we could encounter delays in the introduction of products, or could find that the development, manufacture or sale of
products requiring such licenses could be prohibited. In addition, we could incur substantial costs in defending ourselves in
suits brought against us on patents it might infringe or in filing suits against others to have such patents declared invalid.
Patent
applications in the U.S. are maintained in secrecy and not published if either: i) the application is a provisional application
or ii) the application is filed and we request no publication, and certify that the invention disclosed “has not and will
not” be the subject of a published foreign application. Otherwise, U.S. applications or foreign counterparts, if any, publish
18 months after the priority application has been filed. Since publication of discoveries in the scientific or patent literature
often lag behind actual discoveries, we cannot be certain that we or any licensor were the first creator of inventions covered
by pending patent applications or that we or such licensor was the first to file patent applications for such inventions. Moreover,
we might have to participate in interference proceedings declared by the U.S. Patent and Trademark Office to determine priority
of invention, which could result in substantial cost to us, even if the eventual outcome were favorable to us. There can be no
assurance that our patents, if issued, would be held valid or enforceable by a court or that a competitor’s technology or
product would be found to infringe such patents.
Moreover,
we may be subject to third-party preissuance submissions of prior art to the USPTO, or become involved in opposition, derivation,
reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the
patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of,
or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us,
without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent
rights.
Even
if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection,
prevent competitors from competing with us, or otherwise provide us with any competitive advantage. Our competitors may be able
to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner.
The
issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged
in courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate,
or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop
others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection
of our technology and products. Given the amount of time required for the development, testing and regulatory review of new product
candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result,
our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products
similar or identical to ours.
In
addition, the protection of intellectual property rights in China (where our clinical product candidate, VAL-083, is manufactured
pursuant to a collaboration agreement with the only manufacturer presently licensed by the CFDA to manufacture VAL-083 for the
China market, and where VAL-083 is approved for the treatment of CML and lung cancer) is relatively weak compared to the United
States, which may negatively affect our ability to generate royalty revenue from sales of VAL-083 in China.
Much
of our know-how and technology may not be patentable. To protect our rights, we require employees, consultants, advisors and collaborators
to enter into confidentiality agreements. There can be no assurance, however, that these agreements will provide meaningful protection
for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure. Further,
our business may be adversely affected by competitors who independently develop competing technologies, especially if we obtain
no, or only narrow, patent protection.
We
may be unable to protect our patents and proprietary rights.
Our
future success will depend to a significant extent on our ability to:
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obtain and keep patent protection for our products
and technologies on an international basis;
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enforce our patents to prevent others from using
our inventions;
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maintain and prevent others from using our trade
secrets; and
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operate and commercialize products without infringing
on the patents or proprietary rights of others.
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We
can provide no assurance that our patent rights will afford any competitive advantages and these rights may be challenged or circumvented
by third parties. Further, patents may not be issued on any of our pending patent applications in the U.S. or abroad. Because
of the extensive time required for development, testing and regulatory review of a product candidate, it is possible that before
a product candidate can be commercialized, any related patent may expire, or remain in existence for only a short period following
commercialization, reducing or eliminating any advantage of the patent.
If
we sue others for infringing our patents, a court may determine that such patents are invalid or unenforceable. Even if the validity
of our patent rights is upheld by a court, a court may not prevent the alleged infringement of our patent rights on the grounds
that such activity is not covered by our patent claims.
In
addition, third parties may sue us for infringing their patents. In the event of a successful claim of infringement against us,
we may be required to:
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defend litigation or administrative proceedings;
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pay substantial damages;
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stop using our technologies and methods;
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stop certain research and development efforts;
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develop non-infringing products or methods;
and
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obtain one or more licenses from third parties.
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If
required, we can provide no assurance that we will be able to obtain such licenses on acceptable terms, or at all. If we are sued
for infringement, we could encounter substantial delays in development, manufacture and commercialization of our product candidates.
Any litigation, whether to enforce our patent rights or to defend against allegations that we infringe third-party rights, will
be costly, time consuming, and may distract management from other important tasks.
As
is commonplace in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at other biotechnology
or pharmaceutical companies, including our competitors or potential competitors. To the extent our employees are involved in research
areas which are similar to those areas in which they were involved at their former employers, we may be subject to claims that
such employees and/or we have inadvertently or otherwise used or disclosed the alleged trade secrets or other proprietary information
of the former employers. Litigation may be necessary to defend against such claims, which could result in substantial costs and
be a distraction to management and which may have a material adverse effect on us, even if we are successful in defending such
claims.
We
are subject to various government regulations.
The
manufacture and sale of human therapeutic and diagnostic products in the U.S., Canada and foreign jurisdictions are governed by
a variety of statutes and regulations. These laws require approval of manufacturing facilities, controlled research and testing
of products and government review and approval of a submission containing manufacturing, preclinical and clinical data in order
to obtain marketing approval based on establishing the safety and efficacy of the product for each use sought, including adherence
to current cGMP during production and storage, and control of marketing activities, including advertising and labeling.
VAL-083
and any other products we may develop will require significant development, preclinical and clinical testing and investment of
substantial funds prior to its commercialization. The process of obtaining required approvals can be costly and time-consuming,
and there can be no assurance that we will successfully develop any future products that will prove to be safe and effective in
clinical studies or receive applicable regulatory approvals. Markets other than the U.S. and Canada have similar restrictions.
Potential investors and shareholders should be aware of the risks, problems, delays, expenses and difficulties which we may encounter
in view of the extensive regulatory environment which controls our business.
We
may request priority review for our product candidate in the future. The FDA may not grant priority review for our product candidate.
Moreover, even if the FDA designated such product for priority review, that designation may not lead to a faster regulatory review
or approval process and, in any event, would not assure FDA approval.
We
may be eligible for priority review designation for our product candidate if the FDA determines such product candidate offers
major advances in treatment or provides a treatment where no adequate therapy exists. A priority review designation means that
the goal for the FDA to review an application is six months, rather than the standard review period of ten months. The FDA has
broad discretion with respect to whether or not to grant priority review status to a product candidate, so even if we believe
a particular product candidate is eligible for such designation or status, the FDA may decide not to grant it. Thus, while the
FDA has granted priority review to other oncology disease products, our product candidate, should we determine to seek priority
review, may not receive similar designation. Moreover, even if our product candidate is designated for priority review, such a
designation does not necessarily mean a faster regulatory review process or necessarily confer any advantage with respect to approval
compared to conventional FDA procedures. Receiving priority review from the FDA does not guarantee approval within an accelerated
timeline or thereafter.
