As filed with the Securities and Exchange Commission
on January 29, 2024
Registration Statement No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Longeveron Inc.
(Exact name of registrant as specified in its
charter)
Delaware | | 2834 | | 47-2174146 |
(State or Other Jurisdiction of Incorporation or Organization) | | (Primary Standard Industrial Classification Code Number) | | (I.R.S. Employer Identification Number) |
1951 NW 7th Avenue, Suite 520
Miami, Florida 33136
(305) 909-0840
(Address, including zip code, and telephone
number, including area code, of registrant’s principal executive offices)
Wa’el Hashad
Chief Executive Officer
1951 NW 7th Avenue, Suite 520
Miami, Florida 33136
(305) 909-0840
(Name, address, including zip code, and telephone
number,
including area code, of agent for service)
Copies to:
Jennifer Minter, Esq.
Brian North, Esq.
Buchanan Ingersoll & Rooney PC
Union Trust Building
501 Grant Street, Suite 200
Pittsburgh, PA 15219
(412) 562-8800
Approximate date of commencement of proposed
sale to the public: From time to time after this registration statement becomes effective.
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following
box: ☒
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | Emerging growth company | ☒ |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this prospectus is
not complete and may be changed. The selling stockholders may not sell these securities pursuant to this prospectus until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and
is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion,
Dated January 29, 2024
PRELIMINARY PROSPECTUS
1,450,172 Shares of Class A Common Stock
This prospectus relates to the re-sale or other
disposition from time to time by certain selling stockholders identified herein (each, a “Selling Stockholder” and, together,
the “Selling Stockholders”) or their pledgees, assignees, distributees and successors-in-interest, from time to time, of up
to of up to 1,450,172 shares of our Class A Common Stock, par value $0.001 per share (“Common Stock”) issuable upon the
exercise of certain warrants held by the Selling Stockholders (including shares that may be issued to the holder in lieu of fractional
shares).
We are registering the offer and sale of Common
Stock on behalf of the Selling Stockholders to satisfy certain registration rights that we have granted to the Selling Stockholders.
Each Selling Stockholder may, from time to time,
sell, transfer, or otherwise dispose of any or all of the Common Stock on any stock exchange, market, or trading facility on which shares
of our Common Stock are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the
time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The Selling Stockholders will bear all commissions and discounts, if any, attributable to the sales of Common Stock. We will bear all
other costs, expenses, and fees in connection with the registration of the Registered Securities. See “Plan of Distribution”
which begins on page 60 of this prospectus.
We are not offering any shares of our Common Stock
for sale under this prospectus. We will not receive any of the proceeds from the sale or other disposition of our Common Stock by the
Selling Stockholders. However, we may receive proceeds of up to approximately $2.4 million if all of the Warrants covered by this prospectus
are exercised for cash, based on the per share exercise price of the warrants held by the Selling Stockholders.
Our Common Stock is traded on the NASDAQ Capital
Market under the symbol “LGVN”. On January 26, 2024, the last reported sale price for our Common Stock as reported on the
NASDAQ Capital Market was $0.80 per share.
Investing in our securities involves a high
degree of risk. Before making any investment in these securities, you should consider carefully the risks and uncertainties in the section
entitled “Risk Factors” beginning on page 11 of this prospectus and in the other documents that are incorporated by reference.
Neither the Securities and Exchange Commission
(the “SEC”) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy
or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2024
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus provides you with a general description
of the Common Stock that may be resold by the Selling Stockholders. In certain circumstances, we may provide a prospectus supplement that
will contain specific information about the terms of a particular offering by the Selling Stockholders. We also may provide a prospectus
supplement to add information to, or update or change information contained in, this prospectus. To the extent there is a conflict between
the information contained in this prospectus and any prospectus supplement, you should rely on the information in the prospectus supplement,
provided that if any statement in one of these documents is inconsistent with a statement in another document having a later date — for
example, a document incorporated by reference in this prospectus or any prospectus supplement — the statement in the
later-dated document modifies or supersedes the earlier statement.
This prospectus is part of a registration statement
that we have filed with the Securities and Exchange Commission pursuant to which the Selling Stockholders named herein may, from time
to time, offer and sell or otherwise dispose of the Common Stock covered by this prospectus. You should rely only on the information contained
in this prospectus or any related prospectus supplement. We have not authorized anyone to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on it. The information contained in this prospectus is accurate
only on the date of this prospectus. Our business, financial condition, results of operations and prospects may have changed since such
date. Other than as required under the federal securities laws, we undertake no obligation to publicly update or revise such information,
whether as a result of new information, future events or any other reason. This prospectus contains summaries of certain provisions contained
in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries
are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed,
or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain
copies of those documents as described below under “Where You Can Find More Information.”
This prospectus does not constitute an offer to
sell or the solicitation of an offer to buy any of our securities other than the Common Stock covered hereby, nor does this prospectus
constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside
the United States are required to inform themselves about, and to observe, any restrictions as to the offering and the distribution of
this prospectus applicable to those jurisdictions.
This prospectus contains references to trademarks,
trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred
to in this prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the
applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do
not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement
or sponsorship of us by, any other companies.
PROSPECTUS SUMMARY
This summary highlights, and is qualified in
its entirety by, the more detailed information and financial statements included elsewhere or incorporated by reference in this prospectus.
This summary does not contain all of the information that may be important to you in making your investment decision. You should read
this entire prospectus carefully, especially the “Risk Factors” section beginning on page 11, and the financial statements
and other information incorporated by reference into this prospectus. In this prospectus, except as otherwise indicated, “Longeveron,”
the “Company,” “we,” “our,” and “us” refer to Longeveron Inc., a Delaware corporation.
Business Overview
We are a clinical stage biotechnology company
developing regenerative medicines to address unmet medical needs. The Company’s lead investigational product is Lomecel-B™,
an allogeneic medicinal signaling cell formulation sourced from bone marrow of young, healthy adult donors. Lomecel-B™ has multiple
potential mechanisms of action that promote tissue repair and healing with broad potential applications across a spectrum of disease areas.
The underlying mechanism(s) of action that lead to the tissue repair programs include the stimulation of new blood vessel formation, modulation
of the immune system, reduction in tissue fibrosis, and the stimulation of endogenous cells to divide and increase the numbers of certain
specialized cells in the body.
We are currently pursuing three pipeline indications:
Hypoplastic Left Heart Syndrome (“HLHS”), Alzheimer’s disease (“AD”), and Aging-related Frailty. Our mission
is to advance Lomecel-B™ and other cell-based product candidates into pivotal or Phase 3 trials, with the goal of achieving regulatory
approvals, subsequent commercialization, and broad use by the healthcare community.
As of October 2023, we have completed five U.S.
clinical studies of Lomecel-B™: Phase 1 AD, Phase 1 HLHS, Phase 1/2 Aging-related Frailty (“HERA Trial”), Phase 2a AD
(“CLEAR MIND Trial”), and Phase 2b Aging-related Frailty. We currently have two clinical trials actively enrolling patients:
Phase 2b HLHS (“ELPIS II” trial) and Japan Phase 2 study in Japanese patients with Aging-related Frailty. Additionally, we
sponsor a registry in The Bahamas under the approval and authority of the National Stem Cell Ethics Committee. The Bahamas Registry Trial
administers Lomecel-B™ to eligible participants at two private clinics in Nassau for a variety of indications. While Lomecel-B™
is considered an investigational product in The Bahamas, under the approval terms from the Bahamian National Stem Cell Ethics Committee,
we are permitted to charge a fee to participate in the Registry Trial.
HLHS
Our HLHS program is focused on the potential clinical
benefits of Lomecel-B™ as an adjunct therapeutic to standard-of-care HLHS surgery. HLHS is a rare and devastating congenital heart
defect in which the left ventricle is severely underdeveloped. As such, babies born with this condition die shortly after birth without
undergoing a complex series of reconstructive heart surgeries. Despite the life-saving surgical interventions, clinical studies show that
only 50 to 60 percent of affected individuals survive to adolescence. We have completed a Phase 1 open-label study (“ELPIS I”)1
that supported the safety and tolerability of Lomecel-B™ for HLHS, when directly injected into the functional right ventricle during
the second-stage standard-of-care surgery (adding minimal additional time to the surgical procedure). Preliminary data also suggested
potential benefits on heart function. In addition, our early clinical stage data is favorable as compared to historical controls for survival
and reduced need for heart transplants. Longeveron is currently conducting a controlled Phase 2 ELPIS II study which, if positive could
add to the clinical data suggesting the functional and clinical benefits of Lomecel-B™ in HLHS patients.
1 |
Sunjay Kaushal, MD, PhD, Joshua M Hare, MD, Jessica R Hoffman, PhD, Riley M Boyd, BA, Kevin N Ramdas, MD, MPH, Nicholas Pietris, MD, Shelby Kutty, MD, PhD, MS, James S Tweddell, MD, S Adil Husain, MD, Shaji C Menon, MBBS, MD, MS, Linda M Lambert, MSN-cFNP, David A Danford, MD, Seth J Kligerman, MD, Narutoshi Hibino, MD, PhD, Laxminarayana Korutla, PhD, Prashanth Vallabhajosyula, MD, MS, Michael J Campbell, MD, Aisha Khan, PhD, Eric Naioti, MSPH, Keyvan Yousefi, PharmD, PhD, Danial Mehranfard, PharmD, MBA, Lisa McClain-Moss, Anthony A Oliva, PhD, Michael E Davis, PhD, Intramyocardial cell-based therapy with Lomecel-B™ during bidirectional cavopulmonary anastomosis for hypoplastic left heart syndrome: The ELPIS phase I trial, European Heart Journal Open, 2023. |
Alzheimer’s Disease
In September 2023, we completed our Phase 2a AD
CLEAR MIND Trial. This trial enrolled patients with mild Alzheimer’s disease and was designed as a randomized, double-blind, placebo-controlled
study across ten U.S. centers. Our primary objective was to assess safety, and we tested three distinct Lomecel-BTM dosing
regimens against a placebo.
The study demonstrated positive results. Notably,
all Lomecel-B™ treatment groups met the safety primary endpoint and showed slowing/prevention of disease worsening relative to
the placebo. There were statistically significant improvements in the secondary efficacy endpoint for both the low-dose Lomecel-BTM
group and the pooled treatment groups compared to the placebo. Other doses also showed promising results in slowing/prevention
of disease worsening. These findings support both the safety and potential therapeutic benefit of Lomecel-BTM in managing
mild Alzheimer’s disease, laying a strong groundwork for subsequent trials in this indication and potentially others.
Aging-related Frailty
Improvement of the quality of life for the aging
population is one of the strategic directions of the Company. Life expectancy has substantially increased over the past century due to
medical and public health advancements. However, this longevity increase has not been paralleled by health span – the period of
time one can expect to live in relatively good health and independence. For many developed and developing countries, health span lags
life-expectancy by over a decade. This has placed tremendous strain on healthcare systems in the management of aging-related ailments
and presents additional socioeconomic consequences due to patient decreased independence and quality-of-life. Since these strains continue
to increase with demographic shifts towards an increasingly older population, improving health span has become a priority for health agencies,
such as the National Institute on Aging (“NIA”) of the National Institutes of Health (“NIH”), the Japanese Pharmaceuticals
and Medical Devices Agency (“PMDA”), and the European Medicines Agency. As we age, many experience a decline in our own stem
cells, a decrease in immune system function (known as “immunosenescence”), diminished blood vessel functioning, chronic inflammation
(known as “inflammaging”), and other aging-related alterations that affect biological functioning. Our preliminary clinical
data suggest that Lomecel-B™ may potentially address these problems through multiple mechanisms of action that simultaneously target
key aging-related processes. Longeveron is currently engaged in a Phase 2 trial studying Lomecel-B™ in Aging-related Frailty under
INDs with the US FDA and under the PMDA in Japan. There are currently 5 patients enrolled in the Japan study and we anticipate completing
the enrollment in this study by the end of 2024. In addition, we are using Lomecel-B™ in registry trials in The Bahamas as part
of the real-world data generation for the aging population.
Since our founding in 2014, we have focused the
majority of our time and resources on the following: organizing and staffing our company, building, staffing and equipping a cGMP manufacturing
facility with research and development labs, business planning, raising capital, establishing our intellectual property portfolio, generating
clinical safety and efficacy data in our selected disease conditions and indications, and developing and expanding our manufacturing processes
and capabilities.
We manufacture all of our own product candidates
for clinical trials. In 2017, we opened a manufacturing facility comprised of eight clean rooms, two research and development laboratories,
and warehouse and storage space. We have supply contracts with multiple third parties for fresh bone marrow, which we use to produce our
product candidate for clinical testing and research and development. From time to time, we enter into contract development and manufacturing
contracts or arrangements with third parties who seek to utilize our product development capabilities.
Since the time that we became a publicly traded
company in February 2021, we have sold 6,798,041 shares of Common Stock through our IPO, a December 2021 private issuance of public equity
(“PIPE”) offering (the “2021 PIPE Offering”), a September 2023 rights offering, an October 2023 registered direct
offering with pre-funded warrants and concurrent private placement (the “October 2023 Offering”) and a December 2023 registered
direct offering and concurrent private placement (the “December 2023 Offering”), along with warrants to purchase (i) 106,400
shares of Common Stock at an initial exercise price of $12.00 per share issued to the underwriter in our IPO in February 2021 (the “IPO
Warrants”), (ii) 1,169,288 shares of Common Stock at an initial exercise price of $17.50 per share in the 2021 PIPE Offering
(the “PIPE Purchaser Warrants”) as well as representative warrants to purchase 46,722 shares of Common Stock at an exercise
price of $17.50 per share (the “PIPE Representative Warrants” and together with the PIPE Purchaser Warrants the “PIPE
Warrants”), (iii) 4,848,486 shares of Common Stock at an exercise price of $1.65 per share (the “October 2023 Private Placement
Warrants”) as well as placement agent warrants to purchase 169,697 shares of Common Stock at an exercise price of $2.0625 per share
(the “October 2023 Placement Agent Warrants”) in the October 2023 Offering (collectively, the “October 2023 Warrants”),
and (iv) 1,355,301 shares of Common Stock at an exercise price of $1.62 per share (the “December 2023 Private Placement Warrants”)
as well as placement agent warrants to purchase 94,871 shares of Common Stock at an exercise price of $2.1813 per share (the “December
2023 Placement Agent Warrants”) in the December 2023 Offering (collectively, the “December 2023 Warrants”), for aggregate
gross proceeds of $2.36 million prior to discounts, commissions and other offering expenses. The exercise price of the PIPE Purchaser
Warrants were re-set in accordance with their terms upon announcement and in connection with the consummation of the September 2023 rights
offering to $5.25 per share.
When appropriate funding opportunities arise,
we routinely apply for grant funding to support our ongoing research and since 2016 we have received approximately $16.0 million in grant
awards ($11.5 million of which has been directly awarded to us and is recognized as revenue when the performance obligations are met)
from the NIA of the NIH, the National Heart Lung and Blood Institute (“NHLBI”) of the NIH, the Alzheimer’s Association,
and the Maryland Stem Cell Research Fund of the Maryland Technology Development Corporation, or TEDCO.
Implication of Being an Emerging Growth Company
and Smaller Reporting Company
We are an “emerging growth company”
as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. We will remain an emerging growth company
until the earlier of (1) the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering,
(2) the last day of the fiscal year in which we have total annual gross revenues of at least $1.235 billion, (3) the date on which we
are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), which would occur if the market value of our Common Stock held by non-affiliates exceeded $700.0 million
as of the last business day of our most recently completed second fiscal quarter or (4) the date on which we have issued more than $1.0
billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified
reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public
companies. As an emerging growth company, we may (i) reduce our executive compensation disclosure; (ii) present only two years of audited
financial statements, plus unaudited condensed financial statements for any interim period, and correspondingly reduced Management’s
Discussion and Analysis of Financial Condition and Results of Operations disclosure; (iii) avail ourselves of the exemption from the requirement
to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the
Sarbanes-Oxley Act of 2002; and (iv) not require stockholder non-binding advisory votes on executive compensation or golden parachute
arrangements.
We have availed ourselves in this prospectus of
the reduced reporting requirements described above. As a result, the information that we provide stockholders may be less comprehensive
than what you might receive from other public companies. When we are no longer deemed to be an emerging growth company, we will not be
entitled to the exemptions provided in the JOBS Act discussed above. We have elected to avail ourselves of the exemption that allows emerging
growth companies to extend the transition period for complying with new or revised financial accounting standards. This election is irrevocable.
We are also currently a “smaller reporting
company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging
growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to
take advantage of these scaled disclosures for so long as our public float is less than $250.0 million measured on the last business day
of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our
public float is less than $700.0 million measured on the last business day of our second fiscal quarter. In the event that we are still
considered a “smaller reporting company,” at such time as we cease being an “emerging growth company,” the disclosure
we will be required to provide in our SEC filings will increase but will still be less than it would be if we were not considered either
an “emerging growth company” or a “smaller reporting company.” Specifically, similar to “emerging growth
companies,” “smaller reporting companies” are able to provide simplified executive compensation disclosures in their
filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting
firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased
disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial
statements in annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or
“smaller reporting company” may make it harder for investors to analyze our results of operations and financial prospects.
Summary of Clinical Development Strategy
Our core mission is to become a world-leading
regenerative medicine company through the development, approval, and commercialization of novel cell therapy products for unmet medical
needs, with a focus on HLHS. Key elements of our current business strategy include the following:
|
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Execution of ELPIS II, a Phase 2b randomized, placebo-controlled trial, to measure the efficacy of Lomecel-B™ in HLHS. This trial is ongoing and is being conducted in collaboration with the NHLBI through grants from the NIH. |
|
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Continue to pursue the therapeutic potential of Lomecel-B™ in Alzheimer’s disease (AD). In September 2023, we completed the Phase 2a CLEAR MIND Trial, which was a randomized, placebo-controlled trial to evaluate safety and efficacy of Lomecel-BTM in patients with mild Alzheimer’s disease. The safety primary endpoint was met across all study groups and the trial demonstrated a statistical significance in the efficacy composite Alzheimer’s disease endpoint. Overall, Lomecel-BTM demonstrated slowing/prevention of Alzheimer’s disease worsening relative to placebo. These results were consistent with the previously completed Phase 1b study. |
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Continue developing our international programs. Japan is our first non-U.S. territory in which we are conducting a randomized, double-blinded, placebo-controlled clinical trial to evaluate Lomecel-B™ for Aging-related Frailty. With successful completion of this trial and demonstration of safety, we intend to seek marketing approval under the Act on the Safety of Regenerative Medicine (ASRM). We also intend to explore conditional or full approval in Japan of Lomecel-B™ under the Pharmaceuticals and Medical Devices (PMD) Act for the treatment of Aging-related Frailty in the future, which will be guided by results from this trial and potentially others in our Frailty program. We may also explore other indications in Japan, and potentially pursue Aging-related Frailty and other indications in additional international locations for further development and commercialization. We also continue to successfully enroll in our Frailty and Cognitive Impairment registry trials in The Bahamas, and presently intend to launch an Osteoarthritis registry trial in The Bahamas as well. |
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Expand our manufacturing capabilities to commercial-scale production. |
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Collaborative arrangements and out-licensing opportunities. We will be opportunistic and consider entering into co-development, out-licensing, or other collaboration agreements for the purpose of eventually commercializing Lomecel-B™ and other products domestically and internationally if appropriate approvals are obtained. |
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Product candidate development pipeline through internal research and development and in-licensing. Through our research and development program, and through strategic in-licensing agreements, or other business development arrangements, we intend to actively explore promising potential additions to our pipeline. |
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Continue to expand our intellectual property portfolio. Our intellectual property is vitally important to our business strategy, and we take significant steps to develop this property and protect its value. Results from our ongoing research and development efforts are intended to add to our existing intellectual property portfolio. |
December 2023 Warrant Private Placement
On December 20, 2023, we entered into a securities
purchase agreement (the “Purchase Agreement”) with an institutional accredited investor (the “Purchaser”) relating
to the registered direct offering and sale of an aggregate of 1,355,301 shares of our Common Stock at a purchase price of $1.745 per share
of Common Stock (the “December 2023 Registered Direct Offering”). The shares of Common Stock issued in the December 2023 Registered
Direct Offering were offered by us pursuant to a prospectus supplement, dated December 22, 2023, and accompanying prospectus, in connection
with a takedown from our shelf registration statement on Form S-3 (File No. 333-264142), which was declared effective by the SEC on April
14, 2022.
In a private placement on December 22, 2023, concurrent
with the December 2023 Registered Direct Offering, we also sold to the Purchaser unregistered long-term warrants to purchase up to an
aggregate of 1,355,301 shares of our Common Stock (the “December 2023 Private Placement”, and together with the December 2023
Registered Direct Offering, the “December 2023 Offering”). The unregistered December 2023 Private Placement Warrants have
an exercise price of $1.62 per share, became exercisable immediately upon issuance, and expire on June 20, 2029. The Purchaser may not
exercise any portion of the December 2023 Private Placement Warrants to the extent the Purchaser would own more than 4.99% of the Company’s
outstanding Common Stock immediately after exercise. The Purchaser may decrease, or upon at least 61 days’ prior notice to the Company,
increase this percentage with respect to the December 2023 Private Placement Warrants. In no event shall such beneficial ownership limitation
exceed 9.99%.
Pursuant to an engagement letter in connection
with the Offerings, dated as of September 28, 2023, and an amendment thereto dated October 11, 2023 (as amended, the “Engagement
Letter”), between the Company and H.C. Wainwright & Co., LLC (“Wainwright” or the “placement agent”),
we issued to certain designees of Wainwright the December 2023 Placement Agent Warrants to purchase up to 94,871 shares of Common Stock,
which represent 7.0% of the aggregate number of shares of Common Stock sold in the December 2023 Registered Direct Offering. The December
2023 Placement Agent Warrants have substantially the same terms as the December 2023 Private Placement Warrants, except that the December
2023 Placement Agent Warrants have an exercise price equal to $2.1813, or 125% of the offering price per share of Common Stock sold in
the December 2023 Registered Direct Offering, and the December 2023 Placement Agent Warrants expire on December 19, 2028.
The shares of Common Stock underlying the December
2023 Warrants are being registered on the registration statement of which this prospectus forms a part in accordance with the terms of
the Purchase Agreement. We refer to the shares of Common Stock underlying the December 2023 Warrants being registered herein as the “Registered
Securities.”
Summary Risk Factors
Investing in our securities involves substantial
risks. Potential investors are urged to read and consider the risk factors relating to an investment in the offered securities set forth
and described more fully under “Risk Factors” in this prospectus as well as other information we include in this prospectus.
These risks include, but are not limited to, the following:
| ● | The price of our stock has been, and may continue to be, volatile, which could result in substantial or
total losses for investors. |
| ● | We may not be able to raise additional capital necessary to continue as a going concern. |
| ● | We have a history of losses and may not be able to achieve profitability going forward. |
| ● | Even if we consummate this offering, we will need to raise substantial additional funding. If we are unable
to raise capital when needed, we could be forced to delay, scale back, or discontinue some of our therapeutic candidate development programs
or commercialization efforts. |
| ● | We could lose our listing on the Nasdaq Capital Market if our current share price continues to decrease.
The loss of our Nasdaq listing would in all likelihood make our common stock significantly less liquid and adversely affect its value. |
| ● | We have a limited operating history and have no products approved for commercial sale, which may make
it difficult for you to evaluate our current business and predict our future success and viability. |
| ● | There are no FDA-approved allogeneic, cell-based therapies for Aging-related frailty, Alzheimer’s
disease (AD), or other aging-related conditions, nor Hypoplastic Left Heart Syndrome or other cardiac-related indications. This could
complicate and delay FDA approval of our product candidate for these indications, or other indications we study or will study. |
| ● | Ethical and other concerns surrounding the use of stem cell therapy or human tissue may negatively affect
public perception of us or our future products or product candidates, or may negatively affect regulatory approval of our future products
or product candidates, thereby reducing demand for our future products. |
| ● | The use of our product candidates or future products in individuals may expose us to product liability
claims, and we may not be able to obtain adequate product liability insurance. |
| ● | If certain license agreements are terminated, our ability to continue clinical trials and commercially
market products could be adversely affected. |
| ● | If we are unable to protect the confidentiality of our proprietary information, trade secrets, and know-how,
our competitive position could be impaired and our business, financial condition, results of operations, and prospects could be adversely
affected. |
| ● | If we are not able to successfully develop and commercialize our product candidates and obtain the necessary
regulatory approvals, we may not generate sufficient revenues to continue our business operations. |
| ● | We cannot market and sell our product candidates in the U.S. or in other countries if we fail to obtain
the necessary regulatory approvals. |
| ● | Final marketing approval of our product candidates by the FDA or other regulatory authorities for commercial
use may be delayed, limited, or denied, any of which could adversely affect our ability to generate operating revenues. |
| ● | We may not be able to secure and maintain research institutions to conduct our clinical trials. |
| ● | Ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our
business and results of operations. |
| ● | We rely on third parties to conduct certain aspects of our preclinical studies and clinical trials. If
these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements,
we may not be able to obtain regulatory approval of or commercialize any potential therapeutic candidates. |
| ● | Interim, “topline” and preliminary data from our clinical trials that we announce or publish
from time to time may change as more data become available and are subject to audit and verification procedures that could result in material
changes in the final data. |
Corporate Information
We were initially formed as a Delaware limited
liability company in October 2014. As part of our initial public offering (“IPO”) in February 2021, Longeveron LLC converted
into a Delaware corporation pursuant to a statutory conversion, and changed its name to Longeveron Inc. Additional information about us
is included in documents incorporated by reference in this prospectus. See “Where You Can Find More Information” and
“Incorporation of Certain Information by Reference.” Our principal executive offices are located at 1951 NW 7th Avenue,
Suite 520, Miami, Florida 33136, and our telephone number is (305) 909-0840. Our website address is www.longeveron.com. The information
contained in, or accessible through, our website does not constitute a part of this prospectus. We have included our website address in
this prospectus solely as an inactive textual reference.
