Forward Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. Forward-looking statements made in this Form 10-Q include statements about:
• our anticipation that future broad clinical trial studies encompassing larger populations of cancer patients with varying cancers should reveal the full potential of the existing developed strategy; • our beliefs regarding the future of our competitors; • our belief that there is a large unmet need in cancer diagnostics exists in early diagnosis; accurate diagnosis; • our belief that there is a need in this segment for an easier blood-based test that will increase compliance and minimize discomfort; • our expectation that the demand for our products will eventually increase; • our expectation that we will be able to raise capital when we need it; and • our expectation that there is a new market for screening tests.
These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:
• general economic and business conditions; • our ability to identify attractive products and negotiate their acquisition or licensing; • volatility in prices for our products; • risks inherent in the pharmaceutical industry; • competition for, among other things, capital, pharmaceutical products and skilled personnel; and • other factors discussed under the section entitled "Risk Factors".
While these forward-looking statements and any assumptions upon which they are
based are made in good faith and reflect our current judgment regarding the
direction of our business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other
future performance suggested herein. Except as required by applicable law,
including the securities laws of
As used in this interim report on Form 10-Q and unless otherwise indicated, the
terms "we", "us" and "our" refer to
Corporate Overview
We were incorporated in the
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Pursuant to a license agreement and research funding agreement (the "License
Agreement") dated
As consideration for the worldwide exclusive license of the Products, our Subsidiary will pay, issue and fund the following to Ramot:
(a) a royalty (the "Royalty") on worldwide net sales of the Products by our company and its affiliates or sublicensee; (b) a minimum annual royalty, credited against the Royalty; (c) percentages of all payments received in connection with a sublicense; (d) issue warrants to purchase, for nominal consideration, the number of common shares of the Subsidiary such that Ramot holds a minority interest in the Subsidiary; and (e) fund research expenditures for the research of the Technology.
After the entry into of the License Agreement, we are focused on the development of Savicell.
Our Current Business Savicell
Savicell is a Liquid ImmunoBiopsyTM company that targets early, non-invasive (blood test) detection of multiple diseases with a patented immunometabolism platform. In addition, it may be used to track/predict treatment effectiveness, including immunotherapy. This exciting field of "immunometabolism" is emerging in pharmaceutical development, given that a normal metabolic state of the immune system is linked to its ability to combat infectious disease and cancer. There are growing publications linking the spectrum of immune system metabolic states as a basis for categorizing human disease. Savicell is at the forefront of developing diagnostics in this new space. This is an important differentiator in the multi-billion liquid biopsy market as it gives Savicell a very strong capability for early stage detection where other liquid biopsy technologies have difficulties.
Initially, Savicell is focused on the multibillion-dollar cancer diagnosis market. Savicell deploys Well-Shield™ technology, a Liquid ImmunoBiopsy™ diagnostic platform. In contrast to existing technologies that evaluate secretions of cancer cells, Well-Shield's ImmunoBiopsy platform receives data directly from the immune system. Importantly, Well-Shield is different in that it is a functional test measuring the metabolic activation profile of the immune system as an indicator of disease status. As an immune system metabolic test, it is inherently suited for early detection.
The technology has now received intellectual property protection with a patent
approved in
Metabolic changes in the immune system modulate cell fate and function, influencing immune response outcomes. Savicell technology measures the energy changes of the immune system, which are disease-specific, and identifies the ailment.
Immune cells are the first to recognize and respond to the formation of cancer cells. When naïve lymphocytes detect cancer antigen, they undergo various differentiation processes aimed at initiating the immune response and bringing it to an optimal level of activity.
One of the most important recent discoveries is that immune system cells alter their energy generation in order to obtain an effector function. The metabolic change is called a metabolic shift, and its key purpose is command and control of the effector function, which produces and secretes cytokines and chemokines.
The immune system is composed of several groups each with a number of subgroups. Each group and subgroup has a specific energy generation profile. Example of groups are naïve cells, effector cells, regulator cells, and memory cells. The metabolic changes of the immune system cells are direct indicators of the performance of the immune system.
Immune cells use various processes to generate energy. These include oxidative phosphorylation, glycolysis, and the breakdown of proteins and nitrogenous bases. The energy generation produces changes in extracellular acidification. Lactic acid is generated in glycolysis, carbon dioxide from oxidative phosphorylation, and ammonia from the breakdown of proteins and nitrogenous bases. Acidification is measured in "open" versus "closed" (air-sealed) wells to track the accumulations of soluble versus volatile metabolic products (lactic acid versus carbon dioxide and ammonia). Savicell's tests measure these acidification (pH) changes.