We
believe we may in some instances be able to secure approval from the FDA or comparable non-U.S. regulatory authorities to use
accelerated development pathways. If we are unable to obtain such approval, we may be required to conduct additional preclinical
studies or clinical studies beyond those that we contemplate, which could increase the expense of obtaining, and delay the receipt
of, necessary marketing approvals.
We
anticipate that we may seek an accelerated approval pathway for our product candidate. Under the accelerated approval provisions
in the Federal Food, Drug, and Cosmetic Act, or FDCA, and the FDA’s implementing regulations, the FDA may grant accelerated
approval to a product designed to treat a serious or life-threatening condition that provides meaningful therapeutic benefit over
available therapies upon a determination that the product 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 such post-approval studies fail to confirm the drug’s clinical
benefit, the FDA may withdraw its approval of the drug.
Prior
to seeking such accelerated approval, we will seek feedback from the FDA and will otherwise evaluate our ability to seek and receive
such accelerated approval. There can also be no assurance that after our evaluation of the feedback and other factors we will
decide to pursue or submit a New Drug Application (“NDA”), for accelerated approval or any other form of expedited
development, review or approval. Similarly, there can be no assurance that after subsequent FDA feedback that we will continue
to pursue or apply for accelerated approval or any other form of expedited development, review or approval, even if we initially
decide to do so. Furthermore, if we decide to submit an application for accelerated approval or under another expedited regulatory
designation (e.g., breakthrough therapy designation), 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. The FDA or other non-U.S.
authorities could also require us to conduct further studies prior to considering our application or granting approval of any
type. A failure to obtain accelerated approval or any other form of expedited development, review or approval for any of our product
candidates that we determine to seek accelerated approval for would result in a longer time period to commercialization of such
product candidate, could increase the cost of development of such product candidate and could harm our competitive position in
the marketplace.
We
have conducted, and may in the future conduct, clinical studies for certain of our product candidates at sites outside the United
States, and the FDA may not accept data from studies conducted in such locations.
We
have conducted and may in the future choose to conduct one or more of our clinical studies outside the United States. Although
the FDA may accept data from clinical studies conducted outside the United States, acceptance of this data is subject to certain
conditions imposed by the FDA. For example, the clinical study must be well designed and conducted and performed by qualified
investigators in accordance with ethical principles. The study population must also adequately represent the U.S. population,
and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful.
Generally, the patient population for any clinical studies conducted outside of the United States must be representative of the
population for whom we intend to seek approval in the United States. In addition, while these clinical studies are subject to
the applicable local laws, FDA acceptance of the data will be dependent upon its determination that the studies also complied
with all applicable U.S. laws and regulations. There can be no assurance that the FDA will accept data from studies conducted
outside of the United States. If the FDA does not accept the data from any of our clinical studies that we determine to conduct
outside the United States, it would likely result in the need for additional studies, which would be costly and time-consuming
and delay or permanently halt our development of the product candidate.
In
addition, the conduct of clinical studies outside the United States could have a significant impact on us. Risks inherent in conducting
international clinical studies include:
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foreign regulatory requirements that could restrict
or limit our ability to conduct our clinical studies;
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administrative burdens of conducting clinical
studies under multiple foreign regulatory schema;
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foreign exchange fluctuations; and
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diminished protection of intellectual property
in some countries.
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If
our clinical studies fail to demonstrate safety and efficacy to the satisfaction of the FDA and comparable non-U.S. regulators,
we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization
of our product candidate.
We
are not permitted to commercialize, market, promote or sell any product candidate in the United States without obtaining marketing
approval from the FDA. Comparable non-U.S. regulatory authorities, such as the EMA, impose similar restrictions. We may never
receive such approvals. We must complete extensive preclinical development and clinical studies to demonstrate the safety and
efficacy of our product candidate in humans before we will be able to obtain these approvals.
Clinical
testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome.
We have not previously submitted an NDA to the FDA or similar drug approval filings to comparable non-U.S. regulatory authorities
for any product candidate.
Any
inability to successfully complete preclinical and clinical development could result in additional costs to us and impair our
ability to generate revenues from product sales, regulatory and commercialization milestones and royalties. In addition, if (1)
we are required to conduct additional clinical studies or other testing of our product candidate beyond the studies and testing
that we contemplate, (2) we are unable to successfully complete clinical studies of our product candidate or other testing, (3)
the results of these studies or tests are unfavorable, uncertain or are only modestly favorable, or (4) there are unacceptable
safety concerns associated with our product candidate, we, in addition to incurring additional costs, may:
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be delayed in obtaining marketing approval for
our product candidates;
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not obtain marketing approval at all;
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obtain approval for indications or patient populations
that are not as broad as we intended or desired;
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obtain approval with labeling that includes
significant use or distribution restrictions or significant safety warnings, including boxed warnings;
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be subject to additional post-marketing testing
or other requirements; or
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be required to remove the product from the market
after obtaining marketing approval.
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If
we experience any of a number of possible unforeseen events in connection with clinical studies of our product candidates, potential
marketing approval or commercialization of our product candidates could be delayed or prevented.
