ITEM 1A. RISK FACTORS
The following risk factors, together with the other information presented in this document, including the financial statements and the notes thereto, should be considered by investors.
Risks Related to Our Financial Resources and Capital Needs
We are engaged in early-stage research and as such might not be successful in our efforts to develop a portfolio of commercially viable products.
A key element of our strategy is to develop LB-100 in combination with other anti-cancer therapies to treat cancer. We are seeking to do so through our internal research programs or strategic partnerships. A significant portion of the research and development that we are conducting involves new and unproven technologies. Research programs to identify new disease targets and product candidates or to develop them require substantial technical, financial and human resources whether or not any candidates or technologies are ultimately identified or proven successful. Our research programs might initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for the following reasons:
the research methodology used might not be successful in identifying potential product candidates; or
product candidates for drugs might on further study be shown to have harmful side effects or other characteristics that indicate they are unlikely to be effective drugs.
If we are unable to discover suitable potential product candidates, develop additional delivery technologies through internal research programs or strategic partnerships, or in-license suitable products or delivery technologies on acceptable business terms, our business prospects will suffer. Even if we discover additional product candidates, new clinical trials of one or more additional drug candidates may show that these product candidates are unsafe or ineffective.
We have incurred substantial losses since our inception and anticipate that we will continue to incur substantial and increasing losses for the foreseeable future.
We are a clinical-stage biopharmaceutical company that uses biomarker technology to identify enzyme targets associated with serious common diseases and then design novel compounds to attack those threats. We do not have any products approved by a regulatory authority and have not generated any revenue from collaboration or licensing agreements or product sales to date, and have incurred significant research, development and other expenses related to our ongoing operations and expect to continue to incur such expenses. As a result, we have not been profitable and have incurred significant operating losses since our inception. For the years ended December 31, 2025 and 2024, we reported a net loss of $6,009,520 and $3,585,965, respectively. As of December 31, 2025 and 2024, we had an accumulated deficit of $58,077,213 and $52,067,693, respectively.
We do not expect to generate revenues for many years, if at all. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate these losses to increase as we continue to research, develop and seek regulatory approvals for one or more of our product candidates and any additional product candidates we might acquire, and potentially begin to commercialize product candidates that might achieve regulatory approval. We might also encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that could adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues. Our expenses will further increase as we:
conduct clinical trials of our lead product candidate, LB-100;
in-license or acquire rights to, and pursue development of, other products, product candidates or technologies;
hire additional clinical, administrative, manufacturing, quality control, quality assurance and scientific personnel;
seek marketing approval for any product candidates that successfully complete clinical trials;
develop our outsourced manufacturing and commercial activities and establish sales, marketing and distribution capabilities, if we receive, or expect to receive, marketing approval for any product candidates;
maintain, expand and protect our intellectual property portfolio; and
add operational, financial and management information systems and personnel.
There is substantial doubt about our ability to continue as a going concern.
The Company has no recurring source of revenue and has used cash in operating activities since inception. As a result, management has concluded, and our independent registered public accounting firm has agreed with our conclusion, that there is a substantial doubt regarding the Company’s ability to continue as a going concern for a period of at least 12 months beyond the filing of this Annual Report on Form 10-K. As a result, the report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2025, includes an explanatory paragraph regarding the existence of substantial doubt about our ability to continue as a going concern.
We need significant additional financing to fund our operations and complete the development and, if approved, the commercialization of our lead product candidate, LB- 100. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.
We expect that our existing cash resources as of December 31, 2025 will provide sufficient working capital resources to fund our operations, including our clinical trial programs with respect to the development of our lead anti-cancer clinical compound LB-100, through approximately September 30, 2026. Our existing cash resources will not be sufficient to complete development of and obtain regulatory approval for our lead product candidate, and we will need to raise significant additional capital to be able to continue our efforts in this regard. The Company estimates that it will need to raise additional capital to fund its operations by mid-2026, including its various clinical trial commitments, to be able to proactively manage its current business plan during the remainder of 2026 and during 2027. In addition, our operating plan might change as a result of many factors currently unknown to us, including possible additional clinical trials, and we might need additional funds sooner than planned. The Company is considering various strategies and alternatives to obtain the required additional capital.
We expect to expend substantial resources for the foreseeable future to continue the clinical development and production of our lead product candidate. These expenditures will include costs associated with research and development, potentially acquiring new product candidates or technologies, conducting preclinical studies and clinical trials and potentially obtaining regulatory approvals and manufacturing products.
Budgets and future capital requirements depend on many factors, including:
the scope, progress, results and costs of our ongoing and planned development programs for our lead product candidate, as well as any additional clinical trials we undertake to obtain data sufficient to seek marketing approval for our lead product candidate;
the timing of, and the costs involved in, obtaining regulatory approvals for our lead drug candidate if our clinical trials are successful;
the cost of commercialization activities for our lead product candidate, if it is approved for sale, including marketing, sales and distribution costs;
the cost of manufacturing our lead product candidate for clinical trials in preparation for regulatory approval, including the cost and timing of process development, manufacturing scale-up and validation activities;
our ability to establish and maintain strategic licensing or other arrangements and the financial terms of such agreements;
the costs to in-license future product candidates or technologies;
the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;
the costs in defending and resolving future derivative and securities class action litigation;
our operating expenses; and
the emergence of competing technologies or other adverse market developments.
Additional funds might not be available when we need them on terms that are acceptable to us, or at all. We have no committed source of additional capital. If adequate funds are not available to us on a timely basis, we might not be able to continue as a going concern or we might be required to delay, limit, reduce or terminate preclinical studies, clinical trials or other development activities for our product candidates or target indications, or delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize our lead product candidate.
We currently have no source of revenues. We might never generate revenues or achieve profitability.
Currently, we do not generate any revenues from product sales or otherwise. Even if we are able to successfully achieve regulatory approval for our lead product candidate, we do not know when we will generate revenues or become profitable, if at all. Our ability to generate revenues from product sales and achieve profitability will depend on our ability to successfully commercialize products, including our lead product candidate, LB-100, and any other product candidates that we might develop, in-license or acquire in the future. Our ability to generate revenues and achieve profitability also depends on a number of additional factors, including our ability to:
successfully complete development activities, including the necessary clinical trials;
complete and submit a New Drug Application (“NDA”) to the FDA and obtain U.S. regulatory approval for an indication for which there is a commercial market;
complete and submit applications to foreign regulatory authorities;
obtain regulatory approval in territories with viable market sizes;
obtain coverage and adequate reimbursement from third parties, including government and private payors;
set commercially viable prices for our intended product, if any;
establish and maintain supply and manufacturing relationships with reliable third parties and/or build our own manufacturing facility and ensure adequate, legally and globally compliant manufacturing of bulk drug substances and drug products to maintain that supply;
develop distribution processes for our lead product candidate;
develop commercial quantities of our lead product candidate, once approved, at acceptable cost levels;
obtain additional funding, if required to develop and commercialize our lead product candidate;
develop a commercial organization capable of sales, marketing and distribution for any products we intend to sell ourselves, in the markets in which we choose to commercialize on our own;
achieve market acceptance of one or more of our intended products;
attract, hire and retain qualified personnel; and
protect our rights in our intellectual property portfolio.
Our revenues for any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which it gains regulatory approval, the accepted price for the product, the ability to get reimbursement at any price, and whether we own the commercial rights for that territory. If the number of our addressable-disease patients is not as significant as our estimates, the indication approved by regulatory authorities is narrower than we expect, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, we might not generate significant revenues from sales of such products, even if approved. In addition, we anticipate incurring significant costs associated with commercializing any approved product candidate. As a result, even if we generate revenues, we might not become profitable and might need to obtain additional funding to continue operations. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we might be unable to continue our operations at planned levels and might be forced to reduce our operations.
Our efforts to integrate acquired businesses may not be successful, and this may adversely affect our financial results.
The success of business acquisitions may depend on our ability to successfully integrate the operations of the acquired business. Integrating the operations of acquired businesses requires significant efforts, including the coordination of operations, manufacturing, personnel, information technologies, research and development, sales and marketing and finance. These efforts can be compounded when the acquisitions are in new geographies or business lines. If these integration efforts are not successful, the anticipated benefits and synergies of the acquisition may not be realized fully, may take longer to realize than expected, or may not be realized at all. Our efforts to successfully integrate acquisitions may also result in additional expenses and divert significant amounts of management’s time from other projects.
Acquiring or implementing new business lines or offering new products and services may subject us to additional risks.
From time to time, we may acquire or implement new business lines or offer new products and services within existing lines of business. For example, with our November 2025 acquisition of Liora Technologies Europe Ltd., we entered the radiotherapy segment of cancer care treatment space. There are substantial risks and uncertainties associated with these efforts. We may invest significant time and resources in developing, marketing, or acquiring new lines of business and/or offering new products and services. Initial timetables for the introduction and development or acquisition of new lines of business and/or the offering of new products or services may not be achieved, and price and profitability targets may prove to be unachievable. Our lack of experience or knowledge, as well as external factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also impact the success of an acquisition or the implementation or of a new line of business or a new product or service. Entry into a new line of business and/or offering a new product or service may also subject us to new laws and regulations with which we are not familiar and may lead to increased litigation or regulatory risk. Furthermore, any new business line and/or new product or service could have an adverse impact on the effectiveness of our system of internal controls. New business lines or new products and services within existing lines of business could affect the sales and profitability of existing lines of business or products and services, including as a result of sales channel conflicts. Other risks include: (i) potential diversion of management’s attention, available cash, and other resources from our existing businesses; (ii) unanticipated liabilities or contingencies; (iii) the need for additional capital and other resources to expand into or acquire the new line of business; (iv) potential damage to existing customer relationships, lack of customer acceptance or inability to attract new customers; and (v) the inability to compete effectively. These risks would be magnified to the extent that any new business line would result in a significant increase in operations in developing markets. Failure to successfully manage these risks in the implementation or acquisition of new lines of business or the offering of new products or services could have a material adverse effect on our reputation, business, results of operations, and financial condition.
We compete in highly competitive markets, and we may lose market share to companies with greater resources or more effective technologies or be forced to reduce our prices.
The market for proton therapy products is still developing and is characterized by rapidly evolving technology and pricing pressure. Our primary competitors in the proton therapy market are Varian Medical Systems, Ion Beam Applications S.A. (IBA) and Hitachi Ltd. Our ability to compete successfully depends, in part, on our ability to lower our product costs, and develop and provide technically superior, proven products that deliver precise, cost-effective, high-quality capabilities.
Our ability to use net operating losses to offset future taxable income might be subject to limitations.
For the period ended 12/31/2025, the Company had federal and states net operating loss carryforwards of approximately $34.8M and $36.8M respectively. Of the federal amount, $14.0 have a limited carryforward period and will begin to expire in 2029 the remaining $20.8M will have an indefinite carryforward period. Of the state post-apportioned amount, $14.1M have a limited carryforward period and will begin to expire in 2038; the remaining $22.7 will have an indefinite carryforward period.
The Company has $732,880 of Federal, R&D ax credit carryforwards as of December 31, 2025.
In accordance with Section 382 and Section 383, utilization of the NOL and tax credit carryforwards may be subject to limitations based on prior or future ownership changes.
Additionally, after weighing up all available positive and negative evidence for the period ending 12/31/2025, the Company has recorded a full valuation allowance.
On July 4th, 2025, the President signed into law significant federal tax legislation, H.R.1 (the “Tax Reform Act of 2025”). The legislation includes numerous changes to U.S. corporate income tax law, including but not limited to permanent 100% bonus depreciation for qualified property, immediate expensing of domestic research and experimental expenditures, modifications to the limitation on business interest expense, increased Section 179 expensing limits, changes to the international tax regime, and expanded limitations on the deductibility of executive compensation under IRC Section 162(m). Most provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions.
