Celcuity

 
 
 
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, 2024
 
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: 001-38207
 
 
Celcuity Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
82-2863566
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
 
 
16305
36th Avenue North,
Suite 100

Minneapolis, MN
55446
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area
code: (763) 392-0767
_________________________________________
 
Securities registered pursuant to Section 12(b)
of the Act:
 
 Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value per share
CELC
The Nasdaq Stock Market LLC
 
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. 262(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 Act).   ☐ Yes   ☒
No
 
The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant, based on $16.38, the closing price of the
shares of common stock on June 28, 2024 (the last business
day of the registrant’s most recently completed second fiscal quarter) as reported by The
Nasdaq Capital Market on such date, was
approximately $530,223,434.
 
As of March 24, 2025, there were 37,839,392 shares
of the registrant’s common stock outstanding.
 
DOCUMENTS INCORPORATED IN PART BY REFERENCE
 
Portions of the registrant’s definitive proxy statement relating
to its 2025 Annual Meeting of Stockholders are incorporated by reference into Part III of this
Annual Report on Form 10-K.
 
 
 
 

 
 
 
2024 Annual Report on Form 10-K
 
Table of Contents
 
 
 
Page
 
 
 
PART I
 
 
Item 1.
Business
5
Item 1A.
Risk Factors
21
Item 1B.
Unresolved Staff Comments
37
Item 1C.
Cybersecurity
37
Item 2.
Properties
38
Item 3.
Legal Proceedings
38
Item 4.
Mine Safety Disclosures
38
 
 
 
PART II
 
 
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
39
Item 6.
Reserved
40
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
40
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
47
Item 8.
Financial Statements and Supplementary Data
48
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures
67
Item 9A.
Controls and Procedures
67
Item 9B.
Other Information
67
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
67
 
 
 
PART III
 
 
Item 10.
Directors, Executive Officers and Corporate Governance
68
Item 11.
Executive Compensation
70
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
70
Item 13.
Certain Relationships and Related Transactions, and Director Independence
70
Item 14.
Principal Accountant Fees and Services
70
 
 
 
PART IV
 
 
Item 15.
Exhibits and Financial Statement Schedules
71
Item 16.
Form 10-K Summary
71
 
Signatures
72
 
 
2
 

 
  
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This Annual
Report on Form 10-K (this
“Annual Report”) contains forward-looking statements regarding us, our business prospects and our
results of operations that are subject to certain risks
and uncertainties that could cause our actual business, prospects and results
of operations to differ materially from those that may be anticipated by such
forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, those described in Part I, Item 1A,
“Risk Factors” and
elsewhere in this Annual Report. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only
as of the date of this Annual Report. We expressly disclaim any intent or obligation to update or revise any forward-looking statements,
whether as a
result of new information, future events or otherwise. Readers are urged to carefully review and consider the various
disclosures made by us in this Annual
Report and in our other reports filed with the Securities and Exchange Commission (the “SEC”)
that advise interested parties of the risks and uncertainties
that may affect our business.
 
All statements, other than statements of historical
facts, contained in this Annual Report, including statements regarding our plans, objectives and
expectations for our business, operations
 and financial performance and condition, are forward-looking statements. In some cases, you can identify
forward-looking statements by
the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “might,” “target,”
“ongoing,” “plan,” “potential,”
“predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other
comparable terminology, although
not all forward-looking statements contain these words. Forward-looking statements involve known and
unknown risks, uncertainties and other factors that
may cause our results, performance or achievements to be materially different from
the information expressed or implied by the forward-looking statements
in this Annual Report. Additionally, our forward-looking statements
do not reflect the potential impact of any future acquisitions, mergers, dispositions,
joint ventures or investments that we may make.
Forward-looking statements may include, among other things, statements relating to:
 
●
our clinical trial plans and the estimated timelines and costs for such trials;
 
●
our plans to develop and commercialize our products, and our expectations about the market opportunity for gedatolisib and our ability
to serve
that market;
 
●
our expectations with respect to our competitive advantages, including the potential efficacy of gedatolisib in various patient types
alone or in
combination with other treatments;
 
●
our expectations regarding the timeline of patient enrollment and results from clinical trials, including our existing Phase 3 VIKTORIA-1
clinical
trial, upcoming Phase 3 VIKTORIA-2 clinical trial, and Phase 1b/2 clinical trial for gedatolisib;
 
●
our expectations regarding our ability to obtain United States Food and Drug Administration (“FDA”) approval to commercialize
gedatolisib;
 
●
our expectations regarding governmental laws and regulations affecting our operations, including, without limitation, developments
in laws and
regulations or their interpretation, including, among others, changes in tax laws and regulations internationally and in the
U.S. and laws that affect
our operations and our laboratory;
 
●
our expectations with respect to the development, validation, required approvals, costs and
timelines of our drug candidate gedatolisib;
 
●
our beliefs related to the potential benefits resulting from Breakthrough Therapy designation for gedatolisib;
 
●
our plans with respect to research and development and related expenses for the foreseeable future;
 
●
our beliefs about our ability to capitalize on the exclusive global development and commercialization rights obtained from our license
agreement
with Pfizer with respect to gedatolisib;
 
●
our expectations regarding the future payments that may be owed to Pfizer under our license agreement with them;
 
●
our beliefs with respect to the potential rate and degree of market acceptance, both in the United States and internationally, and
clinical utility of
gedatolisib;
 
●
our revenue expectations;
 
●
our expectations regarding business development activities, including collaborations with pharmaceutical companies;
 
●
our plans with respect to pricing in the United States and internationally, and our ability to obtain reimbursement for our drug candidate,
gedatolisib, including expectations as to our ability or the amount of time it will take to achieve successful reimbursement from third-party
payors,
such as commercial insurance companies and health maintenance organizations, and from government insurance programs, such as Medicare
and
Medicaid;
 
●
our expectations as to the use of proceeds from our financing activities;
 
●
our expectations with respect to availability of capital, including accessing our current debt facility or any other debt facility
or other capital
sources in the future, and our assumption that we will have adequate authorized shares for future equity issuances;
 
●
our beliefs regarding the adequacy of our cash on hand to fund our clinical trials, capital expenditures, working capital, and other
 general
corporate expenses, as well as the increased costs associated with being a public company;
 
●
our plans with respect to potentially raising capital; and
 
●
our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates, including
our gedatolisib
drug candidate and our CELsignia platform and tests.
 

These statements involve known and unknown risks, uncertainties and other
factors that may cause our results or our industry’s actual results, levels of
activity, performance or achievements to be materially
different from the information expressed or implied by these forward-looking statements. Certain
risks, uncertainties and other factors
 include, but are not limited to, our limited operating history; our potential inability to develop, validate and
commercialize gedatolisib
on a timely basis or at all; the uncertainties and costs associated with clinical studies and with developing and commercializing
biopharmaceuticals;
 the complexity and difficulty of demonstrating the safety and sufficient magnitude of benefit to support regulatory approval of
gedatolisib
 and other products we may develop; challenges we may face in developing and maintaining relationships with pharmaceutical company
partners; the uncertainty and costs associated with clinical trials; the uncertainty
regarding market acceptance by physicians, patients, third-party payors
and others in the medical community, and with the size of market
opportunities available to us; difficulties we may face in managing growth, such as hiring
and retaining
 a qualified sales force and attracting and retaining key personnel; changes in government regulations; tightening credit markets and
limitations
 on access to capital; stock market volatility or other factors that may affect our ability to access capital on favorable terms or at
 all; and
obtaining and maintaining intellectual property protection for our technology and time and expense associated with defending
 third-party claims of
intellectual property infringement, investigations or litigation threatened or initiated against us. See
“Risk Factors” in Part I, Item 1A of this Annual Report
for additional risks, uncertainties and other factors applicable to
the Company.
 
 
3
 

 
 
SUMMARY OF RISK FACTORS
 
Below is a summary of the material factors that make an investment in our
common stock speculative or risky. This summary does not address all of the
risks that we face. Additional discussion of the risks summarized
in this risk factor summary, and other risks that we face, can be found in the “Risk
Factors” section of Part I, Item 1A of
this Annual Report and should be carefully considered, together with other information in this Annual Report and our
other filings with
the Securities and Exchange Commission before making investment decisions regarding our common stock.
 
●
We have a limited operating history and we may never generate revenue or profit;
 
●
Our inability to raise additional capital on acceptable terms in the future may limit our ability to develop and commercialize our
drug candidate,
gedatolisib;
 
●
Future financing activities could dilute the percentage ownership of our stockholders and could cause our stock price to fall, or
could result in
operating or other restrictions;
 
●
We are currently conducting and will continue to conduct clinical trials. Clinical trials are expensive and complex with uncertain
outcomes, which
may prevent or delay commercialization of our products;
 
●
Our near-term revenue prospects depend on the success of our initial drug product, gedatolisib. If we are unable to successfully complete
clinical
development of, obtain regulatory approval for, or commercialize, gedatolisib, or if we experience delays in doing so, our business
 will be
materially and adversely impacted;
 
●
The successful development and commercialization of our products is highly uncertain;
 
●
We were not involved in the early development of gedatolisib, so we are dependent on third parties having accurately generated, collected,
interpreted and reported data from certain preclinical and clinical trials;
 
●
We have not yet successfully completed any registrational clinical trials, and we may be unable to do so for any drug candidates we
may develop;
 
●
For a new drug to be approved for marketing, the FDA in the United States and health authorities in other countries must determine
that the drug
is safe and effective. Because all drugs can have adverse effects, the data from our Phase 3 clinical study must demonstrate
to the satisfaction of
the FDA and other health authorities that the benefits of gedatolisib in combination with palbociclib and fulvestrant,
or gedatolisib in combination
with fulvestrant, outweigh its risks. Failure to demonstrate sufficient magnitude of benefit, even if the
 benefit is found to be statistically
significant, may not support regulatory approval;
 
●
We must navigate lengthy, uncertain, and expensive regulatory approval processes to be able to market our products in the U.S. and
 other
jurisdictions;
 
●
If we encounter difficulties enrolling patients in any of our clinical trials, our clinical development activities could be delayed
 or otherwise
adversely affected;
 
●
We depend on intellectual property licensed from third parties, including from Pfizer for our lead product candidate, gedatolisib,
and termination
of this license could result in the loss of significant rights, which would materially and adversely impact our business;
 
●
If we and our business partners are unable to obtain and maintain intellectual property protection for our products and technology,
or if the scope
of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize
drug candidates similar
or identical to ours, and our ability to successfully commercialize our drug candidate may be impaired;
 
●
If we fail to comply with our obligations under our patent license with Pfizer, we could lose certain license rights that are important
 to our
business;
 
●
We rely on third parties to conduct certain aspects of our preclinical studies and clinical trials and to formulate and manufacture
our drug product.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with
regulatory requirements, we
may not be able to obtain regulatory approval for, or commercialize, any potential product candidates;
 
●
We will be dependent on our ability to attract and retain key personnel;
 
●
We may encounter difficulties in scaling production, commercializing, marketing and distributing our products, including in hiring
and retaining a
qualified sales force;
 
●
Our estimate of the market opportunity for our drug candidate may not prove to be accurate;
 
●
We face significant competition from other pharmaceutical and diagnostic companies; and
 
●
The price of our common stock may be volatile and fluctuate substantially.
 
 
4
 

 
  
PART I
 
ITEM 1. Business
 
Overview
 
Unless otherwise provided in this Annual Report,
references to the “Company,” “we,” “us,” and “our” and similar references refer to Celcuity
Inc., a
Delaware corporation. We own various unregistered trademarks and service marks, including our corporate logo. Solely for convenience,
the trademarks,
trade names and service marks in this Annual Report, including those owned by third parties, may be referred to without
the ®,TM or SM symbols, but such
references should not be construed as any indicator that the
owner of such trademarks, trade names and service marks will not assert, to the fullest extent
under applicable law, their rights thereto.
We do not intend the use or display of other companies’ trademarks, trade names and service marks to imply an
endorsement or sponsorship
of us by any other companies.
 
We are a clinical-stage biotechnology company focused
on the development of targeted therapies for the treatment of multiple solid tumor indications.
Our lead therapeutic candidate is gedatolisib,
 a potent, well-tolerated, small molecule reversible inhibitor, administered intravenously, that selectively
targets all Class I isoforms
of phosphatidylinositol-3-kinase (“PI3K”) and the two mechanistic targets of rapamycin (“mTOR”) sub-complexes,
mTORC1
and mTORC2. Gedatolisib’s mechanism of action and pharmacokinetic properties are differentiated from other currently approved
and investigational
therapies that target PI3K or mTOR alone or together. We believe there is significant potential for gedatolisib to
address breast and prostate cancer tumors,
and it has the potential to be used in other tumor types where the PI3K/protein kinase B (“AKT”)/mTOR
 (“PAM”) pathway is either: i) driving
tumorigenesis directly; ii) cooperating with other dysregulated signaling pathways;
or iii) a mechanism of resistance to other drug therapies.
 
Our initial clinical development programs for gedatolisib
are focusing on the treatment of patients with hormone receptor positive (“HR+”), human
epidermal growth factor receptor 2
 negative (“HER2-”), or HR+/HER2-, advanced or metastatic breast cancer (“ABC”), and patients with metastatic
castration
resistant prostate cancer (“mCRPC”).
 
In January 2022, gedatolisib was granted Fast Track
 designation for the treatment of patients with HR+/HER2- advanced breast cancer after
progression on CDK4/6 therapy. Fast Track designation
is granted by the FDA for products that are intended for the treatment of serious or life-threatening
diseases or conditions and which
demonstrate the potential to address an unmet medical need.
 
In July 2022, gedatolisib was granted Breakthrough
 Therapy Designation for HR+/HER2- advanced breast cancer after progression on CDK4/6
therapy. Breakthrough Therapy designation is granted
by the FDA to expedite the development and regulatory review of an investigational medicine that is
intended to treat a serious or life-threatening
 condition. The criteria for Breakthrough Therapy designation requires preliminary clinical evidence that
demonstrates the drug may have
substantial improvement on one or more clinically significant endpoints over available therapy.
 
In December 2022, we dosed the first patient in our
Phase 3, open-label, randomized two-part clinical trial, VIKTORIA-1. This trial is evaluating the
efficacy and safety of gedatolisib in
combination with fulvestrant with and without palbociclib in adults with HR+, HER2- advanced breast cancer who
have received prior treatment
with a CDK4/6 inhibitor in combination with an aromatase inhibitor. Two studies based on PIK3CA mutation status are
included in the trial.
According to confirmed PIK3CA mutation status, patients will be manually assigned to a cohort evaluating patients who have PIK3CA
wild
type (“WT”) tumors or to a cohort evaluating patients who have PIK3CA mutant (“MT”) tumors. The two cohorts are
randomized separately. The
cohort evaluating PIK3CA WT patients completed enrollment during the fourth quarter of 2024 while the cohort
evaluating patients with PIK3CA MT (as
defined below) continues to enroll patients.
 
In February 2024, we dosed our first patient in our
Phase 1b/2 clinical trial, CELC-G-201, evaluating gedatolisib in combination with darolutamide in
patients with mCRPC. Initial preliminary
data for the Phase 1 portion of the trial is expected to be available by the end of the second quarter of 2025.
 
During the third quarter of
2024, we commenced site selection and activation activities to support a Phase 3, open-label, randomized clinical trial,
VIKTORIA-2.
This trial is expected to dose its first patient in Q2 2025. This trial will evaluate the efficacy and safety of gedatolisib plus a
CDK4/6
inhibitor and fulvestrant as first-line treatment for patients with HR+/HER2- endocrine treatment resistant advanced breast
 cancer. For the CDK4/6
inhibitor, investigators may choose either ribociclib or palbociclib. Approximately 200 clinical sites in
North America, Europe, Latin America, and Asia-
Pacific, including many sites included in the VIKTORIA-1 clinical
trial, will participate in the study.
 
The PI3K/AKT/mTOR (PAM) Pathway
 
Dysregulation of the PAM signaling pathway is observed
in many types of cancer, including breast and prostate cancer. The important role the PAM
pathway plays in cancer has led to significant
investment in the development of many different PI3K and mTOR inhibitors for solid tumors.
 
Activities associated with PI3K involve complex essential
 cell regulatory mechanisms, including feedforward and feedback signaling loops.
Overactivation of the pathway is frequently present in
human malignancies and plays a key role in cancer progression. Four catalytic isoforms of Class I
PI3K preferentially mediate signal transduction
 and tumor cell survival based on the type of malignancy and the genetic or epigenetic alterations an
individual patient harbors. Due to
the multiple subcellular locations, activities, and importance of the different PI3K complexes in regulating many types of
cancer cell
proliferation, control of PI3K activity is an important target in cancer therapy.
 
mTOR is a critical effector in cell-signaling pathways
 commonly dysregulated in human cancers. The mTOR signaling pathway integrates both
intracellular and extracellular signals and serves
as a central regulator of cell metabolism, growth, proliferation, and survival. mTOR is a serine/threonine
protein kinase, a downstream
effector of PI3K, and regulated by hormones, growth factors, and nutrients, that are contained in two functionally distinct
protein assemblies
– mTORC1 and mTORC2. In cancer, dysfunctional signaling leads to various constitutive activities of the mTOR complexes, making
mTOR
a good therapeutic target.
 
 
5
 

 
  
Developing efficacious and well-tolerated therapies
 that target this pathway has been challenging. This reflects the inherent adaptability and
complexity of the PAM pathway, where numerous
feedforward and feedback loops, crosstalk with other pathways, and compensatory pathways enable
resistance to PAM pathway inhibition.
Another major hurdle for the development of PAM pathway inhibitors has been the inability to achieve optimal
drug-target blockade in tumors
while avoiding undue toxicities in patients.
 
Gedatolisib
 
By targeting multiple nodes of the PAM pathway, gedatolisib
 can overcome adaptive resistance mechanisms that inhibitors targeting single
PI3K/AKT/mTOR nodes do not address. As a result, we believe
gedatolisib offers distinct advantages over currently approved and investigational therapies
that target PI3K or mTOR alone or together.
 
●
Overcomes limitations of therapies that only inhibit a single Class I PI3K isoform or only one mTOR kinase complex.
 
Gedatolisib is a pan-class I isoform PI3K inhibitor with low
 nanomolar potency for the p110α, p110β, p110γ, and p110δ isoforms. Because
gedatolisib inhibits all four PI3K isoforms
 and both the mTORC1 and mTORC2 complexes, it prevents the confounding effect of isoform
interaction that may occur with isoform specific
PI3K inhibitors and the confounding interaction between PI3K isoforms, AKT, and mTOR. By
contrast, node-specific inhibitors cross-activate
 uninhibited sub-units due to numerous feedforward and feedback loops between the PI3K
isoforms, AKT, and mTOR complexes, which in turn
induces compensatory resistance that reduces the efficacy of isoform specific PI3K, AKT, or
mTORC1 inhibitors.
 
To compare the functional effect of inhibiting single versus
multiple PAM pathway nodes, we evaluated gedatolisib, and node-selective inhibitors
for PI3Kα (alpelisib), AKT (capivasertib) and
mTORC1 (everolimus) in a panel of breast cancer cell lines using a live cell proliferation rate dose
response analysis. The results of
this analysis are presented in the table below.
 
Breast Cancer Cell Line Proliferation
Rate Dose Response Analysis
Average values for 14 PIK3CA MT and 14
PIK3CA WT breast cancer cell lines
 
 
  
Note: Growth rate (“GR”) was assessed using 28
cell lines by measuring live cells reducing potential with Real Time-Glo MT luciferase assay
before and after 72-hour drug treatment.
GR50 (concentration required to inhibit growth rate by 50%) is a measure of potency. Max cell growth
inhibition (GR at highest drug concentration
tested) is a measure of efficacy.
 
Source: Rossetti S. et.al., npj Breast Cancer, 2024
 
On average, gedatolisib was 300-fold more potent than the single
 node PAM inhibitors analyzed and only gedatolisib induced a significant
cytotoxic effect. In addition, gedatolisib’s potency and
efficacy was comparable in cell lines with and without PIK3CA mutations, in contrast to
the single node PAM inhibitors.
 
●
Better tolerated by patients than oral PI3K and mTOR drugs.
 
Gedatolisib is administered intravenously (IV) on a four-week
cycle of three-weeks-on, one-week-off, in contrast to the orally administered pan-
PI3K or dual PI3K/mTOR inhibitors that are no longer
being clinically developed. Oral pan-PI3K or PI3K/mTOR inhibitors have repeatably been
found to induce significant side effects that were
not well tolerated by patients. This typically leads to a high proportion of patients requiring dose
reductions or treatment discontinuation,
despite showing promising efficacy. By contrast, gedatolisib stabilizes at lower concentration levels in
plasma compared to orally administered
PI3K inhibitors, resulting in less toxicity, while maintaining concentrations sufficient to inhibit PAM
pathway signaling.
 
Isoform-specific PI3K or mTORC1 inhibitors administered orally
were developed to reduce toxicities in patients. While the range of toxicities
associated with single-node PAM inhibitors is narrower
than oral pan-PI3K or PI3K/mTOR inhibitors, administering them orally on a continuous
basis still leads to challenging toxicities. The
 experience with the FDA approved oral PI3K-α inhibitor, alpelisib, and mTORC1 inhibitor,
everolimus, illustrates the challenge.
In their Phase 3 pivotal trials, alpelisib and everolimus were found to induce hyperglycemia in 79% and 69%
of patients evaluated, respectively.
In addition, 26% and 24% of patients discontinued alpelisib and everolimus, respectively, due to treatment
related adverse events. By
contrast, in the 103-patient dose expansion portion of the Phase 1b clinical trial with gedatolisib, only 25% of patients
experienced
hyperglycemia and less than 9% discontinued treatment.
 
 
6
 

 
  
Clinical Development
 
As of December 31, 2024, 492 patients with solid tumors
have received gedatolisib in eight completed clinical trials. Gedatolisib’s safety, tolerability
and pharmacokinetic profile were
determined in a Phase 1 First-in-Human clinical trial. Of the 492 patients, 129 were treated with gedatolisib as a single
agent in three
clinical trials. The remaining 363 patients received gedatolisib in combination with other anti-cancer agents in five clinical trials.
Additional
patients received gedatolisib in combination with other anti-cancer agents in nine investigator sponsored clinical trials.
 
Breast Cancer Program
 
Breast cancer is the most prevalent cancer in women,
accounting for 30% of all female cancers and 13% of cancer-related deaths in the United States.
The National Cancer Institute estimated
that approximately 310,720 new cases of breast cancer would be diagnosed in the United States in 2024, and
approximately 42,250 breast
cancer patients would die of the disease.
 
Four different breast cancer subtypes are currently
identified using molecular tests that determine the level of HR and HER2 expression. The most
common subtype of ABC is HR+/HER2-. Approximately
70% of all breast cancer tumors express the estrogen receptor (“ER”), which, upon activation,
regulates the expression of
various genes involved in tumor proliferation. Despite progress in treatment strategies, metastatic HR+/HER2- breast cancer
(“MBC”) remains
an incurable disease, with a median overall survival (OS) of three years and a five-year survival rate of 34%.
 
Three different classes of targeted therapies are
currently used to treat HR+/HER2- tumors: endocrine-based therapies, CDK4/6 inhibitors, and PAM
inhibitors. Each of the CDK4/6 inhibitors
and PAM inhibitors are generally used to respond to the related mechanisms of resistance to endocrine therapy,
namely, activation of the
CDK4/6 and PAM pathways.
 
Over 70% of breast cancers have direct or indirect
 activation of the PAM pathway. The upregulation of the PAM pathway promotes hormone-
dependent and independent ER transcriptional activity,
which contributes to endocrine resistance, leading to tumor cell growth, survival, motility, and
metabolism. Clinical studies have demonstrated
that PAM inhibition can restore sensitivity to estrogen therapy (ET).
 
Additionally, the PAM pathway, like other mitogenic
pathways, can also promote the activities of cyclin D and CDK4/6 to drive proliferative cell
cycling. The available evidence indicates
that resistance to CDK4/6 inhibition in patients with HR+/HER2- advanced breast cancer is a transient adaptive
mechanism, most likely
involving the PAM pathway. This data indicates that CDK4/6 signaling may be restored in CDK4/6 resistant tumors when PAM
inhibitors are
applied. Thus, continuing CDK4/6 inhibitor treatment in combination with a PAM inhibitor in patients who progressed on their prior CDK4/6
inhibitor, would both blockade the potentially reactivated CDK4/6 pathway and prevent adaptive activation of the PAM pathway. This suggests
the limited
efficacy induced by current standard-of-care (SOC) therapies in patients who have progressed on a CDK4/6 therapy reflects
the mechanistic inadequacy of
relying on partial PAM inhibition (e.g., alpelisib or everolimus) and no CDK4/6 inhibition to address this
complex disease mechanism.
 
We believe the complex connection between the PAM
 and CDK4/6 pathways can potentially enable gedatolisib to adaptively reactivate CDK4/6
signaling that reportedly occurs in CDK4/6 resistant
tumors when the PAM pathway is comprehensively blockaded. By re-activating CDK4/6 signaling, we
believe gedatolisib can restore the therapeutic
effect of CDK4/6 inhibition when it is combined with a CDK4/6 inhibitor. The contributory effect of a
CDK4/6 inhibitor when combined with
gedatolisib would thus largely reflect the interaction between the two therapies that gedatolisib initiates.
 
Evidence of gedatolisib’s anti-tumor activity
 in breast cancer cells was provided in a study evaluating the MCF7 xenograft model
(ER+/HER2-/PIK3CA mutant), where the combination of
 gedatolisib with palbociclib and fulvestrant caused 90% tumor regression with no tumor
regrowth observed for more than 60 days after the
final dose.
 
 
Source: Layman SABCS 2021
 
Clinical Experience with Gedatolisib in Breast Cancer
 
The favorability of preliminary results from our most
recently completed clinical trial, a Phase 1b clinical trial which evaluated 138 patients with
HR+/HER2- ABC, led us to focus on our initial
clinical development program on advanced breast cancer.
 
 
7
 

 
  
On January 13, 2022, gedatolisib was granted Fast
Track designation for the treatment of patients with HR+/HER2- advanced breast cancer after
progression on CDK4/6 therapy. Fast Track
designation is granted by the FDA for products that are intended for the treatment of serious or life-threatening
diseases or conditions
 and which demonstrate the potential to address an unmet medical need. The designation offers the opportunity for frequent
interactions
with the FDA to discuss the drug’s development plan and to ensure collection of appropriate data needed to support drug approval,
as well as
eligibility for rolling submission of a New Drug Application.
 
On July 18, 2022, gedatolisib was granted Breakthrough
Therapy Designation for HR+/HER2- advanced breast cancer after progression on CDK4/6
therapy. Breakthrough Therapy designation is granted
by the FDA to expedite the development and regulatory review of an investigational medicine that is
intended to treat a serious or life-threatening
 condition. The criteria for Breakthrough Therapy designation require preliminary clinical evidence that
demonstrates the drug may have
 substantial improvement on one or more clinically significant endpoints over available therapies. The benefits of
Breakthrough Therapy
Designation include more intensive guidance from the FDA on an efficient development program, access to a scientific liaison to
help accelerate
review time, and potential eligibility for priority review if relevant criteria are met. Celcuity’s breakthrough application was
supported by
data from a Phase 1b clinical trial that assessed the safety, tolerability and clinical activity of gedatolisib in combination
with palbociclib and fulvestrant in
patients with HR+/HER2- advanced breast cancer whose disease progressed during treatment with a CDK4/6
therapy and an aromatase inhibitor.
 
Phase 1b HR+/HER2- ABC Clinical Trial Results
 
A Phase 1b dose-finding trial with an expansion portion
for safety and efficacy evaluated gedatolisib when added to either the standard doses of
palbociclib plus letrozole or palbociclib plus
fulvestrant in patients with HR+/HER2- advanced breast cancer. PI3K mutation status was not used as an
eligibility criterion. Patient
enrollment for the trial is complete.
 
A total of 138 patients with HR+/HER2- advanced breast
cancer were dosed in the clinical trial. Four patients from this study continue to receive study
treatment, as of December 31, 2024, each
of whom have received study treatment for more than five years.
 
●
35 patients were enrolled in two dose escalation arms to evaluate the safety and tolerability and determine the maximum tolerable
dose (“MTD”)
of gedatolisib when used in combination with the standard doses of palbociclib and endocrine therapies. The MTD
was determined to be 180 mg
administered intravenously once weekly.
 
●
103 patients were enrolled in one of four expansion arms (A, B, C, D) to determine if the triplet combination of gedatolisib plus
palbociclib and
letrozole or gedatolisib plus palbociclib and fulvestrant produced a superior objective response (OR), compared to historical
control data of the
doublet combination (palbociclib plus endocrine therapy). All patients received gedatolisib in combination with standard
doses of palbociclib and
endocrine therapy (either letrozole or fulvestrant). In Arms A, B, and C, patients received an intravenous dose
of 180 mg of gedatolisib once
weekly. In Arm D, patients received an intravenous dose of 180 mg of gedatolisib on a four-week cycle of
 three-weeks-on, one-week-off.
Objective response was determined using Response Evaluation Criteria in Solid Tumors v1.0, or RECIST v1.0.
 
○
Arm A: ABC with progression and no prior endocrine-based systemic therapy or a CDK4/6 inhibitor in the metastatic setting.
First-line
endocrine-based therapy for advanced disease (CDK4/6 treatment naive).
 
○
Arm B: ABC with progression during one or two prior endocrine-based systemic therapies in the advanced setting, with no prior
therapy
with any CDK inhibitor. Second- or third-line endocrine-based therapy for metastatic disease.
 
o
Arm C: ABC with progression during one or two prior endocrine-based systemic therapies in the advanced setting and following
prior
therapy with a CDK inhibitor. Second- or third-line endocrine-based therapy for advanced disease.
 
o
Arm D: ABC with progression during one or two prior endocrine-based systemic therapies in the advanced setting and following
prior
therapy with a CDK inhibitor. Second- or third-line endocrine-based therapy for advanced disease.
 
●
For the 103 patients enrolled in the expansion portion of the Phase 1b clinical trial, the objective response rate (“ORR”)
in aggregate among
patients with evaluable tumors was 63%.
 
●
Best responses, as measured by RECIST v1.0, are shown in the following chart for Arm A (1st line patients) and Arm D (2nd/3rd
line patients who
received Phase 3 dosing regimen). The dotted line represents the cutoff for partial response (PR), defined as a 30%
reduction from the baseline
tumor assessment.
 
 
8
 

 
  
 
Source: Layman SABCS 2021
 
●
Safety analysis:
 
○
For all arms in aggregate, all patients experienced at least one Grade 1 or Grade 2 treatment-emergent adverse event. The Grade 3
and 4
treatment-emergent adverse events occurring in at least 20% of patients were neutropenia (63%), stomatitis (27%) and rash (20%).
Neutropenia is a known class effect of CDK4/6 inhibitors. Stomatitis was reversible in most patients with a steroidal mouth rinse. All
grades of treatment-related adverse events related to hyperglycemia were reported in 22% of patients; Grade 3 or 4 hyperglycemia was
reported
in 7% of patients. Gedatolisib was discontinued in less than 9% of patients.
 
○
For the patients in Arm D, who received the Phase 3 dosing schedule, Grade 3 and 4 treatment-emergent adverse events occurring in
at
least 20% of patients were neutropenia (67%), leukopenia (22%), and stomatitis (22%). All grades of treatment-related adverse events
related to hyperglycemia were reported in 26% of patients; Grade 3 or 4 hyperglycemia were reported in 7% of patients. Gedatolisib was
discontinued in 4% of patients.
 
●
Best overall response data for each arm is presented in the table below:
 
Total Expansion Arms
(N=103)
 
 
Arm A
 
Arm B
 
Arm C
 
Arm D
Prior Therapy
 
1L
CDKi-naive
 
2L+
CDKi-naive
 
2L/3L
CDKi-pretreated
 
2L/3L
CDKi-pretreated
n (Full, response evaluable)
 
31, 27
 
13,13
 
32, 28
 
27, 27
Study Treatment
 
P + L + G
 
P + F + G
 
P + F + G
 
P + F + G
Gedatolisib schedule
 
weekly
 
weekly
 
weekly
  3 wks on/1 wk off
ORR 1 (evaluable)
 
85%
 
77%
 
36%
 
63%
mPFS 2 , mos (range)
 
48.4
(16.9, NR)
 
12.9
(7.6, 38.3)
 
5.1
(3.3, 7.5)
 
12.9
(7.4, 16.7)
PFS % at 12 mos 2
 
72.1%
 
54.5%
 
23.6%
 
53.2%
 
 
WT
   
MT
   
WT
   
MT
   
WT
   
MT
   
WT
   
MT
 
PIK3CA status
   
81%   
16%   
69%   
31%   
75%   
25%   
56%   
41%
ORR (evaluable)
   
81%   
100%   
78%   
75%   
25%   
63%   
60%   
73%
PFS at 12 months
   
74%   
60%   
50%   
67%   
22%   
29%   
49%   
60%
 
(1) ORR represents PR, except in Arm A, which had 1 CR = Complete
response. Responses per RECIST 1.1; (2) Includes 2 unconfirmed PR
 
Abbreviations: 1L= first line, 2L= second line; mos= months;
NR = not reached; ORR, objective response rate; PFS, progression free survival
 
Source: Layman R. et. al, Lancet Oncol.,
2024
 
 
9
 

 
  
Phase 3 HR+/HER2- ABC Clinical Trial (VIKTORIA-1)
 
In 2022, we initiated VIKTORIA-1, a Phase 3, open-label,
randomized clinical trial to evaluate the efficacy and safety of gedatolisib in combination
with fulvestrant with or without palbociclib
in adults with HR+/HER2- advanced breast cancer whose disease has progressed after prior CDK4/6 therapy in
combination with an aromatase
inhibitor. This multi-center, international trial is expected to enroll approximately 701 total subjects at more than 200
clinical sites
across North America, Europe, Latin America, and Asia-Pacific. The first patient was dosed in December 2022.
 
The clinical trial enables separate evaluation of
subjects according to their PIK3CA status.
 
●
Subjects who meet eligibility criteria and do not have confirmed PIK3CA mutations (i.e., WT) are randomly assigned (1:1:1)
to receive a
regimen of either gedatolisib, palbociclib, and fulvestrant (Arm A), gedatolisib and fulvestrant (Arm B), or fulvestrant
(Arm C). During the
fourth quarter of 2024, we achieved our enrollment goal of 351 subjects who are PIK3CA WT. We expect topline data
for this group to be
available in Q2 2025.
 
●
Subjects who meet eligibility criteria and have PIK3CA mutations (i.e., MT) are randomly assigned (3:3:1) to receive a regimen
of either
gedatolisib, palbociclib, and fulvestrant (Arm D), alpelisib and fulvestrant (Arm E), or gedatolisib and fulvestrant (Arm F).
Enrollment of up
to 350 subjects who are PIK3CA MT is ongoing. We expect topline data for this group to be available in the fourth quarter
of 2025.
 
The clinical trial primary endpoints are progression
free survival (“PFS”), per RECIST 1.1 criteria, as assessed by blinded independent central review
(“BICR”). Two
primary endpoints will be evaluated in subjects who are PI3KCA WT, and one primary endpoint will be evaluated in subjects who are
PI3KCA
MT. In subjects who are PI3KCA WT, the PFS of gedatolisib in combination with palbociclib and fulvestrant (Arm A) will be compared to
fulvestrant monotherapy (Arm C), and the PFS in gedatolisib in combination with fulvestrant (Arm B) will be compared to fulvestrant monotherapy
(Arm
C). In subjects who are PI3KCA MT, the PFS of gedatolisib in combination with palbociclib and fulvestrant (Arm D) will be compared
 to alpelisib
combined with fulvestrant (Arm E).
 
All subjects will receive treatment according to the
assigned study arm until objective progressive disease, unacceptable toxicity, death, or withdrawal
of consent, whichever occurs first.
 Subjects in Arm C will have the option to receive the treatment regimen provided in Arm A or Arm B upon
radiographically confirmed disease
progression. Subjects will be followed for adverse events, safety laboratory testing, tumor assessment by RECIST v1.1,
quality of life,
and overall survival.
 
Phase 3 HR+/HER2- ABC Clinical Trial (VIKTORIA-2)
 
During the third quarter of 2024, we initiated site
selection and activation activities to support a Phase 3, open-label, randomized clinical trial to
evaluate the efficacy and safety of
gedatolisib plus a CDK4/6 inhibitor and fulvestrant as first-line treatment for patients with HR+/HER2- advanced breast
cancer that is
endocrine treatment resistant (VIKTORIA-2). For the CDK4/6 inhibitor, investigators may choose either ribociclib or palbociclib. This
multi-
center, international trial is expected to enroll approximately 12–36 evaluable subjects in the safety run-in portion of the
study to evaluate the safety of
gedatolisib when combined with ribociclib and fulvestrant. In the Phase 3 portion of the study, approximately
638 subjects will be randomized and assigned
to Cohort 1 (“PIK3CA WT”) or Cohort 2 (“PIK3CA MT”) based on their PIK3CA status.
Subjects in each cohort will be randomized on a 1:1 basis to
either Arm A (gedatolisib with fulvestrant and ribociclib or palbociclib)
 or Arm B (fulvestrant and ribociclib or palbociclib). It is expected that
approximately 200 clinical sites across North America, Europe,
Latin America, and Asia-Pacific will participate. The first patient is expected to be dosed in
the second quarter of 2025.
 
The clinical trial primary endpoints for this study
are PFS, per RECIST 1.1 criteria, as assessed by BICR. The statistical analyses of Cohort 1 and 2 are
independent of the other. For each
cohort, the PFS of gedatolisib in combination with fulvestrant and either palbociclib or ribociclib (Arm A) will be
compared to fulvestrant
combined with either palbociclib or ribociclib (Arm B).
 
Prostate Cancer Program
 
In the United States, prostate cancer is the second
leading cause of cancer death in men. Current estimates predict that one in eight men will be
diagnosed with prostate cancer in his lifetime.
The National Cancer Institute estimates that in 2024 there will be over 299,000 new cases of prostate cancer
in the United States and
approximately 35,250 deaths from the disease. Although approximately 69% of patients are diagnosed with localized prostate
cancer, about
8% of patients present with metastatic disease with a 5-year survival rate of 37%. Androgen deprivation therapy (“ADT”) via
medical or
surgical castration has been the mainstay treatment for metastatic prostate cancer. However, prostate cancer cells develop
resistance to ADT and progress to
castration resistance, leading to poor prognosis and a median overall survival of about three to five years.
 
Men with mCRPC have a poor prognosis and a predicted
survival rate of fewer than two years from the initial time of progression. Treatment options
for prostate cancer depend on many different
factors, including the stage of the cancer. Castration-resistant prostate cancer is defined by disease progression
despite ADT and is
often indicated by rising levels of PSA. Current standard of care for men with castration-resistant prostate cancer provides that patients
should initially receive a combination of ADT and either abiraterone, which works by decreasing androgen levels, or enzalutamide, which
 works by
blocking androgen binding to androgen receptors (“AR”). If the disease progresses despite these second-generation
hormonal therapies, chemotherapy is
considered the next treatment option. Treatment with chemotherapy is generally postponed for as long
as possible due to the potential for severe side
effects including neuropathies, nausea, diarrhea, decreased mental capacity and increased
risk of infections.
 
 
10
 

 
  
Preclinical studies have demonstrated a potential
 association between the PAM pathway and AR signaling in prostate cancer cells developing
resistance to ADT. In these studies, the AR and
PAM pathways were shown to cross-regulate each other. This is similar to the relationship demonstrated in
breast cancer with the estrogen
 receptor pathway and the PAM pathway. Additionally, 70% - 100% of mCRPC tumors have PAM related pathway
alterations.
 
Several clinical studies have shown promising results
by inhibiting the PAM pathway in combination with an AR inhibitor. In separate Phase 2 and
Phase 3 trials, the AKT inhibitor, ipatasertib,
showed improvement in radiographic PFS (“rPFS”) in patients with mCRPC and tumors with phosphatase
and tensin homolog (“PTEN”)
loss when ipatasertib was combined with the AR inhibitor, abiraterone, versus abiraterone alone. In a Phase 2 trial, the pan-
PI3K inhibitor,
samotolisib, reported median rPFS of 10.2 when combined with enzalutamide versus 5.5 months for enzalutamide alone.
 
Evidence of gedatolisib’s in vivo activity in
prostate cancer was provided in a study evaluating the 22RV-1, PC3, and C4-2 prostate cancer xenograft
models. As seen in the figures
below, gedatolisib induced greater than 80% tumor growth inhibition, regardless of the xenograft model’s sensitivity to the
AR inhibitor,
enzalutamide and the cell lines’ PTEN or AR status. In addition, gedatolisib combined with enzalutamide induced significantly greater
tumor
growth inhibition than enzalutamide alone in the enzalutamide sensitive model (“C4-2”).
  
 
Source: Sen, ASCO-GU, 2023
 
Phase 1b/2 mCRPC Clinical Trial (CELC-G-201)
 
We received approval from the FDA in mid-2023 to proceed
 with the clinical development of gedatolisib in combination with Nubeqa®
(darolutamide), an approved androgen receptor inhibitor,
for the treatment of patients with mCRPC. We have since initiated a Phase 1b/2 clinical trial
(CELC-G-201) that will enroll up to 54 participants
with mCRPC who progressed after treatment with an AR inhibitor. We dosed our first patient in this
trial in February 2024.
 
In the Phase 1b portion of the clinical trial, we
enrolled 36 participants randomly assigned to receive 600 mg darolutamide combined with either 120
mg gedatolisib in Arm 1 or 180 mg gedatolisib
in Arm 2. An additional 12 participants will then be enrolled in the Phase 2 portion of the study at the
recommended phase 2 dose (“RP2D”)
level to enable evaluation of 30 participants treated with the RP2D of gedatolisib.
 
The primary objectives of the Phase 1b portion of
 the trial include assessment of the safety and tolerability of gedatolisib in combination with
darolutamide and determination of the recommended
Phase 2 dose of gedatolisib. The primary objective of the Phase 2 portion of the trial is to assess the
rPFS at six months of patients
who received the RP2D.
 
Pfizer License Agreement
 
In April 2021, we entered into a license agreement
 (“the Gedatolisib License Agreement”) with Pfizer pursuant to which we acquired exclusive
(including as to Pfizer) worldwide
sublicensable rights to research, develop, manufacture, and commercialize gedatolisib for the treatment, diagnosis and
prevention of all
diseases. Pursuant to the Gedatolisib License Agreement, we are obligated to use commercially reasonable efforts to develop and seek
regulatory
approval for at least one product in the U.S. and if regulatory approval is obtained, to commercialize such product in the U.S. and at
least one
international major market.
 
We paid Pfizer a $5.0 million upfront fee upon execution
of the Gedatolisib License Agreement and issued to Pfizer $5.0 million of our common stock.
We are also required to make milestone payments
to Pfizer upon achievement of certain development and commercial milestone events, up to an aggregate
of $335.0 million. We will pay Pfizer
tiered royalties on sales of gedatolisib at percentages ranging from the low to mid-teens, that may be subject to
deductions for expiration
 of valid claims, amounts due under third-party licenses and generic competition. Unless earlier terminated, the Gedatolisib
License Agreement
will expire upon the expiration of all royalty obligations. The royalty period will expire on a country-by-country basis upon the later
of
(a) 12 years following the date of First Commercial Sale of such Product in such country, (b) the expiration of all regulatory or data
exclusivity in such
country for such Product, or (c) the date upon which the manufacture, use, sale, offer for sale or importation of
such Product in such country would no
longer infringe, but for the license granted herein, a Valid Claim of a Licensed Patent Right. Capitalized
terms in this paragraph have the meanings set forth
in the Gedatolisib License Agreement.
 
 
11
 

 
  
We have the right to terminate the Gedatolisib License
Agreement for convenience upon 90 days’ prior written notice. Pfizer may not terminate the
agreement for convenience. Either we
or Pfizer may terminate the Gedatolisib License Agreement if the other party is in material breach and such breach is
not cured within
the specified cure period. In addition, either we or Pfizer may terminate the Gedatolisib License Agreement in the event of specified
insolvency events involving the other party.
 
Manufacturing
 
We rely on third parties to manufacture gedatolisib.
We have entered into agreements with contract manufacturing organizations (“CMOs”), to produce
the drug substance gedatolisib,
and produce, package and distribute finished drug product for clinical supply. We require all of our CMOs to conduct
manufacturing activities
in compliance with applicable laws including current good manufacturing practice (“cGMP”), requirements. We anticipate that
these CMOs will have the capacity to support both clinical supply and commercial-scale production, and we have started negotiating agreements
at this
time to cover commercial production. We may also elect to enter into agreements with other CMOs to manufacture supplies of drug
substance and finished
drug product.
 
Sales and Marketing
 
If any of our product candidates are approved, we
intend to market and commercialize them in the U.S. and select international markets, either alone or
in partnership with others. Cancer
patients are primarily treated by medical, surgical, or radiation oncologists, and we believe they can be reached with a
targeted sales
force.
 
Competition for Gedatolisib
 
The pharmaceutical industry is characterized by rapid
evolution of technologies and intense competition. While we believe that our product candidates,
technology, knowledge, experience, intellectual
property, and scientific resources provide us with competitive advantages, we face competition from major
pharmaceutical and biotechnology
companies, academic institutions, governmental agencies and public and private research institutions, among others.
Any product candidates
that we successfully develop and commercialize will compete with approved treatment options, including off-label therapies, and
new therapies
that may become available in the future. Key considerations that would impact our ability to effectively compete with other therapies
include
the efficacy, safety, method of administration, cost, level of promotional activity and intellectual property protection of our
 products. Many of the
companies against which we may compete have significantly greater financial resources and expertise than we do in
 research and development,
manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing
approved products.
 
There are several PI3K, AKT, and mTOR inhibitors approved
by the FDA, including PIQRAY and AFINITOR from Novartis AG, TRUQAP from
AstraZeneca plc, Itovebi from F. Hoffmann-La Roche Ltd, COPIKTRA
from Verastem, Inc., and ZYDELIG from Gilead Sciences, Inc. We are aware that
other companies are, or may be, developing products for
this indication, including BridgeBio Pharma Inc., Eli Lilly and Company, Kazia Therapeutics
Limited, Relay Therapeutics, Inc., Revolution
Medicines Inc., and Takeda Pharmaceutical Company Limited. There may be additional companies with
programs suitable for addressing these
 patient populations that could be competitive with our efforts but that have not yet disclosed specific clinical
development plans. Smaller
or early-stage companies, including oncology-focused therapeutics companies, may also prove to be significant competitors,
particularly
 through collaborative arrangements with large and established companies. These companies may also compete with us in recruiting and
retaining
 qualified scientific and management personnel, establishing clinical trial sites, enrolling patients in clinical trials and acquiring
 technologies
complementary to, or necessary for, our programs. The availability of reimbursement from government and private payors will
also significantly impact the
pricing and competitiveness of our products. Our competitors may obtain FDA or other regulatory approvals
for their products more rapidly than we may
obtain approvals for our product candidates, which could result in our competitors establishing
 a strong market position before we are able to
commercialize our product candidates.
 