We
may experience numerous unforeseen events during, or as a result of, clinical studies that could delay or prevent marketing approval
of our product candidate, including:
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clinical studies of our product candidate may
produce unfavorable or inconclusive results;
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we may decide, or regulators may require us,
to conduct additional clinical studies or abandon product development programs;
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the number of patients required for clinical
studies of our product candidate may be larger than we anticipate, patient enrollment in these clinical studies may be slower
than we anticipate or participants may drop out of these clinical studies at a higher rate than we anticipate;
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data safety monitoring committees may recommend
suspension, termination or a clinical hold for various reasons, including concerns about patient safety;
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regulators or IRBs may suspend or terminate
the study or impose a clinical hold for various reasons, including noncompliance with regulatory requirements or concerns
about patient safety;
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patients with serious, life-threatening diseases
included in our clinical studies may die or suffer other adverse medical events for reasons that may not be related to our
product candidate;
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participating patients may be subject to unacceptable
health risks;
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patients may not complete clinical studies due
to safety issues, side effects, or other reasons;
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changes in regulatory requirements and guidance
may occur, which require us to amend clinical study protocols to reflect these changes;
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our third-party contractors, including those
manufacturing our product candidate or components or ingredients thereof or conducting clinical studies on our behalf, may
fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner or at all;
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regulators or institutional review boards, or
IRBs may not authorize us or our investigators to commence a clinical study or conduct a clinical study at a prospective study
site;
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we may experience delays in reaching or fail
to reach agreement on acceptable clinical study contracts or clinical study protocols with prospective study sites;
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patients who enroll in a clinical study may
misrepresent their eligibility to do so or may otherwise not comply with the clinical study protocol, resulting in the need
to drop the patients from the clinical study, increase the needed enrollment size for the clinical study or extend the clinical
study’s duration;
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we may have to suspend or terminate clinical
studies of our product candidate for various reasons, including a finding that the participants are being exposed to unacceptable
health risks, undesirable side effects or other unexpected characteristics of a product candidate;
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regulators or IRBs may require that we or our
investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements
or their respective standards of conduct, a finding that the participants are being exposed to unacceptable health risks,
undesirable side effects or other unexpected characteristics of the product candidate or findings of undesirable effects caused
by a chemically or mechanistically similar drug or drug candidate;
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the FDA or comparable non-U.S. regulatory authorities
may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers
with which we enter into agreements for clinical and commercial supplies;
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the FDA or comparable non-U.S. regulatory authorities
may disagree with our clinical study design or our interpretation of data from preclinical studies and clinical studies;
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the supply or quality of raw materials or manufactured
product candidate or other materials necessary to conduct clinical studies of our product candidate may be insufficient, inadequate,
delayed, or not available at an acceptable cost, or we may experience interruptions in supply; and
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the approval policies or regulations of the
FDA or comparable non-U.S. regulatory authorities may significantly change in a manner rendering our clinical data insufficient
to obtain marketing approval.
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Product
development costs for us will increase if we experience delays in testing or pursuing marketing approvals and we may be required
to obtain additional funds to complete clinical studies and prepare for possible commercialization of our product candidate. We
do not know whether any preclinical tests or clinical studies will begin as planned, will need to be restructured or will be completed
on schedule, or at all. Significant preclinical or clinical study delays also could shorten any periods during which we may have
the exclusive right to commercialize our product candidate or allow our competitors to bring products to market before we do and
impair our ability to successfully commercialize our product candidate and may harm our business and results of operations. In
addition, many of the factors that cause, or lead to, clinical study delays may ultimately lead to the denial of marketing approval
of our product candidate.
If
we experience delays or difficulties in the enrollment of patients in clinical studies, we may not achieve our clinical development
on our anticipated timeline, or at all, and our receipt of necessary regulatory approvals could be delayed or prevented.
We
may not be able to initiate or continue clinical studies for VAL-083 or any other product candidate if we are unable to locate
and enroll a sufficient number of eligible patients to participate in clinical studies. Patient enrollment is a significant factor
in the timing of clinical studies, and is affected by many factors, including:
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the size and nature of the patient population;
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the severity of the disease under investigation;
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the proximity of patients to clinical sites;
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the eligibility criteria for the study;
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the design of the clinical study;
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efforts to facilitate timely enrollment;
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competing clinical studies; and
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clinicians’ and patients’ perceptions
as to the potential advantages and risks of the drug being studied in relation to other available therapies, including any
new drugs that may be approved for the indications we are investigating.
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Our
inability to enroll a sufficient number of patients for our clinical studies could result in significant delays or may require
us to abandon one or more clinical studies altogether. Enrollment delays in our clinical studies may result in increased development
costs for our product candidate, delay or halt the development of and approval processes for our product candidate and jeopardize
our ability to achieve our clinical development timeline and goals, including the dates by which we will commence, complete and
receive results from clinical studies. Enrollment delays may also delay or jeopardize our ability to commence sales and generate
revenues from our product candidate. Any of the foregoing could cause our value to decline and limit our ability to obtain additional
financing, if needed.
Positive
results in previous clinical studies of VAL-083 may not be replicated in future clinical studies, which could result in development
delays or a failure to obtain marketing approval.
Positive
results in previous clinical studies of VAL-083 may not be predictive of similar results in future clinical studies. Also, interim
results during a clinical study do not necessarily predict final results. A number of companies in the pharmaceutical and biotechnology
industries have suffered significant setbacks in late-stage clinical studies even after achieving promising results in early-stage
development. Accordingly, the results from the completed preclinical studies and clinical studies for VAL-083 may not be predictive
of the results we may obtain in later stage studies. Our clinical studies may produce negative or inconclusive results, and we
may decide, or regulators may require us, to conduct additional clinical studies. Moreover, clinical data are often susceptible
to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in
preclinical studies and clinical studies have nonetheless failed to obtain FDA or EMA, or other regulatory agency, approval for
their products.
FDA
approval of VAL-083 or future product candidates may be denied.
There
can be no assurance that the FDA will ultimately approve our NDA. The FDA may deny approval of VAL-083 for many reasons, including:
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we may be unable to demonstrate to the satisfaction
of the FDA that our products are safe and effective for its intended uses;
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the FDA may disagree with our interpretation
of data from the clinical studies;
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we may be unable to demonstrate that any clinical
or other benefits our products outweigh any safety or other perceived risks; or
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we may not be able to successfully address any
other issues raised by the FDA.
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If
VAL-083 fails to receive FDA approval, our business and prospects will be materially adversely impacted.
We
expect to rely on orphan drug status to develop and commercialize our product candidate, but our orphan drug designations may
not confer marketing exclusivity or other expected commercial benefits as anticipated.
Market
exclusivity afforded by orphan drug designation is generally offered as an incentive to drug developers to invest in developing
and commercializing products for unique diseases that impact a limited number of patients. The FDA may grant orphan drug designation
to drugs intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000
individuals in the United States. Qualification to maintain orphan drug status is generally monitored by the regulatory authorities
during the orphan drug exclusivity period, currently seven years from the date of approval in the United States.