The Company has not recognized any signifcnt impact from the change in the tax law.
Risks Related to the Development and Regulatory Approval of Our Product Candidates
Clinical-stage biopharmaceutical companies with product candidates in clinical development face a wide range of challenging activities which might entail substantial risk.
We are a clinical-stage biopharmaceutical company with a lead product candidate in clinical development. The success of our lead product candidate will depend on several factors, including the following:
designing, conducting and successfully completing preclinical development activities, including preclinical efficacy and IND-enabling studies, for our lead product candidate or product candidates that we might, in the future, in-license or acquire;
designing, conducting and completing clinical trials with positive results for our lead product candidate;
receipt of regulatory approvals from applicable authorities;
obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our lead product candidate;
making arrangements with third party manufacturers, receiving regulatory approval of our manufacturing processes and our third-party manufacturers’ facilities from applicable regulatory authorities and ensuring adequate supply of drug product;
manufacturing our lead product candidate at an acceptable cost;
effectively launching commercial sales of our lead product candidate, if approved, whether alone or in collaboration with others;
achieving acceptance of our lead product candidate, if approved, by patients, the medical community and third-party payors;
effectively competing with other therapies;
if our lead product candidate is approved, obtaining and maintaining coverage and adequate reimbursement by third party payors, including government payors, for our lead product candidate;
complying with all applicable regulatory requirements, including FDA current Good Clinical Practices (“GCP”), Current Good Manufacturing Practices (“CGMP”), and standards, rules and regulations governing promotional and other marketing activities;
maintaining a continued acceptable safety profile of the lead product candidate during development and following approval.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully develop and commercialize our lead product candidate, which could materially harm our business.
We might find it difficult to enroll patients in our clinical trials which could delay or prevent the start of clinical trials for our product candidate.
Identifying and qualifying patients to participate in clinical trials of our lead product candidate is essential to our success. The timing of our clinical trials depends in part on the rate at which we can recruit patients to participate in clinical trials of our lead product candidate, and we might experience delays in our clinical trials if we encounter difficulties in enrollment. If we experience delays in our clinical trials, the timeline for obtaining regulatory approval of our lead product candidate will most likely be delayed.
Many factors might affect our ability to identify, enroll and maintain qualified patients, including the following:
eligibility criteria of our ongoing and planned clinical trials with specific characteristics appropriate for inclusion in our clinical trials;
design of the clinical trial;
size and nature of the patient population;
patients’ perceptions as to risks and benefits of the lead product candidate under study and the participation in a clinical trial generally in relation to other available therapies, including any new drugs that might be approved for the indications we are investigating;
the availability and efficacy of competing therapies and clinical trials;
pendency of other trials underway in the same patient population;
willingness of physicians to participate in our planned clinical trials;
severity of the disease under investigation;
proximity of patients to clinical sites;
patients who are noncompliant or do not otherwise complete the trials; and
issues with a contract research organization (a “CRO”) and/or with other vendors that are involved with our clinical trials.
We might not be able to initiate or continue to support clinical trials of LB-100, our lead product candidate, for one or more indications, or any future product candidates if we are unable to locate and enroll a sufficient number of eligible participants in these trials as required by the FDA or one or more other regulatory authorities. Even if we are able to enroll a sufficient number of patients in our clinical trials, if the pace of enrollment is slower than we expect, the development costs for our lead product candidate might increase and the completion of our trials might be delayed or our trials could become too expensive to complete.
If we experience delays in the completion of, or termination of, any clinical trials of our lead product candidate, the commercial prospects of our lead product candidate could be harmed, and our ability to generate product revenue from any of our product candidates could be delayed or prevented. In addition, any delays in completing our clinical trials would likely increase our overall costs, impair product candidate development and jeopardize our ability to obtain regulatory approval relative to our current plans. Any of these occurrences might harm our business, financial condition, and prospects significantly.
The results of preclinical studies or earlier clinical trials are not necessarily predictive of future results. Our lead product candidate in clinical trials, and any other product candidates that might advance into clinical trials, might not have favorable results in later clinical trials or receive regulatory approval.
Success in preclinical studies and early clinical trials does not ensure that later clinical trials will generate adequate data to demonstrate the efficacy and safety of an investigational drug. A number of companies in the pharmaceutical and biotechnology industries, including those with greater resources and experience than we have, have suffered significant setbacks in clinical trials, even after seeing promising results in earlier preclinical studies or clinical trials.
Despite the results reported in earlier preclinical studies or clinical trials for our lead product candidate, we do not know whether the clinical trials that we might conduct will demonstrate adequate efficacy and safety to result in regulatory approval to market our lead product candidate for a particular indication, in any particular jurisdiction. Efficacy data from prospectively designed trials might differ significantly from those obtained from retrospective subgroup analyses. If later-stage clinical trials do not produce favorable results, our ability to achieve regulatory approval for our lead product candidate might be adversely impacted. Even if we believe that we have adequate data to support an application for regulatory approval to market our lead product candidate or any future product candidates, the FDA or other regulatory authorities might not agree and might require that we conduct additional clinical trials.
Clinical drug development involves a lengthy and expensive process with an uncertain outcome.
Clinical testing is expensive and can take many years to complete, with the outcome inherently uncertain. Failure can occur at any time during the clinical trial process. Before obtaining approval from regulatory authorities for the sale of our lead product candidate, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our lead product candidate in humans. Prior to initiating clinical trials, a sponsor must complete extensive preclinical testing of a product candidate, including, in most cases, preclinical efficacy experiments as well as IND-enabling toxicology studies. These experiments and studies might be time-consuming and expensive to complete. The necessary preclinical testing might not be completed successfully for a preclinical product candidate and a potentially promising product candidate might therefore never be tested in humans. Once it commences, clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials might not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. We might experience numerous unforeseen events during drug development that could delay or prevent our ability to receive marketing approval or commercialize our lead product candidate. In particular, clinical trials of our lead product candidate might produce inconclusive or negative results. We have limited data regarding the safety, tolerability and efficacy of our lead product candidate. Clinical trials also require the review and oversight of an institutional review board (“IRB”). An inability or delay in obtaining IRB approval could prevent or delay the initiation and completion of clinical trials, and the FDA might decide not to consider any data or information derived from a clinical investigation not subject to initial and continuing IRB review and approval.
We might experience delays in our ongoing or future clinical trials, and we do not know whether planned clinical trials will begin or enroll subjects on time, will need to be redesigned or will be completed on schedule, if at all. There can be no assurance that the FDA or another regulatory agency will not put clinical trials of our lead product candidate on hold in the future. Clinical trials might be delayed, suspended or prematurely terminated for a variety of reasons, such as:
delay or failure in reaching agreement with the FDA or a foreign regulatory authority on a clinical trial design that we are able to execute;
delay or failure in obtaining authorization to commence a trial or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a trial;
delay or failure in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
delay or failure in obtaining IRB approval or the approval of other reviewing entities, including comparable foreign regulatory authorities, to conduct a clinical trial at each site;
withdrawal of clinical trial sites from our clinical trials or the ineligibility of a site to participate in our clinical trials;
delay or failure in recruiting and enrolling suitable subjects to participate in a trial;
delay or failure in subjects completing a trial or returning for post-treatment follow-up;
clinical sites and investigators deviating from trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial;
inability to identify and maintain a sufficient number of trial sites, many of which may already be engaged in other clinical trial programs, including some that may be for the same indication;
failure of our third party clinical trial managers, CROs, clinical trial sites, contracted laboratories or other third party vendors to satisfy their contractual duties, meet expected deadlines or return trustworthy data;
delay or failure in adding new trial sites;
interim results or data that are ambiguous or negative or are inconsistent with earlier results or data;
alteration of trial design necessitated by re-evaluation of design assumptions based upon observed data;
feedback from the FDA, the IRB or a foreign regulatory authority, or results from earlier stage or concurrent preclinical studies and clinical trials, that might require modification to the protocol for a trial;
a decision by the FDA, the IRB, a foreign regulatory authority, or us to suspend or terminate clinical trials at any time for safety issues or for any other reason;
unacceptable risk-benefit profile, unforeseen safety issues or adverse side effects;
failure to demonstrate a benefit from using a product candidate;
difficulties in manufacturing, obtaining, from one or more third parties, or qualifying sufficient quantities of a product candidate to start or to use in clinical trials;
lack of adequate funding to continue a trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional studies or increased expenses associated with the services of our CROs and other third parties; or
changes in governmental regulations or administrative actions or lack of adequate funding to continue a clinical trial.
If we experience delays in the completion or termination of any clinical trial of our lead product candidate, the approval and commercial prospects of our lead product candidate will be harmed, delaying our ability to generate product revenues from such product candidate and our costs will most likely increase. The required regulatory approvals may also be delayed, thereby jeopardizing our ability to commence product sales and generate revenues and the period of commercial exclusivity for our intended product may be shortened. Regulatory approval of our lead product candidate may be denied for the same reasons that caused the delay.
Risks associated with operating in foreign countries could materially adversely affect our product development.
We are currently conducting clinical trials in Spain and the Netherlands. Consequently, we will also be subject to risks related to operating in foreign countries. Risks associated with conducting operations in foreign countries include:
differing regulatory requirements for drug approvals and regulation of approved drugs in foreign countries;
more stringent privacy requirements for data to be supplied to our operations in the United States, but generated outside of the United States, e.g., General Data Protection Regulation in the European Union;
unexpected changes in tariffs, trade barriers and regulatory requirements;
economic weakness, including inflation, or political instability in particular foreign countries, economies or markets;
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
foreign taxes, including withholding or payroll taxes;
differing payor reimbursement regimes, governmental payors or patient self-pay systems and price controls;
foreign currency fluctuations, which could result in increased operating expenses or reduced revenues, and other obligations incident to doing business or operating in another country;
workforce uncertainty in countries where labor unrest is more common than in the United States;
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and
business interruptions resulting from geopolitical actions or events, including civil or political unrest (such as the ongoing conflict between Ukraine and Russia), sanctions, war and terrorism.
Our current and future product candidates, the methods used to deliver them or their dosage levels may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following any regulatory approval.
Undesirable side effects caused by our current or future product candidates, their delivery methods or dosage levels could cause us, our collaborators or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval or termination of clinical trials by the FDA or other foreign regulatory authorities; or an IRB, that approves and, monitors biomedical research to protect the rights and welfare of human subjects. As a result of safety or toxicity issues that we might experience in our clinical trials, or negative or inconclusive results from the clinical trials of others for drug candidates that might be similar to our own, we might not receive approval to market our current lead product candidate or any product candidates we may pursue, which could prevent us from ever generating revenues or achieving profitability. Results of our trials could reveal an unacceptably high severity or incidence of side effects. In such an event, our trials or those or our collaborators could be suspended or terminated, and the FDA or foreign regulatory authorities could order us or our collaborators to cease further development of or deny approval of our current or any future product candidates for any or all targeted indications. Any drug-related side effects could also affect patient recruitment or the ability of enrolled subjects to complete clinical trials or result in potential product liability claims. Any of these occurrences could have a material adverse effect on our business, results of operations, financial condition, cash flows and future prospects.
Additionally, if our lead product candidate receives regulatory approval, and we or others later identify undesirable side effects caused by such product, a number of potentially significant negative consequences could result, including that:
we may be forced to suspend marketing of such product;
regulatory authorities might withdraw their approvals of such product;
regulatory authorities might require additional warnings on the label that could diminish the usage or otherwise limit the commercial success of such product;
we may be required to conduct post-marketing studies;
we may be required to change the way the product is administered;
we could be sued and held liable for harm caused to subjects or patients; and
our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of our lead product candidate, if approved.
