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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
(Mark One)
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the
fiscal year
 
ended
December 31, 2023
or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
for the transition period from
 
to
 
.
Commission File Number
 
001-41058
VAXXINITY, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
86-2083865
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
505 Odyssey Way
 
Merritt Island
,
FL
32953
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:
(
254
)
244-5739
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of exchange on which registered
Class A Common Stock, par value $0.0001 per
share
VAXX
The
Nasdaq
 
Global Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
Indicate by
 
check mark
 
whether the
 
registrant (1) has
 
filed all
 
reports required
 
to be
 
filed by
 
Section 13 or
 
15(d) of the
 
Securities Exchange
 
Act of
1934 during the preceding 12 months (or for such shorter
 
period that the registrant was required to file such
 
reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes
 
No
Indicate by check mark
 
whether the registrant has
 
submitted electronically every Interactive
 
Data File required to
 
be submitted pursuant to
 
Rule 405
of Regulation S-T (§ 232.405 of
 
this chapter) during the preceding
 
12 months (or for such shorter period
 
that the registrant was required
 
to submit such
files).
Yes
 
No
Indicate by check mark whether
 
the registrant is a
 
large accelerated filer,
 
an accelerated filer,
 
a non-accelerated filer,
 
a smaller reporting company or
an emerging growth company. See the definitions of “large accelerated filer,”
 
“accelerated filer,” “smaller reporting company” and "emerging growth
company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer
 
Smaller Reporting Company
Emerging Growth Company
If an emerging growth company,
 
indicate by check mark if the registrant has
 
elected not to use the extended transition period
 
for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report.
 
If securities are registered
 
pursuant to Section 12(b)
 
of the Act, indicate
 
by check mark whether
 
the financial statements of
 
the registrant included in
the filing reflect the correction of an error to previously issued financial statements.
Indicate by
 
check mark
 
whether any
 
of those
 
error corrections
 
are restatements
 
that required
 
a recovery
 
analysis of
 
incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
 
No
The aggregate market value of registrant’s voting and non-voting outstanding common stock
 
held by non-affiliates was approximately $
155.6
 
million
based upon the closing stock price of
 
issuer’s common stock on June 30,
2023
, the last business day of the
 
registrant’s most recently completed second
fiscal quarter. Shares of common stock held by each officer and director and by each person who may be deemed to be affiliates of the Company. This
determination of affiliate status is not necessarily a conclusive determination for other purposes.
 
As of March 25,
 
2024, the registrant
 
had
112,873,552
 
shares of $0.0001
 
par value Class
 
A common stock
 
outstanding and
13,874,132
 
shares of $0.0001
par value Class B common stock outstanding.
 
 
DOCUMENTS INCORPORATED BY REFERENCE
Portions of
 
the following document
 
are incorporated
 
by reference in
 
Part III of this
 
Report: the
 
registrant’s definitive
 
proxy statement relating
 
to its
2024 Annual Meeting
 
of Shareholders. We
 
currently anticipate that
 
our definitive proxy
 
statement will be
 
filed with the
 
SEC no later
 
than 120 days
after December 31, 2023, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended.
 
2
PART
 
I
Unless otherwise indicated
 
in this report,
 
“Vaxxinity
 
,” “we,” “us,”
 
“our,” and similar terms
 
refer to Vaxxinity,
 
Inc. and our
 
consolidated
subsidiaries.
SPECIAL NOTE REGARDING FORWARD
 
-LOOKING STATEMENTS
This Annual
 
Report on
 
Form 10-K
 
for the
 
year ended December 31,
 
2023 (“Report”) contains
 
forward-looking statements. Forward-
looking
 
statements
 
are
 
neither
 
historical
 
facts
 
nor
 
assurances of
 
future
 
performance.
 
Instead,
 
they
 
are
 
based
 
on
 
our
 
current
 
beliefs,
expectations and assumptions
 
regarding the future
 
of our business,
 
future plans and
 
strategies and other
 
future conditions. In
 
some cases,
you can identify forward-looking
 
statements because they contain
 
words such as “anticipate,”
 
“believe,” “estimate,” “expect,” “intend,”
“may,” “predict,” “project,” “target,” “potential,” “seek,” “will,” “would,” “could,” “should,” “continue,” “contemplate,” “plan,” other
words and terms of similar meaning and the negative of these words or similar terms.
Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control.
 
We
caution you
 
that forward-looking
 
statements are
 
not guarantees
 
of future
 
performance or
 
outcomes and
 
that actual
 
performance and
outcomes may differ
 
materially from those
 
made in or
 
suggested by the
 
forward-looking statements
 
contained in this
 
Report. In addition,
even
 
if
 
our results
 
of
 
operations, financial
 
condition
 
and cash
 
flows,
 
and
 
the development
 
of
 
the
 
markets in
 
which we
 
operate, are
consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of
 
results
or developments in subsequent periods.
 
New factors emerge from time to
 
time that may cause our
 
business not to develop as
 
we expect,
and it is not possible for us to predict all
 
of them. Factors that could cause actual results and outcomes to differ
 
from those reflected in
forward-looking statements include, among others, the following:
 
the prospects
 
of UB-612
 
and other
 
product candidates,
 
including the
 
timing of
 
data from
 
our clinical
 
trials and
 
our
ability to obtain and maintain regulatory approval for our product candidates;
 
our ability to develop and commercialize new products and product candidates;
 
our substantial doubt about our ability to continue as a going concern;
 
our ability to leverage our AIM Platform (defined below);
 
the rate and degree of market acceptance of our products and product candidates;
 
decreased demand for our COVID-19 product candidate, if and when such product candidate is approved;
 
our
 
status
 
as
 
a
 
clinical-stage
 
company
 
and
 
estimates
 
of
 
our
 
addressable
 
market,
 
market
 
growth,
 
future
 
revenue,
expenses, capital requirements and our needs for additional financing;
 
our ability
 
to comply
 
with multiple
 
legal and
 
regulatory systems
 
relating to
 
privacy,
 
tax, anti-corruption
 
and other
applicable laws;
 
our ability to hire and retain key personnel and to manage our future growth effectively;
 
competitive companies and technologies,
 
including existing third party
 
approved and market accepted
 
products in our
industry and our ability to compete;
 
our and our
 
collaborators’, including United
 
Biomedical’s (“UBI”), ability and
 
willingness to obtain,
 
maintain, defend
and enforce our
 
intellectual property
 
protection for our
 
proprietary and collaborative
 
product candidates,
 
and the scope
of such protection;
 
the
 
performance
 
of
 
third-party
 
suppliers
 
and
 
manufacturers
 
and
 
our
 
ability
 
to
 
find
 
additional
 
suppliers
 
and
manufacturers;
 
our ability and the potential to successfully manufacture our product candidates for pre-clinical use, for clinical trials
and on a larger scale for commercial use, if approved;
 
the ability and willingness of our third-party collaborators to continue research and development activities relating to
our product candidates;
 
general economic,
 
political, demographic
 
and business conditions
 
in the United
 
States, Taiwan and other
 
jurisdictions;
 
3
 
the
 
potential
 
effects
 
of
 
government
 
regulation,
 
including
 
regulatory
 
developments
 
in
 
the
 
United
 
States
 
and
 
other
jurisdictions;
 
our ability to obtain additional financing in future offerings;
 
our ability to maintain our listing on The Nasdaq Global Market;
 
expectations about market trends; and
 
the effects of
 
the ongoing conflicts between Russia
 
and Ukraine or Israel and
 
Hamas and increased tension between
Taiwan and
 
China on business operations, the
 
initiation, development and operation of our
 
clinical trials and patient
enrollment of our clinical trials.
We discuss many of
 
these factors
 
in greater
 
detail under
 
Item 1A. “Risk
 
Factors.” These
 
risk factors are
 
not exhaustive
 
and other sections
of
 
this
 
report
 
may
 
include
 
additional
 
factors
 
which
 
could
 
adversely
 
impact
 
our
 
business
 
and
 
financial
 
performance.
 
Given
 
these
uncertainties, you should not place undue reliance on these forward-looking statements.
You
 
should read
 
this Report
 
and the
 
documents that
 
we reference
 
in this
 
Report and
 
have filed
 
as exhibits
 
completely and
 
with the
understanding that
 
our actual
 
future results
 
may be
 
materially different
 
from what
 
we expect.
 
We
 
qualify all
 
of the
 
forward- looking
statements in this Report by these cautionary statements. Except as required by law, we undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information, future events or otherwise.
 
Item 1. Business.
 
Overview
We
 
are a purpose-driven biotechnology company
 
committed to positively impacting humanity
 
by democratizing healthcare across the
globe. Our metric for success is simple:
 
amount of human suffering alleviated. We doggedly pursue this as our north
 
star, and aim to be
number one in the world at this metric. Our vision is to redefine the paradigm for tackling the global epidemic of chronic diseases, and
provide cheaper, safer, more convenient and effective medicines to all.
 
There are many inventions that have served thousands
 
of lives, and some that have benefited
 
a million lives, but only a select
 
few that
have saved billions
 
lives. These include
 
the innovations of
 
fertilizer of the
 
green revolution to
 
feed an exponentially
 
growing population,
hygienic plumbing to
 
control cholera and
 
typhoid, and vaccines
 
to prevent over
 
20 dangerous or
 
deadly diseases. We
 
believe that we
have a technological innovation in medicine with the potential for a billion-person impact within the chronic disease
 
epidemic.
 
Today’s
 
approach to
 
treating patients
 
suffering from
 
chronic disease
 
is focused
 
on and
 
increasingly dominated by
 
drugs, particularly
monoclonal antibodies (“mAbs”), which can be
 
highly efficacious but remain limited by prohibitive costs,
 
cumbersome administration,
and
 
restricted scale.
 
We
 
believe our
 
synthetic peptide-based
 
Active
 
Immunotherapy Medicines
 
Platform (“AIM
 
Platform” formerly
called the Vaxxine Platform) has the potential to enable a new class of
 
medicines that will improve the quality
 
and convenience of care,
reduce costs and increase access to
 
treatments for a wide range of indications.
 
Moreover, we believe that
 
due to the unique features of
our AIM Platform, these new medicines can
 
enable an expansion from treating sick patients
 
to prevention of illness in healthy people.
Medicine
 
is
 
only
 
as
 
effective
 
as
 
its
 
access,
 
and
 
we
 
believe
 
there
 
is
 
a
 
path
 
to
 
increasing
 
the
 
number
 
of
 
people
 
who
 
have
 
access
 
to
immunotherapies from less than 1% of the world today to nearly anyone that could benefit.
 
Our AIM
 
Platform is
 
designed to
 
harness the
 
immune system
 
to convert
 
the body
 
into its
 
own “mAb
 
drug factory,”
 
stimulating the
production of
 
antibodies with
 
a therapeutic
 
or protective
 
effect. While
 
traditional vaccines
 
have been
 
able to
 
leverage this
 
approach
against infectious diseases,
 
they have historically
 
been unable to resolve
 
key challenges in
 
the fight against
 
chronic diseases. We believe
our AIM Platform
 
has the potential
 
to overcome these challenges
 
and to bring
 
the efficiency of vaccines
 
to a whole new
 
class of medical
conditions. Our technology has
 
been commercialized independently in
 
billions of doses
 
of animal health
 
vaccines, tested in
 
over four
thousand human
 
subjects across
 
multiple candidates
 
and clinical
 
trials, including
 
the company’s
 
first completed
 
Phase 3
 
study.
 
Our
current pipeline
 
consists of
 
five chronic
 
disease product
 
candidates from
 
early to
 
late-stage development
 
across multiple
 
therapeutic
areas, including
 
Alzheimer’s Disease (“AD”),
 
Parkinson’s disease (“PD”),
 
migraine and
 
hypercholesterolemia, diseases
 
that collectively
affect billions
 
of people
 
in the
 
world today
 
and of
 
which hundreds
 
of millions
 
more are
 
at high
 
risk of
 
contracting. Additionally,
 
we
believe our AIM Platform may be used to disrupt the treatment paradigm for a wide range of other chronic diseases, including any that
are
 
or
 
could
 
potentially
 
be
 
successfully
 
treated
 
by
 
mAbs.
 
We
 
have
 
assembled
 
an
 
industry-leading
 
team
 
with
 
extensive
 
experience
developing successful
 
drugs that
 
is committed
 
to realizing
 
our mission
 
of alleviating
 
the greatest
 
amount of
 
suffering we
 
can in
 
the
world. Our website address
 
is www.vaxxinity.com.
 
The information contained on,
 
or that can
 
be accessed through, our
 
website is not
part of, and is not incorporated into, this Report.
 
4
The Chronic Disease Epidemic
More people today are suffering from
 
a chronic disease than ever before. Chronic diseases
 
kill 41 million people each year,
 
or 74% of
all deaths globally.
 
These diseases are
 
ongoing, generally incurable illnesses
 
or conditions that
 
gradually onset and
 
tend to be
 
of long
duration such as heart disease, cancer and AD.
 
Less than a century ago, the chronic
 
disease and disability prevalence was about 7.5% in
 
adults in the U.S. By 2000,
 
the proportion of
Americans with at least
 
one chronic disease had
 
grown to 45%, and
 
today, only two decades later, it has grown
 
to 60% of all
 
adults. The
proportion with multiple
 
chronic diseases
 
has similarly skyrocketed
 
to 40% of
 
adults in the
 
U.S. today. Overall, chronic
 
disease accounts
for 70% of deaths and nearly 90% of overall healthcare expenditure in the U.S.
 
The epidemic
 
is not
 
limited to
 
the U.S.
 
or the
 
developed world.
 
To
 
the contrary,
 
chronic diseases
 
disproportionately affect
 
low- and
middle-income countries (LMICs) where 77% of all
 
chronic disease deaths occur. Each year, 17 million people die of a chronic disease
before age
 
70, and
 
86% of
 
these premature
 
deaths occur
 
in LMICs.
 
According to
 
the World
 
Health Organization
 
(“WHO”), chronic
disease
 
is
 
closely
 
linked
 
with
 
poverty
 
in
 
what
 
can
 
become
 
a
 
vicious
 
cycle.
 
More
 
limited
 
access
 
to
 
health
 
services
 
by
 
socially
disadvantaged people
 
underlies increased
 
incidence of
 
chronic disease.
 
Meanwhile, healthcare
 
costs for
 
treatment of
 
these diseases,
which often become lengthy and expensive,
 
can quickly drain household resources. The WHO
 
estimates millions of people are forced
into poverty annually due to chronic disease.
 
Limitations of the Current Healthcare Paradigm
Since 2000, there have
 
been over 700 new
 
medicines approved by
 
the FDA, mostly to
 
treat chronic illnesses,
 
and yet the chronic
 
disease
epidemic continues to grow.
 
We believe that medicine is only as effective as its access, and many of the newest medicines are limited to less than 1% of the world’s
patient population. The current
 
healthcare paradigm favors the
 
development of drugs that
 
are primarily intended for
 
the U.S. market, for
niche indications and
 
for treatment of
 
disease rather than
 
prevention. Furthermore, these
 
drugs are expected
 
to be sold
 
at price points
that are only accessible to healthcare systems in developed countries, and even within those systems, to a small subset of patients.
 
One class of drugs in particular exemplifies the current environment: biologics, especially mAbs. In
 
2022, biologics represented seven
of
 
the
 
fifteen top
 
selling drugs,
 
of
 
which
 
six were
 
mAbs. The
 
global
 
market for
 
mAbs totaled
 
approximately $202 billion
 
in
 
2022,
representing over 60%
 
of the total
 
sales for all
 
biopharmaceutical products. While
 
mAbs can provide
 
life-altering care with
 
generally
favorable safety
 
characteristics and
 
significant health
 
benefits for
 
the patients
 
who receive
 
them, regular
 
in-office transfusions
 
and annual
treatment costs,
 
which can
 
exceed hundreds
 
of thousands
 
of dollars,
 
present challenges
 
to both
 
patients and
 
payors. These
 
price and
administration
 
hurdles
 
cause
 
mAb
 
treatments
 
to
 
be
 
available
 
to
 
only
 
a
 
fraction
 
of
 
the
 
population
 
who
 
could
 
benefit
 
from
 
them.
Furthermore, mAbs are
 
often restricted to
 
moderate to severe
 
disease and to
 
later lines of
 
treatment due to
 
their high cost,
 
rather than
prevention or early intervention in disease.
Thus, due to their cost and administrative burden, mAbs account for less than 2% of all
 
prescriptions in the U.S., and, based on internal
estimates, less
 
than 1%
 
worldwide. Meanwhile, the
 
alternative to
 
mAb treatments
 
tends to
 
be small
 
molecules, which are
 
sometimes
more accessible to patients, but are often comparatively
 
less effective with more significant side effects. Collectively, this perpetuates a
profound inequity
 
in healthcare
 
access, domestically
 
but even
 
more so
 
globally,
 
that we
 
believe represents
 
a tremendous
 
social and
market opportunity.
 
Our Scalable AIM Platform Solution
Our vision is to disrupt the existing
 
paradigm of chronic disease treatment
 
with a new class of active immunotherapeutic
 
medicines that
can potentially improve the health of more people, more conveniently, for less money.
 
Our AIM Platform
 
is designed to
 
harness the immune
 
system to convert
 
the body into
 
its own “drug
 
factory,” to stimulate
 
the production
of
 
antibodies
 
with
 
a
 
therapeutic
 
or
 
protective
 
effect,
 
and
 
to
 
be
 
scaled
 
to
 
supply
 
millions
 
or
 
even
 
billions
 
of
 
persons.
 
In
 
contrast,
monoclonal antibodies are developed, produced and purified outside the body and then transfused into the patient on a regular basis, as
frequently as bi-weekly. Therefore,
 
mAbs are inherently
 
less efficient than
 
active immunotherapies,
 
or vaccines, which
 
instead stimulate
antibody production
 
within the
 
patient’s
 
immune system,
 
requiring both
 
less active
 
material and
 
less frequent
 
treatments. However,
while traditional
 
vaccines have
 
historically been
 
successful at
 
addressing infectious
 
diseases, previous
 
attempts to
 
utilize vaccines
 
to
address
 
chronic
 
disease
 
have
 
not
 
achieved
 
both
 
acceptable
 
safety
 
and
 
efficacy.
 
Our
 
AIM
 
Platform
 
technology
 
contains
 
modular
components
 
that
 
can
 
be
 
rapidly
 
custom-designed
 
to
 
mimic
 
select
 
biology
 
and
 
activate
 
the
 
immune
 
system,
 
enabling
 
our
 
product
candidates to break
 
immune tolerance when
 
targeting self-antigens, a property
 
observed across multiple
 
clinical and pre-clinical
 
studies.
Our AIM Platform
 
depends heavily on
 
intellectual property licensed
 
from UBI and
 
its affiliates, a
 
related party and
 
a commercial partner
for us,
 
who first
 
developed the
 
synthetic peptide
 
vaccine technology
 
utilized by
 
our AIM
 
Platform. The
 
formulation of
 
our peptide-
based product
 
candidates relies
 
on contract
 
manufacturers at
 
this time,
 
including both
 
related parties
 
as well
 
as third-party
 
manufacturers.
 
 
vaxxq410kp7i0
5
We
 
believe
 
our
 
AIM
 
Platform
 
has
 
the
 
potential
 
to
 
generate
 
product
 
candidates
 
with
 
attributes
 
that
 
collectively
 
offer
 
significant
advantages over both
 
mAbs and small
 
molecule therapeutics, and
 
that some of
 
these advantages may
 
allow for use
 
in a first-line
 
or a
prevention setting for population health level diseases:
Cost and Scalability
: Whereas monoclonal antibodies require
 
costly and complex biological manufacturing
processes,
 
our
 
manufacturing
 
process
 
is
 
chemically
 
based
 
and
 
highly
 
scalable,
 
and
 
requires
 
lower
 
capital
 
expenditures.
 
Our
 
AIM
Platform has
 
been designed
 
and tested
 
to produce
 
on a scale
 
of hundreds
 
of millions
 
of doses
 
of GMP manufactured
 
material. In
 
addition,
we design our product candidates to generate antibody production in the body, thus requiring meaningfully less drug substance relative
to mAbs, leading to commensurately lower costs.
Administration and Convenience
: Our product candidates
 
are designed to be
 
injected in quarterly or
 
longer
intervals via intramuscular
 
injection similar to
 
a flu shot.
 
We
 
believe this offers
 
considerable convenience compared
 
to mAbs, which
can require up to bi-weekly dosing via intravenous infusion or subcutaneous injections, and small molecules, which often require daily
dosing. We
 
are also
 
in the
 
early stages
 
of exploring
 
additional modes
 
of administration,
 
including intradermal
 
delivery that
 
may be
administered in an at-home setting, potentially offering enhanced convenience to patients.
Efficacy
: In
 
our clinical
 
trials conducted
 
to date,
 
our product
 
candidates have
 
yielded high
 
response rates
(90% or above
 
at target
 
dose levels for
 
UB-311, UB-312,
 
UB-313, and UB-612),
 
high target-specific
 
antibodies against self-antigens
(as
 
seen
 
in
 
UB-311,
 
UB-312,
 
and
 
UB-313 clinical
 
trials)
 
and
 
long
 
durations
 
of
 
action (for
 
UB-311
 
based
 
on
 
titer levels
 
remaining
elevated between doses, and UB-612 based on half-life). We have observed target engagement in patient CSF in a Phase 1 clinical trial
of our UB-312
 
program.
 
See our descriptions
 
of these clinical
 
trials under “—Our Product
 
Candidates.” Our AIM
 
Platform also enables
the
 
combining
 
of
 
multiple
 
target
 
antigens
 
into
 
a
 
single
 
formulation.
 
For
 
indications
 
that
 
could
 
be
 
treated
 
more
 
effectively
 
with
 
a
multivalent approach, we
 
believe our AIM
 
Platform would have
 
an advantage over
 
other modalities. Further, because
 
our AIM Platform
is designed to elicit endogenous antibodies, we believe our product candidates may lessen or avoid altogether the phenomenon of anti-
drug antibodies
 
which has
 
limited the
 
efficacy of
 
certain mAbs
 
over time.
 
Finally,
 
we believe
 
that the
 
improved convenience
 
of our
product candidates
 
as compared
 
to mAbs
 
has the
 
potential to
 
lead to
 
increased adherence
 
by patients
 
and therefore
 
improve overall
effectiveness of our candidates.
Safety
: Based on our clinical trials to date, our product candidates have been well tolerated. We aim to offer
product candidates with safety profiles at least comparable to the relevant mAb or small molecule alternative for the relevant disease.
Our Targeted Impact
Our current
 
pipeline addresses
 
leading areas
 
of unmet
 
medical need,
 
from AD
 
to heart
 
disease, impacting
 
nearly 3.5
 
billion persons
worldwide, and resulting
 
in over 8
 
million annual deaths
 
and $4 trillion
 
dollars in economic
 
impact globally. The following table
 
depicts
our R&D pipeline.
As used in the chart above, “IND” signifies a program has begun investigational new drug (“IND”)-enabling studies.
 
Our pipeline
 
consists of
 
five lead
 
programs focused on
 
chronic disease, particularly
 
neurodegenerative disorders, in
 
addition to other
neurology and
 
cardiovascular indications.
 
For each
 
candidate, we
 
believe the
 
targeted biology
 
has been
 
validated or
 
de-risked either
through published genetic evidence or by a successfully licensed mAb against the same target.
 
 
 
 
 
 
 
 
 
 
6
Neurodegenerative Disease Programs:
UB-311
: Targets toxic forms of aggregated amyloid-beta (“Aβ”) in the brain to fight AD, a disease
affecting 44 million people worldwide, resulting in 1.6 million annual deaths and over $3 trillion in estimated economic cost. Phase 1,
Phase 2a and Phase 2a Long Term Extension (“LTE”)
 
trials have shown UB-311 to be well tolerated in mild-to-moderate AD subjects
over three years of repeat dosing, with a safety profile comparable to placebo, with no cases of amyloid-related imaging
abnormalities-edema (“ARIA-E”) observed in the main Phase 2a trial, and only one case of ARIA-E in the LTE trial, which was
clinically not significant according to the study investigator.
 
UB-311 was also shown to be immunogenic, with a high responder rate
and antibodies that bind to the desired target. Although not powered for statistical significance, the Phase 2a trial showed dose-
dependent trends of slowing of cognitive decline by 48% versus placebo, as measured by CDR-SB. We held an End of Phase 2
meeting with the U.S. Food and Drug Administration (“FDA”) and have aligned upon a large scale efficacy trial, which, pending data,
could potentially support initial licensure of UB-311 for the treatment of early AD.
 
The FDA granted UB-311 Fast Track Designation
in the second quarter of 2022.
 
The expected timing of the next clinical trial will be determined based upon the timing of additional
financing or a strategic partnership.
UB-312
: Targets toxic forms of aggregated α-synuclein (“aSyn”) in the brain and peripheral tissues to fight
PD and other synucleinopathies, such as Lewy body dementia (“LBD”) and multiple system atrophy (“MSA”), diseases
 
together
affecting 16 million people worldwide, resulting in 400,000 annual deaths and over $80 billion in estimated economic cost. Part A and
Part B of a Phase 1 trial in healthy volunteers and Parkinson’s patients, respectively, have been completed and have shown UB-312 to
be well tolerated, with no significant safety findings, and immunogenic, with a high responder rate and antibodies that cross the
 
blood-
brain barrier (“BBB”).
 
UB-312-induced antibodies were observed in the serum and CSF of both healthy volunteers and PD patients,
and showed preferential binding to aggregated aSyn and almost no binding to normal monomeric aSyn. Two exploratory biomarkers
were evaluated as measures of target engagement: aggregated aSyn as measured by a semi-quantitative seed amplification assay
(“SAA”), and phosphorylated aSyn (pS129 aSyn).
 
PD patients with UB-312-induced antibodies in the CSF showed a significant
reduction from baseline in pathological aSyn in the CSF compared to the placebo group as measured by both SAA and pS129 aSyn.
A
post hoc
 
analysis showed that patients with detectable UB-312-induced antibodies in the CSF exhibited improvement in activities of
daily living versus placebo, as measured by the MDS-UPDRS II clinical scale. We believe UB-312 is the first immunotherapy
candidate to show data of reduction of pathological aSyn in CSF of PD patients. The next step will be to conduct a Phase 2 trial to
optimize a dose regimen and to confirm target engagement in PD patients.
 
VXX-301
:
 
We
 
are
 
developing
 
an
 
anti-tau
 
product
 
candidate
 
that
 
has
 
the
 
potential
 
to
 
address
 
multiple
neurodegenerative conditions,
 
including AD,
 
traumatic brain
 
injury (“TBI”)
 
and chronic traumatic
 
encephalopathy (“CTE”)
 
by targeting
abnormal tau proteins alone and
 
in potential combination with other pathological
 
proteins such as Aβ to
 
address multiple pathological
processes at once. TBI is estimated to affect 56 million people worldwide and is attributed to approximately 2 million deaths
 
annually.
Our
 
lead
 
candidate targets
 
multiple epitopes
 
of
 
tau
 
and
 
has
 
been
 
shown in
 
preclinical studies
 
to
 
reduce tau
 
spreading
 
and
 
improve
survival in
 
animal models.
 
In an
 
effort to
 
focus internal
 
resources, we
 
have decided
 
to continue
 
the development
 
of VXX-301
 
only
through a
 
preclinical research
 
collaboration with
 
the University
 
of Florida,
 
which has
 
received a
 
grant from the
 
state of
 
Florida in support
of this project.
Next Wave Chronic
 
Disease Programs:
VXX-401
:
 
Targets
 
proprotein
 
convertase
 
subtilisin/kexin type
 
9
 
serine
 
protease
 
(“PCSK9”) to
 
lower
 
low-
density lipoprotein (“LDL”) cholesterol and reduce the risk of cardiac events. Today,
 
cardiovascular disease is the leading killer in the
world, accounting
 
for over
 
18 million
 
annual deaths,
 
affecting both
 
developed and
 
developing countries.
 
Over 2
 
billion people
 
have
high cholesterol globally.
 
As of October 2023, we have expanded
 
the ongoing first-in-human clinical trial of VXX-401
 
in Australia to
include two higher
 
dose cohorts due
 
to its favorable
 
safety and tolerability
 
profile to that
 
point, for
 
a total of
 
six cohorts.
 
In the
 
first
quarter of 2024, we submitted a protocol amendment to add a booster dose to these
 
two higher dose cohorts. We expect to report initial
topline data from this trial in mid-2024, with results from the booster dose later in the second half of 2024.
 
UB-313
: Targets
 
Calcitonin Gene-Related Peptide
 
(“CGRP”) to fight migraines,
 
a disease affecting
 
over 1
billion people worldwide, resulting in an estimated over
 
45 million years lived with disability annually.
 
In 2023, we completed a first-
in-human Phase 1 clinical trial in healthy volunteers in which UB-313 was generally well tolerated and immunogenic: all subjects who
received
 
three
 
doses
 
of
 
UB-313
 
(31
 
out
 
of
 
31)
 
developed
 
anti-CGRP
 
antibodies;
 
however,
 
serum
 
antibody
 
titers
 
were
 
lower
 
than
expected, and due
 
to this lower
 
immunogenicity, UB-313 did not meet
 
the trial’s secondary objective of
 
capsaicin-induced dermal blood
flow inhibition.
 
We believe this
 
was the
 
result of
 
a suboptimal
 
drug product
 
made by
 
a new
 
contract manufacturer, and
 
we have
 
identified
the necessary steps to
 
manufacture a more immunogenic
 
product consistent with prior
 
lots and the known immunogenic
 
potential of our
platform candidates.
 
In an
 
effort to
 
focus internal
 
resources, we
 
have deprioritized
 
this program
 
and are
 
not currently
 
planning on
 
running
another Phase 1 at this time.
Given the
 
global COVID-19
 
pandemic and
 
our AIM
 
Platform’s
 
applicability to
 
infectious disease,
 
we also
 
have advanced
 
a product
candidate that addresses SARS-CoV-2.
7
COVID-19
UB-612
: Employs a “multitope” subunit protein-peptide approach to neutralizing the SARS-CoV-2 virus,
meaning the product candidate is designed to activate both antibody and cellular immunity against multiple viral epitopes.
 
A Phase 3
trial evaluating UB-612 as a heterologous boost against SARS-CoV-2, head-to-head versus homologous boosts of VNT162b2
(mRNA), ChAdOx1-S (adenovirus), and BIBP (inactivated virus), was initiated in the first half of 2022 with funding support from the
Coalition of Epidemic Preparedness Innovations (“CEPI”).
 
In December 2022, we announced positive topline data: UB-612 met
primary and key secondary endpoints, eliciting non-inferior neutralizing antibody titers and seroconversion rates (“SCR(s)”), defined
as a 4-fold or greater increase in neutralizing antibodies from baseline, against both Wuhan and Omicron BA.5 variants as compared
to BNT162b2, and superior neutralizing antibody titers and SCRs against both variants as compared to ChAdOx1-S and BIBP.
 
UB-
612 was well tolerated with balanced reactogenicity and no additional safety risks evoked over the licensed COVID-19 comparators.
 
There were no serious adverse events (“SAEs”) related to UB-612 reported through 12 months of safety follow-up.
 
Phase 1 and Phase
2 trials of UB-612 have also shown UB-612 to be well tolerated, with over 7,500 doses administered to over 3,750 subjects. In March
2023 we completed rolling submissions for conditional/provisional authorization with regulatory authorities in the United Kingdom
and Australia, who are reviewing under their established work share agreement. In November 2023, the MHRA conducted GMP
inspections of our overseas CMO facilities responsible for UB-612 manufacture.
 
We believe a decision on authorization will be made
in 2024.
 
We
 
believe
 
our
 
AIM
 
Platform
 
has
 
application
 
across
 
a
 
multitude of
 
chronic and
 
infectious disease
 
indications beyond
 
our
 
existing
pipeline. We are developing additional product candidates that
 
we believe may address significant
 
unmet needs both within and
 
beyond
our current pipeline’s therapeutic areas.
Our Team
We have assembled an experienced group of executives with deep scientific, business and leadership expertise in pharmaceutical and
vaccine discovery and development, manufacturing, regulatory and commercialization. Mei Mei Hu, our co-founder and Chief
Executive Officer, has been a member of the executive committee of UBI since 2010. Our board of directors is chaired by our co-
founder Louis Reese, who has been a member of the executive committee of UBI since 2014. Our research efforts are guided by
highly experienced scientists and physicians on our leadership team including Dr. Jean-Cosme Dodart, our Senior Vice President of
Research. Our leadership team contributes a diverse range of experiences from leading companies including AstraZeneca, Eli Lilly,
Genentech, Merck, and Pharmacyclics, and were executives in multiple successful mAb and vaccine launches.
 
As of December 31,
2023, we have assembled an exceptional team of 53 employees, the majority of whom hold Ph.D., M.D., J.D. or Master’s degrees. We
also have a highly experienced scientific advisory board consisting of leading doctors and scientists in relevant therapeutic
 
areas.
 
Our Strategy
Our mission is to alleviate the
 
most human suffering possible by developing active
 
immunotherapy product candidates that
 
improve the
quality of care for chronic diseases and are accessible to all patients across the globe. In order to achieve this mission, we seek to:
Advance our chronic disease pipeline through clinical stage development
: We plan to advance UB-311,
UB-312, and VXX-401 through clinical stage development for the treatment or prevention of chronic diseases, either ourselves or with
a strategic partner. We
 
believe that our differentiated AIM Platform will enable our product candidates, if approved and successfully
commercialized, to potentially disrupt the current treatment paradigm for their respective indications. However, there can be no
guarantee that we will obtain regulatory approval or commercialize of any such product candidates.
 
Expand our pipeline of product candidates
: Chronic diseases are prevalent globally and expected to worsen
over the next several decades. In furtherance of our mission, we plan to expand our pipeline
 
by developing new product candidates that
address additional indications. In
 
expanding our pipeline,
 
we rely on
 
our proprietary filtering
 
methodology, which
 
evaluates potential
product
 
candidates
 
across
 
five
 
principal
 
criteria
 
 
(i)
 
probability
 
of
 
technical
 
and
 
regulatory
 
success,
 
(ii)
 
addressable
 
market,
 
(iii)
development cost, (iv) competitive dynamics and (v) disruptive potential.
Continue
 
to
 
improve
 
our
 
AIM
 
Platform
:
 
In
 
addition
 
to,
 
and
 
in
 
conjunction
 
with,
 
our
 
product
 
candidate
development efforts, we are
 
continuously working to
 
improve and enhance
 
the richness, breadth and
 
effectiveness of our AIM
 
Platform.
As our AIM Platform further develops,
 
we believe that we can both
 
increase the speed and efficiency of
 
developing product candidates,
improve the
 
probability of
 
technical success
 
of our
 
product candidates,
 
and increase
 
the number
 
of product
 
candidates in
 
concurrent
development.
Maximize the value
 
of our product candidates
 
through potential partnerships
: We currently retain
 
worldwide
rights for all
 
of our
 
product candidates
 
and will
 
consider entering
 
into development
 
and commercialization
 
partnerships with
 
third parties
that align with our mission on an opportunistic basis.
8
Background and Limitations of Traditional Vaccines
 
and Monoclonal Antibodies
The immune
 
system, the
 
body’s
 
mechanism for
 
fighting off
 
potential threats,
 
is comprised
 
of cells
 
that form
 
the innate
 
and adaptive
immune responses.
 
The main
 
purpose of
 
the innate
 
immune system
 
is to
 
immediately prevent
 
the spread
 
and movement
 
of
 
foreign
pathogens throughout the body. The adaptive immune response is specific
 
to the pathogen presented to T-cells and B lymphocytes (“B-
cells”) and leads to an enhanced
 
response upon future encounters with those
 
antigens. Antibodies represent an important
 
tool within the
adaptive immune system’s arsenal. Upon
 
detection of a potential
 
threat, B-cells produce antibodies
 
that recognize, bind
 
to and eliminate
the threatening pathogen. Over
 
time, the immune system
 
develops the ability to
 
produce countless types of
 
antibodies, each finely tuned
against a specific threat.
Generally, the immune system is able to function effectively by neutralizing
 
viruses, bacteria and even self-generated cells and
 
proteins
from within our own bodies that could
 
cause harm if unchecked. However,
 
as powerful as the immune system is,
 
there are threats that
it
 
cannot
 
overcome
 
on
 
its
 
own,
 
generating
 
the
 
need
 
for
 
medicine.
 
Conventional
 
forms
 
of
 
medicine
 
include
 
small
 
molecules
 
(e.g.,
antibiotics), which
 
can inhibit or
 
promote action within
 
the body by, for
 
instance, binding
 
to a receptor
 
on the surface
 
of a cell,
 
or directly
inducing toxic effects
 
upon bacteria. These
 
medicines do not
 
necessarily modulate the
 
immune system directly
 
in order to
 
work. Instead,
they work
 
alongside it. While
 
small molecules have
 
provided substantial benefits
 
to human health,
 
they are
 
typically not designed
 
to
interact with the
 
immune system. They
 
may also have
 
limited efficacy in
 
cases where an
 
immune response
 
to a target
 
can be used
 
against
a chronic condition.
Vaccines
In the first
 
part of the
 
twentieth century,
 
vaccines revolutionized healthcare
 
by directly interacting
 
with, and modulating,
 
the immune
system — training
 
it to recognize
 
a dangerous pathogen
 
by introducing the
 
immune system
 
to a relatively
 
harmless form
 
of the pathogen,
its toxins
 
or one
 
of its
 
surface proteins,
 
thereby promoting
 
the body’s
 
own production
 
of binding
 
antibodies. Once
 
immunized
 
to a
specific pathogen, the immune system can recognize it and generate the antibodies to fight it more quickly and robustly.
Traditional vaccine technologies have generally
 
focused on the prevention of bacterial and
 
viral infections and not on chronic disease.
In
 
chronic
 
disease
 
settings,
 
the
 
disease-causing
 
agents
 
frequently
 
come
 
from
 
within
 
the
 
body.
 
These
 
self-antigens
 
are
 
proteins
 
that
become too abundant, misfolded or aggregated such
 
that they can no longer perform their
 
healthy function and even may induce
 
toxic
effects.
 
The body
 
can
 
sometimes produce
 
antibodies
 
against
 
such proteins,
 
but
 
this often
 
falls
 
short of
 
providing
 
the right
 
types of
antibodies in the
 
right concentrations to
 
ward off disease.
 
Historically, vaccine technologies developed
 
to target these
 
proteins have been
unable to
 
break immune
 
tolerance —
 
that is,
 
the immune
 
system’s
 
general avoidance
 
of reactivity
 
towards self-antigens
 
— with
 
an
acceptable level of reactogenicity.
 
The challenges faced by prior efforts to
 
advance vaccine technologies for chronic diseases included
low response rates, low titer levels, off-
 
target responses and other safety concerns such as T-cell mediated inflammation.
Monoclonal Antibodies
The first
 
mAbs were
 
developed in
 
the later
 
part of
 
the twentieth
 
century.
 
In contrast
 
to vaccines,
 
which prompt
 
the body
 
to produce
antibodies, mAbs are antibodies manufactured outside of the patient’s body and then injected or infused into the body to recognize and
eliminate
 
harmful
 
targets.
 
Monoclonal
 
antibodies
 
have
 
revolutionized
 
the
 
standard-of-care
 
treatment
 
for
 
many
 
chronic
 
diseases.
However, manufacturing mAbs
 
is often
 
an expensive
 
and complex
 
process and
 
administering mAbs
 
is cumbersome,
 
sometimes requiring
infusions as
 
frequently as
 
bi-weekly.
 
These factors
 
have generally
 
limited mAbs’
 
availability to
 
moderate-to-severe disease,
 
to later
lines of therapy and to wealthier geographies, thus denying access to a substantial portion of the patients who could benefit from them.
Finally,
 
patients
 
on
 
mAbs
 
often
 
experience
 
a
 
loss
 
of
 
effectiveness
 
over
 
time
 
due
 
to
 
a
 
phenomenon
 
known
 
as
 
anti-drug
 
antibodies,
whereby the
 
immune system
 
begins to
 
recognize therapeutic
 
mAbs as
 
foreign, and
 
mounts a
 
response against
 
them, eventually
 
mitigating
their efficacy.
Our AIM Platform
Our AIM
 
Platform is
 
designed to
 
stimulate the
 
patient’s
 
own immune
 
system to
 
generate antibodies
 
and overcome
 
the limitations
 
of
traditional
 
vaccines
 
to
 
target
 
self-antigens
 
safely
 
and
 
effectively
 
in
 
chronic
 
diseases.
 
Our
 
product
 
candidates
 
have
 
broken
 
immune
tolerance against
 
self-antigens consistently.
 
As described
 
in the
 
section titled
 
“Our Product
 
Candidates” below,
 
across seven
 
clinical
trials, we
 
have consistently
 
observed that
 
our product
 
candidates have
 
stimulated the
 
development of
 
antibodies against
 
the desired
target at relevant doses in clinical
 
trial subjects, including the elderly. We have observed favorable tolerability and
 
reactogenicity of our
product candidates
 
across studies
 
of UB-311,
 
UB-312, UB-313,
 
and UB-612,
 
with no
 
significant safety
 
findings to
 
date. We
 
aim to
develop product candidates that are more convenient, more cost-effective
 
and more accessible to large patient populations, with
 
safety
profiles at least comparable
 
to relevant mAbs and
 
small molecule treatments. We
 
believe our product candidates
 
have the potential to
eventually not
 
only capture
 
meaningful market
 
share from
 
mAbs and
 
small molecules,
 
but more
 
importantly,
 
to provide
 
therapeutic
benefit to large patient populations who currently receive neither form of treatment
 
and thereby open up the broadest access to patients.
This would represent
 
an unprecedented shift
 
in the treatment
 
paradigm, potentially providing
 
better global access
 
to treatments that
 
have
been previously limited to the
 
wealthiest nations. In particular, we believe our treatments
 
for chronic disease could reflect
 
the following
benefits as compared with the relevant mAbs and small molecule alternatives:
 
 
vaxxq410kp11i0
9
Characteristics of our Product Candidates versus Monoclonal Antibodies and Small Molecules
History and Design
Our AIM
 
Platform utilizes
 
a peptide
 
vaccine technology
 
first developed
 
by UBI
 
and subsequently
 
refined over
 
the last
 
two decades,
with more
 
than three billion
 
doses of
 
animal vaccines
 
commercialized to
 
date. UBI
 
initiated the
 
development of
 
this technology
 
for
human use; the business focused on human use was then
 
separated from UBI through two separate transactions: a spin-out from
 
UBI in
2014 of operations focused
 
on developing chronic disease
 
product candidates that resulted
 
in United Neuroscience, a
 
Cayman Islands
exempted company
 
(“UNS”), and
 
a second
 
spin-out from
 
UBI in
 
2020 of
 
operations focused
 
on the
 
development of
 
a COVID-19
 
vaccine
that resulted in
 
C19 Corp., a
 
Delaware corporation (“COVAXX”).
 
Our current company,
 
Vaxxinity,
 
Inc., was incorporated
 
under the
laws of the State of Delaware on February 2, 2021 for the purpose of acquiring UNS and COVAXX in March of 2021.
 
On March 2,
 
2021, in
 
accordance with
 
a contribution
 
and exchange
 
agreement among Vaxxinity,
 
UNS, COVAXX
 
and the
 
UNS and
COVAXX stockholders party thereto (the “Contribution and
 
Exchange Agreement”), the
 
existing equity holders
 
of UNS and COVAXX
contributed their equity interests
 
in each of
 
UNS and COVAXX
 
in exchange for equity
 
interests in Vaxxinity
 
(the “Reorganization”).
In
 
connection
 
with
 
the
 
Reorganization,
 
(i) all
 
outstanding
 
shares
 
of
 
UNS
 
and
 
COVAXX
 
preferred
 
stock
 
and
 
common
 
stock
 
were
contributed to
 
Vaxxinity
 
and exchanged for
 
like shares
 
of stock
 
in Vaxxinity,
 
(ii) the outstanding
 
options to
 
purchase shares
 
of UNS
and COVAXX
 
common stock were terminated and substituted with options to purchase shares of Class A common stock in Vaxxinity,
(iii) the outstanding
 
warrant to
 
purchase shares
 
of
 
COVAXX
 
common stock
 
was cancelled
 
and
 
exchanged for
 
a warrant
 
to acquire
Class A common
 
stock in
 
Vaxxinity,
 
and (iv) the
 
outstanding convertible
 
notes
 
and a
 
related party
 
not payable
 
were contributed
 
to
Vaxxinity
 
and the former holders of such notes received Series A
 
preferred stock in Vaxxinity.
 
On December 31, 2022, COVAXX was
merged into Vaxxinity
 
in order to simplify the corporate structure.
 
UBI has used
 
its capabilities in peptide
 
technology for innovations across
 
an array of
 
business endeavors: antibody
 
testing for human
diagnostics, animal health vaccines and the manufacture of
 
medical products. Its innovative products include one of
 
the first approved
peptide-based blood antibody tests in
 
the world (for HIV), one
 
of the first approved peptide
 
vaccines against an infectious disease
 
in the
world in animal health (for a food-and-mouth disease virus) and one of the first approved peptide vaccines against a self-antigen in the
world in
 
animal health
 
(an anti-luteinizing
 
hormone-releasing hormone
 
(“LHRH”) vaccine
 
used for
 
the immunocastration
 
of swine).
Grant funding from the
 
National Institutes of Health
 
supported some of UBI’s
 
work in the fields
 
of vaccines and antibody
 
testing. To
commercialize its
 
animal health vaccine
 
business, UBI and
 
its affiliates scaled
 
up GMP vaccine
 
manufacturing to over
 
500 million doses
per
 
year
 
and
 
partnered
 
with
 
a
 
top-ten
 
animal
 
health
 
company
 
for
 
commercialization
 
of
 
its
 
anti-LHRH
 
vaccine;
 
all
 
together,
 
UBI’s
technology platform is utilized for the vaccination of approximately 25% of the global swine population annually.
We are advancing our peptide-based AIM
 
Platform to develop
 
product candidates that target
 
chronic diseases and COVID-19.
 
Our AIM
Platform
 
comprises
 
a
 
proprietary,
 
custom,
 
rationally
 
designed
 
antigen
 
capable
 
of
 
evoking
 
an
 
immune
 
response
 
(an
 
“immunogen”)
formulated with a proprietary
 
CpG oligonucleotide. The immunogen
 
contains several advanced
 
synthetic peptide domains,
 
including B-
cell epitopes, T-helper
 
(“Th”) peptide carrier
 
constructs and peptide
 
linkers. This composition
 
enables us to
 
achieve a highly
 
specific
immune response
 
to the
 
target antigen,
 
with limited
 
inflammation and
 
off-target
 
effects that
 
could cause
 
reactogenicity.
 
This design
process has evolved into a
 
repeatable series of well-defined
 
steps, which has enabled the
 
development of our current
 
pipeline of product
candidates.
vaxxq410kp12i0
10
Key Elements of our AIM Platform Constructs and Formulations
When developing a
 
product candidate, we
 
use publicly available
 
information and sophisticated
 
bioinformatics tools to
 
investigate the
entire protein structure of a target in a comprehensive manner to identify functional B-cell epitopes that may provide
 
optimal antigens.
We
 
then synthesize peptides
 
that mimic
 
these identified
 
antigens to
 
elicit highly
 
specific antibodies
 
against these
 
B-cell epitopes.
 
To
yield favorable tolerability profiles, we screen our product candidates
 
for lack of toxicity as well as reactogenicity, and design them not
to elicit T-cell
 
mediated inflammation. To
 
enhance effectiveness, we seek to optimize the
 
size and sequence of our custom peptides
 
to
elicit a robust, specific antibody response when linked to a carrier molecule.
We
 
then attach a
 
proprietary carrier molecule,
 
an artificial Th
 
carrier peptide that
 
delivers the synthetic
 
peptide into cells.
 
Traditional
vaccines have
 
faced challenges
 
in achieving
 
specific responses
 
because they
 
rely on
 
conjugating an
 
antigen to
 
a large
 
toxoid carrier
molecule, to which most of the antibody response is directed, causing off-target effects
 
such as inflammation.
 
In our pre-clinical trials
and clinical trials to date, our product candidates have displayed specific immunogenicity, or the ability to stimulate a targeted immune
response, thereby greatly reducing
 
potential off-target effects and increasing
 
the potential for our
 
product candidates to be
 
well tolerated
and
 
efficacious.
 
We
 
have
 
observed
 
that
 
our
 
carrier
 
molecules
 
have
 
produced
 
consistent
 
results
 
across
 
multiple
 
species
 
and
 
against
multiple targets in seven human clinical trials to date.
vaxxq410kp13i0
11
Our Product Candidate Does Not Induce an Antibody Response against its Carrier Molecule
The graph
 
above illustrates
 
that our
 
peptide carriers
 
induce a
 
strong immune response
 
against the
 
target antigen, and
 
a minimal
 
immune
response against themselves, as compared to traditional vaccines formulated with other types of carrier molecules.
Our peptide
 
carriers have
 
short sequence
 
lengths; we
 
design them
 
with the
 
aim that
 
they are
 
not antigenic
 
on their
 
own and
 
do not
stimulate cytotoxic T-cells.
 
The carriers’ sequences model those found in natural
 
pathogens, so they are recognized by T-helper
 
cells.
This encourages robust T-helper
 
cell exposure and
 
promotes activation of other
 
immune cells.
 
In turn, B-cells
 
are exposed to
 
the B-
cell antigen and begin antibody production against the antigen, while avoiding an antibody response to the carrier.
Our library of peptide carriers enables the use of different carrier molecules or different combinations of carrier molecules, which
allows us to potentially regulate the speed of immune response onset as well as the magnitude and duration of that response. For
example, a longer duration of response would allow for less frequent dosing. In the case of vaccines for infectious diseases, where T-
cell mediated activity is desirable, our AIM Platform also affords the flexibility to design immunogen constructs that specifically
promote cytotoxic T-cell activity when warranted.
 
We
 
utilize proprietary
 
linker constructs
 
to fuse
 
our peptide
 
carriers with
 
our custom
 
peptide antigens.
 
These linkers
 
are designed
 
to
promote binding of
 
both B-cell and T-helper epitopes to
 
their respective receptors,
 
contributing to a
 
B-cell response.
 
They may enhance
the immune
 
response by
 
enabling conformational
 
changes to
 
optimize presentation
 
of the
 
B-cell epitope
 
to antigen-presenting
 
cells
(“APCs”), such as dendritic cells (“DCs”).
Our AIM Platform also enables the construction of candidates that target multiple epitopes
 
in a single formulation, whether on multiple
targets or
 
a single
 
target.
 
In certain
 
cases, targeting
 
multiple epitopes
 
of a
 
single target
 
could promote
 
increased target
 
engagement.
 
Combinations of
 
therapies targeting
 
different molecular
 
mechanisms are
 
common in
 
treating neurologic,
 
cardiovascular, psychiatric,
metabolic,
 
respiratory,
 
infectious
 
and
 
oncologic
 
disease.
 
Our
 
AIM
 
Platform’s
 
favorable
 
cost
 
of
 
goods
 
and
 
efficient
 
manufacturing
process could
 
allow for
 
viable multi-target
 
therapies in
 
a single
 
formulation. This
 
concept could
 
be applied
 
in an
 
array of
 
potential
therapeutic areas. Our current
 
pipeline has candidates against
 
amyloid-β, α-synuclein and tau;
 
targeting of two or
 
more of these at
 
the
same time
 
might prove
 
more effective
 
than any
 
single-target therapy
 
in some
 
patients. Pre-clinical
 
data to
 
date suggests
 
that we
 
can
elicit antibody titers against
 
all three targets in
 
a single formulation. In
 
contrast, multi-target therapy with
 
mAbs would compound the
cost and administration burdens as compared to single-target mAb therapy.
vaxxq410kp14i0
12
Immunogenicity of Single- Versus Multi-Target
 
Formulations in Guinea Pigs
Guinea pigs (three
 
per dose) were
 
immunized with
 
either single-target or
 
multi-target formulations, then
 
serum was drawn
 
and antibody
titers compared
 
via enzyme immunoassays (“EIA”).
 
Multi-target formulations
 
elicited similar titer
 
levels against each
 
target as
 
their
corresponding single-target formulations. This suggests we can create product candidates with multiple
 
neurodegenerative targets in a
single formulation and achieve sustainable titer levels.
Product Candidate Formulations
In
 
addition
 
to
 
our
 
immunogen
 
construct,
 
each
 
product
 
candidate
 
formulation
 
includes
 
custom
 
CpG
 
oligonucleotides
 
and
 
adjuvant
selection. CpG
 
oligonucleotides are
 
negatively charged, and
 
we utilize
 
proprietary CpG
 
configurations to
 
stabilize the
 
positively charged
peptides. This
 
stabilization acts
 
to optimize
 
display of
 
the B-cell
 
epitope to
 
the immune
 
system. In
 
this way,
 
the primary
 
function of
CpG oligonucleotides in our formulations is that of an excipient.
A potential secondary
 
function of CpG
 
is that of
 
an adjuvant. Certain
 
CpG configurations are known
 
to act as
 
immunostimulants and
promote direct
 
cytotoxic T-cell activity, while others
 
do not.
 
Accordingly, our selection
 
of the
 
specific CpG
 
modality is
 
highly dependent
on the target indication. For
 
infectious disease indications, the T-cell
 
response generated by the CpG configuration
 
is independent and
in addition to that of the T-cell response generated by the peptide carrier.
The final formulation includes the addition
 
of an adjuvant, such as a well-recognized,
 
alum-derived Adju-Phos or Alhydrogel to further
enhance the immunogenicity of our product candidate. Alum-derived adjuvants are commonly used in vaccines to promote an immune
response. This is not the same adjuvant used in other companies’ failed neurodegenerative vaccine candidates.
How our Product Candidates are Designed to Function
Our immunogens
 
stimulate the
 
body’s
 
adaptive immune
 
system to
 
produce antibodies
 
against a
 
variety of
 
antigen targets,
 
including
secreted
 
peptides
 
or
 
proteins,
 
degenerative
 
or
 
dysfunctional
 
proteins
 
and
 
membrane
 
proteins,
 
as
 
well
 
as
 
infectious
 
pathogens.
 
The
mechanism of action involves the following sequence of steps:
1.
 
The immunogen is taken up
 
by an APC, such as
 
a DC. Antigen uptake leads
 
to DC maturation and
 
migration
to the draining lymph nodes where the DCs interact with CD4+ T-helper cells.
2.
 
DCs engulf and process the
 
antigen internally and present the
 
T-helper
 
epitope on major histocompatibility
complex (“MHC”)
 
Class II
 
molecules. The
 
presentation activates
 
immunogen-specific CD4+
 
T-helper
 
cells causing
 
them to
 
mature,
proliferate and promote B-cell stimulatory activity.
3.
 
B-cells with receptors that recognize the target B-cell
 
epitope bind, internalize and process the immunogen.
The binding of the B-cell receptor to the immunogen provides the first activation signal to the B-cells.
4.
 
When B-cells
 
function as
 
APCs and
 
present the
 
T-helper
 
epitope on
 
MHC Class
 
II molecules,
 
interaction
with immunogen-specific CD4+
 
T-helper
 
cells provides a
 
second activation signal
 
to B-cells, which
 
causes them
 
to differentiate
 
into
plasma cells.
5.
 
B-cell
 
epitope-specific plasma
 
cells produce
 
high
 
affinity
 
antibodies
 
against the
 
target
 
B-cell
 
epitope. Of
particular
 
importance
 
for
 
targets
 
located
 
in
 
the
 
central
 
nervous
 
system
 
(“CNS”),
 
these
 
antibodies
 
are
 
produced
 
in
 
sufficient
concentrations to cross the BBB.
vaxxq410kp15i1 vaxxq410kp15i0
13
Overview of How our Product Candidates Function
Importantly, from both
 
clinical trials and pre-clinical studies, we have
 
observed the rapid expansion of antibodies upon
 
administration
of a booster of our
 
product candidates. Based on
 
the available data to
 
date, we can infer that
 
while antibody titers decline with
 
time after
administration, a small number of memory B-cells
 
and antibody secreting cells are maintained in
 
the lymphoid organs, spleen or bone
marrow. We believe this is important because if a
 
patient misses a dose
 
of our product candidate,
 
they may be able
 
to recall the antibody
response, and therefore the therapeutic effect of the antibodies, with a single booster, even after a long period of time has passed.
AIM Platform Immunogenicity upon Re-dosing
As
 
shown in
 
the above
 
graph, a
 
rapid antibody
 
response
 
is
 
elicited by
 
a
 
booster dose
 
of UB-311
 
given 72
 
weeks after
 
the priming
regimen.
Furthermore, the antibodies elicited
 
by our product candidates
 
have different properties than those
 
of mAbs targeting similar pathology.
In general,
 
we aim
 
to achieve
 
binding affinity,
 
specificity and
 
functionality similar
 
or improved
 
compared to
 
mAbs targeting
 
similar
pathology. We
 
use Bio-Layer Interferometry (ForteBio
®
) to compare the binding kinetics (K
ON
, K
OFF
, and K
D
) of antibodies elicited by
14
our product candidates versus mAbs. We
 
also use Western
 
blot or slot blot to evaluate
 
the binding specificity of antibodies elicited by
our product
 
candidates against
 
the normal,
 
toxic, misfolded
 
or aggregated
 
forms of
 
the target
 
protein. We
 
use immunohistochemical
analyses to observe the binding of antibodies to pathological inclusions on tissue sections,
 
such as brain sections of patients. Moreover,
we use cell-based models and animal models to measure the induced antibodies’ functionality. Additionally, a major challenge in mAb
drug
 
discovery
 
is
 
that
 
mAbs
 
are
 
prone
 
to
 
induce
 
an
 
immune
 
response
 
against
 
themselves,
 
resulting
 
in
 
a
 
potential
inactivation/neutralization of the mAb by
 
the host (i.e., the patient).
 
This is not a concern
 
with our vaccine approach as
 
each patient will
produce its own antibodies against
 
the target. Finally,
 
mAbs have a potential for
 
off-target binding, which
 
could result in non-specific
binding leading to
 
safety and toxicity
 
issues. We
 
believe that this
 
is unlikely to
 
happen using our
 
technology since antibodies elicited
by our product candidates are
 
designed to break immune tolerance
 
against specific targets and
 
should not trigger an
 
immune response
against other self-peptides or proteins.
Product Candidate Selection Process
Because our AIM Platform may
 
have applicability across a range
 
of chronic diseases, we employ
 
a proprietary filtering methodology to
best identify new product candidates for development. We evaluate potential product candidates across five principal criteria:
Probability
 
of
 
technical
 
and
 
regulatory
 
success
:
 
We
 
examine
 
the
 
probability
 
of
 
success
 
for
 
a
 
product
candidate based on stage of development and therapeutic area, and then make target-specific adjustments for design difficulty, industry
knowledge and
 
clarity of biological
 
mechanism, general
 
safety risk and
 
estimated titer
 
level required
 
for therapeutic
 
effect. This criterion
accounts for the known validity of a given target in the relevant disease context.
Market
 
opportunity
:
 
We
 
account
 
for
 
the
 
prevalence,
 
unmet
 
need
 
and
 
drug
 
market
 
size
 
for
 
each
 
likely
indication associated with a given target, as well as the number of potential indications.
Development cost
: We
 
estimate the
 
cost of
 
development through
 
BLA submission,
 
the time
 
to submission
and the number of patient-years to proof-of-concept.
Competitive advantages
: We
 
evaluate the extent
 
to which the
 
advantages of our
 
AIM Platform compare
 
to
the current and potential future standard of care, including convenience, dosing, safety, efficacy and cost.
Disruptive opportunities
:
 
We
 
evaluate
 
the extent
 
to which
 
the potential
 
disruptive properties
 
of
 
our AIM
Platform may play
 
a role in
 
treatment paradigms, including
 
the ability to
 
“leap-frog” mAbs
 
and treat patients
 
in earlier lines
 
of treatment,
to be used as a prophylactic, to include multiple targets in a single formulation and to be used as an adjuvant therapy.
After assigning values to
 
each criterion for a
 
given product candidate, we
 
weight each criterion according
 
to a confidential algorithm,
and thereby prioritize product candidates for development. We update these values on a regular basis based on new scientific
 
literature,
trial results and our AIM Platform advancements.
As an example, in light of these criteria, AD and other neurodegenerative
 
diseases that involve misfolded proteins are an attractive area
for development. First, as the field has gained knowledge and clinical experience
 
around the biology of targeting aberrant proteins with
antibodies, the relative technical, safety and regulatory risk has
 
decreased. For instance, with two FDA-approved products targeting Aβ
for AD, Aβ has been validated as a target.
 
Both AD and PD have high prevalence worldwide, and large unmet need with limited or no
disease-modifying products
 
readily
 
available to
 
patients. Moreover,
 
the underlying
 
pathologies often
 
begin years
 
or
 
decades
 
before
symptoms may appear and as a result,
 
early intervention in the disease state, as
 
well as prevention or delay of onset
 
strategies, may be
optimal and
 
more practically
 
achievable with
 
a vaccine
 
approach. While
 
mAbs can
 
target the
 
pathology,
 
they face
 
the limitations
 
of
high cost, cumbersome and inefficient administration and limited access, and are not suited
 
for early treatment or prevention, which we
believe provides a disruptive opportunity for our AIM Platform.
We
 
believe that
 
our AIM
 
Platform, and
 
our strategy
 
more generally,
 
will create
 
a significant
 
opportunity for
 
drug development
 
well
beyond our current
 
pipeline of clinical
 
and pre-clinical indications,
 
in therapeutic areas
 
including allergy (e.g.,
 
atopic dermatitis,
 
chronic
rhinosinusitis, , food
 
allergy), autoimmune disease
 
(e.g., psoriasis, psoriatic
 
arthritis, Crohn’s disease), pain
 
(e.g., peripheral neuropathy,
diabetic neuropathy) and bone and muscle atrophy (e.g., sarcopenia, osteoporosis, osteopenia).
Underlying Drivers of Our Platform Advantages
Our AIM Platform’s properties drive the unique combination of attributes that we believe will be reflected in our product candidates:
Cost and Scalability
: Whereas monoclonal antibodies require
 
costly and complex biological manufacturing
processes,
 
our
 
manufacturing
 
process
 
is
 
chemically
 
based
 
and
 
highly
 
scalable,
 
and
 
requires
 
lower
 
capital
 
expenditures.
 
Our
 
AIM
Platform has
 
been designed
 
and tested
 
to produce
 
on a scale
 
of hundreds
 
of millions
 
of doses
 
of GMP manufactured
 
material. In
 
addition,
we design our product candidates to generate antibody production in the body, thus requiring meaningfully less drug substance relative
to mAbs, leading to commensurately lower costs.
15
Administration and Convenience
: Our product candidates
 
are designed to be
 
injected in quarterly or
 
longer
intervals via intramuscular
 
injection similar to
 
a flu shot.
 
We
 
believe this offers
 
considerable convenience compared
 
to mAbs, which
can require up to bi-weekly dosing via intravenous infusion or subcutaneous injections, and small molecules, which often require daily
dosing. We
 
are also
 
exploring additional
 
modes of
 
administration, including
 
intradermal delivery
 
that may
 
be administered
 
in an
 
at-
home setting, potentially offering enhanced convenience to patients.
Efficacy
: In
 
our clinical
 
trials conducted
 
to date,
 
our product
 
candidates have
 
yielded high
 
response rates
(90% or above
 
at target
 
dose levels for
 
UB-311, UB-312,
 
UB-313, and UB-612),
 
high target-specific
 
antibodies against self-antigens
(as
 
seen
 
in
 
UB-311,
 
UB-312,
 
and
 
UB-313 clinical
 
trials)
 
and
 
long
 
durations
 
of
 
action (for
 
UB-311
 
based
 
on
 
titer levels
 
remaining
elevated between doses, and UB-612 based on half-life). We have observed target engagement in patient CSF in a Phase 1 clinical trial
of our UB-312
 
program.
 
See our descriptions
 
of these clinical
 
trials under “—Our Product
 
Candidates.” Our AIM
 
Platform also enables
the
 
combining
 
of
 
multiple
 
target
 
antigens
 
into
 
a
 
single
 
formulation.
 
For
 
indications
 
that
 
could
 
be
 
treated
 
more
 
effectively
 
with
 
a
multivalent approach, we
 
believe our AIM
 
Platform would have
 
an advantage over
 
other modalities. Further, because
 
our AIM Platform
is designed to elicit endogenous antibodies, we believe our product candidates may lessen or avoid altogether the phenomenon of anti-
drug antibodies
 
which has
 
limited the
 
efficacy of
 
certain mAbs
 
over time.
 
Finally,
 
we believe
 
that the
 
improved convenience
 
of our
product candidates
 
as compared
 
to mAbs
 
has the
 
potential to
 
lead to
 
increased adherence
 
by patients
 
and therefore
 
improve overall
effectiveness of our candidates.
Safety
: Based on our clinical trials to date, our product candidates have been well tolerated. We aim to offer
product candidates with safety profiles at least comparable to the relevant mAb or small molecule alternative for the relevant disease.
Additionally,
 
we
 
believe
 
our
 
AIM
 
Platform
 
possesses
 
important
 
benefits
 
reflected
 
at
 
the
 
platform
 
level,
 
as
 
opposed
 
to
 
the
 
product
candidate level:
Product Candidate Discovery
: Our AIM Platform enables the efficient iteration of product candidates in the
discovery phase through rapid, rational design and formulation. We are able to screen in high throughput rapidly and at low cost. Upon
nominating
 
a
 
target
 
for
 
drug
 
discovery,
 
we
 
can
 
formulate
 
several
 
dozen
 
product
 
candidate
 
compounds
 
for
 
preliminary
 
in
 
vivo
immunogenicity and cross-reactivity
 
screening within 2 to
 
3 months. This process
 
allows nonviable product
 
candidates to “fail fast”
 
and
allows
 
us
 
to
 
carry
 
top
 
product
 
candidates
 
forward
 
through
 
subsequent
 
pre-clinical
 
development
 
to
 
lead
 
identification.
 
In
 
contrast,
biologics require the maintenance and
 
adjustment of living cultures to design,
 
formulate and iterate, and therefore discovery
 
and early
development is inherently less efficient.
Process Development
: Scaling the formulation of a drug product from research grade
 
to clinical grade, then
to commercial grade, typically
 
consumes a great deal
 
of resources. This, together
 
with the development of
 
assays for quality control
 
and
quality assurance, comprise
 
process development. We
 
leverage our manufacturing
 
expertise, originally developed
 
alongside UBI and
certain of
 
its affiliates,
 
to enable
 
rapid scale-up
 
of the
 
manufacture of
 
both clinical
 
and commercial
 
compounds that
 
use our
 
AIM Platform
technology.
 
Unlike
 
process
 
development
 
for
 
mAbs,
 
which
 
has
 
inherent
 
challenges
 
such
 
as
 
risk
 
of
 
contamination
 
in
 
cell
 
culture
 
or
bioreactors and
 
time-consuming adjustments
 
to cell
 
lines for
 
any formulation
 
adjustment, our
 
peptide platform
 
relies on
 
synthetic peptide
chemistry, which is more reproducible and scalable, and relatively quick to manipulate for any modifications.
Our Product Candidates
Neurodegenerative Disease Programs
Neurodegenerative diseases are a collection of conditions defined by progressive nervous system dysfunction, degeneration or death of
neurons, which can cause cognitive decline,
 
functional impairment and eventually death. Neurodegeneration
 
represents one of the most
significant unmet medical needs of our time due to an aging population and lack of effective therapeutic options.
Two of the most common
 
neurodegenerative diseases are
 
AD and PD.
 
In the United
 
States, currently more
 
than six million people
 
suffer
from
 
AD,
 
and
 
approximately
 
one million
 
people
 
suffer
 
from
 
PD
 
according
 
to
 
estimates
 
from
 
the
 
Alzheimer’s
 
Association
 
and
 
the
Parkinson’s Disease
 
Foundation, respectively.
 
As a result,
 
AD and PD
 
bring a heavy
 
burden on our
 
society’s cost
 
of care. The
 
direct
costs of
 
AD treatment
 
in the
 
United States
 
were
 
estimated at
 
$321 billion in
 
2022 according
 
to a
 
study published
 
by
 
the American
Journal of Managed
 
Care, and are
 
projected to exceed
 
$1 trillion by
 
2050. The financial
 
burden of PD
 
exceeded $50 billion in
 
the United
States in 2019. Many more people around the world suffer from these two diseases and their related social and economic implications.
UB-311
An Overview of Alzheimer’s Disease
Alzheimer’s
 
disease is
 
a progressive
 
neurodegenerative disorder
 
that slowly
 
affects
 
memory and
 
cognitive skills
 
and eventually
 
the
ability to
 
carry out
 
simple tasks.
 
Its symptoms
 
include cognitive
 
dysfunction, memory
 
abnormalities, progressive
 
impairment in
 
activities
16
of daily
 
living and
 
a host
 
of other
 
behavioral and
 
neuropsychiatric symptoms.
 
The exact
 
cause of
 
AD is
 
unknown, but
 
genetic and
environmental
 
factors
 
are
 
established
 
contributors.
 
AD
 
affects
 
more
 
than
 
six million
 
people
 
in
 
the
 
United
 
States
 
and
 
44 million
worldwide. The global economic burden of AD is expected to surpass $2.8 trillion by 2030.
Many molecular and cellular changes take place in the brain of a person with AD. Aβ plaques and neurofibrillary tangles of tau protein
in the
 
brain are
 
the pathological
 
hallmarks of
 
the disease.
 
