As filed with the Securities and Exchange Commission on August 10, 2023
No. 333-273101
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
to
FORM
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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| 2834 | 26-1299952 | ||
(State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer |
1455 Adams Drive, Suite 1308
Menlo Park, CA 94025
(650) 446-7888
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
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Jeffrey F. Biunno
Chief Financial Officer
CohBar, Inc.
1455 Adams Drive, Suite 1308
Menlo Park, CA 94025
(650) 446-7888
(Name, address, including zip code, and telephone number, including area code, of agent for service)
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Copies of all communications, including communications sent to agent for service, should be sent to:
Ryan A. Murr, Esq. Branden C. Berns, Esq. 555 Mission Street, Suite 3000 San Francisco, CA 94105 (415) 393-8373 |
Curt P. Creely, Esq. Carrie T. Long, Esq. Garrett F. Bishop, Esq. |
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Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, 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, 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, a smaller reporting company, or 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 | ☐ | |||||
| ☒ | 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. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐
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 of 1933, as amended, or until the 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 proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED AUGUST 10, 2023
PROPOSED MERGER
YOUR VOTE IS VERY IMPORTANT
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To the Stockholders of CohBar, Inc. and Morphogenesis, Inc.,
CohBar, Inc., a Delaware corporation (“CohBar”), and Morphogenesis, Inc., a Delaware corporation (“Morphogenesis”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) on May 22, 2023, pursuant to which, among other matters, Chimera MergeCo, Inc., a Delaware corporation and wholly owned subsidiary of CohBar, will merge with and into Morphogenesis, with Morphogenesis surviving as a wholly owned subsidiary of CohBar and CohBar being the surviving corporation of the Merger (the “Merger”). The surviving corporation following the Merger is referred to herein as the “combined company.”
Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, (a) each then-outstanding share of common stock, par value $0.001 per share, of Morphogenesis (the “Morphogenesis Common Stock”) (other than shares held in treasury and Dissenting Shares (as defined in the Merger Agreement)) will be converted into and become exchangeable for a number of shares of common stock, par value $0.001 per share, of CohBar (the “CohBar Common Stock”) calculated in accordance with the Merger Agreement (the “Exchange Ratio”), (b) each then-outstanding option to purchase Morphogenesis Common Stock will be assumed and converted by CohBar into an option to purchase shares of CohBar Common Stock, subject to certain adjustments as set forth in the Merger Agreement, and (c) each then-outstanding warrant to purchase shares of Morphogenesis Common Stock will be converted into and exchangeable for a warrant of like tenor entitling the holder to purchase shares of CohBar Common Stock, subject to certain adjustments as set forth in the Merger Agreement.
The Exchange Ratio will be equal to the quotient obtained by dividing (a) the Company Merger Shares by (b) the Company Outstanding Shares, as those terms are defined and further described in the Merger Agreement, which has the effect and purpose of determining the number of shares to be issued to pre-Merger Morphogenesis stockholders (or issuable to pre-Merger Morphogenesis option and warrant holders in respect of such options and warrants) based on the relative valuations and fully-diluted shares of each of CohBar and Morphogenesis as of immediately prior to the closing of the Merger. For purposes of calculating the Exchange Ratio, (i) shares of CohBar Common Stock underlying CohBar stock options and warrants outstanding as of immediately prior to the closing of the Merger with an exercise price per share of less than or equal to $2.00 (subject to adjustment pursuant to the Merger Agreement) will be deemed to be outstanding and (ii) all shares of Morphogenesis Common Stock underlying outstanding Morphogenesis preferred stock, stock options, and warrants will be deemed to be outstanding.
Concurrently with the execution and delivery of the Merger Agreement, CohBar entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with K & V Investment Two, LLC, a Florida limited liability company (the “Investor”). Pursuant to the Stock Purchase Agreement, CohBar will issue, subject to adjustments contained in the Stock Purchase Agreement, 7,500,000 shares of CohBar Common Stock for an aggregate purchase price of $15 million (the “Initial Financing”) immediately prior to the effective time of the Merger (the “Initial Closing”). The consummation of the Initial Financing is conditioned on the satisfaction or waiver of the conditions set forth in the Stock Purchase Agreement. In addition, pursuant to the Stock Purchase Agreement, CohBar has agreed to sell, at the election of the Investor within six months after the Initial Closing of the Initial Financing and subject to the satisfaction or waiver of the conditions set forth in the Stock Purchase Agreement, an aggregate of 7,500,000 additional shares of CohBar Common Stock, subject to adjustments contained in the Stock Purchase Agreement, for an aggregate purchase price of up to $15 million at the same price per share as sold in connection with the Initial Closing (the “Second Closing”).
In addition, as contemplated by the Merger Agreement, CohBar will make a dividend to the holders of CohBar Common Stock as of the close of business on the business day immediately prior to the date of the closing of the Merger or such other date pursuant to the terms of the Merger Agreement (the “Record Date”) equal to approximately 3.3 shares
of CohBar Common Stock per each share of CohBar Common Stock issued and outstanding as of the Record Date (the “Stock Dividend”). The payment date for the Stock Dividend is anticipated to be either immediately prior to or immediately after the effective time of the Merger. The purpose of the Stock Dividend is to increase the amount of the total number of shares of CohBar Common Stock held by pre-Merger CohBar equityholders to give effect to the Exchange Ratio so that, immediately after the Merger, on a pro forma basis, including the Stock Dividend and after taking into account the Initial Financing, pre-Merger CohBar equityholders would own approximately 15% of the combined company.
Prior to the closing of the Merger, CohBar, at the discretion of the CohBar Board, will conduct a reverse stock split of the CohBar Common Stock, at a ratio of not less than 1-for- and not more than 1-for- and thereafter, each share of CohBar Common Stock and option to purchase CohBar Common Stock that is issued and outstanding at the effective time of the Merger will remain issued and outstanding and such shares will be unaffected by the Merger. It is expected that the reverse stock split will be effected immediately prior to the closing of the Merger.
Immediately after the Merger, on a pro forma basis, including the Stock Dividend and after taking into account the Initial Financing, pre-Merger Morphogenesis equityholders would own approximately 77% of the combined company, pre-Merger CohBar equityholders would own approximately 15% of the combined company, and the Investor would own approximately 9% of the combined company (excluding in each such case the effect of out-of-the-money options and warrants of CohBar that will remaining outstanding after the Merger).
At the effective time of the Merger, the board of directors of CohBar is expected to consist of six members, four of whom will be designated by Morphogenesis and two of whom will be designated by CohBar. At the effective time, the officers of Morphogenesis as of immediately prior to the effective time will become the officers of CohBar.
Shares of CohBar Common Stock are currently listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “CWBR.” CohBar intends to file an initial listing application for the common stock of the combined company with Nasdaq. It is a condition of the closing of the Merger that the initial listing application with Nasdaq shall have been approved. If such condition is not satisfied, the Merger may not be consummated. Each of CohBar and Morphogenesis may waive this condition as set forth in the Merger Agreement. Nasdaq’s determination is not expected to be known at the time that CohBar stockholders are asked to vote on the proposals at the CohBar Special Meeting. After completion of the Merger, CohBar will be renamed “TuHURA Biosciences, Inc.” and it is expected that the common stock of the combined company will trade on Nasdaq under the symbol “HURA.” On , 2023, the last trading day before the date of this proxy statement/prospectus, the closing sale price of CohBar Common Stock was $ per share.
CohBar stockholders are cordially invited to attend the special meeting in lieu of annual meeting of CohBar stockholders. CohBar is holding its special meeting in lieu of annual meeting of stockholders (the “CohBar Special Meeting”) on , 2023, at Eastern Time, unless postponed or adjourned to a later date, in order to obtain the stockholder approvals necessary to complete the Merger and related matters. The CohBar Special Meeting in lieu of annual meeting will be held entirely online. CohBar stockholders will be able to attend and participate in the CohBar Special Meeting online by visiting www.virtualshareholdermeeting.com/CWBR2023, where they will be able to listen to the meeting live, submit questions and vote. At the CohBar Special Meeting, CohBar will ask its stockholders:
1. To approve (i) the issuance of shares of CohBar Common Stock, which will represent more than 20% of the shares of CohBar Common Stock outstanding immediately prior to the Merger, to stockholders of Morphogenesis, pursuant to the terms of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, and (ii) the change of control resulting from the Merger, pursuant to Nasdaq Listing Rules 5635(a) and 5635(b), respectively (the “Nasdaq Stock Issuance Proposal” or “Proposal No. 1”);
2. To approve an amendment to the amended and restated certificate of incorporation of CohBar (the “CohBar Charter”) at the option of the CohBar board of directors (the “CohBar Board”) to increase the number of authorized shares of CohBar Common Stock to (the “Authorized Share Increase”) (the “Authorized Share Increase Proposal” or “Proposal No. 2”);
3. To adopt and approve an amendment to the CohBar Charter to effect a reverse stock split of CohBar Common Stock (the “Reverse Stock Split”), by a ratio of not less than 1-for- and not more than 1-for- , such ratio and the implementation and timing of the Reverse Stock Split to be determined in the discretion of the CohBar Board (the “Reverse Stock Split Proposal” or “Proposal No. 3”);
4. To approve, on an advisory (non-binding) basis, certain compensation payments that will or may be made by CohBar to its named executive officers in connection with the Merger (the “Golden Parachute’s Compensation Proposal” or “Proposal No. 4”);
5. To elect a board of directors named in this proxy statement/prospectus, up to the number of directorships subject to election (being seven or two), to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified (the “Director Election Proposal” or “Proposal No. 5”);
6. To ratify the appointment of Marcum LLP as CohBar’s independent registered public accounting firm for the year ending December 31, 2023 (the “Auditor Ratification Proposal” or “Proposal No. 6”);
7. To approve the TuHURA Biosciences, Inc. 2023 Equity Incentive Plan, in the form attached as Annex H to this proxy statement/prospectus (the “2023 Equity Incentive Plan Proposal” or “Proposal No. 7”);
8. To approve an adjournment of the CohBar Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposals 1, 2, 3, 4 and 7 (the “Adjournment Proposal” or “Proposal No. 8”); and
9. To transact such other business as may properly come before the stockholders at the CohBar Special Meeting or any adjournment or postponement thereof.
Concurrently with the execution of the Merger Agreement, (i) certain stockholders of Morphogenesis (solely in their respective capacities as Morphogenesis stockholders) have entered into support agreements with CohBar and Morphogenesis to vote all of their shares of Morphogenesis Common Stock in favor of the adoption and approval of the Merger Agreement and the transactions contemplated thereby and against any alternative acquisition proposals and (ii) certain officers and directors of CohBar have entered into support agreements with CohBar and Morphogenesis to vote all of their shares of CohBar Common Stock in favor of the adoption and approval of the Merger Agreement, the Merger and related transactions contemplated by the Merger Agreement and against any alternative acquisition proposals.
After careful consideration, each of the CohBar and Morphogenesis boards of directors have approved the Merger Agreement and have determined that it is advisable to consummate the Merger. The CohBar Board has approved the proposals described in the accompanying proxy statement/prospectus and recommends that its stockholders vote “FOR” the proposals described in the accompanying proxy statement/prospectus.
More information about CohBar, Morphogenesis, the Merger Agreement, the Merger and transactions contemplated thereby and the foregoing proposals is contained in the accompanying proxy statement/prospectus. CohBar urges you to read the accompanying proxy statement/prospectus carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE 26 OF THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.
CohBar and Morphogenesis are excited about the opportunities the Merger brings to CohBar’s and Morphogenesis’ stockholders and thank you for your consideration and continued support.
Dr. Joseph J. Sarret |
Dr. James Bianco |
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President, Chief Executive Officer |
President, Chief Executive Officer |
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CohBar, Inc. |
Morphogenesis, Inc. |
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the accompanying proxy statement/prospectus. Any representation to the contrary is a criminal offense.
The accompanying proxy statement/prospectus is dated , 2023, and is first being mailed to CohBar’s stockholders on or about , 2023.
COHBAR, INC.
1455 Adams Drive, Suite 1308
Menlo Park, CA 94025
NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS
To the stockholders of CohBar, Inc.:
NOTICE IS HEREBY GIVEN that a virtual special meeting in lieu of annual meeting of stockholders (the “CohBar Special Meeting”) will be held on , 2023 at Eastern Time, unless postponed or adjourned to a later date. The CohBar Special Meeting will be held entirely online. You will be able to attend and participate in the CohBar Special Meeting online by visiting www.virtualshareholdermeeting.com/CWBR2023, where you will be able to listen to the meeting live, submit questions and vote.
The CohBar Special Meeting will be held for the following purposes:
1. To approve (i) the issuance of shares of CohBar Common Stock, which will represent more than 20% of the shares of CohBar Common Stock outstanding immediately prior to the Merger, to stockholders of Morphogenesis, pursuant to the terms of the Merger Agreement, a copy of which is attached as Annex A to the accompanying proxy statement/prospectus, and (ii) the change of control resulting from the Merger, pursuant to Nasdaq Listing Rules 5635(a) and 5635(b), respectively (the “Nasdaq Stock Issuance Proposal” or “Proposal No. 1”);
2. To approve an amendment to the CohBar Charter at the option of the CohBar Board to effect Authorized Share Increase (the “Authorized Share Increase Proposal” or “Proposal No. 2”);
3. To adopt and approve an amendment to the CohBar Charter to effect a reverse stock split of CohBar Common Stock (the “Reverse Stock Split”), by a ratio of not less than 1-for- and not more than 1-for- , such ratio and the implementation and timing of the Reverse Stock Split to be determined in the discretion of the CohBar Board (the “Reverse Stock Split Proposal” or “Proposal No. 3”);
4. To approve, on an advisory (non-binding) basis, certain compensation payments that will or may be made by CohBar to its named executive officers in connection with the Merger (the “Golden Parachute’s Compensation Proposal” or “Proposal No. 4”);
5. To elect a board of directors named in this proxy statement/prospectus, up to the number of directorships subject to election (being seven or two), to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified (the “Director Election Proposal” or “Proposal No. 5”);
6. To ratify the appointment of Marcum LLP as CohBar’s independent registered public accounting firm for the year ending December 31, 2023 (the “Auditor Ratification Proposal” or “Proposal No. 6”);
7. To approve the TuHURA Biosciences, Inc. 2023 Equity Incentive Plan, in the form attached as Annex H to this proxy statement/prospectus (the “2023 Equity Incentive Plan Proposal” or “Proposal No. 7”);
8. To approve an adjournment of the CohBar Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposals 1, 2, 3, 4 and 7 (the “Adjournment Proposal” or “Proposal No. 8”); and
9. To transact such other business as may properly come before the stockholders at the CohBar Special Meeting or any adjournment or postponement thereof.
These proposals are collectively referred to as the “Proposals.”
The CohBar Board has fixed , 2023 as the record date for the determination of stockholders entitled to notice of, and to vote at, the CohBar Special Meeting and any adjournment or postponement thereof. Only holders of record of shares of common stock of CohBar at the close of business on the record date are entitled to notice of, and to vote at, the CohBar Special Meeting. At the close of business on the record date, CohBar had shares of common stock outstanding and entitled to vote.
Your vote is important. The affirmative vote of the holders of a majority of all of the shares of CohBar Common Stock present or represented by proxy at the CohBar Special Meeting and voting on such matter is required for approval of Proposal Nos. 1, 2, 3, 4, 6, 7 and 8. With respect to Proposal No. 5, directors are elected by a plurality of the votes cast by the stockholders entitled to vote on the election at the CohBar Special Meeting, and the nominees for director receiving the highest number of affirmative votes, up to the number of directorships subject to election, will be elected. Approval of each of Proposal No. 1, Proposal No. 2 and Proposal No. 3 is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2 and 3.
Even if you plan to virtually attend the CohBar Special Meeting, CohBar requests that you sign and return the enclosed proxy or vote by mail or online to ensure that your shares will be represented at the CohBar Special Meeting if you are unable to virtually attend. You may change or revoke your proxy at any time before it is voted at the CohBar Special Meeting.
COHBAR’S BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS FAIR TO, IN THE BEST INTERESTS OF, AND ADVISABLE TO COHBAR AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. COHBAR’S BOARD OF DIRECTORS RECOMMENDS THAT COHBAR STOCKHOLDERS VOTE “FOR” EACH NOMINEE AND “FOR” EACH SUCH PROPOSAL.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders’ Meeting
to Be Held on , 2023 at Eastern Time via the internet
The proxy statement/prospectus and annual report to stockholders are available at
www.virtualshareholdermeeting.com/CWBR2023
By Order of CohBar’s Board of Directors,
Dr. Joseph J. Sarret
President, Chief Executive Officer
, 2023
EXPLANATORY NOTE
The issuance of all shares of CohBar Common Stock in exchange for each share of Morphogenesis Common Stock (including all shares of Morphogenesis preferred stock converted into Morphogenesis Common Stock) pursuant to the Merger Agreement is intended to be covered by this registration statement on Form S-4 of which this proxy statement/prospectus is a part.
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and financial information about CohBar, Inc. that is not included in or delivered with this document. You may obtain this information without charge through the Securities and Exchange Commission (“SEC”) website (www.sec.gov) or upon your written or oral request by contacting the Corporate Secretary of CohBar, Inc. by calling (650) 446-7888 or via email to investors@cohbar.com.
To ensure timely delivery of these documents, any request should be made no later than , 2023 to receive them before the CohBar Special Meeting.
For additional details about where you can find information about CohBar, please see the section titled “Where You Can Find More Information” beginning on page 317 of this proxy statement/prospectus.
TABLE OF CONTENTS
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26 |
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100 |
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THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF COHBAR STOCKHOLDERS |
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107 |
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146 |
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PROPOSAL NO. 4 — THE GOLDEN PARACHUTE’S COMPENSATION PROPOSAL |
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COHBAR MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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MORPHOGENESIS’ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION |
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296 |
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COMPARISON OF RIGHTS OF HOLDERS OF COHBAR CAPITAL STOCK AND MORPHOGENESIS CAPITAL STOCK |
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INDEX TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
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PART II INFORMATION NOT REQUIRED IN PROXY STATEMENT/PROSPECTUS |
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D-1 |
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E-1 |
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F-1 |
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G-1 |
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Annex H — TuHURA Biosciences, Inc. 2023 Equity Incentive Plan |
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I-1 |
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Annex J — Appraisal Rights (Section 262 of the Delaware General Corporation Law) |
J-1 |
ii
QUESTIONS AND ANSWERS ABOUT THE MERGER
Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus does not give effect to the proposed Reverse Stock Split described in Proposal No. 3 of this proxy statement/prospectus.
The following section provides answers to frequently asked questions about the Merger. This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.
Q: What is the Merger?
A: On May 22, 2023, CohBar, Inc., a Delaware corporation (“CohBar”), Chimera MergeCo, Inc., a Delaware corporation and wholly owned subsidiary of CohBar (“Merger Sub”), and Morphogenesis, Inc., a Delaware corporation (“Morphogenesis”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), a copy of which is attached as Annex A. Pursuant to the Merger Agreement, Merger Sub will merge with and into Morphogenesis, with Morphogenesis continuing as a wholly owned subsidiary of CohBar and CohBar being the surviving corporation of the Merger (the “Merger”). The Merger Agreement contains the terms and conditions of the proposed Merger. After the completion of the Merger, CohBar will change its corporate name to “TuHURA Biosciences, Inc.” CohBar following the Merger is referred to herein as the “combined company.”
At the closing of the Merger, (a) each then-outstanding share of common stock, par value $0.001 per share, of Morphogenesis (the “Morphogenesis Common Stock”) (other than shares held in treasury and Dissenting Shares (as defined in the Merger Agreement)) will be converted into and become exchangeable for a number of shares of common stock, par value $0.001 per share, of CohBar (the “CohBar Common Stock”) calculated in accordance with the Merger Agreement (the “Exchange Ratio”), (b) each then-outstanding option to purchase Morphogenesis Common Stock will be assumed and converted by CohBar into an option to purchase shares of CohBar Common Stock, subject to certain adjustments as set forth in the Merger Agreement, and (c) each then-outstanding warrant to purchase shares of Morphogenesis Common Stock will be converted into and exchangeable for a warrant of like tenor entitling the holder to purchase shares of CohBar Common Stock, subject to certain adjustments as set forth in the Merger Agreement.
The Exchange Ratio will be equal to the quotient obtained by dividing (a) the Company Merger Shares by (b) the Company Outstanding Shares, as those terms are defined and further described in the Merger Agreement, which has the effect and purpose of determining the number of shares to be issued to pre-Merger Morphogenesis stockholders (or issuable to pre-Merger Morphogenesis option and warrant holders in respect of such options and warrants) based on the relative valuations and fully-diluted shares of each of CohBar and Morphogenesis as of immediately prior to the closing of the Merger. For purposes of calculating the Exchange Ratio (as defined in the Merger Agreement), (i) shares of CohBar Common Stock underlying CohBar stock options and warrants outstanding as of immediately prior to the closing of the Merger with an exercise price per share of less than or equal to $2.00 (subject to adjustment pursuant to the Merger Agreement) will be deemed to be outstanding and (ii) all shares of Morphogenesis Common Stock underlying outstanding Morphogenesis preferred stock, stock options, and warrants will be deemed to be outstanding.
Immediately after the Merger, on a pro forma basis, including the Stock Dividend and after taking into account the Initial Financing (as discussed below), pre-Merger Morphogenesis equityholders would own approximately 77% of the combined company, pre-Merger CohBar equityholders would own approximately 15% of the combined company, and the Investor would own approximately 9% of the combined company (excluding in each such case the effect of out-of-the-money options and warrants of CohBar that will remaining outstanding after the Merger).
Q: Why are the two companies proposing to merge?
A: CohBar and Morphogenesis believe that combining the two companies will result in a company with a promising pipeline, a strong leadership team and substantial capital resources, positioning it to become a great oncology-focused company. If the Merger is completed, the combined company will focus on developing Morphogenesis’ product candidates, which are described on page 218 under the section titled “Morphogenesis’ Business,” and it is anticipated that the combined company will not continue to develop CohBar’s product candidates. If the Merger is not completed, CohBar will reconsider its strategic alternatives. For a more
1
complete description of the reasons for the Merger, please see the sections titled “The Merger — CohBar’s Reasons for the Merger; Recommendation of the CohBar Board” and “The Merger — Morphogenesis’ Reasons for the Merger” beginning on pages 117 and 123, respectively, of this proxy statement/prospectus.
Q: Why am I receiving this proxy statement/prospectus?
A: You are receiving this proxy statement/prospectus because you have been identified as a stockholder of CohBar as of the record date, and you are entitled to vote to approve the matters set forth herein. This document serves as:
• a proxy statement of CohBar used to solicit proxies for a virtual special meeting in lieu of annual meeting of stockholders (the “CohBar Special Meeting”) to vote on the matters set forth herein; and
• a prospectus of CohBar used to offer shares of CohBar Common Stock in exchange for shares of Morphogenesis Common Stock (other than shares held in treasury and Dissenting Shares) in the Merger.
Q: What is the Stock Dividend?
A: As contemplated by the Merger Agreement, CohBar will make a dividend to the holders of CohBar Common Stock as of the close of business on the business day immediately prior to the date of the closing of the Merger or such other date pursuant to the terms of the Merger Agreement (the “Record Date”) equal to approximately 3.3 shares of CohBar Common Stock per each share of CohBar Common Stock issued and outstanding as of the Record Date (the “Stock Dividend”).
The payment date for the Stock Dividend is anticipated to be either immediately prior to or immediately after the effective time of the Merger (the “Effective Time”).
The purpose of the Stock Dividend is to increase the amount of the total number of shares of CohBar Common Stock held by pre-Merger CohBar equityholders to give effect to the Exchange Ratio so that, immediately after the Merger, on a pro forma basis, including the Stock Dividend and after taking into account the Initial Financing, pre-Merger CohBar equityholders would own approximately 15% of the combined company.
Q: What is the Initial Financing and the Second Financing?
A: On May 22, 2023 and concurrently with the execution and delivery of the Merger Agreement, CohBar entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with K & V Investment Two, LLC, a Florida limited liability company (the “Investor”). Pursuant to the Stock Purchase Agreement, CohBar will issue, subject to adjustments contained in the Stock Purchase Agreement, 7,500,000 shares of CohBar Common Stock for an aggregate purchase price of $15 million (the “Initial Financing”) immediately prior to the Effective Time (the “Initial Closing”). The consummation of the Initial Financing is conditioned on the satisfaction or waiver of the conditions set forth in the Stock Purchase Agreement. In addition, pursuant to the Stock Purchase Agreement, CohBar has agreed to sell, at the election of the Investor within six months after the Initial Closing of the Initial Financing and subject to the satisfaction or waiver of the conditions set forth in the Stock Purchase Agreement, an aggregate of 7,500,000 additional shares of CohBar Common Stock, subject to adjustments contained in the Stock Purchase Agreement, for an aggregate purchase price of up to $15 million at the same price per share as sold in connection with the Initial Closing (the “Second Financing”). Immediately after the Merger, on a pro forma basis, including the Stock Dividend and after taking into account both the Initial Financing and Second Financing, the Investor would own approximately 9% of the combined company (excluding the effect of out-of-the-money options and warrants of CohBar that will remaining outstanding after the Merger).
Q: What proposals will be voted on at the CohBar Special Meeting in connection with the Merger?
A: Pursuant to the terms of the Merger Agreement, the following proposals must be approved by the requisite stockholder vote at the CohBar Special Meeting in order for the Merger to close:
• Proposal No. 1 — The Nasdaq Stock Issuance Proposal to approve (i) the issuance of shares of CohBar Common Stock, which will represent more than 20% of the shares of CohBar Common Stock outstanding immediately prior to the Merger, to stockholders of Morphogenesis, pursuant to the terms
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of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, and (ii) the change of control resulting from the Merger, pursuant to Nasdaq Listing Rules 5635(a) and 5635(b), respectively (the “Nasdaq Stock Issuance Proposal” or “Proposal No. 1”);
• Proposal No. 2 — The Authorized Share Increase Proposal to approve an amendment to the amended and restated certificate of incorporation of CohBar (the “CohBar Charter”) at the option of the CohBar board of directors (the “CohBar Board”) to increase the number of authorized shares of CohBar Common Stock to (the “Authorized Share Increase”) (the “Authorized Share Increase Proposal” or “Proposal No. 2”); and
• Proposal No. 3 — The Reverse Stock Split Proposal to approve an amendment to the CohBar Charter to effect the Reverse Stock Split, by a ratio of not less than 1-for- and not more than 1-for- , such ratio and the implementation and timing of the Reverse Stock Split to be determined in the discretion of the CohBar Board (the “Reverse Stock Split Proposal” or “Proposal No. 3”).
The approval of each of Proposal Nos. 1, 2 and 3 is a condition to completion of the Merger. The issuance of CohBar Common Stock in connection with the Merger and the change of control resulting from the Merger will not take place unless Proposal No. 1 is approved by CohBar stockholders and the Merger is consummated. The amendment to the CohBar Charter to effect the Authorized Share Increase will not take place unless Proposal No. 2 is approved by the requisite CohBar stockholders. The amendment to the CohBar Charter to effect a Reverse Stock Split of CohBar’s issued and outstanding common stock will not take place unless Proposal No. 3 is approved by the requisite CohBar stockholders. The CohBar Board may determine to effect the Reverse Stock Split, if it is approved by the stockholders, even if the other proposals to be acted upon at the meeting are not approved, including Proposal No. 1 and Proposal No. 2.
In addition to the requirement of obtaining CohBar stockholder approval of Proposal Nos. 1, 2 and 3, the closing of the Merger is subject to the satisfaction or waiver of each of the other closing conditions set forth in the Merger Agreement. For a more complete description of the closing conditions under the Merger Agreement, please see the section titled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 159 of this proxy statement/prospectus.
The presence, by accessing online or being represented by proxy, at the CohBar Special Meeting of the holders of not less than one-third of the total voting power of shares of CohBar Common Stock issued and outstanding and entitled to vote at the CohBar Special Meeting is necessary to constitute a quorum at the meeting for the Proposals.
Q: What proposals are to be voted on at the CohBar Special Meeting, other than the Nasdaq Stock Issuance Proposal, the Authorized Share Increase Proposal and the Reverse Stock Split Proposal?