Our product development program might not uncover all possible adverse events that patients who take our lead product candidate may experience. The number of subjects exposed to our lead product candidate and the average exposure time in the clinical development program might be inadequate to detect rare adverse events or chance findings that might only be detected once the product is administered to more patients and for greater periods of time.
Clinical trials by their nature utilize a sample of the potential patient population. However, with a limited number of subjects and limited duration of exposure, we cannot be fully assured that rare and severe side effects of our lead product candidate will be uncovered. Such rare and severe side effects might only be uncovered with a significantly larger number of patients exposed to our lead product candidate. If such safety problems occur or are identified after our lead product candidate reaches the market, the FDA might require that we amend the labeling of the product or recall the product, or might even withdraw approval for the product.
There is a risk that one or more of our clinical trials could be placed on hold by regulatory authorities due to serious adverse events (SAEs) related to our drug candidate or to another company’s drug used in combination in one of our clinical trials.
It is possible that the SAEs could be attributable to our drug candidate and could include, but not be limited to, unexpected severe side effects, treatment-related deaths, or long-term health complications. A dose given could result in non-tolerable adverse events defined as dose-limiting toxicity (DLT). When two DLTs occur at the same dose-level that dose-level is considered too high and unsafe. Further treatment is only allowed at lower dose-levels that have previously been found safe.
The principal investigator of the colorectal study testing LB-100 in combination with atezolizumab (Roche PD-L1 inhibitor) is currently investigating two SAEs observed in the clinical trial that was launched in August 2024. The Institutional Review Board of the Netherlands Cancer Institute has put the colorectal cancer study on hold, as more fully discussed at “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Specific Risks Associated with the Company’s Business Activities – Serious Adverse Events”.
Our future success is dependent on the regulatory approval of our lead product candidate.
Our business is dependent on our ability to obtain regulatory approval for our lead product candidate in a timely manner. We cannot commercialize our lead product candidate in the United States without first obtaining regulatory approval for the product from the FDA. Similarly, we cannot commercialize our lead product candidate outside of the United States without obtaining regulatory approval from one or more foreign regulatory authorities. Before obtaining regulatory approvals for the commercial sale of our lead product candidate for a target indication, we must demonstrate with substantial evidence gathered in preclinical studies and clinical trials, that the product candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate with respect to such product candidate.
The time required to obtain approval by the FDA and foreign regulatory authorities is unpredictable but typically takes many years following the commencement of preclinical studies and clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.
Even if a product candidate were to successfully obtain approval from the FDA and one or more foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements. Also, any regulatory approval of our lead product candidate or any future product candidates we may pursue, once obtained, may be withdrawn.
Our lead product candidate and future product candidates could fail to receive regulatory approval from the FDA.
We have not obtained regulatory approval for our lead product candidate, and it is possible that our lead product candidate or any future product candidates will not obtain regulatory approval, for many reasons, including:
disagreement with the regulatory authorities regarding the scope, design or implementation of our clinical trials;
failure to demonstrate that a product candidate is safe and effective for our proposed indication;
failure of clinical trials to meet the level of statistical significance required for approval;
failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
disagreement with our interpretation of data from preclinical studies or clinical trials;
the insufficiency of data collected from clinical trials of our lead product candidate to support the submission and filing of an NDA or other submission or to obtain regulatory approval;
failure to obtain approval of our manufacturing processes or facilities of third party manufacturers with whom we contract for clinical and commercial supplies or our own manufacturing facility; or
changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.
The FDA or a foreign regulatory authority might require more information, including additional preclinical or clinical data, to support approval or additional studies, which might delay or prevent approval or our commercialization plans, or we might decide to abandon the development program. The FDA or a foreign regulatory authority might also require the manufacture of a new lead product candidate in accordance with new or revised standards. If we were to obtain approval, regulatory authorities might approve our lead product candidate and any future product candidates we might pursue for fewer or more limited indications than we request (including failing to approve the most commercially promising indications), might grant approval contingent on the performance of costly post-marketing clinical trials, or might approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.
If we are unable to obtain regulatory approval for our lead product candidate in one or more jurisdictions, or if any approval contains significant limitations, we might not be able to obtain sufficient funding to continue the development of that product or generate revenues attributable to that product candidate.
Failure to obtain regulatory approval in international jurisdictions would prevent our lead product candidate from being marketed abroad.
In addition to regulations in the United States, to market and sell our lead product candidate in the European Union, in the United Kingdom, in many Asian countries and in other jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval as well as risks attributable to the satisfaction of local regulations in foreign jurisdictions. The approval procedure varies among countries and can require additional data or involve additional testing. The time required to obtain foreign approval may differ substantially from that required to obtain FDA approval. We might not be able to obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Clinical trials accepted in one country might not be accepted by regulatory authorities in other countries. In addition, many countries outside the United States require that a product be approved for reimbursement before it can be approved for sale in that country. A product candidate that has been approved for sale in a particular country might not receive reimbursement approval in that country.
We might not be able to file for regulatory approvals and might not receive necessary approvals to commercialize our intended product in any market. If we are unable to obtain approval of any of our current product candidate or any future product candidates we might pursue by regulatory authorities in the European Union, United Kingdom, Asia or elsewhere, the commercial prospects of that product candidate might be significantly diminished, our business prospects could decline and this could materially adversely affect our business, results of operations and financial condition.
Even if our current primary product candidate received regulatory approval, it might still face future development and regulatory difficulties.
Even if we obtain regulatory approval for our lead product candidate, LB-100, that approval would be subject to ongoing requirements by the FDA and foreign regulatory authorities governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, adverse event reporting, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-marketing information. These requirements can include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance by us and/or our CMOs and CROs for any post-approval clinical trials that we or our collaborators might conduct. The safety profile of any product will continue to be closely monitored by the FDA and foreign regulatory authorities after approval. If the FDA or foreign regulatory authorities become aware of new safety information after approval of our lead product candidate, they might require labeling changes or establishment of a risk evaluation and mitigation strategy, impose significant restrictions on such product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.
In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with CGMP, GCP, and other regulations. If we, a collaborator or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency might impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If we, our lead product candidate or the manufacturing facilities for our lead product candidate fail to comply with applicable regulatory requirements, a regulatory agency might:
issue warning letters or untitled letters;
mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;
require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;
seek an injunction or impose civil or criminal penalties or monetary fines;
suspend or withdraw regulatory approval;
suspend any ongoing clinical trials;
refuse to approve pending applications or supplements to applications filed by us or a collaborator;
suspend or impose restrictions on operations, including costly new manufacturing requirements; or
seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall.
The occurrence of any event or penalty described above might inhibit our ability to successfully commercialize our intended product and generate revenues.
Advertising and promotion of any product candidate that obtains approval in the United States is heavily scrutinized by the FDA, the Department of Justice, the Office of Inspector General of Health and Human Services, state attorneys general, members of Congress and the public. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. Additionally, advertising and promotion of any product candidate that obtains approval outside of the United States is heavily scrutinized by foreign regulatory authorities. Violations, including actual or alleged promotion of our intended product for unapproved or off-label uses, are subject to enforcement letters, inquiries and investigations, and civil and criminal sanctions by the FDA, as well as prosecution under the federal False Claims Act. Any actual or alleged failure to comply with labeling and promotion requirements can have a negative impact on our business.
Risks Related to Our Dependence on Third Parties
We depend on certain key scientific personnel for our success who do not work full time for us. The loss of any such personnel could a dversely affect our business, financial condition and results of operations.
Effective September 26, 2023, Bastiaan van der Baan, who had served as a director of the Company since June 17, 2022, replaced our founder, John S. Kovach, as President and Chief Executive Officer. Dr. Kovach passed away on October 5, 2023. Effective October 6, 2023, Mr. van der Baan was appointed Chairman of the Board of Directors.
Effective June 16, 2025, Mr. van der Baan resigned as Chairman of the Board and Chief Executive Officer. Mr. van der Baan remained President and a member of the Board of Directors and also assumed the role of Chief Scientific Officer. At that time, Geordan Pursglove was appointed Chairman of the Board of Directors and Chief Executive Officer.
Effective September 1, 2025, Mr. van der Baan resigned from the Board of Directors and resigned as President of the Company.
Although our success depended, in part, on the continued availability and contributions of Dr. Kovach, we were able to replace Dr. Kovach on a timely basis with a qualified replacement in Mr. van der Baan and subsequently Mr. Pursglove. Furthermore, recruiting and retaining qualified scientific personnel to perform future research and development work is critical to our success. Our inability to attract or retain qualified personnel or advisors in the future could significantly weaken our management, harm our ability to compete effectively, and harm our business. The competition for qualified personnel in the pharmaceutical field is intense and, as a result, we might be unable to attract and retain qualified personnel necessary for the development of our business.
Additionally, we replaced our previous Chief Medical Officer, Dr. James S. Miser, with Dr. Jan Schellens during 2024, and we reallocated the responsibilities of Eric J. Forman, our Vice President and Chief Operating Officer, who resigned on December 31, 2024. Effective as of July 31, 2025, the Company agreed to accept the resignation of Dr. Schellens and to terminate his consulting agreement to allow Dr. Schellens to pursue employment opportunities. We believe that Mr. Van der Baan is capable of managing the Company’s research and clinical activities.
Our business may suffer if we are not able to hire and retain qualified personnel.
Our future success depends, to a great degree, on our ability to retain, attract, expand, integrate and train our management team and other key personnel, such as qualified engineering, service, sales, marketing and other staff. We compete for key personnel with other clinical-stage pharmaceutical and med-tech companies, as well as universities and research institutions. As we continue to grow our software revenues, we face intense competition for personnel from software and technology companies. Because this competition is intense, compensation-related costs could increase significantly if the supply of qualified personnel decreases or demand increases. If we are unable to hire and train qualified personnel, we may not be able to maintain or expand our business. In addition, some of our executive officers have had long careers at our company. If these executives retire or leave, and we are unable to locate qualified or suitable replacements in a timely manner, our business could be adversely affected.
We expect to rely heavily on third parties for the conduct of clinical trials of our product candidates. If these clinical trials are not successful, or if we or our collaborators are not able to obtain the necessary regulatory approvals, we will not be able to commercialize our product candidates.
In order to obtain regulatory approval for the commercial sale of our product candidates, we or our collaborators will be required to complete extensive preclinical studies as well as clinical trials in humans to demonstrate to the FDA and foreign regulatory authorities that our product candidates are safe and effective.
We expect to rely on collaborative partners and CROs for their performance and management of clinical trials of our product candidates.
Our intended products under development might not be effective in treating any of our targeted disorders or might prove to have undesirable or unintended side effects, toxicities or other characteristics that might prevent or limit their commercial use. Institutional review boards or regulators, including the FDA, might hold, suspend or terminate our clinical research or the clinical trials of our product candidates for various reasons, including non-compliance with regulatory requirements or if, in their opinion, the participating subjects are being exposed to unacceptable health risks. Additionally, failure of third parties conducting or overseeing the operation of the clinical trials to perform their contractual or regulatory obligations in a timely fashion could delay the clinical trials. Failure of clinical trials can occur at any stage. Any of these events would adversely affect our ability to market a product candidate.
The development process necessary to obtain regulatory approval is lengthy, complex and costly. If we or our collaborative partners do not obtain necessary regulatory approvals, then our business would not be successful, and the market price of our common stock could decline substantially.
To the extent that we, or our collaborative partners, are able to successfully advance a product candidate through the clinic, we, or such partner, will be required to obtain regulatory approval prior to marketing and selling such product. The process of obtaining FDA and other required regulatory approvals is costly and lengthy. The time required for FDA and other approvals is uncertain and can typically take several or many years, depending on the complexity and novelty of the product.
