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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark one)
⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
Or
For the transition period from to
Commission file number 001-36020
Onconova Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
12 Penns Trail, Newtown, PA
(Address of principal executive offices)
22-3627252
(I.R.S. Employer
Identification No.)
18940
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
(267) 759-3680
(Registrant’s telephone number, including area code)
Title of each class
Common Stock, par value $.01 per share
Trading Symbol(s)
ONTX
Name of each exchange on which registered
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. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ⌧
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 Rule12b-2 of the Act). Yes ☐ No ⌧
As of June 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s voting stock held by non-affiliates
was approximately $27.5 million, based on the last reported sale price of the registrant’s common stock on the Nasdaq Capital Market.
There were 20,969,559 shares of Common Stock outstanding as of March 1, 2023.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for the registrant’s 2023 annual meeting of stockholders to be filed within 120 days after the end of the period covered by this annual report on
Form 10-K are incorporated by reference into Part III of this annual report on Form 10-K.
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ONCONOVA THERAPEUTICS, INC.
INDEX TO REPORT ON FORM 10-K
Item 1: Business
Item 1A: Risk Factors
Item 1B: Unresolved Staff Comments
Properties
Item 2:
Item 3: Legal Proceedings
Item 4: Mine Safety Disclosures
PART I
PART II
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6: Reserved
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A: Quantitative and Qualitative Disclosures About Market Risk
Item 8:
Item 9: Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A: Controls and Procedures
Item 9B: Other Information
Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Financial Statements and Supplementary Data
PART III
Item 10: Directors, Executive Officers and Corporate Governance
Item 11: Executive Compensation
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13: Certain Relationships and Related Transactions, and Director Independence
Item 14: Principal Accounting Fees and Services
Item 15: Exhibits, Financial Statement Schedules
Item 16: Form 10-K Summary
PART IV
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All common stock, equity, share and per share amounts have been retroactively adjusted to reflect a one-for-
fifteen reverse stock split which was effective May 20, 2021.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Annual Report on Form 10-K (Annual Report) includes forward-looking statements. We may, in some cases, use
terms such as “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,”
“should,” “approximately” or other words that convey uncertainty of future events or outcomes to identify these forward-
looking statements. Forward-looking statements appear in a number of places throughout this Annual Report and include
statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other
things, our ongoing and planned preclinical development and clinical trials, the timing of and our ability to make regulatory
filings and obtain and maintain regulatory approvals for our product candidates, protection of our intellectual property
portfolio, the degree of clinical utility of our products, particularly in specific patient populations, our ability to develop
commercial and manufacturing functions, expectations regarding clinical trial data, our results of operations, cash needs,
financial condition, liquidity, prospects, growth and strategies, the industry in which we operate and the trends that may
affect the industry or us.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive
dynamics and industry change, and depend on the economic circumstances that may or may not occur in the future or may
occur on longer or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each
forward-looking statement contained in this Annual Report, we caution you that forward-looking statements are not
guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the
development of the industry in which we operate may differ materially from the forward-looking statements contained in
this Annual Report.
You should also read carefully the factors described in the “Risk Factors” section of this Annual Report and elsewhere
to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. As
a result of these factors, actual results could differ materially and adversely from those anticipated or implied in the
forward-looking statements in this report and you should not place undue reliance on any forward-looking statements.
These factors include, without limitations, the risks related to:
● our need for additional financing for our future clinical trials and other operations, and our ability to obtain
sufficient funds on acceptable terms when needed, and our plans and future needs to scale back operations if
adequate financing is not obtained;
● our ability to continue as a going concern;
● our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;
● the success and timing of our preclinical studies and clinical trials, including site initiation and patient enrollment,
and regulatory approval of protocols for future clinical trials;
● our ability to enter into, maintain and perform collaboration agreements with other pharmaceutical companies, for
funding and commercialization of our clinical drug product candidates or preclinical compounds, and our ability
to achieve certain milestones under those agreements;
● the difficulties in obtaining and maintaining regulatory approval of our product candidates, and the labeling under
any approval we may obtain;
● our plans and ability to develop, manufacture and commercialize our product candidates;
● our failure to recruit or retain key scientific or management personnel or to retain our executive officers;
● the size and growth of the potential markets for our product candidates and our ability to serve those markets;
● regulatory developments in the United States and foreign countries;
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● the rate and degree of market acceptance of any of our product candidates;
● obtaining and maintaining intellectual property protection for our product candidates and our proprietary
technology;
● the successful development of our commercialization capabilities, including sales and marketing capabilities;
● recently enacted and future legislation and regulation regarding the healthcare system;
● the success of competing therapies and products that are or may become available;
● our ability to maintain the listing of our securities on a national securities exchange;
● the potential for third party disputes and litigation;
● the performance of third parties, including contract research organizations (CROs) and third-party manufacturers;
and
● the impact of the novel coronavirus disease, COVID-19, to global economy and capital markets, and to our
business and our financial results.
Any forward-looking statements that we make in this Annual Report speak only as of the date of such statement, and
we undertake no obligation to update such statements to reflect events or circumstances after the date of this Annual Report
or to reflect the occurrence of unanticipated events.
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ITEM 1. BUSINESS
Overview
PART I
Onconova Therapeutics, Inc., sometimes referred to as “we” or the “Company,” is a clinical-stage biopharmaceutical
company focused on discovering and developing novel products for patients with cancer. We have proprietary molecularly
targeted agents designed to disrupt specific cellular pathways that are important for cancer cell proliferation. We believe
that the product candidates in our pipeline have the potential to be efficacious in a variety of cancers with unmet medical
need. We have the following two clinical-stage programs: 1. narazaciclib (ON 123300), a multi-targeted kinase inhibitor in
solid tumors and hematological malignancies as a single agent or in combination with other anti-cancer therapies; and 2.
rigosertib administered alone or in combination for the treatment of various cancers. We are currently evaluating potential
compounds for in-licensing opportunities.
Product Candidates / Compounds
Narazaciclib (ON 123300) — Differentiated Multi-Kinase Inhibitor Targeting CDK4/6
Pursuant to a license agreement with Temple University dated January 1, 1999 as amended March 21, 2013, we
licensed compounds including our product candidate narazaciclib from Temple University. Narazaciclib is a multi-targeted
kinase inhibitor targeting multiple cyclin-dependent kinases, (CDK's), AMP-activated protein kinase (AMPK) related
protein kinase 5 (ARK5), and colony-stimulating factor 1 receptor (CSF1R) at low nM concentrations as well as other
tyrosine kinases believed to drive tumor cell proliferation, survival and metastasis. As an apoptotic and antiproliferative
agent, narazaciclib modulates the levels and activities of regulatory proteins of the cell cycle, including cyclin D1 and
inhibits retinoblastoma (Rb) protein binding. Narazaciclib inhibits cancer cell growth and suppresses deoxyribonucleic acid
(DNA) synthesis by preventing CDK-mediated G1-S phase transition, followed by tumor cell death by induction of
mitochondria-mediated apoptosis. We believe, based on data from preclinical studies, that narazaciclib has the potential to
overcome the limitations of the current generation of approved cyclin dependent kinase (CDK) 4/6 inhibitors. The below
table depicts the half-maximal in vitro inhibitory concentration (IC50) of narazaciclib palbociclib, ribociclib and
abemaciclib. IC50 is a quantitative measure indicating the concentration of each drug needed to inhibit, in vitro, these listed
kinases by 50%. We believe our CDK inhibitor is differentiated from other agents in the market or in development due to
its multi-targeted kinase inhibition profile.
Sponsor
CDK4/cyclin D1
CDK6/cyclin D1
CDK1/cyclin A
CDK2/cyclin E
CDK9/T1
CSF1R
ARK 5/NUAK 1
FLT3
Narazaciclib
Onconova
2
0.6
2190
69
48
0.7
5
6.0
Palbociclib
Pfizer
CDK Family
2
0.8
>10,000
2300
630
Other Kinases
>10,000
1,400
496
Ribociclib
Novartis
Abemaciclib
Lilly
3
6.0
>10,000
>10,000
390
>10,000
1,540
753
0.8
0.6
270
130
7
>10,000
773
72
Source: Reaction Biology 2021
In addition to CDK 4/6, narazaciclib also inhibits ARK5 (NUAK1) with high potency with a 50% inhibitory
concentration (IC50) of 4.95 nM (Report EPR-123300-001 and Reddy 2014) while palbociclib, ribociclib, and abemaciclib
do not. The equilibrium dissociation constant (Kd) value of narazaciclib binding to ARK5 was found to be 19 nM, while a
known NUAK1 specific inhibitor (HTH-015-01) was 790 nM. In addition, using a cellular based assay that measures
kinase activity in intact cells, NanoBret technology, it was determined that narazaciclib inhibited ARK5
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with an IC50 value of 30 nM, while 2 published inhibitors, HTH-015-01 and WZ4003, had IC50 values of >10,000 nM.
ARK5 (also known as NUAK1) is a member of the AMPK catalytic subunit family and functions as a key regulator of
cellular energy homeo-stasis (Lui 2012). ARK5 has been shown to be important in a number of cancer cell regulated
survival pathways such as regulating AKT dependent cell survival, cell metabolism through c-MYC activity, tumor cell
survival under oxidative stress and tumor cell migration (Faisal, 2020, Lui, 2012, Port, 2018). The combination of CDK
and ARK5 inhibitors in the same molecular entity is proposed to have a differentiated effect on cancer cells by
simultaneously inhibiting both cell cycle (cytostatic) and cellular metabolism (cytotoxic) pathways through CDK and
ARK5, respectively.
Narazaciclib also inhibits CSF1R with IC50 values between 0.7 to 10 nM (Unpublished data and Reddy 2014). The
Kd value of narazaciclib binding to CSF1R was determined to be 0.7 nM. The ability of narazaciclib to bind and inhibit
CSF1R at low nanomolar values, in both in vitro and cell-based assays suggests that this compound may have an impact in
cancers with a dependence on CSF1R signaling.
In certain in vitro models, the kinase inhibitory profile of narazaciclib had high activity against CDK4, CDK6, ARK5,
CSF1R, PDGFRß and PI3K-δ, all of which are associated with the growth, survival and metastasis of human tumor cells
(Reddy, 2014). In an in vitro investigation of narazaciclib against a broad spectrum of human tumor cell lines, narazaciclib
displayed potent antiproliferative activity, with 50% growth inhibitory concentrations (GI50) ranging from 0.02 µM to 1.5
µM. In these in vitro models, narazaciclib exhibited a broad range of activity against a wide spectrum of cell lines of both
hematological origin (lymphoma, leukemia and myeloma) as well as solid tumors derived from multiple organ sites.
Studies on drug-resistant human tumor cell lines suggested that narazaciclib is not a multidrug resistance gene (mdr1)
substrate and may be active against drug-resistant tumor cell lines (IBv.1 2020; Reddy, 2014). The activity of narazaciclib
does not appear to be affected by the overexpression of MDR-1 and induced apoptosis in both ibrutinib-sensitive and
ibrutinib-resistant patient derived cells (Divakar, 2016). The ability of narazaciclib to inhibit the CDK4/6/RB1 pathway has
also been shown in pre-clinical testing of mantle cell lymphoma (Divakar, 2016), multiple myeloma (Perumal, 2016),
various breast cancer subtypes (Reddy 2014) and colorectal cancer (IBv.2 2022).
The effectiveness of first-generation non-selective CDK inhibitors (Selicilib/roscovitine and Alvocidib/ flavopiridol)
in early trials was limited due to toxicities (Blachly 2013). Second-generation compounds (palbociclib and ribociclib)
specifically inhibit CDK4 and 6, thereby inhibiting retinoblastoma (RB) protein phosphorylation. Abemaciclib is a multi-
targeted kinase CDK4/6 inhibitor with low nano molar activity against CDK4/6. The second generation CDK4/6 inhibitors
have substantially improved clinical outcomes for patients with hormonal-receptor (HR) positive metastatic breast cancer
(Hortobagyi 2018, Sledge 2017, Finn 2016). Several CDK4/6 inhibitors (palbociclib, ribociclib and abemaciclib) have been
approved and are now standard of care either alone (abemaciclib) or in combination with anti-estrogen therapy for patients
with HR-positive, HER2-negative metastatic breast cancer. Another CDK4/6 inhibitor has recently been approved,
trilaciclib, in the supportive care space, for the prevention of myelosuppression following chemotherapy.
In December 2017, we entered into a license and collaboration agreement with HanX Biopharmaceuticals, Inc.
(HanX), a company focused on development of novel oncology products, for the manufacturing, clinical development,
registration and commercialization in China of narazaciclib. Under the terms of the agreement, we received an upfront
payment, and will receive regulatory and commercial milestone payments, as well as royalties on any future Chinese sales
if the drug is approved. The key feature of the 2017 collaboration was that HanX provided all funding required for the
Chinese Investigational New Drug Application (IND) thereby enabling the studies necessary in order to seek IND approval
by the National Medical Products Administration (the Chinese FDA). In the fourth quarter of 2019, HanX filed an IND
with the Chinese FDA which was approved on January 6, 2020. We and HanX also intended for these studies underlying
the Chinese IND approval, to meet the US Food and Drug Administration (FDA) standards for IND approval. Accordingly,
such studies were used by us for an IND filing with the US FDA. In September 2020, a Phase 1 Study with narazaciclib in
cancer patients was initiated in China. We maintain global rights to the manufacturing, clinical development and
commercialization of narazaciclib outside of China.
In partnership with HanX, a Phase 1 dose escalation study (Study HX301-I-01) for patients with advanced
relapsed/refractory cancer has been initiated in China at three sites and the first patient was enrolled on September 15,
2020. In this study HX301 (narazaciclib) is dosed every day for 21 days followed by 7 days off therapy in each 28 -day
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cycle. In China, the first five dose cohorts have been completed. The fifth cohort is at 200 mg per day on a three weeks-on
followed by a one week-off schedule.
Our IND submission to the US FDA was submitted in November 2020 and the FDA Study May Proceed letter was
issued in December 2020. Enrollment into the complementary US phase 1 study (Study 19-01) with narazaciclib
commenced in May 2021. The study will assess the safety, tolerability, pharmacokinetics and pharmacodynamics of
narazaciclib administered orally at increasing doses starting at 40 mg daily for consecutive 28-day cycles in patients with
relapsed/refractory advanced cancer. Enrollment in the fifth dose cohort (200 mg orally each day) of the Phase 1 solid
tumor study of narazaciclib is complete with one dose limiting toxicity (DLT) observed. The sixth dose cohort is currently
ongoing. In study 19-01 in the US narazaciclib is dosed on a continuous daily schedule.
Collectively, once completed, these two Phase 1 studies are expected to provide preliminary safety data and the
recommended Phase 2 dose and schedule for narazaciclib as a single agent.
Retinoblastoma (Rb) protein is a master regulator of cell division and is critical to several cellular processes including
senescence, self-renewal, replication and apoptosis (Engel, 2015). It is believed that loss or inactivation of Rb leads to
malignant cell formation and occurs in the pathogenesis of some cancers. In a preclinical Rb positive xenograft model for
breast cancer, narazaciclib activity was shown to be similar to palbociclib (Pfizer’s Ibrance ®). Moreover, based on the
same preclinical model, narazaciclib may have the potential advantage of reduced neutropenia when compared to
palbociclib. Whereas both compounds resulted in decreased RBC and platelet counts in this preclinical model system,
palbociclib was found to have a more prominent and statistically significant (P< 0.01) inhibitory effect on neutrophil
counts when compared to narazaciclib. These results would need to be replicated in clinical trials.
In vitro studies compared the growth inhibitory activity of narazaciclib and palbociclib in breast cancer RB null cell
lines, which demonstrated resistance to palbociclib while maintaining sensitivity towards narazaciclib (IBv.2 2022).
Studies using mantle cell lymphoma cells indicated that narazaciclib was able to induce cell death via induction of
apoptosis by inhibiting the AKT/PI3K/mTOR pathway while palbociclib treatment was only able to induce cell cycle arrest
due to the inhibition of CDK4/6 (Divakar, 2016). Narazaciclib treatment was associated with the presence of several
apoptotic markers (PARP, caspase 3, caspase 7 and caspase 9) and narazaciclib (but not palbociclib) led to the generation of
apoptotic cells. Overall, apoptosis following narazaciclib exposure has been observed in the following cell lines: breast
cancer (IBv.2 2022, Reddy, 2014), mantle cell lymphoma (Divakar, 2016), multiple myeloma (Perumal, 2016) and
colorectal cancer (IBv.2 2022).
In addition to CDK4/6 and PI3 Kinase pathways, narazaciclib inhibits several other kinases in vitro including ARK5
(NUAK1) (IC50 of 4.95 nM) (IBv.2 2022, Reddy, 2014) while palbociclib does not. ARK5 is a member of the AMPK
family and is thought to function as a key regulator of cellular energy homeo-stasis (Liu, 2012) and is important in a
number of cancer cell survival pathways. Overexpression of ARK5 is associated with poor prognosis in hepatocellular
cancer (Cui, 2013), ovarian cancer (Phippen, 2016), colorectal cancer (Port, 2018) and glioblastoma (Lu, 2013). ARK5 is
involved in the increased invasiveness, migration and metastatic potential of breast cancer cells (Chang, 2012), colorectal
cancer (Kusakai, 2004), gastric cancer (Chen, 2017), and multiple myeloma (Suzuki et al., 2005). Narazaciclib inhibits
ARK5 which may result in down regulation of the mTOR/MYC/RB1 pathways leading to cell cycle arrest and apoptosis.
Because ARK5 activity is now recognized as a component in promoting cancer cell migration and invasion (Kusaki,
2004) the effect of narazaciclib treatment may have an impact on cell migration and metastasis. In certain in vitro models,
narazaciclib was able to inhibit the percent migration of U87 cells in a concentration- dependent manner. The time and
concentrations that were tested did not result in cell death but did inhibit cell division at the higher concentrations (IBv.2
2022). The ability of narazaciclib to inhibit cell migration was compared to palbociclib using a wound healing model.
Triple negative cancer cell migration was inhibited for 72 hours in the presence of narazaciclib but not in the presence of
palbociclib (IBv.2 2022).
The pathogenesis and progression of a number of cancers, including breast and multiple myeloma, is linked to C-Myc
(Li, 2003) which was dependent on ARK5 activity (Liu, 2012) and calcium dependent metabolism (Monteverde, 2018).
The inhibition of ARK5 has been shown to be lethal in MYC overexpressing tumors (Liu, 2012, Perumal, 2016)
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and targeting ARK5 in the inhibitory profile of narazaciclib has the potential to overcome the emergence of resistance to
CDK4/6 inhibitors due to the loss of retinoblastoma function and C-Myc overexpression. Preclinical studies with tumor
cell lines suggest that several malignancies including HR-positive breast cancer, colorectal carcinoma, hepatocellular
carcinoma, mantle cell lymphoma and multiple myeloma, may be clinically responsive to narazaciclib exposure (Reddy,
2014, Divakar, 2016, Perumal, 2016). Furthermore, narazaciclib has been tested in four murine xenograft models (breast
cancer, colorectal cancer, mantle cell lymphoma and multiple myeloma) and was found to have on-target activity and be
non-toxic to the animals (Reddy, 2014; Divakar, 2016; Perumal, 2016; and IBv.2 2022).
CSF1R is in the class III kinase receptors that include c-Kit, platelet-derived growth factor receptor (PDGFR) alpha,
and FLT3. CSF1R has 2 high affinity binding ligands, colony stimulating factor 1 (CSF-1), also known as macrophage
colony-stimulating factor (M-CSF) and interleukin 34 (IL-34). CSF-1 is important for the differentiation and proliferation
of myeloid progenitor cells into macrophages, monocytes, dendritic cells, and osteoclasts. Macrophages play an important
role in the pathogenesis of not only tumor growth but multiple other diseases such as inflammatory diseases and bone
metabolism. High levels of CSF-1 are critical for the recruitment of tumor associated macrophages (TAMs), predominantly
the immunosuppressive phenotype (M2). They are the main inflammatory immune cells in the tumor microenvironment
and are involved in tumor immunosuppression, angiogenesis, invasion, and metastasis.
Overexpression of CSF-1 or CSF1R is associated with tumor aggressiveness and poor prognosis. Inhibiting the
signaling pathway of CSF1R provides a method to reduce the number of M2 macrophages/TAMs within the tumor
microenvironment and thus improve anti-tumor immunological therapy. Recent studies have found that CSF-1/CSF1R axis
blockade can improve the efficiency of immune checkpoint inhibitors, especially programmed death-ligand 1 inhibitors.
Cancer cells can lose RB function through mutation and become resistant or insensitive to palbociclib. Generally,
second generation agents have not been shown to be suitable for single agent therapy and must typically be used in
combination with hormonal therapy in the treatment of HR+/HER2- mBC. In addition, the rate of disease progression that
occurs, especially in patients with visceral disease (Hortobagyi 2018), may benefit from the novel inhibitory effects of
narazaciclib. This hypothesis needs to be proven in a clinical trial.
Unfortunately, several mechanisms of acquired resistance are emerging with the approved CDK4/6 inhibitors leading
to progression in patients with HR+/HER2- mBC (Spring, 2019; Knudsen, 2020). Therefore, the unmet medical need
supports development of the next (third) generation CDK4/6 inhibitors in advanced HR+/HER- mBC. The inhibitory effect
of narazaciclib may provide a therapeutic strategy to optimize efficacy of CDK 4/6 inhibition and reduce the emergence of
resistance and/or provide clinical benefit for patients with progression on palbociclib, ribociclib and/or abemaciclib.
We believe narazaciclib has a favorable kinase inhibitory profile in comparison to the approved CDK4/6 inhibitors
(palbociclib, ribociclib, and abemaciclib) and may result in both tumorigenic and safety benefits (Perumal, 2016, Divakar,
2016).
Based on data from continuous dosing studies in rats and monkeys the safety profile of narazaciclib is anticipated to be
better than the approved CDK4/6 inhibitors with myelosuppression and gastrointestinal toxicity being most common.
Management of these adverse events is expected to follow that used for the approved CDK 4/6 inhibitors. We believe that
the proposed mechanism of action of narazaciclib, the unmet medical need of the advanced cancers potentially targeted by
narazaciclib and the anticipated safety profile of narazaciclib as seen in pre-clinical studies, support conducting clinical
studies.
Clinical development of narazaciclib for breast cancer as well as other solid tumors and hematological malignancies in
clinical trials is warranted based on the preclinical in vitro studies as well as the xenograft models. Onconova plans to
advance testing whether narazaciclib will demonstrate activity and/or safety in patients with advanced malignancies.
As previously mentioned, CDK 4/6 inhibitors have been added to aromatase inhibitors and SERDs to enhance anti-
tumor activities in HR+, HER2- metastatic breast cancer. Mirza and colleagues presented the results of the randomized
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phase 2 study NSGO-PALEO / ENGOT-EN3 trial at ESMO 2020 and reported that palbociclib and letrozole yielded
meaningful PFS benefit in women with ER+ recurrent endometrial cancer (Mirza et al. 2020).
Endometrial carcinoma (EC) is the most common gynecological malignancy (American Cancer Society 2021).
Endometrioid endometrial carcinoma (EEC), the most common subtype of EC, accounts for approximately 75% of cases.
In the US, approximately 65,950 new endometrial cancers and uterine sarcomas and approximately 12,550 deaths are
expected in 2022, and the incidence and mortality have been increasing (American Cancer Society 2022). Low-grade
(Grade 1 or 2) EECs (LGEECs) have ≥95% (Grade 1) or 50% to 94% (Grade 2) cancer tissue forming glands. Treatment
includes surgery, radiotherapy, and/or systemic therapy. Systemic therapy is typically chemotherapy and/or hormonal
therapy, and typical regimens include paclitaxel/carboplatin with letrozole maintenance;
paclitaxel/carboplatin/bevacizumab with bevacizumab maintenance; or letrozole, anastrozole, or exemestane (NCCN
2022). Overall, five-year disease-free survival and five-year survival are high, 81.7% and 83.1%, respectively (Gottwald
2010), but for recurrent or metastatic disease morbidity and mortality are high.
In the NSGO-PALEO / ENGOT-EN3 trial presented by Mirza at ESMO 2020 participants were randomized to
letrozole 2.5 mg orally D1-28 with either palbociclib 125 mg or placebo orally d1–21 in a 28-d cycle until disease
progression. PFS was significantly improved with letrozole and palbociclib compared to the placebo arm (median PFS 8.3
vs. 3.0 months, HR 0.56, 95% CI 0.32 to 0.98, p=0.04). Disease control rate at 24 weeks was also improved (63.6% vs.
37.8%). This data has been reinforced by phase 2 data presented with ribociclib and letrozole as well as abemaciclib and
letrozole in this patient population.
Onconova will initiate a multi-center Phase 1/2a trial evaluating its multi-kinase inhibitor, narazaciclib, in combination
with letrozole as a second- or third-line therapy for the treatment of recurrent metastatic low-grade endometrioid
endometrial cancer (LGEEC) in 1Q23. Both narazaciclib and letrozole will be administered orally with a continuous daily
dosing schedule in the trial, which will begin with a Phase 1 dose escalation phase before moving to a Phase 2 expansion
cohort designed to enroll approximately 30 patients.
Oral Rigosertib and PD-1 Combination in KRAS-Mutated Cancers
We are currently supporting an investigator-initiated study (IIS) that is exploring the use of oral rigosertib for cancers
driven by mutated K-Ras genes, a Phase 1/2a study of rigosertib in combination with a PD-1 inhibitor (nivolumab) for
patients with check point inhibitor (CPI) resistant K-Ras mutated non-small cell lung cancer (NSCLC). The NSCLC study
is open and continues to enroll patients. The objectives of this study are to identify the recommended Phase 2 dose (RP2D)
of the combination for future studies and characterize the safety profile of the combination treatment. To date, one patient
with a dose limiting toxicity of hyponatremia has been observed. Continued dose escalation is being considered as we
believe the maximum tolerated dose has not been reached. Interim data presented at the European Society of Medical
Oncology (ESMO) meeting in September 2022 showed an early and encouraging signal of efficacy in the trial’s
extensively pre-treated population, with one complete response, two partial responses, and one instance of stable disease
achieved in fourteen evaluable patients. These responses were achieved in patients with three distinct KRAS mutations
who had failed prior checkpoint inhibitor therapy, thereby confirming rigosertib’s KRAS-agnostic mechanism of action and
potential to synergize with anti-PD-1 agents. We anticipate reporting additional data from this trial in 1H23, which will be
key to informing our next steps in this program. We believe this supports further investigation of rigosertib in combination
with CPI in KRAS mutated NSCLC.
On June 17, 2021, we announced a publication in Molecular Cancer (Yan, C., Saleh, N., Yang, J. et al. Novel induction
of CD40 expression by tumor cells with RAS/RAF/PI3K pathway inhibition augments response to checkpoint blockade.
Mol Cancer 20, 85; 2021) which demonstrated that rigosertib synergistically combined with a CPI improved tumor growth
inhibition and survival in a murine melanoma model that did not respond to a CPI alone. It was postulated that rigosertib’s
anti-cancer activity was due to its ability to reverse immunosuppressive tumor microenvironments. We believe this pre-
clinical data support the clinical evaluation of rigosertib in combination with a CPI in metastatic melanoma that has
progressed on CPI therapy. An IIS at Vanderbilt University evaluating oral rigosertib in combination with pembrolizumab
in patients with CPI resistant advanced/metastatic melanoma will open for enrollment in March 2023.
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Rigosertib as monotherapy
RDEB is an ultra-rare condition with high unmet medical need caused by a lack of type VII collagen protein
expression. Type VII collagen protein is responsible for anchoring the skin’s inner layer to its outer layer, and its absence
leads to extreme skin fragility and chronic wound formation in RDEB patients. Over time, many of these patients develop
squamous cell carcinomas (SCCs) that typically arise in areas of chronic skin wounding and inflammation. Preclinical
investigations demonstrated overexpression of polo like kinase 1 (PLK1) in RDEB-associated SCC tumor cells. These
tumors show a highly aggressive, early metastasizing course, making them the primary cause of death for these patients,
with a cumulative risk of death of 70% and 78.7% by age 45 and 55, respectively (Mellerio, 2016), (Fine, 2016). These
neoplasms show limited response rates of mostly short duration to conventional chemo- and radiotherapy as well as
targeted therapy with epidermal growth factor and tyrosine kinase inhibitors (Mellerio, 2016), (Stratigos, 2020).
Based on rigosertib’s activity as a potent PLK-1 pathway inhibitor (Antanasova, 2019), a Phase 2 open label IIS with
rigosertib monotherapy in patients with advanced/metastatic squamous cell carcinoma associated with recessive
dystrophic epidermolysis bullosa (RDEB-SCC) is enrolling patients. As we disclosed in December 2021 early preliminary
data from this study were presented at the Austrian Society of Dermatology and Venerology Annual Conference 2021,
which took place from November 25 – 27, 2021 and more recently at the World Congress on Rare Skin Diseases which
took place in Paris, from June 7-9, 2022.
Data from the recent presentations are from a patient with a history of multiple, unresectable cutaneous SCCs (cSCC)
that were unresponsive to prior treatments including cemiplimab. Results showed that intravenously administered
rigosertib had an acceptable safety profile and that the patient experienced sustained clinical and histological complete
remission of all lesions without signs of metastatic disease following 13 treatment cycles. The patient remains in complete
remission and on drug. Another patient was recently enrolled, a patient with RDEB and multiple cSCCs and metastatic
disease involving the lymph nodes whose prior treatments included surgical excision, systemic targeted therapy
(cetuximab) and immunotherapy (pembrolizumab). At baseline, the patient had extensive, unresectable cSCC involving the
left elbow region as well nodal disease noted on PET-CT scan. After 4 cycles of oral rigosertib starting at 560 mg PO BID,
there was reportedly complete clinical remission of all cSCC lesions. The patient has tolerated oral rigosertib and remains
on therapy.
Although the trial’s currently available safety and efficacy data are from only two patients, the investigators believe
they represent a very encouraging finding that warrants further study. In addition, the investigators, and we, believe the
data generated in preclinical models that suggest rigosertib’s activity against PLK1 have now been preliminarily supported
in the clinic and suggest that rigosertib may play a role in other more common cancers driven by PLK1.
Rare Disease Program in “RASopathies”
Based on the mechanism of action data published in the journal Cell in 2016, we initiated a collaborative development
program focusing on a group of rare diseases with a well- defined molecular basis in expression or defects involving the
Ras effector pathways. Since RASopathies are rare congenital diseases affecting young children, we embarked on a
multifaceted collaborative program involving patient advocacy, government and academic organizations. RASopathies are
usually caused by germline mutations in genes that alter the RAS subfamily and mitogen-activated protein kinases
(MAPK) that control signal transduction and are among the most common genetic syndromes. Together, this group of
diseases can impact more than 1 in 1,000 individuals, according to RASopathies.Net.