A: At the CohBar Special Meeting, the holders of CohBar Common Stock will also be asked to consider the following proposals:
• Proposal No. 4 — The Golden Parachute’s Compensation Proposal to approve, on an advisory (non-binding) basis, certain compensation payments that will or may be made by CohBar to its named executive officers in connection with the Merger (the “Golden Parachute’s Compensation Proposal” or “Proposal No. 4”);
• Proposal No. 5 — The Director Election Proposal to elect a board of directors named in this proxy statement/prospectus, up to the number of directorships subject to election (being seven or two), to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified (the “Director Election Proposal” or “Proposal No. 5”);
• Proposal No. 6 — The Auditor Ratification Proposal to ratify the appointment of Marcum LLP as CohBar’s independent registered public accounting firm for the year ending December 31, 2023 (the “Auditor Ratification Proposal” or “Proposal No. 6”);
• Proposal No. 7 — The 2023 Equity Incentive Plan Proposal to approve the TuHURA Biosciences, Inc. 2023 Equity Incentive Plan, in the form attached as Annex H to this proxy statement/prospectus (the “2023 Equity Incentive Plan Proposal” or “Proposal No. 7”); and
• Proposal No. 8 — The Adjournment Proposal to approve an adjournment of the CohBar Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposals 1, 2, 3, 4 and 7 (the “Adjournment Proposal” or “Proposal No. 8”).
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The approval of each of Proposal Nos. 4, 5, 6, 7 and 8 is not a condition to the Merger. CohBar does not expect that any matter other than the Proposals will be brought before the CohBar Special Meeting.
The presence, by accessing online or being represented by proxy, at the CohBar Special Meeting of the holders of not less than one-third of the total voting power of shares of CohBar Common Stock issued and outstanding and entitled to vote at the CohBar Special Meeting is necessary to constitute a quorum at the meeting for the Proposals.
Q: What stockholder votes are required to approve the Proposals at the CohBar Special Meeting?
A: The affirmative vote of the holders of a majority of all of the shares of CohBar Common Stock present or represented by proxy at the CohBar Special Meeting and voting on such matter is required for approval of Proposal Nos. 1, 2, 3, 4, 6, 7 and 8. With respect to Proposal No. 5, directors are elected by a plurality of the votes cast by the stockholders entitled to vote on the election at the CohBar Special Meeting, and the nominees for director receiving the highest number of affirmative votes, up to the number of directorships subject to election, will be elected.
Votes will be counted by the inspector of election appointed for the meeting, who will separately count “FOR,” “AGAINST” and “WITHHOLD” votes, abstentions and broker non-votes, as applicable to each proposal. Abstentions and broker non-votes will also be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the CohBar Special Meeting. Votes withheld, abstentions and broker non-votes, if any, will not be counted as “votes cast” and will therefore have no effect on Proposal Nos. 1, 2, 3, 4, 5, 6, 7 and 8.
Q: What are the contingent value rights (“CVRs”) being issued to CohBar stockholders and warrant holders in connection with the Merger?
A: At or prior to the Effective Time, CohBar will enter into a Contingent Value Rights Agreement (the “CVR Agreement”) with a rights agent (“Rights Agent”), pursuant to which CohBar’s pre-Merger common stockholders and certain warrant holders of record as of the Record Date will receive one CVR for each outstanding share of CohBar Common Stock held by such stockholder (or, in the case of the warrants, each share of CohBar Common Stock for which such warrant is exercisable). A copy of the form of CVR Agreement is included as Annex F to this proxy statement/prospectus.
Pursuant to the CVR Agreement, each CVR will entitle the holder thereof to receive certain cash payments from the net proceeds, if any, related to the disposition of CohBar’s legacy assets pursuant to any disposition agreement entered into within three years of the closing of the Merger. CohBar’s legacy assets include the tangible and intangible assets primarily used in or primarily related to the development and optimization of novel therapeutics that are analogs of mitochondrial derived peptides, including without limitation CohBar’s CB4211 candidate and CB5138 Analogs.
The contingent payments under the CVR Agreement, if they become payable, will become payable to the Rights Agent for subsequent distribution to the holders of the CVRs. In the event that no such proceeds are received, holders of the CVRs will not receive any payment pursuant to the CVR Agreement. There can be no assurance that any holders of CVRs will receive any payments with respect thereto.
The right to the contingent payments contemplated by the CVR Agreement is a contractual right only and will not be transferable, except in the limited circumstances specified in the CVR Agreement. The CVRs will not be evidenced by a certificate or any other instrument and will not be registered with the SEC. The CVRs will not have any voting or dividend rights and will not represent any equity or ownership interest in CohBar or the combined company or any of its affiliates. No interest will accrue on any amounts payable in respect of the CVRs.
The payment date for the CVRs will be three business days after the Effective Time, provided, that CohBar will make additional CVR distributions to certain CohBar warrant holders from time to time to the extent such warrant holders become entitled to the CVR in accordance with the terms of such warrants.
For a more detailed description of the CVRs and the CVR Agreement, see “Agreements Related to the Merger — Contingent Value Rights Agreement” elsewhere in this proxy statement/prospectus.
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Q: What will Morphogenesis equityholders receive in the Merger?
A: At the closing of the Merger, (a) each then-outstanding share of Morphogenesis Common Stock (other than shares held in treasury and Dissenting Shares) will be converted into and become exchangeable for a number of shares of CohBar Common Stock calculated in accordance with the Exchange Ratio, (b) each then-outstanding option to purchase Morphogenesis Common Stock will be assumed and converted by CohBar into an option to purchase shares of CohBar Common Stock, subject to certain adjustments as set forth in the Merger Agreement, and (c) each then-outstanding warrant to purchase shares of Morphogenesis Common Stock will be converted into and exchangeable for a warrant of like tenor entitling the holder to purchase shares of CohBar Common Stock, subject to certain adjustments as set forth in the Merger Agreement.
The Exchange Ratio will be equal to the quotient obtained by dividing (a) the Company Merger Shares by (b) the Company Outstanding Shares, as those terms are defined and further described in the Merger Agreement, which has the effect and purpose of determining the number of shares to be issued to pre-Merger Morphogenesis stockholders (or issuable to pre-Merger Morphogenesis option and warrant holders in respect of such options and warrants) based on the relative valuations and fully-diluted shares of each of CohBar and Morphogenesis as of immediately prior to the closing of the Merger. For purposes of calculating the Exchange Ratio, (i) shares of CohBar Common Stock underlying CohBar stock options and warrants outstanding as of immediately prior to the closing of the Merger with an exercise price per share of less than or equal to $2.00 (subject to adjustment pursuant to the Merger Agreement) will be deemed to be outstanding and (ii) all shares of Morphogenesis Common Stock underlying outstanding Morphogenesis preferred stock, stock options, and warrants will be deemed to be outstanding.
For a more complete description of the treatment of Morphogenesis Common Stock and Morphogenesis’ options and warrants in the Merger, please see the sections titled “The Merger Agreement — Merger Consideration” and “The Merger Agreement — Exchange Ratio” beginning on pages 146 and 147, respectively, of this proxy statement/prospectus.
Q: Will the common stock of the combined company trade on an exchange?
A: Shares of CohBar Common Stock are currently listed on Nasdaq under the symbol “CWBR.” CohBar intends to file an initial listing application for the common stock of the combined company with Nasdaq. It is a condition of the closing of the Merger that the initial listing application with Nasdaq shall have been approved. If such condition is not satisfied, the Merger may not be consummated. Each of CohBar and Morphogenesis may waive this condition as set forth in the Merger Agreement. Nasdaq’s determination is not expected to be known at the time that you are asked to vote on the Proposals at the CohBar Special Meeting. After completion of the Merger, CohBar will be renamed “TuHURA Biosciences, Inc.” and it is expected that the common stock of the combined company will trade on Nasdaq under the symbol “HURA.” On , 2023, the last trading day before the date of this proxy statement/prospectus, the closing sale price of CohBar Common Stock was $ per share.
Q: Who will be the directors of the combined company following the Merger?
A: Immediately following the Merger, the combined company’s board of directors will be composed of six members, consisting of James Manuso, Alan List, George Ng, James Bianco, Misha Petkevich and Joanne Yun, four of whom will be designated by Morphogenesis and two of whom will be designated by CohBar.
Q: Who will be the executive officers of the combined company immediately following the Merger?
A: Immediately following the Merger, the executive management team of the combined company is expected to consist of members of the Morphogenesis executive management team prior to the Merger, including:
Name |
Title |
|||
James Bianco, M.D. |
President and Chief Executive Officer |
|||
Dan Dearborn |
Chief Financial Officer |
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Q: As a CohBar stockholder, how does the CohBar Board recommend that I vote?
A: After careful consideration, the CohBar Board recommends that CohBar stockholders vote “FOR” all of the Proposals.
Albion J. Fitzgerald, one of the seven members of the CohBar Board, did not vote in favor of the Merger and the transactions contemplated by the Merger Agreement. The other six directors, after weighing various factors, voted in favor of the board approvals and recommendations regarding the Merger and the Proposals because they believed that, taking all relevant factors into account, the Merger Agreement and the Merger were in the best interests of CohBar and its stockholders. For more information, please see the section titled “CohBar’s Reasons for the Merger; Recommendation of the CohBar Board — Concerns of Dissenting Director” beginning on page 122 of this proxy statement/prospectus.
Q: What risks should I consider in deciding whether to vote in favor of the Merger?
A: You should carefully review the section titled “Risk Factors” beginning on page 26 of this proxy statement/prospectus and the documents incorporated by reference herein, which set forth certain risks and uncertainties related to the Merger, risks and uncertainties to which the combined company’s business will be subject, and risks and uncertainties to which each of CohBar and Morphogenesis, as independent companies, are subject.
Q: When do you expect the Merger to be consummated?
A: The Merger is anticipated to close in the third quarter of 2023, but the exact timing cannot be predicted. For more information, please see the section titled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 159 of this proxy statement/prospectus.
Q: What do I need to do now?
A: CohBar urges you to read this proxy statement/prospectus carefully, including the annexes and the documents incorporated by reference, and to consider how the Merger affects you.
If you are a CohBar stockholder of record, you may provide your proxy instructions in one of four (4) different ways:
• You can vote using the proxy card, simply complete, sign and date the accompanying proxy card and return it promptly in the envelope provided. If you return your signed proxy card before the CohBar Special Meeting, CohBar will vote your shares in accordance with the proxy card.
• You can vote by proxy over the internet, follow the instructions provided on the Notice of Internet Availability.
• You can vote by telephone by calling the toll-free number found on the Notice of Internet Availability.
• You may attend the CohBar Special Meeting online and vote by following the instructions at www.virtualshareholdermeeting.com/CWBR2023.
Your signed proxy card, telephonic proxy instructions, or internet proxy instructions must be received by , 2023 at 11:59 p.m. Eastern Time to be counted.
If you hold your shares in “street name” (as described below), you may provide your proxy instructions via telephone or the internet by following the instructions on your vote instruction form provided by your broker. Please provide your proxy instructions only once, unless you are revoking a previously delivered proxy instruction, and as soon as possible so that your shares can be voted at the CohBar Special Meeting.
Q: What happens if I do not return a proxy card or otherwise vote or provide proxy instructions, as applicable?
A: If you are a CohBar stockholder, the failure to return your proxy card or otherwise vote or provide proxy instructions will reduce the aggregate number of votes required to approve Proposal Nos. 1, 2, 3, 4, 5, 6 and 7.
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Q: May I attend the CohBar Special Meeting and vote in person?
A: Stockholders of record as of , 2023 will be able to attend and participate in the CohBar Special Meeting online by accessing www.virtualshareholdermeeting.com/CWBR2023. To join the CohBar Special Meeting, you will need to have your 16 digit control number which is included on your Notice of Internet Availability of Proxy Materials and your proxy card. If your shares are held in “street name,” you should contact your bank, broker or other nominee if you did not receive a 16 digit control number.
Q: Who counts the votes?
A: Broadridge Financial Solutions, Inc. (“Broadridge”) has been engaged as CohBar’s inspector of election. If you are a stockholder of record, your executed proxy card is returned directly to Broadridge for tabulation. If you hold your shares through a broker, your broker returns one proxy card to Broadridge on behalf of all its clients.
Q: If my CohBar shares are held in “street name” by my broker, will my broker vote my shares for me?
A: If you hold shares beneficially in street name and do not provide your broker or other agent with voting instructions, your shares may constitute “broker non-votes.” A “broker non-vote” occurs when shares held by a broker are not voted with respect to a particular proposal because the broker does not have or did not exercise discretionary authority to vote on the matter and has not received voting instructions from its clients. These matters are referred to as “non-routine” matters. On non-routine items for which you do not give your broker instructions, shares of CohBar Common Stock will be treated as broker non-votes. Whether a proposal is considered routine or non-routine is subject to stock exchange rules and final determination by the stock exchange. To make sure that your vote is counted, you should instruct your broker to vote your shares, following the procedures provided by your broker.
Q: What are broker non-votes and do they count for determining a quorum?
A: Generally, a “broker non-vote” occurs when shares held by a broker are not voted with respect to a particular proposal because the broker does not have or did not exercise discretionary authority to vote on the matter and has not received voting instructions from its clients.
Broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the CohBar Special Meeting. Broker non-votes will not be counted as “votes cast” and will therefore have no effect on Proposal Nos. 1, 2, 3, 4, 5, 6, 7 and 8.
Q: May I change my vote after I have submitted a proxy or provided proxy instructions?
A: CohBar stockholders of record, unless such stockholder’s vote is subject to a support agreement, may change their vote at any time before their proxy is voted at the CohBar Special Meeting in one of four ways:
• You may submit another properly completed proxy with a later date by mail or via the internet.
• You can provide your proxy instructions via telephone at a later date.
• You may send a notice that you are revoking your proxy over the internet, following the instructions provided on the Notice of Internet Availability.
• You may attend the CohBar Special Meeting online and vote by following the instructions at www.virtualshareholdermeeting.com/CWBR2023. Simply attending the CohBar Special Meeting will not, by itself, revoke your proxy.
Your signed proxy card, telephonic proxy instructions, internet proxy instructions, or written notice must be received by , 2023, 11:59 p.m. Eastern Time to be counted.
If a CohBar stockholder who owns CohBar shares in “street name” has instructed a broker to vote its shares of CohBar Common Stock, the stockholder must follow directions received from its broker to change those instructions.
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Q: Who is paying for this proxy solicitation?
A: CohBar and Morphogenesis will share equally the cost of printing and filing of this proxy statement/prospectus and the proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of CohBar Common Stock for the forwarding of solicitation materials to the beneficial owners of CohBar Common Stock. CohBar will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials. CohBar has retained Morrow Sodali LLC, 333 Ludlow Street, 5th Floor, South Tower, Stamford, CT 06902 (“Morrow”), to assist it in soliciting proxies using the means referred to above. CohBar will pay the fees of Morrow, which CohBar expects to be approximately $40,000 plus reimbursement of out-of-pocket expenses. Solicitations also may be made by personal interview, mail, telephone, and electronic communications by directors, officers, and other employees without additional compensation.
Q: What are the material U.S. federal income tax consequences of the Merger to holders of CohBar capital stock?
A: CohBar stockholders will not sell, exchange or dispose of any shares of CohBar Common Stock as a result of the Merger. Thus, there will be no material U.S. federal income tax consequences to CohBar stockholders as a result of the Merger. Accordingly, CohBar stockholders will generally not recognize any gain or loss for U.S. federal income tax purposes as a result of the Merger.
Q: What are the material U.S. federal income tax consequences of the Merger to United States holders of Morphogenesis capital stock?
A: The Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) for U.S. federal income tax purposes. However, it is not a condition to the parties’ obligations to complete the Merger that the Merger so qualifies. Nevertheless, assuming that the Merger so qualifies, U.S. holders (as defined in the section entitled “The Merger — U.S. Federal Income Tax Consequences” beginning on page 138) of shares of Morphogenesis capital stock will generally not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their shares of Morphogenesis capital stock for shares of CohBar Common Stock in the Merger. Morphogenesis and CohBar have not sought and will not seek any ruling from the Internal Revenue Service (the “IRS”) regarding any matters relating to the transactions and, as a result, there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth herein.
Q: What are the material U.S. federal income tax consequences of the issuance of the CVRs, including any distributions of CohBar Common Stock under the CVRs?
A: Because no authority directly addresses the U.S. federal income tax treatment of the CVRs, the amount of income or gain, and the timing and character of the income or gain, a holder of CohBar stock may recognize with respect to the CVRs is uncertain. Please review the information in the section titled “Agreements Related to the Merger — Contingent Value Rights Agreement — Material U.S. Federal Income Tax Consequences of the CVRs to Holders of CohBar Common Stock” for a discussion of the material U.S. federal income tax consequences of the CVRs to holders of CohBar Common Stock.
Q: What are the material U.S. federal income tax consequences of the Reverse Stock Split to holders of CohBar Common Stock?
A: A holder of CohBar Common Stock should not recognize gain or loss upon the Reverse Stock Split, except to the extent such holder receives cash in lieu of a fractional share of CohBar Common Stock, and subject to the discussion in the section titled “Proposal No. 3 — The Reverse Stock Split Proposal.” Please review the information in the section titled “Proposal No. 3 — The Reverse Stock Split Proposal — Material U.S. Federal Income Tax Consequences of the Reverse Stock Split” for a more complete description of the material U.S. federal income tax consequences of the Reverse Stock Split to holders of CohBar Common Stock.
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Q: Who can help answer my questions?
A: If you are a CohBar stockholder and would like additional copies of this proxy statement/prospectus or any documents incorporated by reference herein, without charge, or if you have questions about the Merger or related matters, including the procedures for voting your shares, you should contact:
CohBar, Inc.
1455 Adams Drive, Suite 1308
Menlo Park, CA 94025
Telephone: (650) 446-7888
Attention: Corporate Secretary
Email: investors@cohbar.com
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PROSPECTUS SUMMARY
This summary highlights selected information from this proxy statement/prospectus and may not contain all of the information that is important to you. To better understand the Merger and the Proposals being considered at the CohBar Special Meeting, you should read this entire proxy statement/prospectus carefully, including the Merger Agreement and the other annexes to which you are referred in this proxy statement/prospectus, and the documents incorporated by reference therein. For more information, please see the section titled “Where You Can Find More Information” beginning on page 317 of this proxy statement/prospectus. Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus does not give effect to the proposed Reverse Stock Split described in Proposal No. 3 of this proxy statement/prospectus.
The Companies
CohBar
Unless the context otherwise requires, references to “we,” “us” or “our” in this subsection generally refer to CohBar.
CohBar is a clinical stage biotechnology company that has historically focused on leveraging the power of the mitochondria and the peptides encoded in its genome to develop potential breakthrough therapeutics targeting chronic and age-related diseases. Our novel approach is built on the key insights of our founders that certain mitochondrially encoded peptides produce effects that are not limited to local regulation within the mitochondria and may have important roles to play in critical systemic biological pathways. Many of these effects are quite distinct from what has traditionally been thought of as mitochondrial function.
Our proprietary processes of identifying nucleic acid sequences encoding native peptides in the mitochondrial genome, developing and optimizing novel analogs of these natural mitochondrial derived peptides (“MDPs”), as well as developing and conducting proprietary screens to identify and characterize the activities of these peptides are referred to as our technology platform. We expect our research and development expenses to decrease in the coming quarters as we continue to explore strategic alternatives. However, we do not believe that it is possible at this time to accurately project our research and development costs.
Historically, we have financed our operations primarily with proceeds from sales of our equity securities, including our initial public offering, private placements of our securities, a debt offering, public sales of our securities and the exercise of outstanding warrants and stock options. Since our inception through March 31, 2023, our operations have been funded with an aggregate of approximately $97.3 million from the sale and issuance of equity instruments and debt, including the proceeds from the exercise of warrants and stock options.
Since inception, we have incurred significant operating losses. Our net losses were $2.2 million and $3.3 million for the three months ended March 31, 2023 and 2022, respectively. We incurred $0.4 million and $0.5 million in non-cash expenses during the three months ended March 31, 2023 and 2022, respectively. Our net losses excluding non-cash expenses were $1.8 million and $2.8 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, we had an accumulated deficit of $99.1 million. Dependent upon the completion of the Merger, significant expenses and operating losses over the next several years may continue to occur and our net losses may fluctuate significantly from quarter to quarter and from year to year.
We recently suspended Investigational New Drug (“IND”)-enabling work on pre-clinical candidate CB5138-3, which we had been developing as a potential treatment of idiopathic pulmonary fibrosis and other fibrotic diseases. The decision to suspend IND-enabling work follows recently completed non-clinical formulation studies seeking to identify a formulation suitable for clinical development. In connection with the decision to suspend IND-enabling work for this candidate, we intend to explore development and/or partnership opportunities within our peptide library and technology platform, while simultaneously exploring other strategic alternatives. In addition, we do not believe that the formulation of CB4211 used in the Phase 1b stage of the trial is suitable for further development. Efforts to develop an improved formulation have not been successful to date and there can be no assurances that we will be able to develop such a formulation.
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We have retained Ladenburg Thalmann & Co. Inc. (“Ladenburg”) as a financial advisor to assist CohBar in completing the Merger. There can be no assurance that this will result in completion of the Merger. See also “Risk Factors — Risks Related to the Merger”.
If the Merger is completed, the combined company will focus on developing Morphogenesis’ product candidates, which are described on page 218 under the section titled “Morphogenesis’ Business,” and it is anticipated that the combined company will not continue to develop CohBar’s product candidates. If the Merger is not completed, CohBar will reconsider its strategic alternatives.
CohBar’s principal executive offices are located at 1455 Adams Drive, Suite 1308, Menlo Park, CA 94025, and its telephone number is (650) 446-7888. CohBar’s website address is www.cohbar.com.
Morphogenesis
Morphogenesis is a clinical stage immuno-oncology company developing novel personalized cancer vaccine product candidates and also developing inhibitors of myeloid derived suppressor cells (“MDSCs”), to modulate their immunosuppressive effects on the tumor microenvironment. The company’s technologies are designed to overcome primary and acquired resistance to checkpoint inhibitors or cellular therapies like CAR T in the treatment of cancer.
Morphogenesis has developed Immune FxTM (“IFx”), as a personalized cancer vaccine technology designed to “trick” the body’s immune system to attack tumor cells by making tumor cells look like bacteria and to thereby harness the natural power of innate immunity by leveraging natural mechanisms conserved throughout evolution to recognize threats from foreign pathogens like bacteria or viruses. Morphogenesis’ personalized cancer vaccine product candidates are delivered either via intratumoral injection (in the case of the company’s proprietary plasmid DNA (“pDNA”) vaccine product candidate) or tumor targeted via intravenous or autologous whole-cell administration (in the case of the company’s messenger RNA (“mRNA”) vaccine product candidate).
Morphogenesis has completed enrollment and received preliminary results in a multicenter Phase 1b dose and schedule finding study for the company’s IFx-Hu2.0 personalized cancer vaccine product candidate (“IFx-2.0”) in advanced or metastatic Merkel cell carcinoma (“MCC”) and advanced cutaneous Squamous cell carcinoma (“cSCC”). The primary objective of the trial is to determine the safety, tolerability and optimal dose and schedule of IFx-2.0 when administered intratumoral in up to three lesions injected across three different administration schedules. Safety was evaluated for up to 28 days following IFx-2.0 administration. Five patients with advanced MCC and four with cSCC were enrolled in the dose escalation stage of the trial. Prior to enrollment, all patients with MCC received checkpoint inhibitor with pembrolizumab (4 patients) or avelumab (1 patient), and all had progressive disease with median 3 months treatment (2.0 – 4.5 months). All 4 patients with cSCC previously received cemiplimab with median 6 months treatment (3.0 – 11.5 months). Following completion of protocol therapy, all 5 patients with MCC and 2 of 4 patients with cSCC were treated with anti-PD(L)-1 checkpoint inhibitor monotherapy as the immediate post-protocol treatment as follows: pembrolizumab (3 patients) or avelumab (2 patients) in MCC and cemiplimab (2 patients) in cSCC. Four of 5 patients with MCC and 1 of 2 patients with cSCC, or 5 of 7 total (71%), experienced an objective response to checkpoint inhibitor rechallenge with duration of response ongoing in 4 patients (7+, 8+, 9+, 20+ months), and one response lasting 23 months. IFx-2.0 was well tolerated at all doses and schedules with no treatment related serious adverse events reported. In sum, the company’s preliminary Phase 1b clinical trial results demonstrated the potential for IFx-2.0 to produce durable, objective anti-tumor responses in 80% patients with MCC who exhibited primary resistance to anti-PD(L)-1, a checkpoint inhibitor, with a “durable response” being a complete or partial response beginning within 12 months of treatment and lasting ≥6 months. See the section entitled “Business — Morphogenesis Development Program and Development Strategy — Phase 1b Trial in Metastatic Merkel Cell Carcinoma and Cutaneous Squamous Cell Carcinoma.”
The evidence of clinical response rates described above or elsewhere in this proxy statement/prospectus, as well as the other clinical activity and results described in this proxy statement/prospectus, does not mean that IFx-2.0 or any other product candidate has demonstrated, or that such clinical response data will predict, sufficient clinical efficacy and prove the required level of safety in order to receive FDA approval or any other required regulatory approval.
Morphogenesis is in discussions with the FDA, including the deputy director of the FDA’s Oncology Center of Excellence, in finalizing its Phase 2/3 registration trial design for the company’s IFx-Hu2.0 cancer vaccine product candidate, which is Morphogenesis’ lead personalized cancer vaccine candidate. Under Morphogenesis’ current development plan and subject to the FDA’s agreement on clinical trial design, Morphogenesis expects to
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initiate a single registration-directed trial utilizing the FDA’s accelerated approval pathway for IFx-2.0 in the first half of 2024, with top line results expected to be available in mid-to-late 2026 according to the development plan. Morphogenesis has agreed in principle with the FDA to conduct a single, randomized, placebo-controlled trial in first line therapy of patients with advanced MCC. It is estimated by the American Cancer Society that there are approximately 2,000 patients in the U.S. diagnosed with MCC each year. This trial will compare overall response rates achieved with Keytruda® (pembrolizumab), the current first-line standard of care, compared to Keytruda® and adjunctive therapy with IFx-2.0. Generally, an “adjunctive therapy” is a therapy given in addition to the main treatment to maximize effectiveness of the main treatment. The company anticipates conducting this trial under a Special Protocol Assessment Agreement with the FDA. If successful, this trial would form the basis of a Biologics Licensing Application (“BLA”) that Morphogenesis currently expects to submit to the FDA in the first quarter of 2027. Notwithstanding Morphogenesis’ discussions with the FDA to date, there is no guarantee that Morphogenesis will ultimately receive a Special Protocol Assessment Agreement with the FDA for a registration-directed trial for IFx-2.0 under the accelerated approval pathway, and even if a Special Protocol Assessment Agreement for such a trial is granted, such agreement does not increase the likelihood of marketing approval for the product and may not lead to a faster or less costly development, review, or approval process.
Morphogenesis is also developing its IFx-Hu3.0 cancer vaccine product candidate (“IFx-3.0”), an mRNA cancer vaccine candidate for intravenous or autologous whole cell administration for blood-related cancers, to expand the utility of its IFx technology to tumor types not accessible by intra-tumoral injection.
In addition to its cancer vaccine product candidates, Morphogenesis is using its Delta receptor technology to develop small molecule or bifunctional antibody drug conjugates (“ADCs”) designed to inhibit the immune suppressing effects of MDSCs on the tumor microenvironment to prevent T cell exhaustion and acquired resistance to checkpoint inhibitors. The company’s Delta receptor technology was acquired in January 2023 when Morphogenesis acquired the intellectual property assets of TuHURA Biopharma, Inc.
Morphogenesis is not profitable and has incurred significant losses in each period since Morphogenesis’ inception, including net losses of $7.0 million for the year ended December 31, 2021, $9.4 million for the year ended December 31, 2022, and $18.7 million for the three months ended March 31, 2023 (which includes the expensing of the entire $16.2 million purchase price for the assets of TuHURA Biopharma, Inc., of which $15 million was paid in the form of Morphogenesis common stock). To date, Morphogenesis has financed its operations primarily through private placements of its preferred stock and convertible notes that have been converted into preferred stock. Morphogenesis has not commercialized any products and has never generated any revenue from product sales. Morphogenesis expects these losses to increase as it continues to incur significant research and development and other expenses related to Morphogenesis’ ongoing operations, seeks regulatory approvals for Morphogenesis’ product candidates, scales-up manufacturing capabilities and hires additional personnel to support the development of its product candidates and to enhance its operational, financial and information management systems.