Several pathological
 
or toxic
 
forms of
 
Aβ and
 
tau seem
 
implicated in
 
the
disease process, leading to loss of neurons and neuronal connectivity underlying the signs and symptoms of AD.
The Aβ protein involved in AD comes in several different pathological
 
forms that accumulate in the brain parenchyma. Soluble species
of
 
 
(e.g.,
 
oligomers)
 
can
 
directly
 
disrupt
 
normal
 
synaptic
 
and
 
neuronal
 
functions.
 
They
 
may
 
also
 
contribute
 
to
 
tau
 
pathology.
 
Research is ongoing to better understand how, and at what stage of the disease, the various forms of Aβ influence AD.
Neurofibrillary tangles are
 
abnormal accumulations of
 
a protein called
 
tau that collect
 
inside neurons. Healthy
 
neurons are
 
supported
internally,
 
in part,
 
by structures called
 
microtubules, which help
 
to guide nutrients
 
and molecules from
 
the cell
 
body to
 
the axon
 
and
dendrites. In healthy neurons, tau normally
 
binds to and stabilizes microtubules. In
 
AD, abnormal chemical changes cause tau
 
to detach
from microtubules
 
and to
 
stick to
 
other tau
 
molecules, forming
 
threads that
 
eventually join
 
to form
 
tangles. These
 
tangles block
 
the
neuron’s transport system, which harms the synaptic communication between neurons.
Converging lines of evidence suggest that
 
AD-related brain changes may result
 
from a complex interplay among
 
Aβ proteins, abnormal
tau, and several other factors. It appears that abnormal tau accumulates in
 
specific brain regions involved in memory. Concurrently, Aβ
clumps into plaques between neurons. As
 
the level of Aβ reaches a
 
tipping point, tau rapidly spreads throughout
 
the brain. In addition
to the spread of Aβ and tau,
 
chronic inflammation and its effect on the
 
cellular functions of microglia and astrocytes,
 
as well as changes
to the vasculature, are thought to be involved in AD’s pathology and progression.
In the last three years, the FDA has approved two different mAbs that target Aβ for the treatment of AD.
Limitations of Current Therapies
Two
 
classes
 
of
 
small
 
molecules
 
approved
 
for
 
the
 
treatment
 
of
 
AD’s
 
symptoms
 
are
 
acetylcholinesterase
 
inhibitors
 
(“AChEIs”)
 
and
glutamatergic modulators.
 
AChEIs are
 
designed to
 
slow the
 
degradation of
 
the neurotransmitter
 
acetylcholine, temporarily
 
compensating
for cholinergic
 
deficits.
 
Glutamatergic modulators
 
are designed
 
to block
 
sustained, low-level
 
activation of
 
the N-methyl-D-aspartate
(“NMDA”)
 
receptor,
 
without
 
inhibiting
 
the
 
normal
 
function
 
of
 
the
 
receptor
 
in
 
memory
 
and
 
cognition.
 
However,
 
these
 
therapeutic
products only address the symptoms of AD and do not modify or alter the progression of the underlying disease.
Aducanumab, marketed under the trade name Aduhelm, is
 
a mAb developed by Biogen, Inc. (“Biogen”) that
 
targets aggregated forms
of Aß. The FDA approved
 
aducanumab in June 2021, making
 
it the first approved immunotherapy
 
for AD, the first new
 
FDA-approved
treatment since 2003 and, importantly, the first to receive accelerated
 
approval based on a biomarker. By approving aducanumab
 
on the
basis of biomarker evidence, we believe the FDA set a precedent for developers of neurodegeneration immunotherapies.
 
Despite
 
the
 
milestone
 
in
 
the
 
treatment
 
of
 
AD
 
that
 
aducanumab’s
 
approval
 
represents,
 
the
 
drug
 
has
 
several
 
limitations,
 
and
 
Biogen
announced
 
its
 
discontinuation
 
in
 
2024.
 
Approximately
 
one-third
 
of
 
patients
 
experience
 
ARIA-E
 
related
 
adverse
 
events,
 
which
 
can
manifest as symptoms
 
ranging from
 
headaches to confusion
 
to coma.
 
In addition, the
 
drug must be
 
administered monthly
 
via intravenous
infusion in healthcare facilities specifically configured
 
to support an hour-long infusion process with
 
healthcare professionals trained to
administer infusion
 
therapies, creating
 
a burden
 
for patients
 
and additional
 
costs resulting
 
from the
 
complex administration
 
process.
Because of the
 
risk of developing
 
ARIA-E, physicians who
 
prescribe aducanumab must
 
titrate dosing and
 
carefully monitor each
 
patient
using magnetic resonance imaging (“MRI”). This process is costly and burdensome The combination of price, side effects, extra costs,
and extra administration burden
 
highlight the challenges of
 
mAbs.
 
The Center for Medicare
 
& Medicaid Services (“CMS”)
 
decided not
to cover aducanumab, leading to its commercial failure.
Soon after the FDA’s approval of aducanumab, Eli Lilly and Company (“Lilly”)
 
announced that it would file
 
for approval of its anti-Aβ
mAb, donanemab, in 2022 on the basis of Phase 2 data.
 
In January 2023, the FDA declined accelerated approval of donanemab due to
an insufficiently sized safety database in its Phase 2 trial; however, Lilly filed for approval later in 2023 on the basis of Phase 3 data.
In January 2023, the
 
FDA granted accelerated
 
approval to lecanemab,
 
another mAb targeting Aβ,
 
jointly developed by
 
Biogen and Eisai
Co., Ltd. (“Eisai”).
 
Over 12.5% of patients on lecanemab experience ARIA-E, and physicians who prescribe lecanemab must monitor
each patient
 
using MRI.
 
Lecanemab must
 
be administered
 
every two
 
weeks as
 
an intravenous
 
infusion in
 
healthcare facilities
 
specifically
configured to
 
support an
 
hour-long infusion
 
process with
 
healthcare professionals
 
trained to
 
administer infusion
 
therapies, creating
 
a
burden for
 
patients and
 
additional costs resulting
 
from the
 
complex administration process.
 
Biogen and
 
Eisai have set
 
the wholesale
acquisition cost (“WAC”)
 
price of lecanemab in
 
the U.S. at $26,500
 
for the drug product
 
only, which
 
does not include administration
and ongoing monitoring costs.
 
CMS has decided to cover lecanemab under
 
Medicare Part B with a 20% coinsurance
 
after a patient has
met their Part B deductible.
 
17
We
 
believe the
 
above examples
 
signify not
 
only the
 
validity of
 
targeting toxic
 
forms of
 
Aβ as
 
a target
 
in AD,
 
but also
 
the practical
limitations of mAbs, which so far despite approval have remained unable to serve a population with high unmet need.
 
Our Product Candidate: UB-311
We are developing a novel product candidate,
 
UB-311, as a potential disease-modifying
 
therapy for the treatment
 
of AD. We completed
a Phase 1 open label trial (V118-AD) and a Phase 2a randomized, double-blinded, placebo-controlled trial (the “Phase 2a
 
Main Trial”).
 
We believe that UB-311
 
may offer several differentiators versus the approved mAbs, including the preferential targeting of aggregated
 
oligomers
 
over
 
monomers,
 
longer
 
durability
 
suggesting
 
greater
 
overall
 
exposure,
 
or
 
area
 
under
 
the
 
curve
 
(“AUC”),
 
improved
convenience in dosing and administration, a safety and tolerability profile comparable to placebo with potentially limited ARIA-E, and
an ability
 
to broaden
 
patient access
 
with greater
 
cost-effectiveness and
 
scalability.
 
No signs
 
of ARIA-E
 
related adverse
 
events were
reported in the Phase 2a Main Trial
 
despite more than two-thirds of the study participants being APOE4
 
carriers.
Post hoc
 
exploratory
analyses of UB-311’s Phase 2a clinical data also
 
suggest that quarterly dosing
 
of UB-311 might slow cognitive decline
 
in some subjects
by up to 50% when compared to
 
placebo, as measured by Clinical Dementia Rating
 
Sum of Boxes (“CDR-SB”), Alzheimer’s Disease
Assessment Scale – Cognitive
 
Subscale (“ADAS-Cog”), Alzheimer’s Disease
 
Cooperative Study – Activities
 
of Daily Living (“ADCS-
ADL”) and Mini-Mental State Examination (“MMSE”) scores, all clinically validated measures of cognition or function in AD. In this
small Phase 2a study, these were secondary measures, as the study
 
was not designed to assess cognitive decline.
 
Although our Phase 2a
trial was a proof-of-concept study,
 
not powered to demonstrate significant changes in any endpoint, we believe the
 
data are suggestive
of potential therapeutic efficacy and may lead to clinical benefit.
UB-311 is
 
formulated for intramuscular administration
 
on a dosing
 
schedule of every
 
three or six
 
months. In addition,
 
manufacturing
costs
 
lower than
 
those of
 
mAbs may
 
support meaningfully
 
lower pricing
 
and access
 
to larger
 
patient populations.
 
We
 
believe such
advantages of UB-311,
 
if ever approved for use,
 
could position it not only
 
to disrupt the emerging
 
mAb-based treatment for early AD
as both
 
a monotherapy
 
and adjuvant
 
therapy to
 
existing mAbs,
 
but
 
also to
 
open up
 
a new
 
paradigm for
 
prevention of
 
AD (i.e.,
 
for
potential prophylactic use to delay or interrupt early disease onset).
Clinical Development
We
 
completed a randomized, double-blind, placebo-controlled Phase 2a
 
trial of two dosing regimens of
 
UB-311 in subjects with
 
mild
AD. The primary objective
 
of this trial was
 
to assess safety and
 
immunogenicity. Secondary measures for exploratory analyses
 
included
assessment of changes
 
in the CDR-SB,
 
ADAS-Cog, ADCS-ADL and
 
MMSE scales, along
 
with amyloid PET
 
imaging evaluations. This
study was intended for proof-of-concept,
 
so no statistical hypothesis testing
 
was planned, and exploratory
 
analyses were performed to
evaluate trends as described below.
A total of 43 patients diagnosed with
 
mild AD were randomized (1:1:1) to one of
 
three treatment groups: UB-311 quarterly
 
dosing, or
“Q3M,” receiving a total of seven doses, UB-311
 
every six-month dosing, or “Q6M,” receiving a total of five doses,
 
and placebo. The
Q3M cohort,
 
which included
 
14 subjects,
 
received an
 
initial regimen
 
of three
 
300μg injections,
 
one injection
 
at the
 
trial start,
 
one at
week 4 and the
 
final at week 12,
 
followed by four single
 
300μg booster doses administered
 
in three-month intervals over
 
the subsequent
12 months. The
 
Q6M cohort, which
 
included 15 subjects,
 
involved the same
 
initial schedule of
 
three 300μg injections
 
administered over
the first 12-week
 
period, followed by
 
the administration of
 
two 300μg booster
 
doses given at
 
six-month intervals. The
 
placebo group
comprised 14 subjects.
In the Phase
 
2a Main Trial,
 
UB-311 generated
 
an immune response
 
as measured by
 
ELISA in 28
 
out of 29
 
subjects. Across this
 
trial
and the
 
Phase 1
 
trial, 47
 
of the
 
48 subjects
 
(98%) that
 
received UB-311
 
registered an
 
immune response
 
(which we
 
define as
 
a 95%
confidence interval separation from placebo) as measured by ELISA. The intramuscular injection produced appreciable antibody titers
against
 
Aβ.
 
The antibody
 
titers remained
 
elevated
 
through the
 
trial’s
 
duration.
 
Moreover,
in
 
vitro
 
studies demonstrate
 
that
 
UB-311
generated serum antibody titers against Aβ oligomers, comparable to or greater than those
 
measured after maximum therapeutic dosing
with an approved mAb. We believe these results underscore the significant promise of our therapeutic approach.
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18
Generation of Antibodies Repeatable Across Clinical Studies, and Antibodies Bind Target with High
Specificity as Compared to Monoclonal Antibody
Across Phase
 
1 and Phase
 
2a trials, UB-311
 
generated an over
 
95% response
 
rates in subjects.
 
In a comparative
 
in vitro
 
study with
aducanumab, we observed that UB-311 elicited titer levels comparable to mAbs.
Phase 1
 
and Phase
 
2a trials
 
of UB-311
 
demonstrated a
 
repeatable anti-Aβ
 
titer response.
 
In an
in vitro
 
comparison of
 
titers in
 
serum
from subjects
 
dosed with
 
UB-311
 
versus pre-immune
 
serum spiked
 
with aducanumab
 
at the
 
published C
max
concentration following
10mg/kg administration
 
(183μg/mL), antibodies
 
generated by
 
UB-311 bond
 
to Aβ
 
oligomers similarly
 
to or
 
greater than
 
the mAb
 
as
measured by EIA.
Exploratory analyses of
 
clinical and imaging
 
measures were conducted.
 
Trends of changes in
 
disease assessment scores
 
suggest slowing
of cognitive decline.
 
Changes in the
 
CDR-SB assessment at
 
week 78 of
 
the Phase 2a
 
Main Trial
 
showed a 48%
 
slowing in cognitive
decline from baseline relative to the placebo group; changes in ADAS-Cog measurements showed a 50% slowing in decline relative to
placebo and showed a 54% slowing in decline in ADCS-ADL relative to placebo.
UB-311 Phase 2a Suggests Slowing of Cognitive Decline in Mild Alzheimer’s Subjects (mITT)
UB-311 Phase 2a secondary endpoint data suggested possible slowing of clinical
 
decline by up to 50% in subjects with
 
mild AD. These
are exploratory analyses, and no statistical inference was performed.
 
In addition,
 
functional MRI
 
suggested marginal
 
increases in
 
connectivity in
 
some brain
 
regions and
 
PET imaging
 
showed a
 
modest
reduction in
 
amyloid plaque
 
burden as
 
measured by
 
standard uptake
 
value ratio.
 
We
 
believe these
 
clinical and
 
biomarker endpoints
suggest a causal
 
effect of UB-311 impacting
 
the underlying
 
molecular pathology
 
of the disease
 
and slowing
 
of clinical
 
decline. Together,
these findings offer some evidence that UB-311 may exhibit disease-modifying effects.
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UB-311 Phase 2a Analysis of Clinical and Biomarker Endpoints Suggests Overall Disease-Modifying Effect
Compared to placebo,
 
UB-311
 
low-frequency dosing and
 
high-frequency dosing demonstrated slowing
 
of overall disease progression
in an independent analysis conducted by Pentara Corporation.
 
The Phase 2a
 
Main Trial
 
recapitulated the safety
 
and tolerability profile
 
of UB-311
 
that was observed
 
in the earlier
 
Phase 1 trial.
 
No
subjects discontinued trial
 
participation due to
 
a treatment emergent
 
adverse effect (“TEAE”).
 
No ARIA-E was
 
observed in quarterly
MRI
 
scans.
 
Aβ-related
 
imaging
 
abnormalities
 
related
 
to
 
microhemorrhages
 
or
 
hemosiderosis
 
seemed
 
similar
 
between
 
the
 
UB-311
treatment groups and placebo group. In the
 
Phase 2a Main Trial,
 
six SAEs were observed, including three in
 
the Q6M dosing arm and
one in the Q3M dosing arm. None were deemed related or likely related to UB-311.
Titers generated by UB-311 ramped up gradually over the
 
course of several months, as
 
opposed to titers following the
 
administration of
anti-Aβ mAbs, which reach C
max
 
very rapidly.
 
We believe this led to the relatively low
 
rates of ARIA-E observed
 
in our clinical studies
of UB-311 as compared to those observed in clinical studies of mAbs. No meningoencephalitis was observed.
Summary of Safety Data from UB-311 Phase 1 and Phase 2a Trials
As depicted
 
in the
 
table above,
 
UB-311 was well
 
tolerated across Phase
 
1 and
 
Phase 2a
 
trials. The
 
most common
 
TEAE was
 
site injection
reactivity, and there
 
were no discontinuations or withdrawals due to TEAEs
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20
An
 
extension
 
of
 
the
 
Phase
 
2a
 
Main
 
Trial,
 
the
 
Phase
 
2a
 
LTE
 
trial,
 
involved
 
the
 
continued
 
participation
 
by
 
34
 
of
 
the
 
subjects
 
who
participated in the
 
Phase 2a Main
 
Trial for
 
an additional 78
 
weeks. The objective
 
of the Phase
 
2a LTE
 
trial was to
 
assess the
 
longer-
term tolerability of extended treatment with UB-311. Following a non-treatment period of up to 26 weeks, participants in the LTE
 
trial
were segmented
 
into two
 
groups: those
 
previously on drug
 
in the
 
Phase 2a
 
Main Trial
 
would receive
 
two placebo
 
doses and
 
a single
300μg priming dose at the start of the LTE
 
treatment period and those previously on placebo would receive three 300μg priming doses
over an
 
initial 12-week
 
period. Due
 
to an
 
error by
 
the CRO
 
responsible for
 
administering blinded
 
placebo and
 
active doses
 
to trial
subjects, which reduced the confidence of subsequently collected data, we decided to discontinue the LTE trial, having determined that
we had collected
 
sufficient data on
 
UB-311’s tolerability and immunogenicity. Analysis of
 
the data collected
 
before trial discontinuation
indicated that
 
UB-311
 
was well
 
tolerated, with
 
return of
 
anti-Aβ antibody
 
titers to
 
peak levels
 
achieved after
 
a gap
 
of as
 
long as
 
12
months
 
between
 
doses
 
and
 
a
 
continued
 
trend
 
toward
 
evidence
 
of
 
disease
 
modification.
 
In
 
the
 
Phase
 
2a
 
LTE
 
trial,
 
six
 
SAEs
 
were
observed. One case of ARIA-E was
 
observed in the Phase 2a LTE
 
trial in a subject 10 weeks
 
after receiving a dose of UB-311,
 
which
was clinically not significant according to the study investigator. No SAE was deemed related or likely related to UB-311, and all such
events were recovered/resolved
 
by the end
 
of the study.
 
Exploratory analyses of
 
the clinical data
 
generated in this
 
portion of the
 
trial
suggested that subjects in the treatment cohorts showed sustained improvement, as measured by the change in CDR-SB from baseline.
We completed an open-label Phase 1 trial of UB-311 in 19 subjects with mild-to-moderate AD between the ages of 51 to 78 years. The
primary objective
 
of the
 
trial was
 
to assess
 
safety and
 
tolerability.
 
Secondary measures
 
included UB-311
 
antibody titers
 
along with
changes in the ADAS-Cog,
 
MMSE and the Alzheimer’s
 
Disease Cooperative Study-Clinician’s
 
Global Impression of Change
 
disease
assessment ratings. The 24-week,
 
open label trial was
 
designed as three intramuscular
 
injections of 300μg, the first
 
dose administered
at the start of the trial, a second at week four and a third at week 12. An observation study included additional follow-up visits up to 48
weeks after the
 
first injection to
 
assess the long-term
 
immunogenicity and safety of
 
UB-311. In
 
this trial, UB-311
 
was well tolerated,
with the most common TEAE being injection site redness and swelling. No TEAE resulted in the discontinuation or withdrawal of any
study participant in the trial. In the Phase 1 trial, one SAE was observed: a case of herpes zoster deemed unlikely related to UB-311.
Anti-Aβ
 
antibody
 
titers,
 
recorded
 
among
 
all
 
study
 
participants,
 
approached
 
a
 
100-fold
 
increase
 
during
 
weeks
 
16
 
to
 
48
 
after
administration of
 
the third
 
300μg injection
 
at week
 
12, demonstrating
 
the ability
 
of UB-311 to
 
elicit a
 
strong immune
 
response. Durability
of the response was reflected in elevated anti-Aβ antibody titers measurable well beyond the 24-week duration of the trial.
In a Western blot assay, we observed that UB-311 elicited antibody titers specific to toxic
 
forms of Aβ with minimal binding
 
to normal,
non-plaque-causing, forms of Aβ.
Pre-Clinical Data
Pre-clinical trials of UB-311
 
included multiple antibody titer studies involving
 
mice, guinea pigs, macaques and baboons. Application
of
 
specific
 
transgenic
 
animal
 
models
 
was
 
intended
 
to
 
emulate
 
both
 
therapeutic
 
and
 
preventive
 
treatment
 
paradigms.
 
These
 
trials
demonstrated that UB-311 generated high
 
antibody titers across
 
multiple species that selectively
 
target aggregated Aβ and
 
both slow the
accumulation of and reduce existing Aβ pathology.
We also observed the ability of UB-311
 
induced antibodies to penetrate the BBB, as well as preferentially bind to toxic Aβ aggregates.
In our study of UB-311 in cynomolgus
 
monkeys, we tested five escalating
 
dose levels of UB-311: 0μg, 30μg, 100μg,
 
300μg and 900μg.
Each dose level was
 
administered on weeks zero,
 
three and six by
 
intramuscular injection and the
 
cerebrospinal fluid (“CSF”): serum
ratio of
 
UB-311
 
calculated on
 
week eight
 
(two weeks
 
after the
 
last dose).
 
This analysis
 
concluded that
 
UB-311
 
antibody titers
 
were
detectable in the CSF in a
 
dose-dependent manner with CSF: serum
 
antibody ratios of 0.1% to
 
0.2%, ratios similar to published
 
data for
mAbs in development for neurodegenerative diseases.
UB-311 Shows Dependent Response in CSF in Pre-Clinical Study
21
The above graphs demonstrates
 
that UB-311
 
induces enough antibodies for
 
BBB penetration, across
 
five dose levels in
 
a pre-clinical
study with cynomolgus monkeys.
Development Plans for UB-311
We have completed an End of Phase 2 meeting with the FDA and obtained guidance on the further development of UB-311.
We believe UB-311 could also have a potential therapeutic benefit in a prophylactic
 
setting for the prevention of AD
 
in at-risk subjects.
We may seek to further develop UB-311
 
for the prevention of AD.
UB-312
An Overview of Parkinson’s
 
Disease
Parkinson’s disease currently affects approximately
 
one million people in
 
the United States
 
and more than
 
10 million people worldwide.
The economic burden of
 
PD is estimated at
 
$52 billion in the United
 
States alone. PD
 
is a chronic and
 
progressive neurodegenerative
disorder that affects
 
predominately dopamine-producing (“dopaminergic”) neurons
 
in the substantia
 
nigra area of
 
the brain. Although
the
 
mechanisms responsible
 
for
 
the
 
dopaminergic
 
cell
 
loss in
 
PD
 
are not
 
fully
 
elucidated, several
 
lines
 
of
 
evidence
 
suggest
 
that α-
synuclein plays a central role in the neurodegenerative process.
Alpha-synuclein
 
is
 
a
 
protein
 
highly
 
expressed
 
in
 
neurons,
 
mostly
 
at
 
presynaptic
 
terminals,
 
suggesting
 
a
 
role
 
in
 
synaptic
 
vesicle
trafficking,
 
synaptic
 
functions
 
and
 
in
 
regulation
 
of
 
neurotransmitter
 
release
 
at
 
the
 
synapse.
 
Duplications,
 
point
 
mutations
 
or
 
single
nucleotide polymorphisms
 
in the
 
gene encoding
 
α-synuclein are
 
known to
 
cause or
 
increase the
 
risk of
 
developing PD
 
or LBD.
 
Mutations
have been shown to primarily alter the
 
secondary structure of α-synuclein, resulting in misfolded and aggregated forms
 
of α-synuclein
(i.e., pathological
 
forms). While
 
mutations in
 
the α-synuclein
 
gene are rare,
 
aggregates of
 
α-synuclein in
 
the form
 
of Lewy bodies
 
(“LB”)
and Lewy neurites are common neuropathological hallmarks of
 
both familial and sporadic PD, suggesting
 
a key role of α-synuclein in
PD
 
neuropathogenesis.
 
Moreover,
 
preformed
 
fibrils
 
of
 
α-synuclein
 
can
 
induce
 
the
 
formation
 
of
 
LB-like
 
inclusions
 
and
 
cellular
dysfunction in
 
cell-based assays
 
as well
 
as in
 
pre-clinical animal
 
models. Together, these data
 
strongly suggest
 
that targeting
 
pathological
forms of α-synuclein has therapeutic potential.
Limitations of Current Therapies
Most approved
 
therapeutic products
 
are aimed
 
at compensating
 
for the
 
dopaminergic deficits
 
and only
 
provide symptomatic
 
relief. While
existing products can indeed
 
provide meaningful symptomatic relief,
 
they often produce significant
 
side effects and lose their
 
beneficial
effects overtime. On the other hand, there are no currently approved disease-modifying therapeutics for PD.
Immunotherapy approaches targeting
 
α-synuclein have been
 
shown to ameliorate
 
α-synuclein pathology as
 
well as functional
 
deficits
in mouse models of PD
 
and are now being investigated in
 
the clinic. These include passive immunization
 
therapy using humanized or
human anti-α-synuclein mAbs or active immunization therapy aimed at inducing a humoral response against pathological α-synuclein.
These approaches have thus far demonstrated good tolerability profiles in Phase 1 clinical trials. A Phase 2 clinical trial in PD subjects
with prasinezumab,
 
a mAb
 
that preferentially
 
recognizes oligomeric
 
and fibrillar
 
forms of
 
α-synuclein, suggested
 
reduced motor
 
function
decline in subjects as
 
compared with placebo; however, this
 
Phase 2 trial did
 
not meet its primary
 
or secondary endpoints.
 
Further trials
of prasinezumab
 
in different
 
patient populations
 
remain ongoing.
 
Even if
 
approved as
 
therapeutic for
 
PD, we
 
expect prasinezumab
would be burdened by the general challenges of cost and administration.
Our Product Candidate: UB-312
We are developing UB-312,
 
an anti-α-synuclein product candidate, as a treatment for PD and other synucleinopathies. We
 
believe that
UB-312 has
 
the potential
 
to be
 
established as
 
a disease-modifying
 
treatment modality
 
for PD,
 
and possibly
 
for LBD
 
and MSA.
 
Pre-
clinical data indicated
 
that UB-312 elicits
 
antibodies that preferentially
 
recognize pathological forms
 
of a-synuclein and
 
improves motor
performance in mouse models of
 
α-synucleinopathies. Clinical data from our
 
Phase 1 trial, which we
 
completed in 2023, indicate that
UB-312 is well tolerated and elicits antibody levels sufficient to
 
cross the BBB (i.e., detectable in CSF) in both healthy volunteers
 
and
PD patients. Antibodies showed preferential
 
binding to aggregated aSyn.
 
Two
 
exploratory biomarkers were evaluated as
 
measures of
disease progression: aggregated α-synuclein
 
as measured by
 
a semi-quantitative SAA, and
 
phosphorylated aSyn (pS129 α-synuclein).
 
A
post hoc
 
analysis showed that
 
PD patients with UB-312-induced
 
antibodies in CSF had
 
significantly less α-synuclein aggregation
 
and
pS129 α-synuclein
 
as compared
 
to placebo.
 
PD patients
 
with UB-312-induced
 
antibodies in
 
CSF also
 
showed improvement
 
in the
clinical Movement Disorder Society – Unified
 
Parkinson’s Disease Response
 
Score (“MDS-UPDRS”) Part II activities of
 
daily living
scale as compared to placebo.
 
In 2018, the European Medical Agency (“EMA”) granted UB-312 orphan designation for MSA.
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Clinical Development
In
 
Part
 
B of
 
a randomized,
 
placebo-controlled, double-blind,
 
dose-escalating, single-center
 
Phase 1
 
clinical trial
 
of
 
UB-312, 20
 
PD
patients between the ages of 40 and
 
85 years received three intramuscular
 
doses of either UB-312 or placebo.
 
During this 44-week Part
B of the trial, subjects received one of
 
two different three-dose priming regimens ("Group A" and "Group
 
B"), with doses on weeks 1,
5, and 13.
 
Immunogenicity was evaluated by
 
measuring changes in
 
serum and CSF
 
anti- α-synuclein antibody
 
concentrations during
the course of the
 
study.
 
In addition, an exploratory
 
endpoint was included involving
 
a clinical assessment
 
using the MDS-UPDRS.
 
The
Michael J. Fox Foundation (“MJFF”) has funded a 2-year collaborative project between Vaxxinity,
 
the Mayo Clinic, and University of
Texas
 
Houston using
 
CSF collected
 
from individuals
 
enrolled in
 
Part B
 
of the
 
Phase 1
 
trial of
 
UB-312.
 
This work
 
is evaluating
 
the
potential of an SAA to assess target engagement, and aims to characterize
 
the anti-α-synuclein antibodies produced after immunization
with UB-312.
UB-312 was
 
generally safe
 
and well-tolerated
 
in PD
 
patients, with
 
19 of
 
20 patients
 
completing dosing.
 
The most
 
common TEAEs
were headache, procedural pain, fatigue, and orthostatic hypotension.
 
The majority of TEAEs was considered either mild or moderate,
and UB-312 was
 
comparable to placebo.
 
Two patients experienced SAEs,
 
of which one
 
was deemed possibly
 
related by the
 
investigator
due to the
 
timing of onset.
 
This SAE was a
 
deep venous thrombosis of
 
the left leg 50
 
days after administration of
 
the second dose of
UB-312.
 
There were no apparent trends in safety signals,
 
including ECG, vital signs, and blood and urine assessments.
 
There was no
difference in
 
either physician
 
or participant
 
reported tolerability
 
within seven
 
days after
 
each administration
 
of UB-312
 
compared to
placebo.
UB-312 generated robust
 
levels of anti-α-synuclein
 
antibody titers detectable
 
in the serum
 
and CSF of
 
PD patients.
 
12 out of
 
13 patients
who completed dosing
 
had anti-α-synuclein antibodies
 
detectable in
 
the serum.
 
In Group A,
 
4 out
 
of 6
 
patients had
 
anti-α-synuclein
antibodies
 
detectable
 
in
 
CSF;
 
in
 
Group
 
B,
 
1
 
out
 
of
 
7
 
patients
 
had
 
anti-α-synuclein antibodies
 
detectable
 
in
 
CSF.
 
Of
 
patients
 
with
detectable
 
anti-α-synuclein
 
titers
 
in
 
CSF,
 
the
 
CSF:serum
 
antibody
 
ratio
 
was
 
approximately
 
0.35%.
 
Antibodies
 
were
 
selective
 
to
aggregated forms of α-synuclein over monomeric α-synuclein as measured by dot blot.
Results
 
from
 
a
 
SAA
 
performed
 
at
 
Mayo
 
Clinic
 
suggest
 
that
 
UB-312-induced
 
antibodies
 
functionally
 
inhibit
 
the
 
aggregation
 
of
 
α-
synuclein when spiked into PD patient CSF.
Spiking UB-312 Antibodies into PD Patient CSF Slows Down Alpha-Synuclein Aggregation
This
 
α-synuclein SAA
 
performed at
 
Mayo Clinic
 
used
 
antibodies purified
 
from
 
subjects in
 
the
 
Phase
 
1
 
trial of
 
UB-312.
 
It
 
suggests
slowing of the aggregation of α-synuclein in
 
PD patient CSF samples seeded
 
with α-synuclein monomers, as measured by
 
fluorescence
intensity.
We also
 
directly measured α-synuclein aggregates in the CSF of the PD
 
patients who participated in the Phase 1 trial of UB-312
 
using
fluorescence max in a SAA.
 
This showed up to a
 
20% reduction of aggregated
 
α-synuclein in PD patient CSF
 
in Group A, as compared
to a 3% increase in the placebo group (p = 0.024), over the 44-week trial period.
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Reduction of Alpha-Synuclein Aggregates in CSF of PD Patients
This α-synuclein SAA performed at Amprion showed a significant reduction
 
in the pathological species of α-synuclein with UB-312 as
compared to placebo.
 
*Placebo vs. Group A, two-way RM ANOVA: F
2,19
 
= 4.047; p = 0.034
An exploratory
post hoc
 
analysis comparing
 
patients with detectable
 
anti-α-synuclein antibodies
 
in CSF to
 
those without
 
was performed.
 
Patients with detectable anti-α-synuclein
 
antibodies in CSF showed
 
significant reduction in aggregated
 
α-synuclein in CSF (28%
 
versus
placebo, p = 0.0183), as well as improvement in MDS-UPDRS Part II), the activities of daily living clinical scale (p = 0.0062).
This exploratory
post hoc
 
analysis also
 
examined differences
 
in levels
 
of phosphorylated
 
α-synuclein (pS129)
 
between patients
 
with
and without detectable
 
anti-α-synuclein antibodies in
 
CSF.
 
Patients with detectable
 
anti-α-synuclein antibodies in
 
CSF showed a
 
27.2%
reduction in pS129 α-synuclein, as compared to a 19.5% increase observed in the placebo group (p = 0.0351).
Reduction of Phosphorylated Alpha-Synuclein in PD Patient CSF
This assay performed at Magqu demonstrates
 
a statistically significant reduction in
 
phosphorylated pS129 α-synuclein in PD patients
with detectable
 
anti-α-synuclein antibody
 
titers in
 
CSF.
 
*Placebo vs.
 
UB-312 with CSF
 
titers at
 
the end
 
of the study, Bonferroni
 
multiple
comparison test p = 0.0351.
Correlations between changes in titers and changes in aggregated α-synuclein were observed.
In Part A of the Phase 1 clinical trial of UB-312, 50 healthy volunteers between the ages of 40 and 85 years received three
intramuscular doses of either UB-312 or placebo. During this 44-week Part A of the trial, subjects received three priming doses on the
same schedule as described for Part B, with escalating doses ranging from 40μg to 2,000μg. Data from Part A indicated that UB-312 is
generally well tolerated, with no significant safety findings. Data from Part A also suggested that UB-312 is highly immunogenic,
with all individuals in the 300μg/dose group showing detectable anti-α-synuclein antibodies in both serum and CSF samples. CSF:
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24
serum ratios appeared similar to those observed in UB-311 non-human primate studies (approximately 0.2%), and to those observed in
clinical trials of mAbs.
UB-312 Demonstrated Dose-Dependent Response in Phase 1 Part A Trial Including Penetration of Titers into CSF
Across
 
four cohorts,
 
UB-312 demonstrated
 
a dose-dependent
 
immunogenic response.
 
Antibodies generated
 
by UB-312
 
were
 
readily
detectable in CSF,
 
indicating BBB penetration with a CSF: serum ratio of approximately 0.2%.
We paused dosing in high dose
 
cohorts in Part A
 
of the trial after
 
one subject developed
 
an adverse effect (“AE”)
 
of special interest
 
(i.e.,
Grade 3 flu-like symptoms) shortly after receiving the second 1000μg dose of UB-312. Although this AE was transient and not a SAE,
data collected
 
until that
 
point suggested
 
that the
 
100μg and
 
300μg dose
 
levels were
 
well tolerated
 
and yielded
 
relatively high
 
anti-α-
synuclein titers. During
 
the evaluation of
 
the AE, the
 
COVID-19 pandemic was
 
becoming increasingly pervasive
 
throughout Europe,
increasing the risk to healthy volunteers
 
participating in the trial. We
 
therefore did not resume dose escalation
 
and selected 100μg and
300μg doses for Part B in PD subjects.
An end-of-treatment analysis of
 
the ongoing Part B
 
of the Phase 1 trial
 
in PD patients was
 
completed in the fourth
 
quarter of 2022.
 
This
analysis has shown UB-312 to be well tolerated and immunogenic, with anti-α-synuclein antibodies observed in the serum and
 
CSF of
PD patients.
 
Three SAEs were observed in Part B, which remains blinded, meaning
 
it remains unknown in which treatment group they
occurred (UB-312 or placebo).
Pre-Clinical Data
We
 
have
 
conducted
 
pre-clinical
 
studies
 
of
 
UB-312
 
across
 
multiple
 
animal
 
species,
 
including
 
mice
 
and
 
guinea
 
pigs.
 
These
 
trials
demonstrated that
 
our product
 
candidates, including
 
UB-312, generated
 
high antibody
 
titers to
 
α-synuclein across
 
animal species.
 
In
addition, in vitro studies provided
 
evidence that anti-α-synuclein antibodies produced
 
after UB-312 immunization are highly
 
selective
to pathological α-synuclein, and do not bind to normal α-synuclein.
UB-312 Demonstrates Selective Binding Towards α-Synuclein Fibrils and Ribbons
This in vitro slot blot analysis of sera from guinea pigs dosed with UB-312 demonstrates that antibodies induced by UB-312 bind to α-
synuclein fibrils
 
and ribbons,
 
the toxic
 
forms of
 
α-synuclein believed
 
to underlie
 
PD, more
 
strongly than
 
they bind
 
to monomers,
 
the
normal form of α-synuclein in the body.
 
We believe
 
this preference will allow UB-312
 
antibodies to avoid altering normal functions of
α-synuclein and selectively neutralize the toxic species
(Nimmo et al., Alzheimers Res Ther. 2020;12:159).
vaxxq410kp27i0
25
Anti-α-synuclein
 
antibodies
 
produced
 
by
 
UB-312
 
immunization
 
specifically
 
bind
 
pathogenic
 
species
 
of
 
α-synuclein,
 
including
aggregated fibrils, oligomers
 
and ribbons, while
 
demonstrating low affinity
 
for the monomer.
 
This species selectivity
 
contrasted with
Syn-1, a commercial research mAb used as a control, which failed to differentiate the toxic variants.
In an in vivo study of UB-312 using a transgenic mouse model of PD, we demonstrated prevention
 
of motor deficits in treated animals,
which was associated with significant
 
reduction of brain oligomeric forms
 
of α- synuclein. We
 
believe this data supports the
 
potential
of UB-312 to prevent behavioral motor deficits and reduce toxic forms of α-synuclein.
UB-312 Demonstrates Improvement in Motor Symptoms in Pre-Clinical Study
UB-312
 
immunization
 
in a
 
transgenic mouse
 
model
 
(α-synuclein
 
overexpression)
 
demonstrates
 
improvement
 
in
 
beam
 
test
 
and
 
wire
hanging test, and reductions in α-synuclein oligomers in various brain regions (Nimmo et al., Acta Neuropathol. 2022;143:55-73).
We
 
have also observed
 
by immunohistochemistry that
 
serum antibodies from
 
guinea pigs dosed
 
with UB-312 can
 
bind to aberrant
 
α-
synuclein in PD, LBD and MSA brain sections.
Finally,
 
antibodies
 
derived
 
from
 
UB-312
 
showed
 
no
 
off-target
 
binding
 
on
 
human
 
tissue
 
sections.
 
UB-312-treated
 
transgenic
 
mice
showed no signs of neuroinflammation,
 
and GLP toxicity studies
 
in rats indicated a
 
good non-clinical safety and
 
tolerability profile. We
believe
 
our
 
preclinical
 
data
 
suggest
 
that
 
UB-312
 
may
 
potentially
 
induce
 
a
 
well-tolerated,
 
strong
 
and
 
specific
 
IgG
 
response
 
against
pathological forms of
a-synuclein
in PD subjects.
Development Strategy
An investigator-initiated
 
Phase 1 trial
 
of UB-312 in
 
PD and
 
MSA patients
 
is ongoing at
 
New York University.
 
Based on
 
the encouraging
results from the 20-patient Phase 1 Part B completed in 2023, we plan to take UB-312 into a Phase 2 trial.
Other Neurodegeneration Programs
We are
 
actively engaged in additional initiatives related to neurodegenerative disorders. One of these programs focuses specifically on
tau-protein pathology
 
and its
 
involvement in
 
diseases such
 
as AD
 
and related
 
tauopathies. We believe
 
that targeting
 
different pathological
tau variants simultaneously may enhance treatment efficacy,
 
which will most likely require targeting
 
multiple epitopes concomitantly.
Using our AIM
 
Platform, we have
 
constructed multi-epitope product candidates
 
that have successfully
 
demonstrated immunogenicity
and in vitro activity in various models.
We
 
are also investigating the use of
 
a multi-target of product candidates
 
targeting Aβ, α-synuclein, and tau,
 
as multiple proteins could
be implicated in neurodegenerative diseases.
Next Wave Chronic Disease Programs
Pathological
 
endogenous
 
proteins
 
(“self-proteins”)
 
drive
 
a
 
wide
 
range
 
of
 
chronic
 
diseases.
 
While
 
mAbs
 
and
 
small
 
molecules
 
have
provided therapeutic
 
benefits in
 
the treatment
 
of these
 
diseases, inherent
 
limitations of
 
these drug
 
classes have
 
restricted access
 
and
adherence to these treatment modalities globally.
26
Our next wave chronic disease programs are initially focused on hypercholesterolemia and migraine. Monoclonal antibodies
 
have been
approved in both therapeutic areas; however, their high costs have limited access and generally limited use to relatively severe disease.
We aim to develop product candidates in these therapeutic areas that could offer similar efficacy as mAbs at a meaningfully lower cost
and
 
improved
 
administrative
 
convenience
 
to
 
patients,
 
thereby
 
potentially
 
allowing
 
for
 
access
 
to
 
broader
 
patient
 
populations
 
versus
mAbs, and greater efficacy than small molecules.
VXX-401
An Overview of Hypercholesterolemia
Hypercholesterolemia is
 
the presence
 
of high
 
levels of
 
cholesterol in
 
the blood
 
and typically
 
results from
 
a combination
 
of environmental
and genetic
 
factors. Cholesterol
 
is transported
 
in the
 
blood plasma
 
within particles
 
called lipoproteins.
 
Lipoproteins are
 
classified by
their density:
 
very low-density
 
lipoprotein, intermediate
 
density lipoprotein,
 
LDL and
 
high-density lipoprotein
 
(“HDL”). All
 
lipoproteins
carry
 
cholesterol,
 
but
 
elevated
 
levels
 
of
 
lipoproteins
 
other
 
than
 
HDL,
 
particularly
 
LDL,
 
are
 
associated
 
with
 
the
 
development
 
of
cardiovascular disease.
 
Approximately 2 billion
 
people worldwide
 
have elevated
 
levels of
 
LDL, potentially
 
putting
 
them at
 
risk for
cardiovascular disease.
Although hypercholesterolemia itself is asymptomatic, elevation of serum cholesterol can over time
 
lead to atherosclerosis. Over many
years, elevated
 
serum cholesterol
 
contributes to
 
formation of
 
atheromatous plaques
 
in the
 
arteries. These
 
plaque deposits
 
can in
 
turn
lead to progressive narrowing of the
 
involved arteries. Smaller plaques may rupture
 
and cause a clot to form and
 
obstruct blood flow. A
sudden blockage of a coronary artery may result in a heart attack. A blockage of an artery supplying the brain can cause a stroke. If the
development
 
of
 
the
 
stenosis
 
or
 
occlusion
 
is
 
gradual,
 
blood
 
supply
 
to
 
the
 
tissues
 
and
 
organs
 
slowly
 
diminishes until
 
organ
 
function
becomes impaired.
PCSK9 is mainly expressed in the liver and, to a lesser extent, in the small
 
intestine, kidney, pancreas and the CNS. The LDL receptors
(“LDLR”) at
 
the cell
 
surface bind
 
and initiate
 
ingestion of
 
LDL particles
 
from extracellular
 
fluid into
 
cells, leading
 
to a
 
reduction in
serum LDL
 
levels. PCSK9
 
protein plays
 
a major
 
regulatory role
 
in cholesterol
 
homeostasis, mainly
 
by reducing
 
LDLR levels
 
on the
plasma membrane,
 
which leads
 
to decreased
 
metabolism of
 
LDL by
 
the cells.
 
Inhibition of
 
PCSK9 prevents
 
this reduction
 
in LDLR
levels on the plasma membrane,
 
and in consequence the
 
cellular process of internalizing
 
LDL particles, resulting in a
 
reduction of LDL.
Limitations of Current Therapies
Statins are the
 
most commonly used
 
drugs to treat
 
hypercholesterolemia and result
 
in a pronounced
 
reduction in LDL.
 
The unambiguous
benefits of
 
statins, together with
 
the prevalence of
 
coronary heart disease,
 
have made statins
 
the most highly
 
prescribed drug
 
class in
developed countries.
 
However,
 
many patients
 
are unable
 
to achieve
 
targeted lipid
 
levels despite
 
intensive statin
 
therapy.
 
In addition,
continued patient adherence to statin therapy,
 
which is necessary to maintain a lower risk for cardiac events, is variable
 
but considered
to be low – as low as 30% to
 
40% after two years in persons following a
 
myocardial infarction. Importantly, at the transcriptional level,
statins
 
up-regulate
 
not
 
only
 
LDLR,
 
but
 
also
 
PCSK9,
 
causing
 
the
 
so-called
 
paradox
 
of
 
statin
 
treatment.
 
Although
 
statins
 
induce
 
a
beneficial increase in LDLR, they also increase
 
PCSK9, thus leading to LDLR degradation, which
 
indirectly increases LDL, mitigating
the overall LDL
 
reduction that statins
 
otherwise cause. Given
 
the limitations in
 
efficacy and adherence,
 
targeting PCSK9 in
 
combination
with statins treatment is an emerging treatment paradigm for hypercholesterolemia.
Two
 
mAbs
 
that
 
inhibit
 
activity
 
have
 
received
 
FDA
 
approval,
 
alirocumab
 
(Praluent)
 
and
 
evolocumab
 
(Repatha).
 
These
 
drugs
 
were
initially approved
 
to treat
 
the genetic
 
condition heterozygous
 
familial hypercholesterolemia,
 
although the
 
approved indications
 
were
expanded after
 
the publication
 
of studies
 
demonstrating that
 
the use
 
of a
 
PCSK9 inhibitor
 
in conjunction
 
with a
 
statin significantly
reduced the risk for major cardiovascular events, including heart attack, stroke, unstable angina requiring hospitalization or death from
coronary heart disease. In addition,
 
inclisiran (Leqvio), an siRNA
 
inhibitor of PCSK9 synthesis,
 
was approved by the EMA
 
in late 2020
for the treatment of heterozygous familial hypercholesterolemia in addition to other dyslipidemia.
While alirocumab
 
and evolucumab
 
have demonstrated clinical
 
benefit, their commercial
 
potential has been
 
limited by their
 
pricing. Both
launched
 
with
 
a
 
wholesale
 
acquisition
 
price
 
exceeding
 
$14,000
 
annually,
 
but
 
prices
 
for
 
both
 
were
 
subsequently
 
reduced
 
in
 
2018.
Nevertheless, this drug
 
class generated sales
 
of approximately $1.5 billion
 
in 2021 and
 
is expected to
 
grow to approximately
 
$2.1 billion
by 2030, including
 
the addition of inclisiran
 
to the market. In
 
addition, both are administered
 
bi-weekly or monthly,
 
which represents
what
 
we
 
believe
 
to
 
be
 
a
 
frequent
 
and
 
inconvenient
 
administration
 
schedule
 
for
 
patients.
 
While
 
inclisiran
 
represents
 
an
 
improved
administration schedule
 
compared to
 
alirocumab and
 
evolucumab, as
 
it must
 
be administered
 
twice annually,
 
we believe
 
that it
 
may
encounter similar pricing challenges due to the published cost effectiveness price.
Our Product Candidate: VXX-401
We are developing VXX-401,
 
an anti-PCSK9
 
product candidate
 
to treat
 
hypercholesterolemia. We are dedicated
 
to developing
 
a product
candidate that has long-acting treatment duration,
 
which we believe will offer a more convenient treatment
 
regimen compared to the up
to
 
bi-weekly
 
dosing
 
required
 
by
 
some
 
mAbs.
 
We
 
believe
 
that
 
lower
 
manufacturing
 
costs
 
commensurate
 
with
 
the
 
requirement
 
of
27
meaningfully
 
less
 
drug
 
substance
 
relative
 
to
 
mAbs,
 
coupled
 
with
 
our
 
ability
 
to
 
achieve
 
commercial
 
scale
 
production
 
rapidly,
 
may
promote expanded use of this drug class as a first-line therapy,
 
allowing for treating a greater number of hypercholesterolemia patients
than currently treated with mAbs.
Pre-Clinical Data
In August 2022 we announced the selection of VXX-401 as our lead anti-PCSK9 vaccine candidate.
 
In pre-clinical studies, VXX-401
generated therapeutic
 
titer levels
 
of anti-PCSK9
 
antibodies, a
 
high response
 
rate among
 
dosed animals,
 
and robust
 
reduction in
 
LDL
across multiple species.
Results from
 
three separate
 
pre-clinical studies
 
of VXX-401
 
in non-human
 
primates, including
 
a GLP
 
toxicity study, have
 
been published
in the
 
Journal of
 
Lipid Research
 
(Vroom
 
et al.
 
2024).
 
This paper
 
reported that
 
VXX-401 triggers
 
a safe
 
humoral immune
 
response
against PCSK9,
 
consistently "resulting
 
in the
 
production of
 
antibodies and
 
a subsequent
 
30-40% reduction
 
in blood
 
LDL-C.”
 
These
effects are sustained over time.
 
Anti-PCSK9 antibodies generated by VXX-401 bind human
 
PCSK9 “with high affinity and block
 
the
inhibitory effects of PCSK9 on LDL-C uptake in a hepatic cell model.”
The GLP toxicology study demonstrated that 5 doses of VXX-401 were safe and well tolerated, with no clinical observations and no
pathological findings.
 
Development Strategy
We
 
have
 
initiated
 
a
 
first-in-human Phase
 
1
 
clinical
 
trial
 
of
 
VXX-401 in
 
Australia
 
in
 
the
 
first quarter
 
of
 
2023.
 
In
 
October 2023
 
we
expanded
 
this
 
trial
 
from
 
48
 
subjects
 
with
 
elevated
 
cholesterol
 
to
 
64
 
subjects,
 
monitoring
 
for
 
safety,
 
immunogenicity,
 
and
 
relevant
biomarkers.
 
We
 
expect a
 
topline readout
 
by mid-2024.
 
In a
 
potential subsequent
 
Phase 2
 
trial we
 
may test
 
VXX-401 alone
 
and in
combination with statins.
UB-313
An Overview of Migraine
Migraine
 
is
 
a
 
chronic
 
and
 
debilitating disorder
 
characterized by
 
recurrent attacks
 
lasting four
 
to
 
72
 
hours
 
with
 
multiple symptoms,
including typically
 
one-sided, pulsating
 
headaches of
 
moderate to
 
severe pain
 
intensity that
 
are associated
 
with nausea
 
or vomiting,
sensitivity to sound
 
and sensitivity to
 
light. Over 90%
 
of the patients
 
are unable to
 
function normally during
 
a migraine attack.
 
Many
experience comorbid conditions such as depression, anxiety and insomnia.
The Migraine Research
 
Foundation ranks migraine
 
as the world’s third
 
most prevalent illness.
 
The disease affects
 
39 million individuals
in the
 
United States and
 
approximately one billion individuals
 
globally.
 
Patients generally suffer
 
from chronic or
 
episodic migraines.
Chronic migraine is defined
 
as 15 headache days or
 
more per month, while
 
episodic migraine is defined
 
as fewer than 15
 
headache days
per month. Both acute and prophylactic treatments are used to address chronic and episodic migraines.
CGRP’s
 
Role in Migraine
CGRP
 
is
 
a
 
neuropeptide
 
found
 
throughout
 
the
 
body,
 
including
 
in
 
the
 
spinal
 
cord.
 
CGRP
 
activates
 
CGRP
 
receptor
 
in
 
the
trigeminovascular system, which is
 
located within pain-signaling pathways,
 
intracranial arteries and mast
 
cells. Activation of the
 
CGRP
receptor has been demonstrated to induce migraine in migraineurs. Multiple anti-CGRP therapies
 
have been approved for the treatment
of migraine.
Limitations of Current Therapies
Since the early 1990s,
 
there has been minimal
 
improvement in the standard
 
treatment for migraine. Treatments are
 
characterized as elite
acute or prophylactic.
 
Triptans are
 
the current first-line
 
prescription therapy for
 
the acute treatment
 
of migraine, with
 
over 15 million
annual prescriptions written in the United States.
Prophylactic medications
 
approved for migraine
 
include beta
 
blockers, such
 
as propranolol, topiramate,
 
sodium valproate
 
and botulinum
toxin,
 
branded
 
as
 
Botox.
 
However,
 
many
 
of
 
these
 
medications
 
provide
 
limited
 
clinical
 
benefit.
 
In
 
addition,
 
they
 
are
 
often
 
not
 
well
tolerated, with AEs such as cognitive impairment, nausea, fatigue and sleep disturbance.
Therapeutics targeting
 
the CGRP pathway
 
represent an emerging
 
treatment paradigm. Three
 
anti-CGRP mAbs were
 
approved by the
FDA in
 
2018 for
 
the prophylactic
 
treatment of
 
migraine in
 
adults. These
 
mAbs, erenumab-aooe
 
(Aimovig), fremanezumab-vfrm
 
(Ajovy)
and
 
galcanezumab-gnlm
 
(Emgality),
 
are
 
all
 
administered
 
subcutaneously.
 
Their
 
side
 
effects
 
are
 
generally
 
mild,
 
including
 
pain
 
and
redness at the
 
site of injection,
 
nasal congestion and
 
constipation. Studies show that
 
these mAbs reduce
 
the number of
 
headache days
by 50%
 
or more
 
in approximately
 
50% of
 
patients. In
 
2020, the
 
FDA approved
 
eptinezumab-jjmr (Vyepti),
 
an intravenously
 
infused
vaxxq410kp30i0
28
anti-CGRP mAb
 
for the
 
preventive treatment
 
of migraine.
 
The FDA
 
has also
 
approved small
 
molecule anti-CGRP
 
drugs, including
atogepant (Qulipta)
 
for the
 
preventive treatment
 
of episodic
 
migraine, ubrogepant
 
(Ubrelvy) for
 
the acute
 
treatment of
 
migraine, and
rimegepant (Nurtec) for both acute
 
and preventive treatment of migraine.
 
Sales for marketed and clinical-stage
 
anti-CGRP therapeutics
are projected
 
to reach
 
approximately $10.1 billion
 
by 2033.
 
Despite the
 
commercial success
 
that this
 
class represents,
 
many of
 
these
treatments require frequent administration, creating inconvenience for patients.
Our Product Candidate: UB-313
We
 
are developing UB-313 as
 
a preventive treatment for
 
migraine. We
 
believe UB-313 has
 
the potential to improve
 
upon the current
preventive treatments for migraine in multiple aspects: we expect UB-313 will require administration quarterly to annually,
 
in contrast
to monthly
 
to quarterly
 
for currently
 
marketed mAbs
 
and frequent
 
administration for
 
small molecules.
 
Furthermore, a
 
potential long
durability of
 
response may
 
offer physicians
 
and patients
 
the option
 
to administer
 
UB-313 in
 
an office
 
setting, which
 
can potentially
improve adherence. We expect the cost of UB-313 treatment, if approved, to be lower than that of mAbs for migraine.
Clinical Development
In 2023, we completed
 
a first-in-human Phase 1
 
clinical trial in 40
 
healthy volunteers in which
 
UB-313 was generally well
 
tolerated and
immunogenic:
 
all
 
subjects
 
who
 
received
 
three
 
doses
 
of
 
UB-313
 
(31
 
out
 
of
 
31)
 
developed
 
anti-CGRP
 
antibodies;
 
however,
 
serum
antibody titers were lower than expected,
 
and due to this lower immunogenicity, UB-313 did not meet
 
the trial’s secondary objective of
capsaicin-induced dermal blood flow
 
inhibition.
 
We
 
believe this was the
 
result of a suboptimal
 
drug product made by
 
a new contract
manufacturer, and we have identified the
 
necessary steps to manufacture
 
a more immunogenic product
 
consistent with prior lots
 
and the
known immunogenic potential of our platform candidates.
Pre-Clinical Data
We
 
have completed both
 
in vitro
 
and in vivo
 
pre-clinical studies of
 
UB-313. We
 
used an
 
in vivo proof-of-concept
 
capsaicin-induced
dermal blood flow model in
 
mice to demonstrate target engagement
 
of the marketed CGRP-targeting mAbs.
 
In this model, we observed
similar rates in reduction of dermal blood flow as fremanezumab in a head-to-head comparison against fremanezumab.
UB-313 Reduces Capsaicin-Induced Dermal Blood Flow in Mice
**Dunnett’s:
 
Ctl vs Vac
 
1p < 0.05; Ctl vs Vac
 
2 p < 0.05
In this preliminary study, dermal blood flow measurements were
 
taken 17 weeks following the first dose of UB-313. There were 3 to 11
animals per treatment group. Reduced dermal blood flow indicates target engagement with CGRP.
 
UB-313 reduced dermal blood flow
versus the control with an approximately similar magnitude to fremanezumab, which was administered 24 hours prior to the capsaicin
test.
We observed similar results in a capsaicin / dermal blood flow model in rats, comparing a rat version of UB-313 head-to-head against
galcanezumab.
Our in
 
vivo studies
 
of UB-313
 
have involved
 
multiple animal
 
species. High
 
immunogenicity was observed
 
in all
 
pre-clinical species
tested. Characterization of the antibodies produced after
 
immunization with UB-313 indicated that they have
 
limited, if any,
 
off-target
potential, are primarily IgG1
 
and IgG2, potently bind
 
to CGRP and potently
 
block CGRP activity
in vitro
. We
 
refer to potency
 
as the
amount
 
of
 
drug
 
required
 
to
 
produce
 
a
 
pharmacological
 
effect
 
of
 
given
 
intensity
 
and
 
is
 
not
 
a
 
measure
 
of
 
therapeutic
 
efficacy.
 
In
 
a
vaxxq410kp31i1 vaxxq410kp31i0
29
comparison
 
of
 
binding
 
affinities
 
with
 
fremanezumab
 
and galcanezumab,
 
UB-313-induced
 
IgG
 
antibodies
 
demonstrated
 
comparable
binding affinities.
UB-313 Demonstrated Induced Antibodies Comparable to Approved CGRP mAbs
We evaluated UB-313 formulations with two different
 
adjuvants in comparison to
 
fremanezumab and galcanezumab; both
 
formulations
demonstrated comparable IgG to these two approved CGRP mAbs.
Additional
in vitro
 
studies using human
 
SK-N-MC cells demonstrated
 
that UB-313-induced IgG
 
antibodies also had
 
comparable
in vitro
activity to CGRP-targeted mAbs.
UB-313 Induced IgGs Have Comparable In Vitro Activities to Marketed CGRP mAbs
In a cyclic AMP
 
(“cAMP”) production assay
 
conducted in human SK-N-MC
 
cells, antibodies taken from
 
the serum of guinea
 
pigs 15
weeks following the first injection of UB-313 demonstrated similar properties to two approved CGRP mAbs.
Moreover, the binding potency of UB-313 was determined to be comparable to these mAbs.
vaxxq410kp32i0
30
UB-313 Induced IgGs Demonstrate Comparable Binding Potencies to Marketed CGRP mAbs
Antibodies taken from the serum
 
of guinea pigs 15
 
weeks following the first
 
injection of UB-313 demonstrated
 
similar binding potencies
to two approved CGRP mAbs as measured by ELISA.
Next Stage Development Candidates
In addition to our
 
initial focus on migraines
 
and hypercholesterolemia, we believe
 
our AIM Platform can
 
generate product candidates
for a range of chronic diseases. We are evaluating opportunities across multiple disease areas, including allergy (e.g., atopic dermatitis,
chronic
 
rhinosinusitis,
 
food
 
allergy),
 
autoimmune
 
(e.g.,
 
psoriasis,
 
psoriatic
 
arthritis),
 
pain
 
(e.g.,
 
peripheral
 
neuropathy,
 
diabetic
neuropathy) and bone and
 
muscle deterioration (e.g., sarcopenia,
 
osteoporosis, osteopenia) indications as
 
they may apply
 
to geriatrics
and space travel health.
COVID-19 Program
An Overview of COVID-19
COVID-19, caused
 
by SARS-CoV-2,
 
has rapidly
 
swept throughout
 
the world.
 
As of
 
February 2024,
 
there have
 
been more
 
than 700
million confirmed COVID-19 cases and more than 6.9 million
 
deaths worldwide. Common symptoms of COVID-19 are fever,
 
cough,
lymphocytopenia and chest radiographic abnormality. A proportion of patients recovering
 
from COVID-19 continue shedding virus for
days, and asymptomatic carriers may also transmit SARS-CoV-2, indicating a risk of a continuous and long-term pandemic.
SARS-CoV-2
 
is an
 
enveloped, single-stranded,
 
positive-sense RNA
 
virus belonging
 
to the
 
family
Coronavidae
 
within the
 
genus β-
coronavirus. The genome of SARS-CoV-2 encodes one large Spike (“S”) protein that plays a pivotal role during
 
viral attachment to the
host receptor, angiotensin converting enzyme 2 (“ACE2”), and
 
entry into host cells. The S protein is the major principal
 
antigen target
for
 
vaccines
 
against
 
human
 
coronavirus,
 
including
 
SARS-Co-V-2.
 
Neutralizing
 
antibodies
 
targeting
 
the
 
receptor
 
binding
 
domain
(“RBD”) subunit
 
of the S
 
protein block the
 
virus from
 
binding to
 
host cells.
 
Over 90% of
 
all neutralizing
 
antibodies produced in
 
response
to infection are directed to the RBD subunit, and mAbs that have shown therapeutic activity target epitopes on the RBD.
Fifty vaccines are authorized for
 
use in one or more
 
countries around the world.
 
Most of these vaccines are
 
based on the S protein
 
of the
SARS-CoV-2,
 
but
 
rely
 
on
 
different
 
mechanisms
 
for
 
presentation or
 
expression of
 
the
 
S
 
antigen,
 
including whole
 
inactivated
 
virus,
defective adenovirus vectors,
 
or mRNA.
 
All have
 
been shown
 
to be
 
safe and
 
effective in
 
placebo- controlled
 
clinical trials. Antiviral
drugs and mAbs have limited availability and effectiveness.
COVID-19 Vaccine Market
As of February 2024, over 5.1
 
billion people have been fully
 
vaccinated against COVID-19.
 
Nearly all of these people received
 
at least
one of three types of
 
vaccine technologies: mRNA, adenovirus vector,
 
or inactivated virus.
 
As SARS-CoV-2
 
continues to evolve and
spread, the market for booster vaccinations has also grown, with over 2.8 billion doses sold to date.
We expect demand for booster vaccinations that are safe and well tolerated, offer long lasting immunity against emerging variants, and
allow
 
for
 
manageable
 
storage
 
and
 
shipping
 
conditions
 
may
 
last
 
for
 
the
 
foreseeable
 
future,
 
particularly
 
in
 
low-
 
and
 
middle-income
countries
 
(“LMICs”), similar
 
to
 
the
 
influenza
 
vaccine
 
market.
 
We
 
also
 
anticipate
 
demand
 
for
 
more
 
types
 
of
 
vaccine
 
technologies,
beyond the readily available mRNA, adenovirus vector, and inactivated virus vaccine options.
31
UB-612: Our COVID-19 Vaccine Initiative
We are developing UB-612 as a product candidate for boosting immunity to COVID-19 in vaccinated individuals. UB-612 is designed
to activate both antibody and cellular immunity against multiple
 
viral targets. The vaccine is composed of
 
a recombinant S1-RBD-sFc
fusion protein
 
combined with
 
rationally designed
 
synthetic Th
 
and CTL
 
epitope peptides
 
selected from
 
the S2
 
domain of
 
the spike,
membrane (“M”),
 
and nucleocapsid
 
(“N”) proteins.
 
These peptides
 
bind to
 
MHC class
 
I and
 
II receptors
 
without significant
 
genetic
restriction, so that they
 
may be recognized broadly by
 
the vast majority of
 
the human population. Our
 
mixture of peptides is
 
designed
to elicit
 
T-cell
 
activation, memory
 
recall and
 
effector functions
 
similar to
 
those of
 
natural SARS-CoV-2
 
infection. The
 
S1-RBD-sFc
fusion protein incorporates essential B-cell epitopes that promote
 
the generation of neutralizing antibodies to the RBD of
 
SARS-CoV-
2. UB-612
 
is formulated
 
with Adju-Phos,
 
an adjuvant
 
widely used
 
in many
 
approved vaccines
 
globally.
 
For added
 
safety,
 
synthetic
peptides in UB-612 are adsorbed by our propriety
 
CpG1 excipient, a Toll
 
-like receptor 9 agonist molecule, known to help
 
to stimulate
balanced T-cell immunity in
 
humans. UB-612
 
can be
 
stored and
 
shipped at
 
2° to
 
8°C (conventional
 
cold chain
 
refrigerated temperatures).
An EUA application
 
for UB-612 was denied
 
by the TFDA in
 
August 2021 because
 
the neutralizing antibody
 
response generated by
 
UB-
612
 
delivered in
 
an accelerated
 
two-dose primary
 
immunization schedule,
 
as
 
compared to
 
that of
 
a designated
 
adenovirus vectored
vaccine, did not meet the TFDA’s specified evaluation criteria. We are now pursuing a path to conditional/provisional authorization for
UB-612 as
 
a heterologous boost
 
with the Medicines
 
and Healthcare products
 
Regulatory Agency (“MHRA”)
 
and Therapeutic Goods
Administration (“TGA”), the regulatory authorities of the United Kingdom and Australia, respectively.
Clinical Development
In March 2022, Vaxxinity
 
initiated a Phase 3 pivotal
 
trial to compare the immune responses
 
stimulated by homologous boosts mRNA
(BNT162b2), adenovirus (ChAdOx1-S), inactivated virus (Sinopharm BIBP) COVID-19 vaccines, to a heterologous boost of UB-612.
This was an
 
active-controlled, randomized trial conducted
 
in the United
 
States, Panama, and
 
Philippines under a
 
platform protocol in
944
 
subjects
 
16
 
years
 
and
 
older
 
who
 
completed
 
a
 
two-dose
 
primary
 
immunization
 
with
 
one
 
or
 
more
 
of
 
the
 
comparator
 
vaccines
mentioned above.
 
Eligible subjects
 
were randomized
 
into one of
 
two treatment
 
arms to
 
receive a
 
single dose
 
of UB-612
 
or an
 
active
comparator. The primary
 
objective of the study was to
 
determine non-inferiority of UB-612-stimulated neutralizing antibodies against
those of the comparator vaccines.
 
CEPI co-funded this trial, which concluded in 2023.
 
Following positive topline
 
results announced in
 
December 2022, we
 
completed submissions for
 
conditional/provisional authorization
with the MHRA in the UK and the TGA
 
in Australia in March 2023.
 
We expect that, if successful, these authorizations may enable the
commercialization of UB-612 in multiple countries including select LMICs.
Heterologous Booster Data: Phase 3 Trial Topline
 
Results
In the global pivotal Phase
 
3 trial, UB-612 elicited strong
 
neutralizing antibodies against SARS-CoV-2 when compared head-to-head to
three globally
 
authorized platform
 
vaccines administered
 
as homologous
 
boosters, successfully
 
meeting primary
 
and key
 
secondary
immunogenicity endpoints.
 
The primary endpoints of the trial were
 
safety and live virus neutralizing antibody
 
titers against the Wuhan
strain of SARS-CoV-2 at day 29.
 
Secondary immunogenicity endpoints included neutralizing antibody titers against Omicron BA.5 at
day 29,
 
SCRs at
 
day 29,
 
and kinetics
 
of neutralizing
 
and RBD
 
binding IgG
 
antibody responses
 
through 12
 
months.
 
The primary
 
objective
of the
 
trial was
 
to determine
 
non-inferiority of
 
UB-612-stimulated neutralizing
 
antibodies against
 
those of
 
the comparator
 
vaccines,
where statistical non-inferiority was defined by the
 
lower bound of the 95% confidence interval
 
(“CI”) of the geometric mean titer ratio
(“GMR”) > 0.67.
 
When delivered as a heterologous booster in populations previously vaccinated with Pfizer-BioNTech’s
 
BNT162b2,
AstraZeneca’s
 
ChAdOx1-S,
 
or
 
Sinopharm’s
 
BIBP,
 
UB-612
 
was
 
shown
 
to
 
generate
 
neutralizing
 
antibody
 
titers
 
28
 
days
 
after
administration that were:
Statistically
 
non-inferior
 
to,
 
and
 
directionally
 
higher
 
than,
 
BNT162b2:
 
1.04
 
GMR
 
against
 
Wuhan
 
(95%
 
CI:
 
0.89,
 
1.21;
p=0.6147), 1.11 GMR against Omicron BA.5 (95% CI: 0.94, 1.31; p=0.2171)
Statistically superior to
 
ChAdOx1-S: 1.92-fold higher
 
geometric mean titers
 
against Wuhan
 
with UB-612 (GMR=1.92;
 
95%
CI: 1.44, 2.56; p<0.0001), 2.85-fold higher against Omicron BA.5 (GMR=2.85; 95% CI: 2.00, 4.05; p<0.0001)
Statistically superior to BIBP:
 
5.77-fold higher geometric mean titers
 
against Wuhan with UB-612 (GMR=5.77; 95%
 
CI: 4.62,
7.20; p<0.0001), 5.93-fold higher against Omicron BA.5 (GMR=5.93; 95% CI: 4.60, 7.65; p<0.0001)
SCR as measured against Wuhan and Omicron BA.5
 
were key secondary endpoints in the
 
Phase 3 trial.
 
Seroconversion was defined as
a ≥4-fold increase of neutralizing antibody titers from baseline.
 
SCR non-inferiority was defined by the lower bound of
 
the 95% CI for
the difference of the UB-612 SCR minus the comparator SCR > -10%.
 