THE OFFERING
Issuer |
Longeveron Inc. |
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Securities Offered by Selling Stockholder: |
We are registering the resale by the Selling Stockholders named in this prospectus, or their pledgees, assignees, distributees and successors-in-interest of an aggregate of 1,450,172 shares of Common Stock issuable upon exercise of the December 2023 Private Placement Warrants held by the Selling Stockholders, of which (i) up to 1,355,301 shares are issuable upon the exercise of the December 2023 Private Placement Warrants issued to the Purchaser upon the closing of the December 2023 Private Placement; and (ii) 94,871 shares are issuable upon exercise of the December 2023 Placement Agent Warrants issued to Wainwright, or its designees, pursuant to the terms of the Engagement Letter. |
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Shares of Common Stock Outstanding Prior to this Offering: |
10,290,472 shares of Common Stock and 14,839,993 shares of Class B Common Stock (assuming none of the December 2023 Warrants issued in the concurrent private placement or placement agent warrants are exercised). |
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Shares of Common Stock Outstanding assuming exercise of December 2023 Warrants (1): |
11,740,644 shares |
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Shares of Class B Common Stock Outstanding |
14,839,993 shares |
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Terms of the Offering |
The Selling Stockholders will determine when and how they will sell the Common Stock offered in this prospectus, as described in the section of this prospectus titled “Plan of Distribution” on page 60. |
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Use of Proceeds: |
The Selling Stockholders will receive the proceeds from the sale of the shares of Common Stock offered hereby. We will not receive any proceeds from the sale of the shares of Common Stock. However, we may receive proceeds in the aggregate amount of up to approximately $2.4 million if all of the December 2023 Warrants are exercised for cash. See “Use of Proceeds” on page 58 of this prospectus. |
Voting Rights: |
Shares of Common Stock are entitled to one (1) vote per share. Shares of Class B Common Stock are entitled to five (5) votes per share. Holders of our Common Stock and Class B Common Stock generally vote together as a single class, unless otherwise required by law or our certificate of incorporation (the “Certificate of Incorporation”). Each share of our Class B Common Stock is convertible into one share of our Common Stock at any time and converts automatically upon certain transfers. The Common Stock is not convertible into Class B Common Stock. |
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Dividend Policy: |
We have never declared or paid any dividends to the holders of our Common Stock, and we do not expect to pay cash dividends in the foreseeable future. We currently intend to retain any earnings for use in connection with the operation of our business and for general corporate purposes. |
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Risk Factors: |
Since our inception, we have incurred substantial losses. We will need additional funding (including the funding which may be received pursuant to a cash exercise of all the Warrants described in this prospectus) to remain a going concern, maintain operations, and to continue our current and planned clinical trial activity. Our business and our ability to execute our business strategy are subject to a number of risks of which you should be aware before you decide to buy our securities. In particular, you should carefully consider all of the risks which are discussed more fully in “Risk Factors” beginning on page 11 of this prospectus and those incorporated by reference from our filings with the SEC. |
Nasdaq Capital Market Symbol: |
LGVN |
(1) |
The number of shares of Common Stock outstanding before and after this offering is based on 10,290,472 shares of Common Stock and 14,839,993 shares of Class B Common Stock outstanding as of January 18, 2024, and excludes: |
| ● | 55,339 shares of common stock issuable upon exercise of outstanding Warrants at an exercise price of $12.00
per share; |
| ● | 1,169,288 shares of common stock issuable upon exercise of outstanding Warrants at an exercise price of
$5.25 per share; |
| ● | 46,772 shares of common stock issuable upon exercise of outstanding stock options at a weighted average
exercise price of $17.50 per share; |
| ● | 4,848,486 shares of common stock issuable upon exercise of outstanding October 2023 Private Placement
Warrants at an exercise price of $1.65 per share; |
| ● | 169,697 shares of common stock issuable upon exercise of outstanding October 2023 Placement Agent Warrants
at an exercise price of $2.0625 per share; |
| ● | 1,355,301 shares of common stock issuable upon the exercise of outstanding December 2023 Private Placement
Warrants at an exercise price of $1.62 per share; |
| ● | 94,871 shares of common stock issuable upon the exercise of outstanding December 2023 Placement Agent
Warrants at an exercise price of $2.1813 per share; |
| ● | 1,993,347 shares of common stock reserved for future issuance under our 2021 Equity Incentive Plan (the
“2021 Plan”); |
| ● | 87,584 shares issuable upon the vesting of Restricted Stock Units (RSUs) under the Company’s 2021
Plan; |
| ● | 125,000 shares issuable upon the vesting of Performance Stock Units (PSUs) under the Company’s 2021
Plan; |
| ● | 437,843 stock options outstanding with an average exercise price of $4.96 per share, issuable under the
Company’s 2021 Plan. |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains
forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current expectations
about our future results, performance, prospects, and opportunities. Such forward-looking statements can involve substantial risks and
uncertainties. All statements other than statements of historical facts contained herein, including statements regarding our future results
of operations and financial position, business strategy, prospective products, product approvals, research and development costs, future
revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products
and prospects, plans and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties
and other important factors that may cause our actual results, performance, or achievements to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can
identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,”
“predict,” “project,” “should,” “target,” “will,” or “would” or
the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking
statements contained in this prospectus include, but are not limited to, statements about:
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the ability of our clinical trials to demonstrate the safety and efficacy of our product candidates, and other positive results; |
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the timing and focus of our ongoing and future preclinical studies and clinical trials, and the reporting of data from those studies and trials; |
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the size of the market opportunity for our product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting; |
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the success of competing therapies that are or may become available; |
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the beneficial characteristics, safety, efficacy, and therapeutic effects of our product candidates; |
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our ability to obtain and maintain regulatory approval of our product candidates in the U.S., Japan, The Bahamas, and other jurisdictions; |
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our plans relating to the further development of our product candidates, including additional disease states or indications we may pursue; |
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our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available and our ability to avoid infringing the intellectual property rights of others; |
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the need to hire additional personnel and our ability to attract and retain such personnel; |
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our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
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our cash position and need to raise additional capital, the difficulties we may face in obtaining access to capital, and the dilutive impact it may have on our investors; |
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our financial performance, ability to continue as a going concern and ability to remain listed on the Nasdaq Capital Markets; and |
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the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements. |
We have based these forward-looking statements
largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we
believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not
guarantees of future performance or development. These forward-looking statements speak only as of the date of this prospectus and are
subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere
in this prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted
or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected
in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the
forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements
contained herein, whether as a result of any new information, future events or otherwise.
In addition, statements that “we believe”
and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available
to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information
may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or
review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly
rely upon these statements.
INDUSTRY AND MARKET DATA
This prospectus includes industry data and forecasts
that we obtained from industry publications and surveys, public filings, and internal company sources. Industry publications and surveys
and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there
can be no assurance as to the accuracy or completeness of the included information. Statements as to our market position and market estimates
are based on independent industry publications, government publications, third party forecasts, management’s estimates and assumptions
about our markets and our internal research. While we are not aware of any misstatements regarding the market, industry or similar data
presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed
under the headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in
this prospectus.
RISK FACTORS
Investing in our securities involves a high degree of risk. You
should consider and read carefully all of the risks and uncertainties described below, as well as other information contained in this
prospectus and which is incorporated by reference in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, before
making an investment decision with respect to our securities. The occurrence of any of the following risks or those incorporated by reference,
or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely
affect our business, financial condition, results of operations or cash flows. In any such case, the trading price of our Common Stock
could decline, and you may lose all or part of your investment. This prospectus also contains forward-looking statements and estimates
that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements
as a result of specific factors, including the risks and uncertainties described below and those incorporated by reference.
Risks Related to Our
Common Stock and the Securities Market
Trading volume in shares of our common stock on the Nasdaq
Capital Market has been limited, and stockholders may not be able to resell their shares at or above the price at which they purchase
those shares.
Trading volume in shares of our common stock on the Nasdaq Capital
Market has been limited. You may not be able to sell your shares quickly or at the market price if trading in shares of our common stock
is not active. An active or liquid market in our common stock may not develop or, if it does develop, it may not sustain. As a result
of these and other factors, shareholders may not be able to resell their shares of our common stock at or above the price at which they
purchase those shares in this offering.
Further, an inactive market may also impair our ability to raise capital
by selling shares of our common stock and may impair our ability to enter into strategic collaborations or acquire companies or products
by using our shares of common stock as consideration.
The price of our stock has been, and
may continue to be, volatile, which could result in substantial or total losses for investors.
The trading price of our common stock has been, and may continue to
be highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control. The stock market
in general, and pharmaceutical and biotechnology companies in particular, have experienced extreme price and volume fluctuations that
have often been unrelated or disproportionate to the operating performance of these companies.
Broad market and industry factors may negatively
affect the market price of our common stock, regardless of our actual operating performance. In addition to the factors discussed in this
“Risk Factors” section and elsewhere in this prospectus, these factors include:
| ● | the timing and results, or perception of the results, of preclinical studies and clinical trials of our
product candidates or those of our competitors; |
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| ● | the success of competitive products or announcements by potential competitors of their product development
efforts; |
| ● | regulatory actions with respect to our or our competitors’ product candidates or approved products; |
| ● | actual or anticipated changes in our growth rate relative to our competitors; |
| ● | regulatory or legal developments in the U.S. and other countries; |
| ● | developments or disputes concerning patent applications, issued patents or other proprietary rights; |
| ● | the recruitment or departure of key personnel; |
| ● | announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures,
or capital commitments; |
| ● | actual or anticipated changes in estimates as to financial results, development timelines or recommendations
by securities analysts; |
| ● | fluctuations in the valuation of companies perceived by investors to be comparable to us; |
| ● | market conditions in the pharmaceutical and biotechnology sector; |
| ● | changes in the structure of healthcare payment systems; |
| ● | share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; |
| ● | announcement or expectation of additional financing efforts; |
| ● | sales of our common stock by us, our insiders or our other stockholders; |
| ● | expiration of market stand-off or lock-up agreements; and |
| ● | general economic, industry and market conditions. |
The realization of any of the above risks or any of a broad range of
other risks, including those described in this “Risk Factors” section, could have a dramatic and adverse impact on
the market price of our common stock. If the market price of our common stock after this offering does not exceed the public offering
price in this offering, you may not realize any return on your investment in us and you may lose some or all of your investment. Additionally,
in the past, securities class action litigation has often been instituted against companies following periods of volatility in the market
price of a company’s securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management’s
attention and resource.
There may not be sufficient liquidity in the market for
our securities in order for investors to sell their shares.
We are a small company that is relatively unknown to stock analysts,
stockbrokers, institutional investors and others in the investment community that generate or influence sales volume, and even if we came
to the attention of such persons, they tend to be risk-averse and may be reluctant to follow an unproven company such as ours or purchase
or recommend the purchase of our shares until such time as we became more seasoned and viable. There may be periods of several days
or more when trading activity in our shares is minimal as compared to a mature issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share price. It is possible that a broader or more active public
trading market for our common stock will not develop or be sustained, or that trading levels will not continue. These factors may materially
adversely affect the market price of our common stock, regardless of our performance.
We still need to raise substantial additional
funding. If we are unable to raise capital when needed, we could be forced to delay, scale back or discontinue some of our therapeutic
candidate development programs or commercialization efforts.
The development of pharmaceutical drugs is capital
intensive. We are currently advancing Lomecel-B into clinical development. Our current cash resources are insufficient to fund our planned
operations or development plans beyond the early second quarter of 2024. We will require additional funds to advance further. If we are
capital constrained, we may not be able to meet our obligations. If we are unable to meet our obligations, or we experience a disruption
in our cash flows, it could limit or halt our ability to continue to develop our current product candidate or even to continue operations,
either of which occurrence would have a material adverse effect on us.
We expect our expenses to continue to increase in connection with our
ongoing activities, particularly as we continue the research and development of, advance the preclinical and clinical activities of, and
seek marketing approval for, our current product candidate. In addition, if we obtain marketing approval for any of our current or future
product candidates, we expect to incur significant commercialization expenses related to sales, marketing, manufacturing and distribution.
We may also need to raise additional funds sooner if we choose to pursue additional indications and/or geographies for our current product
candidate or otherwise expand more rapidly than we presently anticipate. Furthermore, we expect to continue to incur significant costs
associated with operating as a public company. If we are unable to raise capital when needed, we could be forced to delay, scale back
or discontinue the development and commercialization of one or more of our therapeutic candidates, delay our pursuit of potential licenses
or acquisitions, or significantly reduce our operations.
Our existing cash will be sufficient to fund our
operations only for various amounts of time in 2024 depending on our cash burn rate. Our future capital requirements will depend on and
could increase significantly as a result of many factors, including:
| ● | the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and
clinical trials for our current or future therapeutic candidates; |
| ● | the potential additional expenses attributable to adjusting our development plans (including any supply-related
matters) to the COVID-19 pandemic; |
| ● | the scope, prioritization and number of our research and development programs; |
| ● | the costs, timing and outcome of regulatory review of our current or future therapeutic candidates; |
| ● | our ability to establish and maintain collaborations on favorable terms, if at all; |
| ● | the achievement of milestones or occurrence of other developments that trigger payments under any additional
collaboration agreements we obtain; |
| ● | the extent to which we are obligated to reimburse, or are entitled to reimbursement of, clinical trial costs
under future collaboration agreements, if any; |
| ● | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual
property rights and defending intellectual property-related claims; |
| o | the extent to which we acquire or license other current or future therapeutic candidates and technologies; |
| o | the costs of securing manufacturing arrangements for commercial production; and |
| o | the costs of establishing or contracting for sales and marketing capabilities if we obtain regulatory approvals
to market our current or future therapeutic candidates. |
Identifying potential current or future product candidates and conducting
preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we
may never generate the necessary data or results required to obtain marketing approval and achieve drug sales.
In addition, our current or future product candidates, if approved,
may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially
available for many years, if ever. Accordingly, we will need to continue to rely on additional funding to achieve our business objectives.
Any additional fundraising efforts may divert our management from their
day-to-day activities, which may adversely affect our ability to develop and commercialize our current or future therapeutic candidates.
Disruptions in the financial markets in general have made equity and
debt financing more difficult to obtain and may have a material adverse effect on our ability to meet our fundraising needs. We cannot
guarantee that future financing will be available in sufficient amounts or on terms favorable to us, if at all. Moreover, the terms of
any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity
or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity
or convertible securities would dilute all of our stockholders. The incurrence of indebtedness could result in fixed payment obligations,
and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations
on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our
ability to conduct our business. We could also be required to seek funds through arrangements with collaborators or otherwise at an earlier
stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or current or future therapeutic
candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results
and prospects.
If we are unable to obtain funding on a timely basis, we may be required
to significantly delay, scale back or discontinue one or more of our research or development programs or the commercialization of any
therapeutic candidates or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which
could materially affect our business, financial condition and results of operations.
We could lose our listing on the Nasdaq Capital Market if our
current share price continues to decrease. The loss of our Nasdaq listing would in all likelihood make our common stock significantly
less liquid and adversely affect its value.
As of January 26, 2024 our common stock closing
bid price was $0.80. In the event that our closing bid price falls below $1.00 per share (the “Minimum Bid Price Requirement”)
for more than thirty (30) days, as required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2),
we could receive a notification letter from the Nasdaq Listing Qualifications Department, commencing delisting proceedings. The receipt
of a Nasdaq letter does not result in the immediate delisting of the Company’s common stock from the Nasdaq Capital Market.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance
Period Rule”), a company is provided an initial period of 180 calendar days (the “Compliance Date”) to regain compliance
with the Minimum Bid Price Requirement. If, at any time during this 180-day period, the bid price closes at $1.00 or more per share for
a minimum of 10 consecutive business days, as required under the Compliance Period Rule, the Staff would provide written notification
to the company that it again complies with the Minimum Bid Price Requirement and the common stock will continue to be eligible for listing
on The Nasdaq Capital Market unless other eligibility deficiencies exist.
If the Company were to not regain compliance with the Minimum Bid Price
Requirement by the Compliance Date, the Company may be eligible for an additional 180 calendar day compliance period. To qualify, the
Company would be required to meet the continued listing requirement for the market value of publicly held shares and all other initial
listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and would need to provide written
notice to Nasdaq of its intention to cure the deficiency during the additional compliance period.
If it appears to the Staff that the Company would not be able to cure
the deficiency, the Staff will provide written notice to the Company that its common stock will be subject to delisting. At that time,
the Company may appeal the Staff’s delisting determination to a Nasdaq Hearing Panel (the “Panel”). The Company expects
that its stock would remain listed pending the Panel’s decision, subject to the Company’s ability to regain compliance with
the Stockholders’ Equity Requirement (as defined below). There can be no assurance that, if the Company does appeal the Staff’s
delisting determination to the Panel, such appeal would be successful.
In the event of a delisting from the Nasdaq Capital Market, our stock
would likely be traded in the over-the- counter inter-dealer quotation system, more commonly known as the OTC. OTC transactions involve
risks in addition to those associated with transactions in securities traded on the securities exchanges, such as the Nasdaq Capital Market,
or Exchange-listed stocks. Many OTC stocks trade less frequently and in smaller volumes than Exchange-listed stocks. Accordingly, our
stock would be less liquid than it would be otherwise. Also, the prices of OTC stocks are often more volatile than Exchange-listed stocks.
Additionally, many institutional investors are prohibited from investing in OTC stocks, and it might be more challenging to raise capital
when needed.
The dual class structure of our common
stock may adversely affect the trading market for our common stock.
We cannot predict whether our dual class structure will result in a
lower or more volatile market price of our common stock or in adverse publicity or other adverse consequences. For example, certain index
providers have announced restrictions on including companies with dual class or multi-class share structures in certain of their indexes.
Our dual class capital structure could make us ineligible for inclusion in certain indices and mutual funds, exchange-traded funds and
other investment vehicles that attempt to passively track these indices will not be investing in our stock. These policies are still fairly
new and it is as of yet unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices,
but it is possible that they may depress these valuations compared to those of other similar companies that are included. Furthermore,
we cannot assure you that other stock indices will not take a similar approach to S&P Dow Jones or FTSE Russell in the future. Exclusion
from indices could make our common stock less attractive to investors and, as a result, the market price of our common stock could be
adversely affected.
Holders of our Class B common stock control the direction
of our business and their ownership of our common stock can prevent other stockholders from influencing significant decisions.
As of January 18, 2024, two holders of our Class B common stock, Joshua
M. Hare, co-founder, Chief Science Officer and Chairman of the Board of Directors, and Donald M. Soffer, co-founder and former member
of our Board of Directors, control voting rights over approximately 84.3% of the combined voting power of our Class A and Class B
common stock. For so long as holders of Class B common stock continue to hold their shares, they will be able to significantly influence
or effectively control the composition of our Board of Directors and the approval of actions requiring stockholder approval through their
voting power. Accordingly, for such period of time, these holders will have significant influence with respect to our management, business
plans and policies. In particular, for so long as the Class B common stock remains outstanding, the holders may be able to cause or prevent
a change of control of our Company or a change in the composition of our Board of Directors, and could preclude any unsolicited acquisition
of our Company. The concentration of ownership could deprive stockholders of an opportunity to receive a premium for shares of common
stock as part of a sale of our Company and ultimately might affect the market price of our common stock.
If securities or industry analysts do not publish research
or reports, or if they publish negative, adverse or misleading research or reports, regarding us, our business or our market, our stock
price and trading volume could decline.
The trading market for our common stock is influenced by the research
and reports that securities or industry analysts publish about us, our business or our market. We do not currently have significant research
coverage and may never obtain significant research coverage by securities or industry analysts. If no or few securities or industry analysts
provide coverage of us, the stock price could be negatively impacted. In the event we obtain significant or any securities or industry
analyst coverage and such coverage is negative, or adverse or misleading regarding us, our business model, our intellectual property,
our stock performance or our market, or if our operating results fail to meet the expectations of analysts, our stock price would likely
decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in
the financial markets, which in turn could cause our stock price or trading volume to decline.
FINRA sales practice requirements may limit a stockholder’s
ability to buy and sell our securities.
Effective June 30, 2020, the SEC implemented Regulation Best Interest
requiring that “A broker, dealer, or a natural person who is an associated person of a broker or dealer, when making a recommendation
of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer, shall
act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest
of the broker, dealer, or natural person who is an associated person of a broker or dealer making the recommendation ahead of the interest
of the retail customer.” This is a significantly higher standard for broker-dealers to recommend securities to retail customers
than before under prior FINRA suitability rules. FINRA suitability rules do still apply to institutional investors and require that in
recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending securities to their customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives and other information, and, for retail customers, determine
that the investment is in the customer’s “best interest,” and meet other SEC requirements. Both SEC Regulation Best
Interest and FINRA’s suitability requirements may make it more difficult for broker-dealers to recommend that their customers buy
speculative, low-priced securities. They may affect investing in our common stock, which may have the effect of reducing the level of
trading activity in our securities. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a
stockholder’s ability to resell shares of our common stock.
We do not currently intend to pay dividends on our common
stock and, consequently, your ability to achieve a return on your investment will depend on appreciation of the value of our common stock.
We have never declared or paid any cash dividends on our equity securities.
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 any appreciation
in the value of our common stock, which is not certain.
Provisions in our certificate of incorporation and bylaws
and Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress
the market price of our common stock.
Our certificate of incorporation and bylaws contain provisions that
could depress the market price of our common stock by acting to discourage, delay or prevent a change in control of our company or changes
in our management that the stockholders of our company may deem advantageous. These provisions, among other things:
| ● | establish a classified board of directors so that not all members of our board are elected at one time; |
| ● | permit only the board of directors to establish the number of directors and fill vacancies on the board; |
| ● | provide that directors may only be removed “for cause” and only with the approval of two-thirds
of our stockholders; |
| ● | provide for a dual class common stock structure, which provides certain affiliates of ours, including our
co-founder and members of our Board, individually or together, with the ability to significantly influence the outcome of matters requiring
stockholder approval, even if they own significantly less than a majority of the shares of our outstanding common stock and Class B common
stock; |
| ● | authorize the issuance of “blank check” preferred stock that our Board could use to implement
a stockholder rights plan (also known as a “poison pill”); |
| ● | eliminate the ability of our stockholders to call special meetings of stockholders; |
| ● | prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting
of our stockholders; |
| ● | prohibit cumulative voting; |
| ● | authorize our Board to amend our bylaws; |
| ● | establish advance notice requirements for nominations for election to our board or for proposing matters
that can be acted upon by stockholders at annual stockholder meetings; and |
| ● | require a super-majority vote of stockholders to amend some of the provisions described above. |
In addition, Section 203 of the General Corporation Law of the
State of Delaware prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder,
generally a person which together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for
a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner.
Any provision of our certificate of incorporation, bylaws or Delaware
law that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium
for their shares of our capital stock and could also affect the price that some investors are willing to pay for our common stock.
We are an emerging growth company, and we cannot be certain
if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an emerging growth company, or EGC, as defined in the JOBS Act,
enacted in April 2012. For as long as we continue to be an EGC, we may take advantage of exemptions from various reporting requirements
that are applicable to other public companies that are not EGCs, including not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, or Section 404, reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation
and stockholder approval of any golden parachute payments not previously approved. We could be an EGC for up to five years following
the year in which we completed our initial public offering, although circumstances could cause us to lose that status earlier. We
will remain an EGC until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary of the
completion of our initial public offering (i.e., December 31, 2026), (b) in which we have total annual gross revenue of at least
$1.235 billion or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our common stock
that is held by non-affiliates to exceed $700.0 million as of the prior June 30th, and (ii) the date on which we have issued
more than $1.0 billion in non-convertible debt during the prior three-year period.
We may choose to take advantage of some, but not all, of the available
exemptions. We cannot predict whether investors will find our common stock less attractive if we rely on certain or all of these exemptions.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and
our stock price may be more volatile.
Under the JOBS Act, EGCs can also delay adopting new or revised accounting
standards until such time as those standards apply to private companies, which may make our financial statements less comparable to companies
that comply with new or revised accounting pronouncements as of public company effective dates.
If we engage in acquisitions, reorganizations or business
combinations, we will incur a variety of risks that could adversely affect our business operations or our stockholders.
We may consider strategic alternatives, such as acquiring businesses,
technologies or products or entering into a business combination with another company. If we do pursue such a strategy, we could, among
other things:
| ● | issue equity securities that would dilute our current stockholders’ percentage ownership; |
| ● | incur substantial debt that may place strains on our operations; |
| ● | spend substantial operational, financial and management resources in integrating new businesses, personnel
intellectual property, technologies and products; |
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| ● | assume substantial actual or contingent liabilities; |
| ● | reprioritize our programs and even cease development and commercialization of Lomecel-B™; |
| ● | suffer the loss of key personnel, or |
| ● | merge with, or otherwise enter into a business combination with, another company in which our stockholders
would receive cash or shares of the other company or a combination of both on terms that certain of our stockholders may not deem desirable. |
Although we intend to evaluate and consider different strategic alternatives,
we have no agreements or understandings with respect to any acquisition, reorganization or business combination at this time.
The issuance of additional stock in connection with acquisitions
or otherwise will dilute all other stockholdings.
We are not restricted from issuing additional shares of our common
stock, or from issuing securities that are convertible into or exchangeable for, or that represent the right to receive, common stock.
As of January 18, 2024, we had an aggregate of 84,295,000 shares of common stock authorized and of that approximately 63,621,000
not issued, outstanding or reserved for issuance (for purposes of warrant exercise or under the Company’s current 2021 Equity Incentive
Plan). We may issue all of these shares without any action or approval by our stockholders. We may expand our business through complementary
or strategic business combinations or acquisitions of other companies and assets, and we may issue shares of common stock in connection
with those transactions. The market price of our common stock could decline as a result of our issuance of a large number of shares of
common stock, particularly if the per share consideration we receive for the stock we issue is less than the per share book value of our
common stock or if we are not expected to be able to generate earnings with the proceeds of the issuance that are as great as the earnings
per share we are generating before we issue the additional shares. In addition, any shares issued in connection with these activities,
the exercise of warrants or stock options or otherwise would dilute the percentage ownership held by our investors. We cannot predict
the size of future issuances or the effect, if any, that they may have on the market price of our common stock.
Risks Related to our Business
We have a limited
operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business
and predict our future success and viability.
We are a clinical stage biotechnology company
with a limited operating history upon which you can evaluate our business and prospects. We have no products approved for commercial sale,
have not generated any material revenue from product sales and may never be able to develop marketable products. To date, we have devoted
substantially all of our resources and efforts to organizing and staffing our company, business planning, building and equipping our research
and development laboratories, building and equipping our manufacturing suites, raising capital, acquiring raw materials for manufacturing,
product candidate development and manufacturing, securing related intellectual property rights and conducting clinical trials of Lomecel-B™,
which includes engaging clinical research organizations and clinical trial sites. We have not yet demonstrated our ability to obtain marketing
approvals, manufacture a commercial-scale product or arrange for a third party to do so on our behalf, or conduct sales and marketing
activities necessary for successful product commercialization. As a result, it may be more difficult for you to accurately predict our
future success or viability than if we had a longer operating history.
In addition, we may encounter unforeseen expenses,
difficulties, complications, delays and other known and unknown factors and risks frequently experienced by clinical stage biotechnology
companies in rapidly evolving fields, including but not limited to changes in FDA or foreign body regulatory oversight of products. We
also may need to transition from a company with a research focus to a company capable of supporting commercial activities. Such a transition
may involve substantial additional capital requirements in order to launch and market a product, changes in the use of proceeds, and significant
adjustment to personnel, compared to a clinical-stage development company. If we do not adequately address these risks and difficulties
or successfully make such a transition, our business will suffer.
If the potential
of our product candidates to treat diseases is not realized, the value of our technology and our development programs could be significantly
reduced.
Our team is currently exploring the potential
of our product candidates to treat diseases. We have not yet proven in clinical trials that our product candidates will be a safe and
effective treatment for any disease or condition. Our product candidates are susceptible to various risks, including undesirable and unintended
side effects, unintended immune system responses, inadequate therapeutic efficacy, or other characteristics that may prevent or limit
their marketing approval or commercial use. These side effects could cause IRBs, our contract research organizations (CROs), the FDA or
other regulatory authorities to interrupt, delay or discontinue clinical trials and could result in the denial of regulatory approval
for our product candidates. This, in turn, could prevent us from commercializing our product candidates and generating revenues from their
sale.
If the potential of our product candidates
to treat disease is not realized, the value of our technology and our development programs could be significantly reduced. Because our
product candidates are based on MSCs, any negative developments regarding the therapeutic potential or side effects of our MSCs, or regarding
scientific and medical knowledge about MSCs in general, could have a material adverse effect on our business, financial condition, results
of operations, and prospects.
Our product development programs are
based on novel technologies and are inherently risky.
We are subject to the risks of failure inherent
in the development of product candidates based on new technologies. The novel nature of our product candidates creates significant challenges
in regard to product development and optimization, manufacturing, government regulation, third-party reimbursement, and market acceptance.
For example, although the FDA has approved several cell therapy products, the FDA has relatively limited experience with regulating these
kinds of therapies, and its regulations and policies are still evolving. As a result, the pathway to regulatory approval for our product
candidates may be more complex and lengthier.
Additionally, stem cells that are taken from
one person and transplanted into a different individual may pose additional risks. For example, stem cells that are not autologous (i.e.,
taken from, and given to, the same individual) but are instead allogeneic (i.e., taken from one individual and given to a different person)
are subject to donor-to-donor variability, which can make standardization more difficult. As a result of these factors, the development
and commercialization pathway for our therapies may be more complex and lengthier, and subject to increased uncertainty, as compared to
the pathway for new conventional (i.e., new chemical entity) drugs.
There are no FDA-approved allogeneic,
cell-based therapies for Aging-related frailty, Alzheimer’s disease (AD), or other aging-related conditions, nor Hypoplastic Left
Heart Syndrome or other cardiac-related indications. This could complicate and delay FDA approval of our product candidate for these indications,
or other indications we study or will study.
Although FDA has approved several cell therapy
products, there are no allogeneic cell-based or stem cell therapies currently approved by the FDA for the treatment of Aging-related frailty
or our other indications. There are also no conventional drugs or therapies currently approved by the FDA with stated indications for
Aging-related frailty, Aging, or Frailty.
According to the FDA, neither “Frailty”
nor “Aging-related frailty” has a definition that is acceptable for characterizing the conditions for regulatory purposes,
and there are no precedents for regulatory approvals in these indications. This could prevent, complicate and/or delay regulatory approval
of our product candidate for these indications.
The FDA and the Japanese PMDA have both indicated
that the concept of “Frailty” as an indication will require additional clinical data and discussion before future pivotal
trials and marketing authorization. Because the condition of Frailty lacks consensus, there is no guarantee that PMDA, FDA or any regulatory
agency will agree to an approvable indication, or will agree on clinical endpoints that would be considered acceptable for demonstrating
clinically meaningful benefit. More specifically, our ability to begin Phase 3 (i.e., pivotal) trials in a “Frailty” or “Aging-related
frailty” indication will depend on our Phase 2 clinical data and subsequent interactions with FDA where we would discuss the size
and scope of a Phase 3 program, the appropriate target patient population (i.e., defining the indication), and agreement on one or more
primary endpoints that demonstrate clinically meaningful outcome.