Morphogenesis is a Delaware corporation that was originally incorporated under the laws of the State of Florida on May 11, 1995, and redomesticated as a Delaware corporation effective April 27, 2023. Morphogenesis’ principal executive offices are located at 10500 University Center Drive, Suite 110, Tampa, Florida 33612. Morphogenesis’ telephone number is (813) 875-6600.
Merger Sub
Merger Sub is a direct, wholly-owned subsidiary of CohBar and was formed solely for the purpose of carrying out the Merger. Merger Sub’s principal executive offices are located at 1455 Adams Drive, Suite 1308, Menlo Park, CA 94025, and its telephone number is (650) 446-7888.
The Merger (see page 107)
If the Merger is completed, Merger Sub will merge with and into Morphogenesis, with Morphogenesis surviving as a wholly owned subsidiary of CohBar.
CohBar’s Reasons for the Merger; Recommendation of the CohBar Board (see page 117)
During the course of its evaluation of the Merger Agreement and the transactions contemplated by the Merger Agreement, the CohBar Board held numerous meetings, consulted with CohBar’s senior management, CohBar’s legal counsel and financial advisors, and reviewed and assessed a significant amount of information. In reaching
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its decision to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, the CohBar Board considered a number of factors and scenarios that it viewed as supporting its decision to approve the Merger Agreement, including:
• the financial condition and prospects of CohBar and the risks associated with continuing to operate CohBar on a stand-alone basis, including in light of:
• CohBar’s decision, announced in December 2022, to suspended IND-enabling work on its pre-clinical candidate CB5138-3, a potential treatment of idiopathic pulmonary fibrosis and other fibrotic diseases that CohBar had been developing, which was driven in large part by the completed non-clinical studies seeking to identify a formulation suitable for clinical development;
• CohBar’s belief that the formulation of CB4211 used in the Phase 1b stage of its trial is not suitable for further development, and efforts to develop an improved formulation have not been successful;
• investor interest and value perception for possible further development of its programs, the product candidates’ tolerability profiles, difficulty in formulating, stage of development, the lack of clarity on the mechanism of action for CB5138-3, and probability of success in relation to the requisite time and costs; and
• difficulties encountered in CohBar’s related business development efforts to license, sell or otherwise partner its assets that could result in meaningful new capital or shared future development costs;
• the CohBar Board and CohBar’s financial advisor undertook a comprehensive and thorough process of reviewing and analyzing potential strategic alternatives and merger partner candidates and the CohBar Board’s view that no alternatives to the Merger (including remaining a standalone company, a liquidation or dissolution of CohBar to distribute any available cash, and alternative strategic transactions) were reasonably likely to create greater value to CohBar’s stockholders;
• the CohBar Board’s belief, after a thorough review of strategic alternatives, such as attempting to further advance the development of its internal programs, raising additional capital through the issuance of equity or debt securities, entering into a licensing, sale or other strategic agreement related to certain assets sufficient to fund operations, combining with other potential strategic transaction candidates, and discussions with CohBar’s senior management, financial advisors and legal counsel, that the Merger is more favorable to CohBar stockholders than the potential value that might have resulted from other strategic alternatives available to CohBar;
• the CohBar Board’s belief that, as a result of arm’s length negotiations with Morphogenesis, CohBar and its representatives negotiated the most favorable exchange ratio for CohBar’s stockholders to which Morphogenesis was willing to agree, and that the terms of the Merger Agreement include the most favorable terms to CohBar in the aggregate that were achievable and consistent with other similar transactions;
• the CohBar Board’s belief that the $25 million equity value ascribed to CohBar would provide the existing CohBar stockholders significant value for CohBar’s public listing, and afford the CohBar stockholders a significant opportunity to participate in the potential growth of the combined company following the Merger at the negotiated exchange ratio; and
• the CohBar Board’s view, following a review with CohBar’s management and advisors of Morphogenesis’ current development and clinical trial plans, of the likelihood that the combined company would possess sufficient cash resources at the closing of the Merger to fund development of Morphogenesis’ product candidates through upcoming value inflection points, including the initiation of Morphogenesis’ anticipated Phase 2/3 registration trial for IFx-Hu2.0.
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Morphogenesis’ Reasons for the Merger (see page 123)
In the course of reaching its decision to approve the Merger, the Morphogenesis Board held numerous meetings, consulted with Morphogenesis senior management and legal counsel and considered a wide variety of factors. Ultimately, the Morphogenesis Board concluded that a merger with CohBar, together with the additional financing committed from the Initial Financing and Second Financing, was the best option to generate capital resources to support the advancement of Morphogenesis’ pipeline and fund the combined organization.
Additional factors the Morphogenesis Board considered included the following:
• the Merger will potentially expand the access to capital and the range of investors available as a public company to support the clinical development of Morphogenesis’ pipeline, compared to the capital and investors Morphogenesis could otherwise gain access to if it continued to operate as a privately-held company;
• the potential benefits from increased public market awareness of Morphogenesis and its pipeline;
• the historical and current information concerning Morphogenesis business, including its financial performance and condition, operations, management and pre-clinical and clinical data;
• the Morphogenesis Board’s belief that no alternatives to the Merger, together with the additional financing committed from the Initial Financing (as well as the potential additional financing associated with the Second Financing, which would be at the option of the Investor in the Initial Financing), were reasonably likely to create greater value for Morphogenesis stockholders, after reviewing the various financing and other strategic options to enhance stockholder value that were considered by the Morphogenesis Board;
• the Morphogenesis Board’s expectation that the Merger, together with the additional financing committed from the Initial Financing, would be a higher probability and more cost-effective means to access capital than other options considered, including an initial public offering;
• the Morphogenesis Board’s belief that the Second Financing, although at the option of the Investor in the Initial Financing, might represent a higher probability and more cost-effective means to access additional capital during the six-month period immediately following the completion of the Merger in light of the relatively short time period during which the Investor would have to exercise the right to complete the Second Financing and in light of the Investor’s then-existing interest in the combined company after giving effect to the Initial Financing;
• the expected financial position, operations, management structure and operating plans of the combined company (including the ability to support the combined company’s current and planned pre-clinical and clinical trials), including the impact of the CVR Agreement;
• the Morphogenesis Board’s view, based on scientific, regulatory and technical due diligence conducted by CohBar management and advisors, of the regulatory pathway for, and market opportunity of, the combined company product candidates;
• business, history, operations, financial resources, assets, technology and credibility of CohBar; and
• the terms and conditions of the Merger Agreement.
Recommendation of CohBar’s Board of Directors (see page 103)
• The CohBar Board has determined and believes that the issuance of shares of CohBar Common Stock pursuant to the Merger Agreement is fair to, in the best interests of, and advisable to, CohBar and its stockholders and has approved such issuance. The CohBar Board recommends that CohBar stockholders vote “FOR” the Nasdaq Stock Issuance Proposal.
• The CohBar Board has determined and believes that it is fair to, in the best interests of, and advisable to, CohBar and its stockholders to approve the amendment to CohBar’s Charter to, at the option of its
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board of directors, effect the Authorized Share Increase, as described in this proxy statement/prospectus. The CohBar Board recommends that CohBar stockholders vote “FOR” the Authorized Share Increase Proposal.
• The CohBar Board has determined and believes that it is fair to, in the best interests of, and advisable to, CohBar and its stockholders to approve the amendment to CohBar’s Charter to effect the Reverse Stock Split, as described in this proxy statement/prospectus. The CohBar Board recommends that CohBar stockholders vote “FOR” the Reverse Stock Split Proposal.
• The CohBar Board has determined and believes that it is advisable to, and in the best interests of, CohBar and its stockholders to approve, on an advisory (non-binding) basis, certain compensation payments that will or may be made by CohBar to its named executive officers in connection with the Merger, as described in this proxy statement/prospectus. The CohBar Board recommends that CohBar stockholders vote “FOR” the Golden Parachute’s Compensation Proposal.
• The CohBar Board has determined and believes that it is advisable to, and in the best interests of, CohBar and its stockholders to elect each of the director nominees named in the Director Election Proposal, to serve on the CohBar Board. The CohBar Board recommends that CohBar stockholders vote “FOR” each of the director nominees named in the Director Election Proposal.
• The CohBar Board has determined and believes that it is advisable to, and in the best interests of, CohBar and its stockholders to ratify the appointment of Marcum LLP as CohBar’s independent registered public accounting firm for the fiscal year ending December 31, 2023. The CohBar Board recommends that CohBar stockholders vote “FOR” the Auditor Ratification Proposal.
• The CohBar Board has determined and believes that it is advisable to, and in the best interests of, CohBar and its stockholders to approve the TuHURA Biosciences, Inc. 2023 Equity Incentive Plan, in the form attached as Annex H to this proxy statement/prospectus. The CohBar Board recommends that CohBar stockholders vote “FOR” the 2023 Equity Incentive Plan Proposal.
• The CohBar Board has determined and believes that adjourning the CohBar Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Nasdaq Stock Issuance Proposal and/or the Authorized Share Increase Proposal is fair to, in the best interests of, and advisable to, CohBar and its stockholders and has approved and adopted the proposal. The CohBar Board recommends that CohBar stockholders vote “FOR” the Adjournment Proposal, if necessary.
Interests of CohBar’s Directors and Officers in the Merger (see page 132)
In considering the recommendation of the CohBar Board with respect to issuing shares of CohBar Common Stock in the Merger and the other matters to be acted upon by the CohBar stockholders at the CohBar Special Meeting, the CohBar stockholders should be aware that CohBar’s directors and executive officers have interests in the Merger that are different from, or in addition to, the interests of CohBar’s stockholders generally. These interests may present them with actual or potential conflicts of interest. These interests include the following:
• each of Misha Petkevich and Joanne Yun will continue as directors of the combined company after the Effective Time, and, following the closing of the Merger, will be eligible to be compensated as a non-employee director of the combined company pursuant to the non-employee director compensation policy in place following the Effective Time;
• under the Merger Agreement, CohBar’s directors and executive officers are entitled to continued indemnification, expense advancement and insurance coverage; and
• in connection with the Merger, certain executives of CohBar entered into certain retention bonus letter agreement with CohBar, which is further described in the section captioned “The Merger — Interests of CohBar’s Executive Officers and Directors in the Merger — Golden Parachute Compensation.”
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Interests of Morphogenesis’ Directors and Officers in the Merger (see page 135)
In considering the recommendation of the Morphogenesis Board with respect to approving the Merger, stockholders should be aware that Morphogenesis’ directors and executive officers have interests in the Merger that are different from, or in addition to, the interests of Morphogenesis stockholders generally. These interests may present them with actual or potential conflicts of interest. These interests include the following:
• in connection with the Merger, each option to purchase shares of Morphogenesis Common Stock held by Morphogenesis’ executive officers and directors, whether or not vested, will be converted into an option to purchase shares of CohBar Common Stock;
• certain of Morphogenesis’ directors and executive officers are expected to become directors and executive officers of the combined company upon the closing; and
• each of Morphogenesis’ directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement.
The board of directors of Morphogenesis was aware of these potential conflicts of interest and considered them, among other matters, in reaching its decision to approve the Merger Agreement and the Merger, and to recommend that the Morphogenesis stockholders approve the Merger as contemplated by this proxy statement/prospectus.
Opinion of CohBar’s Financial Advisor (see page 125)
On May 22, 2023, Ladenburg orally rendered its opinion to the CohBar Board (which was subsequently confirmed in writing by delivery of Ladenburg’s written opinion addressed to the CohBar Board dated May 22, 2023), as to, as of May 22, 2023, the fairness of the Exchange Ratio provided for in the Merger pursuant to the Merger Agreement, from a financial point of view, to the holders of CohBar Common Stock.
The full text of the Opinion is attached as Annex G to this proxy statement/prospectus and is incorporated by reference. CohBar encourages its stockholders to read the Opinion in its entirety for the assumptions made, procedures followed, other matters considered and limits of the review by Ladenburg. The summary of the Opinion set forth herein is qualified by reference to the full text of the Opinion. Ladenburg provided its Opinion for the benefit and use by the CohBar Board in its consideration of the financial terms of the Merger. The Opinion is not a recommendation to the CohBar Board of whether or not to approve the Merger or to any holder of CohBar Common Stock or any other person as to how to vote with respect to the proposed Merger or to take any other action in connection with the Merger or otherwise.
The Merger Agreement (see page 146)
Merger Consideration (see page 146)
At the Effective Time, upon the terms and subject to the conditions set forth in the Merger Agreement, each share of Morphogenesis Common Stock issued and outstanding immediately prior to the Effective Time (excluding shares to be canceled pursuant to the Merger Agreement and excluding dissenting shares) will be automatically converted solely into the right to receive a number of shares of CohBar Common Stock equal to the Exchange Ratio described in more detail below.
After giving effect to the Stock Dividend and taking into account the Initial Financing, pre-Merger Morphogenesis equityholders would own approximately 77% of the combined company, pre-Merger CohBar equityholders would own approximately 15% of the combined company, and the Investor would own approximately 9% of the combined company (excluding in each such case the effect of out-of-the-money options and warrants of CohBar that will remaining outstanding after the Merger).
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Treatment of Morphogenesis Options (see page 148)
Under the terms of the Merger Agreement, each option to purchase shares of Morphogenesis Common Stock, whether vested or unvested, that is outstanding immediately prior to the Effective Time will be assumed and converted into an option to purchase shares of CohBar Common Stock on the same terms and conditions (including any forfeiture and post-termination exercise provisions, but not taking into account any accelerated vesting provided for in the Morphogenesis Equity Plan or in the related award document by reason of the transactions contemplated hereby) as were applicable to such option as of immediately prior to the Effective Time.
Accordingly, at the Effective Time, subject to certain limitations as set forth in the Merger Agreement: (i) the number of shares of CohBar Common Stock subject to each outstanding Morphogenesis stock option assumed by CohBar shall be equal to (A) the number of shares of Morphogenesis Common Stock subject to such Morphogenesis stock option assumed by CohBar, as in effect immediately prior to the Effective Time multiplied by (B) the Exchange Ratio, and (ii) the per share exercise price of each Morphogenesis stock option assumed by CohBar shall be equal to (A) the exercise price per share of Morphogenesis Common Stock otherwise purchasable pursuant to such option divided by (B) the Exchange Ratio.
Each Morphogenesis stock option assumed by CohBar will otherwise continue in full force and effect and the term, exercisability, vesting schedule, acceleration rights and other terms and conditions of such Morphogenesis stock option will otherwise remain unchanged.
Treatment of Morphogenesis Warrants
Under the terms of the Merger Agreement, each warrant to purchase shares of Morphogenesis Common Stock issued and outstanding immediately prior to the Effective Time, whether or not vested, will be converted into and become exchangeable for a warrant of like tenor entitling the holder to purchase shares of CohBar Common Stock.
Accordingly, at the Effective Time, (i) the number of shares of CohBar Common Stock subject to each outstanding Morphogenesis warrant assumed by CohBar will be determined by multiplying (A) the number of shares of Morphogenesis Common Stock issuable upon exercise of the Morphogenesis warrant that were subject to such Morphogenesis warrant as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio, and (ii) the per share exercise price for the CohBar Common Stock issuable upon exercise of each Morphogenesis warrant assumed by CohBar will be determined by dividing (A) the per share exercise price of CohBar Common Stock subject to such Morphogenesis warrant as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio. Each Morphogenesis warrant assumed by CohBar will otherwise continue in full force and effect and the term, any restriction on the exercise and other provisions of such Morphogenesis warrant will otherwise remain unchanged.
Treatment of CohBar Common Stock, CohBar Options and Warrants (see page 149)
Each share of CohBar Common Stock issued and outstanding at the time of the Merger will remain issued and outstanding. In addition, each option to purchase shares of CohBar Common Stock that is outstanding immediately prior to the Effective Time, whether vested or unvested, and each warrant to acquire shares of CohBar Common Stock that is issued and outstanding will survive the closing and remain outstanding in accordance with its terms.
Catch-Up Dividend (see page 154)
In the event that, within 18 months following the Effective Time, any officer or director of CohBar becomes aware of any shares of Morphogenesis capital stock (or any warrant, option, right, convertible or exchangeable security, or other similar contract providing for the potential issuance of Morphogenesis capital stock) that were outstanding as of the closing of the Merger and not included in the number of Morphogenesis outstanding shares used to calculate the Exchange Ratio at the closing of the Merger, CohBar will, as promptly as reasonably practicable and subject to any applicable laws, recalculate the Exchange Ratio with the correct number of Morphogenesis outstanding shares (including any such unaccounted shares) and declare, and take all steps necessary to effect, a distribution of CohBar Common Stock to the holders of CVRs to the extent necessary to correct for the unaccounted shares.
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Stock Dividend (see page 154)
Subject to the consummation of the Merger, the CohBar Board will make a dividend to the holders of CohBar Common Stock as of the Record Date equal to approximately 3.3 shares of CohBar Common Stock per each share of CohBar Common Stock issued and outstanding as of the Record Date (the “Stock Dividend”). The Record Date for the Stock Dividend will be the close of the business day immediately prior to the closing date of the Merger. The payment date for the Stock Dividend is anticipated to be either immediately prior to or immediately after the Effective Time. The purpose of the Stock Dividend is to increase the amount of the total number of shares of CohBar Common Stock held by pre-Merger CohBar equityholders to give effect to the Exchange Ratio so that, immediately after the Merger, on a pro forma basis, including the Stock Dividend and after taking into account the Initial Financing, pre-Merger CohBar equityholders would own approximately 15% of the combined company.
Conditions to the Completion of the Merger (see page 159)
To complete the Merger, CohBar stockholders must approve Proposal Nos. 1, 2 and 3 and Morphogenesis stockholders must adopt the Merger Agreement and approve the Merger and the related transactions contemplated by the Merger Agreement. Additionally, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived.
Non-Solicitation (see page 155)
Each of CohBar and Morphogenesis have agreed that, except as described below, CohBar and Morphogenesis and any of their respective subsidiaries will not, nor will either party or any of its subsidiaries authorize any of the directors, officers, employees, agents, attorneys, accountants, investment bankers, advisors or representatives retained by it or any of its subsidiaries to, directly or indirectly:
• solicit, initiate or knowingly encourage, induce or facilitate the communication, making, submission or announcement of, any Acquisition Proposal (as defined in the section of this proxy statement/prospectus titled “The Merger Agreement — Non-Solicitation”) or Acquisition Inquiry (as defined in the section of this proxy statement/prospectus titled “The Merger Agreement — Non-Solicitation”) or take any action that could reasonably be expected to led to an Acquisition Proposal or Acquisition Inquiry;
• furnish any non-public information with respect to it to any person in connection with or in response to an Acquisition Proposal or Acquisition Inquiry;
• engage in discussions or negotiations with any person with respect to any Acquisition Proposal or Acquisition Inquiry;
• approve, endorse or recommend an Acquisition Proposal (subject to certain exceptions);
• execute or enter into any letter of intent or any contract contemplating or otherwise relating to an Acquisition Proposal;
• take any action that would reasonably be expected to lead to an Acquisition Proposal or Acquisition Inquiry; or
• publicly propose to do any of the foregoing.
Board Recommendation Change (see page 156)
Neither CohBar Board nor Morphogenesis Board may change its recommendation in favor of the Merger, except that prior to receipt by such party of its stockholder approval, such party’s board of directors may effect a change in recommendation with respect to a superior offer that did not result from a material breach of the Merger Agreement if:
• such party’s board of directors shall have determined in good faith, based on the advice of its outside legal counsel, that the failure to effect such change in recommendation would reasonably be expected to be inconsistent with its fiduciary duties under applicable law;
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• such party has provided at least four business days’ prior written notice to the other party that it intends to effect a change in recommendation, and during such period has, and has caused its lead financial advisor and outside legal counsel to, negotiate with the other party in good faith to make such adjustments to the terms and conditions so that the acquisition proposal ceases to constitute a superior offer; and
• if after other party shall have delivered to such party a written offer to alter the terms or conditions of the Merger Agreement during the four-business day period referred to above, such party’s board of directors shall have determined in good faith (based on the advice of its outside legal counsel), that the failure to effect a change in recommendation would reasonably be expected to be inconsistent with its fiduciary duties under applicable law.
In the event of any material amendment to any superior offer, such party would be required to provide the other party with notice of such material amendment and there would be a new four business day period following such notification during which the parties would be obligated to comply again with the requirements described above.
Termination of the Merger Agreement (see page 163)
Either CohBar or Morphogenesis may terminate the Merger Agreement under certain circumstances, which would prevent the Merger from being consummated.
Termination Fee (see page 164)
If the Merger Agreement is terminated under certain circumstances, CohBar could be required to pay Morphogenesis a termination fee of $1 million or Morphogenesis could be required to pay CohBar a termination fee of $3 million, plus, in each case, up to $1.5 million in expense reimbursements, respectively.
Stock Purchase Agreement (see page 166)
Concurrently with the execution and delivery of the Merger Agreement, CohBar entered into a Stock Purchase Agreement, pursuant to which, CohBar will issue 7,500,000 shares of CohBar Common Stock for an aggregate purchase price of $15 million in the Initial Financing at the Initial Closing. The consummation of the Initial Financing is conditioned on the satisfaction or waiver of the conditions set forth in the Stock Purchase Agreement.
In addition, pursuant to the Stock Purchase Agreement, CohBar has agreed to sell an aggregate of 7,500,000 additional shares of CohBar Common Stock in the Second Financing at the Second Closing.
Registration Rights Agreement (see page 166)
In connection with the Stock Purchase Agreement, at or prior to the Initial Closing, CohBar, the Investor, and certain former holders of Morphogenesis warrants will enter into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the combined company will be required to prepare and file a resale registration statement with the SEC within 45 days following the closing of the Merger to register the resale of combined company common stock issued in the Initial Closing and issuable upon the exercise of warrants to purchase combined company common stock that are received by the certain former holders of Morphogenesis warrants in the Merger. The combined company will use commercially reasonable efforts to cause such resale statement to be declared effective by the SEC within 30 calendar days following the (“Filing Deadline”) (or within 60 calendar days if the SEC review the resale registration statement).
Support Agreements (see page 167)
Certain Morphogenesis stockholders are parties to support agreements with CohBar and Morphogenesis pursuant to which, among other things, each such stockholder, solely in his, her or its capacity as a Morphogenesis stockholder, has agreed to vote all of such stockholder’s shares of Morphogenesis capital stock in favor of (i) the adoption of the Merger Agreement and (ii) the approval of the Merger and related transactions contemplated by the Merger Agreement (the “Morphogenesis Support Agreements”). These Morphogenesis stockholders also agreed to vote against any competing proposal with respect to Morphogenesis.
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As of May 22, 2023, the Morphogenesis stockholders that are party to a support agreement with CohBar and Morphogenesis owned approximately 65% of the outstanding shares of Morphogenesis capital stock. These stockholders include executive officers and directors of Morphogenesis, as well as certain other stockholders owning a significant portion of the outstanding shares of Morphogenesis capital stock. Following the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus is a part and pursuant to the Merger Agreement, Morphogenesis stockholders holding a sufficient number of shares of Morphogenesis Common Stock to adopt the Merger Agreement and approve the Merger and related transactions contemplated by the Merger Agreement will execute a written consent providing for such adoption and approval.
Certain officers and directors of CohBar are parties to support agreements with CohBar and Morphogenesis pursuant to which, among other things, each such person, solely in his, her or its capacity as a CohBar stockholder, has agreed to vote all of such stockholder’s shares of CohBar’s capital stock in favor of (i) the adoption of the Merger Agreement and the approval of the Merger and related transactions contemplated by the Merger Agreement, (ii) if deemed necessary by the parties, to amend the CohBar Charter, (x) increase the number of authorized shares of CohBar Common Stock and/or (y) effect a reverse stock split of all outstanding shares of CohBar capital stock, (iii) to elect the directors of CohBar as contemplated in the Merger Agreement, and (iv) adopt a new equity compensation plan (the “CohBar Support Agreements”). These CohBar stockholders also agreed to vote against any competing proposal with respect to CohBar.
As of May 22, 2023, the officers and directors of CohBar that are party to a support agreement with CohBar and Morphogenesis owned approximately 0.8% of shares of CohBar Common Stock.
Lock-Up Agreements (see page 167)
Certain of Morphogenesis’ executive officers, directors and stockholders have entered into lock-up agreements, pursuant to which such parties have agreed not to, except in limited circumstances, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of CohBar Common Stock or any securities convertible into or exercisable or exchangeable for CohBar Common Stock, currently or thereafter owned, including, as applicable, shares purchased by the Investor in the Initial Financing, until 180 days after the Effective Time.
Contingent Value Rights Agreement (see page 168)
At or prior to the Effective Time, CohBar will enter into a CVR Agreement with a Rights Agent, pursuant to which CohBar’s pre-Merger common stockholders and certain warrant holders of record as of the Record Date will receive one CVR for each outstanding share of CohBar Common Stock held by such stockholder (or, in the case of the warrants, each share of CohBar Common Stock for which such warrant is exercisable).
Pursuant to the CVR Agreement, each CVR will entitle the holder thereof to receive certain cash payments from the net proceeds, if any, related to the disposition of CohBar’s legacy assets pursuant to any disposition agreement entered into within three years of the closing of the Merger. CohBar’s legacy assets include the tangible and intangible assets primarily used in or primarily related to the development and optimization of novel therapeutics that are analogs of mitochondrial derived peptides, including without limitation CohBar’s CB4211 candidate and CB5138 Analogs.
The contingent payments under the CVR Agreement, if they become payable, will become payable to the Rights Agent for subsequent distribution to the holders of the CVRs. In the event that no such proceeds are received, holders of the CVRs will not receive any payment pursuant to the CVR Agreement. There can be no assurance that any holders of CVRs will receive any payments with respect thereto.
The right to the contingent payments contemplated by the CVR Agreement is a contractual right only and will not be transferable, except in the limited circumstances specified in the CVR Agreement. The CVRs will not be evidenced by a certificate or any other instrument and will not be registered with the SEC. The CVRs will not have any voting or dividend rights and will not represent any equity or ownership interest in CohBar or the combined company or any of its affiliates. No interest will accrue on any amounts payable in respect of the CVRs.
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The payment date for the CVRs will be three business days after the Effective Time, provided, that CohBar will make additional CVR distributions to certain CohBar warrant holders from time to time to the extent such warrant holders become entitled to the CVR in accordance with the terms of such warrants.
Management Following the Merger (see page 277)
Effective as of the closing of the Merger, the combined company’s executive officers are expected to be members of the Morphogenesis executive management team prior to the Merger, including:
Name |
Title |
|
James Bianco, M.D. |
President and Chief Executive Officer |
|
Dan Dearborn |
Chief Financial Officer |
Material U.S. Federal Income Tax Consequences of the Merger (see page 138)
The Merger is intended to qualify as (1) a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) for U.S. federal income tax purposes and (2) if the former stockholders of Morphogenesis are in “control” of CohBar immediately after the Effective Time, an exchange of shares of Morphogenesis’ Common Stock for shares of CohBar Common Stock within the meaning of Section 351 of the Code. However, it is not a condition to Morphogenesis’ obligation or CohBar’s obligation to complete the Merger that the Merger so qualifies. Nevertheless, assuming that the Merger so qualifies, U.S. holders (as defined in the section titled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger”) of shares of Morphogenesis Common Stock will generally not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their shares of Morphogenesis Common Stock for shares of CohBar Common Stock in the Merger. Morphogenesis and CohBar have not sought and will not seek any ruling from the Internal Revenue Service (the “IRS”) regarding any matters relating to the transactions and, as a result, there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth herein. For a more detailed discussion of the material U.S. federal income tax consequences of the Merger, see “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 138.