SCR superiority was defined by the lower bound of the 95% CI
for the difference of
 
the UB-612 SCR minus
 
the comparator SCR >
 
0%.
 
UB-612 SCR at day
 
29 was statistically non-inferior to,
 
and
directionally higher than, BNT162b2 against both Wuhan and Omicron BA.5, statistically superior to ChAdOx1-S
 
with 1.9-fold higher
SCR against Wuhan (23.6% absolute
 
difference, p=0.0009) and 2.0-fold
 
higher SCR against
 
Omicron BA.5 (29.2%
 
absolute difference,
32
p<0.0001), and statistically superior to BIBP, with 8.3-fold higher SCR against Wuhan (56.8% absolute difference, p<0.0001) and 5.8-
fold higher SCR against Omicron BA.5 (58.0% absolute difference, p<0.0001).
Safety data from the Phase 3 trial suggested that UB-612 was generally well tolerated; no vaccine-related SAEs were reported.
2-Dose Clinical Data
In early 2021, we completed an open-label dose escalation Phase 1 clinical trial to evaluate the safety, tolerability and immunogenicity
of UB-612 in
 
healthy volunteers between
 
the ages of
 
20 and 55
 
in Taiwan.
 
This six-month trial
 
consisted of three 20-subject
 
cohorts,
each receiving
 
an initial
 
dose at
 
the start
 
of the
 
trial and
 
a second
 
dose on
 
day 28:
 
one cohort
 
received two
 
10µg doses,
 
the second
received two
 
30µg doses,
 
and the
 
third received
 
two 100µg
 
doses.
 
The mean
 
titer of
 
antigen-specific antibodies
 
to UB-612
 
and the
seroconversion rate
 
was evaluated
 
throughout the
 
duration of
 
the trial
 
to determine
 
the humoral
 
immune response
 
and persistence
 
of
immunogenicity. In addition, T-cell responses were evaluated by interferon-γ ELISpot assay and intracellular cytokine
 
staining by flow
cytometry.
 
The Phase 1
 
clinical trial was sponsored
 
by UBIA. UBIA conducted
 
the trial on our
 
behalf in accordance with
 
one of our
related party master services agreements.
After one
 
and two
 
doses, UB-612
 
was considered
 
to be
 
generally safe
 
and well
 
tolerated, with
 
a low
 
frequency of
 
solicited and
 
unsolicited
AEs, which
 
were all
 
Grade 1
 
(mild) in
 
severity.
 
After each
 
vaccination, the
 
most common
 
AE was
 
injection site
 
pain, with
 
no clear
difference in reactogenicity between dose levels. In all dose groups, there was a trend towards
 
increased reactogenicity with increase in
dose.
 
Three
 
cases
 
of
 
mild
 
allergic
 
reactions
 
were
 
reported
 
(e.g.,
 
itching
 
at
 
vaccine
 
site),
 
which
 
were
 
all
 
resolved
 
within
 
1-3
 
days.
Importantly, and
 
in distinction to certain
 
vaccines authorized for emergency
 
use, no other increase
 
in AEs was seen
 
at second dose as
compared to first injection. We selected the highest dose (100μg) to take into a Phase 2 trial.
In an
 
anti-S1-RBD ELISA assay,
 
we observed that
 
all three dose
 
levels of UB-612
 
induced titer levels
 
comparable to or
 
greater than
those in sera from
 
patients hospitalized with COVID-19.
 
Furthermore, in a cytopathic
 
effect viral neutralization assay
 
(CPE VNT
50
), we
observed neutralizing titers comparable to those in sera from patients hospitalized with COVID-19.
Neutralizing activities of sample
 
sera from the Phase 1
 
trial were assessed against
 
live virus variants at the
 
Viral and Rickettsial Disease
Laboratory of the
 
California State Department
 
of Public
 
Health. The
 
results indicate
 
that UB-612
 
induces viral neutralizing
 
antibody
titers against the Alpha, Gamma and Delta variants of SARS-CoV-2, close to the neutralizing titer level against the original (wild-type,
WT) Wuhan
 
strain, while
 
the titer
 
level against
 
the Beta
 
variant is
 
lower in
 
comparison. The
 
latter finding
 
is anticipated
 
by results
published for other COVID-19 vaccines, as pointed out above.
A randomized,
 
placebo-controlled, multi-center
 
Phase 2
 
trial of
 
UB-612 in
 
3,850 healthy
 
volunteers aged
 
12 to
 
85 was
 
conducted in
Taiwan.
 
Subjects in
 
this trial
 
receive two
 
doses of
 
100μg UB-612,
 
or placebo,
 
28 days
 
apart. The
 
objectives of
 
this trial
 
include the
analysis of safety and immunogenicity of
 
UB-612, in particular, antigen-specific antibodies to UB-612, the
 
seroconversion rate and lot-
to-lot consistency
 
of antibody
 
responses. An
 
interim analysis
 
of data
 
from this
 
Phase 2
 
trial in
 
healthy volunteers
 
18 years
 
and older
based on
 
the data
 
cut-off date
 
of June 27,
 
2021 was
 
submitted to
 
the TFDA
 
as part
 
of a
 
filing for
 
an EUA
 
in Taiwan.
 
The EUA
 
was
denied in August 2021 by the TFDA.
 
In data from the Phase 2 trial, UB-612 appears well tolerated. AEs were generally mild, and no UB-612-related SAEs were
observed. Local injection site AEs occurred in half of the subjects, the most frequent being injection site pain. Systemic Aes
occurred in less than half of the subjects, and the incidence was similar in the active and placebo groups, except for muscle pain
which was more frequent in the active group. Aside from muscle pain, systemic reactions were comparable across the active and
placebo groups, with less than 10% of subjects in either group experiencing fever or chills. Systemic Aes were similar after the first
and second doses. The vast majority of AEs were mild (Grade 1), and all were self-limited. No subject had a severe (Grade 3) local
reaction. The incidence of severe (Grade 3) systemic reactions was <0.1%.
Immunization with UB-612 in both
 
Phase 2 and Phase
 
1 studies led to
 
detectable T-cell
 
responses observed in a
 
subset of subjects. In
Phase 2, a total
 
of 88 subjects receiving UB-612
 
and 12 receiving placebo were
 
tested for T cell
 
responses at baseline and on
 
Day 57.
Preliminary results of ELISpot
 
(Interferon-γ and IL-4) and
 
intracellular cytokine staining indicate
 
robust responses to UB-612,
 
with a
strong
 
Th1
 
orientation.
 
Intracellular
 
cytokine
 
staining
 
(ICS)
 
confirmed
 
the
 
Th1
 
orientation
 
of
 
T
 
cell
 
responses.
 
UB-612
 
induced
measurable CD8+ T cell responses and CD107a+/Granzyme secreting cells, which are putative cytotoxic T cells.
3-Dose Clinical Data
In a Phase 1 extension trial, 50 subjects from Phase 1 received a third booster dose of UB-612 approximately 7-9 months after their
second dose (100µg).
 
In this
extension trial, UB-612 was generally well tolerated after a third dose, with no vaccine-related SAEs
reported.
Immunogenicity and safety data from the Phase 1 extension suggests that UB-612 elicits a multi-fold increase in neutralizing
antibody titers upon third dose, significantly exceeding those observed in human convalescent sera, and that the third dose is well
33
tolerated with no vaccine-related SAEs reported.
 
Published studies have shown a correlation between efficacy in randomized
controlled trials and the ratio of neutralizing titers in sera from vaccinated subjects to titers in human
convalescent sera.
In collaboration with University College London and VisMederi, we analyzed sera from subjects immunized with three doses of UB-
612. Data demonstrated that UB-612 elicited a broad IgG antibody response against multiple SARS-CoV-2 variants of concern,
including, Alpha, Beta, Delta, and Gamma, and Omicron, and higher levels of neutralizing antibodies against Omicron than three
doses of an approved mRNA vaccine.
An extension of the Phase 2, observer-blind, multicenter, randomized, placebo-controlled trial was sponsored by UBIA to evaluate the
immunogenicity, safety,
 
tolerability, and lot consistency of a homologous booster dose of UB-612 in adolescents, younger adults, and
elderly adults.
 
Adult subjects who completed the primary 2-dose UB-612 series in the main Phase 2 trial were unblinded and offered
a third dose of UB-612.
 
The third dose of UB-612 stimulated both arms of adaptive immunity in subjects.
 
The frequency of solicited
and unsolicited adverse events following the third dose was consistent with the safety profile observed after the first and
 
second doses.
 
Development Strategy
Based on our
 
belief in UB-612’s
 
potential utility as
 
a heterologous booster
 
dose (boosting the
 
immunity of a
 
subject who has
 
already
received
 
a
 
different
 
vaccine),
 
we
 
have
 
completed
 
rolling
 
submissions
 
for
 
conditional/provisional
 
authorization
 
with
 
regulatory
authorities in the United Kingdom and Australia, who are reviewing under their established work share agreement.
 
Competition
The
 
pharmaceutical
 
industry
 
is
 
characterized
 
by
 
rapidly
 
advancing
 
technologies,
 
intense
 
competition
 
and
 
a
 
strong
 
emphasis
 
on
proprietary
 
products.
 
While
 
we
 
believe
 
that
 
our
 
technology,
 
the
 
expertise
 
of
 
our
 
executive
 
and
 
scientific
 
teams,
 
research,
 
clinical
capabilities, development experience and scientific knowledge
 
provide us with competitive advantages, we face
 
increasing competition
from multiple
 
sources, including
 
pharmaceutical and
 
biotechnology companies,
 
academic institutions,
 
governmental agencies
 
and public
and private research institutions both in the United States and abroad.
Many of our competitors may have significantly greater financial resources and expertise in research and development, manufacturing,
preclinical
 
testing,
 
conducting
 
clinical
 
trials,
 
obtaining
 
regulatory
 
approvals
 
and
 
marketing
 
approved
 
products
 
than
 
we
 
do.
 
These
competitors also
 
compete with
 
us in
 
recruiting and
 
retaining qualified
 
scientific and
 
management personnel
 
and establishing
 
clinical
trial sites
 
and patient
 
enrollment for
 
clinical trials,
 
as well
 
as in acquiring
 
technologies complementary
 
to, or
 
necessary for, our
 
programs.
Smaller or
 
early stage
 
companies may
 
also prove
 
to be
 
significant competitors,
 
particularly through
 
collaborative arrangements
 
with
larger or more established companies.
Vaccines
The global
 
vaccine market
 
is highly
 
concentrated among
 
a small
 
number of
 
multinational pharmaceutical
 
companies: Pfizer,
 
Merck,
GlaxoSmithKline and Sanofi together control most
 
of the global vaccine market.
 
Other pharmaceutical and biotechnology companies,
academic institutions, governmental agencies and public and private research institutions are also working toward new solutions
 
given
the continuing global unmet need.
Neurodegenerative Disorders
We
 
expect
 
that,
 
if
 
approved,
 
our
 
product
 
candidates
 
will
 
compete
 
with
 
currently
 
approved
 
therapies
 
for
 
management
 
of
neurodegenerative diseases, such as AD and PD.
 
In AD, four drugs are currently approved by the FDA for the treatment of symptoms
of AD, based
 
on acetylcholinesterase (“AchE”) inhibition
 
and NMDA receptor
 
antagonism. In addition to
 
the marketed therapies, we
are aware of
 
several companies currently developing
 
therapies for AD,
 
including Eisai, Lilly,
 
Hoffman-LaRoche, Abbvie, Johnson
 
&
Johnson, and Novartis. Biogen’s
 
aducanumab was approved by the
 
FDA in June 2021 under
 
the accelerated approval pathway,
 
which
allows for
 
earlier approval
 
of drugs
 
that treat
 
serious conditions,
 
and that
 
fill an
 
unmet medical
 
need based
 
on a
 
surrogate endpoint.
Aducanumab
 
failed
 
to
 
achieve
 
approval
 
in
 
Europe
 
and
 
Japan.
 
In
 
January
 
2024,
 
Biogen
 
announced
 
its
 
intention
 
to
 
discontinue
aducanumab.
 
Eisai and Biogen’s lecanemab was approved by the FDA in January 2023 under an accelerated approval pathway.
Pharmaceutical treatments for PD address its symptoms
 
only and do not treat the underlying causes
 
of PD. The majority of prescription
drugs
 
are
 
dopaminergic
 
medications
 
and
 
act
 
by
 
increasing
 
dopamine,
 
a
 
neurotransmitter.
 
We
 
are
 
aware
 
of
 
several
 
companies
 
with
product
 
candidates
 
at
 
various
 
stages
 
of
 
clinical
 
development,
 
including
 
Sanofi,
 
Kyowa
 
Kirin,
 
Cerevel
 
Therapeutics
 
and
 
Hoffman-
LaRoche. Hoffman-LaRoche is developing prasinezumab, a mAb, as a potential treatment for PD.
 
 
34
PCSK-9 Inhibitors
Three companies
 
currently have
 
PCSK-9 inhibitors
 
approved by
 
the FDA
 
to treat
 
hypercholesterolemia: Regeneron
 
Pharmaceuticals
developed alirocumab (Praluent),
 
a mAb, in
 
collaboration with Sanofi,
 
and Amgen developed
 
evolocumab (Repatha), another
 
mAb, and
 
Novartis is commercializing inclisiran, an RNAi construct, to down-regulate synthesis of PCSK-9.
CGRP-Directed Migraine Treatments
Seven migraine treatments have been approved by the FDA that target CGRP.
 
Four of these therapeutics are mAbs and were approved
to prevent or reduce the number of
 
migraine episodes. These medications are galcanezumab
 
(Emgality), which was developed by Lilly;
erenumab (Aimovig), which
 
was developed by
 
Amgen in collaboration
 
with Novartis; fremanezumab
 
(Ajovy), which was
 
developed
by
 
Teva;
 
and
 
eptinezumab
 
(Vyepti),
 
which
 
was
 
developed
 
by
 
Alder,
 
acquired
 
by
 
Lundbeck.
 
Ubrogepant
 
(Ubrelvy),
 
developed
 
by
Allergan,
 
was
 
approved
 
for
 
the
 
treatment
 
of
 
acute
 
migraine
 
episodes;
 
rimegepant
 
(Nurtec),
 
approved
 
for
 
both
 
the
 
acute
 
treatment
migraine and the
 
preventive treatment of
 
episodic migraine, is
 
sold by Pfizer
 
following its acquisition
 
of Biohaven. Atogepant
 
(Qulipta),
developed by AbbVie, was approved for the preventive treatment of episodic migraine.
Collaborations
From time to time, we enter into licensing and commercialization agreements when they
 
align with our mission, including the Platform
License Agreement described under
 
“—Intellectual Property—Platform License Agreement.”
 
Current collaboration partners include,
the
 
University of
 
Central Florida,
 
the University
 
of
 
Florida, and
 
the University
 
of
 
Southampton.
 
For more
 
information see
 
Recent
Developments section.
Manufacturing
The manufacture of
 
our product candidates
 
encompasses both
 
the manufacture
 
of custom components
 
and the formulation,
 
fill and finish
of the final product.
 
We
 
do not currently own
 
or operate manufacturing facilities
 
for these processes. We
 
currently rely upon contract
manufacturing organizations, including those mentioned below, to produce our product candidates for both pre-clinical and clinical use
and will
 
continue to
 
rely upon
 
these relationships
 
for commercial
 
manufacturing if
 
any of
 
our product
 
candidates obtain
 
regulatory
approval. Although
 
we rely
 
upon contract
 
manufacturers, we
 
also have
 
personnel with
 
extensive manufacturing
 
experience that
 
can
oversee the relationships with our manufacturing partners.
Historically,
 
we
 
have
 
depended
 
heavily
 
on
 
UBI
 
and
 
its
 
affiliates
 
for
 
our
 
business
 
operations,
 
including
 
the
 
provision
 
of
 
research,
development
 
and
 
manufacturing
 
services.
 
Currently,
 
UBIA
 
provides
 
testing
 
services
 
for
 
UB-312
 
and
 
UB-612,
 
UBI
 
Pharma
 
Inc.
(“UBIP”)
 
provides
 
testing
 
relating
 
to
 
formulation-fill-finish
 
services
 
for
 
UB-312,
 
and
 
United
 
BioPharma,
 
Inc.
 
(“UBP”)
 
is
 
the
 
sole
manufacturer of protein for UB-612. Our commercial arrangements with UBI and its affiliates are described in more detail below.
Formulation-fill-finish services for UB-612 are provided by multiple contract manufacturers to ensure adequate capacity and minimize
supply
 
chain
 
risks.
 
For
 
supply
 
of
 
our
 
other
 
custom
 
components,
 
in
 
addition
 
to
 
protein
 
manufacturing
 
conducted
 
by
 
UBP,
 
we
 
have
engaged third party CMOs,
 
including C S Bio
 
Co. (“CSBio”) as our
 
primary peptide supplier for
 
UB-612 peptides, CPC Scientific
 
as
our primary peptide
 
supplier for VXX-401,
 
Wuxi STA
 
for process development
 
and manufacturing services
 
of oligonucleotides, and
Pharmaceuticals International, Inc (“Pii”) for additional fill-finish services.
 
UBI Group Manufacturing Partnership
We
 
primarily rely
 
on our
 
relationships with
 
third-party contract
 
manufacturing organizations
 
to produce
 
product candidates
 
for our
clinical trials. Historically, we have heavily depended on UBI as a
 
manufacturing partner for these efforts. In support
 
of our COVID-19
program (UB-612), we have entered into a
 
master services agreement with UBP and
 
an additional master services agreement with
 
UBI,
UBIA and UBP.
 
Pursuant to these agreements, UBI
 
and its affiliates have
 
provided research, development, testing
 
and manufacturing
services to us
 
and continue to
 
provide manufacturing services
 
for our protein.
 
Payment terms are
 
mutually agreed in
 
connection with
each work order relating
 
to services rendered. Our
 
agreement with UBP will
 
expire on the later
 
of March 2024 and
 
the completion of
all services
 
under the
 
last work
 
order executed
 
prior to
 
such scheduled
 
expiration and our
 
agreement with UBI,
 
UBIA and
 
UBP will
expire on
 
the later
 
of September
 
2023 and
 
the completion
 
of all
 
services under
 
the last
 
work order
 
executed prior
 
to such
 
scheduled
expiration. We also have
 
a management services
 
agreement with
 
UBI pursuant to
 
which UBI has
 
provided research and
 
prior back office
administrative services to us and acts as our agent with respect
 
to certain matters relating our COVID-19 program. UBI is compensated
for its services on a cost-plus basis. The agreement terminates upon mutual agreement between the parties.
In support of our
 
chronic disease pipeline,
 
we have entered into
 
master service agreements with
 
each of UBI, UBIA
 
and UBIP. Pursuant
to these agreements, UBI currently provides limited research services to us on a cost-plus basis, UBIA provides
 
testing services related
to UB-312 clinical trial material already manufactured
 
and UBIP has provided manufacturing, quality control,
 
testing, validation, GMP
warehousing and
 
supply services
 
to us
 
for UB-312
 
on payment
 
terms agreed
 
in connection
 
with work
 
orders relating
 
to the
 
services
35
rendered. UBI and its
 
affiliates no longer provide
 
clinical or manufacturing services for
 
other programs. These agreements
 
may all be
terminated for convenience upon 180 days’ notice or less.
We have
 
also entered into a research and development services agreement
 
with UBI. Pursuant to this agreement, UBI and
 
its affiliates
may
 
provide
 
research
 
and
 
development
 
services
 
to
 
us.
 
Service
 
fees
 
payable
 
by
 
us
 
to
 
UBI
 
for
 
research
 
and
 
development
 
projects
undertaken in accordance with the research and development plan would be determined by a joint steering committee and set forth in a
research and development plan. Any aggregate services fees payable by us under the research and development services agreement are
subject to a
 
quarterly cap throughout
 
the term of
 
the agreement. The
 
research and development
 
services agreement expires
 
in August
2026.
Intellectual Property
Our ability to
 
obtain and maintain
 
intellectual property protection
 
for our product
 
candidates and core
 
technologies is fundamental
 
to
the
 
long-term
 
success
 
of
 
our
 
business.
 
We
 
rely
 
on
 
a
 
combination
 
of
 
intellectual
 
property
 
protection
 
strategies,
 
including
 
patents,
trademarks, trade secrets, license agreements, confidentiality policies and procedures, nondisclosure agreements, invention assignment
agreements and technical
 
measures designed to
 
protect the intellectual
 
property and commercially
 
valuable confidential information
 
and
data used in our business.
In summary,
 
our patent
 
estate includes
 
issued patents
 
and patent
 
applications which
 
claims cover
 
our AIM
 
Platform and
 
each of
 
our
product candidates.
 
As of
 
December 31, 2023,
 
our patent
 
estate included
 
four U.S.
 
issued patents,
 
ten U.S.
 
patent applications,
 
three
U.S. provisional patent applications, seven pending Patent Cooperation Treaty (“PCT”) patent applications, 34 issued non-U.S. patents
and 153 pending non-U.S. patent applications.
For our
 
product candidates
 
targeting the
 
prevention and
 
treatment of
 
neurodegenerative disease,
 
including claims
 
covering UB-311,
UB-312, and anti-tau,
 
patent rights are
 
provided by patents
 
and patent applications,
 
the majority of
 
which are being
 
prosecuted in the
United States, Australia, Brazil, Canada,
 
China, the EPO, Hong Kong,
 
Indonesia, India, Israel, Japan, the
 
Republic of Korea, Mexico,
Russia,
 
Singapore,
 
South
 
Africa,
 
Taiwan
 
and
 
the
 
United
 
Arab
 
Emirates,
 
and
 
three
 
pending
 
PCT
 
applications
 
and
 
one
 
provisional
application in the
 
U.S., directed to
 
peptide vaccines for
 
the prevention and
 
treatment of neurodegenerative
 
diseases. These issued
 
patents
and patent applications, if issued,
 
and any U.S. or non-U.S.
 
patent issuing from the PCT
 
or provisional patent applications, are
 
expected
to expire between 2033 and 2043, excluding any patent term adjustments or patent term extensions.
For our product candidates directed to peptide immunogens targeting CGRP and formulations thereof for
 
the prevention and treatment
of migraine,
 
including UB-313,
 
patent rights
 
are provided
 
by a
 
patent and
 
patent applications
 
being prosecuted
 
in the
 
United States,
Australia, Brazil, Canada, China, the EPO, India, Indonesia, Japan, Mexico, Russia, the Republic of Korea, Singapore, Taiwan and the
United Arab Emirates. The
 
issued patent and these
 
patent applications, if issued,
 
are expected to expire
 
in 2039, excluding any
 
patent
term adjustments or patent term extensions.
For
 
our
 
product
 
candidates
 
targeting
 
cholesterol
 
and
 
cardiovascular
 
disease,
 
including
 
our
 
anti-PCSK9
 
product
 
candidate
 
targeting
PCSK9 and
 
formulations thereof for
 
prevention and treatment
 
of PCSK9-mediated disorders,
 
we have
 
pending patent applications
 
in
the United States, Australia, Brazil, Canada, the EPO, India, Indonesia, Japan, Mexico, the Philippines, the Republic of Korea, Russia,
Saudi Arabia,
 
Taiwan,
 
the United
 
Arab Emirates,
 
and Vietnam.
 
These patent
 
applications, if
 
issued, are
 
expected to
 
expire in
 
2041,
excluding any patent term adjustment or patent term extension.
For our
 
product candidates
 
targeting SARS-CoV-2,
 
including UB-612
 
for COVID-19,
 
we have
 
an issued
 
patent and
 
pending patent
applications
 
in
 
the
 
United
 
States,
 
Argentina,
 
Australia,
 
Brazil,
 
Canada,
 
the
 
EPO,
 
India,
 
Indonesia,
 
Japan,
 
Mexico,
 
Pakistan,
 
the
Philippines, the Republic of
 
Korea, Russia, Saudi Arabia,
 
Taiwan,
 
United Arab Emirates,
 
and Vietnam,
 
and four pending
 
PCT patent
applications.
 
The
 
issued
 
patent
 
and
 
these
 
patent
 
applications,
 
if
 
issued,
 
and
 
any
 
U.S.
 
or
 
non-U.S.
 
patent
 
issuing
 
from
 
the
 
PCT
applications, are expected to expire between 2041 and 2043, excluding any patent term adjustments or patent term extensions.
For each product candidate utilizing the AIM Platform, additional patent
 
rights directed to artificial T helper cell epitopes and to a CpG
delivery
 
system
 
are
 
provided
 
by
 
patents
 
and
 
patent
 
applications,
 
the
 
majority
 
of
 
which
 
are
 
being
 
prosecuted
 
in
 
the
 
United
 
States,
Australia, Brazil,
 
Canada, Chile,
 
China, Colombia,
 
the EPO,
 
Indonesia, India,
 
Israel, Japan,
 
Mexico, New
 
Zealand, Philippines,
 
the
Republic of Korea, Russia,
 
Singapore, South Africa, Taiwan, Thailand, Ukraine,
 
the United Arab Emirates,
 
and Vietnam. The members
of one family of patents expired
 
in 2023, except for two U.S.
 
patents that will expire in 2025
 
and 2026. With regards to
 
the rest of the
families that cover the
 
AIM Platform, the issued
 
patents and patent applications,
 
if issued, are expected
 
to expire in 2039, excluding
 
any
patent term adjustments or patent term extensions.
The term of
 
individual patents
 
depends on the
 
countries in which
 
they are obtained.
 
The patent
 
term is 20
 
years from the
 
earliest effective
filing date of a
 
non-provisional patent application in most
 
of the countries in
 
which we file, including the
 
United States. In the United
States, a
 
patent’s
 
term may
 
be lengthened
 
by patent
 
term adjustment,
 
which compensates
 
a patentee
 
for administrative
 
delays by
 
the
USPTO in
 
examining and granting
 
a patent, or
 
may be shortened
 
if a patent
 
is terminally disclaimed
 
over an
 
earlier filed patent.
 
The
term of a patent that
 
covers a drug or biological product
 
may also be eligible for patent
 
term extension when FDA approval is
 
granted
36
for a
 
portion of
 
the term
 
effectively lost
 
as a
 
result of
 
the FDA
 
regulatory review
 
period, subject
 
to certain
 
limitations and
 
provided
statutory and regulatory requirements are met.
In addition to our reliance on patent protection for our inventions, products and technologies, we also seek to protect
 
our brand through
the procurement of trademark rights.
 
We
 
own registered trademarks and pending
 
trademark applications for our brands,
 
including our
“Vaxxinity”, “United Neuroscience” and “COVAXX” brands and
 
other related names
 
and logos, in
 
the United States
 
and certain
 
foreign
jurisdictions.
Furthermore, we rely upon trade secrets and know-how and continuing technological innovation to develop and maintain our
competitive position. However, trade secrets and know-how can be difficult to protect. We generally control access to and use of our
trade secrets and know-how, through the use of internal and external controls, including by entering into nondisclosure and
confidentiality agreements with our employees and third parties. We cannot guarantee, however, that we have executed such
agreements with all applicable counterparties, that such agreements will not be breached or that these agreements will afford us
adequate protection of our intellectual property and proprietary rights. Furthermore, although we take steps to protect our proprietary
information and trade secrets, third parties may independently develop substantially equivalent proprietary information and techniques
or otherwise gain access to our trade secrets or disclose our technology. As a result, we may not be able to meaningfully protect our
trade secrets. For further discussion of the risks relating to intellectual property, see “Risk Factors—Risks Related to Our Intellectual
Property Rights.”
 
Platform License Agreement
In August 2021, Vaxxinity
 
entered into a license
 
agreement (the “Platform License
 
Agreement”) with UBI and
 
certain of its affiliates
(collectively, the “Licensors”) that
 
expanded intellectual
 
property rights previously
 
licensed under
 
the Original
 
UBI Licenses (as
 
defined
below). Pursuant
 
to the
 
Platform License
 
Agreement, Vaxxinity
 
obtained a
 
worldwide, sublicensable
 
(subject to
 
certain conditions),
perpetual, fully paid-up, royalty-free (i) exclusive license (even as to the Licensors) under all patents owned or otherwise controlled by
the Licensors or their affiliates
 
existing as of the effective
 
date of the Platform License
 
Agreement, (ii) exclusive license (except
 
as to
the Licensors) under all patents owned or otherwise controlled by the Licensors or their affiliates arising after the effective
 
date during
the term of the Platform License Agreement, and (iii) non-exclusive
 
license under all know-how owned or otherwise controlled by the
Licensors or their affiliates existing as of the
 
effective date or arising during the term of
 
the Platform License Agreement, in each of
 
the
foregoing
 
cases,
 
to
 
research,
 
develop,
 
make,
 
have
 
made,
 
utilize,
 
import,
 
export,
 
market,
 
distribute,
 
offer
 
for
 
sale,
 
sell,
 
have
 
sold,
commercialize or otherwise exploit peptide-based vaccines in the field of all
 
human prophylactic and therapeutic uses, except for such
vaccines related to human
 
immunodeficiency virus (HIV), herpes
 
simplex virus (HSE) and
 
Immunoglobulin E (IgE). The
 
patents and
patent applications licensed under the
 
Platform License Agreement include claims
 
directed to a CpG delivery system,
 
artificial T helper
cell
 
epitopes
 
and
 
certain
 
designer
 
peptides
 
and
 
proteins
 
utilized
 
in
 
UB-612.
 
As
 
partial
 
consideration
 
for
 
the
 
rights
 
and
 
licenses
 
we
received pursuant to the Platform License Agreement, we granted UBI a warrant to purchase 1,928,020 shares of our Class A common
stock (“UBI Warrant”). The UBI
 
Warrant is exercisable at an
 
exercise price of
 
$12.45 per share
 
(subject to adjustment
 
pursuant thereto),
is not subject to vesting, and has a term of five years.
Vaxxinity
 
has the first right to control the filing, prosecution, maintenance and enforcement of the licensed patents
 
at Vaxxinity’s
 
own
expense, subject to the
 
Licensors’ right to comment on
 
and review any patent filings.
 
The Platform License Agreement shall
 
continue
until the parties mutually consent in writing to terminate the agreement. Upon such termination, all licenses granted
 
under the Platform
License Agreement shall
 
terminate and Vaxxinity
 
will assign any
 
regulatory documentation previously assigned
 
to Vaxxinity
 
back to
the Licensors.
Pricing, Coverage and Reimbursement
Sales of our
 
product candidates in
 
the United States
 
will depend, in
 
part, on the
 
extent to which
 
third-party payors, including
 
government
health programs such
 
as Medicare and
 
Medicaid, commercial insurance
 
and managed health
 
care organizations provide
 
coverage and
establish
 
adequate
 
reimbursement levels
 
for
 
such
 
product
 
candidates.
 
The
 
process
 
for
 
determining whether
 
a
 
third-party payor
 
will
provide coverage for a pharmaceutical
 
or biological product is typically separate
 
from the process for setting
 
the price of such a product
or for establishing the reimbursement rate
 
that the payor will pay for
 
the product once coverage is
 
approved, and we may also
 
need to
provide
 
discounts
 
to
 
purchasers,
 
private
 
health
 
plans
 
or
 
government
 
healthcare
 
programs,
 
as
 
increasingly,
 
third-party
 
payors
 
are
requiring that
 
drug companies provide
 
them with
 
predetermined discounts from
 
list prices and
 
are challenging the
 
prices charged
 
for
medical products.
 
As a
 
result, a
 
third-party payor’s
 
decision to
 
provide coverage
 
for a
 
pharmaceutical or
 
biological product
 
does not
imply that the reimbursement rate will be adequate for commercial viability, and inadequate reimbursement rates, including significant
patient
 
cost
 
sharing
 
obligations,
 
may
 
deter
 
patients
 
from
 
selecting
 
our
 
product
 
candidates.
 
Obtaining
 
coverage
 
and
 
reimbursement
approval of a
 
product from a
 
third-party payor is
 
a time-consuming and
 
costly process that
 
could require us
 
to provide to
 
each payor
supporting scientific, clinical
 
and cost-effectiveness data
 
for the use
 
of our product
 
on a payor-by-payor
 
basis, with no
 
assurance that
coverage and adequate reimbursement will
 
be obtained. Third-party payors may limit
 
coverage to specific products on an
 
approved list,
also known as a formulary, which might not include all of the approved products for a particular indication.
37
Further,
 
no uniform
 
policy for
 
coverage and
 
reimbursement exists
 
in the
 
United States,
 
and coverage
 
and reimbursement
 
can differ
significantly from
 
payor to payor. In
 
general, factors
 
a payor
 
considers in
 
determining coverage
 
and reimbursement
 
are based
 
on whether
the product is a covered benefit under its health plan; safe, effective,
 
and medically necessary, including its regulatory approval
 
status;
medically appropriate for the specific
 
patient; cost-effective; and neither experimental
 
nor investigational. Third-party payors
 
often rely
upon Medicare coverage policy and payment limitations in setting their own reimbursement
 
rates, but also have their own methods and
approval process apart from
 
Medicare determinations. As such,
 
one third-party payor’s
 
decision to cover a
 
particular medical product
or service does not ensure that other payors will also
 
provide coverage for the medical product or service, and the level
 
of coverage and
reimbursement can differ significantly from payor to payor. Even if favorable coverage and reimbursement status is attained for one or
more products for which
 
we receive regulatory approval,
 
less favorable coverage
 
policies and reimbursement
 
rates may be implemented
in the future.
Product Approval and Government Regulation
Government authorities in the United States, at the
 
federal, state and local level, and other countries extensively
 
regulate, among other
things,
 
the
 
research,
 
development,
 
testing,
 
manufacture,
 
quality
 
control,
 
approval,
 
labeling,
 
packaging,
 
storage,
 
record-keeping,
promotion, advertising, distribution,
 
post-approval monitoring and
 
reporting, marketing and
 
export and import
 
of products such as
 
those
we are
 
developing. Any
 
product candidate
 
that we
 
develop must
 
be approved
 
by the
 
FDA before
 
it may
 
be legally
 
marketed in
 
the
United States and by the appropriate foreign regulatory agency before it may be legally marketed in foreign countries.
U.S. Drug Development Process
In the United States,
 
the development, manufacturing and marketing
 
of human drugs and vaccines
 
are subject to extensive
 
regulation.
The FDA
 
regulates drugs
 
under the
 
Federal Food,
 
Drug and
 
Cosmetic Act
 
(“FDCA”) and
 
implementing regulations,
 
and biological
products, including vaccines, under provisions of the FDCA and the Public Health Service Act (“PHSA”). Drugs and vaccines are also
subject
 
to
 
other
 
federal,
 
state
 
and
 
local
 
statutes
 
and
 
regulations.
 
The
 
process
 
of
 
obtaining
 
regulatory
 
approvals
 
and
 
the
 
subsequent
compliance with
 
appropriate federal,
 
state, local
 
and foreign
 
statutes and
 
regulations require
 
the expenditure
 
of substantial
 
time and
financial
 
resources.
 
Failure
 
to
 
comply
 
with
 
the
 
applicable
 
U.S.
 
requirements
 
at
 
any
 
time
 
during
 
the
 
product
 
development
 
process,
approval process or after
 
approval, may subject
 
an applicant to administrative
 
or judicial sanctions. FDA
 
sanctions could include refusal
to approve
 
pending applications,
 
withdrawal of
 
an approval,
 
clinical hold,
 
warning letters,
 
product recalls,
 
product seizures,
 
total or
partial
 
suspension
 
of
 
production
 
or
 
distribution,
 
injunctions,
 
fines,
 
refusals
 
of
 
government
 
contracts,
 
debarment,
 
restitution,
disgorgement or civil or criminal penalties. Any agency or
 
judicial enforcement action could have a material adverse effect
 
on us. The
process required by the
 
FDA before a drug
 
or biological product may
 
be marketed in the
 
United States generally involves
 
the following:
 
completion of nonclinical
 
laboratory tests, animal
 
studies and formulation
 
and stability studies
 
according to good
 
laboratory
practices, or GLPs and other applicable regulations;
 
submission to the FDA of an application for an IND, which must become effective before human clinical trials may begin;
 
performance of adequate
 
and well-controlled human
 
clinical trials according
 
to the FDA’s
 
good clinical practice
 
regulations
commonly referred
 
to as
 
GCPs, among
 
other requirements,
 
to establish
 
the safety
 
and efficacy
 
of the
 
proposed drug
 
for its
intended uses;
 
submission to the FDA of an NDA or BLA for a new drug;
 
satisfactory completion of
 
an FDA inspection
 
of the manufacturing
 
facility or facilities
 
where the drug
 
is produced to
 
assess
compliance
 
with
 
the
 
FDA’s
 
cGMP,
 
to
 
assure
 
that
 
the
 
facilities,
 
methods
 
and
 
controls
 
are
 
adequate
 
to
 
preserve
 
the
 
drug’s
identity, strength, quality and purity;
 
potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the NDA or BLA; and
 
FDA review and approval of the NDA or BLA.
The
 
lengthy process
 
of
 
seeking required
 
approvals and
 
the continuing
 
need for
 
compliance with
 
applicable statutes
 
and
 
regulations
require the expenditure of substantial resources and approvals are inherently uncertain.
Before testing any compounds
 
with potential therapeutic value
 
in humans, the product
 
candidate enters the pre-clinical
 
study stage. Pre-
clinical tests, also
 
referred to as
 
nonclinical studies, include
 
laboratory evaluations of
 
product chemistry,
 
toxicity and formulation,
 
as
well as animal
 
studies to assess
 
the potential safety
 
and activity of
 
the product candidate.
 
The Consolidated Appropriations
 
Act for 2023,
signed into law on December 29, 2022, (P.L. 117
 
-328) amended both the FDCA and PHSA to specify that nonclinical testing for drugs
and biologics, respectively,
 
may, but
 
is not required to,
 
include in vivo animal
 
testing. According to the
 
amended language, a sponsor
may
 
fulfill
 
nonclinical
 
testing
 
requirements
 
by
 
completing
 
various
 
in
 
vitro
 
assays
 
(e.g.,
 
cell-based
 
assays,
 
organ
 
chips,
 
or
38
microphysiological
 
systems),
 
in
 
silico
 
studies
 
(i.e.,
 
computer
 
modeling),
 
other
 
human
 
or
 
non-human
 
biology-based
 
tests
 
(e.g.,
bioprinting), or in vivo animal tests.
The conduct of the
 
pre-clinical tests must comply with
 
federal regulations and requirements including
 
GLP.
 
The sponsor must submit
the results of the pre-clinical tests, together
 
with manufacturing information, analytical data, any available
 
clinical data or literature and
a proposed clinical protocol,
 
to the FDA as
 
part of the IND. The
 
IND automatically becomes effective 30
 
days after receipt by the
 
FDA,
unless the FDA imposes a clinical hold within that 30-day time period. In
 
such a case, the IND sponsor and the FDA must resolve any
outstanding concerns before
 
the clinical trial
 
can begin.
 
The FDA
 
may also
 
impose clinical holds
 
on a
 
product candidate at
 
any time
before or
 
during clinical trials
 
due to
 
safety concerns or
 
non-compliance. Accordingly,
 
we cannot
 
be sure
 
that submission of
 
an IND
will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such trial.
Clinical trials
 
involve the
 
administration of
 
the product
 
candidate to
 
healthy volunteers or
 
patients under
 
the supervision
 
of qualified
investigators,
 
generally
 
physicians
 
not
 
employed
 
by
 
or
 
under
 
the
 
trial
 
sponsor’s
 
direct
 
control.
 
Clinical
 
trials
 
are
 
conducted
 
under
protocols detailing, among other
 
things, the objectives of
 
the clinical trial, dosing
 
procedures, subject selection and
 
exclusion criteria,
and the parameters to be used to monitor subject safety. Each protocol must be submitted to the FDA as part of the IND. Congress also
recently amended the FDCA, as part of the Consolidated Appropriations Act
 
for 2023, in order to require sponsors of a Phase 3 clinical
trial, or
 
other “pivotal study”
 
of a new
 
drug to
 
support marketing authorization,
 
to design and
 
submit a diversity
 
action plan for
 
such
clinical
 
trial.
 
The
 
action
 
plan
 
must
 
include
 
the
 
sponsor’s
 
diversity
 
goals
 
for
 
enrollment,
 
as
 
well
 
as
 
a
 
rationale
 
for
 
the
 
goals
 
and
 
a
description of how
 
the sponsor will
 
meet them. Sponsors
 
must submit a
 
diversity action plan
 
to the FDA by
 
the time the
 
sponsor submits
the relevant
 
clinical trial
 
protocol to
 
the agency
 
for review.
 
The FDA
 
may grant
 
a waiver
 
for some
 
or all
 
of the
 
requirements for
 
a
diversity action
 
plan. It
 
is unknown
 
at this
 
time how
 
the diversity
 
action plan
 
may affect
 
Phase 3
 
trial planning
 
and timing
 
or what
specific information
 
FDA will expect
 
in such
 
plans, but
 
if the
 
FDA objects to
 
a sponsor’s
 
diversity action plan
 
or otherwise
 
requires
significant changes to
 
be made, it
 
could delay initiation
 
of the relevant
 
clinical trial. Clinical
 
trials must be conducted
 
in accordance with
the FDA’s
 
regulations comprising the good clinical practices requirements.
 
Further, each clinical trial must
 
be reviewed and approved
by an independent IRB at
 
or servicing each institution at which
 
the clinical trial will be conducted.
 
An IRB is charged with
 
protecting
the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials
are minimized and
 
are reasonable in
 
relation to anticipated
 
benefits. The IRB
 
also approves the
 
form and content
 
of the informed
 
consent
that
 
must
 
be
 
signed
 
by
 
each
 
clinical
 
trial
 
subject
 
or
 
his
 
or
 
her
 
legal
 
representative
 
and
 
provide
 
oversight
 
for
 
the
 
clinical
 
trial
 
until
completed.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
Phase 1
. The drug is initially introduced into healthy human subjects and tested for safety, dosage
tolerance, absorption, metabolism, distribution and excretion. In the case of some products for severe or life-threatening diseases,
especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing
 
may be
conducted in patients;
Phase 2
. The drug is evaluated in a limited patient population to identify possible adverse effects and safety
risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal
dosage and dosing schedule; and
Phase 3
. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an
expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish
 
the overall
risk/benefit ratio of the product and provide an adequate basis for product labeling. Generally, a well-controlled Phase 3 clinical trial is
required by the FDA for approval of an NDA or BLA.
Post-approval clinical trials, sometimes referred
 
to as Phase 4
 
clinical trials, may be
 
conducted after initial marketing approval.
 
These
clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication.
During all
 
phases of
 
clinical development,
 
regulatory agencies
 
require extensive
 
monitoring and
 
auditing of
 
all clinical
 
activities, clinical
data and clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA and
written IND safety reports must
 
be promptly submitted to the
 
FDA and the investigators for
 
serious and unexpected adverse events or
any finding from
 
tests in laboratory
 
animals that suggests
 
a significant risk
 
for human subjects.
 
Phase 1, Phase
 
2 and Phase
 
3 clinical
trials may
 
not be
 
completed successfully
 
within any
 
specified period,
 
if at
 
all. The
 
FDA or
 
the sponsor
 
or its
 
data safety
 
monitoring
board may
 
suspend a clinical
 
trial at
 
any time on
 
various grounds, including
 
a finding that
 
the research subjects
 
or patients
 
are being
exposed to
 
an unacceptable
 
health risk.
 
Similarly,
 
an IRB
 
can suspend
 
or terminate
 
approval of
 
a clinical
 
trial at
 
its institution
 
if the
clinical trial
 
is not being
 
conducted in accordance
 
with the IRB’s requirements
 
or if the
 
drug has been
 
associated with
 
unexpected serious
harm to patients.
Concurrently with
 
clinical trials,
 
companies usually
 
complete additional
 
nonclinical studies
 
and must
 
also develop
 
additional information
about the chemistry and
 
physical characteristics of the drug
 
as well as finalize
 
a process for manufacturing
 
the product in commercial
quantities in
 
accordance with
 
cGMP requirements.
 
The manufacturing
 
process must
 
be capable
 
of consistently
 
producing quality
 
batches
39
of the product candidate and, among other things, must
 
develop methods for testing the identity, strength, quality and purity of the final
drug. For biological
 
products in particular, the
 
PHSA emphasizes the
 
importance of manufacturing
 
control for products
 
whose attributes
cannot be
 
precisely defined
 
in order
 
to help
 
reduce the
 
risk of
 
the introduction
 
of adventitious
 
agents. Additionally, appropriate
 
packaging
must
 
be
 
selected
 
and
 
tested,
 
and
 
stability
 
studies
 
must
 
be
 
conducted
 
to
 
demonstrate
 
that
 
the
 
product
 
candidate
 
does
 
not
 
undergo
unacceptable deterioration over its shelf life.
U.S. Review and Approval Processes
Assuming successful completion of all required
 
testing in accordance with all applicable
 
regulatory requirements, the results of product
development, nonclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests
 
conducted on
the
 
chemistry
 
of
 
the
 
drug,
 
proposed
 
labeling
 
and
 
other
 
relevant
 
information
 
are
 
submitted
 
to
 
the
 
FDA
 
as
 
part
 
of
 
an
 
NDA
 
or
 
BLA
requesting approval to market the product.
 
The submission of an NDA or BLA
 
is subject to the payment of substantial
 
fees; a waiver of
such fees may be obtained under certain limited circumstances.
In addition, under the Pediatric Research Equity Act (“PREA”), an NDA or
 
BLA or supplement to an NDA or BLA must contain data
to assess
 
the safety
 
and effectiveness
 
of the
 
drug for
 
the claimed
 
indications in
 
all relevant
 
pediatric subpopulations
 
and to
 
support
dosing and administration for each
 
pediatric subpopulation for which
 
the product is safe and
 
effective. The FDA may grant
 
deferrals for
submission of data
 
or full or
 
partial waivers. Unless
 
otherwise required by
 
regulation, PREA does
 
not apply to
 
any drug for
 
an indication
for which orphan designation has been granted.
The FDA reviews all NDAs or
 
BLAs submitted to determine if they
 
are substantially complete before it accepts
 
them for filing. If the
FDA determines that an NDA or BLA
 
is incomplete or the application is
 
found to be non-navigable, the filing may
 
be refused and must
be re-submitted for consideration. Once the submission is accepted for filing, the FDA begins an in-depth
 
review of the NDA or BLA.
Under the goals and
 
policies agreed to by the
 
FDA under the Prescription
 
Drug User Fee Act
 
(“PDUFA”), the FDA has 10 months from
acceptance of filing
 
in which to
 
complete its initial
 
review of a standard
 
NDA or BLA
 
and respond to
 
the applicant, and
 
six months from
acceptance of
 
filing for
 
a priority
 
NDA or
 
BLA. The
 
FDA does
 
not always
 
meet its
 
PDUFA
 
goal dates.
 
The review
 
process and
 
the
PDUFA
 
goal date
 
may be
 
extended by
 
three months
 
or longer
 
if the
 
FDA requests
 
or the
 
NDA or
 
BLA sponsor
 
otherwise provides
additional information or clarification regarding information already provided in the submission before the PDUFA goal date.
After the NDA or BLA submission
 
is accepted for filing, the
 
FDA reviews the NDA or BLA
 
to determine, among other things,
 
whether
the proposed product is
 
safe and effective for
 
its intended use, and
 
whether the product is
 
being manufactured in accordance
 
with cGMP
to assure and preserve the product’s identity,
 
strength, quality and purity. The FDA may
 
refer applications for novel drug or biological
products or drug
 
or biological products
 
which present difficult
 
questions of safety
 
or efficacy to
 
an advisory committee,
 
typically a panel
that includes clinicians
 
and other experts,
 
for review, evaluation and
 
a recommendation as
 
to whether the
 
application should be
 
approved
and
 
under
 
what
 
conditions.
 
The
 
FDA
 
is
 
not
 
bound
 
by
 
the
 
recommendations
 
of
 
an
 
advisory
 
committee,
 
but
 
it
 
considers
 
such
recommendations carefully
 
when
 
making decisions.
 
During
 
the drug
 
approval process,
 
the
 
FDA also
 
will determine
 
whether a
 
risk
evaluation and mitigation strategy, or REMS is necessary to ensure that
 
the benefits of the drug outweigh its
 
risks and to assure the safe
use of
 
the drug.
 
The REMS
 
could include
 
medication guides,
 
physician communication
 
plans, assessment
 
plans and/or
 
elements to
assure safe
 
use, such
 
as restricted
 
distribution methods,
 
patient registries
 
or other
 
risk minimization
 
tools. The
 
FDA determines
 
the
requirement for a REMS, as
 
well as the specific
 
REMS provisions, on a case-by-case
 
basis. If the FDA
 
concludes a REMS is needed,
the sponsor
 
of the
 
NDA or
 
BLA must
 
submit a
 
proposed REMS;
 
the FDA
 
will not
 
approve the
 
NDA or
 
BLA without
 
a REMS,
 
if
required.
Before approving an NDA or BLA, the FDA
 
will inspect the facilities at which the product
 
is manufactured. The FDA will not approve
the product unless
 
it determines that
 
the manufacturing processes
 
and facilities are
 
in compliance with
 
cGMP requirements and
 
adequate
to assure consistent
 
production of the
 
product within required
 
specifications. The FDA requires
 
vaccine manufacturers to
 
submit data
supporting
 
the
 
demonstration
 
of
 
consistency
 
between
 
manufacturing
 
batches,
 
or
 
lots.
 
The
 
FDA
 
works
 
together
 
with
 
vaccine
manufacturers to develop
 
a lot release
 
protocol, the tests
 
conducted on each
 
lot of vaccine
 
post-approval. Additionally, before approving
an NDA
 
or BLA, the
 
FDA will
 
typically inspect
 
the sponsor
 
and one
 
or more
 
clinical sites
 
to assure that
 
the clinical
 
trials were conducted
in
 
compliance with
 
IND
 
study
 
requirements
 
and
 
with
 
GCPs.
 
If
 
the
 
FDA
 
determines
 
that
 
the
 
application, manufacturing
 
process
 
or
manufacturing facilities are not acceptable it will
 
outline the deficiencies in the submission and
 
often will request additional testing or
information.
The NDA
 
or BLA
 
review and
 
approval process
 
is lengthy
 
and difficult
 
and the
 
FDA may
 
refuse to
 
approve an
 
NDA or
 
BLA if
 
the
applicable regulatory criteria
 
are not satisfied
 
or may require
 
additional clinical data
 
or other data
 
and information. Even
 
if such data
and information
 
is submitted,
 
the FDA
 
may ultimately
 
decide that
 
the NDA
 
or BLA
 
does not
 
satisfy the
 
criteria for
 
approval. Data
obtained from clinical trials are not
 
always conclusive and the FDA may
 
interpret data differently than we
 
interpret the same data. An
approval
 
letter
 
authorizes
 
commercial
 
marketing
 
of
 
the
 
drug
 
with
 
specific
 
prescribing
 
information
 
for
 
specific
 
indications,
 
while
 
a
complete response
 
letter indicates
 
that the
 
review cycle
 
of the
 
application is
 
complete and
 
the application
 
will not
 
be approved
 
in its
present form. The complete response letter usually describes all of the specific deficiencies in the NDA or BLA identified by the FDA.
The deficiencies identified may be minor,
 
for example, requiring labeling changes, or major,
 
for example, requiring additional clinical
trials. Additionally, the complete response
 
letter may include
 
recommended actions that
 
the applicant might
 
take to place
 
the application
40
in a condition for
 
approval. If a complete
 
response letter is issued,
 
the applicant may either
 
submit new information, addressing
 
all of
the deficiencies identified in the letter, or withdraw the application.
If a product receives regulatory
 
approval, the approval may be
 
significantly limited to specific diseases
 
and dosages or the
 
indications
for use may otherwise be
 
limited, which could restrict the commercial
 
value of the product. Further,
 
the FDA may require that
 
certain
contraindications, warnings or
 
precautions be included
 
in the product
 
labeling. In addition,
 
the FDA may
 
require post-marketing clinical
trials, sometimes referred to as Phase 4 clinical trials, which are
 
designed to further assess a product’s safety and effectiveness and may
require testing and surveillance programs to
 
monitor the safety of approved
 
products that have been commercialized. In
 
addition, new
government requirements, including those
 
resulting from new legislation,
 
may be established, or the
 
FDA’s
 
policies may change, which
could impact the timeline for regulatory approval or otherwise impact ongoing development programs.
Expedited Development and Review Programs
The FDA
 
is authorized
 
to designate
 
certain products
 
for expedited
 
development or
 
review if
 
they are
 
intended to
 
address an
 
unmet
medical
 
need
 
in
 
the
 
treatment
 
of
 
a
 
serious
 
or
 
life-threatening
 
disease
 
or
 
condition.
 
These
 
programs
 
include
 
fast
 
track
 
designation,
breakthrough therapy designation and priority review designation.
The FDA has a fast track program that is intended to expedite or facilitate the process for reviewing new drugs and biologics that meet
certain criteria. Specifically, new drugs and biologics are eligible for fast track designation if they are intended to treat a serious or life-
threatening condition and preclinical
 
or clinical data
 
demonstrate the potential to
 
address unmet medical needs
 
for the condition.
 
Fast
track designation
 
applies to the
 
combination of the
 
product and
 
the specific indication
 
for which
 
it is
 
being studied. The
 
sponsor can
request the FDA to designate the
 
product for fast track status any
 
time before receiving NDA or BLA
 
approval, but ideally no later than
the pre-NDA or pre-BLA meeting.
Additionally,
 
a
 
drug
 
or
 
biologic
 
may
 
be
 
eligible
 
for
 
designation
 
as
 
a
 
breakthrough
 
therapy
 
if
 
the
 
product
 
is
 
intended,
 
alone
 
or
 
in
combination with one or more other drugs or biologics, to treat a serious or life-threatening condition and
 
preliminary clinical evidence
indicates
 
that
 
the
 
product
 
may
 
demonstrate
 
substantial
 
improvement
 
over
 
currently
 
approved
 
therapies
 
on
 
one
 
or
 
more
 
clinically
significant endpoints.
 
The benefits
 
of breakthrough
 
therapy designation
 
include the
 
same benefits
 
as fast
 
track designation,
 
plus intensive
guidance from the FDA to facilitate an efficient drug development program.
Any product
 
submitted to
 
the FDA for
 
marketing, including under
 
a fast track
 
or breakthrough therapy
 
designation program, may
 
be
eligible for
 
other types
 
of FDA
 
programs intended
 
to expedite
 
development and
 
review, such as
 
priority review
 
and accelerated
 
approval.
Any product is eligible
 
for priority review if
 
it treats a serious or
 
life-threatening condition and, if
 
approved, would provide a
 
significant
improvement
 
in
 
safety
 
and
 
effectiveness
 
compared
 
to
 
available
 
therapies.
 
Priority
 
review
 
reduces
 
the
 
review
 
time
 
for
 
an
 
initial
 
or
supplemental marketing application by four months.
Even if a product qualifies
 
for one or more of
 
these programs, the FDA may
 
later decide that the product
 
no longer meets the conditions
for qualification or
 
decide that the time
 
period for FDA
 
review or approval
 
will not be shortened.
 
Fast track designation,
 
priority review,
and breakthrough therapy designation do not change the standards for approval but may expedite the development or approval process.
Accelerated Approval Pathway
A product may be
 
eligible for accelerated
 
approval if it
 
treats a serious
 
or life-threatening condition
 
and generally provides
 
a meaningful
advantage over available therapies based on 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
 
("IMM") that is
 
reasonably likely to
 
predict an
effect on IMM
 
or other clinical
 
benefit. As a
 
condition of accelerated approval,
 
the FDA requires
 
that a sponsor of
 
a drug or
 
biologic
receiving
 
accelerated
 
approval
 
subsequently
 
provide
 
additional
 
data
 
confirming
 
the
 
anticipated
 
clinical
 
benefit,
 
for
 
example
 
by
performing adequate and well-controlled post-marketing clinical
 
trials. If clinical benefit is not confirmed,
 
accelerated approval may be
revoked.
 
In addition, as part of the Consolidated Appropriations Act for 2023, Congress provided FDA additional statutory authority to mitigate
potential risks
 
to patients
 
from continued
 
marketing of
 
ineffective drugs
 
previously granted
 
accelerated approval.
 
Under these
 
recent
amendments to
 
the FDCA,
 
the agency
 
may require
 
a sponsor
 
of a
 
product granted
 
accelerated approval
 
to have
 
a confirmatory
 
trial
underway prior
 
to approval.
 
The sponsor
 
must also
 
submit progress
 
reports on
 
a confirmatory
 
trial every
 
six months
 
until the
 
trial is
complete, and
 
such reports
 
will be
 
published on
 
FDA’s
 
website. Failure
 
to conduct
 
required post-approval
 
studies, or
 
to confirm
 
the
predicted clinical benefit
 
of the product
 
during post-marketing studies,
 
allows the FDA
 
to withdraw approval
 
of the drug
 
or biologic.
Congress also
 
recently amended
 
the law
 
to give
 
FDA the
 
option of
 
using expedited
 
procedures to
 
withdraw product
 
approval if
 
the
sponsor’s confirmatory trial fails to verify the claimed clinical benefits of the product.
41
Granting of an EUA
The Commissioner
 
of the
 
FDA, under
 
delegated authority from
 
the Secretary of
 
the U.S. Department
 
of Health
 
and Human
 
Services
(“DHHS”)
 
may,
 
under
 
certain
 
circumstances,
 
issue
 
an
 
Emergency
 
Use
 
Authorization,
 
or
 
EUA
 
that
 
would
 
permit
 
the
 
use
 
of
 
an
unapproved drug product or unapproved
 
use of an approved drug product.
 
Before an EUA may be issued,
 
the Secretary must declare an
emergency based on one of the following grounds:
 
a
 
determination
 
by
 
the
 
Secretary
 
of
 
the
 
Department
 
of
 
Homeland
 
Security
 
that
 
there
 
is
 
a
 
domestic
 
emergency,
 
or
 
a
significant potential for a domestic
 
emergency, involving a heightened risk of attack with
 
a specified biological, chemical,
radiological or nuclear agent or agents;
 
a determination by the
 
Secretary of the Department
 
of Defense that there
 
is a military emergency, or a significant
 
potential
for a military
 
emergency, involving a heightened
 
risk to U.S.
 
military forces
 
of attack with
 
a specified
 
biological, chemical,
radiological or nuclear agent or agents; or
 
a determination by the Secretary of the DHHS that a
 
public health emergency that affects, or has
 
the significant potential
to affect, national security and that involves a
 
specified biological, chemical, radiological or nuclear agent or agents, or
 
a
specified disease or condition that may be attributable to such agent or agents.
In order to be the subject of an EUA, the FDA Commissioner must conclude that, based on the totality of scientific evidence available,
it is
 
reasonable to
 
believe that
 
the product
 
may be
 
effective in
 
diagnosing, treating
 
or preventing
 
a disease
 
attributable to
 
the agents
described above, that the
 
product’s potential
 
benefits outweigh its potential
 
risks and that
 
there is no adequate
 
approved alternative to
the product.
Although an EUA cannot
 
be issued until after
 
an emergency has been
 
declared by the Secretary
 
of DHHS, the FDA
 
strongly encourages
an entity with a
 
possible candidate product,
 
particularly one at an
 
advanced stage of
 
development, to contact the
 
FDA center responsible
for the candidate
 
product before a determination
 
of actual or potential
 
emergency. Such an entity may submit
 
a request for consideration
that includes data to
 
demonstrate that, based on
 
the totality of scientific
 
evidence available, it is
 
reasonable to believe that
 
the product
may be
 
effective
 
in diagnosing,
 
treating or
 
preventing the
 
serious or
 
life-threatening disease
 
or condition.
 
This is
 
called a
 
pre-EUA
submission and
 
its purpose
 
is to
 
allow FDA
 
review considering
 
that during
 
an emergency,
 
the time
 
available for
 
the submission
 
and
review of an EUA request may be severely limited.
Post-Approval Requirements
Any drug or
 
biological products for
 
which we or
 
our collaborators receive
 
FDA approvals are
 
subject to continuing
 
regulation by the
FDA, including,
 
among other
 
things, record-keeping
 
requirements, reporting
 
of adverse
 
experiences with
 
the product,
 
providing the
FDA with updated safety and efficacy
 
information, product sampling and distribution requirements, complying with
 
certain electronic
records and
 
signature requirements
 
and complying
 
with FDA
 
promotion and
 
advertising requirements, which
 
include, among
 
others,
standards for
 
direct-to-consumer advertising,
 
promoting drugs
 
for uses
 
or in
 
patient populations
 
that are
 
not described
 
in the
 
drug’s
approved
 
labeling
 
(known
 
as
 
“off-label
 
use”),
 
industry-sponsored
 
scientific
 
and
 
educational
 
activities,
 
and
 
promotional
 
activities
involving the internet.
Failure to comply
 
with FDA requirements
 
can have negative
 
consequences, including adverse
 
publicity,
 
enforcement letters from
 
the
FDA,
 
mandated
 
corrective
 
advertising
 
or
 
communications
 
with
 
doctors,
 
and
 
civil
 
or
 
criminal
 
penalties.
 
Although
 
physicians
 
may
prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses.
Manufacturers of
 
our product
 
candidates are
 
required to
 
comply with
 
applicable FDA
 
manufacturing requirements
 
contained in
 
the
FDA’s
 
cGMP
 
regulations.
 
cGMP
 
regulations
 
require,
 
among
 
other
 
things,
 
quality
 
control
 
and
 
quality
 
assurance
 
as
 
well
 
as
 
the
corresponding maintenance of records and documentation. Following approval, the FDA continues
 
to monitor vaccine quality through
real-time monitoring of lots by requiring manufacturers to submit certain information for each vaccine lot. Vaccine manufacturers may
only distribute a lot following release by the
 
FDA. Drug manufacturers and other entities involved in
 
the manufacture and distribution
of
 
approved drugs
 
are required
 
to register
 
their establishments
 
with the
 
FDA and
 
certain state
 
agencies, and
 
are subject
 
to periodic
unannounced inspections by the
 
FDA and certain state
 
agencies for compliance with
 
cGMP and other laws.
 
Accordingly, manufacturers
must continue to expend time, money and effort
 
in the area of production and quality
 
control to maintain cGMP compliance. Discovery
of problems with a product after approval may result in restrictions on a product, manufacturer or holder
 
of an approved NDA or BLA,
including withdrawal of
 
the product
 
from the
 
market. In
 
addition, changes
 
to the
 
manufacturing process generally
 
require prior
 
FDA
approval before being implemented, and other types of changes to the approved product, such as adding new indications and additional
labeling claims, are also subject to further FDA review and approval.
42
U.S. Patent-term Extension
Depending upon the timing,
 
duration and specifics
 
of FDA approval of
 
our product candidates,
 
some of our U.S.
 
patents may be eligible
for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as
the Hatch-Waxman
 
Amendments to
 
the FDCA.
 
The Hatch-Waxman
 
Amendments permit
 
extension of
 
the patent
 
term of
 
up to
 
five
years as
 
compensation for
 
patent term
 
lost during
 
product development
 
and FDA
 
regulatory review
 
process. Patent-term
 
extension,
however, cannot
 
extend the
 
remaining term
 
of a
 
patent beyond
 
a total
 
of 14
 
years from
 
the product’s
 
approval date.
 
The patent-term
extension period is generally one-half
 
the time between the effective
 
date of an IND and
 
the submission date of an
 
NDA or BLA plus
the time between the submission date of an NDA or BLA and the approval of that application, except that the review period is reduced
by any time during which
 
the applicant failed to exercise
 
due diligence. Only one patent
 
applicable to an approved drug
 
is eligible for
the extension
 
and the
 
application for
 
the extension
 
must be
 
submitted prior
 
to the
 
expiration of
 
the patent.
 
The U.S.
 
Patent and
 
Trademark
Office, or USPTO, in consultation with the FDA,
 
reviews and approves the application for any patent term extension or
 
restoration. In
the future, we may
 
apply for extension of
 
patent term for our
 
currently owned or licensed
 
patents to add patent
 
life beyond its current
expiration date, depending
 
on the expected
 
length of the
 
clinical trials and
 
other factors involved
 
in the filing
 
of the relevant
 
NDA or
BLA.
 
 
U.S. Foreign Corrupt Practices Act
 
In general, the Foreign Corrupt Practices Act of 1977, as amended,
 
or the FCPA, prohibits offering to pay,
 
paying, promising to pay, or
authorizing the
 
payment of
 
money or
 
anything of
 
value to
 
a foreign
 
official in
 
order to
 
influence any
 
act or
 
decision of
 
the foreign
official in his
 
or her official
 
capacity or to secure
 
any other improper advantage
 
in order to obtain
 
or retain business for
 
or with, or
 
in
order to direct business to, any person. The prohibitions apply
 
not only to payments made to “any foreign official,” but also those made
to “any foreign political party
 
or official thereof,” to “any candidate
 
for foreign political office” or to
 
any person, while knowing that
 
all
or a portion of the payment
 
will be offered, given, or
 
promised to anyone in any of
 
the foregoing categories. “Foreign officials” under
the FCPA include officers
 
or employees
 
of a
 
department, agency, or instrumentality
 
of a
 
foreign government.
 
The term
 
“instrumentality”
is broad and can include state-owned or state-controlled entities.
 
Importantly, United States authorities that enforce the FCPA, including the Department of Justice, deem most health care professionals
and other employees of foreign
 
hospitals, clinics, research facilities and
 
medical schools in countries with
 
public health care or
 
public
education systems to be “foreign officials” under the FCPA. When we interact with foreign health care professionals and researchers in
testing and marketing our products abroad, we must have policies and procedures in place sufficient to prevent us and agents acting on
our behalf
 
from providing
 
any bribe,
 
gift or
 
gratuity,
 
including excessive
 
or lavish
 
meals, travel
 
or entertainment
 
in connection
 
with
marketing our future products and services or securing required permits
 
and approvals such as those needed to initiate
 
clinical trials in
foreign jurisdictions.
 
The FCPA
 
also obligates
 
companies whose
 
securities are
 
listed in
 
the United
 
States to
 
comply with
 
accounting
provisions requiring the maintenance
 
of books and records
 
that accurately and fairly
 
reflect all transactions of
 
the corporation, including
international subsidiaries, and the development and
 
maintenance of an adequate system of internal
 
accounting controls for international
operations. The Securities and Exchange Commission is involved with the books and records provisions of the FCPA.
Regulation in Europe and Other Regions
In addition
 
to regulations
 
in the
 
United States,
 
we and
 
our collaborators
 
are subject
 
to a
 
variety of
 
regulations in
 
other jurisdictions
governing, among other things, clinical trials and any commercial sales and distribution of our products.
Whether or
 
not we
 
or our
 
collaborators obtain
 
FDA approval
 
for a
 
product, we
 
must obtain
 
the requisite
 
approvals from
 
regulatory
authorities in
 
foreign countries
 
prior to
 
the commencement
 
of
 
clinical trials
 
or marketing
 
of
 
the product
 
in those
 
countries. Certain
countries outside
 
of the
 
United States
 
have a
 
similar process
 
that requires
 
the submission
 
of a
 
clinical trial
 
application much
 
like the
IND
 
prior
 
to
 
the
 
commencement
 
of
 
human
 
clinical
 
trials.
 
In
 
the
 
European
 
Union,
 
for
 
example,
 
a
 
CTA
 
must
 
be
 
submitted
 
to
 
each
country’s national
 
health authority and
 
an independent ethics committee,
 
much like the
 
FDA and IRB,
 
respectively. Once
 
the CTA
 
is
approved in accordance with a country’s requirements, clinical trial development may proceed.
The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country
to country.
 
In all cases,
 
the clinical trials
 
are conducted in
 
accordance with GCPs
 
and the
 
applicable regulatory requirements
 
and the
ethical principles on human subjects research that have their origin in the Declaration of Helsinki.
To
 
obtain regulatory
 
approval of
 
an investigational
 
drug or
 
biological product
 
under European
 
Union regulatory
 
systems, we
 
or our
strategic partners must submit a marketing authorization application.
 
The application in the European Union is
 
similar to that required
in the United States, with the exception of, among other things, country-specific document requirements.
For other countries
 
outside of the
 
European Union, such
 
as countries in
 
Asia, Europe and
 
Latin America, the
 
requirements governing
the conduct of clinical trials, product licensing,
 
pricing and reimbursement vary from country
 
to country. In all cases, again, the clinical
trials are conducted in
 
accordance with GCPs and
 
the applicable regulatory requirements
 
and the ethical principles
 
that have their origin
in the Declaration of Helsinki.
43
Employees and Human Capital Resources
As of December 31, 2023, we employed 57 full-time
 
employees and 8 part-time employees. Of these 57
 
full-time employees, 54 were
located in the
 
United States, 2
 
were located in
 
Ireland and 1
 
was located in
 
the UK.
 
As of March
 
1, 2024, we
 
employed 50 full-time
employees and 9 part-time employees. Of these 50 full-time employees, 47 were located in the United States, 2 were located in Ireland
and 1 was located in
 
the UK.
 
None of our employees are
 
represented by a labor union
 
or are party to a
 
collective bargaining agreement,
and we have had no labor-related work stoppages.
 
Compensation, Benefits, Recruitment and Retention Strategy
We aim to focus on attracting,
 
motivating and retaining
 
talented employees with
 
relevant experience who
 
can contribute to
 
the sustained
performance of the Company and its day-to-day operations.
We believe our total compensation package helps recruit
 
and retain our employees.
 