The NCI has conducted preclinical studies with cell lines from two pediatric solid tumors (rhabdomyosarcoma and
neuroblastoma), including xenograft models. For both tumor cell lines, in vitro rigosertib exposure was associated with
reduced cell viability associated with destabilization of microtubules, mitotic arrest and apoptosis. In a rhabdomyosarcoma
xenograft model, rigosertib treatment delayed time to tumor progression and prolonged survival in the animals treated with
rigosertib. (Kowalczyk, 2020).
Preclinical studies with rigosertib are also being conducted in cardiomyopathies which are seen in children with
RASopathies.
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Research and Development
Since commencing operations, we have dedicated a significant portion of our resources to the development of our
clinical-stage product candidates, particularly rigosertib and more recently narazacicib. We incurred research and
development expenses of $11.4 million and $7.3 million during the years ended December 31, 2022 and 2021, respectively.
We anticipate that a significant portion of our operating expenses will continue to be related to research and development.
Collaboration and License Agreements
HanX Biopharmaceuticals, Inc. (narazaciclib Agreement)
In December 2017, we entered into a license and collaboration agreement with HanX, a company focused on
development of novel oncology products, for the further development, registration and commercialization in Greater China
of narazaciclib. We believe narazaciclib has the potential to overcome limitations of current generation CDK 4/6 inhibitors.
Under the terms of the agreement, we received an upfront payment, and will receive regulatory and commercial milestone
payments, as well as royalties on Chinese sales. The key feature of the collaboration is that HanX provides all funding
required for Chinese IND enabling studies performed for Chinese health authority IND approval. The Chinese IND was
approved in January 2020. We and HanX also intended for these studies to comply with the FDA standards. Accordingly,
such studies were used by us for an IND filing with the FDA in November 2020. The FDA Study May Proceed letter was
received in December 2020. Drug product for the US study was manufactured in North America and stability data was
submitted as part of the IND. We maintain global rights to narazaciclib outside of China.
SymBio Pharmaceuticals Limited
In July 2011, we entered into a license agreement with SymBio Pharmaceuticals Limited (Symbio), as subsequently
amended, granting SymBio an exclusive, royalty-bearing license for the development and commercialization of rigosertib
in Japan and Korea. Under the SymBio license agreement, SymBio is obligated to use commercially reasonable efforts to
develop and obtain market approval for rigosertib inside the licensed territory and we have similar obligations outside of
the licensed territory. We have also entered into an agreement with SymBio providing for the Company to supply SymBio
with development-stage product. Under the SymBio license agreement, we also agreed to supply commercial product to
SymBio under specified terms that will be included in a commercial supply agreement to be negotiated prior to the first
commercial sale of rigosertib. The supply of development-stage product and the supply of commercial product will be at
our cost plus a defined profit margin. We have additionally granted SymBio a right of first negotiation to license or obtain
the rights to develop and commercialize compounds having a chemical structure similar to rigosertib in the licensed
territory.
Under the terms of the SymBio license agreement, we received an upfront payment of $7,500,000. In addition, we
could receive regulatory, development and sales-based milestone payments as well as royalty payments at percentage rates
ranging from the mid-teens to 20% based on net sales of rigosertib by SymBio.
Royalties will be payable under the SymBio agreement on a country- by-country basis in the licensed territory, until
the later of the expiration of marketing exclusivity in those countries, a specified period of time after first commercial sale
of rigosertib in such country, or the expiration of all valid claims of the licensed patents covering rigosertib or the
manufacture or use of rigosertib in such country. If no valid claim exists covering the composition of matter of rigosertib or
the use of or treatment with rigosertib in a particular country before the expiration of the royalty term, and specified
competing products achieve a specified market share percentage in such country, SymBio’s obligation to pay us royalties
will continue at a reduced royalty rate until the end of the royalty term. In addition, the applicable royalties payable to us
may be reduced if SymBio is required to pay royalties to third-parties for licenses to intellectual property rights necessary
to develop, use, manufacture or commercialize rigosertib in the licensed territory. The license agreement with SymBio will
remain in effect until the expiration of the royalty term. However, the SymBio license agreement may be terminated earlier
due to the uncured material breach or bankruptcy of a party, or force majeure. If SymBio terminates the license agreement
in these circumstances, its licenses to rigosertib will survive, subject to SymBio’s milestone and royalty obligations, which
SymBio may elect to defer and offset against any damages that may be determined to be due
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from us. In addition, we may terminate the license agreement in the event that SymBio brings a challenge against it in
relation to the licensed patents, and SymBio may terminate the license agreement without cause by providing us with
written notice a specified period of time in advance of termination. The upfront payment is being recognized ratably
through December 2037, the expected term of the agreement. We recognize revenues related to the supply agreement with
SymBio when control of the product is transferred to Symbio. Revenues related to the supply agreement were $0 and $0
for the fiscal years ended December 31, 2022 and 2021, respectively.
Pint International SA
In March 2018, we entered into a License, Development and Commercialization Agreement (the Pint License
Agreement) with Pint International SA (which, together with its affiliate Pint Pharma GmbH, are collectively referred to as
Pint). Under the terms of the Pint License Agreement, we granted Pint an exclusive, royalty-bearing license, with the right
to sublicense, under certain Company patent rights and know-how to develop and commercialize any pharmaceutical
product (the Pint Licensed Product) containing rigosertib in all uses of rigosertib or the Product in humans in Latin
American countries (the Pint Territory, including Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba,
Dominican Republic, Ecuador, El Salvador, French Guiana, British Guiana, Suriname, Guatemala, Haiti, Honduras,
Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela).
Pint agreed to make an upfront equity investment and a subsequent equity investment in our common stock. In
addition, we could receive regulatory, development and sales-based milestone payments as well as tiered, double-digit
royalties based on aggregate net sales in the Pint Territory. Pint and the Company have also agreed to enter into a supply
agreement providing for Pint purchasing rigosertib and the Pint Licensed Product from the Company within 90 days of
FDA approval of a New Drug Application (NDA) for the Pint Licensed Product.
Under the terms of the Pint Securities Purchase Agreement, Pint agreed to make an upfront equity investment in the
Company at a specified premium to the Company’s share price. Pursuant to the Pint Securities Purchase Agreement,
closing of the upfront equity investment occurred on April 4, 2018 and Pint purchased 54,463 shares of common stock for
$1,250,000. The total amount of the premium was $319,000 and this amount was allocated to the license.
Pint may terminate the Pint License Agreement in whole (but not in part) at any time upon 45 days’ prior written
notice. The Pint License Agreement also contains customary provisions for termination by either party in the event of
breach of the Pint License Agreement by the other party, subject to a cure period, or bankruptcy of the other party.
Knight Therapeutics, Inc.
In November 2019, we entered into a Distribution, License and Supply Agreement (the Knight License Agreement)
with Knight Therapeutics Inc. (Knight). Under the terms of the License Agreement, we granted Knight (i) a non-exclusive,
royalty-bearing license, with the right to sublicense, under certain Company patent rights and know-how to develop and
manufacture any product (the Knight Licensed Product) containing rigosertib for Canada (and Israel should Knight
exercise its option) (the Knight Territory) and in human uses (the Knight Licensed Field), and (ii) an exclusive, royalty-
bearing license, with the right to sublicense, under certain Company patent rights and know-how to commercialize the
Knight Licensed Product in the Knight Territory and in the Knight Licensed Field.
Knight has also agreed to obtain from us all of Knight’s requirements of the Knight Licensed Products for the Knight
Territory, and we have agreed to supply Knight with all of its requirements of the Knight Licensed Products. We may, at
our discretion, use the services of a contract manufacturer to manufacture and package the Knight Licensed Products.
In addition, we have granted Knight an exclusive right of first refusal with respect to all or any part of the Knight
Territory, to store, market, promote, sell, offer for sale and/or distribute any ROFR Products. As used in the Knight License
Agreement, “ROFR Products” means all products other than the Knight Licensed Product that are owned, licensed, or
controlled by us as of the effective date of the Knight License Agreement and all improvements thereto.
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We are eligible to receive clinical, regulatory, and sale-based milestone payments as well as tiered, double-digit
royalties based on net sales in the Knight Territory.
The License Agreement is for a term of 15 years from the launch on a country by country basis in the Territory and
contains customary provisions for termination by either party in the event of breach of the License Agreement by the other
party (subject to a cure period), bankruptcy of the other party, or challenges to the patents by any sublicensee or assignee.
Specialised Therapeutics Asia Pte. Ltd.
In December 2019, we entered into a Distribution, License and Supply Agreement (the STA License Agreement) with
Specialised Therapeutics Asia Pte. Ltd. (STA). Under the terms of the License Agreement, we granted STA (i) a non-
exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent rights and know-how to
develop and manufacture any product (the STA Licensed Product) containing rigosertib for Australia and New Zealand
(the STA Territory) and in human uses (the STA Licensed Field), and (ii) an exclusive, royalty-bearing license, with the
right to sublicense, under certain Company patent rights and know-how to commercialize the STA Licensed Product in the
STA Territory and in the STA Licensed Field.
STA has also agreed to obtain from us all of its requirements of the STA Licensed Products for the STA Territory, and
we have agreed to supply STA with all of its requirements of the STA Licensed Products. We may, at our discretion, use the
services of a contract manufacturer to manufacture and package the STA Licensed Products.
We are eligible to receive clinical, regulatory, and sale-based milestone payments as well as tiered, double-digit
royalties based on net sales in the STA Territory.
The STA License Agreement is for a term of 15 years from the launch on a country by country basis in the STA
Territory and contains customary provisions for termination by either party in the event of breach of the STA License
Agreement by the other party (subject to a cure period), bankruptcy of the other party, or challenges to the patents by any
sublicensee or assignee.
Intellectual Property
Patents and Proprietary Rights
Our intellectual property is derived through our internal research, licensing agreements with Temple University, or
Temple, and licensing research agreements with the Mount Sinai School of Medicine, or Mount Sinai.
License Agreement with Temple University
In January 1999, we entered into a license agreement with Temple as subsequently amended, to obtain an exclusive,
world-wide license to certain Temple patents and technical information to make, have made, use, sell, offer for sale and
import several classes of novel compounds.
Under the terms of the license agreement, we paid Temple a non-refundable up-front payment, and are required to pay
annual license maintenance fees, as well as a low single-digit percentage of net sales as a royalty. In addition, we agreed to
pay Temple 25% of any consideration received from any sublicensee of the licensed Temple patents and technical
information, which does not include any royalties on sales, funds received for research and development or proceeds from
any equity or debt investment.
The license agreement with Temple can be terminated by mutual agreement or due to the material breach or
bankruptcy of either party. We may terminate the license agreement for any reason by giving Temple prior written notice.
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Narazaciclib Patents
As of March 2023, we owned or exclusively licensed issued patents and pending patent applications covering
composition of matter, formulation and various indications for method-of-use for narazaciclib filed worldwide, including in
the United States. The U.S. composition-of-matter patent for narazaciclib expires in 2031. We have recently filed new
patent applications covering methods of treatment in target indications that are projected to extend to 2043 before any
possible patent term extensions. Patent term extensions may be available, depending on various provisions in the law.
Rigosertib Patents
As of March 2023, we owned or exclusively licensed issued patents and pending patent applications covering
composition-of-matter, process, formulation and various indications for method-of-use for rigosertib filed worldwide,
including in the United States. The U.S. composition-of-matter patent for rigosertib, which we in-licensed pursuant to the
license agreement with Temple, currently expires in 2026. A U.S. method of treatment patent for rigosertib, which we also
in-licensed from Temple, expires in 2025. A patent covering the use of rigosertib in combination with anticancer agents
including azacitidine is issued and will expire in 2028. The novel formulation patent for rigosertib expires in 2037. We
have recently filed new patent applications covering methods of treatment in target indications that are projected to extend
to 2044 before any possible patent term extensions. Patent term extensions may be available, depending on various
provisions in the law.
General Considerations
As with other biotechnology and pharmaceutical companies, our ability to maintain and solidify a proprietary position
for our product candidates will depend upon our success in obtaining effective patent claims and enforcing those claims
once granted.
Our commercial success will depend in part upon not infringing upon the proprietary rights of third parties. It is
uncertain whether the issuance of any third-party patent would require us to alter our development or commercial
strategies, or our product candidates or processes, obtain licenses or cease certain activities. The biotechnology and
pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights.
If a third party commences a patent infringement action against us, or our collaborators, it could consume significant
financial and management resources, regardless of the merit of the claims or the outcome of the litigation.
The term of a patent that covers an FDA-approved drug may be eligible for additional patent term extension, which
provides patent term restoration to account for the patent term lost during product development and the FDA regulatory
review process. The Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, permits
a patent term extension of up to five years beyond the expiration of the patent. The length of the patent term extension is
determined based upon the time from the IND effective date to the NDA submission date, and the time from NDA
submission date and the eventual application approval, as further described below. Patent extension cannot extend the
remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent applicable to
an approved drug may be extended. Similar provisions are available in Europe and other foreign jurisdictions to extend the
term of a patent that covers an approved drug. In the future, if and when our pharmaceutical products receive FDA
approval, we expect to apply for patent term extensions on patents covering those products.
Furthermore, we may be able to obtain extension of patent term by adjustment of the said term under the provisions of
35 U.S.C. § 154 if the issue of an original patent is delayed due to the failure of the U.S. Patent and Trademark Office. For
example, we have received adjustments of 1,139 days extension to the patent term for the rigosertib composition of matter
patent (US 7,598,232), 1,155 days extension for the patent covering the process for making rigosertib (US 8,143,453) and
751 days extension for rigosertib formulation patent (US 8,063,109) under the provisions of 35 U.S.C. §154.
In addition to patents, we rely upon unpatented trade secrets, know-how and continuing technological innovation to
develop and maintain a competitive position. We seek to protect our proprietary information, in part, through
confidentiality agreements with our employees, collaborators, contractors and consultants, and invention assignment
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agreements with our employees. We also have agreements requiring assignment of inventions with selected consultants and
collaborators. The confidentiality agreements are designed to protect our proprietary information and, in the case of
agreements or clauses requiring invention assignment, to grant us ownership of technologies that are developed through a
relationship with a third party.
Competition
The pharmaceutical industry is highly competitive and subject to rapid and significant technological change. While we
believe that our development experience and scientific knowledge provide us with competitive advantages, we face
competition from both large and small pharmaceutical and biotechnology companies. There are a number of
pharmaceutical companies, biotechnology companies, public and private universities and research organizations actively
engaged in the research and development of products that may compete with our products. Many of these companies are
multinational pharmaceutical or biotechnology organizations, which are pursuing the development of, or are currently
marketing, pharmaceuticals that target the key oncology indications or cellular pathways on which we are focused.
It is probable that the increasing incidence and prevalence of cancer will lead to many more companies seeking to
develop products and therapies for the treatment of unmet needs in oncology. Many of our competitors have significantly
greater financial, technical and human resources than we have. Many of our competitors also have a significant advantage
with respect to experience in the discovery and development of product candidates, as well as obtaining FDA and other
regulatory approvals of products and the commercialization of those products. We anticipate intense and increasing
competition as new drugs enter the market and as more advanced technologies become available. Our success will be based
in part on our ability to identify, develop and manage a portfolio of drugs that are safer and more effective than competing
products in the treatment of cancer patients.
There are several ongoing clinical trials aimed at expanding the use of approved chemotherapeutic and
immunomodulatory agents in the diseases we are studying, as well as several new clinical programs testing novel
technologies. Companies with marketed CDK 4/6 inhibitors in the HR+/ HER2- metastatic breast cancer space include
Pfizer (palbociclib), Novartis (ribociclib) and Eli Lilly (abemacicilib). Onconova will be studying narazaciclib and
letrozole in advanced low-grade endometrioid endometrial cancer, as well as combinations with narazaciclib in CDK 4/6i
refractory HR+/ HER2- metastatic breast cancer and other potential indications.
Manufacturing
Our product candidates are synthetic small molecules. Manufacturing activities must comply with FDA current good
manufacturing practices (cGMP), regulations commensurate with the product candidates’ stage of development. We
conduct our manufacturing activities under individual purchase orders with third-party contract manufacturers (CMOs). We
have quality agreements in place with our key CMOs. We have also established an internal quality management
organization, which audits and qualifies CMOs in the United States and abroad.
We believe that the manufacturing processes for the active pharmaceutical ingredient and finished drug products for
our products are being developed to adequately support future development and commercial demands. If manufacturing
challenges occur, they are thoroughly reviewed and, as may be required, reported to health authorities to determine whether
the product can be used for clinical trials.
The FDA regulates and inspects or conducts remote regulatory assessments of equipment, facilities and processes used
in manufacturing pharmaceutical products prior to approval. If we or CMOs fail to comply with applicable cGMP
requirements and conditions of product approval, the FDA may seek sanctions, including fines, civil penalties, injunctions,
suspension of manufacturing operations, operating restrictions, withdrawal of FDA approval, refusal to approve
applications, seizure or recall of products and criminal prosecution. Although we periodically monitor the FDA compliance
of our third-party CMOs, we cannot be certain that our present or future third-party CMOs will consistently comply with
cGMP and other applicable FDA regulatory requirements.
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Commercial Operations
We do not currently have an organization for the sales, marketing and distribution of pharmaceutical products. We may
rely on licensing and co-promotion agreements with strategic partners for the commercialization of our products in the
United States and other territories. If we choose to build a commercial infrastructure to support marketing in the United
States, such commercial infrastructure could be expected to include a targeted, oncology sales force supported by sales
management, internal sales support, an internal marketing group and distribution support. To develop the appropriate
commercial infrastructure internally, we would have to invest significant financial and management resources.
Government Regulation
As a pharmaceutical company that operates in the United States, we are subject to extensive regulation by the FDA,
and other federal, state, and local regulatory agencies. The Federal Food, Drug, and Cosmetic Act (the FDC Act), and its
implementing regulations set forth, among other things, requirements for the research, testing, development, manufacture,
quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export,
advertising, marketing, and promotion of our products. The FDA also has issued a growing body of guidance documents
that provide the agency’s interpretation of regulatory requirements.
Although the discussion below focuses on regulation in the United States, we and/or our partners anticipate seeking
approval for, and marketing of, our products in other countries. Generally, our activities in other countries will be subject to
regulation that is similar in nature and scope as that imposed in the United States, although there can be important
differences. Additionally, some significant aspects of approval and regulation in Europe are addressed in a centralized way
through the EMA, but country-specific regulation remains essential in many respects and enforcement is generally through
EU member state authorities. The process of obtaining regulatory marketing approvals and the subsequent compliance with
appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial
resources and may not be successful. In addition, approval in the United States does not automatically result in approval in
the European Union or elsewhere.
United States Government Regulation
The FDA is the main regulatory body that controls pharmaceuticals in the United States, and its regulatory authority is
based in the FDC Act. Pharmaceutical products are also subject to other federal, state and local statutes. A failure to
comply explicitly with any requirements during the product development, approval, or post-approval periods, may lead to
administrative or judicial sanctions. These sanctions could include the imposition by the FDA or an institutional review
board (IRB), or Independent Ethics Committee (IEC) of a hold on clinical trials, refusal to approve pending marketing
applications or supplements, withdrawal of approval, warning letters, untitled letters, cyber letters, product recalls, product
seizures or detention, prohibition on importing or exporting, total or partial suspension of production or distribution,
injunctions, fines, civil penalties, adverse publicity, disgorgement, restitution, FDA debarment, debarment from
government contracting or refusal of future orders under existing contracts, exclusion from Federal healthcare programs,
corporate integrity agreements, consent decrees, or criminal prosecution.
The steps required before a new drug may be marketed in the United States generally include:
● Completion of preclinical or nonclinical laboratory tests, animal studies and formulation studies in compliance
with the FDA’s good laboratory practice (GLP), regulations and other applicable laws and regulations;
● Submission to the FDA of an IND to support human clinical testing;
● Approval by an IRB at each clinical site or centrally before each trial may be initiated;
● Performance of adequate and well-controlled clinical trials in accordance with federal regulations and with
current good clinical practices (GCPs) to establish the safety and efficacy of the investigational drug product for
each targeted indication;
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● Submission of an NDA to the FDA;
● Satisfactory completion of an FDA Advisory Committee review, if applicable;
● Satisfactory completion of an FDA inspection of the manufacturing facilities at which the investigational product
is produced to assess compliance with cGMPs, and to assure that the facilities, methods and controls are
adequate, as well as satisfactory completion of FDA inspections of selected clinical trial sites to ensure that
clinical trials were conducted in accordance with GCPs; and
● FDA review and approval of the NDA.
Preclinical and Clinical Trials
The testing and approval process of product candidates requires substantial time, effort, and financial resources.
Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary
substantially based upon the type, complexity, and novelty of the product or disease. Product development typically begins
with preclinical or nonclinical studies. Preclinical studies include laboratory evaluation of chemistry, pharmacology,
toxicity, and product formulation, as well as animal studies to assess potential safety and efficacy. Such studies must
generally be conducted in accordance with the FDA’s GLPs.
Prior to commencing the first clinical trial with a product candidate, an IND sponsor must submit the results of the
preclinical tests and preclinical literature, together with manufacturing information, analytical data, any available clinical
data or literature, and proposed clinical study protocols among other things, to the FDA as part of an IND. An IND is a
request for authorization from the FDA to administer an investigational drug product to humans. This authorization is
required before interstate shipping and administration of any new drug product to humans that is not the subject of an
approved NDA. A 30-day waiting period after the submission of each IND is required prior to the commencement of
clinical testing in humans. During its review, the FDA may determine that study subjects would be exposed to an
unacceptable level of risk of harm or injury, and may raise questions or issues related to one or more components of the
IND, resulting in the IND being placed on clinical hold. 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. Clinical trials involve the administration of the
investigational drug to patients under the supervision of qualified investigators following GCPs, an international standard
meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and
monitors. Clinical trials are conducted under protocols that detail the parameters to be used in monitoring safety, and the
efficacy criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments
must be submitted to the FDA as part of the IND. Under newly enacted legislation, diversity plans will also be required.
The informed written consent of each participating subject is required. Special clinical trial ethical considerations also must
be taken into account if a study involves children. The clinical investigation of an investigational drug is generally divided
into three phases. Although the phases are usually conducted sequentially, they may overlap or be combined. The three
phases of an investigation are as follows:
● Phase 1. Phase 1 includes the initial introduction of an investigational drug into humans. Phase 1 clinical trials
may be conducted in patients with the target disease or condition or healthy volunteers. These studies are
designed to evaluate the safety, metabolism, pharmacokinetics and pharmacologic actions of the investigational
drug in humans, the side effects associated with increasing doses, and if possible, to gain early evidence on
effectiveness. During Phase 1 clinical trials, sufficient information about the investigational product’s
pharmacokinetics and pharmacological effects may be obtained to permit the design of Phase 2 clinical trials. The
total number of participants included in Phase 1 clinical trials varies, but is generally in the range of 20 to 80.
● Phase 2. Phase 2 includes the controlled clinical trials conducted to evaluate the effectiveness of the
investigational product for a particular indication(s) in patients with the disease or condition under study, to
determine dosage tolerance and optimal dosage, and to identify possible adverse side effects and safety risks
associated with the drug. Phase 2 clinical trials are typically well-controlled, closely monitored, and conducted in
a limited patient population, usually involving no more than several hundred participants.
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● Phase 3. Phase 3 clinical trials are controlled clinical trials conducted in an expanded patient population at
geographically dispersed clinical trial sites. They are performed after preliminary evidence suggesting
effectiveness of the investigational product has been obtained, and are intended to further evaluate dosage,
clinical effectiveness and safety, to establish the overall benefit-risk relationship of the product, and to provide an
adequate basis for product approval. Phase 3 clinical trials usually involve several hundred to several thousand
participants. In most cases, the FDA requires two adequate and well controlled Phase 3 clinical trials to
demonstrate the efficacy of the drug.
Additional kinds of data may also help support an NDA, such as patient experience data and real world evidence. Real
world evidence may be used to assist in clinical trial design or support an NDA for already approved products.
The decision to terminate development of an investigational drug product may be made by either a health authority
body, such as the FDA or IRB/independent ethics committees (IECs), or by a company for various reasons. An IRB
approves the initiation of a clinical trial and supervises the conduct of the trial to ensure that the risks to human subjects are
reasonable in relation to the anticipated benefits and that there are adequate human subject protections in place. The FDA
may order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it
believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an
unacceptable risk to the clinical trial patients. In some cases, clinical trials are overseen by an independent group of
qualified experts organized by the trial sponsor. This group provides guidance on whether or not a trial may or should move
forward at designated check points. These decisions are based on the limited access to data from the ongoing trial. The
suspension or termination of development can occur during any phase of clinical trials if it is determined that the
participants or patients are being exposed to an unacceptable health risk, if the product candidate does not show sufficient
evidence of efficacy, if the development program does not comply with applicable regulatory requirements, or due to
changing sponsor business objectives.
In addition, there are various reporting requirements that clinical trial sponsors and investigators must comply with
during the course of a clinical trial. For instance, there are requirements for the registration of ongoing clinical trials of
drugs on public registries and the disclosure of certain information pertaining to the trials as well as clinical trial results
after completion. Sponsors must also make annual reports to the FDA concerning the progress of their clinical trial
programs as well as more frequent reports for certain serious adverse events. Sponsors must submit a protocol for each
clinical trial, and any subsequent protocol amendments to the FDA and the applicable IRBs. IRBs must also receive
information concerning unanticipated problems involving risks to subjects. Investigators must further provide certain
information to the clinical trial sponsors to allow the sponsors to make certain financial disclosures to the FDA. Moreover,
under the 21st Century Cures Act, manufacturers or distributors of investigational drugs for the diagnosis, monitoring, or
treatment of one or more serious diseases or conditions must have a publicly available policy concerning expanded access
to investigational drugs.
Further, the manufacture of investigational drugs for the conduct of human clinical trials is subject to cGMP
requirements. Investigational drugs and active pharmaceutical ingredients imported into the United States are also subject
to regulation by the FDA relating to their labeling and distribution. Further, the export of investigational drug products
outside of the United States is subject to regulatory requirements of the receiving country as well as U.S. export
requirements under the FDC Act.
Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional
information about the chemistry and physical characteristics of the product candidate as well as finalize a process for
manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process
must be capable of consistently producing quality batches of the product candidate and, among other things, must develop
methods for testing the identity, strength, quality, potency, and purity of the final product. Additionally, appropriate
packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate
does not undergo unacceptable deterioration over its shelf life.
Assuming successful completion of all required testing in accordance with all applicable regulatory requirements,
detailed investigational drug product information is submitted to the FDA in the form of an NDA to request market
approval for the product in specified indications.
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New Drug Applications
In order to obtain approval to market a drug in the United States, a marketing application must be submitted to the
FDA that provides data establishing the safety and effectiveness of the drug product for the proposed indication. The
application includes all relevant data available from pertinent preclinical and clinical trials, including negative or
ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry,
manufacturing, controls and proposed labeling, among other things. Data can come from company-sponsored clinical trials
intended to test the safety and effectiveness of a product, or from a number of alternative sources, including studies
initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to
establish the safety and effectiveness of the investigational drug product to the satisfaction of the FDA.
In most cases, the NDA must be accompanied by a substantial user fee; there may be some instances in which the user
fee is waived. The FDA will initially review the NDA for completeness before it accepts the NDA for filing. The FDA has
60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s
threshold determination that it is sufficiently complete to permit substantive review. After the NDA submission is accepted
for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs.
For new molecular entities, or NMEs, the FDA has the goal of completing its review within 10 months of the application’s
acceptance for filing. This, however, is just a goal, and the review time may take longer. For instance, the FDA can extend
this review by three months to consider certain late-submitted information or information intended to clarify information
already provided in the submission.
The FDA reviews the NDA to determine, among other things, whether the proposed product is safe and effective for
its intended use, and whether the product is being manufactured in accordance with cGMP. The FDA may refer
applications for novel drug products which present difficult questions of safety or efficacy to an advisory committee,
typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the
application should be approved and under what conditions. For drugs for which no active ingredient (including any ester or
salt of active ingredients) has previously been approved by the FDA, the FDA must refer the drug to an advisory
committee or provide in an action letter, a summary of the reasons why the FDA did not refer the product candidate to an
advisory committee. Product candidates may also be referred to advisory committees for other reasons. The FDA is not
bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making
decisions.
Before approving an NDA, the FDA will inspect or conduct a remote regulatory assessment of the facilities at which
the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes
and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product
within required specifications. Additionally, before approving an NDA, the FDA will typically inspect or conduct a remote
regulatory assessment of one or more clinical sites to assure compliance with GCP. 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
indicates that the review cycle of the application is complete and the application is not ready for approval. 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, including additional clinical trials. If a complete response
letter is issued, the applicant may either: resubmit the NDA, addressing all of the deficiencies identified in the letter;
withdraw the application; or request an opportunity for a hearing. 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 or six months depending on the type of information included. Notwithstanding the
submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy
the regulatory criteria for approval.
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, or 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, or 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
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the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval
testing, clinical trials, 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 if 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, including the imposition of user fees for certain supplements.
Advertising and Promotion
The FDA and other federal regulatory agencies closely regulate the marketing and promotion of drugs through, among
other things, standards and regulations for direct-to-consumer advertising, communications regarding unapproved uses,
industry-sponsored scientific and educational activities, and promotional activities involving the Internet. A product cannot
be commercially promoted before it is approved. After approval, product promotion can include only those claims relating
to safety and effectiveness that are consistent with the labeling approved by the FDA. Healthcare providers are permitted to
prescribe drugs for “off-label” uses — that is, uses not approved by the FDA and therefore not described in the drug’s
labeling — because the FDA does not regulate the practice of medicine. All statements regarding products must be
consistent with the FDA approved label, must be truthful and non-misleading, and must be adequately substantiated with a
fair balance between product benefit claims and risks, among other requirements. This means, for example, that we cannot
make claims about the superiority of or otherwise compare our products to other treatments without substantiation, which
typically are head-to-head clinical studies However, FDA regulations impose stringent restrictions on manufacturers’
communications regarding off-label uses. Broadly speaking, a manufacturer may not promote a drug for off-label use, but
may engage in non-promotional, balanced communication regarding off-label use under specified conditions. Failure to
comply with applicable FDA requirements and restrictions in this area may subject a company to adverse publicity and
enforcement action by the FDA, the Department of Justice (the DOJ), or the Office of the Inspector General of the
Department of Health and Human Services (HHS), as well as state authorities. This could subject a company to a range of
penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially
restrict the manner in which a company promotes or distributes drug products.
Post-Approval Regulations
After regulatory approval of a drug is obtained, a company is required to comply with a number of post-approval
requirements. For example, as a condition of approval of an NDA, the FDA may require post-marketing testing, including
Phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after
commercialization. Regulatory approval of oncology products often requires that patients in clinical trials be followed for
long periods to determine the overall survival benefit of the drug. In addition, as a holder of an approved NDA, a company
would be required to report adverse reactions and production problems to the FDA, to provide updated safety and efficacy
information, and to comply with requirements concerning advertising and promotional labeling for any of its products.
Further, under the Drug Quality and Security Act, manufacturers, repackagers, wholesale distributors, dispensers, and
third-party logistics providers have obligations concerning the tracking and tracing of drug products, as well as the
investigation and reporting of suspect and illegitimate products. Also, quality control and manufacturing procedures must
continue to conform to cGMP after approval to assure and preserve the long-term stability of the drug product.