CELsignia
 
We founded our company to develop our proprietary
CELsignia diagnostic platform and relied on the capability of this technology to identify our lead
drug candidate, gedatolisib. CELsignia
characterizes the specific activity of various oncogenic signaling pathways, including the PAM pathway, in living
patient tumor cells.
As previously disclosed, we made the decision to focus on the clinical development of gedatolisib and minimize our activities to
support
development of CELsignia.
 
Intellectual Property
 
Our success depends in part on our ability to obtain
 and maintain proprietary protection for our product candidates, manufacturing and process
discoveries and other know-how, to operate without
infringing the proprietary rights of others, and to prevent others from infringing our proprietary rights.
We plan to protect our proprietary
positions using a variety of methods, which include protecting current U.S. and foreign patents related to proprietary
technology, inventions
and improvements and prosecuting additional U.S. and foreign patents that we determine are important to the development and
implementation
of our business. For example, we, our licensors, or our collaborators currently have, or are pursuing, patents covering the composition
of
matter for our drug product candidates and we plan to generally pursue patent protection covering methods-of-use for one or more clinical
programs. We
also rely on trade secrets, trademarks, know-how, continuing technological innovation and potential in-licensing opportunities
to develop and maintain our
proprietary position.
 
 
12
 

 
  
Gedatolisib Patents
 
We entered into the Gedatolisib License Agreement
with Pfizer in April 2021, pursuant to which we acquired exclusive worldwide rights under Pfizer
patents and know-how to develop, manufacture
and commercialize gedatolisib. We have exclusive licenses under the Gedatolisib License Agreement to
patent rights in the U.S. and numerous
foreign jurisdictions relating to gedatolisib. The patent rights in-licensed under the Gedatolisib License Agreement
include 12 granted
patents in the U.S. and more than 290 patents granted in foreign jurisdictions including Australia, Canada, China, France, Germany,
Spain,
 United Kingdom and Japan. A U.S. patent covering gedatolisib as a composition of matter has a statutory expiration date in December 2029
(including 209 days of Patent Term Adjustment) and a U.S. patent that covers the cyclodextrin formulation of gedatolisib that is currently
in clinical
development expires in January 2041 (including 578 days of Patent Term Adjustment), not including any patent term extension
that may be awarded by the
FDA, and relevant foreign counterparts.
 
CELsignia Patents
 
With respect to CELsignia, we have six issued U.S.
patents and 30 issued international patents covering our diagnostic approach using cell signaling
analysis in living patient cells to
guide treatment of patients with targeted therapies and cell sample preparation methods. The earliest expiration date of the
patents is
2033. In addition, we have developed significant proprietary know-how and trade secrets for the various cell sample preparation and cellular
analysis methods we have developed.
 
Product Trademark
 
We have applied for trademark protection for our preferred
 commercial product tradename. While we expect the trademark to issue, the FDA
ultimately will determine whether we can use the trademark
with our product.
 
Trade Secrets
 
In addition to patents, we rely on trade secrets and
know-how to develop and maintain our competitive position. We typically rely on trade secrets to
protect aspects of our business that
are not amenable to, or that we do not consider appropriate for, patent protection. We protect trade secrets and know-
how by establishing
confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and
partners.
These agreements generally provide that all confidential information developed or made known during the course of an individual or entity’s
relationship with us must be kept confidential during and after the relationship. These agreements also generally provide that all inventions
resulting from
work performed for us or relating to our business and conceived or completed during the period of employment or assignment,
as applicable, shall be our
exclusive property. In addition, we take other appropriate precautions, such as physical and technological
 security measures, to guard against
misappropriation of our proprietary information by third parties.
 
Government Regulation
 
Approval of Gedatolisib and Other Drug Products
 
Government authorities in the U.S. at the federal,
state and local level and in other countries and jurisdictions, including the EU, 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 drug products, such as gedatolisib and other drugs
that may
be used in combination with or compete with gedatolisib. Generally, before a new drug can be marketed, considerable data demonstrating
its
quality, safety and efficacy must be obtained, organized into a format specific for each regulatory authority and submitted for review
and approved by the
regulatory authority. The regulatory approval process is time-consuming and requires significant capital expenditures.
 
U.S. Approval Process
 
Overview of FDA Approval Process
 
In the U.S., pharmaceutical products are subject to
extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act (the “FDC Act”), and
other federal and state statutes
 and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping,
approval, labeling,
promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical
products.
Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as
FDA
refusal to approve pending New Drug Applications (“NDAs”), warning or untitled letters, product recalls, product seizures,
total or partial suspension of
production or distribution, injunctions, fines, civil penalties and criminal prosecution. The process required
by the FDA before a drug may be marketed in
the United States generally involves the following:
 
●
completion of nonclinical laboratory tests, animal studies and formulation studies according to good laboratory
 practices (GLP), or other
applicable regulations;
 
●
submission to the FDA of an application for an investigational new drug application (“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 regulations
 commonly referred to as current good
clinical practices (“GCPs”), to establish the safety and efficacy of the proposed drug
for its intended use;
 
 
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●
submission to the FDA of an NDA 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 cGMPs, to assure that the facilities, methods and controls are adequate to preserve the
drug’s identity, strength, quality and purity;
 
●
potential FDA inspection of the nonclinical and clinical trial sites that generated the data in support
of the NDA; and
 
●
FDA review of the NDA.
 
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.
 
Preclinical and Clinical Stages
 
Preclinical tests include laboratory evaluation of
product chemistry, formulation and toxicity, as well as animal trials to assess the characteristics and
potential safety and efficacy
of the product. The conduct of the preclinical tests must comply with federal regulations and requirements, including good
laboratory
practices. The results of preclinical testing are submitted to the FDA as part of an IND along with other information, including information
about
product chemistry, manufacturing and controls and a proposed clinical trial protocol. Long term preclinical tests, such as animal
tests of reproductive
toxicity and carcinogenicity, may continue after the IND is submitted. A 30-day waiting period after the submission
of each IND is required prior to the
commencement of clinical testing in humans. If the FDA has neither commented on nor questioned the
IND within this 30-day period, the clinical trial
proposed in the IND may begin.
 
The clinical stage of development involves the administration
of the investigational product to healthy volunteers or disease-affected patients under the
supervision of qualified investigators, generally
physicians not employed by, or under control of, the trial sponsor, in accordance with GCPs. 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 and assess efficacy. Each protocol, and any subsequent amendments to the protocol, must
be
submitted to the FDA as part of an IND. Furthermore, each clinical trial must be reviewed and approved by an Institutional Review Board
(“IRB”), for
each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating
in the clinical trials are minimized and are
reasonable in relation to anticipated benefits. The IRB also monitors the clinical trial
until completed. Human clinical trials are typically conducted in three
sequential phases, which may overlap or be combined:
 
●
Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed
to a single dose
and then multiple doses of the product candidate. The primary purpose of these clinical trials is to assess the metabolism,
pharmacologic action,
side effect tolerability and safety of the drug.
 
●
Phase 2 clinical trials involve studies in disease-affected patients to determine the dose required to produce the desired benefits.
At the same time,
safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety
risks are identified, and a
preliminary evaluation of efficacy is conducted.
 
●
Phase 3 clinical trials generally involve a larger number of patients at multiple sites and are designed to provide the data necessary
to demonstrate
the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit/risk relationship
of the product and provide
an adequate basis for product approval. These trials may include comparisons with placebo and/or other comparator
treatments. The duration of
treatment is often extended to mimic the actual use of a product during marketing.
 
A registrational trial is a clinical trial that adequately
meets regulatory agency requirements for the evaluation of a drug candidate’s efficacy and safety
such that it can be used to justify
the approval of the drug. Generally, registrational trials are Phase 3 trials but may be Phase 2 trials if the trial design
provides a
reliable assessment of clinical benefit, particularly in situations where there is an unmet medical need.
 
Post-approval trials, sometimes referred to as Phase
4 clinical trials, may be conducted after initial marketing approval. These trials are used to gain
additional experience from the treatment
of patients in the intended therapeutic indication, particularly for long-term safety follow up.
 
Progress reports detailing the results of the clinical
trials must be submitted at least annually to the FDA and more frequently if serious adverse events
occur. The FDA or the sponsor may
suspend or terminate a clinical trial at any time, or the FDA may impose other sanctions on various grounds, including
a finding that
the research 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 requirements of the IRB or if the drug has
 been associated with
unexpected serious harm to patients.
 
There also are requirements governing the reporting
of ongoing clinical trials and completed clinical trial results to public registries. Information about
most clinical trials must be submitted
within specific timeframes for publication on the www.clinicaltrials.gov website. Information related to the product,
patient population,
phase of investigation, trial sites and investigators and other aspects of the clinical trial is made public as part of the registration
of the
clinical trial. Sponsors are also obligated to discuss the results of their clinical trials after completion. Disclosure of the
results of these trials can be delayed
in some cases for up to two years after the date of completion of the trial. Competitors may use
this publicly available information to gain knowledge
regarding the progress of development programs.
 
 
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FDA Review and Approval Process
 
After completion of the required clinical testing,
an NDA is prepared and submitted to the FDA. Prior to granting approval of the NDA, which is
required before marketing of the product
may begin in the U.S., the FDA must determine whether to accept the submission and, thereafter, conduct an in-
depth review. This process
may take a year or more. The NDA must include the results of all preclinical, clinical and other testing and a compilation of data
relating
to the product’s pharmacology, chemistry, manufacture and controls. The cost of preparing and submitting an NDA is substantial.
The submission
of an NDA to FDA, absent an applicable fee waiver, is subject to a substantial application user fee, currently $4,310,002
for Fiscal Year 2025, and the
manufacturer and/or sponsor under an approved NDA are also subject to annual program fees for eligible products,
which are currently $403,889 for Fiscal
Year 2025.
 
The FDA may also refer applications for novel drug
products, or drug products that 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.
The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving
an
NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility
or the
facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with cGMP is satisfactory
and the NDA contains
data that provide substantial evidence that the drug is safe and effective in the indication studied.
 
After the FDA evaluates the NDA and the manufacturing
 facilities, it issues either an approval letter or a complete response letter. A complete
response letter generally outlines the deficiencies
in the submission and may require substantial additional testing, or information, in order for the FDA to
reconsider the application.
If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue
an
approval letter. The FDA has committed to reviewing such resubmissions in two to six months depending on the type of information included.
 
An approval letter authorizes commercial marketing
of the drug with specific prescribing information for specific indications. As a condition of NDA
approval, the FDA may require a risk
evaluation and mitigation strategy (“REMS”), to help ensure that the benefits of the drug outweigh the potential risks.
REMS
can include medication guides, communication plans for healthcare professionals and elements to assure safe use (“ETASU”).
ETASU can include,
but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain
circumstances, special monitoring and the
use of patient registries. The requirement for a REMS can materially affect the potential market
and profitability of the drug. Moreover, product approval
may require substantial post-approval testing and surveillance to monitor the
drug’s safety or efficacy. Once granted, product approvals may be withdrawn
if compliance with regulatory standards is not maintained
or problems are identified following initial marketing.
 
Changes to some of the conditions established in an
approved application, including changes in indications, labeling or manufacturing processes or
facilities, require submission and FDA
approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new
indication typically requires
clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA
supplements
as it does in reviewing NDAs.
 
U.S. Marketing Exclusivity
 
Upon NDA approval of a new chemical entity (“NCE”),
which is a drug (i.e., gedatolisib) that contains no active moiety that has been approved by the
FDA in any other NDA, that drug receives
 five years of marketing exclusivity during which the FDA cannot accept any Abbreviated New Drug
Application (“ANDA”), seeking
approval of a generic version of that drug. Certain changes to a drug, such as the addition of a new indication to the
package insert,
are associated with a three-year period of exclusivity during which the FDA cannot approve an ANDA for a generic drug that includes the
change. An ANDA may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed. If there is no listed
patent in the
Orange Book, there is no Paragraph IV certification, and, thus, no ANDA may be filed before the expiration of the exclusivity
period.
 
Patent Term Extension
 
After NDA approval, owners of relevant drug patents
may apply for up to a five-year patent extension for one patent. The allowable patent term
extension is calculated as half of the drug’s
testing phase—the time between IND and NDA submission—and all of the review phase—the time between
NDA submission and
approval up to a maximum of five years. The time can be shortened if the FDA determines that the applicant did not pursue approval
with
due diligence. The total patent term after the extension may not exceed 14 years from approval.
 
For patents that might expire during the application
phase, the patent owner may request an interim patent extension. An interim patent extension
increases the patent term by one year and
may be renewed up to four times. For each interim patent extension granted, the post-approval patent extension is
reduced by one year.
The director of the U.S. Patent and Trademark Office must determine that approval of the drug covered by the patent for which a
patent
extension is being sought is likely. Interim patent extensions are not available for a drug for which an NDA has not been submitted.
 
Fast Track Designation
 
The FDA is required to facilitate the development,
and expedite the review, of drugs that are intended for the treatment of a serious or life-threatening
disease or condition for which
there is no effective treatment, and which demonstrate the potential to address unmet medical needs for the condition. Under
the Fast
Track program, the sponsor of a new drug candidate may request that the FDA designate the drug candidate for a specific indication as
a Fast
Track drug concurrent with, or after, the filing of the IND for the drug candidate. The FDA must determine if the drug candidate
qualifies for Fast Track
Designation within 60 days of receipt of the sponsor’s request.
 
 
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Under the Fast Track program and the FDA’s accelerated
approval regulations, the FDA may approve a drug for a serious or life-threatening illness
that provides meaningful therapeutic benefit
to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical
benefit, or on a clinical
endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on
irreversible
morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability
or lack
of alternative treatments.
 
In clinical trials, a surrogate endpoint is a measurement
of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement
of how a patient feels, functions
or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A drug
candidate approved
on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval
clinical
trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit
during post-
marketing studies, will allow the FDA to withdraw the drug from the market on an expedited basis. All promotional materials
for product candidates
approved under accelerated regulations are subject to prior review by the FDA.
 
In addition to other benefits such as the ability
to use surrogate endpoints and engage in more frequent interactions with the FDA, the FDA may initiate
review of sections of a Fast Track
drug’s NDA before the application is complete. This rolling review is available if the applicant provides, and the FDA
approves,
a schedule for the submission of the remaining information and the applicant pays applicable user fees. However, the FDA’s time
period goal for
reviewing an application does not begin until the last section of the NDA is submitted. Additionally, the Fast Track Designation
may be withdrawn by the
FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.
 
Breakthrough Therapy Designation
 
Breakthrough Therapy Designation by the FDA provides
more extensive development consultation opportunities with FDA senior staff, allows for the
rolling review of the drug’s application
for approval and indicates that the product could be eligible for priority review if supported by clinical data at the
time of application
submission for drugs that are intended to treat a serious or life-threatening disease or condition where preliminary clinical evidence
indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints.
 Under the
breakthrough therapy program, the sponsor of a new drug candidate may request that the FDA designate the drug candidate for
a specific indication as a
breakthrough therapy concurrent with, or after, the filing of the IND for the drug candidate. The FDA must
determine if the drug candidate qualifies for
Breakthrough Therapy Designation within 60 days of receipt of the sponsor’s request.
 
Disclosure of Clinical Trial Information
 
Sponsors of clinical trials of FDA regulated products,
 including drugs, are required to register and disclose certain clinical trial information.
Information related to the product, patient
population, phase of investigation, trial sites and investigators and other aspects of the clinical trial is then made
public as part
of the registration. Sponsors are also obligated to discuss the results of their clinical trials after completion. Disclosure of the results
of these
trials can be delayed in certain circumstances for up to two years after the date of completion of the trial. Competitors may
use this publicly available
information to gain knowledge regarding the progress of development programs.
 
European Union Approval Process
 
Overview
 
In the EU, our product candidates may also be subject
to extensive regulatory requirements. As in the U.S., medicinal products can be marketed only if
a marketing authorization from the competent
regulatory agencies has been obtained. Similar to the U.S., the various phases of preclinical and clinical
research in the EU are subject
to significant regulatory controls.
 
The Clinical Trials Regulation
(EU) No 536/2014 came into effect in 2022. The Clinical Trials Regulation is directly applicable in all the EU Member
States, and repealed
the Clinical Trials Directive 2001/20/EC. The Clinical Trials Regulation aims to simplify and streamline the approval of clinical trials
in the EU. The main characteristics of the regulation include: a streamlined application procedure via a single-entry point, the Clinical
Trial Information
System (“CTIS”); a single set of documents to be prepared and submitted for the application
as well as simplified reporting procedures for clinical trial
sponsors; and a harmonized procedure for the assessment of applications
 for clinical trials, which is divided in two parts. Part I is assessed by the
competent authorities of all EU Member States in which
an application for authorization of a clinical trial has been submitted (Member States concerned).
Part II is assessed separately by
each Member State concerned. Strict deadlines have been established for the assessment of clinical trial applications. The
role of the
relevant ethics committees in the assessment procedure will continue to be governed by the national law of the concerned EU Member State.
However, overall related timelines will be defined by the Clinical Trials Regulation.
 
To obtain a marketing authorization of a drug in the
EU, we may submit Marketing Authorisation Applications (“MAA”), either under the so-called
centralized or national authorization
procedures.
 
 
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Centralized Procedure
 
The centralized procedure provides for the grant of
a single marketing authorization following a favorable opinion by the European Medicines Agency
(“EMA”), that is valid in
all EU Member States, as well as Iceland, Liechtenstein and Norway. The centralized procedure is compulsory for medicines
produced by
specified biotechnological processes, products designated as orphan medicinal products, advanced therapy medicines (such as gene-therapy,
somatic cell-therapy or tissue-engineered medicines) and products with a new active substance indicated for the treatment of specified
diseases, such as
HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases and other immune dysfunctions and viral
 diseases. The centralized
procedure is optional for products that represent a significant therapeutic, scientific or technical innovation,
or whose authorization would be in the interest
of public health. Under the centralized procedure, the maximum timeframe for the evaluation
of an MAA by the EMA is 210 days, excluding clock stops,
when additional written or oral information is to be provided by the applicant
in response to questions asked by the Committee of Medicinal Products for
Human Use (the “CHMP”). Accelerated assessment might
be granted by the CHMP in exceptional cases when a medicinal product is expected to be of a
major public health interest, particularly
 from the point of view of therapeutic innovation. The timeframe for the evaluation of an MAA under the
accelerated assessment procedure
is 150 days, excluding stop-clocks.
 
National Authorization Procedures
 
There are also two other possible routes to authorize
medicinal products in several EU countries, which are available for investigational medicinal
products that fall outside the scope of
the centralized procedure:
 
●
Decentralized procedure. Using the decentralized procedure, an applicant may apply for simultaneous authorization in more than one
EU country
of medicinal products that have not yet been authorized in any EU country and that do not fall within the mandatory scope of
the centralized
procedure.
 
●
Mutual recognition procedure. In the mutual recognition procedure, a medicine is first authorized in one EU Member State, in accordance
with the
national procedures of that country. Following this, further marketing authorizations can be sought from other EU countries in
 a procedure
whereby the countries concerned agree to recognize the validity of the original, national marketing authorization.
 
Under the above-described procedures, before granting
 an MAA, the EMA or the competent authorities of the Member States of the European
Economic Area (“EEA”), assess the risk-benefit
balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
 
EU Regulatory Exclusivity
 
In the EU, new products authorized for marketing (i.e.,
reference products) qualify for eight years of data exclusivity and an additional two years of
market exclusivity upon marketing authorization.
The data exclusivity period prevents generic applicants from relying on the preclinical and clinical trial
data contained in the dossier
of the reference product when applying for a generic marketing authorization in the EU during a period of eight years from the
date on
 which the reference product was first authorized in the EU. The market exclusivity period prevents a successful generic applicant from
commercializing its product in the EU until ten years have elapsed from the initial authorization of the reference product in the EU.
The ten-year market
exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those ten years,
the marketing authorization holder
obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation
prior to their authorization, are held to bring a
significant clinical benefit in comparison with existing therapies.
 
Drug Approval-Related Regulations – Rest of the World
 
For other countries outside of the EU and the U.S.,
such as countries in Eastern Europe, Latin America or Asia, the requirements governing the
conduct of clinical trials, product licensing,
 pricing and reimbursement vary from jurisdiction to jurisdiction. Additionally, the clinical trials must be
conducted in accordance with
 cGCP requirements and the applicable regulatory requirements and the ethical principles that have their origin in the
Declaration of Helsinki.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension
or withdrawal
of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
 
Regulations of CELsignia Tests
 
CLIA and CMS for Diagnostic
 
Our CELsignia tests are laboratory developed tests
(“LDTs”), and subject to regulation under the Clinical Laboratory Improvement Amendments
(“CLIA”). The Centers
for Medicare & Medicaid Services (“CMS”), an agency within the U.S. Department of Health and Human Services (“HHS”),
regulates all clinical laboratory testing (except research) performed on humans in the United States through CLIA. All clinical laboratories
that perform
clinical lab services on human specimens for the purpose of providing information on the diagnosis, prevention or treatment
of disease must receive CLIA
certification. We received our CLIA certification in 2016. We also had our laboratory certified by the College
of American Pathologists (“CAP”), in 2016,
an organization recognized by CMS as a third-party reviewer of clinical laboratories.
Several states, including, among others, New York and California,
require licensure of out-of-state labs that receive specimens from the
state and compliance with the state’s individual laboratory regulations.
 
 
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FDA for Diagnostics
 
FDA approval or clearance is not currently required
for CELsignia tests offered as a stand-alone LDT test. If we are partnered with a drug company to
launch a CELsignia test as a companion
diagnostic for a new drug indication, we would be required to obtain premarket approval (PMA), in conjunction
with the pharmaceutical
company seeking a new drug approval for the matching therapy. Historically, the FDA has exercised enforcement discretion with
respect
to tests performed solely in a central laboratory, like the CELsignia tests or LDTs. The FDA has not required laboratories that furnish
only LDTs to
comply with the agency’s requirements for medical devices (e.g., establishment registration, device listing, quality
 systems regulations, premarket
clearance or premarket approval, and post-market controls). However, the FDA has discussed potential regulation
of LDTs and may regulate LDTs in the
future.
 
Pricing and Reimbursement of our Product Candidates
 
Significant uncertainty exists as to the coverage
and reimbursement status of any products we sell or may sell. Sales of our drug products will depend,
in part, on the extent to which
the costs of the products will be covered by third-party payors, including government health programs such as VA, Tricare,
Medicare and
Medicaid, commercial health insurers, and other managed care organizations.
 
In order to obtain coverage and reimbursement for
our drug product, we will conduct extensive pharmacoeconomic studies in order to demonstrate the
medical necessity and cost-effectiveness
of our product. Whether or not we conduct such studies, our products may not be considered medically necessary
or cost-effective. A third-party
payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved.
Further,
 one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage, and adequate
reimbursement, for the product. Third-party reimbursement may not be sufficient to enable us to maintain price levels high enough to realize
an appropriate
return on our investment in product development.
 
The containment of healthcare costs has become a priority
of federal, state and foreign governments, and the prices of drugs have been a focus in this
effort. Third-party payors are increasingly
challenging the prices charged for medical products, examining the medical necessity and reviewing the cost-
effectiveness of drug products
and questioning product safety and efficacy. If these third-party payors do not consider our product to be cost-effective
compared to
other available products, they may not cover our product or, if they do, the level of reimbursement may not be sufficient to allow us
to realize
a profit on the use of our product. The U.S. government, state legislatures and foreign governments have shown significant
interest in implementing cost-
containment programs to limit the growth of government-paid healthcare costs, including price controls and
restrictions on reimbursement. Adoption of
such controls and measures, and tightening of restrictive policies in jurisdictions with existing
controls and measures, could limit payments for our product
and could adversely affect our net revenue and results.
 
In August 2022, the Inflation Reduction Act (“IRA”)
was signed into law, which, among other things, requires manufacturers of certain drugs to
engage in price negotiations with Medicare
(beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases
that outpace inflation, and
replaces the Part D coverage gap discount program with a new discounting program. We will evaluate the impact of the IRA on
our business,
operations and financial condition and results as the full effect of the IRA on our business strategy and the pharmaceutical industry
remains
uncertain. In addition, changes to the Medicaid program or the federal 340B drug pricing program, which imposes ceilings on prices
 that drug
manufacturers can charge for medications sold to certain health care facilities, could have a material impact on our business
following commercialization.
We expect to see continued focus by Congress and the Trump Administration on regulating pricing, which could
result in legislative and regulatory changes
designed to control costs.
 
Pricing and reimbursement schemes vary widely from
 country to country. Some countries may require the completion of additional studies that
compare the cost-effectiveness of a particular
drug product to currently available drugs. The downward pressure on healthcare costs in general, particularly
prescription drugs, has
become intense. As a result, increasingly high barriers are being erected to the entry of new drug products. In addition, in some
countries,
cross-border imports from low-priced markets exert competitive pressure that may reduce pricing within a country. Any country that has
price
controls or reimbursement limitations for drug products may not allow favorable reimbursement and pricing arrangements for our product.
 
Coverage policies, third-party reimbursement rates
and pricing regulation may change at any time.
 
Other Healthcare Laws
 
Manufacturing, sales, promotion and other activities
following product approval are also subject to regulation by numerous regulatory authorities in the
U.S. in addition to the FDA, including
CMS, the HHS Office of Inspector General and HHS Office for Civil Rights, other divisions of the HHS, the
Department of Justice and state
regulatory bodies including Boards of Pharmacy and Price Transparency Boards.
 
Healthcare systems, physicians, pharmacists, and third-party
payors will play a primary role in the recommendation and prescription of any products
for which we obtain marketing approval. Our current
and future arrangements with third-party payors, healthcare systems, physicians and pharmacists may
expose us to broadly applicable fraud
and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and
relationships through
which we market, sell and distribute our drug product. In the U.S., these laws include, without limitation, state and federal anti-
kickback,
false claims, physician payment transparency, and patient data privacy and security laws and regulations, including but not limited to
those
described below.
 
 
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The U.S. federal Anti-Kickback Statute (“AKS”)
prohibits, among other things, any person or entity from knowingly and willfully offering, paying,
soliciting, receiving or providing
any remuneration, directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering or
arranging for
 or recommending the purchase, lease or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare,
Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted to include anything of
value. The AKS has been
interpreted to apply to arrangements between pharmaceutical and medical device manufacturers on the one hand and
prescribers, purchasers, formulary
managers and beneficiaries on the other hand. A person does not need to have actual knowledge of the
statute or specific intent to violate it in order to have
committed a violation of the AKS.
 
Moreover, a claim including items or services resulting
from a violation of the AKS constitutes a false or fraudulent claim for purposes of the federal
civil False Claims Act, which imposes
civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including
manufacturers) for,
among other things, knowingly presenting, or causing to be presented to federal programs (including Medicare and Medicaid) claims
for
items or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary
items or services.
This could apply even if we are not submitting claims directly to payors as would be the case with drug products.
 
In addition, under a federal law directed at “self-referral,”
commonly known as the “Stark Law,” there are prohibitions, with certain exceptions, on
referrals for certain designated health
services, including laboratory services, that are covered by the Medicare and Medicaid programs by physicians who
personally, or through
a family member, have an investment or ownership interest in, or a compensation arrangement with, an entity performing the tests.
The
prohibition also extends to payment for any testing referred in violation of the Stark Law. Bills submitted in violation of the Stark
Law may not be paid
by Medicare or Medicaid, and there may be significant penalties for violations. Many states have comparable laws that
are not limited to Medicare and
Medicaid referrals.
 
These regulations present compliance and litigation
risks for our business and others in our industry. We incur compliance-related expenses and expect
to incur additional expenses if and
 when our products are commercialized. We may be subject to penalties or limitations on government program
participation if we are found
to have violated these regulations.
 
The federal Health Insurance Portability and Accountability
Act of 1996 (“HIPAA”) created additional federal criminal statutes that prohibit, among
other actions, knowingly and willfully
executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses,
representations or promises,
any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-
party payors,
 knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a
healthcare offense and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious
or fraudulent
statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the AKS,
a person or entity does not need to
have actual knowledge of the statute or specific intent to violate it in order to have committed a
violation.
 
In addition, there has been a recent trend of increased
 federal and state regulation of payments made to physicians and certain other healthcare
providers, and their ownership and investment
 interests. The Affordable Care Act (the “ACA”), imposed, among other things, annual reporting
requirements through the Physician
Payments Sunshine Act for covered manufacturers for certain payments and “transfers of value” to these providers.
Failure
to submit timely, accurately and completely the required information for all payments, transfers of value and ownership or investment
interests may
result in civil monetary penalties.
 
We may also be subject to data privacy and security
regulation by both the federal government and the states in which we conduct our business.
HIPAA, as amended by the Health Information
 Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing
regulations, impose specified
requirements relating to the privacy, security and transmission of individually identifiable health information held by covered
entities
and their business associates. Among other things, HITECH made HIPAA’s security standards directly applicable to “business
associates,” defined
as independent contractors or agents of covered entities that create, receive, maintain or transmit protected
health information in connection with providing
a service for or on behalf of a covered entity, although it is unclear that we would be
considered a “business associate” in the normal course of our business.
HITECH also increased the civil and criminal penalties
that may be imposed against covered entities, business associates and possibly other persons, and
gave state attorneys general new authority
to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek
attorney’s fees and
costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in
certain circumstances, many of which differ from each other in significant ways and may not have the same requirements, thus complicating
compliance
efforts. See “European Data Collection” below for a discussion of data privacy and security enactments of the EU.
 
At the state level, the California Consumer Privacy
Act (the “CCPA”), as amended and expanded by the California Privacy Rights Act (the “CPRA”),
impose data protection
obligations on certain businesses. While we believe that certain limited exceptions under the CPRA for clinical trial data and other
health
data would apply to us, these regulations exemplify the vulnerability of our business to the evolving regulatory environment related to
personal data
and protected health information, which causes us to incur compliance costs. Privacy legislation similar to the CCPA has
been adopted in other U.S. states,
including Colorado, Connecticut, Kentucky, Maryland, Minnesota, Montana, New Jersey, New Hampshire,
Nevada, Oregon, Rhode Island, Tennessee,
Texas, Utah, and Virginia.
 
States and foreign jurisdictions also have fraud and
abuse laws and regulations, such as state anti-kickback and false claims laws, which may apply to
sales or marketing arrangements and
claims involving healthcare items or services. Some state laws also require pharmaceutical companies to comply with
the pharmaceutical
industry’s voluntary compliance guidelines and the relevant federal government compliance guidance, and require drug manufacturers
to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures
or drug pricing.
 
 
19
 

 
  
In order to sell products, we will need to comply
 with state laws, including those that require the registration of manufacturers and wholesale
distributors of drug and biological products.
Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish
marketing compliance programs,
file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other
activities,
 and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician
prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit certain other sales and
marketing practices.
If and when we commercialize our products, all of our activities are potentially subject to federal and state consumer
protection and unfair competition
laws.
 
The scope and enforcement of each of these laws is
uncertain and subject to rapid change in the current environment, especially in light of the lack of
applicable precedent 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, damages, fines, disgorgement, contractual damages, reputational
harm, diminished profits and future earnings, imprisonment, exclusion of drugs from government funded healthcare programs, such as Medicare
 and
Medicaid, and the curtailment or restructuring of our business strategy operations, as well as additional reporting obligations and
oversight if we become
subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these
laws, any of which could adversely affect
our ability to operate our business and our financial results. If any of the physicians or other
healthcare providers or entities with whom we expect to do
business is found to be not in compliance with applicable laws, they may be
subject to significant criminal, civil or administrative sanctions, including
exclusions from government funded healthcare programs. Ensuring
business arrangements comply with applicable healthcare laws, as well as responding to
possible investigations by government authorities,
can be time- and resource consuming and can divert a company’s attention from the business.
 
European Data Collection
 
We are subject to the General Data Protection Regulation
(the “GDPR”), and associated Data Protection Legislation, which govern the collection and
use of personal data as it pertains
to the EU/EEA/UK. This legislation imposes several requirements, including, but not limited to: determining the lawful
bases of the processing
of personal data, providing transparency information to the affected individuals, managing contractual
relationships with relevant
vendors and other third parties, notifying the appointment of a data protection officer to the relevant
EU/EEA/UK competent national data protection
authorities, and ensuring the security and confidentiality of personal data. The GDPR also
imposes strict rules on the transfer of personal data outside of the
EU/EEA/UK to the U.S. Failure to comply with the requirements of
the GDPR and the related national data protection laws of the EU/EEA Member States
and the UK may result in administrative penalties and
other enforcement actions. We have incurred, and expect to continue to incur, compliance expenses
in connection with the GDPR. If we are
found to be in violation of the GDPR, our product development timeline may be affected, which would potentially
affect our ability to
generate revenue and might impact our competitive position.
 
Current and Future Legislation
 
In the U.S. and other jurisdictions, continued healthcare
reform measures may result in more rigorous coverage criteria and additional downward
pressure on the price that we, or any collaborators,
 may receive. Individual states in the U.S. have also been increasingly passing legislation and
implementing regulations designed to control
 pharmaceutical and biological product pricing, including price or patient reimbursement constraints,
discounts, restrictions on certain
product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage
importation from other
countries and bulk purchasing. Regulations may also prevent or delay marketing approval of our product candidates, restrict or
regulate
post-approval activities and affect our ability to profitably sell any product candidates.
 
Other Regulatory Requirements
 
Our operations use small amounts of hazardous materials
in research and development and generate regulated medical waste in the normal course of
performing our CELsignia tests. This subjects
 us to a variety of federal, state and local environmental and safety laws and regulations. Some of the
regulations under the current regulatory
structure provide for strict liability, holding a party potentially liable without regard to fault or negligence. We
could be held liable
 for damages and fines as a result of our, or others’, business operations should contamination of the environment or individual
exposure to hazardous substances occur. We cannot predict how changes in laws or development of new regulations will affect our business
operations or
the cost of compliance.
 
Impact of Public Health Matters on our Business
 
As witnessed during the COVID-19 pandemic, future
outbreaks or variants of the virus or other public health disruptions may cause additional delays
in our clinical trial work or impact
our ability to access health care practitioners who might utilize our product.
 
Corporate History
 
We were organized as a Minnesota limited liability
company in 2011 and commenced operations in 2012. On September 15, 2017, we converted from
a Minnesota limited liability company
into a Delaware corporation and changed our name from Celcuity LLC to Celcuity Inc.
 
Employees and Labor Relations
 
As of December  31, 2024, we had 87 full-time
 employees, most of which were engaged in research and development activities, though hiring
employees in preparation for anticipated commercial
launch has begun. None of our employees are currently represented by a labor union or covered by a
collective bargaining agreement and
 we believe that our relations with our employees are good. During 2024, our voluntary turnover rate was
approximately 5%.
 
 
20
 

 
  
ITEM 1A. Risk Factors
 
Risk factors that could cause actual results to
differ from our expectations and that could negatively impact our financial condition and results of
operations are discussed below and
elsewhere in this Annual Report. Additional risks and uncertainties not presently known to us or that are currently not
believed
to be significant to our business may also affect our actual results and could harm our business, financial condition and results of operations. If
any of the risks or uncertainties described below or any additional risks and uncertainties actually occur, our business, results of operations
and financial
condition could be materially and adversely affected.
 
Risks Relating to Our Business
 
We have a limited operating history and we may never generate revenue
or profit.
 
We are a clinical-stage biotechnology company that
commenced activities in January 2012. We have a limited operating history, and our business plan
has not been tested. Since inception,
we have had no revenue and have incurred significant operating losses. We have financed our operations primarily
through equity and debt
offerings. To generate revenue and become and remain profitable, we need to successfully complete our existing clinical trials,
cultivate
partnerships with pharmaceutical companies, and develop and commercialize gedatolisib pursuant to our license agreement with Pfizer. We
must
also build operational and financial infrastructure to support commercial operations, train and manage employees, and market and
sell our anticipated drug
product.
 
We may never succeed in any of these activities and,
even if we do, we may never generate revenue that is sufficient to achieve profitability. We expect
to continue to incur significant expenses
and operating losses for the foreseeable future, and the net losses we incur may fluctuate significantly from quarter
to quarter. Our
failure to become and remain profitable would decrease our value and could impair our ability to raise capital, maintain or expand our
research and development efforts, expand our business, or continue our operations.
 
Our inability to raise additional capital on acceptable terms in
the future may limit our ability to develop and commercialize our drug candidate,
gedatolisib.
 
We will require additional capital to finance operating
expenses and capital expenditures over the next several years if we launch gedatolisib and
expand our infrastructure, commercial operations
and research and development activities. If we are not able to secure additional funding when needed, we
may have to delay, reduce the
scope of or eliminate one or more research and development programs or selling and marketing initiatives. In addition, we
may have to
 work with a partner on one or more of our products or market development programs, which could lower the economic value of those
programs
to our company.
 
Future financing activities could dilute the percentage ownership
 of our stockholders and could cause our stock price to fall or could result in
operating or other restrictions.
 
We may seek to raise additional capital through equity
offerings, debt financings, collaborations or licensing arrangements. Additional funding may not
be available to us on acceptable terms,
or at all. If we raise funds by issuing equity securities, it will result in dilution to current stockholders. Any equity
securities issued
may also provide for rights, preferences or privileges senior to those of holders of our existing securities. The incurrence of additional
indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also include restrictive
covenants,
such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire
or license intellectual property
rights, and other operating restrictions that could adversely affect our ability to conduct our business.
In the event that we enter into collaborations or
licensing arrangements to raise capital, we may be required to accept unfavorable terms.
 
We are dependent on our ability to attract and retain key personnel.
 
Our operations are materially dependent upon the services
of our officers and key employees, including Brian F. Sullivan, our Chief Executive Officer,
and Dr. Lance G. Laing, our Chief Science
Officer. Successful implementation of our business plan will also require the services of other consultants and
additional personnel.
We cannot assure you that we will be able to attract and retain such persons as employees, independent contractors, consultants or
otherwise.
If we are not able to attract individuals with the skills required for our business, or if we lose the services of either Mr. Sullivan
or Dr. Laing, we
may be unable to successfully implement our business plan.
 
Product liability claims may damage our reputation and, if insurance
proves inadequate, these claims may harm our business.
 
We may be exposed to the risk of product liability
claims that is inherent in the biopharmaceutical industry. A product liability claim may damage our
reputation by raising questions about
our product’s safety and efficacy and could limit our ability to sell one or more products by preventing or interfering
with commercialization
of our drug candidate. In addition, product liability insurance for the biopharmaceutical industry is generally expensive to the
extent
it is available at all. There can be no assurance that we will be able to obtain or maintain such insurance on acceptable terms for any
product we
bring to market. Further, our product liability insurance coverage may not provide coverage or may be insufficient to reimburse
us for any or all expenses
or losses we may suffer. A successful claim against us with respect to uninsured liabilities or in excess of
insurance coverage could have a material adverse
effect on our business, financial condition and results of operations.
 
We expect to expand our development and regulatory capabilities and
potentially implement sales, marketing and distribution capabilities, and as a
result, 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 drug
development, regulatory affairs and, if our
product candidate receives marketing approval, sales, marketing and distribution. To manage our anticipated
future growth, 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. Due to our limited financial and human resources, we may not be able to effectively manage the expansion of our
operations
or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our
management
and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt
our operations.
 
 
21
 

 
  
Risks Related to Our Product Strategy
 
Our near-term revenue prospects depend on the success of our initial
drug product, gedatolisib. If we are unable to successfully complete clinical
development of, obtain regulatory approval for or commercialize
gedatolisib, or if we experience delays in doing so, our business will be materially
harmed.
 
To date, we have not yet completed any registrational
clinical trials or the development of our initial drug candidate, gedatolisib. Our future success
and ability to generate revenue, which
we do not expect until 2026 or later, if ever, is dependent on our ability to successfully develop, obtain regulatory
approval for and
commercialize gedatolisib for one or more intended uses. We may not have the financial resources to continue development of, or to
modify
existing or enter into new collaborations for, our current or future product candidates if we experience any issues that delay or prevent
regulatory
approval of, or our ability to commercialize, gedatolisib, including:
 
●
our inability to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that gedatolisib is safe
and effective;
●
insufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;
●
negative or inconclusive results from our clinical trials or the clinical trials of others for drug products similar to ours, leading
to a decision or
requirement to conduct additional preclinical studies or clinical trials or abandon a program;
●
product-related adverse events experienced by subjects in our clinical trials or by individuals using drugs or therapeutic biologics
 similar to
gedatolisib;
●
delays in submitting applications, delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial,
 or a
suspension or termination of a clinical trial once commenced;
●
conditions imposed by the FDA or comparable foreign regulatory authorities regarding the scope or design of our clinical trials;
●
poor effectiveness of gedatolisib or companion therapeutics during clinical trials;
●
better than expected performance of control arms, such as placebo groups, which could lead to negative or inconclusive results from
our clinical
trials;
●
delays in enrolling subjects in clinical trials;
●
high drop-out rates of subjects from clinical trials;
●
inadequate supply or quality of drug products or other materials necessary for the conduct of our clinical trials;
●
greater than anticipated clinical trial or manufacturing costs;
●
unfavorable FDA or comparable regulatory authority inspection and review of a clinical trial site;
●
failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual
obligations in a
timely manner, or at all;
●
delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight
around clinical
testing generally or with respect to our therapies in particular; or
●
varying interpretations of data by the FDA and comparable foreign regulatory authorities.
 
We were not involved in the early development of gedatolisib; therefore,
we are dependent on third parties having accurately generated, collected,
interpreted and reported data from certain preclinical and clinical
trials of gedatolisib.
 
We had no involvement with or control over the initial
preclinical and clinical development of gedatolisib. We are dependent on third parties having
conducted their research and development
in accordance with the applicable protocols and legal, regulatory and scientific standards; having accurately
reported the results of
all preclinical studies and clinical trials conducted with respect to such drug product; and having correctly collected and interpreted
the data from these trials. If these activities were not compliant, accurate or correct, the clinical development, regulatory approval
or commercialization of
our drug product will be delayed and may be adversely affected.
 
We have not yet successfully completed any registrational clinical
trials, and we may be unable to do so for any drug candidates we may develop.
 
We will need to successfully complete registrational
 clinical trials in order to obtain the approval of the FDA or comparable foreign regulatory
authorities to market our drug product. Carrying
 out clinical trials, including later-stage registrational clinical trials, is a complicated process. As an
organization, we have not previously
completed any registrational clinical trials. In order to do so, we are building and expanding our clinical development
and regulatory
capabilities, and there is risk that we may be unable to recruit and train qualified personnel. We also expect to continue to rely on
third
parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties, meet expected
deadlines or comply with
regulatory requirements, we may not be able to obtain regulatory approval of or commercialize any product candidates.
Consequently, we may be unable to
successfully and efficiently execute and complete necessary clinical trials in a way that leads to submission
and approval of our drug product. We may
require more time and incur greater costs than our competitors and may not succeed in obtaining
regulatory approval of any drug products that we develop.
Failure to commence or complete, or delays in, our planned clinical trials,
could prevent us from or delay us in commercializing our drug products.
 
 
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The successful development of our products is highly uncertain.
 
Our business depends on the successful development
of biopharmaceuticals, which is highly uncertain and is dependent on numerous factors, many of
which are beyond our control. Product candidates
that appear promising in the early phases of development may fail to reach the market for several reasons
including, among other things,
that clinical trial results may show the product candidates to be less effective than expected or to have unacceptable side
effects or
toxicities; we may fail to receive the necessary regulatory approvals or there may be a delay in receiving such approvals; or the proprietary
rights
of others and their competing products and technologies may prevent our product candidates from being commercialized.
 
The length of time necessary to complete clinical
 trials and to submit an application for marketing approval for a final decision by a regulatory
authority varies significantly from one
drug product to the next and from one country to the next and may be difficult to predict. We will incur significant
research and development
expenses before knowing whether our products are commercially viable, and may abandon development of a specific trial, or a
product candidate,
at any time for a variety of reasons. If we expend resources on products that are ultimately not commercially viable, our timing for
becoming
profitable and our ability to invest in other products in our pipeline would be adversely affected.
 
In addition, if gedatolisib
receives marketing approval for the intended uses that we are pursuing, we will continue to be subject to significant post-
approval regulatory
obligations. Compliance with these requirements is costly, and any failure to comply or other issues with our drug products post-
approval
 could adversely affect our business, financial condition and results of operations. In addition, there is always the risk that we, a regulatory
authority or a third party might identify previously unknown problems with a product post-approval, such as adverse events of unanticipated
severity or
frequency.
 
If we encounter difficulties enrolling patients in any of our clinical
trials, our clinical development activities could be delayed or otherwise adversely
affected.
 
The timely completion of clinical trials in accordance
with their protocols depends, among other things, on our ability to enroll a sufficient number of
patients who remain in the trial until
its conclusion. We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons,
including:
 
●
the patient eligibility and exclusion criteria defined in the protocol;
●
the size of the patient population required for analysis of the clinical trial’s primary endpoints;
●
the proximity of patients to clinical trial sites;
●
the design of the clinical trial;
●
our ability to recruit clinical trial investigators with the appropriate competencies and experience, and the ability of these investigators
to identify
and enroll suitable patients;
●
perception of the safety profile of our drug products;
●
our ability to obtain and maintain patient consents; and
●
the risk that patients enrolled in clinical trials will drop out of the trials before completion.
 
Delays in patient enrollment may result in increased
costs or may affect the timing or outcome of our clinical trials, which could prevent completion of
these trials and adversely affect
our ability to advance the development of our product candidates.
 
Interim, topline and preliminary data from our clinical studies that
we announce or publish from time to time may change as more data becomes
available and are subject to audit and verification procedures
that could result in material changes in the final data.
 
From time to time, we may publicly disclose preliminary
or topline data from our clinical studies, which is 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. We also
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 topline results that we report may differ from future results of the same studies,
or
different conclusions or considerations may qualify such results once additional data have been received and fully evaluated. Topline
data also remain
subject to audit and verification procedures that may result in the final data being materially different from the preliminary
data we previously published.
As a result, topline data should be viewed with caution until the final data are available. From time to
time, we may also disclose interim data from our
clinical studies. Interim data from clinical studies that we may complete are subject
to the risk that one or more of the clinical outcomes may materially
change as more patient data becomes available. Adverse differences
 between preliminary or interim data and final data could significantly harm our
reputation and marketing efforts.
 