We strive to provide compensation and benefits that
are competitive to market
 
and create incentives
 
to attract and retain
 
employees. Our compensation
 
package includes market-competitive
pay,
 
broad-based stock
 
grants, health
 
care and
 
401(k) plan
 
benefits, paid
 
time off
 
and family
 
leave, among
 
others. We
 
also provide
annual incentive bonus opportunities that are
 
tied to both company performance
 
as well as individual performance
 
to foster a pay-for-
performance culture.
Scientific Advisory Board
We have assembled a highly qualified scientific
 
advisory board composed of advisors
 
who have deep expertise
 
in the fields of biologics
and vaccine development, as well as in the relevant therapeutic areas for our product candidates.
Immunology & Vaccinology
Thomas P.
 
Monath, M.D.
Wayne Koff, Ph.D.
Stanley A. Plotkin, M.D.
Neurology
Brad Boeve, M.D.
Richard Mohs, Ph.D.
Jeffrey Cummings, M.D.
Eric Reiman, M.D.
Nick Fox, M.D.
Stephen D. Silberstein, M.D.
Cardiovascular
Kausik K. Ray, M.D.
Stephen Nicholls, Ph.D.
Frederick Raal, Ph.D.
Dirk von Lewinski, M.D.
Parviz Ghahramani, Ph.D.
 
 
44
Item 1A. Risk Factors.
Investing in our Class A common stock involves a high degree of risk.
 
The following information sets forth risk factors that could
cause our actual results to differ materially from those contained in forward-looking statements we have made in this Annual Report
on Form 10-K and those we may make from time to time. You should carefully consider the risks described below, in addition to the
other information contained in this Report and our other public filings, before you decide to purchase shares of our Class A common
stock. Our business, financial condition or results of operations could be harmed by any of these risks. The risks and uncertainties
described below are not the only ones we face. Additional risks not presently known to us or other factors not perceived by us to
present significant risks to our business at this time also may impair our business operations.
 
Summary Risk Factors
Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may
adversely affect our business, financial condition, results of operations and prospects. These risks are discussed more fully under Part
II, Item 1A. “Risk Factors.” The following is a summary of some of the principal risks we face:
 
 
clinical drug development involves a lengthy and expensive process, and if our pre-clinical development or clinical trials
are prolonged or delayed or do not achieve expected results, we may be unable to commercialize our product candidates;
 
 
we depend on intellectual property licensed from UBI and its affiliates, the termination of which could result in the loss
of significant rights;
 
 
even if we obtain regulatory approval of, or commercialize, any of our product candidates in one or more jurisdictions,
we may never obtain approval for, or commercialize,
 
our product candidates in other jurisdictions;
 
 
after receipt of regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny and
post-marketing requirements, which may include burdensome post-approval trial or risk management requirements that
may adversely impact the financial results of any future commercialization efforts or cause us to choose not to
commercialize the product candidate;
 
 
if we are able to commercialize any product candidate, the successful commercialization of such product candidate will
depend on the extent governmental authorities, private health insurers and other third-party payors provide coverage,
adequate reimbursement levels and favorable pricing policies;
 
 
the manufacture of peptide-based medicines is complex and manufacturers often encounter difficulties in production;
 
 
we have no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects
for our future viability;
 
 
the regulatory landscape that will govern our product candidates is uncertain, and changes in regulatory requirements
could result in delays or discontinuation of development of our product candidates or unexpected costs;
 
 
developments by competitors may render our products or technologies obsolete or non-competitive or may reduce the
size of our markets;
 
 
our capital resources may not be sufficient to successfully complete the development and commercialization of our
product candidates, which could delay, limit, reduce or terminate our development or commercialization efforts;
 
 
we have incurred significant losses since our inception, we expect to incur losses for the foreseeable future and may
never achieve or maintain profitability and there exists substantial doubt as to our ability to continue as a going
 
concern
over the next twelve months;
 
 
conflicts of interest and disputes exist and may further arise between us and UBI and its affiliates, and these conflicts and
disputes might ultimately be resolved in a manner unfavorable to us;
 
we will need to expand our organization, and we may experience difficulties in managing this growth, which could
disrupt our operations;
 
 
while our Class A common stock is expected to continue listing on The Nasdaq Global Market, there is no guarantee as
to how long such listing will be maintained;
45
 
the dual-class structure of our common stock and the Voting Agreement (as defined below) will have the effect of
concentrating voting power, which will significantly limit your ability to influence significant corporate decisions;
 
 
we rely on contract manufacturers for the manufacture of raw materials for our research programs, pre-clinical studies
and clinical trials and we do not have long-term contracts with many of these parties, which could impact our ability to
develop and commercialize our products;
 
 
undetected errors or defects in our production could harm our reputation or expose us to product liability claims;
 
 
we rely on in-licensed intellectual property and technology, and the loss of such rights, our licensors’ inability or refusal
to enforce or defend such rights, and any requirement to pay amounts under current or future agreements could harm our
business;
 
 
the degree of protection afforded by our intellectual property rights is uncertain because such rights offer only limited
protection and may not adequately protect our rights or permit us to gain or keep a competitive advantage;
 
 
we have previously identified and remediated material weaknesses, in our internal control over financial reporting and if
we are unable to maintain an effective system of internal control over financial reporting, or if we discover material
deficiencies in the future, we may not be able to accurately report our financial results or prevent fraud, and as a result,
shareholders could lose confidence in our financial and other public reporting, which would harm our business and the
trading price of our Class A common stock;
 
 
cyberattacks or other failures in our or our third-party vendors’, contractors’ or consultants’ telecommunications or
information technology systems could result in information theft, compromise, or other unauthorized access, data
corruption and significant disruption of our business operations, and could harm our reputation and subject us to liability,
lawsuits and actions from governmental authorities; and
 
 
we are subject to privacy, tax, anti-corruption and other stringent laws, regulations, policies and contractual obligations
across multiple jurisdictions and changes in, or our failure to comply with, such laws, regulations, policies and
contractual obligations could adversely affect our business, financial condition, results of operations and prospects.
Risks Related to the Discovery and Development of Product Candidates
 
Clinical drug development involves a lengthy and expensive process with uncertain timelines and uncertain outcomes,
 
and results
of earlier studies and trials may not be predictive of future results. If our pre-clinical development or clinical trials are prolonged
or delayed, or if we do not or cannot achieve the results we expect, we may be unable to obtain required regulatory approvals, and
therefore be unable to commercialize our product candidates on a timely basis or at all.
Our business is dependent on the successful development, regulatory approval and commercialization of product candidates based on
our AIM Platform. If we and our collaborators are unable to obtain approval for and effectively commercialize our product candidates,
our business would be significantly harmed. Even if we complete the necessary pre-clinical studies and clinical trials, the regulatory
approval process is expensive, time-consuming and uncertain, and we may not be able to obtain approvals for the commercialization
of any product candidates we may develop. Changes in regulatory approval policies, changes in or the enactment of additional statutes
or regulations, or changes in regulatory review processes, may cause delays in the approval of a particular product candidate or
rejection of an application for a particular product candidate. We have not obtained regulatory approval for any product candidate to
date, and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the
 
future
will ever obtain regulatory approval. Any regulatory approval we ultimately obtain may be limited or subject to restrictions, including
labeling requirements, or post-approval commitments that render the approved product not commercially viable.
 
See “—Even if we
obtain approval of any of our product candidates in one or more jurisdictions, we may never obtain approval for or commercialize any
of our products in other jurisdictions, which would limit our ability to realize the full market potential of our product
 
candidates.”
 
46
To obtain the requisite regulatory approvals to market and sell any of our product candidates, we must demonstrate through extensive
pre-clinical studies and clinical trials that our products are safe and effective in humans. 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 pre-clinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage
clinical trials and results from post-hoc data analysis may not be predictive of final results and may not support product approval.
Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy characteristics despite having
progressed through pre-clinical studies and initial clinical trials. For example, an EUA for UB-612 was denied by the TFDA in August
2021 because the neutralizing antibody response generated by UB-612, as compared to a designated adenovirus vectored vaccine, did
not meet the TFDA’s
 
specified evaluation criteria.
 
If results from our clinical trials differ from previous reports or market
expectations, such as a potential development of market expectations that COVID-19 boosters or vaccines be developed specifically to
address certain variants which we fail to satisfy, or if we fail to obtain a required regulatory approval, the price of our Class A
common stock could decrease substantially. Several companies in the biopharmaceutical industry have suffered significant setbacks in
advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Our
ongoing and future clinical trials may not be successful.
Further, while we have conducted limited head-to-head comparisons in pre-clinical studies of UB-313 and VXX-401, we have not
conducted a head-to-head comparison of any competing products to any of our chronic disease product candidates in any clinical
 
trial
to date. We have compared the published data for certain of our competitors’ products to the clinical trial results of certain of our
product candidates. Accordingly, the value of comparisons of our product candidates to any alternative products in this report may be
limited because they are not derived from a head-to-head clinical trial, rather they are from trials that were conducted under different
protocols, at different sites, with different patient populations, at different times and results were analyzed using non-standardized
assays performed internally or by different clinical research organizations (“CROs”). Without head-to-head data, we will be unable to
make comparative claims for our product candidates, if any such product candidate is approved. Future clinical trials may not confirm
the comparisons or analyses we have made to date.
Clinical trials must be conducted in accordance with applicable regulatory authorities’ legal requirements, regulations or guidelines
and are subject to oversight by these governmental agencies as well as Institutional Review Boards (“IRBs”) at the medical
institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with supplies of our product
candidates produced in accordance with current good manufacturing practices (“cGMP”) and other legal and regulatory requirements.
Defects in manufacturing of a clinical trial batch or a failure of a batch to meet all quality control test specifications could result in
delays to initiation of our clinical trials. We depend on medical institutions and CROs to conduct our clinical trials in compliance with
good clinical practice (“GCP”), and other applicable laws and regulations. Failure to follow and document adherence to such
 
laws and
regulations may lead to significant delays in the availability of product for our clinical trials, result in the termination of or a clinical
hold being placed on one or more of our clinical trials, or delay or prevent submission or approval of marketing applications for our
product candidates.
To the extent our CROs fail to enroll participants for our clinical trials, fail to conduct the trial in accordance with the trial protocol
GCP or are delayed for a significant time in the execution of trials, including achieving full enrollment, we may be affected by
increased costs, program delays or both, which may harm our business and delay our ability to seek approval for our product
candidates. For example, due in part to an error by the CRO responsible for administering blinded placebo and active doses to trial
subjects, which reduced the confidence of subsequently collected data, we decided to discontinue a Phase 2a LTE trial for UB-311.
 
In
that case, however, we determined that we had collected sufficient data on UB-311’s
 
tolerability and immunogenicity.
 
The completion of clinical trials for our clinical product candidates may be delayed, suspended or terminated because of many factors,
including but not limited to:
 
the delay or refusal of regulators or IRBs to authorize us to commence a clinical trial at a prospective trial site;
 
changes in regulatory requirements, policies and guidelines;
 
delays or failure to reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of
which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
 
delays in patient enrollment and variability in the number and types of patients available for clinical trials;
 
negative or inconclusive results, which may require us to conduct additional pre-clinical or clinical trials or to abandon
product candidates that we expect to be promising;
 
delays in manufacturing and control of clinical trial materials;
 
shortages of materials required for the production of our product candidates;
47
 
disruptions from events surrounding the ongoing conflicts between Russia and Ukraine or Israel and Hamas and
increased tension between Taiwan and China;
 
safety or tolerability concerns causing us to suspend or terminate a trial if it is determined that the participants are being
exposed to unacceptable health risks;
 
lower than anticipated retention rates of patients and volunteers in clinical trials and difficulty in maintaining contact
with patients after treatment, resulting in incomplete data;
 
failure of us, our CROs or clinical trial sites to comply with regulatory requirements;
 
failure of our CROs or clinical trial sites to meet their contractual obligations to us in a timely manner, or at all, deviating
from the clinical trial protocol or dropping out of a trial;
 
delays relating to adding new clinical trial sites;
 
delays in establishing necessary pre-clinical or clinical data;
 
the occurrence of unexpected severe or serious product-related adverse events in a clinical trial;
 
the quality or stability of the product candidate falling below acceptable standards;
 
the inability to produce or obtain sufficient quantities of the product candidate to complete clinical trials on time, or
delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials;
 
supply chain constraints and inflationary pressures;
 
the lack of adequate funding to continue the clinical trial;
 
developments observed in trials conducted by competitors for related technology that raises general concerns from
regulatory authorities about risk to patients of similar vaccine technology;
 
the determination that a product candidate will not be producible in relevant quantities at the manufacturing stage;
 
the failure of regulatory authorities such as the FDA, MHRA or TGA to approve our manufacturing processes or
facilities or those of contract manufacturers with which we contract for clinical and commercial supplies; and
 
the transfer of manufacturing processes to larger-scale facilities operated by contract manufacturers or by us, and delays
or failure by our contract manufacturers or us to make any necessary changes to such manufacturing process.
In addition, pre-clinical and clinical data are often susceptible to varying interpretations and analyses and results from post-hoc data
analysis may not be predictive of final results and may not support product approval. Many companies that believed their product
candidates performed satisfactorily in pre-clinical studies and clinical trials have nonetheless failed to obtain marketing approval
 
for
their product candidates. Regulatory authorities have substantial discretion in the approval process and in determining when or
whether regulatory approval will be obtained for any of our product candidates. Additionally, the FDA typically does not accept post-
hoc data analyses as support for regulatory approval. Even if we believe the data collected from clinical trials of our product
candidates are promising, such data may not be sufficient to support approval by regulatory authorities. Regulatory authorities may
disagree with the design or implementation of our clinical trials and may disagree with our interpretation of data from pre-clinical
studies or clinical trials.
In some instances, there can be significant variability in safety or efficacy results between different trials of the same product
candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the
patient populations, adherence to the dosing regimen and other trial procedures and the rate of dropout among clinical trial
participants. Further, none of our trials to date of UB-311 have been large enough to determine whether their assessments of efficacy
were statistically significant. Therefore, we are able to report potential trends on such measures, but we will not be able to make more
definitive statements about the efficacy of our product candidates until we complete clinical trials that are adequately powered to
demonstrate statistical significance of clinically meaningful results.
48
Moreover, for AD, given the difficulties in assessing whether a product candidate is disease-modifying in terms of interrupting disease
pathology and delaying cognitive decline, we plan to include in our trial designs for UB-311 biomarker endpoints and, if our trial
results warrant, may apply for regulatory approval based on biomarker data. While the FDA recently approved aducanumab based on
biomarker data, there is no assurance that the FDA will accept biomarker data for other product candidates, including UB-311, in the
future.
 
Even if we obtain approval of any of our product candidates in one or more jurisdictions, we may never obtain approval for or
commercialize any of our products in other jurisdictions, which would limit our ability to realize the full market potential of our
product candidates.
To market any products, we must establish and comply with numerous and varying regulatory requirements in different countries
regarding safety and efficacy and obtain relevant approvals to market our product candidates. As discussed in another risk factor
above (“
Clinical drug development involves a lengthy and expensive process…
”) an EUA for UB-612 was denied by the TFDA in
August 2021. Approval by a foreign regulatory authority in any other jurisdiction does not ensure approval by comparable regulatory
authorities in other countries or jurisdictions, including approval by the FDA in the United States. The failure to obtain approval in
one jurisdiction may delay or otherwise negatively impact our ability to obtain approval elsewhere. In addition, clinical trials
conducted in one country may not be accepted by regulatory authorities in other countries. Approval procedures vary among countries
and even if we have obtained approval in one country, approval in other countries can involve additional product testing and
validation and additional administrative review periods.
Seeking regulatory approvals in different countries could result in additional and unexpected costs for us, including as a result of
additional required pre-clinical studies or clinical trials which would be costly and time-consuming. Satisfying regulatory
requirements is costly, time-consuming, uncertain and may be subject to unanticipated delays. In addition, our failure to obtain
regulatory approval in any country may delay or have negative effects on the process for regulatory approval in other countries.
 
Interim, “top-line” and preliminary data from our clinical trials that we announce or publish from time to time may change as
more patient data become available and are also subject to audit and verification procedures that could result in material changes
in the final data.
From time to time, we may publicly disclose preliminary or top-line data from our pre-clinical studies and clinical trials, which are
based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change
following a more comprehensive review of the data related to the particular study or trial. We also may make assumptions,
estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully
and carefully evaluate all data. As a result, the top-line or preliminary results that we report may differ from future results of the same
studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully
evaluated. Top-line data also remain subject to audit and verification procedures that may result in the final data being materially
different from the preliminary data we previously published. As a result, top-line data should be viewed with caution until the final
data are available.
From time to time, we may also disclose interim data from our pre-clinical studies and clinical trials. Interim data from clinical trials
that we may complete are subject to the risk that one or more of the clinical outcomes may materially change
 
as patient enrollment
continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease.
Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. Further,
disclosure of interim data by us or by our competitors could result in volatility in the price of our Class A common stock.
Further, others, including regulatory authorities, may not accept or agree with our assumptions, estimates, calculations, conclusions or
analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the
approvability or commercialization of the particular product candidate or product and the Company in general. In addition, the
information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive
information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in
our disclosure.
49
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed and result
in increased costs and longer development periods or otherwise be adversely affected.
We will be required to identify and enroll a sufficient number of patients for our planned clinical trials. Trial participant enrollment
could be limited in future trials given that many potential participants may be ineligible because of pre-existing conditions, medical
treatments or other reasons. For example, the next phase of our UB-311 development could be affected by worldwide effects resulting
from the ongoing conflicts between Russia and Ukraine or Israel and Hamas, increased tension between Taiwan and China and other
geopolitical factors.
We
may not be able to initiate or continue clinical trials required by applicable regulatory authorities or any of our
other product candidates that we pursue if we are unable to locate and enroll enough eligible patients or volunteers to participate in
these clinical trials. Patient enrollment is affected by other factors, as well, including the incidence and severity of the disease under
investigation; the design of the clinical trial protocol; the size and nature of the patient population; the eligibility criteria for the trial in
question; the perceived risks and benefits of the product candidate under trial; the perceived safety and tolerability of the product
candidate; the proximity and availability of clinical trial sites for prospective patients; the availability of competing therapies and
clinical trials; effects of the COVID-19 pandemic on our clinical trial sites; our ability to monitor patients adequately during and after
treatment; patient referral practices of physicians; clinicians’ and patients’ perceptions as to the potential advantages
 
of the drug being
studied in relation to other available therapies, including standard-of-care and any new drugs that may be approved for the indications
we are investigating; and efforts to facilitate timely enrollment in clinical trials.
We also may encounter difficulties in identifying and enrolling such patients with a stage of disease appropriate for our ongoing or
future clinical trials. In addition, the process of finding and diagnosing patients may prove costly. Our inability to enroll a sufficient
number of patients for any of our clinical trials would result in significant delays or may require us to abandon one or more clinical
trials.
Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny and post-
marketing requirements.
Any regulatory approvals that we may receive for our product candidates will require the submission of reports to regulatory
authorities and ongoing surveillance to monitor the safety and efficacy of the product candidate, may contain significant limitations
related to use restrictions for specified age groups, warnings, precautions or contraindications, and may include burdensome post-
approval study or risk management requirements. For example, the FDA may require a Risk Evaluation and Mitigation Strategy
(“REMS”) to approve our product candidates, which could entail requirements for a medication guide, physician training
 
and
communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk
minimization tools. In addition, if one of our product candidates is approved in the United States or abroad, it will be subject to
ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping,
conduct of post-marketing studies and submission of safety, efficacy and other post- market information. Manufacturers and
manufacturers’ facilities are required to comply with extensive requirements by regulatory authorities, including ensuring that
 
quality
control and manufacturing procedures conform to cGMP regulations. As such, we and our contract manufacturers will be subject to
continual review and inspections to assess compliance with cGMP and adherence to commitments made in any approved marketing
application. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory
compliance, including manufacturing, production and quality control.
If a regulatory authority such as the FDA discovers previously unknown problems with a product, such as adverse events of
unanticipated severity or frequency, or problems with product quality or the facility where the product is manufactured, or disagrees
with the promotion, marketing or labeling of a product, such regulatory authorities may impose restrictions on that product or us,
including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory requirements, a
regulatory authority or enforcement authority may, among other things: issue warning letters; impose civil or criminal penalties;
suspend or withdraw regulatory approval; suspend any of our clinical trials; refuse to approve pending applications or supplements to
approved applications submitted by us; impose restrictions on our operations, including closing our contract manufacturers’ facilities;
or seize or detain products, or require a product recall.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and
could generate negative publicity. Any failure to comply with ongoing regulatory requirements may adversely affect our ability to
commercialize and generate revenue from our products. If regulatory sanctions are applied or if regulatory approval is withdrawn, our
business will be seriously harmed. Further, if a regulatory authority identifies previously unknown problems with our platform, any or
all of our product candidates may also be affected.
Furthermore, the burden of these requirements may outweigh any benefit or revenue that we could generate from product sales. Even
if we obtain regulatory approval for a product candidate, compliance with the many post-approval regulations may be so costly that it
becomes financially prudent to abandon the product or sell ownership of the underlying intellectual property at prices that are not
sufficient to recoup our investment in developing the product.
 
50
Moreover, the policies of regulatory authorities may change, and additional government regulations may be enacted that could
prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government
regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. If we are
slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to
maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve
 
or sustain
profitability.
We have no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for our
future viability.
We commenced operations through UNS and COVAXX
 
in 2014 and 2020, respectively, and as Vaxxinity
 
in March 2021. Our
operations to date have been limited to organizing and staffing Vaxxinity,
 
business planning, raising capital, developing our AIM
Platform, identifying and testing potential product candidates and conducting clinical trials. We have a limited track record of
successfully conducting late-stage clinical trials, obtaining marketing approvals, manufacturing a commercial-scale product
 
or
arranging for a third-party to do so on our behalf, or conducting sales and marketing activities necessary for successful product
commercialization. Accordingly, you should consider our prospects considering the costs, uncertainties, delays and difficulties
frequently encountered by companies in the early stages of development, especially clinical-stage biopharmaceutical companies such
as ours. Any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer
operating history or a history of successfully developing and commercializing pharmaceutical products.
We may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving our
business objectives. We will eventually need to transition from a company with a development focus to a company capable of
supporting commercial activities. We may not be successful in such a transition.
We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year
due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly
or annual periods as indications of future operating performance.
Our product candidates may cause undesirable side effects that could delay or prevent their regulatory approval, limit the
commercial profile of an approved label or result in significant negative consequences following regulatory approval, if any.
Undesirable side effects that may be caused by our product candidates could cause us, our collaboration partners or the regulatory
authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of approval by
regulatory authorities. Results of our trials could reveal a high and unacceptable severity and prevalence of side effects. In such an
event, our trials could be suspended or terminated and regulatory authorities could order us to cease further development of or deny
approval of our product candidates for any or all targeted indications. The product-related side effects could affect patient recruitment
or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may
harm our business, financial condition, results of operations and prospects significantly.
Clinical trials assess a sample of the potential patient population. With a limited number of patients and duration of exposure, rare and
severe side effects of our product candidates may only be uncovered with a significantly larger number of patients exposed to the
product candidate. If our product candidates receive an EUA or regulatory approval and we or others identify undesirable side effects
caused by such product candidates (or any other similar products) after such approval, a number of potentially significant
 
negative
consequences could result, including:
 
regulatory authorities may withdraw or limit their approval of such product candidates and require us to take our
approved product(s) off the market;
 
regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a contraindication,
or submission of field alerts to physicians and pharmacies;
 
we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
 
we may be required to change the way such product candidates are distributed or administered, conduct additional
clinical trials or change the labeling of the product candidates;
 
actual or potential drug-related side effects could negatively affect patient recruitment or the ability of enrolled patients
to complete a trial for our products or product candidates;
 
market acceptance of our products by patients and physicians may be reduced and sales of the product may decrease
significantly;
51
 
regulatory authorities may require a REMS plan to mitigate risks, which could include medication guides, physician
communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other
risk minimization tools;
 
we may be subject to regulatory investigations and government enforcement actions;
 
we may decide or be required to remove such product candidates from the marketplace;
 
we could be sued and potentially held liable for injury caused to individuals exposed to or taking our product candidates;
 
sales of the product(s) may decrease substantially; and
 
our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidates and could
substantially increase the costs of commercializing our product candidates, if approved, and therefore could have a material
 
adverse
effect on our business, financial condition, results of operations and prospects.
The regulatory landscape that will govern our product candidates is uncertain. Regulations that impact
 
our product candidates are
still
developing, and changes in regulatory requirements could result in delays or discontinuation of development of our product
candidates or unexpected costs in obtaining regulatory approval.
The regulatory requirements to which our product candidates will be subject are complex and uncertainties exist. Even with respect to
more established vaccine products, the regulatory landscape is still evolving, especially as it relates to novel adjuvants in vaccines,
such as CpG1, which we use at low concentration in our product candidates.
 
Although regulatory authorities decide whether
individual clinical trial protocols may proceed, the review process and determinations of other reviewing bodies can impede or delay
the initiation of a clinical trial, even if another regulatory authority has reviewed the trial and authorizes
 
its initiation. The FDA, for
example, can place an IND on clinical hold even if other regulatory agencies have provided a favorable review. In addition, adverse
developments in clinical trials involving novel adjuvants in vaccines, such as CpG1, conducted by others may cause regulatory
authorities to change the requirements for approval of any of our product candidates.
Complex regulatory environments exist in other jurisdictions in which we might consider seeking regulatory approvals for our product
candidates, further complicating the regulatory landscape. For example, in the European Union a special committee called the
Committee for Advanced Therapies was established within the European Medicines Authority in accordance with Regulation (EC) No
1394/2007 on advanced-therapy medicinal products (“ATMPs”), to assess the quality,
 
safety and efficacy of ATMPs,
 
and to follow
scientific developments in the field.
These various regulatory review committees and advisory groups and new or revised guidelines that they promulgate from time to
time may lengthen the regulatory review process, require us to perform additional studies or analyses, increase our development costs,
lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates
or lead to significant post-approval limitations or restrictions. We may face even more cumbersome and complex regulations than
those emerging for novel adjuvants. Furthermore, even if our product candidates obtain required regulatory approvals, such approvals
may later be withdrawn because of changes in regulations or the interpretation of regulations by applicable regulatory authorities.
Even if we receive regulatory approval to market any of our product candidates, we will be subject to ongoing obligations and
continued regulatory review, which may materially adversely affect our business, financial condition, results of operations and
prospects. Further, other jurisdictions may consider our product candidates to be new drugs, not biologics or medicinal products, and
require different marketing applications. Even if a regulatory authority approves any of our product candidates, the manufacturing
processes, labeling, packaging, distribution, product sampling, adverse event reporting, storage, advertising, marketing, promotion and
recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include
submissions of safety and other post-marketing information and reports and registration, as well as continued compliance with cGMPs
and GCPs for any clinical trials that we conduct post-approval, all of which may result in significant expense and limit
 
our ability to
commercialize such products. There also are continuing, annual program user fees for any marketed products. In the United States,
biologic manufacturers and their subcontractors are required to register their establishments with the FDA
 
and certain state agencies
and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP, which impose
certain procedural and documentation requirements upon us and our contract manufacturers. Changes to the manufacturing process are
strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA
regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any
contract manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in
production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.
52
Any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses
for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing
testing and surveillance to monitor the safety and efficacy of the product. For example, the FDA has the authority to require a REMS
as part of a BLA or after approval, which may impose further requirements or restrictions on the distribution or use of an approved
product, such as limiting prescribing to certain physicians or medical centers that have undergone specialized training, limiting
treatment to patients who meet certain safe-use criteria and requiring treated patients to enroll in a registry. Later discovery of
previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our contract
manufacturers or manufacturing processes, or failure to comply with regulatory requirements may result in, among other things:
 
restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or
mandatory product recalls;
 
fines, warning letters, untitled letters or holds on clinical trials;
 
refusal by regulatory authorities to approve pending applications or supplements to approved applications, or suspension
or revocation of product approvals;
 
requirements to conduct additional clinical trials, change our product labeling or submit additional applications or
application supplements;
 
product seizure or detention, or refusal to permit the import or export of products;
 
mandated modification of promotional materials and labeling and the issuance of corrective information;
 
consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs;
 
the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing
warnings or other safety information about the product; or
 
injunctions or the imposition of civil or criminal penalties.
In addition, regulatory policies may change or additional government regulations or legislation may be enacted that could prevent,
limit or delay regulatory approval of our product candidates, particularly in countries where elections may result in changes in
government administration. If we fail to comply with existing requirements, are slow or unable to adapt to changes in existing
requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose
any regulatory approval that we may have obtained or face regulatory or enforcement actions, which may materially adversely affect
our business, financial condition, results of operations and prospects.
The FDA strictly regulates the promotional claims that may be made about prescription products in the United States. In
 
particular, a
product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling. If we receive
marketing approval for a product candidate, physicians may nevertheless prescribe it to their patients in a manner that is inconsistent
with the approved label. If we are found to have promoted such off-label uses, we may become subject to significant liability. The
FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is
found to have improperly promoted off-label uses may be subject to significant sanctions. Federal and state government agencies have
levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from
engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions
under which specified promotional conduct is changed or curtailed.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and
could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect
our ability to commercialize our product candidates.
53
A breakthrough therapy designation or fast track designation by the FDA for a product candidate may not lead to a faster
development or regulatory review or approval process, and it would not increase the likelihood that the product
 
candidate will
receive marketing approval.
In 2022 the FDA granted fast track designation to UB-311. We may in the future seek a fast track designation for other of our product
candidates, or a breakthrough therapy designation for any of our product candidates. A breakthrough therapy is defined as a product
candidate that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening
 
disease or
condition, and preliminary clinical evidence indicates that the product candidate may demonstrate substantial improvement over
existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical
development. For product candidates that have been designated as breakthrough therapies, interaction and communication between the
FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of
patients placed in ineffective control regimens. Product candidates designated as breakthrough therapies by the FDA are also eligible
for priority review if supported by clinical data at the time of the submission of the BLA.
Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe that one of our product
candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such
designation. In any event, the receipt of a breakthrough therapy designation for a product candidate may not result in a faster
development process, review or approval compared to product candidates considered for approval under conventional FDA
procedures and it would not assure ultimate approval by the FDA. In addition, even if one or more of our product
 
candidates qualify as
breakthrough therapies, the FDA may later decide that the product candidate no longer meets the conditions for qualification or it may
decide that the time period for FDA review or approval will not be shortened. Further, certain of our product candidates, including
UB-612, are not eligible for breakthrough therapy designation, and we will be unable to take advantage of such designation for such
product candidates.
Fast track designation is designed to facilitate the development and expedite the review of therapies to treat serious conditions
 
and fill
an unmet medical need. Programs with fast track designation may benefit from early and frequent communications with the FDA,
potential priority review and the ability to submit a rolling application for regulatory review. Fast track designation applies to both the
product candidate and the specific indication for which it is being studied. However, even if one or more of our product candidates
qualify for fast track designation, we may not be able to meet the criteria of the fast track designation, or if our clinical trials are
delayed, suspended or terminated, or put on clinical hold due to unexpected adverse events or issues with clinical supply, we will not
receive the benefits associated with the fast track program. Furthermore, fast track designation does not change the standards for
approval. Fast track designation alone does not guarantee qualification for the FDA’s
 
priority review procedures. Fast track
designation also does not guarantee our product candidate will be approved in a timely manner, if at all.
We plan to seek approval of certain product candidates through the use of an accelerated approval pathway.
 
If we are unable to
obtain such approval, we may be required to conduct additional pre-clinical studies or clinical trials beyond those that
 
we
contemplate, which could increase the expense of obtaining, and delay the receipt of, necessary marketing approvals. Even if our
product candidates receive accelerated approval from regulatory authorities, if our confirmatory trials do not verify
 
clinical
benefit, or if we do not comply with rigorous post-marketing requirements, such regulatory authorities may seek
 
to withdraw
accelerated approval.
We are developing certain product candidates for the treatment of serious or life-threatening conditions, including UB-311, and
therefore may decide to seek approval of such product candidates under the FDA’s
 
accelerated approval pathway. A product may be
eligible for accelerated approval if it is designed to treat a serious or life-threatening disease or condition and generally
 
provides a
meaningful advantage over available therapies upon a determination that the product candidate has an effect on a surrogate endpoint
or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. The FDA considers
 
a clinical benefit to be a
positive therapeutic effect that is clinically meaningful in the context of a given disease, such as irreversible morbidity or mortality.
For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image,
physical sign or other measure that is thought to predict clinical benefit but is not itself a measure of clinical benefit. An intermediate
clinical endpoint is a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is
reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit.
The accelerated approval pathway may be used in cases in which the advantage of a new drug over available therapy may not be a
direct therapeutic advantage but is a clinically important improvement from a patient and public health perspective. If granted,
accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval
confirmatory studies to verify and describe the drug’s clinical benefit. If the sponsor fails to conduct such studies in a timely manner,
or if such post- approval studies fail to validate the drug’s predicted clinical benefit, the FDA may withdraw its approval of the drug
on an expedited basis.
54
If we decide to submit a BLA seeking accelerated approval or receive an expedited regulatory designation for our product candidates,
there can be no assurance that such submission or application will be accepted or that any expedited development, review or approval
will be granted on a timely basis, or at all. Failure to obtain accelerated approval or any other form of expedited development,
 
review
or approval for a product candidate would result in a longer time period to commercialization of such product candidate,
 
if any, and
could increase the cost of development of such product candidate, which could harm our competitive position in the marketplace.
 
Because we are developing product candidates for the treatment or prevention of diseases in which there is little
 
clinical experience
using new technologies, there is increased risk that the FDA or other foreign regulatory authorities may not consider the endpoints
of our clinical trials to provide clinically meaningful results and that these results may be difficult to analyze.
As we are developing novel treatments and preventative measures for diseases in which we believe there is limited clinical experience
with new endpoints and methodologies, there is heightened risk that the applicable regulatory authorities may not consider
 
the clinical
trial endpoints to provide clinically meaningful results, and the resulting clinical data and results may be more difficult to analyze. It is
difficult to determine how long it will take, if ever, or how much it will cost to obtain regulatory approvals for our product candidates
in the United States or other jurisdictions, if ever. Further, approvals by one regulatory authority may not be indicative of what other
regulatory authorities may require for approval.
During the regulatory review process, we will need to identify success criteria and endpoints such that regulatory authorities will
 
be
able to determine the clinical efficacy and safety profile of any product candidates we may develop. Because our initial focus is to
identify and develop product candidates to treat or prevent diseases in which there is little clinical experience using new technologies,
there is heightened risk that regulatory authorities may not consider the clinical trial endpoints that we propose to provide clinically
meaningful results. In addition, the resulting clinical data and results may be difficult to analyze.
In the United States, the FDA also weighs the benefits of a product against its risks, and the FDA may view the efficacy results in the
context of safety as not being supportive of regulatory approval. Foreign regulatory authorities may make similar comments with
respect to these endpoints and data. Any product candidate we may develop will be based on a novel technology that makes it difficult
to predict the time and cost of development and of subsequently obtaining regulatory approval.
We and our collaboration partners have conducted and intend to conduct additional clinical trials for selected product candidates
at sites outside the United States, and for any of our product candidates for which we seek approval in the United States, the FDA
may not accept data from trials conducted in such locations or may require additional U.S.-based trials.
We and our collaboration partners have conducted, currently are conducting and intend in the future to conduct, clinical trials outside
the United States, including but not limited to Australia, Belgium, Netherlands, Panama, Philippines and Taiwan.
Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of these data is subject to
certain conditions imposed by the FDA. For example, the clinical trial must be conducted by qualified investigators in
 
accordance
with GCPs, and the FDA must be able to validate the trial data through an on-site inspection, if necessary. Generally, the patient
population for any clinical trial conducted outside of the United States must be representative of the population for which we intend to
seek approval in the United States. There can be no assurance that the FDA will accept data from trials conducted outside
 
of the
United States. If the FDA does not accept the data from any clinical trials that we or our collaboration partners conduct outside the
United States, it would likely result in the need for additional clinical trials, which would be costly and time-consuming and delay or
permanently halt our ability to develop and market these or other product candidates in the United States. In other jurisdictions, there
is a similar risk regarding the acceptability of clinical trial data conducted outside of that jurisdiction.
In addition, there are risks inherent in conducting clinical trials in multiple jurisdictions, inside and outside of the United States,
 
such
as:
 
regulatory and administrative requirements of the jurisdiction where the trial is conducted that could burden or limit our
ability to conduct our clinical trials;
 
foreign exchange fluctuations;
 
manufacturing, customs, shipment and storage requirements;
 
cultural differences in medical practice and clinical research; and
 
the risk that the patient populations in such trials are not considered representative as compared to the patient population
in the target markets where approval is being sought.
55
If any of our product candidates receive EUA or regulatory approval, such products may not achieve broad market acceptance
among government agencies, physicians, patients, the medical community and third-party payors, in which
 
case revenue generated
from their sales would be limited.
The commercial success of our product candidates and our ability to generate revenues from our products will depend upon their
acceptance among government agencies, physicians, patients, the medical community, and third-party payors. The degree of market
acceptance of our product candidates will depend on a number of factors, including:
 
limitations or warnings contained in the approved labeling for a product candidate and any other product insert
requirements of regulatory authorities;
 
changes in the standard of care for the targeted indications for any of our product candidates;
 
limitations in the approved clinical indications for our product candidates;
 
demonstrated clinical safety and efficacy compared to other products;
 
the impact of disease variants, such as the Delta or Omicron variant of SARS-CoV-2, on the efficacy and marketability
of our product candidates targeting such diseases;
 
presence of significant adverse side effects, and the prevalence and severity of any side effects;
 
sales, marketing and distribution support;
 
availability of coverage and extent of reimbursement from managed care plans and other third-party payors;
 
timing of market introduction and perceived effectiveness of our products as well as competitive products;
 
continued projected growth of the markets in which our products compete;
 
the degree of cost-effectiveness of our product candidates;
 
the impact of past product price increases and limitations on future price increases for our products;
 
availability of alternative therapies;
 
whether the product is designated under physician treatment guidelines as a first-line therapy or as a second or third-line
therapy for particular diseases;
 
whether the product can be used effectively with other therapies to achieve higher response rates;
 
adverse publicity about our product candidates or favorable publicity about competitive products;
 
if and when we are able to obtain regulatory approvals for indications for our products;
 
our ability to establish and maintain a continuous supply of our products for commercial sale;
 
potential or perceived advantages or disadvantages of our products over alternative treatments;
 
convenience and ease of administration of our products; and
 
the effect of current and future healthcare laws.
If any of our product candidates are approved, but do not achieve an adequate level of acceptance by government agencies
 
as well as
physicians, patients and the medical community, we may not generate sufficient revenue from these products, and we may not become
or remain profitable. We also expect competition from existing approved and market accepted products, such as the Moderna and
Pfizer-BioNTech vaccines, to impact our ability to generate revenues. In addition, efforts to educate the medical community and third-
party payors on the benefits of our product candidates may require significant resources and may never be successful.
56
We may focus on potential product candidates that may prove to be unsuccessful and such focus may require us to forego
opportunities to develop other product candidates that may prove to be more successful.
We may choose to focus our efforts and resources on a potential product candidate that ultimately proves to be unsuccessful, or to
license or purchase a marketed product that does not meet our financial expectations. Furthermore, we have limited financial and
personnel resources and are placing significant focus on the development of our lead product candidates, and as such, we may forgo or
delay pursuit of opportunities with other future product candidates that later prove to have greater commercial potential. Our spending
on current and future research and development programs and other future product candidates for specific indications
 
may not yield
any commercially viable future product candidates and could result in spending on raw materials that cannot be repurposed. As a
result of our resource allocation decisions, we may fail to capitalize on viable commercial products or profitable market opportunities,
be required to forego or delay pursuit of opportunities with other product candidates or other diseases that may later prove to have
greater commercial potential, fail to identify novel product candidates that may be successful, or relinquish valuable rights to such
product candidates through collaboration, licensing or other arrangements in cases in which it would have been advantageous for us to
retain sole development and commercialization rights. If we are unable to identify and successfully commercialize
 
additional suitable
product candidates, or if the additional product candidates we do identify and develop prove to be ineffective, incapable of being
commercialized on a large scale or otherwise fail to achieve market success, this would adversely impact our business strategy and our
financial position.
Risks Related to Our Financial Position and Need for Additional Capital
We cannot assure you of the adequacy of our capital resources to successfully complete the development,
 
and if approved,
commercialization of our product candidates, and a failure to obtain additional capital, could force us to delay, limit, reduce or
terminate one or more of our product development programs or commercialization efforts.
As of December 31, 2023, the Company had $4.9 million of cash and cash equivalents and $25.5 million of short-term investments to
fund operations. We believe that we will continue to expend substantial resources for the foreseeable future developing our proprietary
product candidates. These expenditures will include costs associated with research and development, conducting pre-clinical studies
and clinical trials, seeking regulatory approvals, as well as launching and commercializing products approved for sale and costs
associated with manufacturing products. In addition, other unanticipated costs may arise. Because the outcomes of our anticipated
clinical trials are highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete
 
the
development and commercialization of our proprietary product candidates.
Our future funding requirements will depend on many factors, including but not limited to:
 
the numerous risks and uncertainties associated with developing product candidates and maintaining our platform;
 
the number and characteristics of product candidates that we pursue;
 
the rate of enrollment, progress, cost and outcomes of our clinical trials, which may or may not meet their primary end-
points;
 
the timing of, and cost involved in, conducting non-clinical studies that are regulatory prerequisites to conducting clinical
trials of sufficient duration for successful product registration;
 
the cost of manufacturing clinical supply and establishing commercial supply of our product candidates;
 
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual
property rights and defending any intellectual property-related claims;
 
tax and other compliance costs associated with operating in foreign jurisdictions (including any withholding
requirements);
 
the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates if clinical
 
trials are
successful;
 
the timing of, and costs involved in, conducting post-approval studies that may be required by regulatory authorities;
 
the cost of commercialization activities for our product candidates, including product manufacturing, pharmacovigilance,
marketing and distribution of product candidates generated from our platform and any other product opportunity for
which we receive marketing approval in the future;
57
 
the terms and timing of any collaborative, licensing and other arrangements that we are currently party to or may
establish, including any required milestone and royalty payments thereunder and any non-dilutive funding that we may
receive;
 
the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including
litigation costs, if any, and the outcome of any such litigation;
 
the timing, receipt and amount of sales of, or royalties or milestones on, our future products, if any, including the risk of
potential nonpayment by buyers of our future products, if any;
 
the costs to recruit and build the organization including key executives needed to transform to a commercial
organization; and
 
the costs of operating as a public company, including hiring additional personnel.
In addition, our operating plan may change as a result of many factors currently unknown to us. As a result of these factors, we may
need additional funds sooner than planned. We expect to finance future cash needs primarily through public or private equity
offerings, strategic collaborations and debt financing. If sufficient funds on acceptable terms are not available when needed, or at all,
we could be forced to significantly reduce operating expenses and delay, limit, reduce or terminate one or more of our product
development programs or commercialization efforts, which would have a negative impact on our business, financial condition, results
of operations and prospects.
We have incurred significant losses since our inception and we expect to incur losses for the foreseeable future and may never
achieve or maintain profitability. There exists substantial doubt as to our ability to continue as a going concern over the next
twelve months.
We have incurred significant losses since our inception. We
 
had net losses of approximately $56.9 million and $75.2 million for the
years ended December 31, 2023 and December 31, 2022 respectively. As of December 31, 2023, our consolidated accumulated deficit
was $361.6 million. Our recurring losses from operations together with the factors described below raise substantial doubt about our
ability to continue as a going concern, and our independent public accounting firm included an explanatory paragraph regarding the
same in its report to our Annual Report on Form 10-K for the year ended December 31, 2023. Substantial doubt about our ability to
continue as a going concern may create negative reactions to the price of our Class A common stock and may have adverse
consequences on our ability to raise financing in the future. While we have implemented cost reductions, our finite cash resources
available to execute our business plan present the risk that we will not have sufficient cash available in the amount or at the time we
need it to fund our ongoing operations and execute our business plans on our timeliness.
 
We will need to raise additional capital and
may need to undertake additional cost saving measures to expand our cash runway. This additional capital could be raised through a
combination of non-dilutive financings (including collaborations, strategic alliances, monetization of non-core assets, marketing,
distribution or licensing arrangements), dilutive financings (including equity, equity-linked and/or debt financings) and, potentially,
from revenue related to product sales, to the extent our product candidates receive marketing approval and can be commercialized.
 
There can be no assurance that new financings or other capital raising transactions will be available to us on commercially
 
acceptable
terms, or at all. See also Note 1 – Nature of Business to our consolidated financial statements for the year ended December 31, 2023
included elsewhere in this Annual Report for additional discussion of our liquidity and ability to continue as a going concern.
Our expectation is that we will continue to incur losses as we continue our research and development of, and seek regulatory
 
approvals
for, our product candidates and maintain and develop new platforms, prepare for and begin to commercialize any approved product
candidates and add infrastructure and personnel to support our product development efforts and operations as a public company. We
have devoted substantially all of our financial resources and efforts to research and development, including pre-clinical studies and
clinical trials and we anticipate that our expenses will continue to increase over the next several years as we continue these
 
activities.
The net losses and negative cash flows incurred to date, together with expected future losses, have had, and may continue to have, an
adverse effect on our working capital. The amount of future net losses will depend, in part, on the rate of future growth of our
expenses and our ability to generate revenue.
 
Because of the numerous risks and uncertainties associated with biopharmaceutical product development, we are unable to accurately
predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. For example, our expenses
could increase if we are required by regulatory authorities such as the FDA to perform trials in addition to those that we currently
expect to perform, or if there are any delays in completing our currently planned clinical trials, the partnering process for our
proprietary product candidates or in the development of any of our proprietary product candidates.
58
Our revenue to date has been generated from the sales of our ELISA test and the sale of an option to negotiate a license with UNS
(which option has expired). Our ability to generate revenue and achieve profitability in the future depends in large part on our ability,
alone or with our collaborators, to achieve milestones and to successfully complete the development of, obtain the necessary
regulatory approvals for, and commercialize, our product candidates and AIM Platform. We may never succeed in these activities and
may never generate revenue from product sales that is significant enough to achieve profitability. Even if we successfully obtain
regulatory approvals to market one or more of our product candidates, our revenues will be dependent, in part, upon the size of the
markets in the territories for which we gain regulatory approval and have commercial rights. If the markets for patient subsets that we
are targeting are not as significant as we estimate, we may not generate significant revenues from sales of such products, if approved.
Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become
or remain profitable could depress our market value and could impair our ability to raise capital, expand our business, develop other
product candidates or continue our operations. A decline in our value could also cause you to lose all or part of your investment.
We need additional funding to fully execute our business plan. Raising additional capital may cause dilution to our shareholders,
restrict our operations or require us to relinquish rights to our technology or product candidates.
To the extent that we raise additional capital through the sale of our Class A common stock, convertible securities or other equity
securities, your ownership interest will be diluted, and the terms of these securities could restrict our operations or include liquidation
or other preferences and anti-dilution protections that could adversely affect your rights as a stockholder. The issuance of additional
equity securities, or the possibility of such issuance, may cause the market price of our Class A common stock to decline. In addition,
debt financing, if available, may result in fixed payment obligations and may involve agreements that include restrictive covenants
that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures, creating
 
liens, redeeming
shares or declaring dividends, that could adversely impact our ability to conduct our business. Securing financing could require a
substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from
day-to-day activities, which may adversely affect our management’s ability to oversee the development of our product candidates.
If we raise additional funds through collaborations, strategic alliances, monetization of non-core assets or marketing, distribution or
licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, including geographic and
regional agreements, future revenue streams or product candidates or grant licenses on terms that may not be favorable
 
to us. If we are
unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or
future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop
and market ourselves.
We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital
in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or
commercialization of our product candidates or other research and development initiatives. Our current or future license
 
agreements
may also be terminated if we are unable to meet the payment or other obligations under the agreements.
Changes in or reinterpretations of tax laws and regulations, including their application to us or our customers as reviewed
 
by the
relevant tax authorities, may have a material adverse effect on our business, results of operations, financial condition and
prospects.
We are subject to complex and evolving tax laws and regulations. New income, sales, use or other tax laws, statutes, rules, regulations
or ordinances could be enacted at any time, which could affect the tax treatment of any of our future domestic and foreign earnings.
Any new taxes could adversely affect our domestic and international business operations, and our business and financial performance.
Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us
or our customers. Future changes in applicable tax laws and regulations, or their interpretation and application, could
 
have an adverse
effect on our business, financial conditions, results of operations and prospects.
In addition, our determination of our tax liability is subject to review by applicable tax authorities. Any adverse outcome of such a
review could harm our results of operations, cash flow and overall financial condition. The determination of our tax liabilities requires
significant judgment and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax
determination is complex and uncertain.
59
Our ability to use our net operating loss carryforwards and other tax attributes to offset future taxable income may be subject to
certain limitations.
As of December 31, 2023, we had U.S. federal net operating loss carryforwards (“NOLs”) of $178.8 million,
 
which may be available
to offset future taxable income, if any, but are limited in their usage to an annual deduction equal to 80% of annual taxable income. In
general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an
“ownership change,” generally defined as a greater than 50% change by value in its equity ownership over a three-year period, is
subject to limitations on its ability to utilize its pre-change NOLs and its research and other tax attributes to offset future taxable
income. Our existing NOLs and tax attributes may be subject to limitations arising from previous ownership changes, and if we
undergo future ownership changes, our ability to utilize NOLs and research and tax attributes could be further limited by Sections 382
and 383 of the Code. For these reasons, we may not be able to utilize a portion of our existing NOLs or research and tax attributes.
Adverse developments affecting financial institutions, companies in the financial services industry or the financial services
industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect
our operations and liquidity.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or
other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events
of these kinds, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon
Valley
 
Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal
Deposit Insurance Corporation, or the FDIC, as receiver. As of March 10, 2023, we had approximately 11% of our cash and cash
equivalent balances on deposit with SVB. Since then, we have moved substantially all of our cash and cash equivalent deposits that
were at SVB to another major U.S. financial institution.
 
Our access to our cash and cash equivalents in amounts adequate to finance our operations could be significantly
 
impaired by the
financial institutions with which we have arrangements directly facing liquidity constraints or failures. For example,
 
as we expect to
continue to maintain balances at one or more banks and financial institutions that exceed federally insured limits, in the
 
event of a
closure of any such banks or institutions we may not be able to recover our uninsured balances. Even if the U.S. Department of the
Treasury, the Federal Reserve and the FDIC provide that depositors would have access to all of their balances, there may be a delay in
our ability to access such funds.
 
In addition, investor concerns regarding the U.S. or international financial systems could result in
less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or
systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on
acceptable terms or at all. Any material decline in available funding or our ability to access our cash and cash equivalents could
adversely impact our ability to meet our operating expenses, result in breaches of our contractual obligations or result in violations of
federal or state wage and hour laws, any of which could have material adverse impacts on our operations and liquidity.
Risks Related to the Manufacturing of Our Product Candidates
The formulation of peptide-based medicines is complex and manufacturers often encounter difficulties in production. If we, UBI
or any of our other contract manufacturers encounter difficulties, our ability to provide product candidates for clinical trials or
products, if approved, to patients or future customers could be delayed or halted.
The formulation of peptide-based medicines is complex and requires significant expertise and capital investment, including the
development of advanced manufacturing techniques and analytics. We are currently dependent on contract manufacturers, including
UBI, its affiliates, CSBioa, Pii, and WuXi STA,
 
to conduct the manufacturing and supply activities for our product candidates and the
underlying component parts, but may choose to conduct these manufacturing activities ourselves in the future. If our contract
manufacturers are unable to manufacture our product candidates in clinical qualities and quantities or, when necessary, in commercial
quantities and at sufficient yields, then we will need to identify and reach supply arrangements with additional third parties. This may
delay or halt our clinical trials. For example, we believe that UB-313 did not meet the Phase 1 clinical trial’s secondary objective of
capsaicin-induced dermal blood flow inhibition due to a suboptimal drug product made by a new contract manufacturer. Further, our
product candidates may be in competition with other products for access to these facilities and may be subject to delays in
manufacture if our contract manufacturers give other products higher priority. We and our contract manufacturers must comply with
cGMP,
 
regulations and guidelines for the manufacturing of our product candidates used in pre-clinical studies and clinical trials and, if
approved, marketed products. If we or our contract manufacturers do not receive any regulatory approvals, or lose existing approvals,
required to manufacture our product candidates, production and fulfilment of orders will be delayed, which may materially adversely
affect our business. Manufacturers of biotechnology products often encounter difficulties in production, particularly in scaling up and
validating initial production. Furthermore, if microbial, viral or other contaminations are discovered in our product candidates or in the
manufacturing facilities where our product candidates are made, such manufacturing facilities may be closed for an extended period of
time to investigate and remedy the contamination. Shortages of raw materials may also extend the period of time required to develop
our product candidates.
60
Manufacturing these products requires facilities specifically designed for and validated for this purpose and sophisticated quality
assurance and quality control procedures are necessary. Slight deviations anywhere in the manufacturing process, including filling,
labeling, packaging, storage and shipping and quality control and testing, may result in lot failures, product recalls or spoilage.
Further, delays in our clinical trials or in any regulatory approvals may result in the expiration of manufactured product, which could
in turn lead to further delays. When changes are made to the manufacturing process, we may be required to provide pre-clinical and
clinical data showing the comparable identity, strength, quality, purity or potency of the products before and after such changes. The
use of biologically derived ingredients can also lead to allegations of harm, including infections or allergic reactions, or closure of
product facilities due to possible contamination.
In addition, there are risks associated with large scale manufacturing for clinical trials or commercial scale including, among others,
cost overruns, potential problems with process scale-up, process reproducibility, stability issues, compliance with cGMP,
 
lot
consistency and timely availability of raw materials. Even if we obtain marketing approval for any of our product candidates, there is
no assurance that we or our manufacturers will be able to manufacture the approved product to specifications acceptable to regulatory
authorities, to produce it in sufficient quantities to meet the requirements for the potential commercial launch of the product or to meet
potential future demand. If we or our manufacturers are unable to produce sufficient quantities for clinical trials, advance purchase
commitments or commercialization, more generally, our development and commercialization efforts would be impaired, which would
have an adverse effect on our business, financial condition, results of operations and prospects.
We cannot assure you that any disruptions or other issues relating to the manufacture of any of our product candidates will not occur
in the future. Any delay or interruption in the supply of clinical trial supplies could delay the completion of planned clinical trials,
increase the costs associated with maintaining clinical trial programs and, depending upon the period of delay, require us to commence
new clinical trials at additional expense or terminate clinical trials completely. Any adverse developments affecting clinical or
commercial manufacturing of our product candidates or products may result in shipment delays, inventory shortages, lot failures,
product withdrawals or recalls or other interruptions in the supply of our product candidates. We may also have to take inventory
write-offs and incur other charges and expenses for product candidates that fail to meet specifications, undertake costly remediation
efforts or seek more costly manufacturing alternatives. Accordingly, failures or difficulties faced at any level of our supply chain
could delay or impede the development and commercialization of any of our product candidates and could have an adverse effect on
our business, financial condition, results of operations and prospects.
We and our contract manufacturers and suppliers could be subject to liabilities, fines, penalties or other sanctions under federal,
state, local and foreign environmental, health and safety laws and regulations if we or they fail to comply with such laws or
regulations or otherwise incur costs that could have a material adverse effect on our business.
We currently rely on and expect to continue to rely on contract manufacturers for the manufacturing and supply of our product
candidates and custom components. We and these contract manufacturers are subject to various federal, state, local and foreign
environmental, health and safety laws and regulations, including those governing laboratory procedures and the
 
generation, handling,
labeling, transportation, use, manufacture, storage, treatment and disposal of hazardous materials and wastes and worker health and
safety. We
 
do not have control over a manufacturer’s or supplier’s compliance with environmental, health and safety laws and
regulations. Liabilities they incur pursuant to these laws and regulations could result in significant costs or in certain circumstances,
 
an
interruption in operations, any of which could adversely affect our business, financial condition, results of operations and prospects.
With respect to any hazardous materials or waste which we are currently, or in the future will be, generating, handling, transporting,
using, manufacturing, storing, treating or disposing of, we cannot eliminate the risk of contamination or injury from these materials or
waste, including at third-party disposal sites. In the event of such contamination or injury, we could be held liable for any resulting
damages and liability. We
 
also could be subject to significant civil or criminal fines and penalties, cessation of operations,
investigation or remedial costs or other sanctions for failure to comply with applicable environmental, health and safety laws. In
addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and
regulations. These current or future laws and regulations may impair our research, development or production efforts or otherwise
have a material adverse effect on our business.
Undetected errors or defects in our production could harm our reputation or expose us to product liability claims.
Undetected errors and defects in the cGMP materials used in the production of our product candidates could result in a lower quality
of any products we produce, and could give rise to reputational harm to us and to the contract manufacturers with whom we work. If
any such errors or defects are discovered, we may incur significant costs, the attention of our key personnel could be diverted, or other
significant problems may arise. We may also be subject to warranty and liability claims for damages related to errors or defects in
products made with our cGMP materials. In addition, if we do not meet industry or quality standards, if applicable, such products may
be subject to recall. A material liability claim, recall or other occurrence that harms our reputation or decreases market acceptance of
such products could harm our business and operating results.
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Risks Related to Our Reliance on UBI, Collaborators and Other Third Parties
Conflicts of interest and disputes have and may arise between us and UBI and its affiliates, and these conflicts and disputes might
ultimately be resolved in a manner unfavorable to us.
UBI is our largest stockholder, the licensor of certain of our intellectual property and is a commercial partner for the Company.
 
In
addition, Dr. Chang Yi
 
Wang, UBI’s
 
founder, holds shares of our common stock.
 
Our co-founders (Mei Mei Hu and Louis Reese),
one of their affiliates and UBI (collectively, our “principal stockholders”), are party to a voting agreement (the “Voting
 
Agreement”),
which provides Mei Mei Hu with the authority (and irrevocable proxies) to vote the shares of capital stock held by the stockholders
party to the Voting
 
Agreement at her discretion on all matters to be voted upon by stockholders.
 
Our CEO, Mei Mei Hu, our
Chairman, Louis Reese and our shareholder and former director James Chui, also serve on and constitute a majority of the board of
directors of UBI.
 
UBI’s equity interests in the Company, and the overlapping directorships, could give rise to conflicts of interest, in
particular when a decision could favor the interests of UBI (or its affiliates) or us over the other.
 
Further, we have historically
depended heavily on UBI and its affiliates for our business operations, including the provision of research, development and
manufacturing services.
 
While we have taken steps to separate our operations from those of UBI and currently anticipate taking
additional steps to lessen our dependence, we still have ongoing relationships with UBI and its affiliates. With respect to our UB-612
program, we have partnered with UBIA for the development of UB-612 in Taiwan, UBIP for the formulation-fill-finish services, and
UBP as the sole manufacturer of protein. Relating to our chronic disease pipeline, we continue to work with UBIP and UBIA for the
production and testing of clinical material for our UB-312 program.
Conflicts of interest may arise with respect to existing or possible future commercial arrangements between us and UBI or any of its
affiliates in which the terms and conditions of the arrangements are subject to negotiation or dispute. For example, conflicts of interest
could arise over matters such as:
 
disputes over the cost or quality of the manufacturing and testing services provided to us by UBI with respect to our
product candidates;
 
the allocation of UBI’s resources as between our business objectives and UBI’s own objectives;
 
a decision whether to engage UBI or its affiliates in the future to manufacture, test and supply of additional custom
components or product candidates for us;
 
decisions as to which particular product candidates we will commit sufficient development efforts to; or
 
business opportunities unrelated to our current products that may be attractive both to us and to the other company.
We also cannot guarantee conflicts of interest will not arise in connection with the negotiation or execution of any future agreement
with UBI, its affiliates or any other related party.
 
Further, we have been advised that there is currently an ongoing dispute within UBI between Dr. Wang
 
and members of UBI’s board
of directors relating to certain corporate governance matters, including the overall management and control of UBI, as well
 
as its
relationship with the Company. Specifically, we have been advised that Dr.
 
Wang attempted to replace the UBI board of directors in
July and August 2021 and asserted that she is the majority shareholder of UBI, which we understand UBI’s other directors dispute as
invalid and incorrect. In April 2023, a judgment from a Texas court confirmed the management and control structure of UBI,
adjudicating that Dr. Wang
 
has no authority to manage or control UBI. Dr. Wang
 
filed litigation against UBI and its Directors that is
currently pending in New York state court. This dispute has created risks and uncertainties for us, and this dispute or any resolution of
it could negatively impact us, including, without limitation, by impairing our ability to work with UBI and its affiliates as a
commercial partner in the future and/or otherwise adversely affecting other existing arrangements with or involving UBI or its
affiliates. Late in the day on November 9, 2021, counsel to the Company received correspondence on behalf of Dr. Wang (the
“Correspondence”). The Correspondence outlined Dr. Wang’s
 
concerns that the preliminary prospectus for our initial public offering,
subject to completion, dated November 5, 2021 did not accurately describe the relationship between the Company and UBI, namely
the Company’s ability to operate independently from UBI. The Correspondence also relayed Dr. Wang’s
 
concerns that the preliminary
prospectus did not fully describe the disruption to the Company’s business that could result from the abovementioned dispute,
including with respect to intellectual property agreements among the Company and UBI and its affiliates. Various other claims have
been made by Dr. Wang
 
regarding UBI’s corporate governance, the operations of the Company and the disclosures for our initial
public offering, and the Company cannot predict the course of this dispute. However, the Company has carefully considered Dr.
Wang’s
 
concerns and, based on the disclosures included in the preliminary prospectus and in the final prospectus for our initial public
offering and the Company’s diligence efforts, the Company remains confident in the appropriateness and accuracy of its disclosures.
62
We will rely on contract manufacturers for the manufacture of raw materials for our research programs,
 
pre-clinical studies and clinical trials and we do not have long-term contracts with many of these parties. This reliance
 
on contract
manufacturers increases the risk that we will not have sufficient quantities of such materials or product candidates that we may
develop and commercialize, or that such supply will not be available to us at an acceptable cost or on an acceptable timeline, which
could delay, prevent or impair our development or commercialization efforts.
We rely on contract manufacturers, including UBI and its affiliates, for the manufacture of raw materials for our clinical trials and pre-
clinical and clinical development. We do not have a long-term agreement with some of the contract manufacturers we currently use to
provide pre-clinical and clinical raw materials. Certain of these manufacturers are critical to our production, and the loss
 
of these
manufacturers to one of our competitors or otherwise, or an inability to obtain quantities at an acceptable cost or quality, could delay,
prevent or impair our ability to timely conduct pre-clinical studies or clinical trials, and would materially adversely affect our
development and commercialization efforts.
We expect to continue to rely on contract manufacturers for the commercial supply of any of our product candidates for which we
obtain marketing approval, if any. We
 
may be unable to maintain or establish long-term agreements with contract manufacturers or to
do so on acceptable terms. Even if we are able to establish agreements with contract manufacturers, reliance on contract manufacturers
entails additional risks, including:
 
the failure of the contract manufacturer to manufacture our product candidates according to our schedule, or at all,
including if our contract manufacturers give greater priority to the supply of other products over our product candidates
or otherwise do not satisfactorily perform according to the terms of the agreements between us and them;
 
the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms;
 
the termination or nonrenewal of arrangements or agreements by our contract manufacturers at a time that is costly or
inconvenient for us;
 
the breach by the contract manufacturers of our agreements with them;
 
the failure of contract manufacturers to comply with applicable regulatory requirements;
 
the failure of the contract manufacturer to manufacture our product candidates according to our specifications;
 
the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or
placebo not being properly identified;
 
clinical supplies not being delivered to clinical sites on time, leading to clinical trial interruptions, or of drug supplies not
being distributed to commercial vendors in a timely manner, resulting in lost sales; and
 
the misappropriation or unauthorized disclosure of our intellectual property or other proprietary information, including
our trade secrets and know-how.
We do not have complete control over all aspects of the manufacturing process of, and are dependent on, our contract manufacturing
partners for compliance with cGMP regulations for manufacturing both custom components and finished products. Contract
manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside of the United States. If
our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory
requirements of applicable regulatory authorities, they will not be able to secure and/or maintain authorization for their manufacturing
facilities. In addition, we do not have full control over the ability of our contract manufacturers to maintain adequate
 
quality control,
quality assurance and qualified personnel. Further, our manufacturing partners may be unable to successfully increase the
manufacturing capacity for any of our product candidates in a timely or cost-effective manner, or at all, and quality issues may arise
during any such scale-up activities. If regulatory authorities do not authorize these facilities for the manufacture of our product
candidates or if they withdraw any such authorization in the future, we may need to find alternative manufacturing facilities, which
would significantly impact our ability to develop, obtain marketing approval for or market our product candidates, if approved. Our
failure, or the failure of our contract manufacturers, to comply with applicable regulations could result in sanctions being imposed on
us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of
product candidates or drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect
supplies of our product candidates or drugs and harm our business and results of operations.
63
We depend on strategic partnerships, collaborations and license agreements in connection with the research, development and
commercialization of our AIM Platform and product candidates. If our existing or future partners, collaborators or licensees do
not perform as expected, if we fail to maintain any of these strategic partnerships, collaborations or license agreements, or if they
are not successful, our ability to commercialize our product candidates successfully and to generate revenues may be materially
adversely affected.
We have established and intend to continue to establish strategic partnerships, collaborations, licensing agreements, or other
arrangements with third parties. For our research, development and commercialization activities, we have depended, and will continue
to depend, on our partners to design and conduct their own clinical studies. As a result, these activities may not be able to be
conducted in the manner or on the time schedule we currently contemplate, which may negatively impact our business
 
operations.
While we have certain contractual rights to information about pre-clinical and clinical developments and results under certain of our
collaboration and license agreements, including our agreements with UBIA and Aurobindo, we cannot be certain that clinical trials
conducted in connection with such collaboration programs will be conducted in a manner consistent with the best
 
interests of our
business. In addition, if any of our partners, collaborators or licensees withdraw support for these programs or proposed products or
otherwise impair their development, our business could be negatively affected. Also, our inability to find a partner for any of our
product candidates may result in our termination of that specific product candidate program or evaluation of a product
 
candidate in a
particular indication. Because of contractual restraints and the limited number of contract manufacturers with the expertise, required
regulatory approvals and facilities to manufacture our product candidates on a commercial scale, replacement of a contract
manufacturer may be expensive and time-consuming and may cause interruptions in the production of our product candidates, which
could delay our clinical trials or interrupt our potential future commercial sales. Even if we find or establish a strategic partner,
collaborator or licensee for one or more of our product candidates, there is no assurance that upon the approval of one or more of such
product candidates that such product candidates will be successfully commercialized.
Furthermore, our licenses and collaboration agreements impose, and any future agreement we enter into may
 
also impose, restrictions
on our ability to license certain of our intellectual property to third parties or to develop or commercialize certain product
 
candidates
or technologies ourselves.
In the future, we may enter into additional collaborations or license agreements to fund our development programs or to gain access to
sales, marketing or distribution capabilities of other parties. While certain of our existing collaboration and license agreements,
including our agreements with Aurobindo, impose development or commercialization obligations on our collaborators or licensees, we
cannot be certain that our collaboration partners will allocate sufficient resources or attention to our collaboration programs, that they
will progress our collaboration programs consistent with the best interests of our business or that they will otherwise meet
 
their
obligations under these agreements in a timely manner or at all. Our existing collaborations and licenses,
 
and any future collaborations
and licenses we enter into, therefore may pose a number of risks, including the following:
 
collaborators or licensees may have significant discretion in determining the efforts and resources that they will apply to
developing or commercializing our product candidates, and they may not sufficiently fund the development or
commercialization of a product candidate;
 
collaborators and licensees may not perform their obligations as expected by us or by health authorities, such as the FDA
or comparable foreign regulatory authorities;
 
collaborators and licensees may dissolve, merge, be bought or may otherwise become unwilling to fulfill the initial terms
of the collaboration with us, or we may be unwilling to continue our arrangement following such an occurrence;
 
collaborators and licensees may fail to perform their obligations under their agreements or may be slow in performing
their obligations;
 
collaborations and licensees may be terminated for the convenience of the collaborator or licensee and, if terminated, we
could be required to raise additional capital to pursue further development or commercialization of the applicable
product candidates;
 
collaborators and licensees may not pursue commercialization of any product candidates that achieve regulatory approval
or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes
in the collaborators’ or licensees’ strategic focus or available funding, or external factors, such as an acquisition, that
divert resources or create competing priorities, or due to the actual or perceived competitive situation in a specific
indication;
 
collaborators and licensees may delay clinical trials, stop a clinical trial or abandon a product candidate, repeat or
conduct additional clinical trials or may require a new formulation of a product candidate for clinical testing;
64
 
collaborators and licensees could independently develop, or develop with third parties, products that compete directly or
indirectly with our products or product candidates if the collaborators believe that competitive products are more likely
to be successfully developed or can be commercialized under terms that are more economically attractive than ours;
 
product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own
product candidates or products, which may cause collaborators to cease to devote resources to the commercialization
 
of
our product candidates;
 
disagreements with collaborators or licensees, including disagreements over proprietary rights, contract interpretation
and breach of contract claims, payment obligations or the preferred course of development, might cause delays or
termination of the research, development or commercialization of products or product candidates, might lead to
additional responsibilities, including financial obligations for us with respect to products or product candidates, or delays
or withholding of payments due to us or might result in litigation or arbitration, any of which would be time-
 
consuming
and expensive, and could limit our ability to execute on our strategies and delay or prevent our ability to devote
resources to other product candidates;
 
collaborators or licensees may not properly obtain, maintain, enforce or defend our intellectual property or may use our
proprietary information in such a way that could jeopardize or invalidate our intellectual property or proprietary
information or expose us to potential litigation; and
 
collaborators may infringe, misappropriate or otherwise violate the intellectual property of third parties, which may
expose us to litigation and potential liability.
If our collaborations and licenses related to the research, development and commercialization of product candidates do not result in the
successful development and commercialization of our product candidates, or if one of our collaborators or licensees terminates its
agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration or
license, and we may be unable to continue the development and commercialization of the product candidate. Further, even if our
collaborations and licenses do result in successful development and commercialization of products, if one of our collaborators
breaches its obligations under its agreement with us or enters bankruptcy or insolvency, there may be a material delay in our receipt of
payments under such agreements, or we may never receive such payments. If we do not receive the payments we expect under these
agreements, our own development and commercialization activities could be delayed or prevented altogether, and we may need to
secure additional resources to develop our proprietary product candidates. Moreover, maintaining our relationships with our
collaborators and licensees may divert significant time and effort of our scientific staff and management team, which may harm our
ability to effectively allocate our resources to multiple internal and other projects. All of the risks relating to product development,
regulatory approval and commercialization described in this report also apply to the activities of our collaborators and
 
licensees.
Additionally, subject to its contractual obligations to us, if one of our collaborators or licensors is involved in a business combination,
merger, acquisition or other similar transaction, the collaborator or licensor might deprioritize or terminate the development or
commercialization of any product candidate licensed to it by us. If one of our collaborators or licensors terminates its agreement with
us, we may be unable to attract new collaborators in a timely manner or at all, which may delay or prevent our ability to develop or
commercialize one or more of our product candidates.
65
We rely on third parties to conduct our pre-clinical studies and clinical trials and perform other tasks for us. If these third parties
do not successfully carry out their contractual duties, meet expected deadlines, or comply with legal and regulatory requirements,
we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be
substantially harmed.
We have relied upon and plan to continue to rely upon CROs to execute certain of our pre-clinical and clinical trials, and to monitor
and manage data for our ongoing pre-clinical and clinical programs and to provide us with significant data and other information
related to our projects, pre-clinical studies and clinical trials. If such third parties provide inaccurate, misleading or incomplete data,
our business, financial condition and results of operations and prospects could be materially adversely affected. We have control over
limited aspects of our CROs’ activities; nevertheless, we are responsible for, and our reliance on CROs does not relieve us of our
responsibilities for, ensuring that each of our trials is conducted in accordance with the applicable protocol, legal, regulatory, scientific
and ethical standards. We and our CROs and other vendors are required to comply with cGMP,
 
GCP,
 
Good Laboratory Practice
(“GLP”) and other laws, regulations and guidelines enforced by applicable regulatory authorities for all of our product candidates
during both pre-clinical and clinical development. Regulatory authorities enforce these regulations through periodic inspections of
study sponsors, principal investigators, trial sites and other contractors. If we or any of our CROs or vendors fail to comply with
applicable regulations, the data generated in our pre-clinical and clinical trials may be deemed unreliable and regulatory authorities
may require us to perform additional pre-clinical and clinical trials before approving our marketing applications. We cannot assure
you that upon inspection by a given regulatory authority, such regulatory authority will determine that all of our clinical trials comply
with cGCP regulations or other applicable laws and regulations. Our failure to comply with applicable laws and regulations may
require us to repeat clinical trials, which would delay the regulatory approval process and require significant additional
 
expenditures,
which we may be unable to meet.
If any of our relationships with these CROs terminates, we may not be able to enter into arrangements with alternative CROs or do so
on commercially reasonable terms or in a timely manner. We would also incur additional costs and delays while engaging a new CRO,
which we may not be able to engage on commercially reasonable terms or at all. In addition, our CROs are not our employees, and
except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient
time and resources to our ongoing pre-clinical and clinical programs. If CROs do not successfully carry out their contractual duties
 
or
obligations, meet expected deadlines, conduct our studies in accordance with regulatory requirements or our stated study plans and
protocols, if they need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to
our protocols, regulatory requirements, or for other reasons, our clinical trials may be extended, delayed or terminated and we may not
be able to obtain regulatory approval for or successfully commercialize our product candidates in a timely manner or at all. For
example, due to an error by the CRO responsible for administering blinded placebo and active doses to trial subjects,
 
which reduced
the confidence of subsequently collected data, we decided to discontinue a Phase 2a LTE trial for UB-311. In that case, however, we
determined that we had collected sufficient data on UB-311’s tolerability and immunogenicity. CROs or any of our other collaborators
may also generate higher costs than anticipated. As a result, our results of operations and the commercial prospects for our product
candidates could be harmed, our costs could increase and our ability to generate revenue could be delayed.
Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or
delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition,
results of operations and prospects.
We do not have multiple sources of commercial supply for some of the components used in our product candidates, nor long-term
supply contracts with our existing suppliers, and certain of our suppliers are critical to our production. If we were to lose a critical
supplier or if an approved supplier experiences delays due to raw material constraints, it could have a material adverse effect on
our ability to complete the development of our product candidates. If we obtain regulatory approval for any of our product
candidates, we cannot guarantee that our suppliers will be able to meet our increased demands for supply.
We do not have multiple sources of commercial supply for each of the components used in the manufacturing of our product
candidates, nor do we have long-term supply agreements with all of our component suppliers. Manufacturing suppliers are subject to
cGMP quality and regulatory requirements, covering manufacturing, testing, quality control and record keeping relating to our product
candidates and are subject to ongoing inspections by applicable regulatory authorities. Manufacturing suppliers are also subject to
licensing requirements as well as local, state and federal regulations and regulations in foreign jurisdictions in which they operate.
Failure by any of our suppliers to comply with all applicable regulations and requirements may result in
 
long delays and interruptions
in supply.
66
The number of suppliers of the raw material components of our product candidates is limited. In the event it is necessary or desirable
to acquire supplies from alternative suppliers, we might not be able to obtain such supply on commercially reasonable terms, if at
 
all.
It could also require significant time and expense to redesign our manufacturing processes to work with another company and
 
redesign
of processes can trigger the need for conducting additional studies such as comparability or bridging studies. Additionally, certain of
our suppliers are critical to our production, and the loss of these suppliers to one of our competitors or otherwise would materially
adversely affect our development and commercialization efforts. Further, if such critical suppliers experience delays in their ability to
supply of components due to limited availability of raw materials or other difficulties which may be beyond our or their control, our
manufacturing efforts may be materially adversely affected.
As part of any marketing approval, regulatory authorities conduct inspections that must be successful prior to the approval of a
product candidate. Failure of manufacturing suppliers to successfully complete these regulatory inspections will result in delays. If
supply from the approved supplier is interrupted, an alternative vendor would need to be qualified through an NDA amendment
 
or
supplement, and this could result in significant disruption in commercial supply. Regulatory authorities may also require additional
studies if a new supplier is relied upon for commercial production. Switching vendors may involve substantial costs and is likely to
result in a delay in our desired clinical and commercial timelines.
If we are unable to obtain the supplies we need at a reasonable price or on a timely basis, it could have a material adverse effect on our
ability to complete the development of our product candidates or, if we obtain regulatory approval for our product candidates, to
commercialize them.
Risks Related to Our Intellectual Property Rights
We depend on intellectual property licensed from UBI and its affiliates, the termination of which could result in the loss of
significant rights, which would harm our business.
We are dependent on technology,
 
patents, know-how and proprietary information, both our own and those licensed from UBI and its
affiliates. We entered into the Platform License Agreement in August 2021 pursuant to which we obtained a worldwide, sublicensable
(subject to certain conditions), perpetual, fully paid-up, royalty-free (i) exclusive license (even as to the Licensors) under all patents
owned or otherwise controlled by the Licensors or their affiliates existing as of the effective date of the Platform License Agreement,
(ii) exclusive license (except as to the Licensors) under all patents owned or otherwise controlled by the Licensors or their affiliates
arising after the effective date during the term of the Platform License Agreement, and (iii) non-exclusive license under all know-how
owned or otherwise controlled by the Licensors or their affiliates existing as of the effective date or arising during the term of the
Platform License Agreement, in each of the foregoing cases, to research, develop, make, have made, utilize, import, export, market,
distribute, offer for sale, sell, have sold, commercialize or otherwise exploit peptide-based vaccines in the field of all human
prophylactic and therapeutic uses, except for such vaccines related to human immunodeficiency virus, herpes simplex virus and
Immunoglobulin E. The patents licensed to us under the Platform License Agreement include patents directed to a CpG delivery
system, artificial T helper cell epitopes and certain designer peptides and proteins that are used in our product candidates.
 
