Overview
The Company is a drug discovery company that uses biomarker technology to
identify enzyme targets associated with serious common diseases and then designs
novel compounds to attack those targets. The Company's product pipeline is
primarily focused on inhibitors of protein phosphatases, used alone and in
combination with cytotoxic agents and/or x-ray and immune checkpoint blockers,
and encompasses two major categories of compounds at various stages of
pre-clinical and clinical development that the Company believes have broad
therapeutic potential not only for cancer but also for other debilitating and
life-threatening diseases.
The Company's activities are subject to significant risks and uncertainties,
including the need for additional capital. The Company has not yet commenced any
revenue-generating operations, does not have positive cash flows from
operations, and is dependent on periodic infusions of equity capital to fund its
operating requirements.
Reverse Stock Split
On November 18, 2020, the Company effected a 1-for-6 reverse split of its
outstanding shares of common stock. No fractional shares were issued in
connection with the reverse split, with any fractional shares resulting from the
reverse split were rounded up to the nearest whole share.
All share and per share amounts and information presented herein have been
retroactively adjusted to reflect the reverse stock split for all periods
presented.
Sale of Common Stock
Effective March 2, 2021, the Company completed the sale of 1,133,102 shares of
common stock at a price of $3.70 per share in a registered direct equity
offering, generating gross proceeds of $4,192,477. The total cash costs of this
offering were approximately $502,447, resulting in net proceeds of approximately
$3,690,030. Pursuant to the placement agents' agreement, the Company granted to
the placement agents warrants to purchase up to 113,310 shares of common stock
commencing on March 2, 2021 and expiring on March 2, 2026, at an exercise price
of $3.70 per share.
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Going Concern
At December 31, 2020, the Company had cash of $5,069,266 available to fund its
operations. Because the Company is currently engaged in Phase 2 clinical trials,
it is expected that it will take a significant amount of time and resources to
develop any product or intellectual property capable of generating sustainable
revenues. Accordingly, the Company's business is unlikely to generate any
sustainable operating revenues in the next several years and may never do so.
Even if the Company is able to generate revenues through licensing its
technologies or through product sales, there can be no assurance that the
Company will be able to achieve positive earnings and operating cash flows.
The Company's consolidated financial statements have been presented on the basis
that it will continue as a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. The
Company has no recurring source of revenue and has experienced negative
operating cash flows since inception. The Company has financed its working
capital requirements primarily through the recurring sale of its equity
securities.
As a result, management has concluded that there is substantial doubt about the
Company's ability to continue as a going concern within one year of the date
that the accompanying consolidated financial statements have been issued. The
Company's independent registered public accounting firm, in its report on the
Company's consolidated financial statements for the year ended December 31,
2020, has also expressed substantial doubt about the Company's ability to
continue as a going concern. The Company's consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Recent Accounting Pronouncements
In December 2019, the Financial Accounting Standards board (the "FASB") issued
Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12
simplifies the accounting for income taxes by removing certain exceptions and
enhances and simplifies various aspects of the income tax accounting guidance in
ASC 740. ASU 2019-12 will be effective January 1, 2021. The adoption of ASU
2019-12 is not expected to have any impact on the Company's consolidated
financial statement presentation or disclosures subsequent to its adoption.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity ("ASU 2020-06). ASU 2020-06 simplifies
the accounting for convertible debt by eliminating the beneficial conversion and
cash conversion accounting models. Upon adoption of ASU 2020-06, convertible
debt proceeds, unless issued with a substantial premium or an embedded
conversion feature that is not clearly and closely related to the host contract,
will no longer be allocated between debt and equity components. This
modification will reduce the issue discount and result in less non-cash interest
expense in financial statements. ASU 2020-06 also updates the earnings per share
calculation and requires entities to assume share settlement when the
convertible debt can be settled in cash or shares. ASU 2020-06 will be effective
January 1, 2024, and a cumulative-effect adjustment to the opening balance of
retained earnings is required upon adoption. Early adoption is permitted, but no
earlier than January 1, 2021, including interim periods within that year. The
adoption of ASU 2020-06 is not expected to have any impact on the Company's
consolidated financial statement presentation or disclosures subsequent to its
adoption, with any effect being largely dependent on the composition and terms
of outstanding financial instruments at the time of adoption.
Management does not believe that any other recently issued, but not yet
effective, authoritative guidance, if currently adopted, would have a material
impact on the Company's financial statement presentation or disclosures.
Concentration of Risk
The Company periodically contracts with vendors and consultants to provide
services related to the Company's operations. Charges incurred for these
services can be for a specific time period (typically one year) or for a
specific project or task. Costs and expenses incurred that represented 10% or
more of general and administrative costs or research and development costs for
the years ended December 31, 2020 and 2019 are described as follows.
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General and administrative costs for the years ended December 31, 2020 and 2019
include charges from a legal firm for general licensing and patent prosecution
costs relating to the Company's intellectual properties representing 27.3% and
44.5%, respectively, of total general and administrative costs. General and
administrative costs for the years ended December 31, 2020 and 2019 also include
charges for the amortized value of stock options granted to directors and
officers representing 23.7% and 18.8%, respectively, of total general and
administrative costs.
Research and development costs for the year ended December 31, 2020 include
charges from a consultant, and the value associated with extending stock options
previously granted to that consultant, representing 65.6% of total research and
development costs, and charges from a vendor representing 13.7% of total
research and development costs. Research and development costs for the year
ended December 31, 2019 include charges for the value associated with
fully-vested stock options granted to a consultant representing 52.9% of total
research and development costs, and charges from a consultant and from a vendor
representing 12.2% and 10.7%, respectively, of total research and development
costs.
Critical Accounting Policies and Estimates
The preparation of the Company's consolidated financial statements in conformity
with generally accepted accounting principles in the United States ("GAAP")
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of expenses during the reporting period. Some of those
judgments can be subjective and complex, and therefore, actual results could
differ materially from those estimates under different assumptions or
conditions. Management bases its estimates on historical experience and on
various assumptions that are believed to be reasonable in relation to the
financial statements taken as a whole under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Management
regularly evaluates the key factors and assumptions used to develop the
estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such
evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates. Significant estimates include
those related to assumptions used in accruals for potential liabilities, valuing
equity instruments issued for services, and the realization of deferred tax
assets.
The following critical accounting policies affect the more significant
judgements and estimates used in the preparation of the Company's consolidated
financial statements.