Our technology exposes the immune system cells to stimulants that have been characterized specifically for the method. The process of acid production described above and the monitoring of the pH level in the cell environment allows early detection of disease. This is because the metabolic profiles of immune cells in sick people are different from those of the healthy.
Immune cells of sick people have already been activated (metabolic shift) in vivo against cancer proteins. As a result, acidification rates are different compared to the immune cells of healthy individuals that have not been exposed in vivo to cancer proteins. To measure extracellular acidification Savicell adds a pH-sensitive impermeable fluorescence probe along with the cells and stimulants to the microwell plate, which is monitored over time. Various stimulants are chosen to increase the pH signal and to more specifically characterize the disease.
Savicell ImmunoBiopsy platform uses three types of stimulants:
1. General stimulants that activate all immune system cells in a non-specific mode, and are used as positive controls for testing. Examples are para-methoxyamphetamine (PMA), lipopolysaccharides (LPS), and concanavalinA (ConA).
2. Metabolic stimulants used as substrates, whose consumption increases in activated cells, especially those undergoing increased glycolysis. Examples are glucose and L-glutamine.
3. Cancer-specific stimulants, including those by cancer type (e.g. lung). These
enhance separation by specific cancer type as well as distinguishing cancer from
healthy and other diseases. Examples are human epidermal growth factor receptor
2 (HER2) and
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The Savicell vision is to develop and commercialize a line of patient-friendly blood tests that enable early diagnosis, staging, and monitoring, thereby saving lives and ensuring appropriate treatment. Cancer is our initial focus.
The need for early diagnosis
Cancer cases are increasing, with more than 20 million new cases predicted in
2025, compared to 12 million in 2008. Early detection is very important because
it can improve outcomes. Typically, more treatment options are available when
cancer is diagnosed early, and survival improves. In
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While surgical biopsies are the norm, they are invasive and expensive. The need
for simpler and more efficient processes for cancer detection has incentivized
some 38 companies in
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Using technologies based on circulating tumor cells, exosomes, and circulating tumor nucleic acids, liquid biopsy companies are making progress in developing products that have advantages versus current technologies. However, it appears more likely that these types of liquid biopsy technologies best support late stage cancers, with technical challenges remaining for early-stage cancers and early cancer screening.
In contrast, the Well-Shield patented ImmunoBiopsy platform is unique in the Liquid Biopsy market. And we believe that as an immune system functional test it is inherently better suited for early detection.
Product focus
Savicell conducted clinical work for tests specific to breast and lung cancers in multiple medical centers. We had encouraging early reviews of our breast cancer and lung cancer analyses albeit on relatively small sample sizes. Specifically, we distinguished between breast cancer patients and healthy donors, and lung cancer patients and healthy donors, with high sensitivity and specificity of greater than 95% in both cancers. In addition, we were able to show that there is a metabolic profile difference between other breast disease donors and breast cancer donors and between COPD (chronic obstructive pulmonary disease) donors and lung cancer donors.Based on this early potential, Savicell has decided to focus our resources on lung cancer as our lead product.
Savicell's lung cancer clinical study results were published in Cancer
Immunology and Immunotherapy that validate the promise of Savicell's Liquid
ImmunoBiopsy™. The published study uses the
Novel non-invasive early detection of lung cancer using liquid immunobiopsy
metabolic activity profiles
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https://doi.org/10.1007/s00262-018-2173-5
https://link.springer.com/article/10.1007%2Fs00262-018-2173-5
Abstract
Lung cancer is the leading cause of cancer death worldwide. Survival is largely dependent on the stage of diagnosis: the localized disease has a 5-year survival greater than 55%, whereas, for spread tumors, this rate is only 4%. Therefore, the early detection of lung cancer is key for improving prognosis. In this study, we present an innovative, non-invasive, cancer detection approach based on measurements of the metabolic activity profiles of immune system cells. For each Liquid ImmunoBiopsy test, a 384 multi-well plate is loaded with freshly separated PBMCs, and each well contains 1 of the 16 selected stimulants in several increasing concentrations. The extracellular acidity is measured in both air-open and hermetically-sealed states, using a commercial fluorescence plate reader, for approximately 1.5 h. Both states enable the measurement of real-time accumulation of 'soluble' versus 'volatile' metabolic products, thereby differentiating between oxidative phosphorylation and aerobic glycolysis. The metabolic activity profiles are analyzed for cancer diagnosis by machine-learning tools. We present a diagnostic accuracy study, using a multivariable prediction model to differentiate between lung cancer and control blood samples. The model was developed and tested using a cohort of 200 subjects (100 lung cancer and 100 control subjects), yielding 91% sensitivity and 80% specificity in a 20-fold cross-validation. Our results clearly indicate that the proposed clinical model is suitable for non-invasive early lung cancer diagnosis, and is indifferent to lung cancer stage and histological type.