Any regulatory approval to market a product might be subject to limitations on the indicated uses for which we, or our collaborative partners, may market the product. These limitations might restrict the size of the market for the product and affect reimbursement by third party payors. In addition, regulatory agencies might not grant approvals on a timely basis or might revoke or significantly modify previously granted approvals.
We, or our collaborative partners, also are subject to numerous foreign regulatory requirements governing the manufacturing and marketing of our potential future products outside of the United States. The approval procedure varies among countries, additional testing might be required in some jurisdictions, and the time required to obtain foreign approvals often differs from that required to obtain FDA approvals. Moreover, approval by the FDA does not ensure approval by regulatory authorities in other countries, and vice versa.
As a result of these factors, we, or our collaborative partners, might not successfully complete clinical trials in the time periods estimated, if at all. Moreover, if we, or our collaborative partners, incur unanticipated costs and/or delays in development programs or if we fail to successfully develop and commercialize products based upon our technologies, we might not be able to generate significant operating revenues or sustainable profitability, as a result of which our stock price could decline substantially.
Business interruptions could adversely affect future operations, revenues, and financial conditions, and might increase our costs and expenses.
Our operations, and those of our directors, advisors, contractors, consultants, CROs, and collaborators, could be adversely affected by earthquakes, floods, hurricanes, typhoons, extreme weather conditions, fires, water shortages, power failures, business systems failures, medical epidemics and other natural and man-made disaster or business interruptions. Our phones, electronic devices and computer systems and those of our directors, advisors, contractors, consultants, CROs, and collaborators are vulnerable to damages, theft and accidental loss, negligence, unauthorized access, terrorism, war, electronic and telecommunications failures, and other natural and man-made disasters. Operating as a virtual company, our employees conduct business outside of our headquarters and leased or owned facilities. These locations might be subject to additional security and other risk factors due to the limited control of our employees. If such an event as described above were to occur in the future, it might cause interruptions in our operations, delay research and development programs, clinical trials, regulatory activities, manufacturing and quality assurance activities, sales and marketing activities, hiring, training of employees and persons within associated third parties, and other business activities. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
Likewise, we will rely on third parties to manufacture our product candidates and conduct clinical trials, and similar events as those described previously relating to their business systems, equipment and facilities could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or misappropriation or disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our lead product candidate could be delayed or altogether terminated.
Our failure to find third party collaborators to assist or share in the costs of product development could materially harm our business, financial condition or results of operations.
Our strategy for the development and commercialization of our proprietary product candidates might include the formation of collaborative arrangements with third parties. We have entered into a number of agreements with third parties as described elsewhere in this document. Existing and future collaborators have significant discretion in determining the efforts and resources they apply and might not perform their obligations as expected. Potential third party collaborators include biopharmaceutical, pharmaceutical and biotechnology companies, academic institutions, government agencies and other entities. Third party collaborators may assist us in:
funding research, preclinical development, clinical trials and manufacturing;
seeking and obtaining regulatory approvals; and
successfully commercializing any future product candidates.
If we are not able to establish further collaboration agreements, we might be required to undertake product development and commercialization at our own expense. Such an undertaking might limit the number of product candidates that we will be able to develop, significantly increase our capital requirements and place additional strain on our internal resources. Our failure to enter into additional collaborations could materially harm our business, financial condition and results of operations.
In addition, our dependence on licensing, collaboration and other agreements with third parties might subject us to a number of risks. If we fail to comply with our obligations under these agreements, of if one or more third parties allege that we fail to comply, then one or more third parties might terminate the agreements. In this event, we might not be able to develop, manufacture or market our product candidates. This would materially adversely affect our business prospects.
These agreements might not be on terms that prove favorable to us and might require us to relinquish certain rights in our product candidates. To the extent we agree to work exclusively with one collaborator in a particular territory, research area, or therapeutic field of use, our opportunities to collaborate with other entities could be curtailed. Lengthy negotiations with potential new collaborators might lead to delays in the research, development or commercialization of product candidates. The decision by our collaborators to pursue alternative technologies or the failure of our collaborators to develop or commercialize successfully any product candidate to which they have obtained rights from us could materially harm our business, financial condition and results of operations.
In addition, our agreements might not be assignable by us without the consent of the respective other party or parties, which might limit or delay our ability to consummate transactions, adversely impact the value of those transactions, or limit our ability to pursue research, development or other activities.
We might be subject to claims by third parties asserting that our employees, consultants, collaborators contractors or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.
Our employees, consultants, collaborators or contractors have been previously employed at universities or third-party pharmaceutical companies, including our actual or possible competitors, and received confidential and proprietary information from them. Although we try to ensure that our employees, consultants, collaborators or contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these employees, consultants, collaborators or contractors, or we, have used or disclosed intellectual property, including trade secrets or other proprietary information, of any former employer. We might also be subject to claims that former employers or other third parties have an ownership interest in our patents. Litigation may be necessary to defend against these claims. We might not be successful in defending these claims, and if we fail in defending any such claims, in addition to paying monetary damages, we could lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Even if we are successful, litigation could result in substantial cost and reputational loss and be a distraction to our business.
In addition, while it is our policy to require our employees, consultants, collaborators and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we might be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Such assignment agreements might not be self-executing or may be breached, and we might be forced to bring claims against third parties or defend claims that third parties might bring against us, to determine the ownership of what we regard as our intellectual property.
The financial results of our Liora LiGHT system business may be unpredictable and if our proton therapy customers are unsuccessful, our financial results will be adversely affected.
The success of our Liora LiGHT system business will depend upon widespread awareness, acceptance and adoption by the oncology market of proton therapy systems for the treatment of cancer. This technology is expensive and has not been widely adopted. Future developments may not be adopted as quickly as technological developments in more traditional areas of radiation therapy.
Our estimates as to future operating results include certain assumptions about the future results of Liora LiGHT system’ business. If we are incorrect in our assumptions, our financial results could be materially and adversely affected. It is possible that Liora LiGHT system could perform significantly below our expectations due to a number of factors that cannot be predicted with certainty, including future market conditions, market acceptance of proton therapy and reimbursement rates. These factors could adversely impact Liora LiGHT system’s ability to meet its projected results.
Our Liora LiGHT system business may subject us to increased liability.
Our Liora LiGHT system’s business may subject us to increased liability. For example, because proton therapy projects are large in scale and require detailed project planning, failure to deliver or delays in delivering on our commitments could result in greater than expected liabilities, as we could be required to indemnify business partners and customers for losses suffered or incurred if we are unable to deliver our products in accordance with the terms of customer contracts. Additionally, customers have in the past requested and may in the future request that the systems vendor, as the primary technology provider, provide guarantees for and suffer penalties in relation to the overall construction project. Since the cost of a proton therapy center project is typically between $25 million and $200 million, the amount of potential liability and potential for financial loss would likely be higher than the levels historically assumed by us for our traditional radiation therapy business and may also exceed the project’s value. Insurance covering these contingencies may be unobtainable or expensive. If we cannot reasonably mitigate or eliminate these contingencies or risks, our ability to competitively bid upon proton center projects will be negatively impacted or we may be required to assume material amounts of potential liability, all of which may have adverse consequences to us.
Risks Related to Our Intellectual Property
We cannot be certain we will be able to obtain patent protection to protect our product candidates and technology.
Our patents and patent applications are owned solely by our wholly owned subsidiary, Lixte Biotechnology, Inc., except in several instances where they are jointly owned with one of our collaborators.
The patent prosecution process is expensive and time-consuming, and we might not be able to file or prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research or development before it is too late to obtain patent protection. Therefore, these patents and applications might not be prosecuted and enforced in a manner consistent with the best interests of our business.
The patent position of pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries might not protect our rights to the same extent as the laws of the United States. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our solely owned or jointly owned patents or pending patent applications, or that we were the first inventors to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications might not result in patents being issued that protect our technology or products, in whole or in part, or that effectively prevent others from commercializing competitive technologies and products. Changes in the patent laws or their interpretation by courts or patent offices might diminish the value of our patents or patent applications or narrow their scope.
The issuance of a patent is not conclusive as to its inventorship, scope, term, validity or enforceability, and our solely or jointly owned patents might be challenged in a U.S. or non-U.S. court or patent office. Such challenges might result in loss of exclusivity 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 research, development, testing or regulatory review of product candidates, patents protecting such candidates might expire before or shortly after such candidates are approved or commercialized. As a result, our solely or jointly owned patents might not provide us with sufficient rights to exclude others from commercializing intended products similar or identical to ours.
We cannot be certain that all patents applied for will be issued. If a third party has also filed a patent application relating to an invention claimed by us, solely or jointly with one of our collaborators, we might be required to participate in an interference or derivation proceeding declared or instituted by the United States Patent and Trademark Office, which could result in substantial uncertainties and cost for us, even if the eventual outcome is favorable to us. The degree of future protection for our proprietary rights is uncertain. For example:
we, solely or jointly with our collaborators, might not have been the first to make the inventions covered by our pending or future patent applications;
we, solely or jointly with our collaborators, might not have been the first to file patent applications for these inventions;
others might independently develop identical, similar or alternative technologies;
it is possible that our patent applications will not result in an issued patent or patents, or that the scope of protection granted by any patents arising from our patent applications will be significantly narrower than expected;
we might be unaware of prior art that renders one or more of our patent applications unpatentable or one or more of our patents invalid;
a court might determine that we failed to disclose to a patent office prior art that we were aware of and that is material to patentability and, therefore, conclude that one or more of our patents are unenforceable;
any patents under which we hold rights might not cover commercially viable products, might not provide us with any competitive advantages or might be challenged by one or more third parties as being not infringed, being invalid, or being unenforceable under United States or foreign laws;
a court or patent office might determine that two or more of our patents claim patentably indistinct subject matter, which could adversely affect one or more of the patents’ term, validity or enforceability;
a court or patent office might determine that one or more patents issued to us in the future or under which we hold rights are invalid or unenforceable; or
we might develop additional proprietary technologies that are not patentable and which might not be adequately protected through trade secrets or know-how.
In addition, we solely or jointly own patents or patent applications in jurisdictions having, or that might in the future have, geopolitical disputes, including over sovereignty. We cannot guarantee that patents granted in these jurisdictions will be enforceable. An inability to enforce patents in these jurisdictions could have a material adverse effect on our business.
If we do not obtain patent term extension in the United States under the Hatch-Waxman Act or in foreign countries under similar legislation, our business might be materially harmed.
In the United States, the term of a patent that covers an FDA-approved drug, its method for use or method for manufacture, can be eligible for patent term extension. U.S. law provides a patent term extension of up to five years beyond the expiration of the patent for time during which the drug is under regulatory review. Patent term extension cannot extend the term of a patent beyond a total of 14 years from the date of regulatory approval; only one patent can be extended for the same regulatory review period; and the scope of a patent’s enforceability during a patent term extension is limited to the scope of FDA approval. There is no guarantee that the relevant agencies, including the United States Patent and Trademark Office (“USPTO”), will agree with our assessment of whether such extensions should be granted, and even if granted, the term of these extensions. We might not be granted patent term extension in the United States or in any foreign country because of, for example, expiration of our patents before obtaining regulatory approval, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the length of a patent term extension, as well as the scope of patent protection during any such extension, afforded by the governmental authority could be less than we request. If we are unable to obtain any patent term extension or if the term of any such extension is less than we request, our competitors might obtain approval of competing products following the expiration of our patent rights, and our business, financial condition, results of operations and prospects could be materially harmed.
It is possible that we will not obtain patent term extension under the Hatch-Waxman Act for a U.S. patent covering any of our product candidates that we may identify even where that patent is eligible for patent term extension, or if we obtain such an extension, it may be for a shorter period than we had sought.