Any
termination of these licenses will result in the loss of significant rights and will restrict our ability to develop and commercialize our
product candidates.
Our reliance on in-licensed intellectual property and technology results in a number of risks to the development and
commercialization of our product candidates, including the loss of such rights, our licensors’ inability or refusal to enforce or
defend such rights, and the requirement to pay royalties, milestones, and other amounts.
Agreements under which we license intellectual property or technology to or from UBI, its affiliates and from other third parties may
be complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract
interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual
property or technology or increase what we believe to be our financial or other obligations under the relevant agreement, either of
which could have a material adverse effect on our business, financial condition, results of operations and prospects. Moreover, if
disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements
on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates. Our
business may also suffer if any current or future licensors fail to abide by the terms of the license, if the licensors fail to enforce
licensed patents against infringing third parties, if the licensed patents or other rights are found to be invalid or unenforceable, or if we
are unable to enter into necessary licenses on acceptable terms or at all. In the event of a bankruptcy by one of our licensors, our
intellectual property licenses could also be affected. For example, while the U.S. Bankruptcy Code allows a licensee to retain its rights
under its license notwithstanding the bankrupt licensor’s rejection of such license, such protections may not be available to us in the
event a licensor declares bankruptcy in a foreign jurisdiction. Our licensors may also own or control intellectual property that has not
been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing or otherwise violating
the licensors’ rights.
67
Furthermore, while we cannot currently determine the amount of the royalty obligations we would be required to pay on sales of
future products, if any, the amounts may be significant. The amount of our future royalty obligations will depend on the technology
and intellectual property we use in products that we successfully develop and commercialize, if any. Therefore, even if we
successfully develop and commercialize products, we may be unable to achieve or maintain profitability.
We believe the growth of our business may depend in part on our ability to acquire or in-license additional intellectual property rights,
including to advance our research or allow commercialization of our product candidates. If we are unable
 
to obtain additional licenses
we need to develop and commercialize our product candidates, or if we obtain such licenses and they are terminated, we may be
required to expend considerable time and resources in an attempt to develop or license replacement technology. We may also need to
cease use of the compositions or methods covered by such third-party intellectual property rights, and our ability to license
 
or develop
alternative approaches that do not infringe on such intellectual property rights may entail significant additional costs and
 
development
delays, even if we were able to develop or license such alternatives, which may not be feasible.
The licensing and acquisition of third-party intellectual property rights is a competitive practice, and companies that may be more
established, or have greater resources than we do, may also be pursuing strategies to license or acquire third-party intellectual property
rights that we may consider necessary or attractive in order to commercialize our product candidates. More established companies
may have a competitive advantage over us due to their larger size and cash resources or greater clinical development and
commercialization capabilities. There can be no assurance that we will be able to successfully complete such negotiations and
ultimately acquire the rights to the intellectual property surrounding the additional product candidates that
 
we may seek to acquire.
Even if we are able to obtain a license under such intellectual property rights, any such license may be non-exclusive, which may
allow our competitors’ access to the same technologies licensed to us.
Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues
and is complicated by the rapid pace of scientific discovery in our industry. Disputes may also arise between us and our licensors
regarding intellectual property subject to a license agreement, including those relating to:
 
the scope of rights granted under the license agreement and other interpretation-related issues;
 
whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not
subject to the license agreement;
 
our right to sublicense patent and other rights to third parties under collaborative development relationships;
 
our compliance with reporting, financial or other obligations under the license agreement;
 
the amount and timing of payments owed under license agreements; and
 
the allocation of ownership of inventions and know-how resulting from the creation or use of intellectual property by our
licensors and by us and our partners.
We may also not be able to fully protect our licensed intellectual property rights or maintain our licenses under our licensing
arrangements. Our existing and future licensors could retain the right to prosecute, maintain, defend and enforce the intellectual
property rights licensed to us, in which case we would depend on the ability and will of our licensors to do so. Our licensors may take
different approaches to prosecuting patents than we would, and it is possible our inability to control such activities could harm our
business. Furthermore, our licensors may determine not to pursue litigation against other companies or may pursue such
 
litigation less
aggressively than we would. We may also rely upon obtaining the consent of our licensors to settle legal claims. If our licensors do not
adequately protect or enforce such licensed intellectual property, competitors may be able to use such intellectual property and erode
or negate any competitive advantage we may have, which could materially harm our business, negatively affect our position in the
marketplace, limit our ability to commercialize our products and product candidates and delay or render impossible our achievement
of profitability.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements
on acceptable terms or at all, we may be unable to successfully develop and commercialize the affected product candidates. We are
generally also subject to all of the same risks with respect to protection of intellectual property that we license as we are for
intellectual property that we own, which are described below. If we or our licensors fail to adequately protect this intellectual property,
our ability to develop or commercialize our products could suffer.
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Furthermore, our existing license agreements may impose, and we expect that future license agreements will
 
impose, various
diligence, milestone payment, royalty and other obligations on us and if our licensors, licensees or collaborators conclude that we have
failed to comply with our obligations under these agreements or our use of the intellectual property licensed to us in a manner the
licensor believe is unauthorized, or we are subject to a bankruptcy, we may be required to pay damages and the licensor may have the
right to terminate the license. Any of the foregoing could result in us being unable to develop, manufacture and sell products that are
covered by the licensed technology or enable a competitor to gain access to the licensed technology. We might not have the necessary
rights or the financial resources to develop, manufacture or market our current or future product candidates without the rights granted
under our licenses, and the loss of sales or potential sales in such product candidates could have a material adverse effect on our
business, financial condition, results of operations and prospects.
Moreover, our rights to our in-licensed patents and patent applications may depend, in part, on inter- institutional or other operating
agreements between the joint owners of such in-licensed patents and patent applications or the owners of such in-licensed patents and
patent applications and their affiliates. We may not be aware of each party’s rights and obligations under such inter-institutional or
other operating agreements and, as such, the ownership of our in-licensed patents and patent applications may be uncertain. If one or
more of these owners breaches such inter-institutional or other operating agreements, our rights to such in-licensed patents and patent
applications may be adversely affected. In addition, the development of certain of our product candidates may be funded by grants that
impose certain pricing limitations on such product candidates and limit our ability to commercialize such product candidates and
 
to
achieve or maintain profitability. Any of the foregoing could have a material adverse effect on our competitive position, business,
financial conditions, results of operations and prospects.
We may be required to license or obtain rights to use third party intellectual property or technology in connection with the
development and commercialization of our product candidates.
We may not be aware of all technologies developed or under development by third parties, and other pharmaceutical companies or
academic institutions may also have filed or may be planning to file patent applications potentially relevant to our business and
product candidates. The technologies used in connection with the formulations of our product candidates may also be covered by
intellectual property rights held by others. From time to time, in order to avoid infringing these third-party patents, we may be required
to license technology from additional third parties to further develop, manufacture, use, sell or commercialize our product candidates,
or that we otherwise deem necessary for our business operations. We may fail to obtain any such licenses at a reasonable cost or on
reasonable terms, if at all, and as a result we may be unable to develop or commercialize the affected product candidates, and we may
have to abandon development of the relevant research programs or product candidates, which would harm our business.
If we are unable to obtain and maintain intellectual property protection for our products or product candidates, or if the duration
or scope of our intellectual property protection is not sufficiently broad, our ability to commercialize our product candidates
successfully and to compete effectively may be materially adversely affected.
Our success depends on our ability to obtain and maintain patent and other intellectual property protection in the United States and
other countries with respect to our current and future proprietary product candidates. We rely upon a combination of patents, trade
secret protection and confidentiality agreements to protect the intellectual property related to our technology, manufacturing
processes, products and product candidates. We, UBI and our other collaborators and licensors have primarily sought to protect our
proprietary positions by filing patent applications in the United States and abroad related to our proprietary technology, manufacturing
processes and product candidates that are important to our business. Despite our or our third party collaborators’ or licensors’ efforts
to protect these proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary. Third
parties may also seek to invalidate our patents or those of our licensors. If we are unable to obtain rights to required third-party
intellectual property rights or maintain the existing intellectual property rights we have, we may be required to expend significant
 
time
and resources to redesign our technology, product candidates or the methods for manufacturing them or to develop or license
replacement technology, all of which may not be feasible on a technical or commercial basis. We could also lose expected revenues
under license agreements we maintain with third parties. If we are unable to obtain or maintain our intellectual property, we may be
unable to develop or commercialize the affected technology and product candidates or could lose revenue, either of which could harm
our business, financial condition, results of operations and prospects significantly.
The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or
desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions where protection may be commercially
advantageous. It is also possible that we may fail to identify patentable aspects of our research and development output before it is too
late to obtain patent protection.
 
69
In addition, we, UBI or our other collaborators and licensors, may only pursue, obtain or maintain patent protection in a limited
number of countries. Because patent applications in the United States, Europe and many other foreign jurisdictions are typically not
published until 18 months after filing, or in some cases not at all, and because publications of discoveries in scientific literature lag
behind actual discoveries, we cannot be certain that we or our licensors were the first to make the inventions claimed in any of our
owned or any in-licensed issued patents or pending patent applications, or that we or our licensors were the first to file for protection
of the inventions set forth in our patents or patent applications. As a result, we may not be able to obtain or maintain protection for
certain inventions, and there can be no assurance that the patents we file, or those that are issued, will not be vulnerable to claims of
invalidity or unenforceability.
Even if patents do successfully issue, our owned or in-licensed patents may not adequately protect our intellectual property, provide
exclusivity for our products or product candidates, prevent others from designing around our claims or otherwise provide us with a
competitive advantage. Competitors may use our technologies in jurisdictions where we have not obtained or are unable to adequately
enforce patent protection to develop their own products and, further, may export otherwise infringing products to territories where we
have patent protection, but enforcement is not as strong as that in the United States and Europe. These products may compete with our
products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing with
us. We also cannot offer any assurances about which, if any,
 
patents will issue, the breadth of any such patents or whether any issued
patents will be found invalid or unenforceable or will be threatened by third parties. In addition, third parties may challenge the
validity, enforceability,
 
ownership, inventorship or scope of any of our patents. Any successful challenge to any of our patents or our
in-licensed patents could deprive us of rights necessary for the successful commercialization of any product candidate that we may
develop and could impair or eliminate our ability to collect future revenues and royalties with respect to such
 
products or product
candidates. If any of our patent applications with respect to our product candidates fail to issue as patents, if their breadth or strength
of protection is narrowed or threatened, or if they fail to provide meaningful exclusivity or competitive position, it could dissuade
companies from collaborating with us or otherwise adversely affect our competitive position.
In addition, patents have a limited lifespan. In the United States, for example, the natural expiration of a patent is generally 20 years
after its effective filing date. Various
 
extensions may be available, however, the life of a patent and the protection it affords is limited.
Given the amount of time required for the development, testing, regulatory review and approval of new product candidates, our
patents protecting such candidates might expire before or shortly after such candidates are commercialized. If we encounter delays in
obtaining regulatory approvals, the period of time during which we could market a product under patent protection could be further
reduced. Even if patents covering our product candidates are obtained, once such patents expire, or if such patents are waived or
suspended, we may be vulnerable to competition from similar or biosimilar products. Any expiration, waiver or suspension of our
patent or other intellectual property protection by the U.S. or other foreign governments could lead to the launch of a similar or
biosimilar version of one of our products and would likely result in an immediate and substantial reduction in the demand for our
product, which could have a material adverse effect on our business, financial condition, results of operations and prospects. The
members of one family of patents covering aspects of our platform expired in 2023, except for two US patents that will expire in 2025
and 2026.
We may not be able to protect or enforce our intellectual property rights in all jurisdictions, and we cannot guarantee that the
patent rights we have will prevent others from competing with us.
The patent position of pharmaceutical companies is generally uncertain because it involves complex legal, scientific and factual
considerations for which legal principles remain unsolved. The standards applied by the United States Patent and Trademark Office
(“USPTO”) and foreign patent offices in granting patents are not always applied uniformly or predictably, and can change.
Additionally, the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United
States, and many companies have encountered significant challenges in protecting and defending such rights in foreign jurisdictions.
We may face similar challenges. The legal systems of certain countries, particularly certain developing countries, do not favor the
enforcement of patents and other intellectual property rights, particularly those relating to biotechnology, which could make it difficult
for us to stop the infringement, misappropriation or other violation of our patents or other intellectual property, including the
unauthorized reproduction of our manufacturing or other know-how or the marketing of competing products in violation of our
intellectual property rights generally. Any of these outcomes could impair our ability to prevent competition from third parties, which
may have a material adverse effect on our business, financial condition, results of operations and prospects.
Further, the existence of issued patents does not guarantee our right to practice the patented technology or commercialize a patented
product candidate. Third parties may design around our patents, or have or obtain rights to patents which they may use to prevent or
attempt to prevent us from practicing our patented technology or commercializing any of our patented product candidates. As a result,
we could be prevented from selling our products unless we were able to obtain a license under such third-party patents, which may not
be available on commercially reasonable terms or at all. In addition, third parties may seek approval to market their own products
similar to or otherwise competitive with our products and such products may not violate our patent rights. We may also need to assert
our patents against third parties, including by filing lawsuits alleging patent infringement. In any such proceeding, a third
 
party may
assert, and a court or agency of competent jurisdiction may find, our asserted patents to be invalid or unenforceable. Any of the
foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.
70
There is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and
 
we may
become party to, or threatened with, litigation or other adversarial proceedings regarding intellectual property rights. Proceedings to
defend or enforce our patent rights, whether or not successful and whether or not meritorious, could result in substantial costs and
divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or held
unenforceable, or interpreted more narrowly. There can be no assurance that we will have sufficient financial or other resources to file
and pursue such claims, which often last for years before they are concluded. Some claimants may have substantially greater resources
than we do and may be able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of
time than we could. In addition, patent holding companies that focus solely on extracting royalties and settlements by enforcing
 
patent
rights may target us, especially as we gain greater visibility and market exposure as a public company. In addition, our enforcement of
our patent rights could provoke third parties to assert counterclaims against us. Third parties also may raise similar claims before
administrative bodies in the United States or abroad, even outside the context of litigation. We may not prevail in any lawsuits or
administrative proceedings that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.
If a third party were to prevail on a legal assertion of invalidity or unenforceability, we could lose part or all of the patent protection on
one or more of our product candidates, which could result in our competitors and other third parties using our technology to compete
with us. An adverse outcome in a litigation or administrative proceeding involving our patents could limit our ability to assert
 
our
patents against competitors, affect our ability to receive royalties or other licensing consideration from our licensees, and may curtail
or preclude our ability to exclude third parties from making, using and selling similar or competitive products. Any of these
occurrences could have a material adverse effect on our business, financial condition, results of operations and prospects.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant
commercial advantage from the intellectual property that we develop, acquire or license.
Many countries, including certain countries in Asia, have compulsory licensing laws under which a patent owner may be compelled to
grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or
government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of
such patent. If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to our
business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be
adversely affected. Our owned and in-licensed patents may be subject to a reservation of rights by one or more third parties. For
example, the research resulting in certain of our licensors’ patents and technology, including patents and technology relating
 
to UB-
612, was funded in part by the Taiwanese government. As a result, the Taiwanese government may have certain rights to such patent
rights and technology.
Furthermore, certain of our patents and technology, including patents and technology relating to UB-312, were funded in part by
grants from nonprofit third parties, including the MJFF and CEPI. We are required to fulfill certain contractual obligations with
respect to products created using such grant funding, including certain reporting requirements. If these grant proposals are awarded, or
if we receive funding from other nonprofit third parties in the future, we may be required to fulfill other contractual obligations, such
as publishing the results of our scientific studies, making certain products available at an affordable price in a list of clearly defined
low and lower-middle income countries and ensuring that certain products are available in geographic regions where there has been an
outbreak of an infectious disease at certain reduced economic rates.
If we or our licensors infringe, misappropriate, or otherwise violate intellectual property of third parties, we may face increased
costs or we may be unable to commercialize our product candidates.
Many of our current and former employees, consultants and independent contractors including our senior management, were
previously employed at universities or at other biotechnology or pharmaceutical companies, including some which may be
competitors or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not
use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees,
consultants or independent contractors have used or disclosed intellectual property, including trade secrets or other proprietary
information, of such individual’s current or former employers, or that patents and applications we have filed to protect inventions of
these individuals, even those related to one or more of our current or future product candidates, are rightfully owned by their former or
concurrent employer. In addition, while we typically require our employees, consultants and independent contractors who may be
involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be
unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our
 
own, or
such agreements may be breached or alleged to be ineffective, and the assignment may not be self-executing, which may result in
claims by or against us related to the ownership of such intellectual property or may result in such intellectual property becoming
assigned to third parties.
71
Third parties have, and may in the future have, U.S. and non-U.S. issued patents and pending patent applications relating to
compounds, methods of manufacturing compounds or methods of use for the treatment of the disease indications for which we are
developing our product candidates that may cover our product candidates. For example, we are aware of certain third-party U.S. and
non-U.S. patents and patent applications, including those of our competitors, that relate to anti-alpha synuclein binding molecules
 
that
may be construed to cover the technology used in our anti-alpha synuclein vaccine product candidate. We are also aware of certain
third-party U.S. and non-U.S. patents and patent applications, including those of our competitors, that relate to coronavirus vaccines
and treatments and vaccines against other infectious diseases and we expect such third parties to have filed additional patent
applications, which have not yet been published and to file additional patent applications in the future.
In the event that any of these patent rights were asserted against us, we believe that we have defenses against any such action,
including that such patents would not be infringed by our product candidates and/or that such patents are not valid. However, if any
such patent rights were to be asserted against us and our defenses to such assertion were unsuccessful, unless we obtain a license to
such patents, we could be liable for damages, which could be significant and include treble damages and attorneys’ fees if we are
found to willfully infringe such patents. We could also be precluded from commercializing any product candidates that were
ultimately held to infringe such patents, any of which could have a material adverse effect on our business, financial condition, results
of operations and prospects.
Uncertainties resulting from our participation in patent litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace. Furthermore, because of the substantial amount of discovery required in
 
certain jurisdictions in
connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by
disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim
proceedings or developments. If securities analysts or investors perceive these results to be negative, the perceived value of our
product candidates or intellectual property could be diminished. Accordingly, the market price of our Class A common stock could
decline. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material
adverse effect on our business, financial condition, results of operations and prospects.
Changes to the patent law in the United States and other jurisdictions could increase the uncertainties and costs
 
surrounding the
prosecution of our patent applications and the enforcement or defense of our issued patents, thereby impairing our ability to
protect our technologies and product candidates.
As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.
Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore
costly, time-consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws in the United
States or abroad could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement
 
or
defense of issued patents. For example, certain U.S. Supreme Court rulings provide that patent claims that recite laws of nature are not
themselves patentable unless those patent claims have sufficient additional features that provide practical assurance that the processes
are genuine inventive applications of those laws. What constitutes a “sufficient” additional feature remains uncertain. This
combination of events has created uncertainty with respect to the validity and enforceability of patents, even once they are obtained.
Depending on future actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents
could change in unpredictable ways. In addition, the complexity and uncertainty of European and Asian patent laws have also
increased in recent years. Complying with these laws and regulations could have a material adverse effect on our existing patent
portfolio and our ability to protect and enforce our intellectual property in the future.
Obtaining and maintaining our patent protection, including patents licensed from third parties, depends on compliance with
various procedural, documentary, fee payment and other requirements imposed by governmental patent agencies, and our patent
protection could be reduced or eliminated for noncompliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and patent applications will be
due to be paid to the USPTO and various government patent agencies outside the United States over the lifetime of our patents and
patent applications and any patent rights we may own or license in the future. Additionally, the USPTO and various government
patent agencies outside the United States require compliance with a number of procedural, documentary, fee payment and other
similar provisions during the patent application process. In certain cases, an inadvertent lapse can be cured by payment of a late fee or
by other means in accordance with rules applicable to the particular jurisdiction. However, there are situations in which
noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent
rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application
include failure to respond to official communications within prescribed time limits, non-payment of fees and failure to properly
legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering or otherwise
protecting our technologies or our product candidates, our competitors may be able to enter the market with similar or identical
products or technology without infringing our patents, which could have a material adverse effect on our business. In addition, to the
extent that we have responsibility for taking any action related to the prosecution or maintenance of patents or patent applications in-
licensed from a third party, any failure on our part to maintain the in-licensed intellectual property could jeopardize our rights under
the relevant license and may have a material adverse effect on our business, financial condition, results of operations and prospects.
72
If we do not obtain patent term extensions and data exclusivity for each of our product candidates, our business may be materially
harmed.
Depending upon the timing, duration and specifics of any FDA marketing approval in the United States of any product candidates we
may develop, one or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and
Patent Term Restoration Action of 1984 (“Hatch-Waxman
 
Amendments”). The Hatch-Waxman Amendments permit a patent
extension term of up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term
extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent
applicable to an approved drug may be extended and only those claims covering the approved drug, a method for using it, or a method
for manufacturing it may be extended. The length of the patent term extension is typically calculated as one half of the clinical trial
period plus the entire period of time during the review of the NDA or BLA by the FDA, minus any time of delay by the applicant
during these periods. We might not be granted a patent term extension at all, because of, for example, failure to apply within the
applicable period, failure to apply prior to the expiration of relevant patents or otherwise failure to satisfy any of the numerous
applicable requirements.
In the European Union, a maximum of five and a half years of supplementary protection can be achieved for an active ingredient or
combinations of active ingredients of a medicinal product protected by a basic patent, if a valid marketing authorization
 
exists (which
must be the first authorization to place the product on the market as a medicinal product) and if the product has not already
 
been the
subject of supplementary protection. Although all countries in Europe must provide supplementary protection certificates, there is no
unified legislation among European countries and so supplementary protection certificates must be applied for and granted
 
on a
country-by-country basis. This can lead to a substantial cost to apply for and receive these
 
certificates, which may vary among
countries or not be provided at all. Further, we may not receive an extension because of, for example, failing to exercise due diligence
during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration
of relevant patents, or otherwise failing to satisfy applicable requirements. Moreover, the length of the extension could be less than we
request. If we are unable to obtain patent term extension or if the term of any such extension is less than we request, our competitors
may obtain approval of competing products earlier than expected following our patent expiration, and our business, financial
condition, results of operations and prospects could be materially harmed.
If we are unable to protect the confidentiality of our proprietary information and trade secrets, the value of our technology and
products could be materially adversely affected.
In addition to patent protection, we also rely on trade secrets and confidentiality agreements to protect other proprietary information
that is not patentable or that we elect not to patent. To maintain the confidentiality of trade secrets and proprietary information, we
enter into confidentiality agreements with our employees, consultants, independent contractors, collaborators, contract
 
manufacturers,
CROs and others upon the commencement of their relationships with us. These agreements require that all
 
confidential information
developed by the individual or entity or made known to the individual or entity by us during the course of the individual’s or entity’s
relationship with us be kept confidential and not disclosed to third parties. Our agreements with employees as well as our personnel
policies also generally provide that any inventions conceived by the individual in the course of rendering services
 
to us shall be our
exclusive property or that we may obtain full rights to such inventions at our election. However, we cannot guarantee that we have
entered into such agreements with each party that may have or has had access to our trade secrets or proprietary technology and
processes and cannot guarantee that individuals with whom we have these agreements will comply with their terms. In the event of
unauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide
meaningful protection, particularly for our trade secrets.
We may not have adequate remedies in the event of unauthorized use or disclosure of our proprietary information in the case of a
breach of any such agreements and our trade secrets and other proprietary information could be disclosed to third parties, including
our competitors. Many of our partners also collaborate with our competitors and other third parties. The disclosure of our trade secrets
to our competitors, or more broadly, would impair our competitive position and may materially harm our business, financial condition,
results of operations and prospects. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our
proprietary rights, and failure to maintain trade secret protection could adversely affect our competitive business position. The
enforceability of confidentiality agreements may vary from jurisdiction to jurisdiction. Courts outside the United States are sometimes
less willing to protect proprietary information, technology and know-how. In addition, others may independently discover or develop
substantially equivalent or superior proprietary information and techniques, and the existence of our own trade secrets affords no
protection against such independent discovery.
73
If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of
interest and our business, financial condition, results of operations and prospects may be adversely affected.
We rely on our trademarks for name recognition by potential partners and customers in our markets of interest. However, our
trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing
 
on other
marks. We may not be able to protect our rights to these trademarks and trade names or may be forced to stop using these names or
marks. During trademark registration proceedings, we may receive rejections that we may be unable to overcome. In addition, in the
USPTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark
applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks,
and our trademarks or trademark applications may not survive such proceedings. If we are unable to establish name recognition based
on our trademarks and trade names, we may not be able to compete effectively and our business, financial condition, results of
operations and prospects may be adversely affected.
Intellectual property rights do not necessarily address all potential threats.
The degree of future protection afforded by our proprietary and intellectual property rights is uncertain because such rights offer only
limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:
 
others may be able to develop products that are similar to, or better than, our product candidates in a way that is not
covered by the claims of the patents we license or may own currently or in the future;
 
we, or our licensing partners or current or future collaborators, might not have been the first to make or file patent
applications for the inventions covered by issued patents or pending patent applications that we license or may own
currently or in the future;
 
we may not have the financial or other resources necessary to enforce a patent infringement or other proprietary rights
violation action;
 
we may choose not to file a patent for certain trade secrets or know-how, and a third party may subsequently file a patent
covering such intellectual property;
 
our trade secrets or proprietary know-how may be unlawfully disclosed, thereby losing their trade secret or proprietary
status;
 
our competitors or other third parties might conduct research and development activities in countries where we do not
have patent rights and then use the information learned from such activities to develop competitive products for
 
sale in
our major commercial markets;
 
it is possible that there are prior public disclosures that could invalidate our or our licensors’ patents;
 
the patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our
business;
 
third parties could design around our patents, or independently develop trade secrets that provide them with an advantage
over us;
 
any patents that we obtain may not provide us with any competitive advantages or may ultimately be found not to be
owned by us, or to be invalid or unenforceable; or
 
we may not develop additional proprietary technologies that are patentable.
Should any of these events occur, they could significantly harm our business, financial conditions, results of operations and prospects.
74
Risks Related to Our Business and Industry
Even if we, or any current or future collaborators, are able to commercialize any product candidate that we or they develop, the
successful commercialization of our product candidates will depend in part on the extent to which governmental authorities,
private health insurers and other third-party payors provide coverage and adequate reimbursement levels and implement pricing
policies favorable for our product candidates. Failure to obtain or maintain coverage and adequate reimbursement for our product
candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue.
The healthcare industry is acutely focused on cost containment, both in the United States and elsewhere. Government authorities and
third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement. The insurance
 
coverage and
reimbursement status of newly approved products is uncertain and failure to obtain or maintain adequate coverage and reimbursement
for our product candidates could limit our ability to generate revenue. Our business model is also focused on lowering the cost and
increasing the accessibility of healthcare. Even if we are successful in driving down the cost of healthcare, third- party payors may still
not view our product candidates, if approved, as cost-effective, and coverage and reimbursement may not be available to our patients
or may not be sufficient to allow our products, if any, to be marketed on a competitive basis. If coverage and reimbursement are not
available, or reimbursement is available only to limited levels, patient subpopulations of labeled indications, or otherwise restricted,
we, or any collaborators, may not be able to successfully commercialize our product candidates. Even if coverage is provided,
 
the
approved reimbursement amount may not be high enough to allow us, or any collaborators, to establish or maintain pricing
 
sufficient
to realize a sufficient return on our or their investments. Cost-control initiatives could also cause us to decrease any price we might
establish for our product candidates, which could result in lower than anticipated product revenues. Moreover, eligibility for
reimbursement does not imply that any product will be paid for in all cases or at a rate that covers our costs, including our costs related
to research, development, manufacture, sale and distribution. Reimbursement rates may vary, by way of example, according to the use
of the product and the clinical setting in which it is used. For products administered under the supervision of a physician, obtaining
coverage and adequate reimbursement may be difficult because of the higher costs often associated with administering such drugs. If
the prices for our product candidates, if approved, decrease or if governmental and other third-party payors do not provide adequate
coverage or reimbursement, our business, financial condition, results of operations and prospects will suffer, perhaps materially.
There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States,
the CMS, the federal agency responsible for administering the Medicare program, makes the principal decisions about coverage and
reimbursement for new treatments under Medicare. Private payors may follow CMS to a substantial degree. It is difficult to predict
what CMS will decide with respect to reimbursement for novel products such as ours. In addition, certain Affordable Care Act
marketplace and other private payor plans are required to include coverage for certain preventative services, including vaccinations
recommended by the U.S. Centers for Disease Control’s Advisory Committee on Immunization Practices (“ACIP”) without cost share
obligations (i.e., co- payments, deductibles or co-insurance) for plan members. For Medicare beneficiaries, some of our product
candidates may be covered for reimbursement under either the Part B program or Part D program depending on several criteria,
including the type of vaccine and the beneficiary’s coverage eligibility. If our product candidates, once approved, are reimbursed only
under the Part D program, physicians may be less willing to use our products because of the claims adjudication costs and time related
to the claims adjudication process and collection of copayments associated with the Part D program. If our product candidates, once
approved, are reimbursed only under the Part B program, certain potential drawbacks associated with the Part B program, such as the
time and effort required to seek reimbursement after purchase, may make our product candidates less attractive to clinics or other
potential customers. Outside of Medicare, private insurance is likely to raise similar claims adjudication and copayment
considerations, which may also make our product candidates less attractive to potential customers using private insurance.
Outside the United States, certain countries set prices and reimbursement for pharmaceutical products, with limited
 
participation from
the marketing authorization holders. We cannot be sure that such prices and reimbursement will be acceptable to us or our
collaborators. If the regulatory authorities in these jurisdictions set prices or reimbursement levels that are not commercially
 
attractive
for us or our collaborators, our revenues from sales by us or our collaborators, and the potential profitability of our product candidates,
in those countries would be negatively affected. Additionally, some countries require approval of the sale price of a product before it
can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. As a
result, we might obtain marketing approval for a product in a particular country, but then may experience delays in the reimbursement
approval of our product or be subject to price regulations that would delay our commercial launch of the product, possibly for lengthy
time periods, which could negatively impact the revenues we are able to generate from the sale of the product in that particular
country.
Moreover, an increasing number of countries are taking initiatives to attempt to reduce large budget deficits by focusing cost-cutting
efforts on pharmaceuticals for their state-run healthcare systems. These international price control efforts have impacted all regions of
the world, notably in the European Union. In some countries, in particular in many Member States of the European
 
Union, we may be
required to conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidates to other available
therapies in order to obtain or maintain reimbursement or pricing approval. In addition, publication of discounts by third-
 
party payors
or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries.
75
If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business,
financial condition, results of operations or prospects could be materially adversely affected. Cost-control initiatives could cause us, or
any collaborators, to decrease the price we, or they, might establish for products, which could result in lower than anticipated product
revenues. Further, our competitors have more experience dealing with and contracting with payors for preferred coverage, which
could potentially put us at a competitive disadvantage. An inability to promptly obtain coverage and adequate payment rates from both
government-funded and private payors for any of our product candidates for which we, or any future collaborator, obtain marketing
approval could significantly harm our operating results, our ability to raise capital needed to commercialize products and our overall
financial condition.
Our business and current and future relationships with third-party payors, healthcare professionals and customers in the United
States and elsewhere will be subject to applicable healthcare laws and regulations, which could expose us to significant
 
penalties.
Healthcare providers, physicians and third-party payors in the United States and elsewhere will play a primary role in the
recommendation and prescription of any product candidates for which we obtain marketing approval. Our current
 
and future
arrangements with healthcare professionals, third-party payors and customers expose us to broadly applicable fraud and abuse and
other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal civil False
Claims Act, that may constrain the business or financial arrangements and relationships through which we conduct clinical
 
research,
sell, market and distribute any products for which we obtain marketing approval. In addition, we may be subject to physician payment
transparency laws and patient privacy regulation by the federal government and by the U.S. states and foreign jurisdictions
 
in which
we conduct our business.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations may
involve substantial costs. It is possible that governmental authorities will conclude that our business practices, including our
relationships with physicians and other healthcare providers, some of whom may recommend, purchase or prescribe our product
candidate, if approved, may not comply with current or future statutes, regulations or case law involving applicable
 
fraud and abuse or
other healthcare laws and regulations.
If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may
be subject to significant civil, criminal and administrative penalties, including, without limitation, damages, fines, disgorgement,
individual imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, additional
reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve
allegations of noncompliance with these laws and the curtailment or restructuring of our operations, which could have a material
adverse effect on our business. If any of the physicians or other healthcare providers or entities with whom we expect to do business is
found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including
exclusions from participation in government healthcare programs, which could also materially affect our business.
We
, our management and directors are or may become involved in or subject to legal proceedings that are uncertain, costly and
time-consuming and could have an adverse effect on our business, financial condition, results of operations and prospects.
We
, our management and directors are involved, or may become involved, from time to time in litigation matters
 
incidental to the
conduct of our business. In December 2022, our board of directors became aware of pending litigation filed by our CEO against a
significant stockholder, Ask America, LLC (“Ask America”). For more information regarding legal proceedings, see Note 14 –
Commitments and Contingencies to our consolidated financial statements for the year ended December 31, 2023 included elsewhere
in this Annual Report.
Legal proceedings can become complex and divert the time and attention of our management and certain of our employees from our
business. These matters are inherently uncertain and there is no guarantee that we will be successful in prosecuting or defending
ourselves or that our assessment of the materiality of these matters and the likely outcome or potential losses will be consistent
 
with
the ultimate outcome of such matters. Responding to these matters, even those that are ultimately non-meritorious, may require us to
incur significant expense and devote significant resources. Defending against or settling such claims and any
 
unfavorable legal
decisions, settlements or orders could have a material adverse effect on our business, financial condition, results of operations and
prospects.
76
Cyberattacks or other failures in our or our third-party vendors’, contractors’ or consultants’ telecommunications
 
or information
technology systems could result in information theft, compromise, or other unauthorized access, data corruption and significant
disruption of our business operations, and could harm our reputation and subject us to liability, lawsuits and actions from
governmental authorities.
The success of our research and development programs depends on data which is stored and transmitted digitally, the corruption or
loss of which could cause significant setback to one or all of our programs. We face a number of risks related to our use, processing,
storage and security of this critical information, including loss of access, inappropriate use or disclosure, inappropriate
 
modification
corruption, unauthorized access or processing. Because we use third-party vendors and subcontractors to manage our sensitive
information, we also may not have the ability to adequately monitor, audit or modify the security controls over this critical
information. Despite the implementation of security measures, given the size and complexity of our internal information technology
(“IT”) systems and those of our third-party vendors, contractors and consultants, such IT systems are potentially vulnerable
 
to
breakdown or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war, and
telecommunication and electrical failures.
Cyber threats are persistent and constantly evolving. Such threats, which may include ransomware or other malware, phishing attacks,
denial of services attacks, man-in-the-middle attacks and others, have increased in frequency, scope and potential impact in recent
years, which increase the difficulty of detecting and successfully defending against them. We may not be able to anticipate all types of
security threats, and, despite our efforts, we may not be able to implement preventive measures effective against all such security
threats. The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a
wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations
or hostile foreign governments or agencies. There can be no assurance that we or our third-party service providers, contractors
 
or
consultants will be successful in preventing cyberattacks or successfully mitigating their effects. Our IT systems and those of our
third-party service providers, contractors or consultants are additionally vulnerable to security breaches from inadvertent
 
or intentional
actions by our employees, third-party vendors, contractors, consultants, business partners and/or other third parties. These threats pose
a risk to the security of our systems and networks, the confidentiality and the availability, security and integrity of our data, and these
risks apply both to us and to third parties on whose systems we rely for the conduct of our business. If the IT systems of our third-
party vendors and other contractors and consultants become subject to disruptions or security breaches, we may have insufficient
recourse against such third parties and we may have to expend significant resources to mitigate the impact of such an event, and to
develop and implement protections to prevent future events of a similar nature from occurring. Any cyberattack or destruction or loss
of, unauthorized access to, processing of, or exfiltration of data could have a material adverse effect on our business, financial
condition, results of operations and prospects. For example, if such an event were to occur and cause interruptions in our operations,
or those of our third-party vendors and other contractors and consultants, it could result in a material disruption or delay of the
development of our product candidates. In addition, we may suffer reputational harm or face litigation or adverse regulatory action as
a result of cyberattacks or other data security breaches, particularly those involving personal information or protected health
information, and may incur significant additional expense to implement further data protection measures. As cyber
 
threats continue to
evolve, we may be required to incur material additional expenses in order to enhance our protective measures or to remediate any
information security vulnerability.
We are subject to stringent privacy laws, information security laws, regulations, policies and contractual obligations related to data
privacy and security and changes in such laws, regulations, policies and contractual obligations could adversely affect our
business, financial condition, results of operations and prospects.
We are subject to data privacy and security laws and regulations that apply to the collection, transmission, storage, use, processing,
destruction, retention and security of personal information, which among other things, including additional laws or regulations relating
to health information. The legislative and regulatory landscape for privacy and data protection continues to evolve in jurisdictions
worldwide, and these laws may at times be conflicting. It is possible that these laws may be interpreted and applied in a manner
 
that is
inconsistent with our practices and our efforts to comply with the evolving data protection rules may be unsuccessful. We must devote
significant resources to understanding and complying with this changing landscape. Failure to comply with federal,
 
state and
international laws regarding privacy and security of personal information could expose us to penalties under such laws,
 
orders
requiring that we change our practices, claims for damages or other liabilities, regulatory investigations and enforcement action,
litigation and significant costs for remediation, any of which could adversely affect our business. Even if we are not determined to
have violated these laws, government investigations into these issues typically require the expenditure of significant resources and
generate negative publicity, which have a material adverse effect on our business, financial condition, results of operations and
prospects. Failure to comply with any of these laws and regulations could result in enforcement action against us, including fines,
criminal prosecution of employees, claims for damages by affected individuals and damage to our reputation and loss of goodwill, any
of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Additionally, if
we are unable to properly protect the privacy and security of personal information, including protected health information, we could
be found to have breached our contracts with certain third parties.
77
There are numerous U.S. federal and state laws and regulations related to the privacy and security of personal information. In
particular, HIPAA,
 
as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”)
and their respective implementing regulations, establish privacy and security standards that limit the use and disclosure of individually
identifiable health information, or protected health information, and require the implementation of administrative, physical and
technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability
of electronic protected health information. Determining whether protected health information has been handled in compliance with
applicable privacy standards and our contractual obligations can be complex and may be subject to changing interpretation.
 
If we fail
to comply with applicable privacy laws, including applicable HIPAA privacy and security standards, we could face civil and criminal
penalties. The HHS has the discretion to impose penalties without attempting to first resolve violations. HHS enforcement activity can
result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal
resources. Even when HIPAA does not apply,
 
failing to take appropriate steps to keep consumers’ personal information secure can
constitute unfair acts or practices in or affecting commerce and be construed as a violation of Section 5(a) of the Federal Trade
Commission Act (the “FTCA”), 15 U.S.C § 45(a). The FTC expects a company’s data security measures to be reasonable and
appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its
 
business, and the
cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered
sensitive data that merits stronger safeguards and the FTC’s guidance for appropriately securing consumers’ personal information is
similar to what is required by the HIPAA Security Rule. In addition, state attorneys general are authorized to bring civil actions
seeking either injunctions or damages in response to violations that threaten the privacy of state residents. We cannot be sure how
these regulations will be interpreted, enforced or applied to our operations. In addition to the risks associated with enforcement
activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations at the federal and state
level may be costly and require ongoing modifications to our policies, procedures and systems.
Internationally, laws, regulations and standards in many jurisdictions apply broadly to the collection, transmission, storage, use,
processing, destruction, retention and security of personal information. For example, in the European Union, the collection,
transmission, storage, use, processing, destruction, retention and security of personal data is governed by the provisions of the General
Data Protection Regulation (the “GDPR”) in addition to other applicable laws and regulations. The GDPR came into effect in May
2018, repealing and replacing the European Union Data Protection Directive, and imposing revised data privacy and security
requirements on companies in relation to the processing of personal data of European Union data subjects. The GDPR, together with
national legislation, regulations and guidelines of the European Union Member States governing the collection, transmission, storage,
use, processing, destruction, retention and security of personal data, impose strict obligations with respect to, and restrictions on, the
collection, use, retention, protection, disclosure, transfer and processing of personal data. The GDPR also imposes strict rules on the
transfer of personal data to countries outside the European Union that are not deemed to have protections for personal information,
including the United States. The GDPR authorizes fines for certain violations of up to 4% of the total global annual turnover of the
preceding financial year or €20 million, whichever is greater. Such fines are in addition to any civil litigation claims by data subjects.
Separately, Brexit has led and could also lead to legislative and regulatory changes and may increase our compliance costs. As of
January 1, 2021, and the expiry of transitional arrangements agreed to between the United Kingdom and the European Union, data
processing in the United Kingdom is governed by a United Kingdom version of the GDPR (combining the GDPR and the Data
Protection Act 2018), exposing us to two parallel regimes, each of which authorizes similar fines and other potentially divergent
enforcement actions for certain violations. On June 28, 2021, the European Commission adopted an adequacy decision for the United
Kingdom, allowing for the relatively free exchange of personal information between the European Union and the United Kingdom.
Other jurisdictions outside the European Union are similarly introducing or enhancing privacy and data security laws, rules and
regulations, which could increase our compliance costs and the risks associated with noncompliance. We cannot guarantee that we are,
or will be, in compliance with all applicable international regulations as they are enforced now or as they evolve.
We face potential liability related to the privacy of health information we obtain from clinical trials sponsored by us.
Most healthcare providers, including research institutions from which we obtain patient health information, are subject to privacy and
security regulations promulgated under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health
Act. We do not believe that we are currently classified as a covered entity or business associate under HIPAA and thus are not directly
subject to its requirements or penalties. However, any person may be prosecuted under HIPAA’s
 
criminal provisions either directly or
under aiding-and-abetting or conspiracy principles. Consequently, depending on the facts and circumstances, we could face substantial
criminal penalties if we knowingly receive individually identifiable health information from a HIPAA-covered healthcare provider or
research institution that has not satisfied HIPAA’s
 
requirements for disclosure of individually identifiable health information. Even
when HIPAA does not apply,
 
according to the FTC failing to take appropriate steps to keep consumers’ personal information secure
constitutes unfair acts or practices in or affecting commerce in violation of the FTCA. The FTC expects a company’s data security
measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and
complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually
 
identifiable
health information is considered sensitive data that merits stronger safeguards.
78
In addition, we may maintain sensitive personally identifiable information, including health information, that we receive
 
throughout
the clinical trial process, in the course of our research collaborations. As such, we may be subject to state laws, including
 
the CCPA,
requiring notification of affected individuals and state regulators in the event of a breach of personal information, which is a broader
class of information than the health information protected by HIPAA. Our clinical trial programs outside the United States may
implicate international data protection laws, including the GDPR and legislation of the EU member states implementing it.
Our activities outside the United States impose additional compliance requirements and generate additional risks of enforcement for
noncompliance. Failure by our CROs and other contractors to comply with the strict rules on the transfer of personal data outside of
the EU into the United States may result in the imposition of criminal and administrative sanctions on such collaborators, which could
adversely affect our business. Furthermore, certain health privacy laws, data breach notification laws, consumer protection laws and
genetic testing laws may apply directly to our operations and/or those of our collaborators and may impose restrictions on our
collection, use and dissemination of individuals’ health information.
Moreover, patients about whom we or our collaborators obtain health information, as well as the providers who share this information
with us, may have statutory or contractual rights that limit our ability to use and disclose the information. We may be required to
expend significant capital and other resources to ensure ongoing compliance with applicable privacy and data
 
security laws. Claims
that we have violated individuals’ privacy rights or breached our contractual obligations, even if we are not found liable, could be
expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
If we or our contract manufacturers, CROs or other contractors or consultants fail to comply with applicable federal, state or local
regulatory privacy requirements, we could be subject to a range of regulatory actions that could affect our or our contractors’ ability to
develop and commercialize our product candidates and could harm or prevent sales of any affected products that we are able to
commercialize, or could substantially increase the costs and expenses of developing, commercializing and marketing our products.
Any threatened or actual government enforcement action could also generate adverse publicity and require that we devote
 
substantial
resources that could otherwise be used in other aspects of our business. Increasing use of social media could give rise to liability,
breaches of data security or reputational damage. Any of the foregoing could have a material adverse effect on our business, financial
condition, results of operations and prospects.
We face substantial competition, which may result in others discovering, developing or commercializing products before or more
successfully than we do.
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a
strong emphasis on proprietary products. We face and will continue to face competition from third parties that use similar platforms
and from third parties focused on developing and commercializing other peptide and peptide-based product candidates. The
competition is likely to come from multiple sources, including large and specialty pharmaceutical and biotechnology companies,
academic research institutions, government agencies and public and private research institutions.
Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and other
resources than we do, such as larger research and development, clinical, marketing and manufacturing organizations. Mergers and
acquisitions in the biotechnology and pharmaceutical industries may result in even greater concentration of resources among
 
a smaller
number of competitors. Our commercial opportunity could be reduced or eliminated if competitors develop and commercialize
products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any
products that we may develop. Our competitors also may obtain FDA or other regulatory approvals for their products faster or earlier
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. For example, some of our competitors have already received approval from regulatory authorities for
 
their
COVID-19 vaccines and boosters to address variants of SARS-CoV-2. Additionally, technologies developed by our competitors may
render our product candidates uneconomical or obsolete, and we may not be successful in marketing our product candidates against
competitors’ products. In addition, the availability of our competitors’ products and the lack of complementary products offered by
our sales and distribution team as compared to competitors with more extensive product lines, could limit the demand and
 
the prices
we are able to charge for any products that we may develop and commercialize.
79
Developments by competitors may render our products or technologies obsolete or non-competitive or may reduce the size of our
markets.
Our industry has been characterized by extensive research and development efforts, rapid developments in technologies, intense
competition and a strong emphasis on proprietary products. We expect our product candidates to face intense and increasing
competition as new products enter the relevant markets and advanced technologies become available. We face potential competition
from many different sources, including pharmaceutical, biotechnology and specialty pharmaceutical companies. Academic research
institutions, governmental agencies and public and private institutions are also potential sources of competitive products and
technologies. Our competitors may have or may develop superior technologies or approaches and have different business models from
us which do not focus on democratizing healthcare and on lower cost, all of which may provide them with competitive advantages.
Many of these competitors may also have compounds already approved or in development in the therapeutic categories that we are
targeting with our product candidates. The global vaccine market is highly concentrated among a small number of multinational
pharmaceutical companies: Pfizer, Moderna, Merck, GlaxoSmithKline and Sanofi together control most of the global vaccine market.
While we are not aware of all of our competitors’ efforts, there are approximately fifty COVID-19 vaccines currently approved for use
in one or more countries around the world. We also face substantial competition in therapeutic areas outside of COVID-19. For
example, the FDA approved aducanumab in June 2021 as the first FDA-approved immunotherapy for AD, and lecanemab in January
2023, and multiple approved products exist in the fields of migraine and hypercholesterolemia, including products that act on the same
therapeutic targets as our vaccine candidates.
 
In addition, many of our competitors, either alone or together with their collaborative
partners, may operate larger research and development programs or have substantially greater financial resources than we do, as well
as greater experience in:
 
developing product candidates;
 
undertaking pre-clinical testing and clinical trials;
 
obtaining BLA approval by the FDA;
 
obtaining comparable foreign regulatory approvals of product candidates;
 
formulating and manufacturing products;
 
launching, marketing and selling products; and
 
competing for market share, obtaining reimbursement and securing payor contractors for preferential coverage.
If these competitors access the marketplace with safer, more effective, or less expensive therapeutics, our product candidates, if
approved for commercialization, may not be profitable to sell or worthwhile to continue to develop. Technology in the pharmaceutical
industry has undergone rapid and significant change, and we expect that it will continue to do so. Any compounds, products or
processes that we develop may become obsolete or uneconomical before we recover any expenses incurred in connection with their
development. The success of our product candidates will depend upon factors such as product efficacy, safety, reliability,
 
availability,
timing, scope of regulatory approval, acceptance and price, among other things. Other important factors to our success include speed
in developing product candidates, completing clinical development and laboratory testing, obtaining regulatory approvals and
manufacturing and selling commercial quantities of potential products.
Our product candidates are intended to compete directly or indirectly with existing products and products currently in development.
Even if approved and commercialized, our product candidates may fail to achieve market acceptance with hospitals, physicians,
patients or third-party payors. Hospitals, physicians or patients may conclude that our products are less safe or effective or otherwise
less attractive than existing drugs. If our product candidates do not receive market acceptance for any reason, our revenue potential
would be diminished, which would materially adversely affect our ability to become profitable.
Many of our competitors have substantially greater capital resources, robust product candidate pipelines, established presence in the
market and expertise in research and development, manufacturing, pre-clinical and clinical testing, obtaining regulatory approvals
 
and
reimbursement and marketing approved products than we do. As a result, our competitors may achieve product commercialization or
patent or other intellectual property protection earlier than we can. Smaller or early-stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete
with us in recruiting and retaining qualified clinical, regulatory, scientific, sales, marketing and management personnel and
establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary
 
to, or
necessary for, our programs. Our commercial opportunity could be reduced or eliminated if our competitors develop and
commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less
expensive than any products that we may develop or that would render any products that we may develop obsolete or noncompetitive.
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We are subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”), and similar laws of non-U.S.
jurisdictions where we conduct business. If we fail to comply with these laws, we could be subject to civil
 
or criminal penalties,
other remedial measures, and legal expenses, which could adversely affect our business, financial condition, results of operations
and prospects.
We are currently subject to anti-corruption laws, including the FCPA.
 
The FCPA, the U.K. Bribery Act 2010 and other applicable
anti-bribery and anti-corruption laws generally prohibit us, our employees and intermediaries from bribing, being bribed or making
other prohibited payments to government officials or other persons to obtain or retain business or gain other business advantages. In
furtherance of our goal to democratize healthcare, we intend to distribute any product candidates that are approved or receive an EUA
in various countries around the world, including countries with a heightened corruption risk. This may raise the risk of non-
compliance with anti-corruption laws and other rules and regulations prohibiting bribery and other crimes. We also participate in
collaborations and relationships with third parties whose actions could potentially subject us to liability under the FCPA or other
jurisdictions’ anti-corruption laws, which in turn could result in internal and external investigations, associated legal costs
 
and even
civil fines and criminal charges, any of which would divert time and resources away from our core business operations even if we and
our employees and agents do not violate laws and regulations. The FCPA also requires public companies to make and keep books and
records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal
accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials, including
officials of non-U.S. governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are
(directly or indirectly) employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, our
dealings with these prescribers and purchasers are subject to regulation under, but not limited to, the FCPA. In recent years, the SEC
and Department of Justice have also increased their FCPA enforcement activities with respect to pharmaceutical companies.
We are in the process of establishing a program to govern the compliance of any potential sales or marketing operations of our
products, should any of them be approved or receive an EUA. To date, we have not had a robust compliance program. We cannot
ensure that our operations to date have complied, and that our future operations will comply, with our compliance program or laws,
rules and regulations governing the sales and marketing of pharmaceutical products, government contracting and other aspects of our
business. We have used, and plan to use, a network of agents in countries around the world to conduct our sales and marketing
operations. These agents will not be our employees, and while we intend to have a robust diligence program in connection with
engaging agents, our diligence program and compliance program may not be sufficient to prevent wrong-doing.
There is also no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws,
including the FCPA, particularly given the high level of complexity of these laws. We
 
have adopted a code of conduct applicable to all
of our employees and contractors, but it is not always possible to identify and deter misconduct by these
 
parties and other third parties,
and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or
losses or in protecting us from governmental investigations or other actions, claims or lawsuits stemming from a failure to comply
with such laws or regulations. If we are not in compliance with the FCPA or other anti-corruption laws, we may be subject to criminal
and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact
on our business, financial condition, results of operations and prospects. Similarly, any investigation of any potential violations of the
FCPA or other anti-corruption laws by authorities in the United States or other jurisdictions where we conduct business could also
have an adverse impact on our reputation, business, financial condition, results of operations and prospects.
As a result of our geographically diverse operations, we are more susceptible to certain risks.
We have operation in multiple countries. We
 
have also used, and plan to use, a network of agents in countries around the world to
conduct our sales and marketing operations. If we are unable to manage the risks of our global operations, including fluctuations in
foreign exchange and inflation rates, international hostilities such as the ongoing conflicts between Russia and Ukraine or Israel and
Hamas, increased tension between Taiwan and China, natural disasters, security breaches, our ability to supply our product candidates
on a timely and large scale basis in local markets, lead times for shipping, accounts receivable collection times, import or export
licensing requirements, language barriers, failure to maintain compliance with our clients’ control requirements and multiple legal and
regulatory systems, our results of operations and ability to grow could be materially adversely affected. In particular, our business and
stock price may be affected by fluctuations in foreign exchange rates between currencies in different jurisdictions in which operate or
in which we may have sales in the future.
81
Certain legal and political risks are also inherent in foreign operations. Foreign sales of our product candidates could be adversely
affected by the imposition of governmental controls, political and economic instability, trade restrictions and changes in tariffs. In
many countries, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations
with governmental authorities can take considerable time after the receipt of marketing approval for a drug. There is a risk that foreign
governments may nationalize private enterprises in certain countries where we may operate. In certain countries or regions, terrorist
activities and the response to such activities may threaten our operations more than in the United States. Social and cultural norms
 
in
certain countries may not support compliance with our corporate policies, including those that require compliance with substantive
laws and regulations. Also, changes in general economic and political conditions in countries where we may operate are a risk to our
financial performance and future growth. For example, we have partnered with UBIA for the development of UB-612 in Taiwan,
which was also funded in part by the Taiwanese government.
 
In addition, we have in the past relied upon, and may in the future,
continue to be dependent on contract manufacturers from China or Taiwan or affiliated with Chinese or Taiwanese entities, including
UBI, it affiliates and WuXi STA
 
.
 
Geopolitical tension, such as a deterioration in the relationship between the United States and China,
including any potential resulting sanctions, export controls, or other restrictive actions that may be imposed by the United States
against governmental or other entities in, for example, China or Taiwan, also could have an adverse impact on our product
development programs. If any of our contract manufacturers encounter difficulties as a result, our ability to provide product candidates
for clinical trials or products, if approved, to patients or future customers could be delayed or halted. Additionally, the need to identify
financially and commercially strong partners for commercialization outside the United States who will comply with the
 
high
manufacturing and legal and regulatory compliance standards we require is a risk to our financial performance. As we operate our
business globally, our success will depend, in part, on our ability to anticipate and effectively manage these and other related risks.
There can be no assurance that the consequences of these and other factors relating to our international operations
 
will not have an
adverse effect on our business, financial condition, results of operations and prospects.
We are exposed to potential product liability and professional indemnity risks that are inherent in the research, development,
manufacturing, marketing and use of pharmaceutical products.
The use of our investigational medicinal products in clinical trials and the sale of any approved products in the future may expose us
to liability claims. These claims might be made by patients who use the product, health care providers, pharmaceutical companies or
others selling such products. Any claims against us, regardless of their merit, could be difficult and costly to defend and could
materially adversely affect the market for our product candidates or any prospects for commercialization of our product candidates.
In addition, regulations vary significantly across jurisdictions regarding the clinical trial sponsor’s responsibility to provide free
medical care and compensation to clinical trial participants who experience an injury or illness during
 
the trial. For example, there is
no legal requirement in the United States for sponsors to provide free medical treatment or compensation to a participant injured
during a study; as a result, sponsors usually agree to pay for the medical care to diagnose and treat participant injuries to the extent
related to the clinical trial and typically do not pay unless the injury is determined to be related to participation in the trial. In contrast,
India requires free medical care until it is established that the injury is not related to the study and compensation for any
 
injury that is
determined to be related to the study. In 2019, India’s Ministry of Health and Family Welfare
 
published the “New Drugs and Clinical
Trials Rules,” which increased a clinical trial sponsor’s liability for injuries related to clinical trial trials. Under the regulation,
sponsors are required to (i) provide “free medical management” to participants that experience an injury that, in the investigator’s
opinion, is related to the study or until it is established that the injury is not related to the study and (ii) “compensate”
 
clinical trial
participants for trial-related injuries. Clinical trials conducted in jurisdictions with broad compensation and medical
 
care requirements
could result in increased overall research costs and adversely affect our ability to conduct clinical trials.
Although the clinical trial process is designed to identify and assess potential side effects, it is always possible that a product, even
after regulatory approval, may exhibit unforeseen side effects, including rare side effects more likely to be seen in commercial use
than in clinical studies. If any of our product candidates were to cause adverse side effects during clinical trials or after approval of the
product candidate, we may be exposed to substantial liabilities. Physicians and patients may not comply with any warnings that
identify known potential adverse effects and patients who should not use our product candidates.
To cover such liability claims, we purchase clinical trial insurances in the conduct of each of our clinical trials (typically conducted
through our CROs). It is possible that our liabilities could exceed our insurance coverage or that our insurance will not
 
cover all
situations in which a claim against us could be made. We also intend to expand our insurance coverage to include the sale of
commercial products if we receive marketing approval for any of our proprietary products. However, we may not be able to maintain
insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability
 
that may arise. If a
successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our
assets may not be sufficient to cover such claims and our business operations could be impaired. Should any of the events described
above occur, this could have a material adverse effect on our business, financial condition, results of operations and prospects,
including, but not limited to:
 
decreased demand for our future product candidates;
 
adverse publicity and injury to our reputation;
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withdrawal of clinical trial participants;
 
initiation of investigations by regulators;
 
costs to defend the related litigation;
 
a diversion of management’s time and our resources;
 
compensation in response to a liability claim;
 
product recalls, withdrawals or labeling, marketing or promotional restrictions;
 
loss of revenue;
 
exhaustion of any available insurance and our capital resources; and
 
the inability to commercialize our products or product candidates.
We could be adversely affected if we are subject to negative publicity.
 
