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Contact Name
Contact Phone
Filer Accelerated Status*
Filer File Number
Filer CIK*
Filer CCC*
Filer is Shell Company*
Filer is Voluntary Filer*
Filer is Well Known Seasoned Issuer*
Confirming Copy
Notify via Website only
Return Copy
SROS*
Period*
Emerging Growth Company
Elected not to use extended transition period
General Information
20-F
EDGAR AGENTS, LLC
212-265-3347
Non-Accelerated Filer
0001723069 (Tiziana Life Sciences Ltd)
**********
N
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NASD
12-31-2023
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18
ea0203872-20f_tiziana.htm
20-F
Annual Report
ea020387201ex2-1_tiziana.htm
EX-2.1
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EX-13.1
Certification
ea020387201ex13-2_tiziana.htm
EX-13.2
Certification
ea020387201ex15-1_tiziana.htm
EX-15.1
Consent of Mazars LLP
ea020387201ex15-2_tiziana.htm
EX-15.2
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ea020387201ex97_tiziana.htm
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ea0203872-20f_tiziana.htm
Edgar Agents LLC
Form Type: 20-F
Tiziana Life Sciences Ltd
Page 1
05/10/2024 01:57 PM
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number:
Tiziana Life Sciences Ltd
(Exact name of Registrant as specified in its charter and translation of Registrant’s name into English)
Bermuda
(Jurisdiction of incorporation or organization)
Clarendon House,
2 Church Street,
Hamilton HM 11,
Bermuda
(Address of principal executive offices)
Keeren Shah
Chief Financial Officer
14-15 Conduit Street, LondonW1S 2XJ United Kingdom
+44 20 7495 2379
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Copies to:
Ed Lukins
Orrick, Herrington & Sutcliffe (UK) LLP
107 Cheapside
London EC2V 6DN
United Kingdom
Jeffrey Fessler
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza
New York, NY 10112-0015
(212) 653 8700
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Common Shares
Name of each exchange on which registered
NASDAQ Capital Market
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
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Form Type: 20-F
Tiziana Life Sciences Ltd
Page 2
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Number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2023: 103,087,744 common shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934.
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 and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted 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 and post such files).
☐ Yes ☐ No
☐ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, smaller reporting company, or an
emerging growth company. See definitions of “large accelerated filer, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer ☒
Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by checkmark 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. ☐
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
If the 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 which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐
International Financial Reporting Standards as issued by the
International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Item 17 ☐ Item 18
☐ Yes ☒ No
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Edgar Agents LLC
Form Type: 20-F
Tiziana Life Sciences Ltd
Page 3
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TABLE OF CONTENTS
PART I
Item 1
Item 2
Item 3
Item 4
Item 4A
Item 5
Item 6
Item 7
Item 8
Item 9
Item 10
Item 11
Item 12
Item 13
Item 14
Item 15
Item 16
Item 16A
Item 16B
Item 16C
Item 16D
Item 16E
Item 16F
Item 16G
Item 16H
Item 16I
Item 16J
Item 16K
Identity of Directors, Senior Management and Advisers
Offer Statistics and Expected Timetable
Key Information
Information on the Company
Unresolved Staff Comments
Operating and Financial Review and Prospects
Directors, Senior Management and Employees
Major Shareholders and Related Party Transactions
Financial Information
The Offer and Listing
Additional Information
Quantitative and Qualitative Disclosures About Market Risk
Description of Securities Other than Equity Securities
PART II
Defaults, Dividend Arrearages and Delinquencies
Material Modifications to the Rights of Security Holders and Use of Proceeds
Controls and Procedures
[Reserved]
Audit Committee Financial Expert
Code of Ethics
Principal Accountant Fees and Services
Exemptions From the Listing Standards for Audit Committees
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Change in Registrant’s Certifying Accountant
Corporate Governance
Mine Safety Disclosure
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Insider Trading Policies
Cybersecurity
Item 17
Item 18
Item 19
Financial Statements
Financial Statements
Exhibits
PART III
i
1
1
1
37
77
77
94
110
111
112
112
119
119
120
120
120
121
121
121
122
122
122
122
122
122
122
123
124
124
124
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Edgar Agents LLC
Form Type: 20-F
Tiziana Life Sciences Ltd
Page 4
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INTRODUCTION
In this Annual Report on the Form 20-F references to “Tiziana,” “Tiziana Life Sciences plc,” “the company,” “we,” “us” and “our” refer to Tiziana
Life Sciences Ltd, Bermuda and its wholly owned subsidiaries, Tiziana Life Sciences Ltd (formerly Tiziana Life Sciences plc), Tiziana Therapeutics Inc.,
Tiziana Pharma Limited and Longevia Genomics S.r.l.
Solely for convenience, the trademarks, service marks and trade names in this registration statement may be referred to without the ® and ™ symbols,
but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights
thereto. This annual report contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. We do
not intend to use or display other companies’ trademarks, service marks and trade names to imply a relationship with, or endorsement or sponsorship of us by,
any other companies.
In this annual report, unless otherwise stated, all references to “U.S. dollars” or “US$” or “$” or “cents” are to the currency of the United States of
America, and all references to “Pounds Sterling” or “Sterling” or “£” or “pence” are to the currency of the United Kingdom.
In this annual report, any reference to any provision of any legislation shall include any amendment, modification, re-enactment or extension thereof.
Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.
ii
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Form Type: 20-F
Tiziana Life Sciences Ltd
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PRESENTATION OF FINANCIAL INFORMATION
This annual report includes our audited consolidated financial statements as of and for the years ended December 31, 2023 and 2022, which are
prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. None
of our financial statements were prepared in accordance with generally accepted accounting principles in the United States.
Our financial information is presented in United States dollars. For the convenience of the reader, in this prospectus, unless otherwise indicated,
translations from Pounds Sterling into U.S. dollars were made at the rate of £1.00 to $1.2743, which was the noon buying rate of the Federal Reserve Bank of
New York on December 29, 2023. Such U.S. dollar amounts are not necessarily indicative of the amounts of U.S. dollars that could actually have been
purchased upon exchange of Pounds Sterling at the dates indicated.
We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables
may not be an arithmetic aggregation of the figures that preceded them.
iii
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Form Type: 20-F
Tiziana Life Sciences Ltd
Page 6
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Annual
Report, other than statements of historical fact, including statements regarding our strategy, future operations, future financial position, future revenues,
projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “may,” “might,” “will,” “could,” “would,”
“should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and “ongoing,” or the negative of these
terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and
other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information
expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this registration statement are based upon
information available to us as of the date of this registration statement and, while we believe such information forms a reasonable basis for such statements,
such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review
of, all potentially available relevant information. Forward-looking statements include statement as about:
● the development of Foralumab, anti-IL6R monoclonal antibody (TZLS-501), Milciclib, and any of our other product candidates, including
statements regarding the timing of initiation, completion and the outcome of clinical studies or trials and related preparatory work, the period
during which the results of the trials will become available and our research and development programs;
● our ability to obtain and maintain regulatory approval of our product candidates, including Foralumab, anti-IL6R monoclonal antibody (TZLS-
501), Milciclib, in the indications for which we plan to develop them, and any related restrictions, limitations or warnings in the label of an
approved drug or therapy;
● our plans to research, develop, manufacture and commercialize our product candidates;
● the timing of our regulatory filings for our product candidates;
● the size and growth potential of the markets for our product candidates;
● our ability to raise additional capital;
● our commercialization, marketing and manufacturing capabilities and strategy;
● our expectations regarding our ability to obtain and maintain intellectual property protection;
● our ability to attract and retain qualified employees and key personnel;
● our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
● our estimates regarding future revenue, expenses and needs for additional financing; and
● regulatory developments in the United States, European Union and foreign countries.
You should refer to the section titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from
those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this
registration statement will prove to be accurate.
Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these
forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives
and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
You should read this Annual Report and the documents that we have filed as exhibits to this Annual Report completely and with the understanding that
our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
iv
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Tiziana Life Sciences Ltd
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ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable
ITEM 2: OFFER STATISTICS AND EXPECTED TIMETABLE
PART I
Not applicable.
ITEM 3: KEY INFORMATION
A. Selected Financial Data
The following table summarizes our consolidated financial data as of the dates and for the periods indicated. The consolidated financial statement data
as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 have been derived from our consolidated financial statements,
as presented at the end of this Annual Report, which have been prepared in accordance with IFRS, as issued by the IASB, and audited in accordance with the
standards of the Public Company Accounting Oversight Board (United States). The consolidated financial statement data as of December 31, 2020 and 2019
and for the years ended December 31, 2020 and 2019 have been derived from our consolidated financial statements, which are not presented herein, which have
also been prepared in accordance with IFRS as issued by the IASB.
Our functional and presentational currency is the U.S. dollar.
1
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Form Type: 20-F
Tiziana Life Sciences Ltd
Page 8
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Our historical results are not necessarily indicative of the results that may be expected in the future. The following selected consolidated financial data
should be read in conjunction with our audited consolidated financial statements included at the end of this Annual Report and the related notes and Item 5,
“Operating and Financial Review and Prospects” below.
Consolidated Statement of Operations and Comprehensive Loss Data:
2023
Years Ended December 31,
2021
(in thousands except share and per share data)
2020
2022
Operating expenses:
Research and development
General and administrative
Realization bonus
Impairment of asset
Disposal of Intellectual Property
Total operating expenses
Loss from operations
Other income (expense), net
Tax provision
Net loss attributable to ordinary shareholders
Other comprehensive loss:
Foreign currency translation adjustment
Total comprehensive loss
$
(8,113) $
(9,871)
-
-
-
(17,984)
(17,984)
742
(449)
(17,691)
(12,955) $
(1,631)
-
-
-
(14,586)
(14,586)
(811)
-
(15,397)
(13,208) $
(13,311)
(855)
-
-
(27,374)
(27,374)
717
3,240
(23,417)
(5,993) $
(11,203)
(13,214)
(279)
2,663
(28,026)
(28,026)
(312)
2,207
(26,131)
1,492
(16,199)
(3,582)
(18,979)
(4, 478)
(27,895)
3,474
(22,657)
2019
(3,714)
(6,207)
-
-
-
(9,921)
(9,921)
(91)
689
(9,323)
(27)
(9,350)
Basic and diluted net loss per ordinary share
(0.15)
(0.15)
(0.24)
(0.16)
(0.07)
Consolidated Balance Sheet Data:
2023
As of December 31,
2021
(in thousands except share and per share data)
2022
2020
2019
Cash and cash equivalents
Working capital
Total assets
Total shareholders’ equity/(deficit)
$
1,183 $
688
12,184
5,534
18,122 $
17,619
26,477
19,571
42,186 $
41,133
48,826
41,280
65,824 $
62,196
70,656
62,386
200
(5,846)
2,378
(5,514)
We define working capital as current assets less current liabilities.
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
2
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Tiziana Life Sciences Ltd
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D. Risk Factors
Our business has significant risks. You should consider carefully the risks described below, together with the other information contained in this
Annual Report, including our financial statements and the related notes. If any of the following risks occur, our business, financial condition, results of
operations and future growth prospects could be materially and adversely affected. This Annual Report also contains forward-looking statements that
involve risks and uncertainties. Our results could materially differ from those anticipated in these forward-looking statements, as a result of certain
factors including the risks described below and elsewhere in this Annual Report and our other SEC filings. See “Cautionary Statement Regarding
Forward-Looking Statements” above.
Risks Related to the Development of our Product Candidates
If we encounter substantial delays in clinical trials of our product candidates, we may be unable to obtain required regulatory approvals, and therefore will
be unable to commercialize our product candidates on a timely basis or at all.
Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials to
demonstrate the safety and utility of the product candidates. Clinical testing is expensive, time-consuming and uncertain as to outcome. We cannot guarantee
that any clinical trials will be conducted as planned or completed on schedule, if at all, as a failure of one or more clinical trials can occur at any stage of testing.
Events that may prevent successful or timely completion of clinical development include:
● delays in reaching a consensus with the U.S. Food and Drug Administration, or FDA, European Medicines Agency, or EMA, or other regulatory
authorities on trial design;
● delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites;
● delays in execution of development due to financial instability of our CROs, CMOs and CDMOs
● delays in opening clinical trial sites or obtaining required institutional review board or independent ethics committee approval at each clinical trial
site;
● delays in recruiting suitable patients to participate in our future clinical trials;
● imposition of a clinical hold by regulatory authorities as a result of a serious adverse event or after an inspection of our clinical trial operations or
clinical trial sites;
● failure by us, any CROs we engage or any other third parties to adhere to clinical trial requirements;
● failure to perform in accordance with good clinical practice, or GCP, or applicable regulatory guidelines in Europe and other international markets;
● delays in the testing, validation, manufacturing and delivery of our product candidates to the clinical trial sites, including delays by third parties
with whom we have contracted to perform certain of those functions;
● delays in having patients complete participation in a clinical trial or return for post-treatment follow-up;
● clinical trial sites or patients dropping out of a clinical trial;
● selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data;
● occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits;
● occurrence of serious adverse events in clinical trials of the same class of agents conducted by other sponsors; and
● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.
Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate
revenues from product sales, regulatory and commercialization milestones and royalties. In addition, if we make manufacturing or formulation changes to our
product candidates, we may need to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical trial delays also could
shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to
market before we do, which could impair our ability to successfully commercialize our product candidates and may harm our business, financial condition,
results of operations and prospects.
3
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Form Type: 20-F
Tiziana Life Sciences Ltd
Page 10
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We may fail to demonstrate the safety and therapeutic utility of our product candidates to the satisfaction of applicable regulatory authorities, which would
prevent or delay regulatory approval and commercialization.
Before obtaining regulatory approvals for the commercial sale of our product candidates, we must demonstrate through lengthy, complex and
expensive preclinical testing and clinical trials that our product candidates are both safe and effective for use in each target indication. Clinical testing is
expensive and can take many years to complete, and its outcome is inherently uncertain. Most product candidates that commence clinical trials are never
approved as products. If the results of our registrational trial or future pivotal trials for our other product candidates do not demonstrate therapeutic utility of our
product candidates, or if there are safety concerns or serious adverse events associated with our product candidates, we may:
● be delayed in obtaining marketing approval for our product candidates, if at all;
● obtain approval for indications or patient populations that are not as broad as intended or desired;
● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;
● be subject to additional post-marketing testing requirements;
● be subject to changes in the way the product is administered;
● be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements;
● have regulatory authorities withdraw or suspend their approval of the product or impose restrictions on its distribution in the form of a modified
risk evaluation and mitigation strategy, or REMS;
● be subject to the addition of labeling statements, such as warnings or contraindications; or
● be sued or experience damage to our reputation.
Success in preclinical studies or clinical trials may not be indicative of results in future clinical trials.
Success in preclinical testing and early clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide
adequate data to demonstrate the effectiveness and safety of our product candidate. Frequently, product candidates that have shown promising results in early
clinical trials have subsequently suffered significant setbacks in later clinical trials. To date, some of our clinical trials have involved small patient populations
and because of the small sample size in such trials, the interim results of these clinical trials may be subject to substantial variability and may not be indicative
of either future interim results or final results. In addition, the design of a clinical trial can determine whether its results will support approval of a product and
flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. In addition, there is a high failure rate for drugs and
biologic products proceeding through clinical trials. In fact, many companies in the pharmaceutical and biotechnology industries have suffered significant
setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. Moreover, data obtained from
preclinical and clinical activities is subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, we may experience
regulatory delays or rejections as a result of many factors, including due to changes in regulatory policy during the period of our product candidate
development. Any such delays could negatively impact our business, financial condition, results of operations and prospects.
We depend on enrollment of patients in our clinical trials for our product candidates and may find it difficult to enroll patients in our clinical trials, which
could delay or prevent us from proceeding with clinical trials of our product candidates and could materially adversely affect our R&D efforts and business,
financial condition and results of operations.
Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials
depends on our ability to recruit patients to participate, and to see those patients through the completion of required follow-up periods. If, for any reason,
patients are unwilling to enroll in our clinical trials, then the timeline for recruiting patients, conducting studies and obtaining regulatory approvals for our
product candidates may be delayed. These delays could result in increased costs, delays in advancing our product candidates, delays in testing the effectiveness
of our product candidates or termination of clinical trials altogether.
4
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Our current product candidates are being developed to treat oncology and immune diseases of high unmet medical need. However, we may not be able
to initiate or continue clinical trials if we cannot enroll a sufficient number of eligible patients to participate in the clinical trials required by the FDA, EMA or
other regulatory authorities. As a result, we may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired
characteristics, to complete our clinical trials in a timely manner. Patient enrollment can be affected by many factors, including:
● size of the patient population and process for identifying patients;
● eligibility and exclusion criteria for our clinical trials;
● perceived risks and benefits of our product candidates;
● severity of the disease under investigation;
● proximity and availability of clinical trial sites for prospective patients;
● competition with other clinical trials for product candidates competing in the same therapeutic areas as our product candidates;
● ability to obtain and maintain patient consent;
● patient drop-outs prior to completion of clinical trials;
● patient referral practices of physicians; and
● ability to monitor patients adequately during and after treatment.
Our ability to successfully initiate, enroll and complete clinical trials in any foreign country is subject to numerous risks unique to conducting business
in foreign countries, including:
● difficulty in establishing or managing relationships with CROs and physicians;
● different standards for the conduct of clinical trials;
● absence in some countries of established groups with sufficient regulatory expertise for review of certain treatment protocols;
● inability to locate qualified local consultants, physicians and partners; and
● the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of
pharmaceutical and biotechnology products and treatment.
If we have difficulty enrolling a sufficient number of patients or finding additional clinical trial sites to conduct our clinical trials as planned, we may
need to delay, limit or terminate ongoing or planned clinical trials, any of which could have an adverse effect on our business, financial condition, results of
operations and prospects.
Our product candidates and the process for administering our product candidates may cause undesirable side effects or have other properties that could
delay or prevent their regulatory approval, limit their commercial potential or result in significant negative consequences following any potential marketing
approval.
During the conduct of clinical trials, patients report changes in their health, including illnesses, injuries and discomforts, to their study doctor. Often, it
is not possible to determine whether the product candidate being studied caused these conditions. Regulatory authorities may draw different conclusions or
require additional testing to confirm these determinations. For Milciclib, the most frequent drug-related side effects reported across studies, at all doses tested,
were gastrointestinal, or GI, adverse events (nausea and diarrhea, followed by less frequent vomiting), neurological effects (mainly tremor, then ataxia,
dizziness and dysgeusia), skin disorders and asthenia, fatigue, headache and anorexia. For Foralumab, the most frequent drug-related side effects reported
following intravenous administration were infusion related reactions, or IRR, including fever, headaches, chills, nausea, vomiting diarrhea and hypotension
considered the result of cytokine release also known as cytokine release syndrome, or CRS. Other adverse events included reactivation of Epstein-Barr virus
(clinically silent); moderate lymphocytopenia, abnormalities in liver function tests. Since most of these changes are related to the infusion route of
administration and dosage level, such systemic toxicities are not anticipated when administered orally or nasally due to what we assume will be minimal
systemic absorption.
In addition, it is possible that as we test our product candidates in larger, longer and more extensive clinical programs, or as use of these product
candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier
trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by patients. Many times, side effects are only detectable
after investigational products are tested in large-scale, Phase 3 clinical trials or, in some cases, after they are made available to patients on a commercial scale
after approval. If additional clinical experience indicates that our product candidates cause serious or life-threatening side effects, the development of our
product candidates may fail or be delayed, or, if the product candidate has received regulatory approval, such approval may be revoked, which would harm our
business, prospects, operating results and financial condition.
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If in the future we are unable to demonstrate that such adverse events were caused by the administration process or related procedures, the FDA, EMA
or other regulatory authorities could order us to cease further development of, or deny approval of, our product candidates for any or all targeted indications.
Even if we are able to demonstrate that any serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of
enrolled patients to complete the clinical trial. Moreover, if we elect or are required to delay, suspend or terminate any clinical trial of any of our product
candidates, the commercial prospects of such product candidate may be harmed and our ability to generate product revenues from such product candidate may
be delayed or eliminated. Any of these occurrences may harm our ability to develop other product candidates, and may harm our business, financial condition
and prospects.
Additionally, if we or others later identify undesirable side effects caused by any of our product candidates, several potentially significant negative
consequences could result, including:
● regulatory authorities may suspend or withdraw approvals of such product candidate;
● regulatory authorities may require additional warnings on the label;
● we may be required to change the way a product candidate is administered or conduct additional clinical trials;
● we could be sued and held liable for harm caused to patients; and
● our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of our product candidates.
Any contamination in our manufacturing process, shortages of raw materials or failure of any of our key suppliers to deliver necessary components could
result in delays in our clinical development or marketing schedules.
Given the nature of biologics and NCE manufacturing, there is a risk of contamination. Any contamination could adversely affect our ability to
produce product candidates on schedule and could, therefore, harm our results of operations and cause reputational damage. In addition, some of the raw
materials required in our manufacturing process are derived from biologic sources and are difficult to procure and may be subject to contamination or recall. A
material shortage, contamination, recall or restriction on the use of biologically derived substances in the manufacture of our product candidates could adversely
impact or disrupt the commercial manufacturing or the production of clinical material, which could adversely affect our development timelines and our
business, financial condition, results of operations and prospects.
Risks Related to Our Financial Position and Need for Capital
We have incurred net losses in every year since our inception. We anticipate that we will continue to incur losses for the foreseeable future and may never
achieve or maintain profitability.
We are a clinical stage biotechnology company with a limited operating history. Since our inception in May 2013, we have incurred significant net
losses. Our net losses were $17.8 million, $15.4 million and $23.4million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December
31, 2023, we had an accumulated loss of $134 million. We have devoted substantially all of our efforts to research and development of our product candidates,
including clinical development of our lead product candidates, Foralumab and Milciclib, as well as to building out our management team and infrastructure. We
expect that it could be several years, if ever, before we have a commercialized product candidate. We expect to continue to incur significant expenses and
increasing operating losses for the foreseeable future. These net losses will adversely impact our shareholders’ equity and net assets and may fluctuate
significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially if, and as, we:
● continue research and development of Foralumab, including the initiation of a clinical trial with nasally administered Foralumab in patients with
secondary progressive multiple sclerosis (SPMS), develop a program for intranasal administration of Foralumab for the treatment or prevention of
Type 1 Diabetes (TID), investigate intranasal foralumab for the treatment of Long COVID, study intranasal foralumab in patients with mild to
moderate Alzheimer’s Disease and potentially study intranasal foralumab in rare Orphan pediatric diseases when funding becomes available.
● initiate a Phase 2 trial for Milciclib in combination with gemcitabine in patients with KRAS-mutated (mut) non-small cell lung cancer (NSCLC)
after failure of standard-of-care (SoC) therapy.