If we fail to comply with our obligations in agreements under which we have licensed or, might license, intellectual property rights from third parties, or if we otherwise experience disruptions to our business relationships with our licensors, we could lose rights that are important to our business.
We have entered into, and might in the future enter into, one or more intellectual property license agreements that are important to our business. These license agreements might impose various diligence, milestone payment, royalty and other obligations on us. For example, we might be required to use commercially reasonable efforts to engage in various development and commercialization activities with respect to licensed products and might need to satisfy specified milestone and royalty payment obligations. If we fail to comply with any obligations under our agreements with any of these licensors, we might be subject to termination of the license agreement in whole or in part, increased financial obligations to our licensors or loss of exclusivity in a particular field or territory, in which case our ability to develop or commercialize products covered by the license agreement will be impaired.
In addition, disputes might arise regarding intellectual property subject to a license agreement, including:
the scope of rights granted under the license agreement and other interpretation-related issues;
whether our technology, product candidates or processes infringe intellectual property rights that are owned by the licensor, but that are not subject to the licensing agreement;
our diligence obligations under the license agreement and the activities that satisfy those obligations;
whether we are required to sublicense to a third-party rights that the license grants to us, but that we do not commercially pursue; and
the ownership of inventions, data and know-how resulting from joint creation or use of intellectual property by our licensors and us.
If disputes over intellectual property that we have licensed, or might in the future license, prevent or impair our ability to maintain our licensing arrangements on acceptable terms, we may be unable to successfully develop or commercialize the affected product candidates.
We might need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates. We may fail to obtain any of these licenses at a commercially reasonable cost or on commercially reasonable terms, if at all. Other companies might have a competitive advantage over us due to their larger size or cash resources or greater clinical development and commercialization capabilities. We might be unable to further develop or commercialize one or more of our product candidates, which could harm our business significantly.
We might infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increasing the costs of commercializing our product candidates.
Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. We cannot guarantee that our intended products or our product candidates, or manufacture or use of our intended products or our product candidates, will not infringe third party patents. Furthermore, a third party might claim that we are using without permission one or more inventions covered by the third party’s patent rights and might go to court to stop us from engaging in our normal operations and activities, including making, offering to sell or selling our product candidates. Still further a third party might go to court seeking judgment that our patents are invalid or unenforceable. These lawsuits are costly and could affect our results of operations and divert the attention of managerial and scientific personnel. Some of these third parties might be better capitalized and have more resources than us. There is a risk that a court would decide that we are infringing the third party’s patents and would order us to stop the activities covered by the patents. In that event, we might not have a viable way around the patent and might need to halt commercialization of the relevant product candidate. In addition, there is a risk that a court will order us to pay the other party damages for having violated the other party’s patents. There is also a risk that a court would decide that one or more of our patents are invalid or unenforceable. In addition, we might be obligated to indemnify our licensors and collaborators against intellectual property infringement claims brought by third parties, which could require us to expend additional resources. The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.
We cannot guarantee that we have identified all third-party patents or pending patent applications that are or might be necessary for the commercialization of our intended products and technologies in any jurisdiction. Patent applications in the United States and elsewhere are not published until approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our technologies and intended products could have been filed by others without our knowledge.
Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies or intended products. The scope of a patent claim is determined by the interpretation of the law, the words of a patent claim, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending patent application may be incorrect, which may negatively impact our ability to market our intended products. We might incorrectly determine that our technologies or intended products are not covered by a third-party patent or might incorrectly predict whether a third party’s pending patent application will issue with claims of relevant scope. Our determination of the expiration date of any patent in the United States or abroad that we consider relevant might be incorrect, and we might incorrectly conclude that a third-party patent does not cover our technology or intended products, is invalid or is unenforceable. Our inability to identify or correctly interpret relevant patents might negatively impact our ability to develop or market our technologies or intended products. If we fail to identify or correctly interpret relevant patents, we might be subject to infringement claims. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we fail in any such dispute, in addition to being liable for damages, we might be temporarily or permanently enjoined or otherwise prohibited from commercializing any of technologies or intended products that are held to be infringing. We might, if possible, also be forced to redesign intended products or product formulations so that we no longer infringe the third-party intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.
As the pharmaceutical or biotechnology industry expands and more patents are issued, the risk increases that our product candidates or intended products give rise to claims of infringement of the patent rights of others. There may be third party patents of which we are currently unaware with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. If we are sued for patent infringement, we would need to demonstrate that our products or methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid or unenforceable, negotiate and obtain a license under reasonable terms to us or discontinue performing the allegedly infringing activities. We might not be able to do any of these. Proving invalidity is difficult. For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings, we might incur substantial costs and divert management’s time and attention in pursuing these proceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we might be required to seek a license, which might not be available, and then we will have to defend an infringement action, challenge the validity of the patents in the USPTO or in court, or discontinue performing the allegedly infringing activities. Patent litigation is costly and time consuming. We might not have sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or fail to have infringed patents declared invalid or unenforceable, we might incur substantial monetary damages, encounter significant delays in bringing our product candidates to market and be precluded from manufacturing or selling our product candidates.
We cannot be certain that others have not filed patent applications for technology covered by our pending applications, that we were the first to invent the technology or that we were the first to file patent applications covering our technology, because:
some patent applications in the United States are maintained in secrecy until the patents are issued;
patent applications in the United States are typically not published until 18 months after their earliest claimed priority date; and
publications in scientific literature often lag behind actual discoveries.
Our competitors might have filed, and might in the future file, patent applications covering technology similar or identical to ours. Any such patent applications might dominate our patent applications, which could further require us to obtain rights to issued patents covering such technologies. If another party has filed US patent applications that cover inventions similar or identical to ours and claim priority to any applications filed prior to the priority dates of our applications, we might have to participate in an interference proceeding declared or a derivation proceed instituted by the USPTO to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful if the other party had independently arrived at the same or similar inventions before us, possibly resulting in a loss of our U.S. patent position with respect to such inventions. Other countries might have similar laws that permit secrecy of patent applications. Either way, the third party’s patents or patent applications might be entitled to priority over our applications in such jurisdictions.
Some of our competitors might be able to sustain the costs of a patent challenge more effectively than we can because they have substantially greater resources. In addition, uncertainties regarding the outcome of the challenge could have a material adverse effect on our ability to raise the funds necessary to continue our operations.
We might be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed alleged trade secrets of one or more third parties.
As is common in the biotechnology and pharmaceutical industries, we employ, and might employ in the future, individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for us, we might be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation might be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we could lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
Our intellectual property might not be sufficient to protect our intended products from competition, which might negatively affect our business as well as limit our partnership or acquisition appeal.
We might be subject to competition despite the existence of intellectual property we license or own. We can give no assurance that our intellectual property claims will be sufficient to prevent third parties from designing around patents we own or license and developing and commercializing competitive products. The existence of competitive products that avoid our intellectual property could materially adversely affect our operating results and financial condition. Furthermore, any actual or perceived limitations, in our intellectual property might lessen the interest of third parties to partner, collaborate or otherwise transact with us, if third parties perceive a higher than acceptable risk to commercialization of our intended products or future products.
Our approach includes filing patent applications covering combination therapy with known, studied and/or marketed drugs. Although the protection afforded by our patent applications might be significant, when looking at our patents’ ability to block competition, the protection offered by our patents might be, to some extent, more limited than protection provided by patents claiming a composition of matter that is entirely new and previously unknown. If a competitor were able to successfully design around any combination therapy patents we have or might have in the future, our business and competitive advantage could be significantly affected.
We might elect to sue a third party, or otherwise make a claim, alleging infringement or other violation of patents, trademarks, trade dress, copyrights, trade secrets, domain names or other intellectual property rights that we either own or license. We might alternatively elect to sue a third party, or otherwise make a claim, alleging that we don’t infringe a third party’s patents or that the third party’s patents are invalid or unenforceable. Any claims that we assert against a third party could provoke the third party to assert one or more counterclaims against us, for example, alleging that we infringe their patents. In addition, in a patent infringement proceeding, a court might decide that a patent of ours is invalid or unenforceable, in whole or in part; construe the patent’s claims narrowly; or refuse to stop the other party from using the technology at issue. Any litigation proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly. Even if we prevail in a lawsuit, a court might not award remedies that sufficiently compensate us for our losses.
If we do not prevail in either type of litigation, we might be subject to:
paying monetary damages related to the legal expenses of the third party;
facing additional competition that might have a significant adverse effect on our intended-product pricing, market share, business operations, financial condition, and the commercial viability of our intended products; and
restructuring our company or delaying or terminating select business opportunities, including, but not limited to, research and development, clinical trials, and commercialization activities, due to a potential deterioration of our financial condition or market competitiveness.
A third party might also challenge the validity, enforceability or scope of the intellectual property rights that we license or own, and the result of these challenges might narrow the scope or claims of or invalidate patents that are integral to our product candidates in the future. There can be no assurance that we will be able to successfully defend patents we own in an action against third parties due to the unpredictability of litigation and the high costs associated with intellectual property litigation, among other factors.
The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws or rules and regulations of the United States, and many companies have encountered significant difficulties in protecting and defending such rights in non-U.S. jurisdictions. The legal systems of some countries are less supportive of enforcement of patents, trade secrets and other intellectual property protection, than the United States. This could make it difficult for us to enforce our patents or market competing products outside the United States, in violation of our proprietary rights generally. Proceedings to enforce our patent rights in non-U.S. jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We might not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, might not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights in all jurisdictions where we have the rights might be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. Furthermore, while we seek to protect our intellectual property rights in significant markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we might wish to market our intended products or our product candidates. Accordingly, our efforts to protect our intellectual property rights in such countries might be inadequate, which might have an adverse effect on our ability to successfully commercialize our product candidates in all of our expected significant foreign markets. If we or our licensors encounter difficulties in protecting, or are otherwise precluded from effectively protecting, the intellectual property rights important for our business in such jurisdictions, the value of these rights might be diminished, and we might face additional competition from others in those jurisdictions.
Changes to patent law, for example the Leahy-Smith America Invests Act, AIA or Leahy-Smith Act, of 2011 and the Patent Reform Act of 2009 and other future article of legislation in the U.S., might substantially change the regulations and procedures surrounding patent applications, issuance of patents, prosecution of patents, challenges to patent validity, and patent enforcement. We can give no assurance that our patents or those of our licensor(s) can be defended or will protect us against future intellectual property challenges, particularly as they pertain to changes in patent law and future patent law interpretations.
In addition, enforcing and maintaining our intellectual property protection depends on compliance with various procedural, document-submission, fee-payment and other requirements imposed by the U.S. Patent and Trademark Office and courts, and foreign government patent agencies and courts, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Filing, prosecuting and defending patents covering our product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some jurisdictions outside the United States can be less extensive than those in the United States. And filing, prosecuting and defending patents even in only those jurisdictions in which we develop or commercialize our product candidates might be prohibitively expensive or impractical. Competitors might use our technologies in jurisdictions where we have not obtained patent protection to develop their own products or technologies and, further, may export otherwise infringing products or technologies to territories where we and have patent protection, but where enforcement is not as strong as that in the United States. These third-party products or technologies might compete with our product candidates, and our intellectual property rights may not be effective or sufficient to prevent third parties from competing.
In addition, we might decide to abandon national or regional patent applications while they are still pending or to abandon granted patents. This might invite or encourage third parties to develop their products or technologies in jurisdictions where we abandon patent applications or patents.
If we are not able to protect and control our unpatented trade secrets, know-how and other technological innovations, we might suffer competitive harm.