Research and Development
Research and development costs consist primarily of fees paid to consultants and
contractors, and other expenses relating to the acquisition, design, development
and clinical trials with respect to the Company's compounds and product
candidates. Research and development costs also include the costs to produce the
compounds used in research and clinical trials.
Research and development costs are charged to operations ratably over the life
of the underlying contracts, unless the achievement of milestones, the
completion of contracted work, or other information indicates that a different
expensing schedule is more appropriate.
Obligations incurred with respect to mandatory scheduled payments under research
agreements with milestone provisions are recognized as charges to research and
development costs in the Company's consolidated statement of operations based on
the achievement of such milestones, as specified in the agreement. Obligations
incurred with respect to mandatory scheduled payments under research agreements
without milestone provisions are recognized ratably over the appropriate period,
as specified in the agreement, and are recorded as liabilities in the Company's
consolidated balance sheet, with a corresponding charge to research and
development costs in the Company's consolidated statement of operations.
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Payments made pursuant to research and development contracts are initially
recorded as advances on research and development contract services in the
Company's consolidated balance sheet and are then charged to research and
development costs in the Company's consolidated statement of operations as those
contract services are performed. Expenses incurred under research and
development contracts in excess of amounts advanced are recorded as research and
development contract liabilities in the Company's consolidated balance sheet,
with a corresponding charge to research and development costs in the Company's
consolidated statement of operations. The Company reviews the status of its
research and development contracts on a quarterly basis.
Patent and Licensing Related Legal and Filing Costs
Due to the significant uncertainty associated with the successful development of
one or more commercially viable products based on the Company's research efforts
and related patent applications, all patent-related legal and filing fees and
licensing-related legal fees are charged to operations as incurred. Patent and
licensing related legal and filing costs are included in general and
administrative costs in the Company's consolidated statements of operations.
Stock-Based Compensation
The Company periodically issues common stock and stock options to officers,
directors, employees, Scientific Advisory Committee members, contractors and
consultants for services rendered. Options vest and expire according to terms
established at the issuance date of each grant. Stock grants, which are
generally time vested, are measured at the grant date fair value and charged to
operations ratably over the vesting period.
The Company accounts for stock-based payments to officers, directors, employees,
Scientific Advisory Committee members contractors and consultants by measuring
the cost of services received in exchange for equity awards utilizing the grant
date fair value of the awards, with the cost recognized as compensation expense
on the straight-line basis in the Company's financial statements over the
vesting period of the awards.
The fair value of stock options granted as stock-based compensation is
determined utilizing the Black-Scholes option-pricing model, and is affected by
several variables, the most significant of which are the expected life of the
stock option, the exercise price of the stock option as compared to the fair
market value of the common stock on the grant date, and the estimated volatility
of the common stock. Unless sufficient historical exercise data is available,
the expected life of the stock option is calculated as the mid-point between the
vesting period and the contractual term (the "simplified method"). Estimated
volatility is based on the historical volatility of the Company's common stock,
calculated utilizing a look-back period approximately equal to the contractual
life of the stock option being granted. The risk-free interest rate is based on
the U.S. Treasury yield curve in effect at the time of grant. The fair market
value of the common stock is determined by reference to the quoted market price
of the Company's common stock on the grant date.
The Company recognizes the fair value of stock-based compensation awards in
general and administrative costs and in research and development costs, as
appropriate, in the Company's consolidated statements of operations. The Company
issues new shares of common stock to satisfy stock option exercises.
Summary of Business Activities and Plans
Company Overview
The Company is a drug discovery company that uses biomarker technology to
identify enzyme targets associated with serious common diseases and then designs
novel compounds to attack those targets. The Company's product pipeline is
primarily focused on inhibitors of protein phosphatases, used alone and in
combination with cytotoxic agents and/or x-ray and immune checkpoint blockers,
and encompasses two major categories of compounds at various stages of
pre-clinical and clinical development that the Company believes have broad
therapeutic potential not only for cancer but also for other debilitating and
life-threatening diseases.
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The Company has developed two series of pharmacologically active drugs, the
LB-100 series and the LB-200 series. The Company believes that the mechanism by
which compounds of the LB-100 series affect cancer cell growth is different from
cancer agents currently approved for clinical use. Lead compounds from each
series have activity against a broad spectrum of common and rarer human cancers
in cell culture systems. In addition, compounds from both series have
anti-cancer activity in animal models of glioblastoma multiforme, neuroblastoma,
and medulloblastoma, all cancers of neural tissue. Lead compounds of the LB-100
series also have activity against melanoma, breast cancer and sarcoma in animal
models and enhance the effectiveness of commonly used anti-cancer drugs in these
model systems. The enhancement of anti-cancer activity of these anti-cancer
drugs occurs at doses of LB-100 that do not significantly increase toxicity in
animals. It is therefore hoped that, when combined with standard anti-cancer
regimens against many tumor types, the Company's compounds will improve
therapeutic benefit without enhancing toxicity in humans.
Product Candidates
The LB-100 series consists of novel structures which have the potential to be
first in their class and may be useful in the treatment of not only several
types of cancer but also vascular and metabolic diseases. The LB-200 series
contains compounds which have the potential to be the most effective in its
class and may be useful for the treatment of chronic hereditary diseases, such
as Gaucher's disease, in addition to cancer and neurodegenerative diseases.
The Company has demonstrated that lead compounds of both the LB-100 series and
the LB-200 are active against a broad spectrum of human cancers in cell culture
and against several types of human cancers in animal models. The research on
these compounds was initiated in 2006 under a Cooperative Research and
Development Agreement, or CRADA, with the National Institute of Neurologic
Disorders and Stroke, or NINDS, of the National Institutes of Health, or NIH,
dated March 22, 2006 that was subsequently extended through a series of
amendments until it terminated on April 1, 2013. As discussed below, the
Company's primary focus is on the clinical development of LB-100.
The LB-200 series consists of histone deacetylase inhibitors (HDACi). Many
pharmaceutical companies are also developing drugs of this type, and at least
two companies have HDACi approved for clinical use, in both cases for the
treatment of a type of lymphoma. Despite this significant competition, the
Company has demonstrated that its HDACi have broad activity against many cancer
types, have neuroprotective activity, and have anti-fungal activity. In
addition, these compounds have low toxicity. LB-200 has not yet advanced to the
clinical stage and would require additional capital to fund further development.