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Savicell had a poster presentation on clinical results focused on early stage
lung cancer at the
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Lung cancer
Less than 20% of lung cancers are diagnosed at an early stage, with a five-year survival rate (completely resected NSCLC stage 1A) that ranges from 67 to 89% (4). Unfortunately, the majority of lung cancer cases (57%) are diagnosed at an advanced stage when five-year survival is as low as 4%. This is because lung cancer symptoms present themselves at later stages of the disease.
Cigarette smoke remains the main risk factor for lung cancer, with 85% to 90% of
lung cancer cases in the
With improved low-dose computed tomography (LDCT) technology, it is possible to detect potential malignant nodules in high-risk populations. Pulmonary nodules are small, focal, radiographic opacities that may be solitary or multiple. The management goal of patients with pulmonary nodules is to distinguish between benign and malignant nodules, speeding diagnosis for malignant nodules while minimizing unnecessary and invasive testing of those that are benign. Many pulmonary nodules are detected incidentally in computed tomography (CT) and chest x-rays examination (not related to the indication for obtaining the CT or x-rays examination) and in scheduled LDCT screening.
The largest
Broader Screening
Because of cost-benefit ratios (including possible radiation risks), LDCT was approved only for a heavy- use segment of past and current smokers. Specifically, Americans aged 55 to 80 years old who have a 30 pack-year smoking history and currently smoke or have quit within the past 15 years. This represents about 10 million people or about 11% of the 94 million past and current smokers in the US. There is still a major unmet need for a safer, cost- effective liquid biopsy test that can help screen for lung cancer in the broader past and current smoker population.
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Indeterminate Nodules
A total of 96.4% of the positive screening results (NLST) in the low- dose CT
group and 94.5% in the radiography group were false positive results. The
estimated number of pulmonary nodules in the
After nodule findings, the follow-up procedures to diagnose lung cancer are expensive, invasive procedures like biopsy. Bronchoscopy can have significant complication risks, and follow-up imaging adds to radiation risks. Millions of false positive cases annually could lead to unnecessary invasive procedures on many smokers or past smokers who do not actually have lung cancer, driving higher costs, mortality and morbidity.
There is an important need for a safer liquid biopsy test that can assist in the diagnosis of indeterminate nodules and significantly reduce the number of false positive results.
Lung cancer strategy
In the longer term, we plan to develop a screening test for lung cancer.
However, our initial goal is to provide an additional tool for clinicians,
designed to assist in the diagnosis of indeterminate nodules identified by
imaging. The Well-Shield test is intended to help a clinician decide on invasive
and/or non-invasive follow- up. It could help reduce the majority of the false
positive results and reduce the number of unnecessary invasive procedures by
more than 200,000 annually in the US (5)(6). As a result, Well-Shield's test
could drive
Sources Quoted
(1)
(2) MacMahon H, Austin JH, Gamsu G, et al. Guidelines for management of small
pulmonary nodules detected on CT scans: a statement from the
(3)
(4) Apichat Tantraworasin et al. ISRN Surgery Volume 2013, Article ID 175304, 7 pages
(5) Moving Beyond the National Lung Screening Trial: Discussing Strategies for
Implementation of Lung Cancer Screening Programs
(6) Assume 10 million patients screened and sensitivity and specificity of 92% and 75% respectively. Well-Shield may have higher or lower sensitivity and specificity.
(7) Cancer Facts & Figures 2015.
(8) World Cancer Report 2014.
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Results of Operations
Revenues
We have not earned any revenue from operations since our inception and further losses are anticipated in the development of our business. We are currently in the development stage of our business and we can provide no assurances that we will generate revenue in the foreseeable future.