● cGMP manufacturing of anti-IL6R mAb drug substance and drug product for treatment Interstitial lung disease associated with systemic sclerosis
(SSc-ILD) is complete. An IND to conduct a Phase 1 clinical trial was submitted in December 2021
● manufacture our product candidates in accordance with current good manufacturing practices, or cGMP, for clinical trials or potential commercial
sales;
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● establish a sales, marketing and distribution infrastructure to commercialize any product candidate for which we may obtain marketing approval;
● develop, maintain, expand and protect our intellectual property portfolio;
● identify, assess, and acquire or in-license other product candidates and technologies;
● secure, maintain or obtain freedom to operate for any in-licensed technologies and products;
● address any competing technological and market developments; and
● expand our operations in the United States and Europe.
We may never succeed in any or all of these activities and, even if we do, we may never generate revenues that are significant or large enough to
achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become
and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our R&D efforts, expand our business or
continue our operations.
We need substantial additional funding to complete the development of our product candidates, which may not be available on acceptable terms, if at all.
Failure to obtain this necessary capital when needed may force us to delay, limit or terminate certain of our product development, research operations or
future commercialization efforts, if any.
Our operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase in connection with our ongoing
activities, particularly as we continue the R&D of, initiate further clinical trials of and seek marketing approval for, our product candidates. In addition, if we
obtain marketing approval for our product candidates, we expect to incur significant expenses related to product sales, marketing, manufacturing and
distribution. Furthermore, we expect to incur additional costs associated with operating as a public company listed on the Nasdaq in the United States. Our
future capital requirements will depend on many factors, including:
● the scope, progress, results and costs of laboratory testing, manufacturing, preclinical and clinical development for our current and future product
candidates;
● the costs, timing and outcome of regulatory review of our product candidates;
● the extent to which we acquire or in-license and develop other product candidates and technologies;
● our ability to establish and maintain collaborations and license agreements on favorable terms, if at all;
● the costs, timing and outcome of potential future commercialization activities, including manufacturing, marketing, sales and distribution for our
product candidates for which we receive marketing approval;
● the costs of developing, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and
● the sales price and availability of adequate third-party coverage and reimbursement for our product candidates, if and when approved.
Developing product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes
years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our
product candidates, if approved, may not achieve commercial success. Our product revenues, if any, will be derived from or based on sales of product
candidates that may not be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our
business objectives. Adequate additional financing may not be available to us on acceptable terms, if at all. To the extent that additional capital is raised through
the issuance of equity or equity-linked securities, the issuance of those securities could result in substantial dilution for our current shareholders and the terms of
any future issuance may include liquidation or other preferences that adversely affect the rights of our current shareholders. Debt financing, if available, may
involve covenants restricting our operations or our ability to incur additional debt. Any debt or additional equity financing that we raise may contain terms that
are not favorable to us or our shareholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary
to relinquish some rights to our technologies or our product candidates or grant licenses on terms that are not favorable to us. Furthermore, the potential
issuance of additional securities in the future, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our Common
shares, to decline and existing shareholders may not agree with our financing plans or the terms of such financings.
If we are unable to obtain adequate funding on a timely basis, we may be required to significantly curtail, delay or discontinue our R&D programs of
our product candidates or any future commercialization efforts, be unable to expand our operations or be unable to otherwise capitalize on our business
opportunities, as desired, which could harm our business and potentially cause us to discontinue operations.
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Our limited operating history and no history of commercializing pharmaceutical products may make it difficult to evaluate the success of our business to
date and to assess the prospects for our future viability.
Since our inception, we have devoted substantially all of our resources to developing Foralumab and Milciclib, and our other product candidates,
building our intellectual property portfolio and providing general and administrative support for these operations. Although our R&D efforts to date have
resulted in a pipeline of product candidates, we have not yet demonstrated our ability to successfully complete Phase 3 or other pivotal clinical trials, obtain
regulatory approvals, or commercialize any of our product candidates. In addition, given our limited operating history, we may encounter unforeseen expenses,
difficulties, complications, delays and other known and unknown factors in achieving our business objectives.
Additionally, we are not profitable and have incurred losses in each year since our inception, and we expect that our financial condition and operating
results may continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control.
Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.
Risks Related to Our Reliance on Third Parties
We rely, and expect to continue to rely, on third parties to conduct our preclinical studies 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 parties, including independent clinical investigators and third-party CROs, to conduct our
preclinical studies and clinical trials and to monitor and manage data for our ongoing preclinical and clinical programs. In engaging these third parties, we
typically have to, and expect to have to, negotiate budgets and contracts, which may result in delays to our development timelines and increases costs.
Additionally, there is a limited number of qualified third-party service providers that specialize or have the expertise required to achieve our business objectives,
and so it may be challenging to find alternative investigators or CROs, or do so on commercially reasonable terms. We rely on these parties for execution of our
preclinical studies and clinical trials, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our
preclinical studies and clinical trials is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on
these third parties does not relieve us of our regulatory responsibilities. We and our third-party contractors and CROs are required to comply with GCP
requirements, which are regulations and guidelines 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 product candidates in clinical development. Regulatory authorities enforce these GCP requirements
through periodic inspections of trial sponsors, principal investigators and clinical trial sites. If we fail to exercise adequate oversight over any of our CROs or if
we or any of our CROs fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the
FDA, EMA or other regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure
you that upon a regulatory inspection of us or our CROs or other third parties performing services in connection with our clinical trials, such regulatory
authority will determine that any of our clinical trials complies with GCP regulations. In addition, our clinical trials must be conducted with product produced
under applicable cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory
approval process.
Further, these investigators and CROs are not our employees and we will not be able to control, other than by contract, the amount of resources,
including time, which they devote to our product candidates and clinical trials. If independent investigators or CROs fail to devote sufficient resources to the
development of our product candidates, or if their performance is substandard, it may delay or compromise the prospects for approval and commercialization of
our product candidates. These investigators and CROs may also have relationships with other commercial entities, including our competitors, for whom they
may also be conducting clinical studies or other drug development activities, which could affect their performance on our behalf. In addition, the use of third-
party service providers requires us to disclose our proprietary information to these parties, which increases the risk that a competitor will discover them or that
this information will be misappropriated or disclosed.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on
commercially reasonable terms. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be
replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to 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
successfully commercialize our product candidates. As a result, our results of operations and commercial prospects would be harmed, our costs could increase
and our ability to generate revenues could be delayed.
Repeating clinical trials or switching or engaging additional CROs involves additional cost and requires our management’s time and focus. In addition,
there is a natural transition period when a clinical trial has to be repeated or when a new CRO commences work. As a result, delays could occur, which could
materially impact our ability to meet our desired clinical development timelines.
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Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade
secrets will be misappropriated or disclosed.
We have engaged contract manufacturing organizations, or CMOs, to cGMP manufacture Foralumab (TZLS-401) drug product, Milciclib (TZLS-201)
and anti-Interleukin 6 Receptor monoclonal antibody (anti-IL6R mAb, TZLS-501) drug substance and drug product and to perform quality testing, and because
we collaborate with various organizations and academic institutions for the advancement of our platforms, we must, at times, share our proprietary technology
and confidential information, including trade secrets, with them. We seek to protect our proprietary technology, in part, by entering into confidentiality
agreements and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our
collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights
of the third parties to use or disclose our confidential information. Despite the contractual provisions employed when working with third parties, the need to
share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated
into the technology of others or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how
and trade secrets, a competitor’s discovery of our proprietary technology and confidential information or other unauthorized use or disclosure of such
technology or information would impair our competitive position and may have an adverse effect on our business, financial condition, results of operations and
prospects.
Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of these agreements, independent
development or publication of information including our trade secrets by third parties. A competitor’s discovery of our trade secrets would impair our
competitive position and have an adverse impact on our business, financial condition, results of operations and prospects.
We utilize, and expect to continue to utilize, third parties to conduct our product manufacturing for the foreseeable future, and these third parties may not
perform satisfactorily.
We currently rely on CMOs for the manufacturing of clinical batches and intend to continue to rely on third parties to manufacture our preclinical
study and clinical trial product supplies. If our current CMOs, or any future third-party manufacturers, do not successfully carry out their contractual duties,
meet expected deadlines or manufacture our product candidates in accordance with regulatory requirements, or if there are disagreements between us and our
CMOs or any future third-party manufacturers, we will not be able to complete, or may be delayed in completing, the preclinical studies required to support
future investigational new drug, or IND, submissions and the clinical trials required for approval of our product candidates.
In addition to our current CMOs, we may rely on additional third parties to manufacture ingredients of our product candidates in the future and to
perform quality testing, and reliance on these third parties entails risks to which we would not be subject if we manufactured the product candidates ourselves,
including:
● reduced control for certain aspects of manufacturing activities;
● termination or nonrenewal of manufacturing and service agreements with third parties in a manner or at a time that is costly or damaging to us;
and
● disruptions to the operations of our third-party manufacturers and service providers caused by conditions unrelated to our business or operations,
including the bankruptcy of the manufacturer or service provider.
Any of these events could lead to clinical trial delays or failure to obtain regulatory approval or impact our ability to successfully commercialize any of
our product candidates. Some of these events could be the basis for FDA, EMA or other regulatory authority action, including injunction, recall, seizure or total
or partial suspension of product manufacture.
To the extent we rely on a third-party manufacturing facility for commercial supply, that third party will be subject to significant regulatory oversight with
respect to manufacturing our product candidates.
The preparation of therapeutics for clinical trials or commercial sale is subject to extensive regulation. Components of a finished therapeutic product
approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with cGMP requirements. These regulations govern
manufacturing processes and procedures, including record keeping, and the implementation and operation of quality systems to control and assure the quality of
investigational products and products approved for sale. Poor control of production processes can lead to the introduction of outside agents or other
contaminants, or to inadvertent changes in the properties or stability of a product candidate that may not be detectable in final product testing. To the extent that
we utilize third-party facilities for commercial supply, the third party’s facilities and quality systems must pass an inspection for compliance with the applicable
regulations as a condition of regulatory approval. In addition, the regulatory authorities may, at any time, audit or inspect the third-party manufacturing facility
or the associated quality systems for compliance with the regulations applicable to the activities being conducted. If, for example, these facilities do not pass a
plant inspection, the FDA will not approve the applicable NDA or biologics license application, or BLA.
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We do not directly control the manufacturing of, and are completely dependent on, our CMOs for compliance with cGMP requirements. If our CMOs
cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA, EMA or other regulatory
authorities, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. In addition, we have no direct control over the
ability of our CMOs to maintain adequate quality control, quality assurance and qualified personnel. Furthermore, all of our CMOs are engaged with other
companies to supply and/or manufacture materials or products for such companies, which exposes our CMOs to regulatory risks for the production of such
materials and products. As a result, failure to meet the regulatory requirements for the production of those materials and products may generally affect the
regulatory clearance of our CMOs’ facilities. Our failure, or the failure of third parties, to comply with applicable regulations could result in sanctions being
imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls
of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our
products and product candidates.
Our potential future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our
ability to commercialize any products that receive regulatory approval on a timely and competitive basis.
Risks Related to Commercialization of Our Product Candidates
We currently have no marketing and sales force. If we are unable to establish effective sales, marketing and distribution capabilities or enter into
agreements with third parties to market, sell and distribute our product candidates that may be approved, we may not be successful in commercializing our
product candidates if and when approved, and we may be unable to generate any product revenue.
We currently do not have a marketing or sales team for the marketing, sales and distribution of any of our product candidates. In order to
commercialize any of our product candidates that may be approved, we intend to build, on a territory-by-territory basis, marketing, sales, distribution,
managerial and other non-technical capabilities or make arrangements with third parties to perform these services. These efforts will require significant capital
expenditures, management resources and time, and we face competition in search for qualified personnel or third parties to assist with marketing, sales and
distribution of any of our product candidates. We may not be successful in building these capabilities.
There are risks involved with both establishing our own sales, marketing and distribution capabilities and entering into arrangements with third parties
to perform these services. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the
commercial launch of a product candidate for which we recruit a sales force and establish marketing and/or distribution capabilities is delayed or does not occur
for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost
if we cannot retain or reposition our sales and marketing personnel.
Factors that may inhibit our efforts to commercialize our product candidates on our own include:
● our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;
● the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future product that we
may develop;
● the lack of complementary treatments to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with
more extensive product lines; and
● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
If we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenue or the profitability to us
from these revenue streams is likely to be lower than if we were to market and sell any product candidates that we develop ourselves. In addition, we may not
be successful in entering into arrangements with third parties to sell and market our product candidates or may be unable to do so on terms that are favorable to
us. We likely will have little control over such third parties and any of them may fail to devote the necessary resources and attention to sell and market our
product candidates effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we
may not be successful in commercializing our product candidates.
We face significant competition in an environment of rapid technological change and the possibility that our competitors may achieve regulatory approval
before us or develop therapies that are more advanced or effective than ours.
The biotechnology and pharmaceutical industries are characterized by rapidly changing technologies, significant competition and a strong emphasis on
intellectual property. We face substantial competition from many different sources, including large and specialty pharmaceutical and biotechnology companies,
academic research institutions, government agencies and public and private research institutions.
New developments, including the development of other pharmaceutical technologies and methods of treating disease, occur in the pharmaceutical and
life sciences industries at a rapid pace. Developments by competitors may render our product candidates obsolete or noncompetitive. We anticipate that we will
face intense and increasing competition as new treatments enter the market and advanced technologies become available.
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Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and other resources, such as
larger R&D, clinical, sales and marketing and manufacturing organizations. These third parties also compete with us in recruiting and retaining qualified
scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies
complementary to, or necessary for, the development of our products. In addition, mergers and acquisitions in the biotechnology and pharmaceutical industries
may result in even more resources being concentrated among a smaller number of competitors. Our commercial opportunity could be reduced or eliminated if
competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive
than any product candidate that we may develop. Competitors also may obtain FDA, EMA or other regulatory approval for their products more rapidly or
earlier than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.
Additionally, technologies developed by our competitors may render our product candidates uneconomical or obsolete, and we may not be successful in
marketing our product candidates against competitors.
In addition, as a result of the expiration or successful challenge of our patent rights, we could face more litigation with respect to the validity and/or
scope of patents relating to our competitors’ products. The availability of our competitors’ products could limit the demand, and the price we are able to charge,
for any product candidate that we may develop and commercialize.
The market opportunities for our product candidates may be smaller than we anticipate.
We focus our R&D efforts on treatments for cancer and autoimmune disease. Our understanding of both the number of people who have these
diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our product candidates, is based on estimates.
These estimates may prove to be incorrect and new studies may reduce the estimated incidence or prevalence of these diseases. The number of patients in the
United States, the European Union and elsewhere may turn out to be lower than expected, may not be otherwise amenable to treatment with our product
candidates or patients may become increasingly difficult to identify and access, all of which would adversely affect our business, financial condition, results of
operations and prospects.
Further, there are several factors that could contribute to making the actual number of patients who receive our potential products, if and when
approved, less than the potentially addressable market. These include, for example, the lack of widespread availability of, and limited reimbursement for, new
therapies in many underdeveloped markets.
The future commercial success of our product candidates will depend upon the degree of each product candidates’ market acceptance by physicians,
patients, third-party payors and others in the medical community.
Our product candidates are at varying stages of development, and we may never have a product that is commercially successful. To date, we have no
product authorized for marketing. Due to the inherent risk in the development of pharmaceutical products, we may never successfully complete development
and commercialization of any of our product candidates. Even with the requisite approvals from the FDA, EMA and other regulatory authorities internationally,
the commercial success of our product candidates will depend, in part, on the acceptance of physicians, patients and third-party payors of our product
candidates as medically necessary, cost-effective and safe. Any product that we commercialize may not gain acceptance by physicians, patients, third-party
payors and others in the medical community. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue
and may not become profitable. Even if some product candidates achieve market acceptance, the market may not prove to be large enough to allow us to
generate significant revenues. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on several factors,
including:
● the effectiveness and safety of our product candidates as demonstrated in clinical trials;
● the potential and perceived advantages of our product candidates over alternative treatments;
● the availability and cost of treatment relative to alternative treatments;
● changes in the standard of care for the targeted indications for any product candidate;
● the willingness of physicians to prescribe, and the target patient population to try, new therapies;
● the prevalence and severity of any side effects;
● product labeling or product insert requirements of the FDA, EMA or other regulatory authorities, including any limitations or warnings contained
in a product’s approved labeling;
● the timing of market introduction of competitive products;
● sales, distribution and marketing support;
● publicity concerning our product candidates or competing products and treatments;
● potential product liability claims;
● any restrictions on the use of our products together with other medications; and
● favorable third-party payor coverage and adequate reimbursement.
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Even if a potential product displays favorable clinical properties and safety profile in preclinical studies and clinical trials, market acceptance of the
product will not be fully known until after it is launched.
The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and
reimbursement for our product candidates, if approved, could limit our ability to market those products.
We expect that coverage and adequate reimbursement by government and private payors will be essential for most patients to be able to afford these
treatments. Accordingly, sales of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our product
candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or will be reimbursed by
government authorities, private health coverage insurers and other third-party payors. Coverage and reimbursement by a third-party payor may depend upon
several factors, including the third-party payor’s determination that use of a product is:
● a covered benefit under our health plan;
● safe, effective and medically necessary;
● appropriate for the specific patient;
● cost-effective; and
● neither experimental nor investigational.
Obtaining coverage and reimbursement for a product from third-party payors is a time-consuming and costly process that could require us to provide to
the payor supporting scientific, clinical and cost-effectiveness data. We may not be able to provide data sufficient to gain acceptance with respect to coverage
and reimbursement. If coverage and reimbursement are not available, or are available only at limited levels, we may not be able to successfully commercialize
our product candidates. Even if coverage is provided, the approved reimbursement amount may not be adequate to realize a sufficient return on our investment.
There is significant uncertainty related to third-party coverage and reimbursement of newly approved products. In the United States, third-party payors,
including government payors such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs and biologics
will be covered and reimbursed. The Medicare and Medicaid programs increasingly are used as models for how private payors develop their coverage and
reimbursement policies. However, no uniform policy of coverage and reimbursement exists among third-party payors. Therefore, coverage and reimbursement
for products can differ significantly from payor to payor. One payor’s determination to provide coverage for a product does not assure that other payors will
also provide coverage, and adequate reimbursement. It is difficult to predict what the Centers for Medicare and Medicaid Services, or CMS will decide with
respect to coverage and reimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these
types of products. Moreover, reimbursement agencies in the European Union may be more conservative than the CMS. For example, several cancer drugs have
been approved for reimbursement in the United States and have not been approved for reimbursement in certain European Union, or EU, member states, or
Member States. It is difficult to predict what third-party payors will decide with respect to the coverage and reimbursement for our product candidates.
Also, the containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of drugs have been a focus in
this effort. The U.S. government, state legislatures, and foreign governments have shown significant interest in implementing cost-containment programs to
limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic
products for branded prescription drugs. For example, in the United States, the Patient Protection and Affordable Care Act of 2010 (as amended by the Health
Care and Education Reconciliation Act of 2010), or the PPACA, contains provisions that may reduce the profitability of products, including, for example,
increased rebates for products sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain
Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs. Further, there has been
heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several recent
congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to product pricing, contain the cost
of drugs, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for
products.
Outside the United States, international operations generally are subject to extensive government price controls and other market regulations and
increasing emphasis on cost-containment initiatives in the European Union, Canada and other countries may put pricing pressure on us. In many countries, the
prices of medical products are subject to varying price control mechanisms as part of national health systems. In general, the prices of medicines under such
systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medical products but monitor and control
company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product
candidates. Accordingly, in markets outside the United States, the reimbursement for our product candidates may be reduced compared with the United States
and may be insufficient to generate commercially reasonable product revenues.
In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost
containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue
after reimbursement has been obtained. Reference pricing used by various Member States and parallel distribution, or arbitrage between low-priced and high-
priced Member States, can further reduce prices. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial
that compares the cost-effectiveness of our product candidates to other available therapies. If reimbursement of our products is unavailable or limited in scope
or amount, or if pricing is set at unsatisfactory levels, our business could be harmed.
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Moreover, increasing efforts by government and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such
organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate
payment for our product candidates.
Payors increasingly are considering new metrics as the basis for reimbursement rates, such as average sales price, average manufacturer price and
actual acquisition cost. The existing data for reimbursement based on some of these metrics is relatively limited, although certain states have begun to survey
acquisition cost data for the purpose of setting Medicaid reimbursement rates, and CMS has begun making pharmacy National Average Drug Acquisition Cost
and National Average Retail Price data publicly available on at least a monthly basis. Therefore, it may be difficult to project the impact of these evolving
reimbursement metrics on the willingness of payors to cover product candidates that we or our partners are able to commercialize. We expect to experience
pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health
maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and
surgical procedures and other treatments, has become intense. As a result, increasingly high barriers are being erected to the entry of new products such as ours.
Risks Related to Our Intellectual Property
Our rights to develop and commercialize our product candidates are subject to the terms and conditions of licenses granted to us by others. If we fail to
comply with our obligations under our existing and any future intellectual property licenses with third parties, we could lose license rights that are
important to the business.
We are heavily reliant upon licenses and sublicenses from Nerviano, Lonza and Novimmune to certain patent rights and proprietary technology that are
important or necessary to the development of our technology and product candidates, including the patents and know-how relating to manufacture. These and
other licenses may not provide exclusive rights to use such intellectual property and technology or may not provide exclusive rights to use such intellectual
property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology and product
candidates in the future. As a result, we may not be able to prevent competitors from developing and commercializing competitive products, including in
territories covered by our licenses.
In some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents,
covering technology that we license from third parties. If our licensors fail to maintain such patents or patent applications, or lose rights to those patents or
patent applications, the rights we have licensed may be reduced or eliminated and our right to develop and commercialize any of our product candidates that are
the subject of such licensed rights could be adversely affected. In addition to the foregoing, the risks associated with patent rights that we license from third
parties will also apply to patent rights we may own in the future.
Licenses to additional third-party technology and materials that may be required for our development programs, including additional technology and
materials owned by any of our current licensors, may not be available in the future or may not be available on commercially reasonable terms, or at all, which
could have an adverse effect on our business and financial condition.
If we are unable to obtain and maintain patent protection for our current product candidates, any future product candidates we may develop and our
technology, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and
technology similar or identical to ours.
Our success depends, in large part, on our ability to seek, obtain and maintain patent protection in the United States and other countries with respect to
our product candidates and to future innovation related to our manufacturing technology. Our licensors have sought, and we intend to seek to protect our
proprietary position by filing patent applications in the United States, the United Kingdom and elsewhere, related to certain technologies and our product
candidates that are important to our business. Our current patent portfolio contains a limited number of patent applications, all of which are in-licensed from
third parties and relate to either composition of matter, formulation, method of use or process of manufacturing Foralumab, Milciclib and a fully human anti-
interleukin-6 receptor, or IL-6r, mAb. However, the risks associated with patent rights generally apply to patent rights that we in-license now or in the future, as
well as patent rights that we may own in the future. Moreover, the risks apply with respect to patent rights and other intellectual property applicable to our
product candidates, as well as to any intellectual property rights that we may acquire in the future related to future product candidates, if any. Tiziana was
granted a new patent by USPTO in June 2020 covering lyophilized formulation of Foralumab..