We could also be adversely affected if any of our products or
any similar products distributed by other companies prove to be, or are asserted to be, harmful to patients. Any adverse publicity
associated with illness or other adverse effects resulting from patients’ use or misuse of our products or any similar products
distributed by other companies could have a material adverse impact on our business, financial condition, results of operations or
prospects.
If we need to expand our organization, we may experience difficulties in managing this growth, which could disrupt our
operations.
If we expand our organization, we may encounter difficulties in managing our growth, which could disrupt our operations. We expect
to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of clinical
development and regulatory affairs, as well as to support our public company operations. For example, we may build our own focused
sales, distribution and marketing infrastructure to market our product candidates, if approved, in markets around the world, which
involves significant expenses and risks. To manage these growth activities, we must continue to implement and improve our
managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
Our management may need to devote a significant amount of its attention to managing these growth activities. Due to
 
our limited
financial resources and the limited experience of our management team in managing a company with such anticipated
 
growth, we may
not be able to effectively manage the expansion of our operations, retain key employees or identify, recruit and train additional
qualified personnel. Our inability to manage the expansion or relocation of our operations effectively may result in weaknesses in our
infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among
remaining employees. Our expected growth could also require significant capital expenditures and may divert financial resources from
other projects, such as the development of additional product candidates. If we are unable to effectively manage our expected growth,
our expenses may increase more than expected, our ability to generate revenues could be reduced and we may not be able to
implement our business strategy, including the successful development and commercialization of our product candidates. Any of the
foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. Future growth
would impose significant additional responsibilities on our management, including:
 
the need to identify, recruit, maintain, motivate and integrate additional employees, consultants and contractors;
 
managing our internal development efforts effectively, including the clinical and regulatory review process for our
product candidates, while complying with our contractual obligations to contractors and other third parties; and
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improving our operational, financial and management controls, reporting systems and procedures. We currently rely, and
for the foreseeable future will continue to rely, in substantial part on certain related parties, independent organizations,
advisors and consultants to provide certain services, including substantially all aspects of regulatory approval, clinical
trial management and manufacturing. There can be no assurance that the services of independent organizations, advisors
and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified
replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of
the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or
terminated, and we may not be able to obtain regulatory approval of our product candidates or otherwise advance our
business. There can be no assurance that we will be able to manage our existing consultants or find other competent
outside contractors and consultants on economically reasonable terms, or at all. If we are not able to effectively expand
our organization by hiring new employees and expanding our groups of consultants and contractors, or we are not able to
effectively build out new facilities to accommodate this expansion, we may not be able to successfully implement the
tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our
research, development and commercialization goals.
Many of the biotechnology and pharmaceutical companies that we compete against for qualified personnel and consultants have
greater financial and other resources, different risk profiles and a longer history in the industry than we do. If we are unable to
continue to attract and retain high-quality personnel and consultants, the rate and success at which we can discover and develop
product candidates and operate our business will be limited.
We only have a limited number of employees to manage and operate our business, which may lead to certain operational issues.
As of March 15, 2024, we had 51 employees. Our focus on the development of UB-612, UB-312, UB-313, VXX-401 and other
product candidates requires us to manage and operate our business in a highly efficient manner. We have a limited number of
employees upon which we rely to effectively manage and operate our business and we cannot assure you that operational issues will
not arise.
While we intend to identify, recruit, maintain, motivate and integrate additional employees, consultants and contractors to support our
growth, we cannot assure you that we will be able to hire and/or retain adequate staffing levels to develop our product candidates or
run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish.
If we lose key management or scientific personnel, cannot recruit qualified employees, directors, officers or other significant
personnel or experience increases in our compensation costs, our business may materially suffer.
We are highly dependent on our management and directors. Due to the specialized knowledge each of our officers and key employees
possesses with respect to our product candidates and our operations, the loss of service of any of our officers or directors could delay
or prevent the successful enrollment and completion of our clinical trials. We do not carry key person life insurance on any officers or
directors. In general, the employment arrangements that we have with our executive officers do not prevent them from terminating
their employment with us at any time. Our agreements with our employees generally provide for at-will employment.
In addition, our future success and growth will depend in part on the continued service of our directors, employees and management
personnel and our ability to identify, hire and retain additional personnel. If we lose one or more of our executive officers or key
employees, our ability to implement our business strategy successfully could be seriously harmed. Furthermore, replacing executive
officers and key employees may be difficult or costly and may take an extended period of time because of the limited number of
individuals in our industry with the breadth of skills and experience required to develop, gain regulatory approval of and
commercialize product candidates successfully. Competition to hire from this limited pool is intense, and we may be unable to hire,
train, retain or effectively incentivize these additional key personnel on acceptable terms given the competition among numerous
pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and
clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including
 
scientific and
clinical advisors, to assist us in formulating our research, development and commercialization strategy. Our consultants and advisors
may be engaged by entities other than us and may have commitments under consulting or advisory contracts with other entities that
may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to develop and
commercialize product candidates will be limited.
Many of our employees have become or will soon become vested in a substantial amount of our Class A common stock or a number
of common stock options. Our employees may be more likely to leave us if the shares they own have significantly appreciated in value
relative to the original purchase prices of the shares, or if the exercise prices of the options that they hold are significantly
 
below the
market price of Class A our common stock. Our future success also depends on our ability to continue to attract and retain additional
executive officers and other key employees.
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If we engage in future acquisitions, joint ventures or strategic collaborations, this may increase our capital requirements, dilute
our stockholders, cause us to incur debt or assume contingent liabilities and subject us to other risks.
We may evaluate various acquisitions and collaborations, including licensing or acquiring complementary products, intellectual
property rights, technologies, or businesses. Any potential acquisition, joint venture, or collaboration 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;
 
the diversion of our management’s attention from our existing product programs and initiatives in pursuing such a
strategic merger or acquisition;
 
retention of key employees, the loss of key personnel and uncertainties in our 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 investigational medicines and regulatory approvals; and
 
our inability to generate revenue from acquired technology or products sufficient to meet our objectives in undertaking
the acquisition or even to offset the associated acquisition and maintenance costs.
In addition, if we undertake acquisitions, we may utilize our cash, issue dilutive securities, assume or incur debt obligations, incur
large one-time expenses and acquire intangible assets that could result in significant future amortization expense.
Moreover, we may not be able to locate suitable acquisition or strategic collaboration opportunities, and this inability could impair our
ability to grow or obtain access to technology or products that may be important to the development of our business.
We or the third parties upon whom we depend may be adversely affected by natural disasters or pandemics and our business
continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Natural disasters or pandemics,
 
including any lingering effects of the COVID-19 pandemic, could severely disrupt our operations and
have a material adverse effect on our business, results of operations, financial condition and prospects. For example, our headquarters
and main laboratory is located on the Eastern coast of Florida, a location that is at a higher risk of exposure
 
to hurricanes. If a
hurricane or natural disaster causes us to sustain significant damage to our Florida headquarters and main laboratory, or if we must
shut down our operations there for an extended period of time, our business and financial results would be adversely impacted.
 
If a natural disaster, power outage, pandemic or other event occurred that prevented us from using all or a significant portion of our
headquarters, that damaged critical infrastructure, such as the manufacturing facilities on which we rely, 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.
Unstable market and economic conditions have had and may have further serious adverse consequences on our business, financial
condition and share price.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely
diminished liquidity and credit availability, destabilization of a regional or national banking system, declines in consumer confidence,
continuing inflation, rising interest rates, declines in economic growth, increases in unemployment rates and uncertainty about
economic stability. If the equity and credit markets further deteriorate, it may make any necessary debt or equity financing more
difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. In addition, there is a risk that one or more
of our CROs, suppliers, contract manufacturers or other third-party providers may not survive an economic downturn, or that industry
trends with respect to pricing models, supply chains and delivery mechanisms, among other things, deviate from our expectations. As
a result, our business, results of operations and price of our Class A common stock may be adversely affected.
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Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant
uninsured liabilities.
Though we have insurance coverage for clinical trial product liability, we do not carry insurance for all categories of risk that our
business may encounter. Some of the policies we currently maintain include general liability, auto, renters’, workers’ compensation
and directors’ and officers’ insurance.
Any additional product liability insurance coverage we acquire in the future may not be sufficient to reimburse us for any expenses or
losses we may suffer. Moreover,
 
insurance coverage is becoming increasingly expensive and in the future we may not be able to
maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If we obtain
marketing approval for any of our product candidates, we intend to acquire insurance coverage to include the sale of commercial
products; however, we may be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts.
A successful product liability claim or series of claims brought against us could cause our stock price to decline and, if judgments
exceed our insurance coverage, could adversely affect our results of operations and business, including preventing or limiting the
development and commercialization of any product candidates we develop. We do not carry specific biological or hazardous waste
insurance coverage, and our renters’ and general liability insurance policies specifically exclude coverage
 
for damages and fines
arising from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury, we could
be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory
approvals could be suspended.
Operations as a public company have made it more difficult and more expensive for us to obtain director and officer liability
insurance, and we and have incurred substantially higher costs since becoming a public company. As a result, it has become more
expensive for us to obtain the coverage needed to attract and retain qualified people to serve on our board of directors, our board
committees or as executive officers. We do not know,
 
however, if we will be able to maintain existing insurance with adequate levels
of coverage. Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash and
cash equivalents position and results of operations.
Due to the vaccination rate, the demand for our COVID-19 product candidate may decrease significantly or disappear entirely.
We are pursuing a path to conditional and provisional approval of UB-612 as a heterologous boost (boosting the immunity of a subject
who has already received a different vaccine) in the United Kingdom and Australia, respectively.
 
Other companies have also
responded to the pandemic at a faster pace, and to date approximately fifty COVID-19 vaccines are currently in use around the world.
As our competitors continue to develop, receive regulatory approval for and commercialize their own COVID-19 vaccines and
boosters and as demand for the vaccine and boosters has significantly declined, demand for our COVID-19 product candidate may
materially decrease or disappear entirely, along with a corresponding decrease in any future potential revenues. Further, the existence
and significance of the opportunity to provide COVID-19 boosters in the future and patient uptake is highly uncertain, and there can
be no assurance that we will commercially benefit from the development of a COVID-19 booster vaccine.
Risks Related to Our Class A Common Stock
 
An active trading market for our Class A common stock may not continue to be developed or sustained.
Prior to our initial public offering, there was no public market for our Class A common stock.
 
Although our Class A common stock is
now listed on The Nasdaq Global Market, an active trading market for our shares of Class A common stock may never develop or be
sustained.
 
If an active market for our Class A common stock does not develop or is not sustained, it may be difficult for you to sell
shares of our Class A common stock at an attractive price or at all.
 
An inactive market may also impair our ability to raise capital by
selling shares of our common stock, our ability to motivate our employees through equity incentive awards,
 
and our ability to acquire
other companies, products or technologies by using our common stock as consideration for such acquisitions.
The price of our Class A common stock has been volatile and may be further affected by market conditions beyond our control,
and purchasers of our Class A common stock could incur substantial losses.
Our results of operations have fluctuated and are likely to continue to fluctuate in the future. In addition, securities markets worldwide
have experienced, and are likely to continue to experience, significant price and volume fluctuations. This market
 
volatility, as well as
general economic, market or political conditions, could subject the market price of our shares of Class A common stock to wide price
fluctuations regardless of our operating performance, which has caused and could further cause a decline in the market price of our
common stock. Price volatility may be greater if the public float and trading volume of shares of our Class A common stock is low.
Some factors that may cause the market price of our Class A common stock to fluctuate, in addition to the other risks mentioned in
this Report, include:
 
our operating and financial performance and prospects;
86
 
our announcements or our competitors’ announcements regarding new products or services, enhancements, significant
contracts, acquisitions or strategic investments;
 
any delay in our development or regulatory filings for our product candidates and any adverse development or perceived
adverse development with respect to the applicable regulatory authority’s review of such filings;
 
if any of our product candidates receives an EUA or regulatory approval, the terms of such approval and market
acceptance and demand for such product candidates;
 
the success of any efforts to acquire or in-license additional technologies, products or product candidates;
 
changes in earnings estimates or recommendations by securities analysts who cover our Class A common stock;
 
fluctuations in our financial results or, in the event we provide it from time to time, earnings guidance, or the financial
results or earnings guidance of companies perceived by investors to be similar to us;
 
changes in our capital structure, such as future issuances of securities, sales of large blocks of common stock by our
stockholders, including our principal stockholders, or the incurrence of additional debt;
 
additions and departure of key personnel;
 
any disputes relating to our intellectual property, including any intellectual property infringement lawsuit or opposition,
interference or cancellation proceeding in which we may become involved;
 
reputational issues, including reputational issues involving our competitors and their products;
 
actions by institutional stockholders;
 
changes in general economic and market conditions;
 
changes in industry conditions or perceptions or changes in the market outlook for the industry in which we compete,
including changes in the structure of healthcare payment systems; and
 
changes in applicable laws, rules or regulations or regulatory actions affecting us or our clients and other dynamics.
These and other factors have caused and may further cause the market price for shares of our Class A common stock to fluctuate
substantially, which may further limit or prevent investors from readily selling their shares of our Class A common stock and
negatively affect the liquidity of our Class A common stock. In addition, in the past, when the market price of a stock has been
volatile, holders of that stock sometimes have instituted securities class action litigation against the company that issued the stock.
Securities litigation against us, regardless of the merits or outcome, could result in substantial costs and divert the time and attention of
our management from the business, which could significantly harm our business, results of operation, financial condition or
reputation.
While our Class A common stock is expected to continue listing on The Nasdaq Global Market, there
 
is no guarantee as to how
long such listing will be maintained.
 
On February 9, 2024, we received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating
that the Company was no longer in compliance with Listing Rule 5450(a)(1) (the “Minimum Bid Requirement) with respect
 
to its
Class A Common Stock, which requires the Company to maintain a minimum bid price of $1.00 per share for continued listing on The
Nasdaq Global Market (the “Notice”). The Company has until August 7, 2024, which is 180 calendar days from the date of the Notice
(the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement. The Company can regain compliance
 
if
the closing bid price of the Class A Common Stock closes at least $1.00 per share for a minimum of ten consecutive business days.
 
The Company intends to actively monitor the bid price of its Class A Common Stock and will consider available
 
options to regain
compliance with the Minimum Bid Price Requirement. However, there can be no assurance that the Company will be able to regain
compliance with the Minimum Bid Price Requirement or remain in compliance with other continued listing requirements.
 
 
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In addition, delisting or a potential delisting event could harm our ability to raise capital through alternative financing sources on
terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and business
 
development
opportunities. Such a delisting likely would impair your ability to sell or purchase our Class A common stock when you wish to do so.
Further, if we were to be delisted from Nasdaq, our Class A common stock may no longer be recognized as a “covered security” and
we would be subject to regulation in each state in which it offers securities. As a result, delisting from Nasdaq could adversely affect
our ability to raise additional financing through the public or private sale of equity securities, would significantly impact the ability of
investors to trade our securities and would negatively impact the value and liquidity of our Class A common stock.
The dual-class structure of our common stock and the Voting Agreement will have the effect of concentrating voting power, which
will significantly limit stockholders’ ability to influence the outcome of matters submitted to our stockholders for approval,
including the election of our board of directors, the adoption of amendments to our Charter and Bylaws and the approval of any
merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction.
Our Class A common stock has one vote per share, and our Class B common stock has ten votes per share. Our principal stockholders
have entered into the Voting
 
Agreement. As of March 1, 2024 on a fully diluted basis, Mei Mei Hu, as proxyholder under the Voting
Agreement, controls approximately 64.4% of the total voting power of our outstanding capital stock. The Voting Agreement provides
Mei Mei Hu with the authority (and irrevocable proxies) to direct the vote and vote the shares of capital stock held by the parties to the
voting agreement at her discretion on all matters to be voted upon by stockholders. The voting power covered by the Voting
Agreement may increase over time as the UBI Warrant is exercised and as our principal stockholders exercise or vest equity awards
that were outstanding at the time of the completion of our initial public offering. If all such equity awards held by our principal
stockholders had been exercised or vested and exchanged for shares of common stock and the UBI Warrant had been exercised in full
for shares of Class A common stock as of March 1, 2024, assuming no other equity awards had been exercised or vested, the Voting
Agreement would have covered, in the aggregate, approximately 66.1% of the total voting power of our outstanding capital stock. As
a result, if our principal stockholders retain all or a large portion their common stock, including the common stock issuable upon the
exercise or vesting of such principal stockholders’ outstanding equity awards or upon the exercise of the UBI Warrant, our principal
stockholders will be able to significantly influence (if not control) any action requiring the approval of our
 
stockholders, including the
election of our board of directors, the adoption of amendments to our amended and restated certificate of incorporation (the “Charter”)
and our amended and restated bylaws (the “Bylaws”) and the approval of any merger, consolidation, sale of all or substantially all of
our assets or other major corporate transaction. Assuming our principal stockholders retain their equity interests and the Voting
Agreement remains in effect, our principal stockholders will effectively control all such matters submitted to the stockholders for the
foreseeable future. Our principal stockholders will also have the voting power to determine the composition of our board of directors,
which in turn will be able to determine matters affecting us, including, among others:
 
any determination with respect to our business direction and policies, including the appointment and removal of officers;
 
the adoption of amendments to our Charter and Bylaws;
 
determinations with respect to mergers, business combinations or disposition of assets;
 
compensation and benefit programs and other human resources policy decisions;
 
the payment of dividends on our common stock; and
 
determinations with respect to tax matters.
Our principal stockholders may have interests that differ from yours and may vote in a way with which you disagree and which may
be adverse to your interests. This concentrated control may have the effect of delaying, preventing or deterring a change in control of
the Company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale in the
Company and might ultimately affect the market price of our Class A common stock. In addition, each share of Class B common stock
will automatically convert into one share of Class A common stock upon any transfer, whether or not for value and whether voluntary
or involuntary or by operation of law, except for certain transfers described in our Charter, including, without limitation, certain
transfers for tax and estate planning purposes. Such issuances will be dilutive to holders of our Class A common stock.
 
88
We are an “emerging growth company” and a “smaller reporting company” and will be able to avail ourselves of reduced
disclosure requirements applicable to emerging growth companies and smaller reporting companies, which could make our Class
A common stock less attractive to investors and adversely affect the market price of our Class A common stock.
We are an “emerging growth company,”
 
as defined in the JOBS Act. We will remain an emerging growth company until the earliest
of (i) the last day of the fiscal year in which we have annual gross revenues of $1.235 billion or more; (ii) the date on which we have
issued more than $1.0 billion in non-convertible debt in the previous three years; (iii) the date we qualify as a “large accelerated filer”
under the Exchange Act, which would occur at the end of a given fiscal year if the market value of our common stock that is held by
non-affiliates is $700 million or more as of the last business day of the second fiscal quarter of such year (and we have been a public
company for at least 12 months and have filed one annual report on Form 10-K); and (iv) the last day of the fiscal year ending after the
fifth anniversary of our initial public offering. For so long as we remain an emerging growth company, we are permitted and intend to
rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth
companies. These exemptions include:
 
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
 
not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight
Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information
about the audit and the financial statements;
 
being required to provide only two years of audited financial statements in addition to any required unaudited interim
financial statements;
 
permitting an extended transition period for complying with new or revised accounting standards, which allows an
emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies;
 
reduced disclosure obligations regarding executive compensation; and
 
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved.
We may choose to take advantage of some, but not all, of the available exemptions. We have elected to use the extended transition
period for new or revised accounting standards during the period in which we remain an emerging growth company. To the extent that
we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange Act, after we
cease to qualify as an emerging growth company, we will continue to be permitted to make certain reduced disclosures in our periodic
reports and other documents that we file with the SEC. We cannot predict whether investors will find our Class A common stock less
attractive as a result of our reliance on these exemptions. If some investors find our Class A common stock less attractive as a result,
there may be a less active trading market for our Class A common stock and our stock price may be more volatile.
As long as our principal stockholders hold a majority of the voting power of our capital stock, we may rely on certain exemptions
from the corporate governance requirements of the Nasdaq available for “controlled companies.”
We are a “controlled company” within the meaning of the corporate governance requirements of the Nasdaq because our principal
stockholders will continue to hold more than 50% of the voting power of our outstanding shares of capital stock as a result of our dual-
class common stock structure and the Voting
 
Agreement. A controlled company may elect not to comply with certain corporate
governance requirements of the Nasdaq. Accordingly, our board of directors will not be required to have a majority of independent
directors and our Compensation Committee and Nominating and Governance Committee will not be required to
 
meet the director
independence requirements to which we would otherwise be subject until such time as we cease to be a “controlled company.”
Accordingly, you will not have certain of the protections afforded to stockholders of companies that are subject to all of the corporate
governance requirements of the Nasdaq.
Your
 
percentage ownership in us may be diluted by future issuances of capital stock, which could reduce your influence over
matters on which stockholders vote.
Pursuant to our Charter and Bylaws, our board of directors has the authority, without action or vote of our stockholders, to issue all or
any part of our authorized but unissued shares of common stock, including shares issuable upon the exercise of options, or shares of
our authorized but unissued preferred stock. Issuances of shares of common stock or shares of voting preferred stock would reduce
your influence over matters on which our stockholders vote and, in the case of issuances of shares of preferred stock, would likely
result in your interest in us being subject to the prior rights of holders of that preferred stock.
89
Future sales of a substantial number of shares of our Class A common stock may depress the price of our shares.
If our stockholders sell a large number of shares of our Class A common stock, or if we issue a large number of shares of our Class A
common stock in connection with future acquisitions, financings or other circumstances, the market price of shares of our Class A
common stock could decline significantly. Moreover, the perception in the public market that our stockholders might sell shares of our
Class A common stock could depress the market price of those shares. In addition, sales of a substantial number of shares of our
common stock by our principal stockholders could adversely affect the market price of our Class A common stock.
We do not anticipate declaring or paying regular dividends on our Class A common stock in the near term, and any indebtedness
could limit our ability to pay dividends on our Class A common stock.
We have never declared and do not anticipate declaring or paying regular cash dividends on our Class A common stock in the near
term. We currently intend to use our future earnings, if any, to pay any debt obligations, to fund our growth and develop our business
and for general corporate purposes. Therefore, you are not likely to receive any cash dividends on your Class A common stock in the
near term, and the success of an investment in shares of our Class A common stock will depend upon any future appreciation in their
value, which is not certain to occur. There is no guarantee that shares of our Class A common stock will appreciate in value or even
maintain the price at which they are initially offered. Any future declaration and payment of cash dividends or other distributions of
capital will be at the discretion of our board of directors and the payment of any future cash dividends or other distributions of capital
will depend on many factors, including our financial condition, earnings, cash needs, regulatory constraints, capital requirements
(including requirements of our subsidiaries) and any other factors that our board of directors deems relevant in making such a
determination. We cannot assure you that we will establish a dividend policy or pay cash dividends in the future or continue to pay
any cash dividend if we do commence paying cash dividends pursuant to a dividend policy or otherwise.
Our Charter designates courts in the State of Delaware as the sole and exclusive forum for certain types
 
of actions and
proceedings that may be initiated by our stockholders, and also provide that the federal district courts will be the exclusive forum
for resolving any complaint asserting a cause of action arising under the Securities Act, each of which could limit our
stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, stockholders or employees.
Our Charter provides that, subject to limited exceptions, the Court of Chancery for the State of Delaware or other specified courts in
the State of Delaware will be the sole and exclusive forum to the fullest extent of the law for:
 
any derivative action or proceeding brought on our behalf;
 
any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us
or our stockholders;
 
any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law (the
“DGCL”), our Charter or our Bylaws;
 
any action to interpret, apply, enforce or determine the validity of our Charter or Bylaws; and
 
any other action asserting a claim against us that is governed by the internal affairs doctrine.
Our Charter also provides that the federal district courts of the United States of America will be the exclusive forum for the resolution
of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents and arising under the
Securities Act. However, Section 22 of the Securities Act provides that federal and state courts have concurrent jurisdiction over
lawsuits brought pursuant to the Securities Act or the rules and regulations thereunder. To the extent the exclusive forum provision
restricts the courts in which claims arising under the Securities Act may be brought, there is uncertainty as to whether a court would
enforce such a provision. We note that investors cannot waive compliance with the federal securities laws and the rules and
regulations thereunder. This provision does not apply to claims brought under the Exchange Act.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of
and to have consented to these provisions. These provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it
finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and
our directors, officers and employees. Alternatively, if a court were to find these provisions of our Charter inapplicable to, or
unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated
with resolving such matters in other jurisdictions, which could adversely affect our business or financial condition.
90
Delaware law and provisions in our Charter and Bylaws might discourage, delay or prevent a change in control of the Company or
changes in our management and, therefore, depress the trading price of our Class A common stock.
Provisions of our Charter and Bylaws and of state law may delay, deter, prevent or render more difficult a takeover attempt that our
stockholders might consider in their best interests, including the following provisions:
 
our dual-class common stock structure and the Voting
 
Agreement, which provide our principal stockholders with a
majority of the voting power of our capital stock will enable our principal stockholders to influence the outcome of
matters submitted to our stockholders for approval even if they own significantly less than a majority of the number of
shares of our outstanding common stock;
 
our Charter does not provide for cumulative voting in the election of directors;
 
vacancies on our board of directors may be filled only by our board of directors and not by stockholders;
 
our stockholders may act by written consent only so long as the Voting Agreement is in effect and our principal
stockholders hold a majority of the voting power of then-outstanding shares of our capital stock;
 
a special meeting of our stockholders may only be called by the chairperson of our board of directors, our Chief
Executive Officer, our President, a majority of our board of directors or, so long as the Voting
 
Agreement is in effect and
our principal stockholders hold a majority of the voting power of then-outstanding shares of our capital stock, our
stockholders;
 
amendments to certain provisions of our Charter and stockholder-proposed amendments to our Bylaws require the
affirmative vote of the holders of at least 66 2/3% in voting power of all the then outstanding shares of our capital stock
entitled to vote thereon at any time the Voting Agreement is not in effect or our principal stockholders do not hold, in the
aggregate, a majority of the voting power of then-outstanding shares of our capital stock;
 
our Charter authorizes our board of directors, subject to the limitations imposed by Delaware law or the Nasdaq’s listing
rules, without any further vote or action by our stockholders, to issue preferred stock in one or more series and to fix the
designations, powers, preferences, limitations and rights of the shares of each series; and
 
advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters
before an annual meeting of stockholders.
Such provisions or laws may prevent our stockholders from receiving the benefit from any premium to the market price of our Class A
common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions
may adversely affect the prevailing market price of our Class A common stock if they are viewed as discouraging takeover attempts in
the future.
Provisions in our Charter and Bylaws, including the dual-class structure of our common stock, might discourage or prevent
institutional investors from purchasing or holding our Class A common stock, and, therefore, depress the trading price of our
Class A common stock.
Our governance structure and our Charter may negatively affect the decision by certain institutional investors to purchase or hold
shares of our Class A common stock. The holding of low-voting stock, such as our Class A common stock, may not be permitted by
the investment policies of certain institutional investors or may be less attractive to the portfolio managers of certain institutional
investors. In addition, in July 2017, FTSE Russell and Standard & Poor’s announced that they would cease to allow most newly public
companies utilizing dual- or multi-class capital structures to be included in their indices. Affected indices include the Russell 2000 and
the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. Our dual-class common
stock capital structure may make us ineligible for inclusion in any of these and certain other indices, and as a result, mutual funds,
exchange-traded funds and other investment vehicles that attempt to passively track these indices would not invest in our stock. These
policies may depress our valuation compared to those of other similar companies that are included in such indices.
91
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our business or
our market, or if they change their recommendation regarding our Class A common stock adversely, the trading price and trading
volume of our Class A common stock could decline.
The trading market for our Class A common stock will depend in part on the research and reports that securities or industry analysts
publish about us, our business, our market or our competitors. If no or few securities or industry analysts cover us, the price and
trading volume of our Class A common stock likely would be negatively impacted. If one or more of the securities or industry analysts
who cover us downgrade our Class A common stock or publish inaccurate or unfavorable research about us, the trading price
 
of our
Class A common stock would likely decline. If analysts publish target prices for our Class A common stock that are below our then-
current public price of our Class A common stock, it could cause the trading price of our Class A common stock to decline
significantly. Further, if one or more of these analysts cease coverage of the Company or fail to publish reports on us regularly,
demand for our Class A common stock could decrease, which might cause our Class A common stock trading price and trading
volume to decline.
General Risk Factors
We incur increased costs as a result of operating as a public company, and our management is required to devote substantial time
to new compliance initiatives.
As a public company, and particularly after we are no longer an “emerging growth company” or “smaller reporting company,” we will
incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act
and rules subsequently implemented by the SEC and the Nasdaq impose various requirements on public companies, including
establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management
and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations
have increased our legal and financial compliance costs and will make some activities more time- consuming and
 
costly. For example,
these rules and regulations have made it more difficult and more expensive for us to obtain director and officer liability insurance.
Pursuant to Section 404, we are required to furnish a report by our management on our internal control over financial reporting,
including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control
over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within
the prescribed period, we are engaged in a process to document and evaluate our internal control over financial reporting, which is
both costly and challenging. Further, despite our efforts, there is a risk that neither we nor our independent registered public
accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective
as required by Section 404. This 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 the Nasdaq.
Our independent registered public accounting firm may not be able to certify as to the effectiveness of our internal controls over
financial reporting,
 
which could have a significant and adverse effect on our business and reputation.
As a public company, we are now required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley
Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an
annual management report on the effectiveness of internal control over financial reporting. However, we are not required to have our
independent registered public accounting firm formally assess our internal controls for as long as we remain an “emerging growth
company” as defined in the JOBS Act.
When formally evaluating our internal controls over financial reporting, we have identified and may identify
 
further material
weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the
requirements of Section 404 of the Sarbanes-Oxley Act. In addition, if we fail to achieve and maintain the adequacy of our internal
controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure
 
that we can
conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act. We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the
impact of the same on our operations. If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a
timely manner or with adequate compliance, our independent registered public accounting firm may issue an adverse opinion due to
ineffective internal controls over financial reporting, and we may be subject to sanctions or investigation by regulatory authorities,
such as the SEC. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of
our financial statements. In addition, we may be required to incur additional costs in improving our internal control system and the
hiring of additional personnel. Any such action could have a significant and adverse effect on our business and reputation, which
could negatively affect our results of operations or cash flows.
 
 
 
92
Further, we believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system
 
are met. These inherent
limitations include the facts that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or
mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by
an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to
error or fraud may occur and not be detected.
We have in the past identified material weaknesses in our internal control over financial reporting, which have since been
remediated. If we are unable to develop and maintain an effective system of internal control over financial reporting, or if we
discover material deficiencies in the future, we may not be able to accurately report our financial results or prevent fraud, and as a
result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the
trading price of our Class A common stock.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate
disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or
difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. A material weakness is a
deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a
material misstatement of our financial statements will not be prevented or detected on a timely basis.
 
During the preparation of our audited consolidated financial statements for the year ended December 31, 2021, we identified certain
errors in our previously issued financial statements that were determined not to be material.
 
Further, as disclosed in Item 4 of our
Quarterly Reports on Form 10-Q during 2022, we identified material weaknesses in the design and operation of our internal control
over financial reporting relating to maintaining and performing our financial close process, ensuring that formal processes exist
 
for
identifying, analyzing and accounting for complex, non-routine transactions and proper segregation of duties and responsibilities
within our finance department.
 
We have invested resources and taken measures to improve internal control over financial reporting to
remediate the control deficiencies that led to these material weaknesses. Although we have successfully remediated these material
weaknesses, we cannot assure you that we will be able to successfully remediate other material weaknesses that we may discover
additional weaknesses in the future. If we are unable to successfully prevent or remediate any future issues or if the design and
operation of our internal controls fails, it could result in material misstatements or omissions in our financial statements and
potentially require us to restate our financial statements, which may result in the trading value of our Class A common stock being
materially adversely affected.
If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be
incorrect, our operating results could fall below our publicly announced guidance or the expectations of securities analysts and
investors, resulting in a decline in the market price of our Class A common stock.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires
management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and
accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets,
liabilities, equity, revenue and expenses that are not readily apparent from other sources. If our assumptions change or if actual
circumstances differ from our assumptions, our operating results may be adversely affected and could fall below our publicly
announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A
common stock.
 
Item 1B. Unresolved Staff Comments.
None.
 
Item 1C. Cybersecurity Risk Management.
At Vaxxinity,
 
cybersecurity risk management is an integral part of our IT strategy. Our cybersecurity risk management program is
based on standard industry practices and follows the National Institute of Standards and Technology (NIST) framework, which
provides steps for identifying system and operational vulnerabilities, protecting systems, detecting intrusions and malicious behavior,
as well as for planning a strong response and recovery. This methodology and our smaller functional scope allow us to effectively
address cybersecurity threats and incidents.
 
 
 
 
93
A majority of our IT systems are built on services provided by third parties. For example, we leverage commonly used foundational
technologies provided by third parties, such as secure messaging gateways, enforced drive encryption and multi-factor authentication.
Our choice of tools is shaped by these providers’ reputations and the outcomes of our internal evaluation process. We have
implemented a risk management process designed to mitigate cybersecurity risks that arise from utilizing services
 
provided by third
parties and regularly review the performance of these vendors and monitor for any adverse developments which may impact our own
security posture. Our control over and ability to monitor the security posture of third parties with whom we do business remains
limited and there can be no assurance that we can prevent, mitigate or remediate the risk of any compromise or failure in the security
infrastructure owned or controlled by such third parties. Additionally, any contractual protections with such third parties, including our
right to indemnification, if any at all, may be limited or insufficient to prevent a negative impact on our business from any such
compromise or failure.
Employees and contractors are given cybersecurity awareness training as part of their on-boarding process. We also maintain an
organizational IT and Security Policy which includes an Acceptable Use Policy that provides detailed guidelines on proper resource
use and personal behavior. We
 
require written acknowledgment of the latter document by all employees and contractors. All policies
are regularly reviewed and updated to keep in line with industry developments and organizational changes. Employees and contractors
across all departments are encouraged to report any concerns or suspicions to the IT department, who then investigates
 
and
recommends appropriate actions.
 
Our board of directors has overall responsibility for oversight of our risk management policies and procedures. Its audit committee
(the “Audit Committee”) is responsible for ensuring that management has processes in place designed to identify
 
and evaluate
cybersecurity risks to which we are exposed and implement processes and programs to manage them and mitigate and
 
remediate any
incidents. The audit committee also reports material cybersecurity risks to our full board of directors on an as-needed basis, but no less
than annually.
Routine oversight of cybersecurity risk management is delegated by the Audit Committee to our Chief Legal, Compliance and
Administrative Officer. The IT department, reporting directly to this Officer, is responsible for managing the cybersecurity risk
management program and is responsible for identifying, considering and assessing potentially material cybersecurity risks on an
ongoing basis, establishing processes to ensure that potential cybersecurity risk exposures are monitored, putting in place appropriate
mitigation measures and reporting to executive leadership about evolving issues. The Chief Legal, Compliance
 
and Administrative
Officer,
 
in turn, updates the Audit Committee and board of directors of any related incidents or threats that are being addressed.
The IT department's personnel have extensive backgrounds in IT operations in similar environments and each team member has had
experience managing cybersecurity issues.
 
We have access to external advisors in connection with our cybersecurity risk management
program should additional expertise be required to manage cybersecurity incidents or risk.
 
In 2023, we did not identify any cybersecurity threats or incidents that materially affected or are reasonably likely to materially affect
our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from
cybersecurity threats or incidents or provide assurances that we have not experienced an undetected cybersecurity incident. For more
information about these risks, please see “Risk Factors – Risks Related to Our Business and Industry” in this annual report on Form
10-K.
Item 2. Properties.
Facilities
Our principal executive offices are located in Merritt
 
Island, Florida, where we sublease approximately 9,900 square feet of
 
office and
lab space
 
from Space
 
Florida. In
 
April 2022,
 
we entered
 
into a
 
facility lease
 
agreement for
 
4,419 square
 
feet of
 
office space
 
in New
York,
 
New York,
 
which will expire
 
in March 2029.
 
We
 
do not currently
 
own any real
 
property. We
 
believe that our
 
current facilities
are adequate
 
to meet
 
our immediate
 
needs and
 
believe that
 
we should
 
be able
 
to renew
 
each of
 
our leases
 
and subleases
 
without an
adverse impact on our operations. In addition, we believe
 
that if we require additional office space or
 
manufacturing facilities, we will
be able to obtain additional facilities on commercially reasonable terms.
Item 3. Legal Proceedings.
From time to time we are a party to various litigation matters incidental to the conduct of our
 
business. See Note 14 to our consolidated
financial
 
statements
 
for
 
the
 
year
 
ended
 
December 31,
 
2023
 
included
 
elsewhere
 
in
 
this
 
Annual
 
Report
 
for
 
a
 
discussion
 
of
 
legal
proceedings.
Item 4. Mine Safety Disclosures.
The disclosure required by this item is not applicable.
 
 
 
 
94
PART
 
II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Price for the Common Stock
Our Class A
 
common stock is
 
listed on the
 
Nasdaq Global Market
 
under the symbol
 
“VAXX
 
.” As of
 
March 25, 2024, the
 
number of
shares
 
of
 
our Class
 
A
 
common
 
stock outstanding
 
was 112,873,552
 
held
 
by
 
approximately 74
 
shareholders of
 
record, not
 
including
shareholders whose shares are held in securities position listings.
 
Our Class B common stock is not listed on any exchange nor traded on any public market.
 
As of March 25, 2024, the number of shares
of our Class B common stock outstanding was 13,874,132 held by approximately 4 shareholders of record.
Dividends
We
 
have never declared or paid,
 
and do not anticipate declaring
 
or paying in the foreseeable
 
future, any cash dividends on
 
our capital
stock. Any future determination to declare and pay cash dividends will be at the discretion of our board of directors in accordance with
applicable laws and
 
will depend on,
 
among other things,
 
our financial condition,
 
results of operations,
 
cash requirements, contractual
restrictions and
 
such other
 
factors as
 
our board
 
of directors
 
deems relevant.
 
Our ability
 
to pay
 
dividends may
 
also be
 
limited by
 
covenants
of any future outstanding indebtedness we or our subsidiaries incur.
Issuer Purchases of Equity Securities
 
We did not repurchase any shares during the years ended December 31, 2023 and 2022.
Unregistered Sales of Equity Securities
There were no unregistered sales of equity securities during the fourth quarter of 2023.
Use of Proceeds
On November 15, 2021, the Company closed its initial public offering (“IPO”). The aggregate net proceeds to us from the offering,
after deducting underwriting discounts and commissions and other offering expenses payable by us, were approximately
 
$71.1 million.
All of the proceeds from our IPO have been used to fund operations, or invested in U.S. Treasury securities and money market
accounts.
Item 6. [Reserved].
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with our
consolidated financial statements and related notes and other financial information appearing elsewhere in this Report. We intend for
this discussion to provide you with information that will assist you in understanding our consolidated financial statements, the
changes in key items in those consolidated financial statements from year to year and the primary factors that accounted for those
changes.
Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information
with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks,
uncertainties and assumptions. See the section of this Report titled “Special Note Regarding Forward-Looking Statements” for a
discussion of forward-looking statements. As a result of many factors, including those factors set forth in the “Risk Factors” section of
this Report, our actual results could differ materially from management’s
 
expectations and the results described in or implied by the
forward-looking statements contained in the following discussion and analysis.
Overview
Vaxxinity
 
is
 
engaged
 
in
 
the
 
development
 
of
 
rationally
 
designed
 
prophylactic
 
and
 
therapeutic
 
vaccines
 
for
 
chronic
 
disorders
 
and
infectious diseases with
 
large patient populations
 
and unmet medical
 
needs. While vaccines
 
have traditionally been
 
unable to effectively
and safely combat chronic disorders, we believe
 
our platform could overcome the traditional hurdles
 
facing vaccines in this area.
 
Our
AIM
 
Platform
 
relies
 
on
 
a
 
synthetic
 
peptide
 
vaccine
 
technology
 
first
 
developed
 
by
 
UBI
 
and
 
subsequently
 
refined
 
over
 
the
 
last
 
two
decades. We
 
believe our
 
vaccines have
 
the potential
 
to combat
 
conditions that
 
have not
 
yet been
 
successfully treated, or
 
which have
primarily been addressed with monoclonal antibodies (mAbs) which, while generally effective,
 
are extremely costly and cumbersome,
and
 
thus
 
have
 
limited
 
accessibility.
 
Our
 
pipeline
 
primarily
 
consists
 
of
 
five
 
programs
 
focused
 
on
 
chronic
 
disease,
 
particularly
neurodegenerative disorders, in addition to other neurology and cardiovascular indications. Given the global COVID-19 pandemic and
95
our AIM
 
Platform’s applicability to
 
infectious disease,
 
we are
 
also opportunistically
 
advancing a
 
product candidate
 
that addresses
 
SARS-
CoV-2.
Our Neurodegeneration
 
pipeline consists
 
of UB-311,
 
which targets
 
the primary
 
pathological process
 
of Alzheimer’s
 
disease (“AD”);
UB-312, which targets the pathological process of
 
Parkinson’s disease (“PD”) and other so-called synucleinopathies; and
 
VXX-301, an
anti-tau protein product
 
candidate which has
 
the potential to
 
address multiple neurodegenerative
 
conditions, including AD.
 
Our Next
Wave Chronic pipeline consists of VXX-401, which targets proprotein convertase subtilisin/kexin type 9 serine protease (“PCSK9”) to
reduce low-density lipoprotein
 
(“LDL”) cholesterol, a
 
risk factor for
 
atherosclerotic heart disease,
 
and UB-313, which
 
targets Calcitonin
Gene-Related Peptide (“CGRP”) to prevent migraines. Through our AIM Platform, we believe we may be able
 
to address a wide range
of other chronic diseases, including diseases
 
that are or could potentially be
 
successfully treated by mAbs, which
 
increasingly dominate
the treatment paradigm but remain accessible only to a small proportion of patients who could potentially benefit from them.
Given our AIM
 
Platform’s applicability
 
to infectious disease
 
and the ongoing
 
need for booster
 
vaccines to address
 
SARS-CoV-2,
 
we
have developed
 
an infectious
 
disease product
 
candidate, UB-612,
 
as a
 
heterologous booster
 
against COVID-19.
 
We have reported
 
topline
results of a pivotal Phase 3 trial
 
of UB-612 and completed rolling submissions for
 
conditional/provisional authorization with regulatory
authorities in the United Kingdom and Australia in March 2023.
Our ability to
 
generate revenue sufficient
 
to achieve profitability
 
will depend on
 
the eventual regulatory
 
approval and commercialization
of one or more of
 
our product candidates. We
 
have not yet obtained any
 
regulatory approvals for our product candidates
 
or conducted
sales and marketing activities for our product candidates.
We have principally funded our operations through financing transactions. Through December 31, 2023, we received
 
gross proceeds of
$306.8 million
 
in connection
 
with various
 
financing transactions,
 
including the
 
sale of
 
preferred and
 
common stock,
 
the issuance
 
of
promissory notes (including
 
convertible promissory notes
 
(“Convertible Notes”)), and
 
the entry into
 
simple agreements for
 
future equity
(“SAFEs”).
Costs associated with research and development are the most significant
 
component of our expenses. These costs can vary greatly from
period to period
 
depending on
 
the timing of
 
various trials for
 
our product candidates.
 
We
 
expect our research
 
and development costs
and general and administrative
 
expenses could increase over
 
time if we expand
 
the number of product
 
candidates that we are
 
advancing,
advance any of the current pipeline candidates to later stage clinical trials which typically have more subjects
 
and higher costs, or incur
increased costs as a result of operating as
 
a public company.
 
Further, we anticipate incurring greater selling
 
and marketing expenses if
we commercialize any
 
of our product
 
candidates in the
 
future and prepare
 
for such commercialization.
 
Our product candidates
 
are in
clinical stage
 
or pre-clinical
 
stage development.
 
We
 
have generated
 
limited revenue
 
to date
 
and have
 
incurred significant
 
operating
losses since
 
inception. Net
 
losses were
 
$57.8 million
 
and $75.2
 
million for
 
the twelve
 
months ended
 
December 31, 2023
 
and 2022,
respectively.
 
As
 
of
 
December 31,
 
2023,
 
we
 
had
 
an
 
accumulated
 
deficit
 
of
 
$362.5
 
million.
 
We
 
expec
t
 
our
 
expenses
 
and
 
capital
requirements may increase over time in connection with our planned operations, which include:
continuing pre-clinical studies, existing clinical trials, or initiating new clinical trials for product candidates UB-311, UB-312,
UB-313, VXX-401, UB-612, and other product candidates;
hiring additional
 
clinical, quality
 
control, medical,
 
scientific and
 
other technical
 
personnel to
 
support additional
 
clinical and
research and development programs;
expanding operational, financial
 
and management systems
 
and infrastructure, expanding
 
our facilities and
 
increasing personnel
to support operations;
undertaking actions to meet the requirements and demands of being a public company;
maintaining, expanding and protecting our intellectual property portfolio;
seeking regulatory approvals for any product candidates that successfully complete clinical trials; and
undertaking pre-commercialization and commercialization activities to establish sales, marketing and distribution capabilities
for any product candidates for
 
which we may receive regulatory
 
approval in regions where we
 
elect to commercialize products
on our own or jointly with third parties.
The Company has taken several
 
steps to reduce our rate of
 
cash burn, including reducing
 
headcount
through attrition and organizational
restructuring,
 
limiting
 
use
 
of
 
external
 
consultants
 
and
 
other
 
professional
 
services,
 
and
 
deferring
 
certain
 
research
 
and
 
development
activities.
 
As a result of these efforts, as of the date of this report we expect our existing cash and cash equivalents will be sufficient to
fund our operating
 
expenses and capital
 
expenditure requirements
 
through late
 
2024. See Note
 
1 to the
 
consolidated financial
 
statements.
96
Thereafter, our
 
viability will depend
 
on our ability
 
to raise additional
 
capital to finance
 
operations, to successfully
 
commercialize our
product candidates, if approved,
 
or to enter into
 
collaborations with third parties
 
for the development of
 
our product candidates. If
 
we
are unable
 
to do
 
any of
 
the foregoing, we
 
would be
 
forced to
 
delay,
 
limit, reduce or
 
terminate our product
 
candidate development or
future commercialization efforts. Our
 
estimates are based
 
on a variety of
 
assumptions that may
 
prove to be wrong,
 
and we could exhaust
our available capital resources sooner than expected. See “— Liquidity and Capital Resources.”
 
Recent Developments
In January 2024 we announced a collaboration with the
 
University of Central Florida (“UCF”) to conduct research funded by
 
the state
of Florida to further the development
 
of our active immunotherapies to prevent
 
and mitigate muscle and bone wasting, which
 
are well
known health challenges related
 
to long-term spaceflight, and
 
which share biological mechanisms
 
implicated in highly prevalent
 
age-
related diseases.
 
In the same month, we
 
announced a collaboration with the University of
 
Florida’s Center for
 
Translational Research
in Neurodegenerative Disease (“CTRND”) to support our development of vaccines for neurodegenerative diseases.
Components of Our Consolidated Results of Operations
Revenue
 
We recorded no revenues for
 
the years ended
 
December 31, 2023 and
 
December 31, 2022. We do not
 
expect to generate
 
any meaningful
revenue unless and until
 
we obtain regulatory approval
 
of and commercialize
 
or out-license our product
 
candidates, and we do
 
not know
when, or
 
if, this
 
will occur.
 
If our
 
development efforts
 
for our
 
product candidates
 
are successful
 
and result
 
in commercialization,
 
we
may generate additional
 
revenue in the
 
future from a
 
combination of product
 
sales or payments
 
from collaboration or
 
license agreements
that we have entered
 
into or may enter
 
into with third parties.
 
See Risk Factors—Risks Related
 
to the Discovery and
 
Development of
Product Candidates. We
 
have incurred significant
 
losses since our
 
inception. We
 
expect to incur
 
losses for the
 
foreseeable future and
may never achieve or maintain profitability.
 
Cost of Revenue
 
We recorded
 
no cost of revenue for the years ended December 31,
 
2023 and December 31, 2022. If our development efforts
 
in respect
of our current
 
pipeline of product
 
candidates are successful
 
and result in
 
regulatory approval, we
 
expect our cost
 
of revenue will
 
increase
in relative proportion to the level of our revenue as we commercialize the applicable product candidate. We expect that cost of revenue
will increase in absolute dollars as and if our revenue grows and will vary from period to period as a percentage of revenue.
 
Research and Development Expenses
 
The design, initiation and execution of
 
candidate discovery and development programs
 
of our potential future product candidates
 
is key
to our
 
success and
 
involves significant
 
expenses. Prior
 
to initiating
 
these programs,
 
project teams
 
incorporating individuals
 
from the
essential disciplines within
 
Vaxxinity scope out the activities, timing,
 
requirements, inclusion and
 
exclusion criteria and
 
the primary and
secondary endpoints.
 
Once we
 
have decided
 
to proceed,
 
our AIM
 
Platform enables
 
the iteration
 
of drug
 
candidates in
 
the discovery
phase through rapid,
 
rational design and
 
formulation. After we
 
have identified drug
 
candidates, the costs
 
of scaling the
 
formulation from
research grade to clinical grade,
 
then to commercial grade,
 
typically consumes significant resources.
 
In addition to internal research
 
and
development, we utilize service providers, including related parties, to complete activities we lack the internal resources to handle.
Research and development expenses consist primarily of costs incurred for research activities, including drug discovery efforts and the
development of our product candidates. We expense research and development costs as incurred, which include:
expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval;
expenses incurred under agreements with CROs that are primarily engaged in the oversight and conduct of our clinical trials,
preclinical studies and drug discovery efforts and contract manufacturers that are primarily engaged to provide preclinical
and clinical drug substance and product for our research and development programs;
other costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical
studies and clinical trial materials, including manufacturing validation batches;
 
costs related to investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific
development services;
employee-related expenses, including salaries and benefits, travel and stock-based compensation expense for employees
engaged in research and development functions;
costs related to compliance with regulatory requirements; and
97
facilities-related costs, depreciation and other expenses, which include rent and utilities.
We
 
recognize external
 
development
 
costs based
 
on
 
an evaluation
 
of
 
the progress
 
to
 
completion of
 
specific
 
tasks using
 
information
provided to us
 
by service providers.
 
This process involves
 
reviewing open contracts
 
and purchase orders,
 
communicating with personnel
to identify services
 
that have been
 
performed on
 
our behalf and
 
estimating the
 
level of service
 
performed and the
 
associated cost incurred
for the service when we have not yet been invoiced or otherwise notified of actual costs. Any
 
nonrefundable advance payments that we
make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses.
Such amounts are expensed as the
 
related goods are delivered or the
 
related services are performed, or until
 
it is no longer expected that
the goods will be delivered, or the services rendered, at which point the net remainder is expensed.
We continue to work with related parties for the advancement of our research and development programs,
 
including for manufacturing,
quality control, testing, validation, supply services, as well as the winding down of some previously initiated clinical initiatives.
 
While
this related party work has significantly diminished
 
over the last year, and we expect this trend to continue,
 
we are still reliant on UBIA
to provide
 
certain manufacturing-related data
 
that will
 
be needed
 
for inclusion
 
in our
 
regulatory applications for
 
UB-612. During the
years
 
ended
 
December 31,
 
2023
 
and
 
2022,
 
related
 
party
 
expenses
 
were
 
approximately
 
5.6%
 
and
 
6.0%
 
of
 
our
 
operating
 
expenses,
respectively.
 
Where appropriate,
 
we allocate
 
our third-party
 
research and
 
development expenses
 
on a
 
program-by-program basis.
 
These expenses
primarily
 
relate
 
to
 
outside
 
consultants,
 
CROs,
 
contract
 
manufacturers
 
and
 
research
 
laboratories
 
in
 
connection
 
with
 
pre-clinical
development, process development,
 
manufacturing and clinical
 
development activities. We
 
do not
 
allocate our internal
 
costs, such as
employee costs, costs
 
associated with our
 
discovery efforts, laboratory
 
supplies and facilities,
 
including depreciation or
 
other indirect
costs, to
 
specific programs
 
because these
 
costs often
 
relate to
 
platform development,
 
to multiple
 
programs simultaneously
 
or to
 
discovery
of new
 
programs, and
 
any such
 
allocation would necessarily
 
involve significant estimates
 
and judgments
 
and, accordingly,
 
would be
imprecise. When we refer
 
to the research and development
 
expenses associated with a specific
 
program, these refer exclusively
 
to the
allocated
 
third-party
 
expenses
 
associated
 
with
 
that
 
product
 
candidate.
 
All
 
other
 
research
 
and
 
development
 
costs
 
are
 
referred
 
to
 
as
unallocated costs.
Product candidates in
 
later stages of
 
clinical development generally
 
have higher development
 
costs than those
 
in earlier stages
 
of clinical
development,
 
primarily
 
due
 
to
 
the
 
increased
 
size
 
and
 
duration
 
of
 
later-stage
 
clinical
 
trials.
 
Additionally,
 
greater
 
research
 
and
development overhead is
 
required to support
 
broader and more
 
rapid development of
 
our AIM Platform
 
and new product
 
candidates.
As a result, we expect that our research and
 
development expenses could increase if we continue
 
our existing and planned clinical trials
and conduct
 
increased pre-clinical and
 
clinical development activities,
 
including submitting regulatory
 
filings for product
 
candidates,
and focus more generally on the development of our chronic disease product candidates.
At this time,
 
we cannot reasonably
 
estimate or know
 
the nature, timing
 
and costs of
 
the efforts that
 
will be necessary
 
to complete the
pre-clinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from
any of our product candidates.
General and Administrative Expenses
 
General
 
and
 
administrative
 
expenses
 
consist
 
primarily
 
of
 
salaries
 
and
 
benefits,
 
travel
 
and
 
stock-based
 
compensation
 
expense
 
for
personnel
 
in
 
executive,
 
business
 
development,
 
finance,
 
human
 
resources,
 
legal,
 
information
 
technology,
 
public
 
relations,
communications and administrative functions. General
 
and administrative expenses also
 
include insurance costs and
 
professional fees
for
 
legal,
 
patent,
 
consulting,
 
investor
 
and
 
public
 
relations,
 
accounting
 
and
 
audit
 
services
 
and
 
other
 
general
 
operating
 
expenses
 
not
otherwise classified as research and development expenses. We expense general and administrative costs as incurred.
In the event UB-612 obtains regulatory approval and we subsequently commence commercialization of
 
this product, we expect general
and administrative
 
expenses will
 
increase. We
 
will continue
 
to incur
 
public company-related
 
expenses, including
 
services associated
with maintaining compliance with Nasdaq listing
 
and SEC requirements, director and
 
officer liability insurance and investor and public
relations costs.
Other Expense (Income)
 
Interest Expense
 
Interest expense consists of (i) interest
 
expense recognized on the note payable
 
entered into during June 2020 for
 
the acquisition of an
airplane (the “2025 Note”), (ii) interest expense accrued on
 
the 2022 related party promissory note (the “2022 Promissory
 
Note”), (iii)
interest expense recognized on the 2023 related party promissory note (the “2023 Promissory Note”).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
98
Interest Income
Interest income consists of income earned on our cash and cash equivalents, money market holdings, and short-term investments.
 
Loss on Foreign Currency Translation, Net
 
Our foreign subsidiaries, which
 
are wholly-owned by Vaxxinity,
 
use the U.S. dollar
 
as their functional currency
 
and maintain records
in
 
the
 
local
 
currency.
 
Nonmonetary
 
assets
 
and
 
liabilities
 
are
 
remeasured
 
at
 
historical
 
rates
 
and
 
monetary
 
assets
 
and
 
liabilities
 
are
remeasured at exchange
 
rates in effect at
 
the end of
 
the reporting period.
 
Income statement accounts
 
are remeasured at
 
average exchange
rates for the reporting period. The resulting gains or
 
losses are included in foreign currency (losses) gains
 
in the consolidated financial
statements.
Provision for Income Taxes
 
We have not recorded any significant amounts related to income
 
tax, and we have not
 
recorded any income tax benefits
 
for the majority
of our net losses we incurred to date.
 
We
 
account for income
 
taxes using the
 
asset and liability
 
method, which requires
 
the recognition of
 
deferred tax assets
 
and liabilities
for the expected future tax consequences of events that have been included in the consolidated financial statements or our tax returns.
 
Deferred tax assets
 
and liabilities are
 
determined based on the
 
difference between the financial
 
statement carrying amounts
 
and tax basis
of existing assets and liabilities and for loss and credit carryforwards, which are measured
 
using the enacted tax rates and laws in effect
in the years in which the differences are expected
 
to reverse. The realization of our deferred
 
tax assets is dependent upon the generation
of future taxable income, the amount
 
and timing of which are uncertain.
 
Valuation
 
allowances are provided, if, based upon
 
the weight
of available evidence, it is
 
more likely than not that
 
some or all of the deferred
 
tax assets will not be
 
realized. As of December 31, 2023,
we continue to maintain
 
a full valuation allowance
 
against all of our
 
deferred tax assets based
 
on evaluation of all
 
available evidence.
We file income tax returns in the U.S. federal and state jurisdictions as well as foreign jurisdictions and may become subject to income
tax audit and adjustments by related tax authorities. Our tax return periods (for entities then
 
in existence) for U.S. income taxes for the
tax years since 2016 remain
 
open to examination under the
 
statute of limitations by the
 
Internal Revenue Service and state
 
jurisdictions.
We record reserves for potential tax
 
payments to various tax
 
authorities related to uncertain
 
tax positions, if any. The nature
 
of uncertain
tax positions
 
is subject
 
to significant
 
judgment by
 
management and
 
subject to
 
change, which
 
may be
 
substantial. These
 
reserves are
based on a determination of whether and how much a tax benefit taken by us in our tax filings or positions is more likely than
 
not to be
realized following the resolution
 
of any potential contingencies
 
related to the tax
 
benefit. We
 
develop our assessment of
 
uncertain tax
positions, and
 
the associated
 
cumulative probabilities,
 
using internal
 
expertise and
 
assistance from
 
third-party experts.
 
As additional
information becomes
 
available, estimates
 
are revised
 
and refined.
 
Differences between
 
estimates and
 
final settlement
 
may occur
 
resulting
in additional tax expense. Potential interest
 
and penalties associated with such
 
uncertain tax positions is recorded
 
as a component of our
provision for income taxes.
 
Consolidated Results of Operations
The following is a summary of our consolidated results of operations:
 
Years
 
Ended December 31,
2023 vs. 2022
(In thousands)
2023
2022
Change $
Change %
Operating expenses:
Research and development
$
35,899
$
47,627
$
(11,728)
(25)
%
General and administrative
22,386
28,352
(5,966)
(21)
%
Total operating expenses
58,285
75,979
(17,694)
(23)
%
Loss from operations
 
(58,285)
(75,979)
17,694
(23)
%
Other (income) expense:
Interest and other expense
696
514
182
35
%
Interest and other income
(2,090)
(1,259)
(831)
66
%
(Gain) loss on foreign currency translation, net
43
(12)
55
(459)
%
Other (income) expense
(1,351)
(757)
(594)
79
%
Net loss
$
(56,934)
$
(75,222)
$
18,288
(24)
%
99
Comparison of the Years Ended December 31, 2023 and 2022
Research and Development Expenses
Research and development expenses were $35.9 million and $47.6 million for the twelve months ended December 31, 2023 and 2022,
respectively.
Allocated external research and development expenses decreased from $23.5 million for the twelve months ended December 31, 2022
to $17.8 million for the twelve months ended December 31, 2023.
Neurodegenerative Disease
 
Program expenses
 
decreased from
 
$2.9 million
 
for the
 
twelve months
 
ended December 31,
 
2022 to
 
$1.5
million for the twelve months ended December 31, 2023. This decrease primarily resulted from a $1.0 million decrease in expenses for
UB-312 primarily attributable to our Phase 1 trial entering the completion phase.
 
Next Wave Chronic Program expenses decreased from
 
$7.6 million for the
 
twelve months ended December 31,
 
2022 to $7.4 million for
the twelve months ended December 31, 2023. This decrease primarily resulted from a $0.7 million decrease in expenses for UB-313 as
the trial became fully enrolled
 
in late 2022, partially offset by
 
a $0.5 million increase in expenses
 
for VXX-401 primarily attributable to
active patient enrollment in the Phase 1 trial during 2023.
Infectious Disease Program expenses decreased
 
from $12.6 million for the twelve
 
months ended December 31, 2022 to
 
$8.3 million for
the twelve
 
months ended
 
December 31, 2023.
 
This decrease
 
primarily resulted
 
from a
 
$4.3 million
 
decrease in
 
expenses for
 
UB-612
primarily attributable to the Phase 3 trial entering the completion phase as all patient visits were completed in Q3 2023.
Unallocated research and
 
development expenses
 
decreased from $24.1
 
million for the
 
twelve months ended
 
December 31, 2022 to
 
$18.1
million for the
 
twelve months ended
 
December 31, 2023. This
 
decrease primarily resulted
 
from a $4.2
 
million decrease in
 
personnel-
related expenses (including $0.7 million in stock-based compensation) primarily attributable
 
to attrition and internal restructuring, and
a $1.8 million decrease in external consulting services.
General and Administrative Expenses
General and administrative expenses decreased from $28.4 million for the twelve months ended December 31, 2022 to $22.4 million
for the twelve months ended December 31, 2023.
The decrease was due to decreases of $1.8 million in director and officer insurance expense, $1.2 million in external professional
services and consulting services, $2.0 million in payroll-related expenses (including $0.5 million in stock-based compensation)
primarily attributable to attrition and internal restructuring, and $0.3 million in travel expenses.
 
Interest and Other Expense
Interest and
 
other expense
 
was $0.7
 
million and
 
$0.5 million
 
for the
 
years ended
 
December 31, 2023
 
and 2022,
 
respectively. The increase
was due to the conversion of related party payables to notes payable in late 2022 and again in late 2023.
 
Interest and Other Income
Interest on cash and short-term
 
investments and other income was
 
$2.1 million and $1.3 million
 
for the years ended December 31,
 
2023
and 2022, respectively.
 
The increase was primarily
 
due to higher returns earned
 
on the Company’s short-term investments in 2023,
 
due
to increasing short-term interest rates.
(Gain) Loss on Foreign Currency Translation, Net
 
The
 
net
 
(gain)
 
loss
 
of
 
foreign
 
currency
 
translation
 
reflects
 
de
 
minimis
 
fluctuations
 
in
 
the
 
foreign
 
exchange
 
rate
 
for
 
the
 
year
 
ended
December 31, 2023 compared to the year ended December 31, 2022.
 
 
Liquidity and Capital Resources
Sources of Liquidity
 
We have not yet obtained regulatory approval for or commercialized any of our product candidates, which are in various phases of pre-
clinical and clinical development. We have financed operations primarily through the issuance of common stock, convertible preferred
stock, borrowings under promissory notes
 
(including Convertible Notes) and the execution
 
of SAFEs. Through December 31, 2023,
 
we
received gross
 
proceeds of
 
$306.8 million
 
in connection
 
with the
 
issuance of
 
various financial
 
instruments, including
 
the sale
 
of preferred
and common stock, the issuance
 
of promissory notes (including Convertible
 
Notes), and the execution of
 
SAFEs. In addition, we also
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100
generated revenue from the sale
 
of an option to negotiate
 
a license with UNS (which
 
option has expired) and the
 
sales of ELISA tests
in 2020 and 2021. At
 
December 31, 2023, we had $30.4 million
 
in cash and cash equivalents and
 
short-term investments compared to
$86.8 million as of December 31,
 
2022. The decrease in cash
 
and cash equivalents balances for
 
the periods reported are primarily due
to the factors described under “Cash Flows” below.
At-the-Market Offerings
On August 9, 2023,
 
we entered into an
 
Open Market Sale
 
Agreement with Jefferies LLC,
 
as sales agent, pursuant
 
to which we
 
may offer
and sell shares of our
 
Class A common stock, par
 
value $0.0001 per share, having
 
an aggregate offering price
 
of up to $100.0
 
million
from time to time through
 
the sales agent in
 
“at-the-market” offerings, in accordance with
 
the terms and conditions
 
set forth in the
 
Open
Market Sale Agreement. The Open Market
 
Sale Agreement will remain in full force
 
and effect until terminated by either party pursuant
to
 
the
 
terms
 
of
 
the
 
agreement
 
or
 
such
 
date
 
that
 
the
 
maximum
 
program
 
amount
 
has
 
been
 
sold
 
in
 
accordance
 
with
 
the
 
terms
 
of
 
the
agreement. We
 
did not
 
sell or
 
issue any
 
shares of
 
our Class
 
A common
 
stock during
 
the year
 
ended December 31,
 
2023, and
 
as of
December 31, 2023, all $100.0 million remained available for sale.
Cash Flows
The following table provides information regarding our cash flows for the years ended December 31, 2023 and 2022 (in thousands):
 
December 31,
2023
2022
Balance Sheet Data:
Cash and cash equivalents
$
4,931
$
33,475
Short-term investments, net
25,464
53,352
Restricted cash
105
1,095
Total assets
44,311
106,399
Total liabilities
30,902
44,222
Total stockholders' equity
$
13,409
$
62,177
Years
 
Ended December 31,
2023
2022
Statement of Cash Flow Data:
Net cash used in operating activities
$
(57,238)
$
(55,928)
Net cash provided by (used in) investing activities
28,844
(54,392)
Net cash used in financing activities
(1,140)
(167)
Net (decrease) in cash, cash equivalents and restricted cash
$
(29,534)
$
(110,487)
Operating Activities
Net cash used in operating activities for the year ended December 31, 2023 was $57.2 million, primarily due to a $56.9 million net loss
and an unfavorable $8.5
 
million change in operating
 
assets and liabilities, partially offset
 
by total non-cash items
 
of $8.2 million. The
unfavorable cash flow impact from changes in net operating assets and liabilities was primarily due to $11.8
 
million related to accrued
expense,
 
accounts payable
 
and other
 
liabilities, partially
 
offset
 
by
 
$3.2
 
million
 
in prepaid
 
expenses for
 
UB-612
 
trial expenses.
 
The
primary
 
non-cash
 
adjustments
 
to
 
net
 
loss
 
included
 
addbacks
 
of
 
$7.5
 
million
 
of
 
stock-based
 
compensation
 
and
 
$2.2
 
million
 
in
depreciation, offset by a reduction of $1.5 million for amortization of discounts on short-term investments.
Net cash used in operating activities
 
for the year ended December 31, 2022
 
was $55.9 million, primarily due to
 
a $75.2 million net loss,
offset
 
by a
 
favorable $9.8
 
million change
 
in operating
 
assets and
 
liabilities and
 
total non-cash
 
items of
 
$9.5 million.
 
The cash
 
flow
impact from changes in net operating
 
assets and liabilities were primarily due to
 
$2.4 million in amounts due to
 
related parties as well
as $9.0 million related to accrued expense,
 
accounts payable and other liabilities.
 
These increases were offset by a $3.3 million
 
increase
in prepaid expenses. The primary non-cash adjustments to net loss included addbacks of $8.7 million of stock-based compensation and
$1.7 million in depreciation, offset by a reduction of $1.0 million for amortization of discounts on short-term investments.
Investing Activities
Net cash provided by investing activities
 
totaled $28.8 million for the year
 
ended December 31, 2023. The cash provided
 
by investing
activities
 
consisted
 
primarily
 
of
 
the
 
net
 
impact
 
of
 
the
 
acquisition
 
and
 
redemption
 
of
 
short-term
 
investments,
 
partially
 
offset
 
by
 
the
acquisition of laboratory and computer equipment, and leasehold improvements.
 
101
Net cash used in investing
 
activities totaled $54.4 million for the
 
year ended December 31, 2022. The cash
 
used in investing activities
consisted primarily of the net impact of the acquisition and redemption of short-term investments, and
 
the acquisition of laboratory and
computer equipment, and leasehold improvements.
 
Financing Activities
Net cash used in financing activities was $1.1 million for the year ended December 31,
 
2023. We repaid $1.6
 
million in relation to our
outstanding notes payable and received $0.5 million from the exercise of stock options.
Net cash used in
 
financing activities totaled $0.2
 
million for the year
 
ended December 31, 2022. We
 
repaid $0.4 million in
 
relation to
our outstanding notes payable and received $0.3 million from the exercise of stock options.
Funding Requirements
We have incurred net losses in each reporting period since inception. We
 
do not expect to generate any meaningful revenue unless and
until we obtain regulatory approval of
 
and commercialize our product candidates,
 
or enter into collaboration or licensing
 
deals with one
or more third-party strategic partners. We
 
do not know when, or if, this
 
will occur. If
 
we do not receive regulatory approval for any
 
of
our product candidates,
 
or if we
 
receive approval but
 
our commercialization results fall
 
short of our
 
expectations, we will continue
 
to
incur significant
 
losses for
 
the foreseeable
 
future, and
 
we expect
 
the losses
 
to increase
 
as we
 
continue the
 
development of,
 
and seek
regulatory approvals for, our product candidates and begin to commercialize any approved products.
As of the date of this Annual Report, we
 
expect our existing cash and cash equivalents
 
will be sufficient to fund our operating expenses
through late 2024. As of
 
December 31, 2023, other than our
 
2025 Note, the 2022 Promissory Note,
 
and the 2023 Promissory Note we
have no material debt obligations.
We have based
 
our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use all of
our available capital resources sooner than we expect. Our future capital requirements will depend on many factors,
 
which include:
the scope, number, progress, initiation, duration, cost, results and timing of pre-clinical programs and nonclinical studies of
our current or future product candidates;
the outcomes and timing of regulatory reviews, approvals or other actions;
the timing and manner in which we manufacture our pre-clinical and clinical drug material, the terms on which we can have
such manufacturing completed, and the extent to which we undertake commercialization of any drug products, if approved;
the extent to which we establish sales, marketing, medical affairs and distribution infrastructure to commercialize any product
candidates;
the timing and extent to which we expand our operational, financial and management systems and infrastructure, and
facilities;
 
the timing and extent to which we increase our personnel to support operations, including necessary increases in headcount to
conduct and expand our clinical trials, commercialize any approved products and support our operations as a public
company;
the number of patent applications we must file and claims we must defend in order to maintain, expand and protect our
intellectual property portfolio, and the costs of preparing, filing and prosecuting patent applications, maintaining
 
and
protecting our intellectual property rights;
our ability to obtain marketing approval for our product candidates;
 
our ability to establish and maintain additional licensing, collaboration or similar arrangements on favorable terms and
whether and to what extent we retain development or commercialization responsibilities under any new licensing,
collaboration or similar arrangement;
the success of any other business, product or technology that we acquire or in which we invest;
 
 
our ability to maintain, expand and defend the scope of our intellectual property portfolio;
 
 
the costs of acquiring, licensing or investing in businesses, product candidates and technologies;
 
 
102
market acceptance of our product candidates, to the extent any are approved for commercial sale; and
 
the effect of competing technological and market developments.
Until such time, if ever, as we can generate positive cash flows from operations, we expect to finance our cash needs through public or
private equity offerings, strategic collaborations
 
and debt financing. To the extent that
 
we raise additional capital
 
through the sale of our
Class A common stock, convertible securities
 
or other equity securities, shareholders’ ownership interest
 
will be diluted and the
 
terms
of these securities could include
 
liquidation or other preferences and
 
anti-dilution protections. In addition, debt financing,
 
if available,
may result
 
in fixed
 
payment obligations
 
and may
 
involve agreements
 
that include
 
restrictive covenants
 
that limit
 
our ability
 
to take
specific actions, such as incurring
 
additional debt, making capital
 
expenditures, creating liens, redeeming shares
 
or declaring dividends.
If we raise additional funds through strategic collaborations or
 
marketing, distribution or licensing arrangements with third parties,
 
we
may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that
may
 
not
 
be favorable
 
to
 
us.
 