We also rely on proprietary trade secrets and unpatented know-how to protect our research and development activities, particularly when we do not believe that patent protection is appropriate or available. However, trade secrets are difficult to protect. We will attempt to protect our trade secrets and unpatented know-how by requiring our employees, consultants, collaborators, and advisors to execute a confidentiality and non-use agreement. We cannot guarantee that these agreements will provide meaningful protection; that these agreements will not be breached, by, e.g., a misappropriating or disclosing our confidential information; that we will have an adequate remedy for any such breach; or that our trade secrets will not otherwise become known or independently developed by a third party. Our trade secrets, and those of our present or future collaborators that we utilize by agreement, might become known or might be independently discovered by others, which could adversely affect the competitive position of our product candidates.
We might incur substantial costs prosecuting our patent applications, maintaining our patents and patent applications, enforcing our patents, defending against third party patent infringement suits, seeking invalidation of third-party patents or in-licensing third party intellectual property, as a result of litigation or other proceedings relating to patent and other intellectual property rights.
We might be unaware of or unfamiliar with prior art and/or interpretations of prior art that could potentially impact the validity or scope of our patents or pending patent applications, or patent applications that we will file. We might have elected, or elect now or in the future, not to maintain or pursue intellectual property rights that, at some point in time, might be considered relevant to or enforceable against a competitor.
We take efforts and enter into agreements with employees, consultants, collaborators, and advisors to confirm ownership of and chain of title in intellectual property rights. However, an inventorship or ownership dispute could arise that might permit one or more third parties to practice our intellectual property rights, including possible efforts to enforce rights against us.
We might not have rights under some patents or patent applications that cover technologies that we use in our research, drug targets that we select, product candidates and particular uses thereof that we seek to develop and commercialize, as well as synthesis of our product candidates. Third parties might own or control these patents and patent applications in the United States and elsewhere. These third parties could bring claims against us or our collaborators that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages. Further, if a patent infringement suit were brought against us or our collaborators, we or they could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit. We or our collaborators therefore might choose to seek, or be required to seek, a license from the third party and would most likely be required to pay license fees or royalties or both. These licenses might not be available on acceptable terms, or at all. Even if we or our collaborators were able to obtain a license, the rights might be nonexclusive, which would give our competitors access to the same intellectual property. Ultimately, we could be prevented from commercializing a product or product candidate or forced to cease some aspect of our business operations, as a result of patent infringement claims, which could harm our business.
Periodic maintenance fees on issued U.S. patents are due to be paid to the USPTO, and periodic maintenance fees on issued non-U.S. patents and pending non-U.S. patent applications are due to be paid to non-U.S. patent offices. Patent offices require compliance with many procedural, documentary, fee payment and other requirements during the patent application process and after a patent issues or grants. While an inadvertent lapse can in some cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which non-compliance, for example, caused by geopolitical events such as civil or political unrest (including the ongoing conflict between Ukraine and Russia), can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of a patent or patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to patent office actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our business.
The USPTO and various non-U.S. government agencies require compliance with certain foreign filing requirements during the patent application process. For example, in some countries, including the United States, a foreign filing license is required before certain patent applications are filed outside that country. The foreign filing license requirements can vary by country. In some cases, a foreign filing license may be obtained retroactively in accordance with the applicable rules. There are situations, however, in which non-compliance can result in abandonment of a pending patent application or can be grounds for revoking or invalidating an issued patent, resulting in the loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able to enter the relevant markets with similar or identical products or technology, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.
There has been substantial litigation and other legal proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. Although we are not currently a party to any patent litigation or any other adversarial proceeding, including any interference or derivation proceeding declared or instituted before the United States Patent and Trademark Office, regarding intellectual property rights with respect to our intended products, our product candidates and our technology, it is possible that we might become one in the future. We are not currently aware of any actual or reasonably foreseeable third-party infringement claim involving our product candidates. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. The outcome of patent litigation is subject to uncertainties that cannot be adequately quantified in advance, including the dispute forum, demeanor and credibility of witnesses and the identity of the adverse party, especially in pharmaceutical and biotechnology related patent cases that might turn on the testimony of experts as to technical facts upon which experts might reasonably disagree. Some of our competitors might be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. If a patent or other proceeding is resolved against us, we might be encouraged by researching, developing, manufacturing or commercializing our intended products or our product candidates without a license from the other party and we might be held liable for significant damages. We might not be able to obtain any required license on commercially acceptable terms or at all.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could harm our ability to compete in the marketplace. Patent litigation or other proceedings might also absorb significant management time.
If we are unable to protect our intellectual property rights, our competitors might develop and market products with similar or identical features that might reduce demand for our potential products.
The following factors are important to our success:
receiving patent protection for our product candidates;
preventing others from infringing our intellectual property rights; and
maintaining our patent rights and trade secrets.
We will be able to protect our intellectual property rights in patents and trade secrets from unauthorized use by third parties only to the extent that such intellectual property rights are covered by valid and enforceable patents or are effectively maintained as trade secrets and we enforce these rights.
Because issues of patentability involve complex legal and factual questions, the issuance, scope or enforceability of patents cannot be predicted with certainty. Patents can be challenged, invalidated, found unenforceable, or circumvented. United States patents and patent applications can be subject to interference or derivation proceedings. United States patents can also be subject to post grant proceedings, including re-examination, derivation, Inter Partes Review and Post Grant Review, in the United States Patent and Trademark Office. Foreign patents can be subject to opposition or comparable proceedings in corresponding foreign patent offices. Any of these challenges might result in loss of the patent, rejection of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, these proceedings can be costly. Thus, any patents that we own or license from others might not provide any protection against competitors. Furthermore, an adverse decision in an interference or derivation proceeding can result in a third party receiving the patent rights sought by us, which in turn could affect our ability to market a potential product to which that patent filing was directed. Our pending patent applications, those that we might file in the future, or those that we might license from third parties might not result in patents being issued. If issued, they might not provide us with proprietary protection or competitive advantages against competitors with similar or identical technology. Furthermore, others might independently develop similar technologies or duplicate any technology that we have developed. Some countries have compulsory licensing laws under which a patent owner might be compelled to grant licenses to third parties. For example, compulsory licenses might be required in cases such as where the patent owner has failed to “work” the invention in that country or where a third party has patented improvements. In addition, some countries might limit the enforceability of patents against government agencies or government contractors. In these countries, we might have limited infringement remedies, which could materially diminish the value of our patents. Moreover, the legal systems of some countries are less supportive of enforcement of patents, trade secrets and other intellectual property protection, than the United States, which might make it difficult to stop infringement in these countries.
In addition, our ability to enforce our patent rights depends on our ability to detect infringement. It is difficult to detect infringers who do not advertise or otherwise promote the compounds that are used in their products. Any litigation to enforce or defend our patent rights, even if we prevail, could be costly and time-consuming and would divert the attention of management and key personnel from business operations.
We will also rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. We will seek to protect this information by entering into confidentiality agreements with parties that have access to it, such as strategic partners, collaborators, employees, contractors and consultants. Any of these parties might breach these agreements and misappropriate or disclose our confidential information or our competitors might learn of the information in some other way. If any trade secret, know-how or other technology not protected by a patent were disclosed to, or independently developed by, a competitor, our business, financial condition and results of operations could be materially adversely affected.
Risks Related to Commercialization of Our Current Product Candidate and Future Product Candidates
Our commercial success depends upon attaining significant market acceptance of our current product candidate and future product candidates, if approved, among physicians, patients, healthcare payors and cancer treatment centers.
Even if we obtain regulatory approval for our lead product candidate or any future product candidates, the products might not gain market acceptance among physicians, healthcare payors, patients or the medical community, including cancer treatment centers. Market acceptance of any product candidates for which we receive approval depends on a number of factors, including:
the efficacy and safety of such product candidates as demonstrated in clinical trials;
the clinical indications and patient populations for which the product candidate is approved;
acceptance by physicians, major cancer treatment centers and patients of the drug as safe and effective treatment;
the adoption of novel immunotherapies by physicians, hospitals and third-party payors;
the potential and perceived advantages of product candidates over alternative treatments;
the safety of product candidates seen in a broader patient group, including our use outside the approved indications;
any restrictions on use together with other medications;
the prevalence and severity of any side effects;
product labeling or product insert requirements of the FDA or other regulatory authorities;
the timing of market introduction of our intended product as well as competitive products;
the development of manufacturing and distribution processes for commercial scale manufacturing for our lead product candidate and any future product candidates;
the cost of treatment in relation to alternative treatments;
the availability of coverage and adequate reimbursement from third party payors and government authorities;
relative convenience and ease of administration; and
the effectiveness of our sales and marketing efforts and those of our collaborators.
If our lead product candidate and any future product candidates are approved but fail to achieve market acceptance among physicians, patients, healthcare payors or cancer treatment centers, we will not be able to generate significant revenues, which would compromise our ability to become profitable.
Even if we are able to commercialize our lead product candidate or any future product candidates, the products might not receive coverage or adequate reimbursement from third party payors in the United States and in other countries in which we seek to commercialize our intended products, which could harm our business.
Our ability to commercialize any product successfully will depend, in part, on the extent to which coverage and adequate reimbursement for such product and related treatments will be available from third party payors, including government health administration authorities, private health insurers and other organizations.
Third party payors determine which medications they will cover and establish reimbursement levels. A primary trend in the healthcare industry is cost containment. Third party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Third party payors might also seek additional clinical evidence, beyond the data required to obtain regulatory approval, demonstrating clinical benefit and value in specific patient populations before covering our intended product for those patients. We cannot be sure that coverage and adequate reimbursement will be available for any product that we commercialize and, if coverage is available, what the level of reimbursement will be. Coverage and reimbursement might impact the demand for, or the price of, any product candidate for which we obtain regulatory approval. If reimbursement is not available or is available only at limited levels, we might not be able to successfully commercialize any product candidate for which we obtain regulatory approval.
There might be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage might be more limited than the purposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and 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. Interim reimbursement levels for new drugs, if applicable, might also not be sufficient to cover our costs and might only be temporary. Reimbursement rates might vary according to the use of the drug and the clinical setting in which it is used, might be based on reimbursement levels already set for lower cost drugs and might be incorporated into existing payments for other services. Net prices for drugs might be reduced by mandatory discounts or rebates required by third party payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they might be sold at lower prices than in the United States. No uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to payor. Third party payors can rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies, but also have their own methods and approval process apart from Medicare determinations. Our inability to promptly obtain coverage and profitable reimbursement rates from both government-funded and private payors for any approved product that we develop could have a material adverse effect on our operating results, ability to raise capital needed to commercialize our intended product and overall financial condition.
Healthcare legislative measures aimed at reducing healthcare costs might have a material adverse effect on our business and results of operations.
Third party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In both the United States and certain international jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our intended product profitably. In particular, in 2010, the Affordable Care Act (“ACA”) was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, and provided incentives to programs that increase the federal government’s comparative effectiveness research.
There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at containing or lowering the cost of healthcare. We cannot predict the initiatives that might be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls might adversely affect:
the demand for our lead product candidate, if we obtain regulatory approval;
our ability to receive or set a price that we believe is fair for our intended product;
our ability to generate revenue and achieve or maintain profitability;
the level of taxes that we are required to pay; and
the availability of capital.
We expect that the ACA, as well as other healthcare reform measures that might be adopted in the future, might result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, lower reimbursement and new payment methodologies. This could lower the price that we receive for any approved product. Any denial in coverage or reduction in reimbursement from Medicare or other government-funded programs might result in a similar denial or reduction in payments from private payors, which might prevent us from being able to generate sufficient revenue, attain profitability or commercialize our product candidate, if approved.
Price controls might be imposed in foreign markets, which might adversely affect our future profitability.
In some countries, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of regulatory approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments might further complicate pricing negotiations, and pricing negotiations might continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices.