The patent prosecution process is expensive, time-consuming, and complex, and we may not be able to file, prosecute, maintain, enforce or license all
necessary or desirable patent applications at a reasonable cost or in a timely manner.
In some cases, the work of certain academic researchers in the oncology and immunology fields has entered the public domain, which we believe
precludes our ability to obtain patent protection for certain inventions relating to such work.
Consequently, we will not be able to assert any such patents to prevent others from using our technology for, and developing and marketing competing
products to treat, these indications. It is also possible that we will fail to identify patentable aspects of our R&D output before it is too late to obtain patent
protection.
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Our existing license agreements impose, and we expect that future license agreements will impose, various due diligence, development and
commercialization timelines, insurance, milestone payments, royalties, and other obligations on us. See the description in the section titled “Business-
Collaboration and License Agreements” herein. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, or, in some
cases, under other circumstances, the licensor may have the right to terminate the license, in which event we would not be able to market product candidates
covered by the license. In addition, certain of these license agreements are not assignable by us without the consent of the respective licensor, which may have
an adverse effect on our ability to engage in certain transactions.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and
has, in recent years, been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of any patent rights are
highly uncertain. Our licensed patent applications may not result in patents being issued which protect our technology or product candidates, effectively prevent
others from commercializing competitive technologies and product candidates or otherwise provide any competitive advantage. In fact, patent applications may
not issue as patents at all. Even assuming patents issue from patent applications in which we have rights, changes in either the patent laws or interpretation of
the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.
Other parties have developed technologies that may be related or competitive to our own and such parties may have filed or may file patent
applications, or may have received or may receive patents, claiming inventions that may overlap or conflict with those claimed in our own patent applications or
issued patents. We may not be aware of all third-party intellectual property rights potentially relating to our current and future product candidates.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and in other
jurisdictions are typically not published until 18 months after filing, or, in some cases, not at all. Therefore, we cannot know with certainty whether the
inventors of our licensed patents and applications were the first to make the inventions claimed in those patents or pending patent applications, or that they were
the first to file for patent protection of such inventions. Similarly, should we own any patents or patent applications in the future, we may not be certain that we
were the first to file for patent protection for the inventions claimed in such patents or patent applications. As a result, the issuance, scope, validity and
commercial value of our patent rights cannot be predicted with any certainty.
The degree of patent protection we require to successfully compete in the marketplace may be unavailable or severely limited in some cases and may
not adequately protect our rights or permit us to gain or keep any competitive advantage. We cannot provide any assurances that any of our licensed patents
have, or that any of our pending licensed patent applications that mature into issued patents will include, claims with a scope sufficient to protect our product
candidates or otherwise provide any competitive advantage. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws
of the United States. Furthermore, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed.
Various extensions may be available; however, the life of a patent, and the protection it affords, is limited. Given the amount of time required for the
development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates
are commercialized. As a result, our licensed patent portfolio may not provide us with adequate and continuing patent protection sufficient to exclude others
from commercializing products similar to our product candidates, including “highly similar,” or biosimilar, versions of such products. In addition, the
intellectual property portfolio licensed to us by Nerviano and Novimmune may be used by them or licensed to third parties, and such third parties may have
certain enforcement rights. Thus, patents licensed to us could be put at risk of being invalidated or interpreted narrowly in litigation filed by or against our
licensors or another licensee or in administrative proceedings brought by or against our licensors or another licensee in response to such litigation or for other
reasons.
Even if we acquire patent protection that we expect should enable us to maintain some competitive advantage, third parties, including competitors,
may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable. In litigation, a
competitor could claim that our patents, if issued, are not valid for several reasons. If a court agrees, we would lose our rights to those challenged patents.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability and our licensed patents may be challenged in courts
or patent offices in the United States and abroad. For example, we may be subject to a third-party submission of prior art to the USPTO challenging the validity
of one or more claims of our licensed patents. Such submissions may also be made prior to a patent’s issuance, precluding the granting of a patent based on one
of our pending licensed patent applications. We may become involved in opposition, derivation, re-examination, inter partes review, post-grant review or
interference proceedings challenging the patent rights of others from whom we have obtained licenses to such rights. Competitors may claim that they invented
the inventions claimed in our licensed issued patents or patent applications prior to the inventors of such patents or applications. A competitor who can establish
an earlier filing or invention date may also claim that we are infringing their patents and that we therefore cannot practice our technology as claimed under our
licensed patents, if issued. Competitors may also contest our licensed patents, if issued, by showing that the invention was not patent-eligible, was not novel,
was obvious or that the patent claims failed any other requirement for patentability.
An adverse determination by former employees or consultants asserting ownership rights to our patents may result in loss of exclusivity or freedom to
operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or
commercializing similar technology and therapeutics, without payment to us, or could limit the duration of the patent protection covering our technology and
product candidates. Such challenges may also result in our inability to manufacture or commercialize our product candidates without infringing third-party
patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from
collaborating with us to license, develop or commercialize current or future product candidates.
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Even if they are unchallenged, our licensed patents and pending patent applications, if issued, may not provide us with any meaningful protection or
prevent competitors from designing around our patent claims to circumvent our licensed patents by developing similar or alternative technologies or
therapeutics in a non-infringing manner. For example, a third party may develop a competitive therapeutic that provides benefits similar to one or more of our
product candidates but that uses a different antibody or molecular active ingredient that falls outside the scope of our patent protection. If the patent protection
provided by the patents and patent applications we hold or pursue with respect to our product candidates is not sufficiently broad to impede such competition,
our ability to successfully commercialize our product candidates could be negatively affected, which would harm our business.
Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our
rights to the relevant intellectual property or technology or increase our financial or other obligations to our licensors.
We currently depend, and will continue to depend, on our license agreements whereby we obtain rights in certain patents and patent applications
owned by them. Further development and commercialization of our current product candidates may, and development of any future product candidates will,
require us to enter into additional license or collaboration agreements. The agreements under which we currently license intellectual property or technology
from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract
interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or
increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have an adverse effect on our business,
financial condition, results of operations and prospects.
If any of our licenses or material relationships or any in-licenses upon which our licenses are based are terminated or breached, we may:
● lose our rights to develop and market our product candidates;
● lose patent protection for our product candidates;
● experience significant delays in the development or commercialization of our product candidates;
● not be able to obtain any other licenses on acceptable terms, if at all; or
● incur liability for damages.
In addition, a third party may in the future bring claims that our performance under our license agreements, including our sponsoring of clinical trials,
interferes with such third party’s rights under its agreement with one of our licensors. If any such claim were successful, it may adversely affect our rights and
ability to advance our product candidates as clinical candidates or subject us to liability for monetary damages, any of which would have an adverse effect on
our business, financial condition, results of operations and prospects.
These risks apply to any agreements that we may enter into in the future for our current or any future product candidates. If we experience any of the
foregoing, it could have a negative impact on our business, financial condition, results or operations and prospects.
If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience
disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.
We have entered into license agreements with third parties and may need to obtain additional licenses from one or more of these same third parties or
from others to advance our research or allow commercialization of our product candidates. It is possible that we may be unable to obtain additional licenses at a
reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to redesign our product candidates or
the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If we
are unable to do so, we may be unable to develop or commercialize our product candidates, which would harm our business. We cannot provide any assurances
that third-party patents or other intellectual property rights do not exist which might be enforced against our current product candidates or future product
candidates, resulting in either an injunction prohibiting our manufacture or sales, or, with respect to our sales, an obligation on our part to pay royalties and/or
other forms of compensation to third parties.
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In each of our existing license agreements, and we expect in our future agreements, patent prosecution of our licensed technology is controlled solely
by the licensor, and we may be required to reimburse the licensor for their costs of patent prosecution. If our licensors fail to obtain and maintain patent or other
protection for the proprietary intellectual property we license from them, we could lose our rights to the intellectual property, or our exclusivity with respect to
those rights, and our competitors could market competing products using the intellectual property. Our license agreements with Nerviano and Novimmune also
require us to meet development thresholds to maintain each license, including establishing a set timeline for developing and commercializing product
candidates. Disputes may arise regarding intellectual property subject to a licensing agreement, including:
● the scope of rights granted under the license agreement and other interpretation-related issues;
● the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
● the sublicensing of patent and other rights pursuant to our collaborative development relationships;
● our diligence obligations under the license agreements and what activities satisfy those diligence obligations;
● the inventorship or ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us
and our partners; and
● the priority of invention of patented technology.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable
terms, we may be unable to successfully develop and commercialize our product candidates.
We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.
We currently have certain rights to the intellectual property, through licenses from third parties, to develop our product candidates. Because our
programs may require the use of additional proprietary rights held by these or other third parties, the growth of our business likely will depend, in part, on our
ability to acquire, in-license or use these proprietary rights. We may be unable to acquire or in-license any compositions, methods of use, processes or other
intellectual property rights from third parties that we identify as necessary for our product candidates. The licensing or acquisition of third-party intellectual
property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights
that we may consider attractive. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical
development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.
We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our
investment.
We may collaborate with non-profit and academic institutions to accelerate our preclinical R&D under written agreements with these institutions.
These institutions may provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration.
Regardless of such option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us. If we are unable to
do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.
If we are unable to successfully obtain rights to required third-party intellectual property or maintain the existing intellectual property rights we have,
we may have to abandon development of our product candidates and our business, financial condition, results of operations and prospects could suffer.
Moreover, to the extent that we seek to develop other product candidates in the future, we will likely require acquisition or in-license of additional proprietary
rights held by third parties.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other
requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated as a result of non-compliance with these
requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and/or applications will be due to be paid to the
USPTO and various government patent agencies outside of the United States over the lifetime of our licensed patents and/or applications and any patent rights
we may own in the future. We rely on our outside counsel or our licensing partners to pay these fees due to non-U.S. patent agencies. The USPTO and various
non-U.S. government patent agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent
application process. We employ reputable law firms and other professionals to help us comply and we are also dependent on our licensors to take the necessary
action to comply with these requirements with respect to our licensed intellectual property. In many cases, an inadvertent lapse can be cured by payment of a
late fee or by other means in accordance with the applicable rules. There are situations, however, in which non-compliance can result in abandonment or lapse
of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might
be able to enter the market and this circumstance could have an adverse effect on our business.
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We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our
intellectual property rights in some countries outside the United States could be less extensive than those in the United States. In some cases, we may not be
able to obtain patent protection for certain licensed technology outside the United States. In addition, the laws of some foreign countries do not protect
intellectual property rights to the same extent as federal and state laws in the United States, even in jurisdictions where we do pursue patent protection.
Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, even in jurisdictions where
we do pursue patent protection or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
Competitors may use our technologies in jurisdictions where we have not pursued and obtained patent protection to develop their own products and,
further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.
These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them
from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal
systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property
protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents, if pursued and
obtained, or marketing of competing products in violation of our proprietary rights generally. Moreover, many countries have compulsory licensing laws under
which a patent owner may be compelled to grant licenses to third parties. Many countries limit the enforceability of patents against government agencies or
government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any
of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and
our business and results of operations may be adversely affected.
In addition, proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from
other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and
could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any,
may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a
significant commercial advantage from the intellectual property that we develop or license.
We may not be able to protect our trade secrets in court.
In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that
is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidate discovery
and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult
to protect and some courts inside and outside the United States are less willing or unwilling to protect trade secrets. We seek to protect our proprietary
technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors and contractors. However, we
may not be able to prevent the unauthorized disclosure or use of our technical know-how or other trade secrets by the parties to these agreements, despite the
existence generally of confidentiality agreements and other contractual restrictions.
Monitoring unauthorized uses and disclosures is difficult and we do not know whether the steps we have taken to protect our proprietary technologies
will be effective. If any of the collaborators, scientific advisors, employees and consultants who are parties to these agreements breach or violate the terms of
any of these agreements, we may not have adequate remedies for any such breach or violation. As a result, we could lose our trade secrets.
We cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary
technology and processes. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our
premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and
systems, agreements and security measures, they may still be breached, and we may not have adequate remedies for any breach.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Competitors could purchase our product
candidates and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual
property rights, design around our protected technology or develop their own competitive technologies that fall outside of our intellectual property rights. If any
of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they
communicate such trade secrets, from using that technology or information to compete with us. If our trade secrets are not adequately protected so as to protect
our market against competitors’ therapeutics, our competitive position could be adversely affected, as could our business.
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Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights.
Our commercial success depends upon our ability and the ability of our future collaborators to develop, manufacture, market and sell our product
candidates and use our proprietary technologies without infringing the proprietary rights and intellectual property of third parties. The biotechnology and
pharmaceutical industries are characterized by extensive and complex litigation regarding patents and other intellectual property rights. We may in the future
become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our product candidates and
technology, including interference proceedings, post grant review and inter partes review before the USPTO. Our competitors or other third parties may assert
infringement claims against us, alleging that our therapeutics, manufacturing methods, formulations or administration methods are covered by their patents.
Given the vast number of patents in our field of technology, we cannot be certain or guarantee that we do not infringe existing patents or that we will not
infringe patents that may be granted in the future. Since this area is competitive and of strong interest to pharmaceutical and biotechnology companies, there
will likely be additional patent applications filed and additional patents granted in the future, as well as additional R&D programs expected in the future.
Furthermore, because patent applications can take many years to issue, may be confidential for 18 months or more after filing and can be revised before
issuance, there may be applications now pending which may later result in issued patents that may be infringed by the manufacture, use, sale or importation of
our product candidates and we may or may not be aware of such patents. If a patent holder believes the manufacture, use, sale or importation of one of our
product candidates infringes its patent, the patent holder may sue us even if we have licensed other patent protection for our technology. Moreover, we may face
patent infringement claims from non-practicing entities that have no relevant product revenue and against whom our licensed patent portfolio may therefore
have no deterrent effect.
It is also possible that we have failed to identify relevant third-party patents or applications. For example, applications filed before November 29, 2000
and certain applications filed after that date that will not be filed outside the United States may remain confidential until patents issue. Moreover, it is difficult
for industry participants, including us, to identify all third-party patent rights that may be relevant to our product candidates and technologies because patent
searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. We
may fail to identify relevant patents or patent applications or may identify pending patent applications of potential interest but incorrectly predict the likelihood
that such patent applications may issue with claims of relevance to our technology. In addition, we may be unaware of one or more issued patents that would be
infringed by the manufacture, sale or use of a current or future product candidate, or we may incorrectly conclude that a third-party patent is invalid,
unenforceable or not infringed by our activities. Additionally, pending patent applications that have been published can, subject to certain limitations, be later
amended in a manner that could cover our technologies, our product candidates or the use of our product candidates.
Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit.
There is a risk that third parties may choose to engage in litigation with us to enforce or to otherwise assert their patent or other intellectual property rights
against us. Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable
and infringed, which could adversely affect our ability to commercialize our product candidates. In order to successfully challenge the validity of any such U.S.
patent in federal court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence
as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S.
patent. Similarly, there is no assurance that a court of competent jurisdiction would find that product candidates or our technology did not infringe a third-party
patent.
Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcome is uncertain. If we are
found or believe there is a risk that we may be found, to infringe a third party’s valid and enforceable intellectual property rights, we could be required or may
choose to obtain a license from such third party to continue developing, manufacturing and marketing our product candidates and technology. However, we may
not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive,
thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and
royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technology or product
candidate. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed
a patent or other intellectual property right. A finding of infringement could prevent us from manufacturing and commercializing our product candidates or
force us to cease some or all of our business operations, which could harm our business. Claims that we have misappropriated the confidential information or
trade secrets of third parties could have a similar negative impact on our business, financial condition, results of operations and prospects.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Litigation or other legal proceedings relating to intellectual property claims, with or without merit, are unpredictable and generally expensive and time-
consuming. Competitors may infringe our patents or the patents of our licensing partners, should such patents issue, or we may be required to defend against
claims of infringement. To counter infringement or unauthorized use claims or to defend against claims of infringement can be expensive and time consuming.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could
distract our technical and management personnel from their normal responsibilities. 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. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities
analysts or investors perceive these results to be negative, it could have a substantial adverse effect on us. Such litigation or proceedings could substantially
increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.
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We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to
sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed
intellectual property portfolios.
Accordingly, despite our efforts, we may not be able to prevent third parties from infringing, misappropriating or successfully challenging our
intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a negative impact on
our ability to compete in the marketplace.
We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or
former employers or claims asserting ownership of what we regard as our own intellectual property.
Certain of our employees, consultants or advisors are currently, or were previously, employed at universities or other biotechnology or pharmaceutical
companies, including our competitors or potential competitors, as well as our academic partners. Although we try to ensure that our employees, consultants and
advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these individuals or we have used
or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may
be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual
property rights. An inability to incorporate such technologies or features would harm our business and may prevent us from successfully obtaining necessary
regulatory approvals and commercializing our product candidates. In addition, we may lose personnel as a result of such claims, and any such litigation or the
threat thereof may adversely affect our ability to hire employees or contract with independent contractors. A loss of key personnel or their work product could
hamper or prevent our ability to obtain necessary regulatory approvals and commercialize our product candidates, which would have an adverse effect on our
business, results of operations and financial condition. Even if we are successful in defending against such claims, litigation could result in substantial costs and
be a distraction to management.
In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual
property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact,
conceives or develops intellectual property that we regard as our own. Moreover, even when we obtain agreements assigning intellectual property to us, the
assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and we may be forced to bring claims
against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Furthermore,
individuals executing agreements with us may have pre-existing or competing obligations to a third party, such as an academic institution, and thus an
agreement with us may be ineffective in perfecting ownership of inventions developed by that individual. Disputes about the ownership of intellectual property
that we may own may have an adverse effect on our business.
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or
defense of issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act
includes several significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted and also may affect
patent litigation. These also include provisions that switched the United States from a “first-to-invent” system to a “first-to-file” system, allow third-party
submission of prior art to the USPTO during patent prosecution and set forth additional procedures to attack the validity of a patent through various post-grant
proceedings administered by the USPTO. Under a first-to-file system, assuming the other requirements for patentability are met, the first inventor to file a
patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. The USPTO
developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with
the Leahy-Smith Act, and in particular, the first-to-file provisions, only became effective on March 16, 2013.
Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its
implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued
patents, all of which could have a negative impact effect on our business, financial condition, results of operations and prospects.
Additionally, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in
certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain
patents in the future, the combination of new federal legislation, federal court decisions, and guidance from the USPTO has created uncertainty with respect to
the value of patents, once obtained. Depending on the decisions by the U.S. Congress, federal courts, and the USPTO, the laws and regulations governing
patents could change in unpredictable ways that would weaken our ability to obtain new patents or enforce our existing patents and patents we might obtain in
the future.
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If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest.
We do not currently have any registered trademarks and we have not filed any trademark applications to date. Any trademark applications in the United
States, Europe and in other foreign jurisdictions where we may file may not be allowed or may subsequently be opposed. Once filed and registered, our
trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. As a means to
enforce our trademark rights and prevent infringement, we may be required to file trademark claims against third parties or initiate trademark opposition
proceedings. This can be expensive and time-consuming, particularly for a company of our size. We may not be able to protect our rights to these trademarks
and trade names, which we need to build name recognition among potential partners or customers in our markets of interest. At times, competitors may adopt
trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there
could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of
our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade
names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights
related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and
diversion of resources.
Intellectual property rights and regulatory exclusivity rights do not necessarily address all potential threats.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may
not adequately protect our business or permit us to maintain our competitive advantage. For example:
● others may be able to make products that are similar to our product candidates but that are not covered by the claims of the patents that we license
or may own in the future;
● we, or our license partners or future collaborators, might not have been the first to make the inventions covered by the issued patent or pending
patent applications that we license or may own in the future;
● we, or our license partners or future collaborators, might not have been the first to file patent applications covering certain of our or their
inventions;
● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or
licensed intellectual property rights;
● others may circumvent our regulatory exclusivities, such as by pursuing approval of a competitive product candidate via the traditional approval
pathway based on their own clinical data, rather than relying on the abbreviated pathway provided for biosimilar applicants;
● it is possible that our pending licensed patent applications or those that we may own in the future will not lead to issued patents;
● issued patents that we hold rights to now or in the future may be held invalid or unenforceable, including as a result of legal challenges by our
competitors;
● others may have access to the same intellectual property rights licensed to us on a non-exclusive basis;
● our competitors might conduct R&D activities in countries where we do not have patent rights and then use the information learned from such
activities to develop competitive products for sale in our major commercial markets;
● we may not develop additional proprietary technologies that are patentable;
● the patents or other intellectual property rights of others may have an adverse effect on our business; or
● we may choose not to file a patent for certain trade secrets or know-how, and a third party may subsequently file a patent covering such
intellectual property.
Should any of these events occur, they could significantly harm our business, financial condition, results of operations and prospects.
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Risks Related to Government Regulation
Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize our product candidates
and the approval may be for a narrower indication than we seek.
We cannot commercialize a product candidate until the appropriate regulatory authorities have reviewed and approved the product candidate. The FDA
must review and approve any new pharmaceutical product before it can be marketed and sold in the United States. The FDA regulatory review and approval
process, which includes evaluation of preclinical studies and clinical trials of a product candidate and proposed labeling, as well as the evaluation of the
manufacturing process and manufacturers’ facilities, all of which is lengthy, expensive and uncertain. To obtain approval, we must, among other things,
demonstrate with substantial evidence from well-controlled clinical trials that the product candidate is both safe and effective for each indication where
approval is sought. Even if our product candidates meet the FDA’s safety and effectiveness endpoints in clinical trials, the FDA may not complete their review
processes in a timely manner, or we may not be able to obtain regulatory approval. The FDA has substantial discretion in the review and approval process and
may refuse to file our application for substantive review or may determine after review of our data that our application is insufficient to allow approval of our
product candidates. The FDA may require that we conduct additional preclinical studies, clinical trials or manufacturing validation studies and submit that data
before it will reconsider our application. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval
or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or
administrative action, or changes in regulatory authority policy during the period of product development, clinical trials and the review process.
The FDA, EMA or other regulatory authorities also may approve a product candidate for more limited indications than requested or may impose
significant limitations in the form of narrow indications, warnings or a REMS. These regulatory authorities may require precautions or contraindications with
respect to conditions of use or may grant approval subject to the performance of costly post-marketing clinical trials. In addition, the FDA, EMA or other
regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates. Any
of the foregoing scenarios could harm the commercial prospects for our product candidates and negatively impact our business, financial condition, results of
operations and prospects.
Delays in obtaining regulatory approval of our manufacturing process and facility or disruptions in our manufacturing process may delay or disrupt our
product development and commercialization efforts.