Manufacturing facilities must be registered with FDA and marketed drug products must be listed. Sponsors are also subject
to annual program fees, though there may be some exemptions. The FDA periodically inspects or conducts remote
regulatory assessments of manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural
and substantive record keeping requirements. In addition, changes to the manufacturing process are strictly regulated, and,
depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations
also require investigation and correction of any deviations from cGMP and impose reporting and documentation
requirements upon a company and any third-party manufacturers that a company may decide to use. Accordingly,
manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain
compliance with cGMP and other aspects of regulatory compliance.
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We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our
product candidates. Future FDA and state inspections may identify compliance issues at our facilities or at the facilities of
our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct. In
addition, discovery of previously unknown problems with a product or the failure to comply with applicable requirements
may result in restrictions on a product, manufacturer or holder of an approved NDA, including withdrawal or recall of the
product from the market or other voluntary, FDA-initiated or judicial action that could delay or prohibit further marketing.
Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling,
including the addition of new warnings and contraindications, and also may require the implementation of other risk
management measures, such as risk evaluation and mitigation strategies and phase 4 studies. Also, new government
requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which
could delay or prevent regulatory approval of our products under development or result in additional post-approval
requirements.
After a product is approved for commercial sale, in addition to marketing and promotion restrictions, manufacturers
are subject to federal and state laws and regulations requiring them to report certain pricing data, transactions with medical
professionals, and similar information. Manufacturers participating in federal health care programs are also required to
provide statutorily mandated discounts and rebates.
FDA post-approval requirements are continually evolving. For example, in March 2020, the U.S. Congress passed the
Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, which includes various provisions regarding FDA
drug shortage and manufacturing volume reporting requirements, as well as provisions regarding supply chain security,
such as risk management plan requirements, and the promotion of supply chain redundancy and domestic manufacturing.
As part of the CARES Act implementation, the FDA recently issued a guidance on the reporting of the volume of drugs
produced, which reporting will require additional administrative efforts by drug manufacturers. The executive branch has
also taken steps to promote domestic manufacturing, and the Consolidated Appropriations Act of 2023, and the
reauthorization of the Prescription Drug User Fee Act, which were passed in 2022, included several changes to the FDC
Act.
The Hatch-Waxman Amendments to the FDC Act
Orange Book Listing
In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent whose claims
cover the applicant’s product or method of using the product. Upon approval of a drug, each of the patents listed in the
application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence
Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential
competitors in support of approval of an abbreviated new drug application, or ANDA or 505(b)(2) application. In an effort
to clarify which patents must be listed in the Orange Book, in January 2021, Congress passed the Orange Book
Transparency Act of 2020, which largely codified the FDA’s existing practices into the FDCA.
An ANDA provides for marketing of a generic drug product that has the same active ingredients in the same strengths
and dosage form as the listed drug and has been shown through bioequivalence testing to be therapeutically equivalent to
the listed drug. Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or
submit results of, pre-clinical or clinical tests to prove the safety or effectiveness of their drug product. Drugs approved in
this way are commonly referred to as “generic equivalents” to the listed drug, and can often be substituted by pharmacists
under prescriptions written for the original listed drug. 505(b)(2) applications provide for marketing of a drug product that
may have the same active ingredients as the listed drug and contain the same full safety and effectiveness data as an NDA,
but at least some of the information comes from studies not conducted by or for the applicant. 505(b)(2) applicants may
rely on published literature or the FDA’s prior finding of safety and effectiveness for an NDA approved drug product. The
ANDA or 505(b)(2) applicant is required to certify to the FDA concerning any patents listed for the approved product
referenced in the marketing application in the FDA’s Orange Book. Specifically, the applicant must certify that: (i) the
required patent information has not been filed; (ii) the listed patent has expired;
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(iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or
(iv) the listed patent is invalid or will not be infringed by the new product. The ANDA or 505(b)(2) applicant may also
elect to submit a statement certifying that its proposed label does not contain (or carves out) any language regarding the
patented method-of-use rather than certify to a listed method-of-use patent. If the applicant does not challenge or carve out
the listed patents, the ANDA or 505(b)(2) application approval will not be made effective until all the listed patents
claiming the referenced product have expired.
A certification that the new product will not infringe the already approved product’s listed patents, or that such patents
are invalid, is called a Paragraph IV certification. If the ANDA or 505(b)(2) applicant has provided a Paragraph IV
certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent
holders. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the
Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV
certification automatically prevents the FDA from making an approval of the ANDA or 505(b)(2) application effective
until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that
is favorable to the ANDA or 505(b)(2) applicant, or such shorter or longer period as may be determined by a court.
The ANDA or 505(b)(2) application also will not be approved until any applicable non-patent exclusivity has expired.
Congress, the Administration, and administrative agencies have taken certain measures to increase drug competition
and thus, decrease drug prices. For example, measures have been proposed and implemented to facilitate product
importation. Congress also passed a bill requiring sponsors of NDA approved products to provide sufficient quantities of
drug product on commercially reasonable market-based terms to entities developing generic and similar drug products.
This bill also included provisions on shared and individual REMS for generic drug products.
Exclusivity
Upon NDA approval of a new chemical entity, or NCE, which is a drug 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 receive any ANDA or a 505(b)(2) application for the same active moiety. Certain changes to a drug, such as the
addition of a new indication to the package insert, may be associated with a three-year period of exclusivity during which
the FDA cannot approve an ANDA for a generic drug or a 505(b)(2) application that includes the change, if the applicant
conducted clinical trials essential to the approval of the application, which are not bioavailability or bioequivalence studies.
Such exclusivity in the EU under a broadly equivalent regime is 10 years.
An ANDA or a 505(b)(2) application may be submitted one year before NCE exclusivity expires if a Paragraph IV
certification is filed.
Patent Term Extension
After NDA approval, owners of relevant drug patents may apply for up to a five-year patent extension of a single
unexpired patent, that has not previously been extended. The allowable patent term extension is calculated as half of the
drug’s testing phase — the time between IND application 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 the date of approval. Similar extension rules apply in the EU.
The Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act (FCPA), prohibits any U.S. individual or business from paying, offering, or
authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or
candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business
in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to
comply with accounting provisions requiring the company to maintain books and records that accurately and
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fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate
system of internal accounting controls for international operations.
Europe and Other International Government Regulation
In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions
governing, among other things, clinical trials and any commercial sales and distribution of our products. Whether or not we
obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries
prior to the commencement of clinical trials or marketing of the product in those countries. Some countries outside of the
United States have a similar process that requires the submission of a clinical trial application, or CTA, much like the IND
prior to the commencement of human clinical trials. In Europe, for example, a CTA must be submitted to each country’s
national health authority and an IEC, much like the FDA and IRB, respectively. Once the CTA is approved in accordance
with a country’s requirements, clinical trial development may proceed. With the Clinical Trials Regulation (EC) 536/2014
in force since January 31, 2022, it is now possible to make a single application for a cross-border trial within the EU
through an EU clinical trial portal. With the departure of the United Kingdom (UK) from the EU, trials in the UK have to
be approved through the portal and a separate application will need to be made to the UK Medicines and Healthcare
products Regulatory Agency. Additionally, in the EU there is an increasing move to transparency of trial summary reports
and the above Clinical Trial Regulation will include a publicly accessible database of data and information submitted in
accordance with this regulation. Companies submitting data will need to justify why it should be kept confidential.
To obtain regulatory approval to commercialize a new drug under European Union regulatory systems, we must
submit a marketing authorization application, or MAA. The MAA is comparable to the NDA.
For other countries outside of the European Union, 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 country to
country. In all cases, again, the clinical trials are conducted in accordance with GCP and the applicable regulatory
requirements and the ethical principles that have their origin in the Declaration of Helsinki.
Expanded Access
Under certain circumstances, regulators may permit unapproved drugs to be used by patients outside of clinical trials.
In the U.S., with FDA approval, manufacturers may provide investigational drugs to patients with serious or immediately
life threatening diseases for which there are no comparable or satisfactory alternative therapies. To qualify for U.S.
expanded access, the potential benefit must justify the potential risks and the potential risks must not be unreasonable.
Providing the investigational drug must also not interfere with product development. There are additional qualifying
criteria depending on the number of patients in the expanded access program, and the expanded access sponsor and
investigator must comply with FDA’s regulations. U.S. law also permits treatment access to certain investigational drugs
under the federal Right to Try law, which permits manufacturers to provide investigational drugs to patients with a life-
threatening disease or condition, who have exhausted all approved treatment options, who cannot participate in a clinical
trial of the drug, and who provides informed consent, provided that certain conditions are met. Certain reports must be
submitted to FDA under the federal Right to Try law. There are also state level Right to Try statutes.
In the European Union, early access programs are authorized by EU legislation and, through national laws, EU
member states have implemented regulatory requirements related to these programs. National competent authorities may
authorize early access program use. In both the European Union and United States unapproved drug products may not be
promoted or marketed.
Compliance
During all phases of development (pre- and post-marketing), failure to comply with applicable regulatory requirements
may result in administrative or judicial sanctions. These sanctions could include the imposition by the FDA or an
institutional review board, or IRB, of a hold on clinical trials, refusal to approve pending marketing applications or
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supplements, withdrawal of approval, warning letters, untitled letters, cyber letters, product recalls, product seizures or
detention, prohibition on importing or exporting, total or partial suspension of production or distribution, injunctions, fines,
civil penalties, adverse publicity, disgorgement, restitution, FDA debarment, debarment from government contracting or
refusal of future orders under existing contracts, exclusion from Federal healthcare programs, corporate integrity
agreements, consent decrees, or criminal prosecution. Any agency or judicial enforcement action could have a material
adverse effect on us.
Other Special Regulatory Procedures
Orphan Drug Designation
The FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition that affects fewer
than 200,000 individuals in the United States, or, if the disease or condition affects more than 200,000 individuals in the
United States, there is no reasonable expectation that the cost of developing and making the drug would be recovered from
sales in the United States. Additionally, sponsors must present a plausible hypothesis for clinical superiority to obtain
orphan designation if there is a product already approved by the FDA that is intended for the same indication and that is
considered by the FDA to be the same as the already approved product. This hypothesis must be demonstrated to obtain
orphan exclusivity. In the European Union, the EMA’s Committee for Orphan Medicinal Products, or COMP, grants
Orphan Drug Designation to promote the development of products that are intended for the diagnosis, prevention or
treatment of life-threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the
European Union. Additionally, designation is granted for products intended for the diagnosis, prevention or treatment of a
life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that
sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug.
In the United States, Orphan Drug Designation entitles a party to financial incentives, such as opportunities for grant
funding towards clinical trial costs for certain kinds of studies, tax credits for certain research and user fee waivers under
certain circumstances. Under the 21st Century Cures Act, Congress expanded the potential opportunities for grant funding
to include additional kinds of studies. The 2017 Tax Cuts and Jobs Act, however, reduced the available tax credits for
orphan products. In addition, if a product receives the first FDA approval for the indication for which it has orphan
designation, the product is entitled to seven years of market exclusivity, which means the FDA may not approve any other
application for the same drug for the same indication for a period of seven years, except in limited circumstances, such as a
showing of clinical superiority over the product with orphan exclusivity. Orphan drug exclusivity does not prevent the FDA
from approving a different drug for the same disease or condition, or the same drug for a different disease or condition.
Notably, the exact scope of orphan drug exclusivity is currently in flux. A 2021 judicial decision, Catalyst Pharms.,
Inc. v. Becerra, challenged and reversed an FDA decision on the scope of orphan product exclusivity for the drug Firdapse.
Under this decision, orphan drug exclusivity for Firdapse blocked approval of another company’s application for the same
drug for the entire disease or condition that for which orphan drug designation was granted even though the approved
product indication was narrower. This decision was contrary to FDA’s interpretation of the FDC Act, which took the
position that orphan drug exclusivity only protected a product’s approved indication. In January 2023, the FDA published a
notice in the Federal Register stating that it interprets the Catalyst Pharms., decision narrowly and intends to continue tying
the scope of orphan drug exclusivity to the uses or indications that a drug is approved for. The scope of orphan drug
exclusivity will likely be an evolving area.
In the European Union, Orphan Drug Designation also entitles a party to financial incentives such as reduction of fees
or fee waivers and 10 years of market exclusivity is granted following drug approval. This period may be reduced to
six years if the Orphan Drug Designation criteria are no longer met, including where it is shown that the product is
sufficiently profitable not to justify maintenance of market exclusivity or where the holder of the marketing authorization
for the original orphan medicinal product is unable to supply sufficient quantities of the medicinal product. As with the
FDA, orphan drug exclusivity does not prevent the EMA from approving a second medicinal product where such second
medicinal product, although similar to the orphan medicinal product already authorized, is safer, more effective or
otherwise clinically superior.
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Orphan drug designation must be requested before submission of an application for marketing approval. Orphan drug
designation does not convey any advantage in, or shorten the duration of the regulatory review and approval process.
Priority Review (United States), Accelerated Review (European Union) and other Expedited Programs
The FDA has various programs, including Fast Track designation, accelerated approval, priority review and
breakthrough designation, that are intended to expedite or simplify the process for the development and FDA review of
certain drug products that are intended for the treatment of serious or life threatening diseases or conditions, and
demonstrate the potential to address unmet medical needs or present a significant improvement over existing therapy. The
purpose of these programs is to provide important new drugs to patients earlier than under standard FDA review
procedures.
To be eligible for a Fast Track designation, the FDA must determine, based on the request of a sponsor, that a product
is intended to treat a serious or life threatening disease or condition and demonstrates the potential to address an unmet
medical need. The FDA will determine that a product will fill an unmet medical need if the product will provide a therapy
where none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy, safety, or
public health factors. If Fast Track designation is obtained, drug sponsors may be eligible for more frequent development
meetings and correspondence with the FDA. In addition, the FDA may initiate review of sections of an NDA before the
application is complete. This “rolling review” is available if the applicant provides and the FDA approves a schedule for
the remaining information.
Based on results of one or more Phase 3 clinical trials submitted in an NDA, upon the request of an applicant, a
priority review designation may be granted to a product by the FDA, which sets the target date for FDA action on the
application at six months from FDA filing, or eight months from the sponsor’s submission. Priority review is given to
drugs intended to treat serious conditions and which, if approved would provide significant improvements in the safety or
effectiveness of the treatment, diagnosis, or prevention of the serious condition. If criteria are not met for priority review,
the standard FDA review period is 10 months from FDA filing, or 12 months from sponsor submission. Priority review
designation does not change the scientific/medical standard for approval or the quality of evidence necessary to support
approval.
Moreover, under the provisions of the Food and Drug Administration Safety and Innovation Act, or FDASIA, enacted
in 2012, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is
defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-
threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial
improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects
observed early in clinical development. Drugs designated as breakthrough therapies are eligible for the Fast Track
designation features as described above, intensive guidance on an efficient drug development program beginning as early
as Phase 1 trials, and a commitment from the FDA to involve senior managers and experienced review staff in a proactive
collaborative, cross-disciplinary review.
In addition, products for treating serious or life threatening conditions and that provide a meaningful advantage over
available therapies may be eligible for accelerated approval and may be approved on the basis of adequate and well-
controlled clinical trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to
predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is
reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the
severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of
approval, the FDA will require a sponsor of a drug receiving accelerated approval to perform post-marketing studies,
including completion of Phase 4 clinical trials to demonstrate clinical benefit, and to verify and describe the predicted
effect on irreversible morbidity or mortality or other clinical endpoints. By the date of approval of an accelerated approval
product, the FDA must specify the conditions for the required post approval studies, including enrollment targets, the study
protocol, milestones, and target completion dates. The FDA may also require that the confirmatory Phase 4 studies be
commenced prior to the FDA granting a product accelerate approval. Reports on the progress of the required Phase 4
confirmatory studies must be submitted to the FDA every 180 days after approval. The
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drug may be subject to accelerated withdrawal procedures if such studies do not verify the product’s clinical benefit or
other evidence shows a lack of safety or efficacy pursuant to a streamlined process that is outlined in the FDC Act.
Promotional materials for products approved via the accelerated approval pathway must be submitted to the FDA prior to
initial distribution. Such products may also be subject to distribution or use restrictions, if the FDA determines that
restrictions are needed to assure safe use. In recent years, the accelerated approval pathway has come under significant
FDA and public scrutiny. Accordingly, depending on the results of our studies, the FDA may be more conservative in
granting accelerated approval or, if granted, may be more apt to withdrawal approval if clinical benefit is not confirmed.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer
meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.
Sponsors availing themselves of these programs must also be prepared to potentially work on accelerated timelines with
respect to other areas of product development, including manufacturing.
Under the Centralized Procedure in the European Union, the maximum timeframe for the evaluation of a marketing
authorization application 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 EMA’s Committee for Medicinal Products of Human Use (CHMP)).
On average, an approval is provided by the European Commission after approximately 15 months. 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, defined by three cumulative criteria: the seriousness of the disease (e.g., heavy disabling or life-threatening
diseases) to be treated; the absence or insufficiency of an appropriate alternative therapeutic approach; and anticipation of
high therapeutic benefit. In this circumstance, EMA ensures that the opinion of the CHMP is given within 150 days. There
is also a conditional marketing authorization which allows for the early approval of a medicine on the basis of less
complete clinical data than normally required, if the medicine addresses an unmet medical need and targets a seriously
debilitating or life-threatening disease, a rare disease or is intended for use in emergency situations in response to a public
health threat. The benefit to public health must outweigh the risk due to the limited availability of clinical data at the time
of marketing authorization.
The EMA has recently been conducting a pilot on ‘adaptive pathways’ — an iterative process building on existing
regulatory processes involving gathering evidence through real-life use to supplement clinical trial data.
Pediatric Information
Under the Pediatric Research Equity Act (the PREA), NDAs or certain supplements to NDAs must contain data to
assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to
support dosing and administration for each pediatric subpopulation for which the drug is safe and effective. Unless
otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has
been granted.
Also, under the FDA Reauthorization Act of 2017, sponsors submitting applications for product candidates intended
for the treatment of adult cancer which are directed at molecular targets that the FDA determines to be substantially
relevant to the growth or progression of pediatric cancer must submit, with the application, reports from molecularly
targeted pediatric cancer investigations designed to yield clinically meaningful pediatric study data, using appropriate
formulations, to inform potential pediatric labeling. The FDA may grant full or partial waivers, or deferrals, for submission
of data under PREA and this requirement.
The Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month extension of any exclusivity
— Orange Book listed patent or non-patent exclusivity — for a drug if certain conditions are met. Conditions for
exclusivity include the FDA’s determination that information relating to the use of a new drug in the pediatric population
may produce health benefits in that population, the FDA making a written request for pediatric studies, and the applicant
agreeing to perform, and reporting on, the requested studies within the required timeframe. The data do not need to show
the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the
FDA’s request, the additional protection is granted. This is not a patent term extension, but it effectively extends the
regulatory exclusivity period. Moreover, pediatric exclusivity attaches to all formulations, dosage forms, and indications
for products with existing marketing exclusivity or Orange Book listed patent life that contain the same
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active moiety as that which was studied. Applications under the BPCA for labeling changes receive priority review
designation, with all of the benefits that designation confers.
In the European Union all applications for marketing authorization for new medicines have to include the results of
studies as described in an agreed pediatric investigation plan, unless the medicine receives a deferral or waiver. Medicines
authorized across the EU with the results of studies from a pediatric investigation plan included in the product information
are eligible for an extension of their supplementary protection certificate by six months. This is the case even when the
studies’ results are negative. For orphan medicines, the incentive is an additional two years of market exclusivity.
Healthcare Regulation
Following approval of any product candidate, the product would be subject to a comprehensive system of laws and
regulations on the state and federal level that govern how drug products are reimbursed , healthcare financing, and drug
manufacturers’ relationships and interactions with healthcare professionals, including potential prescribers. These
requirements include required fees, rebates, discounts and payment reductions, required price reporting and pricing
transparency, caps on price increases, requirements around price negotiation, and requirements to enter into agreements
with government agencies and certain healthcare entities that may result in significant limits on the prices we may charge
for our products. Failure to comply with these laws, regulations, and/or restrictions could result in a loss of our ability to
continue selling our drugs to the federal and state governments or receiving reimbursement for our drugs once approved. It
could also result in enforcement actions.
The government is increasingly focused on measures to contain program costs for prescription drugs and there have
been a number of U.S. Congressional inquiries, proposed bills, and enacted legislation focused on decreasing prescription
drug spending and bringing more transparency to drug pricing. These efforts may result in a decrease in the amount of
reimbursement we received for our drugs from Medicare or other government programs for our drugs, once approved, and
any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in
payments from private payors. These and any additional healthcare reform measures could further constrain our business
or limit the amounts that federal and state governments will pay for healthcare products and services, which could result in
additional pricing pressures. The implementation of cost containment measures or other healthcare reforms may prevent us
from being able to generate revenue, attain profitability, or commercialize our products. In addition, it is possible that there
will be further legislation or regulation that could harm our business, financial condition, and results of operations.
Because of the significant governmental focus on drug prices, at this time we cannot determine how or if our product
candidates will be reimbursed, following approval, or if any reimbursement levels will be sufficient to allow us to attain
profitability. Changes in the law may result in additional downward pressure on coverage and the price that we receive for
any approved product, or may require increased manufacturer rebates, and could seriously harm our business.
Different pricing and reimbursement schemes exist in other countries. In the European Community, governments
influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health
care systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate positive and
negative list systems under which products may only be marketed once a reimbursement price has been agreed. To obtain
reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the
cost-effectiveness of a particular drug candidate to currently available therapies. Other member states allow companies to
fix their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs
in general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected
to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert a
commercial pressure on pricing within a country. There can be no assurance that any country that has price controls or
reimbursement limitations for dug products will allow favorable reimbursement and pricing arrangements of our products.
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Other Healthcare Laws and Compliance Requirements
The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting
or receiving remuneration, directly or indirectly, to induce or in return for purchasing, leasing, ordering or arranging for the
purchase, lease or order of any healthcare item or service reimbursable in whole or in part under Medicare, Medicaid or
other federally financed healthcare programs. This statute has been interpreted to apply to arrangements between
pharmaceutical manufacturers on one hand and prescribers, purchasers, and formulary managers on the other. Although
there are a number of statutory exemptions and regulatory safe harbors protecting some business arrangements from
prosecution, the exemptions and safe harbors are drawn narrowly and practices that involve remuneration intended to
induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exemption or safe
harbor, as well as if they do. With respect to the safe harbors, the Office of Inspector General of HHS recently promulgated
two additional safe harbor regulations. One safe harbor regulation excludes from the definition of “remuneration” limited
categories of manufacturer rebates or other price reductions to a plan sponsor under Medicare Part D or a Medicaid
Managed Care Organization plan reflected in point-of sale reductions in price. The second safe harbor regulation excludes
from the definition of “remuneration” PBM service fees paid by a manufacturer to a PBM. In addition, the Office of
Inspector General of HHS revised the discount safe harbor regulation to exclude from the definition of “discount” a
reduction in price by a manufacturer to plan sponsors under Medicare Part D either directly to the plan sponsor, or
indirectly through a PBM. The effective date of the two new safe harbors and the revision to the discount safe harbor was
delayed by court order until January 1, 2023. Recent legislation further delayed implementation of the new safe harbors
and the revision to the discount safe harbor until January 1, 2032. Our practices may not in all cases meet all of the criteria
for safe harbor protection from federal Anti-Kickback Statute liability. The reach of the Anti-Kickback Statute was
broadened by the Affordable Care Act, which, among other things, amends the intent requirement of the federal Anti-
Kickback Statute. Pursuant to the statutory amendment, a person or entity no longer needs to have actual knowledge of this
statute or specific intent to violate it in order to have committed a violation. In addition, the Affordable Care Act provides
that the government may assert that a claim including items or services resulting from a violation of the federal Anti-
Kickback Statute constitutes a per se false or fraudulent claim for purposes of the civil False Claims Act (discussed below)
or the civil monetary penalties statute, which imposes penalties against any person who is determined to have presented or
caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or
service that was not provided as claimed or is false or fraudulent.
The federal civil False Claims Act prohibits any person from knowingly presenting, or causing to be presented, a false
claim for payment to the federal government, knowingly making, using, or causing to be made or used a false record or
statement material to a false or fraudulent claim to the federal government or avoiding, decreasing, or concealing an
obligation to pay money to the federal government. A claim includes “any request or demand” for money or property
presented to the U.S. government. The civil False Claims Act authorizes imposition of treble damages and a civil penalty
for each false claim submitted, which, for pharmaceutical products, have frequently resulted in multi-million dollar
penalties. Claims under the civil False Claims Act may be brought by the government or private parties on behalf of the
government, called “qui tam” actions, which may proceed even if the government does not join as a party.
The civil False Claims Act has been used to assert liability on the basis of kickbacks and other improper referrals,
improperly reported government pricing metrics such as Best Price or Average Manufacturer Price, improper use of
Medicare provider or supplier numbers when detailing a provider of services, improper promotion of off-label uses not
expressly approved by the FDA in a product’s label, and allegations as to misrepresentations with respect to products,
contract requirements, and services rendered , in addition to other allegations. In addition, private payers have been filing
follow-on lawsuits alleging fraudulent misrepresentation. Intent to deceive is not required to establish liability under the
civil False Claims Act. Rather, a claim may be false for deliberate ignorance of the truth or falsity of the information
provided or for acts in reckless disregard of the truth or falsity of that information. If the government decides to intervene
in a qui tam action and prevails in the lawsuit, the individual will share in the proceeds from any damages, penalties or
settlement funds. If the government declines to intervene, the individual may pursue the case alone. The civil False Claims
Act provides for treble damages and a civil penalty for each false claim, such as an invoice or pharmacy claim for
reimbursement, which can aggregate into tens and even hundreds of millions of dollars. For these reasons, since 2004,
False Claims Act lawsuits against biopharmaceutical companies have increased significantly in volume and breadth,
leading to several substantial civil and criminal settlements, as much as $3.0 billion, regarding certain sales
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practices and promoting off label uses. Civil False Claims Act liability may further be imposed for known Medicare or
Medicaid overpayments, for example, overpayments caused by understated rebate amounts, that are not refunded within 60
days of identifying the overpayment, even if the overpayment was not caused by a false or fraudulent act.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created new federal criminal statutes that
prohibits, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program,
including private third-party payors 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. The Affordable Care Act amended the intent requirement of certain of these criminal statutes
under HIPAA so that a person or entity no longer needs to have actual knowledge of the statute, or the specific intent to
violate it, to have committed a violation. Further, the government may prosecute conduct constituting a false claim under
the criminal False Claims Act. The criminal False Claims Act prohibits the making or presenting of a claim to the
government knowing such claim to be false, fictitious, or fraudulent and, unlike the civil False Claims Act, requires proof
of intent to submit a false claim. Also, many states have fraud and abuse statutes or regulations that are similar to the
federal Anti-Kickback Statute and False Claims Act that apply to items and services reimbursed under Medicaid and other
state programs, or, in several states, apply regardless of the payor.
The Affordable Care Act further created new federal requirements for reporting, by applicable manufacturers of
covered drugs, of information related to payments and other transfers of value made to or at the request of covered
recipients, namely US-licensed physicians and teaching hospitals, as well as ownership and investment interests held by
physicians and their immediate family. The categories of covered recipients later was expanded to include physician
assistants, nurse practitioners, clinical nurse specialists, certified nurse midwives and certified registered nurse anesthetists.
Payments made to physicians and certain research institutions for clinical trials are included within the ambit of this law.
In addition, we may 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 (HITECH) Act, and their implementing regulations, impose requirements relating to the privacy, security, breach
notification, and transmission of protected health information. HIPAA’s security and certain privacy standards are directly
applicable to “business associates” — persons or organizations, other than a member of a covered entity’s workforce, that
create, receive, maintain, or transmit protected health information on behalf of a covered entity for a function or activity
regulated by HIPAA. HIPAA authorizes the imposition of civil and criminal penalties against covered entities and business
associates. HIPAA permits state attorneys general to file civil actions for damages or injunctions in federal courts to
enforce the HIPAA and seek attorneys’ fees and costs associated with pursuing federal civil actions. HIPAA also imposes
requirements with respect to disclosures of protected health information for research purposes, such as clinical trials. In
addition, state laws, such as the California Consumer Privacy Act, govern the privacy and security of health information in
specified circumstances, many of which differ from each other in significant ways and may not be preempted by HIPAA.
In 2023, new state privacy laws will become effective in California, Colorado Connecticut, Utah, and Virginia, further
complicating privacy compliance efforts. In addition, more onerous foreign data privacy provisions may apply. For
instance, the EU General Data Protection Regulation imposes stricter rules on the processing of personal data than apply in
the United States and its provisions exclude the export of data relating to identifiable individuals to most countries,
including the United States, unless certain safeguards are in place.
In the United States, our activities are potentially subject to additional regulation by various federal, state and local
authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of HHS (e.g.,
the Office of Inspector General), the DOJ and individual U.S. Attorney offices within the DOJ, and state and local
governments. If a drug product is reimbursed by Medicare or Medicaid, pricing and rebate programs must comply with, as
applicable, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as well as the Medicaid rebate
requirements of the Omnibus Budget Reconciliation Act of 1990, or the OBRA, and the Veterans Health Care Act of 1992,
each as amended. Among other things, the OBRA requires drug manufacturers to calculate and report complex pricing
metrics used to determine rebates paid on prescription drugs to state Medicaid programs. Under the Veterans Health Care
Act, or VHCA, drug companies are required to offer “covered drugs” (including all drugs approved under an NDA) at no
more than a statutory ceiling price, calculated based on a manufacturer’s required price calculations, to four federal
agencies including the U.S. Department of Veterans Affairs and DoD, the Public Health Service. Also
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under the VHCA, manufacturers are required to offer drugs for sale at no more than a separate statutory ceiling price
calculated by the manufacturer to Public Health Service designated entities in order to participate in other federal funding
programs including Medicaid. Legislation subsequent to the VHCA has required that certain discounted prices under the
VHCA also be offered for specified DoD purchases for its TRICARE program via a rebate system. Participation under the
VHCA requires submission of pricing data and calculation of discounts and rebates pursuant to complex statutory
formulas, as well as the entry into government procurement contracts governed by the Federal Acquisition Regulation.
Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible
that some of our business activities could be subject to challenge under one or more of such laws. If our operations are
found to be in violation of any of the federal and state laws described above or any other governmental regulations that
apply to us, we may be subject to penalties, including criminal and significant civil monetary penalties, damages, fines,
imprisonment, exclusion from participation in government healthcare programs, injunctions, recall or seizure of products,
total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private “qui tam”
actions brought by individual whistleblowers in the name of the government, suspension or debarment prohibiting us from
participating in federal procurement and non-procurement transactions, including government contracts, and the
curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and
our results of operations. To the extent that any of our products are sold in a foreign country, we may be subject to similar
foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety
surveillance, anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments
or transfers of value to healthcare professionals.