In some countries, we or our collaborators might be required to conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidate to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third party payors or authorities might lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of our intended product is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.
Our performance depends on successful improvements to our existing products and services, commercialization of new products and services and increasingly on our ability to anticipate emerging trends in oncology diagnosis, treatment and management.
Our Liora LiGHT system products require intensive planning, design, development, testing and capital commitment. Because of the large footprint and high price of many proton therapy systems, there is increasing demand for the development of smaller, more compact proton therapy systems. Although we have introduced our Liora Light machine proton therapy solution, other companies have more experience offering smaller, less expensive proton therapy systems. Our competitiveness will depend on our ability to continue to timely develop new technologies to reduce the size and price of our system or provide additional features and functionality that our competitors do not.
We may need to spend more time and money than anticipated to develop and introduce new products, product enhancements or services. We may not be able to recover all or a meaningful part of our investments. New products may adversely impact orders and sales of our existing products or make them less desirable or even obsolete. In addition, certain costs, including installation and warranty costs, associated with new products may be disproportionately greater than the costs associated with existing products, and if we are unable to lower these costs over time, our operating results could be adversely affected.
Risks Related to Healthcare Compliance Regulations
Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings. If we or they are unable to comply with these provisions, we might become subject to civil and criminal investigations and proceedings that could have a material adverse effect on our business, financial condition and prospects.
Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain regulatory approval. Our current and future arrangements with healthcare providers, healthcare entities, third party payors and customers might expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that might constrain the business or financial arrangements and relationships through which we research, develop and will market, sell and distribute our intended product. As a pharmaceutical company, even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are applicable to our business. Restrictions under applicable federal and state healthcare laws and regulations that might affect our ability to operate include the following:
the federal healthcare Anti-Kickback Statute which prohibits, among other things, individuals and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment might be made under a federal healthcare program such as Medicare and Medicaid;
federal civil and criminal false claims laws, including the federal False Claims Act that can be enforced through civil whistleblower or qui tam actions, and civil monetary penalty laws, prohibit individuals or entities from knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment or approval that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”) which imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information on entities subject to the law, such as certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, and their respective business associates that perform services for them that involve the creation, use, maintenance or disclosure of, individually identifiable health information;
the federal physician sunshine requirements under the ACA which requires certain manufacturers of drugs, devices, biologics and medical supplies, with certain exceptions, to report annually to HHS information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations;
analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which might apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers; some state laws which require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and might require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures or pricing information; and certain state and local laws which require the registration of pharmaceutical sales representatives; and
state and foreign laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices might not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that might apply to us, we might be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, disgorgement, exclusion from government funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, and the curtailment or restructuring of our operations. If any physicians or other healthcare providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they might be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
Our employees might engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.
We are exposed to the risk of employee fraud or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory authorities, comply with manufacturing standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose unauthorized activities to us. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity might not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and integrity oversight and reporting obligations.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we might develop.
We face an inherent risk of product liability exposure related to the testing of our lead product candidate or future product candidates in human clinical trials and will face an even greater risk if we commercially sell any products that we might develop. Product liability claims might be brought against us by subjects enrolled in our clinical trials, patients, healthcare providers or others using, administering or selling our intended product. If we cannot successfully defend ourselves against claims that our lead product candidate or product caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims might result in:
decreased demand for any product candidates or products that we might develop;
termination of clinical trial sites or entire clinical trial programs;
injury to our reputation and significant negative media attention;
withdrawal of clinical trial participants;
significant costs to defend the related litigation;
substantial monetary awards to trial subjects or patients;
loss of revenue;
diversion of management and scientific resources from our business operations; and
the inability to commercialize any products that we might develop.
Prior to engaging in clinical trials, we obtain product liability insurance coverage at a level that we believe is customary for similarly situated companies and adequate to provide us with insurance coverage for foreseeable risks; however, we might be unable to obtain such coverage at a reasonable cost, if at all. If we are able to obtain product liability insurance, we might not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that might arise and such insurance might not be adequate to cover all liabilities that we might incur. Furthermore, we intend to expand our insurance coverage for products to include the sale of commercial products if we obtain regulatory approval for our lead product candidate in development, but we might be unable to obtain commercially reasonable product liability insurance for any products that receive regulatory approval. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.
Risks Related to our Business Operations
We face substantial competition, which might result in others discovering, developing or commercializing products before or more successfully than we do.
We will face competition from numerous pharmaceutical and biotechnology enterprises, as well as from academic institutions, government agencies and private and public research institutions for our lead product candidate. Our commercial opportunities will be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects or are less expensive than any products that we might develop. Competition could result in reduced sales and pricing pressure on our lead product candidate, if approved, which in turn would reduce our ability to generate meaningful revenues and have a negative impact on our results of operations. In addition, significant delays in the development of our lead product candidate could allow our competitors to bring products to market before we do and impair our ability to commercialize our lead product candidate. The biotechnology industry, including the cancer immunotherapy market, is intensely competitive and involves a high degree of risk. We compete with other companies that have far greater experience and financial, research and technical resources than us. Potential competitors in the United States and worldwide are numerous and include pharmaceutical and biotechnology companies, educational institutions and research foundations, many of which have substantially greater capital resources, marketing experience, research and development staffs and facilities than ours. Some of our competitors might develop and commercialize products that compete directly with those incorporating our technology or might introduce products to market earlier than our intended product or on a more cost-effective basis. Our competitors compete with us in recruiting and retaining qualified scientific and management personnel as well as in acquiring technologies complementary to our technology. We might face competition with respect to product efficacy and safety, ease of use and adaptability to various modes of administration, acceptance by physicians, the timing and scope of regulatory approvals, availability of resources, reimbursement coverage, price and patent position, including the potentially dominant patent positions of others. An inability to successfully complete our product development or commercializing our lead product candidate could result in our having limited prospects for establishing market share or generating revenue.
Many of our competitors or potential competitors have significantly greater established presence in the market, financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do, and as a result might have a competitive advantage over us. Mergers and acquisitions in the pharmaceutical and biotechnology industries might result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies might also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies and technology licenses complementary to our programs or potentially advantageous to our business.
As a result of these factors, these competitors might obtain regulatory approval of their products before we are able to obtain patent protection or other intellectual property rights, which will limit our ability to develop or commercialize our lead product candidate. Our competitors might also develop drugs that are safer, more effective, more widely used and cheaper than ours, and might also be more successful than us in manufacturing and marketing their products. These appreciable advantages could render our lead product candidate obsolete or non-competitive before we can recover the expenses of development and commercialization.
Significant disruptions of information technology systems, computer system failures or breaches of information and cyber security could adversely affect our business.
We rely to a large extent upon sophisticated information technology systems to operate our business. In the ordinary course of business, we collect, store and transmit large amounts of confidential information (including, but not limited to, personal information and intellectual property). The size and complexity of our information technology and information security systems, and those of our third-party vendors with whom we might contract, make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from malicious attacks by third parties. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives (including, but not limited to, industrial espionage and market manipulation) and expertise. While we intend to invest in the protection of data and information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches.
Our internal computer systems, and those of our CROs, our CMOs, and other business vendors on which we might rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war and telecommunication and electrical failures. We exercise little or no control over these third parties, which increases our vulnerability to problems with their systems. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. Any interruption or breach in our systems could adversely affect our business operations and/or result in the loss of critical or sensitive confidential information or intellectual property, and could result in financial, legal, business and reputational harm to us or allow third parties to gain material, inside information that they use to trade in our securities. For example, the loss of clinical trial data from completed or ongoing clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or misappropriation or disclosure of confidential or proprietary information, we could incur liability, the further development of our lead and future product candidates could be delayed and our business could be otherwise adversely affected.
We might need to grow the size of our organization in the future, and we might experience difficulties in managing this growth.
As of March 31, 2026, we had three officer/employees, our Chief Executive Officer, our Chief Financial Officer, and our Chief Scientific Officer. The Company relies to a significant extent on outside consultants and advisors with various technical skills and expertise that the Company can draw on as necessary to conduct its research and development and clinical trial programs. We might need to grow the size of our organization in order to support our continued development and potential commercialization of our lead product candidate. As our development and commercialization plans and strategies continue to develop, our need for additional managerial, operational, manufacturing, sales, marketing, financial and other resources might increase. Our management, personnel and systems currently in place might not be adequate to support this future growth. Future growth would impose significant added responsibilities on members of management, including:
managing our clinical trials effectively;
identifying, recruiting, maintaining, motivating and integrating additional employees;
managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors and other third parties;
improving our managerial, development, operational, information technology, and finance systems; and
expanding our facilities.
If our operations expand, we will likely also need to manage additional relationships with various strategic partners, suppliers and other third parties. Our future financial performance and our ability to commercialize our lead product candidate and to compete effectively will depend, in part, on our ability to manage any future growth effectively, as well as our ability to develop a sales and marketing force when appropriate for our company. To that end, we must be able to manage our development efforts and preclinical studies and clinical trials effectively and hire, train and integrate additional management, research and development, manufacturing, administrative and sales and marketing personnel. The failure to accomplish any of these tasks could prevent us from successfully growing our company.
Mr. Pursglove’s simultaneous service as our Chief Executive Officer and member of our Board of Directors, and as Chief Executive Officer and member of the Board of Directors of Powell Max Ltd., may create conflicts of interest and may adversely affect management attention, financial reporting and decision-making.
Geordan Pursglove currently serves as our Chief Executive Officer and as a member of our Board of Directors, while also serving as Chief Executive Officer and a director of Powell Max Ltd. (“PMAX”). These dual roles may from time to time create actual or potential conflicts of interest, including with respect to the allocation of Mr. Pursglove’s time and attention, the evaluation of strategic, commercial or financing opportunities, relationships with counterparties, the handling of confidential information, compliance with blackout and other securities-law restrictions, and the timing and content of public disclosures. Because Mr. Pursglove serves as our Chief Executive Officer, any reduction in his availability or any required recusal from deliberations involving PMAX could also adversely affect financial management, internal-control oversight, capital-markets activities and the speed of management decision-making. If actual or perceived conflicts of interest are not resolved effectively, or if Mr. Pursglove is unable to devote sufficient time to our business, our business, financial condition, results of operations and stock price could be materially adversely affected.
Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business might rely, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations might rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies might also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times for various periods of time, and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition and stock price.
The global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, inflationary pressures and interest rate changes, increases in unemployment rates and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the conflict between Russia and Ukraine, between Israel and Gaza, terrorism or other geopolitical events. Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. Future adverse developments with respect to financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access near-term working capital needs, and create additional market and economic uncertainty. There can be no assurance that future credit and financial market instability and a deterioration in confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market conditions. If the equity markets deteriorate, or if adverse developments are experienced by financial institutions, it may cause short-term liquidity risk and also make any necessary equity financing more difficult, more costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our business plans and stock price and could require us to delay or abandon clinical development plans. In addition, there is a risk that one or more of our current service providers, financial institutions, manufacturers and other partners may be adversely affected by the foregoing risks, which could directly affect our ability to conduct our business plans on schedule and on budget.
Risks Related to Owning our Securities
Provisions of certain warrants could discourage a change-in control transaction involving a third party.
Some of our warrants contain provisions that could make it more difficult or expensive for a third party to make an investment in us acquire us in a change-in-control transaction. Under certain transactions constituting a “fundamental transaction”, the Company could be required to redeem the warrants for a cash payment calculated pursuant to the Black-Scholes option-pricing model. These and other provisions of the warrants could prevent or deter a third party from acquiring us or investing in us in a change-in control transaction, even where the acquisition could be beneficial to you.