We do not currently operate manufacturing facilities for clinical or commercial production of our product candidates. Before we can begin to
commercially manufacture our product candidates, whether in a third-party facility or in our own facility, if and when established, we must obtain regulatory
approval from the FDA for our manufacturing process and facility. A manufacturing authorization must also be obtained from the appropriate European Union
regulatory authorities and from other foreign regulatory authorities, as applicable. In order to obtain approval, we will need to ensure that all of our processes,
methods and equipment are compliant with cGMP, and perform extensive audits of vendors, contract laboratories and suppliers. If any of our vendors, contract
laboratories or suppliers are found to be non-compliant with cGMP, we may experience delays or disruptions in manufacturing while we work with these third
parties to remedy the violation or while we work to identify suitable replacement vendors. The cGMP requirements govern quality control of the manufacturing
process and documentation policies and procedures. In complying with cGMP, we will be obligated to expend time, money and effort in production, record
keeping and quality assurance to confirm that the product meets applicable specifications and other requirements. If we fail to comply with these requirements,
we would be subject to possible regulatory action and may not be permitted to sell any product candidate that we may develop.
If we or our third-party manufacturers fail to comply with applicable cGMP regulations, the FDA, EMA and other regulatory authorities can impose
regulatory sanctions including, among other things, refusal to approve a pending application for a new product candidate or suspension or revocation of a pre-
existing approval. Such an occurrence may cause our business, financial condition, results of operations and prospects to be harmed.
Additionally, if the supply of our products from our third-party manufacturers to us is interrupted for any reason, including due to regulatory
requirements or actions (including recalls), adverse financial developments at or affecting the supplier, failure by the supplier to comply with cGMPs,
contamination, business interruptions or labor shortages or disputes, there could be a significant disruption in commercial supply of our products. We do not
currently have a backup manufacturer of our product candidate supply for clinical trials or commercial sale. An alternative manufacturer would need to be
qualified through a supplement to its regulatory filing, which could result in further delays. The regulatory authorities also may require additional clinical trials
if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and could result in a delay in our
desired clinical and commercial timelines.
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If our competitors are able to obtain orphan drug exclusivity for products that constitute the same drug and treat the same indications as our product
candidates, we may not be able to have competing products approved by applicable regulatory authorities for a significant period of time. In addition, even
if we obtain orphan drug exclusivity for any of our products, such exclusivity may not protect us from competition.
Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate products for relatively small patient
populations as orphan drugs. Under the Orphan Drug Act of 1983, the FDA may designate a product candidate as an orphan drug if it is intended to treat a rare
disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population
greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the
United States. In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial
costs, tax advantages and user-fee waivers. In the European Union, the EMA’s Committee for Orphan Medicinal Products grants orphan drug designation to
promote the development of products that are intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition
affecting not more than five in 10,000 persons in the European Union. Additionally, orphan drug 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 or biologic product. In Europe, orphan drug
designation entitles a party to a number of incentives, such as protocol assistance and scientific advice specifically for designated orphan medicines, and
potential fee reductions depending on the status of the sponsor.
The designation as an orphan product does not guarantee that any regulatory agency will accelerate regulatory review of, or ultimately approve, that
product candidate, nor does it limit the ability of any regulatory agency to grant orphan drug designation to product candidates of other companies that treat the
same indications as our product candidates prior to our product candidates receiving exclusive marketing approval.
Generally, if a product candidate with an orphan drug designation receives the first marketing approval for the indication for which it has such
designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or the EMA from approving another marketing application for
a product that constitutes the same drug treating the same indication for that marketing exclusivity period, except in limited circumstances. If another sponsor
receives such approval before we do (regardless of our orphan drug designation), we will be precluded from receiving marketing approval for our product for
the applicable exclusivity period. The applicable period is seven years in the United States and ten years in the European Union. The exclusivity period in the
European Union can be reduced to six years if a product no longer meets the criteria for orphan drug designation or if the product is sufficiently profitable so
that market exclusivity is no longer justified. Orphan drug exclusivity may be revoked if any regulatory agency determines that the request for designation was
materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition.
Even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product candidate from competition
because different drugs can be approved for the same condition. In the United States, even after an orphan drug is approved, the FDA may subsequently
approve another drug for the same condition if the FDA concludes that the latter drug is not the same drug or is clinically superior in that it is shown to be safer,
more effective or makes a major contribution to patient care. In the European Union, marketing authorization may be granted to a similar medicinal product for
the same orphan indication if:
● the second applicant can establish in its application that its medicinal product, although similar to the orphan medicinal product already
authorized, is safer, more effective or otherwise clinically superior;
● the holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or
● the holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient quantities of orphan medicinal
product.
Even if we obtain regulatory approval for a product candidate, our product candidates will remain subject to regulatory oversight.
Even if we obtain regulatory approval for our product candidates, they will be subject to ongoing regulatory requirements for manufacturing, labeling,
packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information. Any regulatory approvals
that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the
conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the
quality, safety and clinical effectiveness of the product.
Some of our product candidates are classified as biologics in the United States, and therefore, can only be sold if we obtain a BLA from the FDA. The
holder of an approved BLA also must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product
labeling or manufacturing process. In addition, the holder of a BLA must comply with the FDA’s advertising and promotion requirements, such as those related
to the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off-label use”).
Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state
laws.
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In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA
and other regulatory authorities for compliance with cGMP requirements and adherence to commitments made in the BLA or foreign marketing application. If
we, or a regulatory authority, discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems
with the facility where the product is manufactured or if a regulatory authority disagrees with the promotion, marketing or labeling of that product (in addition
to our being obligated as holder of a BLA to monitor and report adverse events and any failure of a product to meet the BLA specifications), a regulatory
authority may impose restrictions relative to that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the
market or suspension of manufacturing.
If we fail to comply with applicable regulatory requirements following approval of our product candidates, a regulatory or enforcement authority may:
● issue a warning letter asserting that we are in violation of the law;
● seek an injunction or impose administrative, civil or criminal penalties or monetary fines;
● suspend or withdraw regulatory approval;
● suspend any ongoing clinical trials;
● refuse to approve a pending BLA or comparable foreign marketing application (or any supplements thereto) submitted by us or our strategic
partners;
● restrict the marketing or manufacturing of the product;
● seize or detain the product or otherwise require the withdrawal of the product from the market;
● refuse to permit the import or export of the product; or
● refuse to allow us to enter into supply contracts, including government contracts.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate
negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and adversely affect
our business, financial condition, results of operations and prospects.
In addition, the FDA’s policies, and those of the EMA and other regulatory authorities, may change and additional government regulations may be
enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government
regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in
existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing
approval that we may have obtained and we may not achieve or sustain profitability, which would negatively impact our business, financial condition, results of
operations and prospects.
Even if we obtain and maintain approval for our product candidates in a major pharmaceutical market such as the United States, we may never obtain
approval for our product candidates in other major markets.
In order to market any products in a country or territory, we must establish and comply with numerous and varying regulatory requirements of such
countries or territories regarding safety and effectiveness. Clinical trials conducted in one country may not be accepted by regulatory authorities in other
countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval procedures vary
among countries and can involve additional product testing and validation and additional administrative review periods. Seeking regulatory approvals in all
major markets could result in significant delays, difficulties and costs for us and may require additional preclinical studies or clinical trials, which would be
costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our product
candidates in those countries. For example, in many jurisdictions outside of the United States, a product candidate must be approved for reimbursement before
it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our products would also be subject to approval. Satisfying
these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. In addition, our failure to obtain regulatory
approval in any country may delay or have negative effects on the process for regulatory approval in other countries. We currently do not have any product
candidates approved for sale in any jurisdiction, whether in the United States, Europe or any other international markets, and we do not have experience in
obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain
required approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be compromised.
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We may seek a conditional marketing authorization in Europe for some or all of our current product candidates, but we may not be able to obtain or
maintain such designation.
As part of its marketing authorization process, the EMA may grant marketing authorizations for certain categories of medicinal products on the basis
of less complete data than is normally required, when doing so may meet unmet medical needs of patients and serve the interest of public health. In such cases,
it is possible for the Committee for Medicinal Products for Human Use, or CHMP, to recommend the granting of a marketing authorization, subject to certain
specific obligations to be reviewed annually, which is referred to as a conditional marketing authorization.
This may apply to medicinal products for human use that fall under the jurisdiction of the EMA, including those that aim at the treatment, the
prevention, or the medical diagnosis of seriously debilitating or life-threatening diseases and those designated as orphan medicinal products.
A conditional marketing authorization may be granted when the CHMP finds that, although comprehensive clinical data referring to the safety and
therapeutic utility of the medicinal product have not been supplied, all the following requirements are met:
● the risk-benefit balance of the medicinal product is positive;
● it is likely that the applicant will be in a position to provide the comprehensive clinical data;
● unmet medical needs will be fulfilled; and
● the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact
that additional data is still required.
The granting of a conditional marketing authorization is restricted to situations in which only the clinical part of the application is not yet fully
complete. Incomplete preclinical or quality data may only be accepted if duly justified and only in the case of a product intended to be used in emergency
situations in response to public health threats. Conditional marketing authorizations are valid for one year, on a renewable basis. The holder will be required to
complete ongoing trials or to conduct new trials with a view to confirming that the benefit-risk balance is positive. In addition, specific obligations may be
imposed in relation to the collection of pharmacovigilance data.
Granting a conditional marketing authorization allows medicines to reach patients with unmet medical needs earlier than might otherwise be the case
and will ensure that additional data on a product is generated, submitted, assessed and acted upon.
Healthcare legislative reform measures may have a negative impact on our business and results of operations.
In the United States and some foreign jurisdictions, there have been, and continue to be, several 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
and affect our ability to profitably sell any product candidates for which we obtain marketing approval.
In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, changed the way Medicare covers
and pays for pharmaceutical products. The MMA expanded Medicare coverage for outpatient drug purchases by adding a new Medicare Part D program and
introduced a new reimbursement methodology based on average sales prices for Medicare Part B physician-administered drugs. In addition, the MMA
authorized Medicare Part D prescription drug plans to limit the number of drugs that will be covered in any therapeutic class in their formularies. The MMA’s
cost reduction initiatives and other provisions could decrease the coverage and price that we receive for any approved products. While the MMA applies only to
drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement
rates. Therefore, any reduction in reimbursement that results from the MMA may result in a similar reduction in payments from private payors. Similar
regulations or reimbursement policies may be enacted in international markets, which could similarly impact our business.
In March 2010, the PPACA (as amended by the Health Care and Education Reconciliation Act of 2010) was passed, which substantially changes the
way healthcare is financed by both the government and private insurers, and significantly impacts the U.S. pharmaceutical industry. The PPACA, among other
things: (i) addresses a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are
inhaled, infused, instilled, implanted or injected; (ii) increases the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program
and extends the rebate program to individuals enrolled in Medicaid managed care organizations; (iii) establishes annual fees and taxes on manufacturers of
certain branded prescription drugs; (iv) expands the availability of lower pricing under the 340B drug pricing program by adding new entities to the program;
and (v) establishes a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off
negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to
be covered under Medicare Part D. Additionally, in the United States, the Biologics Price Competition and Innovation Act of 2009 created an abbreviated
approval pathway for biologic products that are demonstrated to be biosimilar or “interchangeable” with an FDA-approved biologic product. This new pathway
could allow competitors to reference data from biologic products already approved after 12 years from the time of approval. This could expose us to potential
competition by lower-cost biosimilars even if we commercialize a product candidate faster than our competitors. Moreover, the creation of this abbreviated
approval pathway does not preclude or delay a third party from pursuing approval of a competitive product candidate via the traditional approval pathway based
on their own clinical trial data.
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Additional changes that may affect our business include those governing enrollments in federal healthcare programs, reimbursement changes, rules
regarding prescription drug benefits under the health insurance exchanges and fraud and abuse and enforcement. Continued implementation of the PPACA and
the passage of additional laws and regulations may result in the expansion of new programs such as Medicare payment for performance initiatives, and may
impact existing government healthcare programs, such as by improving the physician quality reporting system and feedback program.
For each state that does not choose to expand its Medicaid program, there likely will be fewer insured patients overall, which could impact the sales,
business and financial condition of manufacturers of branded prescription drugs. Where patients receive insurance coverage under any of the new options made
available through the PPACA, manufacturers may be required to pay Medicaid rebates on that resulting drug utilization. The U.S. federal government also has
announced delays in the implementation of key provisions of the PPACA. The implications of these delays for our and our potential partners’ business and
financial condition, if any, are not yet clear.
In addition, there have been judicial and congressional challenges to certain aspects of the PPACA, and we expect the current administration and
Congress will likely continue to seek legislative and regulatory changes, including repeal and replacement of certain provisions of the PPACA. In January 2017,
President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the PPACA to waive, defer, grant exemptions
from, or delay the implementation of any provision of the PPACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers,
health insurers, or manufacturers of pharmaceuticals or medical devices. More recently, the U.S. House of Representatives passed legislation known as the
American Health Care Act of 2017, and Senate Republicans have released a draft bill known as the Better Care Reconciliation Act of 2017, each of which
would repeal certain aspects of the PPACA if ultimately enacted. The prospects for enactment of these legislative initiatives remain uncertain. Further, Congress
also could consider other legislation to replace elements of the PPACA. We cannot know how efforts to repeal and replace the PPACA or any future healthcare
reform legislation will impact our business.
We expect that the PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage
criteria and in additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other
government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare
reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal
and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing
pressures.
We are subject to governmental regulation and other legal obligations related to privacy, data protection and data security. Our actual or perceived failure
to comply with such obligations could harm our business.
We are subject to diverse laws and regulations relating to data privacy and security in the UK and EU, including the EU and UK GDPR. New global
privacy rules are being enacted and existing ones are being updated and strengthened. We are likely to be required to expend capital and other resources to
ensure ongoing compliance with these laws and regulations.
The EU and UK GDPR applies extraterritorially and implements stringent operational requirements for controllers and processors of personal data. For
example, the EU and UK GDPR: (i) require detailed disclosures to data subjects; (ii) require disclosure of the legal basis on which personal data is processed;
(iii) make it harder to obtain valid consent for processing; (iv) require the appointment of a data protection officers where sensitive personal data (i.e. health
data) is processed on a large scale; (v) provide more robust rights for data subjects; (vi) introduce mandatory data breach notification through the EU and in the
UK; (vii) impose additional obligations when contracting with service providers; and (viii) require an appropriate privacy governance framework to be
implemented including policies, procedures, training and data audit. The EU GDPR permits Member State derogations for certain issues and, accordingly, we
are also subject to EU national laws relating to the processing of certain data such as genetic data, biometric data and data concerning health. Complying with
these numerous, complex and often changing regulations is expensive and difficult. Failure by us, or our partners or service providers, to comply with the EU
and/or UK GDPR could result in regulatory investigations, enforcement notices and/ or fines of up to the higher of 20,000,000 Euros/17,500,000 GBP or up to
4% of our total worldwide annual turnover. In addition to the foregoing, any breach of privacy laws or data security laws, particularly those resulting in any
security incident or breach involving the misappropriation, loss or other unauthorized use or disclosure of sensitive or confidential patient or consumer
information, could have a material adverse effect on our business, reputation and financial condition.
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As a data controller, we are accountable for any third-party data service providers we engage to process personal data on our behalf. We attempt to
address the associated risks by performing security assessments, detailed due diligence and regularly performing privacy and security reviews of its vendors and
requiring all such third-party providers with data access to sign agreements, including business associate agreements, and where required under EU or UK law,
obligating them to only process data according to our instructions and to take sufficient security measures to protect such data. There is no assurance that these
contractual measures and our own privacy and security-related safeguards will protect us from the risks associated with the third-party processing, storage and
transmission of such information. Any violation of data or security laws by our third-party processors could have a material adverse effect on our business and
result in the fines and penalties outlined above. We are also subject to evolving European privacy laws on electronic marketing and cookies. The EU is in the
process of replacing the e-Privacy Directive (2002/58/EC) with a new set of rules taking the form of a regulation, which will be directly implemented in the
laws of each Member State. The draft e-Privacy Regulation imposes strict opt-in marketing rules with limited exceptions for business-to-business
communications, alters rules on third-party cookies, web beacons and similar technology and significantly increases fining powers to the same levels as GDPR
(i.e. the greater of 20,000,000 Euros or 4% of total global annual revenue). While the e-Privacy Regulation was originally intended to be adopted on May 25,
2018 (alongside the GDPR), it is still going through the European legislative process and commentators do not expect it to be enacted before mid to end 2023
and would not come into force before mid to end 2025. The UK is also updating its data protection law via the Data Protection and Digital Information Bill that
is currently being considered by the UK Parliament. This is expected to be passed at the end of 2023 and will modify certain aspects of the UK GDPR and Data
Protection Act 2018. These proposed changes will require us to modify certain aspects of our data protection compliance program.
We are subject to the U.K. Bribery Act, the U.S. Foreign Corrupt Practices Act and other anti-corruption laws, as well as export control laws, import and
customs laws, trade and economic sanctions laws and other laws governing our operations.
Our operations are subject to anti-corruption laws, including the U.K. Bribery Act 2010, or the U.K. Bribery Act, the U.S. Foreign Corrupt Practices
Act of 1977, or the FCPA, the U.S. domestic bribery statute contained in 18 §201, the U.S. Travel Act, and other anti-corruption laws that apply in countries
where we do business. The U.K. Bribery Act, the FCPA and these other laws generally prohibit us and our employees and intermediaries from authorizing,
promising, offering, or providing, directly or indirectly, improper or prohibited payments, or anything else of value, to government officials or other persons to
obtain or retain business or gain some other business advantage. Under the U.K. Bribery Act, we may also be liable for failing to prevent a person associated
with us from committing a bribery offense. We and our commercial partners operate in a number of jurisdictions that pose a high risk of potential U.K. Bribery
Act or FCPA violations, and we participate in collaborations and relationships with third parties whose corrupt or illegal activities could potentially subject us to
liability under the U.K. Bribery Act, FCPA or local anti-corruption laws, even if we do not explicitly authorize or have actual knowledge of such activities. In
addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in
which existing laws might be administered or interpreted.
We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of the
United Kingdom and the United States, and authorities in the European Union, including applicable export control regulations, economic sanctions and
embargoes on certain countries and persons, anti-money laundering laws, import and customs requirements and currency exchange regulations, collectively
referred to as the Trade Control laws.
There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the U.K.
Bribery Act, the FCPA or other legal requirements, including Trade Control laws. If we are not in compliance with the U.K. Bribery Act, the FCPA and other
anti-corruption laws or Trade Control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and
legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity. Likewise, any investigation of any
potential violations of the U.K. Bribery Act, the FCPA, other anti-corruption laws or Trade Control laws by United Kingdom, United States or other authorities
could also have an adverse impact on our reputation, our business, results of operations and financial condition.
Our relationships with customers, physicians and third-party payors will be subject, directly or indirectly, to federal and state healthcare fraud and abuse
laws, false claims laws, health information privacy and security laws and other healthcare laws and regulations. If we are found in violation of these laws
and regulations, we may be required to pay a penalty or be suspended from participation in federal or state healthcare programs, which may adversely
affect our business, financial condition and results of operations.
If we obtain FDA approval for our product candidates and begin commercializing them in the United States, our operations will be directly, or
indirectly through our prescribers, customers and purchasers, subject to various federal and state fraud and abuse laws and regulations, including, without
limitation, the federal Anti-Kickback Statute, the federal civil and criminal laws and Physician Payments Sunshine Act of 2010 and regulations. These laws will
impact, among other things, our proposed sales, marketing and educational programs. In addition, we may be subject to patient privacy laws by both the U.S.
federal government and the states in which we conduct our business. The laws that will affect our operations include, but are not limited to:
● the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving,
offering or paying any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, in
return for either the referral of an individual, or the purchase, leasing, furnishing or arranging for the purchase, lease or order of a good, facility,
item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs. This statute has been interpreted to
apply to arrangements between pharmaceutical manufacturers on the one hand, and prescribers, purchasers and formulary managers on the other.
The PPACA amended the intent requirement of the federal Anti-Kickback Statute, such that a person or entity no longer needs to have actual
knowledge of this statute or specific intent to violate it;
● federal civil and criminal false claims laws and civil monetary penalty laws which prohibit, among other things, individuals or entities from
knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other government payors that are
false or fraudulent. The PPACA provides, and recent government cases against pharmaceutical and medical device manufacturers support the view
that federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, may implicate the False Claims Act
of 1863;
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● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit,
among other things, a person from knowingly and willfully executing a scheme or from making false or fraudulent statements to defraud any
healthcare benefit program, regardless of the payor (e.g., public or private);
● HIPAA (as amended by the Health Information Technology for Economic and Clinical Health Act of 2009), and their implementing regulations,
which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information without
appropriate authorization by entities subject to the rule, such as health plans, health care clearinghouses and health care providers, and their
respective business associates that perform certain functions or activities that involve the use or disclosure of protected health information on their
behalf;
● federal transparency laws, including the federal Physician Payment Sunshine Act, that require certain manufacturers of drugs, devices, biologics
and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific
exceptions, to report annually to the CMS information related to: (i) payments or other “transfers of value” made to physicians and teaching
hospitals and (ii) ownership and investment interests held by physicians and their immediate family members;
● federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm
consumers; and
● state and foreign law equivalents of each of the above federal laws, state and local laws that require drug manufacturers to report information
related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state and foreign laws
governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and
may not have the same effect, thus complicating compliance efforts.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial
costs. Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business
activities could be subject to challenge under one or more of such laws. It is possible that governmental authorities will conclude that our business practices
may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our
operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant
criminal, civil and administrative sanctions including monetary penalties, damages, fines, disgorgement, individual imprisonment, and exclusion from
participation in government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject
to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, reputational harm, and we may be required to
curtail or restructure our operations, any of which could adversely affect our ability to operate our business and our results of operations.
The risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory
authorities or the courts, and their provisions are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully
defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. The shifting
compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance
and/or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur substantial costs.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the
generation, handling, use, storage, treatment, manufacture, transportation and disposal of, and exposure to, hazardous materials and wastes, as well as laws and
regulations relating to occupational health and safety. We contract with third parties that conduct operations on our behalf that involve the use of hazardous and
flammable materials, including chemicals and biologic materials. Our contractors also produce and dispose of hazardous waste products. We cannot eliminate
the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our contractors’ use of hazardous materials, we
could be held liable for any resulting damages and any liability could exceed our resources, and our clinical trials or regulatory approvals could be suspended.
We also could incur significant costs associated with civil or criminal fines and penalties. Our third-party contractors may not carry specific biological or
hazardous waste insurance coverage, and their property, casualty and general liability insurance policies specifically exclude coverage for damages and fines
arising from biological or hazardous waste exposure or contamination.