Risk Factors (see page 26)
Both CohBar and Morphogenesis are subject to various risks associated with their businesses and their industries. In addition, the Merger, including the possibility that the Merger may not be completed, poses a number of risks to each company and its respective securityholders, including the following risks:
Risks Related to the Merger
• The merger consideration at the closing of the Merger may have a greater or lesser value than at the time the Merger Agreement was signed because of the fixed Exchange Ratio;
• Failure to complete the Merger may result in either CohBar or Morphogenesis paying a termination fee to the other party and could harm the price of CohBar Common Stock and future business and operations of each company;
• If the conditions to the Merger, including the condition for CohBar to have at least $4.0 million cash and cash equivalents at the Effective Time, are not satisfied or waived, the Merger may not occur, the closing of the Merger could be delayed or pre-Merger CohBar stockholders could be diluted;
• Some CohBar and Morphogenesis directors and executive officers have interests in the Merger that are different from yours and that may influence them to support, approve or vote against the Merger without regard to your interests;
• CohBar stockholders and Morphogenesis stockholders may not realize a benefit from the Merger commensurate with the ownership interest dilution they will experience in connection with the Merger, including due to any shares of CohBar Common Stock issued in the Initial Financing, as defined below;
• If the Merger is not completed, CohBar’s stock price may decline significantly;
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• During the pendency of the Merger, CohBar and Morphogenesis may not be able to enter into a business combination with another party on more favorable terms because of restrictions in the Merger Agreement, which could adversely affect their respective business prospects;
• Lawsuits may be filed against CohBar, the members of the CohBar Board, Morphogenesis or the members of the Morphogenesis Board arising out of the Merger, which may delay or prevent the Merger; and
• CohBar’s stockholders may potentially not receive any payment on the CVRs and the CVRs may otherwise expire valueless.
Risks Related to the Proposed Reverse Stock Split
• The Reverse Stock Split may not increase the combined company’s stock price over the long-term;
• The Reverse Stock Split may decrease CohBar’s or the combined company’s common stock liquidity; and
• The Reverse Stock Split may decrease our or the combined company’s overall market capitalization.
Risks Related to CohBar
• If the Merger is not approved or does not occur, we may decide to dissolve and liquidate our Company, and the amount of cash that may be available for distribution to our stockholders is uncertain;
• If the Merger is not approved or does not occur, we may not be successful in identifying and implementing any strategic alternatives and any future strategic transactions could have negative consequences;
• We are an early-stage biotechnology company and may never be able to successfully develop marketable products or generate any revenue and there is no assurance that our future operations will result in profits;
• Volatility in the price of our common stock could result in substantial losses to our stockholders, and if we are unable to comply with Nasdaq’s continued listing requirements, our common stock could be delisted;
• Our business could be negatively affected as a result of significant stockholders or potential stockholders attempting to effect changes or acquire control over CohBar, which could cause us to incur significant expense, hinder execution of our business strategy, and impact the trading value of our securities;
• We maintain our cash at financial institutions. The failure of financial institutions could adversely affect our ability to pay our operational expenses or make other payments; and
• Our employees, directors, and potential future principal investigators, CROs and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.
Risks Related to Morphogenesis
• Morphogenesis has a limited operating history, has completed limited clinical trials, and has no products approved for commercial sale, which may make it difficult for you to evaluate its current business and likelihood of success and viability;
• Even if the Merger and the Initial Financing and the Second Financing are successful, Morphogenesis will require substantial additional capital to finance its operations in the future. If Morphogenesis is unable to raise such capital when needed, or on acceptable terms, Morphogenesis may be forced to delay, reduce or eliminate clinical trials, product development programs or future commercialization efforts;
• Morphogenesis has incurred significant losses since inception and expects to incur significant losses for the foreseeable future and may not be able to achieve or sustain profitability in the future;
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• Morphogenesis’ product candidates are in early stages of development and may fail in development or suffer delays that materially and adversely affect their commercial viability. If Morphogenesis or its current or future collaborators are unable to complete development of, or commercialize, its product candidates, or experience significant delays in doing so, its business will be materially harmed;
• Morphogenesis is substantially dependent on the success of its most advanced product candidate, IFx-Hu2.0, and its clinical trials of such candidate may not be successful;
• Morphogenesis is on the development, manufacturing, and sale of biologics, which is complex and subject to unique risks and uncertainties, including access to necessary biological materials, which may be limited, are subject to regulations restricting access and transportation and are costly to manufacture;
• In order to successfully implement its plans and strategies, Morphogenesis will need to grow the size of its organization and Morphogenesis may experience difficulties in managing this growth; and
• Morphogenesis’ ability to protect its patents and other proprietary rights is uncertain, exposing Morphogenesis to the possible loss of competitive advantage.
Risks Related to the Combined Company
• The market price of the combined company’s common stock is expected to be volatile, the market price of the common stock may drop following the Merger and an active trading market for the combined company’s common stock may not develop and its stockholders may not be able to resell their shares of common stock for a profit, if at all;
• The combined company will need to raise additional financing in the future to fund its operations, which may not be available to it on favorable terms or at all;
• Provisions in the combined company’s charter documents and under Delaware law could make an acquisition of the combined company more difficult and may discourage any takeover attempts which stockholders may consider favorable, and may lead to entrenchment of management; and
• The combined company will have broad discretion in the use of the cash and cash equivalents of the combined company and the proceeds from the Initial Financing and Second Financing and may invest or spend the proceeds in ways that may not increase the value of your investment.
These risks and other risks are discussed in greater detail under the section titled “Risk Factors” beginning on page 26 of this proxy statement/prospectus. CohBar and Morphogenesis both encourage you to read and consider all of these risks carefully.
Regulatory Approvals (see page 138)
Each of CohBar and Morphogenesis will use commercially reasonable efforts to file or otherwise submit, as soon as practicable after the date of the Merger Agreement, all applications, notices, reports and other documents reasonably required to be filed by such party with or otherwise submitted by such party to any governmental authority with respect to the Merger and the related transactions contemplated by the Merger Agreement, if any, and to submit promptly any additional information requested by any such governmental authority.
Nasdaq Stock Market Listing (see page 142)
CohBar intends to file an initial listing application for the combined company common stock with Nasdaq. If such application is accepted, CohBar anticipates that the common stock of the combined company will be listed on Nasdaq following the closing of the Merger under the trading symbol “HURA.”
Anticipated Accounting Treatment (see page 142)
The Merger is expected to be accounted for as a reverse recapitalization in accordance with U.S. GAAP. For accounting purposes, Morphogenesis is considered to be acquiring the assets and liabilities of CohBar in this transaction based on the terms of the Merger Agreement and other factors, including: (i) Morphogenesis’ equity holders will own a substantial majority of the voting rights in the combined company; (ii) Morphogenesis will
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designate a majority (four of six) of the initial members of the board of directors of the combined company; and (iii) Morphogenesis’ executive management team will become the management of the combined company. The combined company will be named “TuHURA Biosciences, Inc.,” and will be headquartered in Tampa, FL. Accordingly, the Merger is expected to be treated as the equivalent of Morphogenesis issuing stock to acquire the net assets of CohBar. As a result of the Merger, the net assets of CohBar and Morphogenesis will be recorded at carrying value, with no goodwill or other intangible assets recorded, and the historical results of operations prior to the Merger will be those of Morphogenesis. See the section titled “Unaudited Pro Forma Condensed Combined Financial Information” on page 285 of this proxy statement/prospectus for additional information.
Appraisal Rights and Dissenters’ Rights (see page 143)
Holders of CohBar Common Stock are not entitled to appraisal rights in connection with the Merger under Delaware law. Holders of Morphogenesis capital stock are entitled to appraisal rights in connection with the Merger under Delaware law.
Comparison of Stockholder Rights (see page 299)
Both CohBar and Morphogenesis are incorporated under the laws of the State of Delaware and, accordingly, the rights of the stockholders of each are currently, and will continue to be, governed by the Delaware General Corporation Law (“DGCL”). If the Merger is completed, Morphogenesis stockholders will become CohBar stockholders, and their rights will be governed by the DGCL, the amended and restated bylaws of CohBar (“CohBar’s bylaws”) and the CohBar Charter”), as may be further amended by Proposal No. 3 if approved by the CohBar stockholders at the CohBar Special Meeting. The rights of CohBar stockholders contained in the CohBar Charter and bylaws differ from the rights of Morphogenesis stockholders under the certificate of incorporation and bylaws of Morphogenesis, as more fully described under the section titled “Comparison of Rights of Holders of CohBar Capital Stock and Morphogenesis Capital Stock” beginning on page 299 of this proxy statement/prospectus.
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MARKET PRICE AND DIVIDEND INFORMATION
The CohBar Common Stock is currently listed on the Nasdaq Capital Market under the symbol “CWBR.”
The closing price of the CohBar Common Stock on May 22, 2023, the last day of trading prior to the announcement of the Merger, as reported on Nasdaq, was $1.55 per share. The closing price of the CohBar Common Stock on , 2023, the last practicable date before the date of this proxy statement/prospectus, as reported on Nasdaq, was $ per share.
Because the market price of the CohBar Common Stock is subject to fluctuation, the market value of the shares of the CohBar Common Stock that the Morphogenesis stockholders will be entitled to receive in the Merger may increase or decrease.
Morphogenesis is a private company and shares of Morphogenesis Common Stock are not publicly traded.
Assuming approval of Proposal Nos. 1, 2 and 3 and successful application for initial listing with The Nasdaq Capital Market, following the consummation of the Merger, the CohBar Common Stock will trade on The Nasdaq Capital Market under CohBar’s new name, “TuHURA Biosciences, Inc.,” and new trading symbol “HURA.”
As of , 2023, the Record Date for the CohBar Special Meeting, there were approximately registered holders of record of the CohBar Common Stock. As of , 2023, Morphogenesis had holders of record of Morphogenesis Common Stock and holders of record of Morphogenesis preferred stock. For detailed information regarding the beneficial ownership of certain CohBar and Morphogenesis stockholders, see the sections of this proxy statement/prospectus titled “Principal Stockholders of CohBar” and “Principal Stockholders of Morphogenesis.”
Dividends
CohBar has not declared or paid a cash dividend on its capital stock and does not intend to pay cash dividends for the foreseeable future. All dividends are subject to the approval of the CohBar Board. Any future determinations to pay dividends on CohBar’s capital stock would depend on its results of operations, its financial condition and liquidity requirements, restrictions that may be imposed by applicable laws or its contracts, and any other factors that the CohBar Board in its sole discretion may consider relevant in declaring a dividend.
Morphogenesis has never paid or declared any cash dividends on its capital stock. If the Merger does not occur, Morphogenesis does not anticipate paying any cash dividends on its capital stock in the foreseeable future, and Morphogenesis intends to retain all available funds and any future earnings to fund the development and expansion of its business. Any future determination to pay dividends will be at the discretion of the Morphogenesis Board and will depend upon a number of factors, including its results of operations, financial condition, future prospects, contractual restrictions, and restrictions imposed by applicable laws and other factors the Morphogenesis Board deems relevant.
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RISK FACTORS
Risks Related to the Merger
The merger consideration at the closing of the Merger may have a greater or lesser value than at the time the Merger Agreement was signed because of the fixed Exchange Ratio.
Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, each then-outstanding share of Morphogenesis Common Stock will be converted into shares of CohBar Common Stock. Applying the Exchange Ratio, on pro forma basis, including the Stock Dividend and, after taking into account the Initial Financing, pre-Merger Morphogenesis equityholders are expected to own approximately 77% of the combined company, pre-Merger CohBar equityholders are expected to own approximately 15% of the combined company, and the Investor is expected to own approximately 9% of the combined company (excluding in each such case the effect of out-of-the-money options and warrants of CohBar that will remain outstanding after the Merger), subject to certain assumptions, including, but not limited to, (i) a valuation for CohBar equal to $25.0 million, (ii) a valuation for Morphogenesis equal to $130.6 million and (iii) gross proceeds of $15.0 million from the Initial Financing, in each case as further described in the Merger Agreement. Accordingly, the Exchange Ratio is fixed (subject to certain adjustments in relation to the capitalization of CohBar and Morphogenesis as set forth in the Merger Agreement) and will not change or otherwise be adjusted based on the market price of CohBar Common Stock.
Any changes in the market price of CohBar Common Stock before the completion of the Merger will not affect the number of shares Morphogenesis stockholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger, the market price of CohBar Common Stock increases from the market price on the date of the Merger Agreement, then Morphogenesis stockholders could receive merger consideration with substantially more value for their shares of Morphogenesis capital stock than the parties had negotiated when they established the Exchange Ratio. Similarly, if before the completion of the Merger the market price of CohBar Common Stock declines from the market price on the date of the Merger Agreement, then Morphogenesis stockholders could receive merger consideration with substantially lower value. The Merger Agreement does not include a price-based termination right.
Failure to complete the Merger may result in either CohBar or Morphogenesis paying a termination fee to the other party and could harm the price of CohBar Common Stock and future business and operations of each company.
If the Merger is not completed, CohBar and Morphogenesis are subject to the following risks:
• if the Merger Agreement is terminated under specified circumstances, CohBar could be required to pay Morphogenesis a termination fee of $1.0 million, or Morphogenesis could be required to pay CohBar a termination fee of $3.0 million, plus, in each case, up to $1.5 million in expense reimbursements, respectively;
• the price of CohBar Common Stock may decline and could fluctuate significantly; and
• costs related to the Merger, such as financial advisor, legal and accounting fees, a majority of which must be paid even if the Merger is not completed.
If the Merger Agreement is terminated and the CohBar Board or the Morphogenesis Board determines to seek another business combination, there can be no assurance that either CohBar or Morphogenesis will be able to find another third party to transact a business combination with, or that if either CohBar or Morphogenesis is successful in finding such a third party, that such a business combination would yield comparable or greater benefits.
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The issuance of CohBar Common Stock to Morphogenesis stockholders pursuant to the Merger Agreement and the resulting change in control from the Merger must be approved by CohBar stockholders, and the Merger Agreement and transactions contemplated thereby must be approved by the Morphogenesis stockholders. Failure to obtain these approvals would prevent the closing of the Merger.
Before the Merger can be completed, the CohBar stockholders must approve, among other things, the issuance of CohBar Common Stock to Morphogenesis stockholders pursuant to the Merger Agreement and the resulting change in control from the Merger, and Morphogenesis stockholders must adopt the Merger Agreement and approve the Merger and the related transactions. Failure to obtain the required stockholder approvals, including due to the inability to obtain a quorum to hold the CohBar Special Meeting, may result in a material delay in, or the abandonment of, the Merger. Any delay in completing the Merger may materially adversely affect the timing and benefits that are expected to be achieved from the Merger or the ability of CohBar or Morphogenesis to complete the Merger in accordance with the Merger Agreement.
If the conditions to the Merger, including the condition for CohBar to have at least $4.0 million cash and cash equivalents at the Effective Time, are not satisfied or waived, the Merger may not occur, the closing of the Merger could be delayed or pre-Merger CohBar stockholders could be diluted.
Even if the Merger is approved by the stockholders of Morphogenesis and Proposal Nos. 1, 2 and 3, as described in this proxy statement/prospectus are approved by the CohBar stockholders, specified conditions must be satisfied or, to the extent permitted by applicable law, waived to complete the Merger. One such condition is that CohBar shall have at least $4 million cash and cash equivalents after taking into account any of its transaction expenses as of the Effective Time. If this condition is not satisfied, the parties may renegotiate the terms of the Merger Agreement and/or the Merger may not occur or, even if this condition is waived by Morphogenesis, not satisfying this condition may adversely impact negotiations between CohBar and Morphogenesis to complete the Merger and/or a lower valuation being attributed to CohBar under the Merger Agreement, which could cause dilution to pre-Merger CohBar stockholders. These conditions are set forth in the Merger Agreement and each material condition to the completion of the Merger is described in the section titled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 159 of this proxy statement/prospectus. CohBar and Morphogenesis cannot assure you that all of the conditions to the consummation of the Merger will be satisfied or waived. If the conditions are not satisfied or waived, the Merger may not occur or the closing may be delayed. Any delay in completing the Merger may materially adversely affect the timing and benefits that are expected to be achieved from the Merger.
The Merger may be completed even though a material adverse effect may result from the announcement of the Merger, industry-wide changes or other causes.
In general, neither CohBar nor Morphogenesis is obligated to complete the Merger if there is a material adverse effect affecting the other party between May 22, 2023, the date of the Merger Agreement, and the closing of the Merger. However, certain types of causes are excluded from the concept of a “material adverse effect.” Such exclusions include, but are not limited to, changes or conditions generally affecting the industries in which Morphogenesis operates, the economy, financial markets or regulatory or political conditions or developments, changes resulting from the announcement of the Merger, natural disasters, pandemics (including the coronavirus (“COVID-19”) pandemic), other force majeure events, acts of terrorism, war and certain governmental responses in relation thereto, changes in law or the generally accepted accounting principles in the U.S. (“GAAP”) and certain actions taken or not taken by Morphogenesis. Therefore, if any of these events were to occur or adversely affect CohBar or Morphogenesis, the other party would still be obliged to consummate the closing of the Merger notwithstanding such material adverse effect. If any such adverse effects occur and CohBar and Morphogenesis consummate the closing of the Merger, the stock price of the combined company may suffer. This in turn may reduce the value of the Merger to the stockholders of CohBar, Morphogenesis or both. For a more complete discussion of what constitutes a material adverse effect on CohBar or Morphogenesis, see the section titled “The Merger Agreement — Representations and Warranties” beginning on page 150 of this proxy statement/prospectus.
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If CohBar and Morphogenesis complete the Merger, CohBar has agreed to issue and sell additional CohBar Common Stock in the Initial Financing and Second Financing, which will result in dilution of pre-Merger stockholders of CohBar and Morphogenesis if completed, and, even if the Initial Financing and Second Financing are each completed, the combined company will need to raise additional capital by issuing equity securities or additional debt or through licensing arrangements, which may cause further dilution to the combined company’s stockholders or restrict the combined company’s operations.
On May 22, 2023, CohBar entered into the Stock Purchase Agreement with the Investor pursuant to which CohBar agreed to participate in the Initial Financing at the Initial Closing. The consummation of the Initial Financing is conditioned on the satisfaction or waiver of the conditions of the Merger and the other conditions set forth in the Stock Purchase Agreement. In addition, pursuant to the Stock Purchase Agreement, CohBar has also agreed to participate in the Second Financing at the Second Closing. Any shares of CohBar Common Stock issued in the Initial Financing at the Initial Closing will result in dilution to the pre-Merger Morphogenesis equityholders and pre-Merger CohBar equityholders ownership interests of the combined company. Any shares of CohBar Common Stock issued in the Second Financing at the Second Closing will result in dilution to the then-existing securityholders’ ownership interests of the combined company. The Initial Financing and Second Financing are more fully described under the section titled “Agreements Related to the Merger — Stock Purchase Agreement” beginning on page 166 of this proxy statement/prospectus.
Even if the Initial Financing and Second Financing are completed, the combined company will need to raise additional capital by issuing equity securities or additional debt or through licensing arrangements. Additional financing may not be available to the combined company when it is needed or may not be available on favorable terms. To the extent that the combined company raises additional capital by issuing equity securities, such financing will cause additional dilution to all then-existing securityholders of the combined company. It is also possible that the terms of any new equity securities may have preferences over the combined company’s common stock. Any debt financing the combined company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the combined company raises additional funds through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to the combined company. For additional information relating to the risks and uncertainties regarding the combined company’s need to raise additional capital, see “Risks Related to the Combined Company — The combined company will need to raise additional financing in the future to fund its operations, which may not be available to it on favorable terms or at all.”
Some CohBar and Morphogenesis directors and executive officers have interests in the Merger that are different from yours and that may influence them to support, approve or vote against the Merger without regard to your interests.
Directors and executive officers of CohBar and Morphogenesis may have interests in the Merger that are different from, or in addition to, the interests of other CohBar stockholders generally. These interests with respect to CohBar’s directors and executive officers may include, among others, acceleration of stock option, warrant or equity grant vesting, retention bonus payments, extension of exercisability periods of previously issued stock option grants, severance payments if employment is terminated in a qualifying termination in connection with the Merger and rights to continued indemnification, expense advancement and insurance coverage. Two members of the CohBar Board are expected to continue as directors of the combined company after the Effective Time, and, following the closing of the Merger, are expected to be eligible to be compensated as non-employee directors of the combined company. These interests with respect to Morphogenesis’ directors and executive officers may include, among others, certain of Morphogenesis’ directors and executive officers have options, subject to vesting, to purchase shares of Morphogenesis Common Stock which, after the Effective Time, will be converted into and become options to purchase shares of the common stock of the combined company; Morphogenesis’ executive officers are expected to continue as executive officers of the combined company after the Effective Time; and all of Morphogenesis’ directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement.
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In addition, certain current members of the Morphogenesis Board will continue as directors of the combined company after the Effective Time, and, following the closing of the Merger, will be eligible to be compensated as non-employee directors of the combined company pursuant to the combined company’s non-employee director compensation policy.
The CohBar Board and Morphogenesis Board were aware of and considered such interests, among other matters, in reaching their decisions to approve and adopt or vote against the adoption of the Merger Agreement, approve or vote against the Merger and recommend the approval or disapproval of the Merger Agreement to CohBar and Morphogenesis stockholders. These interests, among other factors, may have influenced the directors and executive officers of CohBar and Morphogenesis to support, approve or vote against the Merger.
For more information regarding the interests of CohBar and Morphogenesis directors and executive officers in the Merger, please see the sections titled “The Merger — Interests of CohBar’s Directors and Executive Officers in the Merger” beginning on page 132 and “The Merger — Interests of Morphogenesis’ Directors and Executive Officers in the Merger” beginning on page 135 of this proxy statement/prospectus.
CohBar stockholders and Morphogenesis stockholders may not realize a benefit from the Merger commensurate with the ownership interest dilution they will experience in connection with the Merger, including due to any shares of CohBar Common Stock issued in the Initial Financing.
If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the Merger, CohBar stockholders and Morphogenesis stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Merger.
If the Merger is not completed, CohBar’s stock price may decline significantly.
The market price of CohBar Common Stock is subject to significant fluctuations. Market prices for securities of pharmaceutical, biotechnology and other life science companies have historically been particularly volatile. In addition, the market price of CohBar Common Stock will likely be volatile based on whether stockholders and other investors believe that CohBar can complete the Merger or otherwise raise additional capital to support CohBar’s operations if the Merger is not consummated and another strategic transaction cannot be identified, negotiated and consummated in a timely manner, if at all. The volatility of the market price of CohBar Common Stock has been and may be exacerbated by lower trading volume. Additional factors that may cause the market price of CohBar Common Stock to fluctuate include:
• the entry into, or termination of, key agreements, including commercial partner agreements;
• announcements by commercial partners or competitors of new commercial products, clinical progress or lack thereof, significant contracts, commercial relationships or capital commitments;
• the loss of key employees;
• future sales of its common stock;
• general and industry-specific economic conditions that may affect its research and development expenditures;
• the failure to meet industry analyst expectations; and
• period-to-period fluctuations in financial results.
Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of CohBar Common Stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.
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The market price of the combined company’s common stock following the Merger may decline as a result of the Merger.
The market price of the combined company’s common stock may decline as a result of the Merger for a number of reasons, including if
• investors react negatively to the prospects of the combined company’s product candidates, business and financial condition following the Merger;
• the effect of the Merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or
• the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts.
For additional information relating to the risks and uncertainties regarding the market price of the combined company’s common stock following the Merger, see “Risks Related to the Combined Company — The market price of the combined company’s common stock is expected to be volatile, and the market price of the common stock may drop following the Merger.”
CohBar and Morphogenesis stockholders will generally have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the Merger as compared to their current ownership and voting interests in the respective companies.
After the completion of the Merger, the current stockholders of CohBar and Morphogenesis will generally own a smaller percentage of the combined company than their ownership of their respective companies prior to the Merger. Immediately after the Merger, including the Stock Dividend and, after taking into account the Initial Financing, pre-Merger Morphogenesis stockholders are expected to own approximately 77% of the combined company, pre-Merger CohBar stockholders are expected to own approximately 15% of the combined company, and the Investor is expected to own approximately 9% of the combined company (excluding in each such case the effect of out-of-the-money options and warrants of CohBar that will remain outstanding after the Merger), subject to certain assumptions, including, but not limited to, (i) a valuation for CohBar equal to $25.0 million, (ii) a valuation for Morphogenesis equal to $130.6 million and (iii) gross proceeds of $15.0 million from the Initial Financing, in each case as further described in the Merger Agreement. The Chief Executive Officer and Chief Financial Officer of Morphogenesis will serve as the Chief Executive Officer and Chief Financial Officer of the combined company, respectively, following the completion of the Merger.
During the pendency of the Merger, CohBar and Morphogenesis may not be able to enter into a business combination with another party on more favorable terms because of restrictions in the Merger Agreement, which could adversely affect their respective business prospects.
Covenants in the Merger Agreement impede the ability of CohBar and Morphogenesis to make acquisitions during the pendency of the Merger, subject to specified exceptions. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating or knowingly encouraging, inducing or facilitating the communication, making, submission or announcement of any acquisition proposal or acquisition inquiry or taking any action that could reasonably be expected to lead to any acquisition proposal or acquisition inquiry regarding transactions involving a third party, including a merger, consolidation or other business combination, subject to specified exceptions. Any such transactions could be favorable to such party’s stockholders, but the parties may be unable to pursue them. For more information, see the section titled “The Merger Agreement — Non-Solicitation” beginning on page 155 of this proxy statement/prospectus.
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Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the transactions contemplated by the Merger Agreement.
The terms of the Merger Agreement prohibit each of CohBar and Morphogenesis from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances as described in further detail in the section titled “The Merger Agreement — Non-Solicitation” beginning on page 155 of this proxy statement/prospectus. In addition, if CohBar terminates the Merger Agreement under specified circumstances, CohBar could be required to pay Morphogenesis a termination fee of $1.0 million, or Morphogenesis could be required to pay CohBar a termination fee of $3.0 million, plus, in each case, up to $1.5 million in expense reimbursements. The termination fee provisions may discourage third parties from submitting competing proposals to CohBar, Morphogenesis or their respective stockholders, and may cause the CohBar Board or the Morphogenesis Board to be less inclined to recommend a competing proposal.
Because the lack of a public market for Morphogenesis’ capital stock makes it difficult to evaluate the fair market value of Morphogenesis’ capital stock, the value of the CohBar Common Stock to be issued to Morphogenesis stockholders may be more or less than the fair market value of Morphogenesis’ capital stock.
The outstanding capital stock of Morphogenesis is privately held and is not traded in any public market. The lack of a public market makes it difficult to determine the fair market value of Morphogenesis’ capital stock. Because the percentage of CohBar equity to be issued to Morphogenesis stockholders was determined based on negotiations between the parties, it is possible that the value of the CohBar Common Stock to be issued to Morphogenesis stockholders will be more or less than the fair market value of Morphogenesis’ capital stock.
If the Merger does not qualify as a reorganization or a section 351 contribution under the Code, U.S. holders of Morphogenesis Common Stock may be taxed on the full amount of the consideration received in the Merger.
As discussed more fully under the section titled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger,” the Merger is intended to qualify for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming the Merger so qualifies, no gain will be recognized by U.S. holders of Morphogenesis Common Stock who receive only CohBar Common Stock in the Merger. It is not, however, a condition to Morphogenesis’ obligation or CohBar’s obligation to complete the transactions that the Merger so qualifies. None of the parties to the Merger Agreement have sought or intend to seek any ruling from the IRS regarding the qualification of the Merger as a reorganization within the meaning of Section 368(a) of the Code. If the Merger does not qualify for the U.S. federal income tax treatment described herein, U.S. holders of Morphogenesis Common Stock may be taxed on any gain realized up to the full fair market value of any CohBar Common Stock received in the Merger.
Lawsuits may be filed against CohBar, the members of the CohBar Board, Morphogenesis or the members of the Morphogenesis Board arising out of the Merger, which may delay or prevent the Merger.
Putative stockholder complaints, including stockholder class action complaints, and other complaints may be filed against CohBar, the CohBar Board, Morphogenesis or the Morphogenesis Board in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, and CohBar and Morphogenesis may not be successful in defending against any such future claims. Lawsuits that may be filed against CohBar, the CohBar Board, Morphogenesis or the Morphogenesis Board could delay or prevent the Merger, divert the attention of the management teams and employees of CohBar and Morphogenesis from day-to-day business and otherwise adversely affect the business and financial condition of CohBar, Morphogenesis or the combined company.