Accordingly, because of the Company's focus on the clinical development of
LB-100 and analogs for cancer therapy as described below in more detail, the
Company have decided not to actively pursue the pre-clinical development of our
LB-200 series of compounds at this time. At this time, the Company intend to
only maintain composition of matter patents for LB-200.
Collaborations with leading academic research centers in the United States,
Europe and Asia have established the breadth of activity of LB-100 in
pre-clinical models of several major cancers. There is considerable scientific
interest in LB-100 because it exerts its activity by a novel mechanism and is
the first of its type to be evaluated so broadly in multiple animal models of
cancer and now in human beings. LB-100 is one of a series of serine/threonine
phosphatase (s/t ptase) inhibitors designed by the Company. The s/t ptases are
ubiquitous enzymes that regulate many cell signaling networks important to cell
growth, division and death. The s/t ptases have long been appreciated as
potentially important targets for anti-cancer drugs. However, because of the
multi- functionality of these enzymes, it had been widely held that
pharmacologic inhibitors of s/t ptases would be too toxic to allow their
development as anti-cancer treatments, but the Company has shown that this is
not the case. LB-100 was well tolerated at doses associated with objective
regression (significant tumor shrinkage) and/or the arresting of tumor
progression in patients with progressive cancers.
Pre-clinical studies showed that LB-100 itself inhibits a spectrum of human
cancers and that combined with standard cytotoxic drugs and/or radiation, LB-100
potentiates their effectiveness against hematologic and solid tumor cancers
without enhancing toxicity. Given at very low doses in animal models of cancer,
LB-100 markedly increased the effectiveness of a PD-1 blocker, one of the widely
used new immunotherapy drugs. This finding raises the possibility that LB-100
may further expand the value of the expanding field of cancer immunotherapy.
The Company completed a Phase 1 clinical trial of LB-100 to evaluate its safety
that showed it is associated with antitumor activity in humans at doses that are
readily tolerable. Responses included objective regression (tumor shrinkage)
lasting for 11 months of a pancreatic cancer and cessation of growth
(stabilization of disease) for 4 months or more of 9 other progressive solid
tumors out of 20 patients who had measurable disease. As Phase 1 clinical trials
are fundamentally designed to determine safety of a new compound in humans, the
Company was encouraged by these results. The next step is to demonstrate in
Phase 2 clinical trials the efficacy of LB-100 in one or more specific tumor
types, against which the compound has well documented activity in pre-clinical
models.
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As a compound moves through the FDA-approval process, it becomes an increasingly
valuable property, but at a cost of additional investment at each stage. As the
potential effectiveness of LB-100 has been documented at the clinical trial
level, the Company has allocated resources to expand the breadth and depth of
its patent portfolio. The Company's approach has been to operate with a minimum
of overhead, moving compounds forward as efficiently and inexpensively as
possible, and to raise funds to support each of these stages as certain
milestones are reached. The Company's longer-term objective is to secure one or
more strategic partnerships or licensing agreements with pharmaceutical
companies with major programs in cancer.
Impact of the Novel Coronavirus (COVID-19) on the Company's Business Operations
The global outbreak of the novel coronavirus (COVID-19) has led to severe
disruptions in general economic activities worldwide, as businesses and
governments have taken broad actions to mitigate this public health crisis. In
light of the uncertain and continually evolving situation relating to the spread
of COVID-19, this pandemic could pose a risk to the Company. The extent to which
the coronavirus may impact the Company's business operations will depend on
future developments, which are highly uncertain and cannot be predicted at this
time. The Company intends to continue to monitor the situation and may adjust
its current business plans as more information and guidance become available.
The coronavirus pandemic presents a challenge to medical facilities worldwide.
As the Company's clinical trials are conducted on an outpatient basis, it is not
currently possible to predict the full impact of this developing health crisis
on such clinical trials, which could include delays in and increased costs of
such clinical trials. Current indications from the clinical research
organizations conducting the clinical trials for the Company are that such
clinical trials are being delayed or extended for several months as a result of
the coronavirus pandemic.
There is also significant uncertainty as to the effect that the coronavirus may
have on the amount and type of financing available to the Company in the future.
Results of Operations
At December 31, 2020, the Company had not yet commenced any revenue-generating
operations, does not have any positive cash flows from operations, and is
dependent on its ability to raise equity capital to fund its operating
requirements.
The Company's consolidated statements of operations as discussed herein are
presented below.
Years Ended December 31,
2020 2019
Revenues $ - $ -
Costs and expenses:
General and administrative costs 2,042,764 1,669,160
Research and development costs 1,223,676 820,906
Total costs and expenses 3,266,440 2,490,066
Loss from operations (3,266,440 ) (2,490,066 )
Interest income 5,232 49,723
Interest expense (3,674 ) -
Net loss $ (3,264,882 ) $ (2,440,343 )Net loss per common share - basic and diluted $ (0.29 ) $ (0.22 )
Weighted average common shares outstanding -
basic and diluted 11,277,126 11,174,737
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Years Ended December 31, 2020 and 2019
Revenues. The Company did not have any revenues for the years ended December 31,
2020 and 2019.
General and Administrative Costs. For the year ended December 31, 2020, general
and administrative costs were $2,042,764, which consisted of the fair value of
vested stock options issued to officers and consultants of $580,634, patent and
licensing legal fees and costs of $553,173, other consulting and professional
fees of $403,983, insurance expense of $142,575, officer's salary and related
costs of $268,457, licensing fees of $25,001, stock transfer fees of $11,801,
listing fees of $12,000, filing fees of $10,616, travel of $718, and other
operating costs of $33,806.
For the year ended December 31, 2019, general and administrative costs were
$1,669,160, which consisted of the fair value of vested stock options issued to
officers and consultants of $314,631, patent and licensing legal fees and costs
of $742,918, other consulting and professional fees of $350,534, insurance
expense of $55,935, officer's salary and related costs of $67,684, licensing
fees of $80,669, stock transfer fees of $10,202, listing fees of $12,000, filing
fees of $10,016, travel of $4,703, and other operating costs of $19,868.
General and administrative costs increased by $373,604 or 22.4% in 2020 as
compared to 2019, primarily as a result of an increase in the fair value of
vested stock options issued to officers and consultants of $266,003, an increase
in officer's salary and related costs of $200,773, an increase in insurance
expense of $86,640, offset by a decrease in patent and licensing legal fees and
costs of $189,745.