Although we maintain workers’ compensation insurance for certain costs and expenses, we may incur due to injuries to our employees resulting from
the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. We do not maintain
insurance for toxic tort claims that may be asserted against us in connection with our storage or disposal of biologic, hazardous or radioactive materials.
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In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations, which have
tended to become more stringent over time. These current or future laws and regulations may impair our research, development or production efforts. Failure to
comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities, which could adversely affect our business,
financial condition, results of operations and prospects.
Risks Related to our Business Operations
We may not be successful in our efforts to identify or discover additional product candidates and may fail to capitalize on programs or product candidates
that may be a greater commercial opportunity or for which there is a greater likelihood of success.
The success of our business depends upon our ability to identify, develop and commercialize product candidates. Research programs to identify new
product candidates require substantial technical, financial and human resources. Although a substantial amount of our efforts will focus on the continued
preclinical and clinical testing and potential approval of our product candidates, a key element of our long-term growth strategy is to develop and market
additional products and product candidates. However, we may fail to identify other potential product candidates for clinical development for several reasons.
For example, our research may be unsuccessful in identifying potential product candidates or our potential product candidates may be shown to have harmful
side effects, may be commercially impracticable to manufacture or may have other characteristics that may make the products unmarketable or unlikely to
receive marketing approval.
Additionally, because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or product candidates or for
indications that later prove to have greater commercial potential. Our spending on current and future R&D programs may not yield any commercially viable
products. If we do not accurately evaluate the commercial potential for a particular product candidate, we may relinquish valuable rights to that product
candidate through strategic collaboration, licensing or other arrangements in cases in which it would have been more advantageous for us to retain sole
development and commercialization rights to such product candidate. Alternatively, we may allocate internal resources to a product candidate in a therapeutic
area in which it would have been more advantageous to enter into a partnering arrangement.
Our long-term growth strategy to develop and market additional products and product candidates is heavily dependent on precise, accurate and reliable
scientific data to identify, select and develop promising pharmaceutical product candidates and products. Our business decisions may therefore be adversely
influenced by improper or fraudulent scientific data sourced from third parties. Any irregularities in the scientific data used by us to determine our focus in
R&D of product candidates and products could have a material adverse effect on our business, prospects, financial condition and results of operations.
If any of these events occur, we may be forced to abandon our development efforts with respect to a particular product candidate or fail to develop a
potentially successful product candidate, which could have a negative impact on our business, financial condition, results of operations and prospects.
Our future success depends on our ability to retain key employees, consultants and advisors and to recruit, retain and motivate qualified personnel.
Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon our ability to attract and retain highly
qualified managerial, scientific and medical personnel. While we have entered into employment agreements with each of our executive officers, any of them
could leave our employment at any time. We currently do not have “key person” insurance on any of our employees. The loss of the services of one or more of
our current employees might impede the achievement of our research, development and commercialization objectives.
Recruiting and retaining other qualified employees, consultants and advisors for our business, including scientific and technical personnel, also will be
critical to our success. We may not be able to attract and retain personnel on acceptable terms given the competition among numerous pharmaceutical and
biotechnology companies and academic institutions for individuals with similar skill sets. In addition, failure to succeed in preclinical studies or clinical trials or
applications for marketing approval may make it more challenging to recruit and retain qualified personnel. The inability to recruit, or loss of services of certain
executives, key employees, consultants or advisors, may impede the progress of our research, development and commercialization objectives and have an
adverse effect on our business, financial condition, results of operations and prospects.
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If we are unable to manage expected growth in the scale and complexity of our operations, our performance may suffer.
At December 31, 2023, we had 3 full-time employees, who were engaged in R&D activities. If we are successful in executing our business strategy, we
will need to expand our managerial, operational, financial and other systems and resources to manage our operations, continue our R&D activities and, in the
longer term, build a commercial infrastructure to support commercialization of any of our product candidates that are approved for sale. Future growth would
impose significant added responsibilities on members of management and, to a potentially significant extent, divert our management and business development
resources away from their current uses. It is likely that our management, finance, development personnel, systems and facilities currently in place may not be
adequate to support this future growth. Our need to effectively manage our operations, growth and any future product candidates requires that we continue to
develop more robust business processes and improve our systems and procedures in each of these areas, to attract and retain sufficient numbers of talented
employees and to expand the group of contractors we use.
We may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our research, development and growth
goals.
Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-
compliance with regulatory standards and requirements and insider trading, which could have a material adverse impact on our business.
We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners. Misconduct
by these parties could include intentional failures to: comply with FDA or EMA regulations or the regulations applicable in other jurisdictions, provide accurate
information to the FDA, EMA and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad,
report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the
healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs
and other business arrangements. Such misconduct also could involve the improper use of information obtained in the course of clinical trials or interactions
with the FDA, EMA or other regulatory authorities, which could result in regulatory sanctions and cause serious harm to our reputation. Additionally, we are
subject to the risk that a person could allege fraud or other misconduct, even in none occurred. We have adopted a code of conduct applicable to all of our
employees, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent these activities may not
be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from
a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our
rights, those actions could have a significant impact on our business, financial condition, results of operations and prospects, including the imposition of
significant criminal, civil and administrative sanctions, such as monetary penalties, damages, fines, disgorgement, individual imprisonment, and exclusion from
participation in government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject
to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, reputational harm, and we may be required to
curtail or restructure our operations. We are also subject to the data privacy regime in the EU, which imposes obligations and restrictions on the collection and
use of personal data relating to individuals located in the EU and includes the General Data Protection Regulation, or the GDPR, and any national laws
implementing or supplementing the GDPR. If we do not comply with our obligations under the EU privacy regime, we could be exposed to significant fines and
we may be the subject of litigation and/or adverse publicity, which could have a material adverse effect on our reputation and business.
Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidate that we may
develop.
We face an inherent risk of product liability exposure related to the testing of our current and future product candidates in clinical trials and may face
an even greater risk if we commercialize any product candidate that we may develop. For example, we may be sued if our current or future product candidates
cause or are perceived to cause injury or are found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product
liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict
liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against
product liability claims, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
● decreased demand for any product candidate that we may develop;
● loss of revenue;
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● substantial monetary awards to trial participants or patients;
● significant time and costs to defend the related litigation;
● withdrawal of clinical trial participants;
● the inability to commercialize any product candidates that we may develop; or
● injury to our reputation and significant negative media attention.
Although we maintain product liability insurance coverage, such insurance may not be adequate to cover all liabilities that we may incur. We anticipate
that we will need to increase our insurance coverage each time we commence a clinical trial and if we successfully commercialize any product candidate.
Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any
liability that may arise.
A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business and operations.
The outbreak of COVID-19 originated in Wuhan, China, in December 2019 and spread to multiple countries, including the United States and several
European countries. Disruptions caused by the COVID-19 pandemic may increase the likelihood that we encounter such difficulties or delays in initiating,
enrolling, conducting or completing our planned and ongoing preclinical studies and clinical trials, as applicable.
In addition, the COVID-19 pandemic may affect the operations of the FDA and other health authorities, which could result in delays of reviews and
approvals, including with respect to our product candidates. The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. We do
not yet know the full extent of potential delays or impacts on our business, financing or clinical trial activities or on healthcare systems or the global economy
as a whole. However, these effects could have a material impact on our liquidity, capital resources, operations and business and those of the third parties on
which we rely.
Exchange rate fluctuations may materially affect our results of operations and financial condition.
Owing to the international scope of our operations, fluctuations in exchange rates, particularly between Pounds Sterling and the U.S. dollar, may
adversely affect us. Although we are based in the United Kingdom, we may source R&D, manufacturing, consulting and other services from the United States
and the European Union. Further, potential future revenue may be derived from abroad, particularly from the United States. As a result, our business and the
potential value of our Common shares may be affected by fluctuations in foreign exchange rates not only between the Pounds Sterling and the U.S. dollar, but
also the euro, which may have a significant impact on our results of operations and cash flows from period to period. Currently, we do not have any exchange
rate hedging arrangements in place.
Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in
a material disruption of our product development programs.
Our internal computer systems and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage
from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. 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 development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or
other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval
efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or
damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position
could be harmed, and the further development and commercialization of our product candidates could be delayed.
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Risks Related to the Ownership of Our Securities
The prices of our common shares may be volatile and fluctuate substantially, which could result in substantial losses for holders of our common shares.
The market prices of our common shares on the Nasdaq Capital Market may be volatile and fluctuate substantially. The stock market in general and the
market for smaller pharmaceutical and biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating
performance of particular companies. As a result of this volatility, holders our common shares may not be able to sell their common shares at or above the price
at which they were purchased. The market price for the common shares may be influenced by many factors, including:
● the success of competitive products or technologies;
● results of clinical trials of Foralumab, anti-IL6R mAb (TZLS-501), Milciclib and any other future product candidate that we develop;
● results of clinical trials of product candidates of our competitors;
● changes or developments in laws or regulations applicable to Foralumab, anti-IL6R mAb (TZLS-501), Milciclib and any other future product
candidates that we develop;
● our entry into, and the success of, any collaboration agreements with third parties;
● developments or disputes concerning patent applications, issued patents or other proprietary rights;
● the recruitment or departure of key personnel;
● the level of expenses related to any of our product candidates or clinical development programs;
● the results of our efforts to discover, develop, acquire or in-license additional product candidates, products or technologies;
● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
● variations in our financial results or those of companies that are perceived to be similar to us;
● market conditions in the biotechnology and pharmaceutical sectors;
● general economic, industry and market conditions;
● the trading volume of our common shares on the Nasdaq Capital Market; and
● the other factors described in this “Risk Factors” section.
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Our common shares may be delisted from The Nasdaq Capital Market if we fail to comply with continued listing standards.
If we fail to meet any of the continued listing standards of The Nasdaq Capital Market, our common shares could be delisted from The Nasdaq Capital
Market. These continued listing standards include specifically enumerated criteria, such as:
● a $1.00 minimum closing bid price;
● stockholders’ equity of $2.5 million;
● 500,000 shares of publicly-held common stock with a market value of at least $1 million;
● 300 round-lot stockholders; and
● compliance with Nasdaq’s corporate governance requirements, as well as additional or more stringent criteria that may be applied in the exercise
of Nasdaq’s discretionary authority.
On June 14, 2022, we received a written notice (the “Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”) notifying us that were not in
compliance with Nasdaq Listing Rule 5550(a)(2) (the “Rule”), as the minimum bid price of the Company’s common shares has been below $1.00 per share for
30 consecutive business days. On December 13, 2022, Nasdaq notified us that we were eligible for an additional 180 calendar day period, or until June 12,
2023, to regain compliance.
On April 21, 2023, we received notice from Nasdaq that we had regained compliance with the minimum bid price requirement for continued listing on
The Nasdaq Capital Market.
On July 19, 2023, we received a written notice from Nasdaq notifying us that were not in compliance with the Rule, as the minimum bid price of the
Company’s common shares has been below $1.00 per share for 30 consecutive business days. On January 22, 2024, Nasdaq notified us that we were eligible for
an additional 180 calendar day period, or until July 15, 2024, to regain compliance.
If we fail to comply with Nasdaq’s continued listing standards, we may be delisted and our common shares will trade, if at all, only on the over-the-
counter market, such as the OTC Bulletin Board or OTCQX market, and then only if one or more registered broker-dealer market makers comply with
quotation requirements. In addition, delisting of our common shares could depress our stock price, substantially limit liquidity of our common shares and
materially adversely affect our ability to raise capital on terms acceptable to us, or at all. Finally, delisting of our common shares could result in our common
shares becoming a “penny stock” under the Exchange Act.
Because we are a foreign corporation, you may not have the same rights as a shareholder in a U.S. corporation.
We are a Bermuda exempted company. Our Memorandum of Association and Bye-laws and the Companies Act 1981 of Bermuda (the “Companies
Act”) govern our affairs Bermudan 1981 While many provisions of the Companies Act resemble provisions of the corporation laws of a number of states in the
United States, Bermuda law may not as clearly establish your rights and the fiduciary responsibilities of our directors as do statutes and judicial precedent in
some U.S. jurisdictions. In addition, apart from three non-executive directors, our directors and officers are not resident in the United States and all or
substantially all of our assets are located outside of the United States. As a result, investors may have more difficulty in protecting their interests and enforcing
judgments in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S.
jurisdiction.
In addition, you should not assume that courts in the country in which we are incorporated or where our assets are located would enforce judgments of
U.S. courts obtained in actions against us based upon the civil liability provisions of applicable U.S. federal and state securities laws or would enforce, in
original actions, liabilities against us based on those laws.
Shareholders of Bermuda exempted companies such as the Company also have no general rights under Bermuda law to inspect corporate records and
accounts other than rights to review the Company’s memorandum of association and bye-laws, financial statements, minutes of the shareholder meetings and
the shareholder register. This could make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or
to solicit proxies from other shareholders in connection with a proxy contest.
As a result of all of the above, public shareholders might have more difficulty in protecting their interests in the face of actions taken by management,
members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.
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U.S. persons who own our securities may have more difficulty in protecting their interests than U.S. persons who are shareholders of a U.S. corporation.
The Companies Act, which applies to the Company, differs in some material respects from laws generally applicable to U.S. corporations and their
shareholders. These differences include, but are not limited to, the manner in which directors must disclose transactions in which they have an interest, the
rights of shareholders to bring class action and derivative lawsuits, the scope of indemnification available to directors and officers and provisions relating to
amalgamations, mergers and acquisitions and takeovers. Holders of our common shares may therefore have more difficulty protecting their interests than would
shareholders of a corporation incorporated in a jurisdiction within the U.S.
Generally, the duties of directors and officers of a Bermuda company are owed to the company and not, in the absence of special circumstances, to the
shareholders as individuals. Shareholders of Bermuda companies typically do not have rights to take action against directors or officers of the company and
may only do so in limited circumstances. Class actions and derivative actions are typically not available to shareholders under Bermuda law. The Bermuda
courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company
where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s
memorandum of association or bye-laws.
Certain Other Bermuda Law Considerations.
All Bermuda “exempted companies” are exempt from certain Bermuda laws restricting the percentage of share capital that may be held by non-
Bermudians. However, exempted companies may not participate in certain business transactions, including (1) the acquisition or holding of land in Bermuda
except that required for their business and held by way of lease or tenancy for a term not exceeding 50 years or, with the consent of the Minister of Economic
Development (the “Minister”) granted in his discretion by way of lease or tenancy for a term not exceeding 21 years in order to provide accommodation or
recreational facilities for officers and employees of the Company, (2) the taking of mortgages on land in Bermuda to secure an amount in excess of $50,000
without the consent of the Minister, (3) the acquisition of any bonds or debentures secured by any land in Bermuda, other than certain types of Bermuda
government securities or securities issued by Bermuda public authorities or (4) the carrying on of business of any kind in Bermuda, except in furtherance of
business carried on outside Bermuda or under license granted by the Minister.
All Bermuda companies must comply with the provisions of the Companies Act regulating the payment of dividends and making distributions from
contributed surplus. A company may not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for
believing that: (a) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (b) the realizable value of the company’s
assets would thereby be less than its liabilities.
Bermuda Exchange Control Regulation. The permission of the Bermuda Monetary Authority is required, under the provisions of the Exchange Control
Act 1972 of Bermuda and related regulations, for all issuances and transfers of shares (which includes our common shares) of Bermuda companies to or from a
non-resident of Bermuda for exchange control purposes, other than in cases where the Bermuda Monetary Authority has granted a general permission. The
Bermuda Monetary Authority, in its notice to the public dated June 1, 2005, has granted a general permission for the issue and subsequent transfer of any
securities of a Bermuda company from and/or to a non-resident of Bermuda for exchange control purposes for so long as any “Equity Securities” of the
company (which include our common shares) are listed on an “Appointed Stock Exchange” (which include Nasdaq). In granting the general permission the
Bermuda Monetary Authority accepts no responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in
this annual report.
Although the Company is incorporated in Bermuda, as an exempted company, the Company is classified as a non-resident of Bermuda for exchange
control purposes by the Bermuda Monetary Authority. Other than transferring Bermuda Dollars out of Bermuda, there are no restrictions on the Company’s
ability to transfer funds into and out of Bermuda or to pay dividends in currency other than Bermuda Dollars to nonresidents of Bermuda who are holders of our
common shares.
If we engage in future acquisitions or strategic partnerships, this may increase our capital requirements, dilute our shareholders, cause us to incur debt or
assume contingent liabilities and subject us to other risks.
We intend to continue to evaluate various acquisitions and strategic partnerships, including licensing or acquiring complementary drugs, intellectual
property rights, technologies or businesses. Any potential acquisition or strategic partnership may entail numerous risks, including:
● increased operating expenses and cash requirements;
● the assumption of additional indebtedness or contingent liabilities;
● assimilation of operations, intellectual property and drugs of an acquired company, including difficulties associated with integrating new
personnel;
● the diversion of our management’s attention from our existing drug programs and initiatives in pursuing such a strategic partnership, merger or
acquisition;
● retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships;
● risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing drugs or drug
candidates and regulatory approvals; and
● our inability to generate revenue from acquired technology and/or drugs sufficient to meet our objectives in undertaking the acquisition or even to
offset the associated acquisition and maintenance costs.
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As an FPI, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the SEC than U.S. public
companies.
We are an FPI, as defined in the SEC rules and regulations and, consequently, we are not subject to all of the disclosure requirements applicable to
companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act, that regulate disclosure obligations and
procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act. In addition,
our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with
respect to their purchases and sales of our securities. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently
or as promptly as U.S. public companies. Accordingly, there may be less publicly available information concerning our company than there is for U.S. public
companies.
As an FPI, we will file an annual report on Form 20-F within four months of the close of each fiscal year ended December 31 and reports on Form 6-K
relating to certain material events promptly after we publicly announce these events. However, because of the above exemptions for FPIs, our common
shareholders will not be afforded the same protections or information generally available to investors holding shares in public companies organized in the
United States.
While we are an FPI, we are not subject to certain Nasdaq corporate governance rules applicable to U.S. listed companies.
We are entitled to rely on a provision in Nasdaq’s corporate governance rules that allows us to follow our home country corporate law and the
Companies Act with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant
respects from the corporate governance requirements applicable to U.S. companies listed on Nasdaq.
For example, we are exempt from Nasdaq regulations that require a listed U.S. company to (i) have a majority of the board of directors consist of
independent directors, (ii) require non-management directors to meet on a regular basis without management present and (iii) promptly disclose any waivers of
the code for directors or executive officers that should address certain specified items.
In accordance with our Nasdaq listing, our audit committee is required to comply with the provisions of Section 301 of the Sarbanes-Oxley Act and
Rule 10A-3 of the Exchange Act, both of which are also applicable to Nasdaq-listed U.S. companies. Because we are an FPI, however, our audit committee is
not subject to additional Nasdaq requirements applicable to listed U.S. companies, including an affirmative determination that all members of the audit
committee are “independent,” using more stringent criteria than those applicable to us as an FPI. Furthermore, Nasdaq’s corporate governance rules require
listed U.S. companies to, among other things, seek shareholder approval for the implementation of certain equity compensation plans and issuances of ordinary
shares, which we are not required to follow as an FPI.
We may lose our FPI status, which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant
legal, accounting and other expenses.
As an FPI, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S.
domestic issuers. In order to maintain our current status as an FPI, either (a) a majority of our Common shares must be either directly or indirectly owned of
record by non-residents of the United States or (b)(i) a majority of our executive officers or directors cannot be U.S. citizens or residents, (ii) more than 50% of
our assets must be located outside the United States and (iii) our business must be administered principally outside the United States. If we lose our status as an
FPI, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and
extensive than the requirements for FPIs. We may also be required to make changes in our corporate governance practices in accordance with various SEC and
Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a
U.S. domestic issuer may be significantly higher than the cost we would incur as an FPI. As a result, we expect that a loss of FPI status would increase our legal
and financial compliance costs and is likely to make some activities highly time consuming and costly. We also expect that if we were required to comply with
the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also
make it more difficult for us to attract and retain qualified members of our board of directors.
As of December 31, 2023, we were no longer an emerging growth company within the meaning of the Securities Act of 1933, but still remain a smaller
reporting company, and will take advantage of certain reduced reporting requirements.
As of December 31, 2023, we were no longer an “emerging growth company”, as defined in the Jumpstart Our Business Startups ( JOBS) Act. While
we were an emerging growth company, we took advantage of exemptions from various reporting requirements that are applicable to other public companies that
are not EGCs, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, or Section 404. Even
though we are no longer an emerging growth company, we remain exempt from the auditor attestation requirements of Section 404 pursuant to the rules of the
SEC, as we remain a non-accelerated filer. We will cease to be a non-accelerated filer if (a) the aggregate market value of our outstanding Ordinary Shares held
by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $75 million or more and we reported annual net revenues of
greater than $100 million for our most recently completed fiscal year or (b) the aggregate market value of our outstanding Ordinary Shares held by non-
affiliates as of the last business day of our most recently completed second fiscal quarter is $700 million or more, regardless of annual net revenues. If we cease
to be a non-accelerated filer, we would be subject to the requirement for an annual attestation report by our independent registered public accounting firm on the
effectiveness of our internal control over financial reporting.
We remain a “smaller reporting company”, as defined in Rule 405 under the Securities Act, which means that we are not an investment company, an
asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a “smaller reporting company” which allows us to take advantage of many
of the same exemptions from disclosure requirements, including this Annual Report on Form 20-F. In addition, we are eligible to remain a smaller reporting
company for so long as we have a public float of less than $250 million measured as of the last business day of our most recently completed second fiscal
quarter or a public float of less than $700 million as of such date and annual revenues of less than $100 million during the most recently completed fiscal year.
We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares
less attractive as a result, there may be a less active trading market for our common shares and the price of our common shares may be more volatile in the
event that we decide to make an offering of our common shares.
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If we fail to establish and maintain proper internal controls, our ability to produce accurate financial statements or comply with applicable regulations
could be impaired.
Section 404(a) of the Sarbanes-Oxley Act, or Section 404(a), requires that beginning with our second annual report following our IPO, management
assess and report annually on the effectiveness of our internal control over financial reporting and identify any material weaknesses in our internal control over
financial reporting. Although Section 404(b) of the Sarbanes-Oxley Act, or Section 404(b), requires our independent registered public accounting firm to issue
an annual report that addresses the effectiveness of our internal control over financial reporting, we have opted to rely on the exemptions provided as a non-
accelerated filer, and consequently will not be required to comply with SEC rules that implement Section 404(b) until such time as we are no longer a non-
accelerated filer.
Pursuant to Section 404, we will be required to furnish a report by our senior management on our internal control over financial reporting. However,
while we remain a non-accelerated filer, we will not be required to include an attestation report on internal control over financial reporting issued by our
independent registered public accounting firm. To prepare for eventual compliance with Section 404, once we no longer qualify as a non-accelerated filer, we
will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.
In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess
and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that
controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite
our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is
effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss
of confidence in the reliability of our financial statements.