The following warrants issued by the Company and outstanding at December 31, 2025, contain a “fundamental transaction” provision whereby in the event of a fundamental transaction (including a sale or transfer of assets or ownership of the Company as defined in the warrant agreement) within the Company’s control, the holder of the unexercised common stock warrants would be entitled to receive, in exchange for extinguishment of the warrants, cash consideration equal to a Black-Scholes valuation, as defined in the warrant agreement. If such fundamental transaction is not within the Company’s control, the warrant holder would only be entitled to receive the same form of consideration (and in the same proportion) as the holders of the Company’s common stock.
Issued
Number of warrants
July 2023
February 2025
February 2025
July 2, 2025
December 22, 2025
In the event of a change in control of the Company or a sale or transfer of all or substantially all of the Company’s assets, as defined, to the extent that the warrants are outstanding at the effective date that such a transaction is closed, this “fundamental transaction” provision would entitle the holder to substantial cash consideration, thus reducing the amounts to be retained by the Company or potentially distributable to the Company’s stockholders.
Our management has broad discretion over the use of the proceeds from any stock offerings we may conduct in the future and we may apply it to uses that do not improve our operating results or the value of our common stock.
Our management will have broad discretion in the application of the net proceeds from any stock offerings, and investors will be relying solely on the judgment of our management regarding the application of these proceeds. Although we expect to use the net proceeds from an offering for working capital and general corporate purposes, including the ongoing clinical development of our lead compound LB-100, we have not allocated these net proceeds for specific purposes. Investors will not have the opportunity, as part of their investment decision, to assess whether the proceeds are being used appropriately. Our use of the proceeds may not improve our business prospects or increase the value of our common stock.
As part of the Company’s ongoing process of evaluating various alternatives to obtain the capital required to fund its operations and maintain its listing on Nasdaq, management may decide to consider a wide variety of strategic alternatives, and there can be no assurances that any such transaction, if implemented, would enhance stockholder value, and could be highly dilutive to existing stockholders.
The Company is evaluating various alternatives to obtain the capital required to fund its operations and maintain its listing on Nasdaq, including merger or acquisition opportunities (including reverse mergers) and funding transactions involving a change in control. There can be no assurances that the evaluation process will result in the identification of an appropriate transaction, the negotiation and execution of a definitive agreement to effect such a transaction, or that any such transaction will ultimately be approved by the Company’s stockholders and then be consummated. Depending on various factors, many of which are outside the control of the Company, our failure to enter into and consummate a strategic transaction could have a material adverse effect on our ability to continue to operate and finance our business, and on the market price of our common stock. Even if such a strategic transaction is consummated, there can be no assurances that it will enhance stockholder value, and it may result in substantial dilution to existing stockholders. Any potential transaction would be dependent on a number of factors that may be outside of our control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with the Company, and the availability of appropriate financing for such a transaction. If we are unable to raise the required capital to fund our operations, or to enter into a strategic transaction in the near future, we may need to curtail or cease operations, which could result in a total loss of stockholders’ investment.
The price of our common stock might fluctuate substantially.
You should consider an investment in our common stock to be risky. Some factors that might cause the market price of our common stock to fluctuate, in addition to the other risks mentioned in this “Risk Factors,” are:
sale of our common stock by our stockholders, executives, and directors and our stockholders;
volatility and limitations in trading volumes of our shares of common stock;
our ability to obtain financings to conduct and complete research and development activities including, but not limited to, our clinical trials, and other business activities;
the timing and success of introductions of new products by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or strategic partners;
network outages or security breaches;
our ability to secure resources and the necessary personnel to conduct clinical trials on our desired schedule;
commencement, enrollment or results of our clinical trials for our lead product candidate or any future clinical trials we might conduct;
changes in the development status of our lead product candidate;
any delays or adverse developments or perceived adverse developments with respect to the FDA’s review of our planned preclinical and clinical trials;
any delay in our submission for studies or product approvals or adverse regulatory decisions, including failure to receive regulatory approval for our lead product candidate;
unanticipated safety concerns related to the use of our lead product candidate;
failures to meet external expectations or management guidance;
changes in our capital structure or dividend policy, future issuances of securities, sales of large blocks of common stock by our stockholders;
our cash position;
announcements and events surrounding financing efforts, including debt and equity securities;
our inability to enter into new markets or develop new products;
reputational issues;
competition from existing technologies and products or new technologies and products that might emerge;
announcements of acquisitions, partnerships, collaborations, joint ventures, new products, capital commitments, or other events by us or our competitors;
changes in general economic, political and market conditions in or any of the regions in which we conduct our business;
changes in industry conditions or perceptions;
changes in valuations of similar companies or groups of companies;
analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage;
departures and additions of key personnel;
disputes and litigations related to intellectual properties, proprietary rights, and contractual obligations;
changes in applicable laws, rules, regulations, or accounting practices and other dynamics; and
other events or factors, many of which might be out of our control.
In addition, if the market for stocks in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition and results of operations. If any of the foregoing occurs, it could cause our stock price to fall and might expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.
Risks Related to the Company’s Common Stock
Nasdaq Compliance.
The Company’s common stock are traded on The Nasdaq Capital Market under the symbols “LIXT”.
On June 2, 2023, the Company effected a 1-for-10 reverse split of its outstanding shares of common stock in order to remain in compliance with the $1.00 minimum closing bid price requirement of Nasdaq. However, there can be no assurances that the Company will be able to remain in compliance with the $1.00 minimum closing bid price requirement of Nasdaq over time. In addition, Nasdaq has other continued listing requirements, one of which is maintaining a minimum net stockholders’ equity of $2,500,000.
On August 23, 2024, the Company received a letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) on August 19, 2024 indicating that the Company was not in compliance with the minimum stockholders’ equity requirement of $2,500,000 for continued listing on the Nasdaq Capital Market under Listing Rule 5550(b) (the “Stockholders’ Equity Requirement”).
On October 3, 2024, the Company submitted a plan to the Staff to regain compliance with the Stockholders’ Equity Requirement, which outlined the Company’s proposed initiatives to regain compliance by raising equity capital through various registered equity offerings.
On October 21, 2024, the Staff provided notice (the “Notice”) to the Company that it had granted an extension through February 18, 2025 to regain compliance with the Stockholders’ Equity Requirement, which required that the Company complete its capital raising initiatives and evidence compliance with the Stockholders’ Equity Requirement through filing a Current Report on Form 8-K with the Securities and Exchange Commission (the “SEC”) providing certain required information.
As of February 18, 2025, the Company had not gained compliance with the Stockholders’ Equity Requirement. Accordingly, on February 19, 2025, the Company received a Staff determination letter from the Staff stating that the Company did not meet the terms of the extension because it did not complete its proposed financing initiatives to regain compliance.
The Company did not meet the terms of the extension and, on February 19, 2025, received a Staff determination letter. The Company timely requested a hearing before the Nasdaq Hearings Panel, staying any suspension or delisting pending the Panel’s decision.
Following an April 3, 2025 hearing, the Panel granted the Company a further extension through July 3, 2025 to regain compliance.
On July 2, 2025, the Company closed a $5.05 million private placement and, on July 8, 2025, completed a $1.5 million registered direct offering (see Note 6). On July 15, 2025, Nasdaq notified the Company that it had regained compliance with the stockholders’ equity requirement.
The Company remains subject to a Panel Monitor under Nasdaq Listing Rule 5815(d)(4)(B) through July 15, 2026. During this period, any future deficiency in stockholders’ equity would require the Company to request a hearing before the Panel rather than submit a new compliance plan.
A sale or perceived sale of a substantial number of shares of our common stock might cause the price of our common stock to decline.
If our stockholders sell substantial amounts of our common stock in the public market, the market price of our common stock could fall. Moreover, the perceived risk of this potential dilution could cause stockholders to attempt to sell their shares and investors to short our common stock. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
Market and economic conditions might negatively impact our business, financial condition and share price.
Concerns over medical epidemics, energy costs, geopolitical issues, the U.S. mortgage market and a deteriorating real estate market, unstable global credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth, increased unemployment rates, and increased credit defaults in recent years. Our general business strategy might be adversely affected by any such economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it might make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and share price and could require us to delay or abandon development or commercialization plans.
If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports about our business, our stock price and trading volume might decline.
The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us, our business, our markets and our competitors. We do not control these analysts. If securities analysts do not cover our common stock, the lack of research coverage might adversely affect the market price of our common stock. Furthermore, if one or more of the analysts who do cover us downgrade our stock or if those analysts issue other unfavorable commentary about us or our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fails to regularly publish reports on us, we could lose visibility in the market and interest in our stock could decrease, which in turn could cause our stock price or trading volume to decline and might also impair our ability to expand our business with existing customers and attract new customers.
Future sales and issuances of our common stock could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.
In the future, we will need to issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our stockholders. We may also issue additional common stock, warrants or other securities that are convertible into or exercisable for common stock in connection with future mergers or acquisitions, future sales of securities for capital raising purposes, or for other business purposes, in one or more transactions at prices and in a manner that we determine from time to time. The future issuance of any such additional shares of common stock may create downward pressure on the trading price of the common stock. There can be no assurances that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with any capital raising efforts, and the new investors could gain rights superior to our existing stockholders in any such transactions.
We do not intend to pay cash dividends on our shares of common stock so any returns will be limited to the value of our shares.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the increase, if any, of our share price.
We might be at risk of securities class action litigation.
We might be at risk of securities class action litigation. In the past, biotechnology and pharmaceutical companies have experienced significant stock price volatility, particularly when associated with binary events such as clinical trials and product approvals. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business and results in a decline in the market price of our common stock.
Our Certificate of Incorporation and our Amended and Restated Bylaws, and Delaware law might have anti-takeover effects that could discourage, delay or prevent a change in control, which might cause our stock price to decline.
Our Certificate of Incorporation and our Amended and Restated Bylaws, and Delaware law could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial to our stockholders. We are authorized to issue up to 10,000,000 shares of preferred stock. This preferred stock might be issued in one or more series, the terms of which might be determined at the time of issuance by our Board of Directors without further action by stockholders. The terms of any series of preferred stock might include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. The issuance of any preferred stock could materially adversely affect the rights of the holders of our common stock, and therefore, reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management.
Provisions of our Certificate of Incorporation and our Amended and Restated Bylaws and Delaware law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions might also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, the certificate of incorporation and bylaws and Delaware law, as applicable, among other things:
provide the Board of Directors with the ability to alter the bylaws without stockholder approval;
place limitations on the removal of directors;
establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted upon at stockholder meetings; and
provide that vacancies on the Board of Directors might be filled by a majority of directors in office, although less than a quorum.
Financial reporting obligations of being a public company in the United States are expensive and time-consuming, and our management will be required to devote substantial time to compliance matters.
As a publicly traded company we incur significant additional legal, accounting and other expenses. The obligations of being a public company in the United States require significant expenditures and will place significant demands on our management and other personnel, including costs resulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the listing requirements of the stock exchange on which our securities are listed. These rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain compliance with. Moreover, despite recent reforms made possible by the JOBS Act, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly, particularly after we are no longer an “emerging growth company”. In addition, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance. Our management and other personnel will need to devote a substantial amount of time to ensure that we comply with all of these requirements and to keep pace with new regulations, otherwise we might fall out of compliance and risk becoming subject to litigation or being delisted, among other potential problems.
If we fail to comply with the rules under Sarbanes-Oxley related to accounting controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.
Section 404 of Sarbanes-Oxley requires annual management assessments of the effectiveness of our internal control over financial reporting. If we fail to comply with the rules under Sarbanes-Oxley related to disclosure controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult. If material weaknesses or significant deficiencies are discovered or if we otherwise fail to achieve and maintain the adequacy of our internal control, we might not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of Sarbanes-Oxley. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly.