It is possible that the FDA may never recognize
“aging” as a disease and may never agree to a definition of “Aging-related frailty” primarily due to a lack of
consensus on the definitions amongst clinicians, researchers and regulators, an insufficient understanding of the underlying pathophysiologic
mechanisms that cause any or all of the manifestations, or both. To obtain FDA approval for any indication for the disease states we are
studying, we will have to demonstrate, among other things, that our product candidates are safe and effective for that indication in the
target population. The results of our clinical trials must be statistically significant, meaning that there must be sufficient data to
indicate that it is unlikely the outcome occurred by chance. The FDA will also require us to demonstrate an appropriate dose (i.e., number
of cells) and dosing interval for our product candidates, and to identify and define treatment responders, which may require additional
clinical trials. As a result, the clinical endpoints, the criteria to measure the intended results of treatment, and the correct dosing
for our cell-based therapeutic approaches for these indications may be difficult to determine. These challenges may prevent us from developing
and commercializing products on a timely or profitable basis, or at all.
If we are not able to recruit and retain
qualified management and scientific personnel, we may fail in developing our technologies and product candidates.
Our future success depends to a significant
extent on the skills, experience, and efforts of the principal members of our scientific and management personnel. These members include
Joshua M. Hare, M.D. and our staff of scientific consultants. Our co-founder, Dr. Hare, remains employed by the University of Miami (UM),
and provides services to us as a consultant on a limited basis. The loss of Dr. Hare or any or all of these individuals could harm our
business and might significantly delay or prevent the achievement of research, development or business objectives. Competition for regulatory,
clinical manufacturing and management personnel in the pharmaceutical industry is intense. We may be unable to recruit or retain personnel
with sufficient management skills in the area of cell therapeutics or attract or integrate other qualified management and scientific personnel
in the future.
Our product candidates represent new
classes of therapy that the marketplace may not understand or accept.
Even if we successfully develop and obtain
regulatory approval for our product candidates, the market may not understand or accept them. We are developing product candidates that
represent novel treatment approaches and will compete with a number of more conventional products and therapies manufactured and marketed
by others, including major pharmaceutical companies. The degree of market acceptance of any of our future developed and potential products
will depend on a number of factors, including:
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the clinical safety and effectiveness of our products and their perceived advantage over alternative treatment methods; |
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our ability to demonstrate that our cell-based products can have a clinically significant effect, initially for Aging-related frailty, AD, HLHS, and other disease states for which we may seek marketing approval; |
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ethical controversies that may arise regarding the use of stem cells or human tissue of any kind, including adult stem cells, adult bone marrow, and other adult tissues derived from donors; |
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adverse events involving our product candidates or candidates of others that are cell based; |
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our ability to supply a sufficient amount of our products to meet regular and repeated demand in order to develop a core group of medical professionals familiar with and committed to the use of our products; and |
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the cost of our products and the reimbursement policies of government and third-party payors. |
If the health care community does not accept
our product candidates or future approved products for any of the foregoing reasons, or for any other reason, it could affect our sales
or have a material adverse effect on our business, financial condition, results of operations, and prospects.
Our dependence upon a limited supply
of bone marrow donors and biologic growth media may impact our ability to produce sufficient quantities of our product candidates as needed
to complete our clinical trials, and if our trials are successful, to meet product demand.
The population of acceptable bone marrow donors
is limited to volunteers between the ages of 18 and 45. In addition, potential donors are prescreened for a variety of health conditions
and are only allowed to donate bone marrow a total of six times in their lifetime, further limiting the total number of potential donors.
The amount of bone marrow donated may be insufficient for us to mass produce our product candidates at a scale sufficient to meet our
clinical trial needs or to produce a product to meet future commercial demand at an acceptable cost. In addition, the expansion of MSCs
through our proprietary manufacturing methods utilizes biologic growth media that may be in limited supply. Our product candidates will
be inherently more difficult to manufacture at commercial-scale than conventional pharmaceuticals, which are manufactured using precise
chemical formulations and operational methods. Cost-effective production at clinical trial or commercial scale quantities may not be achievable.
Future government regulation or health concerns
may also reduce the number of donors or otherwise limit the amount of bone marrow available to us. If we cannot secure quantities of bone
marrow or biologic growth media sufficient to meet the manufacturing demands for our clinical trials, we might not be able to complete
our clinical trials and obtain marketing approval for our product candidates. Moreover, even if our clinical trials are successful and
we obtain marketing approval for our product candidates, our inability to secure enough bone marrow or biologic growth media to meet product
demand could limit our potential revenues.
MSCs are biological entities derived
from human bone marrow and therefore have the potential for disease transmission and can pose risks to the recipient.
MSC therapies require many manufacturing steps.
Cells must be harvested from donor tissue, isolated, and expanded in cell culture to produce a sufficient number of cells for use. Each
step carries risks for contamination by other cells, microbes, or adventitious agents. The transfer of cells into a recipient can also
carry risks and complications associated with the procedure itself, and a recipient may reject the transplanted cells.
Further, the utilization of donated bone marrow
creates the potential for transmission of cancer and communicable disease, including but not limited to human immunodeficiency virus (HIV),
viral hepatitis, syphilis, Creutzfeldt-Jakob disease, and other viral, fungal, or bacterial pathogens. Although we and our suppliers are
required to comply with federal and state regulations intended to prevent communicable disease transmission, we or our suppliers may fail
to comply with such regulations. Further, even with compliance, our products might nevertheless be viewed by the public as being associated
with transmission of disease, and a clinical trial subject or patient who contracts an infectious disease might assert that the use of
our product candidate or products resulted in disease transmission, even if the individual became infected through another source.
Any actual or alleged transmission of communicable
disease could result in clinical trial subject or patient claims, litigation, distraction of management’s attention, increased expenses,
and adverse regulatory authority action. Further, any failure in screening, whether by us or other manufacturers of similar products,
could adversely affect our reputation, the support we receive from the medical community, and overall demand for our products. As a result,
such actions or claims, whether or not directed at us, could have a material adverse effect on our reputation with our customers and our
ability to market our products, which could have a material adverse effect on our business, financial condition, results of operations,
and prospects.
If our processing and storage facility
or our clinical manufacturing facilities are damaged or destroyed, our business and prospects could be negatively affected.
Our processing and storage facility is located
in a region which experiences severe weather, notably hurricanes, from time to time. If this facility in Miami, Florida or the equipment
in the facility were to be significantly damaged or destroyed, we could suffer a loss of some or all of the stored units of our product
candidates and it could force us to halt our clinical trial processes. The risk of tropical storm and hurricane activity historically
rises on or about June 1st each year, and subsides on or about November 30th each year. We have not undertaken
a systematic analysis of the potential consequences to our business and financial results from a major hurricane or tornado, flood, fire,
earthquake, power loss, terrorist activity or other disasters and do not currently have a recovery plan for such disasters. If we underestimate
our insurance needs, we will not have sufficient insurance to cover losses above and beyond the limits on our policies. In addition, we
do not carry sufficient insurance to compensate us for actual losses from interruption of our business that may occur, and any losses
or damages incurred by us could harm our business. The occurrence of any of these business disruptions could seriously harm our operations
and financial condition and increase our costs and expenses.
Ethical and other concerns surrounding
the use of stem cell therapy or human tissue may negatively affect public perception of us or our future products or product candidates,
or may negatively affect regulatory approval of our future products or product candidates, thereby reducing demand for our future products.
The commercial success of our product candidates
will depend in part on general public acceptance of the use of MSC therapy for the prevention or treatment of human diseases. Although
we do not use embryonic stem cells or fetal tissue, but the public may not be able to, or may fail to, differentiate our use of adult
MSCs from the use of embryonic stem cells or fetal tissue by others, which could result in a negative perception of our company or our
future products or product candidates, thereby reducing demand, which could have a material adverse effect on our business, financial
condition, results of operations, and prospects.
We may obtain MSCs from volunteer adult bone
marrow donors from non-profit organizations that collect and process tissue donations. Bone marrow donors receive payment, but ethical
concerns have been raised by some about the use of donated human tissue in a for-profit setting, as we are doing. Future adverse events
in the field of stem cell therapy, changes in public policy, or changes to the FDA’s regulatory approval framework for these products
could also result in greater governmental regulation of our product candidates or products, and potential regulatory delays relating to
their testing or approval.
We may eventually compete for product
sales with other companies, many of which will have greater resources or capabilities than we have, or may succeed in developing better
products or in developing products more quickly than we do, and we may not compete successfully with them.
We compete or may eventually compete with
other companies and organizations that are marketing or developing therapies for our targeted disease indications, based on traditional
pharmaceutical, medical device, or other non-cellular therapy and technologies. In addition, we have other potential competitors developing
a variety of therapeutics, and in some cases, such as with Alzheimer’s disease, there may be tens or hundreds of companies seeking
to commercialize therapeutics.
We also face competition in the cell therapy
field from academic institutions and governmental agencies. Many of our current and potential competitors have greater financial and human
resources than we have, including more experience in research and development and more established sales, marketing, and distribution
capabilities.
We anticipate that competition in our industry
will increase. In addition, the health care industry is characterized by rapid technological change, resulting in new product introductions
and other technological advancements. Our competitors may develop and market products that render product candidates under development
by us now or in the future, or any products manufactured or marketed by us, non-competitive or otherwise obsolete.
Sales of our products may involve a
lengthy sales cycle.
Many factors are expected to influence the
sales cycle for our approved product. These factors include the future state of the market, the perceived value of our product candidate(s),
the evolution of competing technologies, insurance coverage or prior authorization requirements and changes in medical practices. Any
of these may adversely affect our sales cycles and the rate of market acceptance of our approved products.
We have ongoing challenges with respect
to our liquidity and access to capital.
As we advance the preclinical and clinical
development of our programs, we expect to continue to incur significant expenses and operating losses, for which we do not have offsetting
revenue. We expect that our sales, research and development and general and administrative costs will increase in connection with conducting
additional preclinical studies and clinical trials for our current and future programs and product candidates, contracting with contract
research organizations (CROs) to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing
general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may
obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources.
As of September 30, 2023, we had $3.9 million
in cash and cash equivalents and marketable securities. To date, we have financed our operations primarily through public and private
equity financings, grant awards, and fees generated from clinical trial revenue and contract manufacturing services. There are no assurances
that we will be able to continue to finance operations through these means, and our inability to generate sufficient revenue in the near
term may have an adverse impact on our business, operations and prospects.
We face risks related to health epidemics
and outbreaks.
The COVID-19 pandemic had a material impact
on countries, communities, supply chains and markets. Further, the COVID-19 pandemic impacted and may continue to impact our Bahamas Registry
Trial business. It is also possible that the COVID-19 pandemic or other public health risks could adversely affect our business, results
of operations, financial condition or liquidity in the future. For example, they could impact the timing and enrollment of our collaborators’
planned or ongoing clinical trials, delaying clinical site initiation, regulatory review and the potential receipt of regulatory approvals,
payment of milestones under our license agreements and commercialization of one or more of our product candidates, if approved. The COVID-19
pandemic and other public health risks could also disrupt the production capabilities of our contract manufacturing facility. Further,
the outbreak of COVID-19 has heightened the risk that a significant portion of our workforce will suffer illness or otherwise be unable
to work. The impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot currently predict the extent to
which our business, clinical trials, results of operations, financial condition or liquidity will ultimately be impacted. In addition,
COVID-19 or other public health risks could materially and adversely impact our operations due to, among other factors:
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a general decline in business activity; |
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difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deteriorations in credit and financing conditions which could affect our access to capital necessary to fund business operations; |
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the potential negative impact on the health of our employees, especially if a significant number of them or any of their family members are impacted or if any of our senior leaders are impacted for an extended period of time; |
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the potential negative impact on our prospective trial participants to participate in the clinical studies, or our investigative sites to conduct the clinical studies, or our ability to monitor the investigative sites participating in our clinical studies in person or even remotely, which could result in a deviation from pre-pandemic protocols and/or site monitoring and data management plans, and delays in our ability to perform data-related tasks dependent on communications with personnel at the investigative sites, such as resolution of open data queries, the cumulative effects of which could lead to delayed or missed identification of non-compliance with cGMP, and/or unrecognized data errors; |
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potential delays in the preparation and submission of applications for regulatory approval of our products, as well as potential delays in FDA’s or other regulatory authority’s ability to review applications in a timely manner consistent with past practices; |
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potential difficulty in adequately overseeing and/or evaluating the manufacturing process at the facilities that will manufacture future commercial products; and |
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a deterioration in our ability to ensure business continuity during a disruption. |
Adverse global conditions, including
macroeconomic uncertainty, may negatively impact our financial results.
Volatility in global conditions, geopolitical
divides and conflicts, dislocations in the financial markets, or continuing inflation could adversely impact our business. In addition,
the global macroeconomic environment has been and may continue to be negatively affected by, among other things, instability in global
economic markets, increased U.S. trade tariffs and trade disputes with other countries, instability in the global credit markets, supply
chain weaknesses, instability in the geopolitical environment as a result of the Russian invasion of the Ukraine and the war in Israel,
and other political tensions that presently exist or may exist in the future, and foreign governmental debt concerns. Such challenges
have caused, and may continue to cause, uncertainty and instability in local economies and in global financial markets, which may adversely
affect our business.
We may not be able to raise additional
capital necessary to continue as a going concern.
As of September 30, 2023, we had cash and
cash equivalents of $2.0 million and marketable securities of $2.0 million. We have prepared a cash flow forecast which indicates that
we will have sufficient cash to fund our operating expenses and capital expenditure requirements into early second quarter of 2024. As
a result, we will need to raise additional capital to continue as a going concern. Our recurring losses from operations and negative cash
flow raise substantial doubt about our ability to continue as a going concern without sufficient capital resources and we have included
an explanatory paragraph in the notes to our unaudited condensed financial statements for the quarterly period ended September 30, 2023,
with respect to this uncertainty. Our ability to continue as a going concern is dependent on our available cash, how well we manage that
cash, and our operating requirements. If we are unable to raise additional capital when needed, we would be forced to delay, reduce or
eliminate our clinical trial programs, commercialization efforts and other business activities.
We have a history of losses and may
not be able to achieve profitability going forward.
We have experienced significant losses since
inception and, at September 30, 2023 and December 31, 2022, had an accumulated deficit of approximately $79.0 million and $62.8 million,
respectively. We expect to incur additional losses in the future and expect the cumulative losses to increase. We expect our operating
expenses to increase and it is not likely that our grant revenues will fully fund our clinical programs. In such event, we will not have
sufficient cash flow to meet our obligations or make progress in our clinical programs and will need to raise additional capital.
We have been funded in part by government
and non-profit association grant awards, which is not a guaranteed source of future funding.
The funding of government programs is dependent
on budgetary limitations, congressional appropriations and administrative allotment of funds, and changes in national health and welfare
priorities, all of which are inherently uncertain and may be affected by changes in U.S. government policies resulting from various political
and military developments. Our continued receipt of government and non-profit association funding is also dependent on the ability to
adhere to the terms and provisions of the original grant and contract documents and other regulations. We can provide no assurance that
we will receive or continue to receive funding for the grants and contracts we have been awarded. The loss of government funds or non-profit
association grant awards could have a material adverse effect on our clinical programs and on our business, financial condition, and results
of operations.
The use of our product candidates or
future products in individuals may expose us to product liability claims, and we may not be able to obtain adequate product liability
insurance.
Because of the nature of our products, we
face an inherent risk of product liability claims. None of our product candidates have been widely used over an extended period of time,
and therefore our safety data are limited. We derive the raw materials for our product candidates from human donor sources, the manufacturing
process is complex, and the handling requirements are specific, all of which increase the likelihood of quality failures and subsequent
product liability claims. We will need to increase our insurance coverage if and when we receive approval for and begin commercializing
our product candidates. We may not be able to obtain or maintain product liability insurance on acceptable terms with adequate coverage
or at all. If we are unable to obtain insurance, or if claims against us substantially exceed our coverage, then our business could be
adversely impacted. Whether or not we are ultimately successful in any product liability litigation, such litigation either before or
after product approval and marketing could consume substantial amounts of our financial and managerial resources and could result in,
among other things:
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significant awards against us; |
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substantial litigation costs; |
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recall of products or termination of clinical trials; |
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FDA withdrawal of marketing approval of products or suspension or revocation of an IND for a product candidate; |
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injury to our reputation; |
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withdrawal of clinical trial participants; |
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withdrawal of clinical trial sites or investigators; or |
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Any of these results
could have a material adverse effect on our business, financial condition, and results of operations.
Risks Related to Intellectual
Property
If our trade secret and patent position
does not adequately protect our product candidates and their uses, others could compete against us more directly, which could harm our
business and have a material adverse effect on our business, financial condition and results of operations.
Our success depends, in large part, on our
ability to obtain and maintain intellectual property protection for our product candidates. The patent position of biotechnology companies
is generally highly uncertain, involves complex legal and factual questions, and continues to be the subject of much litigation. Our trade
secrets attempt to bridge the gap that threatens patent exclusivity for the protection of products derived from MSCs. Our trade secrets
may also remain valid and enforceable without regard to limitations such as term restrictions that are imposed on patents. Our trade secrets
and know-how are the subject of various license agreements and confidentiality agreements as further discussed below.
The claims of existing U.S. and foreign patent
applications and patents, and those patents that may issue in the future, or those to be licensed to us, that are owned by the Company
or under an obligation of assignment to the Company, may not confer on us significant commercial protection against competing products.
Furthermore, to the extent that the Company owns or is assigned or licenses patent rights covering its business, third parties may challenge
or design around those patent rights, such as by asserting that the patents are invalid or arguing that the patent claims should be narrowly
construed, and thereby avoid successful infringement actions. There is no guarantee that any patent application, or any particular claim
or claims of a patent application, will issue as a patent, either as originally presented or as may be amended during patent prosecution.
Our patent applications on MSC technology,
in particular, include claims directed to therapeutic uses and kits comprising MSCs. Patents with such claims tend to be more vulnerable
to challenge by other parties than patents with extremely narrow claims. Also, our pending patent applications may not issue, may issue
with substantially narrower claims than currently pending claims, or we may not receive any additional patents. Further, the laws of foreign
countries may not protect our intellectual property rights to the same extent as do the laws of the U.S. Our patents might not contain
claims that are sufficiently broad to prevent others from practicing our technologies or from competing with us with their own technology
in the fields of interest to us.
Although the Company has obligations of assignment
and has been assigned patents and patent applications concerning stem cell products and their uses, none of those patents or presently
pending applications has granted claims or pending claims that, if granted, would prevent a third party from commercializing their own
allogeneic stem cell therapy for those indications that we are studying. Consequently, our competitors may independently develop competing
products that do not infringe our patents or other intellectual property.
Control over patented technology requires
the Company to obtain formal assignment of patents and applications from third parties. Although the Company believes it has contracts
requiring formal assignment of the patent properties in its patent portfolio, there is risk that the inventors and research partners now
of record as owning these patent properties will refuse to execute documents confirming assignment of their rights to the Company or that
litigation will be required to compel the execution of those documents. In the meantime, those inventors and research partners may claim
to be co-owners of some of the patent portfolio.
Because of the extensive time required for
development, testing, and regulatory review of a potential product, it is possible that, before any of our product candidates can be commercialized,
any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantages
of the patent. To the extent our product candidates based on that technology are not commercialized ahead of this patent expiration, to
the extent we have no other patent protection on such products, or to the extent that regulatory or patent extensions are not granted,
those products might not have the robust protection we currently expect to enjoy. The background technologies used in the development
of our product candidates are known in the scientific community, and it may be possible to duplicate the methods we use to create our
product candidates, which makes us vulnerable to competition, without the ability to exclude others from potentially commercializing a
similar product.
If certain license agreements are terminated,
our ability to continue clinical trials and commercially market products could be adversely affected.
We are a party to various agreements that
give us rights to use specified technologies applicable to research, development, and commercialization of our product candidates. If
these agreements are voided or terminated, our product development, research, and commercialization efforts may be altered or delayed.
Certain aspects of our technology rely on inventions developed using university or other third-party resources. The universities or third
parties may have certain rights, as defined by law or applicable agreements, and may choose to exercise such rights. If we fail to comply
with any terms or provisions of these agreements, our rights and our access to the universities’ or third parties’ resources
could be terminated. The Exclusive License Agreement with the University of Miami dated November 20, 2014, as amended on December 11,
2017, and on March 3, 2021, requires the Company to pay fees and royalties and to make commercially reasonable efforts to achieve milestones.
The University of Miami may terminate the Exclusive License Agreement for material breach if the fees and royalties are not paid, or if
the milestones are not met and an extension to achieve the milestones is not agreed upon.
Some of our employees, including but not limited
to Dr. Hare, are employed by third party employers in addition to being employed or engaged as a consultant by the Company. Such employees
and consultants may owe obligations to the third-party employers related to that employment. Those third-party employers may assert that
they are entitled to assignment of some or all rights in new inventions made by such employees or consultants. If we are unable to conclusively
prove that we are entitled to assignment of those rights, we may be required to negotiate co-ownership to or a license of those rights,
if such an arrangement is available at all.
If we are unable to protect the confidentiality
of our proprietary information, trade secrets, and know-how, our competitive position could be impaired and our business, financial condition,
results of operations, and prospects could be adversely affected.
As disclosed above, some aspects of our technology,
especially regarding manufacturing processes, are unpatented and maintained by us as trade secrets. In an effort to protect these trade
secrets, we require our employees, consultants, collaborators, and advisors to execute confidential disclosure agreements before the commencement
of their relationships with us. These agreements require that all confidential information developed by the individual or made known to
the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third
parties. These agreements, however, may not provide us with adequate protection against improper use or disclosure of confidential information,
and these agreements may be breached. A breach of confidentiality could affect our competitive position. In addition, in some situations,
these agreements may conflict with, or be subject to, the rights of third parties with whom our employees, consultants, collaborators,
or advisors have previous employment or consulting relationships. Also, others may independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to our trade secrets.
Adequate remedies may not exist in the event
of unauthorized use or disclosure of our confidential information. The disclosure of our trade secrets could impair our competitive position
and could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Third-party claims of intellectual property
infringement may prevent or delay our product development efforts.
Our commercial success depends in part on
our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation involving
patents and other intellectual property rights in the biotechnology and pharmaceutical industries. Numerous U.S. and foreign issued patents
and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our product candidates.
As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates,
methods of making product candidates, and methods of using product candidates may give rise to claims of infringement of the patent rights
of others.
Third parties may assert that we infringe
their patents or are otherwise employing their proprietary technology without authorization and may sue us. We are aware of several U.S.
patents held by third parties covering potentially similar or related products and their manufacture and use. Generally, conducting clinical
trials and other acts relating to FDA approval are not considered acts of infringement in the U.S. If and when Lomecel-B™ MSCs are
approved by the FDA, third parties may seek to enforce their patents by filing a patent infringement lawsuit against us. Patents issued
in the U.S. by law enjoy a presumption of validity that can be rebutted only with evidence that is “clear and convincing,”
a heightened standard of proof. We may not be able to prove in litigation that any patent enforced against us is invalid.
Additionally, 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. Because patent applications can take many years to issue, there may be currently pending
patent applications which may later result in issued patents that our product candidates may infringe. Some of those patent applications
may not yet be available for public inspection. In addition, third parties may obtain patents in the future and claim that use of our
technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing
process of our product candidates, constructs or molecules used in or formed during the manufacturing process, or any final product itself,
the holders of any such patents may be able to block our ability to commercialize the product candidates unless we obtain a license under
the applicable patents, or until such patents expire or they are finally determined to be held not infringed, unpatentable, invalid or
unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations,
processes for manufacture or methods of use, including combination therapy or patient selection methods, the holders of any such patent
may be able to block our ability to develop and commercialize the product candidate unless we obtained a license or until such patent
expires or is finally determined to be held not infringed, unpatentable, invalid or unenforceable. In either case, such a license may
not be available on commercially reasonable terms or at all. If we are unable to obtain a necessary license to a third-party patent on
commercially reasonable terms, or at all, our ability to commercialize our product candidates may be impaired or delayed, which could
in turn significantly harm our business.
Parties making claims against us may seek
and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our product
candidates. They might seek an exclusion order from the International Trade Commission to prevent import of our product candidates. Defense
of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee
resources from our business and may impact our reputation. In the event of a successful claim of infringement against us, we may have
to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from
third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure.
We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms.
Furthermore, even in the absence of litigation, we may 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 reasonable cost or on reasonable terms, if at all. In that
event, we would be unable to further develop and commercialize our product candidates, which could harm our business significantly.
We may become involved in lawsuits to
protect or enforce our patents or the patents of our collaborators or licensors, which could be expensive and time consuming.
Litigation may be necessary to enforce patents
issued or licensed to us, to protect trade secrets or know-how, or to determine the scope and validity of the proprietary rights. Litigation,
opposition, or other administrative and/or patent office proceedings could result in substantial additional costs and diversion of management
focus. If we are ultimately unable to protect our technology, trade secrets, or know-how, we may be unable to operate profitably. Competitors
may infringe our patents or the patents of our collaborators or licensors. As a result, we may be required to file infringement claims
to protect our proprietary rights, which can be expensive and time-consuming, particularly for a company of our size. In addition, in
an infringement proceeding, a court may decide that a patent of ours is invalid or is unenforceable, or may refuse to enjoin the other
party from using the technology at issue. An adverse determination of any litigation or defense proceedings could put one or more of our
patents at risk of being invalidated or interpreted narrowly. Litigation or other patent office proceedings may fail and, even if successful,
may result in substantial costs and distraction to our management. We may not be able, alone or with our collaborators and licensors,
to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as
in the U.S.
Furthermore, though we could seek protective
orders where appropriate, because of the substantial amount of discovery required in connection with intellectual property litigation,
there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition,
during the course of this kind of litigation, there could be public announcements of the results of hearings, motions, or other interim
proceedings or developments. If investors perceive these results to be negative, the market price for our Class A Common Stock could be
significantly harmed.
Our industry is highly competitive and
subject to significant or rapid technological change.
The biotechnology industry, including our
fields of therapeutic interest, is highly competitive and subject to significant and rapid technological change. Accordingly, our success
may depend, in part, on our ability to respond quickly to such change through the development and introduction of new products. Our ability
to compete successfully against currently existing and future alternatives to our product candidates and systems and competitors who compete
directly with us in the biopharmaceutical industry may depend, in part, on our ability to attract and retain skilled scientific and research
personnel, develop technologically superior products, develop competitively priced products, obtain patent or other required regulatory
approvals for our products, be an early entrant to the market and manufacture, market, and sell our products, independently or through
collaborations. If a third party were to commercialize a competitive product, there is no assurance that we would have a basis for initiating
patent infringement proceedings or that, if initiated, we would prevail in such proceedings.
If our product candidates are approved by
the FDA, then potential competitors who seek to introduce generic versions of our product candidates may seek to take advantage of the
abbreviated approval pathway for biological products shown to be biosimilar to or interchangeable with our product candidates. The Biologics
Price Competition and Innovation Act of 2009 might permit these potential competitors to enter the market using a shorter and less costly
development program for a biosimilar product that competes with our products. As discussed, our ability to obtain one or more types of
regulatory exclusivity upon product approval could impact the timing of approval of a competing biosimilar or interchangeable product.
If all of the Company’s intellectual
property has not been properly maintained and/or assigned to the Company, our business, financial condition, results of operation, and
prospects could be adversely affected.
While the Company believes that each patent
application or patent has already been assigned or, if it has not yet been formally assigned, is under an obligation to be assigned to
the Company either through direct employment agreements between the Company and the inventors, or through research agreements with a third
party and the Company, if such is not the case, our business, financial condition, results of operations, and prospects could be adversely
affected.
Intellectual property rights do not
necessarily address all potential threats to our competitive advantage.