We have identified a material weakness in our internal control over financial reporting. Failure to maintain effective internal controls could cause our
investors to lose confidence in us and adversely affect the market price of our common stock. If our internal controls are not effective, we may not be able to
accurately report our financial results or prevent fraud.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports in a timely manner. In connection with the
preparation of our consolidated financial statements for the year ended December 31, 2023, we concluded that there was a material weakness in our internal
control over financial reporting related to our failure to timely develop and communicate an employee handbook for employees to consult in the event an issue
arises. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
If we identify additional material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and our
consolidated financial statements may be materially misstated. Moreover, in the future we may engage in business transactions, such as acquisitions,
reorganizations or implementation of new information systems that could negatively affect our internal control over financial reporting and result in material
weaknesses.
Our independent registered public accounting firm did not perform an evaluation of our internal control over financial reporting during any period in
accordance with the provisions of the Sarbanes-Oxley Act. Had our independent registered public accounting firm performed an evaluation of our internal
control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional control deficiencies amounting to material weaknesses
might have been identified. If we identify new material weaknesses in our internal control over financial reporting, if we are unable to comply with the
requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, if we are unable to assert that our internal control over financial reporting is
effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial
reporting, we may be late with the filing of our periodic reports, investors may lose confidence in the accuracy and completeness of our financial reports and the
market price of our common shares could be negatively affected. As a result of such failures, we could also become subject to investigations by the stock
exchange on which our securities are listed, the SEC, or other regulatory authorities, and become subject to litigation from investors and stockholders, which
could harm our reputation, financial condition or divert financial and management resources from our core business.
Our 10% or more stockholders and management own a significant percentage of our stock and are able to exercise significant influence over matters
subject to stockholder approval.
As of the date of this annual report, our executive officers, directors and 10% or more stockholders, together with their respective affiliates, owned
approximately 39% of our outstanding securities. Accordingly, this group of security holders will be able to exert a significant degree of influence over our
management and affairs and over matters requiring security holder approval, including the election of our Board of Directors, future issuances of our securities,
declaration of dividends and approval of other significant corporate transactions. As a result, if these shareholders were to choose to act together, they would be
able to exert significant influence over matters submitted to our shareholders for approval, as well as our management and affairs. For example, these persons, if
they choose to act together, would exercise sufficient voting power to influence the election of directors and approve any merger, consolidation or sale of all or
substantially all of our assets. This concentration of ownership control may:
● delay, defer or prevent a change in control;
● entrench our management and board of directors; or
● impede a merger, consolidation, takeover or other business combination involving us that other shareholders may desire.
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Claims of U.S. civil liabilities may not be enforceable against us.
We are incorporated under Bermudan law. The United States and Bermuda do not currently have a treaty providing for recognition and enforcement of
judgments in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether or not predicated solely
upon U.S. securities laws, would not automatically be recognized or enforceable in Bermuda. In addition, uncertainty exists as to whether the courts of
Bermuda would entertain original actions brought in Bermuda against us or our directors or senior management predicated upon the securities laws of the
United States or any state in the United States. Any final and conclusive monetary judgment for a definite sum obtained against us in U.S. courts would be
treated by the courts of Bermuda as a cause of action in itself and sued upon as a debt at common law so that no retrial of the issues would be necessary,
provided that certain requirements are met. The courts of Bermuda will not automatically accept that the foreign court had jurisdiction and was properly seized
of the matter. For a Bermuda court to enforce or recognize a foreign judgment either at common law or under the Judgments (Reciprocal Enforcement) Act
1958 of Bermuda, the foreign court must have had jurisdiction according to Bermuda Conflict of Law principles. Whether these requirements are met in respect
of a judgment based upon the civil liability provisions of the U.S. securities laws, including whether the award of monetary damages under such laws would
constitute a penalty, is an issue for the court making such decision. If a Bermuda court gives judgment for the sum payable under a U.S. judgment, the Bermuda
judgment will be enforceable by methods generally available for this purpose. These methods generally permit the Bermuda court discretion to prescribe the
manner of enforcement.
In addition, U.S. investors may not be able to enforce against us or our senior management, certain of our board of directors or certain experts named
herein (who are residents of countries other than the United States) any judgments obtained in U.S. courts in civil and commercial matters, including judgments
under the U.S. federal securities laws.
If we are a passive foreign investment company, there could be adverse U.S. federal income tax consequences to U.S. holders.
Under the Internal Revenue Code of 1986, as amended, or the Code, we will be a PFIC for any taxable year in which (1) 75% or more of our gross
income consists of passive income or (2) 50% or more of the average quarterly value of our assets consists of assets that produce, or are held for the production
of, passive income. For purposes of these tests, passive income includes dividends, interest, gains from the sale or exchange of investment property and certain
rents and royalties. In addition, for purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the
shares of another corporation is treated as if it held its proportionate share of the assets and received directly its proportionate share of the income of such other
corporation. If we are a PFIC for any taxable year during which a U.S. Holder (as defined below under “Material Income Tax Considerations-Material U.S.
Federal Income Tax Considerations for U.S. Holders”) holds our shares, the U.S. Holder may be subject to adverse tax consequences regardless of whether we
continue to qualify as a PFIC, including ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain
taxes treated as deferred, and additional reporting requirements.
We believe that we were a PFIC for our taxable year ended December 31, 2023 but cannot provide any assurances regarding our PFIC status for any
past, current or future taxable years. The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis applying principles
and methodologies which in some circumstances are unclear and subject to varying interpretation. In particular, the characterization of our assets as active or
passive may depend in part on our current and intended future business plans, which are subject to change. In addition, for our current and future taxable years,
the total value of our assets for PFIC testing purposes may be determined in part by reference to the market price of our common shares from time to time,
which may fluctuate considerably. Under the income test, our status as a PFIC depends on the composition of our income which will depend on the transactions
we enter into in the future and our corporate structure. The composition of our income and assets may also be affected by how, and how quickly, we spend the
cash we raise in any offering.
In certain circumstances, a U.S. Holder of shares in a PFIC may alleviate some of the adverse tax consequences described above by making a qualified
electing fund, or QEF, election to include in income its pro rata share of the corporation’s income on a current basis. However, a U.S. Holder may make a QEF
election with respect to our common shares only if we agree to furnish such U.S. Holder annually with a PFIC annual information statement as specified in the
applicable U.S. Treasury Regulations. We currently do not intend to prepare or provide the information that would enable U.S. Holders to make a QEF election
if we are treated as a PFIC for any taxable year, and prospective investors should assume that a QEF election will not be available.
For further discussion of the PFIC rules and the adverse U.S. federal income tax consequences in the event we are classified as a PFIC, see the section
of this report entitled “Material Income Tax Considerations-Material U.S. Federal Income Considerations For U.S. Holders.”
We may be unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments or benefit from favorable
U.K. tax legislation.
As a U.K. tax resident trading entity, we are subject to U.K. corporate taxation. Due to the nature of our business, we have generated losses since
inception. As of December 31, 2023, we had cumulative carryforward tax losses of $20 million. Subject to any relevant restrictions, we expect these to be
available to carry forward and offset against future operating profits. As a company that carries out extensive research and development activities, we benefit
from the U.K. research and development tax credit regime for small and medium-sized companies, whereby we are able to surrender the trading losses that arise
from our qualifying research and development activities for a payable tax credit of up to 33.35% of eligible research and development expenditures. Qualifying
expenditures largely comprise employment costs for research staff, consumables and certain internal overhead costs incurred as part of research projects.
Certain subcontracted qualifying research expenditures are eligible for a cash rebate of up to 21.67%. The majority of our pipeline research, clinical trials
management and manufacturing development activities are eligible for inclusion within these tax credit cash rebate claims. Our ability to continue to claim
payable research and development tax credits in the future may be limited because we may no longer qualify as a small or medium-sized company.
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We may benefit in the future from the United Kingdom’s “patent box” regime, which allows certain profits attributable to revenues from patented
products to be taxed at an effective rate of 10%. We are the exclusive licensee or owner of several patent applications which, if issued, would cover our product
candidates, and accordingly, future upfront fees, milestone fees, product revenues and royalties could be taxed at this tax rate. When taken in combination with
the enhanced relief available on our research and development expenditures, we expect a long-term lower rate of corporation tax to apply to us. If, however,
there are unexpected adverse changes to the U.K. research and development tax credit regime or the “patent box” regime, or for any reason we are unable to
qualify for such advantageous tax legislation, or we are unable to use net operating loss and tax credit
Changes and uncertainties in the tax system in the countries in which we have operations could materially adversely affect our financial condition and
results of operations, and reduce net returns to our shareholders.
Our tax position could be adversely impacted by changes in tax rates, tax laws, tax practice, tax treaties or tax regulations or changes in the
interpretation thereof by the tax authorities in the United Kingdom, the United States and other jurisdictions as well as being affected by certain changes
currently proposed by the Organization for Economic Co-operation and Development and their action plan on Base Erosion and Profit Shifting. Such changes
may become more likely as a result of recent economic trends in the jurisdictions in which we operate, particularly if such trends continue.
Our actual effective tax rate may vary from our expectation and that variance may be material. A number of factors may increase our future effective
tax rates, including: (1) the jurisdictions in which profits are determined to be earned and taxed; (2) the resolution of issues arising from any future tax audits
with various tax authorities; (3) changes in the valuation of our deferred tax assets and liabilities; (4) increases in expenses not deductible for tax purposes,
including transaction costs and impairments of goodwill in connection with acquisitions; (5) changes in the taxation of share-based compensation; (6) changes
in tax laws or the interpretation of such tax laws, and changes in generally accepted accounting principles; and (7) challenges to the transfer pricing policies
related to our structure.
A tax authority may disagree with tax positions that we have taken, which could result in increased tax liabilities. For example, Her Majesty’s
Revenue& Customs, or HMRC, the U.S. Internal Revenue Service, or IRS, or another tax authority could challenge our allocation of income by tax jurisdiction
and the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including methodologies for
valuing developed technology and amounts paid with respect to our intellectual property development. Similarly, a tax authority could assert that we are subject
to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax
treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.
A tax authority may take the position that material income tax liabilities, interest and penalties are payable by us, for example where there has been a
technical violation of contradictory laws and regulations that are relatively new and have not been subject to extensive review or interpretation, in which case
we expect that we might contest such assessment. High-profile companies can be particularly vulnerable to aggressive application of unclear requirements.
Many companies must negotiate their tax bills with tax inspectors who may demand higher taxes than applicable law appears to provide. Contesting such an
assessment may be lengthy and costly and if we were unsuccessful in disputing the assessment, the implications could increase our anticipated effective tax rate,
where applicable.
ITEM 4: INFORMATION ON THE COMPANY
A. History and Development of the Company
We were originally incorporated under the laws of England and Wales on February 11, 1998, with the goal of leveraging the expertise of our
management team as well as Napoleone Ferrara, M.D., Arun Sanyal, M.D., Howard Weiner, M.D. and Kevan Herold, M.D., and to acquire and exploit certain
intellectual property in biotechnology. We subsequently changed our name to Tiziana Life Sciences plc in April 2014 as a result of the acquisition of Tiziana
Pharma Limited in April 2014. On August 20, 2021 we announced that we had formally commenced a strategic plan to change our corporate structure by
establishing Tiziana Life Sciences Ltd, a Bermuda-incorporated company, to become the ultimate parent company of the Tiziana Group. The reorganization was
performed under a scheme of arrangement under Part 26 of the UK Companies Act 2006 and became effective on October 20, 2021, at which point all
shareholders became shareholders in the new Bermuda company.
Our registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and our telephone number is +44 20 7495 2379.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers, such as we, that
file electronically, with the SEC at www.sec.gov. Our website address is www.tizianalifesciences.com. The reference to our website is an inactive textual
reference only and the information contained in, or that can be accessed through, our website is not a part of this annual report.
Our agent for service of process in the United States is Tiziana Therapeutics, Inc, 420 Lexington Ave, Suite 1402, New York, NY 10170.
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B. Business Overview
Overview
We are a biotechnology company that specializes in developing transformative therapies for neurodegenerative and lung diseases. Our clinical pipeline
includes drug assets for Secondary Progressive Multiple Sclerosis, ALS, Alzheimer’s, and KRAS+ NSCLC. Tiziana is led by a team of highly qualified
executives with extensive drug development and commercialization experience. Our mission is to bring breakthrough therapies to patients with the aim of
treating Secondary Progressive Multiple Sclerosis, ALS, Alzheimer’s, and other CNS indications. Crohn’s Disease, lung diseases and optimizing health
outcomes. We are developing transformational formulation technologies, enabling to switch from traditional routes to alternative routes of immunotherapy to
facilitate local site of action. For example, nasal, oral and inhalation administrations to target neurodegenerative and lung diseases. We believe, if we succeed in
these alternative routes of immunotherapies that has the potential to change the way immunotherapies are currently conducted.
We employ a lean and virtual research and development, or R&D, model using highly experienced teams of experts for each business function to
maximize value accretion by focusing resources on the drug discovery and development processes.
We are developing Foralumab, for which we in-licensed the intellectual property from Novimmune SA, or Novimmune, in December 2014, as a
potential treatment for neurodegenerative diseases such as Secondary Progressive Multiple Sclerosis (SPMS), Crohn’s disease and delayed onset of Type I
Diabetes (T1D). On November 10, 2022, Tiziana announced a short-term focus on administration of intranasal foralumab for treatment of neurodegenerative
diseases, especially SPMS, based on positive clinical findings of Expanded Access (EA) SPMS patients at Brigham and Women’s Hospital treated with
intranasal foralumab for up to 1 year. As the only fully human engineered human anti-CD3 mAb in clinical development, Foralumab has significant potential
advantages such as a shorter treatment duration and reduced immunogenicity. We believe that oral or intranasal administration of Foralumab has the potential to
reduce inflammation while minimizing the toxicity and related side effects. To date, Foralumab has been studied in one Phase 1 and two Phase 2a clinical trials
conducted by Novimmune in 68 patients dosed by the intravenous route of administration. In these trials, Foralumab was observed to be safe and well-tolerated
and produced immunologic effects consistent with potential clinical benefit while demonstrating mild to moderate infusion related reactions, or IRRs. With
completion of the intravenous dosing for Phase 2a trial in Crohn’s Disease, Foralumab’s ability to modulate T-cell response enables potential extension into a
wide range of other autoimmune and inflammatory diseases, such as Graft versus Host Disease (GvHD), ulcerative colitis (UC), multiple sclerosis(MS), type-1
diabetes (T1D), inflammatory bowel disease (IBD), psoriasis (PSA) and rheumatoid arthritis (RA).
Foralumab is being developed as both an immunosuppressive and immunomodulatory agent, with therapeutic benefits of rendering T-cells unable to
orchestrate an immune response and induction of immune tolerance via maintenance of regulatory T-cells. There is further potential for Foralumab to be
combined with the Company’s TZLS-501, a fully human anti-IL-6R mAB in development to target autoimmune and inflammatory diseases.
In November 2016, Tiziana announced new data for oral efficacy in humanized mouse models with Foralumab, a major milestone and a potential
breakthrough for the treatment of NASH and autoimmune disease. This unique oral technology stimulates the natural gut immune system and potentially
provides a therapeutic effect in inflammatory and autoimmune diseases with greatly reduced toxicity. Positive therapeutic effects with Foralumab were
consistently demonstrated in animal studies conducted by Prof. Kevan Herold (Yale University) and Prof. Howard Weiner (Harvard University).
On April 16, 2018, Tiziana entered into an exclusive license agreement with The Brigham and Women’s Hospital, Inc. relating to a novel formulation
of Foralumab dosed in a medical device for nasal administration. An investigational new drug application (IND) for the first-in-human evaluation of the nasal
administration of Foralumab in healthy volunteers for progressive multiple sclerosis indication was filed in the second quarter of 2018. Subsequent to IND
approval, a single-site, double-blind, placebo-controlled, dose-ranging Phase 1 trial with nasally administered Foralumab at 10, 50 and 250 µg per day,
consecutively for 5 days to evaluate biomarkers of immunomodulation of clinical responses was initiated in November 2018. The trial conducted at the
Brigham and Women’s Hospital, Harvard Medical School, Boston, MA, in healthy volunteers. 18 subjects received Foralumab treatment and 9 patients received
placebo. The study was completed in September 2019. Phase 1 clinical data demonstrated that nasally administered Foralumab, was well-tolerated and no drug-
related safety issues were reported at any of the doses. No drug-related changes were observed in vital signs among subjects at predose, during treatment and at
discharge. Nasally administered Foralumab at the 50 µg dose suppressed cytotoxic CD8+ as well as perforin-secreting CD8+ cells, which have been implicated
in neurodegeneration in multiple sclerosis (MS). Treatment at 50 µg stimulated production of anti-inflammatory cytokine IL-10 and suppressed production of
pro-inflammatory cytokine IFN-γ. Taken together, the treatment showed significant positive effects on the biomarkers for activation of mucosal immunity,
which are capable of inducing site-targeted immunomodulation to elicit anti-inflammatory effects. . Systemic levels of Foralumab were below the lower
quantitation limit of 8 ng/mL suggesting that nasally administered Foralumab appears to exert its effects via nasal epithelium utilizing local and lymphatic
immune systems directly. These data support other clinical and pre-clinical studies showing that this route of administration is capable of inducing site-targeted
immunomodulation and anti-inflammatory effects. Furthermore, these pharmacodynamic data point to a clinical dose range that Tiziana intends to test in further
clinical development among MS patients.
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On September 9, 2019, the FDA granted approval to initiate the Phase 1 clinical trials to evaluate the safety and pharmacokinetics of a novel enteric-
coated capsule formulation of oral Foralumab at 1.25, 2.5 and 5.0 mg/day as a single ascending dose study. The study was completed in December 2019 at
Brigham and Women’s Hospital (Boston, MA USA). A total of 12 subjects were enrolled; 9 received the single dose of foralumab and 3 received placebo. The
median age (range) for the oral foralumab subjects was 23 (21 – 55) years, and for the placebo subjects it was 34 (27 – 51). Of the foralumab subjects, 6 were
male and 3 were female. All 3 of the placebo subjects were female. No subjects discontinued the study. Formulated Foralumab powder blend encapsulated in
enteric-coated capsule was well-tolerated at all doses tested and there were no drug-related safety issues observed even at the highest dose of 5 mg in this trial.
Tiziana initiated a Phase 1b clinical trial in Crohn’s disease patients to evaluate oral capsules of foralumab, a fully human anti-CD3 monoclonal
antibody. The revised protocol allowed for the study of a broader patient population and a shorter dosing period. These protocol amendments or revisions were
intended to expedite patient enrollment with study completion targeted for the fourth quarter of 2022. This study was the first multiple-dose study with orally
administered enteric-coated capsules of foralumab in patients with Crohn’s disease. Due to the refocus of the company after the first six months of 2022, this
study was withdrawn.
A collaborative clinical trial was initiated on November 2, 2020 in Brazil investigating nasally administered Foralumab, either alone or in combination
with orally administered dexamethasone (“Dexa”) in COVID-19 patients. The clinical study was completed in collaboration with scientific teams at the Harvard
Medical School (Boston, USA), and INTRIALS, a full-service Latin American CRO based in São Paulo, Brazil. The objectives of the trial were to assess safety
of the treatment and to evaluate if progression of the diseases is delayed with nasally administered 100mcg/day Foralumab (50mcg/nostril). This study enrolled
39 patients randomized in three cohorts: cohort 1, control with no treatment (n=16); cohort 2; nasally administered Foralumab plus 3 days of priming with
orally administered 6 mg Dexamethasone (n=11) and cohort 3; nasally administered Foralumab (n=12). The Foralumab treatment regimen was once a day
dosing for 10 consecutive days. The trial was completed in January 2021. There were no significant differences between cohort 2 and 3. All treatments were
well-tolerated. There were no grade 3 or 4 severe adverse events (“SAEs”) in any of the cohorts. The CT scans of the lungs showed the improvement was
approximately double that shown in patients treated with Foralumab as compared to those in the control group. The results of the study were published in
the peer-reviewed journal, Frontiers in Immunology entitled “Nasal Administration of Anti-CD3 Monoclonal Antibody (Foralumab) Reduces Lung
Inflammation and Blood Inflammatory Biomarkers in Mild to Moderate COVID-19 Patients: A Pilot Study” in August 2021. This program has been temporarily
paused to pursue the short term focus on clinical development of intranasal foralumab administration for treatment of SPMS patients.
On September 2, 2021 the Company and Precision BioSciences Inc announced an exclusive license agreement to explore Foralumab as an agent to
induce tolerance of allogeneic CAR T cells to potentially improve the clinical outcome of CAR T cell therapy. Precision’s approach to manufacturing produces
CAR T cells that are virtually CD3-negative. Foralumab will be used as a lymphodepletion or tolerizing agent, either alone or in combination with other co-
stimulatory molecules, to improve the long-term survival of CAR T cells in cancer treatment. Tiziana has completed manufacturing of foralumab solution for
injection to be used by Precision Biosciences.
On May 25, 2021 the Company announced that the first expanded access (EA) patient with secondary progressive multiple sclerosis (SPMS) was
dosed with nasally administered Foralumab at the Brigham and Women’s Hospital (BWH), Harvard Medical School, Boston, MA. Nasal Foralumab 50 mcg (25
mcg/nostril) was administered in 3-week cycles, with 3 times/week dosing for the first 2 weeks followed by 1 week of rest period. This first-ever clinical study
in SPMS patients, under an Individual Patient Expanded Access IND, was to continue for six months to evaluate routine safety, tolerability, and neurological
behaviors. The study also examined microglial activation, by positron emission tomography (PET), immunological and neurodegenerative markers to assess
clinical responses following the dosing regimen
On March 10, 2022, the Company reported positive clinical data in the first EA SPMS patient following completion of six months of treatment with
intranasally administered foralumab, at the Brigham and Women’s Hospital (BWH), Harvard University, Boston, MA. In addition to being well-tolerated, both
biological and clinical improvements were seen in this patient using Tiziana’s novel immunotherapy technology, which, importantly overcame the challenge of
effecting immunomodulation in the brain using nasal administration.
Foralumab was given to an EA SPMS patient intranasally into each nostril on a regimen of M-W-F for two weeks followed by one week off therapy
for a period of six months. This regimen was well-tolerated with associated beneficial clinical and biomarker changes. Importantly, the PET imaging data
indicated inhibition of microglial cell activation observed at 3 months following treatment initiation and was sustained at 6 months after treatment start (see
Table 1). The reduction in microglial activation was seen in all parts of the brain.
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Table 1. Percent Reduction* in Activated Microglial Cells (AMCs) PET Signal After Starting Intranasal Foralumab as Compared to Baseline, in
Whole Brain and Selected Brain Regions
3 MONTHS
6 MONTHS
WHOLE
BRAIN
CEREBRAL
CORTEX
THALAMUS
WHITE
MATTER
CEREBELLUM
-23%
-38%
-23%
-38%
-20%
-50%
-25%
-36%
-22%
-38%
*
Percent reduction is based on changes from baseline in SUVR-1, a surrogate index for PET binding potential. SUVR=Standardized Uptake Value Ratio,
calculated with reference to a pseudo reference region in cerebral white matter that showed minimal change in PET SUV, across time points.