Research and Development Costs. For the year December 31, 2020, research and
development costs were $1,223,676, which consisted of the fair value of vested
stock options issued to consultants of $670,715, and contractor costs, primarily
in connection with the Company's pre-clinical research focused on the
development of additional novel anti-cancer compounds to add to its clinical
pipeline, including $43,411 to GEIS, $41,142 to Moffitt, $31,388 to Theradex,
$131,650 to BioPharmaWorks, $167,120 to a contract research and development firm
for the synthesis work to develop a new supply of LB-100 for the GEIS clinical
trial, and $138,250 to various other contractors.
For the year ended December 31, 2019, research and development costs were
$820,906, which consisted of the fair value of vested stock options issued to
consultants of $434,024, and contractor costs, primarily in connection with the
Company's pre-clinical research focused on the development of additional novel
anti-cancer compounds to add to its clinical pipeline, including $87,471 to
GEIS, $45,093 to Moffitt, $64,624 to Theradex, $100,000 to BioPharmaWorks and
$89,694 to various other contractors.
Research and development costs increased by $402,770 in 2020 as compared to
2019, primarily as a result of an increase in the fair value of vested stock
options issued to consultants of $236,691 and an increase in contractor costs,
primarily in connection with the Company's pre-clinical research focused on the
development of additional novel anti-cancer compounds to add to its clinical
pipeline.
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Interest Income. For the year ended December 31, 2020, the Company had interest
income of $5,232, as compared to interest income of $49,723 for the year ended
December 31, 2019, as a result of a reduction in the Company's cash resources
previously invested in short-term federally insured certificates of deposit.
Interest Expense. For the year ended December 31, 2020, the Company had interest
expense of $3,674 related to the financing of its directors and officers
liability insurance premium. The Company had no interest expense during the year
ended December 31, 2019.
Net Loss. For the year ended December 31, 2020, the Company incurred a net loss
of $3,264,882, as compared to a net loss of $2,440,343 for the year ended
December 31, 2019.
Liquidity and Capital Resources - December 31, 2020
At December 31, 2020, the Company had working capital of $5,011,951, as compared
to working capital of $2,434,135 at December 31, 2019, reflecting an increase in
working capital of $2,577,816 for the year ended December 31, 2020. The increase
in working capital during the year ended December 31, 2020 was the result of the
net cash proceeds of $4,591,349 from the Company's November 2020 public
offering, which are being utilized to fund the Company's research and
development activities and ongoing operating expenses, including the Company's
clinical trial program and maintaining and developing the patent portfolio. At
December 31, 2020, the Company had cash and cash equivalents of $5,069,266
available to fund its operations.
The Company's ability to continue as a going concern is dependent upon its
ability to raise additional equity capital to fund its research and development
activities and to ultimately achieve sustainable operating revenues and
profitability. The amount and timing of future cash requirements depends on the
pace and design of the Company's clinical trial program, which, in turn, depends
on the availability of operating capital to fund such activities.
Effective November 30, 2020, the Company listed on The Nasdaq Capital Market in
conjunction with the completion of its public offering of units of common stock
and warrants that generated net cash proceeds of $4,591,349. Subsequently, on
January 18, 2021, the Company entered into a clinical trial agreement to carry
out a Phase 1b clinical trial of LB-100, combined with a standard regimen for
untreated, extensive stage-disease small cell lung cancer. This new clinical
trial is being conducted through City of Hope, and is estimated to cost from
$2,500,000 to $2,900,000 and take approximately 18 to 24 months to conduct from
its expected commencement during the quarter ending June 30, 2021. Combined with
the Company's existing clinical trial commitments, this new clinical trial
commitment represents an additional demand on the Company's working capital
resources. Although the Company completed a sale of common stock under a
registered direct equity offering on March 2, 2021 that generated net proceeds
of approximately $3,690,000, the Company estimates that it will need to raise
additional capital to fund its operations, including its various clinical trial
commitments, by mid-2022. In addition, the Company's operating plan may change
as a result of many factors which are currently unknown to the Company,
including possible additional clinical trials, and the Company may need
additional funds sooner than currently planned.
As market conditions present uncertainty as to the Company's ability to secure
additional funds, there can be no assurances that the Company will be able to
secure additional financing on acceptable terms, as and when necessary to
continue to conduct operations. There is also significant uncertainty as to the
effect that the coronavirus may have on the Company's clinical trial schedule
and the amount and type of financing available to the Company in the future.
If cash resources are insufficient to satisfy the Company's ongoing cash
requirements, the Company would be required to scale back or discontinue its
clinical trial program, as well as its licensing and patent prosecution efforts
and its technology and product development efforts, or obtain funds, if
available, through strategic alliances or joint ventures that could require the
Company to relinquish rights to and/or control of LB-100, or to discontinue
operations entirely.
Operating Activities. For the year ended December 31, 2020, operating activities
utilized cash of $2,131,414, as compared to utilizing cash of $1,674,148 for the
year ended December 31, 2019, to fund the Company's ongoing research and
development activities and to fund its other ongoing operating expenses,
including maintaining and developing its patent portfolio.
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Investing Activities. For the years ended December 31, 2020 and 2019, the
Company had no investing activities.
Financing Activities. For the year December 31, 2020, financing activities
consisted of the gross proceeds from the sales of units and warrants in the
Company's public offering of $5,701,800, offset by the payment of offering costs
of $1,099,984. The Company had no financing activities for the year ended
December 31, 2019.
Principal Commitments
Clinical Trial Agreements
Moffitt. Effective August 20, 2018, the Company entered into a Clinical Trial
Research Agreement with the Moffitt Cancer Center and Research Institute
Hospital Inc., Tampa, Florida ("Moffitt"), effective for a term of five years,
unless terminated earlier by the Company pursuant to 30 days written notice.
Pursuant to the Clinical Trial Research Agreement, Moffitt agreed to conduct and
manage a Phase 1b/2 clinical trial to evaluate the therapeutic benefit of the
Company's lead anti-cancer clinical compound LB-100 to be administered
intravenously in patients with low or intermediate-1 risk myelodysplastic
syndrome (MDS).
In November 2018, the Company received approval from the U.S. Food and Drug
Administration for its Investigational New Drug Application ("IND") to conduct a
Phase 1b/2 clinical trial to evaluate the therapeutic benefit of LB-100 in
patients with low and intermediate-1 risk MDS who have failed or are intolerant
of standard treatment. Patients with MDS, although usually older, are generally
well except for severe anemia requiring frequent blood transfusions. This Phase
1b/2 clinical trial utilizes LB-100 as a single agent in the treatment of
patients with low and intermediate-1 risk MDS, including patients with del(5q)
myelodysplastic syndrome (del5qMDS) failing first line therapy. The bone marrow
cells of patients with del5qMDS are deficient in PP2A by virtue of an acquired
mutation and are especially vulnerable to further inhibition of PP2A by LB-100.