The degree of future protection afforded by
our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our
business or permit us to maintain our competitive advantage. For example:
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others may be able to develop products that are similar to our product candidates but that are not covered by the claims of the patents that we own or license; |
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we or our licensors might not have been the first to make the inventions covered by the issued patents or patent application that we own or license; |
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we or our licensors might not have been the first to file patent applications covering certain of our inventions; |
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others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; |
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some or all of our own or our licensors’ pending patent applications may not lead to issued patents; |
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issued patents that we own or license may be held invalid or unenforceable as a result of legal challenges by our competitors; |
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our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets or in commercial markets where we do not have patent rights; |
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we may not develop additional proprietary technologies that are patentable; and |
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the patents of others may have an adverse effect on our business. |
Should any of these events occur, it could
significantly harm our business, results of operations and prospects.
Intellectual property litigation may
lead to unfavorable publicity that harms our reputation and causes the market price of our common shares to decline.
During the course of any intellectual property
litigation, there could be public announcements of the initiation of the litigation as well as results of hearings, rulings on motions,
and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived
value of our existing products, programs or intellectual property could be diminished. Accordingly, the market price of shares of our
Class A Common Stock may decline. Such announcements could also harm our reputation or the market for our future products, which could
have a material adverse effect on our business, financial condition, results of operations, and prospects.
Patent reform legislation
could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our
issued patents.
In September 2011, the Leahy-Smith America
Invents Act, or Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law.
These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. In particular,
under the Leahy-Smith Act, the U.S. transitioned in March 2013 to a “first inventor to file” system in which, assuming that
other requirements of patentability are met, the first inventor to file a patent application will be entitled to the patent regardless
of whether a third party was first to invent the claimed invention. A third party that files a patent application in the USPTO after March
2013 but before us could therefore be awarded a patent covering an invention of that we also made even if we had made the invention before
the invention was made independently by such third party. This will require us to be cognizant going forward of the time from invention
to filing of a patent application. Furthermore, our ability to obtain and maintain valid and enforceable patents depends on whether the
differences between our technology and the prior art allow our technology to be patentable over the prior art. Since patent applications
in the U.S. and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we
were the first to either (1) file any patent application related to our product candidates or (2) invent any of the inventions claimed
in our patents or patent applications.
The Leahy-Smith Act also includes a number
of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include
allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of
a patent by USPTO administered post-grant proceedings, including post-grant review (PGR), inter partes review (IPR),
and derivation proceedings. An adverse determination in any such submission or proceeding could reduce the scope or enforceability of,
or invalidate, our patent rights, which could adversely affect our competitive position.
Because of a lower evidentiary standard necessary
to invalidate a patent claim in USPTO proceedings compared to the evidentiary standard in U.S. federal courts, a third party could potentially
provide evidence in a USPTO proceeding sufficient for the USPTO to hold a patent claim invalid even though the same evidence would be
insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the
USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant
in a district court action. Thus, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the
prosecution of our or our licensors’ patent applications and the enforcement or defense of any resulting issued patents, all of
which could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Changes in U.S. patent law, or laws
in other countries, could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
As is the case with other biopharmaceutical
companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical
industry involve a high degree of technological and legal complexity. Therefore, obtaining and enforcing biopharmaceutical patents is
costly, time-consuming and inherently uncertain. Changes in either the patent laws or in the interpretations of patent laws in the U.S.
and other countries may diminish the value of our intellectual property and may increase the uncertainties and costs surrounding the prosecution
of patent applications and the enforcement or defense of issued patents. We cannot predict the breadth of claims that may be allowed or
enforced in our patents or in third-party patents. In addition, Congress or other foreign legislative bodies may pass patent reform legislation
that is unfavorable to us.
For example, the U.S. Supreme Court has ruled
on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening
the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our or our licensors’ ability
to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.
Depending on decisions by the U.S. Congress, the U.S. federal courts, the USPTO, or similar authorities in foreign jurisdictions, the
laws and regulations governing patents could change in unpredictable ways that would weaken our or our licensors’ ability to obtain
new patents or to enforce our existing patents and patents we might obtain in the future.
Patent terms may be inadequate to protect
our competitive position on our product candidates for an adequate amount of time.
Patents have a limited lifespan. In the U.S.,
if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional
filing date. Various extensions may be available, but the term of a patent, and the protection it affords, are limited. Even if patents
directed to our product candidates are obtained, once the patent term has expired, we may be open to competition from competitive products.
Given the amount of time required for the development, testing and regulatory review of product candidates, patents directed to our product
candidates might expire before or shortly after such candidates are commercialized. As a result, our patent portfolio may not provide
us with sufficient rights to exclude others from commercializing products similar or identical to ours.
If we or our licensors do not obtain
patent term extension for our product candidates and/or methods of their use, our business may be materially harmed.
Depending upon the timing, duration and specifics
of FDA marketing approval of our product candidates and their methods of use, one or more of our U.S. patents may be eligible for limited
patent term restoration. These laws permit a patent restoration term of up to five years as compensation for patent term lost during product
development and the FDA regulatory review process. A maximum of one patent may be extended per FDA-approved product as compensation for
the patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond
a total of 14 years from the date of product approval and only those claims covering such approved drug product, a method for using it
or a method for manufacturing it may be extended.
Patent term extension may also be available
in certain foreign countries upon regulatory approval of our product candidates. However, we or our licensors may not be granted an extension
because of, for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise
failing to satisfy applicable requirements. Patent term extension may also not be granted because the product candidates and/or methods
of use are determined not to be the first permitted marketing or use of those drug candidates in the jurisdiction in question, or patent
term extension may not be granted because the product candidates and/or methods of use are determined not to constitute an “active
ingredient” or use of an “active ingredient” that is eligible for patent term extension. Moreover, if patent term extension
is granted then the additional time period or the scope of patent protection afforded could be less than we request. If we or our licensors
are unable to obtain patent term extension or restoration or the term of any such extension is less than we request, our competitors may
obtain approval of competing products following our patent expiration, and our revenue could be reduced, possibly materially. Further,
if this occurs, our competitors may take advantage of our investment in development and trials by referencing our clinical and preclinical
data and launch their product earlier than might otherwise be the case.
We may not be able to protect our intellectual
property rights throughout the world.
Although we have in-licensed issued patents
and pending patent applications in the U.S. and certain other countries, filing, prosecuting and defending patents in all countries throughout
the world would be prohibitively expensive, and our intellectual property rights in some countries outside the U.S. can be less extensive
than those in the U.S. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent
as federal and state laws in the U.S. Consequently, we may not be able to prevent third parties from practicing our in-licensed inventions
in all countries outside the U.S. or from selling or importing products made using our in-licensed inventions in and into the U.S. or
other jurisdictions. Competitors may use our in-licensed technologies in jurisdictions where we have not obtained patent protection to
develop their own products and, further, may export otherwise infringing products to territories where we or our licensors have patent
protection but enforcement is not as strong as that in the U.S. These products may compete with our product candidates, and our or our
licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent competitors or others from
competing.
Many companies have encountered significant
problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of many foreign countries
do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement
of our or our licensors’ patents or the marketing of competing products in violation of our proprietary rights. Proceedings to enforce
our or our licensors’ patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention
from other aspects of our business, could put our or our licensors’ patents at risk of being invalidated or interpreted narrowly
and our or our licensors’ patent applications at risk of not issuing and could provoke third parties to assert claims against us.
We or our licensors may not prevail in any lawsuits that we or our licensors initiate, and the damages or other remedies awarded, if any,
may not be commercially meaningful. Accordingly, our or our licensors’ efforts to enforce or defend our intellectual property rights
around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Many countries have compulsory licensing laws
under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of
patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could
materially diminish the value of such patents. If we or our licensors are forced to grant a license to third parties with respect to any
patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations
and prospects may be adversely affected. One such compulsory licensing regime arises in the United States; for inventions subject to the
Bayh-Dole Act (a/k/a the Patent and Trademark Law Amendments Act, Pub. L. 96-517, December 12, 1980), the United States government may
have license rights in those inventions, and may exercise “march in” rights that would grant licenses to third parties to
use patents for subject inventions. To date the United States has not exercised “march in” rights under the Bayh-Dole Act,
but there is no guarantee that it will not exercise those rights in the future. The United States may also, but rarely does, use patented
inventions pursuant to 28 U.S.C. § 1498(a), for which use some compensation would be paid to the Company.
Obtaining and maintaining our patent protection
depends on compliance with various procedural, documentary, fee payment and other requirements imposed by regulations and governmental
patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity
fees and various other governmental fees on patents and/or applications will be due to the USPTO and various foreign patent offices at
various points over the lifetime of our patents and/or applications. We have systems in place to remind us to pay these fees, and we rely
on third parties to pay these fees when due. Additionally, the USPTO and various foreign patent office’s require compliance with
a number of procedural, documentary, fee payment and other similar provisions during the patent application process and after a patent
has been granted. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can
be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction. However, there
are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or
complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, it could have a material adverse effect on
our business, financial condition, and results of operations.
Risks Related to Regulatory
Approval and Other Government Regulations
If we are not able to successfully develop
and commercialize our product candidates and obtain the necessary regulatory approvals, we may not generate sufficient revenues to continue
our business operations.
To generate sales revenue from our product
candidates, we must conduct extensive clinical trials to demonstrate that our product candidates are safe and effective, and we must obtain
required regulatory approvals. Our early-stage product candidates may fail to perform as we expect. Moreover, our product candidates in
later stages of development may fail to show the required safety and effectiveness for approval despite having progressed successfully
through initial clinical testing. We may need to devote significant additional research and development, financial resources, and personnel
to develop commercially viable products. If our product candidates do not prove to be safe and efficacious in clinical trials, we will
not obtain the required regulatory approvals. If we fail to obtain such approvals, we may not generate sufficient revenues to continue
our business operations.
In addition, we may experience numerous unforeseen
events during, or as a result of, any future clinical trials that could delay or prevent our ability to receive marketing approval for,
or to commercialize, of our product candidates, including:
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regulators,
IRBs, or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective
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the FDA or other regulatory authorities may disagree with our clinical trial protocol, which may delay or prevent us from initiating our clinical trials; |
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we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites, prospective CROs, and prospective local representatives which can be subject to extensive negotiation and may vary significantly among different local representatives, CROs and trial sites; |
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the number of subjects required for clinical trials of any product candidates may be larger than we anticipate, or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; |
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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators; |
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delays and interruptions to our clinical trials could extend the duration of the trials and increase the overall costs to finish the trials as our fixed costs are not substantially reduced during delays; |
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we may elect to, or regulators, IRBs, or ethics committees may require that we or our investigators, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; |
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we may not have the financial resources available to begin and complete the planned trials, or the cost of clinical trials of any product candidates may be greater than we anticipate; |
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the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our therapeutic candidates may be insufficient or inadequate to initiate or complete a given clinical trial; and |
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The FDA or other comparable foreign regulatory authorities may require us to submit additional data such as long-term toxicology studies or may impose other requirements before permitting us to initiate a clinical trial. |
Our product development costs will increase
if we experience delays in clinical trials or in obtaining marketing approvals. We do not know whether any of our clinical trials will
begin as planned, will need to be restructured or will be completed on schedule, or at all. If we do not achieve our product development
goals in the time frames we announce and expect, the approval and commercialization of our product candidates may be delayed or prevented
entirely. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize
our product candidates and may allow our competitors to bring products to market before we do, potentially impairing our ability to successfully
commercialize our product candidates and harming our business and results of operations. Any delays in our clinical development programs
may harm our business, financial condition and results of operations significantly.
Even if we obtain regulatory approval of a
product candidate, that approval may be subject to limitations on the indicated uses for which it may be marketed. Even after granting
regulatory approval, the FDA and regulatory agencies in other countries continue to review and inspect marketed products, manufacturers,
and manufacturing facilities, which may create additional regulatory burdens. Later discovery of previously unknown problems with a product,
manufacturer, or facility may result in restrictions on the product or manufacturer, including a withdrawal of the product from the market
or a withdrawal of the approved application by the FDA. Furthermore, FDA may require post-approval studies or other post-approval commitments.
Failure to comply with or meet those requirements or commitments could result in withdrawal of the approved application by FDA. Regulatory
agencies may also establish additional regulations, policies, or guidance that could prevent or delay regulatory approval of our product
candidates.
We cannot market
and sell our product candidates in the U.S. or in other countries if we fail to obtain the necessary regulatory approvals.
We cannot sell our product candidates until
regulatory agencies grant marketing approval. The process of obtaining regulatory approval is lengthy, expensive, and uncertain, and the
legal requirements for obtaining approval may change. It is likely to take several years to obtain the required regulatory approvals for
our lead signaling cell product candidates, or we may never gain the necessary approvals. Any difficulties that we encounter in obtaining
regulatory approval may have a substantial adverse impact on our operations. Moreover, because our product candidates are all based on
only three platform technologies, any adverse events in any of our clinical trials for one of our product candidates could negatively
impact the clinical trials and approval process for our other product candidates.
The pathway to regulatory approval for MSCs
may be more complex and lengthier than for approval of a conventional drug. Similarly, to obtain approval to market our cell products
outside of the U.S., we, together with our collaborative partners, will need to file appropriate applications and submit clinical data
concerning our product candidates and receive regulatory approval from governmental agencies, which in certain countries includes approval
of the price we intend to charge for our product. We may encounter delays or rejections if changes occur in regulatory agency regulations,
policies or guidance during the period in which we develop a product candidate or during the period required for review of any application
for regulatory agency approval. If we are not able to obtain regulatory approvals for use of our product candidates under development,
we will not be able to commercialize such products, and therefore may not be able to generate sufficient revenues to support our business.
If we are not able to conduct our clinical
trials properly and on schedule, marketing approval by FDA and other regulatory authorities may be delayed or denied.
The completion of our clinical trials may
be delayed or terminated for many reasons, including, but not limited to, if:
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the FDA does not grant INDs to test the product candidates in humans; |
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the FDA does not grant, or suspends, permission to proceed and places a trial on clinical hold; |
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we are not able to identify sufficient clinical trial sites and/or clinical trial investigators to begin or complete a trial; |
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subjects do not enroll in our trials at the rate we expect; |
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subjects experience an unacceptable rate or severity of adverse side effects; |
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third-party clinical investigators do not perform our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, cGMP, Current Good Tissue Practice (cGTP) and other regulatory requirements, or other third parties do not perform data collection and analysis in a timely or accurate manner; |
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third-party service providers do not appropriately perform the services or terminate a service agreement, particularly in a foreign jurisdiction where such third-party service provider may serve as our local representative in communications with the foreign regulatory authority; |
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inspections by the FDA or IRBs of clinical trial sites at research institutions participating in our clinical trials find regulatory violations that require us to undertake corrective action, suspend, or terminate one or more sites, or prohibit us from using some or all of the data in support of our marketing applications; or |
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one or more IRBs suspends or terminates the trial at an investigational site, precludes enrollment of additional subjects, or withdraws its approval of the trial. |
Our development costs will increase if we
have material delays in our clinical trials, or if we are required to modify, suspend, terminate, or repeat a clinical trial. If we are
unable to conduct our clinical trials properly and on schedule, marketing approval may be delayed or denied by the FDA.
Final marketing
approval of our product candidates by the FDA or other regulatory authorities for commercial use may be delayed, limited, or denied, any
of which could adversely affect our ability to generate operating revenues.
Final marketing approval
for our product candidates may be delayed, limited, or denied if, among other factors:
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we are unable to satisfy the significant clinical testing required to demonstrate safety and effectiveness of our product candidates before marketing applications can be filed with the FDA or other regulatory authority; |
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FDA or other regulatory authorities do not agree with our interpretation of data obtained from preclinical and nonclinical animal testing or human clinical trials, even though the data can be interpreted in different ways; |
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we fail at any stage of the development and testing of our product candidates, which may take years to complete; |
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we receive negative or inconclusive results or reports of adverse side effects during a clinical trial; or |
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the FDA requires us to expand the size and scope of the clinical trials or to conduct one or more additional trials. |
If marketing approval
for our product candidates is delayed, limited, or denied, our ability to market products, and our ability to generate product sales will
be adversely affected.
There has been
very little success in gaining FDA approval for an Alzheimer’s disease drug, and we may never have success in developing Alzheimer’s
disease therapeutics.
Despite billions of dollars invested by the
biopharmaceutical industry in research programs to develop novel therapeutics for AD, there have only been two FDA-approved treatments.
Aduhelm® (aducanumab-avwa), an amyloid beta-directed antibody, was approved by FDA in 2021 under FDA’s accelerated
approval pathway based upon the drug’s effect on a surrogate endpoint. FDA has required confirmatory trials of clinical benefit,
and there is ongoing public discussion of the drug’s clinical benefit. Leqembi™ ® (lecanemab-irmb), also
an amyloid beta-directed antibody, was approved in January 2023 under the accelerated approval pathway as well and will therefore likewise
require confirmatory trials.
Many new types and classes of drugs have been
developed and tested in AD, including monoclonal antibodies, g-secretase modulators and inhibitors, β-site amyloid precursor protein
cleaving enzyme (BACE) inhibitors, receptor for advanced glycation end-products (RAGE) inhibitors, nicotinic agonists, serotonin subtype
receptor (5HT6) antagonists, and others. The vast majority of these scientific programs have failed in clinical testing. Moreover, our
results from our Phase 2a AD trial are preliminary in nature, and we may never have any success in developing therapeutics for AD.
We may not be able to secure and maintain
research institutions to conduct our clinical trials.
We rely on research institutions to conduct
our clinical trials. Specifically, the limited number of bone marrow transplant centers further heightens our dependence on such research
institutions for our future Phase 3 clinical trials. Our reliance upon research institutions, including hospitals and clinics, provides
us with less control over the timing and cost of clinical trials and the ability to recruit subjects. If we are unable to reach agreement
with suitable research institutions on acceptable terms, or if any resulting agreement is terminated, we may be unable to quickly replace
the research institution with another qualified institution on acceptable terms. Even if we do replace the institution, we may incur additional
costs to conduct the trial at the new institution. We may not be able to secure and maintain suitable research institutions to conduct
our clinical trials.
Producing and marketing an approved
drug or other medical product is subject to significant and costly post-approval regulation.
Even if approved for commercial sale, we may
be required to conduct Phase 4 (i.e., post-marketing) clinical trials or comply with other post-marketing requirements or commitments
for the products. Even if we obtain approval of a product, we can only market the product for the approved indications. After granting
marketing approval, the FDA and regulatory agencies in other countries continue to review and inspect marketed products, manufacturers,
and manufacturing facilities, creating additional regulatory burdens. Later discovery of previously unknown problems with a product, manufacturer,
or facility may result in restrictions on the product or manufacturer, including a withdrawal of the product from the market or withdrawal
of product approval. Further, regulatory agencies may establish different or additional regulations that could impact the post-marketing
status of our products.
Our business involves the use of hazardous
materials that could expose us to environmental and other liability.
We have contract facilities in Florida that
are subject to various local, state, and federal laws and regulations relating to safe working conditions, laboratory and manufacturing
practices, the experimental use of animals, and the use and disposal of hazardous or potentially hazardous substances, including chemicals,
micro-organisms, and various radioactive compounds used in connection with our research and development activities. In the U.S., these
laws include the Occupational Safety and Health Act, the Toxic Test Substances Control Act, and the Resource Conservation and Recovery
Act. We cannot guarantee that accidental contamination or injury to our employees and third parties from hazardous materials will not
occur. We do not have insurance to cover claims arising from our use and disposal of these hazardous substances other than limited clean-up
expense coverage for environmental contamination due to an otherwise insured peril, such as fire.
Even if we receive regulatory approval
of Lomecel-B™ or any of our other product candidates, we will be subject to ongoing regulatory requirements and continued regulatory
review, which may result in significant additional expense. We may be subject to penalties if we fail to comply with regulatory requirements
or experience unanticipated problems with our therapeutic candidates.
Any regulatory approvals that we receive for
Lomecel-B™ or another product-candidate may require post-marketing surveillance to monitor the safety and efficacy of the product
and may require us to conduct post-approval clinical studies. The FDA may also require a Risk Evaluation and Mitigation Strategy (“REMS”)
in order to approve our product candidates, which could entail requirements for a medication guide, physician communication plans or additional
elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition,
if the FDA or a comparable foreign regulatory authority approves our product candidates, the manufacturing processes, labeling, packaging,
distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our product candidates will
be subject to extensive and ongoing regulatory requirements. These requirements can include submissions of safety and other post-marketing
information and reports, registration, as well as continued compliance with Current Good Manufacturing Practice regulations (“cGMP”)
and Good Clinical Practice (“GCP”), for any clinical trials that we conduct post-approval and applicable product tracking
and tracing requirements. Compliance with ongoing and changing requirements takes substantial resources and, should we be unable to remain
in compliance, our business could be materially and adversely affected.
Manufacturers and their facilities are required
to comply with extensive FDA and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing
procedures conform to cGMP regulations. As such, we and our contract manufacturers will be subject to continual review and inspections
to assess compliance with cGMP and adherence to commitments made in any marketing application, and previous responses to inspection observations.
Accordingly, we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including
manufacturing, production and quality control.
Any regulatory approvals that we receive for
our product candidates may be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions
of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and surveillance
to monitor the safety and efficacy of the product candidate. The FDA may also require a REMS as a condition of approval of our therapeutic
candidates, which could entail requirements for long-term patient follow-up, a medication guide, physician communication plans or additional
elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition,
if the FDA or a comparable foreign regulatory authority approves our therapeutic candidates, we will have to comply with requirements
including submissions of safety and other post-marketing information and reports and registration.
Later discovery of previously unknown problems
with our product candidates, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or
manufacturing processes, or failure to comply with regulatory requirements, or the making of unsupported claims, may result in revisions
to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks;
or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other
things:
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restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market or product recalls; |
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fines, warning letters or holds on clinical trials; |
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refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or withdrawal of approvals; |
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product seizure or detention or refusal to permit the import or export of our therapeutic candidates; and |
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consent decrees or injunctions or the imposition of civil or criminal penalties. |
Products may be promoted only for the approved
indications and in accordance with the provisions of the approved label. However, companies may share truthful and not misleading information
that is not inconsistent with the labeling. The policies of the FDA and of other regulatory authorities may change, and additional government
regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood,
nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States
or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if
we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve
or sustain profitability.
Ongoing healthcare legislative and regulatory
reform measures may have a material adverse effect on our business and results of operations.
Changes in regulations, statutes or the interpretation
of existing regulations could impact our business in the future by requiring, for example, changes to our manufacturing arrangements;
additions or modifications to product labeling; the recall or discontinuation of our products; or additional record-keeping requirements.
If any such changes were to be imposed, they could adversely affect the operation of our business.
Since the ACA was enacted, other legislative
changes have been proposed and adopted in the United States. The Budget Control Act of 2011, among other things, created measures for
spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction
of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s
automatic reduction to several government programs, including aggregate reductions of Medicare payments to providers of 2% per fiscal year.
These reductions went into effect on April 1, 2013, and subsequent legislative amendments to the statute, including the Bipartisan
Budget Act of 2018, or BBA, will remain in effect through 2030, unless additional congressional action is taken. However, these Medicare
sequester reductions were suspended from May 1, 2020, through December 31, 2020, due to the COVID-19 pandemic. The BBA also
amended the ACA, effective January 1, 2019, by increasing the point-of-sale discount that is owed by pharmaceutical manufacturers
who participate in Medicare Part D and closing the coverage gap in most Medicare drug plans, commonly referred to as the “donut
hole.” On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further
reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased
the statute of limitations period for the government to recover overpayments to providers from three to five years.
Moreover, increasing efforts by governmental
and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage
and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our therapeutic
candidates. There has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing
practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation
designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review
the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.
At the federal level, the former Trump administration’s
budget for fiscal year 2021 included a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase
competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs. On March 10,
2020, the former Trump administration sent “principles” for drug pricing to Congress, calling for legislation that would,
among other things, cap Medicare Part D beneficiary out-of-pocket pharmacy expenses, provide an option to cap Medicare Part D
beneficiary monthly out-of-pocket expenses, and place limits on pharmaceutical price increases. The former Trump administration previously
released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contained proposals to increase manufacturer
competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price
of their products and reduce the out-of-pocket costs of drug products paid by consumers. The U.S. Department of Health and Human Services,
or HHS, has solicited feedback on some of these measures and has implemented others under its existing authority. For example, in May 2019,
Centers for Medicare and Medicaid Services (“CMS”) issued a final rule that would allow Medicare Advantage Plans the
option of using step therapy, a type of prior authorization, for Part B drugs beginning January 1, 2020. This final rule codified
CMS’s policy change that was effective January 1, 2019. On July 24, 2020, former President Trump signed four Executive
Orders aimed at lowering drug prices. The Executive Orders direct the Secretary of HHS to: (1) eliminate protection under an AKS
safe harbor for certain retrospective price reductions provided by drug manufacturers to sponsors of Medicare Part D plans or pharmacy
benefit managers that are not applied at the point-of-sale; (2) allow the importation of certain drugs from other countries through
individual waivers, permit the re-importation of insulin products, and prioritize finalization of the proposed rule to permit the
importation of drugs from Canada; (3) ensure that payment by the Medicare program for certain Medicare Part B drugs is not higher
than the payment by other comparable countries (depending on whether pharmaceutical manufacturers agree to other measures); and (4) require
Federally Qualified Health Centers, or FQHCs, participating in the 340B drug program to provide insulin and injectable epinephrine to
certain low-income individuals at the discounted price paid by the FQHC, plus a minimal administrative fee. On October 1, 2020, the
FDA issued the final rule allowing importation of certain prescription drugs from Canada. On August 6, 2020, former President
Trump signed an additional Executive Order directing U.S. government agencies to encourage the domestic procurement of Essential Medicines,
Medical Countermeasures, and Critical Inputs, which include among other things, active pharmaceutical ingredients and drugs intended for
use in the diagnosis, cure, mitigation, treatment, or prevention of COVID-19. The FDA has been directed to release a full list of Essential
Medicines, Medical Countermeasures, and Critical Inputs affected by this Order by November 5, 2020. On September 13, 2020, former
President Trump signed an Executive Order directing HHS to implement a rulemaking plan to test a payment model, pursuant to which Medicare
would pay, for certain high-cost prescription drugs and biological products covered by Medicare Part B, no more than the most-favored-nation
price (i.e., the lowest price) after adjustments, for a pharmaceutical product that the drug manufacturer sells in a member country of
the Organization for Economic Cooperation and Development that has a comparable per-capita gross domestic product. Although a number of
these and other measures may require additional authorization to become effective, Congress and the Trump administration have each indicated
that it will continue to seek new legislative and/or administrative measures to control drug costs. Any reduction in reimbursement from
Medicare and other government programs may result in a similar reduction in payments from private payors.
Additionally, on July 9, 2021, President
Biden issued an executive order directing the FDA to, among other things, continue to clarify and improve the approval framework for generic
drugs and identify and address any efforts to impede generic drug competition.
At the state level, legislatures are increasingly
passing legislation and implementing regulations designed to control pharmaceutical and biologic product pricing, including price or patient
reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures,
and, in some cases, designed to encourage importation from other countries and bulk purchasing.
These laws, and future state and federal healthcare
reform measures may be adopted in the future, any of which may result in additional reductions in Medicare and other healthcare funding
and otherwise affect the prices we may obtain for any of our therapeutic candidates for which we may obtain regulatory approval or the
frequency with which any such therapeutic candidate is prescribed or used. Additionally, we expect to experience pricing pressures in
connection with the sale of any future approved therapeutic candidates due to the trend toward managed healthcare, the increasing influence
of health maintenance organizations, cost containment initiatives and additional legislative changes.
Healthcare reform in the U.S. and other
countries may materially and adversely affect us.
In the U.S. and in many foreign jurisdictions,
the legislative landscape continues to evolve. Our revenue prospects could be affected by changes in healthcare spending and policies
in our target markets. We operate in a highly regulated industry and new laws or judicial decisions, or new interpretations of existing
laws or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could materially
and adversely affect us.
There is significant interest in promoting
healthcare reform, as evidenced by the enactment in the U.S. of the Patient Protection and Affordable Care Act, as amended by the Health
Care and Education Reconciliation Act in 2010, or together, the ACA. It is likely that many governments will continue to consider new
healthcare legislation or changes to existing legislation. We cannot predict the initiatives that may be adopted in the future or whether
initiatives that have been adopted will be repealed or modified, or how they may affect us. The continuing efforts of governments, insurance
companies, managed care organizations and other third-party payors to contain or reduce healthcare costs may adversely affect:
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the demand for any products for which we may obtain regulatory approval; |
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our ability to set a price that we believe is fair for our products; |
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our ability to generate revenues and achieve or maintain profitability; and |
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the level of taxes that we are required to pay. |
Under the ACA, there are many programs and
requirements for which details or consequences are still not fully understood. We are unable to predict what healthcare programs and regulations
will ultimately be implemented at any level of government in or outside the U.S., but any changes that decrease reimbursement for our
approved products, reduce volumes of medical procedures or impose new cost-containment measures could adversely affect us.