In order to distribute products commercially, we must comply with state laws that require the registration of
manufacturers and wholesale distributors of pharmaceutical products in a state, including, in some states, manufacturers
and distributors who ship products into the state even if such manufacturers or distributors have no place of business within
the state. Several states have enacted legislation requiring pharmaceutical companies to, among other things, 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 specified physician prescribing data to pharmaceutical companies for use in sales
and marketing, and to prohibit other specified sales and marketing practices. Additionally, some states have enacted laws
that cap increases in prices charged for drugs in that state. All of our activities are potentially subject to federal and state
consumer protection and unfair competition laws.
In Europe, most countries have laws or (more commonly) codes of practice which broadly emulate US ‘sunshine laws’
and require companies to maintain and publish a record of transfers of value to healthcare professionals. These are in
addition to national anti-corruption laws similar to the FCPA — for instance the UK Bribery Act 2010 which has a wider
scope than the FCPA in many respects including in that it covers relevant decision makers in both the private and public
sectors and applies both domestically and internationally.
Human Capital
We believe that our success is largely dependent upon our ability to attract and retain qualified employees. As of
December 31, 2022, we had 17 employees (16 of which were full-time employees), in addition to several consultants or
independent contractors working for us. We are not party to any collective bargaining arrangements and consider our
relations with our employees to be good. Although we believe that the size of our current workforce is appropriate to
achieve our objectives, we may hire additional employees with specialized expertise as we continue to grow our business.
We believe that we have been successful to date in attracting skilled and experienced scientific and business professionals.
We strongly believe that our success depends, in part, on open and regular communication with employees to help
foster a high performing and engaged workforce. To help ensure that employees fully understand the Company’s long-
term strategy and annual goals and how their work contributes to the Company’s success, we utilize a variety of channels
to facilitate open and direct communication, including monthly all-employee meetings and regular ongoing update
communications.
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Our compensation philosophy is to pay for performance, which supports the Company’s business strategies, and offer
competitive compensation arrangements to attract and retain key individuals. The Company has established a
Compensation Committee of the Board of Directors which considers the impact of our corporate performance in
determining compensation for named executive officers, as well as each named executive officer’s individual performance,
macroeconomic conditions generally, and data from peer group companies.
Corporate Information
We were incorporated in Delaware in December 1998. Our principal executive offices are located at 12 Penns Trail,
Newtown, PA 18940 and our telephone number is (267) 759-3680. Our website address is www.onconova.com. The
information contained in, or that can be accessed through, our website is not part of this report.
ITEM 1A. RISK FACTORS
You should carefully consider the following risk factors together with the other information contained in this Annual
Report, including our financial statements and the related notes appearing in this report. We cannot assure you that any of
the events discussed in the risk factors below will not occur. If any of the following risks actually occur, they may materially
harm our business and our financial condition and results of operations. In this event, the market price of our securities
could decline and your investment could be lost. You should understand that it is not possible to predict or identify all such
risks. Consequently, you should not consider the following to be a complete discussion of all potential risks or
uncertainties.
Summary of Principal Risk Factors
● Our product development efforts may not be successful.
● Our future success is dependent primarily on the regulatory approval and commercialization of our product
candidates.
● The results of preclinical testing or earlier clinical studies are not necessarily predictive of future results. Any
product candidate we advance into clinical trials may not have favorable results in later-stage clinical trials or
receive regulatory approval.
● Clinical drug development involves a lengthy and expensive process with an uncertain outcome.
● Our product candidates may cause undesirable side effects or have other properties that could delay or prevent
their regulatory approval, limit the commercial profile of an approved label, or result in significant negative
consequences following any marketing approval.
● Failure to follow the FDA’s applicable regulatory requirements may result in enforcement action.
● Changes in product candidate manufacturing or formulation may result in additional costs or delay.
● Healthcare legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives,
may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product
candidates and affect the prices we may obtain.
● Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory
standards and requirements, which could cause significant liability for us and harm our reputation.
● We face substantial competition, which may result in others discovering, developing or commercializing products
before or more successfully than we do.
● If we breach our license agreements or fail to negotiate new agreements pertaining to our product candidates, we
could lose the ability to continue the development and potential commercialization of these product candidates.
● Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization
of any products that we may develop.
● We may engage in future business combinations or collaborations that could disrupt our business, cause dilution
to our stockholders and harm our financial condition and operating results.
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● We depend on information technology and computer systems to operate our business; our business and operations
would suffer in the event of any failures or interruptions of our computer system, such as a data breach or
cybersecurity incident.
● Climate change, environmental, social and governance and sustainability initiatives may result in regulatory or
structural industry changes that could require significant operational changes and expenditures, reduce demand
for the Company’s products and adversely affect our business, financial condition, and results of operations.
● Business disruptions could seriously harm our future revenues and financial condition and increase our costs and
expenses.
● Our future success depends on our ability to retain our executive officers and to attract, retain and motivate
qualified personnel.
● The COVID-19 pandemic could adversely impact our business, including our clinical trials, drug manufacturing
and nonclinical activities.
● Our recurring operating losses, negative cash flows from operations, and accumulated deficit raise substantial
doubt about our ability to continue as a going concern absent obtaining adequate new financings.
● The report of our independent registered accounting firm on our audited financial statements for the fiscal year
ended December 31, 2022 contains an explanatory paragraph relating to our ability to continue as a going
concern.
● We need to obtain additional funding to continue as a going concern; if we are unable to meet our needs for
additional funding in the future, we will be required to limit, scale back or cease operations.
● We have incurred significant losses since our inception and anticipate that we will continue to incur losses in the
future.
● We currently have no source of product revenue and may never become profitable.
● We need to obtain additional funding to further develop our products in future clinical trials and through
regulatory processes; if we are unable to meet our needs for additional funding in the future, we will be required
to limit, scale back or cease operations.
● Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to
relinquish rights to our technologies or product candidates.
● Adverse developments affecting financial institutions, companies in the financial services industry or the financial
services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance,
could adversely affect our operations and liquidity.
● Changes in United States and China relations, as well as relations with other countries, and/or regulations may
adversely impact our business, our operating results, our ability to raise capital and the market price of our shares.
● We rely on third parties to conduct our preclinical and clinical trials. If these third parties do not successfully
carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for
or commercialize our product candidates.
● If we lose our relationships with CROs, our drug development efforts could be delayed.
● We have limited experience manufacturing our product candidates on a large clinical or commercial scale and
have no manufacturing facility. We are dependent on third-party manufacturers for the manufacture of our
product candidates for clinical trials as well as on third parties for our supply chain, and if we experience
problems with any third parties, the manufacturing of our product candidates or products could be delayed.
● We could be required to incur significant expenses to perfect our intellectual property rights, and our intellectual
property rights may be inadequate to protect our competitive position. If we are unable to protect our intellectual
property rights, our competitive position could be harmed.
● We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive,
time consuming and unsuccessful.
● Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the
outcome of which would be uncertain and could harm our business.
● We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their
former employers.
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● We may not comply with the Nasdaq continued listing requirements. If we are unable to comply with the
continued listing requirements of the Nasdaq Capital Market, our Common Stock could be delisted, which could
affect our Common Stock's market price and liquidity and reduce our ability to raise capital.
● Our share price and the liquidity of our stock may be volatile and result in substantial losses to our stockholders.
● We may be subject to securities litigation, which is expensive and could divert management attention.
● Some provisions of our charter documents and Delaware law may have anti-takeover effects that could
discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders and may
prevent attempts by our stockholders to replace or remove our current management.
Risks Related to Our Business and Industry
Our product development efforts may not be successful.
The focus of our development efforts is currently on narazaciclib and oral rigosertib. Although, we believe that there
are opportunities for us to develop narazaciclib, our novel multi kinase inhibitor targeting CDK4/6 as well as other tyrosine
kinases, in indications such as endometrial cancer, metastatic breast cancer, mantle cell lymphoma and multiple myeloma,
and oral rigosertib in RAS mutated cancers, clinical drug development is expensive, can take many years to complete, and
its outcome is inherently uncertain. Even if our clinical development programs are successful, we may not be able to
successfully commercialize any product. There can be no assurance that our focus on narazaciclib and oral rigosertib will
be successful, and that we will be able to successfully develop a product candidate or, even if we do, that we will be able to
successfully commercialize such candidate.
Our future success is dependent primarily on the regulatory approval and commercialization of our product candidates.
Before obtaining regulatory approvals for the commercial sale of any product candidate for a target indication, we
must demonstrate with substantial evidence gathered in preclinical and well-controlled clinical studies and, with respect to
approval in the United States, to the satisfaction of the FDA, that the product candidate is safe and effective for use for that
target indication and that the manufacturing facilities, processes and controls are adequate. If we are unable to obtain
regulatory approval for our product candidates in one or more jurisdictions, we may not be able to obtain sufficient funding
or generate sufficient revenue to continue the development of our product candidates.
The results of preclinical testing or earlier clinical studies are not necessarily predictive of future results. Any product
candidate we advance into clinical trials may not have favorable results in later-stage clinical trials or receive
regulatory approval.
Encouraging results in preclinical testing and earlier clinical studies do not ensure that later clinical trials will generate
adequate data to demonstrate the efficacy and safety of an investigational drug. Additionally, mechanisms of action, studies
in small or single patient populations, and interim study results may not be predictive of later stage studies. The
development of a product for one indication may further impact its development for other indications. By example, our
phase III study of intravenous rigosertib for HR MDS did not meet its primary endpoints. It is possible that this may
impact how regulators or others view the development of rigosertib for alternative indications. If later-stage clinical trials
do not produce favorable results, our ability to achieve regulatory approval for any of our product candidates may be
adversely impacted.
Clinical drug development involves a lengthy and expensive process with an uncertain outcome.
We may experience delays in our ongoing or future clinical trials and we do not know whether planned clinical trials
will begin or enroll subjects on time, need to be redesigned or be completed on schedule, if at all. Regulatory authorities
may also find that our development programs do not support product approval. There can be no assurance that the FDA, an
IRB, or a comparable foreign regulatory authority will permit our clinical trials to commence and will not put clinical trials
of any of our product candidates on clinical hold in the future. Study results may also cause us to
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discontinue trials. Clinical trials may be delayed, suspended or prematurely terminated and development programs may not
be successful for a variety of reasons, including:
● delay or failure in reaching identifying, contracting with, and retaining contract research organizations, or CROs,
and clinical trial sites;
● delay or failure in recruiting and enrolling suitable subjects to participate in a trial and/or retaining subjects;
● failure to follow the study procedures or applicable regulatory requirements;
● negative or ambiguous study results;
● manufacturing or product quality issues;
● the need to conduct additional development work, including clinical trials;
● changes in governmental laws, regulations, policies, or administrative actions; and
● regulatory authority disagreements regarding the design or implementation of our clinical trials.
If we experience delays in the completion or termination of, any clinical trial of our product candidates, the
commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of
these product candidates will be delayed. In addition, any delays in completing our clinical trials will increase our costs,
slow down our product candidate development and approval process and jeopardize our ability to commence product sales
and generate revenues. In addition, many of the factors that could cause a delay in the commencement or completion of
clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their
regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences
following any marketing approval.
Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or
halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or
other comparable foreign regulatory authority.
As a result of undesirable side effects or safety or toxicity issues that we may experience in our clinical trials, we may
not receive approval to market any product candidates, which could prevent us from ever generating revenues or achieving
profitability. Results of our trials could reveal an unacceptably high severity and prevalence of side effects. In such an
event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us
to cease further development or deny approval of our product candidates for any or all targeted indications. These side
effects could affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product
liability claims. They could also result in restrictive labeling for any approved products.
Failure to follow the FDA’s applicable regulatory requirements may result in enforcement action.
If we or our third party contractors are not able to follow the FDA’s regulatory requirements, we or they may face
enforcement actions that may materially harm our business, including, but not limited to:
● warning letters or untitled letters or otherwise unacceptable inspectional findings;
● injunctions, penalties, fines, or debarment;
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● suspension any ongoing clinical studies, clinical holds, or regulatory authority refusal to approve marketing
applications;
● restrictions on operations, product seizure or detention, refusal to permit the import or export of products, or
product recalls; or
● adverse publicity.
Changes in product candidate manufacturing or formulation may result in additional costs or delay.
As product candidates are developed through preclinical studies to late-stage clinical trials towards approval and
commercialization, it is common that various aspects of the development program, such as manufacturing methods and
formulation, are altered along the way in an effort to optimize processes and results. During the course of a development
program, sponsors may also change the contract manufacturers used to produce the product candidates. Such changes carry
the risk that they will not achieve these intended objectives. Any of these changes could cause our product candidates to
perform differently and affect the results of clinical trials. Such changes may also require additional testing, FDA
notification, or FDA approval. This could delay completion of clinical trials; require the conduct of bridging clinical trials
or studies, or the repetition of one or more clinical trials; increase clinical trial costs; delay approval of our product
candidates; and jeopardize our ability to commence product sales and generate revenue.
Healthcare legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may
increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and
affect the prices we may obtain.
The regulations that govern, among other things, marketing approvals, coverage, pricing and reimbursement for new
drug products vary widely from country to country and our ability to commercialize any products will depend, in part, on
the extent to which coverage and adequate reimbursement for our products is available. In the United States and some
foreign jurisdictions, including the European Union, there have been a number of legislative and regulatory changes and
proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product
candidates, restrict or regulate post-approval activities, limit coverage and reimbursement or restrict the prices we may
charge including through payments of increased manufacturer rebates and penalties, and affect our ability to successfully
sell any product candidates for which we obtain marketing approval. Furthermore, in the United States private payors often
follow Medicare coverage policies and payment limitations in setting their own reimbursement rates. These and any
additional healthcare reform measures in the United States, the European Union and other potentially significant markets
could further constrain our business or limit the amounts that governments will pay for healthcare products and services,
which could result in additional pricing pressures.
States, in the US, have also enacted laws requiring pharmaceutical companies to, among other things, establish
marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing,
pricing, clinical trials and other activities, cap or regulate price increases, negotiate or pay increased supplemental rebates
and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing
specified physician prescribing data to pharmaceutical companies for use in sales and marketing, and to prohibit other
specified sales and marketing practices.
Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing
review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription
pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a
result, we might obtain marketing approval for a product candidate in a particular country, but then be subject to price
regulations that delay our commercial launch of the product, possibly for lengthy time periods, which could negatively
impact the revenues we are able to generate from the sale of the product in that particular country.
Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates even if
our product candidates obtain marketing approval. We cannot be sure that timely coverage and adequate
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reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level
of coverage and reimbursement will be.
Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory
standards and requirements, which could cause significant liability for us and harm our reputation.
We are exposed to the risk of employee fraud or other misconduct, including intentional failures to comply with FDA
regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA,
Centers for Medicare & Medicaid Services, or comparable foreign regulatory authorities, comply with manufacturing
standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations and similar
laws and regulations established and enforced by comparable foreign regulatory authorities, comply with the FDA’s laws
and regulations, report financial information or data accurately or disclose unauthorized activities to us. Employee
misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result
in regulatory sanctions and serious harm to our reputation. We have adopted a code of conduct for our directors, officers
and employees, but it is not always possible to identify and deter employee misconduct, and the precautions we take to
detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting
us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such
laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or
asserting our rights, those actions could have a significant impact on our business and results of operations, including the
imposition of significant fines or other sanctions.
We face substantial competition, which may result in others discovering, developing or commercializing products before
or more successfully than we do.
The development and commercialization of new drug products is highly competitive. We face competition with respect
to our current product candidates and will face competition with respect to any product candidates that we may seek to
develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and
biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that
currently market and sell products or are pursuing the development of products for the treatment of certain disease
indications for which we are developing our product candidates. For example, large pharmaceutical companies such as
Pfizer, Novartis, Eli Lilly successfully market commercialized CDK 4/6 inhibitors palbociclib, ribociclib and abemaciclib
and have done so for a number of years. More recently, G1 Therapeutics secured FDA approval of the CDK 4/6 triaciclib
for the prevention of myelosuppression following chemotherapy.
The approved CDK 4/6 inhibitor drugs palbociclib, ribociclib and abemaciclib are well established therapies or
products and are widely accepted by physicians, patients and third-party payors. By the time narazaciclib possibly is
approved in the future, insurers and other third-party payors may also encourage the use of generic products. This may
make it difficult for us to achieve market acceptance at desired levels in a timely manner to ensure viability of our business.
More established companies may have a competitive advantage over us due to their greater size, cash flows and
institutional experience. Compared to us, many of our competitors may have significantly greater financial, technical and
human resources.
If we breach our license agreements or fail to negotiate new agreements pertaining to our product candidates, we could
lose the ability to continue the development and potential commercialization of these product candidates.
If we fail to meet our obligations under our current license agreements or if we fail to negotiate future license
agreements, our rights under the licenses could be terminated, and upon the effective date of such termination, our right to
use the licensed technology would terminate. While we would expect to exercise all rights and remedies available to us,
including attempting to cure any breach by us, and otherwise seek to preserve our rights under the patents and other
technology licensed to us, we may not be able to do so in a timely manner, at an acceptable cost or at all. Any uncured,
material breach under the license agreement could result in our loss of exclusive rights and may lead to a complete
termination of our product development and any commercialization efforts for the applicable product candidates.
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Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any
products that we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical
trials and will face an even greater risk if we commercially sell any products that we may develop. Product liability claims
may be brought against us by subjects enrolled in our clinical trials, and patients, healthcare providers or others using,
administering or selling our products in third party studies, expanded access programs, or commercially, if we receive
product approval. If we cannot successfully defend ourselves against claims that our product candidates or products caused
injuries, the clinical development and commercialization of our product candidates could be adversely affected or
terminated and we could incur substantial liabilities.
We may engage in future business combinations or collaborations that could disrupt our business, cause dilution to our
stockholders and harm our financial condition and operating results.
While we currently have no specific plans to acquire any other specific businesses, we may, in the future, make
acquisitions of, or investments in, or otherwise engage in business combinations or collaborations with companies that we
believe have products or capabilities that are a strategic or commercial fit with our current product candidates and business
or otherwise offer opportunities for our company. In connection with these acquisitions or investments, we may: issue stock
that would dilute our existing stockholders’ percentage of ownership; incur debt and assume liabilities; and incur
amortization expenses related to intangible assets or incur large and immediate write-offs.
We may not be able to complete any future business combination or collaborations on favorable terms, if at all. If we
do complete a business combination or collaboration, we cannot assure you that it will ultimately strengthen our
competitive position or that it will be viewed positively by customers, financial markets or investors. Furthermore, future
business combinations could pose numerous additional risks to our operations, including: problems integrating the
businesses, products or technologies; increases to our expenses; the failure to discover undisclosed liabilities of an acquired
asset or transaction partner; diversion of management’s attention from their day-to-day responsibilities; and harm to our
operating results or financial condition.
We may not be able to complete any collaboration or business combination or effectively integrate the operations,
products or personnel gained through any such business combination.
We depend on information technology and computer systems to operate our business; our business and operations
would suffer in the event of any failures or interruptions of our computer system, such as a data breach or cybersecurity
incident.
Despite the implementation of security measures, our internal computer systems, and those of third parties on which
we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war and
telecommunication and electrical failures. Cybersecurity attacks are evolving and include, but are not limited to, malicious
software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions
in systems, misappropriation of our confidential or otherwise protected information, corruption of data. While we have not
experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause
interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the
loss of clinical trial data from completed, ongoing or planned clinical trials could result in delays in our regulatory approval
efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security
breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary
information, we could incur liability or damage to our reputation, and the further development of our product candidates
could be delayed.
Likewise, data privacy or security breaches by employees or others may pose a risk that sensitive data, including our
intellectual property, trade secrets or personal information of our employees, patients or other business partners may be
exposed to unauthorized persons or to the public. There can be no assurance that our efforts, or the efforts of our partners
and vendors, will prevent service interruptions, or identify breaches in our systems, that could adversely affect our business
and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal,
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business or reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us
against claims related to security breaches, cyberattacks and other related breaches.
Climate change, environmental, social and governance and sustainability initiatives may result in regulatory or
structural industry changes that could require significant operational changes and expenditures, reduce demand for the
Company’s products and adversely affect our business, financial condition, and results of operations.
Climate change, environmental, social and governance (ESG) and sustainability are a growing global movement.
Continuing political and social attention to these issues has resulted in both existing and pending international agreements
and national, regional and local legislation, regulatory measures, reporting obligations and policy changes. Also, there is
increasing societal pressure in some of the areas where we operate, to limit greenhouse gas emissions as well as other
global initiatives. These agreements and measures may require, or could result in future legislation, regulatory measures or
policy changes that would require operational changes or increase expenses.
Furthermore, increasing attention to climate change, ESG and sustainability has resulted in governmental
investigations, and public and private litigation, which could increase our costs or otherwise adversely affect our business
or results of operations. In addition, organizations that provide information to investors on corporate governance and
related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings
are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings may lead to
increased negative investor sentiment toward us, which could have a negative impact on the price of our securities and our
access to and costs of capital.
Any or all of these ESG and sustainability initiatives may result in significant operational changes and expenditures,
cause us reputational harm, and could materially adversely affect our business, financial condition, and results of
operations.
Business disruptions could seriously harm our future revenues and financial condition and increase our costs and
expenses.
Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods,
hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or
business interruptions, for which we are predominantly self-insured. The occurrence of any of these business disruptions
could seriously harm our operations and financial condition and increase our costs and expenses. We rely on third-party
manufacturers to produce our product candidates. Our ability to obtain clinical supplies of product candidates could be
disrupted if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption.
The ultimate impact on us, our significant suppliers and our general infrastructure of being consolidated in certain
geographical areas is unknown, but our operations and financial condition could suffer in the event of a major earthquake,
fire or other natural disaster.
Our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified
personnel.
We are highly dependent upon Steven Fruchtman, M.D., President and Chief Executive Officer, Mark Guerin, C.P.A.,
Chief Operating and Chief Financial Officer, and Mark Gelder, M.D., Chief Medical Officer, and our other executive
officers. Although we have employment agreements with the persons named above, these agreements are at-will and do not
prevent such persons from terminating their employment with us at any time. We do not maintain "key person" insurance
for any of our executives or other employees. The loss of the services of any of these persons could impede the
achievement of our research, development and commercialization objectives.
The COVID-19 pandemic could adversely impact our business, including our clinical trials, drug manufacturing and
nonclinical activities.
As the COVID-19 pandemic continues around the globe, we may experience disruptions that could severely impact
our business, clinical trials, drug manufacturing and nonclinical activities. These potential disruptions may include but
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are not limited to delays or difficulties in clinical site initiation and patient recruitment, patient withdrawals, postponement
of planned clinical or preclinical studies, redirection of site resources from studies, study modification, suspension, or
termination, the introduction of remote study procedures and modified informed consent procedures, study site changes,
direct delivery of investigational products to patient homes requiring state licensing, study deviations or noncompliance,
diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as
our clinical trial sites and hospital staff supporting the conduct of our clinical trials, delays in receiving approval from local
regulatory authorities to initiate our planned clinical trials, delays in obtaining supplies of our product candidate or other
materials that may be necessary for the conduct of our development program, delays in obtaining necessary inspections
from the FDA or other regulatory authorities, changing laws and regulations in responses to the COVID-19 pandemic, and
changes or delays in site monitoring. The foregoing may require that we consult with relevant review and ethics
committees, IRBs, and the FDA. The foregoing may also impact the integrity of our study data. The effects of the COVID-
19 pandemic may also increase the need for clinical trial patient monitoring and regulatory reporting of adverse effects.
Risks Related to Our Financial Position and Capital Needs
Our recurring operating losses, negative cash flows from operations, and accumulated deficit raise substantial doubt
about our ability to continue as a going concern absent obtaining adequate new financings.
Management has concluded that substantial doubt exists about our ability to continue as a going concern for the next
twelve months from the date of the financial statements included in this Annual Report on Form 10-K. As of December 31,
2022, we had cash and cash equivalents of $38.8 million and current liabilities of $8.0 million. We believe that we have
sufficient resources available to support our development activities and business operations and satisfy our obligations into
the first quarter of 2024. We do not have sufficient cash and cash equivalents as of the date of this Annual Report on Form
10-K to support our operations for at least the 12 months following the date that the financial statements are issued.
We will require substantial additional financing to fund our ongoing clinical trials and operations, and to continue to
execute our strategy. To alleviate the conditions that raise substantial doubt about our ability to continue as a going
concern, we plan to explore various dilutive and non-dilutive sources of funding, including equity financings, strategic
alliances, business development and other sources. The future success of the Company is dependent upon our ability to
obtain additional funding. There can be no assurance, however, that we will be successful in obtaining such funding in
sufficient amounts, on terms acceptable to us, or at all. The failure to obtain sufficient capital on acceptable terms when
needed would have a material adverse effect on our business, results of operations, and financial condition. Accordingly,
we have concluded that substantial doubt exists with respect to our ability to continue as a going concern within one year
after the date that these financial statements are issued.
The report of our independent registered accounting firm on our audited financial statements for the fiscal year ended
December 31, 2022 contains an explanatory paragraph relating to our ability to continue as a going concern.
The auditor’s opinion on our audited financial statements for the year ended December 31, 2022 includes an
explanatory paragraph stating that we have incurred recurring losses from operations that raise substantial doubt about our
ability to continue as a going concern for the next twelve months from the date of the financial statements included in this
Annual Report on Form 10-K. While we believe that we will be able to raise the capital we need to continue our
operations, there can be no assurances that we will be successful in these efforts or will be able to resolve our liquidity
issues or eliminate our operating losses. If we are unable to obtain sufficient funding, we would need to significantly
reduce our operating plans and curtail some or all of our development efforts. Accordingly, our business, prospects,
financial condition, and results of operations will be materially and adversely affected, and we may be unable to continue
as a going concern. If we seek additional financing to fund our business activities in the future and there remains
substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to
provide additional funding on commercially reasonable terms or at all.
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We need to obtain additional funding to continue as a going concern; if we are unable to meet our needs for additional
funding in the future, we will be required to limit, scale back or cease operations.
Our consolidated financial statements for the year ended December 31, 2022 have been prepared assuming we will
continue to operate as a going concern. However, due to our ongoing operating losses and our accumulated deficit,
management has concluded that there is substantial doubt about our ability to continue as a going concern for the next
twelve months from the date of the financial statements included in this Annual Report on Form 10-K. Because we
continue to experience net operating losses, our ability to continue as a going concern is subject to our ability to
successfully raise sufficient additional capital, through future financings or through strategic and collaborative
arrangements. If we are unable to obtain additional funding, we may not be able to continue as a going concern.
We do not have the funding resources necessary to carry out all of our proposed operating activities. We will need to
obtain additional financing in the future in order to fully fund rigosertib or any other product candidates through the
regulatory approval process. Accordingly, we may delay or pause our planned clinical trials, until we secure adequate
additional funding. If we seek to proceed with a clinical trial without additional funding, we may receive questions or
comments from the FDA, fail to obtain IRB approval, or find it more difficult to enroll patients in the trial. We have scaled
down our operations in order to reduce spending on general and administrative functions, research and development, and
other clinical trials, but by themselves, those measures may not be sufficient to address our funding needs.
Our future capital requirements will depend on many factors, including:
● timing and success of our clinical trials;
● continued progress of and increased spending related to our research and development activities;
● conditions in the capital markets and the biopharmaceutical industry, particularly with respect to raising capital or
entering into strategic arrangements;
● progress with preclinical experiments and clinical trials, including regulatory approvals necessary for
advancement and continuation of our development programs;
● changes in regulatory requirements and guidance of the FDA and other regulatory authorities, which may require
additional clinical trials to evaluate safety and/or efficacy, and thus have significant impacts on our timelines, cost
projections, and financial requirements;
● ongoing general and administrative expenses related to our reporting obligations under the Exchange Act;
● cost, timing, and results of regulatory reviews and approvals;
● costs of any legal proceedings, claims, lawsuits and investigations;
● success, timing, and financial consequences of any existing or future collaborative, licensing and other
arrangements that we may establish, including potential granting of licenses to one or more of our programs in
various territories, or otherwise monetizing one or more of our programs;
● cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
● costs of commercializing any of our product candidates;
● technological and market developments;
● compliance with Nasdaq's continued listing requirements;
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● cost of manufacturing development; and
● timing and volume of sales of products for which we obtain marketing approval.
These factors could result in variations from our projected operating and liquidity requirements. Additional funds may
not be available when needed, or, if available, we may not be able to obtain such funds on terms acceptable to us. If
adequate funds are unavailable, we may be required, among other things, to:
● delay, reduce the scope of or eliminate one or more of our research or development programs;
● license rights to technologies, product candidates or products at an earlier stage or for indications or territories
than otherwise would be desirable, or on terms that are less favorable to us than might otherwise be available;
● obtain funds through arrangements that may require us to relinquish rights to product candidates or products that
we would otherwise seek to develop or commercialize by ourselves; or
● further reduce or cease operations.
We have incurred significant losses since our inception and anticipate that we will continue to incur losses in the future.
We are a clinical-stage biopharmaceutical company. Investment in biopharmaceutical product development is highly
speculative because it entails substantial upfront capital expenditures and significant risk that a product candidate could fail
to gain regulatory approval or become commercially viable. We do not have any products approved by regulatory
authorities for marketing and have not generated any revenue from product sales to date, and we continue to incur
significant research, development and other expenses related to our ongoing operations. As a result, we are not profitable
and have incurred losses in every reporting period since our inception in 1998. For the years ended December 31, 2022,
and 2021, we reported net losses of $19.0 million and $16.2 million, respectively, and we had an accumulated deficit of
$463.7 million at December 31, 2022.
We expect to continue to incur significant expenses and operating losses for the foreseeable future. These losses may
increase as we continue the research and development of, and seek regulatory approvals for, our product candidates, and
potentially begin to commercialize any products that may achieve regulatory approval. We may encounter unforeseen
expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of
our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues.
If any of our product candidates fail in clinical trials or do not gain regulatory approval, or if approved, fail to achieve
market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to
sustain profitability in subsequent periods.
We currently have no source of product revenue and may never become profitable.
To date, we have not generated any revenues from commercial product sales. Our ability to generate revenue from
product sales and achieve profitability will depend upon our ability to successfully commercialize products, including any
of our current product candidates, or other product candidates that we may in-license or acquire in the future. Even if we
are able to successfully achieve regulatory approval for these product candidates, we do not know when any of these
products will generate revenue from product sales for us, if at all.
In addition, because of the numerous risks and uncertainties associated with product development, including that our
product candidates may not advance through development or achieve the endpoints of applicable clinical trials, we are
unable to predict the timing or amount of increased expenses, or when or if we will be able to achieve or maintain
profitability. Even if we are able to complete the development and regulatory process for any product candidates, we
anticipate incurring significant costs associated with commercializing these products. Even if we are able to generate
revenues from the sale of our products, we may not become profitable and may need to obtain additional funding to
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continue operations. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may
be unable to continue our operations at planned levels and be forced to reduce or suspend our operations.