The clinical trial began at a single site in April 2019 and the first patient
was entered into the clinical trial in July 2019. A total enrollment of 41
patients is planned. An interim analysis will be done after the first 21
patients are entered. If there are 3 or more responders but fewer than 7, an
additional 20 patients will be entered. If at any point there are 7 or more
responders, this will be sufficient evidence to support continued development of
LB-100 for the treatment of low and intermediate-1 risk MDS. Recruitment has
been slow and the Covid-19 pandemic has further reduced recruitment of patients
into the protocol. At the current rate of accrual, the trial would be completed
over a period of four years from its initiation, with the final analysis and
reporting expected by July 2023. However, with additional funds, the Company's
objective would be to add two additional MDS centers to the Phase 2 portion of
the study to accelerate patient accrual, with the goal of an earlier reporting
date.
During the years ended December 31, 2020 and 2019, the Company paid Moffitt
$41,142 and $45,093, respectively, pursuant to this agreement. As of December
31, 2020, total costs of $102,944 have been incurred pursuant to this agreement.
GEIS. Effective July 31, 2019, the Company entered into a Collaboration
Agreement for an Investigator-Initiated Clinical Trial with the Spanish Sarcoma
Group (Grupo Español de Investigación en Sarcomas or "GEIS"), Madrid, Spain, to
carry out a study entitled "Randomized phase I/II trial of LB-100 plus
doxorubicin vs. doxorubicin alone in first line of advanced soft tissue
sarcoma". The purpose of this clinical trial is to obtain information about the
efficacy and safety of LB-100 combined with doxorubicin in soft tissue sarcomas.
Doxorubicin is the global standard for initial treatment of advanced soft tissue
sarcomas ("ASTS"). Doxorubicin alone has been the mainstay of first line
treatment of ASTS for over 40 years, with little therapeutic gain from adding
cytotoxic compounds to or substituting other cytotoxic compounds for
doxorubicin. In animal models, LB-100 consistently enhances the anti-tumor
activity of doxorubicin without apparent increases in toxicity.
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GEIS has a network of referral centers in Spain and across Europe that have an
impressive track record of efficiently conducting innovative studies in ASTS.
The Company agreed to provide GEIS with a supply of LB-100 to be utilized in the
conduct of this clinical trial, as well as to provide funding for the clinical
trial. The goal was to enter the first patient during the quarter ending
December 31, 2020, with approximately 150 patients to be enrolled over two
years. Advanced sarcoma is a very aggressive disease. The design of the study
assumes a median progression free survival (PFS, no evidence of disease
progression or death from any cause) of 4.5 months in the doxorubicin arm and an
alternative median PFS of 7.5 months in the doxorubicin plus LB-100 arm to
demonstrate a statistically significant decrease in relative risk of progression
or death by adding LB-100. There is a planned interim analysis of the primary
endpoint when about half of the 102 events required for final analysis is
reached.
The Company had previously expected that this clinical trial would commence
during the quarter ended June 30, 2020. However, during July 2020, the Spanish
regulatory authority advised the Company that although it had approved the
scientific and ethical basis of the protocol, it required that the Company
manufacture new inventory of LB-100 under current Spanish pharmaceutical
manufacturing standards. These regulations were adopted subsequent to the
production of the Company's existing LB-100 inventory. The Company is in the
process of obtaining approval from the European Union regulatory authorities for
new inventory of LB-100. Accordingly, the clinical trial is now estimated to
begin during the quarter ending September 30, 2021 and to be completed by the
quarter ending September 30, 2024. The interim analysis is expected in June 2023
and could indicate either inferiority or superiority of LB-100 plus doxorubicin
as compared to doxorubicin alone. A positive study would have the potential to
change the standard therapy for this disease after four decades of failure to
improve the marginal benefit of doxorubicin alone.
The Company's agreement with GEIS provides for various payments based on
achieving specific milestones over the term of the agreement. On February 18,
2020, the Company advanced $43,411 to GEIS towards a second milestone payment
obligation of $87,471, which was expected to become due and payable during the
quarter ended June 30, 2020 based on the anticipated achievement of the second
milestone, and which was therefore recorded as an advance on the Company's
balance sheet at March 31, 2020. However, as a result of the substantial delay
in commencing the clinical trial as described above, the achievement of the
second milestone had been delayed until mid-2021 and the Company therefore
determined to charge such advance to research and development costs in the
Company's statement of operations at June 30, 2020. Subsequently, on March 9,
2021, the Company paid an additional $23,802 to GEIS for current work being done
under this agreement.
Accordingly, during the years ended December 31, 2020 and 2019, the Company
incurred costs of $43,411 and $87,471, respectively, pursuant to this agreement.
As of December 31, 2020, total costs of $130,882 have been incurred pursuant to
this agreement.
The Company's aggregate commitments pursuant to the aforementioned clinical
trial agreements, less amounts previously paid to date under these agreements,
totaled approximately $5,230,000 as of December 31, 2020, consisting of
approximately $4,614,000 relating to the GEIS clinical trial and approximately
$616,000 relating to the Moffit clinical trial, which are expected to be
incurred over the next five years through December 31, 2025.
In order to manufacture a new inventory supply of LB-100 for the GEIS clinical
trial, the Company has engaged a number of vendors to carry out the multiple
tasks needed to make and gain approval of a new clinical product for
investigational study in Spain. These tasks include the synthesis under good
manufacturing practices (GMP) of the active pharmacologic ingredient (API), with
documentation of each of the steps involved by an independent auditor. The API
is then transferred to a vendor that prepares the clinical drug product (DP),
also under GMP conditions documented by an independent auditor. The DP is then
sent to a vendor to test for purity and sterility, provide appropriate labels,
store the drug, and distribute the drug to the clinical centers for use in the
clinical trials. A formal application documenting all steps taken to prepare the
DP for clinical use must be submitted to the appropriate regulatory authorities
for review and approval before being used in a clinical trial.