Further, others, including healthcare providers or
 payors, 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 our company in general. In addition, the information we choose to publicly disclose
regarding a particular
study is based on what is typically extensive information, and you or others may not agree with what we determine is the material or
otherwise
appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant
with respect to future decisions, conclusions, views, activities or otherwise regarding our business. If the topline or interim data that
we report differ from
actual results, or if others, including healthcare providers or payors, disagree with the conclusions reached, our
 ability to commercialize our product
candidate may be harmed, which could harm our business, operating results, prospects or financial
condition.
 
 
23
 

 
  
Clinical development involves a lengthy and expensive process, with
an uncertain outcome. We may incur additional costs or experience delays in
completing, or ultimately be unable to complete, the development
and commercialization of our product candidates.
 
To obtain the requisite regulatory approvals to commercialize
 any drug products, we must demonstrate through extensive preclinical studies and
clinical trials that such drug product is safe and effective
in humans. Clinical testing is expensive and can take many years to complete, and its outcome is
inherently uncertain. We may be unable
to establish clinical endpoints that applicable regulatory authorities would consider clinically meaningful, and a
clinical trial can
fail at any stage of testing.
 
Differences in trial design between early-stage clinical
trials and later-stage clinical trials, which involve a greater number of patients and take years to
complete, make it difficult to extrapolate
the results of earlier clinical trials to later clinical trials. Moreover, clinical data are often susceptible to varying
interpretations
and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless
failed to obtain marketing approval of their products. Additionally, we are conducting and plan to conduct some open-label clinical trials,
where both the
patient and investigator know whether the patient is receiving the investigational product candidate or either an existing
approved drug or placebo. Most
typically, open-label clinical trials test only the investigational product candidate and sometimes may
do so at different dose levels. Open-label clinical
trials are subject to various limitations that may exaggerate any therapeutic effect
as patients in those trials are aware when they are receiving treatment.
Open-label clinical trials may be subject to a “patient
bias” where patients perceive their symptoms to have improved merely due to their awareness of
receiving an experimental treatment.
In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the
outcomes
of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more
favorably
given this knowledge. Where a randomized, placebo-controlled clinical trial is designed to allow enrolled subjects to cross-over
to the treatment arm, there
may be a risk of inadvertent unblinding of subjects prior to cross-over, which may limit the clinical meaningfulness
of those data and may require the
conduct of additional clinical trials. As such, the results from an open-label clinical trial may not
be predictive of future clinical trial results with any of our
product candidates for which we include an open-label clinical trial when
studied in a controlled environment with a placebo or active control.
 
Successful completion of clinical trials is a prerequisite
to submitting a new drug application, or NDA, to the FDA and similar marketing applications
to comparable foreign regulatory authorities
 for each drug product and, consequently, the ultimate approval and commercial marketing of any drug
products. We may experience delays
in initiating or completing clinical trials, including if it takes longer than expected to activate the targeted number of
clinical sites,
if the enrollment of patients is slower than anticipated or negatively affected by staffing shortages at clinical sites, or by other unanticipated
factors, or if the FDA or other regulatory authorities require us to pause one or more of our clinical trials due to unexpected safety
issues. We also may
experience numerous unforeseen events during, or as a result of, any future clinical trials that we could conduct
that could delay or prevent our ability to
receive marketing approval or commercialize our current product candidates or any future product
candidates.
 
Our costs will increase if we experience delays in
clinical testing or marketing approvals. We do not know whether our clinical trials will begin or
continue as planned, will need to be
reassigned or will be completed on schedule, or at all. Significant clinical trial delays also could shorten any periods
during which
we may have the exclusive right to commercialize our product candidates and may allow our competitors to bring products to market before
we do, potentially impairing our ability to successfully commercialize our product candidates and harming our business and results of
operations. Any
delays in our clinical development programs may harm our business, financial condition and results of operations significantly.
 
We face significant competition, and our operating results will suffer
if we fail to compete effectively.
 
Our industry is characterized by intense competition
and rapid innovation. Our competitors may be able to develop other compounds or drugs that are
able to achieve similar or better results
than our lead product candidate, gedatolisib. Our potential competitors include major multinational pharmaceutical
companies, established
 biotechnology companies, specialty pharmaceutical and diagnostic companies, and universities and other research institutions.
Many of
our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and
experienced
marketing and manufacturing organizations and well-established sales forces.
 
Smaller or early-stage companies may also prove to
 be significant competitors, particularly as they develop novel approaches to treating disease
indications that gedatolisib is also focused
 on treating. Established pharmaceutical companies may also invest heavily to accelerate discovery and
development of novel therapeutics
 or to in-license novel therapeutics that could make the product candidates that we develop obsolete. Mergers and
acquisitions in the biotechnology
and pharmaceutical industries may result in even more resources being concentrated in our competitors.
 
Competition may increase further as a result of advances
 in the commercial applicability of technologies and greater availability of capital for
investment in these industries. Our competitors,
 either alone or with collaboration partners, may succeed in developing, acquiring or licensing on an
exclusive basis products that are
more effective, safer, more easily commercialized or less costly than our product candidates or may develop proprietary
technologies or
secure patent protection that we may need for the development of our technologies and products. We believe the key competitive factors
that will affect the development and commercial success of our product candidates are efficacy, safety, tolerability, reliability, convenience
of use, price,
and reimbursement.
 
Even if we obtain regulatory approval of drug products,
the availability and price of our competitors’ products could limit the demand and the price we
are able to charge for our product
candidates. We may not be able to implement our business plan if the acceptance of our product candidates is inhibited by
price competition
or the reluctance of physicians to switch from existing methods of treatment to our product candidates, or if physicians switch to other
new drug or biologic products or choose to reserve our product candidates for use in limited circumstances.
 
 
24
 

 
  
If our information technology systems or data, or those of third
parties upon which we rely, are or were compromised, we could face clinical trial
delays; regulatory investigations or actions; litigation;
 fines and penalties; disruptions of our business operations; reputational harm; and other
adverse consequences.
 
Cyberattacks, malicious internet-based activity, online
 and offline fraud, and other similar activities threaten the confidentiality, integrity, and
availability of our sensitive information
 and information technology systems, and those of the third parties upon which we rely. We rely on contract
research organizations, contract
manufacturing organizations, distributors, supply chain resources, and other third-party service providers and technologies
to operate
critical business systems to process sensitive information in a variety of contexts, including, without limitation, on-site systems and
cloud-based
data centers, systems handling human resources, financial reporting and controls, customer relationship management, regulatory
compliance, and other
infrastructure operations. We also communicate sensitive data, including patient data, electronically, and through
relationships with multiple third-party
vendors and their subcontractors. These applications and data encompass a wide variety of sensitive
information, including research and development
information, patient data, commercial information, and business and financial information.
Our ability to monitor these third parties’ security practices is
limited, and these third parties may not have adequate security
measures in place. If we or any of our third-party service providers experience a security
incident or other interruption, we could experience
adverse consequences. We cannot guarantee that third parties and infrastructure in our supply chain or
our third-party partners’
supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or
disruption
to our information technology systems or the third-party information technology systems that support us and our services.
 
Cybersecurity threats are becoming increasingly difficult
to detect, and come from a variety of sources, including without limitation, nation-state actors
and activists that create disruption
for geopolitical reasons and in conjunction with military conflicts and defense activities. This risk is heightened during
times of war
and other major conflicts, including the war between Russia and Ukraine, the conflict between Israel and Hamas and the risk of a larger
regional conflict. In addition, we and the third parties upon which we rely face an evolving cybersecurity threat landscape, which includes
 social-
engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks),
malicious code (such
as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service
attacks, credential stuffing, credential
harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software
bugs, server malfunctions, attacks enhanced or facilitated by
artificial intelligence (“AI”), software or hardware failures,
 loss of data or other information technology assets, adware, telecommunications failures,
natural disasters, terrorism, and other similar
threats.
 
The majority of our employees and contractors work
 remotely. Remote work involves risks to our information technology systems and data, as
individuals utilize network connections, computers
and devices outside our premises or network, including working at home, while in transit and in public
locations.
 
Ransomware attacks also continue to increase in prevalence
and severity and can lead to significant interruptions in our operations, ability to provide
our services, loss of data and income, reputational
harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware
attack, but we may be unwilling or
unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
 
While we take steps designed to identify, prevent,
assess and mitigate vulnerabilities in our information systems and to mitigate related third-party
risks, there can be no assurance that
we will be able to detect and remediate all such vulnerabilities, including on a timely basis. The threats and techniques
used to exploit
vulnerabilities change frequently and are often sophisticated in nature. Therefore, we (or third parties on whom we rely) may be unable
to
detect a vulnerability until after a security incident has occurred. Further, we or third parties on which we rely may face downtime
as a result of adopting
new information technology systems that are designed to enhance compliance or reduce vulnerabilities.
 
A security incident or other interruption could result
in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration,
encryption, disclosure of, or access
to our sensitive information or our information technology systems, or those of the third parties upon whom we rely.
This could disrupt
our clinical trials, damage our reputation, and negatively affect our ability to conduct our business in the ordinary course, including
our
ability to collect, process, and prepare company financial information, provide information and educational materials through our
website, and manage the
administrative aspects of our business.
 
We may expend significant resources or modify our
business activities (including our clinical trial activities) to try to protect against security incidents.
Additionally, certain data
 privacy and security obligations may require us to implement and maintain certain measures to protect our information
technology systems
 and sensitive information and to notify relevant stakeholders, including affected individuals, regulatory authorities and our
stockholders,
 of certain security incidents. The disclosure decisions are complex, may take time to determine, and may be subject to change as an
investigation
progresses. Providing disclosure may be costly, and the failure to comply with such requirements could also lead to adverse consequences.
If
we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we
may face government
enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting
requirements and/or oversight; restrictions
on processing sensitive information (including personal information); litigation (including
class claims) and mass arbitration; indemnification obligations;
negative publicity; reputational harm; monetary fund diversions; interruptions
in our operations (including availability of data); financial loss; and other
similar harms. Accordingly, security incidents and attendant
consequences may damage our financial position and negatively impact our ability to grow and
operate our business.
 
 
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Further, if the information technology systems of
the third parties upon which we rely become subject to security incidents, 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 this nature from occurring. There can be no assurance that limitations of liability in our third-party contracts are
sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure
that our insurance
coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our data privacy
and security practices. Additionally, we
cannot be sure that such coverage will continue to be available on commercially reasonable terms
or at all, or that such coverage will pay future claims.
 
In addition to experiencing a security incident, third
parties may gather, collect, or infer sensitive information about us from public sources, data
brokers, or other means that reveals competitively
sensitive details about our organization and could be used to undermine our competitive advantage or
market position. Additionally, our
 sensitive information could be leaked, disclosed, or revealed as a result of or in connection with our employees’,
personnel’s,
or vendors’ use of generative AI technologies.
 
Public health matters may materially and
adversely impact our business, including ongoing clinical trials.
 
The outbreak of COVID-19
and government measures taken in response demonstrated that public health matters have a significant impact on the
global economy, with
healthcare systems particularly affected. Future outbreaks or variants of COVID-19, or the emergence of other pandemics or public
health
disruptions, could materially and adversely impact our clinical trials, business, financial condition and results of operations. Potential
disruptions
include but are not limited to:
 
●
delays or difficulties in enrolling patients in clinical trials and obtaining the results of completed clinical trials;
●
increased rates of patients withdrawing from clinical trials following enrollment as a result of quarantine or public health concerns;
●
diversion of healthcare resources away from the conduct of clinical trials;
●
delays in prospective clinical trial collaborations with pharmaceutical companies and sponsors;
●
interruption or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines;
●
limitations on our ability to recruit and hire key personnel due to our inability to meet with candidates because of travel restrictions;
and
●
limitations on employee resources that would otherwise be focused on the conduct of clinical trials and research as a result of focus
on health
matters and loss of productivity from remote work. 
 
Artificial intelligence presents risks and challenges that can impact
our business including by posing security risks to our confidential information,
proprietary information and personal data.
 
Issues in the use of artificial intelligence, combined
 with an uncertain regulatory environment, may result in reputational harm, liability or other
adverse consequences to our business operations.
As with many technological innovations, artificial intelligence presents risks and challenges that could
impact our business. Our vendors
may incorporate generative artificial intelligence tools into their offerings without disclosing this use to us, and the
providers of
these generative artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect
to privacy
and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience.
If any of our vendors experiences
an actual or perceived breach or privacy or security incident because of the use of generative artificial
intelligence, we may lose valuable intellectual
property and confidential information and our reputation and the public perception of
the effectiveness of our security measures could be harmed. Further,
bad actors around the world use increasingly sophisticated methods,
including the use of artificial intelligence, to engage in illegal activities involving the
theft and misuse of personal information,
confidential information and intellectual property. Any of these outcomes could damage our reputation, result in
the loss of valuable
property and information, and adversely impact our business.
 
Risks Related to Product Development and Product Regulation
 
If we are unable to obtain approval from the FDA or comparable foreign
regulatory authorities to market our products for their intended use, we will
not be able to generate revenue. For a new drug to be approved
for marketing, the FDA and other regulatory authorities must determine that the drug
is safe and effective. Because all drugs can have
adverse effects, the data from our Phase 3 clinical study must demonstrate to the satisfaction of the
FDA and other health authorities
that the benefits of gedatolisib in combination with palbociclib and fulvestrant, gedatolisib in combination with
fulvestrant, or gedatolisib
in combination with fulvestrant plus a CDK4/6 inhibitor, outweigh its risks. Failure to demonstrate sufficient magnitude of
benefit, even
if the benefit is found to be statistically significant, may not support regulatory approval.
 
The marketability of our products, particularly gedatolisib,
depends on securing approval from the FDA and equivalent foreign regulatory bodies. This
requires rigorous pre-clinical and clinical studies,
including Phase 3 clinical trials for each intended use, that the benefits of the therapy outweigh its risks.
Failure to demonstrate sufficient
magnitude of benefit, even if the benefit is found to be statistically significant, may not support regulatory approval.
Satisfaction
of the FDA’s regulatory requirements typically takes many years and requires substantial resources for research, development and
testing.
 
If
a drug meets its primary efficacy endpoint objective in a Phase 3 clinical trial, and the drug sponsor has additional nonclinical
and clinical data
required by the FDA or other regulatory authorities, the drug sponsor may submit an NDA seeking marketing
approval. Upon submission of an NDA, these
health authorities perform a benefit-risk assessment that considers the strength and
quality of evidence available and takes remaining uncertainties into
account. These considerations include an assessment of the
strengths and limitations of clinical trials, including design, and potential implications for
assessing drug efficacy, the
magnitude of benefit and interpretation of clinical importance, the benefit attributed to the drug when studied in combination
with
other therapies, and the clinical relevance of the study endpoints. We are currently conducting a Phase 3 clinical trial,
VIKTORIA-1, evaluating
gedatolisib in combination with fulvestrant with or without palbociclib, in patients with HR+/HER2-
advanced breast cancer after progression on CDK4/6
therapy, conducting a Phase 3
clinical trial, VIKTORIA-2, evaluating gedatolisib in combination with a CDK4/6 inhibitor and fulvestrant as first-line
treatment
for patients with endocrine treatment resistant HR+/HER2- advanced breast cancer, and
conducting a Phase 1b/2 clinical trial, CELC-G-201,
evaluating gedatolisib in combination with darolutamide in patients with
metastatic castration resistant prostate cancer.
 
 
26
 

 
  
We have sought
feedback from the FDA and other regulatory authorities on the design of gedatolisib clinical trials, with the goal of addressing these
considerations in the clinical trials’ design. However, due to the complexity of clinical trials, the uncertainty of outcomes, and
the uncertainty of how the
FDA and other regulatory authorities may balance benefits and risks in their review of an NDA, it may not be
practical or possible to address all benefit-
risk assessment considerations in a clinical trial so that sufficient evidence is generated
to support a marketing approval, even if the primary endpoint
objective is achieved in the Phase 3 stage of the trial. The FDA or other
regulatory authorities may require us to redesign or conduct additional unplanned
clinical trials before granting any approval and we
 may not get approval at all. Regulatory approval may also be delayed by changes in government
regulation, future legislation or
administrative action or changes in FDA policy that occur prior to or during our regulatory review. We cannot predict
whether our research
and clinical approaches will result in a drug that the FDA considers safe for humans and effective for indicated uses. In light of these
uncertainties, the results from clinical trials that we conduct may not support approval of gedatolisib.
 
If regulatory
approvals are delayed or not obtained, especially with respect to gedatolisib, it will negatively impact our ability to commercialize
our
products and generate revenue and may diminish any competitive advantages that we may otherwise enjoy.
If we are required to conduct additional clinical
trials or other testing of gedatolisib beyond those that we currently contemplate, if
we are unable to successfully complete clinical trials or other testing of
gedatolisib, or if the results of these trials or tests are
not positive or are only modestly positive or if there are safety concerns, we may:
 
●
be delayed in obtaining marketing approval or not obtain marketing approval at all;
●
obtain approval for indications or patient populations that are not as broad as intended or desired;
●
obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings;
●
be subject to changes in the way our products are administered;
●
be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements;
●
have regulatory authorities withdraw, or suspend, their approval of the product or impose restrictions on its distribution in the
form of the FDA’s
Risk Evaluation and Mitigation Strategies program (“REMS”) or through modification to an existing
REMS;
●
be sued; or
●
experience damage to our reputation.
 
Additionally, if the size of the FDA group dedicated
to reviewing oncology-related submissions is reduced, further delays of any regulatory submission
by Celcuity may be encountered.
 
Breakthrough Therapy Designation or Fast Track Designation from the
FDA may not actually lead to a faster development or regulatory review or
approval process.
 
If a drug is intended for the treatment of a serious
or life-threatening condition and the product demonstrates the potential to address unmet medical
needs for this condition, the product
sponsor may apply for Fast Track Designation. The designation offers the opportunity for frequent interactions with
the FDA to discuss
the drug’s development plan and to ensure collection of appropriate data needed to support drug approval, as well as eligibility
for
submission of a New Drug Application.
 
In addition, a drug may receive Breakthrough Therapy
Designation if it is intended, alone or in combination with one or more other products, to treat a
serious or life-threatening disease
or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over
existing therapies
on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The benefits
of Breakthrough Therapy Designation include more intensive guidance from the FDA on an efficient development program, access to a scientific
liaison to
help accelerate review time, and potential eligibility for priority review if relevant criteria are met. This designation can
expedite the development and
regulatory review of an investigational medicine that is intended to treat a serious or life-threatening
condition.
 
Both Fast Track and Breakthrough Therapy Designations
are within the discretion of the FDA. While the FDA has granted both designations to our
lead drug candidate, gedatolisib, such designations
may not result in a faster development process, review or approval compared to products considered for
approval under conventional FDA
procedures, and neither designation assures ultimate approval by the FDA. In addition, the FDA may later decide that
the product no longer
meets the qualification conditions and may rescind either or both such designations.
 
Obtaining and maintaining regulatory approval of our product candidates
in one jurisdiction does not mean that we will be successful in obtaining
regulatory approval of our product candidates in other jurisdictions.
 
Obtaining and maintaining regulatory approval of our
product candidates in one jurisdiction does not guarantee that we will be able to obtain or
maintain regulatory approval in any other
jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative
effect on the regulatory
approval process in others. For example, even if the FDA grants marketing approval of a product candidate, a comparable foreign
regulatory
authority must also approve the manufacturing, marketing and promotion of the product candidate in those countries.
 
Approval procedures vary among jurisdictions and can
involve requirements and administrative review periods different from, and greater than, those
in the U.S., including additional preclinical
studies or clinical trials, as clinical trials conducted in one jurisdiction may not be accepted by regulatory
authorities in other jurisdictions.
In many jurisdictions outside the U.S., a product candidate must be approved for reimbursement before it can be approved
for sale in that
jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval.
 
 
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Obtaining foreign regulatory approvals and compliance
with foreign regulatory requirements could result in significant delays, difficulties and costs for
us and could delay or prevent the
introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international
markets and/or
receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our
product
candidates will be harmed.
 
Even if we receive initial regulatory approvals, we will be subject
to ongoing regulatory obligations and continued regulatory review, which may result
in significant additional expense, and we may be subject
to penalties if we fail to comply with regulatory requirements or experience unanticipated
problems with our product candidates.
 
If any of our product candidates are approved, they
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-marketing
information, including both
federal and state requirements in the U.S. and requirements of comparable foreign regulatory authorities. In addition, we will
be subject
to continued compliance with requirements for any clinical trials that we conduct post-approval.
 
Manufacturers and manufacturers’ facilities
are required to comply with extensive FDA and comparable foreign regulatory authority requirements.
Accordingly, we and others with whom
 we work must continue to expend time, money and effort in all areas of regulatory compliance, including
manufacturing, production and
quality control.
 
Any regulatory approvals that we receive for our product
candidates may be subject to limitations on the approved indicated uses for which the product
may be marketed or to the conditions of
approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and
surveillance to
monitor the safety and efficacy of the product candidate. Certain endpoint data we hope to include in any approved product labeling also
may not make it into such labeling, including exploratory or secondary endpoint data such as patient-reported outcome measures. The FDA
may impose
consent decrees or withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems
occur after the product
reaches the market. Later discovery of previously unknown problems with our product candidates, including adverse
events of unanticipated severity or
frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply
with regulatory requirements, may result in revisions to
the approved labeling to add new safety information, imposition of post-marketing
studies or clinical trials to assess new safety risks or imposition of
distribution restrictions or other restrictions under a REMS program.
Other potential consequences include, among other things:
 
●
restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market or voluntary or mandatory
product
recalls;
●
fines, warning letters or holds on clinical trials;
●
refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation
of license
approvals;
●
product seizure or detention or refusal to permit the import or export of our product candidates; and
●
injunctions or the imposition of civil or criminal penalties.
 
The FDA strictly regulates marketing, labeling, advertising
and promotion of products that are placed on the market. Products may be promoted only
for the approved indications and in accordance
 with the provisions of the approved label. If we are slow or unable to adapt to changes in existing
requirements or adopt 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.
 
Our focus on the clinical development of gedatolisib has led us to
minimize the Company’s activities to support development of CELsignia, which will
significantly delay, or potentially forestall,
 further advancement of clinical development of CELsignia tests or finding appropriate pharmaceutical
company partners.
 
The success of our CELsignia tests depends on our
 ability to attract pharmaceutical company partnerships that provide revenue from the sale of
CELsignia tests during clinical trials, from
milestone payments during clinical trials, from sales of our CELsignia tests as companion diagnostics or stand-
alone tests thereafter,
and, potentially, from royalties on the incremental drug revenues our tests enable. Our ability to obtain such partnerships and generate
such revenue depends in part on the ability of our first CELsignia tests to demonstrate the potential incremental opportunity available
for pharmaceutical
companies, as well as our ability to establish strategic partnerships or other arrangements with suitable pharmaceutical
companies. Since these activities are
no longer a priority for the Company, further advancement of the clinical development of the CELsignia
 platform will be substantially delayed or
forestalled.
 
Risks Related to Intellectual Property
 
We depend on intellectual property licensed from third parties, including
from Pfizer for our lead product candidate, and termination of this license
could result in the loss of significant rights, which would
harm our business.
 
We are dependent on patents, know-how and proprietary
technology, both our own and licensed from others. All patents covering gedatolisib and any
combination therapies using our product candidates
 are licensed from third parties. Any termination of a product license could result in the loss of
significant rights and would cause material
adverse harm to our ability to commercialize our product candidates.
 
 
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Disputes may also arise between us and our licensors
regarding intellectual property subject to a license agreement, including:
 
●
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 licensing
agreement;
●
our right to sublicense patent and other rights to third parties under collaborative development relationships;
●
our diligence obligations with respect to the use of licensed technology in relation to our development and commercialization of our
product
candidates and what activities satisfy those diligence obligations; and
●
the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us
 and our
partners.
 
If disputes over intellectual property that we have
licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable
terms, 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 own, as we are for intellectual property
that we license. If we or our licensors
fail to adequately protect this intellectual property, our ability to commercialize products could materially suffer.
 
If we fail to comply with our obligations under our patent license
with Pfizer, we could lose license rights that are important to our business.
 
We are a party to a license agreement with Pfizer
pursuant to which we in-license key patents for gedatolisib. This license imposes various diligence,
milestone payment, royalty, insurance
and other obligations on us. If we fail to comply with these obligations, Pfizer may have the right to terminate the
license, in which
event we would not be able to develop or market the products covered by such licensed intellectual property. Further, we cannot be certain
that the activities by these licensors were conducted in compliance with applicable laws and regulations or will result in additional
valid and enforceable
patents and other intellectual property rights.
 
We may not be successful in obtaining or maintaining necessary rights
to develop any future product candidates on acceptable terms.
 
Our clinical trials and other programs currently,
and may in the future, involve additional product candidates that require the use of, or reliance on,
proprietary rights held by third
parties. Accordingly, the growth of our business depends in part on our ability to acquire, in-license or use these proprietary
rights.
We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights
from third
parties that we identify as necessary or important to our business operations. We may fail to obtain any of these licenses
 at a reasonable cost or on
reasonable terms, if at all, which could harm our business. We may need to cease use of the compositions or
 methods covered by such third-party
intellectual property rights, and may need to seek to develop alternative approaches that do not infringe
on such intellectual property rights which may
entail additional costs and development delays, even if we were able to develop such alternatives,
which may not be feasible. Even if we are able to obtain
a license, it may be non-exclusive, thereby giving our competitors access to
the same technologies licensed to us. In that event, we may be required to
expend significant time and resources to develop or license
replacement technology.
 
The licensing and acquisition of third-party intellectual
property rights is a competitive area, 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 size, cash
resources and 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.
 
If we are not able to prevent disclosure of our trade secrets and
 other proprietary information, the value of our products could be significantly
diminished.
 
We rely on trade secret protection to protect our
interests in proprietary know-how and in processes for which patents are difficult to obtain or enforce.
We may not be able to protect
our trade secrets adequately. We have a policy of requiring our consultants, advisors and strategic partners to enter into
confidentiality
agreements and our employees to enter into invention, non-disclosure and non-compete agreements. However, no assurance can be given
that
we have entered into appropriate agreements with all parties that have had access to our trade secrets, know-how or other proprietary
information.
There is also no assurance that such agreements will provide meaningful protection of our trade secrets, know-how or other
proprietary information in the
event of any unauthorized use or disclosure of information. Furthermore, we cannot provide assurance that
any of our employees, consultants, contract
personnel, or strategic partners, either accidentally or through willful misconduct, will
not cause serious damage to our programs and/or our strategy, for
example by disclosing important trade secrets, know-how or proprietary
information to our competitors. It is also possible that our trade secrets, know-how
or other proprietary information could be obtained
by third parties as a result of breaches of our physical or electronic security systems. Any disclosure of
confidential data into the
public domain or to third parties could allow our competitors to learn our trade secrets and use the information in competition
against
us. In addition, others may independently discover our trade secrets and proprietary information. Any action to enforce our rights is
likely to be
time consuming and expensive, and may ultimately be unsuccessful, or may result in a remedy that is not commercially valuable.
 These risks are
accentuated in foreign countries where laws or law enforcement practices may not protect proprietary rights as fully as
 in the United States. Any
unauthorized disclosure of our trade secrets or proprietary information could harm our competitive position.
 
 
29
 

 
  
We may be subject to claims by employees claiming ownership of what
we regard as our own intellectual property.
 
While it is our policy to require our employees and
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. Our and their assignment agreements may not be self-executing or may be breached, and we may be forced to bring
claims against
third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.
If we
fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property
rights or personnel.
Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial
costs and be a distraction to management.
 
If we are unable to obtain and maintain intellectual property protection
 for our product candidates, or if the scope of the intellectual property
protection obtained is not sufficiently broad, our competitors
could develop and commercialize product candidates similar or identical to ours, and our
ability to successfully commercialize our product
candidates may be impaired.
 
We have applied for patents that protect our product
candidates, and our patent portfolio currently includes, for CELsignia, six issued U.S. patents and
30 issued international patents, and,
 for our drug candidate gedatolisib, 12 granted patents in the U.S. and more than 290 patents granted in foreign
jurisdictions including
Australia, Canada, China, France, Germany, Spain, United Kingdom and Japan. We cannot ensure that our intellectual property
position will
not be challenged or that all patents for which we have applied will be granted. We cannot know with certainty whether we were the first
to
make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for
patent protection of such
inventions.
 
The patent prosecution
process is expensive and time-consuming, and we may not be able to file, prosecute, maintain, enforce or license all necessary
or desirable
patent applications at a reasonable cost or in a timely manner, or in all jurisdictions. We may choose not to seek patent protection for
certain
innovations and may choose not to pursue patent protection in certain jurisdictions, and under the laws of certain jurisdictions,
patents or other intellectual
property rights may be unavailable or limited in scope. Additionally, the laws and regulations governing
patents could change in unpredictable ways that
would weaken our ability to obtain new patents or to enforce our existing patents and
patents that we might obtain in the future. There also may be patent
reforms in foreign jurisdictions that could increase the uncertainties
and costs surrounding the prosecution of our patent applications and the enforcement or
defense of our issued patents in those jurisdictions.
It is also possible that we will fail to identify patentable aspects of our discovery and nonclinical
development output before it is
too late to obtain patent protection.
 
As a result of these factors, the issuance, scope,
validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending
and future patent applications may
not result in patents being issued that protect our product candidates, in whole or in part, or which effectively prevent
others from
commercializing competitive product candidates. Moreover, given the amount of time required for the development, testing and regulatory
review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
As a result,
our owned patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar
or identical to ours.
 
Third parties may initiate legal proceedings alleging that we are
infringing their intellectual property rights, the outcome of which would be uncertain
and could have a material adverse effect on the
success of our business.
 
The commercial success of our products depends upon
our ability to use proprietary technologies without infringing the proprietary rights of third
parties. There is considerable intellectual
property litigation in the medical technology, biotechnology and pharmaceutical industries. We may become party
to, or threatened with,
future adversarial proceedings or litigation regarding intellectual property rights with respect to our products. Additionally, because
current and future employees may have been previously employed at universities or other biotechnology, diagnostic technology or pharmaceutical
companies, including our competitors or potential competitors and strategic partners, third parties may assert infringement claims against
us based on
existing patents or patents that may be granted in the future, or they may allege that our employees or we have used or disclosed
intellectual property,
including trade secrets or other proprietary information, of any such employee’s former employer. Litigation
may be necessary to defend against these
claims.
 
Patent litigation could result in loss of exclusivity
or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in
whole or in part, which could limit our
ability to stop others from using or commercializing similar or identical technology and product candidates, or limit
the duration of
the patent protection of our technology and potential diagnostic tests. If we are found to infringe a third party’s intellectual
property rights,
we could be required to obtain additional licenses from such third party to continue developing and marketing our applicable
products. However, we may
not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able
to obtain a license, it could be non-exclusive,
thereby giving our competitors access to the same technologies licensed to us. We could
be forced, including by court order, to cease commercializing the
infringing technology or product.
 
In addition, we could be found liable for monetary
damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a
patent. A finding of infringement
could prevent us from commercializing our products or force us to cease some of our business operations, which could
materially harm our
 business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar
negative
impact on our business.
 
Any lawsuits relating to infringement of intellectual property rights
 necessary to defend ourselves or enforce our rights will be costly and time
consuming and could be unsuccessful.
 
Because competition in our industry is intense, competitors
may infringe or otherwise violate our issued patents, patents of our licensors or other
intellectual property. To counter infringement
or unauthorized use, we may be required to file infringement claims, which can be expensive and time
consuming, and could distract our
 technical and management personnel from their normal responsibilities. Any claims we assert against perceived
infringers could provoke
 these parties to assert counterclaims against us alleging that we infringe their patents. In addition, in a patent infringement
proceeding,
a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly
or refuse to stop
the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.
An adverse result in any
litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly.
We may also elect to enter into license
agreements in order to settle patent infringement claims or to resolve disputes prior to litigation,
and any such license agreements may require us to pay
royalties and other fees that could be significant. Furthermore, because of the
substantial amount of discovery required in connection with intellectual
property litigation, there is a risk that some of our confidential
information could be compromised by disclosure.
 

 
30
 

 
  
Risks Related to Our Reliance on Third Parties
 
We rely on third parties to conduct certain aspects of our preclinical
studies and clinical trials. If these third parties do not successfully carry out their
contractual duties, meet expected deadlines or
 comply with regulatory requirements, we may not be able to obtain regulatory approval for, or
commercialize, any potential product candidates.
 
We depend upon third parties to execute our operational
plans and to conduct certain aspects of our preclinical studies. Additionally, we depend on
third parties, including independent investigators,
to conduct our clinical trials, under agreements with universities, medical institutions, contract research
organizations, or CROs, strategic
partners and others. Our reliance on third parties may affect our development timelines and increase our costs.
 
We have limited control over third-party clinical
investigators and limited visibility into their day-to-day activities, including with respect to their
compliance with the approved clinical
protocol. Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance
with the applicable
 protocol, legal and regulatory requirements and scientific standards. We and these third parties are required to comply with GCP
requirements,
which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in clinical
development. Regulatory authorities enforce these GCP requirements through periodic inspections of clinical trial sponsors, clinical investigators
 and
clinical trial sites. If we or any of these third parties fail to comply with applicable GCP requirements, the clinical data generated
in our clinical trials may
be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to suspend or
terminate these trials or perform additional
preclinical studies or clinical trials before approving our marketing applications. Moreover,
our business may be adversely affected if any of these third
parties violates federal or state fraud and abuse or false claims laws and
regulations or healthcare privacy and security laws.
 
Any third parties conducting aspects of our preclinical
studies or our clinical trials will not be our employees and, except for remedies that may be
available to us under our agreements with
such third parties, we cannot control whether or not they devote sufficient time and resources to our preclinical
studies and clinical
programs. These third parties may also have relationships with other commercial entities, including our competitors, for whom they
may
also be conducting clinical trials or other product development activities, which could affect their performance on our behalf. If these
third parties do
not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced
or if the quality or accuracy of the
preclinical or clinical data they obtain is compromised due to the failure to adhere to our protocols
or regulatory requirements or for other reasons, our
development timelines, including clinical development timelines, may be extended,
 delayed or terminated and we may not be able to complete
development of, obtain regulatory approval of or successfully commercialize our
product candidates. As a result, our financial results and the commercial
prospects for our product candidates would be harmed, our costs
could increase and our ability to generate revenue could be delayed or precluded entirely.
 
Our reliance on third parties to formulate and manufacture our drug
 product will expose us to risks that may delay the development, regulatory
approval and commercialization of our drug product or result
in higher product costs.
 
We do not directly formulate or manufacture our drug
product candidate and do not intend to establish our own manufacturing facilities. We will
contract with one or more manufacturers to
manufacture and supply our drug product, and we will use other third parties to package, store and distribute
drug supplies for our clinical
trials. If our drug product receives FDA approval, we will rely on one or more third-party contractors to manufacture and
distribute our
drug product.
 
Our reliance on a limited number of third-party manufacturers,
including one primary manufacturer of the active ingredient gedatolisib, exposes us to
risks that, among other things, we may be unable
to identify manufacturers on acceptable terms or at all because the number of potential manufacturers is
limited and the FDA must approve
 any replacement or additional manufacturer; our third-party manufacturers might be unable to formulate and
manufacture our drugs in the
volume and of the quality required to meet our clinical and/or commercial needs, if any; our contract manufacturers may not
perform as
agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials, or to successfully
produce,
store and distribute our products commercially; and our contract manufacturers may fail to comply with good manufacturing practice
and other government
regulations and corresponding foreign standards. Each of these risks could delay our clinical trials, the approval,
if any, of our product candidates by the
FDA, or the commercialization of our product candidates or result in higher costs or deprive
us of potential product revenues.
 
The pharmaceutical companies that we partner with for our CELsignia
 tests may not be successful in receiving regulatory approval for drug
indications or may not commercialize their companion therapies for
our expected companion diagnostic programs.
 
There can be no assurances that our pharmaceutical
partners for our CELsignia tests will be able to obtain regulatory approval for new indications to
treat applicable patient populations
or otherwise be successful in commercializing their therapies. Among other risks, our pharmaceutical company partners
may not meet clinical
trial endpoint targets, may encounter regulatory or production delays, may not pursue commercialization of companion therapeutics,
or
may terminate their relationship with us.
 
 
31
 

 
 
Performance issues or price increases by our shipping carriers could
adversely affect our business, results of operations and financial condition, and
harm our reputation and ability to provide our products
on a timely basis.
 
Expedited, reliable shipping is essential to our operations.
Should our shipping carriers encounter delivery performance issues such as loss, damage or
destruction of a sample, such occurrences may
damage our reputation and lead to decreased demand for our services and increased cost and expense to our
business. In addition, any significant
increase in shipping rates could adversely affect our operating margins and results of operations. Similarly, strikes,
severe weather,
natural disasters or other service interruptions by delivery services we use would adversely affect our ability to receive and process
patient
samples on a timely basis. There are only a few providers of overnight nationwide transport services, and there can be no assurance
that we will be able to
maintain arrangements with providers on acceptable terms, if at all.
 
Risks Related to Commercializing Our Products
 
Even if our products achieve positive clinical trial results and
 requisite approvals, they may fail to achieve the degree of market acceptance by
physicians, patients, third-party payors and others in
the medical community necessary for commercial success.
 
If any product we develop achieves positive clinical
trial results and receives marketing approval, whether on a standalone basis or in combination with
other therapies, it may nonetheless
fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community.
For example,
existing drug therapies may be viewed as more reliable than gedatolisib. If the product candidates we develop do not achieve an adequate
level of acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance
of any product
candidate, if approved for commercial sale, will depend on a number of factors, including:
 
●
efficacy and potential advantages compared to alternatives;
●
the ability to offer our products, if approved, for sale at competitive prices;
●
convenience and ease of administration compared to other treatments;
●
the willingness of the target patient population to try new therapies or diagnostics and of physicians to prescribe or initiate these
therapies;
●
the strength of marketing and distribution support;
●
the ability to obtain sufficient third-party coverage, market access and adequate reimbursement; and
●
the prevalence and severity of any side effects.
 
If our products do
not achieve an adequate level of acceptance, we may never generate significant product revenues and we may not become profitable.
 
If we commercialize any product candidates, we will be subject to
U.S. and foreign governmental regulations as well as private payor policies that
mandate price controls or limitations on patient access
to our products or establish prices paid by government entities or programs for our products.
Our business and our future results could
be adversely affected by changes in such regulations.
 
Even if we or our partners are successful in obtaining
marketing approval, commercial success of any approved products will also depend in large part
on the availability of insurance coverage
and adequate reimbursement from third-party payors, including government payors such as the VA, Medicare and
Medicaid programs, 340B,
and managed care organizations in the U.S. or country specific governmental organizations in foreign countries. Government
and private
payors routinely seek to manage utilization and control costs, and there is considerable public and government scrutiny of pharmaceutical
and
diagnostic pricing. Efforts by states and the federal government to regulate prices or payment for pharmaceutical products, including
proposed actions to
facilitate drug importation, limit reimbursement to lower international reference prices, require deep discounts,
and require manufacturers to report and
make public price increases and sometimes provide a written justification for such price increases,
could adversely affect our business if implemented.
 
Availability of reimbursement may be affected by existing
and future healthcare reform measures designed to reduce the cost of healthcare, including
the Inflation Reduction Act, which requires
manufacturers of certain drugs to engage in price negotiations with Medicare, imposes rebates under Medicare
Part B and Medicare Part
 D to penalize price increases that outpace inflation, and replaces the Part D coverage gap discount program with a new
discounting program.
 Some states have implemented, and others are considering implementing, patient access constraints or cost cutting under the
Medicaid program,
and some are considering measures that would apply to broader segments of their populations that are not Medicaid-eligible. State
legislatures
also have continued to focus on addressing drug costs, generally by increasing price transparency or limiting drug price increases.
 
 
32
 

 
  
Third-party payors also could require us to conduct
additional studies, including post-marketing studies related to the cost effectiveness of a product
and appropriateness for specific patient
populations, to qualify for reimbursement, which could be costly and divert our resources. If government and other
healthcare payors do
not provide coverage and adequate reimbursement for our products once approved, market acceptance and commercial success would
be reduced.
Even if coverage is provided, the approved reimbursement amount may not be high enough to support pricing that results in a sufficient
return
on our research and development investment.
 
We expect pricing pressures will continue globally.
U.S. and foreign governmental regulations that mandate price controls or limitations on patient
access to our products or establish prices
paid by government entities or programs for our products could impact our business, and our future results could
be adversely affected
by changes in such regulations or policies.
 
We may encounter difficulties in scaling production of, commercializing,
marketing and distributing our products, including in hiring and retaining a
qualified sales force.
 
In order to commercialize any of our products, we
must build production, marketing, sales, managerial and other non-technical capabilities or make
arrangements with third parties to perform
these services, and we may not be successful in doing so. Our beliefs that our products will be commercially
viable have not been tested.
These activities will be expensive and time-consuming and will require significant attention of our executive officers to
manage. There
are risks involved in establishing our own sales and marketing capabilities, as well as with entering into arrangements with third parties
to
perform these services.
 
In particular, there is intense competition for qualified
sales personnel and our inability to hire or retain an adequate number of sales representatives
could limit our ability to maintain or
expand our business and increase sales. Furthermore, there is no guarantee that the market opportunity for gedatolisib
will be as significant
as we expect or exist at all. If we are unable to
successfully commercialize our products, or if we are delayed in doing so, including if
we are unable to develop our marketing and sales
networks or if our sales personnel do not perform as expected, we may never generate any revenue and
our business may fail.
 
Our business, operational and financial goals may not be attainable
if the market opportunities for our products are smaller than we expect. Our
internal research and third party estimates may not accurately
reflect the market opportunities for gedatolisib today or in the future.
 
The total market opportunities that we believe exist
are based on a variety of assumptions and estimates, including the size of the addressable patient
population in applicable jurisdictions,
the penetration of other drugs in these markets, the number of potential companion diagnostic programs we will be
able to successfully
pursue, the amount of potential milestone payments that we could receive in companion diagnostic programs, the number of patients
we will
test in clinical trials, the price we will be able to charge for our products and the total annual number of cancer patients with undiagnosed
abnormal
cell signaling. In addition, we have relied on third-party publications, research, surveys and studies for information related
 to determining market
opportunities, including without limitation, information on the number of cancer patients and those receiving various
forms of treatment, the cost of drug
therapy, the amount of revenue generated from various types of drug therapy, the objective response
rates of drug therapies, the number of deaths caused by
cancer and the expected growth in cancer drug therapy and diagnostic markets.
Our internal research and estimates on market opportunities have been
verified by independent sources, but any or all of our assumptions
and/or estimates may prove to be incorrect for several reasons, such as inaccurate reports
or information that we have relied on, potential
patients or providers not being amenable to using our products or such patients becoming difficult to
identify and access, limited reimbursement
for our products, pricing pressure due to availability of alternative drugs or an inability to obtain the necessary
regulatory approvals
for new indications. If any or all of our assumptions and estimates prove inaccurate, we may not attain our business, operational and
financial goals.
 
 
33
 

 
  
Other Risks Related to Government Regulation for Our Business
 
Failure to comply with the HIPAA security and privacy regulations
may increase our operational costs.
 
A portion of the data that we obtain and handle for
or on behalf of our clients is considered protected health information, or PHI, subject to HIPAA.
Under HIPAA and our contractual agreements
with our HIPAA-covered entity health plan customers, we may be considered a “business associate” to those
customers and are
required to maintain the privacy and security of PHI in accordance with HIPAA and the terms of our business associate agreements with
our clients, including by implementing HIPAA-required administrative, technical and physical safeguards. We are also required to maintain
 similar
business associate agreements with our subcontractors that have access to PHI of our customers in rendering services to us or
on our behalf. We will incur
significant costs to establish and maintain these safeguards and, if additional safeguards are required to
comply with HIPAA regulations or our clients’
requirements, our costs could increase further, which would negatively affect our
operating results. Furthermore, we cannot guarantee that such safeguards
have been and will continue to be adequate under applicable laws.
If we have failed, or fail in the future, to maintain adequate safeguards, or we or our
agents or subcontractors use or disclose PHI in
a manner prohibited or not permitted by HIPAA, our subcontractor business associate agreements, or our
business associate agreements with
our customers, or if the privacy or security of PHI that we obtain and handle is otherwise compromised, we could be
subject to significant
liabilities and consequences.
 
Compliance with global privacy and data security requirements could
result in additional costs and liabilities to us or inhibit our ability to collect and
process data globally, and the failure to comply
with such requirements could subject us to significant fines and penalties, which may have a material
adverse effect on our business,
financial condition or results of operations.
 
In addition to PHI, we collect, receive, store, process,
use, generate, transfer, disclose, make accessible, protect, secure, dispose of, transmit and share
(collectively, process) personal data
and other sensitive information. Accordingly, we are, or may become, subject to numerous federal, state, local and
foreign privacy and
security laws regulating the collection, use, safeguarding, transfer and other processing of information.
 
Globally, virtually every jurisdiction in which we
operate has established its own data security and privacy frameworks with which we must comply.
For example, the collection, use, disclosure,
transfer, or other processing of personal data regarding individuals in the UK, and the European Economic
Area (the “EEA”),
including personal health data, is subject to the UK/EU General Data Protection Regulation (the “GDPR”), which is wide-ranging
in
scope and imposes numerous requirements on companies that process personal data, including requirements relating to the processing
of health and other
sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals
 regarding data processing
activities, implementing safeguards to protect the security and confidentiality of personal data, providing
notification of data breaches, and taking certain
measures when engaging third-party processors. In addition, the GDPR also imposes strict
rules on the transfer of personal data to countries outside the
UK/European Union, including the United States, and, as a result, increases
the scrutiny that clinical trial sites located in the EEA should apply to transfers
of personal data from such sites to countries that
are considered to lack an adequate level of data protection, such as the United States. The GDPR also
permits data protection authorities
to require destruction of improperly gathered or used personal information and/or impose substantial fines for violations
of the GDPR,
which can be up to 4% of global revenue or €20 million, whichever is greater, and it also confers a private right of action on data
subjects and
consumer associates to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for
 damages resulting from
violations of the GDPR. In addition, the GDPR provides that UK/EU member states may make their own further laws
 and regulations limiting the
processing of personal data, including genetic, biometric or health data. Given the breadth and depth of
changes in data protection obligations, preparing for
and complying with these requirements is rigorous and time intensive and requires
significant resources and a review of our technologies, systems and
practices, as well as those of any third-party collaborators, service
providers, contractors or consultants that process or transfer personal data collected in
the European Union.
 