Expenses
For the three and nine months ended
Three Three Nine Nine months months months months ended ended ended ended September September September September 30, 2019 30, 2018 30, 2019 30, 2018 General and Administrative Expenses $ $ $ $ Accounting Fees 7,500 7,500 22,500 22,500 Audit & Tax Fees 20,595 10,019 61,228 82,465 Bank Fees 155 113 567 478 Consulting Fees 182,895 92,381 366,412 296,184 Lease Expense 9,198 - 26,662 - Filing and Transfer Agent Fees 27 2,618 8,653 6,484 Insurance Expense 1,306 10,823 9,626 25,337 Marketing Expense 1,155 - 5,574 - Legal Fees 5,216 6,808 13,956 16,852 Office and Miscellaneous Expense 1,323 15,529 7,467 20,443 Payroll Expense 9,213 8,852 27,149 27,312
Research and Development Expense 406,664 449,188 1,193,917 1,853,950 Travel Expenses
13,915 1,286 24,186 8,621 659,162 605,117 1,767,897 2,360,626
Three-Month Period Ended
Our expenses increased by approximately 8.9% during the three months ended
Nine-Month Period Ended
Our expenses decreased by approximately 25.1% during the nine months ended
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Liquidity And Capital Resources
Working Capital September 30, 2019 December 31, 2018 $ $ Total Current Assets 257,651 193,038 Total Current Liabilities 563,083 440,716 Working Capital (Deficiency) (305,432) (247,678)
Our operations consumed more cash in the first 9 months of 2019 as compared to
the corresponding 9 months in 2018 as less reliance was placed on current
payables as a means of financing the ongoing operations. However, we raised more
financing dollars between debt and equity issuances in the first 9 months of
2019 compared to 2018. Overall, we saw a decrease in our working capital
position relative to our most recent year end,
Given that we are incurring significant monthly cash operating expenses, there is a need to raise additional financing in the short term as current cash balances are not sufficient to sustain our operations. Efforts are ongoing to secure additional convertible debt and equity financing and we are hopeful to realize such transactions imminently.
Recent Financings
As at
Cash Flows Nine months ended Nine months ended September 30, September 30, 2019 2018 $ $ Net Cash (Used in) Operating Activities (1,274,420 ) (939,225 ) Net Cash Provided by Financing Activities 1,340,654 1,013,145 Net Cash (Used in) Investing Activities - (5,152 )
Cash (Used in) Operating Activities
The increase in cash used in operating activities compared to the same period last year is due primarily to reduced reliance on short term liabilities to finance current operations.
Cash Provided by Financing Activities
The increase in cash provided by financing activities compared to the same period last year results primarily from the fact that the aggregate debt and equity financings realized in the first 9 months of 2019 exceeded that realized in the first 9 months of 2018.
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Cash Used in Investing Activities
No funds were used in purchasing capital assets during the third quarter of 2019.
Plan of Operation
We are an early-stage company. There exists substantial doubt that we can continue as an on-going business for the next 12 months unless we obtain additional capital to pay our expenses. This is because we have not generated any revenues and no material revenues are anticipated until we further develop our business. There is no assurance we will reach this point.
Our primary objectives for the next twelve-month period are to further develop the Technology and to advance the Technology and the related clinical testing. The pace at which we will advance the development of the Technology will depend, in part, on the quantum of additional financing that we are able to raise within the balance of 2019. Once such amount becomes known, we will be in a position to estimate the overall expenditure profile for the ensuing 12 months.
If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we may be forced to cease the operation of our business.
Going Concern
The financial statements accompanying this report have been prepared on a going
concern basis, which implies that our company will continue to realize its
assets and discharge its liabilities and commitments in the normal course of
business. Our company has not generated revenues since inception and has never
paid any dividends and is unlikely to pay dividends or generate earnings in the
immediate or foreseeable future. The continuation of our company as a going
concern is dependent upon the continued financial support from our shareholders,
the ability of our company to obtain necessary equity financing to achieve our
operating objectives, and the attainment of profitable operations. As at
Due to the uncertainty of our ability to meet our current operating expenses and
the capital expenses noted in their report on the financial statements for the
year ended
The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
Future Financings
We will require additional financing to fund our planned operations, including further development, clinical testing, regulatory requirements, and commercializing our existing assets. We currently do not have committed sources of additional financing and may not be able to obtain additional financing, particularly, if the volatile conditions in the stock and financial markets, and more particularly, the market for early development stage pharmaceutical company stocks persist.
There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to delay or scale down some or all of our development activities or perhaps even cease the operation of our business.
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Since inception we have funded our operations primarily through equity and debt financings and we expect that we will continue to fund our operations through the equity and debt financing. If we raise additional financing by issuing equity securities, our existing stockholders' ownership will be diluted. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his, her, or its investment in our common stock. Further, we may continue to be unprofitable.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
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