The opinion delivered by Ladenburg to the CohBar Board on May 22, 2023 does not reflect changes in circumstances that may have occurred since the date of the opinion.
The CohBar Board has not obtained an updated opinion either as of the date of this proxy statement/prospectus or as of any other date subsequent to the date of the opinion from Ladenburg, CohBar’s financial advisor. Changes in circumstances since the date of that opinion, including in the operations and prospects of CohBar or Morphogenesis, stock prices, general market and economic conditions and other factors, some or all of which may be beyond the control of CohBar and Morphogenesis are not reflected in its opinion. The opinion does not speak as of any date other than the date of the opinion.
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CohBar’s stockholders may potentially not receive any payment on the CVRs and the CVRs may otherwise expire valueless.
The Merger Agreement contemplates that, at or prior to the Effective Time, CohBar will enter into a Contingent Value Rights Agreement (the “CVR Agreement”) with a rights agent pursuant to which each of CohBar’s stockholders of record immediately prior to the Merger and certain warrant holders of record as of the close of business on the business day immediately prior to the date of the closing of the Merger or such other date pursuant to the terms of the Merger Agreement will receive one CVR for each outstanding share of CohBar Common Stock held by such stockholder or, in the case of the warrants, each share of CohBar Common Stock for which such warrant is exercisable on such date, in each case, subject to and in accordance with the terms and conditions of the CVR Agreement. Each CVR will entitle the holder thereof to receive certain cash payments from the net proceeds, if any, related to the disposition of CohBar’s legacy assets pursuant to any disposition agreement entered into within three years of the closing of the Merger. The right of CohBar’s stockholders to derive any value from the CVRs will be contingent solely upon the disposition of such assets within the time periods specified in the CVR Agreement. CohBar’s legacy assets include the tangible and intangible assets primarily used in or primarily related to the development and optimization of novel therapeutics that are analogs of mitochondrial derived peptides, including without limitation the CohBar’s CB4211 candidate and CB5138 Analogs.
CohBar, or the combined company, may not be able to dispose of, or achieve successful results from the disposition of, such assets as described above. If CohBar, or the combined company, is not able to dispose of, or achieve successful results from the disposition of, such assets for any reason within the time periods specified in the CVR Agreement, including due to any permitted deductions set forth in the CVR Agreement being greater than any gross proceeds, no payments will be made under the CVRs, and the CVRs will expire valueless.
The tax treatment of the CVRs is uncertain.
CohBar intends to treat the issuance of the CVRs to the persons who prior to completion of the Merger were CohBar stockholders as a distribution of property with respect to CohBar Common Stock. However, the U.S. federal income tax treatment of the CVRs is uncertain. There is no legal authority directly addressing the U.S. federal income tax treatment of contingent value rights with characteristics similar to the CVRs. Therefore, it is possible that the issuance of the CVRs may be treated as a distribution of equity with respect to CohBar Common Stock, as an “open transaction,” or as a “debt instrument” for U.S. federal income tax purposes, and such questions are inherently factual in nature. For more information regarding the U.S. federal income tax consequences of the CVRs, see the section titled “Agreements Related to the Merger — Contingent Value Rights Agreement — Material U.S. Federal Income Tax Consequences of the CVRs to Holders of CohBar Common Stock.”
Risks Related to the Proposed Reverse Stock Split
The proposed reverse stock split may not increase the combined company’s stock price over the long-term.
The principal purposes of the reverse stock split are to (i) increase the per-share market price of CohBar Common Stock above the minimum bid price requirement under Nasdaq listing rules so that the listing of CohBar and the shares of CohBar Common Stock being issued in the Merger on Nasdaq will be approved and (ii) increase the number of authorized and unissued shares available for future issuance. It cannot be assured, however, that the reverse stock split will accomplish any increase in the per-share market price of CohBar Common Stock for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of CohBar Common Stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio determined in the discretion of the CohBar Board in consultation and cooperation with Morphogenesis, or result in any permanent or sustained increase in the market price of CohBar Common Stock, which is dependent upon many factors, including CohBar’s business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of CohBar might meet the listing requirements for Nasdaq initially after the reverse stock split, it cannot be assured that it will continue to do so.
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The proposed reverse stock split may decrease the liquidity of CohBar Common Stock or the combined company’s common stock.
Although the CohBar Board believes that the anticipated increase in the market price of the combined company’s common stock resulting from the proposed reverse stock split could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading in and a smaller number of market makers for the combined company’s common stock. In addition, the reverse stock split may not result in an increase in the combined company’s stock price necessary to satisfy Nasdaq’s initial listing requirements for the combined company.
If the Merger does not occur and the CohBar Board were to effect the reverse stock split, the reduction in the number of outstanding shares of CohBar Common Stock after the reverse stock split could reduce the liquidity of CohBar Common Stock. The reduction in the number of outstanding shares may lead to reduced trading in and a smaller number of market makers for CohBar Common Stock. Additionally, there is no guarantee that the reverse stock split would increase the price of CohBar Common Stock to the price necessary to comply with the Nasdaq minimum bid price listing requirements.
The proposed reverse stock split may lead to a decrease in the overall market capitalization of the combined company or CohBar.
Should the market price of the combined company’s common stock or CohBar Common Stock (in the case the Merger does not occur and the CohBar Board were to effect the reverse stock split) decline after the reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in the overall market capitalization the combined company or CohBar, as applicable. If the per-share market price does not increase in proportion to the reverse stock split ratio, then the value of the combined company or CohBar, as applicable, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of the combined company’s common stock or CohBar Common Stock, as applicable, will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on the price of the combined company’s common stock or CohBar Common Stock, as applicable, due to the reduced number of shares outstanding after the reverse stock split.
Risks Related to CohBar
Unless the context otherwise requires, references to “we,” “us,” “our” or “Company” in this subsection “— Risks Related to CohBar” generally refer to CohBar.
Risks Related to Strategic Alternative Process and Potential Strategic Transaction
If the Merger is not approved or does not occur, we may decide to dissolve and liquidate our Company, and the amount of cash that may be available for distribution to our stockholders is uncertain.
If the Merger is not approved or does not occur, we may decide to pursue a dissolution and liquidation of our Company, and the amount of cash that may be available for distribution to our stockholders is uncertain. This amount will depend on the resolution of our financial commitments and contingent liabilities and the timing of the decision to liquidate. Our financial commitments and contingent liabilities include: (i) personnel costs, including severance; (ii) contractual obligations to vendors and clinical study sites; and (iii) non-cancelable lease obligations. In addition, if the Merger Agreement is terminated under specified circumstances, we could be required to pay Morphogenesis a termination fee of $1.0 million, plus up to $1.5 million in expense reimbursements. Even if a termination fee or expense reimbursements are not payable in connection with a termination of the Merger Agreement, we will have incurred significant fees and expenses, which must be paid whether or not the Merger is completed.
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If the Merger is not approved or does not occur, we may not be successful in identifying and implementing any strategic alternatives and any future strategic transactions could have negative consequences.
If the Merger is not approved or does not occur, we may seek strategic alternatives, including a merger, business combination, investment into CohBar, asset sale or other strategic transaction. The process of continuing to evaluate these strategic alternatives is costly, time-consuming and complex, and we have incurred, and may in the future incur, significant costs related to this continued evaluation, such as legal and accounting fees and expenses and other related charges. We may also incur additional unanticipated expenses in connection with this process. A considerable portion of these costs will be incurred regardless of whether any such course of action is implemented or transaction is completed, decreasing the remaining cash available for use in our business. This reduction in our available cash may make us less attractive to potential partners.
Potential counterparties in a strategic transaction involving our Company may place minimal or no value on our assets. Further, the development and any potential commercialization of our product candidates will require substantial additional cash to fund the costs associated with conducting the necessary preclinical and clinical testing and obtaining regulatory approval. Consequently, any potential counterparty in a strategic transaction involving our Company may choose not to spend additional resources and continue to utilize CohBar’s peptide library and technology platform and may attribute little or no value, in such a transaction, to those product assets.
There can be no assurance that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated, lead to increased stockholder value, or achieve the anticipated results. If we are unable to consummate the Merger or a strategic transaction, the CohBar Board may decide to pursue a dissolution and liquidation.
Even if we are successful in completing the Merger or a strategic alternative, we may be exposed to other operational and financial risks.
Although there can be no assurance that the Merger or a strategic alternative (in the case the Merger is not approved or does not occur) will result from the process we have undertaken to identify and evaluate strategic alternatives, the negotiation and consummation of any such transaction requires significant time on the part of our management, which results in disruption to our business.
The negotiation and consummation of any such transaction may also require more time or greater cash resources than we anticipate and expose us to other operational and financial risks, including:
• increased near-term and long-term expenditures;
• exposure to unknown liabilities;
• higher than expected acquisition or integration costs;
• incurrence of substantial debt or dilutive issuances of equity securities to fund future operations;
• write-downs of assets or goodwill or incurrence of non-recurring, impairment or other charges;
• increased amortization expenses;
• difficulty and cost in combining the operations and personnel of any acquired business with our operations and personnel;
• impairment of relationships with key suppliers or customers of any acquired business due to changes in management and ownership;
• inability to retain key employees of our Company or any acquired business; and
• possibility of future litigation.
Any of the foregoing risks could have a material adverse effect on our business, financial condition and prospects.
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Our ability to consummate the Merger or a strategic alternative depends on our ability to retain our employees required to consummate such transaction.
Our ability to consummate the Merger or a strategic alternative (in the case the Merger is not approved or does not occur) depends upon our ability to retain our employees required to consummate such a transaction, in particular our Chief Executive Officer and Chief Financial Officer, the loss of whose services may adversely impact the ability to consummate such transaction. If we are unable to successfully retain these employees, we are at risk of a disruption to our exploration and consummation of a strategic alternative as well as business operations.
We may become involved in securities litigation that could divert management’s attention and harm CohBar’s business, and insurance coverage may not be sufficient to cover all costs and damages.
In the past, securities litigation has often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, or the announcement of negative events, such as negative results from clinical trials. We may be exposed to such litigation even if no wrongdoing occurred. Litigation is usually expensive and diverts management’s attention and resources, which could adversely affect our business and cash resources and our ability to consummate the Merger or a potential strategic alternative (in the case the Merger is not approved or does not occur) or the ultimate value our stockholders receive in any such transaction.
Risks Related to Our Financial Position and Need for Additional Capital
We have had a history of losses and no revenue.
We have generated substantial accumulated losses since our inception. We have not generated any revenues from our operations to date and do not expect to generate any revenue in the near future. As a result, our management expects the business to continue to experience negative cash flow for the foreseeable future. We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future.
Until we can generate significant revenues, if ever, we expect to satisfy our future cash needs through equity or debt financing, the Merger, the Initial Financing, the Second Financing or one or more strategic alternatives (as discussed above). We will need to raise additional funds, and such funds may not be available on commercially acceptable terms, if at all. If we are unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations. In the event we are not able to continue operations, investors will likely suffer a complete loss of their investments in our securities.
We are an early-stage biotechnology company and may never be able to successfully develop marketable products or generate any revenue and there is no assurance that our future operations will result in profits.
We are an early-stage company. Our operations to date have been limited to organizing and staffing our Company, business planning, raising capital, identifying MDPs for further research, developing our intellectual property portfolio, performing research on identified MDPs and our novel analogs and progressing our most advanced drug candidate into and through clinical studies. We have not generated any revenues to date. All of our novel peptide analogs are in the concept, research or early clinical stages. We have not been able to identify suitable formulations for our CB4211 or CB5138-3 product candidates and there can be no assurances that we will be able to develop suitable formulations for any future product candidates. Moreover, we cannot be certain that any research and development efforts that we may undertake in the future will be successful or, if successful, that our novel peptide analogs will ever be approved by the FDA. We have no relevant operating history upon which an evaluation of our performance and prospects can be made. We are subject to all of the business risks associated with a new enterprise, including, but not limited to, risks of unforeseen capital requirements, evaluating and implementing the Merger or a strategic alternative (as discussed above), failure of potential drug candidates either in research, preclinical testing or in clinical trials, and failure to establish business relationships and competitive advantages against other companies. If we fail to consummate the Merger or otherwise become profitable, we may be forced to further suspend or cease operations.
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If we fail to demonstrate efficacy or safety in any future research and clinical trials, our future business prospects, financial condition and operating results will be materially adversely affected.
The success of any future research and development efforts will greatly depend on our ability to demonstrate efficacy of our novel peptide analogs in non-clinical studies, as well as in clinical trials. Non-clinical studies involve testing potential drug candidates in appropriate non-human disease models to demonstrate efficacy and safety. Regulatory agencies evaluate these data carefully before they will approve clinical testing in humans. If certain non-clinical data reveals potential safety issues or the results are inconsistent with an expectation of the potential drug’s efficacy in humans, the program may be discontinued or the regulatory agencies may require additional testing before allowing human clinical trials. This additional testing will increase program expenses and extend timelines. We may decide to suspend further testing on our potential drugs if, in the judgment of our management and advisors, the non-clinical test results do not support further development. For example, in December 2022, we announced that we had suspended further IND-enabling activities for our CB5138-3 product candidate due to challenges in identifying a suitable formulation for clinical development.
Moreover, success in future research, preclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and non-clinical testing. Any future clinical trial process may fail to demonstrate that our potential drug candidates are safe for humans and effective for indicated uses. This failure would cause us to abandon a drug candidate and may delay development of other potential drug candidates. Any delay in, or termination of, future non-clinical testing or clinical trials will delay the filing of any future investigational new drug application and new drug application with the FDA or the equivalent applications with pharmaceutical regulatory authorities outside the United States and, ultimately, our ability to commercialize any potential drugs and generate product revenues. In addition, our Phase 1a/1b trial of CB4211, our most advanced drug candidate, involved, and we expect that any future early clinical trials that we may conduct will involve, small patient populations. Because of these small sample sizes, the results of these early clinical trials, including the topline data from our CB4211 Phase 1a/1b trial, may not be indicative of future results.
Risks Related to Discovery, Development and Commercialization
If any future clinical trials are delayed, suspended or terminated, we may be unable to develop future product candidates on a timely basis, which would adversely affect our ability to obtain regulatory approvals, increase our development costs and delay or prevent commercialization of any approved products.
We cannot predict whether we will encounter problems with our future clinical trials that will cause regulatory agencies, institutional review boards or us to suspend or delay a trial. We have experienced delays in both our CB4211 and CB5138-3 programs. Our Phase 1a/1b clinical trial for CB4211 was suspended in November 2018 in order to address injection site reactions, and was delayed again in March 2020 due to impacts of the COVID-19 pandemic. Our planned IND filing for our CB5138-3 product candidate was delayed from the second half of 2022 to the second half of 2023 due to the observation of injection site reactions in our preclinical toxicology studies. Ultimately, our efforts to mitigate these injection site reactions by improving the formulation for this product candidate were unsuccessful and in December 2022, we announced that we had suspended further IND-enabling activities for this peptide.
Clinical trials and clinical data collection protocols can be delayed for a variety of reasons, including:
• unanticipated consequences of the formulation of the product candidate requiring us to pause the trial to investigate alternative formulations;
• the occurrence of unacceptable drug-related side effects or adverse events experienced by participants in our clinical trials;
• discussions with the FDA regarding the scope or design of our clinical trials and clinical data collection protocols;
• delays or the inability to obtain required approvals from institutional review boards or other responsible entities at clinical sites selected for participation in our existing or future clinical trials;
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• adverse findings in clinical or nonclinical studies related to the safety of our product candidates in humans;
• the amendment of clinical trial or data collection protocols to reflect changes in regulatory requirements and guidance or other reasons, as well as subsequent re-examination of amendments of clinical trial or data collection protocols by institutional review boards or other responsible bodies; and
• the need to repeat or conduct additional clinical trials as a result of inconclusive or negative results, failure to replicate positive early clinical data in subsequent clinical trials, failure to deliver an efficacious dose of a product candidate, poorly executed testing, a failure of a clinical site to adhere to the clinical protocol, an unacceptable study design or other problems.
In addition, a future clinical trial or development program may be suspended or terminated by us, institutional review boards, the FDA or other responsible bodies due to a number of factors, including:
• failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;
• inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;
• inability to resume a suspended trial in a timely manner, which we cannot predict with certainty, if at all;
• unforeseen safety issues or any determination that a trial presents unacceptable health risks;
• inability to deliver an efficacious dose of a product candidate; and
• lack of adequate funding to continue the clinical trial.
If the results of our future clinical trials are not available when we expect or if we encounter any delay in the analysis of data from our future clinical trials, we may be unable to conduct additional clinical trials on the schedule we anticipate. Many of the factors that cause, or lead to, a delay in the commencement or completion of future clinical trials may also ultimately lead to the denial of regulatory approval of a future product candidate. Any delays in completing a clinical trial could increase our development costs, delay or prevent the availability of topline data expected to be available from the trial, delay product development and regulatory submission process or make it difficult to raise additional capital.
If we do not achieve any future projected development goals in the time frames we announce and expect, the commercialization of any such future products may be delayed and, as a result, our stock price may decline.
From time to time, we have estimated the timing of the anticipated accomplishment of various scientific, clinical, regulatory and other product development goals, which we sometimes refer to as milestones. These milestones may include the commencement or completion of scientific studies and clinical trials and the submission of regulatory filings. From time to time, we have publicly announced and may in the future publicly announce the expected timing of some of these milestones. All of these milestones have been and will be based on numerous assumptions, including timely performance by our CROs and other vendors, positive clinical and preclinical results, our ability to develop commercially viable formulations for our product candidates, and sufficient funding from partnering and general fundraising. The actual timing of these milestones have varied dramatically compared to our estimates, in some cases for reasons beyond our control. For example, we initially projected that we would have topline results from our 1a/1b clinical trial for CB4211 trial in early 2019. The trial was substantially delayed, and we did not release topline results for this study until August of 2021. For our CB5138-3 product candidate, we initially projected that we would file an IND for this program in the second half of 2022. We later revised this estimate to the second half of 2023 and, in December 2022, we announced the suspension of IND-enabling activities for this program due to challenges in identifying a suitable formulation for clinical development. The delays in each of these programs resulted in declines in our stock price. If we fail to meet future milestones as publicly announced, or at all, our revenue may be lower than expected, the commercialization of our products may be delayed or never achieved and, as a result, our stock price may decline.
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Our future success depends on our Chief Executive Officer and Chief Financial Officer.
We are highly dependent on our Chief Executive Officer and Chief Financial Officer who are employed “at will,” meaning they may terminate the employment relationship at any time. We do not maintain “key person” insurance for any of the key members of our team. We have in the past and may in the future continue to experience changes in our executive management team resulting from the departure of executives or subsequent hiring of new executives. The loss of the services of our Chief Executive Officer or Chief Financial Officer could impede our ability to consummate the Merger or any other strategic alternatives, as discussed above.
We may seek to establish development and commercialization collaborations, and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans.
Our potential future drug development programs and the potential commercialization of our future drug candidates will require substantial additional cash to fund expenses. We may decide to collaborate with biopharmaceutical companies in connection with the development or commercialization of our potential future drug candidates.
We face significant competition in seeking appropriate collaborators. Whether we reach a definitive collaboration agreement will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the expected efficacy, safety and tolerability of the subject product candidate, the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential reimbursement rates for such product candidates, the potential of competing products, the strength of our data supporting the mechanism of action of the subject product candidate, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar disease indications on which to collaborate, and whether such alternative collaboration project could be more attractive than one with us for our product candidate.
There are a limited number of large biopharmaceutical companies with whom we could potentially collaborate, and collaborations are complex and time-consuming to negotiate and document. We may not be able to negotiate collaborations on a timely basis, on acceptable terms or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund future development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop future product candidates or bring them to market and generate product revenue.
We may not be successful in any future efforts to identify or discover potential drug development candidates.
A key element of our strategy has been to identify and test MDPs and novel analogs that play a role in cellular processes underlying our targeted disease indications. Any drug discovery efforts may not be successful in identifying novel peptide analogs that are useful in treating disease. Our research programs may initially show promise in identifying potential drug development candidates, yet fail to yield candidates for preclinical and clinical development. For example, in December 2022, we announced that we had suspended further IND-enabling activities for our CB5138-3 product candidate due to challenges in identifying a suitable formulation for clinical development. Similarly, we have not been able to identify a formulation for CB4211 that would be suitable to move it forward to the next stage of clinical development. There are a number of reasons why any future research efforts may not yield appropriate development candidates, including:
• the research methodology used may not be successful in identifying appropriate potential drug development candidates;
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• we may not be able to identify the mechanism of action for potential drug candidates, which may make it more difficult to develop and commercialize such drug candidates due to the potential desire of the FDA and other regulatory bodies, potential partners, physicians and patients to understand such mechanism of action; or
• potential drug development candidates may, on further study, be shown not to be effective in humans, or to have unacceptable toxicities, harmful side effects, properties that make them difficult or impossible to formulate in a commercial fashion, or other characteristics that indicate that they are unlikely to be medicines that will receive marketing approval and achieve market acceptance.
We have not been successful to date in our efforts to develop commercially viable formulations for our product candidates.
Our product candidates are comprised of novel peptide analogs. We expect that our product candidates will need to be delivered via subcutaneous injection and may cause local injection site reactions (“ISRs”), which is a common finding in peptide therapeutic product candidates. While not necessarily adverse to patients’ health, ISRs could substantially limit the commercial appeal of our product candidates, and we may decide or be required to perform additional preclinical studies or to halt or delay further clinical development of our product candidates. To date, we have not been able to identify suitable formulations for our CB4211 or CB5138-3 product candidates. It is possible that other product candidates that we may identify will also result in ISRs. Our approach to address these ISRs is to develop novel formulations that decrease or eliminate these reactions. If we are unable to successfully develop such formulations, we may decide to abandon those drug candidates as we have done with CB5138-3. Any efforts to identify alternate drug candidates that do not cause ISRs would take additional time and expense and may not be successful.
Our future research and development plans will require substantial additional funding which could impact our operational and financial condition. Without the required additional funds, we will likely cease operations.
It will take several years before we are able to develop potentially marketable products, if at all. Our future research and development plans will require substantial additional capital to:
• conduct research, preclinical testing and human studies;
• manufacture any future drug development candidate or product at pilot and commercial scale;
• develop and manufacture devices compatible with our drug products that are suitable for use by patients to inject our drug products on a chronic basis; and
• establish and develop quality control, regulatory, and administrative capabilities to support these programs.
Our future operating and capital needs will depend on many factors, including:
• the pace of scientific progress in our future research programs and the magnitude of these programs;
• the scope and results of preclinical testing and human studies;
• the time and costs involved in obtaining regulatory approvals;
• the time and costs involved in preparing, filing, prosecuting, securing, maintaining and enforcing intellectual property rights;
• the complexity of any delivery device that we develop for use in combination with our drug products;
• competing technological and market developments;
• our ability to establish additional collaborations;
• changes in any future collaborations;
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• the cost of manufacturing any drug products and any related delivery device; and
• the cost and effectiveness of efforts to commercialize and market any products.
We base our outlook regarding the need for funds on many uncertain variables. Such uncertainties include the initiation and success of any future research and development initiatives, regulatory approvals, the timing of events outside our direct control such as negotiations with potential strategic partners, and other factors. Any of these uncertain events can significantly change our cash requirements as they determine such one-time events as the receipt or payment of major milestones and other payments.
Additional funds will be required to support our operations, and if we are unable to obtain them on favorable terms or at all, we may be required to cease or reduce future research and development of our drug product programs, sell or abandon some or all of our intellectual property, merge with another entity or cease operations.
Even if we are able to develop future potential drug candidates, we may not be able to obtain regulatory approval, or if approved, we may not be able to generate significant revenues or successfully commercialize our products, which will adversely affect our financial results and financial condition, and we will have to delay or terminate some or all of our research and development plans, which may force us to cease operations.
All of our future potential drug candidates will require extensive additional research and development, including preclinical testing and clinical trials, as well as regulatory approvals, before we can market them. We cannot predict if or when any future potential drug candidate will be approved for marketing. There are many reasons that we may fail in our efforts to develop our future potential drug candidates. These include:
• the possibility that preclinical testing or clinical trials may show that our potential drugs are ineffective and/or cause undesirable or harmful side effects or toxicities;
• we may not be able to develop commercially viable formulations for our potential drug candidates;
• our potential drugs may prove to be too expensive to manufacture or administer to patients;
• our potential drugs may have routes of administration that are less convenient or acceptable to patients;
• we may not understand the mechanism of action of our potential drugs, which could negatively impact our ability to recruit patients to participate in the clinical trials necessary for regulatory approval of our potential drugs;
• our potential drugs may fail to receive necessary regulatory approvals from the FDA or foreign regulatory authorities in a timely manner, or at all;
• even if our potential drugs are approved, we may not be able to produce them in commercial quantities or at reasonable costs;
• even if our potential drugs are approved, they may not achieve commercial acceptance;
• even if our potential drugs are approved and commercially launched, the costs of any delivery device used in combination with our drug products may result in an overall manufacturing cost that is not competitive with competing products that do not require a delivery device;
• even if our potential drugs are approved and commercially launched, they may not receive desirable payor reimbursement and formulary access;
• regulatory or governmental authorities may apply restrictions to any of our potential drugs, which could adversely affect their commercial success; and
• the proprietary rights of other parties may prevent us or our potential collaborative partners from marketing our potential drugs.
If we fail to develop future potential drug candidates, our financial results and financial condition will be adversely affected, we will have to delay or terminate some or all of our research and development plans and may be forced to cease operations.
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Risks Related to Our Reliance on Third Parties
If we do not maintain the support of qualified scientific collaborators, our revenue, growth and profitability will likely be limited, which would have a material adverse effect on our business.
We will need to maintain our existing relationships with leading scientists and/or establish new relationships with scientific collaborators. We believe that such relationships are pivotal to establishing products using our technologies as a standard of care for various disease indications. There is no assurance that our founders, scientific advisors or research partners will continue to work with us or that we will be able to attract additional research partners. If we are not able to establish scientific relationships to assist in future research and development, we may not be able to successfully develop potential drug candidates in the future. If this happens, our business will be adversely affected.
We expect to rely on third parties to conduct any future clinical trials and some aspects of any future research and preclinical testing. These third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or preclinical testing.
We expect to rely on third parties to conduct some aspects of our future research and expect to rely on third parties to conduct additional aspects of our future research and preclinical testing, as well as any future clinical trials. Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would delay our future product research and development activities.
Our reliance on these third parties for future research and development activities will reduce our control over these activities but will not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practices, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.
Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our future drug candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our medicines. For example, we experienced delays in receiving the data from our third-party CRO conducting our CB4211 Phase 1b study, which delayed our analysis and release of topline data.
We expect to rely on other third parties to store and distribute drug supplies for our future clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our future drug candidates or commercialization of any future products, producing additional losses and depriving us of potential product revenue.
Risks Related to Product Development and Regulatory Approval
Even if we are successful in developing future drug candidates, we may not be able to market or generate sales of such future products to the extent anticipated. Our business may fail, and investors could lose all of their investment in our Company.
Assuming that we are successful in developing any future potential drug candidates and receiving regulatory clearances to market our potential products, our ability to successfully penetrate the market and generate sales of such future products may be limited by a number of factors, including the following:
• if our competitors receive regulatory approvals for and begin marketing similar products in the United States, the European Union (“EU”), Japan and other territories before we do, greater awareness of their products as compared to ours will cause our competitive position to suffer;
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• information from our competitors or the academic community indicating that current products or new products are more effective, have better safety or tolerability profiles or offer compelling other benefits than our future products could impede our market penetration or decrease our future market share; and
• the pricing and reimbursement environment for our future products, as well as pricing and reimbursement decisions by our competitors and by payers, may have an effect on our revenues.
If any of these occur, our business could be adversely affected.
Interim and preliminary or topline data from our future clinical trials that we announce or publish from time to time may change as more patient 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 publish interim topline or preliminary data from our future clinical trials. Interim data from future clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary or topline data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between interim or preliminary or topline data and final data could significantly harm our reputation and business prospects.
Any future product candidate we are able to develop and commercialize would compete in the marketplace with existing therapies and new therapies that may become available in the future. These competitive therapies may be more effective, safer, better tolerated, less costly, more easily administered or offer other advantages over any product we seek to market.