Similar actions are either in place or underway in
the United States. For example, the California Consumer Privacy Act of 2018 (the “CCPA”), as
amended and expanded by the California
Privacy Rights Act (the “CPRA”), applies to personal information of consumers, business representatives, and
employees, and
requires covered businesses to provide specific disclosures related to a business’s processing of personal data, new operational
practices,
and requirements to respond to certain requests from California residents related to their personal data. There is uncertainty
about how the CPRA and other
similar laws may be implemented and applied, and inconsistencies across jurisdictions complicate our compliance
efforts. Accordingly, the CPRA and
other similar laws may impact our business activities and increase our compliance costs, as well as
our legal risks. The regulatory framework for the
collection, use, safeguarding, transfer and other processing of information is rapidly
evolving and is likely to remain uncertain for the foreseeable future.
 
Evolving data privacy regulations may interrupt or
delay our development, regulatory and commercialization activities and increase our cost of doing
business, and could lead to government
enforcement actions, private litigation and significant fines and penalties against us and could have a material
adverse effect on our
 business, financial condition or results of operations. 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 could harm our reputation
and our business.
 
We will also need to expend a considerable amount of resources complying
with other federal, state and foreign laws and regulations. If we are unable
to comply or have not complied with such laws, we could face
substantial penalties or other adverse actions.
 
Our operations are subject, directly or indirectly,
to other federal, state and foreign laws and regulations that are complex and their application to our
specific products, services and
relationships may not be clear and may be applied to our business in ways that we do not anticipate. Compliance with laws
and regulations
will require us to expend considerable resources implementing internal policies and procedures for compliance and ongoing monitoring and
will require significant attention of our management team. This will be challenging as an early-stage company with limited financial resources
and human
capital. These laws include, for example:
 
●
Title XI of the Social Security Act, commonly referred to as the federal Anti-Kickback Statute, which prohibits the knowing and willful
offer,
payment, solicitation or receipt of remuneration, directly or indirectly, in cash or in kind, in return for or to reward the referral
of patients or
arranging for the referral of patients, or in return for the recommendation, arrangement, purchase, lease or order of items
or services that are
covered, in whole or in part, by a federal healthcare program such as Medicare or Medicaid;
●
The civil False Claims Act, which forbids the knowing submission or “causing the submission” of false or fraudulent information
or the failure to
disclose information in connection with the submission and payment of claims for reimbursement to Medicare, Medicaid,
 federal healthcare
programs or private health plans;
 
 
34
 

 
  
●
The federal Physician Self-referral Law, commonly known as the Stark Law, which prohibits physicians from referring Medicare or Medicaid
patients to providers of “designated health services” with whom the physician or a member of the physician’s immediate
family has an ownership
interest or compensation arrangement, unless a statutory or regulatory exception applies, and similar state equivalents
that may apply regardless of
payor; and
●
The U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. §
201, the U.S.
Travel Act, and the USA PATRIOT Act, which among other things, prohibit companies and their employees, agents, third-party
intermediaries,
joint venture partners and collaborators from authorizing, promising, offering, or providing, directly or indirectly,
improper payments or benefits
to recipients in the public or private sector.
 
Many states and foreign
governments have adopted similar laws and regulations. Violations of law could subject us to civil or criminal penalties,
monetary fines,
disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and future earnings and curtailment
of
our operations. We could also be required to change or terminate some portions of operations or business or could be disqualified from
providing services
to healthcare providers doing business with government programs.
 
Risks Relating to Our Common Stock
 
Provisions in our corporate charter
documents and under Delaware law could make an acquisition of our company, which may be beneficial to our
stockholders, more difficult
and may prevent attempts by our stockholders to replace or remove our current management.
 
Provisions in our certificate of incorporation and
our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our
company that stockholders may consider
 favorable, including transactions in which you might otherwise receive a premium for your shares. These
provisions could also limit the
price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price
of our
common stock. In addition, because our board of directors will be responsible for appointing the members of our management team, these
provisions
may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult
for stockholders to
replace members of our board of directors. Among other things, these provisions:
 
●
allow the authorized number of our directors to be changed only by resolution of our board of directors;
●
limit the manner in which stockholders can remove directors from our board of directors;
●
establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our
board of
directors;
●
require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by
written consent;
●
limit who may call stockholder meetings;
●
authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison
pill” that would
work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have
not been approved by our board of
directors; and
●
require the approval of the holders of at least two-thirds of the votes that all our stockholders would be entitled to cast to amend
or repeal specified
provisions of our certificate of incorporation or bylaws.
 
Moreover, we are governed
by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess
of 15% of our outstanding
voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person
acquired
in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
 
Any of these provisions of our charter documents or
Delaware law could, under certain circumstances, depress the market price of our common stock.
 
The price of our common stock may be volatile and fluctuate substantially,
which could result in substantial losses for purchasers of our common stock
or could subject us to securities litigation.
 
Our stock price may be extremely volatile. The stock
market in general and the market for smaller medical technology companies in particular have
experienced extreme volatility that has often
been unrelated to the operating performance of particular companies. As a result of this volatility, investors
may not be able to sell
our common stock at or above the price they paid for such stock. The market price for our common stock may be influenced by
many factors,
including:
 
●
the success of competitive products or technologies;
●
results of existing or future clinical trials;
●
regulatory or legal developments in the United States and other countries;
●
developments or disputes concerning patent applications, issued patents or other proprietary rights;
●
the recruitment or departure of key personnel;
●
the level of expenses related to any of our products or clinical development programs;
●
actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
●
operating results that fail to meet expectations of securities analysts that cover our company;
●
variations in our financial results or those of companies that are perceived to be similar to us;
 
 
35
 

 
  
●
changes in the structure of healthcare payment systems;
●
market conditions in the pharmaceutical, biotechnology and medical technology sectors;
●
sales of our stock by us, our insiders and our other stockholders;
●
general economic and market conditions; and
●
the other factors described in this “Risk Factors” section.
 
Additionally, companies that have experienced volatility
in the market price of their stock have been subject to an increased incidence of securities
class action litigation. We may be the target
of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert
our management’s
attention from other business concerns, which could seriously harm our business.
 
Future sales of shares of our common stock, including by us and significant
stockholders, could negatively affect our stock price.
 
Sales of a substantial number of shares of our common
stock in the public market could occur at any time. Since December 2022, we have issued
5,340,914 shares of common stock pursuant to equity
financing arrangements, including pursuant to our Open Market Sale AgreementSM with Jefferies
LLC, as agent, pursuant to which
we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate offering
price of up to $125.0
million. At December 31, 2024, $125.0 million of common stock remains available for sale under the Jefferies agreement. We may
enter into
additional equity financing arrangements in the future. The shares of common stock that we have issued pursuant to equity financings,
or may
issue in the future, may be resold at any time in the discretion of the investors.
 
In addition, an aggregate of 14,444,709 shares of
common stock are issuable upon conversion or exercise of currently outstanding preferred stock and
financing warrants, subject to certain
beneficial ownership limitations, which the investors may subsequently resell into the market, and 4,306,977 shares of
common stock are
issuable upon exercise of awards granted under our 2017 Stock Incentive Plan and 2012 Equity Incentive Plan. Under our Amended and
Restated
Loan and Security Agreement, Innovatus has the right, at its election and until August 9, 2025, to convert up to 20% of the outstanding
principal
of the Term A Loan into shares of the Company’s common stock at a price per share of $10.00 (the “Conversion Right”).
Innovatus will continue to have
the right to exercise a previously disclosed warrant granted to it under the Prior Loan Agreement to purchase
26,042 shares of common stock at a price per
share of $14.40 through April 8, 2031. In connection with the funding of each of the Term
C Loan, the Term D Loan, the Term E Loan and the Term F
Loan, the Company agreed to issue to Innovatus and Oxford warrants to purchase
that number of shares of the Company’s common stock equal to 2.5% of
the principal amount of the applicable Term Loan divided by
the exercise price, which shall, with respect to the Term C Loan, be equal to the lower of (i)
the volume weighted average closing price
of the Company’s common stock for the five-trading day period ending on the last trading day immediately
preceding the execution
of the A&R Loan Agreement or (ii) the closing price on the last trading day immediately preceding the execution of the A&R Loan
Agreement. Accordingly, on May 30, 2024, the Company issued 103,876 warrants with an exercise price of $14.84 per share. The relative
fair value of the
warrants was approximately $1.2 million. For the additional Term Loans, the exercise price will be based on the lower
of (i) the exercise price for the
Warrants issued pursuant to the Term C Loan or (ii) the volume weighted average closing price of the
Company’s common stock for the five-trading day
period ending on the last trading day immediately preceding the applicable Term
Loan funding. The Warrants may be exercised on a cashless basis and are
exercisable through the tenth anniversary of the applicable funding
date. The number of shares of common stock for which each Warrant is exercisable and
the associated exercise price are subject to certain
proportional adjustments as set forth in such Warrant.
 
Sales of substantial amounts of shares of our common
stock or other securities by these investors or our other stockholders or by us under the Open
Market Sale AgreementSM, or
the perception in the market that the holders of a large number of shares of our common stock intend to sell their shares,
could reduce
the trading price of our common stock, make it more difficult for you to sell your shares at a price that you desire and impair our ability
to
raise capital through the sale of equity or equity-related securities.
 
Our Series A Preferred Stock has rights, preferences, and privileges
that are not held by, and are preferential to, the rights of holders of our common
stock.
 
We issued 1,120,873 shares of Series A Preferred Stock
in a financing transaction in December 2022, and 317,577 shares of Series A Preferred Stock
were outstanding as of December 31, 2024.
The Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock
provides that, in the event
of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or in the event of a Deemed Liquidation
Event (as
defined in the Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock), the holders
of Series A
Preferred Stock are entitled to be paid from assets of the Company available for distribution to its stockholders, before
any payment is made to the holders
of common stock by reason of their ownership thereof, an amount per share equal to the greater of (i)
the original issue price ($5.75 on an as-converted-to-
common stock basis), plus all accrued and unpaid dividends and (ii) the amount that
the holder would have been entitled to receive at such time if the
Series A Preferred Stock were converted into common stock. The Company
may not, without the consent of holders of a majority of the outstanding shares
of Series A Preferred Stock, amend its charter in a manner
that adversely affects the powers, preferences or rights of the Series A Preferred Stock or issue
or obligate itself to issue shares of
any additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock with respect to
the distribution
of assets on the liquidation, dissolution or winding up of the Company and the payment of dividends.
 
If securities or industry analysts do not publish research or reports
about our business, or publish negative reports about our business, our stock price
and trading volume could decline.
 
The trading market for our common stock depends in
part on the research and reports that securities or industry analysts publish about us or our
business. We do not have any control over
these analysts. There can be no assurance that analysts will cover us or provide favorable coverage. If one or
more of the analysts who
cover us downgrade our stock or change their opinion of our stock, our stock price would likely decline. If one or more of these
analysts
cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could
cause our
stock price or trading volume to decline.
 
 
36
 

 
  
We incur increased costs as a result of operating as a public company,
and our management devotes substantial time to new compliance initiatives and
corporate governance practices.
 
As a public company, we incur significant legal, accounting
and other expenses that we did not incur as a private company and that private company
competitors do not incur. The Sarbanes-Oxley Act,
the Dodd-Frank Wall Street Reform and Consumer Protection Act, the continued listing requirements of
The Nasdaq Stock Market and other
applicable securities rules and regulations 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 devote a
substantial
amount of time to these compliance initiatives. Moreover, these rules and regulations have increased our ongoing legal and financial compliance
costs and make some activities more time-consuming and costly.
 
Pursuant to Section 404 of the Sarbanes-Oxley Act,
or Section 404, we are required to furnish a report by our management on our internal control over
financial reporting. Depending upon
our filer status, we could also be required to include an attestation report on internal control over financial reporting
issued by our
independent registered public accounting firm as required by Section 404(b). While we, as of December 31, 2024, concluded that our internal
control over financial reporting was effective, we may need to dedicate additional internal resources and engage outside consultants to
maintain compliance
with Section 404 in the future. Any material weaknesses that we may identify in the future could result in an adverse
reaction in the financial markets due
to a loss of confidence in the reliability of our financial statements.
 
We do not currently intend to pay dividends on our common stock,
and, consequently, our stockholders’ ability to achieve a return on their investment
will depend on appreciation in the price of
our common stock.
 
We currently intend to invest our future earnings,
if any, to fund our growth. We do not currently intend to pay dividends on our common stock for the
foreseeable future, and, consequently,
our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our
common stock.
There is no guarantee that our common stock will appreciate or even maintain the price at which our holders have purchased it.
 
ITEM 1B. Unresolved Staff Comments
 
None.
 
ITEM 1C. Cybersecurity
 
Risk Management & Strategy
 
Our cybersecurity risk management process is a component
of our overall approach to managing material risks that could impact our operations,
including cybersecurity threats. In general, we seek
to manage material internal and third-party cybersecurity risks through an approach that focuses on: (i)
protecting information systems
and the information residing therein; (ii) identifying, preventing, and mitigating cybersecurity threats; and (iii) assessing
and responding
to cybersecurity incidents when they occur. Maintaining, monitoring, and updating our information security program—in an effort
to ensure
that it remains reasonable and appropriate in light of changes in the security threat landscape, available technology, and applicable
legal and contractual
requirements—is an ongoing effort.
 
We have implemented and maintain various processes,
procedures, and measures to support our overall risk management strategy and to manage and
mitigate the material risks posed by cybersecurity
threats to our systems and data. With respect to cybersecurity, these measures include conducting risk
assessments of our operations and
using a risk register to assess identified risks; developing business continuity, disaster recovery and incident response
plans; implementing
 technical safeguards and tools; conducting ongoing cybersecurity awareness training; and using contractual protections where
appropriate.
Our incident response plan outlines the procedures for reporting, investigating, and remediating cybersecurity incidents, including a
framework
to facilitate the escalation to our management team and board of cybersecurity incidents, so that our management team is alerted
in a timely manner to
material information that would be required to be disclosed or reported.
 
Our IT department maintains policies and procedures
regarding network security, data protection and incident response. Pursuant to those policies, IT
engages with the Chief Financial Officer,
 General Counsel and other experts when assessing cybersecurity threats, incident response, and making
disclosure determinations following
 a data or network breach. The Vice President, IT is accountable at the management level for our overall IT risk
management program. Additionally,
our Chief Executive Officer and Audit Committee receives regular updates from the Chief Financial Officer, General
Counsel and the Vice
President, IT about significant threats and incidents involving cybersecurity and data protection, as well as security enhancements
made
to our IT infrastructure.
 
We use third-party service providers for a variety
 of services throughout our business, ranging from infrastructure support and maintenance,
cybersecurity incident response, data protection
 and privacy compliance. In addition, we engage with contract research organizations, contract
manufacturing organizations, distributors,
and other supply chain resources.
 
We believe that the use of external service providers
improves our operational capabilities, and we have implemented a vendor qualification and
management program that applies to our service
 providers, including those that handle protected health information, personal information, or other
information subject to protection
 under applicable privacy and data protection regulations. This program is designed to identify, address and seek to
mitigate potential
cybersecurity and data protection risks that arise from our use of external service providers. While we do not have full visibility into
the
cybersecurity risk management processes of our vendors, we require new service providers to complete a vendor questionnaire that identifies
the vendor’s
network and user protections, such as the use of multi-factor authentication, and other cybersecurity risk management
processes. Vendors that store or
access our confidential information are required to certify that their information systems comply with
applicable industry guidelines for cybersecurity,
backup, and system recovery. We rely on our third-party service providers to provide
notification of, and remediate, significant cybersecurity threats and
cybersecurity incidents that jeopardize the confidentiality, integrity,
or availability of our information.
 
 
37
 

 
  
We periodically evaluate, test, and update our policies,
standards, and processes to mitigate cybersecurity threats and manage incidents effectively.
These efforts include risk assessments, vulnerability
 assessments and remediations, phishing tests and employee education, and external scans.
Additionally, to enhance our capabilities, we
periodically engage third-party service providers, including cybersecurity consultants, to incorporate threat
intelligence into our processes.
 
As of the date of this Form 10-K, we are not aware
of any risks from cybersecurity threats, including those resulting from any previous cybersecurity
incidents experienced by us or, to
our knowledge, by any of our third-party service providers, that have materially affected, or are reasonably likely to
materially affect,
our business strategy, results of operations, or financial condition. For further discussion of cybersecurity and data privacy risks that
may
materially affect the Company and how they may do so, see “Risk Factors—If our information technology systems or data,
or those of third parties upon
which we rely, are or were compromised, we could face clinical trial delays; regulatory investigations
or actions; litigation; fines and penalties; disruptions
of our business operations; reputational harm; and other adverse consequences,”
included in Item 1A of this Annual Report on Form 10-K.
 
Governance
 
Our Audit Committee oversees Celcuity’s management
of risks arising from cybersecurity threats. Our CEO delivers periodic briefings to the Board
and Audit Committee on material cybersecurity
risks that are pertinent to our business operations. Additionally, we have processes to promptly notify the
Audit Committee and Board
of a significant cybersecurity incident and to inform the Audit Committee and Board of remediation progress, as appropriate.
 
The Vice President, IT has overall responsibility
 for our information security program, with support from our management team and specialized
partners in cybersecurity incident response
and privacy. The process includes managing our incident response strategy. If a cybersecurity incident meets
certain criteria, however,
our CEO, CFO and General Counsel will become involved with the response strategy, including decisions about public disclosure
and reporting.
Our Vice President, IT also coordinates with our CEO, CFO and General Counsel to determine strategic cybersecurity priorities and to
establish
compliance procedures.
 
We believe our business leaders have the appropriate
expertise, background and depth of experience to manage risks arising from cybersecurity threats.
Our Vice President, IT has served in
various roles in information technology and information security for over three decades, which includes experience in
the biotech, pharmaceutical
and healthcare industries and experience in cybersecurity risk management and data privacy compliance.
 
In the ordinary course of our business, we, and the
third parties upon which we rely, collect, process, receive, generate, use, transfer, disclose, make
accessible, protect, secure, dispose
 of, transmit, share and store (collectively, “process”) proprietary, confidential, and sensitive information, including
protected
 health information, personal information, credit card and other financial information, or other sensitive information owned or controlled
 by
ourselves or our customers, payors, and other parties.
 
ITEM 2. Properties
 
We currently lease and occupy approximately 16,000
square feet in Minneapolis, Minnesota, which includes our clinical laboratory and offices. On
March 13, 2023, we signed the fourth amendment
to our lease agreement, which expires April 30, 2026. We anticipate leasing new office and lab space in
advance of the end date of our
lease. The lease provides for monthly rent, real estate taxes and operating expenses. We believe that this leased space is
adequate to
 meet current and anticipated future requirements and that additional or substitute space will be available as needed to accommodate any
expansions that our operations require.
 
ITEM 3. Legal Proceedings
 
From time to time we may be involved in disputes or
litigation relating to claims arising out of our operations. We are not currently a party to any legal
proceedings that could reasonably
be expected to have a material adverse effect on our business, financial condition and results of operations.
 
ITEM 4. Mine Safety Disclosures
 
Not applicable.
 
 
38
 

 
 
PART II
 
ITEM 5. Market For Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
Market Price Information
 
Our common stock has been listed on The Nasdaq Capital
Market under the symbol “CELC” since September 20, 2017.
 
As of March 17,
2025, there were approximately 107 holders of record of our common stock. The actual number of holders of common stock is
greater
than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street
name by brokers and nominees.
The number of holders of record also does not include stockholders whose shares may be held in trust
by other entities.
 
Dividends
 
We have never declared or paid any cash dividends
on our common stock. We currently intend to retain our future earnings, if any, to finance the
operation and expansion of our business.
We do not expect to pay cash dividends on our common stock in the foreseeable future. Payment of future cash
dividends, if any, will be
at the discretion of our board of directors after taking into account various factors, including our financial condition, operating
results,
current and anticipated cash needs, outstanding indebtedness and plans for expansion and restrictions imposed by lenders, if any.
 
Recent Sales of Unregistered Securities
 
None.
 
Issuer Purchases of Equity Securities
 
None.
 
Equity Compensation Plan Information
 
The information required by this Item concerning equity
compensation plans is incorporated herein by reference from Part III, Item 11 of this Annual
Report.
 
 
39
 

 
  
ITEM 6. Reserved.
 
ITEM 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
 
You should read the following discussion and analysis
of our financial condition and results of operations together in conjunction with our financial
statements and the related notes included
elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth
elsewhere in this Annual
Report, including information with respect to our plans and strategy for our business and expected financial results, includes
forward-looking
statements that involve risks and uncertainties. You should review the “Risk Factors” discussed in Item 1A of Part I of this
Annual Report.
 
OVERVIEW
 
Celcuity is a
 clinical-stage biotechnology company focused on the development of targeted therapies for the treatment of multiple solid tumor
indications. The Company’s lead therapeutic candidate is gedatolisib, a potent, well-tolerated, small molecule reversible
 inhibitor, administered
intravenously, that selectively targets all Class I isoforms of phosphatidylinositol-3-kinase
 (“PI3K”) and the two mechanistic targets of rapamycin
(“mTOR”) sub-complexes, mTORC1 and mTORC2. Its
 mechanism of action and pharmacokinetic properties are differentiated from other currently
approved and investigational therapies
 that target PI3K or mTOR alone or together. A Phase 3 clinical trial, VIKTORIA-1, evaluating gedatolisib in
combination with
fulvestrant with or without palbociclib in patients with HR+/HER2- advanced breast cancer is currently enrolling patients. Site
selection
activities are completed and activation activities for a Phase 3 clinical trial, VIKTORIA-2, evaluating gedatolisib in
combination with a CDK4/6 inhibitor
and fulvestrant as first-line treatment for patients with endocrine treatment resistant
HR+/HER2- advanced breast cancer has commenced, and the first
patient is expected to be dosed in the second quarter of 2025. A Phase
 1b/2 clinical trial, CELC-G-201, evaluating gedatolisib in combination with
darolutamide in patients with mCRPC, is currently
underway.
 
In April 2021, we obtained exclusive global development
and commercialization rights to gedatolisib under a license agreement with Pfizer Inc. We
believe gedatolisib’s unique mechanism
 of action, differentiated chemical structure, favorable pharmacokinetic properties, and intravenous route of
administration offer distinct
advantages over currently approved and investigational therapies that target PI3K, AKT, or mTOR alone or together.
 
●
Overcomes limitations of therapies that only inhibit a single Class I PI3K isoform or only one mTOR kinase complex.
 
Gedatolisib is a pan-class I isoform PI3K inhibitor with low
nanomolar potency for the p110α, p110β, p110γ, and p110δ isoforms and mTORC1
and mTORC2 complexes. Each PI3K isoform
 and mTOR complex is known to preferentially affect different signal transduction events that
involve tumor cell survival, depending upon
the aberrations associated with the linked pathway. When a therapy only inhibits a single Class I
isoform (e.g., alpelisib, a PI3K-α
inhibitor) or only one mTOR kinase complex (e.g., everolimus, an mTORC1 inhibitor), numerous feedforward
and feedback loops between the
 PI3K isoforms and mTOR complexes cross-activate the uninhibited sub-units. This, in turn, induces
compensatory resistance that reduces
the efficacy of isoform specific PI3K or single mTOR kinase complex inhibitors. Inhibiting all four PI3K
isoforms and both mTOR complexes,
as gedatolisib does, thus prevents the confounding effect of isoform interaction that may occur with isoform-
specific PI3K inhibitors
and the confounding interaction between PI3K isoforms and mTOR.
 
●
Better tolerated by patients than oral PI3K and mTOR drugs.
 
Gedatolisib is administered intravenously on a four-week cycle
of three weeks-on, one week-off, in contrast to the orally administered pan-PI3K
or dual PI3K/mTOR inhibitors that are no longer being
clinically developed. Oral pan-PI3K or PI3K/mTOR inhibitors have repeatably been found
to induce significant side effects that were not
well tolerated by patients. This typically leads to a high proportion of patients requiring dose
reductions or treatment discontinuation.
 The challenging toxicity profile of these drug candidates ultimately played a significant role in the
decisions to halt their development,
despite showing promising efficacy. By contrast, gedatolisib stabilizes at lower concentration levels in plasma
compared to orally administered
PI3K inhibitors, resulting in less toxicity, while maintaining concentrations sufficient to inhibit PI3K/mTOR
signaling.
 
Isoform-specific PI3K inhibitors administered orally were developed
to reduce toxicities in patients. While the range of toxicities associated with
isoform-specific inhibitors is narrower than oral pan-PI3K
or PI3K/mTOR inhibitors, administering them orally on a continuous basis still leads to
challenging toxicities. The experience with an
FDA approved oral p110-α specific inhibitor, PIQRAY, illustrates the challenge. In its Phase 3
pivotal trial, PIQRAY was found to
 induce a Grade 3 or 4 adverse event (“AE”) related to hyperglycemia in 39% of patients evaluated. In
addition, 26% of patients
discontinued alpelisib due to treatment related AEs. By contrast, in the 103-patient dose expansion portion of the Phase
1b clinical trial
with gedatolisib, only 7% of patients experienced Grade 3 or 4 hyperglycemia and less than 9% discontinued treatment.
 
As of December 31, 2024, 492 patients with solid tumors
have received gedatolisib in eight clinical trials sponsored by Pfizer. Of the 492 patients, 129
were treated with gedatolisib as a single
agent in three clinical trials. The remaining 363 patients received gedatolisib in combination with other anti-cancer
agents in five clinical
trials. Additional patients received gedatolisib in combination with other anti-cancer agents in nine investigator sponsored clinical
trials.
 
A Phase 1b trial (B2151009) evaluating patients with
 HR+/HER2- metastatic breast cancer was initiated in 2016 and subsequently enrolled 138
patients. Four patients from this study continue
to receive study treatment, as of December 31, 2024, each of whom have received study treatment for more
than five years. The B2151009
 clinical trial was an open label, multiple arm Phase 1b clinical trial that evaluated gedatolisib in combination with
palbociclib (CDK4/6
inhibitor) and fulvestrant or letrozole in patients with HR+/HER2- advanced breast cancer. Thirty-five patients were enrolled in two
dose
escalation arms to evaluate the safety and tolerability and to determine the maximum tolerated dose (“MTD”) of gedatolisib
when used in combination
with the standard doses of palbociclib and endocrine therapy (letrozole or fulvestrant). The MTD was determined
to be 180 mg administered intravenously
once weekly. A total of 103 patients were subsequently enrolled in one of four expansion arms
(A, B, C, and D).
 
 
40
 

 
  
High objective overall response
rates (“ORR”) were observed in all four expansion arms and were comparable in each arm for PIK3CA wild type
(“WT”)
and PIK3CA mutant (“MT”) patients. In patients who received prior hormonal therapy alone or in combination with a CDK4/6 inhibitor
(Arms B,
C, and D), the ORR (including unconfirmed partial responses) ranged from 36% to 77%. In patients who were treatment naïve
in the advanced setting
(Arm A), the ORR was 85%. Each arm achieved its primary endpoint target, which was reporting higher ORR in the
study arm than the ORR from either
the PALOMA-2 study (ORR=55%) that evaluated palbociclib plus letrozole for Arm A or the PALOMA-3 study
(ORR=25%) that evaluated palbociclib
plus fulvestrant for Arms B, C, and D. For all patients enrolled in the expansion portion of the
study who had evaluable tumors, the ORR observed was
63%.
 
Median progression-free survival
(PFS) was 12.9 months for patients who received a prior CDK4/6 inhibitor and were treated in the study with the
Phase 3 dosing schedule
(Arm D). For all treatment naïve patients who received gedatolisib combined with palbociclib plus letrozole in Expansion Arm A
and
Escalation Arm A (N=41), median PFS was 48.6 months and ORR was 79%. These results compare favorably to published data for current first-line
standard-of-care treatments for patients with HR+/HER2-advanced breast cancer.
 
Gedatolisib combined with palbociclib and endocrine
 therapy demonstrated a favorable safety profile with manageable toxicity. The majority of
treatment emergent adverse events were Grade
 1 and 2. The most frequently observed adverse events included stomatitis/mucosal inflammation, the
majority of which were Grade 1 and
2. The most common Grade 4 AEs were neutropenia and neutrophil count decrease, which were assessed as related to
treatment with palbociclib.
No Grade 5 events were reported in this study.
 
We are currently enrolling patients in a Phase 3,
 open-label, randomized clinical trial,VIKTORIA-1, to evaluate the efficacy and safety of two
regimens in adults with HR+/HER2- advanced
breast cancer whose disease has progressed after prior CDK4/6 therapy in combination with an aromatase
inhibitor: 1) gedatolisib in combination
with palbociclib and fulvestrant; and 2) gedatolisib in combination with fulvestrant. Over two hundred clinical sites
in North America,
Europe, Latin America, and Asia-Pacific are participating in the study. The first patient was dosed in this trial in December 2022.
 
The VIKTORA-1 Phase 3 clinical trial will enable separate
evaluation of subjects according to their PIK3CA status. Subjects who meet eligibility
criteria and are PIK3CA WT will be randomly assigned
(1:1:1) to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm A), gedatolisib
and fulvestrant (Arm B), or fulvestrant
(Arm C). The WT enrollment target was achieved in the fourth quarter of 2024. Subjects who meet eligibility
criteria and are PIK3CA MT
will be randomly assigned (3:3:1) to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm D), alpelisib
and fulvestrant
(Arm E), or gedatolisib and fulvestrant (Arm F). Topline data from Arms A, B and C of this clinical trial are expected in Q2 2025.
 
We received approval from the FDA in mid-2023 to proceed
 with the clinical development of gedatolisib in combination with Nubeqa®
(darolutamide), an approved androgen receptor inhibitor,
for the treatment of patients with metastatic castration resistant prostate cancer (“mCRPC”). We
have since initiated a Phase
1b/2 study, CELC-G-201, that is enrolling patients with mCRPC who progressed after treatment with an androgen receptor
inhibitor. The
first patient was dosed in this trial in February 2024.
 
In the Phase 1b portion of the clinical trial, Celcuity
expects approximately 36 participants will be randomly assigned to receive 600 mg darolutamide
combined with either 120 mg gedatolisib
in Arm 1 or 180 mg gedatolisib in Arm 2. An additional 12 participants will then be enrolled in the Phase 2
portion of the study at the
recommended phase 2 dose (“RP2D”) level to enable evaluation of 30 participants treated with the RP2D of gedatolisib.
 
The primary objectives of the Phase 1b portion of
 the trial include assessment of the safety and tolerability of gedatolisib in combination with
darolutamide and determination of the recommended
Phase 2 dose of gedatolisib. The primary objective of the Phase 2 portion of the trial is to assess the
radiographic progression-free
survival at six months of patients who received the RP2D. Initial preliminary data for the Phase 1b dose escalation portion of
the trial
is expected to be available by the end of the second quarter of 2025.
 
A Phase 3, open-label, randomized clinical trial to
evaluate the efficacy and safety of gedatolisib plus a CDK4/6 inhibitor and fulvestrant as first-line
treatment for patients with HR+/HER2-
advanced breast cancer that is endocrine treatment resistant (“VIKTORIA-2”) is currently activating clinical trial
sites.
 For the CDK4/6 inhibitor, investigators may choose either ribociclib or palbociclib. This multi-center, international trial is expected
 to enroll
approximately 12–36 evaluable subjects in the safety run-in portion of the study to evaluate the safety of gedatolisib
when combined with ribociclib and
fulvestrant. In the Phase 3 portion of the study, approximately 638 subjects will be randomized and
assigned to Cohort 1 (PIK3CA WT) or Cohort 2
(PIK3CA MT) based on their PIK3CA status. Subjects in each cohort will be randomized on
a 1:1 basis to either Arm A (gedatolisib with fulvestrant and
ribociclib or palbociclib) or Arm B (fulvestrant and ribociclib or palbociclib).
It is expected that approximately 200 clinical sites across North America,
Europe, Latin America, and Asia-Pacific will participate. The first
patient is expected to be dosed in the second quarter of 2025.
 
Recent Developments
 
The VIKTORIA-1 Phase 3 clinical trial evaluating
 gedatolisib in combination with fulvestrant with and without palbociclib in adults with HR+,
HER2- advanced breast cancer who have received
prior treatment with a CDK4/6 inhibitor is 100% enrolled for the PIK3CA wild-type cohort. We expect
to provide topline data in
Q2 2025.
 
The
VIKTORIA-2 Phase 3 open-label randomized study evaluating the efficacy and safety of gedatolisib in combination with fulvestrant plus
 a
CDK4/6 inhibitor, either ribociclib or palbociclib, in comparison to fulvestrant plus a CDK4/6 inhibitor as a first-line treatment
 for patients with
HR+/HER2- advanced breast cancer who are endocrine therapy resistant remains on track to enroll its first patient in
Q2 2025.
 
In
December 2024, Celcuity presented overall survival data from a Phase 1b trial, which evaluated gedatolisib in combination with palbociclib
and
either letrozole or fulvestrant, in patients with HR+, HER2- advanced or metastatic breast cancer during a poster session at the
2024 San Antonio Breast
Cancer Symposium (SABCS). Median overall survival was 77.3 months among patients with HR+, HER2- advanced breast
cancer who were treatment-
naïve in the advanced setting and 33.9 months among patients previously treated with a CDK4/6 inhibitor.
 
We have not generated any revenue from sales to date,
and we continue to incur significant research and development and other expenses related to our
ongoing operations. As a result, we are
not and have never been profitable and have incurred losses in each period since we began operations in 2012. For
the years ended December
31, 2024 and 2023, we reported a net loss of approximately $111.8 million and $63.8 million, respectively. As of December 31,
2024, our cash and cash equivalents and short-term investments were approximately $235.1 million, and we had an accumulated deficit of approximately
$271.9 million.
 
 
41
 

 
  
RESULTS OF OPERATIONS
 
Components of Operating Results
 
Revenue
 
To date, we have not generated any revenue. With the
execution of the Pfizer license agreement in April 2021, whereby we acquired exclusive world-
wide licensing rights to develop and commercialize
gedatolisib, we initiated a Phase 3 clinical trial, VIKTORIA-1, in 2022 to support potential regulatory
approval to market gedatolisib.
In August 2023, we initiated a Phase 1b/2 clinical trial, CELC-G-201, and we have initiated a second Phase 3 clinical trial,
VIKTORIA-2,
with dosing of the first patient planned in Q2 2025 to support submission to the FDA seeking approval for this indication for gedatolisib.
If
we obtain regulatory approvals to market gedatolisib, we expect to generate revenue from sales of the drug for the treatment of breast
cancer patients.
 
Research and Development
 
Since our inception, we have primarily focused on
 research and development of gedatolisib, a PI3K/mTOR targeted therapy, and our CELsignia
platform and corresponding tests. Research and
development expenses primarily include:
 
●
employee-related expenses related to our research and development activities, including salaries, benefits, recruiting, travel and
 stock-based
compensation expenses;
●
laboratory supplies;
●
consulting fees paid to third parties;
●
clinical trial costs;
●
validation costs for gedatolisib;
●
facilities expenses; and
●
legal costs associated with patent applications.
 
Internal and external research and development costs
are expensed as they are incurred. As we continue development of gedatolisib and manage
studies and clinical trials, including the VIKTORIA-1
Phase 3 clinical trial, the CELC-G-201 Phase 1b/2 clinical trial, and the VIKTORIA-2 Phase 3
clinical trial, the proportion of research
and development expenses allocated to external spending will grow at a faster rate than expenses allocated to
internal expenses.
 
General and Administrative
 
General and administrative expenses consist primarily
of salaries, benefits and stock-based compensation related to our executive, finance and support
functions. Other general and administrative
expenses include professional fees for auditing, tax, and legal services associated with being a public company,
director and officer
insurance, investor relations and travel expenses for our general and administrative personnel.
 
Sales and Marketing
 
Expenses and costs related to the initiation and operation
of our medical and marketing teams, supply chain and distribution network are being incurred
in anticipation of the commercialization
 of our first drug candidate, gedatolisib. These expenses consist primarily of employee-related expenses,
professional and consulting fees related to these functions and operations, software costs, and the acquisition of data required
 to support our market
analysis for our drug product. We would expect to begin to incur sales force,
sales support staff and marketing expenses closer to a potential FDA approval
date.
 
Interest Expense
 
Interest expense is primarily due to a Loan Agreement.
 
Interest Income
 
Interest income consists of interest income earned
on our cash, cash equivalents and investment balances.
 
 
42
 

 
  
Results of Operations
 
Comparison of the Years Ended December 31, 2024 and 2023
 
 
 
Years Ended
   
 
   
 
 
 
 
December 31,
   
Increase (Decrease)
 
 
 
2024
   
2023
   
$
    Percent Change  
Statements of Operations Data:
   
      
      
      
  
Operating expenses:
   
      
      
      
  
 
   
      
      
      
  
Research and development
  $
104,203,230    $
60,594,005    $
43,609,225     
72%
General and administrative
   
9,063,721     
5,636,326     
3,427,395     
61 
Total operating expenses
   
113,266,951     
66,230,331     
47,036,620     
71 
Loss from operations
   
(113,266,951)    
(66,230,331)    
(47,036,620)    
71 
 
   
      
      
      
  
Other (expense) income
   
      
      
      
  
Interest expense
   
(10,280,445)    
(5,326,387)    
(4,954,058)    
93 
Interest income
   
11,768,291     
7,777,602     
3,990,689     
51 
Other income, net
   
1,487,846     
2,451,215     
(963,369)    
(39)
Net loss before income taxes
   
(111,779,105)    
(63,779,116)    
(47,999,989)    
75 
Income tax benefits
   
-     
-     
-     
- 
Net loss
  $
(111,779,105)   $
(63,779,116)   $
(47,999,989)    
75%
  
Research and Development
 
For the year ended December 31, 2024, our research
 and development expenses were approximately $104.2 million, representing an increase of
approximately $43.6 million, or 72%, compared
to 2023. Of the $43.6 million increase in research and development expense, $30.7 million was primarily
related to costs supporting ongoing
activities for the VIKTORIA-1 and CELC-G-201 trials and the commencement of the VIKTORIA-2 Phase 3 pivotal
trial. The remaining $12.9
million was related to increased employee and consulting expenses, of which $0.1 million was in the form of non-cash stock-
based compensation.
 
Conducting a significant amount of research and development
is central to our business model. We plan to increase our research and development
expenses for the foreseeable future as we seek to develop
gedatolisib and manage the VIKTORIA-1 Phase 3 clinical trial, the CELC-G-201 Phase 1b/2
clinical trial, and the VIKTORIA-2 Phase 3 clinical
trial.
 
General and Administrative
 
For the year ended December 31, 2024, our total general
and administrative expenses were $9.1 million, representing an increase of approximately
$3.4 million, or 61%, compared to 2023. Employee
related expenses accounted for $2.6 million of the $3.4 million increase. The remaining $0.8 million of
the increase resulted from professional
fees, expanding infrastructure and other administrative expenses.
 
We anticipate that our general
 and administrative expenses will increase in future periods, reflecting both increased costs in connection with the
potential future commercialization
of gedatolisib, an expanding infrastructure, and increased professional fees associated with public company regulatory
developments and
requirements, and other compliance matters.
 
Interest Expense
 
For the year ended December 31, 2024, interest expense
was $10.3 million and represents an increase of $5.0 million compared to 2023. The increase
is due primarily to the increased debt balance
in 2024 compared to 2023 due to the incremental $61.7 million funding of Term Loan C in May 2024. The
$10.3 million of interest expense
includes $2.7 million of non-cash interest expense.
 
Interest Income
 
For the year ended December 31,
2024, interest income was $11.8 million and represents an increase of $4.0 million compared to 2023. The increase
was primarily the result
of closing on additional equity and debt financing activities in May 2024, leading to higher cash, cash equivalents and short-term
investment
balances.
 
LIQUIDITY AND CAPITAL RESOURCES
 
Since our inception, we have incurred losses and cumulative
negative cash flows from operations. Through December 31, 2024, we have funded our
operations primarily through private placements and
registered offerings of our equity securities and unsecured convertible notes, and borrowings under
loan agreements. From inception through
December 31, 2024, we raised an aggregate of approximately $369.0 million of net proceeds through sales of our
securities, and as of December
31, 2024 had $100.0 million of borrowings under loan agreements, not including payable-in-kind interest. In March 2024,
an investor exercised
1,739,080 warrants at an exercise price of $8.05, which generated approximately $14 million in cash. In March 2025, an investor
exercised 695,650 warrants at an exercise price of $8.05, which generated approximately $5.6 million in cash.
The warrants exercised in March 2024 and
2025 were issued pursuant
to a private placement that closed on December 9, 2022. As of December 31, 2024, our cash and cash equivalents and short-
term investments
were approximately $22.5 million and $212.6 million, respectively, and we had an accumulated deficit of approximately $271.9 million.
 
Open Market Sale Agreement℠. On February
4, 2022, we entered into an Open Market Sale AgreementSM with Jefferies LLC, as agent, pursuant to
which we may offer and sell,
from time to time, through Jefferies, shares of our common stock having an aggregate offering price of up to $50.0 million,
which amount
was subsequently increased to $125.0 million on December 6, 2024. On October 12, 2022, pursuant to this agreement, the Company sold
500,000
shares of common stock in a single transaction at a price of $10.35 per share generating gross proceeds of $5.2 million ($4.8 million
net of

commissions and offering expenses). On December 1, 2023, pursuant to this agreement, the Company sold 1,034,500 shares of common
stock in a single
transaction at a price of $14.50 per share, generating gross proceeds of $15.0 million ($14.4 million net of commissions
and offering expenses). In April
2024 and May 2024, pursuant to this agreement, the Company sold 285,714 and 149,700 shares of common
stock, respectively, at an average selling price
of $17.55 per share, generating gross proceeds of $7.6 million before deducting commissions
and other offering expenses of $0.3 million. At December 31,
2024, $125.0 million of common stock remains available for sale under the
Jefferies agreement.
 
 
43
 

 
  
Private Placement. On December 9, 2022, we
issued 6,182,574 shares of common stock, 1,120,873 shares of Series A Preferred Stock and warrants
exercisable for 6,956,450 shares of
common stock to certain institutional and other accredited investors pursuant to a securities purchase agreement entered
into on May 15,
2022. Pursuant to the securities purchase agreement, the closing (funding) of the private placement occurred following dosage of the first
patient in the Company’s Phase 3 study, VIKTORIA-1. Investors purchased shares of common stock and Series A Preferred Stock at a
price of $5.75 per
share (on an as converted to common stock basis), with forty percent (40%) warrant coverage (on an as converted to
common stock basis) and customary
resale registration rights. The warrants have an exercise price of $8.05 per share. The private placement
generated gross proceeds of approximately $100.0
million before deducting placement agent fees and other offering expenses of $4.3 million.
 
Pre-funded Warrants.
On October 18, 2023, the Company entered into a securities purchase agreement to sell pre-funded warrants at a price of $8.70
per warrant,
to purchase up to 5,747,787 shares of the Company’s common stock in a private placement. The closing of the private placement occurred
on
October 20, 2023, and resulted in gross proceeds of approximately $50.0 million, before deducting offering expenses of approximately
$0.1 million.
 
Equity Offering. On May 30, 2024, the Company
entered into an underwriting agreement with Leerink Partners LLC, TD Securities (USA) LLC and
Stifel, Nicolaus & Company, Incorporated
as representatives of the several underwriters relating to the issuance and sale of 3,871,000 shares of common
stock, at a price to the
public of $15.50, generating gross proceeds of approximately $60.0 million. The offering closed on May 31, 2024 and resulted in net
proceeds
to the Company of approximately $56.3 million after deducting underwriting discounts and other offering expenses payable by the Company.
The
Company intends to use the net proceeds from the offering for working capital and general corporate purposes, which may include research
 and
development expenditures, clinical trial expenditures, expansion of business development activities and other general corporate purposes.
 
Loan Agreement. On May 30, 2024, the Company
entered into an Amended and Restated Loan and Security Agreement (the “A&R Loan Agreement”)
with Innovatus Life Sciences
Lending Fund I, LP, a Delaware limited partnership (“Innovatus”), as collateral agent, and the Lenders including Innovatus
in
its capacity as a Lender and Oxford Finance LLC (“Oxford”), pursuant to which Innovatus and Oxford, as Lenders, have agreed
to make certain term loans
(“Term Loans”) to the Company in the aggregate principal amount of up to $180 million. The A&R
Loan Agreement amends and restates, in its entirety,
that certain Loan and Security Agreement, dated April 8, 2021, as amended, between
the Company and Innovatus, as collateral agent, and the Lenders
named therein (the “Prior Loan Agreement”).
 
Funding of the first $100 million under the A&R
Loan Agreement occurred on May 30, 2024, including tranche payments of $16.8 million (the “Term
A Loan”) and $21.5 million
(the “Term B Loan”) reflecting repayment of the principal amount of loans under the Prior Loan Agreement plus accrued
payment-in-kind
interest, in addition to $61.7 million of new borrowings (the “Term C Loan”). The Company will be eligible to draw on a fourth
tranche of
$30 million (the “Term D Loan”) and fifth tranche of $50 million (the “Term E Loan”), in each case
upon achievement of certain clinical trial milestones
and satisfaction of certain financial covenants determined on a pro forma as-funded
basis. The Lenders may, in their sole discretion upon the Company’s
request, make additional term loans to the Company of $45 million
(the “Term F Loan”). Funding of these additional tranches is also subject to other
customary conditions and limits on when
 the Company can request funding for such tranches. Costs associated with the new borrowings were
approximately $2.4 million.
 
Pursuant to the A&R Loan Agreement, the Company
is entitled to make interest-only payments for thirty-six months, or up to forty-eight months if
certain conditions are met. The Term
Loans will mature on May 1, 2029 and will bear interest at a rate equal to the sum of (a) the greater of (i) the Prime
Rate (as defined
in the A&R Loan Agreement) or (ii) 7.75%, plus (b) 2.85%, provided that 1.0% of such interest will be payable in-kind by adding an
amount equal to such 1.0% of the outstanding principal amount to the then outstanding principal balance on a monthly basis through May
31, 2027. The
A&R Loan Agreement is secured by all assets of the Company. Proceeds will be used for working capital purposes and to
fund the Company’s general
business requirements, including the Phase 3 VIKTORIA-2 clinical trial. The A&R Loan Agreement contains
customary representations and warranties
and covenants, subject to customary carve-outs, and includes financial covenants related to liquidity
and other financial measures. Innovatus has the right,
at its election and until August 9, 2025, to convert up to 20% of the outstanding
principal of the Term A Loan into shares of the Company’s common stock
at a price per share of $10.00 (the “Conversion Right”).
Innovatus will continue to have the right to exercise a previously disclosed warrant granted to it
under the Prior Loan Agreement to purchase
26,042 shares of common stock at a price per share of $14.40 through April 8, 2031.
 