We need to obtain additional funding to further develop our products in future clinical trials and through regulatory
processes; if we are unable to meet our needs for additional funding in the future, we will be required to limit, scale
back or cease operations.
Our ability to successfully raise sufficient additional capital, through future financings or through strategic and
collaborative arrangements will be necessary to carry out all of our proposed future operating activities. We will need to
obtain additional financing in the future in order to fully fund product candidates through the regulatory approval process.
Our future capital requirements will depend on many factors, which could result in variations from our projected
operating and liquidity requirements. Additional funds may not be available when needed, or, if available, we may not be
able to obtain such funds on terms acceptable to us. If adequate funds are unavailable, we may be required, among other
things, to: delay, reduce the scope of or eliminate one or more of our research or development programs; license rights to
technologies, product candidates or products at an earlier stage or for indications or territories than otherwise would be
desirable, or on terms that are less favorable to us than might otherwise be available; obtain funds through arrangements
that may require us to relinquish rights to product candidates or products that we would otherwise seek to develop or
commercialize by ourselves; or further reduce or cease operations.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to
relinquish rights to our technologies or product candidates.
Until we can generate substantial revenue from product sales, if ever, we expect to seek additional capital through a
combination of private and public equity offerings, debt financings, strategic collaborations and alliances and licensing
arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the
ownership interests of existing stockholders will be diluted, and the terms may include liquidation or other preferences that
adversely affect the rights of existing stockholders. Debt financing, if available, may involve agreements that include
restrictive covenants limiting our ability to take important actions, such as incurring additional debt, making capital
expenditures or declaring dividends. If we raise additional funds through strategic collaborations and alliances or licensing
arrangements with third parties, which may include existing collaboration partners, we may have to relinquish valuable
rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us. If we are unable to
raise additional funds through equity or debt financing when needed, we may be required to delay, limit, reduce or
terminate our product development or commercialization efforts or grant rights to develop and market product candidates
or formulations that we would otherwise prefer to develop and market ourselves.
Adverse developments affecting financial institutions, companies in the financial services industry or the financial
services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could
adversely affect our operations and liquidity.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect
financial institutions or other companies in the financial services industry or the financial services industry generally, or
concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity
problems. For example, on March 10, 2023, Silicon Valley Bank, (SVB), was closed by the California Department of
Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or the FDIC, as receiver.
As of March 10, 2023, we had nearly all of our cash and cash equivalent balances in segregated custodial accounts held by
U.S. Bank for which SVB Asset Management is the advisor. Although a statement by the U.S. Department of the Treasury,
the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one
business day following the date of closure and we and other depositors with SVB received such access on March 13, 2023,
uncertainty and liquidity concerns in the broader financial services industry remain. There is no guarantee that the U.S.
Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event
of the closure of other banks or financial institutions in a timely fashion or at all.
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Changes in United States and China relations, as well as relations with other countries, and/or regulations may
adversely impact our business, our operating results, our ability to raise capital and the market price of our shares.
The US government, including the SEC, has made statements and taken certain actions that led to changes to US and
international relations, and will impact companies with connections to the United States or China, including imposing
several rounds of tariffs affecting certain products manufactured in China, imposing certain sanctions and restrictions in
relation to China and issuing statements indicating enhanced review of companies with significant China-based operations.
It is unknown whether and to what extent new legislation, executive orders, tariffs, laws or regulations will be adopted, or
the effect that any such actions would have on companies with significant connections to the U.S. or to China, our industry
or on us. Any unfavorable government policies on cross-border relations and/or international trade, including increased
scrutiny on companies with significant China-based operations, capital controls or tariffs, may affect our ability to raise
capital and the market price of our shares.
If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements
are renegotiated or if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tension, such
changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise
capital and the market price of our shares.
Risks Related to Our Dependence on Third Parties
We rely on third parties to conduct our preclinical and clinical trials. If these third parties do not successfully carry out
their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or
commercialize our product candidates.
We have relied upon and plan to continue to rely upon third-party CROs to monitor and manage data for our ongoing
preclinical and clinical programs, as well as clinical trial sites for the conduct of our clinical trials. There is no guarantee
that we will be able to maintain the relationships with these third parties, that we will be able to enter into additional
relationships, or that we will be able to find replacement sites or CROs should any of our agreements terminate. We rely on
these parties for execution of our preclinical and clinical trials, and we control only some aspects of their activities.
Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable
protocol and legal, regulatory and scientific standards, and our reliance on the CROs and sites does not relieve us of our
regulatory responsibilities. We also rely on third parties to assist in conducting our preclinical studies in accordance with
Good Laboratory Practices, or GLP, and the Animal Welfare Act requirements. We, our clinical trial sites, and our CROs
are required to comply with federal regulations and current GCPs, which are international standards meant to protect the
rights and health of patients that are enforced by the FDA, the Competent Authorities of the Member States of the
European Economic Area and comparable foreign regulatory authorities for all of our products in clinical development.
Regulatory authorities enforce GCP through periodic inspections of trial sponsors, principal investigators and trial sites. If
we or any of our sites or CROs fail to comply with applicable GCP, the clinical data generated in our clinical trials may be
deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical
trials before approving our marketing applications. We or they may also face regulatory enforcement. We cannot assure
you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical
trials comply with GCP requirements. In addition, our clinical trials must be conducted with product produced under
cGMP requirements. Failure to comply with these regulations may require us to repeat preclinical and clinical trials, which
would delay the regulatory approval process. We may also face liability and/or regulatory enforcement action should any of
the third parties that we rely upon fail to comply with legal and/or regulatory requirements.
Our CROs and the employees at clinical sites are not our employees, and except for remedies available to us under our
agreements with such CROs and sites, we cannot control whether or not they devote sufficient time and resources to our
ongoing clinical, nonclinical and preclinical programs. If CROs or sites do not successfully carry out their contractual
duties or obligations or meet expected deadlines or if the quality or accuracy of the clinical data they obtain is
compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical
trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or
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successfully commercialize our product candidates. As a result, our results of operations and the commercial prospects for
our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.
Because we have relied on third parties, our internal capacity to perform these functions is limited. Outsourcing these
functions involves risk that third parties may not perform to our standards, may not produce results in a timely manner or
may fail to perform at all. In addition, the use of third-party service providers requires us to disclose our proprietary
information to these parties, which could increase the risk that this information will be misappropriated. We currently have
a small number of employees, which limits the internal resources we have available to identify and monitor our third-party
providers. To the extent we are unable to identify and successfully manage the performance of third-party service providers
in the future, our business may be adversely affected. Though we carefully manage our relationships with our CROs and
clinical trial sites, there can be no assurance that we will not encounter challenges or delays in the future or that these
delays or challenges will not have a material adverse impact on our business, financial condition and prospects.
If we lose our relationships with CROs, our drug development efforts could be delayed.
We rely on third-party vendors and CROs for preclinical studies and clinical trials related to our drug development
efforts. Switching or adding additional CROs would involve additional cost and requires management time and focus. Our
CROs have the right to terminate their agreements with us in the event of an uncured material breach. In addition, some of
our CROs have an ability to terminate their respective agreements with us if it can be reasonably demonstrated that the
safety of the subjects participating in our clinical trials warrants such termination, if we make a general assignment for the
benefit of our creditors or if we are liquidated. We may also terminate a CRO for a number of reasons. Identifying,
qualifying and managing performance of third-party service providers can be difficult, time consuming and cause delays in
our development programs. In addition, there is a natural transition period when a new CRO commences work and the new
CRO may not provide the same type or level of services as the original provider. If any of our relationships with our third-
party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially
reasonable terms.
We have limited experience manufacturing our product candidates on a large clinical or commercial scale and have no
manufacturing facility. We are dependent on third-party manufacturers for the manufacture of our product candidates
for clinical trials as well as on third parties for our supply chain, and if we experience problems with any third parties,
the manufacturing of our product candidates or products could be delayed.
We do not own or operate facilities for the manufacture of our product candidates. We currently have no plans to build
our own clinical or commercial scale manufacturing capabilities. We currently rely on a single source CMO, for the
chemical manufacture of active pharmaceutical ingredient for each of our product candidates. To meet our projected needs
for clinical supplies to support our activities through regulatory approval and commercial manufacturing, the CMOs with
whom we currently work will need to increase the scale of production. We may need to identify additional CMOs for
continued production of supply for our product candidates. In addition, regulatory authorities enforce cGMP through
periodic inspections and remote regulatory assessments of active pharmaceutical ingredient (API) and drug product
manufacturing sites, quality control contract laboratories and distribution centers. If we or our CMO fail to comply with
applicable cGMP, the manufacturing data generated and subsequent API lots and drug product batches in our supply chain
may be deemed unreliable. Clinical trials using the product candidate may also be deemed to be unreliable. As such, the
FDA or comparable foreign regulatory authorities may require us to perform additional API and drug product
manufacturing before continuing clinical trials or approving our marketing applications, may require us to conduct
additional studies, and any such deficient product we supply to any collaboration partner may subject us to certain
obligations under relevant agreements. We or our contractors may also face enforcement actions. We have not yet qualified
alternate suppliers in the event the current CMOs we utilize are unable to scale production, or if we otherwise experience
any problems with them. By example, our third party manufacturers may not be able to obtain sufficient quantities of any
necessary supplies such as due to changing trade policies or supply shortages. Although alternative third-party suppliers
with the necessary manufacturing and regulatory expertise and facilities exist, as we have experienced with respect to our
existing CMOs, it could be expensive and take a significant amount of time to arrange for alternative suppliers. If we are
unable to arrange for alternative third-party manufacturing sources, or to do so
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on commercially reasonable terms or in a timely manner, we may not be able to complete development of our product
candidates, or market or distribute them.
Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product
candidates or products ourselves, including reliance on the third party for regulatory compliance and quality assurance, the
possibility of breach of the manufacturing agreement by the third party because of factors beyond our control, including a
failure to synthesize and manufacture our product candidates or any products we may eventually commercialize in
accordance with our specifications, and the possibility of termination or nonrenewal of the agreement by the third party,
based on its own business priorities, at a time that is costly or damaging to us. In addition, the FDA and other regulatory
authorities require that our product candidates and any products that we may eventually commercialize be manufactured
according to cGMP and similar foreign standards. Any failure by our third-party manufacturers to comply with cGMP or
failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a
timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of our product candidates. In
addition, such failure could be the basis for the FDA to issue a warning letter, withdraw approvals for product candidates
previously granted to us, or take other regulatory or legal action, including recall or seizure of outside supplies of the
product candidate, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve
pending applications or supplemental applications, detention of product, refusal to permit the import or export of products,
injunction, or imposing civil and criminal penalties. The manufacturing facilities that we use must also be approved by the
FDA under a pre-approval inspection. If the facilities cannot pass these inspections, the FDA will not approve our
marketing application. These manufacturing facilities will further be subject to continuing regulatory oversight and
inspection, and, thus, they must continue to expend time and resources to maintain regulatory compliance.
Risks Related to Our Intellectual Property
We could be required to incur significant expenses to perfect our intellectual property rights, and our intellectual
property rights may be inadequate to protect our competitive position. If we are unable to protect our intellectual
property rights, our competitive position could be harmed.
We depend on our ability to protect our proprietary technology. We rely on trade secret, patent, copyright and
trademark laws, and confidentiality, licensing and other agreements with employees and third parties, all of which offer
only limited protection. Our commercial success will depend in large part on our ability to obtain and maintain patent
protection in the United States and other countries with respect to our proprietary technology and products. Where we have
the right to do so under our license agreements, we seek to protect our proprietary position by filing patent applications in
the United States and abroad related to our novel technologies and products that are important to our business. The patent
positions of biotechnology and pharmaceutical companies generally are highly uncertain, involve complex legal and
factual questions and have in recent years been the subject of much litigation. As a result, the issuance, scope, validity,
enforceability and commercial value of our patents, including those patent rights licensed to us by third parties, are highly
uncertain.
The steps we have taken to protect our proprietary rights may not be adequate to preclude misappropriation of our
proprietary information or infringement of our intellectual property rights, both inside and outside the United States. The
rights already granted under any of our currently issued patents and those that may be granted under future issued patents
may not provide us with the proprietary protection or competitive advantages we are seeking. If we are unable to obtain
and maintain patent protection for our technology and products, or if the scope of the patent protection obtained is not
sufficient, our competitors could develop and commercialize technology and products similar or superior to ours, and our
ability to successfully commercialize our technology and products may be adversely affected.
With respect to patent rights, we do not know whether any of the pending patent applications for any of our licensed
compounds will result in the issuance of patents that protect our technology or products, or if any of our issued patents will
effectively prevent others from commercializing competitive technologies and products. Our pending applications cannot
be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues
from such applications. Further, the examination process may require us or our licensor to narrow the claims for our
pending patent applications, which may limit the scope of patent protection that may be obtained if these
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applications issue. Because the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability,
issued patents that we own or have licensed from third parties may be challenged in the courts or patent offices in the
United States and abroad. Such challenges may result in the loss of patent protection, the narrowing of claims in such
patents or the invalidity or unenforceability of such patents, which could limit our ability to stop others from using or
commercializing similar or identical technology and products, or limit the duration of the patent protection for our
technology and products. Protecting against the unauthorized use of our patented technology, trademarks and other
intellectual property rights is expensive, difficult and may in some cases not be possible. In some cases, it may be difficult
or impossible to detect third-party infringement or misappropriation of our intellectual property rights, even in relation to
issued patent claims, and proving any such infringement may be even more difficult.
Even if patents are granted that cover commercially-valuable compounds, we may decide to allow such patents to
lapse, or if in-licensed, return the patents to the licensor. The effects of doing so are uncertain. In the case of returning
granted patents to a licensor, we may encounter a scenario in which we need the patents in the future and are unable to
obtain a new license to such patents on commercially-reasonable terms or at all. The licensor may license the returned
patents to a competitor, who may then enforce the patents against us. In the first quarter of 2023, we returned a portion of
the patents that we in-licensed from Temple University back to Temple. The long-term economic effects of doing so are
uncertain.
We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time
consuming and unsuccessful.
Competitors may infringe our patents or misappropriate or otherwise violate our intellectual property rights. To
counter infringement or unauthorized use, litigation may be necessary in the future to enforce or defend our intellectual
property rights, to protect our trade secrets or to determine the validity and scope of our own intellectual property rights or
the proprietary rights of others. This can be expensive and time consuming. Many of our current and potential competitors
have the ability to dedicate substantially greater resources to defend their intellectual property rights than we can.
Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our
intellectual property. Litigation could result in substantial costs and diversion of management resources. In addition, in an
infringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or a court
may 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, held unenforceable or interpreted narrowly. 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 during this type of litigation.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the
outcome of which would be uncertain and could harm our business.
Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market
and sell our product candidates, and to use our proprietary technologies without infringing the proprietary rights of third
parties. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual
property rights with respect to our products and technology, including interference or derivation proceedings before the
USPTO. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in
the future. If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license
from such third party to continue developing and commercializing our products and technology. However, we may not be
able to obtain any required license on commercially reasonable terms or at all. 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. We could be forced,
including by court order, to cease commercializing the infringing technology or product. In addition, in any such
proceeding or litigation, we could be found liable for monetary damages. A finding of infringement could prevent us from
commercializing our product candidates or force us to cease some of our business operations, which could materially harm
our business. Any claims by third parties that we have misappropriated their confidential information or trade secrets could
have a similar negative impact on our business.
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We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former
employers.
Many of our employees, including our senior management, were previously employed at other biotechnology or
pharmaceutical companies, including our competitors or potential competitors. Some of these employees, including each
member of our senior management, executed proprietary rights, non-disclosure and non-competition agreements in
connection with such previous employment. Although we try to ensure that our employees do not use the proprietary
information or know-how of others in their work for us, we may be subject to claims that we or these employees have used
or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former
employer.
Risks Related to Ownership of Our Common Stock and Common Stock Warrants
We may not be able to comply with the Nasdaq continued listing requirements. If we are unable to regain compliance
with the continued listing requirements of the Nasdaq Capital Market, our Common Stock could be delisted, which
could affect our Common Stock's market price and liquidity and reduce our ability to raise capital.
We are required to meet certain qualitative and financial tests to maintain the listing of our securities on The Nasdaq
Capital Market. As of March 27, 2023, we were not in compliance with the Nasdaq continued listing requirements related
to minimum bid price.
On March 28, 2023, we received a letter from The Nasdaq Capital Market (“Nasdaq”) indicating that we failed to
comply with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2). Nasdaq Listing Rule 5550(a) (2)
requires that companies listed on Nasdaq maintain a minimum closing bid price of at least $1.00 per share.
Under Nasdaq Listing Rule 5810(c)(3)(A), we have a 180 calendar day grace period, or until September 25, 2023, to
regain compliance by meeting the continued listing standard. The continued listing standard will be met if the Company’s
common stock has a minimum closing bid price of at least $1.00 per share for a minimum of ten consecutive business days
during the 180 calendar day grace period.
If we are not in compliance by September 25, 2023, we may be afforded a second 180 calendar day period to regain
compliance. To qualify, we would be required to meet the continued listing requirement for market value of publicly held
shares and all other initial listing standards for The Nasdaq Capital Market, except for the minimum bid price requirement.
In addition, we would be required to notify Nasdaq of our intention to cure the minimum bid price deficiency during the
second compliance period, by effecting a reverse stock split, if necessary.
If we do not regain compliance within the allotted compliance period(s), including any extensions that may be granted
by Nasdaq, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. At that time, we may
appeal the Nasdaq Staff’s determination to a Nasdaq Hearings Panel.
We intend to monitor the closing bid price of the Company’s common stock and consider our available options to
resolve the noncompliance with the minimum bid price requirement.
There can be no assurance that we will be able to regain compliance with the minimum bid price requirement or will
otherwise be in compliance with other Nasdaq listing criteria.
If we are unable to maintain compliance with the continued listing requirements of the Nasdaq Capital Market, our
Common Stock could be delisted, making it could be more difficult to buy or sell our securities and to obtain accurate
quotations, and the price of our securities could suffer a material decline. Delisting could also impair our ability to raise
capital.
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Our share price and the liquidity of our stock may be volatile and result in substantial losses to our stockholders.
The trading price of our common stock is highly volatile and could be subject to wide fluctuations in response to
various factors, some of which are beyond our control. In addition, the stock market in general, and pharmaceutical and
biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may
negatively affect the market price of our common stock, regardless of our actual operating performance. The realization of
any of these risks or any of a broad range of other risks could have a dramatic and material adverse impact on the market
price of our common stock.
We may be subject to securities litigation, which is expensive and could divert management attention.
In the past companies that have experienced volatility in the market price of their stock have been subject to 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.
Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an
acquisition of us by others, even if an acquisition would be beneficial to our stockholders and may prevent attempts by
our stockholders to replace or remove our current management.
Provisions in our Tenth Amended and Restated Certificate of Incorporation, as amended, or Certificate of
Incorporation, and Amended and Restated Bylaws, as well as provisions of Delaware law, could make it more difficult for
a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, or remove
our current management. These include provisions that will:
● permit our board of directors to issue up to 5,000,000 shares of preferred stock, with any rights, preferences and
privileges as they may designate (as of February 28, 2023, we had no shares of preferred stock issued and
outstanding);
● provide that all vacancies on our board of directors, including as a result of newly created directorships, may,
except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even
if less than a quorum;
● require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting
of stockholders and not be taken by written consent;
● provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates
for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify
requirements as to the form and content of a stockholder’s notice;
● not provide for cumulative voting rights, thereby allowing the holders of a majority of the shares of common
stock entitled to vote in any election of directors to elect all of the directors standing for election; and
● provide that special meetings of our stockholders may be called only by the board of directors or by such person
or persons requested by a majority of the board of directors to call such meetings.
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, who are responsible
for appointing the members of our management. Because we are incorporated in Delaware, we are governed by the
provisions of Section 203 of the Delaware General Corporation Law, which may discourage, delay or prevent someone
from acquiring us or merging with us whether or not it is desired by or beneficial to our stockholders. Under Delaware law,
a corporation may not, in general, engage in a business combination with any holder of 15% or more of
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its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has
approved the transaction. Any provision of our amended and restated certificate of incorporation or amended and restated
bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our
stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors
are willing to pay for our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our corporate headquarters is located in Newtown, Pennsylvania, where we lease short-term flexible office space. We
believe that suitable additional or alternative space would be available on commercially reasonable terms if required in the
future.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any legal proceedings and we are not aware of any such proceedings contemplated by
government authorities.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
PART II
Market Information
Our common stock is listed under the symbol ONTX on the Nasdaq Capital Market.
Stockholders
As of February 28, 2023, there were approximately 97 holders of record for shares of our common stock. This does not
reflect beneficial stockholders who held their common stock in “street” or nominee name through brokerage firms.
Securities Authorized for Issuance Under Equity Compensation Plans
Information regarding securities authorized for issuance under the Company’s equity compensation plans is contained
in Part III, Item 11 of this Annual Report.
Dividend Policy
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available
funds and any future earnings to support our operations and finance the growth and development of our business. We do
not intend to pay cash dividends on our common stock for the foreseeable future.
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
with our consolidated financial statements and the related notes and other financial information 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 related financing, includes
forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this
Annual Report for a discussion of important factors that could cause actual results to differ materially from the results
described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage biopharmaceutical company focused on discovering and developing novel products for patients
with cancer. We have proprietary molecularly targeted agents designed to disrupt specific cellular pathways that are
important for cancer cell proliferation. We believe that the product candidates in our pipeline have the potential to be
efficacious in a variety of cancers with unmet medical need. We have the following two clinical-stage programs: 1.
narazaciclib (ON 123300), a multi-targeted kinase inhibitor in solid tumors and hematological malignancies as a single
agent or in combination with other anti-cancer therapies; and 2. rigosertib administered alone or in combination for the
treatment of various cancers. We are currently evaluating potential compounds for in-licensing opportunities.
We were incorporated in Delaware in December 1998 and commenced operations in January 1999. Our operations to
date have included our organization and staffing, business planning, raising capital, in-licensing technology from research
institutions, identifying potential product candidates, developing product candidates and building strategic alliances, as
well as undertaking preclinical studies and clinical trials of our product candidates.
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Since commencing operations, we have dedicated a significant portion of our resources to the development of our
clinical-stage product candidates, particularly narazaciclib and rigosertib. We incurred research and development expenses
of $11.4 million and $7.3 million during the years ended December 31, 2022 and 2021, respectively. We anticipate that a
significant portion of our operating expenses will continue to be related to research and development as we continue to
advance narazaciclib and our other programs.
In January 2021, we closed on an offering of common stock. We issued 1,303,408 shares of common stock and net
proceeds were approximately $8.5 million. In February 2021, we closed on an offering of common stock. We issued
1,916,667 shares of common stock and net proceeds were approximately $26.7 million. In September 2021, we closed on
an offering of common stock. We issued 5,000,000 shares of common stock and net proceeds were approximately $19.5
million.
In August 2021, we entered into an at-the-market equity distribution agreement for the sale of up to $25.0 million of
common stock. Through September 30, 2021, we sold 109,523 shares under the agreement and net proceeds were
approximately $0.5 million. There were no other sales during the years ended December 31, 2022 and 2021.
Our net losses were $19.0 million and $16.2 million for the years ended December 31, 2022 and 2021, respectively. As
of December 31, 2022, we had an accumulated deficit of $463.7 million. We expect to incur significant expenses and
operating losses for the foreseeable future as we continue the development and clinical trials of, and seek regulatory
approval for, our product candidates, even if milestones under our license and collaboration agreements may be met.
As of December 31, 2022 we had $38.8 million in cash and cash equivalents. We believe that our cash and cash
equivalents will be sufficient to fund our ongoing trials and operations into the first quarter of 2024; however, based on
current projections, we do not have sufficient cash and cash equivalents as of the date of this Annual Report on Form 10-K
to support our operations for at least the 12 months following the date that the financial statements are issued.
Accordingly, substantial doubt exists with respect to our ability to continue as a going concern within one year after the
date that these financial statements are issued.
Financial Overview
Revenue
During the years ended December 31, 2022 and 2021, our revenues were derived exclusively from activities conducted
in accordance with our collaboration arrangement with SymBio.
We have not generated any revenue from commercial product sales. In the future, if any of our product candidates
currently under development are approved for commercial sale in the United States or other territories where we have
retained commercialization rights, we may generate revenue from product sales, or alternatively, we may choose to select a
collaborator to commercialize our product candidates in these markets.
We are recognizing the $7.5 million upfront payment received in 2011 under the SymBio collaboration agreement as
revenue on a straight-line basis through December 2037, reflecting our estimate of when we will complete our obligations
under the agreement. For the years ended December 31, 2022 and 2021, we recognized revenues of $226,000 and
$226,000, respectively, under the SymBio collaboration agreement. In addition, we recognized revenues of $0 and $0 for
the years ended December 31, 2022 and 2021, respectively, related to the supply agreement.
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Operating Expenses
The following table summarizes our operating expenses for the years ended December 31, 2022 and 2021:
General and administrative
Research and development
Total operating expenses
General and Administrative Expenses
2022
$ 8,447,000
2021
$ 9,425,000
11,406,000
7,297,000
$
19,853,000
$
16,722,000
General and administrative expenses consist principally of salaries and related costs for executive and other
administrative personnel, including stock-based compensation and travel expenses. Other general and administrative
expenses include facility-related costs, communication expenses, insurance, board of directors expenses and professional
fees for legal, patent review, consulting and accounting services.
We anticipate that our general and administrative expenses will remain consistent in the short-term, but would increase
in the future with the continued research and development and potential commercialization of our product candidates.
These increases will likely include increased costs for insurance, costs related to the hiring of additional personnel and
payments to outside consultants among other expenses. Additionally, if and when we believe a regulatory approval of a
product candidate appears likely, we anticipate an increase in payroll and expense as a result of our preparation for
commercial operations, especially as it relates to the sales and marketing of our product candidates.
Research and Development Expenses
Our research and development expenses consist primarily of costs incurred for the development of our product
candidates, which include:
● employee-related expenses, including salaries, benefits, travel and stock-based compensation expense;
● expenses incurred under agreements with CROs and investigative sites that conduct our clinical trials and
preclinical studies;
● the cost of acquiring, developing and manufacturing clinical trial materials;
● direct expenses for maintenance of research equipment, clinical trial insurance and other supplies; and
● costs associated with preclinical activities and regulatory operations.
Research and development costs are expensed as incurred. License fees and milestone payments we make related to in-
licensed products and technology are expensed if it is determined that they have no alternative future use. We record costs
for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific
tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors.
Research and development activities are central to our business model. Product candidates in later stages of clinical
development generally have higher development costs than those in earlier stages of clinical development, primarily due to
the increased size and duration of later-stage clinical trials.
Our research and development expenses are related to narazaciclib, oral rigosertib, other candidates in our pipeline,
and potentially in-licensed products. We do not currently utilize a formal time allocation system to capture expenses on a
project-by-project basis because we are organized and record expense by functional department and our employees may
allocate time to more than one development project. Accordingly, we do not allocate expenses to individual projects or
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product candidates, although we do allocate some portion of our research and development expenses by functional area and
by compound.
It is difficult to determine with certainty the duration and completion costs of our current or future preclinical
programs and clinical trials of our product candidates, or if, when or to what extent we will generate revenues from the
commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in
achieving regulatory approval for any of our product candidates. The duration, costs and timing of clinical trials and
development of our product candidates will depend on a variety of factors, including the uncertainties of future clinical and
preclinical studies, uncertainties in clinical trial enrollment rate and significant and changing government regulation. In
addition, the probability of success for each product candidate will depend on numerous factors, including competition,
manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund
each program in response to the scientific and clinical success of each product candidate, an assessment of each product
candidate’s commercial potential and our available funds.
Interest Expense and Other Income, Net
Other income, net consists principally of interest income earned on cash and cash equivalent balances and foreign
exchange gains and losses.
Critical Accounting Policies and Estimates
This management’s discussion and analysis of our financial condition and results of operations is based on our
consolidated financial statements, which have been prepared in accordance with US generally accepted accounting
principles (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in
our consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgments. We base our
estimates on historical experience, known trends and events and various other factors that we believe to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under
different assumptions or conditions.
We believe the following accounting policies may involve a higher degree of judgment and complexity in their
application than our other accounting policies and represent the most critical judgments and estimates used in the
preparation of our consolidated financial statements. Our significant accounting policies are presented within Note 2 to our
Financial Statements.
Clinical Trial Expense
As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued
expenses. Our clinical trial accrual process is designed to account for expenses resulting from our obligations under
contracts with vendors, consultants and CROs and clinical site agreements in connection with conducting clinical trials.
The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in
payment flows that do not match the periods over which materials or services are provided to us under such contracts. Our
objective is to reflect the appropriate clinical trial expenses in our consolidated financial statements by matching the
appropriate expenses with the period in which services are provided and efforts are expended. We account for these
expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the
trial. We determine accrual estimates through financial models that take into account discussion with applicable personnel
and outside service providers as to the progress or state of completion of trials, or the services completed. During the
course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make
estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on the facts
and circumstances known to us at that time. Our clinical trial accrual and prepaid assets are dependent, in part, upon the
receipt of timely and accurate reporting from CROs and other third-party vendors. Although we do not expect our
estimates to be materially different from amounts actually incurred, our understanding of the status and
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timing of services performed relative to the actual status and timing of services performed may vary and may result in us
reporting amounts that are too high or too low for any particular period.
Stock-Based Compensation
We account for stock-based payments to employees and non-employees using an option pricing model for estimating
fair value. Accordingly, stock-based compensation expense is measured based on the estimated fair value of the awards on
the date of grant, net of forfeitures. Compensation expense is recognized for the portion that is ultimately expected to vest
over the period during which the recipient renders the required services, using the straight-line single option method.
We record stock-based compensation expense as a component of research and development expenses or general and
administrative expenses, depending on the function performed by the optionee. For the years ended December 31, 2022
and 2021, we allocated stock-based compensation as follows:
General and administrative
Research and development
Fair Value Estimates
Year ended December 31,
2022
2021
$ 538,000 $
617,000
490,000
86,000
$
1,155,000
$
576,000
We estimate the fair value of share-based awards to employees and non-employees using the Black-Scholes option
pricing model. The Black-Scholes model requires the input of highly complex and subjective assumptions, including
(a) the expected stock price volatility, (b) the calculation of the expected term of the award, (c) the risk free interest rate
and (d) expected dividends. Expected volatility is based on the historical volatility of the Company’s common stock. We
estimate the expected life of our employee stock options using the “simplified” method, whereby, the expected life equals
the arithmetic average of the vesting term and the original contractual term of the option. The risk-free interest rates for
periods within the expected life of the option are based on the U.S. Treasury yield curve in effect during the period when
the options were granted. We have never paid, and do not expect to pay dividends in the foreseeable future.