We
have been granted orphan drug designation in the United States for GBM, ovarian cancer, and medulloblastoma, and in Europe for
GBM. We expect to rely on orphan drug exclusivity for our product candidate. It is possible that the incidence and prevalence
numbers for GBM could change. Should the incidence and prevalence of GBM patients materially increase, it is possible that the
orphan drug designation, and related market exclusivity, in the United States could be lost. Further, while we have been granted
this orphan designation, the FDA can still approve different drugs for use in treating the same indication or disease, which would
create a more competitive market for us and our revenues will be diminished.
Further,
it is possible that another company also holding orphan drug designation for the same product candidate will receive marketing
approval for the same indication before we do. If that were to happen, our applications for that indication may not be approved
until the competing company’s period of exclusivity expires. Even if we are the first to obtain marketing authorization
for an orphan drug indication, there are circumstances under which a competing product may be approved for the same indication
during the seven-year period of marketing exclusivity, such as if the later product is shown to be clinically superior to the
orphan product, or if the later product is deemed a different product than ours. Further, the seven-year marketing exclusivity
would not prevent competitors from obtaining approval of the same product candidate as ours for indications other than those in
which we have been granted orphan drug designation, or for the use of other types of products in the same indications as our orphan
product.
If
the market opportunities for our product candidate are smaller than we believe they are, our revenues may be adversely affected
and our business may suffer. Because the target patient populations of our product candidate are small, we must be able to successfully
identify patients and capture a significant market share to achieve and maintain profitability.
We
focus our research and product development on treatments for orphan cancer indications. Our projections of both the number of
people who have failed other therapies or have limited medical options, are based on estimates. These estimates may prove to be
incorrect and new studies may change the estimated incidence or prevalence. The number of patients in the United States, Europe
and elsewhere may turn out to be lower than expected or may not be otherwise amenable to treatment with our products, or new patients
may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations
and our business. Additionally, because our target patient populations are small, we will be required to capture a significant
market share to achieve and maintain profitability.
We
may be required to suspend or discontinue clinical studies due to unexpected side effects or other safety risks that could preclude
approval of our products.
Our
clinical studies may be suspended at any time for a number of reasons. For example, we may voluntarily suspend or terminate our
clinical studies if at any time we believe that they present an unacceptable risk to the clinical study patients. In addition,
the FDA or other regulatory agencies may order the temporary or permanent discontinuation of our clinical studies at any time
if they believe that the clinical studies are not being conducted in accordance with applicable regulatory requirements or that
they present an unacceptable safety risk to the clinical study patients.
Administering
any product candidate to humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical
studies of our product candidates and could result in the FDA or other regulatory authorities denying further development or approval
of our product candidates for any or all targeted indications. Ultimately, some or all of our product candidates may prove to
be unsafe for human use. Moreover, we could be subject to significant liability if any volunteer or patient suffers, or appears
to suffer, adverse health effects or even death as a result of participating in our clinical studies.
We
may not receive regulatory approvals for our product candidate or there may be a delay in obtaining such approvals.
Our
product and our ongoing development activities are subject to regulation by regulatory authorities in the countries in which we
or our collaborators and distributors wish to test, manufacture or market our products. For instance, the FDA will regulate the
product in the U.S. and equivalent authorities, such as the EMA, will regulate in Europe. Regulatory approval by these authorities
will be subject to the evaluation of data relating to the quality, efficacy and safety of the product for its proposed use, and
there can be no assurance that the regulatory authorities will find our data sufficient to support product approval of VAL-083
or any future product candidates.
The
time required to obtain regulatory approval varies between countries. The FDA is required to facilitate the development and expedite
the review of drugs and biologics that are intended for the treatment of a serious or life-threatening disease or condition and
which demonstrate the potential to address unmet medical needs for the condition. Filling an unmet medical need is defined as
providing a therapy where none exists or providing a therapy that may be potentially better than available therapy. Under the
fast track program, the sponsor of a new drug or biologic candidate may request the FDA to designate the product for a specific
indication as a fast track product concurrent with or after the filing of the IND for the product candidate. The FDA must determine
if the product candidate qualifies for fast track designation within 60 days after receipt of the sponsor’s request. In
the U.S., for products without “Fast Track” status, it can take over eighteen (18) months after submission of an application
for product approval to receive the FDA’s decision. Even with Fast Track status, FDA review and decision can take over twelve
(12) months.
In
December 2017, the FDA granted Fast Track designation for VAL-083 in rGBM.
Different
regulators may impose their own requirements and may refuse to grant, or may require additional data before granting, an approval,
notwithstanding that regulatory approval may have been granted by other regulators. Regulatory approval may be delayed, limited
or denied for a number of reasons, including insufficient clinical data, the product not meeting safety or efficacy requirements
or any relevant manufacturing processes or facilities not meeting applicable requirements as well as case load at the regulatory
agency at the time.
We
may fail to comply with regulatory requirements.
Our
success will be dependent upon our ability, and our collaborative partners’ abilities, to maintain compliance with regulatory
requirements, including cGMP, and safety reporting obligations. The failure to comply with applicable regulatory requirements
can result in, among other things, fines, injunctions, civil penalties, total or partial suspension of regulatory approvals, refusal
to approve pending applications, recalls or seizures of products, operating and production restrictions and criminal prosecutions.
Even
if our product candidate receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients,
third-party payors and others in the medical community necessary for commercial success and the market opportunity for the product
candidate may be smaller than we estimate.
We
have never commercialized a product. Even if VAL-083 or any other product candidate is approved by the appropriate regulatory
authorities for marketing and sale, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party
payors and others in the medical community. For example, physicians are often reluctant to switch their patients from existing
therapies even when new and potentially more effective or convenient treatments enter the market. Further, patients often acclimate
to the therapy that they are currently taking and do not want to switch unless their physicians recommend switching products or
they are required to switch therapies due to lack of reimbursement for existing therapies.