The A&R Loan Agreement contains a Final Fee, which
is equal to 4.5% of the initial funding of the agreement and is due on the earliest to occur of (a)
the Maturity Date, (b) the acceleration
of any Term Loan, and (c) the prepayment of the Term Loans. There is also a contingent non-utilization fee for both
the Term D and Term
E loans. If the Company achieves the Term D Milestone and (i) fails to draw the full amount of the Term D Loan during the Term D
Draw
Period and (ii) fails to notify Collateral Agent, at any time before the date that is four weeks after the Company’s achievement
of the Term D
Milestone, of the Company’s intent not to draw the full amount of the Term D Loan, a non-utilization fee of $900,000,
with respect to the Term D Loan
shall become due and payable on the earliest of (i) the termination of the Term D Draw Period, (ii) the
Maturity Date, (iii) the acceleration of any Term
Loan, and (iv) the prepayment in whole of the Term Loans. If the Company achieves the
Term E Milestone and (i) fails to draw the full amount of the Term
E Loan during the Term E Draw Period and (ii) fails to notify Collateral
Agent, at any time before the date that is four weeks after the Company’s
achievement of the Term E Milestone, of the Company’s
intent not to draw the full amount of the Term E Loan, a non-utilization fee of $1,500,000, with
respect to the Term E Loan shall become
due and payable on the earliest of (i) the termination of the Term E Draw Period, (ii) the Maturity Date, (iii) the
acceleration of any
Term Loan, and (iv) the prepayment in whole of the Term Loans. After the 18-month anniversary of the Effective Date, the Company
shall
have the option to prepay all, but not less than all, of the Term Loans advanced by the Lenders under the A&R Loan Agreement, provided
the
Company (i) provides written notice to Collateral Agent of its election to prepay the Term Loans at least seven Business Days prior
to such prepayment,
and (ii) pays to Lenders on the date of such prepayment, payable to each Lender in accordance with its respective
Pro Rata Share, an amount equal to the
sum of (A) all outstanding principal of the Term Loans plus accrued and unpaid interest thereon
through the prepayment date, (B) the Final Fee, (C) the
Prepayment Fee, plus (D) all other outstanding Obligations that are due and payable,
including, without limitation, Lenders’ Expenses and interest at the
Default Rate with respect to any past due amounts. At May 30,
2024, the Company recognized the Final Fee of $4.5 million as additional debt principal
and a corresponding debt discount to be amortized
over the life of the loan.
 
 
44
 

 
 
In connection with the funding of each of the Term
C Loan, the Term D Loan, the Term E Loan and the Term F Loan, the Company agreed to issue to
Innovatus and Oxford warrants to purchase
that number of shares of the Company’s common stock equal to 2.5% of the principal amount of the applicable
Term Loan divided by
the exercise price, which shall, with respect to the Term C Loan, be equal to the lower of (i) the volume weighted average closing
price
of the Company’s common stock for the five-trading day period ending on the last trading day immediately preceding the execution
of the A&R Loan
Agreement or (ii) the closing price on the last trading day immediately preceding the execution of the A&R Loan
Agreement. Accordingly, on May 30,
2024, the Company issued 103,876 warrants with an exercise price of $14.84 per share. The relative
fair value of the warrants was approximately $1.2
million. For the additional Term Loans, the exercise price will be based on the lower
of (i) the exercise price for the Warrants issued pursuant to the Term C
Loan or (ii) the volume weighted average closing price of the
Company’s common stock for the five-trading day period ending on the last trading day
immediately preceding the applicable Term
 Loan funding. The Warrants may be exercised on a cashless basis and are exercisable through the tenth
anniversary of the applicable funding
date. The number of shares of common stock for which each Warrant is exercisable and the associated exercise price
are subject to certain
proportional adjustments as set forth in such Warrant.
 
We expect that our research and development and general
and administrative expenses will increase as we continue to develop gedatolisib, manage the
VIKTORIA-1 Phase 3 clinical trial, the CELC-G-201
Phase 1b/2 trial, and the VIKTORIA-2 Phase 3 trial, conduct other studies and clinical trials, and
pursue other business development activities.
We would also expect to incur sales and marketing expenses as we commercialize gedatolisib. We expect to
use cash on hand, together with
the funds to be received under the debt and equity financings described above, to fund our research and development
expenses, clinical
trial costs, capital expenditures, working capital, sales and marketing expenses, and general corporate expenses.
 
Based on our current business plan, we believe that
our current cash, cash equivalents and short-term investments together with available borrowings
under the Innovatus Loan Agreement will
provide sufficient cash to finance our clinical development program activities through 2026.
 
Our expectations as to how long our current capital
resources will be sufficient to fund our operations are based on assumptions that may not be
accurate, and we could use our current capital
resources sooner than we currently expect. In addition, we may seek to raise additional capital to finance
capital expenditures and operating
expenses over the next several years as we launch our integrated therapeutic and companion diagnostic strategy and
expand our infrastructure,
commercial operations and research and development activities, and to take advantage of financing or other opportunities that we
believe
to be in the best interests of the Company and our stockholders. Additional capital may be raised through the sale of common or preferred
equity or
convertible debt securities, entry into debt facilities or other third-party funding arrangements. The sale of equity and convertible
debt securities may result
in dilution to our stockholders and those securities may have rights senior to those of our common shares.
Agreements entered into in connection with such
capital raising activities could contain covenants that would restrict our operations
or require us to relinquish certain rights. Additional capital may not be
available on reasonable terms, or at all.
 
Cash Flows
 
The following table sets forth the primary sources
and uses of cash for the years ended December 31:
 
 
 
December 31,
 
 
 
2024
   
2023
 
 
   
 
Net cash (used in) provided by:
   
      
  
Operating activities
  $
(83,466,743)   $
(53,812,253)
Investing activities
   
(63,069,283)    
(5,008,207)
Financing activities
   
138,388,075     
64,911,677 
Net (decrease) increase in cash and cash equivalents
  $
(8,147,951)   $
6,091,217 
 
 
45
 

 
  
Operating Activities
 
Net cash used in operating activities was approximately
$83.5 million for the year ended December 31, 2024 and consisted primarily of a net loss of 
approximately $111.8 million, partially
offset by working capital changes of $18.3 million and non-cash expense items of approximately $10.0 million.
Non-cash expense items of
approximately $10.0 million primarily consisting of $7.0 million of stock-based compensation expense, net non-cash interest
income and
expense of $2.8 million, and depreciation expense of $0.1 million. The approximately $18.3 million of working capital changes was primarily
due to increases in accrued expenses and accounts payable, and a decrease in other current assets.
 
Net cash used in operating activities
was approximately $53.8 million for the year ended December 31, 2023 and consisted primarily of a net loss of
approximately $63.8 million,
partially offset by working capital changes of $3.9 million and non-cash expense items of approximately $6.1 million. Non-
cash expense
items of approximately $6.1 million primarily consisted of $4.9 million of stock-based compensation expense, non-cash interest expense
of
$2.1 million and depreciation expense of $0.1 million, partially offset by $1.0 million of accrued interest income. The approximately
$3.9 million of
working capital changes was primarily due to increases in accounts payable and accrued expenses, offset by an increase
in other current assets.
 
Investing Activities
 
Net cash used in investing activities for the year
ended December 31, 2024 was approximately $63.1 million and consisted of approximately $62.8
million of net purchases of short-term investments
in government securities (U.S. Treasury Bills and U.S. government securities) and approximately $0.3
million in purchases of property
and equipment.
 
Net cash used in investing activities for the year
ended December 31, 2023 was approximately $5.0 million and consisted of approximately $4.9
million of net purchases of short-term investments
in government securities (U.S. Treasury Bills and U.S. government securities) and approximately $0.1
million in purchases of property
and equipment.
 
Financing Activities
 
Net cash provided by financing
activities for the year ended December 31, 2024 was approximately $138.4 million and primarily consisted of net
proceeds of approximately
$59.2 million from incremental debt financing, $56.3 million from an equity offering and $7.3 million from an at-the market
offering.
The remaining $15.6 million consisted of proceeds from the exercise of common stock warrants, the exercise of employee stock options and
employee stock purchases, slightly offset by payments for a secondary registration statement costs.
 
Net cash provided by financing activities for the
year ended December 31, 2023 was approximately $64.9 million and primarily consisted of net
proceeds from a pre-funded warrant offering
and at-the-market offering, collectively totaling $64.4 million. The remaining $0.5 million was the result of
proceeds from the exercise
of employee stock options, the exercise of warrants, and proceeds from employee stock purchases, slightly offset by payments
for secondary
registration statement and debt issuance costs.
 
RECENT ACCOUNTING PRONOUNCEMENTS
 
From time-to-time new accounting pronouncements are
issued by the Financial Accounting Standards Board or other standard setting bodies and
adopted by us as of the specified effective date.
Unless otherwise discussed in Note 2 to our financial statements included elsewhere in this Annual Report,
we believe that the impact
of recently issued standards that are not yet effective will not have a material impact on our financial position or results of
operations
upon adoption.
 
CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES
 
Our management’s discussion and analysis of
financial condition and results of operations is based on our financial statements, which have been
prepared in accordance with accounting
principles generally accepted in the United States, or Generally Accepted Accounted Principles (“U.S. GAAP”).
The preparation
of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities
and the
disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during
the reporting periods. These
items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these
estimates could occur in the future. We base
our estimates on historical experience and on various other factors that we believe are reasonable
under the circumstances; the results of which form the
basis for making judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Changes in estimates are
reflected in reported results for the period in which they become
known. Actual results may differ materially from these estimates.
 
 
46
 

 
  
Our significant accounting policies are more fully
described in Note 2 to our financial statements included elsewhere in this Annual Report. Of our
significant accounting policies, we believe
that the following are the most critical:
 
Stock-Based Compensation
 
Our stock-based compensation
 consists of common stock options and restricted stock issued to certain employees and non-employees and our
Employee Stock Purchase Plan
(“ESPP”). We recognize compensation expense based on an estimated grant date fair value using the Black-Scholes option-
pricing
 method for equity-based awards and the Monte Carlo simulation model for the performance-based awards. We have elected to account for
forfeitures
as they occur.
 
The inputs for the Black-Scholes valuation model require
management’s significant assumptions. Prior to our IPO, the price per share of common
stock was determined by our board based on
recent prices of common stock sold in private offerings. Subsequent to the IPO, the price per share of common
stock is determined by using
the closing market price on the Nasdaq Capital Market on the grant date. The risk-free interest rates are based on the rate for
U.S. Treasury
securities at the date of grant with maturity dates approximately equal to the expected life at the grant date. The expected life was
based on
the simplified method in accordance with SEC Staff Accounting Bulletin Nos. 107 and 110. The expected volatility was estimated
based on historical
volatility information of peer companies that are publicly available in combination with our calculated volatility
since being publicly traded.
 
All assumptions used to calculate the grant date fair
value of non-employee options are generally consistent with the assumptions used for options
granted to employees. In the event we terminate
any of our consulting agreements, the unvested options issued in connection with such agreements would
also be cancelled.
 
For grants of restricted stock, we record compensation
expense based on the quoted fair value of the shares on the grant date over the requisite service
period. Compensation expense for ESPP
rights is recorded in line with each respective offering period.
 
Clinical Trial Costs
 
The Company records prepaid assets or accrued expenses
for prepaid or estimated clinical trial costs conducted by third-party service providers, which
includes the conduct of preclinical studies
and clinical trials. These costs can be a significant component of the Company’s research and development
expenses. The
Company primarily relies on a compilation of progress reports from third-party service providers, including the respective invoicing,
to
record actual expenses, along with determining changes to prepaid assets and accrued liabilities. To date, the Company believes utilization
of third-party
reports most accurately reflects expenses incurred. With the ongoing VIKTORIA-1 Phase 3 trial and the CELC-G-201 Phase
 1b/2 trial, and the
commencement of the VIKTORIA-2 Phase 3 trial site activation and patient enrollment,
the Company’s estimated expenses in future periods and the actual
services performed may vary from these estimates, and these
estimates may become more significant. Changes in these estimates that result in material
changes to the Company’s prepaid assets
or accrued expenses could materially affect the Company’s results of operations.
 
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
 
As a smaller reporting company, we are not required
to provide disclosure pursuant to this item.
 
 
47
 

 
  
ITEM 8. Financial Statements and Supplementary Data
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
 
To
the Board of Directors and
Stockholders of Celcuity Inc.
 
Opinion
on the Financial Statements
 
We
have audited the accompanying balance sheets of Celcuity Inc. (the Company) as of December 31, 2024 and 2023, and the related statements
of
operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31,
2024, and the related notes
(collectively referred to as the financial statements). In our opinion, the financial statements present
fairly, in all material respects, the financial position of
the Company as of December 31, 2024 and 2023, and the results of its operations
and its cash flows for each of the years in the two-year period ended
December 31, 2024, in conformity with accounting principles generally
accepted in the United States of America.
 
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 audits. We are a public accounting firm registered with the 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 audits 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 audits,
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
audits 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 included examining, on a test basis, evidence regarding
the amounts and disclosures in
the financial statements. Our audits 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 audits
provide a reasonable basis for our opinion.
 
Critical
Audit Matters
 
Critical
audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required
to be
communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements
 and (2) involved our
especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
 
/s/ Boulay
LLP
 
We
have served as the Company’s auditor since 2017.
 
Minneapolis,
Minnesota
March 31, 2025
PCAOB
ID: 542
 
 
48
 

 
  
Celcuity Inc.
Balance Sheets
 
 
  December 31, 2024     December 31, 2023 
 
   
     
 
Assets
   
      
  
Current Assets:
   
      
  
Cash and cash equivalents
  $
22,514,823    $
30,662,774 
Investments
   
212,588,960     
149,919,974 
Other current assets
   
9,467,247     
10,007,849 
Total current assets
   
244,571,030     
190,590,597 
Property and equipment, net
   
336,515     
228,782 
Operating lease right-of-use assets
   
215,502     
400,019 
Total Assets
  $
245,123,047    $
191,219,398 
Liabilities and Stockholders’ Equity:
   
      
  
Current Liabilities:
   
      
  
Accounts payable
  $
9,366,007    $
5,076,699 
Operating lease liabilities
   
171,952     
184,950 
Accrued expenses
   
22,184,948     
8,927,094 
Total current liabilities
   
31,722,907     
14,188,743 
Operating lease liabilities
   
53,969     
225,922 
Note payable, non-current
   
97,727,136     
37,035,411 
Total Liabilities
   
129,504,012     
51,450,076 
Commitments and Contingencies (Note 9)
   
     
 
Stockholders’ Equity:
   
      
  
Preferred stock, $0.001 par value: 2,500,000 shares authorized; 317,577 and 854,134 shares issued and
outstanding as of December 31, 2024 and December 31, 2023, respectively
   
318     
854 
Common stock, $0.001 par
value: 95,000,000 and 65,000,000 shares
authorized as of December 31, 2024
and December 31, 2023, respectively; 37,143,242 and 25,506,012
 shares issued and outstanding as of
December 31, 2024 and December 31, 2023, respectively
   
37,143     
25,506 
Additional paid-in capital
   
387,436,682     
299,818,965 
Accumulated deficit
   
(271,855,108)    
(160,076,003)
Total Stockholders’ Equity
   
115,619,035     
139,769,322 
Total Liabilities and Stockholders’ Equity
  $
245,123,047    $
191,219,398 
 
See accompanying notes to the financial statements
 
 
49
 

 
  
Celcuity Inc.
Statements of Operations
 
 
 
Twelve Months Ended December 31,
 
 
 
2024
   
2023
 
 
   
     
 
Operating expenses:
   
      
  
 
   
      
  
Research and development
  $
104,203,230    $
60,594,005 
General and administrative
   
9,063,721     
5,636,326 
Total operating expenses
   
113,266,951     
66,230,331 
Loss from operations
   
(113,266,951)    
(66,230,331)
 
   
      
  
Other (expense) income
   
      
  
Interest expense
   
(10,280,445)    
(5,326,387)
Interest income
   
11,768,291     
7,777,602 
Other income, net
   
1,487,846     
2,451,215 
Net loss before income taxes
   
(111,779,105)    
(63,779,116)
Income tax benefits
   
-     
- 
Net loss
  $
(111,779,105)   $
(63,779,116)
 
   
      
  
Net loss per share, basic and diluted
  $
(2.83)   $
(2.69)
 
   
      
  
Weighted average common shares outstanding, basic and diluted
   
39,449,393     
23,679,472 
  
See accompanying notes to the financial statements
 
 
50
 

 
  
Celcuity Inc.
Statements of Changes in Stockholders’ Equity
  
 
 
Common Stock
   
Preferred Stock
   
Additional 
Paid-In
   
Accumulated      
 
 
 
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
   
Total
 
Balance at December 31, 2022
   
21,667,250    $
21,667     
1,120,873    $
1,121    $ 230,045,566    $
(96,296,887)   $ 133,771,467 
Stock-based compensation
   
1,958     
2     
-     
-     
4,901,432     
-     
4,901,434 
Conversion of preferred to common stock
   
2,667,390     
2,668     
(266,739)    
(267)    
(2,401)    
-     
- 
Employee stock purchases
   
33,850     
33     
-     
-     
202,812     
-     
202,845 
Exercise of common stock options, net of shares withheld
for exercise price
   
98,695     
99     
-     
-     
388,423     
-     
388,522 
Exercise of common stock warrants
   
2,369     
2     
-     
-     
22,503     
-     
22,505 
Issuance costs associated with private placement offering    
-     
-     
-     
-     
(7,486)    
-     
(7,486)
Issuance of common stock in an ATM offering
   
1,034,500     
1,035     
-     
-     
14,999,216     
-     
15,000,251 
Issuance costs associated with an ATM offering
   
-     
-     
-     
-     
(614,205)    
-     
(614,205)
Issuance of pre-funded warrants
   
-     
-     
-     
-     
50,000,000     
-     
50,000,000 
Issuance costs associated with pre-funded warrants
   
-     
-     
-     
-     
(116,895)    
-     
(116,895)
Net loss
   
-     
-     
-     
-     
      
(63,779,116)    
(63,779,116)
Balance at December 31, 2023
   
25,506,012    $
25,506     
854,134    $
854    $ 299,818,965    $ (160,076,003)   $ 139,769,322 
Stock-based compensation
   
1,429     
1     
-     
-     
6,988,340     
-     
6,988,341 
Conversion of preferred to common stock
   
5,365,570     
5,367     
(536,557)    
(536)    
(4,831)    
-     
- 
Employee stock purchases
   
33,215     
33     
-     
-     
275,568     
-     
275,601 
Exercise of common stock options, net of shares withheld
for exercise price
   
103,245     
104     
-     
-     
769,463     
-     
769,567 
Exercise of common stock warrants, net of shares
withheld for exercise price
   
1,827,357     
1,826     
-     
-     
14,733,991     
-     
14,735,817 
Issuance of common stock in an ATM offering
   
435,414     
435     
-     
-     
7,641,765     
-     
7,642,200 
Issuance costs associated with an ATM offering
   
-     
-     
-     
-     
(263,727)    
-     
(263,727)
Issuance of common stock upon closing of follow-on
offering, net of underwriting discounts and offering costs    
3,871,000     
3,871     
-     
-     
56,248,237     
-     
56,252,108 
Issuance of common stock warrants, note payable
   
-     
-     
-     
-     
1,228,911     
-     
1,228,911 
Net loss
   
-     
-     
-     
-     
-      (111,779,105)     (111,779,105)
Balance at December 31, 2024
   
37,143,242    $
37,143     
317,577    $
318    $ 387,436,682    $ (271,855,108)   $ 115,619,035 
 
See accompanying notes to the financial statements
 
 
51
 

 
  
Celcuity Inc.
Statements of Cash Flows
  
 
 
Twelve Months Ended December 31,
 
 
 
2024
   
2023
 
Cash flows from operating activities:
   
      
  
Net loss
  $
(111,779,105)   $
(63,779,116)
Adjustments to reconcile net loss to net cash used for operations:
   
      
  
Depreciation
   
129,947     
142,772 
Stock-based compensation
   
6,988,341     
4,901,434 
Amortization of debt issuance costs and discount
   
1,330,652     
241,752 
Payment-in-Kind interest
   
1,363,708     
1,810,584 
Non-cash operating lease, net
   
(434)    
4,368 
Change in accrued interest income
   
150,421     
(993,457)
Changes in operating assets and liabilities:
   
      
  
Other current assets
   
775,981     
(3,438,018)
Accounts payable
   
4,315,892     
2,430,614 
Accrued expenses
   
13,257,854     
4,866,814 
Net cash used for operating activities
   
(83,466,743)    
(53,812,253)
Cash flows from investing activities:
   
      
  
Proceeds from maturities of investments
   
642,345,545     
309,614,521 
Purchases of investments
   
(705,164,950)    
(314,525,084)
Purchases of property and equipment
   
(249,878)    
(97,644)
Net cash used for investing activities
   
(63,069,283)    
(5,008,207)
Cash flows from financing activities:
   
      
  
Proceeds from exercise of common stock warrants
   
14,735,817     
22,505 
Proceeds from exercise of employee stock options
   
769,571     
388,522 
Proceeds from employee stock purchases
   
275,601     
202,845 
Proceeds from follow-on offering, net of underwriting discounts and offering costs
   
56,252,108     
- 
Proceeds from note payable, net of debt issuance costs and discount of $2,437,644
   
59,226,276     
- 
Proceeds from an ATM offering, net of issuance costs
   
7,356,107     
14,431,186 
Proceeds from pre-funded warrants, net of offering costs
   
-     
49,917,589 
Payments for secondary registration statement costs
   
(227,405)    
(45,805)
Payments for debt issuance costs
   
-     
(2,716)
Payments for finance leases
   
-     
(2,449)
Net cash provided by financing activities
   
138,388,075     
64,911,677 
Net change in cash and cash equivalents
   
(8,147,951)    
6,091,217 
Cash and cash equivalents:
   
      
  
Beginning of period
   
30,662,774     
24,571,557 
End of period
  $
22,514,823    $
30,662,774 
 
   
      
  
Supplemental disclosure of cash flow information:
   
      
  
Interest paid
  $
7,586,084    $
3,274,051 
Supplemental disclosures of non-cash investing and financing activities:
   
      
  
Deferred financing costs and offering and registration statement costs included in accounts payable
  $
42,028    $
56,414 
Property and equipment included in accounts payable
  $
1,417    $
13,615 
Common stock warrants issued with the note payable transaction
  $
1,228,911    $
- 
 
See accompanying notes to the financial statements
 
 
52
 

 
  
CELCUITY INC.
NOTES TO FINANCIAL STATEMENTS
 
1. Organization
 
Nature of Business
 
Celcuity Inc., a Delaware corporation (the “Company”) is a
clinical-stage biotechnology company focused on the development of targeted therapies for the
treatment of multiple solid tumor indications.
The Company’s lead therapeutic candidate is gedatolisib, a potent, well-tolerated, small molecule reversible
inhibitor, administered
intravenously, that selectively targets all Class I isoforms of phosphatidylinositol-3-kinase (“PI3K”) and the two mechanistic
targets
of rapamycin (“mTOR”) sub-complexes, mTORC1 and mTORC2. Gedatolisib’s mechanism of action and pharmacokinetic
properties are differentiated
from other currently approved and investigational therapies that target PI3K or mTOR alone or together.
A Phase 3 clinical trial, VIKTORIA-1, evaluating
gedatolisib in combination with fulvestrant with or without palbociclib in patients with
HR+/HER2- advanced breast cancer is currently enrolling patients.
Site selection and activation activities for a Phase 3 clinical trial,
VIKTORIA-2, evaluating gedatolisib in combination with a CDK4/6 inhibitor and
fulvestrant as first-line treatment for patients with HR+/HER2-
advanced breast cancer has commenced. The first patient is expected to be dosed in the
second quarter of 2025. A Phase 1b/2 clinical trial,
CELC-G-201, evaluating gedatolisib in combination with darolutamide in patients with metastatic
castration resistant prostate cancer,
is currently underway. The Company was co-founded in 2012 by Brian F. Sullivan and Dr. Lance G. Laing and is based
in Minnesota. The Company
has not generated any revenues to date.
 
2. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
 
Basis of Presentation
 
The accompanying financial statements
 have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.
GAAP”) and pursuant
to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Operating results for the year ended December
31, 2024 are not necessarily indicative of results to be expected for any future year.
 
Accounting Estimates
 
Management uses estimates and assumptions in preparing these
financial statements in accordance with U.S. GAAP. Those estimates and assumptions
affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual
results could differ from those estimates
and the difference could be material. Significant items subject to such estimates and assumptions include the
valuation of stock-based
compensation and prepaid or accrued clinical trial costs.
 
Cash and Cash Equivalents
 
The Company maintains its accounts at two financial institutions.
At times throughout the year, the Company’s cash balances may exceed amounts insured
by the Federal Deposit Insurance Corporation.
 At December 31, 2024 and December 31, 2023, the Company had $22,514,823 and $30,662,774,
respectively, in business checking accounts and
money market funds that are considered cash equivalents and not insured by the Federal Deposit Insurance
Corporation.
 
Investments
 
The Company maintains its investments in U.S. governmental agency
securities and U.S. treasury bills and has classified them as held-to-maturity at the
time of purchase. Held-to-maturity purchases are
those securities in which the Company has the ability and intent to hold until maturity. Held-to-maturity
securities are recorded at amortized
cost, adjusted for the amortization or accretion of premiums and discounts. Premiums and discounts are amortized or
accreted over the
life of the related held-to-maturity security using a straight-line method. The difference between the carrying value, which is based
on
cost, and the aggregate fair value of the held-to-maturity securities, was immaterial as of December 31, 2024. At December 31, 2024
and December 31,
2023, the Company had $212,588,960 and $149,919,974, respectively, of short-term investments.
 
 
53
 

 
  
Property and Equipment
 
Property and equipment are stated at cost. Depreciation is provided
over estimated useful lives using the straight-line method. Maintenance and repairs are
expensed as incurred; major improvements and betterments
are capitalized.
 
Estimated useful lives of property and equipment are as follows for the
major classes of assets:
 
 
 
Estimated
Asset Description
 
Lives
Furniture and Equipment
 
4-5
Leasehold Improvements
 
2-3
 
Long-Lived Assets
 
Long-lived assets, such as property and equipment, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. If circumstances require
a long-lived asset or asset group be tested for possible impairment, the Company first
compares undiscounted cash flows expected to be
generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or
asset group is not recoverable
on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value.
Fair value
is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent
appraisals, as considered necessary.
 
Deferred Transaction Costs
 
Deferred transaction costs primarily consist of legal fees that are capitalized
as incurred and will be offset against the proceeds from future equity financing
arrangements. The deferred transaction costs will be
reviewed periodically to assess the probability that future securities will be offered. In the event that
no future offering will occur,
any deferred transaction costs will be expensed. Total costs incurred, but not accounted for as a reduction in equity, were
$235,379 and
$0 as of December 31, 2024 and 2023, respectively.
 
Debt Issuance Costs
 
The Company recognizes debt issuance costs as deferred costs, which are
capitalized and amortized over the term of the related debt using the effective
interest method. These costs primarily consist of fees,
commissions, legal, and other costs directly attributable to securing debt financing. Debt issuance
costs are reported as a direct reduction
of the carrying amount of the related debt on the balance sheets. Amortization of these costs is recorded as interest
expense in the statements
of operations over the life of the debt instrument.
 
Comprehensive Loss
 
Comprehensive loss includes net loss as well as other changes in stockholders’
equity that result from transactions and economic events other than those
with stockholders. For all periods presented, there was no difference
between net loss and comprehensive loss.
 
Risks and Uncertainties
 
The Company is subject to risks common to companies in the development
stage including, but not limited to, dependency on the clinical and commercial
success of its initial drug product, gedatolisib, the ability
to obtain regulatory approval for gedatolisib, the need for substantial additional financing to
achieve its goals, uncertainty of broad
adoption of its approved products, if any, by physicians and consumers, and significant competition.
 
Fair Value of Financial Instruments
 
The Company’s accounting for fair value measurements of
assets and liabilities that are recognized or disclosed at fair value in the financial statements on a
recurring or nonrecurring basis
adheres to the Financial Accounting Standards Board (“FASB”) fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities
(Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level
3 measurements). The three levels of the
fair value hierarchy are as follows:
 
●
Level
1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement
date.
 
●
Level
2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly,
for
substantially the full term of the asset or liability.
 
●
Level
3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available,
thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
 
 
54
 

 
  
The level in the fair value hierarchy within which a fair value
measurement in its entirety falls, is based on the lowest level input that is significant to the
fair value measurement in its entirety.
 
The carrying values of cash equivalents, accounts payable, accrued
expenses and other financial working capital items approximate fair value at December
31, 2024 and December 31, 2023, due to the short
maturity nature of these items.
 
Income Taxes
 
The Company accounts for income taxes using the asset and liability method,
as required by the accounting standard for income taxes. Under this method,
deferred tax assets and liabilities are recognized for the
 future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities
and their respective tax bases, as well as net operating loss and tax credit carryforwards. Deferred taxes are
measured using enacted
tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled.
The effect on deferred taxes of a change in tax rates is recognized in results of operations in the period that includes the enactment
date. The effects
of any future changes in tax laws or rates have not been considered. The Company regularly reviews deferred tax assets
to assess their potential realization
and establish a valuation allowance for portions of such assets to reduce the carrying value if
the Company does not consider it to be more likely than not
that the deferred tax assets will be realized.
 
The Company recognizes the impact of an uncertain tax position in its financial
statements if, in management’s judgment, the position is more-likely-than-
not sustainable upon audit based on the position’s
technical merits. This involves the identification of potential uncertain tax positions, the evaluation of
applicable tax laws and an
assessment of whether a liability for an uncertain tax position is necessary.
 
Stock-Based Compensation
 
The Company’s stock-based compensation consists of stock
options and restricted stock issued to certain employees and non-employees of the Company
and the Company’s 2017 Employee Stock
Purchase Plan. The Company recognizes compensation expense based on an estimated grant date fair value
using the Black-Scholes option-pricing
method for equity-based awards and the Monte Carlo simulation model for performance-based awards. If the
factors change and different
assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. The
Company recognizes
stock-based compensation expense for these options on a straight-line basis over the requisite service period. The Company has
elected
to account for forfeitures as they occur.
 
Research and Development
 
Research and development costs are expensed as incurred. Research and development
costs amounted to $104,203,230 for the year ended December 31,
2024 and $60,594,005 for the year ended December 31, 2023.
 
Clinical Trial Costs
 
The Company relies on third parties to conduct
certain aspects of clinical studies and to formulate and manufacture our drug product. While there are
alternative vendors that can
perform these functions, any disruption or delay by the Company’s current third parties in carrying out their contractual
duties
could delay the clinical trials. The Company records prepaid assets or accrued expenses for prepaid or estimated clinical
trial costs conducted by third-party
service providers, which includes the conduct of preclinical studies and clinical trials. These
 costs can be a significant component of the Company’s
research and development expenses. The Company primarily relies on a
compilation of progress reports from third-party service providers, including the
respective invoicing, to record actual expenses,
along with determining changes to prepaid assets and accrued liabilities. To date, the Company believes
utilization of third-party
reports most accurately reflects expenses incurred. With the ongoing VIKTORIA-1 Phase 3 trial and the CELC-G-201 Phase 1b/2
trial,
and the commencement of the VIKTORIA-2 Phase 3 clinical trial site activation and patient enrollment anticipated in Q2 2025,
the Company’s
estimated expenses in future periods and actual services performed may vary from these estimates, and these
estimates may become more significant.
Changes in these estimates that result in material changes to the Company’s prepaid
assets or accrued expenses could materially affect the Company’s
results of operations and financial position.
 
Segment Data
 
In November 2023, the FASB issued ASU 2023-07: Improvements to Reportable
Segment Disclosures. This ASU, which amends Topic 280: Segment
Reporting, improves disclosure requirements for reportable segments
 and enhances disclosures for companies with single reportable segments. The
Company has a single reportable segment based on the nature
of its operations. The nature of business and the accounting policies of the segment are the
same as described throughout Notes 1 and
2. The Company’s Chief Operating Decision Maker (“CODM”) is its executive team. The CODM assesses the
reportable segment’s performance
and allocates resources for the reportable segment based on net income and total assets, which are the same amounts in
all material respects
as those reported on the statements of operations and balance sheets. The Company adopted the standard on January 1, 2024. The
adoption
did not have a material impact on the Company’s financial statements.
 
 
55
 

 
  
3. Liquidity
 
Based on the Company’s cash and cash equivalents and short-term investments
 on hand at December 31, 2024 of $22,514,823 and $212,588,960,
respectively, the Company believes that its cash and short-term investments
will be sufficient to fund the Company’s current operating plan through at least
the next 12 months from the issuance date of this
Annual Report.
 
4. Net Loss Per Common Share
 
Basic and diluted net loss per common share is determined by dividing net
loss attributable to common stockholders by the weighted-average common
shares outstanding during the period. For all periods presented,
the common shares underlying the preferred stock, options, warrants, and restricted stock
have been excluded from the calculation because
their effect would be anti-dilutive. Therefore, the weighted-average shares outstanding used to calculate
both basic and diluted loss
per common share are the same.
 
The following table summarizes the potentially-dilutive shares excluded
from the diluted weighted-average shares outstanding:
 
 
 
December 31,
 
 
 
2024
   
2023
 
Potentially-dilutive shares excluded from diluted weighted-average shares outstanding:
 
 
    
 
  
Preferred stock on an as-if-converted to common stock
 
 
3,175,770   
 
8,541,340 
Options to purchase common stock
 
 
4,306,977   
 
2,815,392 
Warrants to purchase common stock
 
 
5,521,152   
 
7,263,733 
Restricted common stock
 
 
1,079   
 
1,958 
Total
 
 
13,004,978   
 
18,622,423 
 
Pre-funded warrant shares of 5,747,787 are included in the computation
of basic and diluted net loss per share for the years ended December 31, 2024 and
2023, as the pre-funded warrants are issuable for nominal
consideration.
 
5. Investments
 
The following table summarizes the Company’s held-to-maturity investment
securities at amortized cost as of December 31, 2024 and 2023:
 
 
 
December 31, 2024
 
 
 
Amortized Cost, as
Adjusted
   
Gross Unrealized
Holding Gains
   
Gross Unrealized
Holding Losses    
Estimated Fair
Value
 
 
   
     
     
     
 
U.S. Treasury Bills
  $
212,588,960    $
82,251    $
-    $
212,671,211 
Total
  $
212,588,960    $
82,251    $
-    $
212,671,211 
 
 
 
December 31, 2023
 
 
 
Amortized Cost, as
Adjusted
   
Gross Unrealized
Holding Gains
   
Gross Unrealized
Holding Losses    
Estimated Fair
Value
 
 
   
     
     
     
 
U.S. Treasury Bills
  $
149,919,974    $
30,995    $
-    $
149,950,969 
Total
  $
149,919,974    $
30,995    $
-    $
149,950,969 
 
The fair value of the Company’s held-to-maturity debt securities
is determined based upon inputs, other than the quoted prices in active markets, that are
observable either directly or indirectly, and
are classified as Level 2 fair value instruments.
 
 
56
 

 
  
6. Other Current Assets
 
Other current assets consisted of the following at
December 31:
   
 
 
2024
  
2023
 
Current:
  
    
  
Prepaid clinical trial costs
 $ 6,768,668  $ 8,763,150 
Miscellaneous receivable
   1,600,621   
805,882 
Directors & officers’ insurance
  
256,629   
157,453 
Other
  
841,329   
281,364 
Total
 $ 9,467,247  $10,007,849 
 
7. Property and Equipment
 
Property and equipment consisted of the following
at December 31:
 
 
 
2024
   
2023
 
 
   
     
 
Furniture and equipment
  $
2,025,875    $
1,788,195 
Leasehold improvements
   
302,577     
302,577 
   
2,328,452     
2,090,772 
Less: Accumulated depreciation
   
(1,991,937)   
(1,861,990)
Total
  $
336,515    $
228,782 
 
Depreciation expense
was $129,947 and $142,772 for the years ended December 31, 2024 and 2023, respectively.
 
8. Accrued Expenses
 
Accrued expenses consisted of the following at December
31:
 
 
 
2024
   
2023
 
Clinical trial costs
  $
16,708,499    $
6,464,772 
Accrued compensation
   
3,987,786     
1,763,316 
Other
   
1,384,803     
641,512 
Employee stock purchase plan
   
103,860     
57,494 
Total
  $
22,184,948    $
8,927,094 
 
 
57
 

 
  
9. Commitments
 
Operating and Finance Leases
 
The Company leases its corporate space in Minneapolis,
 Minnesota, with an operating lease in place through April 30, 2026. The lease provides for
monthly rent, real estate taxes, and operating
expenses. Rent expense is recorded on a straight-line basis over the lease term. In March 2023, the Company
signed the fourth amendment
to extend this lease through April 30, 2026. This amendment provides for monthly rent, real estate taxes and operating
expenses.
 
In May 2018, the Company entered into a non-cancelable finance
lease agreement for office equipment with a five-year term. The underlying assets are
included in furniture and equipment. The lease contains
a bargain purchase option at the end of the lease. The finance lease expired in May 2023 and the
equipment was acquired for the bargain
purchase option price.
 
When an implicit rate is not provided, the Company uses its
incremental borrowing rate based on the information available at the lease commencement
date in determining the present value of the lease
payments.
 
Supplemental balance sheet information consisted of the following at December
31, 2024:
 
Operating Lease
   
 
Right-of-use assets
  $
215,502 
 
   
  
Operating lease liability
  $
225,921 
Less: short term portion
   
(171,952)
Long term portion
  $
53,969 
  
Maturity analysis under lease agreements consisted of the following as
of December 31, 2024:
 
 
 
Operating
Leases
 
 
   
 
2025
  $
220,389 
2026
   
74,170 
Total minimum lease payments
   
294,559 
Less: Present value discount
   
(68,638)
Present value of net minimum lease payments
  $
225,921 
 
Weighted Average
 
Remaining Lease
Term
   
Discount Rate
 
Operating lease
   
 1.3 years     
10.5%
 
Lease costs for the period ended December 31:
 
 
   
2024
     
2023
 
 
   
      
  
Operating lease cost
  $
213,104    $
212,238 
Finance lease cost:
   
      
  
Amortization
   
-     
2,411 
Interest
   
-     
4 
Variable lease cost
   
111,246     
101,957 
  $
324,350    $
316,610 
 
Supplemental cash flow information related to leases for the period ended December 31:
 
 
 
2024
   
2023
 
Cash paid for amounts included in operating and finance leases:
   
      
  
Operating cash outflow from operating leases
  $
324,783    $
308,914 
Operating cash outflow from finance leases
   
-     
4 
Financing cash outflow from finance leases
   
-     
2,449 
  $
324,783    $
311,367 
 
 
58
 

 
  
Clinical Research Studies
 
The Company enters into contracts in the normal course of business to conduct
research and development programs internally and through third parties that
include, among others, arrangements with vendors, consultants,
CMOs, and CROs. The Company has a license agreement in place with Pfizer to research,
develop, manufacture and commercialize gedatolisib.
 In conjunction with the license agreement, the Company completed a Phase 1b clinical trial –
B2151009 related to gedatolisib. These
patients subsequently transitioned to an Expanded Access study – CELC-G-001. Contracts related to the Expanded
Access study are
 generally based on time and material. In addition, contracts related to the Company’s Phase 3 clinical studies (VIKTORIA-1 and
VIKTORIA-2)
 and the Phase 1b/2 clinical trial (CELC-G-201) are generally cancelable with reasonable notice within 120 days and the Company’s
obligations under these contracts are primarily based on services performed through termination dates plus certain cancelation charges,
if any, as defined in
each of the respective agreements. In addition, these agreements may, from time to time, be subjected to amendments
as a result of any change orders
executed by the parties. As of December 31, 2024, the Company had five material non-cancelable contractual
 commitments with respect to these
arrangements, which totaled approximately $9.7 million.
 
10. Stockholders’ Equity
 
Capital Stock
 
At December 31, 2023, the Company’s authorized
capital stock consisted of 65,000,000 shares of $.001 par value common stock, of which 25,506,012
shares were outstanding, and 2,500,000
shares of $.001 par value preferred stock, of which 854,134 shares were outstanding.
 
In 2024, several of the Company’s preferred
shareholders elected to convert 536,557 shares of Series A Convertible Preferred Stock into 5,365,570 shares
of common stock, in accordance
with the Securities Purchase Agreement dated May 15, 2022. The cost basis of the shares transferred is $5.75 per share.
 
In 2024, several of the Company’s investors
exercised 1,827,357 common stock warrants at exercise prices ranging between $8.05 and $9.50 per share,
which generated approximately
$14.7 million in cash. The 1,827,357 common stock warrants were net of shares withheld for exercise price.
 
At December 31, 2024, the Company’s
 authorized capital stock consisted of 95,000,000 shares of common stock, of which 37,143,242 shares were
outstanding, and 2,500,000 shares
of preferred stock, including 1,850,000 shares designated as Series A Preferred Stock, of which 317,577 shares were
outstanding. As of
December 31, 2024, no dividends have been declared on the Company’s capital stock.
 
Sale and Issuance of Stock
 
On April 22, 2024, pursuant to an Open Market Sale
AgreementSM with Jefferies LLC, as agent, the Company sold 285,714 shares of common stock in a
single transaction at a price
of $17.50 per share, generating gross proceeds of $5.0 million.
 
On May 8, 2024, pursuant to an Open Market
Sale Agreement with Jefferies LLC, as agent, the Company sold 149,700 shares of common stock in a single
transaction at a price of $17.65
per share, generating gross proceeds of $2.6 million.
 
Commissions and other offering expenses related to the Open Market Sale
Agreement transactions in April and May 2024 were $0.3 million.
 
 
59
 

 
  
On May 30, 2024, the Company entered into an underwriting
agreement with Leerink Partners LLC, TD Securities (USA) LLC and Stifel, Nicolaus &
Company, Incorporated as representatives of the
several underwriters relating to the issuance and sale of 3,871,000 shares of common stock, at a price to
the public of $15.50, generating
gross proceeds of approximately $60.0 million. The offering closed on May 31, 2024 and resulted in net proceeds to the
Company of approximately
$56.3 million after deducting underwriting discounts and other offering expenses payable by the Company. The Company
intends to use the
net proceeds from the offering for working capital and general corporate purposes, which may include capital expenditures, research and
development expenditures, clinical trial expenditures, expansion of business development activities and other general corporate purposes.
 
Pre-Funded Warrants
 
On October 18, 2023, the
 Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain investors (the
“Investors”)
pursuant to which the Company agreed to sell to the Investors in a private placement pre-funded warrants to purchase up to 5,747,787 shares
of the Company’s common stock, par value $0.001 per share. Each Warrant to purchase one share had a purchase price of $8.699 per
share, and an exercise
price of $0.001 per share for the common stock issuable upon exercise of the Warrant.
 
The closing of the Private
Placement occurred on October 20, 2023, and resulted in gross proceeds to the Company of approximately $50.0 million, before
deducting
offering expenses of approximately $0.1 million.
 
Each Warrant is immediately
exercisable and will not expire. Under the terms of the Warrants, the Company may not effect the exercise of any such
Warrant, and a holder
will not be entitled to exercise any portion of any Warrant, if, upon giving effect to such exercise, the aggregate number of shares of
common stock beneficially owned by the holder (together with its affiliates, other persons acting or who could be deemed to be acting
as a group together
with the holder or any of the holder’s affiliates, and any other persons whose beneficial ownership of common
stock would or could be aggregated with the
holder’s or any of the holder’s affiliates for purposes of Section 13(d) or Section
16 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) would exceed 4.99% of the number of shares of
common stock outstanding immediately after giving effect to the exercise, as such percentage
ownership is calculated in accordance with
Section 13(d) of the Exchange Act and the applicable regulations of the SEC (the “Maximum Percentage”). A
holder may reset
the Maximum Percentage to a higher percentage (not to exceed 19.99%), effective 61 days after written notice to the Company, or a lower
percentage, effective immediately upon written notice to the Company. Any such increase or decrease will apply only to that holder and
not to any other
holder of Warrants.
 
The Securities Purchase Agreement
contains customary representations, warranties and agreements by the Company, customary conditions to closing,
indemnification obligations
of the Company, other obligations of the parties and termination provisions.
 
Warrants
 
At December 31,
2024:
   
   
     
     
Issue Date
 
Expiration 
Date
 
# of Warrants 
Outstanding
   
Exercise 
Price
   
Offering
1/21/2016
  1/14/2026
   
33,719    $
7.56    private placement offering - issued to placement agent
5/2/2016
  5/2/2026
   
21,530    $
7.56    private placement offering - issued to placement agent
4/28/2017
  4/28/2027
   
33,250    $
8.42    private placement offering - issued to placement agent
5/17/2017
  5/17/2027
   
15,365    $
8.42    private placement offering - issued to placement agent
9/22/2017
  9/19/2025
   
70,000    $
10.45    IPO - issued to underwriter
4/8/2021
  4/8/2031
   
26,042    $
14.40    debt financing - issued to lender
5/30/2024
  5/30/2034
   
84,227    $
14.84    debt financing – issued to lender
5/30/2024
  5/30/2034
   
19,649    $
14.84    debt financing – issued to lender
12/9/2022
  see below
   
5,217,370    $
8.05   
securities purchase agreement - issued to institutional and other
accredited investors
10/18/2023
  see above
   
5,747,787    $
0.001    private placement offering - issued to investors
Total Warrants
Outstanding
   
   
11,268,939     
      
 
 
60
 

 
  
At December 31, 2024 and 2023, the Company had warrants
to purchase 11,268,939
and 13,011,520
shares of common stock outstanding, at a weighted
average exercise price of $4.04
and $4.53,
respectively. A total of 1,842,913
and 2,369
warrants were exercised in the years ended December 31, 2024 and
2023, respectively. There were 3,544
warrants that expired in 2024.
 
11. Stock-Based Compensation
 
2012 Equity Incentive Plan
 
The 2012 Equity Incentive Plan, as amended, was adopted by the Company’s
board and approved by the members of Celcuity LLC on August 10, 2012.
The Company reserved a maximum of 625,000 shares of common stock
for issuance under the 2012 Equity Incentive Plan. The 2012 Equity Incentive Plan
provides for options, restricted stock awards, performance
stock awards or stock bonuses. The exercise price of each option granted under the 2012 Equity
Incentive Plan is not less than 100% of
the fair market value of one share on the date of grant. The maximum permitted term of options granted under the
2012 Equity Incentive
Plan is ten years. The Company’s board administers the 2012 Equity Incentive Plan and determines the provisions of incentive
awards,
including eligible recipients, number of shares subject to an incentive award, exercise price, vesting schedule, duration of an incentive
award and
other restrictions an incentive award may be subject to. The 2012 Equity Incentive Plan was frozen on September 6, 2017 and
new awards are issued under
the terms of the 2017 Amended and Restated Stock Incentive Plan.
 