Income Taxes
We recorded deferred tax assets of $170.1 million as of December 31, 2022, which have been fully offset by a
valuation allowance due to uncertainties surrounding our ability to realize these tax benefits. The deferred tax assets are
primarily composed of federal and state tax net operating loss (NOL), carry forwards and research and development tax
credit carry forwards. As of December 31, 2022, we had federal NOL carry forwards of $298.1 million, state NOL carry
forwards of $257.8 million, federal research and development tax credit carry forwards of $89.7 million and state research
and development tax credit carry forwards of $1.1 million available to reduce future taxable income, if any. Federal NOL
carry forwards generated before 2018 will begin to expire at various dates starting in 2023. The state NOL carry forwards
will begin to expire at various dates starting in 2025. In general, if we experience a greater than 50 percentage point
aggregate change in ownership of specified significant stockholders over a three-year period, utilization of our pre-change
US NOL, tax credit and other tax attribute carry forwards may be subject to an annual limitations under Sections 382 and
383 of the U.S. Internal Revenue Code of 1986, as amended (the Code) and similar state laws. Such limitations may result
in expiration of a portion of the NOL carry forwards before utilization and may be substantial. The amount of the annual
limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change.
Subsequent ownership changes may further affect the limitation in future years. The Company believes such a change
occurred and may impact available net operating losses and carry over research credits generated. The Company has not
performed any detailed analysis as it expects these to expire before utilization and has provided for a full valuation
allowance but will perform a Section 382 and 383 study if any tax attributes are to be utilized in a given year.
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Results of Operations
Comparison of the Years Ended December 31, 2022 and 2021
Revenue
Operating expenses:
General and administrative
Research and development
Total operating expenses
Loss from operations
Change in fair value of warrant liability
Other income, net
Net loss before income taxes
Income taxes
Net loss
Revenues
Year ended December 31,
2021
2022
226,000
226,000
$
$
Change
—
$
8,447,000
11,406,000
19,853,000
(19,627,000)
—
978,000
9,425,000
4,109,000
7,297,000
3,131,000
16,722,000
(3,131,000)
(16,496,000)
(321,000)
321,000
651,000
12,000
(2,801,000)
(16,163,000)
—
—
$ (18,964,000) $ (16,163,000) $ (2,801,000)
663,000
(18,964,000)
—
Revenues for 2022 were consistent with 2021 and were due to the recognition of deferred revenue from our
collaboration with SymBio.
General and administrative expenses
General and administrative expenses decreased by $1.0 million or 10.4%, to $8.4 million for the year ended
December 31, 2022 from $9.4 million for the year ended December 31, 2021. The decrease was attributable primarily to
$1.2 million lower expenses for investor relations, proxy solicitation, and fees related to our shareholder meetings in the
2021 period which did not recur in the 2022 period, $0.1 million lower facilities related costs, $0.1 million lower insurance
expenses and $0.1 million lower commercial consulting expenses in the 2022 period. These decreases were partially offset
by $0.2 million higher personnel related costs and $0.2 higher professional and consulting fees during the 2022 period.
The details of our general and administrative expenses are:
Professional & consulting fees
Stock based compensation
Personnel related
Commercial
Public company costs
Insurance & other
Research and development expenses
Year Ended December 31,
2022
$ 1,824,000
538,000
3,408,000
—
1,382,000
1,295,000
$ 8,447,000
2021
$ 1,649,000
490,000
3,180,000
101,000
2,587,000
1,418,000
$ 9,425,000
Research and development expenses increased by $4.1 million, or 56.3%, to $11.4 million for the year ended
December 31, 2022 from $7.3 million for the year ended December 31, 2021. This increase was caused primarily by $2.0
million higher clinical and preclinical development expenses related to narazaciclib, by $1.5 million higher manufacturing
costs related to narazaciclib drug substance and drug product, and also by $0.9 million higher personnel and stock
compensation expense during the 2022 period. These increases were partially offset by a $0.3 million decrease in
consulting expenses in the 2022 period.
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The details of our research and development expenses are:
Preclinical & clinical develop ent
Personnel related
Manufacturing, formulation & development
Stock based compensation
Consulting fees
Change in fair value of warrant liability
Year ended December 31,
2021
$ 2,242,000
1,955,000
1,336,000
86,000
1,678,000
$ 7,297,000
2022
$ 4,206,000
2,399,000
2,851,000
617,000
1,333,000
$ 11,406,000
The fair value of the warrant liability was reduced to $0 during the third quarter of 2021, following the expiration of
the underlying tradable warrants. The change in the fair value of the warrant liability was an increase of $0.3 million
during the year ended December 31, 2021 based on the change in market value of the tradable warrants in the 2021 period.
Other income, net
Other income, net, increased by $0.6 million for the year ended December 31, 2022 compared to the year ended
December 31, 2021 due primarily to $0.6 million higher interest income in the 2022 period and $27,000 higher foreign
currency exchange gain in the 2022 period.
Liquidity and Capital Resources
Since our inception, we have incurred net losses and experienced negative cash flows from our operations. We
incurred net losses of $19.0 million and $16.2 million for the years ended December 31, 2022 and 2021, respectively. Our
operating activities used $16.3 million and $19.5 million of net cash during the year ended December 31, 2022 and 2021,
respectively. At December 31, 2022, we had an accumulated deficit of $463.7 million, working capital of $31.3 million,
and cash and cash equivalents of $38.8 million. We believe that our cash and cash equivalents will be sufficient to fund our
ongoing trials and business operations into the first quarter of 2024; however, based on current projections, we do not have
sufficient cash and cash equivalents as of the date of this Annual Report on Form 10-K to support our operations for at
least the 12 months following the date that the financial statements are issued. These conditions raise substantial doubt
about our ability to continue as a going concern through the one-year period after the date that the financial statements are
issued. Due to the inherent uncertainty involved in making estimates and the risks associated with the research,
development, and commercialization of biotechnology products, we may have based this estimate on assumptions that may
prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us.
We will require substantial additional financing to fund our ongoing clinical trials and operations, and to continue to
execute our strategy. To alleviate the conditions that raise substantial doubt about our ability to continue as a going
concern, we plan to explore various dilutive and non-dilutive sources of funding, including equity financings, strategic
alliances, business development and other sources. The future success of the Company is dependent upon our ability to
obtain additional funding. There can be no assurance, however, that we will be successful in obtaining such funding in
sufficient amounts, on terms acceptable to us, or at all. The failure to obtain sufficient capital on acceptable terms when
needed would have a material adverse effect on our business, results of operations, and financial condition. Accordingly,
we have concluded that substantial doubt exists with respect to our ability to continue as a going concern within one year
after the date that these financial statements are issued.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments
relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that
might be necessary should we be unable to continue as a going concern.
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Cash Flows
The following table summarizes our cash flows for the year ended December 31, 2022 and 2021:
Year Ended December 31,
2022
2021
Net cash (used in) provided by:
Operating activities
Financing activities
Effect of foreign currency translation
$
(16,294,000) $
(19,487,000)
— 55,560,000
(28,000)
(19,000)
Net (decrease) increase in cash and cash equivalents
$
(16,313,000) $ 36,045,000
Net cash used in operating activities
Net cash used in operating activities was $16.3 million for the year ended December 31, 2022 and consisted primarily
of a net loss of $19.0 million, including $1.2 million of noncash stock-based compensation and depreciation expense.
Changes in operating assets and liabilities resulted in a net increase in cash of $1.5 million. Significant changes in
operating assets and liabilities included an increase in accounts payable and accrued liabilities of $1.9 million as a result of
the timing of clinical trial and other accruals, and receipt and payment of vendor invoices, and an increase of $0.2 million
in prepaid expenses and other current assets. Deferred revenue decreased $0.2 million due to recognition of the
unamortized portion of the upfront payment under our collaboration agreement with SymBio.
Net cash used in operating activities was $19.5 million for the year ended December 31, 2021 and consisted primarily
of a net loss of $16.2 million, including a favorable change in fair value of warrant liability of $0.3 million and $0.6 million
of noncash stock-based compensation and depreciation expense. Changes in operating assets and liabilities resulted in a net
decrease in cash of $3.6 million. Significant changes in operating assets and liabilities included a decrease in accounts
payable and accrued liabilities of $3.9 million as a result of the timing of clinical trial and other accruals, and receipt and
payment of vendor invoices, and the reduction of prepaid expenses of $0.5 million primarily as a result of recognition of
insurance expense. Deferred revenue decreased $0.2 million due to recognition of the unamortized portion of the upfront
payment under our collaboration agreement with SymBio.
Net cash provided by financing activities
There was no net cash used in or provided by financing activities in the 2022 period. Net cash provided by financing
activities for the year ended December 31, 2021 was $55.6 million, which resulted from the proceeds received from the
sale of common stock in January, February, and September 2021 and through the at-the-market facility during August and
September 2021. An additional $0.5 million was provided by the exercise of common stock warrants.
Material Cash Requirements
We have not achieved profitability since our inception and we expect to continue to incur net losses for the foreseeable
future. We expect net cash expended in 2023 to be higher than 2022 due to clinical trials with narazaciclib and increased
headcount in our clinical and regulatory groups. We also expect an increase in costs for potential in-licensing, the timing of
which will be determined by the timing of any potential in-licensing. We enter into contracts in the normal course of
business with third-party contract organizations for clinical trials, preclinical studies, manufacturing and other services and
products for operating purposes. These contracts generally provide for termination following a certain period after notice
and therefore we believe that, currently, our non-cancelable obligations under these agreements are not material. We
believe that our cash and cash equivalents will be sufficient to fund our ongoing trials and operations into the first quarter
of 2024; however, based on current projections, we do not have sufficient cash and cash equivalents as of the date of this
Annual Report on Form 10-K to support our operations for at least the 12 months following the date that the financial
statements are issued. These conditions raise substantial doubt about our ability to continue as a going concern through the
one-year period after the date that the financial statements are issued.
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We are exploring various sources of funding for continued development of narazaciclib and any potential in-licensed
compounds as well as our ongoing operations. We expect to incur significant expenses and operating losses for the
foreseeable future as we continue the development and clinical trials of, and seek regulatory approval for, our product
candidates, even if milestones under our license and collaboration agreements may be met. If we obtain regulatory
approval for any of our product candidates, we expect to incur significant NDA preparation and commercialization
expenses. We do not currently have an organization for the sales, marketing and distribution of pharmaceutical products.
We may rely on licensing and co-promotion agreements with strategic or collaborative partners for the commercialization
of our products in the United States and other territories. If we choose to build a commercial infrastructure to support
marketing in the United States for any of our product candidates that achieve regulatory approval, such commercial
infrastructure could be expected to include a targeted, oncology sales force supported by sales management, internal sales
support, an internal marketing group and distribution support. To develop the appropriate commercial infrastructure
internally, we would have to invest financial and management resources, some of which would have to be deployed prior to
having any certainty about marketing approval. Furthermore, we have and expect to continue to incur additional costs
associated with operating as a public company.
Please see “Risk Factors” for additional risks associated with our substantial capital requirements.
Segment Reporting
We view our operations and manage our business in one segment, which is the identification and development of
oncology therapeutics.
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (FASB) issued new guidance on the accounting for credit
losses on financial instruments. The guidance was amended in November 2019. The new guidance introduces an expected
loss model for estimating credit losses, replacing the incurred loss model. The new guidance also changes the impairment
model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and
subsequent recoveries). The guidance is effective for fiscal years beginning after December 15, 2022, and interim periods
within those years, for companies deemed to be smaller reporting companies as of November 15, 2019, with early adoption
permitted. We will adopt the guidance as of January 1, 2023. The guidance is not expected to have a material effect on the
Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, the Company is not required to provide the information otherwise required by this
Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by this item are listed in Item 15 — “Exhibits and Financial
Statement Schedules” of this Annual Report.
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 President and Chief Executive Officer (our principal executive officer)
and our Chief Financial Officer (our principal financial officer), evaluated the effectiveness of our disclosure
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controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022.
Based upon this evaluation, our principal executive officer and principal financial officer concluded that, as of such date,
disclosure controls and procedures were effective.
Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making
this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control — Integrated Framework issued in 2013. Based upon the assessments,
management has concluded that as of December 31, 2022 our internal control over financial reporting was effective to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in
accordance with GAAP.
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 exemptions provided to issuers that are non-accelerated filers or qualify as an “emerging growth
company,” as defined in Section 2(a) of the Securities Act of 1933, or the Securities Act, as modified by the JOBS Act.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the fiscal quarter ended December 31,
2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Notice of Delisting or Failure to Satisfy a Continuing Listing Rule or Standard; Transfer of Listing.
On March 28, 2023, the Company received a letter from The Nasdaq Capital Market (“Nasdaq”) indicating that the
Company has failed to comply with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2). Nasdaq Listing
Rule 5550(a) (2) requires that companies listed on Nasdaq maintain a minimum closing bid price of at least $1.00 per
share.
Under Nasdaq Listing Rule 5810(c)(3)(A), the Company has a 180 calendar day grace period, or until September 25,
2023, to regain compliance by meeting the continued listing standard. The continued listing standard will be met if the
Company’s common stock has a minimum closing bid price of at least $1.00 per share for a minimum of ten consecutive
business days during the 180 calendar day grace period.
If the Company is not in compliance by September 25, 2023, the Company may be afforded a second 180 calendar day
period to regain compliance. To qualify, the Company would be required to meet the continued listing requirement for
market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the
minimum bid price requirement. In addition, the Company would be required to notify Nasdaq of its intention to cure the
minimum bid price deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
If the Company does not regain compliance within the allotted compliance period(s), including any extensions that
may be granted by Nasdaq, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. At
that time, the Company may appeal the Nasdaq Staff’s determination to a Nasdaq Hearings Panel.
The Company intends to monitor the closing bid price of the Company’s common stock and consider its available
options to resolve the noncompliance with the minimum bid price requirement.
There can be no assurance that the Company will be able to regain compliance with the minimum bid price
requirement or will otherwise be in compliance with other Nasdaq listing criteria.
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ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information with respect to this item will be set forth in the Proxy Statement for the 2023 Annual Meeting of
Stockholders (the Proxy Statement) under the headings “Election of Directors,” “Executive Officers,” “Section 16(a)
Beneficial Ownership Reporting Compliance,” “Code of Ethics” and “Corporate Governance” and is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item will be set forth in the Proxy Statement under the headings “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
Information with respect to this item will be set forth in the Proxy Statement under the headings “Security Ownership
of Certain Beneficial Owners and Management” and “Executive Compensation,” and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information with respect to this item will be set forth in the Proxy Statement under the headings “Certain
Relationships and Related Party Transactions” and “Corporate Governance” and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information with respect to this item will be set forth in the Proxy Statement under the heading “Ratification of the
Selection of Independent Registered Public Accounting Firm,” and is incorporated herein by reference.
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
(1) Financial Statements: See Index to Consolidated Financial Statements on page F-1.
PART IV
(3) Exhibits: See Exhibits Index on pages 60 to 64
ITEM 16. FORM 10-K SUMMARY
Information with respect to this item is not required and has been omitted at the Company’s option.
Exhibit
Number
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
4.1
4.2
4.3
EXHIBITS INDEX
Exhibit Description
Tenth Amended and Restated Certificate of Incorporation of Onconova Therapeutics, Inc. (Incorporated by
reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 25, 2013).
Certificate of Amendment to Tenth Amended and Restated Certificate of Incorporation of Onconova
Therapeutics, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
filed on May 31, 2016).
Certificate of Amendment to Tenth Amended and Restated Certificate of Incorporation of Onconova
Therapeutics, Inc., as amended (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on
Form 8-K filed on March 22, 2018).
Certificate of Amendment to Tenth Amended and Restated Certificate of Incorporation of Onconova
Therapeutics, Inc., as amended (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on
Form 8-K filed on June 8, 2018).
Certificate of Amendment to Tenth Amended and Restated Certificate of Incorporation of Onconova
Therapeutics, Inc., as amended (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on
Form 8-K filed on September 25, 2018).
Certificate of Designation of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to
the Company’s Current Report on Form 8-K filed on February 8, 2018).
Certificate of Designation of Series B Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to
the Company’s Current Report on Form 8-K filed on April 30, 2018).
Certificate of Amendment to the Tenth Amended and Restated Certificate of Incorporation of Onconova
Therapeutics, Inc., as amended (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on
Form 8-K filed on May 20, 2021).
Certificate of Amendment to the Tenth Amended and Restated Certificate of Incorporation of Onconova
Therapeutics, Inc., as amended (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on
Form 8-K filed on May 20, 2021).
Amended and Restated Bylaws of Onconova Therapeutics, Inc. (Incorporated by reference to Exhibit 3.2 to
Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed on July 11, 2013).
Form of Certificate of Common Stock (Incorporated by reference to Exhibit 4.1 to Pre-Effective Amendment
No. 1 the Company’s Registration Statement on Form S-1 filed on July 11, 2013).
Eighth Amended and Restated Stockholders’ Agreement, effective as of July 27, 2012, by and among
Onconova Therapeutics, Inc. and certain stockholders named therein (Incorporated by reference to Exhibit 4.2
to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed on July 11,
2013).
Amendment No. 1 to Eighth Amended and Restated Stockholders’ Agreement, effective as of July 9, 2013
(Incorporated by reference to Exhibit 4.3 to Pre-Effective Amendment No. 1 the Company’s Registration
Statement on Form S-1 filed on July 11, 2013).
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Exhibit
Number
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
10.1*
10.2*
10.3*
Exhibit Description
Form of Warrant Certificate, issued pursuant to Warrant Agreement, dated as of July 27, 2016, by and between
Onconova Therapeutics, Inc. and Wells Fargo Bank, N.A., as Warrant Agent (Incorporated by reference to
Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed on August 15, 2016).
Warrant Agreement, dated as of July 27, 2016, by and between Onconova Therapeutics, Inc. and Wells Fargo
Bank, N.A., as Warrant Agent (Incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on
Form 10-Q filed on August 15, 2016).
Form of Pre-Funded Warrants, issued as of July 27, 2016 (Incorporated by reference to Exhibit 4.3 to the
Company’s Quarterly Report on Form 10-Q filed on August 15, 2016).
Form of Underwriter Warrant, issued as of February 12, 2018 (Incorporated by reference to Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed on February 8, 2018).
Form of Preferred Stock Warrant, issued as of February 12, 2018 (Incorporated by reference to Exhibit 4.2 to
the Company’s Current Report on Form 8-K filed on February 8, 2018).
Form of Pre-Funded Warrant, issued as of February 12, 2018 (Incorporated by reference to Exhibit 4.3 to the
Company’s Current Report on Form 8-K filed on February 8, 2018).
Form of Preferred Stock Warrant, issued as of May 1, 2018 (Incorporated by reference to Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed on April 30, 2018).
Form of Pre-Funded Warrant, issued as of May 1, 2018 (Incorporated by reference to Exhibit 4.2 to the
Company’s Current Report on Form 8-K filed on April 30, 2018).
First Amendment to Underwriter Series A Convertible Preferred Stock Purchase Warrant, dated as of
September 24, 2018 (Incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-
Q filed on November 14, 2018).
Form of Placement Agent Common Stock Purchase Warrant, issued as of September 25, 2019 (Incorporated by
reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 25, 2019).
Form of Letter Amendment to Warrants, dated as of September 23, 2019 (Incorporated by reference to Exhibit
4.1 to the Company’s Quarterly Report on Form 10-Q filed on November 12, 2019).
Form of Common Stock Purchase Warrant, issued as of November 25, 2019 (Incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 26, 2019).
Form of Pre-Funded Common Stock Warrant, issued as of November 25, 2019 (Incorporated by reference to
Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 26, 2019).
Form of Placement Agent Common Stock Purchase Warrant, issued as of November 25, 2019 (Incorporated by
reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on November 26, 2019).
Form of Common Stock Purchase Warrant, issued as of December 10, 2019 (Incorporated by reference to
Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on December 10, 2019).
Form of Placement Agent Common Stock Purchase Warrant, issued as of December 10, 2019 (Incorporated by
reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on December 10, 2019).
Form of Common Stock Purchase Warrant, issued as of December 2019 (Incorporated by reference to Exhibit
4.1 to the Company’s Current Report on Form 8-K filed on December 19, 2019).
Form of Placement Agent Common Stock Purchase Warrant, issued as of December 19, 2019 (Incorporated by
reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on December 19, 2019).
Form of Placement Agent Common Stock Purchase Warrant, issued as of January 3, 2020 (Incorporated by
reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 3, 2020).
Description of the Company’s Securities Registered under Section 12 of the Securities Exchange Act of 1934,
as amended (Incorporated by reference to Exhibit 4.22 to the Company’s Annual Report on Form 10-K filed on
March 27, 2020).
License Agreement, effective as of July 5, 2011, by and between Onconova Therapeutics, Inc. and SymBio
Pharmaceuticals Limited (Incorporated by reference to Exhibit 10.2 to Pre-Effective Amendment No. 2 the
Company’s Registration Statement on Form S-1 filed on July 18, 2013).
First Amendment to License Agreement, effective as of September 2, 2011, by and between Onconova
Therapeutics, Inc. and SymBio Pharmaceuticals Limited (Incorporated by reference to Exhibit 10.3 to the
Company’s Registration Statement on Form S-1 filed on June 14, 2013).
License Agreement, effective as of January 1, 1999, by and between Onconova Therapeutics, Inc. and Temple
University — Of The Commonwealth System of Higher Education (Incorporated by reference to Exhibit 10.4
to the Company’s Registration Statement on Form S-1 filed on June 14, 2013).
61
Table of Contents
Exhibit
Number
10.4*
10.5*
10.6+
10.7+
10.8+
10.9+
10.10+
10.11+
10.12+
10.13*
10.14
Exhibit Description
Amendment to License Agreement, effective as of September 1, 2000, by and between Temple University —
Of The Commonwealth System of Higher Education and Onconova Therapeutics, Inc. (Incorporated by
reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 filed on June 14, 2013).
Amendment #1 to Exclusive License Agreement, effective as of March 21, 2013, by and between Temple
University — Of The Commonwealth System of Higher Education and Onconova Therapeutics, Inc.
(Incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 filed on June
14, 2013).
Onconova Therapeutics, Inc. 2007 Equity Compensation Plan, and forms of agreement thereunder
(Incorporated by reference to Exhibit 10.13 to Pre-Effective Amendment No. 1 the Company’s Registration
Statement on Form S-1 filed on July 11, 2013).
Consulting Agreement, effective as of January 1, 2012, by and between Onconova Therapeutics, Inc. and E.
Premkumar Reddy, Ph.D., including Consultant Agreement Renewal, dated February 27, 2013 (Incorporated
by reference to Exhibit 10.23 to the Company’s Registration Statement on Form S-1 filed on June 14, 2013).
Form of Indemnification Agreement entered into by and between Onconova Therapeutics, Inc. and each
director and executive officer (Incorporated by reference to Exhibit 10.24 to Pre-Effective Amendment No. 1
the Company’s Registration Statement on Form S-1 filed on July 11, 2013).
Onconova Therapeutics, Inc. 2013 Equity Compensation Plan, and forms of agreement thereunder
(Incorporated by reference to Exhibit 10.25 to Pre-Effective Amendment No. 1 the Company’s Registration
Statement on Form S-1 filed on July 11, 2013).
Onconova Therapeutics, Inc. 2013 Performance Bonus Plan (Incorporated by reference to Exhibit 10.26 to Pre-
Effective Amendment No. 1 the Company’s Registration Statement on Form S-1 filed on July 11, 2013).
Employment Agreement, effective as of July 1, 2015, by and between Onconova Therapeutics, Inc. and Mark
Guerin (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on
February 17, 2016).
Amended and Restated Employment Agreement, effective as of July 1, 2015, by and between Onconova
Therapeutics, Inc. and Steven M. Fruchtman, M.D. (Incorporated by reference to Exhibit 10.5 to the
Company’s Quarterly Report on Form 10-Q filed on August 13, 2015).
License, Development and Commercialization Agreement, dated as of March 2, 2018, by and between
Onconova Therapeutics, Inc. and Pint International SA (Incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q filed on May 15, 2018).
Securities Purchase Agreement, dated as of March 2, 2018, by and between Onconova Therapeutics, Inc. and
Pint Pharma GmbH (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-
Q filed on May 15, 2018).
10.15.1+ Amended and Restated Employment Agreement, effective as of June 19, 2018, by and between Onconova
Therapeutics, Inc. and Steven M. Fruchtman, M.D. (Incorporated by reference to Exhibit 10.2 to the
Company’s Quarterly Report on Form 10-Q filed on August 14, 2018).
10.15.2+ Amendment to Employment Agreement, dated as of March 18, 2021, by and between Onconova Therapeutics,
10.16+
10.17+
10.18+
10.19
Inc. and Steven M. Fruchtman, M.D. (Incorporated by reference to Exhibit 10.15.2 to the Company’s Annual
Report on Form 10-K filed on March 18, 2021).
Onconova Therapeutics, Inc. 2018 Omnibus Incentive Compensation Plan, as approved by the stockholders
(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 29,
2018).
Form of Nonqualified Stock Option Award Agreement under the Onconova Therapeutics, Inc. 2018 Omnibus
Incentive Compensation Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on July 30, 2018).
Employment Agreement, effective as of November 5, 2018, by and between Onconova Therapeutics, Inc. and
Richard C. Woodman, M.D. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on
Form 10-Q filed on November 14, 2018).
License and Collaboration Agreement, effective as of May 10, 2019, by and between Onconova Therapeutics,
Inc. and HanX Biopharmaceuticals, Inc. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly
Report on Form 10-Q filed on August 14, 2019).
62
Table of Contents
Exhibit
Number
10.20
10.21
10.22
10.23**
10.24
10.25
10.26**
10.27
10.28
10.29+
10.30
10.31
10.32+
10.33+
10.34+
10.35+
10.36
10.37
10.38+
Exhibit Description
Securities Purchase Agreement, effective as of May 10, 2019, by and between Onconova Therapeutics, Inc.
and HanX Biopharmaceuticals, Inc. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly
Report on Form 10-Q filed on August 14, 2019).
Securities Purchase Agreement, effective as of May 10, 2019, by and between Onconova Therapeutics, Inc.
and Abundant New Investments Ltd. (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly
Report on Form 10-Q filed on August 14, 2019).
Form of Securities Purchase Agreement, effective as of September 23, 2019, by and between Onconova
Therapeutics, Inc. and each purchase identified on the signature pages thereto (Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 25, 2019).
Distribution, License and Supply Agreement, effective as of November 20, 2019, by and between Onconova
Therapeutics, Inc. and Knight Therapeutics, Inc. (Incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on November 21, 2019).
Form of Securities Purchase Agreement, effective as of November 21, 2019, by and between Onconova
Therapeutics, Inc. and each purchaser identified on the signature pages thereto (Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 26, 2019).
Form of Securities Purchase Agreement, effective as of December 6, 2019, by and between Onconova
Therapeutics, Inc. and each purchaser identified on the signature pages thereto (Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 10, 2019).
Distribution, License and Supply Agreement, by and between Onconova Therapeutics, Inc. and Specialised
Therapeutics Asia Pte. Ltd., effective as of December 18, 2019 (Incorporated by reference to Exhibit 10.1 to
the Company’s Current Report on Form 8-K filed on December 19, 2019).
Form of Securities Purchase Agreement, by and between Onconova Therapeutics, Inc. and each purchaser
identified on the signature pages thereto, effective as of December 17, 2019 (Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 19, 2019).
Form of Securities Purchase Agreement, by and between Onconova Therapeutics, Inc. and each purchaser
identified on the signature pages thereto, effective as of December 31, 2019 (Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 3, 2020).
Form of Stock Appreciation Right Award Agreement (for Employees) (Incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed on July 10, 2020).
Form of Purchase Agreement, dated as of January 7, 2021, by and among Onconova Therapeutics, Inc. and the
investors party thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-
K filed on January 8, 2021).
Underwriting Agreement, dated February 10, 2021, by and between Onconova Therapeutics, Inc. and
Guggenheim Securities, LLC (Incorporated by reference as Exhibit 1.1 to the Company’s Current Report of
Form 8-K filed on February 12, 2021).
Form of Stock Appreciation Right Award Agreement (for Non-Employee Directors) (Incorporated by reference
to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 16, 2020).
Form of Performance Stock Unit Award Agreement (Incorporated by reference to Exhibit 10.2 to the
Company’s Current Report on Form 8-K filed on July 10, 2020).
Employment Agreement, dated June 14, 2021, by and between Onconova Therapeutics, Inc. and Mark Stephen
Gelder, M.D. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q
filed on August 16, 2021).
Employment Agreement, dated March 9, 2021, by and between Onconova Therapeutics, Inc. and Abraham N.
Oler (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on
August 16, 2021).
Equity Distribution Agreement, dated as of August 20, 2021, by and between Onconova Therapeutics, Inc. and
Piper Sandler & Co. (Incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K
filed on August 20, 2021).
Underwriting Agreement, dated September 23, 2021, by and between Onconova Therapeutics, Inc. and
Guggenheim Securities, LLC (Incorporated by reference as Exhibit 1.1 to the Company’s Current Report of
Form 8-K filed on September 24, 2021).
Form of Restricted Stock Unit Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q filed on November 15, 2021).
63
Table of Contents
Exhibit
Number
10.39+
10.40+
10.41+
21.1
23.1
31.1
31.2
32.1
32.2
Exhibit Description
Form of Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q filed on November 15, 2021).
Amendment to Employment Agreement, effective as of June 10, 2022, by and between Onconova
Therapeutics, Inc. and Mark Guerin (Incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on June 13, 2022).
Onconova Therapeutics, Inc. 2021 Incentive Compensation Plan (Incorporated by reference to Exhibit 10.1 to
the Company’s Quarterly Report on Form 10-Q filed on November 14, 2022).
Subsidiaries of Onconova Therapeutics, Inc.
Consent of Ernst & Young, LLP.
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
101.INS XBRL Instance – The instance document does not appear in the Interactive Data File because its XBRL tags
are embedded within the Inline XBRL document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Labels Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data
File because its XBRL tags are embedded within the Inline XBRL document
+
Indicates management contract or compensatory plan.
* Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been
filed separately with the Securities and Exchange Commission.
** Portions of the exhibit have been omitted.
64
Table of Contents
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.
SIGNATURES
Date: March 30, 2023
Onconova Therapeutics, Inc.
By:
/s/ STEVEN M. FRUCHTMAN, M.D.
Steven M. Fruchtman
Chief 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:
Signature
Title
/s/ STEVEN M. FRUCHTMAN, M.D.
Steven M. Fruchtman, M.D.
Director, President and Chief Executive Officer
(Principal Executive Officer)
Date
March 30, 2023
March 30, 2023
/s/ MARK GUERIN
Mark Guerin
/s/ JAMES J. MARINO
James J. Marino
/s/ Peter Atadja PH.D.
Peter Atadja, Ph.D.
/s/ Trafford Clarke, PH.D.
Trafford Clarke, Ph.D.
/s/ JEROME E. GROOPMAN, M.D.
Jerome E. Groopman, M.D.
/s/ VIREN MEHTA, PH.D.
J Viren Mehta, Ph.D.