Efforts
to educate the medical community and third-party payors on the benefits of our product candidate may require significant resources
and may not be successful. If our product candidate is approved but does not achieve an adequate level of market acceptance, we
may not generate significant revenues and we may not become profitable. The degree of market acceptance of VAL-083 or any other
product candidate, if approved for commercial sale, will depend on a number of factors, including:
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the efficacy and safety of the product;
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the potential advantages of the product compared
to alternative treatments;
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the prevalence and severity of any side effects;
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the clinical indications for which the product
is approved;
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whether the product is designated under physician
treatment guidelines as a first-line therapy or as a second- or third-line therapy;
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limitations or warnings, including distribution
or use restrictions, contained in the product’s approved labeling;
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our ability to offer the product for sale at
competitive prices;
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our ability to establish and maintain pricing
sufficient to realize a meaningful return on our investment;
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the product’s convenience and ease of
administration compared to alternative treatments;
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the willingness of the target patient population
to try, and of physicians to prescribe, the product;
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the strength of sales, marketing and distribution
support;
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the approval of other new products for the same
indications;
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changes in the standard of care for the targeted
indications for the product;
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the timing of market introduction of our approved
products as well as competitive products and other therapies;
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availability and amount of reimbursement from
government payors, managed care plans and other third-party payors;
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adverse publicity about the product or favorable
publicity about competitive products; and
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potential product liability claims.
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The
potential market opportunities for our product candidate are difficult to estimate precisely. Our estimates of the potential market
opportunities are predicated on many assumptions, including industry knowledge and publications, third-party research reports
and other surveys. While we believe that our internal assumptions are reasonable, these assumptions involve the exercise of significant
judgment on the part of our management, are inherently uncertain and the reasonableness of these assumptions has not been assessed
by an independent source. If any of the assumptions proves to be inaccurate, the actual markets for our product candidate could
be smaller than our estimates of the potential market opportunities.
If
our product candidate receives marketing approval and we, or others, later discover that the drug is less effective than previously
believed or causes undesirable side effects that were not previously identified, our ability to market the drug could be compromised.
Clinical
studies of our product candidate are conducted in carefully defined subsets of patients who have agreed to enter into clinical
studies. Consequently, it is possible that our clinical studies may indicate an apparent positive effect of a product candidate
that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects. If, following
approval of our product candidate, we, or others, discover that the drug is less effective than previously believed or causes
undesirable side effects that were not previously identified, any of the following adverse events could occur:
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regulatory authorities may withdraw their approval
of the drug or seize the drug;
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we may be required to recall the drug or change
the way the drug is administered;
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additional restrictions may be imposed on the
marketing of, or the manufacturing processes for, the particular drug;
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we may be subject to fines, injunctions or the
imposition of civil or criminal penalties;
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regulatory authorities may require the addition
of labeling statements, such as a “black box” warning or a contraindication;
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we may be required to create a Medication Guide
outlining the risks of the previously unidentified side effects for distribution to patients;
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we could be sued and held liable for harm caused
to patients;
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the drug may become less competitive; and
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our reputation may suffer.
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Any
of these events could have a material and adverse effect on our operations and business and could adversely impact our stock price.
Any
product candidate for which we obtain marketing approval, along with the manufacturing processes, qualification testing, post-approval
clinical data, labeling and promotional activities for such product, will be subject to continual and additional requirements
of the FDA and other regulatory authorities.
These
requirements include submissions of safety and other post-marketing information, reports, registration and listing requirements,
good manufacturing practices, or GMP requirements relating to quality control, quality assurance and corresponding maintenance
of records and documents, and recordkeeping. Even if marketing approval of our product candidate is granted, the approval may
be subject to limitations on the indicated uses for which the product may be marketed or to conditions of approval, or contain
requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. The FDA closely
regulates the post-approval marketing and promotion of pharmaceutical products to ensure such products are marketed only for the
approved indications and in accordance with the provisions of the approved labeling.
In
addition, later discovery of previously unknown problems with our products, manufacturing processes, or failure to comply with
regulatory requirements, may lead to various adverse results, including:
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restrictions on such products, manufacturers
or manufacturing processes;
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restrictions on the labeling or marketing of
a product;
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restrictions on product distribution or use;
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requirements to conduct post-marketing clinical
studies;
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requirements to institute a risk evaluation
mitigation strategy, or REMS, to monitor safety of the product post-approval;
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warning letters issued by the FDA or other regulatory
authorities;
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withdrawal of the products from the market;
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refusal to approve pending applications or supplements
to approved applications that we submit;
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recall of products, fines, restitution or disgorgement
of profits or revenue;
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suspension, revocation or withdrawal of marketing
approvals;
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refusal to permit the import or export of our
products; and
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injunctions or the imposition of civil or criminal
penalties.
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If
we are unable to establish sales, marketing and distribution capabilities or enter into acceptable sales, marketing and distribution
arrangements with third parties, we may not be successful in commercializing any product candidates that we develop, if and when
those product candidates are approved.
We
do not have a sales, marketing or distribution infrastructure and have limited experience in the sale, marketing or distribution
of pharmaceutical products. To achieve commercial success for any approved product, we must either develop a sales and marketing
organization, outsource these functions to third parties, or license our product candidates to others. If approved, we may seek
to license VAL-083 to a large pharmaceutical company with greater resources and experience than us. We may not be able license
the VAL-083 on reasonable terms, if at all. The development of sales, marketing and distribution capabilities will require substantial
resources, will be time-consuming and could delay any product launch. We expect that we will commence the development of these
capabilities prior to receiving approval of our product candidate. If the commercial launch of a product candidate for which we
recruit a sales force and establish marketing and distribution capabilities is delayed or does not occur for any reason, we could
have prematurely or unnecessarily incurred these commercialization costs. Such a delay may be costly, and our investment could
be lost if we cannot retain or reposition our sales and marketing personnel. In addition, we may not be able to hire or retain
a sales force in the United States that is sufficient in size or has adequate expertise in the medical markets that we plan to
target. If we are unable to establish or retain a sales force and marketing and distribution capabilities, our operating results
may be adversely affected. If a potential partner has development or commercialization expertise that we believe is particularly
relevant to our product candidate, then we may seek to collaborate with that potential partner even if we believe we could otherwise
develop and commercialize the product independently.