2017 Stock Incentive Plan
 
The 2017 Amended and Restated Stock Incentive Plan (the “2017 Plan”)
was adopted by the Company’s board on September 6, 2017, became effective
following the corporate conversion on September 15, 2017,
and was approved by stockholders at the Company’s annual stockholder meeting on May 10,
2018. The 2017 Plan was amended and approved
by stockholders at the Company’s annual stockholder meeting on May 14, 2020. The Company initially
reserved a maximum of 750,000
shares of common stock for issuance under the 2017 Plan. The number of shares reserved for issuance was automatically
increased by 255,060
and 216,673 shares on January 1, 2024 and 2023, respectively, and will increase automatically on January 1 of each of 2025 through
2027
by the number of shares equal to 1.0% of the aggregate number of outstanding shares of Company common stock as of the immediately preceding
December 31. However, the Company’s board may reduce the amount of the increase in any particular year. At each of the Annual Meetings
held on May
12, 2021 and May 12, 2022, the stockholders approved a 500,000 increase for a total of 1,000,000 increase, to the number of
shares reserved for issuance
under the 2017 Plan. At each of the Annual Meetings held on May 11, 2023 and May 9, 2024, the stockholders
approved 1,500,000 increases for a total
increase of 3,000,000 to the number of shares reserved for issuance under the 2017 Plan. The
2017 Plan provides for options, restricted stock awards, stock
appreciation rights, restricted stock units, performance awards and stock
bonuses. The exercise price of each option granted under the 2017 Plan is not less
than 100% of the fair market value of one share on
the date of grant. The maximum permitted term of options granted under the 2017 Plan is ten years. The
2017 Plan is generally administered
by the compensation committee of the Company’s board, which has the authority to interpret the 2017 Plan, grant
awards and make
all other determinations necessary for the administration of the 2017 Plan.
 
The following table summarizes the activity for all stock options outstanding
for the years ended December 31:
   
 
 
2024
   
2023
 
 
 
Shares
   
Weighted Average
Exercise Price
   
Shares
   
Weighted Average
Exercise Price
 
Options outstanding at beginning of year
   
2,815,392    $
7.95     
1,976,586    $
6.34 
Granted
   
1,716,729     
16.14     
1,003,298     
10.69 
Exercised
   
(103,245)    
7.45     
(98,695)    
3.94 
Forfeited
   
(121,899)    
11.57     
(65,797)    
7.45 
Balance at December 31:
   
4,306,977    $
11.13     
2,815,392    $
7.95 
 
   
      
      
      
  
Options exercisable at December 31:
   
2,011,474    $
7.35     
1,524,731    $
6.44 
 
   
      
      
      
  
Weighted Average Grant Date Fair Value for options granted
during the year:
   
     $
11.22     
     $
7.48 
 
 
61
 

 
  
The
following table summarizes additional information about stock options outstanding and exercisable at December 31, 2024:
   
Options Outstanding
   
Options Exercisable
 
Options
Outstanding
   
Weighted Average
Remaining
Contractual Life    
Weighted Average
Exercise Price
   
Aggregate
Intrinsic Value
   
Options
Exercisable
   
Weighted Average
Exercise Price
   
Aggregate
Intrinsic
Value
 
 
4,306,977     
7.96    $
11.13    $
13,914,458     
2,011,474    $
7.35    $
11,781,660 
 
The Company recognized stock-based compensation expense for stock options
of $6,626,402 and $4,716,475 for the years ended December 31, 2024 and
2023, respectively. In May 2022, the Company modified the exercise
price on 776,324 stock option awards to $5.50, the closing market price on the
Nasdaq Capital Market on May 17,2022. The effect of this
modification on stock-based compensation was $106,000 and $134,000 for the years ended
December 31, 2024 and 2023, respectively. The effect
 of this modification on stock-based compensation over the remaining service period will be
approximately $57,000. In December 2021, the
Company modified the exercise price on 311,000 stock option awards to $13.44, the closing market price
on the Nasdaq Capital Market on
December 15, 2021. No director or officer awards were modified. The effect on stock-based compensation was $63,000
and $65,000 for the
years ended December 31, 2024 and 2023, respectively. The effect on stock-based compensation over the remaining service period will
be
approximately $35,000. In May 2020, the Company modified the exercise price on 203,750 stock option awards to $5.10, the closing market
price on
the Nasdaq Capital Market on May 14, 2020. No director or officer awards were modified. The effect on stock-based compensation
was $696 and $19,000
for the years ended December 31, 2024 and 2023, respectively. There is no effect on stock-based compensation remaining.
 
The Black-Scholes option-pricing model was used to estimate the
fair value of equity-based awards and the Monte Carlo simulation model was used to
estimate the fair value of the performance-based awards,
with the following weighted-average assumptions for the years ended December 31:
 
 
 
2024
   
2023
 
Risk-free interest rate
   
3.48% - 4.71%      3.41% - 4.86% 
Expected volatility
     71.2% - 76.20%      77.1% - 79.8% 
Expected life (years)
   
5.25 to 10.00     
5.25 to 6.08 
Expected dividend yield
   
0%   
0%
 
The inputs for the Black-Scholes valuation model and the Monte Carlo simulation
 model require management’s significant assumptions. Prior to the
Company’s initial public offering, the price per share of
common stock was determined by the Company’s board based on recent prices of common stock
sold in private offerings. Subsequent
to the initial public offering, the price per share of common stock is determined by using the closing market price on
the Nasdaq Capital
Market on the grant date. The risk-free interest rates are based on the rate for U.S. Treasury securities at the date of grant with maturity
dates approximately equal to the expected life at the grant date. The expected life is based on the simplified method for the time-based
awards and the life
of the option for the performance-based awards, in accordance with the SEC Staff Accounting Bulletin Nos. 107 and
 110. The expected volatility is
estimated based on historical volatility information of peer companies that are publicly available in
combination with the Company’s calculated volatility
since being publicly traded for the time-based awards. For the performance-based
awards, the Company’s full historical volatility was used to value the
options.
 
All assumptions used to calculate the grant date fair value of non-employee
options are generally consistent with the assumptions used for options granted
to employees. In the event the Company terminates any of
its consulting agreements, the unvested options issued in connection with the agreements would
also be cancelled.
 
The Company had 1,079 and 1,958 shares of restricted stock outstanding
at December 31, 2024 and 2023, respectively, and 2,308 and 3,273 shares of
restricted stock vested during the years ended December 31,
2024 and 2023, respectively. The Company recognized stock-based compensation expense for
restricted stock of $22,220 and $18,499 for the
years ended December 31, 2024 and 2023, respectively.
 
The total remaining shares available for grant under the Company’s
2017 Plan as of December 31, 2024 was 1,177,450.
 
 
62
 

 
  
Total unrecognized compensation cost related to stock options and restricted
stock is estimated to be recognized at December 31:
 
2025
  $
7,776,307 
2026
   
6,307,024 
2027
   
5,165,880 
2028
   
1,964,136 
Total estimated compensation cost to be recognized
  $ 21,213,347 
 
2017 Employee Stock Purchase Plan
 
The Company’s 2017 Employee Stock Purchase Plan (the “ESPP”)
 was adopted by the Company’s board on September 6, 2017 and approved by
stockholders at the Company’s annual stockholder meeting
on May 10, 2018. The Company initially reserved a total of 100,000 shares for issuance under
the ESPP. The number of shares reserved for
 issuance was automatically increased by 127,530 and 108,337 shares on January 1, 2024 and 2023,
respectively and will increase automatically
on each subsequent January 1 by the number of shares equal to 0.5% of the total outstanding number of shares
of Company common stock as
of the immediately preceding December 31. However, the Company’s board may reduce the amount of the increase in any
particular year.
The total remaining shares available for issuance under the employee stock purchase plan as of December 31, 2024 is 360,950.
 
The ESPP provides participating employees with an opportunity to purchase
 shares of the Company’s common stock at a discount through payroll
deductions. The ESPP is available to all employees unless they
are employed for less than 20 hours per week or own 5% or more of the total combined
voting power or value of the Company’s common
stock. The ESPP is administered using overlapping 24 month offering periods, referred to as an Offering
Period. Each Offering Period has
four six-month purchase periods. A new Offering Period and purchase period begin every six months on May 1 and
November 1 of each year.
Participating employees may purchase common stock, on a voluntary after tax-basis, at a price equal to 85% of the fair market
value of
a share of common stock on either the offering date or the purchase date, whichever is lower. If the purchase date has a lower price,
the employee
will automatically be placed in the Offering Period beginning immediately after the purchase date. The Company recognized
stock-based compensation
expense related to the ESPP of $339,719 and $166,460 for the years ended December 31, 2024 and 2023, respectively.
 
The Company recognized total stock-based compensation
expense as follows for the years ended December 31:
 
 
 
Years Ended
 
 
 
December 31:
 
 
 
2024
   
2023
 
Stock-based compensation expense in operating expenses:
   
      
  
Research and development
  $
4,404,518    $
2,700,318 
General and administrative
   
2,583,823     
2,201,116 
Total
  $
6,988,341    $
4,901,434 
 
12. Debt
 
On May 30, 2024, the Company entered into an Amended
and Restated Loan and Security Agreement (the “A&R Loan Agreement”) with Innovatus Life
Sciences Lending Fund I, LP, a
Delaware limited partnership (“Innovatus”), as collateral agent, and the Lenders including Innovatus in its capacity as a
Lender and Oxford Finance LLC (“Oxford”), pursuant to which Innovatus and Oxford, as Lenders, have agreed to make certain
term loans (“Term Loans”)
to the Company in the aggregate principal amount of up to $180 million. The A&R Loan Agreement
amends and restates, in its entirety, that certain Loan
and Security Agreement, dated April 8, 2021, as amended, between the Company and
Innovatus, as collateral agent, and the Lenders named therein (the
“Prior Loan Agreement”).
 
 
63
 

 
  
Funding of the first $100 million under the A&R
Loan Agreement occurred on May 30, 2024, including tranche payments of $16.8 million (the “Term A
Loan”) and $21.5 million
 (the “Term B Loan”) reflecting repayment of the principal amount of loans under the Prior Loan Agreement plus accrued
payment-in-kind
interest, in addition to $61.7 million of new borrowings (the “Term C Loan”). The Company will be eligible to draw on a fourth
tranche of
$30 million (the “Term D Loan”) and fifth tranche of $50 million (the “Term E Loan”), in each case
upon achievement of certain clinical trial milestones
and satisfaction of certain financial covenants determined on a pro forma as-funded
basis. The Lenders may, in their sole discretion upon the Company’s
request, make additional term loans to the Company of $45 million
(the “Term F Loan”). Funding of these additional tranches is also subject to other
customary conditions and limits on when
 the Company can request funding for such tranches. Costs associated with the new borrowings was
approximately $2.4 million.
 
Pursuant to the A&R Loan Agreement, the Company
is entitled to make interest-only payments for thirty-six months, or up to forty-eight months if certain
conditions are met. The Term
Loans will mature on May 1, 2029 and will bear interest at a rate equal to the sum of (a) the greater of (i) the Prime Rate (as
defined
in the A&R Loan Agreement) or (ii) 7.75%, plus (b) 2.85%, provided that 1.0% of such interest will be payable in-kind by adding an
amount equal
to such 1.0% of the outstanding principal amount to the then outstanding principal balance on a monthly basis through May
31, 2027. The A&R Loan
Agreement is secured by all assets of the Company. Proceeds will be used for working capital purposes and to
fund the Company’s general business
requirements, including the Phase 3 VIKTORIA-2 clinical trial. The A&R Loan Agreement contains
 customary representations and warranties and
covenants, subject to customary carve-outs, and includes financial covenants related to liquidity
and other financial measures. Innovatus has the right, at its
election and until August 9, 2025, to convert up to 20% of the outstanding
principal of the Term A Loan into shares of the Company’s common stock at a
price per share of $10.00 (the “Conversion Right”).
Innovatus will continue to have the right to exercise a previously disclosed warrant granted to it under
the Prior Loan Agreement to purchase
26,042 shares of common stock at a price per share of $14.40 through April 8, 2031.
 
The A&R Loan Agreement contains a Final Fee, which
is equal to 4.5% of the initial funding of the agreement and is due on the earliest to occur of (a) the
Maturity Date, (b) the acceleration
of any Term Loan, and (c) the prepayment of the Term Loans. There is also a contingent non-utilization fee for both the
Term D and Term
E loans. If the Company achieves the Term D Milestone and (i) fails to draw the full amount of the Term D Loan during the Term D
Draw
Period and (ii) fails to notify Collateral Agent, at any time before the date that is four weeks after the Company’s achievement
of the Term D
Milestone, of the Company’s intent not to draw the full amount of the Term D Loan, a non-utilization fee of $900,000,
with respect to the Term D Loan
shall become due and payable on the earliest of (i) the termination of the Term D Draw Period, (ii) the
Maturity Date, (iii) the acceleration of any Term
Loan, and (iv) the prepayment in whole of the Term Loans. If the Company achieves the
Term E Milestone and (i) fails to draw the full amount of the Term
E Loan during the Term E Draw Period and (ii) fails to notify Collateral
Agent, at any time before the date that is four weeks after the Company’s
achievement of the Term E Milestone, of the Company’s
intent not to draw the full amount of the Term E Loan, a non-utilization fee of $1,500,000, with
respect to the Term E Loan shall become
due and payable on the earliest of (i) the termination of the Term E Draw Period, (ii) the Maturity Date, (iii) the
acceleration of any
Term Loan, and (iv) the prepayment in whole of the Term Loans. After the 18-month anniversary of the Effective Date, the Company
shall
have the option to prepay all, but not less than all, of the Term Loans advanced by the Lenders under the A&R Loan Agreement, provided
the
Company (i) provides written notice to Collateral Agent of its election to prepay the Term Loans at least seven Business Days prior
to such prepayment,
and (ii) pays to Lenders on the date of such prepayment, payable to each Lender in accordance with its respective
Pro Rata Share, an amount equal to the
sum of (A) all outstanding principal of the Term Loans plus accrued and unpaid interest thereon
through the prepayment date, (B) the Final Fee, (C) the
Prepayment Fee, plus (D) all other outstanding Obligations that are due and payable,
including, without limitation, Lenders’ Expenses and interest at the
Default Rate with respect to any past due amounts. At May 30,
2024, the Company recognized the Final Fee of $4.5 million as additional debt principal
and a corresponding debt discount to be amortized
over the life of the loan.
 
In connection with the funding of each of the Term
C Loan, the Term D Loan, the Term E Loan and the Term F Loan, the Company agreed to issue to
Innovatus and Oxford warrants to purchase
that number of shares of the Company’s common stock equal to 2.5% of the principal amount of the applicable
Term Loan divided by
the exercise price, which shall, with respect to the Term C Loan, be equal to the lower of (i) the volume weighted average closing
price
of the Company’s common stock for the five-trading day period ending on the last trading day immediately preceding the execution
of the A&R Loan
Agreement or (ii) the closing price on the last trading day immediately preceding the execution of the A&R Loan
Agreement. Accordingly, on May 30,
2024, the Company issued 103,876 warrants with an exercise price of $14.84 per share. The relative
fair value of the warrants was approximately $1.2
million. For the additional Term Loans, the exercise price will be based on the lower
of (i) the exercise price for the Warrants issued pursuant to the Term C
Loan or (ii) the volume weighted average closing price of the
Company’s common stock for the five-trading day period ending on the last trading day
immediately preceding the applicable Term
 Loan funding. The Warrants may be exercised on a cashless basis and are exercisable through the tenth
anniversary of the applicable funding
date. The number of shares of common stock for which each Warrant is exercisable and the associated exercise price
are subject to certain
proportional adjustments as set forth in such Warrant.
 
 
64
 

 
  
The Company evaluated the change of terms under ASC
470-50, “Debt – Modification and Extinguishment”, and concluded the change in terms did not
result in significant and
 consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not an
extinguishment
of the debt.
 
Long-term debt consisted of the following at December 31, 2024 and 2023:
   
 
 
2024
   
2023
 
Note payable
  $
100,000,000    $
35,000,000 
Add: Final fee
   
4,500,000     
- 
Add: PIK interest (added to principal)
   
593,288     
2,565,660 
Less: unamortized debt issuance costs
   
(1,613,734)    
(480,810)
Less: unamortized debt discount
   
(5,752,418)    
(49,439)
Total long-term debt
  $
97,727,136    $
37,035,411 
 
Future principal payments, including the incurred PIK interest and Final
Fee, are as follows:
 
 
 Years Ending December 31, 
 
  
 
2027
 $
30,615,349 
2028
  
52,483,455 
2029
  
21,994,484 
Total
 $
105,093,288 
 
13. Income Taxes
 
Following the conversion of Celcuity
LLC to Celcuity Inc. on September 15, 2017, Celcuity Inc. began filing federal and state returns where required. No
income tax benefit
was recorded for the years 2024 and 2023, due to net losses and recognition of a valuation allowance. The following table presents a
reconciliation
of the tax expense computed at the statutory federal rate and the Company’s tax expense for the years ended December 31:
 
 
 
2024
   
2023
 
Tax benefit at statutory federal rate
  $
(23,474,000)   $
(13,394,000)
State income tax benefit, net of federal tax effect
   
(95,000)    
(82,000)
Change in valuation allowance on deferred tax assets
   
24,081,000     
13,542,000 
Research & Development Credits
   
(1,236,000)    
(550,000)
Other permanent items
   
724,000     
484,000 
Income tax benefits
  $
-    $
- 
 
 
65
 

 
  
Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.
The Company’s deferred tax assets relate primarily to its net operating loss carryforwards and other balance
sheet basis differences.
In accordance with ASC 740, “Income Taxes,” the Company recorded a valuation allowance to fully offset the net deferred tax
asset, because it is more likely than not that the Company will not realize future benefits associated with these deferred tax assets
at December 31, 2024.
The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred
tax assets are at December 31:
 
 
 
2024
   
2023
 
Deferred tax assets (liabilities):
   
      
  
Accrued expenses
  $
459,000    $
207,000 
Share-based compensation
   
2,861,000     
2,141,000 
Property and equipment
   
420,000     
393,000 
Right-of-use assets
   
(45,000)    
(85,000)
Lease liability
   
48,000     
87,000 
IRC 174 Expenditures
   
30,133,000     
13,900,000 
Start-up expenditures
   
12,998,000     
11,029,000 
Net operating losses and tax credits
   
13,340,000     
8,461,000 
Valuation allowance
   
(60,214,000)    
(36,133,000)
Net deferred tax assets
  $
-    $
- 
 
At December 31, 2024, the Company had federal and
state net operating loss carryforwards of approximately $43.2 million and $0.8 million, respectively.
The federal and state net operating
loss carryforwards for 2017 will begin to expire in the year ending December 31, 2037. The federal net operating loss
carryforwards starting
in 2018 have no expiration. These deferred tax assets were subject to a full valuation allowance as of December 31, 2024 and
December
31, 2023.
 
At December 31, 2024, the Company had federal and
 state research and development tax credit carryforwards resulting in deferred tax assets of
approximately $2.9 million and $1.6 million,
respectively. The federal and state credit carryforwards will begin to expire in the years ending December 31,
2038 and December 31, 2033,
respectively. These deferred tax assets were subject to a full valuation allowance as of December 31, 2024 and December 31,
2023.
 
Under the provisions of Section 382 of the Internal
Revenue Code of 1986, certain substantial changes in the Company’s ownership, including a sale of the
Company, or significant changes
in ownership due to sales of equity, may limit in the future the amount of net operating loss carryforwards available to
offset future
taxable income.
 
The Company recognizes uncertain tax positions in
accordance with ASC 740 on the basis of evaluating whether it is more-likely-than not that the tax
positions will be sustained upon examination
 by tax authorities. For those tax positions that meet the more-likely-than not recognition threshold, we
recognize the largest amount
of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement. As of December 31, 2024, and 2023,
the Company
has no significant uncertain tax positions. There are no unrecognized tax benefits included on the balance sheet that would, if recognized,
impact the effective tax rate. The Company does not anticipate there will be a significant change in unrecognized tax benefits within
the next 12 months.
 
Prior to the conversion, Celcuity was a limited liability
company and therefore was taxed as a partnership for income tax purposes. Accordingly, no benefit
for income taxes was recorded prior
to the conversion.
 
For years prior to 2021, the Company is no longer
 subject to U.S. federal or state income tax examinations and remains open for the unutilized tax
attributes as of December 31, 2024, carried
forward from these years. The Company’s policy is to recognize interest and penalties related to uncertain tax
positions as a component
of general and administrative expenses.
 
14.
Subsequent Event
 
In
January 2025, the Board of Directors approved a repricing of certain outstanding stock options previously granted to employees. As of
the repricing
date, the exercise prices of these options were reduced to $11.92 per share, from their previous exercise prices ranging
from $12.80 to $18.73 per share.
This adjustment was made in response to the decline in the company’s stock price, with the intent
of retaining and motivating key employees. As a result of
this repricing, approximately 837,000 stock options held by 44 employees were
affected. The repriced options will continue to vest according to their
original schedule.
 
In
March 2025, an investor exercised 695,650 warrants at an exercise price of $8.05, which generated approximately $5.6 million in cash.
The warrants
were issued pursuant to a private placement that closed and was funded on December 9, 2022.
 
 
66
 

 
  
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 Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure
controls and procedures
as of December 31, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under
the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that
are designed to ensure that
information required to be disclosed by a company in the reports that it files or submits under the Exchange
Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed
by a company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company’s management,
including its principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance
of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship
of possible
controls and procedures.
 
 Based on the evaluation
of our disclosure controls and procedures as of December 31, 2024, our Chief Executive Officer and Chief Financial Officer
concluded that,
as of such date, our disclosure controls and procedures were effective.
 
Management Report on Internal Control over Financial
Reporting
 
 Our management is responsible for establishing
and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-
15(f) under the Securities Exchange
Act of 1934. Management has assessed the effectiveness of our internal control over financial reporting as of
December 31, 2024 based
on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO – 2013”) in Internal
Control-Integrated Framework. Based on this assessment, our Chief Executive Officer and Chief Financial Officer concluded that our system
of internal
control over financial reporting was effective as of such date.
 
This Annual Report does not
include an attestation report of our registered public accounting firm regarding internal control over financial reporting.
Management’s
report was not subject to attestation by our registered public accounting firm pursuant to our designation as a small reporting company
or
SRC and Non-Accelerated filer.
 
Changes in Internal Control
over Financial Reporting
 
There were no changes to
 our system of internal control over financial reporting during the three months ended December 31, 2024 that have
materially affected, or are reasonably likely to materially affect, our system
of internal controls over financial reporting.
 
ITEM 9B. Other Information
 
On November 19, 2024, Brightstone Venture Capital Fund, LP (“Brightstone”)
adopted a 10b5-1 plan that provided for the sale of up to 220,000 shares
of Celcuity Inc. common stock through November 19, 2025. This
plan was terminated on December 12, 2024. On December 13, 2024,
Brightstone adopted
a 10b5-1 plan that provides for the sale of up to 229,325 shares
of Celcuity Inc. common stock through December 13, 2025. David Dalvey is a General
Partner at Brightstone.
 
During the three months ended December 31, 2024, none
 of our other directors or officers (as defined in Rule 16a-1(f) of the Exchange
Act) adopted  or terminated  a “Rule
 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of
Regulation
S-K.
 
On
March 28, 2025, the Compensation Committee of the Board of Directors (the “Committee”) of the Company
adopted the Celcuity Inc. Change in
Control and Severance Plan (the “Severance Plan”). The purpose of the Severance Plan
is to provide assurances to employees of the Company of specified
benefits in the event of a Change in Control of the Company (as defined
in the Company’s equity plan) or certain terminations of employment following a
Change in Control. The Severance Plan covers all
regular full or part-time employees of the Company, including each executive officer of the Company.
The Committee is responsible for
administering the Severance Plan. The Severance Plan may be amended or terminated at any time prior
to a Change in
Control.
 
In the event of a
participant’s involuntary termination of employment without cause or resignation for good reason (as such terms are defined in
the
Severance Plan) within the twelve-month period following a Change in Control, the Severance Plan provides for: (i) a severance
payment in an amount
ranging from three months to three years of the participant’s base salary and target cash bonus, plus
(ii) COBRA premiums for the participant and their
enrolled dependents for the same time period, but no greater than eighteen months,
both payable in a lump sum.
 
The amount of severance provided under the Severance
Plan is: three years for the Company’s chief executive officer; two years for the Company’s
other executive officers; one
year for the Company’s other executives that are not executive officers; six months for the Company’s vice presidents; and
for
all other participants, the greater of (i) three months or (ii) two weeks per each full year of employment, with a maximum of six
months.
 
In addition, the Severance Plan provides that
in the event of a Change in Control, all outstanding equity awards held by any participant will fully vest
(with performance awards vesting
at the greater of target or actual performance levels) immediately upon the effective date of such change in control.
 
The foregoing description of the Severance Plan
does not purport to be complete and is qualified in its entirety by reference to the full text of the
Severance Plan, which is filed
as Exhibit 10.35 hereto and is incorporated herein by reference.
 
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
 

Not applicable.
 
 
67
 

 
  
PART III
 
ITEM 10.  Directors, Executive Officers and Corporate Governance
 
Directors
 
Brian F. Sullivan, age 63, is our co-Founder
and has served as Chairman of the Board and Chief Executive Officer since we commenced operations in
2012. Mr. Sullivan has over 30 years
of experience founding and building successful, high-growth technology companies. He was Chairman and CEO of
SterilMed, a medical device
reprocessing company, from 2003, when he led an investment group to acquire a majority interest, until its sale to Ethicon
Endo-Surgery
Inc., a Johnson & Johnson company, for $330 million in 2011. Previously, he was co-founder and Chief Executive Officer of Recovery
Engineering, a filtration company, which he took public and subsequently sold to Procter & Gamble for $265 million in 1999. Mr. Sullivan
previously
served on the board of directors of two publicly-held companies, Entegris, Inc. and Virtual Radiologic Inc. Mr. Sullivan
has received nine U.S. patents and
has several pending. He graduated magna cum laude with distinction from Harvard College with
an A.B. in economics. Among other attributes, skills, and
qualifications, the board of directors believes Mr. Sullivan is uniquely
qualified to serve as a director based on his extensive operational and business
development experience, and his knowledge in building
 stockholder value, growing a company from inception and navigating significant corporate
transactions and the public company process.
 
Lance G. Laing, Ph.D., age 63, is our co-Founder
and has served as Chief Science Officer, Vice President, Secretary and Director since we commenced
operations in 2012. Dr. Laing’s
career spans more than 20 years in drug discovery research and technology development. He received his doctorate in
biophysics and biochemistry
from The Johns Hopkins University and completed a National Institutes of Health post-doctoral fellowship at Washington
University Medical
 School. He has received 24 U.S. patents and has several U.S. patents pending. His drug discovery research career began at
Scriptgen/Anadys
Pharmaceuticals (purchased by Novartis), where he worked under Professor Peter Kim, who became President of Merck Research. He
also was
Director of Chemistry and Bioapplications and Director of Detection Product Development for two companies that each developed instruments
similar to those Celcuity uses to perform the CELsignia tests. His work at these two instrument companies gave him unique expertise and
experience in
developing a variety of patented applications for these instruments. Most recently, he served as an executive director for
an international drug discovery and
development company. Among other attributes, skills, and qualifications, the board of directors believes
Dr. Laing is uniquely qualified to serve as a
director based on his significant research, medical and scientific expertise.
 
Richard E. Buller, M.D., Ph.D., age 75, was
appointed to Celcuity’s board of directors in December 2019. Dr. Buller has over 15 years of experience
leading oncology clinical
development and translational medicine departments at major pharmaceutical companies. He has participated in the development
of 15 drugs
and several companion diagnostics that received U.S. FDA approval. Dr. Buller most recently served as Head Oncology Clinical Development
and Vice President of Translational Oncology at Pfizer, Inc, one of the world’s largest pharmaceutical companies, until he retired
 in 2016. He had
previously served as Vice President of Translational Medicine at Exelixis, a leading biopharmaceutical company, where
he led efforts to study patients
selected by molecular testing for inclusion in their phase 2 and phase 3 clinical trials. He began his
pharmaceutical company career at GlaxoSmithKline as
Director of the Oncology Medicine Development Center. Prior to his leadership positions
in drug development, he was Professor of Gynecologic Oncology
at the University of Iowa, where he led laboratory research focused on identifying
genomic variants involved in ovarian cancer. He received his M.D. from
the Baylor College of Medicine, where he also received his Ph.D.
in cell biology. Among other attributes, skills, and qualifications, the board of directors
believes Dr. Buller is uniquely qualified
to serve as a director based on his oncology drug and diagnostic development expertise.
 
 
68
 

 
  
David F. Dalvey, age 66, has served as a member
 of Celcuity’s board of directors since February  2014. Mr.  Dalvey has more than 30 years of
experience in the fields of
corporate finance and venture capital, working primarily with growth-oriented technology and life-science businesses. He has
over 10 years
of corporate finance advisory experience with two national investment banks, completing over 150 individual transactions. He has been
the
General Partner of Brightstone Venture Capital, a venture capital management company, since September 2000. Brightstone is a
25-year old venture capital
management company that has raised and managed ten venture partnerships. Previously, he held management positions
with R.J. Steichen and Company,
an investment bank, from 1995 to 2000, The Food Fund LP, a venture capital firm, from 1992 to 1995 and
Wessels, Arnold & Henderson, an investment
bank, from 1987 to 1992. Mr. Dalvey served on the board of directors for Navarre Corporation
 (now Speed Commerce, Inc.) from 2009 until
November 2012, on the board of managers for Blue Rock Market Neutral Fund, a mutual fund
registered under the Investment Company Act of 1940 from
2000 to 2014 and on the board of directors for Digitiliti, Inc. from July 2011
until October 2012. Mr. Dalvey has significant operational exposure as a board
director or advisor to many other public and privately
 held growth businesses and has served on these companies’ audit, strategic or governance
committees, including companies such as
HomeSpotter, Definity Health, AppTec Laboratories, CHF Solutions, BiteSquad, Agiliti, and Nature Vision. Mr.
Dalvey received a B.S. in
Business/Management Economics from University of Minnesota. Among other attributes, skills, and qualifications, the board of
directors
believes Mr. Dalvey is uniquely qualified to serve as a director based on his leadership experience in operating both public and private
companies
and his experience working in the investment community and with investment firms, which enable him to bring valuable insight
and knowledge to our
board of directors.
 
Leo T. Furcht, M.D., age 78, was appointed
to Celcuity’s board of directors in May 2019. Dr. Furcht is currently Allen-Pardee Professor of Cancer
Biology and Head of the Department
of Laboratory Medicine and Pathology at the University of Minnesota and a member of the Division of Molecular
Pathology and Genomics.
He served as Chairman of the Board of Directors for University of Minnesota Physicians, the Medical School practice plan with
approximately
700 physicians, from 2004-2014. He was also the founding Director of the Biomedical Engineering Center from 1990-2001, where he led
efforts
to establish stem cell and molecular diagnostics expertise at the University of Minnesota. He has published more than 180 scientific papers
and
holds more than 30 patents in the fields of polypeptides, biomaterials, and adult stem cells. His business experience includes co-founding
two medical
technology companies, South Bay Medical, a medical device company that was acquired by Mentor Corporation, and Diascreen,
a diagnostics company,
which was later acquired by Chronimed. Among other attributes, skills, and qualifications, the board of directors
believes Dr. Furcht is uniquely qualified
to serve as a director based on his research in tumor cell behavior and extracellular matrix
proteins, Head of the University of Minnesota’s Department of
Laboratory Medicine and Pathology, and his experience in several biotechnology
start-ups.
 
Polly A. Murphy, D.V.M., Ph.D., age 60, was
appointed to Celcuity’s board of directors in September 2022. Dr. Murphy has served as Chief Business
Officer at Avadel Pharmaceuticals
plc since May 2024. Prior to that, Dr. Murphy was Chief Business Officer at UroGen Pharma, Inc. from August 2020
through May 2024 and
served in various leadership roles at Pfizer Inc. from September 2008 to August 2020, including as Vice President and Head of
Early Commercial
Development, Pfizer Oncology Business Unit from January 2019 to August 2020, Vice President and Head of Global Marketing and
Commercial
Development, Pfizer Oncology Business Unit from June 2017 to December 2018, and Vice President and Head of Strategy and Business
Development
 for Pfizer China from November 2013 to May 2018. Since August 2020,
 Dr. Murphy as served on the board of directors of Atea
Pharmaceuticals, Inc., a publicly held company. Dr. Murphy received her D.V.M.
 and Ph.D. from Iowa State University and her M.B.A. from Nova
Southeastern University. Among other attributes, skills, and qualifications,
the board of directors believes Dr. Murphy is uniquely qualified to serve as a
director based on her significant medical and scientific
 expertise and experience in the pharmaceutical industry in business development and
commercialization.
 
Richard J. Nigon, age 77, is currently Senior
 Vice President of Cedar Point Capital, LLC., a private company that raises capital for early-stage
companies, where he has served since
2007. Mr. Nigon has also been a board member for Northern Technologies International Corp. since February 2010,
including its non-executive
Chairman of the board of directors since November 2012. Mr. Nigon also serves as a director of several private companies. Mr.
Nigon
 previously served as a board member for Tactile Systems Technology from September 2012 to May 2022, Vascular Solutions, Inc. from
November  2000
 to February  2017, when it was acquired by Teleflex, Incorporated and as a board member for Virtual Radiologic Corporation from
May 2007
until it was acquired in July 2010. From February 2001 until December 2006, Mr. Nigon was a Director of Equity Corporate
Finance for Miller
Johnson Steichen Kinnard, a privately held investment firm, which was acquired in December 2006 by Stifel Nicolaus,
a brokerage and investment banking
firm. After that acquisition, Mr. Nigon became a Managing Director of Private Placements of Stifel
Nicolaus until May 2007. From February 2000 to
February 2001, Mr. Nigon served as the Chief Financial Officer of Dantis,
Inc., a web hosting company. Prior to joining Dantis, Mr. Nigon was employed
by Ernst & Young LLP from 1970 to 2000, where he served
as a partner from 1981 to 2000. While at Ernst & Young, Mr. Nigon served as the Director of
Ernst & Young’s Twin Cities
Entrepreneurial Services Group and was the coordinating partner on several publicly-traded companies in the consumer
retailing and manufacturing
sectors. Among other attributes, skills, and qualifications, the board of directors believes Mr. Nigon is qualified to serve as a
director
because of his extensive public accounting and auditing experience, including particular experience with emerging growth companies. The
board
of directors also believes that Mr. Nigon will bring to the board of directors a strong background in financial controls and reporting,
financial management,
financial analysis, SEC reporting requirements and mergers and acquisitions. His strategic planning expertise gained
 through his management and
leadership roles at private investment firms also makes him well-suited to serve as a member of the board of
directors.
 
 
69
 

 
 
Executive Officers
 
Information regarding our Chief Executive Officer,
Brian F. Sullivan, and our Chief Science Officer, Lance G. Laing, PhD., is included above under
the heading “Directors”.
 
Vicky Hahne, age 58, joined as our Chief Financial
Officer in July 2017. She has more than 25 years of financial leadership experience, including the
most recent 15 years in the healthcare
industry. Prior to joining Celcuity, Ms. Hahne served as Controller of Respiratory Technologies Inc., a medical
device manufacturer, from
2015 to 2017. While at Respiratory Technologies, she played a key role in the due diligence process to sell the company to
Koninklijke
Philips. In 2014, she served as Controller for Ability Network Inc., a healthcare information technology company. From 2007 to 2012, Ms.
Hahne served as Controller of SterilMed Inc., a medical device reprocessing company, where she was significantly involved in the sale
of the company to
Johnson & Johnson. Prior to these roles, Ms. Hahne held several senior financial positions at SimonDelivers Inc.,
including Chief Financial Officer. Ms.
Hahne has extensive experience in early stage, high growth companies with responsibilities including
financial controls and stewardship, financial analysis,
mergers and acquisitions, building infrastructure and systems. She received a
B.S. degree in Finance and Accounting from Northern State University and
received her CPA certificate in 1990.
 
Corporate Governance
 
Our board of directors has adopted a Code of Ethical
Business Conduct that applies to our directors, officers and employees.  In addition, our CEO,
CFO and other senior financial
officers of the company are subject to a Code of Ethical Business Conduct for Senior Financial Officers. These Codes are
available on
the corporate governance section of our website (which is a subsection of the investor relations section of our website) at the following
address: www.celcuity.com. We intend to disclose on our website any amendments or waivers to these codes that are required to be disclosed
by SEC or
Nasdaq rules.
 
Additional information required
by this Item 10 will be contained in our definitive proxy statement for our 2025 Annual Meeting of Stockholders (the
“Definitive
Proxy Statement”) under the captions “Corporate Governance,” and “Meetings and Committees of the Board of Directors”
and is incorporated
herein by reference.
 
ITEM 11. Executive Compensation
 
The information required by this Item 11 will be contained
in the Definitive Proxy Statement under the captions “Corporate Governance,” “Executive
Compensation” and “Director
Compensation” and is incorporated herein by reference.
 
ITEM 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
 
The information required by this Item 12 will be contained
in the Definitive Proxy Statement under the captions “Beneficial Ownership of Common
Stock” and “Securities Authorized
for Issuance under Equity Compensation Plans” and is incorporated herein by reference.
 
ITEM 13. Certain Relationships and Related Transactions, and Director
Independence
 
The information required by this Item 13 will be contained
in the Definitive Proxy Statement under the captions and “Corporate Governance” and
“Certain Relationships and Related
Transactions” and is incorporated herein by reference.
 
ITEM 14. Principal Accountant Fees and Services
 
The information required by this Item 14 will be contained
in the Definitive Proxy Statement under the caption “Proposal No. 2, Ratification of
Appointment of Independent Registered Public
Accounting Firm” and is incorporated herein by reference.
 
 
70
 

 
  
PART IV
 
ITEM 15. Exhibits and Financial Statement Schedules.
 
FINANCIAL STATEMENTS
 
Item
 
Page
Report of Independent Registered Public Accounting Firm
 
48
Balance Sheets – December 31, 2024 and 2023
 
49
Statements of Operations – Years ended December 31, 2024 and 2023
 
50
Statements of Changes in Stockholders’ Equity – Years ended December 31, 2024 and 2023
 
51
Statements of Cash Flows – Years ended December 31, 2024 and 2023
 
52
Notes to Consolidated Financial Statements
 
53
 
FINANCIAL STATEMENT SCHEDULES
 
None.
 
EXHIBITS
 
See Exhibit Index immediately following the signature
page hereto, which is incorporated herein by reference.
 
ITEM 16. Form 10-K Summary
 
None.
 
 
71
 

 
  
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
 
Dated: March 31, 2025
 
  CELCUITY INC.
 
 
 
 
By   /s/ Brian F. Sullivan
 
 
  Brian F. Sullivan
 
 
  Chairman and Chief Executive Officer
 
 
  (Principal Executive Officer)
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
 
Each person whose signature appears below constitutes
and appoints Brian F. Sullivan and Vicky Hahne as the undersigned’s true and lawful attorneys-in
fact and agents, each acting alone,
with full power of substitution and resubstitution, for the undersigned and in the undersigned’s name, place and stead, in
any
and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection
therewith,
with the Securities and Exchange Commission, granted unto said attorneys-in-fact and agents, each acting alone, full power
 and authority to do and
perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and
agents, each acting alone, or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue thereof.  
 
Signature
 
Title
 
Date
 
 
 
 
 
/s/
Brian F. Sullivan
 
Chairman and Chief Executive Officer
 
March 31, 2025 
Brian F. Sullivan
 
(Principal Executive Officer)
 
 
 
 
 
 
 
/s/
Vicky Hahne
 
Chief Financial Officer
 
March 31, 2025 
Vicky Hahne
 
(Principal Financial and Accounting Officer)
 
 
 
 
 
 
 
/s/
Lance G. Laing
 
Chief Science Officer, Vice President and Secretary, and
 
March 31, 2025 
Lance G. Laing
 
Director
 
 
 
 
 
 
 
/s/
Richard E. Buller
 
Director
 
March 31, 2025 
Richard E. Buller
 
 
 
 
 
 
 
 
 
/s/
Dave F. Dalvey
 
Director
 
March 31, 2025 
Dave F. Dalvey
 
 
 
 
 
 
 
 
 
/s/
Leo T. Furcht
 
Director
 
March 31, 2025 
Leo T. Furcht
 
 
 
 
 
 
 
 
 
/s/
Polly A. Murphy
 
Director
 
March 31, 2025 
Polly A. Murphy
 
 
 
 
 
 
 
 
 
/s/
Richard J. Nigon
 
Director
 
March 31, 2025 
Richard J. Nigon
 
 
 
 
 
 
72
 

 
  
EXHIBIT INDEX
CELCUITY INC.
FORM 10-K
 
Exhibit
No.
 
Description
 
   
2.1
  Form of Plan of Conversion (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-1/A filed with
the SEC on September 12, 2017).
 
   
3.1
  Certificate of Incorporation of the Company, as amended, including the Certificate of Designations of Preferences, Rights and Limitations of
Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the
SEC on October 9, 2024).
 
   
3.2
  Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on
November 13, 2017).
 
   
4.1
  Specimen Certificate representing shares of common stock of Celcuity Inc. (incorporated by reference to Exhibit 4.1 to the Company’s
Registration Statement on Form S-1/A filed with the SEC on September 12, 2017).
 
   
4.2*
  Description of Registered Securities.
 
   
4.3
  Form of Warrant to Purchase Units of Membership Interest issued by Celcuity LLC to Cedar Point Capital, LLC, as placement agent of
membership units and unsecured convertible promissory notes of Celcuity LLC (incorporated by reference to Exhibit 10.9 to the Company’s
Registration Statement on Form S-1 filed with the SEC on August 23, 2017).
 
   
4.4
  Form of Warrant to Purchase Common Stock issued by Celcuity Inc. in connection with the conversion of 1.25% Unsecured Convertible
Promissory Notes (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on
September 25, 2017).
 
   
4.5
  Representative’s Warrant to Purchase Common Stock (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form
8-K filed with the SEC on September 25, 2017).
 
   
4.6
  First Amendment to Representative’s Warrant, dated September 13, 2022, between Celcuity Inc. and Craig-Hallum Capital Group LLC
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 14, 2022).
 
   
4.7
  Form of Warrant issued by Celcuity Inc. to Innovatus Life Sciences Lending Fund I, LP in connection with the Loan and Security
Agreement dated April 8, 2021 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC
on April 8, 2021).
 
   
4.8
  Equity Grant Agreement, dated April 8, 2021, between the Company and Pfizer Inc. (incorporated by reference to Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed with the SEC on April 8, 2021).
 
   
4.9
  Form of Stock Purchase Warrant issued by Celcuity Inc. in connection with the Securities Purchase Agreement, dated May 15, 2022
(incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2022).
 
   
4.10
  Form of Pre-Funded Warrant to Purchase Common Stock issued by Celcuity Inc. in connection with the Securities Purchase Agreement,
dated October 18, 2023 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on
October 23, 2023).
 
   
4.11
  Form of Amendment to Placement Agent’s Warrants, dated February 13, 2024 (incorporated by reference to Exhibit 4.3 to the Company’s
Quarterly Report on Form 10-Q filed with the SEC on May 15, 2024).
 
   
4.12
  Form of Amendment to Warrants to Purchase Shares of Common Stock, dated February 13, 2024 (incorporated by reference to Exhibit 4.5
to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2024).
 
 
73
 

 
  
4.13
  Form of Warrant to Purchase Stock issued by Celcuity Inc. in connection with the Amended and Restated Loan Agreement, dated May 30,
2024 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 30, 2024).
 
   
10.1+
  Celcuity Inc. 2017 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on
Form S-1/A filed with the SEC on September 12, 2017).
 
   
10.2+
  Celcuity Inc. Amended and Restated 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed with the SEC on May 15, 2020).
 
   
10.3+
  Amendment to the Celcuity Inc. Amended and Restated 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed with the SEC on May 12, 2023).
 
   
10.4+
  Form of Stock Option Agreement pursuant to Celcuity Inc. 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the
Company’s Registration Statement on Form S-1/A filed with the SEC on September 12, 2017).
 
   
10.5+
  Form of Restricted Stock Agreement pursuant to Celcuity Inc. 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the
Company’s Registration Statement on Form S-1/A filed with the SEC on September 12, 2017).
 
   
10.6+
  Form of Restricted Stock Unit Agreement pursuant to Celcuity Inc. 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to
the Company’s Registration Statement on Form S-1/A filed with the SEC on September 12, 2017).
 
   
10.7+
  Form of Stock Appreciation Rights Agreement pursuant to Celcuity Inc. 2017 Stock Incentive Plan (incorporated by reference to Exhibit
10.6 to the Company’s Registration Statement on Form S-1/A filed with the SEC on September 12, 2017).
 
   
10.8+
  Celcuity LLC 2012 Equity Incentive Plan, adopted August 10, 2012, as amended by First Amendment to the Celcuity LLC 2012 Equity
Incentive Plan, adopted November 12, 2015 (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-
1 filed with the SEC on August 23, 2017).
 
   
10.9+
  Form of Unit Option Agreement pursuant to the Celcuity LLC 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to the
Company’s Registration Statement on Form S-1 filed with the SEC on August 23, 2017).
 
   
10.10
  Commercial Lease, dated September 28, 2017, between West Glen Development I, LLC and Celcuity, LLC (incorporated by reference to
Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2017).
 
   
10.11
  Commercial Lease, First Amendment to Lease, dated July 28, 2020, between West Glen Development I, LLC and Celcuity Inc.
(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).
 
   
10.12
  Commercial Lease, Second Amendment to Lease, dated July 19, 2021, between West Glen Development I, LLC and Celcuity Inc.
(incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 11, 2021).
 
   
10.13
  Commercial Lease, Third Amendment to Lease, dated July 27, 2022, by and between Celcuity Inc. and West Glen Development I, LLC
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 29, 2022).
 
   
10.14
  Commercial Lease, Fourth Amendment to Lease, dated March 13, 2023, by and between Celcuity Inc. and West Glen Development I, LLC
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 15, 2023).
 
 
74
 

 
  
10.15
  Clinical Trial Agreement, dated May 8, 2017, by and between NSABP Foundation, Inc. and Celcuity LLC (incorporated by reference to
Exhibit 10.13 to the Company’s Registration Statement on Form S-1 filed with the SEC on August 23, 2017).
 
   
10.16
  Amendment No. 1, Clinical Trial Agreement for FB-12 Phase II Study, by and between NSABP Foundation, Inc and Celcuity Inc., dated
October 15, 2020 (incorporated by reference Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed with the SEC on February
16, 2021).
 