/s/ MARY TERESA SHOEMAKER
Mary Teresa Shoemaker
/s/ JACK E. STOVER
Jack E. Stover
Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer and Principal Accounting
Officer)
Chairman, Board of Directors
March 30, 2023
Director
Director
Director
Director
Director
Director
65
March 30, 2023
March 30, 2023
March 30, 2023
March 30, 2023
March 30, 2023
March 30, 2023
Table of Contents
ONCONOVA THERAPEUTICS, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Consolidated Balance Sheets, December 31, 2022 and 2021
Consolidated Statements of Operations, Years ended December 31, 2022 and 2021
Consolidated Statements of Comprehensive Loss, Years ended December 31, 2022 and 2021
Consolidated Statements of Stockholders’ Equity, Years ended December 31, 2022 and 2021
Consolidated Statements of Cash Flows, Years ended December 31, 2022 and 2021
Notes to Consolidated Financial Statements
Page
F-2
F-4
F-5
F-6
F-7
F-8
F-9
All common stock, equity, share and per share amounts have been retroactively adjusted to reflect a one-for-
fifteen reverse stock split which was effective May 20, 2021.
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Onconova Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Onconova Therapeutics, Inc. (the Company) as of
December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, stockholders’ equity
and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for the years
then ended, in conformity with U.S. generally accepted accounting principles.
The Company's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as
a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring
losses from operations and has stated that substantial doubt exists about the Company's ability to continue as a going
concern. Management's evaluation of the events and conditions and management's plans regarding these matters are also
described in Note 1. The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our 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 Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts
or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or
complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F-2
Table of Contents
Clinical Trial Expense Accruals
Description of the
Matter
As described in Note 2 to the consolidated financial statements, the Company records accruals for
estimated costs of research and development activities that include contract services for clinical trials.
At December 31, 2022, the Company recorded accrued expenses for clinical trial accruals, which are
included in accrued expenses and other current liabilities on the consolidated balance sheet. Clinical
trial activities performed by third parties are accrued based upon estimates of the proportion of work
completed over the life of the individual clinical trial in accordance with agreements established with
contract research organizations, clinical trial sites and other third parties.
Auditing management's clinical trial expense accruals is especially challenging because of the
judgment applied by management to determine the progress or stage of completion of the activities
under the Company's research and development agreements and the cost and extent of work
performed during the reporting period for services not yet billed by contracted third-party vendors.
The testing of the Company's accrued clinical trial expense models also involves a significant level of
effort to test the high volume of data from third parties.
How We
Addressed the
Matter in Our
Audit
To test the clinical trial expense accruals, our audit procedures included, among others, testing the
completeness and accuracy of the underlying data used in the estimates and evaluating the significant
assumptions including, but not limited to, patient enrollment and costs per patient/visit, that are used
by management to estimate the recorded accruals. To assess the reasonableness of the significant
assumptions, we corroborated the progress of clinical trials with the Company’s clinical personnel and
confirmed progress directly with third parties. We also tested subsequent invoicing received from such
third parties and inspected the Company’s contracts with third parties to assess the impact to the
accrual through the balance sheet date and compared that to the Company’s estimates.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2013.
Philadelphia, Pennsylvania
March 30, 2023
F-3
Table of Contents
ONCONOVA THERAPEUTICS, INC.
Consolidated Balance Sheets
Assets
Current assets:
Cash and cash equivalents
Receivables
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Other non-current assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued expenses and other current liabilities
Deferred revenue
Total current liabilities
Deferred revenue, non-current
Total liabilities
Commitments and contingencies
Stockholders’ equity:
December 31,
2022
2021
$
$
$
$
$
$
38,757,000
29,000
561,000
39,347,000
24,000
1,000
39,372,000
3,860,000
3,960,000
226,000
8,046,000
3,017,000
11,063,000
55,070,000
28,000
332,000
55,430,000
38,000
10,000
55,478,000
2,757,000
3,132,000
226,000
6,115,000
3,243,000
9,358,000
Preferred stock, $0.01 par value, 5,000,000 shares authorized, none issued and
outstanding at December 31, 2022 and December 31, 2021
Common stock, $0.01 par value, 125,000,000 shares authorized, 20,925,992 and
20,895,563 shares issued and outstanding at December 31, 2022 and
December 31, 2021, respectively
Additional paid in capital
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
—
—
209,000
491,816,000
(463,683,000)
(33,000)
28,309,000
39,372,000
$
209,000
490,644,000
(444,719,000)
(14,000)
46,120,000
55,478,000
$
See accompanying notes to consolidated financial statements.
F-4
Table of Contents
ONCONOVA THERAPEUTICS, INC.
Consolidated Statements of Operations
Revenue
Operating expenses:
General and administrative
Research and development
Total operating expenses
Loss from operations
Change in fair value of warrant liability
Other income, net
Net loss
Net loss per share, basic and diluted
Basic and diluted weighted average shares outstanding
Years ended December 31,
2021
2022
226,000
226,000
$
$
8,447,000
11,406,000
19,853,000
(19,627,000)
—
663,000
(18,964,000)
$
20,908,235
(0.91) $
9,425,000
7,297,000
16,722,000
(16,496,000)
321,000
12,000
(16,163,000)
(0.96)
16,832,198
See accompanying notes to consolidated financial statements.
F-5
Table of Contents
ONCONOVA THERAPEUTICS, INC.
Consolidated Statements of Comprehensive Loss
Net loss
Other comprehensive loss, net of tax:
Foreign currency translation adjustments, net
Other comprehensive loss, net of tax
Comprehensive loss
Years ended December 31,
2021
2022
$ (18,964,000) $ (16,163,000)
(19,000)
(19,000)
(28,000)
(28,000)
$ (18,983,000) $ (16,191,000)
See accompanying notes to consolidated financial statements.
F-6
Table of Contents
ONCONOVA THERAPEUTICS, INC.
Consolidated Statements of Stockholders’ Equity
Stockholders’ Equity
Balance at December 31, 2020
Net loss
Other comprehensive loss
Stock-based compensation
Exercise of stock options
Shares issued in connection with reverse stock
split
Issuance of common stock, net
Issuance of common stock upon exercise of
warrants
Balance at December 31, 2021
Common Stock
Shares
12,396,219
Amount
124,000
Additional
Paid in
Capital
$ 434,593,000
$
—
—
—
4,642
104
8,329,598
—
—
—
—
—
—
576,000
24,000
—
83,000
—
54,958,000
Accumulated
other
comprehensive
income (loss)
Accumulated
deficit
$ (428,556,000)
(16,163,000)
$
14,000
$
—
(28,000)
—
—
Total
6,175,000
(16,163,000)
(28,000)
576,000
24,000
—
—
—
55,041,000
—
—
—
—
—
165,000
20,895,563
$
2,000
209,000
493,000
$ 490,644,000
—
$ (444,719,000)
$
—
(14,000)
495,000
$ 46,120,000
Net loss
Other comprehensive loss
Stock-based compensation
Shares issued for vested restricted stock units
Balance at December 31, 2022
—
—
—
30,429
20,925,992
$
—
—
—
—
209,000
—
—
(18,964,000)
—
—
—
$ (463,683,000)
$
1,172,000
—
$ 491,816,000
See accompanying notes to consolidated financial statements.
F-7
—
(19,000)
—
—
(33,000)
(18,964,000)
(19,000)
1,172,000
—
$ 28,309,000
Table of Contents
ONCONOVA THERAPEUTICS, INC.
Consolidated Statements of Cash Flows
Operating activities:
Net loss
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Change in fair value of warrant liabilities
Stock compensation expense
Changes in assets and liabilities:
Receivables
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued expenses and other current liabilities
Deferred revenue
Net cash used in operating activities
Financing activities:
Proceeds from the sale of common stock and warrants, net of costs
Proceeds from the exercise of common warrants
Proceeds from the exercise of stock options
Net cash provided by financing activities
Effect of foreign currency translation on cash
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Year Ended December 31,
2021
2022
$ (18,964,000) $ (16,163,000)
14,000
—
1,172,000
14,000
(321,000)
576,000
(1,000)
(229,000)
9,000
1,103,000
828,000
(226,000)
(16,294,000)
9,000
530,000
—
(2,076,000)
(1,830,000)
(226,000)
(19,487,000)
55,041,000
—
495,000
—
—
24,000
— 55,560,000
(28,000)
36,045,000
19,025,000
$ 55,070,000
(19,000)
(16,313,000)
55,070,000
$ 38,757,000
See accompanying notes to consolidated financial statements.
F-8
Table of Contents
1. Nature of Business
The Company
ONCONOVA THERAPEUTICS, INC.
Notes to Consolidated Financial Statements
Onconova Therapeutics, Inc. (the Company) was incorporated in the State of Delaware on December 22, 1998 and
commenced operations on January 1, 1999. The Company's headquarters are located in Newtown, Pennsylvania. The
Company is a clinical-stage biopharmaceutical company focused on discovering and developing novel products for patients
with cancer. The Company has proprietary targeted anti-cancer agents designed to disrupt specific cellular pathways that
are important for cancer cell proliferation. The Company believes that the product candidates in its pipeline have the
potential to be efficacious in a variety of cancers with unmet medical need. The Company has the following two clinical-
stage programs: 1. narazaciclib (ON 123300), a multi-kinase inhibitor in solid tumors; and 2. oral rigosertib alone or in
combination with PD-1 inhibitors for treatment of KRAS-mutated solid tumors. During 2012, Onconova Europe GmbH
was established as a wholly owned subsidiary of the Company for the purpose of further developing business in Europe.
On May 20, 2021, the Company amended its certificate of incorporation to effect a one-for-fifteen reverse stock split
of its common stock. All common stock, equity, share and per share amounts in the financial statements and notes have
been retroactively adjusted to reflect this one-for-fifteen reverse stock split.
On May 20, 2021, the Company amended its certificate of incorporation to decrease the number of authorized shares
of common stock par value $0.01 per share from 250,000,000 to 125,000,000.
Liquidity
On January 11, 2021, the Company closed on an offering of common stock. The Company issued 1,303,408 shares of
common stock and net proceeds were approximately $8.5 million. On February 16, 2021, the Company closed on an
offering of common stock. The Company issued 1,916,667 shares of common stock and net proceeds were approximately
$26.7 million. On September 28, 2021, the Company closed on an offering of common stock. The Company issued
5,000,000 shares of common stock and net proceeds were approximately $19.5 million.
On August 20, 2021, the Company entered into an at-the-market equity distribution agreement for the sale of up to
$25.0 million of common stock. Through September 30, 2021, the Company sold 109,523 shares under the agreement at a
weighted average price of $5.32 per share. Net proceeds after commissions and offering expenses were approximately $0.5
million. There were no other sales during the years ended December 31, 2022 and 2021.
The Company has incurred recurring operating losses since inception. For the year ended December 31, 2022, the
Company incurred a net loss of $18,964,000 and as of December 31, 2022 the Company had generated an accumulated
deficit of $463,683,000. The Company anticipates operating losses to continue for the foreseeable future due to, among
other things, costs related to research, development of its product candidates and its preclinical programs, strategic
alliances and its administrative organization. At December 31, 2022, the Company had cash and cash equivalents of
$38,757,000. The Company believes that its cash and cash equivalents will be sufficient to fund its ongoing trials and
business operations into the first quarter of 2024; however, based on current projections, the Company does not have
sufficient cash and cash equivalents as of the date of this Annual Report on Form 10-K to support its operations for at least
the 12 months following the date that the financial statements are issued. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern through the one year period after the date that the financial statements are
issued. Due to the inherent uncertainty involved in making estimates and the risks associated with the research,
development, and commercialization of biotechnology products, the Company may have based this estimate on
assumptions that may prove to be wrong, and the Company's operating plan may change as a result of many factors
currently unknown to the Company.
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The Company will require substantial additional financing to fund its ongoing clinical trials and operations, and to
continue to execute its strategy. To alleviate the conditions that raise substantial doubt about the Company’s ability to
continue as a going concern, management plans to explore various dilutive and non-dilutive sources of funding, including
equity financings, strategic alliances, business development and other sources. The future success of the Company is
dependent upon its ability to obtain additional funding. There can be no assurance, however, that the Company will be
successful in obtaining such funding in sufficient amounts, on terms acceptable to the Company, or at all. The failure to
obtain sufficient capital on acceptable terms when needed would have a material adverse effect on the Company’s business,
results of operations, and financial condition. Accordingly, management has concluded that substantial doubt exists with
respect to the Company's ability to continue as a going concern within one year after the date that these financial statements
are issued.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments
relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the
United States (GAAP). The financial statements include the consolidated accounts of the Company and its wholly-owned
subsidiary, Onconova Europe GmbH. All significant intercompany transactions have been eliminated.
All common stock, equity, share and per share amounts have been retroactively adjusted to reflect a one-for-fifteen
reverse stock split which was effective May 20, 2021.
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available
for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and
in assessing performance. The Company views its operations and manages its business in one segment, which is the
identification and development of oncology therapeutics.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, other comprehensive income and
related disclosures. On an ongoing basis, management evaluates its estimates, including estimates related to clinical trial
accruals, warrant liability, and allocation of consideration for revenue recognition. The Company bases its estimates on
historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the
circumstances. Actual results may differ from those estimates or assumptions.
Concentrations of Credit Risk and Off-Balance Sheet Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash
equivalents. The Company maintains a portion of its cash and cash equivalent balances in the form of money market
accounts with financial institutions that management believes are creditworthy. The Company has no financial instruments
with off-balance sheet risk of loss.
At December 31, 2022 the Company had $38,522,000 of its cash and cash equivalents in a Morgan Stanley
Institutional Liquidity Fund. The fund is a AAA rated money market fund that invests in a portfolio of liquid, high-quality
debt securities issued by the U.S. government. The fund resides in a custodial account held by U.S. Bank for which SVB
Asset Management is the advisor (see Note: 16, Subsequent Events).
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Cash and Cash Equivalents
The Company considers all highly liquid investments with original or remaining maturity from the date of purchase of
three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities
with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposit,
commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair
value. During the year ended December 31, 2022, the Company received $651,000 of interest income primarily from a
money market mutual fund that invests primarily in U.S. government obligations. The interest income is included in Other
income, net in the Statement of Operations.
Fair Value of Financial Instruments
The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents,
accounts payable, and accrued liabilities approximate their respective fair values because of the short-term nature of these
accounts. The fair value of the warrant liability is discussed in Note 8, Fair Value Measurements.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Property and equipment are depreciated
using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the
useful life of the asset or the lease term, whichever is shorter. Maintenance and repairs are expensed as incurred. The
following estimated useful lives were used to depreciate the Company’s assets:
Lab equipment
Software
Computer and office equipment
Leasehold improvements
Estimated Useful Life
5-6 years
3 years
5-6 years
Shorter of the lease term or
estimated useful life
Upon retirement or sale, the cost of the disposed asset and the related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized.
The Company reviews long-lived assets for impairment when events or changes in circumstances indicate that the
carrying value of the assets may not be recoverable. Recoverability is measured by comparison of the assets’ book value to
future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the book value of the assets exceeds their fair value,
which is measured based on the projected discounted future net cash flows generated from the assets. No impairment losses
have been recorded through December 31, 2022.
Warrant Accounting
Common stock warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic
815, Derivatives and Hedging—Contracts in Entity’s Own Equity (ASC Topic 815), as either derivative liabilities or as
equity instruments depending on the specific terms of the warrant agreement. (See Note 4).
The Company’s warrants that are classified as liabilities are recorded at fair value. The warrants are subject to
remeasurement at each balance sheet date and any change in fair value is recognized as a component of change in fair value
of warrant liability in the consolidated statements of operations. The warrants are classified as level 3 liabilities and the
Company uses the Black-Scholes pricing model to estimate the fair value of the related derivative warrant liability. All of
the warrants that were classified as liabilities expired in July 2021. (See Note 8 for a discussion of the fair value hierarchy).
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Foreign Currency Translation
The reporting currency of the Company and its U.S. subsidiaries is the U.S. dollar. The functional currency of the
Company’s non-U.S. subsidiary is the local currency. Assets and liabilities of the foreign subsidiary are translated into U.S.
dollars based on exchange rates at the end of the period. Revenues and expenses are translated at average exchange rates
during the reporting period. Gains and losses arising from the translation of assets and liabilities are included as a
component of accumulated other comprehensive income. Gains and losses resulting from foreign currency transactions are
reflected within the Company’s results of operations. The Company has not utilized any foreign currency hedging
strategies to mitigate the effect of its foreign currency exposure.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification Topic 606, Revenue from
Contracts with Customers (ASC 606). The Company applies ASC 606 to all contracts with customers, except for contracts
that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial
instruments. In accordance with ASC 606, the Company recognizes revenue when its customer obtains control of promised
goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those
goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of
ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the
performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the
performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance
obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the
consideration it is entitled to in exchange for the goods and services it transfers to the customer. At contract inception, the
Company assesses the goods or services promised within each contract that falls under the scope of ASC 606, determines
those that are performance obligations and assesses whether each promised good or service is distinct. The Company then
recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when
(or as) the performance obligation is satisfied.
The Company derives revenue from its collaboration and licensing agreements.
License, Collaboration and Other Revenues
The Company enters into licensing and collaboration agreements, under which it licenses certain of its product
candidates’ rights to third parties. The Company recognizes revenue related to these agreements in accordance with ASC
606. The terms of these arrangements typically include payment from third parties of one or more of the following: non-
refundable, up-front license fees; development, regulatory and commercial milestone payments; and royalties on net sales
of the licensed product.
In determining the appropriate amount of revenue to be recognized as it fulfills its obligation under each of its
agreements, the Company performs the five steps described above. As part of the accounting for these arrangements, the
Company must develop assumptions that require judgment to determine the stand-alone selling price, which may include
forecasted revenues, development timelines, reimbursement of personnel costs, discount rates and probabilities of technical
and regulatory success.
Licensing of Intellectual Property: If the license to the Company’s intellectual property is determined to be distinct
from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-
refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to
use and benefit from the license. For licenses that are bundled with other performance obligations, the Company utilizes
judgment to assess the nature of the combined performance obligation to determine whether the combined performance
obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for
purposes of recognizing revenue from non-refundable, up-front-fees. The Company evaluates the measure of progress each
reporting period, and, if necessary, adjusts the measure of performance and related revenue recognition.
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Milestone Payments: At the inception of each arrangement that includes development milestone payments, the
Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be
included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal
will not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within
the control of the Company or the licensees, such as regulatory approvals, are not considered probable of being achieved
until those approvals are received. The transaction price is then allocated to each performance obligation on a relative
stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under
the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of
achievement of such development milestones and any related constraint and, if necessary, adjusts its estimate of the overall
transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and
earnings in their period of adjustment.
Manufacturing supply services. Arrangements that include a promise for future supply of drug substance or drug
product for either clinical development or commercial supply at the customer’s discretion are generally considered as
options. The Company assesses if these options provide material rights to the licensee and if so, they are accounted for as
separate performance obligations. If the Company is entitled to additional payments when the customer exercises these
options, any additional payments are recorded when the customer obtains control of the goods, which is upon shipment.
Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of
sales, and for which the license is deemed to be the predominant item to which royalties relate, the Company recognizes
revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some of all of the
royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty
revenue from its license agreements.
Research and Development Expenses
Research and development costs are charged to expense as incurred. These costs include, but are not limited to, license
fees related to the acquisition of in-licensed products; employee-related expenses, including salaries, benefits and travel;
expenses incurred under agreements with contract research organizations and investigative sites that conduct clinical trials
and preclinical studies; the cost of acquiring, developing and manufacturing clinical trial materials; facilities, depreciation
and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other
supplies; and costs associated with preclinical activities and regulatory operations.
Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress
to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to
the Company by its vendors with respect to their actual costs incurred. Payments for these activities are based on the terms
of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated
financial statements as prepaid or accrued research and development expense, as the case may be.
Comprehensive Loss
Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and
other events and circumstances from non-owner sources.
Leases
The Company accounts for leases in accordance with Accounting Standards Codification Topic 842, Leases (ASC
842). The Company determines whether an arrangement is a lease at contract inception by establishing if the contract
conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for
consideration.
Right of Use (ROU) Assets and Lease Liabilities are recognized at the lease commencement date based on the present
value of all minimum lease payments over the lease term. The Company uses its incremental borrowing rate
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based on the information available at commencement date in determining the present value of lease payments, when the
implicit rate is not readily determinable. Lease terms may include options to extend or terminate the lease. These options
are included in the lease term when it is reasonably certain that the Company will exercise that option. Operating lease
expense is recognized on a straight-line basis over the lease term.
The Company has elected the following policy elections on adoption: use of portfolio approach on leases of assets
under master service agreements, exclusion of short-term leases (term of 12 months or less) on the balance sheet, and not
separating lease and non-lease components.
The Company does not have any material lease agreements.
Income Taxes
The Company accounts for income taxes under the asset and liability 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 using enacted tax rates in effect for the year in which the
differences are expected to affect taxable income. The deferred tax asset primarily includes net operating loss and tax credit
carry forwards, accrued expenses not currently deductible and the cumulative temporary differences related to certain
research and patent costs, which have been charged to expense in the accompanying statements of operations but have been
recorded as assets for income tax purposes. The portion of any deferred tax asset for which it is more likely than not that a
tax benefit will not be realized must then be offset by recording a valuation allowance. A full valuation allowance has been
established against all of the deferred tax assets (see Note 9, Income Taxes), as it is more likely than not that these assets
will not be realized given the Company’s history of operating losses. The Company recognizes the tax benefit from an
uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of
the position. The amount for which an exposure exists is measured as the largest amount of benefit determined on a
cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of
the position.
Stock-Based Compensation Expense
The Company applies the provisions of FASB Accounting Standards Codification (ASC) Topic 718, Compensation—
Stock Compensation (ASC 718), which requires the measurement and recognition of compensation expense for all stock-
based awards made to employees and non-employees, including employee stock options, stock appreciation rights,
performance stock units and restricted stock units.
Share-based payment transactions with employees are recognized as compensation expense over the requisite service
period based on their estimated fair values. ASC 718 also requires significant judgment and the use of estimates,
particularly surrounding Black-Scholes assumptions such as stock price volatility over the term and expected lives, to
estimate the grant date fair value of equity-based compensation and requires the recognition of the fair value of stock
compensation in the statement of operations.
Clinical Trial Expense Accruals
As part of the process of preparing its financial statements, the Company is required to estimate its expenses resulting
from its obligations under contracts with vendors, clinical research organizations and consultants and under clinical site
agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations,
which vary from contract to contract and may result in payment flows that do not match the periods over which materials
or services are provided under such contracts. The Company’s objective is to reflect the appropriate trial expenses in its
financial statements by matching those expenses with the period in which services are performed and efforts are expended.
The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the
timing of various aspects of the trial. The Company determines accrual estimates through financial models taking into
account discussion with applicable personnel and outside service providers as to the progress or state of consummation of
trials, or the services completed. During the course of a clinical trial, the Company adjusts its clinical expense recognition
if actual results differ from its estimates. The Company makes estimates of its
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accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that time. The
Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations
and other third-party vendors. Although the Company does not expect its estimates to be materially different from amounts
actually incurred, its understanding of the status and timing of services performed relative to the actual status and timing of
services performed may vary and may result in it reporting amounts that are too high or too low for any particular period.
For the years ended December 31, 2022 and 2021, there were no material adjustments to the Company’s prior period
estimates of accrued expenses for clinical trials.
Basic and Diluted Net Loss Per Share of Common Stock
Basic net loss per share of common stock is computed by dividing net loss applicable to common stockholders by the
weighted-average number of shares of Common Stock outstanding during the period, excluding the dilutive effects of stock
options and warrants. Diluted net loss per share of common stock is computed by dividing the net loss applicable to
common stockholders by the sum of the weighted-average number of shares of Common Stock outstanding during the
period plus the potential dilutive effects of stock options and warrants outstanding during the period calculated in
accordance with the treasury stock method but are excluded if their effect is anti-dilutive. Because the impact of these
items is anti-dilutive during periods of net loss, there was no difference between basic and diluted net loss per share of
Common Stock for the years ended December 31, 2022 and 2021.
Recent Accounting Pronouncements
In June 2016, the FASB issued new guidance on the accounting for credit losses on financial instruments. The
guidance was amended in November 2019. The new guidance introduces an expected loss model for estimating credit
losses, replacing the incurred loss model. The new guidance also changes the impairment model for available-for-sale debt
securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The guidance is
effective for fiscal years beginning after December 15, 2022, and interim periods within those years, for companies deemed
to be smaller reporting companies as of November 15, 2019, with early adoption permitted. The Company will adopt the
guidance effective January 1, 2023. The guidance is not expected to have a material effect on the Company.
3. Property and Equipment
Property and equipment and related accumulated depreciation are as follows:
Computer and office equipment
Less accumulated depreciation
December 31,
2022
$ 70,000
(46,000)
$ 24,000
2021
$ 70,000
(32,000)
$ 38,000
Depreciation and amortization expense was $14,000 and $14,000 for the years ended December 31, 2022 and 2021,
respectively.
4. Warrants
Common stock warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic
815, Derivatives and Hedging-Contracts in Entity’s Own Equity (ASC Topic 815), as either derivative liabilities or as
equity instruments depending on the specific terms of the warrant agreement.
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Table of Contents
Warrants outstanding at December 31, 2021 and 2022, and warrant activity for the year ended December 31, 2022 is as
follows (reflects the number of common shares as if the warrants were converted to common stock):
Description
Non-tradable pre-funded warrants
Non-tradable warrants
Non-tradable pre-funded warrants
Non-tradable warrants
Non-tradable pre-funded warrants
Non-tradable warrants
Non-tradable warrants
Non-tradable warrants
Non-tradable warrants
Non-tradable warrants
Classification Price
Exercise
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
2.25
$
24.00
$
2.25
$
24.00
$
2.25
$
30.00
$
$
3.00
$ 6.54375
$ 6.75450
$ 6.77850
Expiration
Date
July 2023
December 2022
none
December 2022
none
September 2023
November 2024
December 2024
December 2024
December 2023
Balance
Balance
December 31, Warrants Warrants Warrants December 31,
2021
Issued Exercised Expired
2022
26
26,189
3,522
120,407
4,974
7,306
244,500
16,953
46,263
29,968
500,108
—
—
—
—
—
—
—
—
—
—
—
—
—
(26,189)
—
—
—
— (120,407)
—
—
—
—
—
—
—
—
—
—
—
—
— (146,596)
26
—
3,522
—
4,974
7,306
244,500
16,953
46,263
29,968
353,512
5. Net Loss Per Share of Common Stock
The following table sets forth the computation of basic and diluted earnings per share for the years ended
December 31, 2022 and 2021:
Basic and diluted net loss per share of common stock:
Net loss attributable to Onconova Therapeutics, Inc.
Weighted average shares of common stock outstanding
Net loss per share of common stock—basic and diluted
Year ended December 31,
2021
2022
$ (18,964,000) $ (16,163,000)
16,832,198
20,908,235
(0.96)
$
(0.91) $
The following potentially dilutive securities outstanding at December 31, 2022 and 2021 have been excluded from the
computation of diluted weighted average shares outstanding, as they would be antidilutive (reflects the number of common
shares as if the dilutive securities had been converted to common stock):
Warrants
Stock options
6. Revenue
December 31,
2022
344,990
1,397,763
1,742,753
2021
491,586
452,999
944,585
The Company recognized revenue under its license and collaboration agreement with SymBio as follows (See Note
14):
Symbio
Year ended December 31,
2022
2021
Upfront license fee recognition over time
$ 226,000
$ 226,000
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Deferred revenue is as follows:
Deferred balance at December 31, 2021
Recognition to revenue
Deferred balance at December 31, 2022
7. Balance Sheet Detail
Prepaid expenses and other current assets are as follows:
Research and development
Manufacturing
Insurance
Other
Accrued expenses and other current liabilities are as follows:
Research and development
Employee compensation
Professional fees
8. Fair Value Measurements
Symbio
Upfront Payment
3,469,000
(226,000)
$
$
3,243,000
December 31,
2022
$ 233,000
97,000
191,000
40,000
$ 561,000
2021
15,000
29,000
253,000
35,000
332,000
$
$
December 31,
2022
$ 2,593,000
1,187,000
180,000
$ 3,960,000
2021
$ 1,759,000
1,217,000
156,000
$ 3,132,000
At both December 31, 2022 and 2021, the Company had no financial assets and liabilities measured at fair value on a
recurring basis.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date.
The Company utilizes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value.
This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active
markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for
substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own
assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the
hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
During 2021, the Company had tradable warrants and non-tradable warrants that were classified as liabilities and
measured at fair value on a recurring basis. The tradable warrants were listed on the Nasdaq Capital Market. The Company
determined that an active and orderly market for the tradable warrants developed and that the Nasdaq Capital Market price
was the best indicator of fair value of the warrant liability. The quoted market price was used to determine the fair
value.The fair value of the non-tradable warrants was estimated using the Black-Scholes pricing model. All of
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these tradable and non-tradable warrants expired in July 2021. During the year ended December 31, 2021, there was a
decrease in the fair value of the warrant liability of $321,000.
9. Income Taxes
The Company accounts for income taxes under FASB ASC 740 (ASC 740). Deferred income tax assets and liabilities
are determined based upon differences between financial reporting and tax bases of assets and liabilities, which are
measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
Income taxes have been based on the following income (loss) before income tax expense:
Domestic
Foreign
December 31,
2022
2021
$ (18,977,000) $ (16,153,000)
(10,000)
$ (18,964,000) $ (16,163,000)
13,000
As of December 31, 2022, the Company had federal net operating loss (NOL) carry forwards of $298,100,000, state
NOL carry forwards of $257,800,000, federal research and development tax credit carry forwards of $89,700,000, and state
research and development tax credit carry forwards of $1,100,000, which may be available to reduce future taxable
income. There are $208,400,000 of federal NOLs that were generated in tax periods prior to 2018 that will begin to expire
at various dates starting in 2023 and ending in 2037. The NOLs that were generated in 2018 through 2022 of $89,700,000
will carry forward indefinitely and not expire pursuant to changes in tax laws but will be limited in a single tax year to 80
percent of federal taxable income. The state NOL carry forwards will begin to expire at various dates starting in 2025. The
NOL carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax
authorities. NOL and tax credit carry forwards may become subject to an annual limitation in the event of certain
cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as
defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state tax
provisions. The Company believes such a change occurred and may impact available net operating losses and carry over
research credits generated. The Company has not performed any detailed analysis as it expects these to expire before
utilization and has provided for a full valuation allowance. The Company will complete a full Section 382 and 383 analysis
prior to any utilization of any NOL and tax credit carry forwards. The amount of the annual limitation, if any, will be
determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes
may further affect the limitation in future years.
As result of changes made by the Tax Cuts and Jobs Act of 2017, that became effective as of January 1, 2022, the
company is now required to capitalize for tax purposes certain research and development expenses, and amortize domestic
expenses over a 5 year period and foreign expenses over a 15 year period, resulting in a deferred tax asset for the
capitalized amounts.
The Company’s reserves related to taxes are based on a determination of whether and how much of a tax benefit taken
by the Company in its tax filings or positions is more likely than not to be realized. The Company recognized no material
adjustment for unrecognized income tax benefits. Through December 31, 2022, the Company had no unrecognized tax
benefits or related interest and penalties accrued.