Prescription Drug Pricing Reduction
Act
On August 16, 2022, the Inflation Reduction
Act of 2022 was passed, which among other things, allows for CMS to negotiate prices for certain single-source drugs and biologics reimbursed
under Medicare Part B and Part D, beginning with ten high-cost drugs paid for by Medicare Part D starting in 2026, followed
by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond.
The legislation subjects drug manufacturers to civil monetary penalties and a potential excise tax for failing to comply with the legislation
by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law or for taking price
increases that exceed inflation. The legislation also caps Medicare beneficiaries’ annual out-of-pocket drug expenses at $2,000.
The effect of Inflation Reduction Act of 2022 on our business and the healthcare industry in general is not yet known.
Risks Related to Our
Dependence on Third Parties
We rely on third parties to serve as
local representatives in foreign jurisdictions where we perform our clinical trials.
We rely on third parties to provide us with
services related to our clinical trials conducted domestically and in foreign jurisdictions. In foreign jurisdictions, such third parties
may serve as our local representative. Such local representative may perform services that include corresponding with the foreign regulatory
authority on our behalf. If such third party fails to comply with applicable laws, misrepresents our intentions, fails to adequately provide
the necessary services, or terminates its relationship with us, our clinical trial process may be delayed as we engage a new service provider,
which would increase our anticipated development and commercialization costs. Any prolonged disruption could have a significant negative
impact on our ability to effectively communicate with regulatory authorities, which could delay our pre-clinical and clinical trials.
We rely on third parties to provide
us with supplies to produce our product candidates. Any problems experienced by these third parties could result in a delay or interruption
in the supply of our product candidates for our clinical trials and future approved products to our customers, which could have a material
negative effect on our business.
We rely on third parties to provide us with
supplies to produce our product candidates. If the operations of these third parties are interrupted or if they are unable to meet our
delivery requirements due to capacity limitations or other constraints, we may be limited in our ability to fulfill our supply of product
candidates. Any prolonged disruption in the operations of third parties could have a significant negative impact on our ability to produce
our product candidates for pre-clinical and clinical trials or sell our future approved products, could harm our reputation and could
cause us to seek other third-party contracts, thereby increasing our anticipated development and commercialization costs. In addition,
if we are required to change third parties for any reason, we will be required to verify that the new third parties maintain facilities
and procedures that comply with quality standards required by the FDA and with all applicable regulations and guidelines. The delays associated
with the qualification of a new third party could negatively affect our ability to develop product candidates or receive approval for
any product candidates in a timely manner.
We currently depend upon third parties
for services and raw materials needed for the manufacture of our product candidates, and if these products are successfully commercialized,
we may become dependent upon third parties for product distribution. If any of these third parties fail or are unable to perform in a
timely manner, our ability to manufacture and deliver could be compromised.
To produce our product candidates for use
in clinical studies, and to produce any of our product candidates that may be approved for commercial sale, we require biologic media,
reagents, and other highly specialized materials in addition to the bone marrow aspirate used in the manufacture of our product candidates.
These items must be manufactured and supplied to us in sufficient quantities and in compliance with the regulations governing cGMP and
cGTP promulgated by the FDA. To meet these requirements, we have entered into supply agreements with firms that manufacture these components
to meet cGMP and cGTP standards. Our requirements for these items are expected to increase if and when we transition to the manufacture
of commercial quantities of our product candidates.
In addition, as we proceed with our clinical
trial efforts, we must be able to demonstrate to the FDA that we can manufacture our product candidates with consistent characteristics.
While we currently produce our product candidates in our own facility, scaling up the manufacturing process would require us to develop
a larger facility, which could require significant time and capital investments to conform to applicable manufacturing standards. Alternatively,
we may be required to outsource some or all of our manufacturing, which would cause us to be materially dependent on these suppliers for
supply of cGMP- and cGTP-grade components of consistent quality. Our ability to complete ongoing clinical trials may be negatively affected
in the event that we are forced to seek and validate a replacement source for any of these critical components. If we are not able to
obtain adequate supplies of these items of consistent quality from our third-party suppliers, it will also be more difficult to manufacture
commercial quantities of our product candidates that are approved for commercial sale.
In addition, if one or more of our product
candidates is approved for commercial sale, we intend to rely on third parties for their distribution. Proper shipping and distribution
require compliance with specific storage and shipment procedures (e.g., prevention of damage to shipping materials and prevention of temperature
excursions during shipment). Failure to comply with such procedures will necessitate return and replacement, potentially resulting in
additional cost and causing us to fail to meet supply requirements.
Use of third-party manufacturers may
increase the risk that we will not have adequate quantities of our product candidates.
We may use a third-party manufacturer to supply
our product candidates for clinical trials or other uses at some point. Reliance on third-party manufacturers entails risks to which we
would not be subject if we manufactured such components ourselves, including reliance on the third party for regulatory compliance and
quality assurance, possible breach of the manufacturing agreement by the third party or termination or nonrenewal of the agreement by
the third party, based on its own business priorities, at a time that is costly or inconvenient for us.
Future contract manufacturers are or will
be subject to all of the risks and uncertainties that we would be subject to if we manufactured the product candidates on our own. Similar
to us, third-party manufacturers are subject to ongoing, periodic, and unannounced inspection by the FDA and corresponding state and foreign
agencies or their designees to ensure strict compliance with cGMP and cGTP regulations and other governmental regulations and corresponding
foreign standards. Although we do not control compliance by our contract manufacturers with these regulations and standards, we—as
the manufacturer—assume the liabilities for our contract manufacturers’ non-compliance. Our future contract manufacturers
might not be able to comply with these regulatory requirements. If our third-party manufacturers fail to comply with applicable regulations,
the FDA or other regulatory authorities could impose penalties on us, including fines, injunctions, civil penalties, consent decrees,
invocation of FDA’s Application Integrity Policy, issuance of warning or untitled letters, denial of marketing approval of our product
candidates, delays, suspensions, or withdrawals of approvals, license revocation, seizures or recalls of product candidates or our other
products, operating restrictions, and criminal prosecutions. Any of these actions could significantly and adversely affect supplies of
our product candidates or other products and could have a material adverse effect on our business, financial condition, and results of
operations.
We rely on third parties to conduct
certain aspects of our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual
duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval of or commercialize
any potential therapeutic candidates.
We depend, or may depend in the future, upon
third parties to conduct certain aspects of our preclinical studies and clinical trials, under agreements with universities, medical institutions,
CROs, strategic collaborators and others. We expect to have to negotiate budgets and contracts with such third parties, which may result
in delays to our development timelines and increased costs.
We will rely especially heavily on universities,
medical institutions, CROs and other third-parties for the conduct of our clinical trials. While we are obligated to ensure compliance
by third-parties with clinical trial protocols and other aspects of our clinical trials, and to have mechanisms in place to monitor our
clinical trials, the sites at which they are conducted, and the investigators and other personnel involved in our clinical trials, we
have limited control over these entities and individuals and limited visibility into their day-to-day activities, including with respect
to their compliance with the approved clinical protocol. Our reliance on third- parties does not relieve us of our regulatory responsibilities
for ensuring that each of our trials is conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific
standards. We and these third parties are required to comply with GCP requirements, for therapeutic candidates in clinical development.
Regulatory authorities enforce GCP requirements through periodic inspections of trial sponsors, clinical investigators and trial sites.
If we or any of these third parties fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials
may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to suspend or terminate these trials
or perform additional preclinical studies or clinical trials before approving our marketing applications. We cannot be certain that, upon
inspection, such regulatory authorities will determine that any of our clinical trials comply with GCP requirements.
Our failure or any failure by these third
parties to comply with these regulations or to recruit a sufficient number of patients meeting requirements for enrollment in the trial
may require us to repeat clinical trials, which would delay the regulatory approval process. Moreover, our business may be implicated
if any of these third parties violate federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and
security laws.
Any third parties conducting aspects of our
preclinical studies or clinical trials will not be our employees and, except for remedies that may be available to us under our agreements
with such third parties, we cannot control whether or not they devote sufficient time and resources to our preclinical studies and clinical
programs. These third parties may also have relationships with other commercial entities, including our competitors, for whom they may
also be conducting clinical trials or other therapeutic development activities, which could affect their performance on our behalf. If
these third-parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to
be replaced, or if the quality or accuracy of the preclinical or clinical data they obtain is compromised due to the failure to adhere
to our protocols or regulatory requirements or for other reasons or if, due to federal or state orders or absenteeism due to the COVID-19
pandemic, they are unable to meet their contractual and regulatory obligations, our development timelines, including clinical development
timelines, may be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval of or
successfully commercialize our therapeutic candidates. As a result, our financial results and the commercial prospects for our therapeutic
candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.
Switching or adding additional CROs involves
additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO begins work.
As a result, delays may occur, which can materially impact our ability to meet our desired development timelines. Though we carefully
manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future
or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.
If we decide to use third-party manufacturers
in the future, they will likely be dependent upon their own third-party suppliers, making us vulnerable to supply shortages and price
fluctuations, which could harm our business.
The operations of any future third-party manufacturers
will likely be dependent upon their own third-party suppliers. A supply interruption or an increase in demand beyond a supplier’s
capabilities could harm the ability of any future manufacturers to manufacture our product candidates or approved products until the manufacturer
identifies and qualifies new sources of supply. Reliance on these third-party manufacturers and their suppliers could subject us to a
number of risks that could harm our business, including:
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interruption of supply resulting from modifications to or discontinuation of a supplier’s operations; |
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failure of third-party manufacturers or suppliers to comply with their own legal and regulatory requirements; |
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delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier’s variation in a component; |
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a lack of long-term supply arrangements for key components with our suppliers; |
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inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms; |
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difficulty and cost associated with locating and qualifying alternative suppliers for components in a timely manner; |
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production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications; |
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delay in delivery due to suppliers prioritizing other customer orders over ours or those of our third-party manufacturers; |
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damage to our brand reputation caused by defective components produced by the suppliers; and |
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fluctuation in delivery by the suppliers due to changes in demand from us, our third-party manufacturers or their other customers. |
Any interruption in the supply of components
of our product candidates or future products or materials, or our inability to obtain substitute components or materials from alternate
sources at acceptable prices in a timely manner, could impair our ability to meet the demands of our clinical trials or of our future
customers, which would have an adverse effect on our business.
We will depend on third-party distributors
in the future to market and sell our future products which will subject us to a number of risks.
We will depend on third-party distributors
to sell, market, and service our future products in our intended markets. We are subject to a number of risks associated with reliance
upon third-party distributors including:
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lack of day-to-day control over the activities of third-party distributors; |
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failure of the third-party distributors to comply with their own legal and regulatory requirements; |
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third-party distributors may not commit the necessary resources to market and sell our future products to our level of expectations; |
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third-party distributors may terminate their arrangements with us on limited or no notice or may change the terms of these arrangements in a manner unfavorable to us; and |
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disagreements with our future distributors could result in costly and time-consuming litigation or arbitration which we could be required to conduct in jurisdictions with which we are not familiar. |
If we fail to establish
and maintain satisfactory relationships with our future third-party distributors, our revenues and market share may not grow as anticipated,
and we could be subject to unexpected costs which could harm our results of operations and financial condition.
The successful commercialization of
our current or future product candidates will depend on obtaining reimbursement from government and third-party payors, and price controls
in foreign markets could adversely affect our future profitability.
If we successfully develop and obtain necessary
regulatory approvals, we intend to sell our product candidates in countries such as the U.S. and Japan. In the U.S., the market for any
pharmaceutical product is affected by the availability of reimbursement from government and third-party payors, such as government health
administration authorities, private health insurers, health maintenance organizations, and pharmacy benefit management companies. MSC
therapies may be expensive compared with conventional pharmaceuticals, due to the higher cost and complexity associated with the research,
development, and production of product candidates, the small size and large geographic diversity of the target patient population for
some indications, and the complexity associated with distribution of signaling cell therapies which require special handling, storage,
and shipment procedures and protocols. This, in turn, may make it more difficult for us to obtain adequate reimbursement from government
and third-party payors, particularly if we cannot demonstrate a favorable cost-benefit relationship. Government and third-party payors
may also deny coverage or offer inadequate levels of reimbursement for our potential products if they determine that the product has not
received appropriate clearances from the FDA or other regulatory authorities or is experimental, medically unnecessary or inappropriate.
In some other countries where we may seek
to market our products, such as Japan, the pricing of prescription pharmaceutical products and services and the level of government reimbursement
are subject to governmental control. In these countries, pricing negotiations with governmental authorities can take six to twelve months
or longer after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we or
our potential future collaborators may be required to conduct one or more clinical trials that compare the cost effectiveness of our product
candidates or products to other available therapies. Conducting one or more additional clinical trials would be expensive and could result
in delays in commercialization of our product candidates.
Managing and reducing health care costs has
been of great concern in the U.S. and various foreign governments. Although we do not believe that any recently enacted or presently proposed
legislation in any jurisdictions in which we currently operate should impact our business based on our current model, we might be subject
to future regulations or other cost-control initiatives that materially restrict the pricing or reimbursement of our products. In addition,
payors are continuing to limit reimbursements for newly approved health care products while also challenging the price and cost-effectiveness
of medical products and services. In particular, payors may limit the indications for which they will reimburse patients who use any products
that we may develop. Finally, cost control initiatives could decrease the price for products that we may develop, which could result in
lower product revenues to us. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory
levels, our business could be adversely affected.
We may enter into arrangements with
third-party collaborators to help us develop our product candidates and commercialize our products, and our ability to commercialize such
products may be impaired or delayed if collaborations are unsuccessful.
We are parties to various collaborations with
third parties, and may enter into additional collaborations in the future. We are dependent upon the success of our current and any future
collaborators in performing their responsibilities in connection with the relevant collaboration. If we fail to maintain these collaborative
relationships for any reason, we would need to perform the activities that we currently anticipate would be performed by our collaborators
on our own at our sole expense. This could substantially increase our capital needs, and we may not have the capability or financial capacity
to undertake these activities on our own, or we may not be able to find other collaborators on acceptable terms, or at all. This may limit
the programs we are able to pursue and result in significant delays in the development, sale, and manufacture of our product candidates
and products, and may have a material adverse effect on our business, financial condition, and results of operations.
Our dependence upon our current and potential
future collaborations exposes us to a number of risks, including that our collaborators (i) may fail to cooperate or perform their contractual
obligations, including financial obligations, (ii) may choose to undertake differing business strategies or pursue alternative technologies,
or (iii) may take an opposing view regarding ownership of clinical trial results or intellectual property.
Due to these factors and other possible events,
we could suffer delays in the research, development, or commercialization of our product candidates and future products or we may become
involved in litigation or arbitration, which could be time consuming and expensive. We additionally may be compelled to split revenue
with our collaborators, which could have a material adverse effect on our business, financial condition, and results of operations.
If we engage in future acquisitions
or strategic partnerships, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent
liabilities, and subject us to other risks.
From time to time, we may evaluate various
acquisition opportunities and strategic partnerships, including licensing or acquiring complementary products or product candidates, intellectual
property rights, technologies or businesses. Any potential acquisition or strategic partnership may entail numerous risks, including:
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the assumption of additional indebtedness or contingent liabilities; |
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the issuance of our equity securities; |
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assimilation of operations, intellectual property and products or product candidates of an acquired company, including difficulties associated with integrating new personnel; |
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the diversion of our management’s attention from our existing programs and initiatives in pursuing such a strategic merger or acquisition; |
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retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; |
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risks and uncertainties associated with the other party to such a transaction, including the prospects of that party to receive marketing approvals for their existing products or product candidates; and |
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our inability to generate revenue from acquired technology, product candidates and/or approved products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs. |
In addition, if we undertake acquisitions
or pursue partnerships in the future, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses
and acquire intangible assets that could result in significant future amortization expense. Moreover, we may not be able to locate suitable
acquisition opportunities, and this inability could impair our ability to grow or obtain access to technology or products that may be
important to the development of our business.
Our employees, principal investigators,
CROs and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements
and insider trading.
We are exposed to the risk that our employees,
principal investigators, CROs and consultants may engage in fraudulent conduct or other illegal activity. Misconduct by these parties
could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate the regulations
of the FDA and other regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to
such authorities; healthcare fraud and abuse laws and regulations in the U.S. and abroad; or laws that require the reporting of financial
information or data accurately. In particular, sales, marketing, patient support and business arrangements in the healthcare industry
are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer
incentive programs and other business arrangements. Activities subject to these laws also involve the improper use of information obtained
in the course of clinical trials or creating fraudulent data in our preclinical studies or clinical trials, which could result in regulatory
sanctions and cause serious harm to our reputation. We have adopted a code of conduct applicable to all of our employees, but it is not
always possible to identify and deter misconduct by employees and other third- parties, and the precautions we take to detect and prevent
this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations
or other actions or lawsuits stemming from a failure to comply with these laws or regulations. Additionally, we are subject to the risk
that a person could allege such fraud or other misconduct, even if none occurred. 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, including
the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare,
Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment
of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Efforts to ensure that our business arrangements
with third-parties will comply with applicable healthcare laws and regulations will involve substantial costs. Because of the breadth
of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities
could be subject to challenge under one or more of such laws. It is possible that governmental authorities will conclude that our business
practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare
laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may
apply to us, we may be subject to significant criminal, civil and administrative sanctions including monetary penalties, damages, fines,
disgorgement, individual imprisonment, and exclusion from participation in government funded healthcare programs, such as Medicare and
Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement
to resolve allegations of non-compliance with these laws, reputational harm, and we may be required to curtail or restructure our operations,
any of which could adversely affect our ability to operate our business and our results of operations.
The risk of our being found in violation of
these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and
their provisions are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully
defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of
our business. The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple
jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare company may run afoul
of one or more of the requirements.
The provision of benefits or advantages to
physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products
is also prohibited in the EU. The provision of benefits or advantages to physicians is governed by the national anti-bribery laws of EU
Member States, such as the U.K. Bribery Act 2010. Infringement of these laws could result in substantial fines and imprisonment. Payments
made to physicians in certain EU Member States must be publicly disclosed. Moreover, agreements with physicians often must be the subject
of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory
authorities of the individual EU Member States. These requirements are provided in the national laws, industry codes or professional codes
of conduct, applicable in the EU Member States. Failure to comply with these requirements could result in reputational risk, public reprimands,
administrative penalties, fines or imprisonment.
The
collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the EU, including personal health
data, is subject to the General Data Protection Regulation, or GDPR, which became effective on May 25, 2018. The GDPR is wide-ranging
in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health
and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals
regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing
notification of data breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on
the transfer of personal data to countries outside the EU, including the U.S., and permits data protection authorities to impose large
penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is
greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory
authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. Compliance with the GDPR
is a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices and
despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection
with our European activities.
Risks Related to the Discovery, Development
and Commercialization of Our Product Candidates
Interim, “topline” and preliminary
data from our clinical trials that we announce or publish from time to time may change as more data become available and are subject to
audit and verification procedures that could result in material changes in the final data.
From time to time, we may publicly disclose
preliminary or topline data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available
data. These results and related findings and conclusions are based on assumptions, estimations, calculations and conclusions, and are
subject to change following the generation of additional data or a more comprehensive review of the data related to the particular study
or trial. As a result, the topline or preliminary results that we report may differ from future results of the same studies, or different
conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also
remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary
data we previously published. As a result, topline and preliminary data should be viewed with caution until the final data are available.
From time to time, we may also disclose interim
data from our preclinical studies and clinical trials. For example, we have reported interim data from our ongoing clinical trials elsewhere
in this report. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes
may materially change as subject enrollment continues and more subject data become available or as subjects from our clinical trials continue
other treatments for their disease. Adverse differences between preliminary or interim data and final data could significantly harm our
business prospects. Further, disclosure of interim data by us or by our competitors could result in volatility in the price of our common
stock.
Further, others, including regulatory agencies,
may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance
of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular
product candidate or product and the value of our company in general. In addition, the information we choose to publicly disclose regarding
a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we
determine is material or otherwise appropriate information to include in our disclosure.
If the interim, topline, or preliminary data
that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our
ability to obtain approval for, and commercialize, our product candidates may be harmed, which could have a material adverse effect on
our business, financial condition, and results of operations.
We may expend our limited resources
to pursue a particular product candidate or indication and fail to capitalize on other product candidates or indications that may be more
profitable or for which there is a greater likelihood of success.
Because we have limited financial and managerial
resources, we focus on research programs and product candidates that we identify for specific indications. As a result, we may forego
or delay pursuit of opportunities with other therapeutic platforms or product candidates or for other indications that later prove to
have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize
on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs,
therapeutic platforms and product candidates for specific indications may not yield any commercially viable products. If we do not accurately
evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product
candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us
to retain sole development and commercialization rights.
The U.S. FDA, Japanese PMDA and other
comparable foreign regulatory authorities may not accept data from trials conducted in locations outside of their jurisdiction.
We are conducting several trials in the U.S.,
and we recently entered into a sponsored clinical research agreement with the National Center for Geriatrics and Gerontology and Juntendo
University Hospital in Japan to explore the safety and efficacy of Lomecel-B™ in older, frail Japanese subjects. The acceptance
of study data by the U.S. FDA, Japanese PMDA or other comparable foreign regulatory authority from clinical trials conducted outside of
their respective jurisdictions may be subject to certain conditions. In cases where data from foreign clinical trials are intended to
serve as the basis for marketing approval in the U.S., the FDA will generally not approve the application on the basis of foreign data
alone unless (1) the data are applicable to the U.S. population and U.S. medical practice; (2) the trials are performed by clinical investigators
of recognized competence and pursuant to cGMP requirements; and (3) the FDA is able to validate the data through an on-site inspection
or other appropriate means. The FDA may accept the use of some foreign data to support a marketing approval if the clinical trial meets
certain requirements. Additionally, the FDA’s clinical trial requirements, including the adequacy of the subject population studied
and statistical powering, must be met. Furthermore, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions
where the trials are conducted. In Japan, the PMDA is requiring us to conduct our Japanese Phase 2 trial in a Japanese population in order
to demonstrate safety and efficacy in Japanese subjects. There can be no assurance that the FDA, PMDA or any applicable foreign regulatory
authority will accept data from trials conducted outside of its respective jurisdiction. If the FDA, PMDA or any applicable foreign regulatory
authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay
aspects of our business plan, and which may result in our product candidates not receiving approval for commercialization in the applicable
jurisdiction.
Obtaining and maintaining regulatory
approval of a product in one jurisdiction does not mean that we will be successful in obtaining or maintaining regulatory approval in
other jurisdictions.
Obtaining and maintaining regulatory approval
of a product in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction.
For example, even if the FDA or PMDA grants marketing approval of a product, comparable regulatory authorities in other foreign jurisdictions
must also approve the manufacturing, marketing and promotion and reimbursement of the product in those countries. However, a failure or
delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. Moreover,
product types or regulatory classifications, as well as approval procedures, vary among jurisdictions and can involve requirements and
administrative review periods different from those in the U.S., including different or additional preclinical studies or clinical trials,
as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions
outside the U.S., a product must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases,
the price that we intend to charge for our products is also subject to approval.
Obtaining foreign regulatory approvals and
establishing and maintaining compliance with foreign regulatory requirements could result in significant delays, difficulties and costs
for us and could delay or prevent the introduction of our products in certain countries. If we or any future collaborator fails to comply
with the regulatory requirements in international markets or fails to receive applicable marketing approvals, our target market will be
reduced and our ability to realize the full market potential of our product candidates will be harmed.
The FDA and other regulatory agencies
actively enforce the laws and regulations prohibiting the promotion of off-label uses.
If any of our product candidates are approved
and we are found to have improperly promoted off-label uses of those products, we may become subject to significant liability. The FDA
and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, such as our product
candidates, if approved. In particular, an approved product may not be promoted for uses that are not approved by the FDA or such other
regulatory authorities as reflected in the product’s approved labeling. If we receive marketing approval for a product candidate,
physicians may nevertheless prescribe it to their patients in a manner that is inconsistent with the approved label, which is within their
purview as part of their practice of medicine. If we are found to have promoted such off-label uses, however, we may become subject to
significant liability. The U.S. federal government has levied large civil and criminal penalties against companies for alleged improper
promotion of off-label use and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies
enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. The FDA may also
issue a public warning letter or untitled letter to the company. If we cannot successfully manage the promotion of our future approved
products, we could become subject to significant liability, which would materially adversely affect our business and financial condition.
If we are required by the FDA to obtain
approval of a companion diagnostic test in connection with approval of any of our product candidates, and we do not obtain or face delays
in obtaining FDA approval of a diagnostic test, we will not be able to commercialize such future approved product and our ability to generate
revenue will be materially impaired.
If safe and effective use of any of our product
candidates depends on the use of an in vitro diagnostic test that is not otherwise commercially available, then the FDA
generally will require approval or clearance of that diagnostic, known as a companion diagnostic, at the same time that the FDA approves
our product candidates if at all. According to FDA guidance, if the FDA determines that a companion diagnostic is essential to the safe
and effective use of a novel therapeutic product or indication, then the FDA generally will not approve the therapeutic product or new
therapeutic product indication if the companion diagnostic is not also approved or cleared for that indication. If a satisfactory companion
diagnostic is not commercially available, we may be required to create or obtain one that would be subject to its own regulatory approval
requirements. The process of obtaining or creating such a diagnostic is time consuming and costly.
Companion diagnostics are developed in conjunction
with clinical programs for the associated product and are subject to regulation as medical devices by the FDA and comparable regulatory
authorities. The approval of a companion diagnostic as part of the therapeutic product labeling limits the use of the therapeutic product
to only those patients who express the specific genetic alteration that the companion diagnostic was developed to detect.
If the FDA, PMDA or a comparable regulatory
authority requires approval of a companion diagnostic for any of our product candidates, whether before or after it obtains marketing
approval, we, and/or future collaborators, may encounter difficulties in developing and obtaining approval for such product candidate.
Any delay or failure by us or third-party collaborators to develop or obtain regulatory approval of a companion diagnostic could delay
or prevent approval of a product candidate or continued marketing of an approved product.
We may also experience delays in developing
a sustainable, reproducible and scalable manufacturing process for the companion diagnostic or in transferring that process to commercial
partners or negotiating insurance reimbursement plans, all of which may prevent us from completing our clinical trials of a product candidate
or commercializing an approved product on a timely or profitable basis, if at all.
We may attempt to secure approval from
the FDA or comparable foreign regulatory authorities through an expedited review program, and if we are unable to do so, then we could
face increased expense to obtain, and delays in the receipt of, necessary marketing approvals.
We may in the future seek approval for one
or more of our product candidates under one of the FDA’s expedited review programs for serious conditions. These programs are available
to sponsors of therapies that address an unmet medical need to treat a serious condition. The qualifying criteria and requirements vary
for each expedited program. Prior to seeking review under one of these expedited programs for any of our product candidates, we intend
to seek feedback from the FDA and will otherwise evaluate our ability to seek and receive marketing approval through an expedited review
program.
There can be no assurance that, after our
evaluation of the FDA’s feedback and other factors, we will decide to pursue one or more of these expedited review programs. Similarly,
there can be no assurance that after subsequent FDA feedback we will continue to pursue one or more of these expedited programs, even
if we initially decide to do so. Furthermore, FDA could decide not to grant our request to use one or more of the expedited review programs
for a product candidate, even if the FDA’s initial feedback is that the product candidate would qualify for such program(s). Moreover,
FDA can decide to stop reviewing a product candidate under one or more of these expedited review programs if, for example, the conditions
that warranted expedited review no longer apply to that product candidate.
Some of these expedited programs (e.g., accelerated
approval) also require post-marketing clinical trials to be completed and, if any such required trial fails, the FDA could withdraw the
approval of the product. If one of our product candidates does not qualify for any expedited review program, then this could result in
a longer time period to approval and commercialization of such product candidate, could increase the cost of development of such product
candidate, and could harm our competitive position in the marketplace.
The FDA’s Rare Pediatric Disease
designation for Lomecel-B™ for HLHS does not guarantee that we will receive a priority review voucher if the product is approved
for this indication, nor does the receipt of Orphan Drug Designation for Lomecel-B™ for HLHS guarantee that we will receive seven
years of market exclusivity if the product is approved for this indication.