There are numerous therapies currently marketed to treat IPF, diabetes, cancer, and other diseases for which our future potential product candidates may be indicated. These therapies are varied in their design, therapeutic application and mechanism of action and may provide significant competition for any of our future product candidates for which we obtain market approval. New products may also become available that provide efficacy, safety, tolerability, convenience and other benefits that are not provided by currently marketed therapies. As a result, they may provide significant competition for any of our future product candidates for which we obtain market approval. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, better tolerated, more effective, have fewer or less severe side effects, are more conveniently administered (i.e., are administered via methods other than subcutaneous injection) or stored or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected in many cases by insurers’ or other third-party payers’ reimbursement polices seeking to encourage the use of existing products that are generic or are otherwise less expensive to provide.
The use of any of our future product candidates in clinical trials, and the results of those trials, may expose us to liability claims, which may cost us significant amounts of money to defend against or pay out, causing our business to suffer.
The nature of our business exposes us to potential liability risks inherent in the testing, manufacturing and marketing of our potential products. If any of our future drug candidates are used in clinical trials, or if any of our future drug candidates become marketed products, they could potentially harm people or allegedly harm people, possibly subjecting us to costly and damaging product liability claims. Some of the patients who participate in clinical trials are already ill when they enter a trial or may intentionally or unintentionally fail to meet the exclusion criteria. The waivers we obtain may not be enforceable and may not protect us from liability or the costs of product liability litigation. Although we obtained product liability insurance, which we believe is adequate, we are subject to the risk that our insurance will not be sufficient to cover claims. We anticipate that we will need to increase our insurance coverage if we successfully commercialize any product candidate. The insurance costs along with the defense or payment of liabilities above the amount of coverage could cost us significant amounts of money and management distraction from other elements of the business, decrease demand for any product
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candidates that we may develop, injure our reputation and attract significant negative media attention, and lead to the withdrawal of clinical trial participants, causing our business to suffer. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
Compliance with laws and regulations pertaining to the privacy and security of health information may be time consuming, difficult and costly, particularly in light of increased focus on privacy issues in countries around the world, including the United States and the EU.
We are subject to various domestic and international privacy and security regulations. The confidentiality, collection, use and disclosure of personal data, including clinical trial patient-specific information, are subject to governmental regulation generally in the country that the personal data were collected or used. In the United States, we are subject, or expect to be subject, to various state and federal privacy and data security regulations, including but not limited to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009. HIPAA mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common health care transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect such information. In the EU, personal data includes any information that relates to an identified or identifiable natural person with health information carrying additional obligations, including obtaining the explicit consent from the individual for collection, use or disclosure of the information. In addition, the protection of and cross-border transfers of such data out of the EU has become more stringent with the EU’s General Data Protection Regulation which came into effect in May 2018. Furthermore, the legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing amount of focus on privacy and data protection issues. The United States and the EU and its member states continue to issue new privacy and data protection rules and regulations that relate to personal data and health information. Compliance with these laws may be time consuming, difficult and costly. If we fail to comply with applicable laws, regulations or duties relating to the use, privacy or security of personal data, we could be subject to the imposition of significant civil and criminal penalties, be forced to alter our business practices and suffer reputational harm.
We may not be able to obtain agreement with regulatory authorities regarding an acceptable development plan for our future product candidates, the outcome of our future clinical trials may not be favorable or, even if favorable, regulatory authorities may not find the results of our future clinical trials to be sufficient for marketing approval.
In the United States, the FDA generally requires two adequate and well-controlled pivotal clinical trials to approve a new drug application (“NDA”). Furthermore, for full approval of an NDA, the FDA requires a demonstration of efficacy based on a clinical benefit endpoint. The FDA may grant accelerated approval based on a surrogate endpoint reasonably likely to predict clinical benefit. Even if any future pivotal clinical trials for a specific indication were to achieve their primary endpoints and may be reasonably believed by us to be likely to predict clinical benefit, the FDA may not accept the results of such trials or approve our future product candidates on an accelerated basis, or at all. It is also possible that the FDA may refuse to accept for filing and review any regulatory application we submit for regulatory approval in the United States. Even if our regulatory application is accepted for review, there may be delays in the FDA’s review process, and the FDA may determine that such regulatory application does not contain adequate clinical or other data or support the approval of our future product candidate. In such a case, the FDA may issue a complete response letter that may require that we conduct and/or complete additional clinical trials and preclinical studies or provide additional information or data before it will reconsider an application for approval. Any such requirements may be substantial, expensive and time-consuming, and there is no guarantee that we will continue to pursue such application or that the FDA will ultimately decide that any such application supports the approval of our future product candidate. Furthermore, the FDA may also refer any regulatory application to an advisory committee for review and recommendation as to whether, and under what conditions, the application should be approved. While the FDA is not bound by the recommendation of an advisory committee, it considers such recommendations carefully when making decisions. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient revenue to maintain our business.
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The regulatory approval process is lengthy, expensive and uncertain, and we may be unable to obtain regulatory approval for our future product candidates under applicable regulatory requirements. The denial or delay of any such approval would delay commercialization of our future product candidates and adversely impact our ability to generate revenue, our business and our results of operations.
The development, research, testing, manufacturing, labeling, approval, selling, import, export, marketing, promotion and distribution of drug products are subject to extensive and evolving regulation by federal, state and local governmental authorities in the United States, principally the FDA, and by foreign regulatory authorities, which regulations differ from country to country. Neither we nor any future collaborator is permitted to market any of our product candidates in the United States until we receive regulatory approval of an NDA from the FDA.
Obtaining regulatory approval of an NDA can be a lengthy, expensive and uncertain process. Prior to obtaining approval to commercialize our future product candidate in the United States or abroad, we or our collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or other foreign regulatory authorities, that such product candidates are safe and effective for their intended uses. The number of nonclinical studies and clinical trials that will be required for regulatory approval varies depending on the product candidate, the disease or condition that the product candidate is designed to address, and the regulations applicable to any particular product candidate.
Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for our future product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. Administering product candidates to humans may produce undesirable side effects, which could interrupt, delay or halt clinical trials and result in the FDA or other regulatory authorities denying approval of a product candidate for any or all indications. The FDA may also require us to conduct additional studies or trials for our product candidates either prior to or post-approval, such as additional clinical pharmacology studies or safety or efficacy studies or trials, or it may object to elements of our clinical development program such as the primary endpoints or the number of subjects in our clinical trials.
The FDA or any foreign regulatory bodies can delay, limit or deny approval of our product candidates or require us to conduct additional nonclinical or clinical testing or abandon a program for many reasons, including:
• the FDA or the applicable foreign regulatory authority’s disagreement with the design or implementation of our clinical trials;
• negative or ambiguous results from our clinical trials or results that may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;
• serious and unexpected drug-related side effects experienced by participants in our clinical trials;
• our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory authority that our product candidates are safe and effective for the proposed indication;
• the FDA’s or the applicable foreign regulatory authority’s disagreement with the interpretation of data from nonclinical studies or clinical trials;
• our inability to demonstrate the clinical and other benefits of our product candidates outweigh any safety or other perceived risks;
• the FDA’s or the applicable foreign regulatory authority’s requirement for additional nonclinical studies or clinical trials;
• the FDA’s or the applicable foreign regulatory authority’s disagreement regarding the formulation, labeling and/or the specifications of our product candidates;
• the FDA’s or the applicable foreign regulatory authority’s failure to approve the manufacturing processes or facilities of third-party manufacturers with which we contract;
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• the potential for approval policies or regulations of the FDA or the applicable foreign regulatory authorities to significantly change in a manner rendering our clinical data insufficient for approval; or
• the FDA or the applicable foreign regulatory authority’s disagreement with the sufficiency of the clinical, non-clinical and/or quality data in the NDA or comparable marketing authorization application.
Of the large number of drugs in development, only a small percentage successfully complete the FDA or other regulatory approval processes and are commercialized. The lengthy development and approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our future product candidates, which would significantly harm our business, financial condition, results of operations and prospects.
Any future product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our future product candidates, when and if any of them are approved.
Our future product candidates and the activities associated with their development and potential commercialization, including their testing, manufacturing, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other U.S. and international regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, requirements relating to manufacturing, including current good manufacturing practices (“cGMP”), quality control, quality assurance and corresponding maintenance of records and documents, including periodic inspections by the FDA and other regulatory authorities and requirements regarding the distribution of samples to providers and recordkeeping.
The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of any approved product. The FDA closely regulates the post-approval marketing and promotion of drugs and biologics to ensure drugs and biologics are marketed only for the approved disease indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding use of their products. If we promote our future product candidates in a manner inconsistent with FDA-approved labeling or otherwise not in compliance with FDA regulations, we may be subject to enforcement action. Violations of the Food, Drug, and Cosmetic Act relating to the promotion of prescription drugs may lead to investigations alleging violations of federal and state healthcare fraud and abuse laws, as well as state consumer protection laws and similar laws in international jurisdictions.
In addition, later discovery of previously unknown adverse events or other problems with our future product candidates, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:
• restrictions on such product candidates, manufacturers or manufacturing processes;
• restrictions on the labeling or marketing of a product;
• restrictions on product distribution or use;
• requirements to conduct post-marketing studies or clinical trials;
• warning or untitled letters;
• withdrawal of any approved product from the market;
• refusal to approve pending applications or supplements to approved applications that we submit;
• recall of product candidates;
• restrictions on product distribution or use;
• fines, restitution or disgorgement of profits or revenues;
• suspension or withdrawal of marketing approvals;
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• refusal to permit the import or export of our product candidates;
• product seizure; and
• injunctions or the imposition of civil or criminal penalties.
Non-compliance with European requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to comply with the EU’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions.
The patent positions of biopharmaceutical products are complex and uncertain, and we may not be able to protect our patented or other intellectual property. If we cannot protect this property, we may be prevented from using it, or our competitors may use it, and our business could suffer significant harm. Also, the time and money we spend on acquiring and enforcing patents and other intellectual property will reduce the time and money we have available for our business.
We own or exclusively license patents and patent applications related to our MDPs and potential drug candidates comprised of novel analogs. However, neither patents nor patent applications ensure the protection of our intellectual property for a number of reasons, including the following:
• The United States Supreme Court rendered a decision in Molecular Pathology vs. Myriad Genetics, Inc., 133 S.Ct. 2107 (2013) (“Myriad”), in which the court held that naturally occurring DNA segments are products of nature and not patentable as compositions of matter. On March 4, 2014, the United States Patent and Trademark Office (“USPTO”) issued guidelines for examination of such claims that, among other things, extended the Myriad decision to any natural product. Since MDPs are natural products isolated from cells, the USPTO guidelines may affect allowability of some of our patent claims (pertaining to natural MDP sequences) that are filed in the USPTO but are not yet issued. Further, while the USPTO guidelines are not binding on the courts, it is likely that as the law of subject matter eligibility continues to develop, Myriad will be extended to natural products other than DNA. Thus, our issued U.S. patent claims directed to MDPs as compositions of matter may be vulnerable to challenge by competitors who seek to have our claims rendered invalid. While Myriad and the USPTO guidelines described above will affect our patents only in the United States, there is no certainty that similar laws or regulations will not be adopted in other jurisdictions.
• Competitors may interfere with our patenting process in a variety of ways. Competitors may claim that they invented the claimed invention prior to us. Competitors may also claim that we are infringing their patents and restrict our freedom to operate. Competitors may also contest our patents and patent applications, if issued, by showing in various patent offices that, among other reasons, the patented subject matter was not original, was not novel or was obvious. In litigation, a competitor could claim that our patents and patent applications are not valid or enforceable for a number of reasons. If a court agrees, we would lose some or all of our patent protection.
• As a company, we have no meaningful experience with competitors interfering with our patents or patent applications. In order to enforce our intellectual property, we may need to file a lawsuit against a competitor. Enforcing our intellectual property in a lawsuit can take significant time and money. We may not have the resources to enforce our intellectual property if a third party infringes an issued patent claim. Infringement lawsuits may require significant time and money resources. If we do not have such resources, for patents that we have licensed from a third party, the licensor is not obligated to help us enforce our patent rights. If the licensor does take action by filing a lawsuit claiming infringement, we will not be able to participate in the suit and therefore will not have control over the proceedings or the outcome of the suit.
• Because of the time, money and effort involved in obtaining and enforcing patents, our management may spend less time and resources on other aspects of our business than they otherwise would, which could increase our operating expenses and delay any future product programs.
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• There can be no assurance that any of our patent applications, including any licensed patent applications, will result in the issuance of patents, and we cannot predict the breadth of claims that may be allowed in our currently pending patent applications or in patent applications we may file or license from others in the future.
• Issuance of a patent may not provide much practical protection. If we receive a patent of narrow scope, then it may be easy for competitors to design products that do not infringe our patent(s).
• If a court decides that the method of manufacture or use of any of our drug candidates infringes on a third-party patent, we may have to pay substantial damages for infringement.
• A court may prohibit us from making, selling or licensing a potential drug candidate unless the patent holder grants a license. A patent holder is not required to grant a license. If a license is available, we may have to pay substantial royalties or grant cross licenses to our patents, and the license terms may be unacceptable.
• Redesigning our potential drug candidates so that they do not infringe on other patents may not be possible or could require substantial funds and time.
It is also unclear whether our trade secrets are adequately protected. While we use reasonable efforts to protect our trade secrets, our employees or consultants may unintentionally or willfully disclose our information to competitors. Enforcing a claim that someone illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Our competitors may independently develop equivalent knowledge, methods and know-how. We may also support and collaborate in research conducted by government organizations, hospitals, universities or other educational institutions. These research partners may be unable or unwilling to grant us exclusive rights to technology or products derived from these collaborations prior to entering into the relationship.
If we do not obtain required intellectual property rights, we could encounter delays in any future drug development efforts while we attempt to design around other patents or even be prohibited from developing, manufacturing or selling potential drug candidates requiring these rights or licenses. There is also a risk that disputes may arise as to the rights to technology or potential drug candidates developed in collaboration with other parties.
General Risk Factors
If we fail to establish and maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, investors’ views of us and, as a result, the value of our common stock.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures and that we furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment needs to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we are not an accelerated filer or large accelerated filer, we intend to take advantage of the exemption permitting us not to comply with the independent registered public accounting firm attestation requirement.
Our compliance with Section 404 will require us to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue taking steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk
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that we will not be able to conclude that our internal control over financial reporting is effective as required by Section 404. For example, we concluded as of the end of the first quarter of 2023 that our disclosure controls and procedures were not effective due to a material weakness. The material weakness relates to a lack of segregation of duties as we currently have only one employee assigned to positions that involve processing financial information. As a result, not all of our journal entries and account reconciliations have been reviewed by someone other than the preparer, heightening the risk of error or fraud. There can be no assurance of when, if ever, we will be able to remediate the identified material weaknesses. The presence of this or other material weaknesses could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on Nasdaq. If material weaknesses or deficiencies in our internal controls exist and go undetected or unremedied, our financial statements could contain material misstatements that, when discovered in the future, could cause us to fail to meet our future reporting obligations and cause the price of our common stock to decline.
Significant disruptions of information technology systems or security breaches could adversely affect our business.
We are increasingly dependent upon information technology systems, infrastructure and data to operate our business. In the ordinary course of business, we collect, store and transmit large amounts of confidential information (including, among other things, trade secrets or other intellectual property, proprietary business information and personal information). It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. We also have outsourced elements of our operations to third parties, and as a result we have managed, and may in the future continue to manage, a number of third-party vendors who may or could have access to our confidential information. Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized groups and individuals with a wide range of motives and expertise. The size and complexity of our information technology systems, and those of third-party vendors with whom we contract, and the large amounts of confidential information potentially stored on those systems, make such systems vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party vendors, and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information.
Significant disruptions of our information technology systems, or those of our third-party vendors, or security breaches could adversely affect our business operations and/or result in the loss, misappropriation and/or unauthorized access, use or disclosure of, or the prevention of access to, confidential information, including, among other things, trade secrets or other intellectual property, proprietary business information and personal information, and could result in financial, legal, business and reputational harm to us.
Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations. Moreover, data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased harm. While we have implemented data security measures intended to protect our information technology systems and infrastructure, there can be no assurance that such measures will successfully prevent service interruptions or data security incidents.
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Public health crises such as pandemics or similar outbreaks could adversely impact our business.
Public health crises such as pandemics or similar outbreaks could adversely impact our business.
The trading prices for our common stock and other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic and the resulting impact on the macroeconomic environment, including rising interest rates, inflation and recessionary fears. Future public health crises, including pandemics or similar outbreaks such as COVID-19, may adversely impact our business, strategy and financial condition. The extent to which any public health crises impacts our business, strategy or financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the emergence of novel variants, the impact of vaccinations and vaccination rates, travel restrictions and actions to contain new outbreaks or resurgences or treat its impact, such as social distancing and quarantines or lock-downs in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat resurgences or novel variants.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The trading market for our common stock can be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analysts who may cover us were to cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
The volatility in the price of our common stock could result in substantial losses to our stockholders.
The market price of our common stock has been and is likely to continue to be volatile. The stock market in general, and the market for biotechnology companies in particular has experienced extreme volatility that can be unrelated to the operating performance of particular companies. The market price for our common stock may be influenced by many factors, including:
• developments concerning the Merger or Morphogenesis;
• results of preclinical studies or clinical trials of our future product candidates or those of our competitors;
• unanticipated or serious safety concerns related to the use of any of our future product candidates;
• challenges in developing commercially viable formulations for our future product candidates;
• adverse regulatory decisions, including failure to receive regulatory approval for any of our future product candidates;
• the success of competitive drugs or technologies;
• regulatory or legal developments in the United States and other countries applicable to our future product candidates;
• the size and growth of our prospective patient populations;
• developments concerning our future collaborators, our external manufacturers or in-house manufacturing capabilities;
• inability to obtain adequate product supply for any future product candidate for preclinical studies, clinical trials or future commercial sale or inability to do so at acceptable prices;
• developments or disputes concerning patent applications, issued patents or other proprietary rights;
• the recruitment or departure of key personnel;
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• the level of expenses related to any of our future product candidates or clinical development programs;
• the results of our efforts to discover, develop, acquire or in-license additional product candidates or drugs;
• actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts or publications of research reports about us or our industry;
• variations in our financial results or those of companies that are perceived to be similar to us;
• changes in the structure of healthcare payment systems;
• market conditions in the biotechnology sector;
• our cash position or the announcement or expectation of additional financing efforts;
• the impact of rising inflation, including wage inflation;
• general macroeconomic, industry, geopolitical and market conditions; and
• other factors, including those described in this “Risk Factors” section, many of which are beyond our control.
If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq, our common stock could be delisted.
Our common stock is currently listed on Nasdaq. To maintain this listing, we must satisfy continued listing requirements and standards. There can be no assurances that we will be able to comply with the applicable listing requirements and standards. For example, in November 2021, we received a notice from the Nasdaq Listing Qualifications Department notifying us that for 30 consecutive trading days, the bid price of our common stock had closed below the minimum $1.00 per share requirement. In accordance with Nasdaq’s listing rules, we were afforded a grace period of 180 calendar days, or until May 9, 2022, to regain compliance with the bid price requirement. In order to regain compliance, the bid price of our common stock had to close at a price of at least $1.00 per share for a minimum of 10 consecutive trading days.
On May 10, 2022, Nasdaq notified us that we had not regained compliance by May 9, 2022, but that Nasdaq had granted us an additional 180 day period to regain compliance because we met the continued listing requirement for market value of publicly held shares and all other applicable Nasdaq listing requirements (other than the minimum closing bid price requirement) and we provided written notice to Nasdaq of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary. On September 23, 2022, we executed a reverse stock split of our common stock at a ratio of 1-for-30. In response to their non-compliance notification on May 10, 2022, and as a result of the reverse stock split, we received notification from The Nasdaq Stock Market Listing Qualifications Staff on October 7, 2022, that we were in compliance with its minimum bid price requirement and the matter was closed.
If our common stock is delisted from Nasdaq and is not eligible for quotation or listing on another market or exchange, including as a result of our failure to meet the bid price requirement, trading of our shares of common stock could be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted securities. In such event, it would likely become more difficult to dispose of, or obtain accurate price quotations for, shares of our common stock.
Our business could be negatively affected as a result of significant stockholders or potential stockholders attempting to effect changes or acquire control over CohBar, which could cause us to incur significant expense, hinder execution of our business strategy, including consummation of the Merger, and impact the trading value of our securities.
Our stockholders may from time-to-time attempt to effect changes, engage in proxy solicitations or advance stockholder proposals. Responding to proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting our operations and diverting the attention of the CohBar Board and senior management from the pursuit of business strategies, including the consummation of the Merger. Any of these impacts could
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materially and adversely affect our business and operating results. Further, the market price of our common stock, which has been trading below book value, could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties described above.
The requirements of being a public company may strain our resources, divert management’s attention and require us to disclose information that is helpful to competitors, make us more attractive to potential litigants and make it more difficult to attract and retain qualified personnel.
As a public company, we are subject to the reporting requirements of the Securities Act of 1933, as amended, the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and applicable Canadian securities rules and regulations. Despite reforms made possible by the JOBS Act, compliance with these rules and regulations creates significant legal and financial compliance costs and makes some activities difficult, time-consuming or costly. The Exchange Act and applicable Canadian provincial securities legislation require, among other things, that we file annual, quarterly and current reports with respect to our business and operating results.
Additionally, the Sarbanes-Oxley Act and the related rules and regulations of the SEC and Nasdaq require us to implement particular corporate governance practices and adhere to a variety of reporting requirements and complex accounting rules. Among other things, we are subject to rules regarding the independence of the members of the CohBar Board and committees of the board and their experience in finance and accounting matters, rules regarding the diversity of the CohBar Board and certain of our executive officers are required to provide certifications in connection with our quarterly and annual reports filed with the SEC. The perceived personal risk associated with these rules may deter qualified individuals from accepting these positions. Accordingly, we may be unable to attract and retain qualified officers and directors. If we are unable to attract and retain qualified officers and directors, our business and our ability to maintain the listing of our shares of common stock on Nasdaq or another stock exchange could be adversely affected.
Changes in U.S. federal income and other tax laws could adversely affect us.
New U.S. legislation or regulations that could affect our tax burden could be enacted by the U.S. government. We cannot predict the timing or extent of such tax-related developments that could have a negative impact on our financial results. Additionally, we use our best judgment in attempting to quantify and reserve for these tax obligations. However, a challenge by a taxing authority, our ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions could have a material adverse effect on our business, results of operations, or financial condition.
Unfavorable global macroeconomic conditions and geopolitical uncertainty could adversely affect our business, financial condition or results of operations.
Our results of operations could be adversely affected by general conditions in the global economy, such as the inflationary environment, financial institution instability and recessionary fears, in the global financial markets and due to geopolitical uncertainty, such as the ongoing conflict in Ukraine and rising tensions between China and Taiwan. For example, the global financial crisis caused extreme volatility and disruptions in the capital and credit markets, and the recent and ongoing armed conflict in Ukraine had similar impacts on the global financial markets. A severe or prolonged economic downturn, such as a global financial crisis, could result in a variety of risks to our business, including, weakened demand for our product candidates and our weakened ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our future suppliers, possibly resulting in supply disruptions. Any of the foregoing could harm our business, and we cannot anticipate all of the ways in which the current macroeconomic climate, geopolitical uncertainty and financial market conditions could adversely impact our business.
We maintain our cash at financial institutions. The failure of financial institutions could adversely affect our ability to pay our operational expenses or make other payments.
Our cash is held at banking institutions in non-interest-bearing and interest-bearing accounts. If such banking institutions were to fail, similar to Silicon Valley Bank in March 2023, we could lose access to our accounts or our assets held in our accounts or our access to our accounts or assets may be materially delayed. Any material loss that
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we may experience in the future or inability for a material time period to access our cash and cash equivalents could have an adverse effect on our ability to pay our operational expenses or make other payments, which could adversely affect our business.
We or the future third parties upon whom we may depend may be adversely affected by natural disasters, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Natural disasters could severely disrupt our operations and have a material adverse effect on our business, results of operations, financial condition and prospects. For example, our corporate headquarters are located in the San Francisco Bay Area, which has experienced both severe earthquakes and the effects of wildfires. We do not carry earthquake insurance. In addition, the long-term effects of climate change on general economic conditions and the biopharmaceutical industry in particular are unclear, and may heighten or intensify existing risk of natural disasters. If an earthquake, wildfire, other natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverse effect on our business.
Our employees, directors, and potential future 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 of fraud or other misconduct by our employees, directors, and potential future principal investigators, consultants and commercial partners. Misconduct by these parties could include intentional failures to comply with the regulations of FDA and non-U.S. regulators, provide accurate information to the FDA and non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing 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. Such misconduct could also involve the improper use of information obtained in the course of clinical studies, which could result in regulatory sanctions and cause serious harm to our reputation. We have adopted a code of ethics, but it is not always possible to identify and deter employee or director misconduct, 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. 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 significant fines or other sanctions.
Risks Related to Morphogenesis
Risks Related to Morphogenesis’ Business and Industry
Morphogenesis is a clinical-stage company and has a limited operating history, which may make it difficult to evaluate Morphogenesis’ current business and predict its future performance.
Morphogenesis is a clinical-stage pharmaceutical company that was formed in 1995. Morphogenesis has no products approved for commercial sale and has not generated any revenue. Morphogenesis employs a multi-indication immunomodulator platform (ImmuneFx) that utilizes both cell and gene therapies, together, to stimulate the immune system to recognize and combat tumor cells. Although there have been significant advances in cell and gene-based immunotherapies, Morphogenesis’ immunomodulatory platforms are new and largely unproven. Morphogenesis’ operations to date have been limited to organizing and staffing the company, business planning, raising capital, developing its technology, identifying potential product candidates, undertaking preclinical studies, and conducting clinical trials. If one of Morphogenesis’ product candidates received regulatory approval, Morphogenesis would need to transition from a company with a research and
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development focus to a company capable of supporting commercial activities. Morphogenesis may not be successful in such a transition. In addition, Morphogenesis’ limited operating history, particularly in light of the rapidly evolving cancer immunotherapy field, may make it difficult to evaluate its current business and predict its future performance. Morphogenesis will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving fields. If it does not address these risks successfully, Morphogenesis’ business will suffer.
Morphogenesis has incurred significant losses since inception and expects to incur significant losses for the foreseeable future and may not be able to achieve or sustain profitability in the future.
Morphogenesis is not profitable and has incurred significant losses in each period since Morphogenesis’ inception, including net losses of $7.0 million for the year ended December 31, 2021, $9.4 million for the year ended December 31, 2022, and $18.7 million for the three months ended March 31, 2023 (which includes the expensing of the entire $16.2 million purchase price for the assets of TuHURA Biopharma, Inc., of which $15 million was paid in the form of Morphogenesis Common Stock). To date, Morphogenesis has financed its operations primarily through private placements of its preferred stock and convertible notes. Morphogenesis has not commercialized any products and has never generated any revenue from product sales. Morphogenesis expects these losses to increase as it continues to incur significant research and development and other expenses related to Morphogenesis’ ongoing operations, seeks regulatory approvals for Morphogenesis’ product candidates, scales-up manufacturing capabilities and hires additional personnel to support the development of its product candidates and to enhance its operational, financial and information management systems.
A critical aspect of Morphogenesis’ strategy is to invest significantly in its technology platform to improve the efficacy and safety of its product candidates. To become and remain profitable, Morphogenesis must develop and eventually commercialize products with significant market potential, which it may never achieve. Even if Morphogenesis succeeds in commercializing one or more of these product candidates, Morphogenesis will continue to incur losses for the foreseeable future relating to its substantial research and development expenditures to develop Morphogenesis’ technologies. Morphogenesis may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect its business. The size of Morphogenesis’ future net losses will depend, in part, on the rate of future growth of its expenses and its ability to generate revenue. Morphogenesis’ prior losses and expected future losses have had and will continue to have an adverse effect on its stockholders’ equity and working capital. Further, the net losses Morphogenesis incurs may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of its results of operations may not be a good indication of Morphogenesis’ future performance. If Morphogenesis does not achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. Morphogenesis’ failure to become and remain profitable would decrease the value of the company and could impair its ability to raise capital, maintain its discovery and preclinical and clinical development efforts, expand its business or continue its operations and may require Morphogenesis to raise additional capital that may dilute your ownership interest. A decline in the value of Morphogenesis could also cause you to lose all or part of your investment.