   
10.17+
  Confidentiality, Assignment of Inventions and Non-Competition Agreement, dated November 15, 2011, between Celcuity LLC and Brian F.
Sullivan (incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form S-1 filed with the SEC on August
23, 2017).
 
   
10.18+
  Confidentiality, Assignment of Inventions and Non-Competition Agreement, dated November 15, 2011, between Celcuity LLC and Lance
G. Laing (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form S-1 filed with the SEC on August
23, 2017).
 
   
10.19+
  Confidentiality, Non-Compete and Proprietary Rights Agreement, dated May 17, 2017, between Celcuity LLC and Vicky Hahne
(incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form S-1 filed with the SEC on August 23, 2017).
 
   
10.20
  Form of Indemnification Agreement between Celcuity Inc. and each of its officers and directors (incorporated by reference to Exhibit 10.17
to the Company’s Registration Statement on Form S-1/A filed with the SEC on September 12, 2017).
 
   
10.21†
  License Agreement, dated April 8, 2021, by and between the Company and Pfizer, Inc (incorporated by reference to Exhibit 10.3 to the
Company’s Quarterly Report on Form 10-Q filed with the SEC on August 11, 2021).
 
   
10.22†
  Amendment No. 1 to License Agreement, dated May 6, 2021, by and between the Company and Pfizer Inc. (incorporated by reference to
Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 11, 2021).
 
   
10.23
  Open Market Sale AgreementSM, dated February 4, 2022, by and between Celcuity Inc., and Jefferies LLC (incorporated by reference to
Exhibit 1.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 4, 2022).
 
   
10.24
  Securities Purchase Agreement, dated May 15, 2022, by and among the Registrant and the Investors named therein (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2022).
 
   
10.25
  Registration Rights Agreement, dated May 15, 2022, by and among the Registrant and the Investors named therein (incorporated by
reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2022).
 
   
10.26
  Loan and Security Agreement, dated as of April 8, 2021, by and between the Company and Innovatus Life Sciences Lending Fund I, LP.
(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 11, 2021).
 
   
10.27
  First Amendment to Loan and Security Agreement, dated August 9, 2022, by and among the Company and Innovatus Life Sciences Lending
Fund I, LP (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 11,
2022).
 
   
10.28
  Securities Purchase Agreement, dated October 18, 2023, by and among the Company and the Investors named therein (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 23, 2023).
 
   
10.29
  Registration Rights Agreement, dated October 18, 2023, by and among the Company and the Investors named therein (incorporated by
reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 23, 2023).
 
   
10.30
  Second Amendment to Loan and Security Agreement, dated March 29, 2024, by and among the Company and Innovatus Life Sciences
Lending Fund I, LP (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March
29, 2024).
 
 
75
 

 
  
10.31+
  Amendment to the Celcuity Inc. Amended and Restated 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed with the SEC on May 13, 2024).
 
   
10.32+
  Amendment to Form of Stock Option Agreement pursuant to Celcuity Inc. Amended and Restated 2017 Stock Incentive Plan (incorporated
by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2024).
 
   
10.33+
  Form of Non-Qualified Stock Option Transfer Agreement pursuant to Celcuity Inc. Amended and Restated 2017 Stock Incentive Plan
(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2024).
 
   
10.34†
  Amended and Restated Loan and Security Agreement, dated May 30, 2024, by and among the Company, Innovatus Life Sciences Lending
Fund I, LP, as collateral agent, and the Lenders named therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed with the SEC on May 30, 2024).
 
   
10.35+*
  Change in Control and Severance Plan and Summary Plan Description.
 
   
19*
  Celcuity Inc. Policy to Prohibit Insider Trading.
 
   
23.1*
  Consent of Boulay PLLP.
 
   
24.1*
  Power of Attorney (included on the signature page).
 
   
31.1*
  Certification of principal executive officer required by Rule 13a-14(a).
 
   
31.2*
  Certification of principal financial officer required by Rule 13a-14(a).
 
   
32.1**
  Section 1350 Certification of principal executive officer.
 
   
32.2**
  Section 1350 Certification of principal financial officer.
 
   
97
  Celcuity Inc. Policy for the Recoupment of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97 to the Company’s
Annual Report on Form 10-K filed with the SEC on March 27, 2024).
 
   
101
  The following information from the Annual Report on Form 10-K of the Company for the year ended December 31, 2024, formatted, in
Inline XBRL: (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Changes in Stockholders’ Equity, (iv) the
Statements of Cash Flows, (v) the Notes to Financial Statements, and (vi) the information under Part II, Item 9B “Other Information.”.
 
   
104
  Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).
 
*
Filed herewith.
**
Furnished herewith.
+
Management contract or compensatory plan.
†
Certain portions have been omitted from this exhibit.
 
 
76
 

 
Exhibit
4.2
 
Description
of Registrant’s Securities
Registered
Pursuant to Section 12 of the
Securities
Exchange Act of 1934, as amended
 
The
following summary of the terms of our capital stock is subject to and qualified in its entirety by reference to our certificate of incorporation,
as
amended, and bylaws, copies of which are on file with the SEC as exhibits to previous SEC filings.
 
As
 of December 31, 2024, Celcuity Inc. (“we,” “us,” “our,” and the “Company”) had one class
 of securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”): common
stock, par value $0.001 per share. In addition, we have certain equity
interests outstanding that are convertible into common stock,
which are described in more detail below.
 
As
of December 31, 2024, we were authorized to issue 95,000,000 shares of common stock and 2,500,000 shares of preferred stock, $0.001 par
value
per share.
 
Common
Stock
 
Fully
Paid and Nonassessable
 
The
outstanding shares of our common stock are fully paid and nonassessable.
 
Voting
Rights
 
Each
holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders.
 
Dividend
Rights
 
Holders
of our common stock are entitled to receive ratably any dividends that our board of directors may declare out of funds legally available
for that
purpose.
 
Rights
and Preferences
 
Holders
of our common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions
applicable to our common stock.
 
Right
to Liquidation Distributions
 
Upon
our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable
ratably among
the holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction
of all outstanding debt and
liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding
shares of preferred stock, including the
liquidation preference of our Series A Preferred Stock.
 
Transfer
Agent and Registrar
 
The
transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company. The transfer agent and registrar’s
address is
One State Street Plaza, 30th Floor, New York, NY 10004.
 
The
Nasdaq Capital Market
 
Our
common stock is listed for quotation on The Nasdaq Capital Market under the symbol “CELC”.
 
Preferred
Stock
 
Our
board of directors is authorized, without action by the stockholders, to designate and issue up to an aggregate of 2,500,000 shares of
preferred
stock in one or more series. Our board of directors is authorized to designate the rights, preferences and privileges of the
shares of each series and any of its
qualifications, limitations or restrictions. Our board of directors is able to authorize the issuance
of preferred stock with voting or conversion rights that
could adversely affect the voting power or other rights of the holders of common
stock. The issuance of preferred stock, while providing flexibility in
connection with possible future financings and acquisitions and
other corporate purposes, could, under certain circumstances, have the effect of restricting
dividends on our common stock, diluting
the voting power of our common stock, impairing the liquidation rights of our common stock, or delaying,
deferring or preventing a change
in control of the Company, which might harm the market price of our common stock. See also “Anti-Takeover Effect of
Delaware Law
and Certain Charter and Bylaw Provisions” below.
 
 

 
 
On
May 16, 2022, in connection with a Securities Purchase Agreement, dated May 15, 2022, by and among the Company and the Investors named
therein (the “2022 Investors,” and such Securities Purchase Agreement, the “2022 Securities Purchase Agreement”),
the Company filed a Certificate of
Designations (the “Certificate of Designations”) with the Secretary of State of the State
of Delaware, designating 1,850,000 shares out of the authorized but
unissued shares of its preferred stock as Series A Convertible Preferred
Stock (“Series A Preferred Stock”). The following is a summary of the principal
terms of the Series A Preferred Stock:
 
Dividend
Rights
 
Holders
of Series A Preferred Stock shall be entitled to receive dividends or distributions on shares of Series A Preferred Stock equal (on an
as-if-
converted-to-common stock basis) to and in the same form as dividends or distributions actually paid on shares of the common stock
when, as and if such
dividends or distributions are paid on shares of the common stock. No other dividends or distributions shall be
paid on shares of Series A Preferred Stock.
 
Right
to Liquidation Distributions
 
In
the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series A Preferred
Stock
then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders,
and in the event of a Deemed
Liquidation Event (as defined in the Certificate of Designations), the holders of shares of Series A Preferred
Stock then outstanding shall be entitled to be
paid out of the consideration payable to stockholders in such Deemed Liquidation Event
or out of the Available Proceeds (as defined in the Certificate of
Designations), as applicable, before any payment shall be made to
the holders of common stock by reason of their ownership thereof, an amount per share
equal to the greater of (i) the Series A Original
Issue Price (as defined in the Certificate of Designations), plus any dividends declared but unpaid thereon,
or (ii) such amount per
share as would have been payable had all shares of Series A Preferred Stock been converted into common stock pursuant to the
Certificate
of Designations immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event.
 
Voting
Rights
 
The
Series A Preferred Stock is non-voting stock and does not entitle the holder thereof to vote on any matter submitted to the stockholders
of the
Company for their action or consideration, except as otherwise provided by the General Corporation Law of the State of Delaware
or the other provisions
of the Certificate of Incorporation or the Certificate of Designations.
 
As
long as any shares of Series A Preferred Stock are outstanding, the Company may not, without the approval of the holders of a majority
of the
outstanding shares of Series A Preferred Stock, take the following actions: (i) amend, alter or repeal any provision of the Certificate
of Incorporation, the
Certificate of Designations or Bylaws of the Company in a manner that adversely affects the powers, preferences
or rights of the Series A Preferred Stock;
(ii) create, or authorize the creation of, or issue or obligate itself to issue shares of,
any additional class or series of capital stock unless the same ranks
junior to the Series A Preferred Stock with respect to the distribution
of assets on the liquidation, dissolution or winding up of the Company, the payment of
dividends and rights of redemption, or increase
the authorized number of shares of Series A Preferred Stock or increase the authorized number of shares of
any additional class or series
of capital stock of the Company unless the same ranks junior to the Series A Preferred Stock with respect to the distribution of
assets
on the liquidation, dissolution or winding up of the Company, the payment of dividends and rights of redemption; (iii) (A) reclassify,
alter or amend
any existing security of the Company that is pari passu with the Series A Preferred Stock in respect of the distribution
 of assets on the liquidation,
dissolution or winding up of the Company, the payment of dividends or rights of redemption, if such reclassification,
alteration or amendment would render
such other security senior to the Series A Preferred Stock in respect of any such right, preference,
or privilege or (B) reclassify, alter or amend any existing
security of the Company that is junior to the Series A Preferred Stock in
respect of the distribution of assets on the liquidation, dissolution or winding up of
the Company, the payment of dividends or rights
of redemption, if such reclassification, alteration or amendment would render such other security senior to
or pari passu with the Series
A Preferred Stock in respect of any such right, preference or privilege; or (iv) purchase or redeem (or permit any subsidiary to
purchase
or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Company (with exceptions for
(i)
redemptions of or dividends or distributions on the Series A Preferred Stock as expressly authorized in the Certificate of Designations,
and (ii) dividends or
other distributions payable on our common stock solely in the form of additional shares of common stock).
 
 

 
 
Conversion
Rights
 
Subject
to the Beneficial Ownership Limitation described below, each share of Series A Preferred Stock shall be convertible, at the option of
the holder
thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into
such number of fully paid and
non-assessable shares of common stock as is determined by multiplying one share of Series A Preferred Stock
by the Series A Conversion Rate in effect at
the time of conversion. The “Series A Conversion Rate” shall initially be ten
(10) shares of Common Stock for each share of Series A Preferred Stock. The
Series A Conversion Rate shall be subject to adjustment as
provided in the Certificate of Designations.
 
Under
the terms of the Certificate of Designations, the Company may not effect the conversion of Series A Preferred Stock into common stock,
and a
holder will not be entitled to request the conversion of shares of Series A Preferred Stock, if, upon giving effect to such conversion,
the aggregate number
of shares of common stock beneficially owned by the holder (together with its affiliates, any other persons acting
as a group together with the holder or any
of the holder’s affiliates, and any other persons whose beneficial ownership of common
stock would or could be aggregated with the holder’s for purposes
of Section 13(d) or Section 16 of the Exchange Act) would exceed
the Beneficial Ownership Limitation, which is 9.9% of the number of shares of common
stock outstanding immediately after giving effect
to the conversion, as such percentage ownership is calculated in accordance with Section 13(d) of the
Exchange Act and the applicable
 regulations of the Securities and Exchange Commission. A holder may reset the Beneficial Ownership Limitation
percentage to a higher
 percentage (not to exceed 19.9%), effective 61 days after written notice to the Company, or a lower percentage, effective
immediately
upon written notice to the Company. Any such increase or decrease will apply only to that holder and not to any other holder of Series
A
Preferred Stock.
 
The
Series A Preferred Stock does not have, nor is subject to, any preemptive or similar rights.
 
Warrants
 
2024
Warrants
 
Under
the Amended and Restated Loan and Security Agreement, dated as of May 30, 2024, by and among the Company, Innovatus Life Sciences
Lending
Fund I, LP (“Innovatus”), as collateral agent, and the Lenders named therein, including Innovatus in its capacity as a Lender
and Oxford Finance
LLC (“Oxford”) (the “A&R Loan Agreement”), pursuant to which Innovatus and Oxford, as
Lenders, have agreed to make certain term loans, including the
Term C Loan, the Term D Loan, the Term E Loan, and the Term F Loan (as
such terms are defined in the A&R Loan Agreement and, each, a “Term Loan”)
to the Company, the Company issued to Innovatus
and Oxford warrants (the “2024 Warrants”) to purchase that number of shares of common stock equal to
2.5%
of the principal amount of the applicable Term Loan divided by the exercise price, which was, with respect to the Term C Loan, be equal
to the lower
of (i) the volume weighted average closing price of the Company’s common stock for the five-trading day period ending
 on the last trading day
immediately preceding the execution of the A&R Loan Agreement or (ii) the closing price on the last trading
day immediately preceding the execution of
the A&R Loan Agreement. Accordingly, on May 30, 2024, the Company issued 103,876 2024
Warrants with an exercise price of $14.84 per share. For the
additional Term Loans, the exercise price will be based on the lower of
(i) the exercise price for the 2024 Warrants issued pursuant to the Term C Loan or
(ii) the volume weighted average closing price of
the Company’s common stock for the five-trading day period ending on the last trading day immediately
preceding the applicable
Term Loan funding. The 2024 Warrants may be exercised on a cashless basis and are exercisable through the tenth anniversary of
the applicable
funding date. The number of shares of common stock for which each 2024 Warrant is exercisable and the associated exercise price are
subject
to certain proportional adjustments as set forth in such 2024 Warrant.
 
 

 
 
2023
Pre-Funded Warrants
 
Under
the Securities Purchase Agreement, dated October 18, 2023, by and among the Company and the Investors named therein (the “2023
Investors,”
and such Securities Purchase Agreement, the “2023 Securities Purchase Agreement”), the Company issued pre-funded
warrants (the “2023 Warrants”) to
purchase 5,747,787 shares of common stock. Each 2023 Warrant to purchase one share was
sold for a purchase price of $8.699 per Warrant and has an
exercise price of $0.001 per share (for aggregate consideration equating to
$8.70 per share of common stock issuable upon exercise of the 2023 Warrants).
 
Each
2023 Warrant is immediately exercisable and will not expire. Under the terms of the 2023 Warrants, the Company may not effect the exercise
of
any such 2023 Warrant, and a holder will not be entitled to exercise any portion of any 2023 Warrant, if, upon giving effect to such
exercise, the aggregate
number of shares of common stock beneficially owned by the holder (together with its affiliates, other persons
acting or who could be deemed to be acting
as a group together with the holder or any of the holder’s affiliates, and any other
persons whose beneficial ownership of common stock would or could be
aggregated with the holder’s or any of the holder’s
affiliates for purposes of Section 13(d) or Section 16 of the Exchange Act) would exceed 4.99% of the
number of shares of common stock
outstanding immediately after giving effect to the exercise, as such percentage ownership is calculated in accordance
with Section 13(d)
of the Exchange Act and the applicable regulations of the Securities and Exchange Commission (the “Maximum Percentage”).
A holder
may reset the Maximum Percentage to a higher percentage (not to exceed 19.99%), effective 61 days after written notice to the
Company, or a lower
percentage, effective immediately upon written notice to the Company. Any such increase or decrease will apply only
to that holder and not to any other
holder of 2023 Warrants.
 
2022
Warrants
 
Under
the 2022 Securities Purchase Agreement, the Company issued Warrants (the “2022 Warrants”) to purchase 695,645 shares of Series
A Preferred
Stock, each 2022 Warrant having an exercise price of $85.50 per share. The exercise price of the 2022 Warrants is at a 40%
premium to the price (on an as
converted to common stock basis) paid by the 2022 Investors for the initial shares of common stock purchased
 under the 2022 Securities Purchase
Agreement.
 
On
September 1, 2022, the Company amended its Certificate of Incorporation to increase the aggregate authorized number of shares of capital
stock
and the number of shares of common stock such that the Company has available, and has reserved, such number of its duly authorized
but unissued shares
of common stock as shall be sufficient to effect the conversion of all shares of Series A Preferred Stock then outstanding
or available for issuance upon the
exercise of the 2022 Warrants (the “Authorized Share Increase”). Following this Authorized
Share Increase, and notice to the 2022 Investors, the 2022
Warrants became exercisable for an aggregate 6,956,450 shares of common stock
with an exercise price per share adjusted of $8.05.
 
Each
2022 Warrant, when issued, is immediately exercisable and will remain exercisable until the earlier of (i) five years from the date of
issuance and
(ii) seventy-five (75) days after the Company announces (x) whether the progression-free survival (“PFS”) of
gedatolisib in combination with Palbociclib
and fulvestrant (Arm A) to fulvestrant (Arm C) in the Phase 3 study met its primary endpoint
target, (y) whether the PFS of gedatolisib in combination with
fulvestrant (Arm B) to fulvestrant (Arm C) in the Phase 3 study met its
primary endpoint target, and (z) the associated hazard ratios and median PFS values
for each of Arm A, Arm B, and Arm C.
 
Under
the terms of the 2022 Warrants, the Company may not effect the exercise of any such 2022 Warrant, and a holder will not be entitled to
request
the exercise any portion of any 2022 Warrant, if, upon giving effect to such exercise, the aggregate number of shares of common
stock beneficially owned
by the holder (together with its affiliates, any other persons acting as a group together with the holder or
any of the holder’s affiliates, and any other persons
whose beneficial ownership of common stock would or could be aggregated with
the holder’s for purposes of Section 13(d) or Section 16 of the Exchange
Act) would exceed the Beneficial Ownership Limitation
as described in the “Preferred Stock—Conversion Rights” section above. A holder may reset the
Beneficial Ownership
Limitation percentage to a higher percentage (not to exceed 19.9%), effective 61 days after written notice to the Company, or a lower
percentage, effective immediately upon written notice to the Company. Any such increase or decrease will apply only to that holder and
not to any other
holder of 2022 Warrants.
 
 

 
 
Registration
Rights Agreement
 
2023
Registration Rights Agreement
 
In
 connection with the 2023 Securities Purchase Agreement, the Company entered into a Registration Rights Agreement (the “2023 Registration
Rights Agreement”) with the 2023 Investors, pursuant to which the Company agreed to register for resale the Registrable Securities
(the “2023 Registrable
Securities”), which include: (i) the shares of common stock then issued or issuable upon exercise
of the 2023 Warrants (assuming the 2023 Warrants are
exercisable in full without regard to any exercise limitation therein) (the “2023
Warrant Shares”), and (ii) any other securities issued or issuable with
respect to, in exchange for or in replacement of, the 2023
Warrant Shares issued and sold pursuant to the 2023 Securities Purchase Agreement. Under the
2023 Registration Rights Agreement, the
Company agreed to file a registration statement covering the resale by the 2023 Investors of the 2023 Registrable
Securities no later
 than 30 days following the Closing Date (as defined in the 2023 Registration Rights Agreement). The Company agreed to use
commercially
reasonable efforts to cause the registration statement to become effective and to keep such registration statement effective until such
time as
there are no longer 2023 Registrable Securities held by the 2023 Investors. The Company agreed to be responsible for all fees
and expenses incurred in
connection with the registration of the 2023 Registrable Securities. The Company filed a registration statement
on Form S-3 registering for resale the 2023
Registrable Securities, which was declared effective on November 28, 2023.
 
The
 Company granted the 2023 Investors customary indemnification rights in connection with the registration statement, including for liabilities
arising under the Securities Act of 1933, as amended (the “Securities Act”). The 2023 Investors also granted the Company
customary indemnification
rights in connection with the registration statement.
 
2022
Registration Rights Agreement
 
In
 connection with the 2022 Securities Purchase Agreement, the Company entered into a Registration Rights Agreement (the “2022 Registration
Rights Agreement”) with the 2022 Investors, pursuant to which the Company agreed to register for resale the Registrable Securities
(the “2022 Registrable
Securities”), which include: (i) the common stock, (ii) the shares of common stock then issued or
issuable upon conversion of the Series A Preferred Stock
(assuming on such date the shares of Series A Preferred Stock are convertible
in full without regard to any conversion limitations in the Certificate of
Designations), and (iii) the common stock then issued or issuable
upon exercise of the 2022 Warrants (assuming the 2022 Warrants are exercisable in full
without regard to any exercise limitations therein).
Under the 2022 Registration Rights Agreement, the Company agreed to file a registration statement
covering the resale by the 2022 Investors
of the 2022 Registrable Securities no later than 30 days following (i) the Closing Date (as defined in the 2022
Registration Rights Agreement)
and (ii) the date the Company obtained the necessary stockholder approval to effect the Authorized Share Increase. The
Company agreed
to use commercially reasonable efforts to cause the registration statement to become effective and to keep such registration statement
effective until such time as there are no longer 2022 Registrable Securities held by the 2022 Investors. The Company agreed to be responsible
for all fees
and expenses incurred in connection with the registration of the 2022 Registrable Securities. The Company filed a registration
statement on Form S-3
registering for resale the 2022 Registrable Securities, which was declared effective on January 11, 2023.
 
The
 Company granted the 2022 Investors customary indemnification rights in connection with the registration statement, including for liabilities
arising under the Securities Act. The 2022 Investors also granted the Company customary indemnification rights in connection with the
 registration
statement.
 
The
representations, warranties and covenants contained in each of the 2023 Warrants, the 2022 Warrants, the 2023 Securities Purchase Agreement,
the
2022 Securities Purchase Agreement, the 2023 Registration Rights Agreement and the 2022 Registration Rights Agreement were made solely
for the
benefit of the parties thereto and may be subject to limitations agreed upon by the contracting parties.
 
Anti-Takeover
Effect of Delaware Law and Certain Charter and Bylaw Provisions
 
Our
certificate of incorporation, as amended, and bylaws contain provisions that could have the effect of discouraging potential acquisition
proposals
or tender offers or delaying or preventing a change of control of our Company. A summary of these provisions is as follows:
 
●
Board
of directors vacancies. Our bylaws authorize only our board of directors to fill
vacant directorships, including newly created seats. In
addition, the number of directors
constituting our board of directors will be permitted to be set only by a resolution adopted
by our board of
directors. These provisions would prevent a stockholder from increasing the
size of our board of directors and then gaining control of our board of
directors by filling
the resulting vacancies with its own nominees. This makes it more difficult to change the
composition of our board of directors
but promotes continuity of management.
 
 

 
 
●
Advance
 notice requirements for stockholder proposals and director nominations. Our bylaws
 provide advance notice procedures for
stockholders seeking to bring business before our annual
meeting of stockholders or to nominate candidates for election as directors at our annual
meeting of stockholders. Our bylaws also specify certain requirements regarding the form
and content of a stockholder’s notice. These provisions
might preclude our stockholders
from bringing matters before our annual meeting of stockholders or from making nominations
for directors at our
annual meeting of stockholders if the proper procedures are not followed.
These provisions may also discourage or deter a potential acquirer from
conducting a solicitation
of proxies to elect the acquirer’s own slate of directors or otherwise attempting to
obtain control of the Company.
 
●
No
cumulative voting. The Delaware General Corporation Law, or DGCL, provides that stockholders
are not entitled to the right to cumulate
votes in the election of directors unless a corporation’s
 certificate of incorporation provides otherwise. Our certificate of incorporation, as
amended,
does not provide for cumulative voting.
 
●
Stockholder
action; special meetings of stockholders. Our certificate of incorporation, as amended,
provides that our stockholders may not take
action by written consent, but may only take
action at annual or special meetings of our stockholders. As a result, a holder controlling
a majority
of our capital stock would not be able to amend our bylaws or remove directors
 without holding a meeting of our stockholders called in
accordance with our bylaws. Further,
our bylaws provide that special meetings of our stockholders may be called only by a majority
of our board
of directors, the chairperson of our board of directors, or our Chief Executive
 Officer, thus prohibiting a stockholder from calling a special
meeting. These provisions
might delay the ability of our stockholders to force consideration of a proposal or for stockholders
 controlling a
majority of our capital stock to take any action, including the removal of
directors.
 
●
Issuance
of undesignated preferred stock. We have 650,000 shares of undesignated preferred
stock. Subject to certain limitations and approval
requirements with respect to our Series
A Preferred Stock as described in “Preferred Stock—Voting Rights” above,
our board of directors has the
authority, without further action by the stockholders, to
issue this preferred stock with rights and preferences, including voting rights, designated
from time to time by our board of directors. The existence of authorized but unissued shares
of preferred stock would enable our board of directors
to render more difficult or to discourage
an attempt to obtain control of us by means of a merger, tender offer, proxy contest or other
means.
 
●
Amendment
of charter and bylaw provisions. The affirmative vote of stockholders representing
at least two-thirds of the voting power of all then-
outstanding capital stock, and in certain
instances, the vote of the holders of a majority of the then-outstanding Series A Preferred
Stock, is
required to amend, alter or repeal certain provisions of our certificate of incorporation,
as amended, including the provision noted above regarding
stockholders not being able to
act by written consent. Subject to certain limitations and approval requirements with respect
 to our Series A
Preferred Stock as described in “Preferred Stock—Voting Rights”
above, a majority of our board of directors has authority to adopt, amend or
repeal provisions
of our bylaws. Stockholders also have the authority to adopt, amend or repeal provisions
of our bylaws, but only with the
affirmative vote of stockholders representing at least two-thirds
of the voting power of all then-outstanding capital stock and in certain instances,
the vote
of the holders of a majority of the then-outstanding Series A Preferred Stock.
 
We
 are subject to the provisions of Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a “business combination” with an “interested stockholder” for a period of three
years after the date of the transaction in which
the person became an interested stockholder, unless the business combination is approved
in a prescribed manner. For purposes of Section 203, a “business
combination” includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an “interested stockholder”
is a person who owns 15%
or more of the voting stock of a corporation, or any affiliate or associate of a corporation who, within three years prior, did own
15%
or more of the voting stock of that corporation.
 
 
 

 
Exhibit
10.35
 
CELCUITY
INC.
CHANGE IN CONTROL AND SEVERANCE PLAN
AND
SUMMARY
PLAN DESCRIPTION
 
1. Introduction.
 The purpose of this Celcuity Inc. Change in Control and Severance Plan is to provide assurances of specified benefits to
employees of
the Company in the event of a Change in Control or certain terminations of employment following a Change in Control as described in this
Plan (as such terms are defined below). This Plan is governed by ERISA. With respect to Plan benefits provided to Eligible Employees
other than the Chief
Executive Officer, the Plan is considered a “welfare benefit plan”, as defined in Section 3(1) of ERISA,
and with respect to Plan benefits provided to the
Chief Executive Officer, this Plan is considered a “pension plan”, as defined
in Section 3(2) of ERISA, which is established solely for the purpose of
providing severance benefits to a select group of management
or highly compensated employees (i.e., a “top hat” plan), and will be construed accordingly.
This document constitutes both
the written instrument under which this Plan is maintained and the required summary plan description for this Plan.
 
2. Definitions.
As used herein, the following definitions will apply:
 
2.1 “Administrator”
 means (a) the Compensation Committee of the Board or, (b) solely with respect to Participants who are not
Executive Officers of the Company,
(i) the Chief Executive Officer of the Company; or (ii) any other officer of the Company to whom the Board has
delegated any authority
or responsibility with respect to this Plan pursuant to Section 11, but only to the extent of such delegation.
 
2.2 “Affiliate”
 means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling,
controlled by,
or under common control with the Company.
 
2.3 “Annual
Base Salary” means the greater of Participant’s annual base salary as in effect as of the date of the Participant’s
Involuntary
Termination or the Change in Control (without regard to any reduction that would constitute Good Reason). Annual Base Salary
does not include bonuses,
commissions, overtime pay, incentive pay, performance awards, equity compensation, or any other additional
compensation, payments and/or benefits
provided by the Company.
 
2.4 “Board”
means the board of directors of the Company.
 
2.5 “Bonus
Payment Date” means the date when a Participant’s actual bonus is paid to such Participant pursuant to the Company’s
annual
cash bonus program.
 
2.6 “Cause”
has the meaning set forth in the Equity Plan.
 
2.7 “Change
in Control” has the meaning set forth in the Equity Plan. Notwithstanding this definition, no Change in Control shall be
deemed
to have occurred for purposes of this Plan unless the event would also constitute a change in ownership or effective control of, or a
change in the
ownership of a substantial portion of the assets of, the Company under Section 409A.
 
2.8 “Change
in Control Period” means the time period beginning on the date of the Change in Control and ending on the date that is
twelve
(12) months following a Change in Control.
 
 

 
 
2.9 “CIC
Severance Multiplier” means the following based on the Participant’s position with the Company (if a Participant holds
more
than one position, only the higher level CIC Severance Multiplier will apply):
 
Participant’s
Position
 
CIC
Severance Multiplier
Chief
Executive Officer
 
36
Executive
Officers
 
24
All
Other Executives (Chief Commercial Officer, Chief Medical Officer,
VP Pharmaceutical Operations, VP Quality, General Counsel)
 
12
Other
Vice Presidents
 
6
All
Other Eligible Employees
 
3,
or if greater, the lesser of (a) .5 months multiplied by full years of
continuous employment and (b) 6
 
2.10
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
 
2.11 “Code”
means the U.S. Internal Revenue Code of 1986, as amended and in effect from time to time. For purposes of the Plan,
references to sections
of the Code shall be deemed to include any applicable treasury regulations and guidance promulgated thereunder and any successor
or similar
statutory provisions.
 
2.12 “Committee”
means the Compensation Committee of the Board.
 
2.13 “Company”
means Celcuity Inc., a Delaware corporation, or any successor thereto, which, for the avoidance of doubt, includes any
successor to the
Company of all or substantially all of the Company’s business and/or assets (whether direct or indirect and whether by purchase,
merger,
consolidation, liquidation or other transaction).
 
2.14 “Disability”
has the meaning set forth in the Equity Plan.
 
2.15 “Eligible
Employee” means any regular full or part-time employee of the Company, excluding seasonal and temporary employees.
 
2.16 “Equity
Awards” means a Participant’s outstanding stock options, stock appreciation rights, restricted stock, restricted stock
units,
performance shares, performance stock units and other equity-based awards.
 
2.17 “Equity
Plan” means the Celcuity Inc. Amended and Restated 2017 Stock Incentive Plan.
 
2.18 “ERISA”
 means the Employee Retirement Income Security Act of 1974, as amended, including the rules and regulations
promulgated thereunder.
 
2.19 “Exchange
Act” means the U.S. Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated
thereunder.
 
2.20 “Executive
Officer” means an “officer” of the Company within the meaning of Rule 16a-1(f) of the Exchange Act.
 
 

 
 
2.21 “Good
Reason” means, with respect to a Participant, the occurrence of one or more of the following (through a single action or
series
of actions) without the Participant’s written consent: (i) a material reduction in the Participant’s duties, authority or
responsibilities; (ii) a material
diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant
is required to report, including, as applicable, a requirement
that the Participant report to a corporate officer or employee instead
of reporting directly to the Chief Executive Officer or the Board; (iii) a material
reduction in the Participant’s Annual Base
Salary from the Participant’s Annual Base Salary at the time of the Change in Control; or (iv) a change in the
geographic location
of the Participant’s primary work facility or location, including (A) a change from working remotely, if remote work is permitted
for
such Participant, to requiring the Participant to work on-site or in a hybrid arrangement, or (B) by more than 25 miles from its
current primary location,
other than travel reasonably required in the performance of the Participant’s responsibilities. Notwithstanding
the foregoing, the Participant will not be
entitled to resign for Good Reason without first providing the Company with written notice
of the acts or omissions constituting the grounds for “Good
Reason” within 60 days of the initial existence of the grounds
 for “Good Reason” and the Company fails to reasonably cure such grounds within a
reasonable cure period of not less than
30 days following the date of such notice. In addition, the Participant’s resignation will qualify as a resignation for
“Good
Reason” only if (x) the grounds for “Good Reason” are not reasonably cured within the cure period specified in the
preceding sentence and (y) the
Participant resigns within 60 days following the end of such cure period.
 
2.22 “Involuntary
Termination” means a termination of the Participant’s employment with the Company and its Affiliates (a) by the
Participant
for Good Reason, or (b) by the Company and its Affiliates for a reason other than Cause, death or Disability. For the avoidance of doubt,
a
transfer of the Participant’s employment or service from one business group, including corporate groups, or Affiliate of the
Company to another business
group or Affiliate of the Company, shall not be considered an Involuntary Termination of the Participant’s
employment with the Company and its Affiliates
unless the circumstances of such transfer meet the definition of Good Reason.
 
2.23 “Participant”
means any Eligible Employee.
 
2.24 “Plan”
means the Celcuity Inc. Change in Control and Severance Plan, as set forth in this document, and as hereafter amended from
time to time.
 
2.25 “Section
280G” means Section 280G of the Code, including the rules and regulations promulgated thereunder.
 
2.26 “Section
409A” means Section 409A of the Code.
 
2.27 “Separation
from Service” means a “separation from service” as such term is defined for purposes of Section 409A.
 
2.28 “Severance
Benefits” means the compensation and other benefits that the Participant will be eligible to receive under this Plan in the
event of an Involuntary Termination as provided in Section 5, subject to the terms and conditions of this Plan.
 
2.29 “Target
Annual Bonus” means the Participant’s target annual cash bonus amount pursuant to the Company’s annual cash bonus
program (without regard to any reduction that would constitute Good Reason).
 
 

 
 
3. Equity
Acceleration. In the event of a Change in Control, all outstanding Equity Awards held by any Participant in the Plan will fully vest
(with
performance awards vesting at the greater of target or actual performance levels) immediately upon the effective date of such Change
in Control (the
“Equity Acceleration”). For the avoidance of doubt, the Equity Acceleration will occur immediately
 upon the effective date of a Change in Control
regardless of whether the Participant experiences an Involuntary Termination.
 
4. Eligibility
for Severance Benefits. A Participant is eligible for Severance Benefits, as described in Section 5, only if the Participant experiences
an Involuntary Termination.
 
5. Involuntary
Termination during the Change in Control Period. Subject to the Participant’s compliance with Section 6, upon an Involuntary
Termination that is within the Change in Control Period, the Participant will be eligible to receive the following Severance Benefits,
subject to the terms
and conditions of this Plan:
 
5.1 Cash
Severance. An amount in cash equal to the product of (a) the Participant’s (i) Annual Base Salary plus (ii) Target Annual Bonus,
(b) divided by twelve (12), and (c) multiplied by the CIC Severance Multiplier, payable, subject to Section 6, in a single lump sum on
the 60th day after the
Participant’s Involuntary Termination.
 
5.2 COBRA
Premiums. If the Participant timely elects COBRA continuation coverage, a lump sum amount in cash equal to the monthly
COBRA premiums
(on an after-tax basis) that the Participant would be required to pay to continue the group health and prescription drug (but not dental
or
vision) coverage in effect on the date of the Participant’s Involuntary Termination (which amount will be based on the premium
for the first month of
COBRA coverage) for the Participant and any dependents of the Participant who are enrolled in Company benefits
at the time of termination, multiplied by
the lesser of the CIC Severance Multiple or 18, payable, subject to Section 9, in a single
lump sum on the 75th day after the Participant’s Involuntary
Termination.
 
6. Conditions
to Receipt of Severance.
 
6.1 Release
Agreement. As a condition to receiving the Severance Benefits, each Participant will be required to sign and not revoke a
separation
and release of claims in favor of the Company in a form of agreement provided by the Company (the “Release”). In all
cases, the Release must
become effective and irrevocable no later than the 55th day following the Participant’s Involuntary Termination
(the “Release Deadline Date”). If the
Release does not become effective and irrevocable by the Release Deadline Date,
the Participant will forfeit any right to the Severance Benefits. In no
event will the Severance Benefits be paid or provided until the
Release becomes effective and irrevocable.
 
6.2 Restrictive
Covenants. A Participant’s receipt of Severance Benefits will be subject to the Participant continuing to comply with the
terms
 of any enforceable non-compete, non-solicit, employee invention and confidentiality agreement or similar agreement or policy. Any unpaid
Severance Benefits under this Plan will be forfeited immediately if the Participant violates any such agreement and/or the provisions
of this Section 6.
 
7. Limitation
on Payments. In the event that the Severance Benefits, Equity Acceleration, and any other severance or benefits otherwise payable
to
a Participant (i) constitute “parachute payments” within the meaning of Section 280G (the “280G Payments”)
and (ii) but for this Section 7, would be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”),
then the 280G Payments will be either:
 
(a) delivered
in full; or
 
 

 
 
(b) delivered
 as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax,
whichever of the foregoing
amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999 of
the Code,
results in the receipt by the Participant on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some
portion of such
benefits may be taxable under Section 4999 of the Code. If a reduction in the 280G Payments is necessary so that no portion
of such benefits is subject to
the Excise Tax, such reduction will be first applied to reduce any cash payments and will thereafter be
applied to reduce noncash payments and benefits, in
each case, in reverse order beginning with the payments or benefits that are to be
paid the furthest in time from the date of such determination; provided,
however, that, in no event may the 280G Payments
be reduced in a manner that would result in subjecting the Participant to additional taxation or penalties
under Section 409A.
 
Any
 determination required under this Section 7 will be made in writing by the Company’s independent public accountants immediately
 prior to the
Change in Control or such other independent accountant as determined in good faith by the Company (the “Accounting
Firm”), whose determination will
be conclusive and binding upon the Participant and the Company. For purposes of making the
calculations required by this Section 7, the Accounting Firm
may make reasonable assumptions and approximations concerning applicable
taxes and may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Participant
and the Company will furnish to the Accounting Firm such information and documents
as the Accounting Firm may reasonably request in order
to make a determination under this Section 7. The Company will bear all costs the Accounting
Firm may incur in connection with any calculations
contemplated by this Section 7.
 
8. Other
Arrangements. Except as otherwise provided by the Company in writing, (i) in the event that the Participant is eligible for any other
arrangement of the Company regarding severance or severance-type benefits in connection with a Change in Control (“Change in
 Control Severance
Benefits”), the Eligible Employee will be entitled to receive the better of the Change in Control Severance
Benefits and the benefits under this Plan; and (ii)
the Plan shall not provide duplicative benefits with other Change in Control Severance
Benefits, provided, however, that this nonduplication provision will
not apply to any Change in Control bonus or retention arrangement
which provides for benefits not in connection with an Involuntary Termination.
 
9. Section
409A.
 
9.1 This
Plan and the Severance Benefits and Equity Acceleration are intended to comply with or be exempt from the requirements of
Section 409A
and will be construed and interpreted in accordance with such intent.
 
9.2 Except
as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to any Participant
or for the
benefit of any Participant under this Plan may not be reduced by, or offset against, any amount owing by any such Participant to the
Company or
any of its Affiliates to the extent such offset would result in taxes or penalties under Section 409A. Amounts reimbursable
to Participant under this Plan
shall be paid to Participant on or before the last day of the year following the year in which the expense
was incurred and the amount of expenses eligible
for reimbursement (and in-kind benefits provided to Participant) during one year may
not affect amounts reimbursable or provided in any subsequent year);
 
9.3 To
 the extent required to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be
payable and
benefits that would otherwise be provided pursuant to this Plan during the six (6) month period immediately following Participant’s
Separation
from Service shall instead be paid on the first business day after the date that is six (6) months following Participant’s
Separation from Service (or, if
earlier, Participant’s date of death). Such amount will be paid without interest.
 
 

 
 
9.4 Participant
will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on such Participant
in connection
with any Severance Benefits or Equity Acceleration (including any taxes and penalties under Section 409A), and neither the Company nor
any of its Affiliates will have any obligation to indemnify or otherwise hold such Participant harmless from any or all of such taxes
or penalties.
 
9.5 Each
payment and benefit payable under this Plan is intended to constitute a separate payment for purposes of Section 409A. For
purposes of
Section 409A, the right to receive payments in the form of installment payments shall be treated as a right to receive a series of separate
payments and, accordingly, each installment payment shall at all times be considered a separate and distinct payment. In addition, to
the extent necessary to
comply with Section 409A of the Code, if the period during which a Release must be executed and become irrevocable
spans two calendar years, payment
of the Severance Benefits will commence in the second calendar year.
 
9.6 For
purposes of any provision of this Plan providing for the payment of any amount or benefit upon or following a termination of
employment
that constitutes “nonqualified deferred compensation” Section 409A, a termination of employment shall not be deemed to have
occurred
unless such termination is also a Separation from Service and, for purposes of any such provision of this Plan, references to
a “termination,” “termination
of employment” or like terms shall mean Separation from Service.
 
10. Withholdings.
The Company or any Affiliate will have the right and is hereby authorized to withhold from any Severance Benefits or Equity
Acceleration
due under this Plan or from any compensation or other amount owing to a Participant, the amount (in cash, shares, other securities or
other
property) of any applicable withholding taxes in respect of the amounts payable under this Plan and to take such other action as
may be necessary in the
opinion of the Administrator or the Company to satisfy all obligations for the payment of such taxes.
 
11. Administration.
This Plan will be administered and interpreted by the Administrator (in his or her sole discretion). The Administrator is the
“named
fiduciary” of this Plan for purposes of ERISA and will be subject to the fiduciary standards of ERISA when acting in such capacity.
Any decision
made or other action taken by the Administrator with respect to this Plan, and any interpretation by the Administrator of
any term or condition of this Plan,
or any related document, will be conclusive and binding on all persons and be given the maximum possible
deference allowed by law. In accordance with
Section 2.1, the Administrator (a) may, in its sole discretion and on such terms and conditions
as it may provide, delegate in writing to one or more officers
of the Company all or any portion of its authority or responsibility with
respect to this Plan and (b) has the authority to act for the Company (in a non-
fiduciary capacity) as to any matter pertaining to this
Plan.
 
12. Eligibility
to Participate. To the extent that the Administrator has delegated administrative authority or responsibility to one or more officers
of
the Company in accordance with Sections 2.1 and 11, each such officer will not be excluded from participating in this Plan if otherwise
eligible, but he or
she is not entitled to act upon or make determinations regarding any matters pertaining specifically to his or her
own benefit or eligibility under this Plan.
The Committee will act upon and make determinations regarding any matters pertaining specifically
to the benefit or eligibility of each such officer under
this Plan.
 
 

 
 
13. Amendment
or Termination. The Committee reserves the right to amend or terminate this Plan or the benefits provided hereunder at any time,
subject to the provisions of this Section 13. Any amendment or termination will be effective, with or without advance notice, as of the
date determined by
the Committee. Notwithstanding the foregoing, beginning on the date that a Change in Control occurs, the Company may
not, without a Participant’s
written consent, amend or terminate this Plan in any way, nor take any other action under this Plan,
which (a) prevents the Participant from becoming
eligible for Severance Benefits or Equity Acceleration or (b) reduces or alters to the
 detriment of the Participant the Severance Benefits or Equity
Acceleration payable, or potentially payable, to the Participant (including,
without limitation, imposing additional conditions). Unless and until a Change of
Control occurs, the Participants’ rights under
this Plan are unvested and may be amended or revoked at any time. Any action of the Company in amending
or terminating this Plan will
be taken in a non-fiduciary capacity.
 
14. Claims
and Appeals.
 
14.1 Claims
Procedure. Any employee or other person (or his or her authorized representative) who believes he or she is entitled to any
Severance
Benefits or Equity Acceleration (“Claimant”) may submit a claim in writing to the Administrator within 90 days of
the earlier of (a) the date the
Claimant learned the amount of his or her Severance Benefits or Equity Acceleration or (b) the date the
Claimant learned that he or she will not be entitled
to any Severance Benefits or Equity Acceleration. If the claim is denied (in full
or in part), the Claimant will be provided a written notice explaining the
specific reasons for the denial and referring to the provisions
 of this Plan on which the denial is based. The notice also will describe any additional
information needed to support the claim and this
Plan’s procedures for appealing the denial. The denial notice will be provided within 90 days after the
claim is received. If special
circumstances require an extension of time (up to 90 days), written notice of the extension will be given within the initial 90-
day period.
This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Administrator
expects
to render its decision on the claim.
 
14.2 Appeal
Procedure. If the Claimant’s claim is denied, the Claimant may apply in writing to the Administrator for a review of the
decision
denying the claim. Review must be requested within 60 days following the date the Claimant received the written notice of their claim
denial or
else the Claimant loses the right to review. The Claimant then has the right to review and obtain copies of all documents and
other information relevant to
the claim, upon request and at no charge, and to submit issues and comments in writing. The Administrator
will provide written notice of its decision on
review within 60 days after it receives a review request. If additional time (up to 60
days) is needed to review the request, the Claimant will be given
written notice of the reason for the delay. This notice of extension
will indicate the special circumstances requiring the extension of time and the date by
which the Administrator expects to render its
decision. If the claim is denied (in full or in part), the Claimant will be provided a written notice explaining
the specific reasons
for the denial and referring to the provisions of this Plan on which the denial is based. The notice also will include a statement that
the
Claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents and other information
relevant to the claim
and a statement regarding the Claimant’s right to bring an action under Section 502(a) of ERISA. The decision
of the Administrator will be made in its sole
discretion and is final and binding on all parties.
 
14.3 Limitations
Period. The claims and appeals procedure above is mandatory. If a Claimant has completed the entire claims and appeals
procedure
and still disagrees with the outcome of his or her claim, the Claimant may commence a civil action under ERISA. The Claimant must commence
such civil action within one year of the date of the final denial, or the Claimant will waive all rights to relief under ERISA.
 