As noted elsewhere in this report, FDA has
granted both Rare Pediatric Disease designation and Orphan Drug Designation status for the use of Lomecel-B to treat HLHS. These designations
were granted following our Phase 1 safety-focused ELPIS trial. However, even though FDA has granted Lomecel-B Rare Pediatric Disease
designation for the treatment of HLHS, receipt of Rare Pediatric Disease designation does not provide any guarantee that we would or will
receive a priority review voucher upon approval for this indication. This voucher program has been extended, but there is no guarantee
the Congress will extend it again in the future. If we do receive a priority review voucher upon approval of Lomecel-B for this indication,
then that voucher permits a future application to be treated as a priority review application by FDA. FDA does not guarantee that the
future application will be reviewed in a particular period of time. Vouchers may be transferred, including by sale; accordingly, there
is a market for these vouchers at prices that have historically fluctuated. If we receive a voucher, we cannot guarantee that we will
use it or that there will be a market to transfer or sell the voucher. Further, receipt of Orphan Drug Designation does not guarantee
that we will receive seven years of market exclusivity upon approval for this indication unless all appropriate statutory and regulatory
criteria are met, the interpretation of which, as noted, has been in flux.
The FDA has also granted Fast Track Designation
to Lomecel-B™ for the treatment of hypoplastic left heart syndrome. A Fast Track designation by the FDA may not lead to a faster
development or regulatory review or approval process, and does not necessarily increase the likelihood that our product candidates will
receive marketing approval.
We may face difficulties from changes
to current regulations and future legislation, both in the U.S. as well as in other foreign jurisdictions where we may be operating.
Existing regulations and regulatory policies
may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product
candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative
action, either in the U.S. or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements
or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and
we may not achieve or sustain profitability.
For example, the Patient Protection and Affordable
Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the ACA, substantially changed
the way healthcare is financed by both the government and private insurers, and significantly impacted the U.S. pharmaceutical industry.
Since its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA, and we expect there will be
additional challenges and amendments to the ACA in the future.
Other legislative changes have been adopted
since the ACA was enacted, including mandatory sequestration (e.g., aggregate reductions of Medicare payments to providers up to 2%),
which will remain in effect through fiscal year 2031 absent additional Congressional action. Moreover, there has recently been heightened
governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional
inquiries and legislation designed, among other things, to reform government program reimbursement methodologies for pharmaceutical products
and bring more transparency to product pricing and the relationship between pricing and manufacturer patient programs.
The Inflation Reduction Act of 2022, signed
into law by President Biden on August 16, 2022, contains several significant provisions regarding drug pricing, coverage, and reimbursement
that could materially impact our business. Among the key provisions related to drug pricing, Title XI of the Social Security Act would
be amended to direct the Secretary of the U.S. Department of Health and Human Services to establish a Drug Price Negotiation Program to
lower prescription drug costs for people with Medicare and reduce drug spending by the federal government for certain prescription drugs.
Each year, under the Drug Price Negotiation Program, the Secretary would identify a small number of single-source brand name drugs or
biologics, without generic or biosimilar competition, and for which certain periods of time have elapsed since drug approval, that are
covered under Medicare Part D (starting in 2026) and Part B (starting in 2028). These selected drugs would be subject to negotiation to
establish a maximum fair price charged to Medicare. Manufacturers that are noncompliant with the drug price negotiation program would
be subject to an excise tax and other civil monetary penalties during noncompliance periods. Other important drug pricing provisions include
a mandatory rebate for drug manufacturers of certain Medicare Part B and Part D drugs with prices increasing faster than inflation; caps
on annual out-of-pocket spending for Medicare beneficiaries; and limits of $35 for monthly cost-sharing for insulin products under Medicare
Part D and a cap of 20% of the Medicare-approved amount after reaching the Medicare Part B deductible.
In addition, other legislative changes have
been proposed and adopted in the U.S. that could impact our future business and operations, including those that may result in additional
reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our product candidates,
if approved, and accordingly, our business, financial condition, and results of operations. Moreover, there has been heightened governmental
scrutiny recently over the manner in which drug manufacturers set prices for their marketed products, which has resulted in several Congressional
inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing,
review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for
drug products. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical
and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access
and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and
bulk purchasing.
We expect that the ACA, as well as other healthcare
reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on
the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result
in a similar reduction in payments from third-party payors. The implementation of cost containment measures or other healthcare reforms
may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates.
Legislative and regulatory proposals have
been made to expand post-approval requirements and restrict sales and promotional activities for biotechnology products. We cannot be
sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be changed,
or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny
by Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent
product labeling and post-marketing testing and other requirements.
Our relationships with healthcare professionals,
clinical investigators, CROs and payors in connection with our current and future business activities may be subject to federal and state
healthcare fraud and abuse laws, false claims laws, transparency laws, government price reporting, and health information privacy and
security laws, which could expose us to, among other things, criminal sanctions, civil penalties, contractual damages, exclusion from
governmental healthcare programs, reputational harm, administrative burdens and diminished profits and future earnings.
Healthcare providers and payors play a primary
role in the recommendation and prescription of any product candidates for which we obtain future marketing approval. Our current and future
arrangements with healthcare professionals, clinical investigators, CROs, payors and customers may expose us to broadly applicable fraud
and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through
which we market, sell and distribute our products for which we obtain marketing approval. Restrictions under applicable federal and state
healthcare laws and regulations include the following:
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federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering,
receiving or providing remuneration, directly or indirectly, 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 may be made under a federal
healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the federal Anti-Kickback
Statute or specific intent to violate it in order to have committed a violation. In addition, the government may assert that a claim
including items or services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim
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the federal false claims and civil monetary penalties laws, including the civil False Claims Act, which can be enforced by private citizens through civil whistleblower or qui tam actions, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment 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, or HIPAA, prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; |
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the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS starting in 2022 information regarding payments and other transfers of value to physicians, certain other healthcare providers and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members. The information reported will be publicly available on a searchable website, with disclosure required annually; and |
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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may 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 require biotechnology companies
to comply with the biotechnology industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by
the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians
and other healthcare providers or marketing expenditures. Some state laws require biotechnology companies to report information on the
pricing of certain drug products. State and foreign laws also govern the privacy and security of health information in some circumstances,
many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. For
instance, the collection and use of health data in the European Union is governed by the General Data Protection Regulation, or the GDPR,
which extends the geographical scope of European Union data protection law to non-European Union entities under certain conditions, tightens
existing European Union data protection principles, creates new obligations for companies and new rights for individuals. Failure to comply
with the GDPR may result in substantial fines and other administrative penalties. In addition, on June 28, 2018, the State of California
enacted the California Consumer Privacy Act, or CCPA, which took effect on January 1, 2020. The CCPA creates individual privacy rights
for California consumers and increases the privacy and security obligations of entities handling certain personal information. The CCPA
provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data
breach litigation. The CCPA may increase our compliance costs and potential liability, and similar laws have been proposed at the federal
level and in other states.
Efforts to ensure that our current and future
business arrangements with third parties will comply with applicable healthcare laws and regulations will involve on-going substantial
costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes,
regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to
be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant penalties,
including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation
in government funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, temporary or permanent
debarment, contractual damages, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our
operations. Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources.
Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.
Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business are found not to be in
compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government
funded healthcare programs.
A variety of factors, including 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 may rely, which could negatively impact our business.
The ability of 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,
accept payments of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years
as a result of these and other factors. In particular, the FDA has relatively limited experience with regulating novel regenerative medicines
like ours, and this may add to its already fluctuating review times. In addition, government funding of the SEC and other government agencies
on which our operations may rely, including those that fund research and development activities, is subject to the political process,
which is inherently fluid and unpredictable.
Disruptions at FDA and other agencies may
also slow the time necessary for new product candidates 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, and certain regulatory
agencies, such as FDA and the SEC, have had to furlough critical employees and stop critical activities. Separately, since March 2020
when foreign and domestic inspections of facilities were largely placed on hold in connection with the COVID-19 pandemic, FDA has been
working to resume pre-pandemic levels of inspections, including routine surveillance, bioresearch monitoring and pre-approval inspections
on a prioritized basis. Should FDA determine that an inspection is necessary for approval and an inspection cannot be completed during
the review cycle due to restrictions on travel or for other reasons, and FDA does not determine that a remote interactive evaluation will
be adequate, the agency has stated that it generally intends to issue, depending on the circumstances, a complete response letter or defer
action on the application until an inspection can be completed. During the COVID-19 public health emergency, a number of companies announced
receipt of complete response letters due to FDA’s inability to complete required inspections for their applications. Regulatory
authorities outside the U.S. may adopt similar restrictions or other policy measures in response to a pandemic and may experience delays
in their regulatory activities.
If a prolonged government shutdown occurs,
or if global health concerns prevent FDA or other regulatory authorities from conducting their regular inspections, reviews, or other
regulatory activities, 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, 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.
If we fail to comply with environmental,
health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse
effect on our business, financial condition, and results of operations.
We are subject to numerous environmental,
health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and
disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and
biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal
of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination
or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed
our resources. We also could incur significant costs associated with civil or criminal fines and penalties.
Although we maintain workers’ compensation
insurance to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials,
this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability
or toxic tort claims that may be asserted against us in connection with our storage or disposal of hazardous and flammable materials,
including chemicals and biological materials.
In addition, we may incur substantial costs
in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations
may impair our research, development or commercialization efforts. Failure to comply with these laws and regulations also may result in
substantial fines, penalties or other sanctions.
We may not be successful in our efforts
to identify or discover additional product candidates in the future.
Our research programs may initially show promise
in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including:
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our inability to design such product candidates with the pharmacological properties that we desire or attractive pharmacokinetics; |
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potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be regenerative medicines that will receive marketing approval and achieve market acceptance. |
Research programs to identify new product
candidates require substantial technical, financial and human resources. If we are unable to identify other suitable treatments for preclinical
and clinical development, we will not be able to obtain product revenue in future periods, which likely would result in significant harm
to our financial position and adversely impact our stock price.
Our research and development activities
could be affected or delayed as a result of possible restrictions on animal testing.
Certain laws and regulations require us to
test our product candidates on animals before initiating clinical trials involving humans. Animal testing activities have been the subject
of controversy and adverse publicity. Animal rights groups and other organizations and individuals have attempted to stop animal testing
activities by pressing for legislation and regulation in these areas and by disrupting these activities through protests and other means.
To the extent the activities of these groups are successful, or if the laws and regulations regarding animal testing otherwise change,
our research and development activities may be interrupted, delayed or become more expensive.
Our business activities may be subject
to the U.S. Foreign Corrupt Practices Act, or the FCPA, and similar anti-bribery and anti-corruption laws of other countries in which
we operate, as well as U.S. and certain foreign export controls, trade sanctions, and import laws and regulations. Compliance with these
legal requirements could limit our ability to compete in foreign markets and subject us to liability if we violate them.
If we further expand our operations outside
of the U.S., we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan
to operate. Our business activities may be subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules
of other countries in which we operate. The FCPA generally prohibits companies and their employees and third-party intermediaries from
offering, promising, giving or authorizing the provision of anything of value, either directly or indirectly, to a non-U.S. government
official in order to influence official action or otherwise obtain or retain business. The FCPA also requires public companies to make
and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate
system of internal accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials,
including officials of non-U.S. governments. Additionally, in many other countries, hospitals owned and operated by the government, and
doctors and other hospital employees would be considered foreign officials under the FCPA. Recently the Securities and Exchange Commission
(SEC) and Department of Justice (DOJ) have increased their FCPA enforcement activities with respect to biotechnology and pharmaceutical
companies. There is no certainty that all of our employees, agents or contractors, or those of our affiliates, will comply with all applicable
laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result
in fines, criminal sanctions against us, our officers or our employees, disgorgement, and other sanctions and remedial measures, and prohibitions
on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products in one or more countries
and could materially damage our reputation, our brand, our international activities, our ability to attract and retain employees and our
business, prospects, operating results and financial condition.
In addition, our products and technology may
be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations. Governmental regulation of the import
or export of our products and technology, or our failure to obtain any required import or export authorization for our products, when
applicable, could harm our international sales and adversely affect our revenue. Compliance with applicable regulatory requirements regarding
the export of our products may create delays in the introduction of our products in international markets or, in some cases, prevent the
export of our products to some countries altogether. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment
of certain products and services to countries, governments, and persons targeted by U.S. sanctions. If we fail to comply with export and
import regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges.
Moreover, any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations,
or in the countries, persons, or products targeted by such regulations, could result in decreased use of our products by, or in our decreased
ability to export our products to existing or potential customers with international operations. Any decreased use of our products or
limitation on our ability to export or sell access to our products would likely adversely affect our business.
Risks Related to Employee
Matters, Managing Our Growth and Other Risks Related to Our Business
We have never commercialized a product
candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any products on our own or
together with suitable collaborators.
We have never commercialized a product candidate,
and we currently have no sales force, marketing or distribution capabilities, nor do any of our current employees have any experience
in commercializing a regulated product. To achieve commercial success for our product candidates, which we may license to others, we will
rely on the assistance and guidance of those collaborators. For product candidates for which we retain commercialization rights, we will
have to develop our own sales, marketing and supply organization or outsource these activities to a third party.
Factors that may affect our ability to commercialize
our future approved products on our own include recruiting and retaining adequate numbers of effective sales and marketing personnel,
obtaining access to or persuading adequate numbers of physicians to prescribe our products and other unforeseen costs associated with
creating an independent sales and marketing organization. Developing a sales and marketing organization will be expensive and time-consuming
and could delay the launch of our future approved products. We may not be able to build an effective sales and marketing organization.
If we are unable to build our own distribution and marketing capabilities or to find suitable partners for the commercialization of our
future approved products, we may not generate revenues from them or be able to reach or sustain profitability.
In order to successfully implement our
plans and strategies, we will need to grow our organization, and we may experience difficulties in managing this growth.
In order to successfully implement our development
and commercialization plans and strategies, and as we transition into operating as a public company, we expect to need additional managerial,
operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members
of management, including:
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identifying, recruiting, integrating, maintaining and motivating additional employees; |
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improving our operational, financial and management controls, reporting systems and procedures. |
Our future financial performance and our ability
to successfully develop and, if approved, commercialize, any current or future product candidates will depend, in part, on our ability
to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from
day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
We currently rely, and for the foreseeable
future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services,
including key aspects of clinical development and manufacturing. We cannot assure you that the services of independent organizations,
advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements.
In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by
third party service providers is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not
be able to obtain marketing approval of our current and future product candidates or otherwise advance our business. We cannot assure
you that we will be able to manage our existing third-party service providers or find other competent outside contractors and consultants
on economically reasonable terms, or at all.
If we are not able to effectively expand our
organization by hiring new employees and/or engaging additional third-party service providers, we may not be able to successfully implement
the tasks necessary to further develop and commercialize our current and future product candidates and, accordingly, may not achieve our
research, development and commercialization goals.
Our computer systems,
or those of any of our CROs, manufacturers, other contractors, consultants, collaborators or potential future collaborators, may fail
or suffer security or data privacy breaches or other unauthorized or improper access to, use of, or destruction of our proprietary or
confidential data, employee data, or personal data, which could result in additional costs, loss of revenue, significant liabilities,
harm to our brand and material disruption of our operations.
Despite the implementation of security measures,
our computer systems and those of our current and any future CROs and other contractors, consultants, collaborators and third-party service
providers, are vulnerable to damage from computer viruses, cybersecurity threats, unauthorized access, natural disasters, terrorism, war
and telecommunication and electrical failure. If such an event were to occur and cause interruptions in our operations or result in the
unauthorized acquisition of or access to personally identifiable information or individually identifiable health information (violating
certain privacy laws such as HIPAA, Health Information Technology for Economic and Clinical Health Act and GDPR), it could result in a
material disruption of our drug discovery and development programs and our business operations, whether due to a loss of our trade secrets
or other similar disruptions. Some of the federal, state and foreign government requirements include obligations of companies to notify
individuals of security breaches involving particular personally identifiable information, which could result from breaches experienced
by us or by our vendors, contractors, or organizations with which we have formed strategic relationships. Notifications and follow-up
actions related to a security breach could impact our reputation, cause us to incur significant costs, including legal expenses and remediation
costs. 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 lost data. We also rely on third parties to manufacture
our product candidates, and similar events relating to their computer systems 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 inappropriate disclosure
of confidential or proprietary information, we could be exposed to litigation and governmental investigations, the further development
and commercialization of our product candidates could be delayed, and we could be subject to significant fines or penalties for any noncompliance
with certain state, federal and/or international privacy and security laws.
Our insurance policies may not be adequate
to compensate us for the potential losses arising from any such disruption, failure or security breach. In addition, such insurance may
not be available to us in the future on economically reasonable terms, or at all. Further, our insurance may not cover all claims made
against us and could have high deductibles in any event, and defending a suit, regardless of its merit, could be costly and divert management
attention.
Our ability to utilize our net operating
loss carryforwards and certain other tax attributes may be limited.
Although our first year incurring NOLs will
be for the tax year ended 2021, the net operating loss carryforwards, or NOLs, could expire unused and be unavailable to offset future
income tax liabilities because of their limited duration or because of restrictions under U.S. tax law. Under the current Tax Act, federal
NOLs generated in tax years ending after December 31, 2017 may be carried forward indefinitely. It is uncertain if and to what extent
various states will conform to the Tax Act.
In addition, under Sections 382 and 383 of
the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change” (generally defined
as a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year
period), the corporation’s ability to use its pre-change NOLs and certain other pre-change tax attributes to offset its post-change
income and taxes may be limited. Similar rules may apply under state tax laws. We may have experienced such ownership changes in the past,
and we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which are outside
our control. We have not conducted any studies to determine annual limitations, if any, that could result from such changes in the ownership.
Our ability to utilize those NOLs could be limited by an “ownership change” as described above and consequently, we may not
be able to utilize a material portion of our NOLs and certain other tax attributes, which could have a material adverse effect on our
cash flows and results of operations.
A variety of risks associated with marketing
our product candidates internationally could materially adversely affect our business.
We plan to seek regulatory approval of our
product candidates outside of the U.S., including specifically in Japan, and, accordingly, we expect that we will be subject to additional
risks related to operating in foreign countries if we obtain the necessary approvals, including:
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differing regulatory requirements and reimbursement regimes in foreign countries; |
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unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements; |
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economic weakness, including inflation, or political instability in particular foreign economies and markets; |
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compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; |
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foreign taxes, including withholding of payroll taxes; |
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foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; |
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difficulties staffing and managing foreign operations; |
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workforce uncertainty in countries where labor unrest is more common than in the U.S.; |
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potential liability under the FCPA or comparable foreign regulations; |
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challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the U.S.; |
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These and other risks associated with our
international operations may materially adversely affect our ability to attain or maintain profitable operations.
The increasing use of social media platforms
presents new risks and challenges.
Social media is increasingly being used to
communicate about our clinical development programs and the diseases our therapeutics are being developed to treat, and we intend to utilize
appropriate social media in connection with our commercialization efforts following approval of our therapeutic candidates, if any. Social
media practices in the biotechnology and biopharmaceutical industries continue to evolve and regulations and regulatory guidance relating
to such use are evolving and not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable
to our business, resulting in potential regulatory actions against us, along with the potential for litigation related to off-label marketing
or other prohibited activities and heightened scrutiny by the FDA, the SEC and other regulators. For example, patients may use social
media channels to comment on their experience in an ongoing blinded clinical trial or to report an alleged adverse event. If such disclosures
occur, there is a risk that trial enrollment may be adversely impacted, that we may fail to monitor and comply with applicable adverse
event reporting obligations or that we may not be able to defend our business or the public’s legitimate interests in the face of
the political and market pressures generated by social media due to restrictions on what we may say about our therapeutic candidates.
There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any
social networking website. In addition, we may encounter attacks on social media regarding our company, management, therapeutic candidates
or products. Finally, social media may aid in the social reform of current drug prices. For example, CVS’s recently proposed “CostVantage”
program is regularly referred to on social media and may have an impact on how pharmaceutical products are priced in the future. If any
of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions
or incur other harm to our business.
Investors should carefully consider the risks and uncertainties and
all other information contained or incorporated by reference in this prospectus, including the risks and uncertainties discussed under
“Risk Factors” in our most recent Annual Report on Form 10-K, as may be amended from time to time, and in subsequent
filings that are incorporated herein by reference. All these risk factors are incorporated by reference herein in their entirety. These
risks and uncertainties are not the only ones facing us. Our business, financial condition or results of operations could be materially
adversely affected by any of these risks. The trading price of our common stock could decline due to any of these risks, and you may lose
all or part of your investment. This prospectus and the incorporated documents also contain forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of
certain factors, including the risks mentioned in this prospectus.
DIVIDEND POLICY
We have never declared nor paid any cash dividends, and currently intend
to retain all our cash and any earnings for use in our business and, therefore, do not anticipate paying any cash dividends in the foreseeable
future. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon
our consolidated financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems
relevant.
USE OF PROCEEDS
This prospectus relates to the resale by the Selling Stockholders of
up to 1,450,172 shares of Common Stock. The Selling Stockholders will receive all of the proceeds from this offering. We will not receive
any of the proceeds from the sale or other disposition of our Common Stock by the Selling Stockholders pursuant to this prospectus. However,
we may receive proceeds in the aggregate of up to approximately $2.4 million if all of the December 2023 Warrants covered by this prospectus
are exercised for cash, based on the per share exercise price of the December 2023 Warrants. We cannot predict when, or if, the December
2023 Warrants will be exercised. It is possible that the December 2023 Warrants may expire and may never be exercised for cash.
We intend to use any proceeds from the exercise of the December 2023
Warrants for our ongoing clinical and regulatory development of Lomecel-B™ for the treatment of several disease states and indications,
including HLHS and Alzheimer’s Disease, and the ongoing and prospective clinical studies of Lomecel-B™ for the treatment of
Aging-related Frailty study being conducted in Japan; obtaining regulatory approvals; capital expenditures, working capital and other
general corporate purposes. We are subject to substantial risks that could require us to obtain additional funding in order to achieve
these objectives. See “Risk Factors.” We may need substantial additional capital in the future, which could cause dilution
to our existing stockholders, restrict our operations, or require us to relinquish rights, and if additional capital is not available,
we may have to delay, reduce, or cease operations. Our expected use of any proceeds from the exercise of the December 2023 Warrants represents
our current intentions based upon our present plans and business condition. The amounts and timing of our actual use of any proceeds will
vary depending on numerous factors, including our ability to obtain additional financing, the relative success and cost of clinical and
regulatory development programs and the amount and timing of product revenue, if any. In addition, we might decide to postpone or not
pursue certain activities if, among other factors, the proceeds from the exercise of the December 2023 Warrants and our other sources
of cash are less than expected. As a result, management will have broad discretion in the application of the any proceeds from the exercise
of the December 2023 Warrants, and investors will be relying on our judgment regarding the application of such proceeds. Pending the uses
described above, we intend to invest the any proceeds in interest-bearing investment-grade securities or deposits.
The Selling Stockholders will pay any underwriting discounts and commissions
and expenses incurred by the Stockholders for brokerage, accounting, tax or legal services or any other expenses incurred by the Selling
Stockholders in disposing of the securities covered by this prospectus. We will bear the costs, fees and expenses incurred in effecting
the registration of the securities covered by this prospectus, including all registration and filing fees, and fees and expenses of our
counsel and our independent registered public accountants.
DETERMINATION OF OFFERING PRICE
We cannot currently determine the price or prices at which the shares
of our Common Stock may be sold by the Selling Stockholders under this prospectus.
THE SELLING STOCKHOLDERS
The shares of Common Stock being offered by the Selling Stockholders
are those issuable to the Selling Stockholders upon exercise of the December 2023 Warrants. For additional information regarding the Offerings
and the issuance of the December 2023 Warrants, see “Prospectus Summary – Selling Stockholders Overview –
Private Placement of December 2023 Warrants.” We are registering the Registered Securities in order to permit the Selling Stockholders
to offer the Common Stock for resale from time to time. Except for the ownership of the December 2023 Warrants, the Engagement Letter
with Wainwright, and the Purchaser’s purchase of certain warrants and shares of our Common Stock in the Company’s 2021 PIPE
Offering, October 2023 Offering and December 2023 Offering, the Selling Stockholders have not had any material relationship with us within
the past three years.
The table below lists the Selling Stockholders and other information
regarding the beneficial ownership of our Common Stock by each of the Selling Stockholders. The second column lists the number of shares
of Common Stock beneficially owned by each Selling Stockholder, based on its or his beneficial ownership of warrants and our Common Stock,
as of January 18, 2024, assuming exercise of all December 2023 Warrants held by such Selling Stockholder on that date, without regard
to any limitations on exercise. The third column lists the shares of Common Stock being offered under this prospectus by the Selling Stockholders.
This prospectus generally covers the resale of the maximum number of
shares of Common Stock issuable upon exercise of the December 2023 Warrants, determined as if the outstanding December 2023 Warrants were
exercised in full as of the trading day immediately preceding the date the registration statement of which this prospectus forms a part
was initially filed with the SEC, without regard to any limitations on the exercise of the December 2023 Warrants. The fourth column assumes
the sale of all of the shares of Common Stock offered by the Selling Stockholders pursuant to this prospectus. The percentage of beneficial
ownership in the fourth column represents the percentage of the outstanding shares of both the Common Stock and the Company’s Class
B Common Stock.
Under the terms of the December 2023 Warrants, a Selling Stockholder
may not exercise any portion of the December 2023 Warrants to the extent such exercise would cause the Selling Stockholder to own more
than 4.99% of the Company’s outstanding Common Stock immediately after giving effect to the issuance of shares of Common Stock issuable
upon exercise of such Warrant. A Selling Stockholder may decrease or, upon at least 61 days’ prior notice to us, increase such limitation.
In no event shall such beneficial ownership limitation exceed 9.99%. The Selling Stockholders may sell all, some or none of their shares
of Common Stock in this offering. See “Plan of Distribution.”