We
expect to seek one or more strategic partners for commercialization of our product candidate outside the United States. As a result
of entering into arrangements with third parties to perform sales, marketing and distribution services, our product revenues or
the profitability of these product revenues may be lower, perhaps substantially lower, than if we were to directly market and
sell products in those markets. Furthermore, we may be unsuccessful in entering into the necessary arrangements with third parties
or may be unable to do so on terms that are favorable to us. In addition, we may have little or no control over such third parties,
and any of them may fail to devote the necessary resources and attention to sell and market our products effectively.
If
we do not establish sales and marketing capabilities, either on our own or in collaboration with third parties, we will not be
successful in commercializing our product candidate.
We
face substantial competition from other pharmaceutical and biotechnology companies and our operating results may suffer if we
fail to compete effectively.
The
development and commercialization of new drug products is highly competitive. We expect that we will face significant competition
from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide with respect to
VAL-083 and any other product candidates that we may seek to develop or commercialize in the future. Specifically, due to the
large unmet medical need, global demographics and relatively attractive reimbursement dynamics, the oncology market is fiercely
competitive and there are a number of large pharmaceutical and biotechnology companies that currently market and sell products
or are pursuing the development of product candidates for the treatment of cancer. Our competitors may succeed in developing,
acquiring or licensing technologies and drug products that are more effective, have fewer or more tolerable side effects or are
less costly than any product candidates that we are currently developing or that we may develop, which could render our product
candidates obsolete and noncompetitive.
All
of the top ten global pharmaceutical companies and many of the mid-size pharmaceutical companies have a strong research and development
and commercial presence in oncology. Smaller companies also focus on oncology, including companies such as ARIAD Pharmaceuticals,
Inc., Agios Pharmaceuticals, Inc., BIND Therapeutics, Inc., Clovis Oncology, Inc., Endocyte, Inc., Epizyme, Inc., ImmunoGen, Inc.,
Incyte Corporation, Infinity Pharmaceuticals, Inc., MacroGenics, Inc., Merrimack Pharmaceuticals, Inc., OncoMed Pharmaceuticals,
Inc., Onconova Therapeutics, Inc., Pharmacyclics, Inc., Puma Biotechnology, Inc., Seattle Genetics, Inc. and TESARO, Inc.
Several
companies are marketing and developing oncology immunotherapy products. Companies with approved marketed oncology products for
GBM are Merck (Temodar ®) and Genentech (Avastin ®). Companies with oncology immunotherapy product
candidates in clinical development include, but are not limited to, Northwest Biotherapeutics (DCVax-L), Celldex Therapeutics
(Rindopepimut (CDX-110)) and ImmunoCellular Therapeutics (ICT-107).
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.
Our competitors also may obtain FDA or other marketing approval for their products before we are able to obtain approval for ours,
which could result in our competitors establishing a strong market position before we are able to enter the market.
Many
of our existing and potential future competitors have significantly greater financial resources and expertise in research and
development, manufacturing, preclinical testing, conducting clinical studies, obtaining marketing approvals and marketing approved
products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources
being concentrated among a smaller number of our competitors. 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 scientific and management personnel and establishing clinical study sites and patient
registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs.
If
we are unable to or delayed in obtaining state regulatory licenses for the distribution of our product, we would not be able to
sell our product candidate.
The
majority of states require manufacturer and/or wholesaler licenses for the sale and distribution of drugs into that state. The
application process is complicated, time consuming and requires dedicated personnel or a third-party to oversee and manage. If
we are delayed in obtaining these state licenses, or denied the licenses, even with FDA approval, we would not be able to sell
or ship product into that state which would adversely affect our sales and revenues.
We
rely on key personnel and, if we are unable to retain or motivate key personnel or hire qualified personnel, we may not be able
to grow effectively.
We
are dependent on certain members of our management, scientific and drug development staff and consultants, the loss of services
of one or more of whom could materially adversely affect us.
We
currently have two full-time employees, and retain the services of approximately 15 persons on an independent contractor/consultant
and contract-employment basis. Our ability to manage growth effectively will require us to continue to implement and improve our
management systems and to recruit and train new employees. Although we have done so in the past and expect to do so in the future,
there can be no assurance that we will be able to successfully attract and retain skilled and experienced personnel.
Our
success depends in large part upon our ability to attract and retain highly qualified personnel. We compete in our hiring efforts
with other pharmaceutical and biotechnology companies, as well as universities and nonprofit research organizations, and we may
have to pay higher salaries to attract and retain personnel, which would be very costly.
We
may be subject to foreign exchange fluctuation.
Our
functional and reporting currency is the United States dollar. We maintain bank accounts in United States and Canadian dollars.
A portion of our expenditures are in foreign currencies, most notably in Canadian dollars, and therefore we are subject to foreign
currency fluctuations, which may, from time to time, impact our financial position and results. We may enter into hedging arrangements
under specific circumstances, typically through the use of forward or futures currency contracts, to minimize the impact of increases
in the value of the Canadian dollar. In order to minimize our exposure to foreign exchange fluctuations we may hold sufficient
Canadian dollars to cover our expected Canadian dollar expenditures.
Product
liability lawsuits against us could divert our resources, cause us to incur substantial liabilities and limit commercialization
of any products that we may develop.
We
face an inherent risk of product liability claims as a result of the clinical testing of our product candidate despite obtaining
appropriate informed consents from our clinical study participants. We will face an even greater risk if we commercially sell
any product that we may develop. For example, we may be sued if any product we develop allegedly causes injury or is found to
be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include
allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence,
strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully
defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization
of our product candidate. Regardless of the merits or eventual outcome, liability claims may result in:
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decreased demand for our product candidate or
products that we may develop;
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injury to our reputation and significant negative
media attention;
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withdrawal of clinical study participants;
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significant costs to defend resulting litigation;
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substantial monetary awards to study participants
or patients;
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reduced resources of our management to pursue
our business strategy; and
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the inability to commercialize any products
that we may develop.
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Although
we maintain general liability insurance, this insurance may not fully cover potential liabilities that we may incur. The cost
of any product liability litigation or other proceeding, even if resolved in our favor, could be substantial. We will need to
increase our insurance coverage if and when we begin selling any product candidate that receives marketing approval. In addition,
insurance coverage is becoming increasingly expensive. If we are unable to obtain or maintain sufficient insurance coverage at
an acceptable cost or to otherwise protect against potential product liability claims, it could prevent or inhibit the development
and commercial production and sale of our product candidate, which could adversely affect our business, financial condition, results
of operations and prospects.