Consistent with clinical and PET observations, intranasally administered foralumab also downregulated serum levels of pro-inflammatory cytokines,
including interferon-gamma (IFN-g), interleukin (IL-18), IL-1β and IL-6, which are associated with multiple sclerosis pathogenesis and progression. Clinical
evaluation showed improvement in Timed 25-Foot Walk Test (T25FW), 9-Hole Peg Test (9HPT) and Symbol Digit Modality Test (SDMT). Other published
PET studies have shown an increase in activated microglial cells (AMCs) in patients with secondary progressive MS (SPMS), and the increase in AMCs
associated with higher scores on the Expanded Disability Status Scale (EDSS), a widely-used scale to measure disability1,2. Several FDA-approved drugs, such
as TYSABRI®, MAYZENT® and ZEPOSIA® have been shown to suppress microglial activation and exert neuroprotective effects in the central nervous
system (CNS) in animal studies but longitudinal assessment of drug effects on microglial activation in exclusive cohorts of SPMS patients are lacking.
Prior to treatment, this patient had continued to experience worsening disease progression despite several MS therapies, including B cell depletion. The
patient’s gait and limb strength had been deteriorating over the prior two years. The patient then started on intranasal foralumab, which stabilized his disease
course. Tiziana also received FDA authorization to continue treating this patient for an additional 6 months to determine if 12 months of consistent treatment
maintains clinical stabilization and provides sustained clinical benefits.
On January 20, 2022, FDA approved enrollment of a second EA SPMS patient for treatment with intranasal foralumab.
These data were presented in a virtual Key Opinion Leader (KOL) event hosted by Tiziana on March 14th, 2022, entitled “Foralumab Clinical Update
in Multiple Sclerosis; A Landmark Study with Intranasal Immunotherapy” featuring four Key Opinion Leaders and a live Q&A session. The company plans to
continue treatment of EA SPMS patients at Brigham and Women’s Hospital and elsewhere and continue evaluation of foralumab treatment.
On April 5, 2022, Tiziana announced that FDA granted permission to enroll up to eight additional (SPMS) patients in the Intermediate Size Patient
Population EAP with intranasal foralumab. As part of the original treatment plan, the foralumab dose will remain 50 mcg three times a week (MWF), which is
the same dose administered previously to the first two SPMS patients. The dosing regimen in this IND also has a provision for dose escalation up to 100 mcg
three times a week (MWF) as an option to improve clinical benefit, if needed.
Data from a Secondary Progressive Multiple Sclerosis patient treated with intranasal foralumab were presented on June 2, 2022 at the consortium of
multiple sclerosis centers (CMSC) 2022 annual meeting. Dr. Tanuja Chitnis, MD, Professor of Neurology and the Principal investigator of the clinical study at
the at the Brigham and Women’s Hospital (BWH), Boston, MA., presented a poster discussing clinical data from a patient with SPMS, who was treated with
intranasal foralumab for six months.
On June 8, 2022, Tiziana announced positive clinical results for the second patient (EA2) in the non-active SPMS Expanded Access (EA) Program
following three months of dosing with intranasal foralumab. These results confirm the previously reported data, from the first non-active SPMS patient (EA1)
that after three months of treatment, intranasal foralumab. was well-tolerated and improved clinical and PET imaging analyses. The second patient was
diagnosed with SPMS in 2014. Since then, the disease has been progressive, resulting in an accumulation of disability. Patient EA2 started ocrelizumab in 2018
and stopped this treatment in 2021. During this time EA2’s non-active SPMS progressed as measured by EDSS worsening from 3.5 in 2018 to 6.0 in 2021. At
this point in time EA2 needed a cane to walk 100 meters. Patient EA2 was subsequently enrolled in the intranasal foralumab expanded access program.
On September 2022, 8 months after starting treatment with intranasal foralumab, EA2 was able to walk 100 meters without a cane or need to rest. This
improved the EDSS from 6.0 to 5.5. EA2’s pyramidal score remained stable during this time. In December 2022, 11 months after starting treatment with
intranasal foralumab, EA2 was able to walk 200 meters without a cane or need to rest, resulting in further improvement in EDSS from 5.5 to 5.0. EA2’s
pyramidal score continued to remain stable. Lastly preliminary reading of EA2’s 11-month PET Scan (December 2022) demonstrated improvement in
microglial activation over baseline.
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On September 20, 2022, Tiziana announced that the second patient (“EA2”) with non-active secondary progressive multiple sclerosis (SPMS)
receiving intranasal foralumab had shown additional clinical improvements as measured by the Expanded Disability Status Scale (EDSS), a standard clinical
assessment.
On October 12, 2022, Tiziana announced that it planned to submit an Investigational New Drug Application (IND) for a Phase 1 Trial of intranasal
foralumab in Alzheimer’s disease patients after receiving an affirmative written response from the FDA on a Pre-Investigational New Drug Application (PIND).
Tiziana plans on filing the IND for Alzheimer’s disease by the third quarter of 2023 upon the completion of requested toxicology studies, then starting its Phase
1 program by the end of 2023.
On November 2, 2022, Tiziana announced the completion of enrollment of the first patient cohort in its Intermediate Size Patient Population Expanded
Access Program to evaluate foralumab in non-active SPMS patients.
On November 10, 2022, Tiziana announced its near-term focus on developing intranasal foralumab for inflammatory diseases of the Central Nervous
System (CNS) such as non-active SPMS, Alzheimer’s disease and amyotrophic lateral sclerosis (ALS).
During 2022, Tiziana completed compatibility, stability and characterization studies of foralumab nasal solution in unit dose devices for nasal
administration.
We are evaluating administrations of Foralumab to delay onset and progression of T1D in at-risk individuals. T1D is characterized as a chronic and
progressive autoimmune disease leading to the destruction of insulin-producing β-cells of the pancreas. Teplizumab (Provention Bio), a humanized Fc-mutated
anti-CD3 monoclonal antibody that alters the function of the T-lymphocytes that mediate the destruction of the insulin-producing β-cell is seeking FDA
approval. The Company believes that Foralumab, a fully human anti-CD3 mAb, would have a better safety profile and clinical benefit than Teplizumab based
on Foralumab’s fully human protein sequence and binding affinity for CD3e compared to Teplizumab. cGMP manufacturing of Foralumab solution for
subcutaneous injection was initiated in April 2022 and IND submission is anticipated in 2023. This program has been temporarily paused to pursue the short-
term focus on clinical development of intranasal foralumab administration for treatment of SPMS patients.
In 2022, Tiziana initiated five Good Laboratory Practice (GLP) safety toxicology studies of foralumab administered intranasally and subcutaneously in
HuGEMM CD3 transgenic mice. The five studies consisted of three intranasal toxicology studies of 14 days, 13 weeks and 26 weeks dosing duration and two
subcutaneous safety toxicology studies of 14 days and 28 days dosing duration. On December 15, 2022 the Company announced that it had successfully
completed the 13-week toxicology trial and that intranasal foralumab was well-tolerated. The 26 week toxicology study was completed on February 15, 2024
In addition, on August 18, 2020 the United States Patent and Trademark Office, or USPTO, granted us a patent on use and methods of treatment of
Crohn’s disease with Foralumab, its proprietary fully human monoclonal antibody, and all other anti-CD3 mAbs. The CD3 (cluster of differentiation 3) is a
protein complex on T-cells, which is important for the regulation of the immune system. The patent was published by the USPTO on September 1, 2020 as
Patent No. 10,759,858. Recently, we also announced the issuance of the first-ever patent on oral administration of anti-CD3 mAbs for treatment of human
diseases (Patent No. 10,688,186). We believe the grant of this additional composition-of-matter and use patent further strengthens our intellectual property,
consisting of proprietary technologies on oral and nasal administration of Foralumab and other anti-CD3 mAbs for the treatment of human diseases.
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On July 16, 2020, we announced that we had submitted a patent application on the potential use of Foralumab, a fully human anti-CD3 mAbs, to
improve success of chimeric antigen receptor T-cell, or CAR-T, therapy for cancer and other human diseases. We accelerated development of a fully human
mAb targeting the IL-6R (TZLS-501) for which the intellectual property was licensed from Novimmune in January 2017. This fully human mAb has a novel
mechanism of action, binding to both the membrane-bound and soluble forms of the IL-6R as well as depleting circulating levels of the IL-6 in the blood.
Excessive production of IL-6 is regarded as a key driver of acute inflammation resulting from infection with viral agents such as Coronaviruses and of chronic
inflammation, associated with autoimmune diseases such as multiple myeloma, oncology indications and rheumatoid arthritis, and we believe that TZLS-501
may have potential therapeutic value for these indications.
In preclinical studies, TZLS-501 demonstrated the potential for overcoming the limitations of other IL-6 blocking pathway drugs. Compared to
tocilizumab and sarilumab, while binding to the membrane-bound IL-6R complex, TZLS-501 has been observed to have a higher affinity for the soluble IL-6
receptor from antibody binding studies conducted in cell culture. TZLS-501 also demonstrated the potential to block or reduce IL-6 signaling in mouse models
of inflammation. The soluble form of IL-6 has been implicated to have a larger role in disease progression compared to the membrane- bound form (Kallen,
K.J. (2002). “The role of trans-signaling via the agonistic soluble IL-6 receptor in human diseases.” Biochimica et Biophysica Acta. 1592 (3): 323–343.)
The Company initiated development of TZLS-501 for treatment of Interstitial lung disease associated with systemic sclerosis (SSc-ILD). Tocilizumab
(Actemra®, Roche) a humanized interleukin-6 (IL-6) receptor mAb antagonist. was approved by the FDA as a subcutaneous injection for slowing the rate of
decline in pulmonary function in adult patients with systemic sclerosis-associated interstitial lung disease (SSc-ILD), a debilitating condition with limited
treatment options. Actemra® is the first biologic therapy approved by the FDA for the treatment of the disease.
On April 9, 2020 The Company announced that it had developed investigational new technology to treat COVID-19 infections, consisting of direct
delivery of anti-IL-6 receptor (anti-IL-6R) monoclonal antibodies (mAbs) into the lungs using a handheld inhaler or nebulizer for treatment of patients infected
with COVID-19 (SARS-CoV-2) coronavirus. On June 29, 2020 the Company announced that it was advancing GMP manufacturing of TZLS-501 with STC
Biologics concurrently with the development of inhalation technology using a hand-held nebulizer with Sciarra Laboratories and safety toxicology studies in
Cynomolgus monkeys with ITR Canada Laboratories. GMP batches were initiated in January 2021 and completed in March 2021. Safety inhalation toxicology
studies were initiated in November 2020 and completed in March 2021. Technological assessment of nebulizers for inhalation treatment of patients was
initiated in September 2020 and completed in February 2021. An additional 240L cGMP batch of TZLS-501 drug substance was manufactured using an
improved downstream process to support future development activities. An IND for a Phase 1 Clinical Trial in Healthy Subjects for treatment of interstitial lung
disease associated with systemic sclerosis (SSc ILD) was filed in December 2021. This program has been temporarily paused to pursue the Company’s short
term focus on clinical development of intranasal foralumab administration for treatment of SPMS patients.
We are developing Milciclib, for which we in-licensed the intellectual property from Nerviano Medical Sciences S.r.l., or Nerviano, in January 2015,
as a potential treatment for pan KRAS mutations in NSCLC patients.
To date, Milciclib has been studied in a total of eight completed Phase 1 and 2 clinical trials in 316 patients. In these trials, Milciclib was observed to
be well-tolerated and showed initial signals of anti-tumor action. Prior to in-licensing, Milciclib was granted orphan designation by the European Commission
and by the U.S. Food and Drug Administration (“FDA”) for the treatment of malignant thymoma and an aggressive form of thymic carcinoma in patients
previously treated with chemotherapy. In two Phase 2a trials, CDKO-125a-006 and CDKO125a-007, Milciclib showed signs of slowing disease progression and
acceptable safety.
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In the first half of 2017, the Group initiated a Phase 2a trial (CDKO-125a-010) of Milciclib to explore safety, tolerability and antitumor activity of
milciclib as a single therapy in Sorafenib-resistant patients with unresectable or metastatic HCC and good liver function.. Typically, this population of patients
have an advanced form of the disease with poor prognosis and an average overall survival expectancy of 3-5 months. The compound was administered as home-
based treatment at the dose of 100 mg/day for 4 consecutive days a week in a 4-week cycle (4 days on/3 days off x q4 wks) for a total of 24 weeks.
The Phase 2a trial was completed in June 2019 with clinical safety result reported in July 2019 and efficacy results reported in September 2019.
Since overexpression of CDKs and dysregulation in pRB pathway (regulates transcription factors critical for cell cycle progression) are prominently
associated with tumor cell resistance to certain chemotherapeutic drugs, inhibition of multiple CDKs is an appealing approach to improve clinical responses in
cancer patient’s refractory to existing treatment options. A Phase 1 dose-escalation study of Milciclib in combination with gemcitabine in patients with
refractory solid tumors exhibited clinical activity in patients including those refractory to gemcitabine. Milciclib shows inhibitory effects against multiple cell
lines with mutationally active G12D (non-small cell lung carcinoma), G13D (colorectal cancer), G12V(pancreatic cancer), and G12C (pancreatic cancer The
Company also intends to evaluate milciclib in combination with gemcitabine for treatment of pan KRAS mutations in NSCLC patients. cGMP manufacturing of
milciclib capsules was completed in January 2022 and IND filing was completed on December 15, 2022. This program has been temporarily paused to pursue
the short-term focus on clinical development of intranasal foralumab administration for treatment of SPMS patients.
Our Competitive Strengths
Our mission is to design and deliver next generation therapeutics and diagnostics for oncology and immune diseases of high unmet medical need by
combining deep understanding of disease biology with clinical development expertise. We believe the following strengths will allow us to continue to pursue
this mission:
● Advanced, novel pipeline. We have an advanced pipeline of novel and proprietary drug candidates, including antibodies and small molecules, to
address high unmet medical needs in the inflammation, autoimmune and oncology markets with significant commercial potential.
● Proprietary technology. Our proprietary technology enables the development of alternative routes of administration of antibodies, including oral
delivery. We believe that oral and nasal routes of delivery will alleviate the significant time and cost burden associated with other routes of
administration, including intravenous delivery.
● Broad and engaged network of experts. Our strong relationships with key opinion leaders contribute to our clinical development efforts and
position us well to support our products, if approved. Dr. Napoleone Ferrara, Dr. Arun Sanyal, Dr. Kevan Herold, and Dr. Howard Weiner are
among the thought leaders on our scientific advisory committee.
● Specialized expertise and focus on oncology and inflammation. Our management team, including Dr. Matthew Davis, Dr. William Clementi
andJules Jacob, , has considerable experience translating technologies from bench to market, and managing the global administration of clinical
trials.
● Strong intellectual property and know-how. We believe our proprietary intellectual property portfolio, in-licensed from Nerviano and
Novimmune, provides us with a substantial competitive advantage for the commercial development of small molecule NCEs, and biologics, as
well as expanded possibilities for new development programs in the future. We have retained the worldwide development and commercialization
rights to all of our product candidates. We have submitted additional patent applications to further strengthen our intellectual property.
● Lean research and development model, designed to maximize value. We employ a lean and virtual R&D model using highly experienced teams
of experts for each business function to maximize value accretion by focusing resources on the drug discovery and development processes.
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Our Strategy
Our goal is to become a leading biotechnology company focused on developing and delivering therapies and related diagnostics in both oncology and
immunology. The key elements of our strategy to achieve this goal are to:
● Advance the clinical development of intranasally-administered Foralumab for treatment of neurodegenerative diseases, particularly SPMS, and
potentially including Alzheimer’s Disease, ALS and intracerebral hemorrhage (hemorrhagic stroke). Tiziana will continue to supply foralumab for
intranasal treatment of up to 10 EA patients at Brigham and Women’s Hospital and nitiated a multisite Phase 2 trial for treatment of SPMS
patients in Q3 2023.
The following programs have been paused temporarily to focus Tiziana’s clinical development efforts on intranasal foralumab for treatment of SPMS
and other neurodegenerative disease.
● Development of our product candidate, TZLS-501, a fully human mAb targeting the IL-6 receptor (a biological mAb which may control the
proteins involved in cell signaling relevant to many inflammatory diseases and cancers), for treatment of inflammatory and oncology indications
especially SSc-ILD. Additional cGMP manufacturing and IND-enabling GLP safety toxicology studies in Cynomolgus monkeys, have been
completed evaluation/qualification of hand-held nebulizers for pulmonary administration of TZLS-501 for SSc-ILD treatment have been
completed
● Clinical development and obtain regulatory approval for our lead oncology product candidate, Milciclib, as a combination therapy for the
treatment of refractory solid tumors (being cancers which are non-responsive or become resistant to treatment), especially NSCLC. An IND was
filed on December 15, 2022. The IND was withdrawn in January 2023 to refocus clinical activities on use of foralumab for treatment of
neurodegenerative diseases.
The following activities will continue to be pursued aggressively:
● Continue development of platform drug delivery technologies that provide competitive advantage over existing approved products, e.g. inhalation
delivery and nasal delivery of mAbs.
● Continue to leverage relationships with key opinion leaders to promote clinical trial success and enhance future commercialization.
● Opportunistically identify and acquire or in-license complimentary product and technology candidates.
● Seek orphan drug, fast track or breakthrough designation for our product candidates where warranted.
Our Product Candidates
Our product candidate pipeline is set forth below:
DEVELOPMENT PIPELINE
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Foralumab (TZLS-401 formerly known as NI-0401)
We believe Foralumab is the only fully human anti-CD3 mAb in clinical development, in contrast to the previous non-human or humanized anti-CD3
mAbs. Foralumab targets the CD3 epsilon (CD3ε) receptor, which is a recognized approach for modulating T-Cell response and achieving immunosuppression.
We believe Foralumab could have broad application to autoimmune and inflammatory diseases, such as inflammatory bowel disease such as MS, Crohn’s
disease type-1 diabetes (T1D) psoriasis and rheumatoid arthritis, where modulation of a T-cell response is desirable. In July 2017, we announced publication of
a research article in, Clinical Immunology, entitled: “Oral treatment with Foralumab, a fully human anti-CD3 mAb, prevents skin xenograft rejection in
humanized mice.” We believe this is the first-ever published report demonstrating the potential of oral therapy with Foralumab for inflammatory diseases and is
based on the landmark discovery by Prof. Howard Weiner of Harvard University, one of our Scientific Advisory Committee members.
On April 16, 2018, Tiziana entered into an exclusive license agreement with The Brigham and Women’s Hospital, Inc. relating to a novel formulation
of Foralumab dosed in a medical device for nasal administration. An investigational new drug application (IND) for the first-in-human evaluation of the nasal
administration of Foralumab in healthy volunteers for progressive multiple sclerosis indication was filed in the second quarter of 2018. Subsequent to IND
approval, a single-site, double-blind, placebo-controlled, dose-ranging Phase 1 trial with nasally administered Foralumab at 10, 50 and 250 µg per day,
consecutively for 5 days to evaluate biomarkers of immunomodulation of clinical responses was initiated in November 2018. The trial conducted at the
Brigham and Women’s Hospital, Harvard Medical School, Boston, MA, in healthy volunteers. 18 subjects received Foralumab treatment and 9 patients received
placebo. The study was completed in September 2019. Phase 1 clinical data demonstrated that nasally administered Foralumab, was well-tolerated and no drug-
related safety issues were reported at any of the doses. No drug-related changes were observed in vital signs among subjects at predose, during treatment and at
discharge. The mean blood pressure (BP) during the 5 days of treatment were; Cohort A (10 µg/d):124/73, Cohort B (50 µg/d): 119/67 and Cohort C (250
µg/d):113/65 compared to placebo:118/67). Heart rates, respiratory rates and oral temperatures were unchanged among the 3 cohorts compared to the placebo.
Nasally administered Foralumab at the 50 µg dose suppressed cytotoxic CD8+ as well as perforin secreting CD8+ cells, which have been implicated in
neurodegeneration in multiple sclerosis (MS). Treatment at 50 mg stimulated production of anti-inflammatory cytokine IL-10 and suppressed production of pro-
inflammatory cytokine IFN-γ. Taken together, the treatment showed significant positive effects on the biomarkers for activation of mucosal immunity, which
are capable of inducing site-targeted immunomodulation to elicit anti-inflammatory effects. Based on the results we intend to conduct a Phase 2 trial in
secondary progressive MS (SPMS) patients starting in Q3 2023.
An enteric-coated capsule formulation using a proprietary and novel technology has been developed for oral administration of Foralumab. cGMP
manufacturing of clinical trial materials for a Phase 1 study has been completed and an IND was submitted in March 2019.
On September 9, 2019, the FDA granted approval to initiate the Phase 1 clinical trial to evaluate the safety and pharmacokinetics of a novel enteric-
coated capsule formulation of oral Foralumab at 1.25, 2.5 and 5.0 mg/day as a single ascending dose study. The study was completed in December 2019 at
Brigham and Women’s Hospital (Boston, MA USA). A total of 12 subjects were enrolled; 9 received the single dose of foralumab and 3 received placebo. The
median age (range) for the oral foralumab subjects was 23 (21 – 55) years, and for the placebo subjects it was 34 (27 – 51). Of the foralumab subjects, 6 were
male and 3 were female. All 3 of the placebo subjects were female. No subjects discontinued the study. Formulated Foralumab powder blend encapsulated in
enteric-coated capsules was well-tolerated at all doses tested and there were no drug-related safety issues observed even at the highest dose of 5 mg in this trial.