The Company estimates that this program to provide new inventory of the DP for
the Spanish sarcoma study, and potentially for subsequent multiple trials within
the European Union, will cost from $600,000 and $700,000. The Company's
remaining aggregate commitments under this program, less amounts previously paid
to date, totaled approximately $300,000 as of December 31, 2020, which are
expected to be incurred through June 30, 2021.
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Clinical Trial Agreement Entered into Subsequent to December 31, 2020
City of Hope. Effective January 18, 2021, the Company executed a Clinical
Research Support Agreement with City of Hope National Medical Center, an
NCI-designated comprehensive cancer center, and City of Hope Medical Foundation
(collectively, "City of Hope"), to carry out a Phase 1b clinical trial of
LB-100, the Company's first-in-class protein phosphatase inhibitor, combined
with a standard regimen for untreated, extensive stage-disease small cell lung
cancer (ED-SCLC). LB-100 will be given in combination with carboplatin,
etoposide and atezolizumab, an FDA-approved but marginally effective regimen, to
previously untreated ED-SCLC patients. The dose of LB-100 will be escalated with
the standard fixed doses of the 3-drug regimen to reach a recommended Phase 2
dose (RP2D). Patient entry will be expanded so that a total of 12 patients will
be evaluable at the RP2D to confirm the safety of the LB-100 combination and to
look for potential therapeutic activity as assessed by objective response rate,
duration of overall response, progression-free-survival and overall survival.
The Company estimates that from 24 to 30 patients will be needed to complete
this clinical trial, at an estimated cost of $2,500,000 to $2,900,000,
respectively. If a significant number of patients fail during the
dose-escalation process, an increase of up to 12 patients would likely be
necessary, at an estimated additional cost of $800,000.
The clinical trial is planned to commence during the quarter ending June 30,
2021, with patient accrual expected to take approximately 18 to 24 months to
conduct. If LB-100 does potentiate the benefit of the standard regimen, some
evidence could be noted at 12 months into the clinical trial, but an assessment
of potential increased activity is likely to require at least 24 months.
Clinical Trial Monitoring Agreements
On September 12, 2018, the Company finalized a work order agreement with
Theradex Systems, Inc. ("Theradex"), an international contract research
organization ("CRO"), to monitor the Phase 1b/2 clinical trial being managed and
conducted by Moffitt. The clinical trial began in April 2019 and the first
patient was entered into the clinical trial in July 2019. At the current rate of
accrual, the trial would be completed over a period of four years from its
initiation, with the final analysis and reporting expected by July 2023.
Costs under this work order agreement are estimated to be approximately
$954,000, with such payments expected to be divided approximately 94% to
Theradex for services and approximately 6% for payments for pass-through costs.
The costs of the Phase 1b/2 clinical trial being paid to or through Theradex are
being recorded and charged to operations based on the periodic documentation
provided by the CRO. During the years ended December 31, 2020 and 2019, the
Company incurred costs of $18,663 and $51,586, respectively, pursuant to this
work order. As of December 31, 2020, total costs of $75,788 have been incurred
pursuant to this work order agreement.
The Company's aggregate commitments pursuant to this clinical trial monitoring
agreement, less amounts previously paid to date under this agreement, totaled
approximately $874,000 as of December 31, 2020, which are expected to be
incurred over the next five years through June 30, 2025.
On February 5, 2021, the Company signed a new work order agreement with Theradex
to monitor the City of Hope investigator-initiated clinical trial in small cell
lung cancer in accordance with FDA requirements for oversight by the sponsoring
party. The Company estimates that it will incur approximately $335,000 of costs
under this work order agreement through September 30, 2023.
Patent and License Agreements
On March 22, 2018, the Company entered into a Patent Assignment and Exploitation
Agreement with INSERM TRANSFERT SA, acting as delegatee of the French National
Institute of Health and Medical Research, for the assignment to the Company of
INSERM'S interest in United States Patent No. 9,833,450 entitled
"Oxabicyloheptanes and Oxabicycloheptenes for the Treatment of Depressive and
Stress Disorders", which was filed with the United States Patent and Trademark
Office in the name of INSERM and the Company as co-owners on February 19, 2015
and granted on May 12, 2017, and related patent applications and filings. INSERM
is a French public institution dedicated to research in the field of health and
medicine that had previously entered into a Material Transfer Agreement ("MTA")
with the Company to allow INSERM to conduct research on the Company's
proprietary compound LB-100 and/or its analogs for the treatment of depressive
or stress disorders in humans. Pursuant to the Agreement, the Company has agreed
to make certain milestone payments to INSERM aggregating up to $1,750,000 upon
achievement of development milestones and up to $6,500,000 upon achievement of
commercial milestones. The Company also agreed to pay INSERM certain commercial
royalties on net sales of products attributed to the Agreement. The Company's
current plan is to complete the validation process to evaluate LB-100 for the
treatment of depressive or stress disorders in humans within three years;
however, the exploitation of this patent for the treatment of depressive and
stress disorders in humans will require substantial additional capital and/or a
joint venture or other type of business arrangement with a pharmaceutical
company with substantially greater capital and business resources than those
available to the Company. As there can be no assurances that the Company will be
able to obtain the capital or business resources necessary to focus on the
exploitation of this patent, it is uncertain as to when, if at all, the Company
may reach any of the development or commercialization milestones under the
Agreement. As of December 31, 2020 and 2019, no amounts were due under this
agreement.
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Effective April 2, 2018, the Company entered into a consulting agreement for a
term of two years with Liberi Life Sciences Consultancy BV, located in The
Netherlands, for consulting and advisory services with respect to sales and
licensing, as well as the procurement of investors in China, Japan and South
Korea. The Consulting Agreement provided for the payment of a fixed, one-time
retainer of EURO 15,000 (US $18,348), which was paid on April 5, 2018, and 2.5%
of the net payments received by the Company from sales of products or licensing
activities arising directly and exclusively from leads generated by the advisor
during the term of the Consulting Agreement, and any investors introduced to the
Company by the advisor that results in an investment in the Company during the
term of the Consulting Agreement. The Company recorded the payment of the
retainer as a prepaid expense in the Company's consolidated balance sheet and
amortized the retainer payment over the two-year life of the Consulting
Agreement, as a result of which the Company recorded charges to operations of
$2,294 and $9,174 during the years ended December 31, 2020 and 2019,
respectively. As of December 31, 2020, the prepaid consulting fee had been fully
amortized. At December 31, 2019, the unamortized balance of the retainer payment
was $9,174, all of which was classified as a current asset in the Company's
consolidated balance sheet at such date. On March 1, 2020, the Consulting
Agreement was extended to April 2, 2021 without any additional consideration.