Risks
Related to Our Dependence on Third Parties
We
rely on third parties to conduct clinical studies for our product candidate. Any failure by a third-party to meet its obligations
with respect to the clinical development of our product candidate may delay or impair our ability to obtain regulatory approval
for our product candidate.
We
rely on academic institutions and private oncology centers to conduct our clinical studies. Our reliance on third parties to conduct
clinical studies could, depending on the actions of such third parties, jeopardize the validity of the clinical data generated
and adversely affect our ability to obtain marketing approval from the FDA or other applicable regulatory authorities.
Such
clinical study arrangements provide us with information rights with respect to the clinical data, including access to and the
ability to use and reference the data, including for our own regulatory filings, resulting from the clinical studies. If investigators
or institutions breach their obligations with respect to the clinical studies of our product candidate, or if the data proves
to be inadequate, then our ability to design and conduct any future clinical studies may be adversely affected.
We
rely, and expect to continue to rely, on third parties to conduct our clinical studies, and those third parties may not perform
satisfactorily, including failing to meet deadlines for the completion of such studies.
We
currently rely on third-party clinical research organizations, or CROs, to conduct our clinical studies. We expect to continue
to rely on third parties, such as CROs, clinical data management organizations, medical institutions and clinical investigators,
to conduct our clinical studies. Our agreements with these third parties generally allow the third-party to terminate the agreement
at any time. If we are required to enter into alternative arrangements because of any such termination the introduction of our
product candidates to market could be delayed.
Our
reliance on these third parties for research and development activities will reduce our control over these activities but will
not relieve us of our responsibilities. For example, we design our clinical studies and will remain responsible for ensuring that
each of our clinical studies are conducted in accordance with the general investigational plan and protocols for the study. Moreover,
the FDA requires us to comply with standards, commonly referred to as good clinical practices, or GCPs, for conducting, recording
and reporting the results of clinical studies to assure that data and reported results are credible and accurate and that the
rights, integrity and confidentiality of study participants are protected. Our reliance on third parties that we do not control
does not relieve us of these responsibilities and requirements. We also are required to register ongoing clinical studies and
post the results of completed clinical studies on a government-sponsored database, Clinicaltrials.gov, within specified timeframes.
Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.
Furthermore,
these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties
do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical studies in accordance
with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing
approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize
our product candidates.
We
also expect to rely on other third parties to store and distribute drug supplies for our clinical studies. Any performance failure
on the part of our distributors could delay clinical development or marketing approval of our product candidate or commercialization
of our products, producing additional losses and depriving us of potential product revenue.
We
may seek to enter into collaborations with third parties for the development and commercialization of our product candidate. If
we fail to enter into such collaborations, or such collaborations are not successful, we may not be able to capitalize on the
market potential of our product candidate.
We
may seek third-party collaborators for development and commercialization of our product candidate. Our likely collaborators for
any marketing, distribution, development, licensing or broader collaboration arrangements include large and mid-size pharmaceutical
companies, regional and national pharmaceutical companies, non-profit organizations, government agencies, and biotechnology companies.
We are currently party to a limited number of such arrangements and have limited control over the amount and timing of resources
that our collaborators dedicate to the development or commercialization of our product candidate. Our ability to generate revenues
from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them
in these arrangements.
Collaborations
involving our product candidate currently pose, and will continue to pose, the following risks to us:
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collaborators have significant discretion in
determining the efforts and resources that they will apply to these collaborations;
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collaborators may not pursue development and
commercialization of our product candidate or may elect not to continue or renew development or commercialization programs
based on preclinical or clinical study results, changes in the collaborators’ strategic focus or available funding,
or external factors such as an acquisition that diverts resources or creates competing priorities;
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collaborators may delay clinical studies, provide
insufficient funding for a clinical study program, stop a clinical study or abandon a product candidate, repeat or conduct
new clinical studies or require a new formulation of a product candidate for clinical testing;
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collaborators could independently develop, or
develop with third parties, products that compete directly or indirectly with our product candidate 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;
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collaborators with marketing and distribution
rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;
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collaborators may not properly maintain or defend
our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize
or invalidate our intellectual property or proprietary information or expose us to potential litigation;
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collaborators may infringe the intellectual
property rights of third parties, which may expose us to litigation and potential liability;
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disputes may arise between the collaborators
and us that result in the delay or termination of the research, development or commercialization of our product candidate
or that result in costly litigation or arbitration that diverts management attention and resources; and
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collaborations may be terminated and, if terminated,
may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.
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Collaboration
agreements may not lead to development or commercialization of our product candidate in the most efficient manner or at all. If
a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development
or commercialization program could be delayed, diminished or terminated.
If
we are not able to establish collaborations, we may have to alter our development and commercialization plans.
Our
drug development programs and the potential commercialization of our product candidate will require substantial additional cash
to fund expenses. We may decide to collaborate with pharmaceutical and biotechnology companies for the development and potential
commercialization of our product candidate.
We
face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration
will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions
of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include
the design or results of preclinical studies or clinical studies, the likelihood of approval by the FDA or similar regulatory
authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing
and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect
to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the
challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies
for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than
the one with us for our product candidate. We may also be restricted under future license agreements from entering into agreements
on certain terms with potential collaborators. Collaborations are complex and time-consuming to negotiate and document. In addition,
there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in
a reduced number of potential future collaborators.
We
may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may
have to curtail the development of our product candidate, reduce or delay its development program, delay its potential commercialization
or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization
activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on
our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not
have sufficient funds, we may not be able to further develop our product candidate or bring it to market and generate product
revenue.
We
currently manufacture our clinical supplies at a single location. Any disruption at this facility could adversely affect our business
and results of operations.