Name of Selling Shareholder | |
Number of Shares of Common Stock Owned Prior to Offering (1) | | |
Maximum Number of Shares of Common Stock to be Sold Pursuant to This Prospectus (2) | | |
Number of Shares of Common Stock Owned After Offering (3) | | |
Percentage of Beneficial Ownership After Offering (3) | |
Armistice Capital, LLC (4) | |
| 7,989,502 | (5) | |
| 1,355,301 | | |
| 6,634,201 | | |
| 26.4 | % |
Michael Vasinkevich (6) | |
| 169,654 | (7) | |
| 60,836 | | |
| 108,818 | | |
| 0.4 | % |
Noam Rubinstein (6) | |
| 83,339 | (7) | |
| 29,884 | | |
| 53,455 | | |
| 0.2 | % |
Craig Schwabe (6) | |
| 8,929 | (7) | |
| 3,202 | | |
| 5,727 | | |
| 0.02 | % |
Charles Worthman (6) | |
| 2,646 | (7) | |
| 949 | | |
| 1,697 | | |
| 0.003 | % |
(1) |
All of the warrants contain certain beneficial ownership limitations, which provide that a holder of the securities will not have the right to exercise any portion of its warrants if such holder, together with its affiliates and attribution parties, would beneficially own in excess of 4.99% of the number of shares of the Company’s Common Stock outstanding immediately after giving effect to such exercise; provided that the holder may elect to decrease, or upon at least 61 days’ prior notice to the Company, increase such beneficial ownership limitation. In no event shall such beneficial ownership limitation exceed 9.99%. Additionally, stockholders may have acquired or sold shares of Common Stock on the open market without the Company’s knowledge that may not be reflected. |
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Represents shares of the Company’s Common Stock underlying the December 2023 Warrants issued to the Selling Stockholders in connection with the December 2023 Private Placement and offered hereby. |
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We do not know when or in what amounts a Selling Stockholder may offer shares of our Common Stock for sale. The Selling Stockholders might not sell any or might sell all of the shares of our Common Stock offered by this prospectus. Because the Selling Stockholders may offer all or some of the shares of our Common Stock pursuant to this offering, and because there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares of our Common Stock, we cannot estimate the number of shares of our Common Stock that will be held by the Selling Stockholders after completion of the offering. However, for purposes of this table, we have assumed that, after completion of the offering, none of the shares of our Common Stock covered by this prospectus will be held by the Selling Stockholders. |
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(4) |
These securities are directly held by Armistice Capital Master Fund Ltd. (the “Master Fund”), a Cayman Islands exempted company, and may be deemed to be indirectly beneficially owned by Armistice Capital, LLC (“Armistice”), as the investment manager of the Master Fund, and Steven Boyd, as the Managing Member of Armistice. Armistice and Steven Boyd disclaim beneficial ownership of the reported securities except to the extent of their respective pecuniary interests therein. The address of the Master Fund is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, NY 10022. Steven Boyd holds voting and dispositive power over the securities held by the Selling Stockholder. |
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(5) |
These shares are comprised of (i) 144,699 shares of Common Stock acquired in the Company’s October 2023 registered direct offering; (ii) 1,355,301 shares of Common Stock purchased in the December 2023 Offering; (iii) 4,848,486 shares of Common Stock issuable upon the exercise of the October 2023 Private Placement Warrants, which contain a beneficial ownership limitation that provides that a holder of the securities will not have the right to exercise any portion of the warrants if such holder, together with its affiliates and attribution parties, would beneficially own in excess of 4.99% of the number of shares of the Company’s Common Stock outstanding immediately after giving effect to such exercise; (iv) 1,355,301 shares of Common Stock issuable upon the exercise of the December 2023 Private Placement Warrants, which contain a beneficial ownership limitation that provides that a holder of the securities will not have the right to exercise any portion of the warrants if such holder, together with its affiliates and attribution parties, would beneficially own in excess of 4.99% of the number of shares of the Company’s Common Stock outstanding immediately after giving effect to such exercise; (v) 285,715 shares of Common Stock issuable upon the exercise of PIPE Purchaser Warrants issued to the Selling Stockholder in the 2021 PIPE Offering that are subject to a 4.99% beneficial ownership limitation that prohibits the Master Fund from exercising any portion of those warrants if such exercise would result in the Master Fund owning a percentage of our outstanding common stock exceeding the 4.99% ownership limitation after giving effect to the issuance of Common Stock in connection with the Master Fund’s exercise of any portion of a warrant. |
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(6) |
The Selling Stockholder is affiliated with H.C. Wainwright & Co., LLC, a registered broker dealer with a registered address of H.C. Wainwright & Co., LLC, 430 Park Avenue, 3rd Floor, New York, NY 10022, and has sole voting and dispositive power over the securities held. The number of shares of Common Stock beneficially owned prior to this offering consist of shares of Common Stock issuable upon exercise of the October 2023 Placement Agent Warrants and December 2023 Placement Agent Warrants, which were received as compensation in connection with the October 2023 Offering and December 2023 Offering. The Selling Stockholder acquired the warrants in the ordinary course of business and, at the time the warrants were acquired, the Selling Stockholder had no agreement or understanding, directly or indirectly, with any person to distribute such securities. |
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(7) |
These shares are comprised of shares of Common Stock issuable upon the exercise of the October 2023 Placement Agent Warrants and December 2023 Placement Agent Warrants issued in the October 2023 Offering and December 2023 Offering, respectively. |
PLAN OF DISTRIBUTION
We are registering the Registered Securities on behalf of the Selling
Stockholders. Each of the Selling Stockholders and any of their pledgees, assignees, distributees and successors-in-interest of the Registered
Securities received after the date of this prospectus from a Selling Stockholder as a gift, pledge, or other transfer, may, from time
to time, sell, transfer, or otherwise dispose of any or all of the shares of Common Stock covered hereby on The Nasdaq Capital Market
or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These dispositions
may be at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated
prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
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ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
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block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
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purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
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exchange distributions in accordance with the rules of the applicable exchange; |
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privately negotiated transactions; |
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settlement of short sales; |
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transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; |
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through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
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a combination of any such methods of sale; or |
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any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell securities under Rule 144 or
any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather
than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or,
if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set
forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance
with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.
In connection with the sale of the Registered Securities or interests
therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the Registered Securities in the course of hedging the positions they assume. To the extent permitted by
applicable securities laws, the Selling Stockholders may also sell the Registered Securities short and deliver these securities to close
out their short positions, or loan or pledge the Registered Securities to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one
or more derivative securities which require the delivery to such broker-dealer or other financial institution of the Registered Securities
offered by this prospectus, which Registered Securities such broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any underwriters, broker-dealers or agents
that participate in the sale of the Registered Securities or interests therein may be “underwriters” within the meaning of
the Securities Act. In such event, any discounts, commissions, concessions or profit they earn on any resale of the Registered Securities
purchased by them and covered by this prospectus may be deemed to be underwriting discounts and commissions under the Securities Act.
Selling Stockholders who are “underwriters” within the meaning of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement
or understanding, directly or indirectly, with any person to distribute the Registered Securities.
The Company has agreed to indemnify the Selling Stockholders against
certain losses, claims, damages, and liabilities, including liabilities under the Securities Act.
We have agreed to keep the registration statement of which this prospectus
is a part effective until the Purchaser no longer owns any private placement warrants or shares of Common Stock issuable upon the exercise
thereof. The Registered Securities will be sold only through registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the Registered Securities covered hereby may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied
with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Registered Securities may not simultaneously engage in market making activities with respect
to our Common Stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In
addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder,
including Regulation M, which may limit the timing of purchases and sales of our Common Stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy
of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
DESCRIPTION OF SECURITIES TO BE REGISTERED
The following summary description
of our Common Stock is based on the provisions of our Certificate of Incorporation, our bylaws (the “Bylaws”), and the applicable
provisions of the Delaware General Corporation Law (“DGCL”). This information is qualified entirely by reference to the applicable
provisions of our Certificate of Incorporation, our Bylaws, and the DGCL. For information on how to obtain copies of our Certificate of
Incorporation and Bylaws, which are exhibits to the registration statement on Form S-1 of which this prospectus forms a part, see the
sections titled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference”
in this prospectus.
General
Our authorized capital stock consists of (i) 84,295,000 shares of Common
Stock, par value $0.001 per share, (ii) 15,705,000 shares of Class B Common Stock, par value $0.001 per share and (iii) 5,000,000 shares
of preferred stock, par value $0.001 per share.
Common Stock
We have two classes of authorized common stock, Common Stock and Class
B Common Stock. The rights of the holders of Common Stock and Class B Common Stock are identical, except with respect to voting and conversion.
Voting. Holders of our Common Stock are entitled to one
vote for each share held on all matters submitted to a vote of stockholders and holders of our Class B Common Stock are entitled to five
votes for each share of Class B Common Stock held on all matters submitted to a vote of stockholders. Holders of shares of our Common
Stock and Class B Common Stock vote together as a single class on all matters (including the election of directors) submitted to a vote
of stockholders, unless otherwise required by Delaware law or our Certificate of Incorporation. Delaware law could require either holders
of our Common Stock or Class B Common Stock to vote separately as a single class in the following circumstances:
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(1) |
if we were to seek to amend our Certificate of Incorporation to increase or decrease the par value of a class of our capital stock, then that class would be required to vote separately to approve the proposed amendment; and |
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(2) |
if we were to seek to amend our Certificate of Incorporation in a manner that alters or changes the powers, preferences, or special rights of a class of our capital stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment. |
Our Certificate of Incorporation
does not provide for cumulative voting for the election of directors. As a result, the holders of a majority of the voting power of our
outstanding capital stock can elect all of the directors then standing for election. Our Certificate of Incorporation establishes a classified
board of directors, divided into three classes with staggered three-year terms. Only one class of directors will be elected at each
annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. An
election of directors by our stockholders is determined by a plurality of the votes cast by the stockholders entitled to vote on the election.
Subject to the supermajority votes for some matters, other matters shall be decided by the affirmative vote of our stockholders having
a majority in voting power of the votes cast by the stockholders present or represented and voting on such matter. Our Certificate of
Incorporation and Bylaws also provide that our directors may be removed only for cause and only by the affirmative vote of the holders
of at least two-thirds in voting power of the outstanding shares of capital stock entitled to vote thereon. In addition, the affirmative
vote of the holders of at least two-thirds in voting power of the outstanding shares of capital stock entitled to vote thereon is
required to amend or repeal, or to adopt any provision inconsistent with, several of the provisions of our Certificate of Incorporation.
See “— Anti-Takeover Provisions — Amendment of Charter Provisions” below.
Dividends. Holders of Common Stock and Class B Common
Stock are entitled to receive proportionately any dividends as may be declared by our Board of Directors, subject to any preferential
dividend rights of any series of preferred stock that we may designate and issue in the future.
Liquidation. In the event of our liquidation or dissolution,
the holders of our Common Stock and Class B Common Stock will be entitled to receive proportionately our net assets available for distribution
to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock.
Holders of our Common Stock and Class B Common Stock have no preemptive, subscription, redemption, or conversion rights. The rights, preferences,
and privileges of holders of Common Stock and Class B Common Stock will be subject to and may be adversely affected by the rights of the
holders of shares of any series of preferred stock that we may designate and issue in the future.
Change of Control Transactions. In the case of any distribution
or payment in respect of the shares of our Common Stock or Class B Common Stock upon a merger or consolidation with or into any other
entity, or other substantially similar transaction, the holders of our Common Stock and Class B Common Stock will be treated equally and
identically with respect to shares of Common Stock or Class B Common Stock owned by them; provided, however, shares of each class may
receive, or have the right to elect to receive, different or disproportionate consideration if the only difference in the per share consideration
is that the shares to be distributed to a holder of a share Class B Common Stock have five times the voting power of any securities distributed
to a holder of a share of Common Stock.
Subdivisions and Combinations. If we subdivide or combine
in any manner outstanding shares of Common Stock or Class B Common Stock, the outstanding shares of the other class will be subdivided
or combined in the same manner, unless different treatment of the shares of each class is approved by the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock and Class B Common Stock, each voting as a separate class.
Conversions. Each outstanding share of Class B Common
Stock is convertible at any time at the option of the holder into one share of Common Stock. In addition, each share of Class B Common
Stock will convert automatically into one share of Common Stock upon any transfer, whether or not for value, except for certain permitted
transfers described in our Certificate of Incorporation, including transfers to family members, trusts solely for the benefit of the stockholder
or their family members, distributions or transfers of shares out to owners of a stockholder, or to partnerships, corporations, and other
entities exclusively owned by the stockholder or their family members, as well as affiliates, subject to certain exceptions. Once converted
or transferred and converted into Common Stock, the Class B Common Stock may not be reissued. However, Common Stock is not convertible
into Class B Common Stock.
Rights and Preferences. Except for the conversion feature
of our Class B Common Stock described above, holders of our Common Stock and Class B Common Stock have no preemptive, conversion or Subscription
Rights. In addition, there are no redemption or sinking funds provisions applicable to our Common Stock or Class B Common Stock. The rights,
preferences, and privileges of the holders of our Common Stock and Class B Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.
Fully Paid and Nonassessable. All of our outstanding
shares of Common Stock and Class B Common Stock are fully paid and nonassessable.
Outstanding Warrants
As of January 18, 2024, we had 7,739,754 shares of Common Stock issuable
upon exercise of outstanding Common Stock warrants, at a weighted average exercise price of $2.37 per share.
Warrants Issued in our February 2021 IPO and our December 2021
PIPE Offering
Pursuant to our IPO in February 2021, the underwriter received warrants
to purchase 106,400 shares of Common Stock. The IPO Warrants are exercisable at any time and from time to time, in whole or in part, during
the four and a half-year period commencing August 12, 2021, at a price of $12.00 per share. During 2021, the underwriters assigned 95,760
of the IPO Warrants to employees. As of November 13, 2023, 51,061 of the IPO Warrants have been exercised, which provided net proceeds
to the Company of $0.6 million.
On December 3, 2021, the Company completed a private placement with
several investors, wherein a total of 1,169,288 shares of the Company’s Common Stock were issued at a purchase price of $17.50 per
share, with each investor also receiving a warrant to purchase up to a number of shares of Common Stock equal to the number of shares
of Common Stock purchased by such investor in the private placement, at an exercise price of $17.50 per share, for a total purchase price
of approximately $20.5 million. The PIPE Purchaser Warrants are immediately exercisable, expire five years from the date of issuance and
have certain downward pricing adjustment mechanisms, subject to a floor, as described in greater detail therein and below. In addition,
the Company granted certain warrants to the placement agent for the 2021 PIPE Offering, under similar terms, to purchase 46,722 shares
of Common Stock at an exercise price of $17.50 per share (the “PIPE Representative Warrants” and, together with the PIPE Purchaser
Warrants, the “PIPE Warrants”). The PIPE Warrants had an initial exercise price of $17.50 per share. The PIPE Purchaser Warrants
contain a downward pricing adjustment mechanism, which was triggered by our September 2023 rights offering because the deemed subscription
price $3.00 per share of Common Stock was below the then-current exercise price of the PIPE Purchaser Warrants. Upon being triggered in
our September 2023 rights offering, the exercise price of the PIPE Purchaser Warrants was reduced to $5.25. The PIPE Representative Warrants
do not contain such a downward pricing adjustment mechanism. The PIPE Warrants are currently exercisable at any time and from time to
time, in whole or in part, and will expire on December 3, 2026, the fifth anniversary of their original issuance date.
General Terms of the IPO Warrants and the
PIPE Warrants
Adjustment. For so long as the IPO
Warrants and the PIPE Warrants (together, the “2021 Warrant(s)”) remain outstanding and notwithstanding any prior adjustments,
the exercise price and number of shares of Common Stock issuable upon exercise of the 2021 Warrant is subject to adjustment as follows:
(a) with respect to the PIPE Purchaser Warrants, as the Company’s Board of Directors deems appropriate (subject to the prior
written consent of the warrant holder), (b) upon (i) payment of a stock dividend or other distribution or distributions on shares
of its Common Stock or any securities which would entitle the holder thereof to acquire shares of the Company’s Common Stock at
any time (referred to as “Common Stock Equivalents”), (ii) subdivision (by stock spilt, stock dividend, recapitalization,
or otherwise) of shares of Common Stock, (iii) combination (by reverse stock split or otherwise) of shares of Common Stock, or (iv) reclassification
of shares of Common Stock, and (c) with respect to the PIPE Purchaser Warrants, upon the issuance or announcement of contemplated
issuance of shares of Common Stock or Common Stock Equivalents for consideration per share less than the exercise price of the PIPE Purchaser
Warrants (a “Dilutive Issuance”), except for certain exempt issuances as set forth therein. Our September 2023 rights offering
was a Dilutive Issuance, which caused a downward adjustment to the initial exercise price of the PIPE Purchaser Warrants to $5.25.
Rights upon Distribution of Assets. With
respect to the PIPE Warrants, in the event that the Company declares or makes any dividend or other distribution of its assets to holders
of its Common Stock, the warrant holder will be entitled to participate in such distribution to the same extent that such holder would
have participated therein if the holder had held the number of shares of Common Stock acquirable upon exercise of the PIPE Warrant. The
IPO Underwriter Warrants do not contain such dividend or distribution rights.
Fundamental Transaction. In the event
of a fundamental transaction, as described in the PIPE Warrants and generally including the sale, transfer or other disposition of all
or substantially all of our assets, our consolidation or merger with or into another person or reorganization, recapitalization or reclassification
or the acquisition of our outstanding Common Stock which results in any person or group becoming the beneficial owner of 50% of our outstanding
shares of Common Stock, the holders of the PIPE Warrants will be entitled to receive upon exercise of the PIPE Warrants the kind and amount
of securities, cash, assets or other property that the holders would have received had they exercised the PIPE Warrants immediately prior
to such fundamental transaction. Upon the occurrence of any such fundamental transaction, the successor entity shall succeed to, and be
substituted for, and may exercise every right and power of the Company and shall assume all of the obligations of the Company under the
PIPE Warrants. The IPO Underwriter Warrants do not contain such rights.
Purchase Right. With respect to the
PIPE Warrants, any time that the Company grants, issues, or sells any securities pro rata to all of the record holders of the Common Stock
(the “Purchase Right”), the holder of the PIPE Warrant will be entitled to acquire the aggregate Purchase Rights which the
holder could have acquired if the holder had held the number of shares of Common Stock acquirable upon exercise of the PIPE Warrant. The
IPO Underwriter Warrants do not contain such rights.
Transferability. Subject to applicable
laws and restrictions on transfer (and a 180-day waiting period from the effective date with respect to the IPO Underwriter Warrants),
the 2021 Warrants may be transferred at the option of the holder. The 2021 Warrants are not listed on any securities exchange or nationally
recognized trading system.
Exercisability. The 2021 Warrants will
be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed notice of exercise or exercise
form accompanied by payment in full for the number of shares of our Common Stock purchased upon such exercise. If, at the time a holder
exercises its 2021 Warrant, a registration statement registering the issuance of the shares of Common Stock underlying the 2021 Warrants
under the Securities Act is not then effective or available and an exemption from registration under the Securities Act is not available
for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in
payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net
number of shares of Common Stock determined according to a formula set forth in the 2021 Warrant.
Limitations on Exercise. With respect
to the PIPE Warrants, a holder (together with its affiliates) may not exercise any portion of the PIPE Warrant to the extent that the
holder would own more than 4.99% (or 9.99%, at the election of the warrant holder) of the outstanding Common Stock after exercise, except
that upon at least 61 days’ prior notice from the holder to us, the holder may increase the amount of ownership of outstanding
stock after exercising the holder’s warrants up to 9.99% of the number of shares of our Common Stock outstanding immediately after
giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the PIPE Warrants.
No Fractional Shares. No fractional
shares of Common Stock will be issued in connection with the exercise of a 2021 Warrant. In lieu of fractional shares, we will (i) round
up or down to the next whole share, in the case of the IPO Warrants, or (ii) either pay a cash adjustment in respect of such fractional
amount or round up to the next whole share, in the case of the PIPE Warrants.
Rights as a Stockholder. Except as
otherwise provided in the 2021 Warrants or by virtue of such holder’s ownership of shares of our Common Stock, the holders of the
2021 Warrants do not have the rights or privileges of holders of our Common Stock, including any voting rights, unless and until they
exercise their 2021 Warrants.
Waivers and Amendments. Subject to
certain exceptions, any term of the 2021 Warrants may be amended, modified, or waived with our written consent and the written consent
of the holder of such 2021 Warrant.
Failure to Timely Deliver Securities. With
respect to the PIPE Warrants, upon exercise of the PIPE Warrant by the holder, if the Company or its transfer agent, Colonial Stock Transfer
Company, Inc., fails to deliver the securities to holder by the required share delivery date set forth in the PIPE Warrant, or if the
Company did not provide the required notice to holder that a registration statement covering the issuance of the warrant shares subject
to the exercise notice is not available and the Company is unable to deliver the securities without any restrictive legend, then generally,
the holder may rescind the exercise in whole or in part or may require the Company to pay to the holder an amount in cash to make the
investor whole in connection with the Company’s failure to timely deliver securities.
Warrants Issued in our October 2023 Private Placement
In the private placement concurrent with our October 2023 registered
direct offering, we issued unregistered warrants to an institutional accredited investor to purchase up to 4,848,486 shares of our Common
Stock at an exercise price of $1.65 per share, consisting of Series A Warrants to purchase up to 2,424,243 shares of our Common Stock
and Series B Warrants to purchase 2,424,243 shares of our Common Stock. The terms of the October 2023 Private Placement Warrants are identical,
except as to duration.
In accordance with the Engagement Letter between us and Wainwright,
warrants to purchase 169,697 shares of Common Stock were issued on October 13, 2023 to Wainwright. The October 2023 Placement Agent Warrants,
together with the October 2023 Private Placement Warrants, are referred to as the October 2023 Warrants.
Exercise Price and Duration. Each October 2023 Warrant is exercisable
for one share of Common Stock. The October 2023 Private Placement Warrants have an exercise price of $1.65 per share and the October 2023
Placement Agent Warrants are initially exercisable at an exercise price of $2.0625 per share of Common Stock, and are all exercisable
upon the Stockholder Approval Date. The Series A Warrants will expire five and one-half years from the date of issuance on April 13, 2029.
The Series B Warrants will expire eighteen months from the date of issuance on April 14, 2025. The October 2023 Placement Agent Warrants
will expire on October 11, 2028.
Exercisability. The October
2023 Warrants were not exercisable until our stockholders approved the issuance of the October 2023 Private Placement Warrants and the
shares Common Stock issuable upon the exercise thereof (the “Stockholder Approval”), which has now occurred. The October
2023 Warrants may be exercised, at the option of each holder, in whole or in part by delivering to us a duly executed exercise
notice and, at any time a registration statement registering the issuance of the shares of Common Stock underlying the October
2023 Warrants under the Securities Act is effective and available for the issuance of such shares, by payment in full in immediately
available funds for the number of shares of Common Stock purchased upon such exercise.
Cashless Exercise. If, at the time a holder exercises its October
2023 Warrants, a registration statement registering the issuance of the shares of Common Stock underlying the October
2023 Warrants is not then effective or the prospectus contained therein is not available for the resale of such shares by the holder,
then the October 2023 Warrants may be exercised in whole or in part, by means of a cashless
exercise, in which case the holder would receive upon such exercise the net number of shares of Common Stock determined according to the
formula set forth in the October 2023 Warrants.
Exercise Limitation. A holder of October
2023 Warrants will not have the right to exercise any portion thereof if the holder, together with its affiliates, would beneficially
own in excess of 4.99% of the number of shares of our Common Stock outstanding immediately after giving effect to such exercise; provided,
however, that the holder may elect to decrease, or upon at least 61 days’ prior notice to the Company, increase such beneficial
ownership limitation. In no event shall such beneficial ownership limitation exceed 9.99%.
Transferability. Subject to compliance with any applicable securities
laws, the October 2023 Warrants may be transferred at the option of the holder upon surrender
of the warrant(s) to us together with the appropriate instruments of transfer.
Fractional Shares. No fractional shares of Common Stock will
be issued upon the exercise of the October 2023 Warrants. As to any fraction of a share which
the holder would otherwise be entitled to purchase upon such exercise, we shall, at our election, either pay a cash adjustment in respect
of such final fraction in an amount equal to such fraction multiplied by the exercise price or round up to the next whole share.
Trading Market. There is no established public trading market
for the October 2023 Warrants, and we do not expect a market to develop. The October
2023 Warrants are not listed on any securities exchange or nationally recognized trading system. Without an active trading market,
the liquidity of the October 2023 Warrants is limited.
Fundamental Transactions. If a Fundamental Transaction (as defined
in the October 2023 Warrants, but generally including the sale, transfer or other disposition
of all or substantially all of our assets, our consolidation or merger with or into another person or reorganization, recapitalization
or reclassification or the acquisition of our outstanding Common Stock which results in any person or group acquiring 50% or more of the
voting power of our common equity) occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every
right and power that we may exercise and will assume all of our obligations under the October 2023
Warrants with the same effect as if such successor entity had been named in the October 2023
Warrants themselves. If holders of shares of our Common Stock are given a choice as to the securities, cash, or property to be
received in such a Fundamental Transaction, then the holder shall be given the same choice as to the consideration it would receive upon
any exercise of the October 2023 Warrants following such a Fundamental Transaction. Additionally,
as more fully described in the October 2023 Warrants, in the event of certain Fundamental
Transactions, the holders of October 2023 Warrants will be entitled to receive consideration
in an amount equal to the Black Scholes value of the October 2023 Warrants on the date of
consummation of such Fundamental Transaction.
Rights as a Stockholder. Except as otherwise provided in the
October 2023 Warrants or by virtue of such holder’s ownership of our shares of Common
Stock, the holder of an October 2023 Warrants does not have the rights or privileges of a
holder of our Common Stock, including any voting rights, until the holder exercises the October
2023 Warrants.
Amendment and Waiver. October
2023 Warrants may be modified or amended, or the provisions thereof waived with the written consent of the Company and the respective
holder.
This summary of certain terms and provisions of the October
2023 Warrants is not complete, is subject to, and qualified in its entirety by, the provisions of the October
2023 Warrants, the forms of which are filed as exhibits to the registration statement of which this prospectus forms a part.
Warrants Issued in our December 2023 Private Placement
In the private placement concurrent with our December 2023 Registered
Direct Offering, we issued the December 2023 Private Placement Warrants to an institutional accredited investor to purchase up to 1,355,301
shares of our Common Stock at an exercise price of $1.62 per share.
In accordance with the Engagement Letter between us and Wainwright,
warrants to purchase 94,871 shares of Common Stock were issued on December 22, 2023 to Wainwright. The December 2023 Placement Agent Warrants,
together with the December 2023 Private Placement Warrants, are referred to as the December 2023 Warrants.
Exercise Price and Duration. Each December 2023 Warrant is exercisable
for one share of Common Stock. The December 2023 Private Placement Warrants have an exercise price of $1.62 per share and are immediately
exercisable. The December 2023 Private Placement Warrants will expire five and one-half years from the date of issuance on June 20, 2029.
The December 2023 Placement Agent Warrants are immediately exercisable at an initial exercise price of $2.1813 per share of Common Stock
and will expire on December 19, 2028.
Exercisability. The December
2023 Warrants may be exercised, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice
and, at any time a registration statement registering the issuance of the shares of Common Stock underlying the December 2023 Warrants
under the Securities Act is effective and available for the issuance of such shares, by payment in full in immediately available funds
for the number of shares of Common Stock purchased upon such exercise.
Cashless Exercise. If, at the time a holder exercises its December
2023 Warrants, a registration statement registering the issuance of the shares of Common Stock underlying the December 2023 Warrants is
not then effective or the prospectus contained therein is not available for the resale of such shares by the holder, then the December
2023 Warrants may be exercised in whole or in part, by means of a cashless exercise, in which case the holder would receive upon such
exercise the net number of shares of Common Stock determined according to the formula set forth in the December 2023 Warrants.
Exercise Limitation. A holder of December 2023 Warrants will
not have the right to exercise any portion thereof if the holder, together with its affiliates, would beneficially own in excess of 4.99%
of the number of shares of our Common Stock outstanding immediately after giving effect to such exercise; provided, however, that the
holder may elect to decrease, or upon at least 61 days’ prior notice to the Company, increase such beneficial ownership limitation.
In no event shall such beneficial ownership limitation exceed 9.99%.
Transferability. Subject to compliance with any applicable securities
laws, the December 2023 Warrants may be transferred at the option of the holder upon surrender of the warrant(s) to us together with the
appropriate instruments of transfer.
Fractional Shares. No fractional shares of Common Stock will
be issued upon the exercise of the December 2023 Warrants. As to any fraction of a share which the holder would otherwise be entitled
to purchase upon such exercise, we shall, at our election, either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the exercise price or round up to the next whole share.
Trading Market. There is no established public trading market
for the December 2023 Warrants, and we do not expect a market to develop. The December 2023 Warrants are not listed on any securities
exchange or nationally recognized trading system. Without an active trading market, the liquidity of the December 2023 Warrants is limited.
Fundamental Transactions. If a Fundamental Transaction (as defined
in the December 2023 Warrants, but generally including the sale, transfer or other disposition of all or substantially all of our assets,
our consolidation or merger with or into another person or reorganization, recapitalization or reclassification or the acquisition of
our outstanding Common Stock which results in any person or group acquiring 50% or more of the voting power of our common equity) occurs,
then the successor entity will succeed to, and be substituted for us, and may exercise every right and power that we may exercise and
will assume all of our obligations under the December 2023 Warrants with the same effect as if such successor entity had been named in
the December 2023 Warrants themselves. If holders of shares of our Common Stock are given a choice as to the securities, cash, or property
to be received in such a Fundamental Transaction, then the holder shall be given the same choice as to the consideration it would receive
upon any exercise of the December 2023 Warrants following such a Fundamental Transaction. Additionally, as more fully described in the
December 2023 Warrants, in the event of certain Fundamental Transactions, the holders of December 2023 Warrants will be entitled to receive
consideration in an amount equal to the Black Scholes value of the December 2023 Warrants on the date of consummation of such Fundamental
Transaction.
Rights as a Stockholder. Except as otherwise provided in the
December 2023 Warrants or by virtue of such holder’s ownership of our shares of Common Stock, the holder of a December 2023 Warrants
does not have the rights or privileges of a holder of our Common Stock, including any voting rights, until the holder exercises the December
2023 Warrants.
Amendment and Waiver. December 2023 Warrants may be modified
or amended, or the provisions thereof waived with the written consent of the Company and the respective holder.
This summary of certain terms and provisions of the December 2023 Warrants
is not complete, is subject to, and qualified in its entirety by, the provisions of the December 2023 Warrants, the forms of which are
filed as exhibits to the registration statement of which this prospectus forms a part.
Preferred Stock
Under our Certificate of Incorporation, our
Board of Directors is authorized to direct us to issue shares of preferred stock in one or more series without stockholder approval. Our
Board of Directors has the discretion to determine the rights, preferences, privileges, and restrictions, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.