Effective August 20, 2018, the Company entered into an Exclusive License
Agreement with Moffitt. Pursuant to the License Agreement, Moffitt granted the
Company an exclusive license under certain patents owned by Moffitt relating to
the treatment of MDS and a non-exclusive license under inventions, concepts,
processes, information, data, know-how, research results, clinical data, and the
like (other than the Licensed Patents) necessary or useful for the practice of
any claim under the Licensed Patents or the use, development, manufacture or
sale of any product for the treatment of MDS which would otherwise infringe a
valid claim under the Licensed Patents. The Company was obligated to pay Moffitt
a non-refundable license issue fee of $25,000 after the first patient is entered
into a Phase 1b/2 clinical trial to be managed and conducted by Moffitt. The
clinical trial began at a single site in April 2019 and the first patient was
entered into the clinical trial in July 2019. The Company is also obligated to
pay Moffitt an annual license maintenance fee of $25,000 commencing on the first
anniversary of the Effective Date and every anniversary thereafter until the
Company commences payment of minimum royalty payments. The Company has also
agreed to pay non-refundable milestone payments to Moffitt, which cannot be
credited against earned royalties payable by the Company, based on reaching
various clinical and commercial milestones aggregating $1,897,000, subject to
reduction by 40% under certain circumstances relating to the status of Valid
Claims, as such term is defined in the License Agreement. During the years ended
December 31, 2020 and 2019, the Company recorded charges to operations of
$25,001 and $80,669, respectively, in connection with its obligations under the
License Agreement. As of December 31, 2020, no milestones had yet been attained.
The Company will be obligated to pay Moffitt earned royalties of 4% on worldwide
cumulative net sales of royalty-bearing products, subject to reduction to 2%
under certain circumstances, on a quarterly basis, with a minimum royalty
payment of $50,000 in the first four years after sales commence, and $100,000 in
year five and each year thereafter, subject to reduction by 40% under certain
circumstances relating to the status of Valid Claims, as such term is defined in
the License Agreement. The Company's obligation to pay earned royalties under
the License Agreement commences on the date of the first sale of a
royalty-bearing product, and shall automatically expire on a country-by-country
basis on the date on which the last valid claim of the Licensed Patents expires,
lapses or is declared invalid, and the obligation to pay any earned royalties
under the License Agreement shall terminate on the date on which the last valid
claim of the Licensed Patents expires, lapses, or is declared to be invalid in
all countries.
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Employment Agreements
Dr. John Kovach. On July 15, 2020, the Company entered into an employment
agreement with Dr. John Kovach pursuant to which Dr. Kovach is to continue to
act as the Company's President, Chief Executive Officer and Chief Scientific
Officer. His responsibilities shall be for the oversight of the Company's entire
operations and strategic planning, and shall be the primary contact between the
Company's executive team and the Board of Directors, to whom he shall report.
Dr. Kovach shall supervise all scientific endeavors, providing guidance to the
Chief Medical Officer. He shall be the principal spokesperson for the Company.
Dr. Kovach will receive an annual salary of $250,000, payable monthly. The
effective date of the agreement was October 1, 2020 and shall remain in effect
until the earlier of (i) one year from the effective date, automatically
renewable for additional one-year periods unless terminated by either party upon
60 days written notice prior to the end of the applicable one-year period, (ii)
his death, or (iii) termination for cause. During the year ended December 31,
2020, the Company incurred charges for salary in the amount of $62,500 with
respect to this agreement, which amount is included in general and
administrative costs in the Company's consolidated statements of operations.
Eric Forman. On July 15, 2020, as amended on August 12, 2020, the Company
entered into an employment agreement with Eric Forman, pursuant to which Mr.
Forman will act as the Company's Chief Administrative Officer reporting directly
to the Company's Chief Executive Officer. Mr. Forman's primary function shall be
to oversee the Company's internal operations, including IT, licensing, legal,
personnel, marketing, and corporate governance. Mr. Forman will receive an
annual salary of $120,000, payable monthly. Mr. Forman was also granted stock
options to acquire 350,000 shares of the Company's common stock. The effective
date of the agreement was October 1, 2020 and shall remain in effect until the
earlier of (i) one year from the effective date, automatically renewable for
additional one-year periods unless terminated by either party upon 60 days
written notice prior to the end of the applicable one-year period, (ii) his
death, or (iii) termination for cause. During the year ended December 31, 2020,
the Company incurred charges for salary in the amount of $30,000 with respect to
this agreement, which amount is included in general and administrative costs in
the Company's consolidated statements of operations.
Dr. James Miser. On August 1, 2020, the Company entered into an employment
agreement with Dr. James Miser, M.D., pursuant to which Dr. Miser was appointed
as the Company's Chief Medical Officer. Under the employment agreement, Dr.
Miser will play a leadership role in planning, implementation and oversight of
clinical trials. Dr. Miser will be responsible for assisting and developing
strategic clinical goals and the implementation and safety monitoring of
investigational studies. Dr. Miser will be the primary medical monitor for all
clinical investigational studies and for the oversight of third party CRO
monitors. Dr. Miser will work closely with the Company's Chief Executive Officer
on the development of specific goals needed to ensure the timely implementation
of appropriate clinical studies needed for successful registration of
therapeutic products and new drug development. Dr. Miser will be required to
devote at least 50% of his business time to the Company's activities. Dr. Miser
will receive an annual salary of $150,000. Dr. Miser was also granted stock
options to acquire 500,000 shares of the Company's common stock. The effective
date of the agreement was August 1, 2020. The agreement shall remain in effect
until the earlier of (i) one year from the effective date, automatically
renewable for additional one-year periods unless terminated by either party upon
60 days written notice prior to the end of the applicable one-year period, (ii)
his death, or (iii) termination for cause. During the year ended December 31,
2020, the Company incurred charges for salary in the amount of $62,500 with
respect to this agreement, which amount is included in general and
administrative costs in the Company's consolidated statements of operations.
Robert N. Weingarten. On August 12, 2020, the Company entered into an employment
agreement with Robert N. Weingarten pursuant to which Mr. Weingarten was
appointed as the Company's Vice-President and Chief Financial Officer. Mr.
Weingarten will receive an annual salary of $120,000. Mr. Weingarten was also
granted stock options to acquire 350,000 shares of the Company's common stock.