If
 
we are
 
unable to
 
raise
 
additional funds
 
when needed,
 
we
 
may
 
be
 
required to
 
delay,
 
limit, reduce
 
or
terminate our product candidate development or
 
future commercialization efforts or grant rights
 
to third parties to develop
 
and market
product candidates that we would otherwise prefer to develop and market ourselves.
 
Tax-Related Obligations
We have
 
reserved less than $0.1 million of unrecognized tax benefits
 
against NOLs. Additionally, as
 
of December 31, 2023 and 2022,
we accrued less than $0.1 million and $0.2 million, respectively, in interest and penalties related to prior year tax filings.
Off-Balance Sheet Arrangements
We did not have during the periods
 
presented, and do not
 
currently have, any off-balance
 
sheet arrangements, as defined
 
in the rules and
regulations of the SEC.
 
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect
the amounts reported
 
in our consolidated
 
financial statements and
 
accompanying notes. Management
 
bases its estimates
 
on historical
experience, market and other conditions,
 
and various other assumptions it
 
believes to be reasonable. Although
 
these estimates are based
on management’s best knowledge of current events and actions
 
that may impact us in the
 
future, the estimation process is, by
 
its nature,
uncertain given that estimates depend
 
on events over which we
 
may not have control. In
 
addition, if our assumptions change,
 
we may
need to
 
revise our
 
estimates, or
 
take other
 
corrective actions,
 
either of
 
which may
 
also have
 
a material
 
effect on our
 
consolidated financial
statements. Significant
 
estimates contained
 
within these
 
consolidated financial
 
statements include,
 
but are
 
not limited
 
to, accrued
 
of
research and development expenses, stock-based compensation, determination of the fair
 
value of our common stock prior to our initial
public offering, and grant accounting. We
 
base our estimates on historical experience, known trends and other market-specific or other
relevant factors that we believe to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, as
there are
 
changes in
 
facts and
 
circumstances. If
 
market and
 
other conditions
 
change from
 
those that
 
we anticipate,
 
our consolidated
financial statements may be materially affected.
While our
 
significant accounting policies
 
are described
 
in more detail
 
in the
 
notes to our
 
consolidated financial statements
 
appearing
elsewhere in this
 
Annual Report,
 
we believe that
 
the following
 
critical accounting
 
policies and estimates
 
have a higher
 
degree of inherent
uncertainty and require our most significant judgments.
Accrued Research and Development Expenses
As part of the process
 
of preparing our consolidated financial
 
statements, we are required to
 
estimate accrued research and
 
development
expenses. As
 
we
 
advance our
 
programs, we
 
anticipate more
 
complex clinical
 
studies resulting
 
in greater
 
research and
 
development
expenses, which will place even greater emphasis on
 
the accrual. This process involves reviewing open contracts
 
and purchase orders,
communicating with our
 
applicable personnel to
 
identify services that
 
have been performed
 
on our behalf
 
and estimating the
 
level of
service performed and the
 
associated cost incurred for
 
the service when we
 
have not yet been
 
invoiced or otherwise notified
 
of actual
costs. In the past years, UBI and
 
its affiliated companies performed and administered a
 
significant amount of research and development
work on our behalf.
 
Having UBI and its
 
affiliated company act
 
as intermediaries added to
 
the complexity of determining
 
appropriate
accruals, and
 
we have
 
largely moved
 
away from
 
this model.
 
Certain accruals
 
and amounts
 
owed to
 
the UBI
 
entities are
 
still under
review, and these amounts may change as a result of this review.
103
The
 
majority
 
of
 
our
 
service
 
providers
 
invoice
 
in
 
arrears
 
for
 
services
 
performed,
 
on
 
a
 
pre-determined
 
schedule
 
or
 
when
 
contractual
milestones are met; however, some require advance payments. We make estimates of accrued expenses as of each balance sheet date in
the consolidated financial statements based on facts and circumstances known to us at that
 
time. We periodically
 
confirm the accuracy
of the estimates
 
with the service
 
providers and make
 
adjustments if necessary. Examples
 
of estimated accrued
 
research and development
expenses include fees paid to:
vendors, including research laboratories, in connection with pre-clinical development activities;
CROs and investigative sites in connection with pre-clinical studies and clinical trials; and
contract manufacturers in connection with drug substance and drug product formulation of pre-clinical studies and clinical
trial materials.
We
 
base our
 
expenses related to
 
pre-clinical studies and
 
clinical trials on
 
our estimates of
 
the services received
 
and efforts
 
expended
pursuant to quotes and contracts with multiple research institutions and CROs that supply, conduct and manage pre-clinical studies and
clinical trials on our behalf. The financial terms of
 
these agreements are subject to negotiation, vary from contract to
 
contract and may
result
 
in uneven
 
payment
 
flows. There
 
may
 
be
 
instances in
 
which
 
payments
 
made to
 
our
 
vendors will
 
exceed
 
the
 
level of
 
services
provided and result in
 
a prepayment of the
 
expense. Payments under some
 
of these contracts depend
 
on factors such as
 
the successful
enrollment of patients and the completion of
 
clinical trial milestones. In accruing service fees,
 
we estimate the time period over
 
which
services will be performed and
 
the level of effort
 
to be expended in each period.
 
If the actual timing of
 
the performance of services or
the level
 
of effort
 
varies from
 
the estimate,
 
it adjusts
 
the accrual
 
or the
 
prepaid expense
 
accordingly.
 
Although we
 
do not
 
expect our
estimates to be
 
materially different from
 
amounts actually incurred,
 
our understanding of
 
the status and
 
timing of services
 
performed
relative to the actual status and timing of services performed may vary and may result in reporting amounts that
 
are too high or too low
in any particular period. To date, our estimated accruals have not differed materially from actual costs incurred.
Stock-Based Compensation
We measure all stock-based awards granted to
 
employees, directors and non-employees
 
based on their fair
 
value on the date
 
of the grant
and recognize the corresponding compensation
 
expense of those awards over
 
the requisite service period,
 
which is generally the vesting
period of the respective award. Forfeitures are accounted for as they occur.
 
We grant stock
 
options and restricted stock awards that are
subject to service vesting conditions.
We
 
classify stock-based
 
compensation expense
 
in our
 
consolidated statements
 
of operations
 
in the
 
same manner
 
in which
 
the award
recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.
We estimate the fair value of
 
each stock option
 
grant using the Black-Scholes
 
option-pricing model, which
 
requires the use
 
of subjective
assumptions
 
that
 
could
 
materially
 
impact
 
the
 
estimation
 
of
 
fair
 
value
 
and
 
related
 
compensation
 
expense
 
to
 
be
 
recognized.
 
These
assumptions include (i) the
 
expected volatility of our
 
stock price, (ii) the
 
periods of time over
 
which recipients are expected
 
to hold their
options prior to exercise (expected lives), (iii) expected dividend yield on our common stock, and (iv) risk-free interest rates, which are
based
 
on
 
quoted
 
U.S.
 
Treasury
 
rates
 
for
 
securities
 
with
 
maturities
 
approximating
 
the
 
options’
 
expected
 
lives.
 
Developing
 
these
assumptions requires the use of judgment. Both prior to and after the IPO, we lacked company-specific historical and implied volatility
information.
 
Therefore,
 
we
 
estimate
 
our
 
expected
 
stock
 
volatility
 
based
 
on
 
the
 
historical
 
volatility
 
of
 
a
 
publicly
 
traded
 
set
 
of
 
peer
companies. The expected term of the Company’s options has been determined utilizing the “simplified” method for awards that
 
qualify
as “plain-vanilla” options. The expected term of options granted to non-employees is equal to the contractual term of the option award.
The expected dividend
 
yield is zero
 
as we have
 
never paid dividends
 
and do not
 
currently anticipate paying
 
any in the
 
foreseeable future.
Determination of the Fair Value of Common Stock
Before there was a public market for our common stock, the estimated fair value of common stock was determined by its most recently
available third-party
 
valuations of common
 
stock. These
 
third-party valuations
 
were performed
 
in accordance
 
with the guidance
 
outlined
in the
 
American Institute
 
of Certified
 
Public Accountants’
 
Accounting and
 
Valuation
 
Guide, Valuation
 
of Privately-Held-Company
Equity Securities Issued as Compensation. Our common stock valuations were prepared using an option pricing method (“OPM”). The
OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the
value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common
stock
 
has
 
value
 
only
 
if
 
the
 
funds
 
available
 
for
 
distribution
 
to
 
stockholders
 
exceeded
 
the
 
value
 
of
 
the
 
preferred
 
stock
 
liquidation
preferences at the time
 
of the liquidity event,
 
such as a strategic
 
sale or a merger.
 
A discount for lack
 
of marketability of the
 
common
stock is then applied to arrive at an indication of value for the common stock.
 
 
104
In addition to considering the results of these third-party valuations, our board of directors considered various
 
objective and subjective
factors to determine the fair value of our common stock as of each grant date, including:
the prices at which we sold shares of preferred stock and the superior rights and preferences of the preferred stock relative to
our common stock at the time of each grant;
the progress of our research and development programs, including the status and results of pre-clinical studies and clinical
trials for our product candidates;
our stage of development and commercialization and our business strategy;
external market conditions affecting the biopharmaceutical industry and trends within the biopharmaceutical industry;
our financial position, including cash on hand, and our historical and forecasted performance and results of operations;
the lack of an active public market for our common stock and our preferred stock;
the likelihood of achieving a liquidity event, such as an initial public offering or our sale in light of prevailing market
conditions; and
the analysis of initial public offerings and the market performance of similar companies in the biopharmaceutical industry.
The assumptions
 
underlying these
 
valuations represented management’s
 
best estimate,
 
which involved
 
inherent uncertainties
 
and the
application of management’s judgment. As a result,
 
if we had used significantly
 
different assumptions or estimates, the fair
 
value of our
common stock and our stock-based compensation expense could have been materially different.
Once a public trading market for
 
our common stock has been established
 
for a sufficient period of
 
time, it will no longer be
 
necessary
to estimate the fair value
 
of our common stock in
 
connection with our accounting for
 
granted stock options and other
 
such awards we
may grant, as the fair value of our common stock will be determined based on the quoted market price of our common stock.
Coalition for Epidemic Preparedness (“CEPI”) Grant
In April 2022, we entered into an agreement with the Coalition for Epidemic Preparedness Innovations (“CEPI”) whereby CEPI
agreed to provide funding of up to $9.3 million to co-fund a Phase 3 clinical trial of our UB-612 COVID-19 vaccine candidate as a
heterologous – or ‘mix-and-match’ – booster dose. The Phase 3 trial, which began in early 2022 and ended in late 2023, evaluated
 
the
ability of UB-612 to boost COVID-19 immunity against the original strain and multiple variants of concern including Omicron - in
people aged 16 years or older, who have been previously immunized with an authorized COVID-19 vaccine.
Cash payments received in advance under the CEPI Funding Agreement were restricted as to their use until expenditures contemplated
in the
 
funding agreement
 
were incurred.
 
As funds
 
were received
 
they were
 
included within
 
restricted cash
 
offset by
 
a corresponding
short-term accrued
 
liability.
 
We
 
recognized payments
 
from CEPI
 
as a
 
reduction of
 
research and
 
development expenses,
 
in the
 
same
period as the expenses that the grant was intended to reimburse were incurred.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We
 
are exposed
 
to market
 
risk in
 
the ordinary
 
course of
 
our business.
 
These risks
 
primarily relate
 
to foreign
 
currency,
 
inflation and
changes in interest rates.
 
Inflation Risk
Inflation generally may
 
affect us by
 
increasing our cost of
 
labor, clinical
 
trial costs, and
 
other outsourced activities.
 
To
 
date, inflation
has not had a material impact on our business, but if the global inflationary trends continue, we expect appreciable increases in clinical
trial,
 
selling,
 
labor,
 
and
 
other
 
operating
 
costs.
 
If
 
our
 
costs
 
were
 
to
 
become
 
subject
 
to
 
significant
 
inflationary
 
pressures,
 
this
 
would
adversely affect our business, financial condition and results of operations.
Foreign Currency Exchange Risk
 
We
currently have limited exposure to foreign currency exchange risk as most of
 
our operating activities are primarily denominated in
U.S. dollars. We believe actual foreign exchange gains and losses did not have a significant impact on our results of operations for any
periods
 
presented
 
herein.
 
The
 
results
 
of
 
the
 
analysis
 
based
 
on
 
our
 
financial
 
position
 
as
 
of
 
December 31,
 
2023,
 
indicated
 
that
 
a
hypothetical 10% increase or decrease
 
in applicable foreign currency exchange rates
 
would not have a material
 
effect on our financial
results.
105
Interest Rate Risk
 
We
 
are exposed to market risk
 
related to changes in
 
interest rates. As of December 31,
 
2023 and 2022, our
 
cash equivalents consisted
of interest-bearing
 
checking accounts
 
and money
 
market accounts.
 
The 2025
 
Note we
 
entered into
 
for the
 
year ended
 
December 31,
2020 bears a
 
fixed annual interest
 
rate of 3.4%
 
and matures in
 
June 2025. Additionally,
 
the 2022 Promissory
 
Note we entered
 
into in
October 2022
 
bears a
 
fixed annual
 
interest rate
 
of 7.0%
 
and matures
 
in October
 
2026. The
 
2023 Promissory
 
Note we
 
entered into
 
in
December 2023 bears a fixed annual interest rate of 9.25% and matures in November 2027.
Given that the 2025 Note,
 
the 2022 Promissory Note and
 
the 2023 Promissory Note bear
 
fixed rates of interest, we
 
believe there is no
material exposure to interest
 
rate risk. The results
 
of the analysis based
 
on our financial position
 
as of December 31, 2023,
 
indicated that
a hypothetical 100 basis point increase or decrease in risk-free rates would not have a material effect on our financial results.
Our measurement of interest rate
 
risk involves assumptions that are
 
inherently uncertain and, as a
 
result, cannot precisely estimate the
impact of changes
 
in interest rates on
 
net interest revenues. Actual
 
results may differ
 
from simulated results due
 
to balance growth or
decline and
 
the timing,
 
magnitude, and
 
frequency of
 
interest rate
 
changes, as
 
well as
 
changes in
 
market conditions
 
and management
strategies, including changes in asset and liability mix.
 
 
106
Item 8. Financial Statements and Supplementary Data
VAXXINITY,
 
INC.
INDEX TO FINANCIAL STATEMENTS
Audited Consolidated Financial Statements as of and for the years ended December 31, 2023 and 2022
 
 
(FORVIS PCAOB ID:
686
, Armanino PCAOB ID:
32
)
107
109
110
111
112
113
 
107
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Vaxxinity,
 
Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying
 
consolidated balance sheet
 
of Vaxxinity, Inc. (the “Company”) as of
 
December 31, 2023,
 
the related
consolidated statements of operations and other comprehensive loss, stockholders’ equity, and cash flows for the year ended December
31, 2023, and the related notes (collectively referred to as the “financial statements”).
 
In our opinion, the financial statements referred
to above present
 
fairly,
 
in all material
 
respects, the financial
 
position of the
 
Company as of
 
December 31, 2023,
 
and the results
 
of its
operations and its cash flows for the year
 
ended December 31, 2023, in conformity
 
with accounting principles generally accepted in the
United States of America.
Going Concern
 
The accompanying financial statements have been prepared
 
assuming that the Company will continue as
 
a going concern. As discussed
in Note 1
 
to the financial
 
statements, the Company
 
has incurred substantial
 
operating losses and
 
negative cash flows
 
from operations
since inception that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter
are
 
also
 
described
 
in
 
Note
 
1.
 
The
 
financial
 
statements
 
do
 
not
 
include
 
any
 
adjustments
 
that
 
might
 
result
 
from
 
the
 
outcome
 
of
 
this
uncertainty.
Basis for Opinion
These financial
 
statements are
 
the responsibility
 
of the
 
Company’s
 
management.
 
Our responsibility
 
is to
 
express an
 
opinion on
 
the
Company’s financial statements based on our audit.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are
required to be independent with respect
 
to the Company in accordance with
 
the U.S. federal securities laws and
 
the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We
 
conducted our audit in accordance
 
with the standards of
 
the PCAOB.
 
Those standards require that we
 
plan and perform the
 
audit
to obtain reasonable assurance about whether
 
the financial statements are free of
 
material misstatement, whether due to error
 
or fraud.
 
The Company is not required to have, nor were we engaged to perform, an audit of its
 
internal control over financial reporting.
 
As part
of our audit, we are
 
required to obtain an understanding
 
of internal control over financial
 
reporting but not for the
 
purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting.
 
Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the
 
financial statements, whether due to error
or fraud, and performing
 
procedures that respond to
 
those risks.
 
Such procedures include examining,
 
on a test basis,
 
evidence regarding
the amounts
 
and disclosures
 
in the
 
financial statements.
 
Our audit
 
also included
 
evaluating the
 
accounting principles
 
used and
 
significant
estimates made
 
by management,
 
as well
 
as evaluating
 
the overall
 
presentation of
 
the financial
 
statements.
 
We
 
believe that
 
our audit
provides a reasonable basis for our opinion.
/s/
FORVIS, LLP
We have served as the Company’s
 
auditor since 2023.
New York
, New York
March 27, 2024
 
108
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
 
Vaxxinity,
 
Inc.
Merrit Island, Florida
Opinion on the Consolidated Financial Statements
We
 
have audited the accompanying consolidated balance
 
sheet of Vaxxinity,
 
Inc. and Subsidiaries (collectively the "Company")
 
as of
December 31,
 
2022, the
 
related consolidated
 
statements of
 
operations, convertible
 
preferred stock
 
and stockholders’
 
equity (deficit),
and cash flows, for the year ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the
 
financial position of the Company as of
December 31, 2022, and the results of
 
their operations and their cash flows for the
 
year ended December 31, 2022, in conformity with
U.S. generally accepted accounting principles.
Basis for Opinion
The Company's management
 
is responsible for
 
these consolidated financial statements.
 
Our responsibility is
 
to express an
 
opinion on
the Company's
 
consolidated financial
 
statements based
 
on our
 
audit. We are
 
a public
 
accounting firm
 
registered with
 
the Public
 
Company
Accounting Oversight Board
 
(United States) (“PCAOB”)
 
and are required
 
to be independent
 
with respect to
 
the Company in
 
accordance
with
 
the
 
U.S.
 
federal
 
securities
 
laws
 
and
 
the
 
applicable
 
rules
 
and
 
regulations
 
of
 
the
 
Securities
 
and
 
Exchange
 
Commission
 
and
 
the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
 
are free of material misstatement, whether due to error
or fraud.
Our audit
 
of the
 
consolidated financial statements
 
included performing procedures
 
to assess
 
the risks
 
of material
 
misstatement of
 
the
consolidated financial statements,
 
whether due to error
 
or fraud, and performing
 
procedures that respond
 
to those risks. Such
 
procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit
also included evaluating
 
the accounting principles
 
used and significant
 
estimates made by
 
management, as well
 
as evaluating the
 
overall
presentation
 
of
 
the
 
consolidated
 
financial
 
statements.
 
Our
 
audit
 
also
 
included
 
performing
 
such
 
other
 
procedures
 
as
 
we
 
considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
We began serving as the Company's auditor in 2018. In 2023, we became the predecessor auditor.
/s/
Armanino
LLP
San Ramon, California
March 27, 2023
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
109
VAXXINITY,
 
INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
4,931
$
33,475
Short-term investments
25,464
53,352
Restricted cash
105
1,095
Amounts due from related parties
414
414
Prepaid expenses and other current assets
2,316
5,551
Total current assets
33,230
93,887
Property and equipment, net
11,081
12,512
Total assets
$
44,311
$
106,399
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
1,783
5,295
Amounts due to related parties
10,575
12,772
Accrued expenses and other current liabilities
3,341
11,370
Notes payable
406
391
Notes payable to related party
1,500
1,113
Total current liabilities
17,605
30,941
Other liabilities:
Notes payable, net of current portion
9,527
9,933
Notes payable to related party, net of current portion
3,735
3,112
Other long-term liabilities
35
236
Total liabilities
30,902
44,222
Commitments and contingencies (Note 14)
(nil)
(nil)
Stockholders’ equity:
Class A common stock, $
0.0001
 
par value;
1,000,000,000
 
shares authorized,
112,872,672
 
and
112,182,750
 
shares issued and
outstanding at December 31, 2023 and 2022, respectively
278
278
Class B common stock, $
0.0001
 
par value;
100,000,000
 
shares authorized,
13,874,132
 
and
13,874,132
 
shares issued and
outstanding at December 31, 2023 and 2022, respectively
Additional paid-in capital
374,760
366,799
Accumulated other comprehensive income (loss)
8
(197)
Accumulated deficit
(361,637)
(304,703)
Total stockholders’ equity
13,409
62,177
Total liabilities and stockholders’ equity
$
44,311
$
106,399
The accompanying notes are an integral part of the consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
110
VAXXINITY,
 
INC.
CONSOLIDATED STATEMENTS
 
OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
Years
 
Ended December 31,
2023
2022
Operating expenses:
Research and development
$
35,899
$
47,627
General and administrative
22,386
28,352
Total operating expenses
58,285
75,979
Loss from operations
 
(58,285)
(75,979)
Other (income) expense:
Interest and other expense
696
514
Interest and other income
(2,090)
(1,259)
(Gain) loss on foreign currency translation, net
43
(12)
Other (income)
(1,351)
(757)
Loss before income taxes
(56,934)
(75,222)
Net loss
$
(56,934)
$
(75,222)
Net loss per share, basic and diluted
$
(0.45)
$
(0.60)
Weighted average common shares outstanding, basic and diluted
 
126,508,917
125,939,050
Other comprehensive loss:
Unrealized loss (gain) on investments
$
(205)
$
197
Other comprehensive loss (income)
(205)
197
Comprehensive loss
$
(56,729)
$
(75,419)
The accompanying notes are an integral part of the consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111
VAXXINITY,
 
INC.
CONSOLIDATED STATEMENTS
 
OF STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
Stockholder's Deficit
Common Stock-Class A
Common Stock-Class B
Shares
Amount
Shares
Amount
Additional Paid-in
Capital
Accumulated Other
Comprehensive Income
(Loss)
Accumulated Deficit
Stockholders’ Equity
Balance at December 31, 2021
111,518,094
$
278
13,874,132
$
$
357,822
$
$
(229,481)
$
128,619
Issuance of common stock upon exercise of stock options
664,656
263
263
Stock-based compensation expense
8,714
8,714
Unrealized loss on investments
(197)
(197)
Net loss
(75,222)
(75,222)
Balance at December 31, 2022
112,182,750
$
278
13,874,132
$
$
366,799
$
(197)
$
(304,703)
$
62,177
Issuance of common stock upon exercise of stock options
689,922
454
453
Stock-based compensation expense
7,508
7,508
Unrealized gain on investments
205
205
Net loss
(56,934)
(56,934)
Balance at December 31, 2023
112,872,672
$
278
13,874,132
$
$
374,761
$
8
$
(361,637)
$
13,409
The accompanying notes are an integral part of the consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
112
VAXXINITY,
 
INC.
CONSOLIDATED STATEMENTS
 
OF CASH FLOWS
(in thousands)
Years Ended December
 
31,
2023
2022
Cash flows from operating activities:
Net loss
$
(56,934)
$
(75,222)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense
2,234
1,684
Amortization of debt issuance costs
51
53
Amortization of discount on short-term investments
(1,554)
(1,022)
Stock-based compensation expense
7,508
8,714
Non-cash loss on disposal
43
Change in operating assets and liabilities:
Amounts due from related parties
(1)
(21)
Prepaid expenses and other current assets
3,236
3,300
Accounts payable
(3,512)
2,103
Amounts due to related parties
(36)
(2,410)
Accrued expenses and other current liabilities
(8,029)
6,851
Other long-term liabilities
(201)
(1)
 
Net cash used in operating activities
(57,238)
(55,928)
Cash flows from investing activities:
Purchase of short-term investments
(63,942)
(107,526)
Redemption of short-term investments
93,589
55,000
Purchase of property and equipment
(803)
(1,866)
 
Net cash provided by (used in) investing activities
28,844
(54,392)
Cash flows from financing activities:
Repayment of notes payable
(444)
(430)
Repayment of note payable with related party
(1,150)
Proceeds from exercise of stock options
454
263
 
Net cash used in financing activities
(1,140)
(167)
Change in cash, cash equivalents and restricted cash
(29,534)
(110,487)
Cash, cash equivalents and restricted cash at beginning of period
34,570
145,057
Cash, cash equivalents and restricted cash at end of period
$
5,036
$
34,570
Reconciliation of cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash at end of period
$
5,036
$
34,570
Less restricted cash
105
1,095
Cash and cash equivalents end of period
$
4,931
$
33,475
Supplemental Disclosure
Cash paid for interest
$
799
$
367
Noncash Financing Activities
Conversion of amounts due to related party into note payable to related party
$
2,161
$
4,225
The accompanying notes are an integral part of the consolidated financial statements.
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
113
1. Nature of the Business
Vaxxinity,
 
Inc.,
 
a
 
Delaware corporation
 
(“Vaxxinity
 
,”
 
and
 
together
 
with
 
its
 
subsidiaries,
 
the
 
“Company”), was
 
formed
 
through
 
the
combination of two
 
separate businesses that
 
originated from United
 
Biomedical, Inc. (“UBI”)
 
in two separate
 
transactions: a spin-out
from UBI
 
in 2014
 
of operations
 
focused on
 
developing chronic
 
disease product
 
candidates that
 
resulted in
 
United Neuroscience
 
(“UNS”),
and a second spin-out from UBI in
 
2020 of operations focused on the development
 
of a COVID-19 vaccine that resulted in
 
C19 Corp.
(“COVAXX”).
 
On February 2, 2021, Vaxxinity
 
was incorporated for the purpose of reorganizing
 
and combining UNS and COVAXX
and on March 2, 2021, did so by acquiring all of the outstanding equity interests of UNS and COVAXX
 
pursuant to a contribution and
exchange
 
agreement
 
(the
 
“Contribution
 
and
 
Exchange
 
Agreement”)
 
whereby
 
the
 
existing
 
equity
 
holders
 
of
 
UNS
 
and
 
COVAXX
contributed their equity interests in each of UNS and COVAXX in exchange for equity in Vaxxinity
 
(the “Reorganization”).
The Company is
 
a biotechnology company
 
currently focused on
 
developing product candidates
 
for human use
 
in the fields
 
of neurology,
pain, cardiovascular
 
diseases and
 
coronaviruses utilizing
 
its “Vaxxine Platform”—a synthetic
 
peptide vaccine
 
technology first
 
developed
by
 
UBI
 
and
 
subsequently
 
refined
 
over
 
the
 
last
 
two
 
decades.
 
The
 
Company
 
is
 
engaged
 
in
 
the
 
development
 
of
 
rationally
 
designed
prophylactic and therapeutic vaccines to combat common chronic diseases with large global unmet
 
medical need. The Company is also
developing a
 
heterologous booster
 
vaccine for
 
SARS-Cov-2.
 
UBI is a
 
significant shareholder
 
of the Company
 
and, therefore,
 
considered
a related party.
The Company is
 
subject to risks
 
and uncertainties common
 
to early-stage companies
 
in the biotechnology
 
industry including, but
 
not
limited
 
to,
 
uncertainty
 
of
 
product
 
development
 
and
 
commercialization,
 
lack
 
of
 
marketing
 
and
 
sales
 
history,
 
development
 
by
 
its
competitors of
 
new technological
 
innovations, dependence
 
on key
 
personnel, market
 
acceptance of
 
products, product
 
liability, protection
of proprietary technology,
 
ability to raise additional financing, and compliance
 
with government regulations. If the Company does
 
not
successfully commercialize any
 
of its product
 
candidates, it will
 
be unable to
 
generate recurring product
 
revenue or achieve
 
profitability.
The
 
Company’s
 
product
 
candidates
 
are
 
in
 
development
 
and
 
will
 
require
 
significant
 
additional
 
research
 
and
 
development
 
efforts,
including extensive pre-clinical
 
and clinical testing and
 
regulatory approval prior to
 
commercialization. These efforts require
 
significant
amounts of additional capital,
 
adequate personnel and infrastructure
 
and extensive compliance-reporting capabilities.
 
There can be
 
no
assurance that
 
the Company’s
 
research and
 
development will
 
be successfully
 
completed, that
 
adequate protection for
 
the Company’s
intellectual property
 
will be
 
obtained, that
 
any products
 
developed will
 
obtain necessary
 
government regulatory
 
approval or
 
that any
approved products will
 
be commercially viable.
 
Even if the
 
Company’s product development efforts are
 
successful, it is
 
uncertain when,
if ever, the Company will generate significant revenue
 
from product sales. The Company
 
operates in an environment of rapid
 
change in
technology and is dependent upon the services of its employees and consultants.
Liquidity and Going Concern Assessment
As of December 31, 2023, the
 
Company had $
4.9
 
million of cash and cash
 
equivalents and $
25.5
 
million of short-term investments to
fund operations. To date, the
 
Company has primarily
 
financed its operations
 
through the sale
 
of convertible preferred
 
stock and common
stock, borrowings under promissory notes (including Convertible Notes), a
 
portion of which has been raised from related party entities,
and grants
 
from foundations
 
such as
 
the Coalition
 
of Epidemic
 
Preparedness Innovations
 
(CEPI) and
 
the Michael
 
J. Fox
 
Foundation
(MJFF). The Company has
 
experienced significant negative
 
cash flows from operations
 
since inception, and incurred
 
a net loss of
 
$
56.9
million for the year
 
ended December 31, 2023. Net
 
cash used in operating
 
activities for the year
 
ended December 31, 2023 was
 
$
57.2
million. In
 
addition, as
 
of December 31,
 
2023, the
 
Company has
 
an accumulated
 
deficit of
 
$
361.6
 
million. The
 
Company expects
 
to
incur substantial operating losses and negative cash flows from operations for the foreseeable future.
 
In accordance
 
with ASC
 
205-40, Presentation
 
of Financial
 
Statements-Going Concern,
 
management is
 
required to
 
evaluate whether
there are
 
conditions or
 
events, considered
 
in the
 
aggregate, that
 
raise substantial
 
doubt about
 
the Company's
 
ability to
 
continue as
 
a
going concern within one year after the date that the financial statements are issued. When management
 
identifies conditions or events,
considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern, management must
consider whether its plans to mitigate those relevant conditions or events will alleviate the substantial doubt.
 
Given that the Company has incurred substantial operating losses and negative cash flows from operations since inception and expects
to continue
 
to incur
 
substantial operating
 
losses and
 
negative cash
 
flows from
 
operations for
 
the foreseeable
 
future, management
 
assessed
that there are conditions or events, considered
 
in the aggregate, as of the issue
 
date of these financial statements, which
 
raise substantial
doubt about the Company's ability to continue as a going concern.
 
Management considered whether its plans
 
to mitigate those relevant conditions
 
or events will alleviate
 
the substantial doubt about
 
the
Company’s ability
 
to continue as
 
a going concern.
 
These plans include
 
raising new capital
 
through public or
 
private equity offerings,
strategic collaborations, debt
 
financing and other
 
capital sources or
 
combinations thereof, and
 
as needed cost
 
reduction through attrition,
organization restructuring, and curtailment of certain research and development activities.
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
114
However, there are significant risks and uncertainties as to whether these plans will be achieved or additional funding will be available
on terms acceptable to the Company, or at all.
 
Due to
 
the risks
 
and uncertainties,
 
management cannot
 
conclude that
 
substantial doubt
 
about the
 
Company's ability
 
to continue
 
as a
going concern has been
 
alleviated. As such, there
 
is substantial doubt about
 
the entity's ability to
 
continue as a going
 
concern within one
year after the
 
date that these
 
financial statements are
 
issued. However, since liquidation
 
is not imminent,
 
the accompanying consolidated
financial statements
 
have been
 
prepared assuming
 
that the
 
Company will
 
continue as
 
a going
 
concern, which
 
contemplates the
 
realization
of
 
assets and
 
satisfaction of
 
liabilities in
 
the
 
ordinary
 
course of
 
business.
 
The
 
consolidated financial
 
statements
 
do
 
not
 
include
 
any
adjustments relating to the
 
recoverability and classification
 
of recorded asset amounts
 
or the amounts and
 
classification of liabilities
 
that
might result from the outcome of the uncertainties described above.
2. Summary of Significant Accounting Policies
Basis of presentation
The accompanying consolidated financial statements have
 
been prepared using generally accepted
 
accounting principles in the United
States of America (GAAP)
 
and pursuant to the
 
rules and regulations of
 
the United States Securities
 
and Exchange Commission (“SEC”)
for financial reporting.
 
Foreign currency translation
The
 
Company’s
 
consolidated
 
financial
 
statements
 
are
 
prepared
 
in
 
U.S.
 
dollars.
 
Its
 
foreign
 
subsidiaries
 
use
 
the
 
U.S.
 
dollar
 
as
 
their
functional currency
 
and maintain
 
their records
 
in the
 
local currency.
 
Nonmonetary assets
 
and liabilities
 
are re-measured
 
at historical
rates and
 
monetary assets
 
and liabilities
 
are re-measured
 
at exchange
 
rates in
 
effect at
 
the end
 
of the
 
reporting period.
 
Statement of
operations accounts
 
are re-measured
 
at average
 
exchange rates
 
for the
 
reporting period.
 
The resulting
 
gains or
 
losses are
 
included in
foreign currency translation (gains) losses in the consolidated statements of operations.
Segment information
Operating segments are
 
defined as components
 
of an
 
entity for which
 
separate financial information
 
is available and
 
that is
 
regularly
reviewed by
 
the Chief
 
Operating Decision
 
Maker (“CODM”)
 
in deciding
 
how to
 
allocate resources
 
to an
 
individual segment
 
and in
assessing performance. The Company’s
 
CODM is its Chief Executive Officer
 
(“CEO”). The Company has determined that
 
it operates
as a single operating segment and has one reportable segment.
Use of estimates
The preparation of consolidated
 
financial statements in accordance
 
with GAAP requires the Company’s management to
 
make estimates
and assumptions that affect the reported amounts of assets and liabilities and
 
disclosure of contingent assets and liabilities
 
at the date of
the consolidated financial statements and the reported amounts of expenses during
 
the reporting period. Significant estimates contained
within these
 
consolidated financial
 
statements include,
 
but are
 
not limited
 
to, the
 
estimated fair
 
value of
 
stock-based compensation,
prepaid expense recognition, income tax valuation allowance and accruals of research and development expenses. The Company bases
its estimates on historical experience, known trends and other market-specific or other relevant factors that
 
it believes to be reasonable
under the
 
circumstances. On
 
an ongoing
 
basis, management
 
evaluates its
 
estimates, as
 
there are
 
changes in
 
facts and
 
circumstances.
Actual results may differ materially from those estimates or assumptions.
Related party transactions
The
 
Company has
 
a policy
 
governing related
 
party transactions
 
that defines
 
related parties,
 
and
 
assigns oversight
 
responsibility
 
for
related party transactions to the Company's Audit Committee. The Audit Committee reviews in advance related party transactions, and
considers multiple
 
factors, including
 
the proposed
 
aggregate value
 
of the
 
transaction, or,
 
in the
 
case of
 
indebtedness, the
 
amount of
principal that
 
would be involved,
 
the benefits
 
to the
 
Company of
 
the proposed
 
transaction, the
 
availability of
 
other sources
 
of comparable
products or services, and an assessment of whether the proposed transaction is on terms that
 
are comparable to the terms available to or
from, as the case may be, unrelated third parties. Under the policy, related party transactions are approved only if the Audit Committee
determines in good faith that the transaction is consistent with the interests of the Company and its shareholders.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the time of initial purchase to
be
 
cash equivalents,
 
including balances
 
held
 
in
 
the Company’s
 
money market
 
accounts. The
 
Company
 
maintains its
 
cash
 
and
 
cash
equivalents with financial institutions,
 
in which balances from time
 
to time may exceed the
 
U.S. federally insured limits. The
 
objectives
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
115
of the Company’s cash management policy
 
are to safeguard and preserve funds to maintain liquidity sufficient
 
to meet the Company’s
cash flow requirements, and to attain a market rate of return.
Restricted cash
As of
 
December 31,
 
2023 and
 
2022 a
 
deposit of
 
$
0.1
 
million and
 
$
1.1
 
million, respectively,
 
was restricted
 
from withdrawal.
 
These
restrictions related to securing credit card obligations
 
as of December 31, 2023, and cash payments
 
received in advance under the CEPI
Funding Agreement and securing credit
 
card obligations as of December 31,
 
2022. These balances are included
 
in restricted cash on the
accompanying consolidated balance sheets.
Short Term Investments
The
 
Company determines
 
the appropriate
 
classification of
 
its
 
investments at
 
the
 
time of
 
purchase.
 
Currently,
 
all
 
of
 
the
 
Company’s
investments are
 
classified as
 
available-for-sale in
 
accordance with
 
ASC Topic
 
320, Investments
 
– Debt
 
Securities (“ASC
 
320”). The
Company classifies investments
 
available to
 
fund current operations
 
as current assets
 
on its
 
consolidated balance sheets.
 
Investments
are classified as long-term assets
 
on the consolidated balance
 
sheets if (i) the Company
 
has the intent and ability
 
to hold the investments
for a period of at least one year and (ii) the contractual maturity date of the investments is greater than one year.
Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in accumulated other comprehensive
income
 
or
 
loss.
 
Realized
 
gains
 
and
 
losses,
 
interest
 
income
 
earned
 
on
 
the
 
Company’s
 
cash,
 
cash
 
equivalents
 
and
 
investments,
 
and
amortization or accretion of discounts and premiums on investments are included within other income (expense) on
 
the accompanying
consolidated statements of operations and other comprehensive loss.
Available-for-sale debt securities are reviewed for possible impairment at least quarterly, or more frequently if circumstances arise that
may indicate impairment. When the
 
fair value of the securities declines
 
below the amortized cost basis, impairment
 
is indicated and it
must be determined whether it
 
is other than temporary. Impairment is considered to
 
be other than temporary if the
 
Company: (i) intends
to sell the
 
security, (ii) will more likely
 
than not be
 
forced to sell
 
the security before
 
recovering its cost,
 
or (iii) does
 
not expect to
 
recover
the security’s amortized cost
 
basis. If the
 
decline in fair
 
value is considered
 
other than temporary, the
 
cost basis
 
of the security
 
is adjusted
to its fair market value and the realized loss is reported
 
in earnings. Subsequent increases or decreases in fair value are reported within
equity as accumulated other comprehensive income (loss) on the accompanying consolidated statements of stockholder’s equity.
The Company did
no
t record any such impairments during the years ended December 31, 2023 and 2022.
Concentration of credit risk
Financial instruments
 
that potentially
 
expose the
 
Company to
 
concentrations of
 
credit risk
 
consist primarily
 
of cash
 
and cash
 
equivalents.
The Company maintains
 
each of
 
its cash
 
balances with
 
high-quality and
 
accredited financial institutions
 
and accordingly,
 
such funds
are not exposed
 
to unusual credit risk
 
beyond the normal credit
 
risk associated with commercial
 
banking relationships. The Company
maintains a
 
portion of
 
its cash
 
and cash
 
equivalent balances
 
in the
 
form of
 
a money market
 
account with a
 
financial institution
 
that
management believes to be creditworthy.
 
The Company is dependent on contract manufacturers, several of whom are considered to be related parties, for manufacturing, quality
control, testing, validation and supply services, including production, research and development and
 
clinical activities. The Company’s
future revenue as well as research and development
 
programs could be adversely affected by a significant
 
supply interruption by one or
more of its contract manufacturers.
Leases
At
 
inception
 
of
 
a
 
contract,
 
the
 
Company
 
determines
 
whether
 
an
 
arrangement
 
is
 
or
 
contains
 
a
 
lease.
 
For
 
all
 
leases,
 
the
 
Company
determines the
 
classification as
 
either operating
 
or financing.
 
Operating leases
 
are included
 
in operating
 
lease right-of-use
 
assets and
operating lease liabilities in our consolidated balance sheets.
Lease recognition occurs at the commencement date
 
and lease liability amounts are based on
 
the present value of lease payments over
the lease term. The lease terms
 
may include options to extend or
 
terminate the lease when it is
 
reasonably certain that the Company will
exercise that
 
option. If
 
a lease
 
does not
 
provide information
 
to determine
 
an implicit
 
interest rate,
 
the Company
 
uses its
 
incremental
borrowing rate in determining the present value of lease payments. Right-of-use (ROU) assets represent the Company’s
 
right to use an
underlying asset
 
for the
 
lease term,
 
and lease
 
liabilities represent
 
the Company’s
 
obligation to
 
make lease
 
payments under
 
the lease.
ROU assets also
 
include any lease
 
payments made prior
 
to the commencement
 
date and exclude
 
lease incentives received.
 
Operating
lease expense is recognized on
 
a straight-line basis over the
 
lease term. The depreciable life
 
of assets and leasehold improvements are
limited by the expected lease term, unless
 
there is a transfer of title or purchase
 
option reasonably certain of exercise. Lease agreements
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
116
with both lease and non-lease components, are generally accounted for together as a single lease component. The Company has elected
to
 
apply
 
the
 
practical
 
short-term
 
expedient
 
to
 
leases
 
with
 
a
 
lease
 
term
 
of
 
12
 
months
 
or
 
less,
 
which
 
does
 
not
 
subject
 
the
 
leases
 
to
capitalization.
Property and equipment
Property and equipment are
 
stated at cost,
 
less accumulated depreciation. Depreciation
 
is computed on
 
the straight-line basis over
 
the
estimated useful life of the assets.
The estimated useful life of property and equipment is as follows:
 
 
 
 
 
 
 
 
 
 
Estimated
 
Useful
 
Life
Airplane
15 years
Facilities
5 years
Furniture and fixtures
5 years
Vehicles
5 years
Laboratory and computer equipment
3 years
Software
3 years
Leasehold improvements
Shorter of the useful life of improvement or the remaining lease term
Upon retirement or sale, the cost of assets
 
disposed of and the related accumulated depreciation
 
are removed from the accounts and any
resulting gain or
 
loss is included
 
in gain or
 
loss from operations.
 
Expenditures for repairs
 
and maintenance are
 
charged to expense
 
as
incurred
.
Impairment of long-lived assets
Long-lived
 
assets,
 
comprised
 
of
 
property
 
and
 
equipment,
 
are
 
tested
 
for
 
recoverability
 
whenever
 
events
 
or
 
changes
 
in
 
business
circumstances indicate
 
that
 
the
 
carrying
 
amount
 
of
 
the
 
assets
 
may
 
not
 
be
 
fully
 
recoverable.
 
Factors
 
that
 
the
 
Company
 
considers
 
in
deciding
 
when
 
to
 
perform
 
an
 
impairment
 
review
 
include
 
significant
 
underperformance
 
of
 
the
 
business
 
in
 
relation
 
to
 
expectations,
significant negative industry or
 
economic trends and significant
 
changes or planned changes
 
in the use of
 
the assets. If an
 
impairment
review
 
is
 
performed
 
to
 
evaluate
 
a
 
long-lived
 
asset
 
for
 
recoverability,
 
the
 
Company
 
compares
 
forecasts
 
of
 
undiscounted
 
cash
 
flows
expected to
 
result from
 
the use
 
and eventual
 
disposition of
 
the long-lived
 
asset to
 
its carrying
 
value. An
 
impairment loss
 
would be
recognized when estimated undiscounted future cash flows expected to result from the use of an asset
 
are less than its carrying amount.
The impairment loss would be
 
based on the excess of
 
the carrying value of the
 
impaired asset over its fair value,
 
determined based on
discounted cash flows. To date, the Company has not recorded any impairment losses or disposals on long-lived assets.
Deferred offering costs
The Company capitalizes certain
 
legal, audit, accounting and
 
other third-party fees that
 
are directly associated
 
with an in-process capital
financing effort
 
as deferred offering
 
costs until such
 
financing is consummated.
 
After consummation of
 
the financing, these
 
costs are
recorded
 
as
 
a reduction
 
of
 
additional paid-in
 
capital generated
 
as
 
a result
 
of
 
the financing.
 
Should
 
the financing
 
be abandoned,
 
the
deferred offering
 
costs are
 
expensed immediately
 
as a
 
charge to
 
operating expenses
 
in the
 
accompanying consolidated
 
statements of
operations and other comprehensive loss.
 
The Company records
 
debt issuance costs
 
as a reduction
 
to the
 
carrying value of
 
the debt. The
 
debt discounts are
 
amortized over
 
the
term of the debt using the effective interest method and recognized as interest expense in the accompanying consolidated statements of
operations and other comprehensive loss.
Fair value measurements
Certain assets and liabilities
 
are carried at fair value
 
under GAAP. Fair value is defined as the exchange
 
price that would be received
 
for
an asset or paid to transfer a liability (an
 
exit price) in the principal or most advantageous market for
 
the asset or liability in an orderly
transaction between market participants on the measurement date. Valuation
 
techniques used to measure fair value must maximize the
use of
 
observable inputs
 
and minimize
 
the use
 
of unobservable
 
inputs. Financial
 
assets and
 
liabilities carried
 
at fair
 
value are
 
to be
classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable
and the last is considered unobservable:
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
117
Level 1—Quoted prices in active markets that are identical assets or liabilities.
Level 2—Observable inputs (other than Level 1
 
quoted prices), such as quoted prices
 
in active markets for similar assets
 
or liabilities,
quoted prices
 
in markets
 
that are
 
not active
 
for identical
 
or similar
 
assets or
 
liabilities, or
 
other inputs
 
that are
 
observable or
 
can be
corroborated by observable market data.
Level 3—Unobservable inputs that are supported by
 
little or no market activity that
 
are significant to determining the fair
 
value of the
assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
Coalition for Epidemic Preparedness (“CEPI”) grant
In April
 
2022, the
 
Company entered
 
into an
 
agreement with
 
the Coalition for
 
Epidemic Preparedness Innovations
 
(“CEPI”) whereby
CEPI agreed to provide
 
funding of up to $
9.3
 
million to co-fund a Phase
 
3 clinical trial of
 
Vaxxinity’s
 
next generation UB-612 COVID-
19 vaccine candidate as a
 
heterologous – or ‘mix-and-match’ –
 
booster dose. The Phase 3
 
trial, which began in early
 
2022, is evaluating
the ability of UB-612 to boost COVID-19 immunity against the original strain and multiple variants of concern including Omicron - in
people aged 16 years or older, who have been previously immunized with an authorized COVID-19 vaccine.
Cash payments received in advance under the CEPI Funding Agreement were restricted as to their use until expenditures contemplated
in the
 
funding agreement
 
were incurred.
 
As funds
 
were received
 
they were
 
included within
 
restricted cash
 
offset by
 
a corresponding
short-term accrued liability.
 
The Company recognized
 
payments from CEPI
 
as a reduction
 
of research and
 
development expenses, in
the same period as the expenses that the grant was intended to reimburse were incurred.
Research and development
Research
 
and
 
development
 
expenses
 
include
 
employee
 
related
 
costs,
 
consulting,
 
contract
 
research,
 
depreciation,
 
rent,
 
stock-based
compensation and other corporate costs attributable to research and development activities and are expensed as incurred.
The Company has entered into various research, development and manufacturing contracts, some of which are with related parties (see
Note 16). These
 
agreements are generally
 
cancelable by either
 
party,
 
and related payments
 
are recorded as
 
research and development
expenses as incurred.
 
The Company records
 
accruals for estimated
 
ongoing research costs.
 
When evaluating the
 
adequacy of the
 
accrued
liabilities, the Company
 
analyzes progress of
 
the studies or
 
trials, including the
 
phase or
 
completion of events,
 
invoices received and
contracted costs. The Company’s historical accrual estimates have not been materially different from the actual costs.
Patent costs
Patent-related costs
 
incurred in
 
connection with
 
filing and
 
prosecuting patent
 
applications are
 
expensed as
 
incurred due
 
to the
 
uncertainty
relating to the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses.
Stock-based compensation
The Company measures all stock-based awards granted to employees, directors and non-employees based on the fair
 
value on the date
of grant and recognizes compensation
 
expense of those awards over
 
the requisite service period, which
 
is generally the vesting period
of the respective award. Forfeitures are accounted for as they occur.
The Company classifies stock-based
 
compensation expense in its
 
consolidated statements of operations
 
and other comprehensive loss
in the same
 
manner in which
 
the award recipient’s
 
payroll costs are
 
classified or in
 
which the award
 
recipient’s service
 
payments are
classified.
Prior to
 
the Company's IPO
 
in November 2021,
 
there was no
 
public market for
 
the Company’s
 
common stock and
 
the estimated fair
value of its common stock was determined by its most recently available third-party valuations of common stock. There are significant
judgments
 
and
 
estimates
 
inherent
 
in
 
the
 
determination
 
of
 
the
 
fair
 
value
 
of
 
the
 
Company’s
 
common
 
stock.
 
These
 
estimates
 
and
assumptions include
 
a number
 
of objective
 
and subjective
 
factors, including
 
external market
 
conditions, the
 
prices at
 
which the
 
Company
sold shares of preferred
 
securities, the superior rights
 
and preferences of securities senior
 
to the common securities at
 
the time of, and
the likelihood of, achieving a liquidity event, such as an IPO or sale. Significant changes to the key assumptions used in
 
the valuations
could have resulted in different fair values of common stock at each valuation date.
The fair value of each restricted stock award is estimated on
 
the date of grant based on the fair value
 
of the Company’s common stock
on that same
 
date. The fair
 
value of each
 
option grant is
 
estimated on the
 
date of grant
 
using the Black-Scholes
 
option pricing model
(“Black-Scholes”), which
 
requires inputs
 
based
 
on
 
certain subjective
 
assumptions, including
 
the
 
expected stock
 
price volatility,
 
the
expected term
 
of the award,
 
the risk-free
 
interest rate
 
and expected
 
dividends. The
 
Company, both prior
 
to and
 
after the
 
IPO in
 
November
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
118
2021, lacks sufficient company-specific
 
historical and implied volatility
 
information for its stock,
 
and therefore estimates its expected
stock volatility based on
 
the historical volatility of a
 
publicly traded set of
 
peer companies and expects
 
to continue to do
 
so until such
time as it has adequate
 
historical data regarding the
 
volatility of its own
 
traded stock price. The
 
expected term of the
 
Company’s options
has been determined utilizing the “simplified” method for awards that qualify as
 
“plain-vanilla” options. The expected term of options
granted to non-employees is equal to the
 
contractual term of the option award. The risk-free
 
interest rate is determined by reference to
the U.S. Treasury yield curve in effect at
 
the time of grant of
 
the award for time periods
 
approximately equal to the expected
 
term of the
award. Expected dividend
 
yield is
 
based on the
 
fact that
 
the Company has
 
never paid
 
cash dividends on
 
common stock and
 
does not
expect to pay any cash dividends in the foreseeable future.
Performance-based options
The Company accounts for performance-based options according to the ASC 718, Compensation – Stock Compensation ("ASC 718"),
which are subject to different accounting depending on whether they meet the definition of performance conditions, market conditions,
or other conditions. The
 
conditions present in the
 
Company's grants contain
 
both performance and market
 
conditions. The effect of each
market condition is reflected in the grant-date fair value
 
and the performance-based options are recognized considering the probability
of satisfying the
 
performance and market
 
conditions. The Company
 
has used a
 
Monte Carlo Simulation
 
Model to calculate
 
the fair value
of the grant
 
considering the
 
market condition
 
(the 25% higher
 
value after the
 
IPO condition).
 
The performance
 
condition was
 
determined
to not be probable at the time of the grant date, and the recognition of compensation cost was deferred until the IPO was consummated
in November
 
2021. The
 
recognition of
 
expense for
 
the portion of
 
the grant-date
 
fair value
 
assigned to the
 
market condition has
 
been
recognized as expense according to the derived service period in the valuation model.
 
Income taxes
The Company accounts for
 
income taxes according to
 
the ASC 740, Income
 
Taxes
 
(“ASC 740”) using the
 
asset and liability method,
which requires the
 
recognition of deferred
 
tax assets and
 
liabilities for the
 
expected future tax
 
consequences of events
 
that have been
recognized
 
in
 
the
 
consolidated
 
financial
 
statements
 
or
 
in
 
the
 
Company’s
 
tax
 
returns.
 
Deferred
 
taxes
 
are
 
determined
 
based
 
on
 
the
difference between the
 
financial statement and tax
 
basis of assets
 
and liabilities using
 
enacted tax rates in
 
effect in the
 
years in which
the differences are expected to reverse.
 
Changes in deferred tax assets
 
and liabilities are recorded in
 
the provision for income taxes.
 
The
Company assesses
 
the likelihood
 
that its
 
deferred tax
 
assets will
 
be realized
 
and, to
 
the extent
 
it believes,
 
based upon
 
the weight
 
of
available evidence, that
 
it is more likely
 
than not that all
 
or a portion
 
of the deferred tax
 
assets will not
 
be realized, a valuation
 
allowance
is established through a charge to income tax
 
expense. In evaluating its ability to recover
 
its deferred tax assets, the Company
 
considers
all available positive and negative evidence, including
 
projected future taxable income, prudent and feasible
 
tax planning strategies and
recent financial operations.
The
 
Company accounts
 
for uncertainty
 
in income
 
taxes
 
recognized
 
in
 
the
 
consolidated financial
 
statements by
 
applying a
 
two-step
process to determine
 
the amount of
 
tax benefit to
 
be recognized. First,
 
the tax position
 
must be evaluated
 
to determine the
 
likelihood
that it
 
will be
 
sustained upon
 
external examination
 
by the
 
taxing authorities.
 
If the
 
tax position
 
is deemed
 
more-likely-than-not to
 
be
sustained, the tax position is then
 
assessed to determine the amount of
 
benefit to recognize in the consolidated
 
financial statements. The
amount of the
 
benefit that may
 
be recognized is
 
the largest amount
 
that has a
 
greater than 50%
 
likelihood of being
 
realized upon ultimate
settlement. To
 
the extent the
 
Company determines that
 
such tax positions will
 
not be sustained,
 
the provision for
 
income taxes would
include the
 
effects of
 
any resulting
 
income tax
 
reserves, or
 
unrecognized tax
 
benefits, that
 
are considered
 
appropriate as
 
well as
 
the
related net interest and penalties.
 
 
Net loss per share
Basic
 
earnings
 
per
 
common
 
share
 
is
 
computed
 
by
 
dividing
 
net
 
loss
 
by
 
the
 
weighted-average
 
number
 
of
 
shares
 
of
 
common
 
stock
outstanding during the period. Diluted earnings
 
per common share is computed by
 
dividing net loss by the weighted-average
 
number of
shares
 
of
 
common
 
stock
 
outstanding
 
during
 
the
 
period,
 
plus
 
the
 
potential
 
dilutive
 
effect
 
of
 
other
 
securities
 
if
 
those
 
securities
 
were
converted
 
or
 
exercised.
 
During
 
periods
 
in
 
which
 
the
 
Company
 
incurs
 
net
 
losses,
 
both
 
basic
 
and
 
diluted
 
loss
 
per
 
common
 
share
 
is
calculated by dividing the net loss
 
by the weighted-average shares of common
 
stock outstanding and potentially dilutive securities are
excluded from the calculation because their effect would be antidilutive. For purpose of this
 
calculation, outstanding options, unvested
restricted stock
 
and warrants
 
are considered
 
potential dilutive
 
common stock
 
and are
 
excluded from
 
the computation
 
of net
 
loss per
share if their effect is anti-dilutive.
Emerging growth company status
The Company is an “emerging growth company” (“EGC”), as defined in the Jumpstart Our Business Startups Act (“JOBS Act”) and is
permitted to and plans to
 
take advantage of certain exemptions from
 
various reporting requirements that are applicable
 
to other public
companies that are not EGCs. The Company
 
may take advantage of these exemptions until
 
it is no longer an EGC under Section 107
 
of
the JOBS
 
Act, which
 
provides that
 
an EGC
 
can take
 
advantage of
 
the extended
 
transition period
 
afforded
 
by the
 
JOBS Act
 
for the
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
119
implementation of new or revised accounting standards. The Company has
 
elected to avail itself of the extended transition period
 
and,
therefore, as long as the Company remains
 
an EGC, it will not be subject
 
to new or revised accounting standards at the
 
same time that
they become applicable to other public companies that are not EGCs.
 
Recently adopted accounting standards
In
 
July
 
2018,
 
the
 
FASB
 
issued
 
ASU
 
No.
 
2018-11,
 
Leases
 
(Topic
 
842):
 
Targeted
 
Improvements
 
(“ASU
 
2018-11”).
 
ASU
 
2018-
11provided
 
an
 
alternative
 
method
 
in
 
addition
 
to
 
the
 
modified
 
retrospective
 
transition
 
method
 
for
 
ASU
 
No.
 
2016-02,
 
Leases:
Amendments to
 
the FASB
 
Accounting Standards
 
Codification (“ASU
 
2016-02”), issued
 
in February
 
2016. Under
 
ASU 2018-11,
 
an
entity may
 
elect to
 
initially apply
 
the new
 
lease standard
 
at the
 
adoption date
 
and recognize
 
a cumulative-effect adjustment
 
to the
 
opening
balance of retained earnings
 
in the period of
 
adoption. Under ASU 2016-02,
 
a lease is required
 
to recognize assets and
 
liabilities with
lease terms
 
of more
 
than twelve
 
months. ASU
 
2016-02 is
 
effective
 
for nonpublic
 
business entities
 
and public
 
entities eligible
 
to be
smaller reporting companies for fiscal years beginning after December 15, 2021.
 
The Company adopted
 
the new
 
standard on January
 
1, 2022
 
using the
 
modified retrospective approach.
 
The Company has
 
elected to
apply the transition
 
method that allows
 
companies to continue
 
applying the guidance under
 
the lease standard
 
in effect at
 
that time in
the comparative periods
 
presented in the
 
financial statements and
 
recognize a cumulative-effect
 
adjustment to the
 
opening balance of
accumulated deficit on the date of adoption. The Company has elected to
 
combine lease components (for example fixed rent payments)
with non-lease
 
components (for
 
example, common-area
 
maintenance costs)
 
on our
 
facility,
 
lab equipment
 
and CRO
 
embedded lease
asset classes. The
 
Company also elected
 
the “package of
 
practical expedients”, which
 
permits the Company
 
not to reassess
 
under the
new standard
 
the Company’s
 
prior conclusions
 
about lease
 
identification, lease
 
classification and
 
initial direct
 
costs. In
 
addition, the
Company
 
also
 
elected
 
the
 
short-term
 
lease
 
practical
 
expedients
 
allowed
 
under
 
the
 
standard.
 
Lastly,
 
the
 
Company
 
did
 
not
 
elect
 
the
practical expedient allowing the use-of-hindsight which would require the Company to reassess the lease term of its leases based on all
facts and circumstances through the effective date.
 
Results for reporting period beginning
 
after January 1, 2022 are
 
presented under the new standard,
 
while prior period amounts are
 
not
adjusted
 
and
 
continue to
 
be reported
 
under the
 
accounting standards
 
in
 
effect
 
for
 
the prior
 
period.
 
Upon
 
adoption of
 
the
 
new
 
lease
standard, on January 1, 2022, the Company
 
did not enter into any leases subject
 
to ASC 842 and did not capitalize
 
a ROU asset or lease
liability.
3. Short Term Investments
The Company’s short-term investments consist of the following (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2023
Amortized Cost
Unrealized Gains
(Losses), Net
Recorded Basis
U.S. Treasury Securities
$
25,456
$
8
$
25,464
Total
$
25,456
$
8
$
25,464
As of December 31, 2022
Amortized Cost
Unrealized Gains
(Losses), Net
Recorded Basis
U.S. Treasury Securities
$
53,549
$
(197)
$
53,352
Total
$
53,549
$
(197)
$
53,352
 
4. Fair Value Measurements
The fair values of
 
our cash and certain
 
cash equivalents, accounts payable, and
 
other current assets and current
 
liabilities approximate
their carrying values due to their short-term maturities.
The Company's money market accounts
 
and short-term investments are shown
 
at fair value based on
 
unadjusted quoted market prices
in active markets for identical assets.
The following
 
table presents
 
information about
 
the Company’s
 
financial instruments
 
measured at
 
fair value
 
on a
 
recurring basis
 
and
indicate the level of the fair value hierarchy used to determine such fair values (in thousands):
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
120
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Level 1
Level 2
Level 3
Total
Assets:
Short-term investments
$
25,464
$
$
$
25,464
Money market account
1,029
1,029
Total assets
$
26,493
$
$
$
26,493
December 31, 2022
Level 1
Level 2
Level 3
Total
Assets:
Short-term investments
$
53,352
$
$
$
53,352
Money market account
27,724
27,724
Total assets
$
81,076
$
$
$
81,076
During the years ended December 31, 2023 and 2022, there were
no
 
transfers between Level 1, Level 2 and Level 3.
 
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Prepaid insurance
$
1,235
$
1,870
Deposits
241
232
Clinical prepayments
2,679
Prepaid materials and supplies
248
Other
840
522
$
2,316
$
5,551
Prepaid
 
insurance
 
consists
 
primarily
 
of
 
$
1.2
 
million
 
and
 
$
1.6
 
million
 
for
 
the
 
unamortized
 
portion
 
of
 
the
 
Company’s
 
annual
 
D&O
insurance premiums as of December 31, 2023 and 2022, respectively.
 
 
Deposits consist of amounts held by the Company’s travel and logistics company and the leaseholder for the Florida lab.
 
Clinical prepayments consist
 
of amounts paid
 
in advance to clinical
 
research organizations (“CROs”) for
 
expenses related to
 
our clinical
trials, primarily UB-612, that are amortized to expense as earned by the CRO and clinical trial sites.
 
 
Prepaid materials and supplies consist of amounts paid in
 
advance related to the procurement and/or production of materials for
 
use in
the Company’s clinical trials, primarily UB-612.
 
 
Other prepaid
 
expenses and
 
current assets
 
consist primarily of
 
prepaid expenses
 
incurred in
 
the normal course
 
of business,
 
including
software subscriptions and prepaid maintenance.
 
Costs related to the establishment
 
of the Company’s
 
at-the-market offering program
during 2023 were recorded as prepaid expense and will be charged against equity raised under the program.
 
As of December 31, 2023,
no shares have been sold under the program.
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
121
6. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Airplane
$
11,983
$
11,983
Laboratory and computer equipment
3,649
3,146
Leasehold improvements
576
403
Software
426
415
Facilities, furniture and fixtures
99
37
Vehicles
87
87
Construction in progress
128
65
Total property and equipment
16,948
16,136
Less: accumulated depreciation
(5,867)
(3,624)
$
11,081
$
12,512
Depreciation expense for the years ended December 31, 2023 and 2022 was $
2.2
 
million and $
1.7
 
million, respectively.
 
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Accrued compensation
$
1,558
$
2,568
Accrued external research and development
1,202
6,904
Accrued professional fees and other
560
1,722
Accrued interest
21
176
$
3,341
$
11,370
 
8. Other Long-Term Liabilities
Other long-term liabilities consisted of the following (in thousands):
 
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Accrued tax provision
$
35
$
236
$
35
$
236
As of December 31, 2023 and 2022, less than $
0.1
 
million and $
0.2
 
million of the accrued tax provision relates to penalties and interest
the Company
 
may be
 
subject to
 
on transfer
 
pricing related
 
exposures for
 
its foreign
 
subsidiaries. During
 
2023, statute
 
of limitations
expirations enabled the Company to write off approximately $
0.2
 
million of accrued penalties and interest.
 
The Company has accrued
for the remaining exposures until the statute of limitations expires and it is appropriate to write them off.
9. Notes Payable
Note Payable—Airplane
In connection with the acquisition
 
of an airplane, the Company entered
 
into a note payable agreement (the
 
“2025 Note”) in June 2020
for $
11.5
 
million, with an annual interest rate of
3.4
% and a maturity date of
June 9, 2025
. Principal and interest payments are payable
monthly in the amount of
 
$
0.1
 
million with a final payment
 
of $
9.4
 
million at maturity. The 2025 Note is guaranteed
 
by the co-founders
of the Company. In addition, the Company incurred debt issuance costs of $
0.3
 
million, which are being amortized over the term of the
loan. There are no financial covenants associated with the 2025 Note.
 
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
122
The carrying value of the 2025 Note is as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Principal
$
10,011
$
10,455
Unamortized debt issuance cost
(78)
(131)
Carrying amount
9,933
10,324
Less: current portion
(406)
(391)
Note payable, net of current portion and debt issuance cost
$
9,527
$
9,933
As of December 31, 2023, the remaining principal payments for the 2025 Note, are as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
Amount
2024
$
458
2025
9,553
$
10,011
Interest expense
 
associated with
 
the 2025
 
Note was
 
$
0.4
 
million and
 
$
0.4
 
million for
 
the years
 
ended December 31,
 
2023 and
 
2022,
respectively.
2022 Promissory Note with Related Party
In October 2022, the Company entered into a related party unsecured promissory note (the “2022
 
Promissory Note”) with UBI for $
4.2
million. The
 
2022 Promissory
 
Note accrues
 
interest at
7.0
% per
 
annum and
 
is due
 
October 1,
 
2026. The
 
2022 Promissory
 
Note was
issued to
 
satisfy accounts
 
payable to
 
UBI totaling
 
$
4.2
 
million. Interest
 
expense associated
 
with the
 
2022 Promissory
 
Note was
 
$
0.2
million and less than $
0.1
 
million for the years ended December 31, 2023 and 2022, respectively.
The carrying value of the 2022 Promissory Note is as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Principal
$
3,112
$
4,225
Less: current portion
(1,029)
(1,113)
Note payable, net of current portion and debt issuance cost
$
2,083
$
3,112
As of December 31, 2023, the remaining principal payments for the 2022 Promissory Note, are as follows (in thousands):
 
 
 
 
 
 
 
 
Amount
2024
1,029
2025
1,103
2026
980
$
3,112
2023 Promissory Note with Related Party
In December 2023,
 
the Company entered
 
into a related
 
party unsecured promissory
 
note (the
 
“2023 Promissory Note”)
 
with UBI
 
for
$
2.2
 
million. The 2023 Promissory Note accrues
 
interest at
9.25
% per annum and is due
November 1, 2027
. The 2023 Promissory Note
was issued to satisfy
 
accounts payable to UBI totaling
 
$
2.2
 
million. During the year ended
 
December 31, 2023 the Company incurred
less than $
0.1
 
million in interest expense related to the 2023 Promissory Note.
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
123
The carrying value of the 2023 Promissory Note is as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
December 31,
2023
Principal
$
2,124
Less: current portion
(472)
Note payable, net of current portion
$
1,652
As of December 31, 2023, the remaining principal payments for the 2023 Promissory Note, are as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
Amount
2024
472
2025
517
2026
567
2027
568
$
2,124
 
10. Common Stock
Vaxxinity’s
 
Amended and Restated Certificate of Incorporation
 
dated November 15, 2021 authorized
1,100,000,000
 
shares of common
stock
 
with
 
a
 
par
 
value
 
of
 
$
0.0001
 
per
 
share,
 
of
 
which
1,000,000,000
 
shares
 
have
 
been
 
designated
 
as
 
Class
 
A
 
common
 
stock
 
and
100,000,000
 
shares have been designated as Class B common stock.
 
Holders of Class
 
A common stock
 
and Class B
 
common stock have
 
identical rights,
 
except with respect
 
to voting and
 
conversion. Except
as otherwise expressly provided
 
in Vaxxinity’s
 
Amended and Restated Certificate
 
of Incorporation or Bylaws,
 
or required by applicable
law,
 
holders of
 
Class A
 
common stock
 
will be
 
entitled to
 
one vote
 
per share
 
on all
 
matters submitted
 
to a
 
vote of
 
stockholders and
holders of our Class B common stock will be entitled to ten votes per share on all matters submitted to a vote of stockholders.
 
Holders of
 
Class A
 
common stock
 
and Class
 
B common
 
stock vote
 
together as
 
a single
 
class on
 
all matters
 
submitted to
 
a vote
 
of
stockholders, except (i) amendments to Vaxxinity’s
 
Amended and Restated Certificate of Incorporation to increase or decrease the
 
par
value
 
of
 
a
 
class
 
of
 
capital
 
stock,
 
in
 
which
 
case
 
the
 
applicable
 
class
 
would
 
be
 
required
 
to
 
vote
 
separately
 
to
 
approve
 
the
 
proposed
amendment and
 
(ii) amendments
 
to Vaxxinity’s
 
Amended and
 
Restated Certificate
 
of Incorporation
 
that alter
 
or change
 
the powers,
preferences or special rights of a class of capital stock
 
in a manner that affects its holders adversely,
 
in which case the applicable class
would be required to vote separately to approve the proposed amendment.
 
Holders of common stock are
 
entitled to receive, ratably,
 
dividends as may be declared
 
by Vaxxinity’s
 
board of directors out of
 
funds
legally available therefor if the board of directors, in its discretion, determines to issue dividends.
 
The voting,
 
dividend, and
 
liquidation rights
 
of the
 
holders of
 
common stock
 
are subject
 
to and
 
qualified by
 
the rights,
 
powers, and
preferences of the holders of Vaxxinity’s
 
preferred stock, if any.
 