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The principal components of the Company’s deferred tax assets are as follows:
December 31,
2022
2021
Deferred tax assets:
Net operating loss carryovers
R&D tax credits
Non-qualified stock options
Deferred revenue
Charitable contributions
Accrued expenses
Capitalized research and development costs
Stock Appreciation Rights
Deferred tax assets
Deferred tax liabilities:
Fixed Assets
Deferred tax liabilities
Less valuation allowance
Net deferred tax assets
$ 73,394,000
90,522,000
2,135,000
809,000
395,000
2,867,000
12,000
170,134,000
$ 81,468,000
88,721,000
2,194,000
1,002,000
4,000
447,000
—
19,000
173,855,000
—
—
—
(170,134,000)
$
— $
(1,000)
(1,000)
(173,854,000)
—
ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available
evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against
its deferred tax assets at December 31, 2022. The Company experienced a net change in valuation allowance of $3,720,000
and $5,510,000 for the years ended December 31, 2022 and 2021, respectively.
A reconciliation of income tax (expense) benefit at the statutory federal income tax rate and income taxes as reflected
in the financial statements is as follows:
Federal income tax expense at statutory rate
Permanent items
State income tax, net of federal benefit
Tax credits
Change in valuation allowance
Deferred tax adjustment
State tax rate change
Other
Effective income tax rate
10. Stock-Based Compensation
December 31,
2022
21.0 %
—
1.3
9.5
19.6
(0.2)
(50.2)
(1.0)
2021
21.0 %
0.4
8.0
7.4
(34.1)
(2.6)
—
(0.1)
— % — %
The 2018 Omnibus Incentive Compensation Plan (the 2018 Plan) was unanimously approved by the Company’s Board
of Directors on May 24, 2018 and was approved by the Company’s stockholders on June 27, 2018.
Under the 2018 Plan, the Company may grant incentive stock options, non-qualified stock options, stock awards, stock
units, stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants, and
advisors. The maximum aggregate number of shares of the Company’s common stock that may be issued under the 2018
Plan is 26,823.
The 2018 Plan was amended and restated following unanimous approval of the Company’s Board of Directors on
April 24, 2019 and was approved by the Company’s shareholders on June 17, 2019. The amended 2018 Plan (the
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Amended 2018 Plan) allowed for an additional 39,300 shares of the Company’s common stock that may be issued under
the Amended 2018 Plan with respect to awards made on and after June 17, 2019.
The 2021 Incentive Compensation Plan (the 2021 Plan) was approved by the Company’s shareholders on July 30,
2021. Upon stockholders’ approval of the 2021 Plan, no further awards will be made under the Amended 2018 Plan. Under
the 2021 Plan, the Company may grant incentive stock options, non-qualified stock options, stock awards, stock units,
stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants, and
advisors. The maximum aggregate number of shares of the Company’s common stock that may be issued under the 2021
Plan is 2,000,000. At December 31, 2022, there were 1,711,127 shares available for future issuance.
Stock-based compensation expense includes stock options granted to employees and non-employees and has been
reported in the Company’s statements of operations and comprehensive loss in either research and development expenses
or general and administrative expenses depending on the function performed by the optionee. No net tax benefits related to
the stock-based compensation costs have been recognized since the Company’s inception. The Company recognized stock-
based compensation expense related to stock options and restricted stock units as follows for the years ended December 31,
2022 and 2021:
General and administrative
Research and development
Year Ended December 31,
$
2022
538,000
617,000
$ 1,155,000
2021
$ 490,000
86,000
$ 576,000
A summary of stock option activity for the twelve months ended December 31, 2022 is as follows:
Options Outstanding
Balance, December 31, 2021
Granted
Exercised
Forfeitures/adjustments
Balance, December 31, 2022
Exercisable at December 31, 2022
Weighted-
Average
Exercise
Price
Number
of Shares
452,999
1,044,165
$ 20.71
$
1.37
— $ —
8.77
(99,401) $
$
7.15
$ 33.35
1,397,763
232,488
Weighted
Average
Remaining
Contractual
Aggregate
Intrinsic
Term (in years) Value
9.42
9.48
$ —
—
— $ —
8.77
9.18
8.28
$ —
$ —
The Company accounts for all stock-based payments made to employees, non-employees and directors using an option
pricing model for estimating fair value. Accordingly, stock-based compensation expense is measured based on the
estimated fair value of the awards on the date of grant. Compensation expense is recognized for the portion that is
ultimately expected to vest over the period during which the recipient renders the required services to the Company using
the straight-line single option method.
The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options at the grant date.
The Black-Scholes model requires the Company to make certain estimates and assumptions, including assumptions related
to the expected price volatility of the Common Stock, the period during which the options will be outstanding, the rate of
return on risk-free investments and the expected dividend yield for the Company’s stock.
As of December 31, 2022, there was $1,586,000 of unrecognized compensation expense related to the unvested stock
options which is expected to be recognized over a weighted-average period of approximately 1.52 years.
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The weighted-average assumptions underlying the Black-Scholes calculation of grant date fair value include the
following:
Risk-free interest rate
Expected volatility
Expected term
Expected dividend yield
Weighted average grant date fair value
Year ended December 31,
2021
2022
2.65 %
121.11 %
0.89 %
133.77 %
5.77 years
0 %
5.93 years
0 %
$
1.19
$
4.60
The weighted-average valuation assumptions were determined as follows:
● Risk-free interest rate: The Company based the risk-free interest rate on the interest rate payable on U.S. Treasury
securities in effect at the time of grant for a period that is commensurate with the assumed expected option term.
● Expected term of options: Due to its lack of sufficient historical data, the Company estimates the expected life of
its employee stock options using the “simplified” method, as prescribed in Staff Accounting Bulletin (SAB) No.
107, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term
of the option.
● Expected stock price volatility: Expected volatility is based on the historical volatility of the Company’s Common
Stock.
● Expected annual dividend yield: The Company has never paid, and does not expect to pay, dividends in the
foreseeable future. Accordingly, the Company assumed an expected dividend yield of 0.0%.
On August 2, 2021, the compensation committee of the board of directors approved restricted stock unit grants to the
Company’s employees (2021 RSU). An aggregate of 104,700 service-based RSUs were issued at a grant date fair value of
$5.19. The 2021 RSU awards will be settled in stock, vest 33% on each of the first and second anniversary of the date of
grant, and vest 34% on the third anniversary of the date of grant. The 2021 RSU awards were granted under the 2021 Plan.
During the year ended December 31, 2022, there was a vesting event for 30,429 of the 2021 RSUs, and there was a
forfeiture of 13,400 of the 2021 RSUs. There were no expirations or cancelations of the 2021 RSUs during the period. On
February 7, 2022, the compensation committee of the board of directors approved restricted stock unit grants to the
Company’s employees (2022 RSU). An aggregate of 148,343 service-based RSUs were issued at a grant date fair value of
$1.82. The 2022 RSU awards will be settled in stock, vest 33% on each of the first and second anniversary of the date of
grant, and vest 34% on the third anniversary of the date of grant. The 2022 RSU awards were granted under the 2021 Plan.
During the year ended December 31, 2022 there was a forfeiture of 17,633 of the 2022 RSUs and there were no vesting
events, expirations, or cancelations of the 2022 RSU during the period. On June 10, 2022, the compensation committee of
the board of directors approved restricted stock unit grants to certain of the Company’s employees (2022 RSU2). An
aggregate of 24,200 service-based RSUs were issued at a grant date fair value of $1.33. The 2022 RSU2 awards will be
settled in stock, vest 33% on each of the first and second anniversary of the date of grant, and vest 34% on the third
anniversary of the date of grant. During the year ended December 31, 2022 there were no vesting events, forfeitures,
expirations, or cancelations of the 2022 RSUs. At December 31, 2022, the unrecognized compensation cost related to
unvested service-based RSUs was $443,000, which will be recognized over the remaining service period of 1.99 years.
Grants of PSUs and SARs
During 2020 and 2021, the compensation committee of the board of directors and the board approved a cash bonus
program of cash-settled stock appreciation right (“SAR”) awards to the Company’s employees and non-employee directors,
and cash-settled performance stock unit (“PSU”) awards to the Company’s employees. These awards were granted outside
of the 2018 Plan and the 2021 Plan. As the Company’s stock price has decreased since these awards,
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their impact on the results of operations and balance sheet of the Company are not material as of and for the years ended
December 31, 2022 and 2021.
11. Employee Benefit Plan
The Company has a 401(k) Retirement Savings Plan. Employees are eligible to participate in the plan as soon as they
join the Company if they are at least 21 years of age and work a minimum of 1,000 hours per year. The Company matches
$0.75 for every dollar of the first 6% of payroll that employees invest, up to the legal limit. Employer contributions vest
immediately. For the years ended December 31, 2022 and 2021, the Company contributed $131,000 and $114,000,
respectively.
12. Commitments and Contingencies
Employment agreements
The Company has entered into employment agreements with certain of its executives. The agreements provide for,
among other things, salary, bonus and severance payments.
13. Research Agreements
The Company has entered into various licensing and right-to-sublicense agreements with educational institutions for
the exclusive use of patents and patent applications, as well as any patents that may develop from research being conducted
by such educational institutions in the field of anticancer therapy, genes and proteins. Results from this research have been
licensed to the Company pursuant to these agreements. Under one of these agreements with Temple University (Temple),
the Company is required to make annual maintenance payments to Temple and royalty payments based upon a percentage
of sales generated from any products covered by the licensed patents, with minimum specified royalty payments. As no
sales had been generated through December 31, 2022 under the licensed patents, the Company has not incurred any royalty
expenses related to this agreement. In addition, the Company is required to pay Temple a percentage of any sublicensing
fees received by the Company. No sublicense fees were incurred during 2022 or 2021.
14. License and Collaboration Agreements
SymBio Agreement
In July 2011, the Company entered into a license agreement with SymBio Pharmaceuticals Limited (SymBio), which
has been subsequently amended, granting SymBio an exclusive, royalty-bearing license for the development and
commercialization of rigosertib in Japan and Korea. Under the SymBio license agreement, SymBio is obligated to use
commercially reasonable efforts to develop and obtain market approval for rigosertib inside the licensed territory and the
Company has similar obligations outside of the licensed territory. The Company has also entered into an agreement with
SymBio providing for it to supply SymBio with development-stage product. Under the SymBio license agreement, the
Company also agreed to supply commercial product to SymBio under specified terms that will be included in a commercial
supply agreement to be negotiated prior to the first commercial sale of rigosertib. The supply of development-stage product
and the supply of commercial product will be at the Company’s cost plus a defined profit margin. Sales of development-
stage product have been de minimis. The Company has additionally granted SymBio a right of first negotiation to license
or obtain the rights to develop and commercialize compounds having a chemical structure similar to rigosertib in the
licensed territory.
Under the terms of the SymBio license agreement, the Company received an upfront payment of $7,500,000 in 2011.
In addition, the Company could receive regulatory, development and sales-based milestone payments as well as royalty
payments at percentage rates ranging from the mid-teens to 20% based on net sales of rigosertib by SymBio.
Royalties will be payable under the SymBio agreement on a country-by-country basis in the licensed territory, until the
later of the expiration of marketing exclusivity in those countries, a specified period of time after first commercial sale of
rigosertib in such country, or the expiration of all valid claims of the licensed patents covering rigosertib or the
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manufacture or use of rigosertib in such country. If no valid claim exists covering the composition of matter of rigosertib or
the use of or treatment with rigosertib in a particular country before the expiration of the royalty term, and specified
competing products achieve a specified market share percentage in such country, SymBio’s obligation to pay the Company
royalties will continue at a reduced royalty rate until the end of the royalty term. In addition, the applicable royalties
payable to the Company may be reduced if SymBio is required to pay royalties to third-parties for licenses to intellectual
property rights necessary to develop, use, manufacture or commercialize rigosertib in the licensed territory. The license
agreement with SymBio will remain in effect until the expiration of the royalty term. However, the SymBio license
agreement may be terminated earlier due to the uncured material breach or bankruptcy of a party, or force majeure. If
SymBio terminates the license agreement in these circumstances, its licenses to rigosertib will survive, subject to SymBio’s
milestone and royalty obligations, which SymBio may elect to defer and offset against any damages that may be
determined to be due from the Company. In addition, the Company may terminate the license agreement in the event that
SymBio brings a challenge against it in relation to the licensed patents, and SymBio may terminate the license agreement
without cause by providing the Company with written notice within a specified period of time in advance of termination.
The Company assessed the SymBio arrangement in accordance with ASC 606 and determined that its performance
obligations under the SymBio agreement include the exclusive, royalty-bearing, sublicensable license to rigosertib, the
research and development services to be provided by the Company and its obligation to serve on a joint committee. The
Company concluded that the license was not distinct since it was of no benefit to SymBio without the ongoing research and
development services and that, as such, the license and the research and development services should be bundled as a
single performance obligation. Since the provision of the license and research and development services are considered a
single performance obligation, the $7,500,000 upfront payment is being recognized as revenue ratably through December
2037, the expected period over which the Company expects the research and development services to be performed.
SymBio’s purchases of rigosertib as development-stage product or for commercial requirements represent options
under the agreement and revenues are therefore recognized when control of the product is transferred, which is typically
when shipped. If SymBio orders the supplies from the Company, the Company expects the pricing for this supply to equal
its third-party manufacturing cost plus a pre-negotiated percentage, which will not result in a significant incremental
discount to market rates. In January 2018, the agreement was amended to provide SymBio a discount of 35% on future
purchases, limited to a cumulative total amount of $300,000.
HanX Narazaciclib (ON 123300) Agreement
In December 2017, the Company entered into a license and collaboration agreement with HanX Biopharmaceuticals,
Inc. (HanX), a company focused on development of novel oncology products, for the further development, registration and
commercialization of narazaciclib in Greater China. Narazaciclib is a preclinical compound which the Company believes
has the potential to overcome the limitations of current generation CDK 4/6 inhibitors. The key feature of the collaboration
was that HanX provided all funding required for the Chinese IND enabling studies necessary in order to seek IND approval
by the National Medical Products Administration (Chinese FDA). The Chinese IND was approved in January 2020. The
Company and HanX also intended for these studies underlying the Chinese IND approval, to meet the US FDA standards
for IND approval. Accordingly, such studies were used by the Company for an IND filing with the US FDA in November
2020. In September 2020, a Phase 1 Study with narazaciclib in cancer patients was initiated in China. The Company
maintains global rights to the study and study data outside of China. The US FDA Study May Proceed letter was issued in
December 2020. Enrollment into the US phase 1 study (Study 19-01) commenced in May 2021.
Pursuant to the agreement, the Company received a $450,000 upfront payment on April 11, 2018. If the compound
receives regulatory approval and is commercialized, the Company would receive regulatory and commercial milestone
payments, as well as royalties on sales in the Greater China territory.
The Company assessed the HanX arrangement for revenue recognition in accordance with ASC 606 and determined
that the license was distinct and that control of the license had been transferred during the first quarter of 2018. As such,
the Company recognized the $450,000 allocated to the license at that time.
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Pint Agreement
On March 2, 2018, the Company entered into a License, Development and Commercialization Agreement (the Pint
License Agreement) and a Securities Purchase Agreement (the Pint Securities Purchase Agreement) with Pint International
SA (which, together with its affiliate Pint Pharma GmbH, are collectively referred to as Pint).
Under the terms of the Pint License Agreement, the Company granted Pint an exclusive, royalty-bearing license, with
the right to sublicense, under certain Company patent rights and know-how to develop and commercialize any
pharmaceutical product (the Pint Licensed Product) containing rigosertib in all uses of rigosertib in humans in Latin
American countries (the Pint Territory, including Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba,
Dominican Republic, Ecuador, El Salvador, French Guiana, British Guiana, Suriname, Guatemala, Haiti, Honduras,
Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela).
Pint agreed to make an upfront equity investment in the Company’s common stock. In addition, the Company could
receive additional regulatory, development and sales-based milestone payments, an additional equity investment, as well as
tiered, double digit royalties based on net aggregate net sales in the Pint Territory. Pint and the Company have also agreed
to enter into a supply agreement providing for Pint purchasing rigosertib and the Pint Licensed Product from the Company
within 90 days of FDA approval of an NDA for the Pint Licensed Product.
Pint may terminate the Pint License Agreement in whole (but not in part) at any time upon 45 days’ prior written
notice. The Pint License Agreement also contains certain provisions for termination by either party in the event of breach
of the Pint License Agreement by the other party, subject to a cure period, or bankruptcy of the other party.
Under the terms of the Pint Securities Purchase Agreement, Pint agreed to make an upfront equity investment in the
Company at a specified premium to the Company’s share price. Pursuant to the Pint Securities Purchase Agreement,
closing of the upfront equity investment occurred on April 4, 2018 and Pint purchased 3,631 shares of common stock for
$1,250,000. The total amount of the premium was $319,000 and this amount was allocated to the license.
In addition, under the Pint Securities Purchase Agreement, if the FDA approves the NDA for the Pint Licensed
Product, Pint will reimburse the Company for certain research and development expenses. Half of the reimbursement
amount will be paid in cash, the other half of the amount will be by an equity investment at a premium to the average of the
volume weighted average price of common stock for the ten consecutive trading days ended on the day the FDA approves
the NDA.
Pursuant to the Pint Securities Purchase Agreement, the common stock purchased by Pint is subject to certain lock-up
restrictions and Pint is entitled to certain registration and participation rights.
The Company assessed the Pint arrangement for revenue recognition in accordance with ASC 606 and determined that
the license was distinct and that control of the license had been transferred during the second quarter of 2018. As such, the
Company recognized the $319,000 allocated to the license at that time.
Knight Agreement
In November 2019, the Company entered into a Distribution, License and Supply Agreement (the Knight License
Agreement) with Knight Therapeutics Inc. (Knight). Under the terms of the Knight License Agreement, the Company
granted Knight (i) a non-exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent
rights and know-how to develop and manufacture any product (the Knight Licensed Product) containing rigosertib for
Canada (and Israel should Knight exercise its option) (the Knight Territory) and in human uses (the Knight Licensed Field),
and (ii) an exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent rights and know-
how to commercialize the Knight Licensed Product in the Knight Territory and in the Knight Licensed Field.
Knight has also agreed to obtain from the Company all of Knight’s requirements of the Knight Licensed Products for
the Knight Territory, and the Company has agreed to supply Knight with all of its requirements of the Knight
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Licensed Products. The Company may, at its discretion, use the services of a contract manufacturer to manufacture and
package the Knight Licensed Products.
In addition, the Company has granted Knight an exclusive right of first refusal with respect to all or any part of the
Knight Territory, to store, market, promote, sell, offer for sale and/or distribute any ROFR Products. As used in the Knight
License Agreement, “ROFR Products” means all products other than the Knight Licensed Product that are owned, licensed,
or controlled by the Company as of the effective date and all improvements thereto.
The Company received an upfront payment of $100,000 and is eligible to receive clinical, regulatory and sales-based
milestone payments. The Company is also eligible to receive tiered double-digit royalties based on net sales in the Knight
Territory.
The Knight License Agreement is for a term of 15 years from the launch on a country by country basis in the Knight
Territory and contains customary provisions for termination by either party in the event of breach of the Knight License
Agreement by the other party (subject to a cure period), bankruptcy of the other party, or challenges to the patents by any
sublicensee or assignee.
The Company assessed the Knight License Agreement for revenue recognition in accordance with ASC 606 and
determined that the license was distinct and that control of the license had been transferred during the fourth quarter of
2019. As such, the Company recognized the $100,000 allocated to the license at that time.
Specialised Therapeutics Asia Pte. Ltd. Agreement
On December 18, 2019, the Company entered into a Distribution, License and Supply Agreement (the STA License
Agreement) with Specialised Therapeutics Asia Pte. Ltd. (STA). Under the terms of the STA License Agreement, the
Company granted STA (i) a non-exclusive, royalty-bearing license, with the right to sublicense, under certain Company
patent rights and know-how to develop and manufacture any product (the STA Licensed Product) containing rigosertib for
Australia and New Zealand (the STA Territory) and in human uses (the Field), and (ii) an exclusive, royalty-bearing
license, with the right to sublicense, under certain Company patent rights and know-how to commercialize the STA
Licensed Product in the STA Territory and in the Field.
STA has also agreed to obtain from the Company all of STA’s requirements of the STA Licensed Products for the STA
Territory, and the Company has agreed to supply STA with all of its requirements of the STA Licensed Products. The
Company may, at its discretion, use the services of a contract manufacturer to manufacture and package the STA Licensed
Products.
There was an upfront fee of $50,000 and the Company may be entitled to receive clinical, regulatory and sale-based
milestone payments. The Company may also be entitled to receive tiered double-digit royalties based on net sales in the
Territory.
The License Agreement is for a term of 15 years from the launch on a country by country basis in the Territory and
contains customary provisions for termination by either party in the event of breach of the License Agreement by the other
party (subject to a cure period), bankruptcy of the other party, or challenges to the patents by any sublicensee or assignee.
The Company assessed the License Agreement for revenue recognition in accordance with ASC 606 and determined
that the license was distinct and that control of the license had been transferred during the fourth quarter of 2019. As such,
the Company recognized the $50,000 allocated to the license at that time.
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15. Securities Registrations and Sales Agreements
January 2021 Offering
On January 7, 2021, the Company entered into a purchase agreement with certain institutional and accredited investors
for the sale of an aggregate of 1,303,408 shares of the Company’s common stock, at a purchase price of $6.675 per share.
Under the purchase agreement, subject to certain exceptions, the Company is prohibited from effecting or entering into
an agreement to effect any “variable rate transactions” as defined in the purchase agreement for a period of five years
following the closing of the offering.
In connection with the offering, pursuant to the purchase agreement the Company reimbursed Lincoln Park Capital
Fund, LLC, as the lead investor (Lincoln Park), an aggregate of $100,000 for expenses incurred in connection with the
offering, including any due diligence expenses and legal fees. Furthermore, pursuant to the purchase agreement, the
Company granted Lincoln Park certain rights to participate at fair value with other investors in up to 50% of the amount of
any future offerings of common stock or securities exercisable for or convertible into common stock that the Company
seeks to complete within one year after the closing of the offering, other than a firm commitment public offering.
The net proceeds to the Company from the offering, after deducting Lincoln Park’s expenses and other estimated
offering expenses payable by the Company were approximately $8.5 million.
The shares sold in the offering were offered and sold by the Company directly to the investors, without a placement
agent, underwriter, broker or dealer, pursuant to an effective shelf registration statement on Form S-3 (File No. 333-
237844) declared effective by the SEC on May 18, 2020, and the base prospectus contained therein. The offering closed on
January 11, 2021.
February 2021 Offering
On February 10, 2021, the Company entered into an underwriting agreement with Guggenheim Securities, LLC, as
representative of several underwriters, for the public offering of 1,666,667 shares of the Company’s common stock, at a
public offering price of $15.00 per share. Under the terms of the underwriting agreement, the Company granted the
underwriters an option, exercisable for 30 days, to purchase up to an additional 250,000 shares of common stock at the
same price. The option was exercised prior to closing.
In connection with the offering, the Company paid the underwriters a cash fee equal to 6% of the gross proceeds in the
offering and $100,000 in legal fees and expenses.
The net proceeds to the Company from the offering, including exercise of the underwriters’ option, were
approximately $26.7 million, after deducting fees and estimated offering expenses payable by the Company.
The offering was made pursuant to a registration statement (No. 333-237844) on Form S-3, which was initially filed
by the Company with the SEC on April 24, 2020, amended on Form S-3/A that was filed with the SEC on May 15, 2020,
and was declared effective by the SEC on May 18, 2020. The offering closed on February 16, 2021.
August 2021 Equity Distribution Agreement
On August 20, 2021, the Company entered into an Equity Distribution Agreement (the Equity Distribution Agreement)
with Piper Sandler & Co. (Piper Sandler) under which the Company may offer and sell, from time to time at its sole
discretion, shares of the Company’s common stock, with aggregate gross sales proceeds of up to $25.0 million through an
“at the market” equity offering program under which Piper Sandler is the sales agent.
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Under the Equity Distribution Agreement, the Company has the right to set the parameters for the sale of shares,
including the number of shares to be issued, the time period during which sales are requested to be made, limitations on the
number of shares that may be sold in any one trading day and any minimum price below which sales may not be made.
Subject to the terms and conditions of the Equity Distribution Agreement, Piper Sandler may sell the shares by methods
deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as
amended, including sales made through The Nasdaq Capital Market or any other trading market for the Company’s
common stock. The Equity Distribution Agreement provides that Piper Sandler is entitled to compensation for its services
equal to 3.0% of the gross proceeds of any shares of common stock sold through Piper Sandler under the Equity
Distribution Agreement. The Company has no obligation to sell any shares under the Equity Distribution Agreement, and
may at any time suspend solicitation and offers under the Equity Distribution Agreement. Through September 30, 2021, the
Company sold 109,523 shares under the agreement at a weighted average price of $5.32 per share. Net proceeds after
commissions and offering expenses were approximately $0.5 million. There were no other sales during the years ended
December 31, 2022 and 2021.
The shares are issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-237844). The
Company filed a prospectus supplement, dated August 20, 2021 with the Securities and Exchange Commission in
connection with the offer and sale of the shares pursuant to the Equity Distribution Agreement.
September 2021 Offering
On September 23, 2021, the Company entered into an underwriting agreement with Guggenheim Securities, LLC, as
representative of several underwriters, for the public offering of 5,000,000 shares of the Company’s common stock, at a
public offering price of $4.20 per share. Under the terms of the underwriting agreement, the Company granted the
underwriters an option, exercisable for 30 days, to purchase up to an additional 750,000 shares of common stock at the
same price. The option was not exercised.
In connection with the offering, the Company paid the underwriters a cash fee equal to 6% of the gross proceeds in the
offering and $100,000 in legal fees and expenses.
The net proceeds to the Company from the offering, including exercise of the underwriters’ option, were
approximately $19.5 million, after deducting fees and estimated offering expenses payable by the Company.
The offering was made pursuant to a registration statement (No. 333-237844) on Form S-3, which was initially filed
by the Company with the SEC on April 24, 2020, amended on Form S-3/A that was filed with the SEC on May 15, 2020,
and was declared effective by the SEC on May 18, 2020. The offering closed on September 28, 2021.
16. Subsequent Events
Silicon Valley Bank (SVB) was closed on March 10, 2023 by the California Department of Financial Protection and
Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. At the time of closing, the
Company had nearly all of its cash and cash equivalent balances in segregated custodial accounts held by U.S. Bank for
which SVB Asset Management is the advisor. The Company’s investment portfolio currently does not contain any
securities of SVB. On March 12, 2023, the U.S. Treasury, Federal Reserve, and FDIC announced that SVB depositors
would have access to all of their money starting March 13, 2023 and the Company has received such access. The Company
does not believe it will be impacted by the closure of SVB and will continue to monitor the situation as it evolves.
F-27
Subsidiary
Onconova Europe GmbH
Exhibit 21.1
Jurisdiction of
Incorporation
Germany
Exhibit 23.1
We consent to the incorporation by reference in the following Registration Statements:
Consent of Independent Registered Public Accounting Firm
(1) Registration Statement (Form S-8 No. 333-191161) pertaining to the Onconova Therapeutics, Inc. 2013 Equity Compensation
Plan
(2) Registration Statement (Form S-8 No. 333-194228) pertaining to the Onconova Therapeutics, Inc. 2013 Equity Compensation
Plan
(3) Registration Statement (Form S-8 No. 333-204210) pertaining to the Onconova Therapeutics, Inc. 2013 Equity Compensation
Plan
(4) Registration Statement (Form S-8 No. 333-210694) pertaining to the Onconova Therapeutics, Inc. 2013 Equity Compensation
Plan
(5) Registration Statement (Form S-8 No. 333-215575) pertaining to the Onconova Therapeutics, Inc. 2013 Equity Compensation
Plan
(6) Registration Statement (Form S-8 No. 333-222400) pertaining to the Onconova Therapeutics, Inc. 2013 Equity Compensation
Plan
(7) Registration Statement (Form S-8 No. 333-226199) pertaining to the Onconova Therapeutics, Inc. 2018 Omnibus Incentive
Compensation Plan
(8) Registration Statement (Form S-8 No. 333-233410) pertaining to the Onconova Therapeutics, Inc. 2018 Omnibus Incentive
Compensation Plan
(9) Registration Statement (Form S-8 No. 333-258336) pertaining to the Onconova Therapeutics, Inc. 2021 Omnibus Incentive
Compensation Plan
(10) Registration Statement (Form S-8 No. 333-268393) pertaining to the Onconova Therapeutics, Inc. 2021 Omnibus Incentive
Compensation Plan
(11) Registration Statement (Form S-3 No. 333-237844) of Onconova Therapeutics, Inc.
(12) Registration Statement (Form S-3 No. 333-230744) of Onconova Therapeutics, Inc.
(13) Registration Statement (Form S-1 No. 333-211769) of Onconova Therapeutics, Inc.
(14) Registration Statement (Form S-1 No. 333-222374) of Onconova Therapeutics, Inc.
(15) Registration Statement (Form S-1 No. 333-224315) of Onconova Therapeutics, Inc.
(16) Registration Statement (Form S-1 No. 333-234360) of Onconova Therapeutics, Inc.
of our report dated March 30, 2023, with respect to the consolidated financial statements of Onconova Therapeutics, Inc. included in this
Annual Report (Form 10-K) for the year ended December 31, 2022.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
March 30, 2023
Exhibit 31.1
I, Steven Fruchtman, certify that:
CERTIFICATIONS
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Onconova Therapeutics, Inc.;
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;
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;
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)
(b)
(c)
(d)
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;
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;
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
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 other persons
performing the equivalent functions):
(a)
(b)
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
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.
/S/ STEVEN FRUCHTMAN, M.D.
Steven Fruchtman, M.D.
President and Chief Executive Officer
(Principal Executive Officer)
Dated: March 30, 2023
Exhibit 31.2
I, Mark Guerin, certify that:
CERTIFICATIONS
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Onconova Therapeutics, Inc.;
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;
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;
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)
(b)
(c)
(d)
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;
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;
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
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 other persons
performing the equivalent functions):
(a)
(b)
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
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.
/s/ MARK GUERIN
Mark Guerin
Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)
Dated: March 30, 2023
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of Onconova Therapeutics, Inc. (the “Company”) for the year ended
December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Steven
Fruchtman, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that, based on my knowledge:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ STEVEN FRUCHTMAN, M.D.
Steven Fruchtman, M.D.
President and Chief Executive Officer
(Principal Executive Officer)
Dated: March 30, 2023
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date
hereof, regardless of any general incorporation language in such filing.
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report on Form 10-K of Onconova Therapeutics, Inc. (the “Company”) for the year ended
December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Mark
Guerin, Chief Financial Officer, hereby certifies, pursuant to 18 U.S.C. Section 1350, that, based on my knowledge:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ MARK GUERIN
Mark Guerin
Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)
Dated: March 30, 2023
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date
hereof, regardless of any general incorporation language in such filing.