Morphogenesis has never generated any revenue from product sales for its human drug candidates and its ability to generate revenue from product sales and become profitable depends significantly on its success in numerous endeavors.
Morphogenesis has no products approved for commercial sale, has not generated any revenue from product sales, and does not anticipate generating any revenue from product sales until sometime after Morphogenesis has received regulatory approval for the commercial sale of a product candidate. Morphogenesis’ ability to generate revenue and achieve profitability depends significantly on its success in many endeavors, including:
• completing research regarding, and nonclinical and clinical development of, Morphogenesis’ product candidates;
• obtaining regulatory approvals and marketing authorizations for product candidates for which Morphogenesis completes clinical trials;
• developing a sustainable and scalable manufacturing process for Morphogenesis’ product candidates, including establishing and maintaining commercially viable supply relationships with third parties and establishing Morphogenesis’ own manufacturing capabilities and infrastructure;
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• launching and commercializing product candidates for which Morphogenesis obtains regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor;
• obtaining market acceptance of Morphogenesis’ product candidates as viable treatment options;
• addressing any competing technological and market developments;
• identifying, assessing, acquiring and/or developing new product candidates;
• negotiating favorable terms in any collaboration, licensing, or other arrangements into which Morphogenesis may enter;
• maintaining, protecting, and expanding Morphogenesis’ portfolio of intellectual property rights, including patents, trade secrets, and know-how; and
• attracting, hiring, and retaining qualified personnel.
Because of the numerous risks and uncertainties associated with biopharmaceutical product development, Morphogenesis is unable to accurately predict the timing or amount of increased expenses or when, or if, Morphogenesis will be able to achieve profitability. If Morphogenesis is required by the U.S. Food and Drug Administration (the “FDA”), or other regulatory agencies, domestic or foreign, or other comparable foreign authorities, to perform preclinical studies or clinical trials in addition to those Morphogenesis currently anticipates, or if there are any delays in completing its clinical trials or the development of any of its product candidates, Morphogenesis’ expenses could increase and revenue could be further delayed.
Even if one or more of the product candidates that Morphogenesis develops is approved for commercial sale, Morphogenesis anticipates incurring significant costs associated with commercializing any approved product candidate. Morphogenesis’ expenses could increase beyond expectations if Morphogenesis is required by the FDA or other regulatory agencies, domestic or foreign, to change its manufacturing processes or assays, or to perform clinical, nonclinical, or other types of studies in addition to those that Morphogenesis currently anticipates. If Morphogenesis is successful in obtaining regulatory approvals to market of one or more of its product candidates, its revenue will be dependent, in part, upon the size of the markets in the territories for which Morphogenesis gains regulatory approval, the accepted price for the product, the ability to get reimbursement at any price, and whether Morphogenesis owns the commercial rights for that territory. If the number of Morphogenesis’ addressable disease patients is not as significant as it estimates, the indication approved by regulatory authorities is narrower than it expects, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, Morphogenesis may not generate significant revenue from sales of such products, even if approved. If Morphogenesis is not able to generate revenue from the sale of any approved products, Morphogenesis may never become profitable.
Even if the Merger and the Initial Financing and Second Financing are successful, Morphogenesis will require substantial additional capital to finance its operations in the future. If Morphogenesis fails to obtain additional financing on acceptable terms or at all, it may be unable to complete the development and commercialization of its product candidates.
Morphogenesis’ operations have required substantial amounts of cash since inception. Morphogenesis expects to continue to spend substantial amounts to continue the clinical development of its product candidates, particularly as Morphogenesis advances the development of its lead product candidate IFx-Hu2.0 as a potential treatment for patients with melanoma, bladder and cervical cancers. If Morphogenesis obtains orphan drug designation and marketing approval for IFx or any of Morphogenesis’ product candidates, Morphogenesis expects to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.
As of March 31, 2023, Morphogenesis had approximately $9.8 million in cash and cash equivalents. Following the Merger and the Initial Financing and Second Financing, Morphogenesis will also incur additional costs associated with operating as a public company. Accordingly, Morphogenesis will require substantial additional funding to continue its operations. Based on its current operating plan, and assuming the Merger and Initial Financing and Second Financing are successfully completed, Morphogenesis believes that its existing cash, cash equivalents and short-term investments should be sufficient to fund its operations through the third quarter of 2025. This estimate is based on assumptions that may prove to be materially
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wrong, and Morphogenesis could use its available capital resources sooner than it currently expects because of circumstances beyond its control. Morphogenesis may require additional capital for the further development and commercialization of Morphogenesis’ product candidates and may need to raise additional funds sooner if Morphogenesis chooses to pursue additional indications or geographies for its product candidates or otherwise expand more rapidly than it presently anticipates. Any additional fundraising efforts may divert Morphogenesis’ management from their day-to-day activities, which may adversely affect Morphogenesis’ ability to develop and commercialize its product candidates.
Morphogenesis cannot be certain that additional funding will be available on acceptable terms, or at all. Morphogenesis’ ability to raise additional funding will depend on financial, economic and market conditions and other factors, over which Morphogenesis may have no or limited control. In addition, Morphogenesis’ ability to obtain future funding when needed through equity financings, debt financings or strategic collaborations may be particularly challenging in light of the uncertainties and circumstances resulting from the COVID-19 pandemic and the ongoing military conflict between Russian and Ukraine. Morphogenesis has no committed source of additional capital and if it is unable to raise additional capital in sufficient amounts or on terms acceptable to the company, Morphogenesis may have to significantly delay, scale back or discontinue the development or commercialization of its product candidates or other research and development initiatives. Morphogenesis’ license and collaboration agreements may also be terminated if it is unable to meet the payment obligations under the agreements. Morphogenesis could be required to seek collaborators for its product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms Morphogenesis’ rights to its product candidates in markets where it otherwise would seek to pursue development or commercialization itself.
Any of the above events could significantly harm Morphogenesis’ business, prospects, financial condition, and results of operations and cause the price of Morphogenesis’ Common Stock to decline.
The biotechnology and immunotherapy industries are characterized by rapid technological developments and a high degree of competition. Morphogenesis may be unable to compete with more substantial enterprises.
The biotechnology and biopharmaceutical industries are characterized by rapid technological developments and a high degree of competition. As a result, Morphogenesis’ actual or proposed immunotherapies could become obsolete before Morphogenesis recoups any portion of Morphogenesis’ related research and development and commercialization expenses. Competition in the biopharmaceutical industry is based significantly on scientific and technological factors. These factors include the availability of patent and other protection for technology and products, the ability to commercialize technological developments and the ability to obtain governmental approval for testing, manufacturing, and marketing. Morphogenesis competes with specialized biopharmaceutical firms in the United States, Europe and elsewhere, as well as a growing number of large pharmaceutical companies that are applying biotechnology to their operations. Many biopharmaceutical companies have focused their development efforts in the human therapeutics area, including cancer. Many major pharmaceutical companies have developed or acquired internal biotechnology capabilities or made commercial arrangements with other biopharmaceutical companies. These companies, as well as academic institutions, governmental agencies and private research organizations, also compete with Morphogenesis in recruiting and retaining highly qualified scientific personnel and consultants. Morphogenesis’ ability to compete successfully with other companies in the pharmaceutical field will also depend to a considerable degree on the continuing availability of capital to the company.
Morphogenesis is aware of certain investigational new drugs under development or approved products by competitors that are used for the prevention, diagnosis, or treatment of certain diseases Morphogenesis has targeted for drug development. Various companies are developing biopharmaceutical products that have the potential to directly compete with Morphogenesis’ immunotherapies even though their approach may be different. The competition comes from both biotechnology firms and from major pharmaceutical companies. Many of these companies have substantially greater financial, marketing, and human resources than Morphogenesis. Morphogenesis also experiences competition in the development of its immunotherapies from universities, other research institutions and others in acquiring technology from such universities and institutions.
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In addition, certain of Morphogenesis’ immunotherapies may be subject to competition from investigational new drugs and/or products developed using other technologies, some of which have completed numerous clinical trials.
The successful development of immunotherapies is highly uncertain.
Successful development of biopharmaceuticals is highly uncertain and depends on numerous factors, many of which are beyond Morphogenesis’ control. Immunotherapies that appear promising in the early phases of development may fail to reach the market for several reasons including:
• clinical study results that may show the immunotherapy to be less effective than expected (e.g., the study failed to meet its primary endpoint) or to have unacceptable side effects;
• failure to receive the necessary regulatory approvals or a delay in receiving such approvals. Among other things, such delays may be caused by slow enrollment in clinical studies, length of time to achieve study endpoints, additional time requirements for data analysis, or preparation of Biologics License Application (“BLA”), discussions with the FDA, an FDA request for additional preclinical or clinical data, or unexpected safety or manufacturing issues;
• manufacturing costs, formulation issues, pricing or reimbursement issues, or other factors that make the immunotherapy uneconomical; and
• the proprietary rights of others and their competing products and technologies that may prevent the immunotherapy from being commercialized.
Success in preclinical and early clinical studies does not ensure that large-scale clinical studies will be successful. Clinical results are frequently susceptible to varying interpretations that may delay, limit, or prevent regulatory approvals. The length of time necessary to complete clinical studies and to submit an application for marketing approval for a final decision by a regulatory authority varies significantly from one immunotherapy to the next and may be difficult to predict. The evidence of clinical response rates received to date for IFx-2.0, Morphogenesis’ principal product candidate, as well as the other clinical activity and results described in this proxy statement/prospectus, does not mean that IFx-2.0 or any other product candidate has demonstrated, or that such clinical response data will predict, sufficient clinical efficacy and prove the required level of safety in order to receive FDA approval or any other required regulatory approval.
In addition, although Morphogenesis is in discussions with the FDA regarding the initiation of a single registration-directed trial utilizing the FDA’s accelerated approval pathway for IFx-2.0 that would be conducted under a Special Protocol Assessment Agreement, there is no guarantee that Morphogenesis will ultimately receive a Special Protocol Assessment Agreement with the FDA for such a trial. Even if a Special Protocol Assessment Agreement for such a trial is granted, such agreement does not increase the likelihood of marketing approval for the product and may not lead to a faster or less costly development, review, or approval process.
Even if Morphogenesis is successful in getting market approval, commercial success of any of its product candidates will also depend in large part on the availability of coverage and adequate reimbursement from third-party payors, including government payors such as the Medicare and Medicaid programs and managed care organizations, which may be affected by existing and future health care reform measures designed to reduce the cost of health care. Third-party payors could require Morphogenesis to conduct additional studies, including post-marketing studies related to the cost effectiveness of a product, to qualify for reimbursement, which could be costly and divert Morphogenesis’ resources. If government and other health care payors were not to provide adequate coverage and reimbursement levels for any of Morphogenesis’ products once approved, market acceptance and commercial success would be reduced.
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Morphogenesis’ technology platform, including its proprietary, multi-indication immunomodulatory platform (ImmuneFx IFx), technology is a new approach to treat cancer and other immune-related diseases that presents significant challenges.
Morphogenesis has concentrated its research and development efforts on advancing a new generation of immunotherapies based on the IFx platform, and its future success is highly dependent on the successful development of its product candidates, which target cancer and other immune-related diseases. Morphogenesis cannot be sure that its IFx platform will yield satisfactory products that are safe and effective, scalable, or profitable.
Although Morphogenesis is a cell therapy company its technology could become subject to many of the challenges and risks that gene therapies face, including:
• regulatory requirements governing gene and cell therapy products have changed frequently and may continue to change in the future;
• the FDA could recommend follow-up observation period of up to 15 years for all patients who receive Morphogenesis’ treatment. Morphogenesis may need to adopt such an observation period for its product candidates; and
• clinical trials using genetically modified cells conducted at institutions that receive funding for recombinant DNA research from the U.S. National Institutes of Health (the “NIH”) are subject to review by the NIH Office of Biotechnology Activities’ Recombinant DNA Advisory Committee (the “RAC”). Although the FDA decides whether individual protocols may proceed, the RAC review process can impede the initiation of a clinical trial, even if the FDA has reviewed the study and approved its initiation.
Moreover, public perception of therapy safety issues, including adoption of new therapeutics or novel approaches to treatment, may adversely influence the willingness of subjects to participate in clinical trials, or if approved, of physicians to subscribe to the novel treatment mechanics. Physicians, hospitals and third-party payors often are slow to adopt new products, technologies and treatment practices that require additional upfront costs and training. Physicians may not be willing to undergo training to adopt this novel and personalized therapy, may decide the therapy is too complex to adopt without appropriate training and may choose not to administer the therapy. Based on these and other factors, hospitals and payors may decide that the benefits of this new therapy do not or will not outweigh its costs.
Morphogenesis’ near-term ability to generate product revenue is dependent on the success of one or more of its product candidates, each of which are at an early stage of development and will require significant additional clinical testing before it can seek regulatory approval and begin commercial sales.
Morphogenesis’ near-term ability to generate product revenue is highly dependent on its ability to obtain regulatory approval of and successfully commercialize one or more of its product candidates. IFx-Hu2.0 and IFx-Hu3.0 are in the early stages of development and will require additional clinical and nonclinical development, regulatory review, and approval in each jurisdiction in which Morphogenesis intends to market the products, substantial investment, access to sufficient commercial manufacturing capacity, and significant marketing efforts before it can generate any revenue from product sales. Before obtaining marketing approval from regulatory authorities for the sale of Morphogenesis’ product candidates, Morphogenesis must conduct extensive clinical trials to demonstrate the safety, purity, and potency of the product candidates in humans. Morphogenesis cannot be certain that any of its product candidates will be successful in clinical trials and they may not receive regulatory approval even if they are successful in clinical trials.
Before Morphogenesis can generate any revenues from sales of its lead product candidates, it must complete the following activities for each of them, any one of which it may not be able to successfully complete:
• conduct additional preclinical and clinical development with successful outcomes;
• manage preclinical, manufacturing, and clinical activities;
• obtain regulatory approval from the FDA and other comparable foreign regulatory authorities;
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• establish manufacturing relationships for the clinical and post-approval supply of the applicable drug candidate in compliance with all regulatory requirements;
• build a commercial sales and marketing team, either internally or by contract with third parties;
• establish and maintain patent and trade secret protection or regulatory exclusivity for Morphogenesis’ product candidates;
• develop and implement marketing strategies for successful commercial launch of Morphogenesis’ product candidates, if, and when, approved;
• secure and maintain acceptance of Morphogenesis’ products, if, and when approved, by patients, from the relevant medical communities and from third-party payors;
• compete effectively with other therapies;
• establish and maintain adequate health care coverage and reimbursement from third-party payors;
• ensure continued compliance with any post-marketing requirements imposed by regulatory authorities, including any required post-marketing clinical trials or the elements of any post-marketing Risk Evaluation and Mitigation Strategy (“REMS”), that may be required by the FDA or comparable requirements in other jurisdictions to ensure the benefits of the product outweigh its risks;
• maintain continued acceptable safety profile of the product candidates following approval; and
• invest significant additional cash in each of the above activities.
If Morphogenesis is unable to address one or more of these factors in a timely manner or at all, it could experience significant delays in the successful commercialization of, or an inability to successfully commercialize, Morphogenesis’ product candidates, which would materially harm its business. If Morphogenesis does not receive regulatory approvals for one or more of its product candidates, Morphogenesis may not be able to continue its operations. Even if Morphogenesis successfully obtains regulatory approvals to manufacture and market its product candidates, its revenues will be dependent, in part, upon the size of the markets in the territories for which it gains regulatory approval and has commercial rights. If the markets for patient subsets that Morphogenesis is targeting are not as significant as it estimates, Morphogenesis may not generate significant revenues from sales of such products, if approved.
Morphogenesis may encounter substantial delays in its clinical trials or may not be able to conduct its trials on the timelines it expects.
Clinical testing is expensive, time consuming, and subject to uncertainty. Morphogenesis cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing, and Morphogenesis’ future clinical trials may not be successful. Events that may prevent successful or timely completion of clinical development include:
• inability to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation of clinical trials;
• delays in reaching a consensus with regulatory agencies on trial design;
• the FDA may not allow Morphogenesis to use the clinical trial data from a research institution to support an IND, application if Morphogenesis cannot demonstrate the comparability of its product candidates with the product candidate used by the relevant research institution in its clinical trials;
• Morphogenesis’ INDs have been approved in a timely manner thus far, however the FDA may not agree with Morphogenesis’ approach and strategy, which could result in potential delays, and changes to its regulatory strategy;
• Morphogenesis may be required to complete additional preclinical studies in human leukocyte antigens, before it can proceed with its INDs;
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• delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;
• delays in obtaining required Institutional Review Board (“IRB”) approval at each clinical trial site;
• imposition of a temporary or permanent clinical hold by regulatory agencies for a number of reasons, including after review of an IND application or amendment, or equivalent application or amendment; as a result of a new safety finding that presents unreasonable risk to clinical trial participants; a negative finding from an inspection of Morphogenesis’ clinical trial operations or trial sites; developments on clinical trials conducted by competitors for related technology that raises FDA concerns about risk to patients of the technology broadly; or if FDA finds that the investigational protocol or plan is clearly deficient to meet its stated objectives;
• delays in recruiting suitable patients to participate in Morphogenesis’ clinical trials;
• failure by Morphogenesis’ CROs, other third parties, or Morphogenesis to adhere to clinical trial requirements;
• failure to perform in accordance with the FDA’s current good clinical practice regulations (“cGCPs”), requirements, or similar applicable regulatory guidelines in other countries;
• delays in patients completing participation in a trial or returning for post-treatment follow-up;
• patients dropping out of a trial;
• occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits;
• changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;
• changes in the standard of care on which a clinical development plan was based, which may require new or additional trials;
• the cost of clinical trials of Morphogenesis’ product candidates being greater than Morphogenesis anticipates;
• clinical trials of Morphogenesis’ product candidates producing negative or inconclusive results, which may result in Morphogenesis deciding, or regulators requiring it, to conduct additional clinical trials or abandon product development programs;
• delays in developing Morphogenesis’ manufacturing processes and transferring to new third-party facilities to support future development activities and commercialization that are operated by contract manufacturing organizations (“CMOs”), in a manner compliant with all regulatory requirements; and
• delays in manufacturing, testing, releasing, validating, or importing/exporting sufficient stable quantities of Morphogenesis’ product candidates for use in clinical trials or the inability to do any of the foregoing.
Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval for Morphogenesis’ product candidates
Any inability to successfully complete preclinical and clinical development could result in additional costs to Morphogenesis or impair its ability to generate revenue. In addition, if Morphogenesis makes manufacturing or formulation changes to its product candidates, Morphogenesis may be required to, or it may elect to, conduct additional trials to bridge its modified product candidates to earlier versions. Clinical trial delays could also shorten any periods during which Morphogenesis’ products have patent protection and may allow its competitors to bring products to market before Morphogenesis does, which could impair its ability to successfully commercialize its product candidates and may harm its business and results of operations.
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If Morphogenesis does not achieve its projected development and commercialization goals in accordance with its expected and announced timeframes, the commercialization of any of its product candidates may be delayed, and its business will be harmed.
Elsewhere in this proxy statement/prospectus Morphogenesis has provided timing estimates regarding the initiation of clinical trials and clinical development milestones, and the expected availability of data resulting from these trials for certain of Morphogenesis’ product candidates. Morphogenesis expects to continue to estimate the timing of these types of development milestones and its expected timing for the accomplishment of various other scientific, clinical, regulatory, and other product development objectives. From time to time, Morphogenesis may publicly announce the expected timing of some of these events. However, the achievement of many of these milestones and events may be outside of Morphogenesis’ control. These timing estimations are based on a variety of assumptions Morphogenesis makes, which may cause the actual timing of these events to differ from the timing it expects, including:
• Morphogenesis’ available capital resources and its ability to obtain additional funding as needed;
• the rate of progress, costs, and results of its clinical trials and research and development activities;
• Morphogenesis’ ability to identify and enroll patients who meet clinical trial eligibility criteria;
• Morphogenesis’ receipt of approvals by the FDA, European Medicines Agency (“EMA”), and other regulatory authorities and the timing of these approvals;
• Morphogenesis’ ability to access sufficient, reliable, and affordable supplies of materials used in the manufacture of Morphogenesis’ product candidates;
• the efforts with respect to the commercialization of Morphogenesis’ product candidates;
• securing of costs related to, and timing issues associated with, manufacturing Morphogenesis’ therapeutic candidates and, if any of Morphogenesis’ product candidates are approved, sales and marketing activities and the commercial manufacture of its product candidates; and
• circumstances arising from or relating to the COVID-19 pandemic, including potential effects on the global supply chain, Morphogenesis’ manufacturers and the availability of raw materials needed for the research and development of Morphogenesis’ product candidates.
If Morphogenesis fails to timely achieve announced milestones, the commercialization of any of its product candidates may be delayed, and its business and results of operations may be harmed.
Failure to successfully identify, develop, and commercialize additional therapeutics or product candidates could impair Morphogenesis’ ability to grow.
Although a substantial amount of Morphogenesis’ efforts will focus on the continued preclinical and clinical testing and potential approval of the product candidates in the company’s current pipeline, Morphogenesis expects to continue to innovate and potentially expand its portfolio. Research programs to identify product candidates may require substantial additional technical, financial, and human resources and may not result in any new potential product candidates being identified. Morphogenesis’ success may depend, in part, upon its ability to identify, select, and develop promising product candidates and therapeutics. Morphogenesis may expend resources and ultimately fail to discover and generate additional product candidates suitable for further development. All product candidates are prone to risks of failure typical of biotechnology product development, including the possibility that a product candidate may not be suitable for clinical development due to its harmful side effects, limited efficacy, or other characteristics indicating that it is unlikely to receive approval by the FDA, the EMA, and other comparable foreign regulatory authorities and achieve market acceptance. If Morphogenesis does not successfully develop and commercialize new product candidates it has identified and explored, Morphogenesis’ business, prospects, financial condition, and results of operations could be adversely affected.
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The FDA or comparable foreign regulatory authorities may disagree with Morphogenesis’ regulatory plans and Morphogenesis may fail to obtain regulatory approval of Morphogenesis’ product candidates.
The FDA standard for regular approval of a biologic generally requires two well-controlled phase 3 studies or one large and robust, well-controlled phase 3 study in the patient population being studied that provides substantial evidence that a biologic is safe and effective for its proposed indication. Phase 3 clinical trials typically involve hundreds of patients, have significant costs, and take years to complete. Product candidates studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments. As a condition of accelerated approval, the FDA may require a sponsor of a drug or biologic receiving accelerated approval to perform post-marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug or biologic may be subject to withdrawal procedures by the FDA that are more accelerated than those available for regular approvals. If Morphogenesis’ efforts to obtain accelerated approval for IFx-2.0 or any other product candidate is not successful, then Morphogenesis may be required to conduct additional clinical trials beyond those it contemplates, which would likely result in a longer time period to potential approval and commercialization of such product candidate (if approved) and would likely increase the cost of development of such product candidate, all of which could harm the company’s competitive position in the marketplace and shorten the remaining term of applicable patent coverage after product approval.
As part of its marketing authorization process, the EMA may grant marketing authorizations on the basis of less complete data than is normally required, when, for certain categories of medicinal products, doing so may meet unmet medical needs of patients and serve the interest of public health. In such cases, it is possible for the Committee for Medicinal Products for Human Use (“CHMP”), to recommend the granting of a marketing authorization, subject to certain specific obligations to be reviewed annually, which is referred to as a conditional marketing authorization. This may apply to medicinal products for human use that fall under the jurisdiction of the EMA, including those that aim at the treatment, the prevention, or the medical diagnosis of seriously debilitating diseases or life-threatening diseases and those designated as orphan medicinal products.
A conditional marketing authorization may be granted when the CHMP finds that, although comprehensive clinical data referring to the safety and efficacy of the medicinal product have not been supplied, all the following requirements are met:
• the risk-benefit balance of the medicinal product is positive;
• it is likely that the applicant will be in a position to provide the comprehensive clinical data;
• unmet medical needs will be fulfilled; and
• the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required
The granting of a conditional marketing authorization is restricted to situations in which only the clinical part of the application is not yet fully complete. Incomplete nonclinical or quality data may only be accepted if duly justified and only in the case of a product intended to be used in emergency situations in response to public-health threats.
Conditional marketing authorizations are valid for one year, on a renewable basis. The holder will be required to complete ongoing studies or to conduct new studies with a view to confirming that the benefit-risk balance is positive. In addition, specific obligations may be imposed in relation to the collection of pharmacovigilance data.
The granting of a conditional marketing authorization will allow medicines to reach patients with unmet medical needs earlier than might otherwise be the case and will ensure that additional data on a product are generated, submitted, assessed, and acted upon. Although Morphogenesis may seek a conditional marketing authorization for one or more of Morphogenesis’ product candidates by the EMA, the EMA or CHMP may ultimately not agree that the requirements for such conditional marketing authorization have been satisfied.
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Morphogenesis’ clinical trial results may also not support approval, whether accelerated approval, conditional marketing authorizations, or regular approval. The results of preclinical studies and clinical trials may not be predictive of the results of later-stage clinical trials, and product candidates in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through preclinical studies and initial clinical trials. In addition, Morphogenesis’ product candidates could fail to receive regulatory approval for many reasons, including the following:
• the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of Morphogenesis’ clinical trials;
• the population studied in the clinical program may not be sufficiently broad or representative to assure safety in the full population for which Morphogenesis seeks approval;
• Morphogenesis may be unable to demonstrate that its product candidates’ risk-benefit ratios for their proposed indications are acceptable;
• the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;
• Morphogenesis may be unable to demonstrate that the clinical and other benefits of its product candidates outweigh their safety risks;
• the FDA or comparable foreign regulatory authorities may disagree with Morphogenesis’ interpretation of data from preclinical studies or clinical trials;
• the data collected from clinical trials of Morphogenesis’ product candidates may not be sufficient to the satisfaction of the FDA or comparable foreign regulatory authorities to support the submission of a BLA or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere;
• the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, Morphogenesis’ own manufacturing facilities, or a third-party manufacturer’s facilities with which Morphogenesis contracts for clinical and commercial supplies; and
• the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering Morphogenesis’ clinical data insufficient for approval.
Further, failure to obtain approval for any of the above reasons may be made more likely due to the novel nature of Morphogenesis’ technology. Failure to obtain regulatory approval to market any of Morphogenesis’ product candidates would significantly harm its business, results of operations, and prospects.
Morphogenesis’ clinical trials may fail to demonstrate adequately the safety and efficacy of its product candidates, which would prevent or delay regulatory approval and commercialization.
The clinical trials of Morphogenesis’ product candidates are, and the manufacturing and marketing of its products will be, subject to extensive and rigorous review and regulation by numerous government authorities in the United States and in other countries where Morphogenesis intends to test and market its product candidates. Before obtaining regulatory approvals for the commercial sale of any of its product candidates, Morphogenesis must demonstrate through lengthy, complex, and expensive preclinical testing and clinical trials that its product candidates are both safe and effective for use in each target indication. In particular, because its product candidates are subject to regulation as biological drug products, Morphogenesis will need to demonstrate that they are safe, pure, and potent for use in their target indications. Each product candidate must demonstrate an adequate risk versus benefit profile in its intended patient population and for its intended use. The risk/benefit profile required for product licensure will vary depending on these factors and may include not only the ability to show tumor shrinkage, but also adequate duration of response, a delay in the progression of the disease, and/or an improvement in survival. For example, response rates from the use of Morphogenesis’ product candidates may not be sufficient to obtain regulatory approval unless Morphogenesis can also show an adequate duration of response. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of Morphogenesis’
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product candidates may not be predictive of the results of later-stage clinical trials. The results of studies in one set of patients or line of treatment may not be predictive of those obtained in another. Morphogenesis expects there may be greater variability in results for products processed and administered on a patient-by-patient basis, as anticipated for its product candidates, than for “off-the-shelf” products, like small molecule drugs which are not personalized for each patient. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials. Many companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials. Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization.