15. Source
of Payments. All payments under this Plan will be paid from the general funds of the Company; no separate fund will be established
under this Plan, and this Plan will have no assets. No right of any person to receive any payment under this Plan will be any greater
than the right of any
other general unsecured creditor of the Company.
 
 

 
 
16. Benefits
Nontransferable. In no event may any current or former employee of the Company or any of its Affiliates sell, transfer, anticipate,
assign or otherwise dispose of any right or interest under this Plan. At no time will any such right or interest be subject to the claims
of creditors nor liable
to attachment, execution or other legal process.
 
17. No
Right to Continued Employment. Neither the establishment or maintenance or amendment of this Plan, nor the making of any benefit
payment hereunder, will be construed to confer upon any individual any right to continue to be an employee of the Company. This Plan
in no way alters a
Participant’s at-will employment arrangement with the Company, and the Company expressly reserves the right
 to discharge any of its employees,
including the Participant, at any time, with or without cause. However, as described in this Plan,
a Participant may be eligible for Severance Benefits
depending upon the circumstances of his or her termination of employment.
 
18. Successors.
Any successor to the Company of all or substantially all of the Company’s business and/or assets (whether direct or indirect and
whether by purchase, merger, consolidation, liquidation or other transaction) will assume the obligations under this Plan and agree expressly
to perform the
obligations under this Plan in the same manner and to the same extent as the Company would be required to perform such
obligations in the absence of a
succession. For all purposes under this Plan, the term “Company” will include any successor
to the Company’s business and/or assets which become bound
by the terms of this Plan by operation of law, or otherwise.
 
19. Applicable
 Law. This Plan will be governed by, and construed in accordance with, ERISA. For purposes of any action, lawsuit or other
proceedings
brought to enforce this Plan, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive
jurisdiction of
the federal courts for the United States for the District of Minnesota.
 
20. Severability.
If any provision of this Plan is or becomes or is deemed to be invalid, illegal, or unenforceable for any reason in any jurisdiction
or as to any Participant, such invalidity, illegality or unenforceability will not affect the remaining parts of this Plan, and this
Plan will be construed and
enforced as to such jurisdiction or Participant as if the invalid, illegal or unenforceable provision had
not been included.
 
21. Headings
and Construction. Headings are given to the Sections and subsections of this Plan solely as a convenience to facilitate reference.
Such headings will not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision
thereof. Whenever the
words “include”, “includes” or “including” are used in this Plan, they will
be deemed to be followed by the words “but not limited to”, and the word “or”
will not be deemed to be exclusive.
Pronouns and other words of gender will be read as gender neutral. Words importing the plural will include the singular
and the singular
will include the plural.
 
22. Indemnification.
The Company hereby agrees to indemnify and hold harmless the officers and employees of the Company, and the members of
its Board, from
 all losses, claims, costs or other liabilities arising from their acts or omissions in connection with the administration, amendment
 or
termination of this Plan, to the maximum extent permitted by applicable law. This indemnity will cover all such liabilities, including
judgments, settlements
and costs of defense. The Company will provide this indemnity from its own funds to the extent that insurance
 does not cover such liabilities. This
indemnity is in addition to and not in lieu of any other indemnity provided to such person by the
Company.
 
 

 
 
Appendix
STATEMENT
OF ERISA RIGHTS
 
As
a participant in this Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974
(ERISA).
ERISA provides that all plan participants shall be entitled to:
 
■
Receive
Information About Your Plan and Benefits
 
Examine,
without charge, at the Administrator’s office and at other specified locations all documents governing the plan and a copy of the
latest
annual report (Form 5500 Series) required to be filed by the plan with the U.S. Department of Labor and available at the Public
Disclosure Room
of the Employee Benefits Security Administration.
 
Obtain,
upon written request to the Administrator, copies of documents governing the operation of the plan and copies of the latest annual report
(Form 5500 Series), if any required, and updated summary plan description. The administrator may make a reasonable charge for the copies.
 
■
Prudent
Actions by Plan Fiduciaries
 
In
addition to creating rights for plan participants ERISA imposes duties upon the people who are responsible for the operation of the employee
benefit plan. The people who operate your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the
interest of you and other
plan participants and beneficiaries. No one, including your employer, or any other person, may fire you or
otherwise discriminate against you in
any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.
 
■
Enforce
Your Rights
 
If
your claim for a severance benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies
of
documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
 
Under
ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents or the latest
annual
report from the plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may
require the
Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials
were not sent because of
reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored,
in whole or in part, you may file suit
in a state or Federal court. If it should happen that plan fiduciaries misuse the plan’s
money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you
may file suit in a Federal court. The court will decide who should pay
court costs and legal fees. If you are successful the court may
order the person you have sued to pay these costs and fees. If you lose, the court
may order you to pay these costs and fees, for example,
if it finds your claim is frivolous.
 
■
Assistance
with Your Questions
 
If
you have any questions about your plan, you should contact the Administrator. If you have any questions about this statement or about
your
rights under ERISA, or if you need assistance in obtaining documents from the Administrator, you should contact the nearest office
 of the
Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical
Assistance
and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington,
D.C. 20210.
You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline
of the Employee
Benefits Security Administration.
 
 

 
 
ADDITIONAL
INFORMATION
 
Employer
and Plan Sponsor:
Celcuity
Inc.
16305
36th Avenue North; Suite 100
Minneapolis,
Minnesota 55446
 
 
Employer
Identification Number (EIN):
82-2863566
 
 
 Plan
Name:
Celcuity
Inc. Change in Control and Severance Plan
 
 
Type
of Plan:
Welfare
benefit plan - severance pay
 
 
Plan
Year:
Calendar
year
 
 
Plan
Number:
502
 
 
Plan
Administrator:
The
Administrator
Celcuity
Inc.
16305
36th Avenue North; Suite 100
Minneapolis,
Minnesota 55446
 
 
Agent
for Service of Legal Process:
General
Counsel and Chief Compliance Officer
Celcuity
Inc.
16305
36th Avenue North; Suite 100
Minneapolis,
Minnesota 55446
 
 
 
Service
of legal process may be also made upon the Plan Administrator
 
 
Funding
Unfunded;
benefits are paid solely from the Employer’s general assets
 
 
 
 

 
Exhibit
19
 
CELCUITY
INC.
 
POLICY
TO PROHIBIT INSIDER TRADING
 
As
Amended & Restated February 13, 2025
 
Executive
Summary
 
This
Policy to Prohibit Insider Trading (the “Insider Trading Policy” or the “Policy”) provides guidelines
for directors, officers, employees, or other
representatives of Celcuity Inc. (“Celcuity” or the “Company”)
 who may have access to material non-public information about the Company or its
customers, suppliers and other business partners.
 
Both
 federal securities laws and Company policy prohibit transactions in Company Securities at a time when you may be in possession of material
information about the Company that has not been publicly disclosed. “Company Securities” means the Company’s
common stock, options to purchase
common stock, or any other type of securities that the Company may issue, including (but not limited
to) preferred stock, convertible debentures and
warrants, as well as derivative securities that are not issued by the Company, such as
 exchange-traded put or call options or swaps relating to the
Company’s Securities.
 
You
are similarly prohibited from buying or selling securities of Company customers, suppliers or other business partners when you have received,
through
your employment or other relationship with the Company, material non-public information about such customers, suppliers or business
partners. These
prohibitions also apply to members of your household as well as all others whose transactions may be attributable to
you. Anyone who violates these
prohibitions can face severe civil and criminal penalties.
 
“Material
 information” is any information that a reasonably prudent investor would consider to be important in making a decision to buy
 or sell a
security. It specifically includes any information that would affect the public market price for the Company’s common
stock. Either positive or negative
information may be material. Once a public announcement has been made of the material information,
you should wait at least 24 hours following the
announcement before engaging in any market trade of Company stock (e.g., announcement
at 10:00 a.m. on Monday, trade after 10:00 a.m. on Tuesday;
announcement at 2:00 p.m. on Friday, trade after 2:00 p.m. on Monday), assuming
at the time of the transaction you do not have other material information
that has not been made public.
 
Securities
laws and Company policy also prohibit disclosure of material non-public information except on a need-to-know basis. Even if you are not
engaging in any stock trading activity, you must not disclose material information to others, especially to those outside the Company.
This information is
owned by the Company and must be protected as such. Any questions from brokers, securities analysts or the media
regarding the Company should
be directed to the Chief Executive Officer, the Chief Financial Officer, or the General Counsel.
 
This
is only a summary. Please refer to the entire Insider Trading Policy set forth below for additional restrictions and requirements. If
you have any
questions about this Policy or your ability to share information or engage in a transaction involving Company Securities,
 please contact our General
Counsel.
 
 

 
 
Insider
Trading Policy
 
The
Need for an Insider Trading Policy: The Company’s stock is publicly-traded; therefore, the Company is required to take active
steps to prevent
violations of insider trading laws by Company personnel, and members of the Board of Directors (each, a “Director”).
Although insider trading has long
been illegal, over the years Congress has expanded the enforcement authority of the Securities and
Exchange Commission (the “SEC”) and the Justice
Department, increased substantially the penalties for insider trading,
and created potential liability for companies and other “controlling persons,” such as
directors and managers, for violations
by anyone under their supervision, influence or control. We are adopting this Insider Trading Policy to protect the
Company and its Directors
and personnel from liability and reputational harm, and to avoid even the appearance of improper conduct on the part of anyone
employed
by or associated with Celcuity (because anyone with material non-public information could be considered an “insider”). We
cannot afford to
have our reputation for integrity and ethical conduct damaged.
 
The
Consequences: The consequences of insider trading violations can be severe. For individuals who trade on inside information (or tip
information to
others), the consequences can include a civil penalty of up to three times the profit gained or loss avoided, a criminal
penalty (no matter how small the
profit) of up to $5 million, and a prison sentence of up to 20 years. For a company (as well as possibly
any supervisory person) that fails to take appropriate
steps to prevent illegal trading, the consequences can include a civil penalty
of the greater of $1 million or three times the profit gained or loss avoided as a
result of the individual’s violation, and a
criminal penalty of up to $25 million. In addition, any employee or consultant who violates this Policy faces
discipline or even termination
of employment for cause.
 
Any
of the above consequences, even an SEC investigation that does not result in prosecution, can tarnish one’s reputation and irreparably
damage a career.
Regulators use sophisticated surveillance techniques to identify transactions that may appear illegal, so you should
assume that any suspicious trading
activity, even if it is through foreign accounts or family members or friends or relates to only a
small number of shares, will be detected and vigorously
prosecuted.
 
Administration
of the Policy: Our General Counsel will administer the Policy, provided that with respect to the General Counsel, the Chief Financial
Officer will administer the Policy. All determinations by such individuals will be final and not subject to further review.
 
Our
Policy: It is the policy of the Company that no Director, employee or other Company personnel (including contractors) who is aware
of material non-
public information relating to the Company (so-called “inside” information of a nature which could affect
the Company’s stock price or affect an investor’s
decision to buy or sell the Company Securities) may, directly or indirectly
through family members or other persons or entities:
 
●
Engage
in any transaction in Company Securities (including sales, purchases and bona fide gifts),
unless this Policy provides a specific exception;
 
●
Recommend
that others engage in transactions in Company Securities;
 
●
Disclose
material non-public information to persons within the Company whose jobs do not require them
to have that information, or outside of
the Company to anyone; or
 
●
Engage
in any other action to take advantage of material non-public information, including assisting
anyone engaged in the above activities.
 
2

 
 
Small
transactions, and transactions that may be necessary or justifiable for independent reasons (such as the need to sell Company stock to
raise money for
an emergency expenditure), are no exception. The securities laws do not recognize any mitigating circumstances, and even
the appearance of an improper
transaction must be avoided to preserve our reputation for adhering to the highest standards of conduct.
 
●
Material
Information. Material information is any information that a reasonable investor would
consider important in a decision to buy, hold or
sell securities. In short, any information
that could reasonably affect a company’s stock is deemed to be “material.”
 
●
Examples.
Common examples of information that will frequently be regarded as material are: projections
of future earnings or losses; changes in
projections; news of
a pending or proposed merger, acquisition, or tender offer; news of a significant product
development or clinical trial results;
changes in dividend policies, the declaration of a
 stock split or the offering of additional securities; changes in management; impending
bankruptcy
 or financial liquidity problems; significant licensing or collaboration agreements; significant
 cybersecurity incidents or other
significant disruptions in our business, reputation or assets;
and the gain or loss of a substantial customer, supplier or other business partner. This
is not an exhaustive list. Either positive or negative information may be material.
 
●
“Non-public”
Information. As you can appreciate, it is also improper for Company personnel to enter
a trade immediately after Celcuity has made
a public announcement of material information,
including earnings releases. Because Company stockholders and the investing public should
be
afforded the time to receive the information and act upon it, as a general rule you should
not engage in any transactions until at least 24 hours after
the information has been released.
Thus, if an announcement is made at 10:00 a.m. on Monday, after 10:00 a.m. on Tuesday generally
would be
the first time you should trade, assuming you do not have other material information
that has not been made public. If an announcement is made at
2:00 p.m. on Friday, the first
time trading would be permitted would generally be after 2:00 p.m. on the following Monday.
 
●
20/20
Hindsight. Remember, if your securities transactions become the subject of scrutiny,
they will be viewed after-the-fact with the benefit of
hindsight. As a result, before engaging
in any securities transaction, you should carefully consider how regulators and others might
view your
transaction in hindsight.
 
●
Transactions
by Dependents & Household Members. This Policy also applies to anyone living in your
household (other than an unrelated person
who the applicable Administrator of this Policy
determines should not be covered by this Policy) and anyone financially dependent upon you
or
whose transactions in Company Securities are directed by you or are subject to your influence
 or control, even if they do not live in your
household (such as parents, siblings or adult
children who consult with you before they trade in Company Securities). Company personnel
are
expected to be responsible for compliance by their dependents and personal household,
and you should treat all transactions by such persons as if
the transactions were for your
own account.
 
This
Policy does not, however, apply to personal securities transactions of family members, financial dependents, or household members where
the purchase or sale decision is made by a third party not controlled by, influenced by, or related to you or your family members.
 
●
Transactions
 by Entities That You Influence or Control. This Policy applies to any entities that you
 influence or control, including any
corporations, partnerships or trusts (collectively referred
to as “Controlled Entities”), and transactions by these Controlled Entities
should be
treated for the purposes of this Policy and applicable securities laws as if they
were for your own account. However, nothing in this Policy is
intended to limit the ability
of a venture capital partnership or other similar entity with which a director is affiliated
 to distribute Company
Securities to its partners, members or other similar persons. It is
the responsibility of each affected Director and the affiliated entity, in consultation
with
their own counsel (as appropriate), to determine the timing of any distributions, based on
all relevant facts and circumstances and applicable
securities laws.
 
3

 
 
●
Disclosing
Information to Others. Whether the information is proprietary information about the Company
or one of its customers, suppliers or
other business partners, or information that could
have an impact on the market price of the Company’s or its customer’s, supplier’s
or other
business partner’s stock, Company personnel must not pass the information
on to others. The above penalties apply whether or not you derive any
benefit from another’s
actions. In order to prevent unintentional disclosure, all inquiries and requests for information
regarding the Company or
the Company’s customers, suppliers or other business partners
(e.g., from the media, stockbrokers or securities analysts) should be referred to our
General
Counsel.
 
This
 Policy also applies to information relating to any other organization, including our customers, suppliers, and other business partners,
 and
organizations that are involved in a potential transaction or business relationship with the Company, obtained in the course of your
employment or
other relationship with Celcuity. For example, you must keep information about that other company confidential and cannot
engage in transactions in
that other company’s securities if you are aware of non-public information that is material to that company.
Note that what constitutes “material non-
public information” differs by company. Information that is not material to Celcuity
may be material to another company. Please consult with our
General Counsel if you have any questions.
 
Exceptions:
This Policy does not apply to the following transactions, except as specifically noted:
 
●
The
exercise of stock options, except this Policy does apply to both the cashless exercise
of such options and open market sales of shares acquired
through the exercise of any options.
Furthermore, stock option exercises are subject to the terms of the Company’s governing
stock option plans
and any agreements entered into between the Company and the holders of
such options.
 
●
The
purchase of Company Securities under the Company’s employee stock purchase plan resulting
from the periodic contribution of money to the
plan pursuant to a payroll deduction election,
including any decision to terminate contributions made during any pay period, except that
this Policy
does apply to the sale of Company Securities purchased pursuant to the
employee stock purchase plan.
 
●
The
initial election to participate in the employee stock purchase plan for any enrollment period
 or any modifications following such initial
election (i.e., to increase or decrease the contributions
made during any pay period), if such election or modification was made at a time when the
Covered Person does not possess material non-public information.
 
●
The
purchase of Company Securities in the Company’s 401(k) plan resulting from the periodic
contribution of money to the plan pursuant to a
payroll deduction election. This Policy does
apply, however, to certain elections you may make under the 401(k) plan, including: (a)
an election
to increase or decrease the percentage of your periodic contributions that will
be allocated to the Company Securities fund; (b) an election to make
an intra-plan transfer
of an existing account balance into or out of the Company Securities fund; (c) an election
to borrow money against your
401(k) plan account if the loan will result in a liquidation
of some or all of your Company Securities fund balance; and (d) an election to pre-pay a
plan loan if the pre-payment will result in the allocation of loan proceeds to the Company
stock fund. It should be noted that sales of Company
Securities from a 401(k) account are
also subject to Rule 144, and therefore “affiliates” of the Company (typically
officers and Directors) should
ensure that a Form 144 is filed when required.
 
●
Any
other purchase of Company Securities from the Company or sales of Company Securities to the
Company.
 
4

 
 
Additional
Prohibited Transactions: Celcuity prohibits Company personnel from engaging in any of the following activities with respect to Company
Securities:
 
●
Trading
in Company Securities on a short-term basis. Any Company stock purchased in the open
market must be held for a minimum of six
months. Subject to the terms of the applicable awards,
stock received from the Company as a compensatory equity award that is registered with
the
SEC on a Form S-8 need not be held for six months and can be sold at any time, assuming you
 do not have any material non-public
information.
 
●
Margin
accounts and pledged securities. This Policy prohibits holding Company Securities in
a margin account or otherwise pledging Company
Securities as collateral for a loan. Securities
held in a margin account as collateral for a margin loan may be sold by the broker without
the
customer’s consent if the customer fails to meet a margin call. Similarly, securities
pledged (or hypothecated) as collateral for a loan may be sold
in foreclosure if the borrower
defaults on the loan.
 
●
Hedging
Transactions. This Policy prohibits engaging in any hedging transactions with respect
 to Company Securities. Hedging transactions
include transactions for which the value of the
trade is tied to the value of Company Securities. Examples are put options, call options,
and other
derivative and financial instruments such as prepaid variable forwards, equity
swaps, collars and exchange funds. Such transactions may permit a
director, officer or employee
to continue to own Company Securities obtained through employee benefit plans or otherwise,
but without the full
risks and rewards of ownership. When that occurs, the director, officer
or employee may no longer have the same objectives as the Company’s
other shareholders.
 
●
Short
Sales. This Policy prohibits short sales of Company Securities. Short sales (i.e., the
sale of a security that the seller does not own) may
evidence an expectation on the part
of the seller that the securities will decline in value, and therefore have the potential
to signal to the market
that the seller lacks confidence in the Company’s prospects.
 In addition, short sales may reduce a seller’s incentive to seek to improve the
Company’s
performance. Section 16(c) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), also prohibits officers and
directors from engaging in short sales.
 
●
Standing
and Limit Orders. Standing and limit orders (except standing and limit orders under approved
Rule 10b5-1 Plans, as described below)
create heightened risks for insider trading violations
similar to the use of margin accounts. There is no control over the timing of purchases or
sales that result from standing instructions to a broker, and as a result the broker could
execute a transaction when a director, officer or other
employee is in possession of material
non-public information. The Company therefore discourages placing standing or limit orders
on Company
Securities. If a person subject to this Policy determines that they must use a
standing order or limit order, the order should be limited to short
duration and should otherwise
comply with the restrictions and procedures outlined below under the heading “Trading
Windows and Advance
Notice Procedure for Directors, Executive Officers and Certain Other
Key Employees.” In addition, if you are a Covered Person under this Policy,
you should
inform any broker with whom you place a standing or limit order of that designation at the
time the order is placed.
 
5

 
 
Trading
Windows and Advance Notice Procedure for Directors, Executive Officers and Certain Other Key Employees: Because the Company’s
directors, executive officers and certain other key employees listed below (the “Covered Persons”) have regular access
to material non-public information,
this Policy requires that such persons comply with the trading window and advance notice procedures
described below for all transactions in Company
Securities. A “Covered Person” is any of the following persons subject
to this Policy: (a) all executive officers and Directors of Celcuity Inc., (b) all
administrative assistants supporting executive officers,
(c) all members of the senior management team of Celcuity, (d) those persons within Celcuity
identified by the Company’s General
Counsel as a Covered Person for purposes of this Insider Trading Policy, and (e) if they are otherwise subject to this
Policy, the household
members, dependents and Controlled Entities of the individuals identified in (a), (b), (c), or (d) of this sentence. The Company may
amend the list from time to time as it deems necessary to add or subtract from the list of Covered Persons.
 
The
trading window and advance notice procedures are not applicable to employees other than the Covered Persons. However, even if you are
not subject
to these additional restrictions, you should exercise caution when engaging in transactions outside of the trading window
because of the heightened risk that
those transactions will attract regulatory scrutiny and may expose you to accusations of improper
behavior.
 
Trading
Window: Transactions in Company Securities by Covered Persons will be restricted to certain window periods following the end of each
quarter. The window during which trades generally will be permitted, provided such trades comply with advance notice procedures (see
 below) and
provided you possess no material non-public information, will begin 24 hours (not including weekends and other non-business
 days) after the public
release of all material information with respect to the financial results of the most recently completed quarter
and will end at the close of market on the 15th
day of the third month following the end of the most recent fiscal quarter.
 
Event-Specific
Restricted Periods: From time to time, there may be a material event that is known only to certain Covered Persons. In such
instances,
to avoid the appearance of impropriety, the General Counsel, together with the Chief Financial Officer, may not allow any Covered Persons
to
engage in transactions in Company Securities, regardless of whether the trading window is open. The General Counsel also has discretion
to close the
trading window early in any particular quarter. In either of these situations, the General Counsel may notify Covered Persons
that they should not trade in
Company Securities, without disclosing the reason for the restriction. The existence of an event-specific
restricted period or shortening of the trading
window will not be announced to the Company as a whole and should not be communicated
to any other person. Even if the General Counsel has not
designated you as a person who should not trade due to an event-specific restriction,
you should not trade while aware of material non-public information.
 
Pre-Clearance
of Transactions: To provide assistance in avoiding even the appearance of an improper transaction (which could result, for example,
where a person engages in a trade while unaware of a pending major development), all transactions in Company Securities by “Covered
Persons” (as
defined above) must notify the General Counsel of the proposed transaction by submitting the Transaction Pre-Clearance
Form set forth in Attachment 1, as
updated from time to time by the Company, and await pre-clearance from the General Counsel.
The pre-clearance request should be submitted at least two
business days in advance of the proposed transaction and must be effected
within five business days of receipt of pre-clearance, unless an exception is
granted. Covered Persons should also notify the General
Counsel once the pre-cleared transaction is completed.
 
The
pre-clearance will serve only to confirm the status of the trading window. Even if you receive pre-clearance of an open trading window
from
the General Counsel, you are still prohibited under this Policy from effecting the transaction if you possess material non-public
information or it would
violate any other provision of this Policy or any applicable securities law or regulation. Pre-clearance is not
a defense to a claim of insider trading and does
not excuse you from otherwise complying with securities laws or this Policy. You may
want to consult outside counsel regarding the proposed transaction.
Transactions by the General Counsel must receive pre-clearance by
the Chief Financial Officer.
 
6

 
 
Rule
10b5-1 Plans and Exceptions: The trading window restrictions and pre-clearance procedures set forth above do not apply to the transactions
to which this Policy does not apply, as described under the heading “Exceptions.” Further, the trading window restrictions,
event-specific restricted periods,
and pre-clearance procedures do not apply to transactions conducted pursuant to a binding contract,
written plan or specific instruction that is adopted and
operated in compliance with Rule 10b5-1(c) of the Exchange Act and is adopted
at a time when such Covered Person does not possess material non-public
information, so long as the underlying contract, instruction
or plan also complies with the Company’s Rule 10b5-1 Plan Guidelines set forth in Attachment
2 (“Rule 10b5-1 Plan
Guidelines”). Any adoption, modification or termination of a Rule 10b5-1 Plan must be submitted to the General Counsel for
approval, at least five business days prior to entering into, modifying or terminating the Rule 10b5-1 Plan.
 
In
addition, Covered Persons who enter into any written contract, plan, instruction or arrangement at a time that they are not aware of
material
non-public, which (i) specifies the amount of Company Securities to be purchased or sold and the price at which and the date
on which they are to be
purchased or sold, or (ii) includes a written formula or algorithm to determine those transactions, or (iii)
does not permit the Covered Person to exercise any
subsequent influence over the transactions, must also submit a request for approval
 at least five business days prior to entering into, modifying or
terminating the contract, plan, instruction or arrangement, even if
it does not meet the specific criteria of Rule 10b5-1(c) or the Company’s Rule 10b5-1
Plan Guidelines.
 
Post-Termination
Transactions: This Policy continues to apply to transactions in Company Securities even after termination of service to the Company.
If
an individual is in possession of material non-public information when his or her service terminates, that individual may not engage
in transactions in
Company Securities until that information has become public or is no longer material.
 
Certification:
Company personnel may be required from time to time to re-certify their understanding of and intent to comply with this Policy.
 
Company
Assistance: Any person who has any general questions about this Policy or questions about specific transactions should contact the
General
Counsel. Remember, however, the ultimate responsibility for adhering to this Policy and avoiding improper transactions rests
with you. In this regard, it is
imperative that you use your best judgment and consult with your legal and financial advisors,
as needed. We advise you to seek assistance if you have any
questions at all. The rules relating to insider trading can be complex, and
a violation can carry severe consequences.
 
7

 
 
ATTACHMENT
1
 
CELCUITY
INC.
TRANSACTION
PRE-CLEARANCE FORM
 
Name
of Covered Person: ________________________________
 
Date
of Notice: ________________________________________
 
Anticipated
Date of Transaction: __________________________
 
Please
describe the proposed transaction, including the type of transaction (purchase, sale, option exercise, gift, etc.), the number of shares,
and any third
parties involved in the transaction:
 
Please
list any transactions in the securities of Celcuity Inc. (“Celcuity”) in which you have engaged during the six months prior
to the date of this notice,
including, but not limited to, purchases or sales in the open market, exercises of options or warrants, gifts,
or receipt of grants of restricted stock or other
equity, OR if you have not had any such transactions in the preceding six months,
please so indicate by checking this box. ☐
 
Date
Type
of Transaction
 
 
 
 
 
 
 
Please
check the following box to indicate that you are not in possession of material non-public information regarding Celcuity. ☐
 
________________________________
Signature
of Covered Person
 
NOTICE:
This Form relates only to certain aspects of Celcuity’s Policy to Prohibit Insider Trading. Pre-clearance by the Company only indicates
that a trading window is open. It does not indicate whether the transaction is allowable under applicable securities laws or Celcuity
policies.
YOU are responsible for compliance with all applicable securities laws and Celcuity policies. You are encouraged to consult
outside counsel
before engaging in the proposed transaction. Failure to receive pre-clearance at all or on a timely basis shall not give
rise to any claims against
the General Counsel, Chief Financial Officer, Chief Executive Officer or Celcuity.
 
 
To
be completed by the Company:
 
Pre-cleared this
____ day of ______________, 20___.
Signature:
 
Title:
General
Counsel
 
8

 
 
ATTACHMENT
2
 
CELCUITY
INC.
RULE
10B5-1 PLAN GUIDELINES
 
Rule
10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provides a defense from insider
trading liability if transactions
occur pursuant to a plan that complies with the conditions set forth in Rule 10b5-1(c) of the Exchange
Act (a “Rule 10b5-1 Plan”). If the plan meets the
requirements of Rule 10b5-1, transactions in Company Securities
may occur without regard to certain insider trading restrictions. In order to avoid a
violation of securities laws and to comply with
the Celcuity Inc. Policy to Prohibit Insider Trading (the “Policy”), any person subject to the Policy that
intends
to use a Rule 10b5-1 Plan must comply with these Rule 10b5-1 Guidelines. Please note that brokers may apply additional procedures, which
may
be more stringent.
 
In
general, a Rule 10b5-1 Plan must be entered into at a time when the person entering into the plan is not aware of material non-public
information. Once
the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price
at which they are to be traded or the date
of the trade. The Rule 10b5-1 Plan must either specify the amount, pricing and timing of transactions
in advance or delegate discretion on these matters to
an independent third party.
 
As
specified in the Policy, a Rule 10b5-1 Plan must be approved by the General Counsel and meet the requirements of Rule 10b5-1 and these
Guidelines.
Any Rule 10b5-1 Plan must be submitted for approval five business days prior to entering into, modifying or terminating the
Rule 10b5-1 Plan. Following
approval of entry into the Rule 10b5-1 Plan, no further pre-approval of transactions conducted under the
Rule 10b5-1 Plan will be required.
 
The
following guidelines apply to all Rule 10b5-1 Plans:
 
●
You
may enter into, modify or terminate a Rule 10b5-1 Plan only during a trading window. In addition,
 you may not enter into, modify or
terminate a Rule 10b5-1 Plan during an event-specific restricted
period or otherwise while you are aware of material non-public information.
 
●
Unless
otherwise determined by the General Counsel, all Rule 10b5-1 Plans must have a duration of
at least 6 months and no more than 2 years.
 
●
For
officers and directors, no transaction may take place under a Rule 10b5-1 Plan until the
later of (a) 90 days after adoption or modification (as
specified in Rule 10b5-1) of the
Rule 10b5-1 Plan or (b) two business days following the disclosure of the Company’s
financial results in a Form
10-Q or Form 10-K for the fiscal quarter (the Company’s
fourth fiscal quarter in the case of a Form 10-K) in which the Rule 10b5-1 Plan was
adopted
or modified (as specified in Rule 10b5-1). In any event, the cooling-off period is subject
to a maximum of 120 days after adoption of the
plan.
 
●
For
persons other than officers and directors, no transaction may take place under a Rule 10b5-1
Plan until 30 days following the adoption or
modification (as specified in Rule 10b5-1) of
a Rule 10b5-1 Plan.
 
●
Subject
to certain limited exceptions specified in Rule 10b5-1, you may not enter into more than
one Rule 10b5-1 Plan at the same time.
 
9

 
 
●
Subject
to certain limited exceptions specified in Rule 10b5-1, you are limited to only one “single
trade” Rule 10b5-1 Plan during any 12-month
period (i.e., a Rule 10b5-1 Plan designed
to effect an open market purchase or sale of the total amount of securities subject to the
Rule 10b5-1 Plan
as a single transaction).
 
●
You
must act in good faith with respect to a Rule 10b5-1 Plan. A Rule 10b5-1 Plan cannot be entered
into as part of a plan or scheme to evade the
prohibition of Rule 10b-5. Therefore, although
modifications to an existing Rule 10b5-1 Plan are not prohibited, a Rule 10b5-1 Plan should
be
adopted with the intention that it will not be amended or terminated prior to its expiration.
 
●
Officer
and directors must include a representation in the Rule 10b5-1 Plan at the time of its adoption
or modification that (i) the person is not
aware of material non-public information about
the Company or Company Securities and (ii) the person is adopting the plan in good faith
and not
as part of a plan or scheme to evade the prohibitions of Rule 10b-5.
 
The
Company and the Company’s officers and directors must make certain disclosures in SEC filings concerning Rule 10b5-1 Plans. Officers
and directors
of the Company must undertake to provide any information requested by the Company regarding Rule 10b5-1 Plans for the purpose
of providing the
required disclosures or any other disclosures that the Company deems to be appropriate under the circumstances. Each
director, officer and other Section 16
insider understands that the approval or adoption of a pre-planned selling program in no way reduces
or eliminates such person’s obligations under Section
16 of the Exchange Act, including such person’s disclosure and short-swing
trading liabilities thereunder. If any questions arise, such person should consult
with their own counsel in implementing a Rule 10b5-1
Plan.
 
10

 
 
CELCUITY
INC.
 
DIRECTOR
AND EXECUTIVE OFFICER ADDENDUM
TO
POLICY
TO PROHIBIT INSIDER TRADING
 
In
addition to the provisions of Celcuity Inc.’s Policy to Prohibit Insider Trading (the “Policy”), all Celcuity
Inc. (“Celcuity” or the “Company”) directors
and executive officers, and in some cases also significant
stockholders, are subject to additional legal restrictions, including under Sections 16 and 13 of the
Securities Exchange Act of 1934
and the rules promulgated thereunder (the “Exchange Act”). This Addendum summarizes the regulations that directors
and executive officers are most likely to encounter. In addition, this Addendum serves as a reminder that you are required to comply
with the Policy’s pre-
clearance and trading window requirements. In light of the Securities and Exchange Commission (the “SEC”)
regulations that apply to you, it is
particularly important to comply with the pre-clearance procedures under the Policy. Please
 refer to the full Policy for additional details and
exceptions.
 
Trading
Window: Under the Policy, you, as well as any of your household members, dependents and Controlled Entities who are subject to the
Policy,
may engage in transactions in Company Securities only during the “window periods” following the end of each quarter.
The window during which trades
generally will be permitted, provided the trades comply with advance notice procedures (see below) and
provided you possess no material non-public
information, will begin 24 hours (not including weekends and other non-business days) after
the public release of all material information with respect to
the financial results of the most recently completed quarter and will
end at the close of market on the 15th day of the third month following the end of the
most recent fiscal quarter.
 
Event-Specific
Restricted Periods: From time to time, there may be a material event that is known only by a few of the Company’s officers,
directors or
employees. In those instances, to avoid the appearance of impropriety, you should not engage in transactions in Company
Securities, regardless of whether
the trading window is open. The General Counsel also has discretion to close the trading window early
in any particular quarter. In these situations, the
General Counsel may notify you that you should not trade in the Company’s Securities,
without disclosing the reason for the restriction. The existence of
an event-specific restricted period or shortening of the trading
window will not be announced to the Company as a whole and should not be communicated
to any other person. Even if the General Counsel
has not designated you as a person who should not trade due to an event-specific restriction, you should
not trade while aware of material
non-public information.
 
Pre-Clearance:
The Policy prohibits you, as well as any of your household members, dependents and Controlled Entities who are subject to the Policy,
from engaging in any transaction in Company Securities without first obtaining pre-clearance of the transaction from the General Counsel.
The pre-
clearance request should be submitted to the General Counsel, with a copy to the Chief Financial Officer, at least two business
days in advance of the
proposed transaction, using the Company’s Transaction Pre-Clearance Form, and must be effected within five
business days of receipt of pre-clearance,
unless an exception is granted. You should also notify the General Counsel once the pre-cleared
transaction is completed.
 
The
General Counsel is not required to approve pre-clearance requests, and may determine not to permit a transaction. If you are denied permission
to
engage in a transaction, then you should not initiate any transaction in Company Securities, and you should not inform any other person
of the restriction.
 
The
pre-clearance will serve only to confirm the status of the trading window. Even if you receive pre-clearance of an open trading window
from the
General Counsel, you are still prohibited under this Policy from effecting the transaction if you possess material non-public
information or if it would
violate any other provision of this Policy or any applicable securities law or regulation. Therefore, when
making a pre-clearance request, you should
carefully consider whether you are aware of material non-public information that you have
obtained pursuant to your role with the Company.
 
 

 
 
Pre-clearance
is not a defense to a claim of insider trading and does not excuse you from otherwise complying with securities laws or this Policy.
For
example, you should be prepared to comply with the SEC rules described below. You may want to consult outside counsel regarding the
 proposed
transaction. Transactions by the General Counsel must receive pre-clearance by the Chief Financial Officer.
 
Section
16: Section 16 applies to directors, executive officers and more-than-10% stockholders of the Company.
 
Liability.
In general, Section 16(b) provides that any profit realized on a purchase and a sale of Company stock within a six-month period is
recoverable
by the Company. For this purpose, it does not matter whether the purchase or the sale occurs first. It is not necessary for the same
shares to be
involved in each of the matched transactions. Losses cannot be offset against gains. Transactions are paired so as to match
the lowest purchase price and the
highest sale price within a six-month period, resulting in the maximum amount of recoverable profit.
Good faith on the part of the insider is no defense. If
the Company itself does not press a claim, a claim for recovery of the profit
may be asserted by any stockholder for the benefit of the Company.
 
There
 are many types of transactions that constitute a “purchase” or a “sale” for Section 16 purposes, in addition
 to normal open market
transactions. The receipt of an option, warrant or other right to acquire common stock (a “derivative security”)
is generally a “purchase” unless received
under certain employee plans and approved by independent directors. Many unusual
corporate reorganizations may be “purchases” or “sales.” “Beneficial”
ownership for Section 16 purposes
may include indirect ownership, for example, through trusts or estates. In some circumstances, stock held by close
relatives of a person
may be considered to be owned beneficially by such person, and a purchase (or sale) by one individual may be matched with a sale (or
purchase) by his or her close relative to produce a recoverable profit. The provisions also apply to stock held by a broker on your behalf
 through a
brokerage account (i.e., in “street name”).
 
Reports.
As a supplement to the profit recapture provisions of Section 16(b), Section 16(a) includes beneficial ownership reporting provisions.
Each insider is responsible for filing Forms 3, 4 and 5 as required under Section 16(a).
 
●
Form
3. Within 10 days of a person becoming an officer, director or 10% stockholder of an
Exchange Act reporting company, such person must
file an Initial Statement of Beneficial
Ownership of Securities, or a Form 3, as it is more commonly known, with the SEC. A Form
3 is a statement
by each reporting person of the amount of his or her beneficial ownership
of each class of non-derivative securities (e.g., common stock) and
derivative securities
(e.g., options and warrants) of the Company. Generally, an individual is deemed a “beneficial
owner” of a security if the
individual has or shares the opportunity, directly or indirectly,
to profit or share in any profit derived from a transaction in the securities. Special
rules
apply for the application of the beneficial ownership definition to trust holdings and transactions.
In stating the amount of securities owned
indirectly through a partnership, corporation,
trust or other entity, the reporting person may report the entire amount owned by such entity
or,
alternatively, his or her proportionate interest in the securities beneficially owned
by that entity.
 
●
Form
4. When there is a change in an insider’s beneficial ownership of Company Securities,
a Form 4 must be filed with the SEC on or before the
second business day following most transactions,
including the following:
 
○
Purchases
and sales;
 
 
 
○
Stock
option exercises;
 
 
 
○
Stock
option grants;
 
 

 
 
○
Restricted
stock grants;
 
 
 
○
Other
grants, awards and any other acquisitions from the Company (including small acquisitions);
 
 
 
○
Gifts;
 
 
 
○
Dispositions
to the Company that satisfy the requirements of Rule 16b-3(e), which includes (i) shares
delivered to pay tax withholding
amounts or an option exercise price, (ii) surrender of an
option in a repricing and (iii) sale of shares;
 
 
 
○
Discretionary
transactions pursuant to employee benefit plans where the insider controls a trade date;
and
 
 
 
○
Changes
in form of ownership (direct to indirect or indirect to direct), accompanied by a change
in pecuniary interest.
 
●
Form
5. A Form 5 must be filed each year (within 45 days after the end of the Company’s
 fiscal year) by insiders to report any exempt
transactions, unless voluntarily reported earlier
on a Form 4, including the following:
 
○
Acquisitions
pursuant to stock allocations under ERISA profit sharing plans and employee stock ownership
 plans, purchases under
401(k) plans and employee stock purchase plans;
 
 
 
○
Inheritances;
 
 
 
○
Small
acquisitions (other than from the Company) that total $10,000 or less during a six-month
period; and
 
 
 
○
Changes
in form of ownership from indirect to direct or direct to indirect if no change in pecuniary
interest.
 
Another
purpose of the Form 5 is to promote compliance with Section 16 by requiring insiders to report any transactions required to be reported
on a Form 4 but which had not been reported during the year. At year-end officers and directors who have no Form 5 items to report will
be required to
provide the Company with a written representation that no Form 5 filing is due (i.e., there are no unreported transactions).
 
Some
events, like the acquisition of shares through an employee stock purchase plan or in connection with a stock dividend, are not reportable;
however, the holdings must be updated to reflect the change on the next Form 4 or 5 otherwise filed. In addition, officers and directors
(but not 10%
owners) must report any changes which occur after they are no longer insiders if such change takes place within six months
of any opposite way transaction
while an insider.
 
All
changes in beneficial ownership (unless covered by a specific exemption) are reportable, not only transactions which are purchases or
sales,
including sales pursuant to a Rule 10b5-1 trading plan. Reports may be due even though the reported change in beneficial ownership
is not a transaction of
a type which can be “matched” for purposes of short-swing profit liability under Section 16(b).
 
Power
of Attorney. It should be noted that the SEC will not excuse a late filing simply because the individual is unavailable. If an individual
is
unable to personally sign a Form 4 or 5 (e.g., if you are out of town), the SEC permits the form to be signed on behalf of the individual
by another person
pursuant to a power of attorney as long as a power is filed with the SEC as soon as practicable thereafter. We have
designed a standing power of attorney
giving certain officers of the Company the authority to sign Forms 4 and 5 on your behalf in order
to facilitate timely filings in your absence. Please sign
and return this if you have not done so already.
 
Short
Sales. In addition to the foregoing, Section 16(c) prohibits the Company’s directors, officers and more-than-10% stockholders
from making
“short sales” of any equity security of the Company. A “short sale” is a sale of securities which
the seller does not own at the time or, if owned, securities
that will not be delivered for a period longer than 20 days after the sale.
 
 

 
 
Section
13: All more-than-5% stockholders of the Company are required to file initial reports under Section 13 of the Exchange Act. Follow-up
reports
will be required if any material changes in their stockholdings occur. No filing is required where a change in the percentage
of shares owned by a reporting
person is caused solely by a change in the number of outstanding shares. Material changes in stockholdings
in the interim will trigger additional Section 13
filing requirements, including potentially a Schedule 13D, which is a lengthier form
that requires amendments within two business days to report any
material acquisitions or dispositions.
 
Rule
 144: Rule 144 provides a safe harbor for sales of shares by Company affiliates that may otherwise be considered a “distribution”
 that requires
registration under securities laws. Company officers and directors are strongly encouraged to comply with Rule 144 in connection
with any transfers of
Company securities – which include abiding by volume and manner-of-sale restrictions and filing a Form 144
if the securities to be sold during a three-
month period exceed 5,000 shares or have an aggregate sale price in excess of $50,000.
 
Regulation
 BTR: Directors and executive officers may also be subject to trading blackouts pursuant to Regulation Blackout Trading Restriction,
 or
Regulation BTR, under U.S. federal securities laws. In general, Regulation BTR prohibits any director or executive officer from engaging
 in certain
transactions involving Company securities during periods when 401(k) plan participants are prevented from purchasing, selling
or otherwise acquiring or
transferring an interest in certain securities held in individual account plans. Any profits realized from
a transaction that violates Regulation BTR are
recoverable by the Company, regardless of the intentions of the director or officer effecting
the transaction. In addition, individuals who engage in such
transactions are subject to sanctions by the SEC as well as potential criminal
liability. The Company has provided, or will provide, separate memoranda and
other appropriate materials to its directors and executive
officers regarding compliance with Regulation BTR.
 
The
Company will notify directors and officers if they are subject to a blackout trading restriction under Regulation BTR. Failure to comply
with an
applicable trading blackout in accordance with Regulation BTR is a violation of law and our Policy.
 
Regulation
M: Regulation M is a set of anti-market manipulation rules under the Exchange Act. Depending on the circumstances, this rule may
at times
restrict directors and executive officers from bidding or purchasing Company Securities.
 
Annual
Certification and Compliance: Directors and executive officers may be required, on an annual basis, to certify compliance with the
attached
Policy to Prohibit Insider Trading and the additional provisions of this Director and Executive Officer Addendum. In addition,
the Company’s directors and
executive officers are subject to the Company’s other policies and procedures concerning confidential
information and securities in effect from time to
time.
 
DO
NOT FORGET: ALL TRANSACTIONS IN COMPANY SECURITIES BY DIRECTORS AND EXECUTIVE OFFICERS MUST BE PRE-
CLEARED BY CONTACTING OUR GENERAL
COUNSEL.
 
 
 
 

 
Exhibit 23.1
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
 
We have issued our report dated March 31, 2025, with
respect to the financial statements included in the Annual Report of Celcuity Inc. on Form 10-K for
the year ended December 31, 2024.
We hereby consent to the incorporation by reference in the Registration Statements of Celcuity Inc. on Form S-8 (Reg.
Nos. 333-279556,
 333-271976, 333-270238, 333-265328, 333-256500, 333-253940, 333-238787, and 333-221117) and on Form S-3 (Reg. No. 333-
281887 and
333-275551).
 
/s/ Boulay PLLP
 
 
Minneapolis, Minnesota
March 31, 2025
 
 

  
Exhibit 31.1
 
CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
 
I, Brian F. Sullivan, certify that:
 
1.
I have reviewed this annual report on Form 10-K of Celcuity 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements
for external purposes in accordance with generally accepted accounting principles;
 
(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 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 31, 2025
By   /s/
Brian F. Sullivan
 
 
  Brian F. Sullivan
 
 
  Chairman and Chief Executive Officer
  
 

 
Exhibit 31.2
 
CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
 
I, Vicky Hahne, certify that:
 
1.
I have reviewed this annual report on Form 10-K of Celcuity 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements
for external purposes in accordance with generally accepted accounting principles;
 
(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 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 31, 2025
By   /s/
Vicky Hahne
 
 
  Vicky Hahne
 
 
  Chief Financial Officer
 
 

 
Exhibit 32.1
 
CERTIFICATION 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 filing of the Annual Report on Form 10-K for the
year ended December 31, 2024 (the “Report”) by Celcuity Inc. (the “Registrant”),
I, Brian F. Sullivan, the Chief
Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350, that to
the best of my 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 Registrant.
 
Date: March 31, 2025
By   /s/
Brian F. Sullivan
 
 
  Brian F. Sullivan
 
 
  Chairman and Chief Executive Officer
 
 

 
Exhibit 32.2
 
CERTIFICATION 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 filing of the Annual Report on Form 10-K for the
year ended December 31, 2024 (the “Report”) by Celcuity Inc. (the “Registrant”),
I, Vicky Hahne, the Chief Financial
Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350,
that to the best of
my 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 Registrant.
 
Date: March 31, 2025
By   /s/
Vicky Hahne
 
 
  Vicky Hahne
 
 
  Chief Financial Officer