The purpose of authorizing our Board of Directors
to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific
issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and
other corporate purposes, could have the effect of making it more difficult for a third-party to acquire, or could discourage a third-party from
seeking to acquire, a majority of our outstanding voting stock. There are no shares of preferred stock currently outstanding, and we have
no present plans to issue any shares of preferred stock.
Anti-Takeover Provisions
Some provisions of Delaware law and our Certificate of Incorporation
and Bylaws could make the following transactions more difficult: an acquisition of us by means of a tender offer; an acquisition of us
by means of a proxy contest or otherwise; or the removal of our incumbent officers and directors. It is possible that these provisions
could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interests
or in our best interests, including transactions that provide for payment of a premium over the market price for our shares.
These provisions, summarized below, are intended
to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking
to acquire control of us to first negotiate with our Board of Directors. We believe that the benefits of the increased protection of our
potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages
of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.
Undesignated Preferred Stock. The
ability of our Board of Directors, without action by our stockholders, to issue up to 5,000,000 shares of undesignated preferred
stock with voting or other rights or preferences as designated by our Board of Directors could impede the success of any attempt to effect
a change in control of our company. These and other provisions may have the effect of deterring hostile takeovers or delaying changes
in control or management of our company.
Dual Class Stock. As described
above in “— Common Stock — Voting,” our Certificate of Incorporation provides for a dual
class common stock structure, consisting of Common Stock and Class B Common Stock (collectively, our “common stock”), which
provides holders of our Class B Common Stock with significant influence over matters requiring stockholder approval, including the
election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets.
Stockholder Meetings. Our Bylaws provide
that a special meeting of stockholders may be called only by the chair of our Board of Directors, our chief executive officer or president
(in the absence of a chief executive officer), or by a resolution adopted by a majority of our Board of Directors.
Requirements for Advance Notification of
Stockholder Nominations and Proposals. Our Bylaws include advance notice procedures with respect to stockholder proposals to be brought
before a stockholder meeting and the nomination of candidates for election as directors, other than nominations made by or at the direction
of our Board of Directors or a committee of our Board of Directors.
Elimination of Stockholder Action by Written
Consent. Any action to be taken by our stockholders must be effected at duly called annual or special meetings of stockholders
and may not be taken by written consent.
Staggered Board. Our Board of Directors
is divided into three classes. The directors in each class serve a three-year term, with one class being elected each year by our
stockholders. This system of electing and removing directors may tend to discourage a third party from making a tender offer or otherwise
attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors.
Removal of Directors. Our Certificate
of Incorporation provides that no member of our Board of Directors may be removed from office by our stockholders except for cause and,
in addition to any other vote required by law, upon the approval of the holders of at least two-thirds in voting power of the outstanding
shares of stock entitled to vote in the election of directors.
Stockholders Not Entitled to Cumulative
Voting. Our Certificate of Incorporation does not permit stockholders to cumulate their votes in the election of directors. Accordingly,
the holders of a majority of the outstanding shares of our common stock entitled to vote in any election of directors are able to elect
all of the directors standing for election, if they choose. Further, as discussed above, holders of our Class B Common Stock are
entitled to five votes for each share of Class B Common Stock held by them, including with respect to election of directors.
Choice of Forum. Our Certificate
of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State
of Delaware will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any
action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us
or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL or as to which the
DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, (4) any action to interpret, apply, enforce or determine
the validity of our Certificate of Incorporation or Bylaws, or (5) any action asserting a claim governed by the internal affairs
doctrine. Under our Certificate of Incorporation, this exclusive forum provision will not apply to claims which are vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery of the State of Delaware, or for which the Court of Chancery of the
State of Delaware does not have subject matter jurisdiction. For instance, the provision would not apply to actions arising under federal
securities laws, including suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act, or the
rules and regulations thereunder.
Our Certificate of Incorporation further provides
that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting
a cause of action arising under the Securities Act. Our Certificate of Incorporation also provides that any person or entity holding,
purchasing, or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented
to these choice of forum provisions. It is possible that a court of law could rule that the choice of forum provision contained in our
Certificate of Incorporation are inapplicable or unenforceable if they are challenged in a proceeding or otherwise.
Amendment of Charter Provisions. The
amendment of any of the above provisions, except for the provision making it possible for our Board of Directors to issue preferred stock
and the provision prohibiting cumulative voting, would require approval by holders of at least two-thirds in voting power of the
outstanding shares of stock entitled to vote thereon.
The provisions of Delaware law, and our Certificate
of Incorporation and Bylaws, could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they
may also inhibit temporary fluctuations in the market price of our Common Stock that often result from actual or rumored hostile takeover
attempts. These provisions may also have the effect of preventing changes in the composition of our board and management. It is possible
that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best
interests.
Section 203 of the Delaware General
Corporation Law. We are subject to Section 203 of the DGCL, which prohibits persons deemed to be “interested stockholders”
from engaging in a “business combination” with a publicly held Delaware corporation for three years following the date
these persons become interested stockholders unless the business combination is, or the transaction in which the person became an interested
stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder”
is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder
status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision
may have an anti-takeover effect with respect to transactions not approved in advance by our Board of Directors.
LEGAL MATTERS
The validity of the securities offered hereby and certain other legal
matters will be passed upon for us by Buchanan Ingersoll & Rooney PC, Pittsburgh, Pennsylvania. Certain attorneys affiliated with
Buchanan Ingersoll & Rooney PC own approximately 20,000 shares of Common Stock.
EXPERTS
The financial statements of Longeveron Inc. (i) as of December 31,
2022 and for the year then ended, incorporated in this prospectus by reference from the Annual Report on Form 10-K for the year ended
December 31, 2022 (the “2022 10-K”), have been audited by Marcum LLP, an independent registered public accounting firm, as
stated in their report; and (ii) as of December 31, 2021 and for the year then ended, incorporated in this prospectus by reference from
the 2022 10-K, have been audited by MSL, P.A., an independent registered public accounting firm, as stated in their report, which reports
are incorporated herein by reference. Such financial statements have been so incorporated in reliance upon the reports of such firms given
upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We make periodic and other filings required to be filed by us as a
reporting company under Sections 13 and 15(d) of the Exchange Act. The SEC maintains a website at http://www.sec.gov that contains the
reports, proxy and information statements, and other information that issuers, such as us, file electronically with the SEC. Our website
address is http://longeveron.com. Information contained on our website, however, is not, and should not be deemed to be, incorporated
into this prospectus and you should not consider information contained on our website to be part of this prospectus. We have included
our website address as an inactive textual reference only.
This prospectus and any prospectus supplement are part of a registration
statement that we filed with the SEC and do not contain all of the information in the registration statement. The full registration statement
may be obtained from the SEC or us, as provided below. Forms of the documents establishing the terms of the offered securities are or
may be filed as exhibits to the registration statement or documents incorporated by reference in the registration statement. Statements
in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects by
reference to the document to which it refers. You should refer to the actual documents for a more complete description of the relevant
matters. You may inspect a copy of the registration statement through the SEC’s website, as provided above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC’s rules allow us to “incorporate by reference”
information into this prospectus, which means that we can disclose important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus. Any statement contained
in this prospectus or a previously filed document incorporated by reference will be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained in this prospectus modifies or replaces that statement:
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 14, 2023; |
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our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, filed with the SEC on May 12, 2023; |
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our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023, filed with the SEC on August 11, 2023; |
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our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2023, filed with the SEC on November 9, 2023; |
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our Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 28, 2023; |
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our Definitive Proxy Statement on Schedule 14A, filed with the SEC on November 14, 2023; and |
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our Current Reports on Form 8-K filed with the SEC on January 27, 2023, February 28, 2023, April 10, 2023, June 5, 2023, June 12, 2023, July 5, 2023, July 20, 2023, August 14, 2023, August 16, 2023, August 18, 2023, September 25, 2023, October 5, 2023, October 13, 2023, December 22, 2023, and December 28, 2023. |
In addition to the filings listed above, any future filings made with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after (i) the date of this registration statement
and prior to effectiveness of this registration statement and (ii) the date of this prospectus and before the completion of the offering
of the securities included in this prospectus, however, we will not incorporate by reference any document or portions thereof that are
not deemed “filed” with the SEC, or any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or related exhibits
furnished pursuant to Item 9.01 of Current Reports on Form 8-K.
We will provide, without charge, to each person, including any beneficial
owner, to whom a copy of this prospectus is delivered, upon such person’s written or oral request, a copy of any and all of the
information incorporated by reference in this prospectus. You may request a free copy of any of the documents incorporated by reference
in this prospectus by writing or telephoning us at the following address:
Longeveron Inc.
1951 NW 7th Avenue, Suite 520
Miami, FL 33136
(305) 909-0840
Exhibits to the filings will not be sent, however,
unless those exhibits have specifically been incorporated by reference in this prospectus or any accompanying prospectus supplement.
1,450,172 Shares of Class A Common Stock
PRELIMINARY PROSPECTUS
,
2024
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, payable in connection with the offering of securities described in this registration statement. All amounts
are estimates except for the SEC registration fee. We will bear all expenses shown below.
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Amount | |
SEC registration fee | |
$ | 175.51 | |
Accounting fees and expenses | |
$ | 30,000.00 | |
Legal fees and expenses | |
$ | 30,000.00 | |
Printing and engraving expenses | |
$ | 15,000.00 | |
Miscellaneous fees and expenses | |
$ | 8,000.00 | |
Total expenses | |
$ | 83,175.51 | |
Item 14. Indemnification of Directors and Officers
Section 102 of the DGCL permits a corporation to eliminate the
personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary
duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct
or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law
or obtained an improper personal benefit. Our Certificate of Incorporation provides that no director of the Registrant shall be personally
liable to it or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of
law imposing such liability, except to the extent that the DGCL prohibits the elimination or limitation of liability of directors for
breaches of fiduciary duty.
Section 145 of the DGCL provides that a corporation has the power
to indemnify a director, officer, employee, or agent of the corporation, or a person serving at the request of the corporation for another
corporation, partnership, joint venture, trust or other enterprise in related capacities against expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with an action, suit
or proceeding to which he was or is a party or is threatened to be made a party to any threatened, ending or completed action, suit or
proceeding by reason of such position, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his conduct was
unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect
to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all
of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Our Certificate of Incorporation provides that we will indemnify each
person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other
than an action by or in the right of us) by reason of the fact that he or she is or was, or has agreed to become, a director or officer,
or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar
capacity with, another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to as an “Indemnitee”),
or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and
any appeal therefrom, if such Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to,
our best interests, and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct
was unlawful. Our Certificate of Incorporation provides that we will indemnify any Indemnitee who was or is a party to an action or suit
by or in the right of us to procure a judgment in our favor by reason of the fact that the Indemnitee is or was, or has agreed to become,
a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee
of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action
alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and, to the extent permitted
by law, amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, and any appeal
therefrom, if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests,
except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged
to be liable to us, unless a court determines that, despite such adjudication but in view of all of the circumstances, he or she is entitled
to indemnification of such expenses. Notwithstanding the foregoing, to the extent that any Indemnitee has been successful, on the merits
or otherwise, he or she will be indemnified by us against all expenses (including attorneys’ fees) actually and reasonably incurred
in connection therewith. Expenses must be advanced to an Indemnitee under certain circumstances.
We have entered into indemnification agreements with each of our directors
and officers. These indemnification agreements may require us, among other things, to indemnify our directors and officers for some expenses,
including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or officer in any action or proceeding
arising out of his or her service as one of our directors or officers, or any other company or enterprise to which the person provides
services at our request.
We maintain a general liability insurance policy that covers certain
liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors
or officers.
Item 15. Recent Sales of Unregistered Securities.
Set forth below is information regarding unregistered securities issued
by us within the past three years. Also included is the consideration received by us for such unregistered securities and information
relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed.
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In March 2020, we completed the sale of 22,902 Series C units to accredited investors for an aggregate purchase price of $1,374,120, or $60.00 per unit. |
|
● |
During the nine months ended September 30, 2021, we issued a total of 163,719 unregistered shares of Common Stock, with an aggregate value of $1.2 million, as consideration under various pre-existing consulting and license agreements. More specifically, of the amount noted in the prior sentence, 110,387 shares were issued to University of Miami and 53,332 shares were issued to the Company’s investor relations consultants. |
|
● |
On November 30, 2021, we entered into a Purchase Agreement with the Purchasers (as defined therein) for the purchase and sale of (a) an aggregate of 1,169,288 shares of our Common Stock and warrants to purchase 1,169,288 shares of Common Stock at an initial exercise price of $17.50 per share, at a combined purchase price of $17.50 per share of Common Stock and PIPE Purchaser Warrants. We also issued warrants to purchase 46,722 shares of Common Stock at an initial exercise price of $17.50 per share to the representatives in the transaction. The shares of Common Stock and the PIPE Warrants were issued at a closing on December 3, 2021. |
|
● |
On October 11, 2023, in a private placement concurrent with the registered direct offering, we agreed to sell to an institutional accredited investor unregistered Series A Warrants to purchase up to an aggregate of 2,424,243 shares of its Common Stock and unregistered Series B Warrants to purchase up to an aggregate of 2,424,243 shares of its Common Stock. The unregistered Series A Warrants have an exercise price of $1.65 per share, became exercisable commencing on the effective date of stockholder approval of the issuance of the Series A Warrants and the shares issuable thereunder, and expire on April 13, 2029. The unregistered Series B Warrants have an exercise price of $1.65 per share, became exercisable commencing on the effective date of stockholder approval of the issuance of the Series B Warrants and the shares issuable thereunder, and expire on April 14, 2025. The October 2023 Private Placement Warrants were issued at a closing on October 13, 2023, pursuant to the terms of the Purchase Agreement described herein. |
|
● |
Pursuant to the Engagement Letter between the Company and Wainwright described herein, on October 13, 2023, we issued to Wainwright, or its designees, warrants to purchase 169,697 shares of Common Stock. The October 2023 Placement Agent Warrants have substantially the same terms as the October 2023 Private Placement Warrants, except that the October 2023 Placement Agent Warrants have an exercise price equal to $2.0625, or 125% of the offering price per share of Common Stock sold in the October 2023 registered direct offering, and the October 2023 Placement Agent Warrants expire on October 11, 2028. |
|
● |
On December 22, 2023, in a private placement concurrent with the registered direct offering described herein, we sold to an institutional accredited investor long-term warrants to purchase up to an aggregate of 1,355,301 shares of its Common Stock. The December 2023 Private Placement Warrants have an exercise price of $1.62 per share, became immediately exercisable upon the issuance of the December 2023 Private Placement Warrants and the shares issuable thereunder, and expire on June 20, 2029. The December 2023 Private Placement Warrants were issued at a closing on December 22, 2023, pursuant to the terms of the Purchase Agreement described herein. |
|
● |
Pursuant to the Engagement Letter between the Company and Wainwright described herein, on December 22, 2023, we issued to Wainwright, or its designees, warrants to purchase 94,871 shares of Common Stock. The December 2023 Placement Agent Warrants have substantially the same terms as the December 2023 Private Placement Warrants, except that the December 2023 Placement Agent Warrants have an exercise price equal to $2.1813, or 125% of the offering price per share of Common Stock sold in the December 2023 Registered Direct Offering, and the December 2023 Placement Agent Warrants expire on December 19, 2028. |
The offer and sale of all securities listed in this item 15 was made
to a limited number of accredited investors in reliance upon exemptions from the registration requirements pursuant to Section 4(a)(2) under
the Securities Act and Regulation D promulgated under the Securities Act. Individuals who purchased securities as described above
represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution
thereof, and appropriate legends were affixed to the share certificates issued in such transactions.
Item 16. Exhibits and Financial Statement Schedules
Exhibit Number |
|
Description of Exhibit |
2.1 |
|
Plan of Conversion, incorporated by reference to Exhibit 2.1 to the Registrant’s Annual Report on Form 10-K filed March 30, 2021 |
2.2 |
|
Certificate of Conversion of Longeveron LLC, incorporated by reference to Exhibit 2.2 to the Registrant’s Annual Report on Form 10-K filed March 30, 2021 |
3.1 |
|
Certificate of Incorporation of Longeveron Inc., incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-8 filed on February 16, 2021 |
3.2 |
|
Bylaws of Longeveron Inc., incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-8 filed on February 16, 2021 |
3.3 |
|
First Amended and Restated Limited Liability Company Agreement of Longeveron LLC, effective December 31, 2014, incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
3.3.1 |
|
First Amendment to First Amended and Restated Limited Liability Company Agreement of Longeveron LLC, effective July 18, 2017, incorporated by reference to Exhibit 3.3.1 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
3.3.2 |
|
Second Amendment to First Amended and Restated Limited Liability Company Agreement of Longeveron LLC, effective October 5, 2017, incorporated by reference to Exhibit 3.3.2 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
3.3.3 |
|
Third Amendment to First Amended and Restated Limited Liability Company Agreement of Longeveron LLC, effective October 23, 2017, incorporated by reference to Exhibit 3.3.3 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
3.3.4 |
|
Fourth Amendment to First Amended and Restated Limited Liability Company Agreement of Longeveron LLC, effective October 15, 2023, incorporated by reference to Exhibit 3.3.4 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
4.1 |
|
Specimen Class A Common Stock Certificate evidencing the shares of Class A Common Stock, incorporated by reference to Exhibit 4.1 on Registrant’s Registration Statement No. 333-252234 filed February 3, 2021 |
4.2 |
|
IPO Underwriter Warrants issued February 17, 2021, incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-K filed on March 30, 2021 |
4.3 |
|
Form of PIPE Purchaser Warrant, incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed December 3, 2021 |
4.4 |
|
Form of PIPE Representative Warrant, incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed December 3, 2021 |
4.5 |
|
Form of Pre-Funded Common Stock Purchase Warrant, incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed October 13, 2023 |
4.6 |
|
Form of Series A/B Common Stock Purchase Warrant, incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed October 13, 2023 |
4.7 |
|
Form of Placement Agent Common Stock Purchase Warrant, incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed October 13, 2023 |
4.8 |
|
Form of Common Stock Warrant, incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed December 20, 2023 |
4.9 |
|
Form of Placement Agent Warrant, incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K Filed December 20, 2023 |
5.1* |
|
Opinion of Buchanan Ingersoll
& Rooney PC |
10.1 |
|
Exclusive License Agreement dated November 20, 2014, between the University of Miami and Longeveron LLC, incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.1.1 |
|
Amendment to Exclusive License Agreement dated December 11, 2017, between the University of Miami and Longeveron LLC, incorporated by reference to Exhibit 10.1.1 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
Exhibit Number |
|
Description of Exhibit |
10.1.2 |
|
Second Amendment to Exclusive License Agreement dated March 3, 2021, between the University of Miami and Longeveron Inc., incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed March 9, 2021 |
10.2 |
|
Collaborative Research and Development Agreement dated March 3, 2021, between the University of Miami and Longeveron Inc., incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed March 9, 2021 |
10.3 |
|
License Agreement dated December 22, 2016, between JMHMD Holdings, LLC and Longeveron LLC, incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.3.1 |
|
First Amendment to License Agreement effective December 22, 2016, by and between JMHMD Holdings, LLC and Longeveron LLC, incorporated by reference to Exhibit 10.2.1 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.4# |
|
Consulting Services Agreement, dated November 20, 2014, by and between Longeveron LLC and Joshua M. Hare, M.D., incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.5# |
|
Employment Agreement, effective August 12, 2020, by and between Longeveron LLC and James Clavijo, incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.6 |
|
Lease Agreement, dated October 6, 2015, by and between Wexford Miami, LLC and Longeveron LLC, incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.7 |
|
Grant Agreement, dated October 1, 2020, by and between the Maryland Stem Cell Research Commission, acting by and through the Maryland Technology Development Corporation, and Longeveron LLC, incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.8 |
|
Alzheimer’s Association Grant to Longeveron LLC, dated April 1, 2023, incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.9 |
|
National Institutes of Health Grant to Longeveron LLC, dated April 26, 2023, incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.10 |
|
National Institutes of Health Grant to Longeveron LLC, dated June 24, 2020, incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.11 |
|
National Institutes of Health Grant to University of Maryland Baltimore, dated September 9, 2020, incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.12 |
|
Paycheck Protection Program Promissory Note dated April 16, 2020, incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.13 |
|
2017 Longeveron LLC Incentive Plan, dated July 18, 2017, incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement No. 333-252234 filed January 19, 2021 |
10.14 |
|
Longeveron Inc. 2021 Incentive Award Plan, incorporated by reference to Exhibit 10.13 on Registrant’s Registration Statement No. 333-252234 filed February 3, 2021 |
10.15 |
|
Form of Indemnification Agreement for Officers and Directors, incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement No. 333-252234 filed February 3, 2021 |
10.16 |
|
Form of Securities Purchase Agreement, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed December 3, 2021 |
10.17 |
|
Form of Registration Rights Agreement, incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed December 3, 2021 |
10.18 |
|
Form of Securities Purchase Agreement, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed October 13, 2023 |
10.19 |
|
Form of Securities Purchase Agreement, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed December 22, 2023 |
# |
Indicates management contract or compensatory plan. |
Item 17. Undertakings.
(a) The undersigned registrant
hereby undertakes:
(1) To file, during any period in which
offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required
by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table
in the effective registration statement.
(iii) To include any material information
with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information
in the registration statement;
provided, however, that Paragraphs
(i), (ii), and (iii) of this section do not apply if the information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement,
(2) That, for the purpose of determining
any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means
of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining
liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule
430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided,
however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such
date of first use.
(b) The undersigned registrant hereby undertakes
that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the Registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto
duly authorized, in Miami, Florida, on January 29, 2024.
|
LONGEVERON INC. |
|
|
|
By: |
/s/ Wa’el Hashad |
|
Name: |
Wa’el Hashad |
|
Title: |
Chief Executive Officer |
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints Wa’el Hashad, Lisa Locklear and Paul Lehr and each of them singly, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities,
to sign this Registration Statement on Form S-1 and any and all amendments (including post-effective amendments) thereto of Longeveron
Inc. and to file the same, with all exhibits thereto and all other documents in connection therewith, with the SEC, granting unto each
said attorney-in-fact and agents full power and authority to do and perform each and every act in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or either of them or their, his or her substitute or substitutes may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, this registration statement on Form S-1 has been signed by the following persons in the capacities and on
the dates indicated.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/
Wa’el Hashad |
|
Chief Executive Officer and Director |
|
January 29, 2024 |
Wa’el Hashad |
|
(principal executive officer) |
|
|
|
|
|
|
|
/s/ Lisa Locklear |
|
Chief Financial Officer |
|
January 29, 2024 |
Lisa A. Locklear |
|
(principal financial officer
and principal accounting officer) |
|
|
|
|
|
|
|
/s/
Joshua M. Hare |
|
Director |
|
January 29, 2024 |
Joshua M. Hare |
|
|
|
|
|
|
|
|
|
/s/ Neil E.
Hare |
|
Director |
|
January 29, 2024 |
Neil E. Hare |
|
|
|
|
|
|
|
|
|
/s/ Rock Soffer |
|
Director |
|
January 29, 2024 |
Rock Soffer |
|
|
|
|
|
|
|
|
|
/s/
Cathy Ross |
|
Director |
|
January
29, 2024 |
Cathy Ross |
|
|
|
|
|
|
|
|
|
/s/
Khoso Baluch |
|
Director |
|
January
29, 2024 |
Khoso Baluch |
|
|
|
|
|
|
|
|
|
/s/
Ursula Ungaro |
|
Director |
|
January
29, 2024 |
Ursula Ungaro |
|
|
|
|
|
|
|
|
|
|
|
Director |
|
January
__, 2024 |
Douglas Losordo |
|
|
|
|
|
|
|
|
|
/s/
Jeffrey Pfeffer |
|
Director |
|
January
29, 2024 |
Jeffrey Pfeffer |
|
|
|
|
II-7
false
0001721484
0001721484
2023-01-01
2023-09-30
Longeveron Inc.
We have reviewed copies of
(i) the Registration Statement, (ii) the certificate of incorporation of the Company, as amended to date (the “Certificate of
Incorporation”), (iii) the bylaws of the Company (the “Bylaws”), (iv) the Warrants, and (v) certain resolutions
of the Board of Directors and the Pricing Committee of the Company authorizing the Warrants, the Warrant Shares, the registration of the
resale of the Warrant Shares, and other related matters (the “Authorizing Resolutions”). We have also reviewed such
other documents and made such other investigations as we have deemed appropriate in order to enable us to render the opinions set forth
herein. As to various questions of fact material to this opinion, we have relied upon statements, representations and certificates of
officers or representatives of the Company, public officials and others. We have not independently verified the facts so relied on.
In our examination of the documents
described above, we have assumed the genuineness of all signatures, the legal capacity of all individual signatories, the authenticity
of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, the authenticity
of such original documents and the completeness and accuracy of all such documents provided to us by the Company. As to any facts material
to the opinions expressed herein, we have, when such facts were not independently established, relied upon certificates of public officials
and certificates, oaths, declarations and representations of the Company and of its officers, directors and other representatives. We
have assumed that the Company will continue to be presently subsisting in good standing, and will continue to have the requisite legal
status and legal capacity, under the laws of the State of Delaware, and that the Company has complied and will comply with all aspects
of applicable laws of jurisdictions other than the United States of America in connection with the transactions contemplated by the Registration
Statement.
For the purposes of this opinion
letter, we have assumed that at the time of issuance of each Warrant Share, the Certificate of Incorporation, the Bylaws, the Warrants,
and the Authorizing Resolutions, as applicable, will not have been modified or amended and will be in full force and effect. In addition,
it is understood that this opinion is to be used only in connection with the offer and sale of the securities being registered while the
Registration Statement is effective under the Securities Act.
Based upon the foregoing and
in reliance thereon, and subject to the qualifications, limitations, exceptions and assumptions set forth herein, we are of the opinion
that the Warrant Shares, when delivered and paid for in accordance with the terms of the Warrants and when evidence of the issuance thereof
is duly recorded in the Company’s books and records, will be validly issued, fully paid and non-assessable.
Our opinion is not rendered
with respect to any laws other than the federal laws of the United States and the General Corporation Law of the State of Delaware (including
reported cases under applicable statutory provisions). Please note that we are opining only as to the matters expressly set forth herein,
and no opinion should be inferred as to any other matters. Without limiting the generality of the foregoing, we express no opinion with
respect to compliance by the Company with federal securities laws or the securities or “blue sky” laws of any state or other
jurisdiction of the United States or of any foreign jurisdiction, including with respect to antifraud laws relating to the sale of securities.
This opinion is rendered as
of the date first written above, based upon currently existing statutes, rules, regulations and judicial decisions, and we disclaim any
obligation to advise you of any change in any of these sources of law or subsequent legal or factual developments which might affect any
matters or opinions set forth herein, whether by implication or otherwise, as to any other matters relating to the Company, the Warrant
Shares or any other agreements or transactions that may be related thereto or contemplated thereby. We are expressing no opinion as to
any obligations that parties other than the Company may have under or in respect of the Warrant Shares or as to the effect that their
performance of such obligations may have upon any of the matters referred to above. No opinion may be implied or inferred beyond the opinion
expressly stated above.
We hereby consent to the filing
of this opinion with the Commission as an exhibit to the Registration Statement in accordance with the requirements of Item 601(b)(5)
of Regulation S-K under the Securities Act and to the use of our name in any prospectus or prospectus supplement under the caption “Legal
Matters.” In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the Commission.
We consent to the incorporation by reference in
this Registration Statement of Longeveron Inc. on Form S-1 of our report dated March 14, 2023 with respect to our audit of the financial
statements of Longeveron, Inc, as of December 31, 2022 and for the year ended December 31, 2022 appearing in the Annual Report on Form
10-K of Longeveron, Inc. for the year ended December 31, 2022. We also consent to the reference to our Firm under the heading “Experts”
in the Prospectus, which is part of the Registration Statement.
Longeveron Inc.
We hereby consent to the incorporation by reference
in this Registration Statement on Form S-1 of Longeveron Inc. (the “Company”) of our report dated March 11, 2022, relating
to the financial statements of the Company as of December 31, 2021 and for the year ended December 31, 2021, which appears in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2022.
We also consent to the reference to our Firm under
the caption “Experts” in the Prospectus.
/s/ MSL, P.A.
MSL, P.A.