The Company has reserved shares of common stock for issuance for the following purposes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Options and RSUs issued and outstanding
22,123,762
20,716,760
Options available for future grants
6,266,663
6,064,003
Warrants issued and outstanding
1,928,020
1,928,020
30,318,445
28,708,783
11. Equity Incentive Plan
Stock Options
In March 2021,
 
the Company replaced
 
the 2017 and
 
2020 Stock Option
 
and Grant Plans
 
with the 2021
 
Stock Option and
 
Grant Plan
(the “2021 Pre-IPO Plan”), which provided for the Company to grant qualified incentive options, nonqualified options, restricted stock
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
124
awards,
 
unrestricted
 
stock
 
awards,
 
and
 
restricted
 
stock
 
units
 
to
 
employees and
 
non-employees
 
to
 
purchase
 
the
 
Company’s
 
Class
 
A
common stock. The
 
2021 Pre-IPO Plan
 
authorized the issuance
 
of up to
21,593,830
 
shares of Class
 
A common stock
 
pursuant to awards.
In November 2021, our stockholders approved
 
replacing the 2021 Pre-IPO Plan with
 
the 2021 Omnibus Incentive Compensation Plan
(the “Omnibus Plan”), which
 
provides for the Company
 
to grant nonqualified stock
 
options, incentive (qualified) stock
 
options, stock
appreciation rights, restricted
 
share awards, restricted
 
stock units, performance
 
awards, cash
 
incentive awards and
 
other equity-based
awards (including fully vested shares). The Omnibus Plan replaced the
 
2021 Pre-IPO Plan and no further grants will be made under the
2021 Pre-IPO Plan. The following is a summary of certain terms and conditions of the Omnibus Plan.
At its inception in November 2021, the maximum number of shares
 
of common stock that could be issued under the Omnibus Plan
 
was
8,700,000
 
shares of Class A
 
equity. This
 
number increases automatically on January
 
1 of each year,
 
commencing January 1, 2023, by
the
 
number
 
of
 
shares
 
equal
 
to
 
the
 
lesser
 
of
 
(i)
4
%
 
of
 
the
 
outstanding
 
shares
 
of
 
the
 
Company’s
 
common
 
stock
 
on
 
the
 
immediately
preceding December 31, (ii) the number of shares determined by the Compensation Committee, if any such
 
determination is made, and
(iii)
 
the
 
number
 
of
 
shares
 
underlying
 
any
 
awards
 
granted
 
during
 
the
 
preceding
 
calendar
 
year,
 
net
 
of
 
the
 
shares
 
underlying
 
awards
canceled
 
or
 
forfeited under
 
the
 
Omnibus
 
Plan. On
 
January
 
1,
 
2024,
 
in accordance
 
with
 
the
 
automatic “evergreen”
 
provision
 
of
 
the
Omnibus Plan, the maximum number of shares that can be issued under the plan was increased to
 
16,401,213
.
As of
 
December 31, 2023,
6,266,663
 
shares were
 
available for future
 
grant. Shares
 
issued under the
 
Omnibus Plan that
 
are forfeited,
canceled, reacquired by the Company
 
prior to vesting, satisfied
 
without the issuance of stock,
 
withheld to cover the exercise
 
price or tax
withholdings, or
 
otherwise terminated,
 
other than
 
by exercise,
 
shall be added
 
back to the
 
shares available
 
for issuance
 
under the
 
Omnibus
Plan.
The exercise
 
price for
 
grants made
 
pursuant to
 
the terms
 
of the
 
Omnibus Plan
 
is determined
 
in the
 
applicable grant
 
by the
 
board of
directors. Any incentive options granted to persons possessing less than
10
% of the total combined voting power of all classes of stock
may not have an exercise price
 
of less than
100
% of the fair market value of
 
the common stock on the grant
 
date. Any incentive options
granted to persons possessing more than
10
% of the total combined voting power of all classes of stock may not have an exercise price
of less than
110
% of the fair market value of the common stock on the grant date.
 
The option term for incentive awards may not be greater than
ten years
 
from the date of the grant. Incentive options granted to persons
possessing more than
10
% of the total combined
 
voting power of all classes
 
of stock may not have
 
an option term of greater
 
than
five
years
 
from the date of the grant. The vesting period for equity-based awards is determined at the discretion of the board of directors.
 
As
 
of
 
December 31,
 
2023
 
there
 
were
 
options
 
to
 
purchase
15,561,307
 
shares
 
of
 
Class
 
A
 
common
 
stock
 
outstanding
 
and
 
options
 
to
purchase
6,362,455
 
shares
 
of
 
Class
 
B
 
common
 
stock
 
outstanding,
 
of
 
which
11,389,851
 
Class
 
A
 
and
5,063,133
 
Class
 
B
 
shares,
respectively were exercisable.
Stock Option Activity
The following table summarizes stock option activity for the year ended December 31, 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Stock
Options
Outstanding
Weighted Price
Per Share
Weighted
Contractual
Term (years)
Aggregate
Intrinsic Value
(in thousands)
Balance at December 31, 2022
20,416,760
$
5.07
6.8
$
7,166
Granted
4,573,829
2.02
Exercised
(689,922)
0.66
Forfeited
(2,376,905)
6.55
Balance at December 31, 2023
21,923,762
$
4.42
6.0
$
3,158
Options vested and exercisable at December 31, 2023
16,452,984
$
4.37
5.6
$
3,155
The aggregate intrinsic value of options
 
is calculated as the difference between
 
the exercise price of the
 
options and the fair value of
 
the
common stock for those options that had exercise prices lower than the fair value of the common stock.
The intrinsic value of options
 
exercised during each of the
 
years ended December 31, 2023
 
and 2022 was $
0.2
 
million and $
4.5
 
million,
respectively.
The weighted-average grant-date fair
 
value per share of options
 
granted during the years ended
 
December 31, 2023 and 2022
 
was $
1.41
and $
2.21
, respectively.
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
125
The
 
total
 
fair
 
value
 
of
 
options
 
vested
 
during
 
the
 
years
 
ended
 
December
 
31,
 
2023
 
and
 
2022
 
was
 
$
9.2
 
million
 
and
 
$
8.8
 
million,
respectively.
Valuation
 
of Stock Options Granted that Contain Service Conditions Only
 
The fair
 
value of
 
each option
 
award granted
 
with service-based
 
vesting is
 
estimated on
 
the date
 
of the
 
grant using
 
the Black-Scholes
option valuation model
 
based on the
 
assumptions noted in
 
the table below
 
for those options
 
granted in the
 
years ended December
 
31,
2023 and 2022:
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Risk-free interest rate
3.46
% -
5.58
%
1.46
% -
4.22
%
Expected term (in years)
0.12
 
-
6.11
5.5
 
-
6.1
Expected volatility
47.64
% -
83.09
%
90.01
% -
97.82
%
Expected dividend yield
0.00
%
0.00
%
Stock Options Granted to Employees that Contain Performance and Market Conditions
Included in
 
the stock
 
options granted
 
during the
 
year ended
 
December 31,
 
2021 were
 
stock options
 
to purchase
6,799,625
 
shares of
Class A
 
common stock that
 
contain performance- and
 
market-based vesting conditions
 
granted to
 
the Mei Mei
 
Hu, Louis Reese,
 
and
Peter
 
Diamandis.
 
As
 
of
 
December 31,
 
2023,
5,983,670
 
options
 
with
 
performance-
 
and
 
market-based
 
vesting
 
conditions
 
remain
outstanding.
 
The rest have either been exercised or expired.
In August 2021, the stock option awards for the Mei Mei Hu and Louis Reese totaling
5,983,670
 
shares were cancelled in exchange for
an equal number of options to purchase shares
 
of Class B common stock. The Company accounted for
 
this exchange as a stock option
modification. The fair value of the
 
awards granted to Mei Mei Hu
 
and Louis Reese at the modification date
 
was $
23.8
 
million, valued
using the Monte-Carlo simulation model. The assumptions used in the Monte-Carlo simulation model were as follows:
 
 
 
Time to expiration (in years)
4.5
Volatility
75%
Risk-free interest rate
0.58%
Cost of equity
25%
Fair value of underlying common stock (as of valuation date)
$10.07
 
In connection with preparing its
 
financial statements for the fiscal
 
year ended December 31, 2023,
 
the Company identified an error
 
with
how the risk-free
 
interest rate
 
was reported in
 
the financial
 
statements for
 
the fiscal
 
year ended
 
December 31,
 
2022.
 
The risk-free
 
interest
rate was reported as
58.00
% when it should have been reported as
0.58
%.
 
This error has been corrected in the table above.
The stock option awards for Peter Diamandis totaling
815,955
 
shares had a grant date fair value of $
0.3
 
million. The assumptions used
in the Monte-Carlo simulation model were as follows:
 
 
 
Time to expiration (in years)
1
Volatility
90%
Risk-free interest rate
0.09%
Cost of equity
25%
Fair value of underlying common stock (as of valuation date)
$4.12
 
The compensation
 
expense for
 
these awards
 
is recognized
 
when the
 
vesting condition
 
is met
 
for the
 
performance-based criteria,
 
and
over the derived service period for the market-based criteria.
The
 
condition
 
for
 
the
 
performance-based
 
criteria
 
in
 
the
 
stock
 
options
 
was
 
based
 
on
 
the
 
Company's
 
completion
 
of
 
its
 
IPO,
 
and
 
the
condition for the market-based criteria in the stock options was based on the future price of the Company's common stock trading at or
above a specified threshold. During the year ended December
 
31, 2021, stock options for an aggregate of
5,439,700
 
shares of the total
6,799,625
 
shares
 
containing
 
performance-
 
and
 
market-based
 
vesting
 
conditions
 
were
 
vested
 
following
 
the
 
satisfaction
 
of
 
the
performance-based
 
condition
 
achieved
 
through
 
the
 
Company’s
 
completion
 
of
 
its
 
IPO.
 
As
 
of
 
December 31,
 
2023,
 
the
 
market-based
vesting conditions had not been achieved.
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
126
Restricted Stock
The following table summarizes the Company’s restricted stock activity for the year ended December 31, 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of
Shares
Weighted
Average Grant
Date Fair Value
Per Share
Unvested at December 31, 2022
300,000
$
3.76
Issued
Forfeited
(100,000)
3.76
Unvested at December 31, 2023
200,000
$
3.76
No
 
restricted stock vested during the years ended December 31, 2023 and 2022.
Stock-Based Compensation Expense
The
 
Company
 
recorded
 
stock-based
 
compensation
 
expense
 
in
 
the
 
following
 
expense
 
categories
 
in
 
the
 
accompanying
 
consolidated
statements of operations (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Years
 
Ended December 31,
2023
2022
Research and development
$
2,565
$
3,276
General and administrative
4,943
5,438
Total stock-based compensation expense
$
7,508
$
8,714
As of December 31, 2023, total unrecognized compensation cost related to the unvested stock-based awards was $
8.0
 
million, which is
expected to be recognized over a weighted average period of
2.2
 
years.
12. Income Taxes
The sources of
 
losses from continuing
 
operations, before income
 
taxes, classified between
 
domestic entities and those
 
entities domiciled
outside of the U.S., are as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Years
 
Ended December 31,
Losses before taxes
2023
2022
Domestic entities
$
(54,850)
$
(69,745)
Entities outside the U.S.
(2,084)
(5,477)
$
(56,934)
$
(75,222)
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
127
Tax Rate Reconciliation
The Company’s effective tax rate for the years ended December 31, 2023 and 2022 was
0.00
% and
0.00
%, respectively.
A reconciliation
 
of the
 
provision for
 
income taxes
 
at the
 
statutory rate
 
to the
 
amount reflected
 
in the
 
consolidated statements
 
of operations
is as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Years
 
Ended December 31,
2023
2022
Income taxes at statutory rate
21.00
%
 
21.00
%
 
State income taxes, net of federal benefit
2.29
%
 
(1.17)
%
 
Stock compensation
(1.08)
%
 
(0.68)
%
 
Foreign rate differential
(0.31)
%
 
(0.59)
%
 
Uncertain tax positions
0.00
%
 
0.00
%
 
Plane expense
(1.15)
%
 
0.00
%
 
Other
0.67
%
 
1.41
%
 
Change in valuation allowance
(21.42)
%
 
(
19.98
)
%
 
Provision for income taxes
0.00
%
 
0.00
%
 
Deferred Tax Assets (Liabilities)
 
The Company computes income taxes using
 
the liability method. This method requires
 
recognition of deferred tax assets and liabilities,
measured by enacted rates, attributable
 
to temporary differences between the
 
financial statements and the income
 
tax basis of assets and
liabilities. In
 
assessing the
 
realizability of
 
deferred tax
 
assets, the
 
Company considers
 
whether it
 
is more
 
likely than
 
not that
 
certain
deferred tax
 
assets will be
 
realized. The
 
ultimate realization of
 
deferred tax
 
assets is dependent
 
upon the
 
generation of future
 
taxable
income
 
in those
 
specific jurisdictions
 
prior to
 
the dates
 
on
 
which such
 
net operating
 
losses
 
expire. The
 
Company maintained
 
a full
valuation allowance against its net deferred
 
tax assets as of December 31, 2023
 
and 2022 because the Company has
 
determined that it
is more likely than
 
not that these assets
 
will not be fully
 
realized based on a
 
current evaluation of expected
 
future taxable income and
the Company is in a cumulative loss position. The valuation allowance increased by $
12.2
 
million during the year ended December 31,
2023 and
 
$
15.0
 
million during
 
the year
 
ended December 31,
 
2022, primarily
 
as a
 
result of
 
net operating
 
losses generated
 
during the
periods. The Company reevaluates the positive and negative evidence at each reporting period.
Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31,
2023
2022
Deferred tax assets:
Net operating loss carryforwards
$
42,170
$
39,184
Section 174 costs
15,631
7,424
Stock compensation
3,385
2,090
Other
225
559
Total deferred tax assets
61,411
49,257
Less: valuation allowance
(61,369)
(49,173)
Net deferred tax assets
$
42
$
84
Deferred tax liabilities:
Depreciation
$
(42)
$
(84)
Net deferred tax liabilities
(42)
(84)
Net deferred income taxes
$
$
Net Operating Losses
As of
 
December 31, 2023,
 
the Company
 
had
 
total net
 
operating loss
 
carryforwards for
 
U.S. federal
 
income tax
 
purposes of
 
$
178.8
million, of
 
which $
175.7
 
million have
 
no expiration
 
date, and
 
foreign net
 
operating loss
 
carryforwards of
 
$
31.2
 
million that
 
have no
expiration date.
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
128
Utilization
 
of
 
the
 
NOL
 
carryforwards
 
and
 
credits
 
may
 
be
 
subject
 
to
 
a
 
substantial
 
annual
 
limitation
 
due
 
to
 
the
 
ownership
 
change
limitations provided by
 
the Internal Revenue
 
Code Sections 382
 
and 383 (the
 
“Code”), as amended,
 
and similar state
 
provisions. The
Company has not
 
completed a study
 
to assess whether
 
an ownership
 
change has occurred
 
or whether there
 
have been multiple
 
ownership
changes since
 
the Company’s
 
formation due
 
to the
 
complexity and
 
cost associated
 
with such
 
a study,
 
and the
 
fact that
 
there may
 
be
additional ownership changes
 
in the future. If
 
the Company experienced
 
an ownership change at
 
any time since its
 
formation, utilization
of the
 
NOL or
 
tax credit
 
carryforwards to
 
offset future
 
taxable income
 
and taxes,
 
respectively,
 
would be
 
subject to
 
annual limitation
under the Code. The annual limitation may result in the expiration of the
 
NOL and credits before utilization. If impaired, the NOL and
credit carryforwards would be removed from
 
the deferred tax asset schedule with
 
a corresponding reduction in the valuation
 
allowance.
The Inflation Reduction Act (IRA) was signed into law on August 16, 2022. The
 
IRA introduces a 15% corporate alternative minimum
tax
 
(CAMT) for
 
corporations whose
 
average annual
 
adjusted financial
 
statement
 
income
 
(AFSI) for
 
any
 
consecutive three-tax-year
period ending after December 31, 2021 and preceding the tax year exceeds $1.0 billion and a 1% excise tax on stock repurchases made
by publicly
 
traded U.S.
 
corporations. Since
 
the Company
 
does not
 
meet the
 
book income
 
threshold to
 
be subject
 
to CAMT
 
and the
excise tax
 
is not
 
an ASC
 
740 tax,
 
they are
 
not expected
 
to have
 
any impact.
 
The other
 
tax law
 
updates are
 
not expected
 
to have
 
any
material impact to the Company's consolidated financial statements and related disclosures.
 
The CHIPS and
 
Science Act was
 
signed into law
 
on August 9,
 
2022. The Act
 
introduces the advanced
 
manufacturing investment tax
credit, a
25
% tax credit for investments in semiconductor manufacturing. It also includes
 
incentives for manufacturing semiconductors,
as well as specialized tooling equipment required in the semiconductor manufacturing process. The Company is not currently claiming
any such tax credits, as such the tax law updates
 
are not expected to have any material impact to the
 
Company's consolidated financial
statements and related disclosures.
Enacted in 2017, the Tax
 
Cuts and Jobs Act (“TCJA”)
 
included significant changes in tax law
 
including a change to Internal Revenue
Code section
 
174 regarding
 
the deductibility
 
of research
 
and experimentation
 
expenses (“R&E
 
expenses”). The
 
section 174
 
tax law
change had a delayed effective date
 
and became effective for the Company
 
in 2022. New section 174
 
requires that companies capitalize
and amortize R&E expenses performed in the U.S. over five years
 
and further provides for a fifteen-year amortization period for R&E
expenses
 
incurred
 
outside
 
the
 
U.S.
 
The
 
Company
 
has
 
factored
 
any
 
impact
 
of
 
section
 
174
 
in
 
the
 
Company’s
 
consolidated
 
financial
statements and related disclosures.
The Company is subject to tax
 
in the United States, many state
 
and local, and foreign jurisdictions. The
 
Company is currently not under
audit in
 
any US
 
federal, state
 
and local
 
or foreign
 
jurisdictions. Tax
 
years starting
 
from 2016
 
remain open
 
to examination
 
due to
 
the
carryover of unused net operating losses and tax credits.
Uncertain Tax Positions
A summary of the Company’s unrecognized tax benefits activity and related information is presented as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Years
 
Ended December 31,
2023
2022
Uncertain tax position liability at the beginning of the year
$
652
$
652
Decreases during current period
(617)
Uncertain tax position liability at the end of the year
$
35
$
652
In 2023, $
0.6
 
million of liabilities were reversed since the Company
 
filed late returns for tax years 2016 and
 
2017 in October of 2020,
and as such, the statute of limitations expired 3 years from that date, in October 2023.
13. Net Loss Per Share
The Company’s potentially dilutive securities, which include options,
 
unvested restricted stock, and warrants,
 
have been excluded from
the computation of
 
diluted net
 
loss per
 
share as the
 
effect would
 
be to
 
reduce the net
 
loss per share.
 
Therefore, the weighted
 
average
number of common shares outstanding
 
used to calculate both basic
 
and diluted net loss per
 
share is the same. The
 
Company excluded
the following potential
 
common shares, presented
 
based on amounts
 
outstanding at each
 
period end, from
 
the computation of
 
diluted
net loss per share for the years ended December 31, 2023 and 2022 because including them would
 
have had an anti-dilutive effect:
 
 
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
129
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Unvested restricted stock
200,000
300,000
Options issued and outstanding
21,923,762
20,416,760
Warrants issued and outstanding
1,928,020
1,928,020
24,051,782
22,644,780
 
14. Commitments and Contingencies
Contractual Obligations
 
The Company
 
enters into
 
agreements with
 
contract research
 
organizations (“CROs”)
 
to conduct
 
clinical trials
 
and preclinical
 
studies
and contract manufacturing organizations (“CMOs”) to produce vaccines and other potential product candidates. Contracts with CROs
and CMOs are generally cancellable, with notice, at the Company’s option.
 
As of December 31, 2023, the Company had
no
 
remaining prepayments to CROs or CMOs for activities associated with the conduct
 
of
its clinical trials or the production of the Company’s product candidates.
 
Michael J. Fox Foundation Grant
 
On November 3, 2021, the Company was awarded a grant from The Michael J. Fox Foundation for
 
Parkinson’s Research (“MJFF”) in
the amount
 
of $
0.8
 
million to
 
explore markers
 
for target
 
engagement in
 
individuals immunized
 
with UB-312,
 
an active
a
-Synuclein
immunotherapy. The
 
Company used the funds to
 
oversee sample management, sample preparation (IgG
 
fractions) and distribution, as
well as characterize the binding properties of the antibodies against pathological forms of aSyn. Since funding was utilized over a two-
year period,
 
as cash
 
was received,
 
the amount
 
expected to
 
be utilized
 
within twelve
 
months was
 
recognized as
 
short-term restricted
cash/deposits, with
 
a corresponding
 
short-term accrued
 
liability, which was
 
released as
 
the related
 
expenses were
 
incurred. The
 
Company
recognized payments from MJFF
 
as a reduction of
 
research and development expenses,
 
in the same period
 
as the expenses that
 
the grant
was intended to reimburse were incurred. The
 
remaining balance of cash received was recognized
 
to long-term restricted cash/deposits,
with a
 
corresponding long-term
 
accrued liability.
 
As of
 
December 31, 2023,
 
there was
no
 
balance remaining
 
in the
 
accrued liability
related
 
to
 
this
 
grant.
 
For
 
the
 
year
 
ended
 
December 31,
 
2022,
 
the
 
Company
 
recognized
 
$
0.1
 
million
 
as
 
a
 
reduction
 
of
 
research
 
and
development
 
expenses
 
for
 
amounts
 
reimbursed
 
through
 
the
 
MJFF
 
grant,
 
and
 
did
no
t
 
recognize
 
any
 
reduction
 
in
 
research
 
and
development expenses for the year ended December 31, 2023.
Coalition for Epidemic Preparedness Innovations (“CEPI”) Grant
In April
 
2022, the
 
Company entered
 
into an
 
agreement with
 
the Coalition for
 
Epidemic Preparedness Innovations
 
(“CEPI”) whereby
CEPI agreed to provide
 
funding of up to $
9.3
 
million to co-fund a Phase
 
3 clinical trial of
 
Vaxxinity’s
 
next generation UB-612 COVID-
19 vaccine candidate as a heterologous – or
 
‘mix-and-match’ – booster dose. The Phase 3 trial, which
 
began in 2023, is evaluating the
ability of
 
UB-612 to
 
boost COVID-19
 
immunity against
 
the original
 
strain and
 
multiple variants
 
of concern
 
including Omicron
 
- in
people aged 16 years or older, who have been previously immunized with an authorized COVID-19 vaccine.
The Company will also be performing further manufacturing scale-up work to enable readiness for potential commercialization. Under
the terms of the agreement with
 
CEPI, if successful, a portion of the
 
released doses of the commercial product will
 
be delivered to the
COVID-19 Vaccines
 
Global Access (“COVAX”)
 
consortium for distribution to developing countries at low cost.
Cash payments received in advance
 
under the CEPI Funding Agreement are
 
restricted as to their use until
 
expenditures contemplated in
the funding agreement
 
are incurred. Funding
 
tranches received are
 
expected to the
 
utilized within twelve
 
months, thus the
 
funds received
are reflected within restricted cash with a corresponding short-term accrued liability. The Company recognizes payments from CEPI as
a reduction
 
of research
 
and development
 
expenses, in
 
the same
 
period as
 
the expenses
 
that the
 
grant is
 
intended to
 
reimburse are
 
incurred.
As of December 31, 2023, there was
no
 
remaining balance of restricted cash and short-term accrued liability related to CEPI
 
funds. For
the years ended
 
December 31, 2023 and
 
2022, the Company
 
recognized $
1.8
 
million and $
7.5
 
million, respectively,
 
as a reduction
 
of
research and development expenses for amounts reimbursed through the CEPI grant.
Lease Agreements
 
The Company has
two
 
operating lease
 
agreements for
 
office and laboratory
 
space. The Company
 
is also
 
required to pay
 
certain operating
costs under its leases.
 
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
130
In August 2023,
 
the Company renewed
 
its lease for
9,839
 
square feet of
 
lab and office
 
space with Space
 
Florida in Exploration
 
Park,
Florida commencing August 12,
 
2023. The lease has a
 
initial
one-year
 
term with an annual
 
lease obligation of $
0.5
 
million, after Lessee
credits. Additionally, the lease requires the Company to provide a security deposit in the amount of less than $
0.1
 
million.
In April 2022, the Company entered into a
 
facility lease agreement for
4,419
 
square feet of office space in New
 
York,
 
New York.
 
The
lease commenced in April 2022 and will expire March 2029 with no option to renew.
 
This lease and its terms were reviewed using the
guidance found in ASC 842. Since the lease has a non-cancellable period of
one year
, and after the first year both the Company and the
landlord have the option to
 
early terminate the lease for
 
any or no reason, the
 
Company has elected to apply
 
the short-term expedient,
which does not subject the New York lease to capitalization.
 
Rent expense for each of the years ended December 31, 2023 and 2022 amounted to $
0.6
 
million and $
0.5
 
million, respectively.
 
License Agreements
In October 2014, the Company
 
entered into a contribution
 
agreement with UBI, whereby
 
UBI contributed and assigned
 
to the Company
assets and
 
granted a non-exclusive
 
license to
 
certain technologies
 
deemed necessary
 
or reasonably
 
useful in
 
the utilization
 
of the licensed
intellectual property.
 
In consideration,
 
the Company
 
issued
32,505,306
 
shares of
 
common stock
 
to UBI.
 
The agreement
 
allowed for
exploitation of all
 
diagnostic, prophylactic, and therapeutic
 
uses and indications in
 
humans in the
 
field of neurology. The agreement
 
was
amended in
 
August 2019
 
to provide
 
the Company
 
with exclusivity
 
(except as
 
to UBI)
 
in the
 
field of
 
neurology and
 
the flexibility
 
to
pursue indications outside the initial field limitations.
 
In connection with the amendment,
 
the Company agreed to execute
 
an exclusive, worldwide license agreement for
 
any product that is
developed by the Company outside the original
 
field. The terms and conditions are
 
to be negotiated in good faith
 
and mutually agreed
upon. The Company
 
anticipates that if
 
it is required
 
to enter into
 
an exclusive license
 
agreement, it will
 
be able to
 
negotiate financial
terms for the license at prevailing
 
market rates within the pharmaceutical industry.
 
Accordingly, the
 
Company may be required to pay
UBI upfront fees, revenue royalties, development milestones, commercial milestones, sublicense fees, and other related
 
fees.
 
Vaxxinity’s
 
COVAXX
 
subsidiary was formed
 
in March 2020
 
through a transfer
 
of technology from
 
UBI, UBI IP
 
Holdings, and UBI
US Holdings, LLC, all
 
related parties of the
 
Company, whereby
 
the Company,
 
pursuant to an April
 
2020 license agreement, obtained
exclusive rights
 
to intellectual
 
property and
 
technology related
 
to the
 
discovery of
 
vaccines, diagnostic
 
assays, and
 
antigens for
 
use
against all coronaviruses
 
including, without
 
limitation, SARS,
 
MERS, and
 
COVID-19 in all
 
strains in humans.
 
The license
 
is worldwide,
perpetual, exclusive and fully paid-up.
 
There are no future royalty
 
or milestone payment obligations
 
associated with the agreement.
 
The
Company has the right to grant sublicenses.
 
The
 
Company
 
considered
 
ASC
 
805,
 
“Business
 
Combinations”
 
and
 
ASC
 
730,
 
“Research
 
and
 
Development”
 
in
 
determining
 
how
 
to
account for the issuance of common
 
stock. The license agreement is considered
 
to be a common control transfer;
 
however, the related
party did not have any basis in the assets licensed, so there was no accounting impact for the Company.
 
In August 2021, Vaxxinity
 
entered into a license
 
agreement (the “Platform License
 
Agreement”) with UBI and
 
certain of its affiliates
that
 
expanded
 
intellectual
 
property
 
rights
 
previously
 
licensed
 
under
 
previously
 
issued
 
license
 
agreements
 
with
 
UBI.
 
As
 
part
 
of
 
the
agreement, Vaxxinity
 
obtained a worldwide, sublicensable (subject to certain conditions), perpetual, fully paid-up, royalty-free
 
license
to
 
research,
 
develop,
 
make,
 
have
 
made,
 
utilize,
 
import,
 
export,
 
market,
 
distribute,
 
offer
 
for
 
sale,
 
sell,
 
have
 
sold,
 
commercialize
 
or
otherwise exploit peptide-based vaccines in the field
 
of all human prophylactic and therapeutic uses,
 
except for such vaccines related to
human immunodeficiency virus (HIV), herpes
 
simplex virus (HSE) and
 
Immunoglobulin E (IgE). The
 
patents and patent applications
licensed under the Platform License
 
Agreement include claims directed to
 
a CpG delivery system, artificial
 
T helper cell epitopes and
certain designer peptides and proteins utilized in UB-612. In consideration
 
for the Platform License Agreement, the Company issued to
UBI a warrant to purchase Class A common stock (the “UBI Warrant”).
 
The Company considered ASC 805, “Business Combinations” (“ASC 805”) and ASC 730,
 
Research and Development” (“ASC 730”)
in
 
determining how
 
to account
 
for the
 
license agreement
 
acquired and
 
the
 
issuance
 
of the
 
UBI Warrant. The
 
majority
 
of
 
the Voting
interests in UBI and in the Company were held by a group
 
of immediate family members, at the time of the transaction,
 
and as such the
transaction constitutes a common control
 
transaction, which requires the license
 
to be accounted for at the carrying
 
value in the books
of the transferor and the excess of consideration paid over the carrying value as a capital transaction.
 
Indemnification Agreements
 
In the ordinary
 
course of business,
 
the Company may
 
provide indemnification of
 
varying scope and
 
terms to employees,
 
consultants,
vendors, lessors,
 
business partners and
 
other parties
 
with respect
 
to certain
 
matters including, but
 
not limited
 
to, losses
 
arising out
 
of
breach of such
 
agreements or from
 
intellectual property infringement
 
claims made by
 
third parties. In
 
addition, the Company
 
has entered
into indemnification agreements
 
with members of
 
its board of
 
directors and executive
 
officers that
 
will require
 
the Company,
 
among
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
131
other things, to indemnify them against certain liabilities that may arise by reason of their status or
 
service as directors or officers. The
maximum potential amount of future payments
 
the Company could be required to
 
make under these indemnification agreements is,
 
in
many cases, unlimited.
 
To
 
date, the Company has
 
not incurred any
 
material costs as
 
a result of
 
such indemnification obligations. The
Company
 
is
 
not
 
aware
 
of
 
any
 
indemnification
 
arrangements
 
that
 
could
 
have
 
a
 
material
 
effect
 
on
 
its
 
financial
 
position,
 
results
 
of
operations, or cash flows, and it has
no
t accrued any liabilities related to such obligations as of December 31, 2023 or 2022.
 
Legal Proceedings
 
From
 
time
 
to
 
time,
 
the
 
Company
 
may
 
become
 
involved
 
in
 
legal
 
proceedings
 
arising
 
in
 
the
 
ordinary
 
course
 
of
 
business.
 
As
 
of
December 31, 2023 and 2022, the Company was not a party to any material legal matters or claims, except as discussed below.
 
In December 2022, the
 
Board became aware of pending
 
litigation filed by the
 
Company’s CEO
 
against a significant stockholder,
 
Ask
America, LLC (“Ask America”).
 
The CEO filed the lawsuit in Texas in May 2022 regarding an alleged private agreement between the
CEO,
 
the
 
Company’s
 
Chairman,
 
and
 
Ask
 
America,
 
relating
 
to
 
the
 
potential
 
purchase
 
of
 
stock
 
by
 
Ask
 
America
 
in
 
the
 
Company’s
November 2021 initial public
 
offering, on behalf
 
of a former director.
 
Ask America asserts that
 
the CEO and Chairman
 
guaranteed a
loan
 
by
 
Ask
 
America
 
to
 
fund
 
the
 
former
 
director’s
 
contemplated
 
purchase.
 
The
 
lawsuit
 
seeks
 
a
 
declaration
 
that
 
no
 
enforceable
transaction was ever completed or consummated.
 
Although the Company was not a party to the litigation initially, the Board formed a
special committee, comprised of independent
 
directors who are being advised
 
by independent legal counsel, to
 
conduct an investigation
into the circumstances of the litigation and
 
the purported transaction.
 
The investigation concluded in the first quarter
 
of 2023, and the
company implemented certain additional control measures.
 
On November 10,
 
2023, Ask America
 
LLC (“Ask
 
America”) filed
 
counterclaims against the
 
Company in
 
connection with
 
a pending
legal matter
 
between Ask
 
America and
 
the Company’s
 
co-founders. The
 
case is
 
styled Hu
 
v.
 
Ask America
 
LLC, Case
 
No. 3:22-cv-
02432-X, and is pending in the U.S. District Court for the Northern District of Texas. The counterclaims name the Company as a third-
party defendant and alleges, among other things, certain violations of the Texas Securities Act and common law fraud.
The Company accrues liability
 
for this and other
 
such matters when it
 
is probable that future
 
expenditures will be made
 
and that such
expenditures can
 
be reasonably
 
estimated. At
 
this time,
 
since the
 
Ask America
 
litigation is
 
at an
 
early stage,
 
the Company
 
does not
consider a loss probable and no loss amount is estimable, hence no accrual for loss has been made.
Loss Contingency
In April 2021, the Company engaged United Biopharma, Inc. (“UBP”) to begin acquiring raw materials for use in the production of
GMP grade recombinant protein for UB-612, the Company’s COVID-19 vaccine candidate under an Authorization to Proceed
(“ATP”)
 
agreement for $
3
 
million of materials. Through August 2021, $
7.2
 
million of materials were ordered by UBP, $
3.0
 
million of
materials were received by UBP and paid for with a $
3.0
 
million advance payment from the Company. The Company has recognized
$
3.0
 
million in expense for these materials purchases authorized under the ATP.
 
When the Company asked to pause further manufacture of protein upon rejection of the Emergency Use Authorization application by
Taiwan in August 2021, UBP requested that its suppliers cancel the remaining $
4.2
 
million in orders for which it had not taken
possession of the materials. In the fourth quarter of 2022, the Company learned that most of the suppliers refused
 
to cancel the orders,
although some agreed to seek other buyers for the materials. For these orders, management has not concluded that a loss for the
Company is probable, or that one amount of loss is a better estimate than any other amount, since UBP were not originally authorized
by the ATP
 
and UBP’s suppliers may be able to dispose of some amount to other buyers. Hence, an expense has
no
t been recognized
for them.
 
There is no claim against the Company by UBP related to these orders, no settlement or other agreement has been reached between the
Company and UBP or, to the Company’s knowledge, between UBP and its suppliers. Therefore, the range of the potential loss is still
$
0
 
to $
4.2
 
million.
15. Benefit Plans
In
 
March
 
2018,
 
the
 
Company
 
established
 
a
 
defined
 
contribution
 
savings
 
plan
 
under
 
Section
 
401(k)
 
of
 
the
 
Code.
 
This
 
plan
 
covers
substantially all
 
U.S. employees
 
who meet
 
minimum age
 
and service
 
requirements and
 
allows participants
 
to defer
 
a portion
 
of their
annual compensation on a
 
pre-tax basis. The Company
 
matches employee contributions to
 
the Plan at
100
% up to
4
% of the employee’s
base salary. During the
 
years ended December 31,
 
2023 and 2022,
 
the Company contributed
 
$
0.5
 
million and $
0.4
 
million to employees’
401(k) accounts.
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
132
The Company offers its Ireland-based employees
 
a Personal Retirement Savings Account (“PRSA”) that allows participants
 
to defer a
portion of their annual compensation. The Company provides contributions equal to
5
% of each participant’s annual salary. During the
years ended December 31, 2023 and 2022, the Company contributed less than $
0.1
 
million per year to the PRSA accounts.
 
 
 
 
 
 
 
 
 
 
 
 
 
16. Related Party Transactions
The Company has related
 
party arrangements with
 
UBI and a number
 
of its affiliated companies
 
listed namely, United Biomedical, Inc.,
Asia (“UBI-Asia”), UBI Pharma, Inc. (“UBI-P”), United BioPharma, Inc (“UBP”), and UBI IP Holding (“UBI-IP”).
As of December 31, 2023, UBI and its
 
affiliated companies owned
44
% of the Company’s stock. The majority of the voting
 
interests in
both UBI and the Company were held by a group of immediate family members, and as such the entities are under common control.
These related parties are governed by various Master Services Agreements (“MSA”) detailed below.
 
UBI MSA - UBI provides research,
 
development and clinical functions to
 
the Company. There is also a purchase arrangement
 
with
UBI for the production and shipment of the Company’s diagnostic test kits.
UBIA MSA - UBI-Asia for manufacturing, quality control, testing, validation, and supply services.
UBP MSA - United BioPharma, Inc. provides the Company with manufacturing, testing, and validation.
COVID MSA (“COVID
 
MSA”) - COVID MSA
 
provides that UBI acts
 
as COVAXX’s
 
agent with respect
 
to matters relating
 
the
Company’s COVID-19 program and provides
 
research, development, manufacturing,
 
and back office administrative
 
services to the
Company.
 
COVID-19
 
Relief
 
MSA
 
-
 
A
 
four-company
 
MSA
 
with
 
UBI,
 
UBI-Asia
 
and
 
UBP.
 
The
 
Company
 
is
 
an
 
exclusive
 
licensee
 
of
technologies related to diagnostics, vaccines, and therapies for COVID-19. The MSA established the terms under which UBI-Asia
provides research, development, testing,
 
and manufacturing services to the Company and UBP provides contract development and
manufacturing services to the Company.
In August
 
2021, Vaxxinity
 
entered into
 
a license
 
agreement with
 
UBI and
 
certain of
 
its affiliates
 
(collectively,
 
the “Licensors”)
 
that
expanded
 
intellectual
 
property
 
rights
 
previously
 
licensed
 
under
 
the
 
Original
 
UBI
 
Licenses
 
in
 
exchange
 
for
 
a
 
warrant
 
to
 
purchase
1,928,020
 
shares of Vaxxinity Class A common stock. The UBI Warrant
 
is exercisable at an exercise price of $
12.45
 
per share (subject
to adjustment pursuant thereto), is not subject to vesting, and has a term of
five years
 
(see Note 14).
The Company also considers
 
Destination Systems, its travel and
 
logistics firm, a related
 
party since its Chief Executive
 
Officer, Landon
Ogilvie, is on the Company’s board of directors.
Total related party operating activity,
 
including the activity described above is as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2023
2022
Consolidated balance sheet
Assets
Prepaid expenses and other current assets
$
$
237
Amounts due from related parties
414
414
Liabilities
Accrued expenses
Amounts due to related parties
10,575
12,772
Current portion of note payable
1,500
1,113
Note payable
3,735
3,112
Accrued interest payable
$
$
73
VAXXINITY,
 
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
133
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Years
 
Ended December 31,
2023
2022
Operating expenses
Research and development
Services provided by related parties
$
 
568
$
 
4,172
General and administrative
Services provided by related parties
2,725
Other expense
Related party interest expense
$
 
248
$
 
73
 
17. Subsequent Events
On March 8, 2024,
 
a Special Committee (the “Committee”)
 
of the Board of
 
Directors of Vaxxinity,
 
Inc. approved an option
 
repricing
(the “Repricing”).
 
The Repricing generally applied to
 
continuing employees and officers with
 
(a) underwater options to purchase
 
shares of the Company’s
Class A
 
common stock
 
that were
 
granted to
 
employees (such
 
options, the
 
“Employee Options”)
 
and to
 
Louis Reese,
 
the Company’s
Executive Chairman,
 
and Mei
 
Mei Hu,
 
the Company’s
 
Chief Executive
 
Officer (together
 
with Mr.
 
Reese, the
 
“Founders”) under
 
the
Company’s Omnibus Plan and the
 
2021 Pre-IPO Plan
 
and (b) underwater
 
options to purchase
 
shares of the
 
Company’s Class B common
stock granted
 
pursuant to stock
 
option agreements
 
governed by
 
the terms
 
of the 2021
 
Pre-IPO Plan
 
(together with
 
the Employee
 
Options,
the
 
“Eligible
 
Options”).
 
The
 
total
 
number
 
of
 
shares
 
of
 
Class
 
A
 
and
 
Class
 
B
 
common
 
stock
 
underlying
 
all
 
Eligible
 
Options
 
was
approximately
10,105,140
 
shares.
The Eligible Options were repriced such that the exercise price
 
per share for such options was reduced to $
0.70
, the closing price of the
Company’s Class
 
A common stock
 
on the Nasdaq
 
Global Market on
 
March 8, 2024,
 
the most recent
 
closing price of
 
the Company’s
Class A common stock prior to the Repricing.
In order to exercise the Employee
 
Options at the reduced exercise price,
 
holders are required to remain in
 
service with the Company (or
otherwise
 
be
 
eligible
 
to
 
exercise
 
their
 
options
 
pursuant
 
to
 
any
 
applicable
 
post-termination
 
exercise
 
period)
 
through
 
the
 
end
 
of
 
a
“Retention Period” that ends on the earlier
 
of: (a) December 31, 2024 and (b)
 
a Change of Control, as defined in
 
the Omnibus Plan. If
an employee exercises an Employee Option prior to the end of the Retention Period, such employee will be required to pay
 
a premium
exercise price
 
equal to
 
the original
 
exercise price
 
per share
 
of such
 
Employee Option.
 
Options subject
 
to the
 
Repricing held
 
by the
Founders will be
 
exercisable in accordance
 
with their terms,
 
and shares of
 
Class B common
 
stock acquired upon
 
exercise of such
 
options
will be subject to
 
a lock-up restriction prohibiting
 
sales for a period
 
of two years from the
 
Repricing Date. In addition,
 
the Founders will
not be eligible to receive annual equity grants in 2024 and 2025.
The Company is evaluating the impact of the Repricing and will disclose this impact in its Quarterly Report on Form 10-Q for the first
quarter of fiscal year 2024.
 
 
134
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
 
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management,
 
with the
 
participation of our
 
principal executive officer
 
and principal
 
financial officer,
 
evaluated, as
 
of and
 
for the
year ended of the period covered by
 
this Annual Report on Form 10-K, the
 
effectiveness of our disclosure controls and
 
procedures (as
defined in Rules 13a-15(e) and
 
15d-15(e) under the Exchange Act).
 
In designing and evaluating our
 
disclosure controls and procedures,
management
 
recognizes
 
that
 
any
 
controls and
 
procedures,
 
no
 
matter
 
how
 
well
 
designed
 
and
 
operated,
 
can
 
provide
 
only
 
reasonable
assurance of achieving the desired control objectives.
 
Based on management’s evaluation
 
our principal executive officer and principal
financial
 
officer
 
concluded
 
that,
 
as
 
of
 
December 31,
 
2023,
 
our
 
disclosure
 
controls
 
and
 
procedures
 
were
 
effective
 
at
 
the
 
reasonable
assurance level.
Report on Internal Control Over Financial Reporting
The Company’s
 
management is
 
responsible for
 
establishing and
 
maintaining adequate
 
internal control
 
over financial
 
reporting. The
internal control process has been designed under management’s supervision to provide
 
reasonable assurance regarding the reliability of
financial reporting
 
and the preparation
 
of the Company’s consolidated
 
financial statements
 
for external
 
reporting purposes in
 
accordance
with U.S. GAAP.
Management, including the principal executive
 
officer and principal financial
 
officer, conducted
 
an assessment of the effectiveness
 
of
the Company’s internal control over
 
financial reporting as
 
of December 31, 2023 utilizing
 
the framework established
 
in Internal Control
– Integrated Framework (2013)
 
issued by the Committee
 
of Sponsoring Organizations of
 
the Treadway Commission (COSO). Based
 
on
this assessment, management has
 
determined that the Company’s
 
internal control over financial
 
reporting as of December 31,
 
2023 is
effective.
All internal control
 
systems, no matter
 
how well designed,
 
have inherent limitations.
 
Therefore, even those
 
systems determined to
 
be
effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
 
This Annual Report on Form 10-K does not include an
 
attestation report of our independent registered public accounting
 
firm due to an
exemption established by the JOBS Act for “emerging growth companies.”
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting
 
(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) during the quarter
 
ended December 31, 2023 that
 
have materially affected, or
 
are reasonably likely
 
to materially affect, our
 
internal
control over financial reporting.
 
Item 9B. Other Information.
On March 25, 2024, Peter
 
Powchik, MD notified the Company
 
of his intention to resign
 
from the board of directors
 
effective March 31,
2024.
 
Dr.
 
Powchik’s
 
resignation
 
is
 
not
 
the
 
result
 
of
 
a
 
disagreement
 
with
 
the
 
Company
 
on
 
any
 
matter
 
relating
 
to
 
the
 
Company’s
operations, policies or practices.
 
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
The disclosure required by this item is not applicable.
PART
 
III
Items 10, 11, 12, 13 and 14.
Our independent registered public accounting firm is Forvis, LLP, New York,
 
NY,
 
Auditor Firm ID: 686.
The information
 
required by
 
these items
 
is incorporated
 
by reference
 
to our
 
definitive proxy
 
statement relating
 
to our
 
2023 Annual
Meeting of Shareholders. We currently anticipate that our definitive proxy statement will be filed with the SEC not later
 
than 120 days
after December 31, 2023, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
135
PART
 
IV
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents filed as part of this Report:
(1)
 
Financial Statements. The
 
following consolidated
 
financial statements
 
and the
 
notes thereto,
 
and the
 
Reports of
 
Independent
Registered Public Accounting Firm are incorporated by reference as provided in Item 8 and Item 9A of this Report:
Audited Consolidated Financial Statements as of and for the years ended December 31, 2023 and 2022
s (PCAOB ID: 686, PCAOB ID: 32)
107
109
110
111
111
112
113
(2)
 
Financial Statement Schedules.
(b) Exhibits:
The following
 
exhibits required
 
by Item 601
 
of Regulation
 
S-K are
 
filed herewith
 
or have
 
been filed
 
previously with
 
the SEC
 
as indicated
below:
Exhibit
No.
 
Index to Exhibits
 
3.1
 
 
3.2
 
 
4.1
 
 
4.2
 
10.1
 
 
10.2
 
 
10.3
 
 
10.4
 
 
10.5
 
 
10.6
 
 
10.7
 
 
 
 
 
 
 
 
 
 
 
 
 
136
 
10.8
 
 
10.9
 
 
10.10
 
 
10.11
 
 
10.12
 
 
10.13
 
 
10.14
 
 
10.15
 
21.1
 
 
23.1
 
23.2
 
24.1
 
 
31.1
 
31.2
 
32.1
 
97.0
101.INS
Inline XBRL Instance Document*
101.SCH
Inline XBRL Taxonomy Extension Schema Document*
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104
Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).*
__________________________
*
 
Filed herewith.
+
 
Indicates management contract or compensatory plan, contract or arrangement.
§
 
Portions of the
 
exhibit, marked by
 
brackets, have been
 
omitted because the
 
omitted information (i)
 
is not material
 
and (ii) is
the type of information that the Company treats as private or confidential.
‡ The certifications attached as Exhibits 32.1 that accompany this Form 10-K are deemed furnished and not filed with the
 
 
137
Securities and Exchange Commission and are not to be incorporated by reference into any filing of Vaxxinity, Inc. under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this
Form 10-K, irrespective of any general incorporation language contained in such filing.
(c) Schedules:
None
Item 16. Form 10-K Summary.
None.
 
 
 
 
 
 
 
 
 
 
 
 
 
138
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act
 
of 1934, the registrant has duly caused this Annual
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on March 27, 2024.
 
VAXXINITY,
 
INC.
By:
/s/ Mei Mei Hu
Mei Mei Hu, President and
Chief Executive Officer
ADDITIONAL SIGNATURES AND POWERS OF ATTORNEY
KNOW ALL PERSONS BY
 
THESE PRESENTS, that each
 
person whose signature appears
 
below constitutes and appoints
 
Mei Mei
Hu
 
and
 
Sumita
 
Ray,
 
jointly and
 
severally,
 
her
 
or
 
his
 
attorney-in-fact, with
 
the
 
power
 
of
 
substitution, for
 
her
 
or
 
him
 
in
 
any
 
and all
capacities, to sign any amendments
 
to this Annual Report on
 
Form 10-K and to file
 
the same, with exhibits thereto
 
and other documents
in connection therewith, with the Securities and Exchange Commission,
 
hereby ratifying and confirming all that each of said attorneys-
in-fact, or her or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements
 
of the Securities Exchange
 
Act of 1934, as
 
amended, this Annual Report
 
on Form 10-K has
 
been signed
below by the following persons and in the capacities indicated on March 27, 2024.
Signature
 
Capacity in Which Signed
/s/ Mei Mei Hu
President, Chief Executive Officer and Director
Mei Mei Hu
(Principal executive officer)
/s/ Jason Pesile
Chief Accounting Officer
Jason Pesile
(Principal financial officer and principal accounting officer)
/s/ Louis Reese
Executive Chairman
Louis Reese
/s/ George Hornig
Director
George Hornig
/s/ Landon Ogilvie
Director
Landon Ogilvie
/s/ Gaby Toledano
Director
Gaby Toledano
/s/ Peter Diamandis
Director
Peter Diamandis
/s/ James Smith
Director
James Smith
exhibit211
 
 
 
 
 
 
 
Exhibit 21.1
Subsidiaries of Vaxxinity,
 
Inc.
 
Name of Subsidiary
 
State/Country of Organization
Covaxx Brasil Ltda.
 
Brazil
Trinity Property Group II, LLC
 
Texas
United Neuroscience
 
Cayman Islands
United Neuroscience Limited
 
Hong Kong
United Neuroscience Limited
 
Ireland
United Neuroscience Limited, Taiwan Branch
 
Taiwan
United Neuroscience, LLC
 
Delaware
UNS IP Holdings, LLC
 
Delaware
exhibit231
 
 
Consent of Independent
 
Registered Public Accounting
 
Firm
We consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333- 273822)
and Form S-8 (Nos. 333-271486 and 333-261061) of Vaxxinity,
 
Inc. (the "Company") of our report dated
March 27, 2024, with respect to the consolidated financial statements of the Company included in this
Annual Report on Form 10-K for the year ended December 31, 2023. Our report contains an explanatory
paragraph describing conditions that raise substantial doubt about the Company's ability to continue as a
going concern. The consolidated financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ FORVIS, LLP
New York, New York
March 27, 2024
exhibit232
 
 
 
 
 
 
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No.
333-271486), Form S-8 (No. 333-261061) and Form S-3 (No. 333-273822) of our report dated March
27, 2023, relating to the consolidated financial statements of Vaxxinity
 
,
 
Inc., appearing in this Annual
Report on Form 10-K for the year ended December 31, 2023.
 
 
/s/ Armanino
LLP
 
San Ramon, California
 
March 27, 2024
exhibit311
 
 
 
Exhibit 31.1
CERTIFICATION
 
OF PRINCIPAL EXECUTIVE
 
OFFICER PURSUANT TO
 
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
 
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Mei Mei Hu, certify that:
1.
 
I have reviewed this Annual Report on Form 10-K of Vaxxinity
 
,
 
Inc.;
2.
 
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3.
 
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for,
the periods presented in this report;
4.
 
The registrant’s other certifying officer(s)
 
and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a)
 
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
 
(b)
 
[Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313];
(c)
 
Evaluated the effectiveness of the registrant’s
 
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d)
 
Disclosed in this report any change in the registrant’s internal control over
 
financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s
 
fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
 
internal
control over financial reporting; and
5.
 
The registrant’s other certifying officer(s)
 
and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors
 
and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
(a)
 
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s
 
ability to record, process,
summarize and report financial information; and
(b)
 
Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
 
Date: March 27, 2024
 
By:
 
/s/ Mei Mei Hu
 
 
Mei Mei Hu
 
President and Chief Executive Officer
(Principal Executive Officer)
 
exhibit312
 
 
 
Exhibit 31.2
CERTIFICATION
 
OF PRINCIPAL FINANCIAL
 
OFFICER PURSUANT TO
 
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
 
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jason Pesile, certify that:
1.
 
I have reviewed this Annual Report on Form 10-K of Vaxxinity
 
,
 
Inc.;
2.
 
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3.
 
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for,
the periods presented in this report;
4.
 
The registrant’s other certifying officer(s)
 
and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a)
 
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
 
(b)
 
[Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313];
(c)
 
Evaluated the effectiveness of the registrant’s
 
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d)
 
Disclosed in this report any change in the registrant’s internal control over
 
financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s
 
fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
 
internal
control over financial reporting; and
5.
 
The registrant’s other certifying officer(s)
 
and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors
 
and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
(a)
 
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s
 
ability to record, process,
summarize and report financial information; and
(b)
 
Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
 
Date: March 27, 2024
 
By:
 
/s/ Jason Pesile
 
 
Jason Pesile
 
Chief Accounting Officer
(Principal Financial and Accounting Officer)
 
exhibit321
 
 
 
 
Exhibit 32.1
CERTIFICATIONS
 
OF PRINCIPAL EXECUTIVE
 
OFFICER AND PRINCIPAL
 
FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
 
906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Vaxxinity
 
,
 
Inc. (the “Company”) on Form 10-K for the year ended
December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the
undersigned hereby certify, pursuant
 
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of their knowledge:
1.
 
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended; and
2.
 
The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
 
Date: March 27, 2024
 
By:
 
/s/ Mei Mei Hu
 
 
Mei Mei Hu
 
President and Chief Executive Officer
(Principal Executive Officer)
Date: March 27, 2024
 
By:
 
/s/ Jason Pesile
 
 
Jason Pesile
 
Chief Accounting Officer
(Principal Financial and Accounting Officer)
 
exhibit970
 
 
 
VAXXINITY,
 
INC.
COMPENSATION RECOUPMENT POLICY
This Compensation Recoupment Policy (the
 
Policy
”) has been adopted by the
 
Board of Directors
(the “
Board
”) of Vaxxinity,
 
Inc. (the “
Company
”) on October 3, 2023. This Policy provides for the recoupment of
certain executive compensation in the event of an accounting restatement resulting from material noncompliance
with financial reporting requirements under U.S. federal securities laws in accordance with the terms
 
and conditions
set forth herein. This Policy is intended to comply with the requirements of Section 10D of the Exchange
 
Act (as
defined below) and Section 5608 of the Nasdaq Listing Rules (the “
Listing Rule
”).
1.
 
Definitions. For the purposes of this
 
Policy, the following terms shall have the meanings set
 
forth below.
Capitalized terms used but not defined in this Policy shall have the meanings set forth in the 2021 Omnibus
Incentive Compensation Plan (as may be amended from time to time).
(a)
 
Committee
” means the compensation committee of the Board or any successor committee thereof. If
there is no compensation committee
 
of the Board, references herein to
 
the “Committee” shall refer to the
 
Company’s
committee of independent directors that is responsible for executive compensation decisions, or in the absence of
such a compensation committee, the independent members of the Board.
(b)
 
Covered Compensation
” means any Incentive-based
 
Compensation “received” by
 
a Covered
Executive during the applicable Recoupment Period;
provided
that:
(i)
 
such Incentive-based Compensation was received
 
by such Covered Executive (A) on
 
or after the Effective
Date, (B) after he or she commenced service as an Executive Officer and (C) while the Company had a class of
securities publicly listed on a United States national securities exchange; and
(ii)
 
such Covered Executive served as
 
an Executive Officer at any time during
 
the performance period
applicable to such Incentive-based Compensation.
For purposes of this Policy, Incentive-based Compensation is “
received
” by a Covered Executive during
 
the fiscal
period in which the Financial Reporting Measure applicable to such Incentive-based Compensation (or portion
thereof) is attained, even if the payment or grant of such Incentive-based Compensation is made thereafter.
(c)
 
Covered Executive
” means any
 
current or former
 
Executive Officer.
(d)
 
Effective Date
” means October
 
2, 2023.
(e)
 
Exchange Act
” means the U.S.
 
Securities Exchange Act
 
of 1934, as amended.
(f)
 
Executive Officer
” means, with respect to the Company, (i) its president, (ii) its principal financial
officer, (iii) its principal accounting officer (or if there is no such accounting officer, its controller), (iv) any vice-
president in charge of a principal business unit, division or function (such as sales, administration or finance), (v)
any other officer who performs a policy-making
 
function for the Company (including any
 
officer of the Company’s
parent(s) or subsidiaries if they perform policy-making functions for the Company) and (vi) any other person who
performs similar policy-making functions for the Company. Policy-making function is not intended to include
policy-making functions that are not significant. The determination as to an individual’s status as an Executive
Officer shall be made by the Committee and such determination shall be final, conclusive and binding on such
individual and all other interested persons.
(g)
 
Financial Reporting Measure
” means any (i) measure that is determined and presented in
accordance with the accounting principles used in preparing the Company’s financial statements, (ii) stock price
measure or (iii) total shareholder return measure (and any measures that are derived wholly or in part from any
measure referenced in clause (i), (ii) or (iii)
 
above). For the avoidance of doubt, any such
 
measure does not need to
be presented within the Company’s financial statements or included in a filing with the U.S. Securities and
Exchange Commission to constitute a Financial Reporting Measure.
 
 
2
(h)
 
Financial Restatement
” means a restatement of the Company’s financial statements due to the
Company’s material noncompliance with any financial reporting requirement
 
under U.S. federal securities laws
 
that
is required in order to correct:
(i)
 
an error in previously issued financial
 
statements that is material to the
 
previously issued financial
statements; or
(ii)
 
an error that would
 
result in a material
 
misstatement if the error
 
were (A) corrected in
 
the current period or
(B) left uncorrected in
 
the current period.
For purposes of this Policy, a Financial Restatement shall not be deemed to occur in the event of a revision of the
Company’s financial statements due to an out-of-period adjustment (i.e., when the error is immaterial to the
previously issued financial statements and the correction of the error is also immaterial to the current period) or a
retrospective (1) application of a change
 
in accounting principles; (2) revision
 
to reportable segment information due
to a change in the structure of the Company’s internal organization; (3) reclassification due to a discontinued
operation; (4) application of a change in reporting entity, such as from a reorganization of entities under common
control; or (5) revision for stock splits, reverse stock splits, stock dividends or other changes in capital structure.
(i)
 
Incentive-based Compensation”
means any compensation (including, for the avoidance of doubt,
any cash or equity or equity-based compensation, whether deferred or current) that is granted, earned and/or vested
based wholly or in part upon the achievement of a Financial Reporting Measure. For purposes of this Policy,
“Incentive-based Compensation” shall also be deemed to include any amounts which were determined based on (or
were otherwise calculated by reference to) Incentive-based Compensation (including, without limitation, any
amounts under any long-term disability, life insurance or supplemental
 
retirement or severance plan or agreement
 
or
any notional account that is based on Incentive-based Compensation, as well as any earnings accrued thereon).
(j)
 
Nasdaq
” means the
 
NASDAQ Global Select
 
Market, or any successor
 
thereof.
(k)
 
Recoupment Period
” means the three fiscal years completed immediately preceding the date of any
applicable Recoupment Trigger Date. Notwithstanding the foregoing, the Recoupment Period additionally includes
any transition period (that results from a change in the Company’s fiscal year) within or immediately following
those three completed fiscal years, provided
 
that a transition period between the
 
last day of the Company’s previous
fiscal year end and the first day of its new fiscal year that comprises a period of nine (9) to twelve (12) months
would be deemed a completed fiscal year.
(l)
 
Recoupment Trigger Date
” means the earlier of (i) the date that the Board (or a committee thereof
or the officer(s) of the Company authorized to take such action if Board action is not required) concludes, or
reasonably should have concluded, that the Company
 
is required to prepare a Financial Restatement,
 
and (ii) the date
on which a court, regulator or other legally
 
authorized body directs the Company to prepare
 
a Financial Restatement.
2.
 
Recoupment of
 
Erroneously Awarded Compensation.
(a)
 
In the event of a Financial Restatement, if the amount of any Covered Compensation received by a
Covered Executive (the “
Awarded Compensation
”) exceeds the amount of such
 
Covered Compensation that would
have otherwise been received by such Covered Executive if calculated based on the Financial Restatement (the
Adjusted Compensation
”), the Company shall reasonably promptly recover from such Covered Executive an
amount equal to the excess of the Awarded Compensation over the Adjusted Compensation, each calculated on a
pre-tax basis (such excess amount, the “
Erroneously Awarded Compensation
”).
(b)
 
If (i) the Financial Reporting
 
Measure applicable to the relevant Covered
 
Compensation is stock price
or total shareholder return (or any measure derived wholly or in part from either of such measures) and (ii) the
amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the
information in the Financial Restatement, then the amount of Erroneously Awarded Compensation shall be
determined (on a pre-tax basis) based on the Company’s reasonable estimate of the effect of the Financial
Restatement on the Company’s stock price or total shareholder return (or the derivative measure thereof) upon
which such Covered Compensation was received.
 
 
 
3
(c)
 
For the avoidance of doubt,
 
the Company’s obligation to recover Erroneously
 
Awarded Compensation
is not dependent on (i) if or when the restated financial statements are filed or (ii) any fault of any Covered
Executive for the accounting errors or other actions leading to a Financial Restatement.
(d)
 
Notwithstanding anything to the contrary in Sections
 
2(a) through (c) hereof, the Company shall
 
not be
required to recover any Erroneously Awarded Compensation if both (x) the conditions set forth in any of the
following clauses (i) or (ii) are satisfied and
 
(y) the Committee (or a majority of the
 
independent directors serving on
the Board) has determined that recovery of the Erroneously Awarded Compensation would be impracticable:
(i)
 
the direct expense paid to a third party to assist in enforcing the recovery of the Erroneously Awarded
Compensation under this Policy would exceed the amount of such Erroneously Awarded Compensation to be
recovered;
provided
that, before concluding that it would be impracticable to recover any amount of Erroneously
Awarded Compensation pursuant to this Section 2(d), the Company shall have first made a reasonable attempt to
recover such Erroneously Awarded Compensation, document such reasonable attempt(s)
 
to make such recovery and
provide that documentation to the Nasdaq; or
(ii)
 
recovery of the Erroneously Awarded Compensation would likely cause an otherwise tax-qualified
retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the
requirements of Sections 401(a)(13) or
 
411(a) of the U.S. Internal Revenue Code
 
of 1986, as amended (the “
Code
”).
(e)
 
The Company shall not indemnify any Covered Executive, directly or indirectly, for any losses that
such Covered Executive may incur in
 
connection with the recovery of Erroneously
 
Awarded Compensation pursuant
to this Policy, including through the payment of insurance premiums or gross-up payments.
(f)
 
The Committee shall determine, in its
 
sole discretion, the manner and timing
 
in which any Erroneously
Awarded Compensation shall be recovered from a Covered Executive in accordance with applicable law, including,
without limitation, by (i) requiring reimbursement of Covered Compensation previously paid in cash; (ii) seeking
recovery of any gain realized on the vesting, exercise, settlement, sale, transfer or other disposition of any equity or
equity-based awards; (iii) offsetting the Erroneously Awarded Compensation amount from any compensation
otherwise owed by the Company or any of its affiliates to the Covered Executive; (iv) cancelling outstanding vested
or unvested equity or equity-based awards; and/or (v) taking any other remedial and recovery action permitted by
applicable law. For the avoidance of doubt, except as set forth in Section 2(d), in no event may the Company accept
an amount that is less than the amount of Erroneously Awarded Compensation;
provided
that, to the extent
necessary to avoid any adverse tax consequences to the Covered Executive pursuant to Section 409A of the Code,
any offsets against amounts under any nonqualified deferred compensation plans (as defined under Section 409A of
the Code) shall be made in compliance with Section 409A of the Code.
3.
 
Administration.
 
This Policy shall be administered
 
by the Committee.
 
All decisions of the Committee
 
shall
be final, conclusive and binding upon the Company and the Covered Executives, their beneficiaries, heirs,
executors, administrators and any other legal representative. The Committee shall have full power and authority to
(i) administer and interpret this Policy; (ii) correct any defect, supply any omission and reconcile any inconsistency
in this Policy; and (iii) make any other determination and take any other action that the Committee deems necessary
or desirable for the administration of this Policy and to comply with applicable law (including Section 10D of the
Exchange Act) and applicable stock market or exchange rules and regulations. Notwithstanding anything to the
contrary contained herein, to the extent permitted by Section 10D of the Exchange Act and the Listing Rule, the
Board may, in its sole discretion, at any time and from time
 
to time, administer this Policy in the same
 
manner as the
Committee.
4.
 
Amendment/Termination. Subject to Section 10D of the Exchange Act and the Listing Rule, this Policy
may be amended or terminated by the Committee
 
at any time.
 
To the extent that any applicable law, or stock market
or exchange rules or regulations require recovery of Erroneously Awarded Compensation in circumstances in
addition to those specified herein, nothing in this Policy shall be deemed to limit or restrict the right or obligation of
the Company to recover Erroneously Awarded Compensation to the fullest extent required by such applicable law,
stock market or exchange rules and regulations. Unless otherwise required by applicable law, this Policy shall no
longer be effective from and after the date that the Company no longer has a class of securities publicly listed on a
United States national securities exchange.
 
 
 
 
 
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5.
 
Interpretation. Notwithstanding anything to the contrary herein, this Policy is intended to comply with the
requirements of Section 10D of the Exchange Act and the Listing Rule (and any applicable regulations,
administrative interpretations or stock market or exchange rules and regulations adopted in connection therewith).
The provisions of this Policy shall be interpreted
 
in a manner that satisfies such requirements
 
and this Policy shall be
operated accordingly. If any provision of this Policy would otherwise frustrate or conflict with this intent, the
provision shall be interpreted and deemed amended so as to avoid such conflict.
6.
 
Other Compensation Clawback/Recoupment Rights. Any right of recoupment under this Policy is in
addition to, and not in lieu of, any
 
other remedies, rights or requirements with respect
 
to the clawback or recoupment
of any compensation that may be available to the Company pursuant to the terms of any other recoupment or
clawback policy of the Company (or any of its affiliates) that may be in effect from time to time, any provisions in
any employment agreement, offer letter, equity plan, equity award agreement or similar plan or agreement, and any
other legal remedies available to the Company, as well as applicable law, stock market or exchange rules, listing
standards or regulations;
provided
,
however
, that any amounts recouped or clawed back under any other policy that
would be recoupable under this Policy shall count toward any required clawback or recoupment under this Policy
and vice versa.
7.
 
Exempt Compensation. Notwithstanding anything to the contrary herein, the Company has no obligation
under this Policy to seek recoupment of amounts paid to a Covered Executive which are granted, vested or earned
based solely upon the occurrence or non-occurrence of nonfinancial events. Such exempt compensation includes,
without limitation, base salary, time-vesting awards, compensation awarded on the basis of the achievement of
metrics that are not Financial Reporting Measures or compensation awarded solely at the discretion of the
Committee or the Board,
provided
that such amounts are in no way contingent
 
on, and were not in any way granted
on the basis of, the achievement of any Financial Reporting Measure performance goal.
8.
 
Miscellaneous.
(a)
 
Any applicable award agreement or other document setting forth the terms and conditions of any
compensation covered by this Policy shall be deemed to include the restrictions imposed herein and incorporate this
Policy by reference and, in the event of any inconsistency, the terms of this Policy will govern. For the avoidance of
doubt, this Policy applies to all compensation
 
that is received on or after the Effective Date,
 
regardless of the date on
which the award agreement or other document setting forth the terms and conditions of the Covered Executive’s
compensation became effective, including, without limitation, compensation received under the 2021 Omnibus
Incentive Compensation Plan and any successor plan thereto.
(b)
 
This Policy shall be binding and
 
enforceable against all Covered Executives
 
and their beneficiaries,
heirs, executors, administrators or other legal representatives.
(c)
 
All issues concerning the construction, validity, enforcement and interpretation of this Policy and all
related documents, including, without limitation, any employment agreement, offer letter, equity award agreement
or similar agreement, shall be governed by, and construed in accordance with, the laws of the State of Delaware,
without giving effect to any choice of law
 
or conflict of law rules or provisions
 
(whether of the State of Delaware
 
or
any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of
Delaware.
(d)
 
The Covered Executives, their beneficiaries, executors, administrators and any other legal
representative and the Company shall initially attempt to resolve all claims, disputes or controversies arising under,
out of or in connection with this Policy by conducting good faith negotiations amongst themselves. To ensure the
timely and economical resolution of disputes that arise in connection with this Policy, the federal and state courts
sitting within the State of Delaware shall be the sole and exclusive forums for any and all disputes, claims, or causes
of action arising from or relating to the enforcement, performance or interpretation of this Policy. The Covered
Executives, their beneficiaries, executors, administrators and any other legal representative and the Company, shall
not commence any suit, action or other proceeding arising out of or based upon this Agreement except in the United
States District Court for the District of Delaware or any Delaware court, and hereby waive, and agree not to assert,
by way of motion, as a defense or otherwise, in any such suit, action or proceeding, any claim that such party is not
subject to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or
execution, that the suit, action or proceeding
 
is brought in an inconvenient forum,
 
that the venue of the suit, action or
 
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proceeding is improper or that this Policy
 
or the subject matter hereof may not be
 
enforced in or by such courts. To
the fullest extent permitted by law, the Covered Executives, their beneficiaries, executors, administrators, and any
other legal representative, and the Company, shall waive (and shall hereby be deemed to have waived) the right to
resolve any such dispute through a trial by jury.
(e)
 
If any provision of this Policy
 
is determined to be unenforceable or
 
invalid under any applicable law,
such provision will be applied to the maximum extent permitted by applicable law and shall automatically
 
be
deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations
required under applicable law.