In addition, even if Morphogenesis’ clinical trials are successfully completed, Morphogenesis cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as Morphogenesis does, and more trials could be required before Morphogenesis submits its product candidates for approval. To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, Morphogenesis may be required to expend significant resources, which may not be available to it, to conduct additional trials in support of potential approval of its product candidates.
Morphogenesis’ product candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences.
As with most biological products, use of Morphogenesis’ product candidates could be associated with side effects or adverse events, which can vary in severity from minor reactions to death and in frequency from infrequent to prevalent. Undesirable side effects or unacceptable toxicities caused by Morphogenesis’ product candidates could cause Morphogenesis or regulatory authorities to interrupt, delay, or halt clinical trials.
The FDA or comparable foreign regulatory authorities could delay or deny approval of Morphogenesis’ product candidates for any or all targeted indications and negative side effects could result in a more restrictive label for any product that is approved. Side effects such as toxicity or other safety issues associated with the use of Morphogenesis’ product candidates could also require Morphogenesis or its collaborators to perform additional studies or halt development or sale of these product candidates.
If one or more of Morphogenesis’ product candidates receives marketing approval, and Morphogenesis or others later identify undesirable side effects caused by such products, including during any long-term follow-up observation period recommended or required for patients who receive treatment using Morphogenesis’ products, many potentially significant negative consequences could result, including:
• regulatory authorities may withdraw or limit their approvals of such products;
• regulatory authorities may require the addition of labeling statements, specific warnings or a contraindications;
• Morphogenesis may be required to create a Risk Evaluation and Mitigation Strategy (“REMS”), plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers, and/or other elements to assure safe use;
• Morphogenesis may be required to change the way such products are distributed or administered, or change the labeling of the products;
• the FDA or a comparable foreign regulatory authority may require Morphogenesis to conduct additional clinical trials or costly post-marketing testing and surveillance to monitor the safety and efficacy of the products;
• Morphogenesis may decide to recall such products from the marketplace after they are approved;
• Morphogenesis could be sued and held liable for harm caused to individuals exposed to or taking its products; and
• Morphogenesis’ reputation may suffer.
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In addition, adverse side effects caused by any therapeutics that may be similar in nature to Morphogenesis’ product candidates could delay or prevent regulatory approval of Morphogenesis’ product candidates, limit the commercial profile of an approved label for Morphogenesis’ product candidates, or result in significant negative consequences for its product candidates following marketing approval.
Morphogenesis believes that any of these events could prevent it from achieving or maintaining market acceptance of the affected product candidates and could substantially increase the costs of commercializing Morphogenesis’ product candidates, if approved, and significantly impact Morphogenesis’ ability to successfully commercialize its product candidates and generate revenues.
If Morphogenesis encounters difficulties enrolling patients in its clinical trials, its clinical development activities could be delayed or otherwise adversely affected.
The timely completion of clinical trials in accordance with their protocols depends, among other things, on Morphogenesis’ ability to enroll a sufficient number of patients who remain in the trial until its conclusion. Morphogenesis may experience difficulties in patient enrollment in its clinical trials for a variety of reasons, including:
• the size and nature of the patient population;
• the patient eligibility criteria defined in the protocol;
• the size of the study population required for analysis of the trial’s primary endpoints;
• the proximity of patients to trial sites;
• the design of the trial;
• Morphogenesis’ ability to recruit clinical trial investigators with the appropriate competencies and experience;
• clinicians’ and patients’ perceptions as to the potential advantages and side effects of the product candidate being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications Morphogenesis is investigating;
• Morphogenesis’ ability to obtain and maintain patient consents; and
• the risk that patients enrolled in clinical trials will not complete a clinical trial.
In addition, Morphogenesis’ clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as Morphogenesis’ product candidates, and this competition will reduce the number and types of patients available to Morphogenesis, because some patients who might have opted to enroll in Morphogenesis’ trials may instead opt to enroll in a trial being conducted by one of its competitors. Because the number of qualified clinical investigators is limited, Morphogenesis may conduct some of its clinical trials at the same clinical trial sites that some of its competitors use, which will reduce the number of patients who are available for Morphogenesis’ clinical trials at such clinical trial sites. Moreover, because Morphogenesis’ product candidates represent a departure from more commonly used methods for cancer treatment, potential patients and their doctors may be inclined to use conventional therapies, such as chemotherapy and hematopoietic cell transplantation, rather than enroll patients in any future clinical trial.
Even if Morphogenesis can enroll a sufficient number of patients in its clinical trials, delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect Morphogenesis’ ability to advance the development of its product candidates.
Clinical trials are expensive, time-consuming, and difficult to design and implement, and Morphogenesis’ clinical trial costs may be higher than those for more conventional therapeutic technologies or drug products.
Clinical trials are expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. Because Morphogenesis’ product candidates are based on new technologies and manufactured on a patient-by-patient basis, Morphogenesis expects that they will require extensive research and
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development and have substantial manufacturing costs. In addition, costs to treat patients with relapsed/refractory cancer and to treat potential side effects that may result from Morphogenesis’ product candidates can be significant. Accordingly, Morphogenesis’ clinical trial costs are likely to be significantly higher per patient than those of more conventional therapeutic technologies or drug products.
In addition, one of Morphogenesis’ early-stage product candidates that is currently in preclinical development is for a novel class of injectable biologics. Development of the underlying technology may be affected by unanticipated technical, regulatory, manufacturing, or other problems, among other research and development issues, and the possible insufficiency of funds needed to complete development of this product candidate.
Morphogenesis’ proposed personalized product candidates involve several complex and costly manufacturing and processing steps, the costs of which will be borne by us. Depending on the number of patients Morphogenesis ultimately enrolls in its trials, and the number of trials Morphogenesis may need to conduct, its overall clinical trial costs may be higher than for more conventional treatments.
Morphogenesis’ product candidates are biologics and the manufacture of its product candidates is complex and Morphogenesis may encounter difficulties in production, particularly with respect to process development or scaling-out of Morphogenesis’ manufacturing capabilities. If Morphogenesis or any of its third-party manufacturers encounter such difficulties, Morphogenesis’ ability to provide supply of its product candidates for clinical trials or its products for patients, if approved, could be delayed or stopped, or Morphogenesis may be unable to maintain a commercially viable cost structure.
Morphogenesis’ product candidates are biologics and the process of manufacturing its products is complex, highly regulated, and subject to multiple risks. The manufacture of Morphogenesis’ product candidates involves complex processes, and, as a result of the complexities, the cost to manufacture biologics in general is generally higher than traditional small molecule chemical compounds, and the manufacturing process is less reliable and is more difficult to reproduce. Morphogenesis’ manufacturing process will be susceptible to product loss or failure due to logistical issues. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects, and other supply disruptions. Further, as product candidates are developed through preclinical to late-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, are altered along the way in an effort to optimize processes and results. Such changes carry the risk that they will not achieve these intended objectives, and any of these changes could cause Morphogenesis’ product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials.
In addition, the manufacturing process for any products that Morphogenesis may develop is subject to FDA and foreign regulatory authority approval process, and Morphogenesis will need to contract with manufacturers who can meet all applicable FDA and foreign regulatory authority requirements on an ongoing basis. If Morphogenesis or its CMOs are unable to reliably produce products to specifications acceptable to the FDA or other regulatory authorities, Morphogenesis may not obtain or maintain the approvals Morphogenesis needs to commercialize such products. Even if Morphogenesis obtains regulatory approval for any of its product candidates, there is no assurance that either Morphogenesis or its CMOs will be able to manufacture the approved product to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential launch of the product, or to meet potential future demand. Any of these challenges could delay completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of Morphogenesis’ product candidate, impair commercialization efforts, increase its cost of goods, and have an adverse effect on its business, financial condition, results of operations and growth prospects.
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Morphogenesis relies on third parties to manufacture its clinical product supplies, and Morphogenesis intends to rely on third parties for at least a portion of the manufacturing process of its product candidates, if approved. Morphogenesis’ business could be harmed if those third parties fail to provide it with sufficient quantities of product or fail to do so at acceptable quality levels or prices or fail to maintain or achieve satisfactory regulatory compliance.
Morphogenesis does not currently own any facility that may be used as its clinical-scale manufacturing and processing facility and currently relies on a single source vendor to manufacture supplies and process Morphogenesis’ product candidates. Morphogenesis has not yet caused its product candidates to be manufactured or processed on a commercial scale and may not be able to do so for any of its product candidates.
Although in the future Morphogenesis does intend to develop its own manufacturing facility, it also intends to use third parties as part of its manufacturing process and may, in any event, never be successful in developing its own manufacturing facility. Morphogenesis’ anticipated reliance on a limited number of third-party manufacturers exposes it to the following risks:
• Morphogenesis may be unable to identify manufacturers on acceptable terms or at all because the number of potential manufacturers is limited and the FDA must approve any manufacturers. This approval would require new testing and good manufacturing practices compliance inspections by FDA. In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for, production of Morphogenesis’ products;
• Morphogenesis’ third-party manufacturers might be unable to timely manufacture its product or produce the quantity and quality required to meet its clinical and commercial needs, if any;
• Contract manufacturers may not be able to execute Morphogenesis’ manufacturing procedures and other logistical support requirements appropriately;
• Morphogenesis’ future contract manufacturers may not perform as agreed, may not devote sufficient resources to its products, or may not remain in the contract manufacturing business for the time required to supply its clinical trials or to successfully produce, store, and distribute its products;
• Morphogenesis’ future contract manufacturers may not perform as agreed, may not devote sufficient resources to its products, or may not remain in the contract manufacturing business for the time required to supply its clinical trials or to successfully produce, store, and distribute its products;
• Manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with current good manufacturing practices, or cGMP, current good tissue practices, or cGTP, if applicable and other government regulations and corresponding foreign standards. Morphogenesis does not have control over third-party manufacturers’ compliance with these regulations and standards;
• Morphogenesis may not own, or may not solely own, the intellectual property rights to improvements made by its third-party manufacturers in the manufacturing process for its products;
• Morphogenesis’ third-party manufacturers could breach or terminate their agreement with the company;
• Raw materials and components used in the manufacturing process, particularly those for which Morphogenesis has no other source or supplier, may not be available or may not be suitable or acceptable for use due to material or component defects;
• Morphogenesis’ contract manufacturers and critical reagent suppliers may be subject to inclement weather, as well as natural or man-made disasters; and
• Morphogenesis’ contract manufacturers may have unacceptable or inconsistent product quality success rates and yields.
Each of these risks could delay or prevent the completion of Morphogenesis’ clinical trials or the approval of any of its product candidates by the FDA, result in higher costs or adversely impact commercialization of Morphogenesis’ product candidates. In addition, Morphogenesis will rely on third parties to perform certain
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specification tests on its product candidates prior to delivery to patients. If these tests are not appropriately done and test data are not reliable, patients could be put at risk of serious harm and the FDA could place significant restrictions on Morphogenesis until deficiencies are remedied.
Although Morphogenesis’ agreements with its CMOs require them to perform according to certain cGMP and, if applicable, cGTP requirements such as those relating to quality control, quality assurance, and qualified personnel, Morphogenesis cannot control the conduct of its CMOs to implement and maintain these standards. If any of Morphogenesis’ CMOs cannot successfully manufacture material that conforms to its specifications and the regulatory requirements of the FDA, EMA, or other comparable foreign authorities, Morphogenesis would be prevented from obtaining regulatory approval for its drug candidates unless and until Morphogenesis engages a substitute CMO that can comply with such requirements, which it may not be able to do. Any such failure by any of Morphogenesis’ CMOs would significantly impact its ability to develop, obtain regulatory approval for, or market Morphogenesis’ drug candidates, if approved.
The manufacture of biological drug products is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.
Manufacturers of biologic products often encounter difficulties in production, particularly in scaling up or out, validating the production process, and assuring high reliability of the manufacturing process (including the absence of contamination). These problems include logistics and shipping, difficulties with production costs and yields, quality control, including stability of the product, product testing, operator error, availability of qualified personnel, as well as compliance with strictly enforced federal, state, and foreign regulations. Furthermore, if contaminants are discovered in Morphogenesis’ supply of its product candidates or in the manufacturing facilities, such manufacturing facilities may need to be closed for an extended period to investigate and remedy the contamination. Morphogenesis cannot assure you that any stability failures or other issues relating to the manufacture of its product candidates will not occur in the future. Additionally, Morphogenesis’ manufacturers may experience manufacturing difficulties due to resource constraints, labor disputes, or unstable political environments. If Morphogenesis’ manufacturers were to encounter any of these difficulties, or otherwise fail to comply with their contractual obligations, its ability to provide its product candidate to patients in clinical trials would be jeopardized. Any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trial programs, and, depending upon the period of delay, require Morphogenesis to begin new clinical trials at additional expense or terminate clinical trials completely.
Morphogenesis’ third-party manufacturers may be unable to successfully scale up manufacturing of its product candidates in sufficient quality and quantity, which would delay or prevent Morphogenesis from developing its product candidates and commercializing any approved product candidates.
Morphogenesis’ manufacturing partners may be unable to successfully increase the manufacturing capacity for its product candidates in a timely or cost-effective manner, or at all, as needed for its development efforts or, if its product candidates are approved, its commercialization efforts. Quality issues may also arise during scale-up activities. If Morphogenesis, or any manufacturing partners, are unable to successfully scale up the manufacture of Morphogenesis’ product candidates in sufficient quality and quantity, the development, testing, and clinical trials of its product candidates may be delayed or infeasible, and regulatory approval or commercial launch of any resulting therapeutic may be delayed or not obtained, which could significantly harm Morphogenesis’ business.
Cell-based therapies rely on the availability of reagents, specialized equipment, and other specialty materials, which may not be available to Morphogenesis on acceptable terms or at all. For some of these reagents, equipment, and materials, Morphogenesis relies or may rely on sole source vendors or a limited number of vendors, which could impair Morphogenesis’ ability to manufacture and supply its products.
Manufacturing Morphogenesis’ product candidates will require many reagents, which are substances used in Morphogenesis’ manufacturing processes to bring about chemical or biological reactions, and other specialty materials and equipment, some of which are manufactured or supplied by small companies with limited resources and experience to support commercial biologics production. Morphogenesis currently depends on a limited number of vendors for certain materials and equipment used in the manufacture of its product candidates. Some of these suppliers may not have the capacity to support commercial products manufactured under cGMP by biopharmaceutical firms or may otherwise be ill-equipped to support Morphogenesis’ needs. Morphogenesis also
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does not have supply contracts with many of these suppliers and may not be able to obtain supply contracts with them on acceptable terms or at all. Accordingly, Morphogenesis may experience delays in receiving key materials and equipment to support clinical or commercial manufacturing.
For some of these reagents, equipment, and materials, Morphogenesis relies and may in the future rely on sole source vendors or a limited number of vendors. An inability to continue to source product from any of these suppliers, which could be due to regulatory actions or requirements affecting the supplier, adverse financial or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected demands, or quality issues, could adversely affect Morphogenesis’ ability to satisfy demand for its product candidates, which could adversely and materially affect its product sales and operating results or its ability to conduct clinical trials, either of which could significantly harm its business.
As Morphogenesis continues to develop and scale its manufacturing process, Morphogenesis expects that it will need to obtain rights to and supplies of certain materials and equipment to be used as part of that process. Morphogenesis may not be able to obtain rights to such materials on commercially reasonable terms, or at all, and if it is unable to alter its process in a commercially viable manner to avoid the use of such materials or find a suitable substitute, it would have a material adverse effect on its business.
Morphogenesis relies and will rely on third parties to conduct its clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or comply with regulatory requirements, Morphogenesis may not be able to obtain regulatory approval of or commercialize its product candidates.
Morphogenesis depends and will depend upon independent investigators and collaborators to conduct its clinical trials under agreements with universities, medical institutions, CROs, strategic partners, and others. Morphogenesis expects to have to negotiate budgets and contracts with CROs and trial sites, which may result in delays to Morphogenesis’ development timelines and increased costs.
Morphogenesis relies and will rely heavily on third parties over the course of its clinical trials, and as a result will have limited control over the clinical investigators and limited visibility into its day-to-day activities. Nevertheless, Morphogenesis is responsible for ensuring that each of its trials is conducted in accordance with the applicable protocol and legal, regulatory, and scientific standards, and Morphogenesis’ reliance on third parties does not relieve it of its regulatory responsibilities. Morphogenesis and these third parties are required to comply with good clinical practices (“GCP”), which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in clinical development. Regulatory authorities enforce these GCP through periodic inspections of trial sponsors, principal investigators, and trial sites. If Morphogenesis or any of these third parties fails to comply with applicable GCP regulations, the clinical data generated in Morphogenesis’ clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require Morphogenesis to perform additional nonclinical or clinical trials before approving its marketing applications. Morphogenesis cannot be certain that, upon inspection, such regulatory authorities will determine that any of its clinical trials comply with the applicable GCP regulations. In addition, Morphogenesis’ clinical trials must be conducted with biologic product produced under cGMP, and likely cGTP regulations and will require a large number of test patients. Morphogenesis’ failure or any failure by these third parties to comply with these regulations or to recruit a sufficient number of patients may require Morphogenesis to repeat clinical trials, which would delay the regulatory approval process. Moreover, Morphogenesis’ business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.
Any third parties conducting Morphogenesis’ clinical trials are not and will not be its employees and, except for remedies available to Morphogenesis under its agreements with such third parties, Morphogenesis cannot control whether or not they devote sufficient time and resources to its ongoing preclinical, clinical, and nonclinical programs. These third parties may also have relationships with other commercial entities, including Morphogenesis’ competitors, for whom they may also be conducting clinical trials or other drug development activities, which could affect their performance on Morphogenesis’ 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 clinical data they obtain is compromised due to the failure to adhere to Morphogenesis’ clinical protocols or regulatory requirements or for other reasons, Morphogenesis’ clinical trials may be extended, delayed, or terminated and Morphogenesis may not be able to complete development of, obtain regulatory approval
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of or successfully commercialize its product candidates. As a result, Morphogenesis’ financial results and the commercial prospects for its product candidates would be harmed, its costs could increase, and its ability to generate revenue could be delayed.
Any agreements governing Morphogenesis’ relationships with CROs or other contractors with whom Morphogenesis currently engages or may engage in the future may provide those outside contractors with certain rights to terminate a clinical trial under specified circumstances. If any of Morphogenesis’ relationships with these third-party CROs terminate, Morphogenesis may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. 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 occur, which can materially impact Morphogenesis’ ability to meet its desired clinical development timelines. Though Morphogenesis carefully manages its relationships with its CROs, there can be no assurance that Morphogenesis will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on its business, financial condition, and prospects.
Morphogenesis plans to seek orphan drug status for some or all of its product candidates, but Morphogenesis may be unable to obtain such designations or to maintain the benefits associated with orphan drug status, including market exclusivity, which may cause its revenue, if any, to be reduced.
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be recovered from sales in the United States for that drug or biologic. Orphan drug designation must be requested before submitting a BLA. In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.
If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a BLA, to market the same biologic for the same indication for seven years, except in limited circumstances such as a showing of clinical superiority to the product with orphan drug exclusivity or if FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated. As a result, even if one of Morphogenesis’ drug candidates receives orphan exclusivity, the FDA can still approve other drugs that have a different active ingredient for use in treating the same indication or disease. Furthermore, the FDA can waive orphan exclusivity if Morphogenesis is unable to manufacture sufficient supply of its product.
Morphogenesis plans to seek orphan drug designation for some or all of its product candidates in specific orphan indications in which there is a medically plausible basis for the use of these products, but exclusive marketing rights in the United States may be limited if Morphogenesis seeks approval for an indication broader than the orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. In addition, although Morphogenesis intends to seek orphan drug designation for other product candidates, Morphogenesis may never receive such designations.
The review processes of regulatory authorities are lengthy, time consuming, expensive and inherently unpredictable. If Morphogenesis is unable to obtain approval for its product candidates from applicable regulatory authorities, it will not be able to market and sell those product candidates in those countries or regions and Morphogenesis’ business could be substantially harmed.
The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of drug products are, and will remain, subject to extensive regulation by the FDA in the United States and by the respective regulatory authorities in other countries where regulations differ. Morphogenesis is not permitted to market
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its biological product candidates in the United States until Morphogenesis receives the respective approval of a BLA from the FDA, or in any foreign countries until Morphogenesis receives the requisite approval from the respective regulatory authorities in such countries. The time required to obtain approval, if any, by the FDA, EMA and comparable foreign authorities is unpredictable, but typically takes many years following the commencement of clinical trials, if approval is obtained at all, and depends upon numerous factors, including the substantial discretion of the regulatory authorities and the type, complexity and novelty of the product candidates involved. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that Morphogenesis’ data is insufficient for approval and require additional nonclinical studies or clinical trials. Morphogenesis has limited experience in planning and conducting the clinical trials required for marketing approvals, and Morphogenesis has and expects to continue to rely on third-party CROs to assist Morphogenesis in this process. Obtaining marketing approval requires the submission of extensive nonclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process, and in many cases the inspection of manufacturing, processing, and packaging facilities by the regulatory authorities. Morphogenesis’ product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude Morphogenesis’ obtaining marketing approval or prevent or limit commercial use, or there may be deficiencies in cGMP compliance by Morphogenesis or by its CMOs that could result in the candidate not being approved. Moreover, Morphogenesis has not obtained regulatory approval for any drug candidate in any jurisdiction and it is possible that none of its existing drug candidates or any drug candidates Morphogenesis may seek to develop in the future will ever obtain regulatory approval.
Morphogenesis’ biological product candidates could fail to receive, or could be delayed in receiving, regulatory approval for many reasons, including any one or more of the following:
• the FDA, EMA or comparable foreign regulatory authorities may disagree with the design or implementation of Morphogenesis’ clinical trials;
• Morphogenesis may be unable to demonstrate to the satisfaction of the FDA, EMA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication;
• the results of clinical trials may not meet the level of statistical significance required by the FDA, EMA or comparable foreign regulatory authorities for approval;
• Morphogenesis may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
• the FDA, EMA or comparable foreign regulatory authorities may disagree with Morphogenesis’ interpretation of data from preclinical studies or clinical trials;
• the data collected from clinical trials of Morphogenesis product candidates may not be sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere;
• upon review of Morphogenesis’ clinical trial sites and data, the FDA or comparable foreign regulatory authorities may find Morphogenesis’ record keeping or the record keeping of its clinical trial sites to be inadequate;
• the manufacturing processes or facilities of third-party manufacturers with which Morphogenesis contracts for clinical and commercial supplies may fail to meet the requirements of the FDA, EMA or comparable foreign regulatory authorities;
• the FDA, EMA or comparable foreign regulatory authorities may fail to approve the companion diagnostics Morphogenesis contemplates developing internally or with partners; and
• the change of the medical standard of care or the approval policies or regulations of the FDA, EMA or comparable foreign regulatory authorities may significantly change in a manner that renders Morphogenesis’ clinical data insufficient for approval.
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Even if Morphogenesis was able to obtain regulatory approval in one or more jurisdictions, regulatory authorities may approve any of its product candidates for fewer or more limited indications than Morphogenesis requests, may not approve prices Morphogenesis may propose to charge for its products, may grant approval contingent on the performance of costly post-marketing clinical trials (referred to as “conditional” or “accelerated” approval depending on the jurisdiction), or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that drug candidate. Any of the foregoing circumstances could materially harm the commercial prospects for Morphogenesis’ drug candidates.
Morphogenesis currently has no marketing and sales organization and have no experience in marketing products. If Morphogenesis is unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell its product candidates, Morphogenesis may not be able to generate product revenue.
Morphogenesis currently has no sales, marketing, or commercial product distribution capabilities and has no experience in marketing products. Morphogenesis intends to develop an in-house marketing organization and sales force, which will require significant capital expenditures, management resources, and time. Morphogenesis will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train, and retain marketing and sales personnel.
If Morphogenesis is unable or decide not to establish internal sales, marketing and commercial distribution capabilities for any or all products Morphogenesis develops, it will likely pursue collaborative arrangements regarding the sales and marketing of its products. However, there can be no assurance that Morphogenesis will be able to establish or maintain such collaborative arrangements, or if Morphogenesis is able to do so, that they will have effective sales forces. Any revenue Morphogenesis receives will depend upon the efforts of such third parties, which may not be successful. Morphogenesis may have little or no control over the marketing and sales efforts of such third parties, and Morphogenesis’ revenue from product sales may be lower than if it had commercialized its product candidates itself. Morphogenesis also faces competition in ts search for third parties to assist it with the sales and marketing efforts of its product candidates.
There can be no assurance that Morphogenesis will be able to develop in-house sales and commercial distribution capabilities or establish or maintain relationships with third-party collaborators to successfully commercialize any product in the United States or overseas, and as a result, Morphogenesis may not be able to generate product revenue.
Morphogenesis may form or seek collaborations or strategic alliances or enter into additional licensing arrangements in the future, and Morphogenesis may not realize the benefits of such alliances or licensing arrangements.
Morphogenesis may form or seek strategic alliances, create joint ventures or collaborations, or enter into additional licensing arrangements with third parties that Morphogenesis believes will complement or augment its development and commercialization efforts with respect to its product candidates and any future product candidates that Morphogenesis may develop. Any of these relationships may require Morphogenesis to incur non-recurring and other charges, increase Morphogenesis’ near and long-term expenditures, issue securities that dilute its existing stockholders, or disrupt its management and business. In addition, Morphogenesis faces significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, Morphogenesis may not be successful in its efforts to establish a strategic partnership or other alternative arrangements for Morphogenesis’ product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view Morphogenesis’ product candidates as having the requisite potential to demonstrate safety and efficacy.
Further, collaborations involving Morphogenesis’ product candidates, such as Morphogenesis’ collaborations with third-party research institutions, are subject to numerous risks, which may include the following:
• collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration;
• collaborators may not pursue development and commercialization of Morphogenesis’ product candidates or may elect not to continue or renew development or commercialization programs based on clinical
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trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities;
• collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing;
• collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with Morphogenesis’ products or product candidates;
• a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to their marketing and distribution;
• collaborators may not properly maintain or defend Morphogenesis’ intellectual property rights, or may use its intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate Morphogenesis’ intellectual property or proprietary information or expose Morphogenesis to potential liability;
• disputes may arise between Morphogenesis and a collaborator that cause the delay or termination of the research, development or commercialization of Morphogenesis’ product candidates, or that result in costly litigation or arbitration that diverts management attention and resources;
• collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; and
• collaborators may own or co-own intellectual property covering Morphogenesis’ products that results from its collaborations with them, and in such cases, Morphogenesis would not have the exclusive right to commercialize such products.
As a result, if Morphogenesis enters into collaboration agreements and strategic partnerships or license its products or businesses, it may not be able to realize the benefit of such transactions if it are unable to successfully integrate them with Morphogenesis’ existing operations and company culture, which could delay Morphogenesis’ timelines or otherwise adversely affect its business. Morphogenesis also cannot be certain that, following a strategic transaction or license, it will achieve the revenue or specific net income that justifies such transaction. Any delays in entering into new collaborations or strategic partnership agreements related to Morphogenesis’ product candidates could delay the development and commercialization of Morphogenesis’ product candidates in certain geographies for certain indications, which would harm Morphogenesis’ business prospects, financial condition, and results of operations.
If Morphogenesis engages in future acquisitions or strategic partnerships, this may increase Morphogenesis’ capital requirements, dilute its stockholders, cause Morphogenesis to incur debt or assume contingent liabilities, and subject it to other risks.
Morphogenesis may evaluate various acquisitions and strategic partnerships, including licensing or acquiring complementary products, intellectual property rights, technologies, or businesses. Any potential acquisition or strategic partnership may entail numerous risks, including:
• increased operating expenses and cash requirements;
• the assumption of additional indebtedness or contingent liabilities;
• assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel;
• Morphogenesis’ inability to achieve desired efficiencies, synergies or other anticipated benefits from such acquisitions or strategic partnerships;
• the diversion of Morphogenesis’ management’s attention from its existing product 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 Morphogenesis’ ability to maintain key business relationships;
• risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and regulatory approvals; and
• Morphogenesis’ inability to generate revenue from acquired technology and/or products sufficient to meet its objectives in undertaking the acquisition or even to of