We
have engaged a single manufacturer to produce GMP active pharmaceutical ingredient and a single manufacturer to produce drug product
for our clinical studies. In addition, we have relied on our manufacturing partner, Guangxi Wuzhou Pharmaceutical Company, for
the manufacture of clinical supply of VAL-083 for our preclinical and Phase 2 clinical studies to-date. If our manufacturer’s
facility were damaged or destroyed, or otherwise subject to disruption, it would require substantial lead-time to replace our
clinical supply. In such event, we would be forced to rely entirely on other third-party contract manufacturers for an indefinite
period of time. We do not currently have established relationships with any back-up manufacturers. At this time no drug product
has been manufactured by a third-party back-up manufacturer. Any disruptions or delays by our third-party manufacturers or Guangxi
Wuzhou Pharmaceutical Company or their failure to meet regulatory compliance could impair our ability to develop VAL-083, which
would adversely affect our business and results of operations.
We
rely on these third-party manufacturers to provide drug product supply for our clinical studies. There is no assurance that such
a supplier will be able to meet our needs from a technical, timing, or cost-effective manner. Our failure to enter into appropriate
agreements with such a third-party manufacturer would delay, or halt, our clinical studies.
We
may become subject to liabilities related to risks inherent in working with hazardous materials.
Our
discovery and development processes involve the controlled use of hazardous and radioactive materials. We are subject to federal,
provincial and local laws and regulations governing the use, manufacture, storage, handling and disposal of such materials and
certain waste products. Although we believe that our safety procedures for handling and disposing of such materials comply with
the standards prescribed by such laws and regulations, the risk of accidental contamination or injury from these materials cannot
be completely eliminated. In the event of such an accident, we could be held liable for any damages that result and any such liability
could exceed our resources. We are not specifically insured with respect to this liability. Although we believe that we are in
compliance in all material respects with applicable environmental laws and regulations and currently do not expect to make material
capital expenditures for environmental control facilities in the near-term, there can be no assurance that we will not be required
to incur significant costs to comply with environmental laws and regulations in the future, or that our operations, business or
assets will not be materially adversely affected by current or future environmental laws or regulations.
Risks
Related to Our Common Stock
The
market price of our common stock is, and is likely to continue to be, highly volatile and subject to wide fluctuations.
The
market price of our common stock is highly volatile and could be subject to wide fluctuations in response to a number of factors
that are beyond our control, including:
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variations in our quarterly operating results;
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announcements that our revenue or income are
below analysts’ expectations;
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general economic slowdowns;
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sales of large blocks of our common stock; and
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announcements by us or our competitors of significant
contracts, acquisitions, strategic partnerships, joint ventures or capital commitments.
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Because
we became public by means of a reverse acquisition, we may not be able to attract, or maintain, the attention of brokerage firms.
Because
we became public through a “reverse acquisition”, securities analysts of brokerage firms may not provide or continue
to provide coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common stock. No
assurance can be given that brokerage firms will want to conduct any follow-on offerings on behalf of us in the future.
We
do not intend to pay dividends on our common stock for the foreseeable future.
We
have paid no dividends on our common stock to date and we do not anticipate paying any dividends to holders of our common stock
in the foreseeable future. While our future dividend policy will be based on the operating results and capital needs of the business,
we currently anticipate that any earnings will be retained to finance our future expansion and for the implementation of our business
plan. Investors should take note of the fact that a lack of a dividend can further affect the market value of our common stock,
and could significantly affect the value of any investment in us.
Our
articles of incorporation allow for our board to create new series of preferred stock without further approval by our stockholders,
which could adversely affect the rights of the holders of our common stock.
Our
Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of
Directors has the authority to issue up to 5,000,000 shares of our preferred stock (of which 1 share has been designated Special
Voting Preferred Stock and is issued and outstanding, 278,530 shares have been designated Series A Preferred Stock and are issued
and outstanding, and 1,000,000 shares have been designated as Series B Preferred Stock, of which 648,613 shares are issued and
outstanding, as of September 6, 2019) without further stockholder approval. As a result, our Board of Directors could authorize
the issuance of additional series of preferred stock that would grant to holders the preferred right to our assets upon liquidation,
the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption
of the shares, together with a premium, prior to the redemption of our common stock. In addition, our Board of Directors could
authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible
into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing
stockholders. Although we have no present intention to issue any additional shares of preferred stock or to create any additional
series of preferred stock, we may issue such shares in the future.
Our
issuance of common stock upon exercise of warrants, Performance Share Units, or options, exchange of Exchangeable Shares, or conversion
of Series B Preferred Stock may depress the price of our common stock.
As
of September 6, 2019, we had 11,388,483 shares of common stock issued and outstanding, 7,813 shares of common stock issuable upon
exchange of the Exchangeable Shares of Exchangeco (which entitle the holder to require Exchangeco to redeem (or, at the option
of us or Callco, to have us or Callco purchase) the Exchangeable Shares, and upon such redemption or purchase to receive an equal
number of shares of our common stock) (the Exchangeable Shares are recognized on an as-exchanged for common stock basis for financial
statement purposes), outstanding warrants to purchase 9,683,596 shares of common stock, outstanding Series B convertible preferred
shares that are convertible into 162,177 shares of common stock and outstanding options to purchase 1,329,199 shares of common
stock (of which 549,199 options are subject to stockholder approval of the increase in the number of shares authorized for issuance
under our 2017 Omnibus Equity Incentive Plan (the “2017 Plan”), as amended, at the next annual meeting of stockholders).
All Exchangeable Shares, warrants, and options are convertible or exercisable into one share of common stock. Each share of Series
B preferred stock is convertible into 0.25 shares of common stock. The issuance of shares of common stock upon exercise of outstanding
warrants or options or exchange of Exchangeable Shares could result in substantial dilution to our stockholders, which may have
a negative effect on the price of our common stock.
FORWARD-LOOKING
STATEMENTS
Statements
in this Annual Report on Form 10-K may be “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements that express our intentions,
beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events
or conditions. These statements are based on current expectations, estimates and projections about our business based, in part,
on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially
from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above
under “Risk Factors,” and under “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in this report and in other documents which we file with the Securities and Exchange Commission. In addition,
such statements could be affected by risks and uncertainties related to our ability to raise any financing which we may require
for our operations, competition, government regulations and requirements, pricing and development difficulties, our ability to
make acquisitions and successfully integrate those acquisitions with our business, as well as general industry and market conditions
and growth rates, and general economic conditions. Any forward-looking statements speak only as of the date on which they are
made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after
the date of this report, except as may be required under applicable securities laws.