The effective date of the agreement was August 12, 2020. The agreement shall
remain in effect until the earlier of (i) one year from the effective date,
automatically renewable for additional one-year periods unless terminated by
either party upon 60 days written notice prior to the end of the applicable
one-year period, (ii) his death, or (iii) termination for cause. During the year
ended December 31, 2020, the Company incurred charges for salary in the amount
of $46,451 with respect to this agreement, which amount is included in general
and administrative costs in the Company's consolidated statements of operations.
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Other Significant Agreements and Contracts
On December 24, 2013, the Company entered into an agreement with NDA Consulting
Corp. for consultation and advice in the field of oncology research and drug
development. As part of the agreement, NDA also agreed to cause its president,
Dr. Daniel D. Von Hoff, M.D., to become a member of the Company's Scientific
Advisory Committee. The term of the agreement was for one year and provided for
a quarterly cash fee of $4,000. The agreement has been automatically renewed for
additional one-year terms on its anniversary date since 2014. Consulting and
advisory fees charged to operations pursuant to this agreement were $16,000 and
$62,000 for the years ended December 31, 2020 and 2019, respectively, which were
included in research and development costs in the consolidated statements of
operations.
Effective September 14, 2015, the Company entered into a Collaboration Agreement
with BioPharmaWorks, pursuant to which the Company engaged BioPharmaWorks to
perform certain services for the Company. Those services included, among other
things: (a) assisting the Company to (i) commercialize its products and
strengthen its patent portfolio, (ii) identify large pharmaceutical companies
with potential interest in the Company's product pipeline, and (iii) prepare and
deliver presentations concerning the Company's products; (b) at the request of
the Board of Directors, serving as backup management for up to three months
should the Company's Chief Executive Officer and scientific leader be
temporarily unable to carry out his duties; (c) being available for consultation
in drug discovery and development; and (d) identifying providers and overseeing
tasks relating to clinical use and commercialization of new compounds.
BioPharmaWorks was founded in 2015 by former Pfizer scientists with extensive
multi-disciplinary research and development and drug development experience. The
Collaboration Agreement was for an initial term of two years and automatically
renews for subsequent annual periods unless terminated by a party not less than
60 days prior to the expiration of the applicable period. In connection with the
Collaboration Agreement, the Company agreed to pay BioPharmaWorks a monthly fee
of $10,000, subject to the right of the Company to pay a negotiated hourly rate
in lieu of the monthly payment and agreed to issue to BioPharmaWorks certain
equity-based compensation. In April 2018, it was mutually agreed to suspend
services and payments under the Collaboration Agreement, without extending its
term, for the period from February 1, 2018 through the September 13, 2019
anniversary date. In February 2019, the Company and BioPharmaWorks subsequently
agreed to resume the Collaboration Agreement effective March 1, 2019, and the
Collaboration Agreement is currently in effect. The Company recorded charges to
operations pursuant to this Collaboration Agreement of $131,650, including
reimbursed expenses of $11,650, and $100,000 for the years ended December 31,
2020 and 2019, respectively, which were included in research and development
costs in the consolidated statements of operations.
Effective August 12, 2020, the Company entered into a Master Service Agreement
with the Foundation for Angelman Syndrome Therapy (FAST) to collaborate in
supporting preclinical studies of the potential benefit of LB-100 in a mouse
model of Angelman Syndrome (AS) as reported in The Proceedings of The National
Academy of Science (Wang et al, June 3, 2019). The preclinical studies will take
place at The University of California - Davis under the direction of Dr. David
Segal, an internationally recognized leader in AS research. If the preclinical
studies confirm that LB-100 reduces AS signs in rodent models, the Company has
agreed to enter into discussions with FAST with respect to possible
collaborations to most efficiently assess the benefit of LB-100 in patients with
AS, which is a rare disease affecting an estimated one out of 12,000 to one out
of 20,000 persons in the United States. The genetic cause of AS, reduced
function of a specific maternal gene called Ube3, has been understood for some
time, but the molecular abnormality resulting from the genetic lesion has now
been shown to be increased concentrations of protein phosphatase 2A (PP2A), a
molecular target of the Company's investigational compound, LB-100. The Company
has agreed to provide FAST with a supply of LB-100 to be utilized in the conduct
of this study, which is initially expected to be completed within three years.
Conditioned on FAST's completion of this study, the Company has agreed to pay
FAST five percent (5%) of all proceeds, as defined in the Master Service
Agreement, received by the Company, up to a maximum of $250,000 from the
exploitation of the study results.
Effective December 21, 2020, the Company entered into a services agreement with
IRTH Communications, LLC for investor/public relations, financial communications
and strategic consulting services, effective for an initial term of twelve
months and renewable annually thereafter. The Company agreed to pay a monthly
fee of $7,500, including any renewal term, and also agreed to issue restricted
shares of common stock, fully vested upon issuance, with a grant date fair value
of $100,000. Upon the commencement of any renewal term, the Company will be
obligated to issue additional restricted shares of common stock, fully vested
upon issuance, with a grant date fair value of $100,000.
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Off-Balance Sheet Arrangements
At December 31, 2020, the Company did not have any transactions, obligations or
relationships that could be considered off-balance sheet arrangements.
Trends, Events and Uncertainties
Research and development of new pharmaceutical compounds is, by its nature,
unpredictable. Although we will undertake research and development efforts with
commercially reasonable diligence, there can be no assurance that our cash
position will be sufficient to enable us to develop our pharmaceutical compounds
to the extent needed to create future sales to sustain operations as
contemplated herein.
There can be no assurances that one or more of our pharmaceutical compounds will
obtain the regulatory approvals and market acceptance to achieve sustainable
revenues sufficient to support our operations. Even if we are able to generate
revenues, there can be no assurances that we will be able to achieve operating
profitability or positive operating cash flows. There can be no assurances that
we will be able to secure additional financing, to the extent required, on
acceptable terms or at all. If cash resources are insufficient to satisfy our
ongoing cash requirements, we would be required to reduce or discontinue our
research and development programs, or attempt to obtain funds, if available
(although there can be no assurances), through strategic alliances that may
require us to relinquish rights to certain of our pharmaceutical compounds, or
to curtail or discontinue our operations entirely.
Other than as discussed above, we are not currently aware of any trends, events
or uncertainties that are likely to have a material effect on our financial
condition in the near term, although it is possible that new trends or events
may develop in the future that could have a material effect on our financial
condition.
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LIXTE BIOTECHNOLOGY HOLDINGS, INC. 