Tiziana initiated a Phase 1b clinical trial in Crohn’s disease patients to evaluate oral capsules of foralumab, a fully human anti-CD3 monoclonal
antibody. The revised protocol allowed for the study of a broader patient population and a shorter dosing period. These protocol amendments or revisions were
intended to expedite patient enrollment with study completion targeted for the fourth quarter of 2022. This study was to be the first multiple-dose study with
orally administered enteric-coated capsules of foralumab in patients with Crohn’s disease. Due to the refocus of the company subsequent to the first six months
of 2022, this study has been withdrawn to focus on nasal administration studies for SPMS indication
A collaborative clinical study was initiated on November 2, 2020, investigating nasally administered Foralumab either alone or in combination with
orally administered dexamethasone in COVID-19 patients in Brazil. In view of the importance and urgency, scientific teams at the Harvard Medical School,
Santa Casa de Misericórdia de Santos Hospital (Jabaquara, Santos, Brazil) and at our company closely collaborated to facilitate initiation of this study in
expedited time frames. The clinical trial was coordinated by the team at INTRIALS, a leading, full-service Latin America Clinical Research Organization,
(CRO) based in Sao Paulo City, Brazil. The trial was completed in January 2021. This trial, the first-ever trial on nasal administration of Foralumab for
treatment of COVID-19, is of enormous significance because the underlying scientific approach is to modulate immune system, which is dysregulated and
crippled to protect against the virus The results of the trial were All treatments were well-tolerated. There were no grade 3 or 4 severe adverse events (“SAEs”)
in any of the cohorts. The CT scans of the lungs showed the improvement was approximately double that shown in patients treated with Foralumab as compared
to those in the control group. The results of the study were published in the peer-reviewed journal, Frontiers in Immunology entitled “Nasal Administration of
Anti-CD3 Monoclonal Antibody (Foralumab) Reduces Lung Inflammation and Blood Inflammatory Biomarkers in Mild to Moderate COVID-19 Patients: A
Pilot Study” in August 2021. The study served as “proof of concept” that nasal administration of foralumab could be used to treat systemic inflammatory
response related to COVID infection and could be used for treatment of other systemic inflammatory diseases. The Company has refocused development of
Foralumab for treatment of Crohn’s disease (oral treatment) and progressive MS (nasal treatment) utilizing site specific delivery technologies to limit systemic
exposure of foralumab which achieving local delivery to inflamed tissue. Further development has been paused because of the Company’s refocus on
administration of nasal foralumab for SPMS and other neurodegenerative diseases.
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Multiple Sclerosis
MS is an inflammatory-mediated demyelinating disease of the human central nervous system. The disease develops in young adults with a complex
predisposing genetic trait and most likely involves an environmental insult such as a viral infection to trigger the disease. The activation of CD4+ autoreactive T
cells and their differentiation are crucial initial steps in the progression of this disease. The therapeutic use of monoclonal antibodies was initially viewed with
great skepticism owing to the high rates of sensitization against mouse proteins, their pharmacokinetic properties, and the difficulties in their production.
However, most of these problems have been overcome, and monoclonal antibodies are now among the most promising therapies for MS.
The innate immune system plays a central role in the chronic central nervous system inflammation that drives neurological disability in progressive
forms of multiple sclerosis, for which there are few effective treatments. The mucosal immune system is a unique tolerogenic organ that provides a
physiological approach for the induction of regulatory T cells. Nasal administration of CD3-specific antibody ameliorates disease in a progressive animal model
of multiple sclerosis. This effect is IL-10-dependent and is mediated by the induction of regulatory T cells that share a similar transcriptional profile to Tr1
regulatory cells and that suppress the astrocyte inflammatory transcriptional program. Treatment results in an attenuated inflammatory milieu in the central
nervous system decreased microglia activation, reduced recruitment of peripheral monocytes, stabilization of the blood-brain barrier, less neurodegeneration,
and decreased accumulation of neurologic disability (Mayo, 2016). Patients with non-active secondary progressive MS, demonstrate increased microglial
activation that drives disease progression. These nonclinical findings suggest foralumab may be a new therapeutic approach for the treatment of progressive
forms of multiple sclerosis. Based on this work, we hypothesize that nasal foralumab will slow disability accumulation and microglial activation measured by
PET imaging in non-active secondary progressive multiple sclerosis. Two patients with non-active SPMS have been treated for 12 or more months with a
suggestion of clinical improvement and no clinically significant adverse events.
Binding of foralumab to the T-cell receptor complex, through the nasal, results in suppression of effector T-cells involved in various inflammatory and
autoimmune diseases along with a reduction in inflammatory cytokines and increase in Tregs anti inflammatory cytokines resulting in site-targeted
immunomodulation.
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Autoimmune and Inflammatory Diseases
Autoimmune diseases are primarily due to a malfunction when the immune system attacks certain cells in the body as foreign invaders. This can result
in irreparable damage to critical organs and tissues eventually resulting in autoimmune diseases.
In humans, CD3-epsilon is encoded by the CD3ε gene on Chromosome 11. The CD3ε molecule, along with four other membrane-bound polypeptides
(CD3-gamma, -delta, -zeta, and -eta) form the CD3 complex, which is associated with the T-cell receptor. Upon antigen bindings, the CD3 complex sends
signals through the cell membrane to the cytoplasm inside the T-cell. This leads to activation of the T-cell that rapidly divides to produce new T-cells sensitized
to fight the particular antigen to which the TCR was exposed. While T-cell activation is critical for the human immune system to properly fight bacterial, viral
or parasitic infections, abnormal T-cell induction can cause and worsen numerous human diseases, including T-cell lymphoma and leukemia, human
malignancies, autoimmune disorders, cardiovascular disease and transplant rejection.
Our Solution
We believe Foralumab is the only fully human anti-CD3 mAb in clinical development. Since the discovery of the hybridoma technology, a method to
generate large quantities of a single (monoclonal) antibody, the production and manufacture of mAbs has become widely available showing promise in several
autoimmune and inflammatory disease clinical trials and therapeutic utility in animal models. The first murine anti-CD3 mAb (IgG2a) was developed and
approved by the FDA in 1985 under the name of muromonab, OKT3, (Ortho Kung T3; Orthoclone®) to treat allograft rejection in kidney, liver and heart
transplantation by exerting its potent immunosuppressive effects, mainly due to depletion of T-cells in tissues and thereby preventing rejection of the allografts.
Subsequently, OKT3 was administered in clinical trials to patients with MS, T1D, inflammatory bowel disease, rheumatoid arthritis and NASH. Although
showing promise to alleviate the disease process, the mAb being of murine origin and extremely immunogenic in humans, was associated with a wide range of
side effects that included the typical Cytokine Release Syndrome (CRS) or flu-like syndrome, limiting its clinical development. The side effect profile of OKT3
is a consequence of T-cell activation resulting in the release of numerous cytokines into the systemic circulation. These shortcomings of the murine OKT3 led to
the development of a new generation of anti-CD3 mAbs using genetic engineering of the mAb structure, as depicted below.
Foralumab dosed intravenously has been observed to alter T-cell function via antigenic modulation, that is, removal of the CD3/TCR complex from the
T-cell surface. Modulation has two therapeutic benefits:
● It transiently renders the T-cells incapable of recognizing an antigen and thus unable to orchestrate an immune response such as an allograft
rejection; and
● It has a favorable long-term effect on generation and maintenance of regulatory T-cells, a specialized subset of T-cells that promote immunological
tolerance.
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In comparison with the two other anti-CD3 mAbs evaluated in patients with T1D (otelixizumab and teplizumab), Foralumab, being fully human, was
less mitogenic (capable of causing cell division), therefore allowing re-treatment, and to have a better risk/benefit profile. As such, Foralumab was previously
developed by Novimmune as an intravenous formulation for the treatment of autoimmune indications: Crohn’s disease and in renal allograft recipients.
Further, recent data from studies conducted in the laboratories of our Scientific Advisory Committee members, Prof. Howard Weiner of Harvard
University and Prof. Kevan Herold of Yale University, suggest that oral administration of Foralumab has the potential for therapeutic utility while minimizing
toxicity associated with intravenous administration, such as Cytokine Release Syndrome (CRS). Importantly, recent clinical studies conducted by Prof. Yaron
Ilan with oral administration of anti-CD3 (OKT3; murine mAb) in HCV infected patients (non-respondents) and in NASH patients suggested that the treatment
was well-tolerated and produced immunologic effects consistent with potential clinical benefits.
In addition, increasing appreciation for the gut-liver cross-talk and of its role in the initiation of NASH-associated inflammation and fibrogenesis has
led to the understanding that systemic inflammatory processes can be alleviated by modulating the gut immune system, without inducing generalized
immunosuppression. This has been achieved in multiple approaches, including oral administration of fatty liver-derived proteins, anti-CD3 antibodies, TNF,
fusion protein, anti-lipopolysaccharide antibodies, glucosylceramide, delayed-release mercaptopurine and soy-derived extracts. Several of these compounds
were shown to be effective in patients with NASH.
Orally administered OKT3 was evaluated in a Phase 2 trial in 36 patients with NASH and type 2 diabetes and was found to be well tolerated. Increases
in regulatory T-cell markers consistent with induction of regulatory T-cells was observed as well as increases in other anti-inflammatory markers. Although not
powered sufficiently to evaluate efficacy endpoints, positive trends were observed including lowering of liver enzymes and lowering of glucose levels (Lalazar
et.al, J. Clin. Immunol. (2015) 34 (4):399-407).
More recent animal studies conducted separately by Prof. Howard Weiner and Prof. Kevan Herold demonstrated therapeutic utility of orally
administered Foralumab for immune-inflammatory diseases. Our strategy is to build on these findings to develop orally administered Foralumab for the
treatment of Crohn’s disease and other autoimmune diseases. We believe Foralumab may also be combined with our other product candidate, TZLS-501, a fully
human anti-IL-6R mAb, for the treatment of rheumatoid arthritis and other diseases.
An enteric-coated capsule formulation using a proprietary and novel technology has been developed for oral administration of Foralumab. cGMP
manufacturing of clinical trial materials for a Phase 1 study has been completed and an IND was submitted in March 2019.
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On September 9, 2019, the FDA granted approval to initiate the Phase I clinical trials to evaluate the safety and pharmacokinetics of oral Foralumab at
1.25, 2.5 and 5.0 mg/day as a single ascending dose study. The study was completed in December 2019 at Brigham and Women’s Hospital (Boston, MA USA).
Formulated Foralumab powder blend encapsulated in enteric-coated capsule was well-tolerated at all doses tested and there were no drug-related safety issues
observed even at the highest dose of 5 mg in this trial.
Tiziana initiated a Phase 1b clinical trial in Crohn’s disease patients to evaluate oral capsules of foralumab, a fully human anti-CD3 monoclonal
antibody. The revised protocol allowed for the study of a broader patient population and a shorter dosing period. These protocol amendments or revisions were
intended to expedite patient enrollment with study completion targeted for the fourth quarter of 2022. This study was the first multiple-dose study with orally
administered enteric-coated capsules of foralumab in patients with Crohn’s disease. Due to the refocus of the company subsequent to the first six months of
2022, this study has been withdrawn.
Clinical Development Plan
Phase 1a Clinical Trial for Oral Foralumab in Healthy Volunteers
This Phase 1a trial, conducted at the Brigham and Women’s Hospital, Harvard Medical School, Boston, MA, USA, was a single-site, double-blind,
placebo-controlled, single ascending dose (“SAD”) study in healthy subjects in which Foralumab was orally administered at 1.25, 2.5 and 5.0 mg per dose as
enteric-coated capsules. The primary endpoint of the Phase 1 study is safety and tolerability of Foralumab in humans. Each cohort comprised of 4 subjects, of
whom 3 received Foralumab treatment and 1 received a placebo capsule. All subjects completed the trial without any safety concerns at any of the doses.
Phase 1 Clinical Trial of Nasally-Administered Foralumab for Treatment of Secondary Progressive Multiple Sclerosis
This Phase 1 trial, conducted at the Brigham and Women’s Hospital, Harvard Medical School, Boston, MA, was a single-site, double-blind, placebo-
controlled, dose-ranging study with nasally administered Foralumab at 10, 50 and 250 µg per day, consecutively for 5 days in healthy volunteers for the
treatment of progressive multiple sclerosis (pMS). 18 subjects received Foralumab treatment and 9 patients received placebo. All nasal doses were well
tolerated. Biomarker analysis showed significant positive immune effects, that were most prominent in the 50 µg cohort with minimal immunomodulatory
effects at the 10 µg and 250 µg doses. Prominent results included:
● Treatment was well-tolerated and no drug-related safety issues were reported at any of the doses.
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● No drug-related changes were observed in vital signs among subjects at predose, during treatment and at discharge. The mean blood pressure (BP)
during the 5 days of treatment were; Cohort A (10 µg/d):124/73, Cohort B (50 µg/d): 119/67 and Cohort C (250 µg/d):113/65 compared to
placebo:118/67). Heart rates, respiratory rates and oral temperatures were unchanged among the 3 cohorts compared to the placebo.
● Nasally administered Foralumab at the 50 µg dose suppressed cytotoxic CD8+ as well as perforin secreting CD8+ cells, which have been
implicated in neurodegeneration in multiple sclerosis (MS).
● Treatment at 50 mg stimulated production of anti-inflammatory cytokine IL-10 and suppressed production of pro-inflammatory cytokine IFN-γ.
● Taken together, these results suggest stimulation of Tregs that are needed to provide clinical benefits
Treatment of Expanded Access SPMS Patients at Brigham and Women’s Hospital (Boston) with Nasally-Administered Foralumab
On May 25, 2021 the Company announced that the first expanded access (EA) patient with secondary progressive multiple sclerosis (SPMS) was
dosed with nasally administered Foralumab at the Brigham and Women’s Hospital (BWH), Harvard Medical School, Boston, MA. Nasal Foralumab 50 mcg (25
mcg/nostril) was administered in 3-week cycles, with 3 times/week dosing for the first 2 weeks followed by 1 week of rest period. This first-ever clinical study
in SPMS patients, under an Individual Patient Expanded Access IND, was to continue for six months to evaluate routine safety, tolerability, and neurological
behaviors. The study also examined microglial activation, by positron emission tomography (PET), immunological and neurodegenerative markers to assess
clinical responses following the dosing regimen
On March 10, 2022, the Company reported positive clinical data in the first SPMS EA patient following completion of six months of treatment with
intranasally administered foralumab, at the Brigham and Women’s Hospital (BWH), Harvard University, Boston, MA. In addition to being well-tolerated, both
biological and clinical improvements were seen in this patient using Tiziana’s novel immunotherapy technology, which, importantly effected
immunomodulation in the brain using nasal administration.
Foralumab was given to an SPMS patient intranasally into each nostril on a regimen of M-W-F for two weeks followed by one week off therapy for a
period of six months. This regimen was well-tolerated with associated beneficial clinical and biomarker changes. Importantly, the PET imaging data indicated
inhibition of microglial cell activation observed at 3 months following treatment initiation and was sustained at 6 months after treatment start (see Table 1). The
reduction in microglial activation was seen in all parts of brain.
Table 1. Percent Reduction* in Activated Microglial Cells (AMCs) PET Signal After Starting Intranasal Foralumab as Compared to Baseline, in
Whole Brain and Selected Brain Regions
3 MONTHS
6 MONTHS
WHOLE
BRAIN
CEREBRAL
CORTEX
THALAMUS
WHITE
MATTER
CEREBELLUM
-23%
-38%
-23%
-38%
-20%
-50%
-25%
-36%
-22%
-38%
*
Percent reduction is based on changes from baseline in SUVR-1, a surrogate index for PET binding potential. SUVR=Standardized Uptake Value Ratio,
calculated with reference to a pseudo reference region in cerebral white matter that showed minimal change in PET SUV, across time points.
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Consistent with clinical and PET observations, intranasally administered foralumab also downregulated serum levels of pro-inflammatory cytokines,
including interferon-gamma (IFN-g), interleukin (IL-18), IL-1β and IL-6, which are associated with multiple sclerosis pathogenesis and progression. Clinical
evaluation showed improvement in Timed 25-Foot Walk Test (T25FW), 9-Hole Peg Test (9HPT) and Symbol Digit Modality Test (SDMT). Other published
PET studies have shown an increase in activated microglial cells (AMCs) in patients with secondary progressive MS (SPMS), and the increase in AMCs
associated with higher scores on the Expanded Disability Status Scale (EDSS), a widely-used scale to measure disability1,2. Several FDA-approved drugs, such
as TYSABRI®, MAYZENT® and ZEPOSIA® have been shown to suppress microglial activation and exert neuroprotective effects in the central nervous
system (CNS) in animal studies but longitudinal assessment of drug effects on microglial activation in exclusive cohorts of SPMS patients are lacking.
Prior to treatment, this patient had continued to experience worsening disease progression despite several MS therapies, including B cell depletion. The
patient’s gait and limb strength had been deteriorating over the prior two years. The patient then started on intranasal foralumab, which stabilized his disease
course. Tiziana also received FDA authorization to continue treating this patient for an additional 6 months to determine if 12 months of consistent treatment
maintains clinical stabilization and provides sustained clinical benefits.
On January 20, 2022, FDA allowed enrollment of a second EA SPMS patient for treatment with intranasal foralumab.
These data were presented in a virtual Key Opinion Leader (KOL) event hosted by Tiziana on March 14th, 2022, entitled “Foralumab Clinical Update
in Multiple Sclerosis; A Landmark Study with Intranasal Immunotherapy” featuring four Key Opinion Leaders and a live Q&A session. The company plans to
continue treatment of EA SPMS patients at Brigham and Women’s Hospital and elsewhere and continue evaluation of foralumab treatment.
On April 5, 2022, Tiziana announced that FDA granted permission to enroll up to eight additional (SPMS) Intermediate Size Patient Population EAP
with intranasal foralumab. As part of the original treatment plan, the foralumab dose will remain 50 mcg three times a week (MWF), which is the same dose
administered previously to the first two SPMS patients. The dosing regimen in this IND also has a provision for dose escalation up to 100 mcg three times a
week (MWF) as an option to improve clinical benefit, if needed.
Data from a Secondary Progressive Multiple Sclerosis patient treated with intranasal foralumab were presented on June 2, 2022 at the consortium of
multiple sclerosis centers (CMSC) 2022 annual meeting. Dr. Tanuja Chitnis, MD, Professor of Neurology and the Principal investigator of the clinical study at
the at the Brigham and Women’s Hospital (BWH), Boston, MA., presented a poster discussing clinical data from a patient with SPMS, who was treated with
intranasal foralumab for six months.
On June 8, 2022, Tiziana announced positive clinical results for the second patient (EA2) in the non-active SPMS Expanded Access (EA) Program
following three months of dosing with intranasal foralumab. These results confirm the previously reported data, from the first non-active SPMS patient (EA1)
that after three months of treatment, intranasal foralumab. was well-tolerated and improved clinical and PET imaging analyses. The second patient was
diagnosed with SPMS in 2014. Since then, the disease has been progressive, resulting in an accumulation of disability. Patient EA2 started ocrelizumab in 2018
and stopped this treatment in 2021. During this time EA2’s non-active SPMS progressed as measured by EDSS worsening from 3.5 in 2018 to 6.0 in 2021. At
this point in time EA2 needed a cane to walk 100 meters. Patient EA2 was subsequently enrolled in the intranasal foralumab expanded access program.
On September 2022, 8 months after starting treatment with intranasal foralumab, EA2 was able to walk 100 meters without a cane or need to rest. This
improved the EDSS from 6.0 to 5.5. EA2’s pyramidal score remained stable during this time. In December 2022, 11 months after starting treatment with
intranasal foralumab, EA2 was able to walk 200 meters without a cane or need to rest, resulting in further improvement in EDSS from 5.5 to 5.0. EA2’s
pyramidal score continued to remain stable. Lastly preliminary reading of EA2’s 11-month PET Scan (December 2022) demonstrated improvement in
microglial activation over baseline.
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On September 20, 2022, Tiziana announced that the second patient (“EA2”) with non-active secondary progressive multiple sclerosis (SPMS)
receiving intranasal foralumab had shown additional clinical improvements as measured by the Expanded Disability Status Scale (EDSS), a standard clinical
assessment.
On October 12, 2022, Tiziana announced that it planned to submit an Investigational New Drug Application (IND) for a Phase 1 Trial of intranasal
foralumab in Alzheimer’s disease patients after receiving an affirmative written response from the FDA on a Pre-Investigational New Drug Application (PIND).
Tiziana plans on filing the IND for Alzheimer’s disease by the third quarter of 2023 upon the completion of requested toxicology studies, then starting its Phase
1 program by the end of 2023.
On November 2, 2022, Tiziana announced the completion of enrollment of the first patient cohort in its Intermediate Size Patient Population Expanded
Access Program to evaluate foralumab in non-active SPMS patients.
On November 10, 2022, Tiziana announced its near-term focus on developing intranasal foralumab for inflammatory diseases of the Central Nervous
System (CNS) such as non-active SPMS, Alzheimer’s disease and amyotrophic lateral sclerosis (ALS).
On November 23,2022, Tiziana announced publication of a scientific article in the peer-reviewed journal Frontiers in Immunology entitled “Nasal
administration of anti-CD3 monoclonal antibody modulates effector CD8+ T cell function and induces a regulatory response in T cells in human
subjects” . The study was completed by researchers at the Brigham and Womens Hospital (BWH) and Harvard Medical School. The goal of the study was to
assess safety and the immune effects of an entirely human, previously uncharacterized nasal anti-CD3 mAb (foralumab) in humans and it’s in vitro stimulatory
properties. The findings support Tiziana’s intranasal foralumab platform as a new modality for the treatment of autoimmune and CNS diseases.
On January 3, 2023, Tiziana announced that the second patient (“EA2”) with na-SPMS receiving intranasal foralumab exhibited additional clinical
improvements since their last reported improvement in September 2022. The improvements were measured by EDSS. Before foralumab treatment, EA2’s non-
active SPMS disability had progressed and EDSS worsened from 3.5 in 2018 to 6.0 in 2021 despite ocrelizumab therapy. Ocrelizumab was discontinued in
2021. At this point, EA2 required a cane to walk 100 meters. EA2 was subsequently enrolled in the intranasal foralumab Expanded Access program in January
2022. In September 2022, 8 months after starting treatment with nasal foralumab, EA2 was able to walk 100 meters without a cane. EDSS score improved from
6.0 to 5.5. EA2’s pyramidal score remained stable during this time. In December 2022, 11 months after starting treatment with intranasal foralumab, EA2 was
able to walk 200 meters without a cane, resulting in an even greater improvement in EDSS; with EDSS falling from a score of 5.5 to 5.0. EA2’s pyramidal score
continued to remain stable.
On March 8, 2023, Tiziana announced a publication in the preeminent1 journal, Proceedings of the National Academy of Sciences (PNAS), that
illustrates the immunological basis of the mechanism of action (MoA) for intranasal foralumab.
On March 28, 2023, Tiziana announced it has received feedback based on the U.S. Food and Drug Administration (FDA) Type C meeting minutes
related to the Phase 2 clinical trial of intranasal foralumab in patients with na-SPMS. Tiziana plans to accept the FDA’s recommendations and intends to start a
Phase 2 study in the third quarter of 2023.
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On April 4, 2023, Tiziana announced pre-clinical data on the effects of intranasal anti-CD3 monoclonal antibody in a model of intracerebral
hemorrhage (hemorrhagic stroke) demonstrating a behavioral outcome improvement at one month. The data showed that modulation of neuroinflammation by
induction of FoxP3+ Tregs appeared to have beneficial effect in intracerebral hemorrhage. Dr. Saef Izzy presented this data from the podium on April 23, 2023
at the Neurocritical Care Scientific Platform Session at the prestigious Annual American Academy of Neurology (AAN) conference in Boston, MA.
On April 13, 2023, Tiziana announced it’s plans to investigate intranasal foralumab for the treatment of Long COVID. The work is supported by
foralumab’s well-established role in de-activating microglia cells, a key component in the pathogenesis of this disease. The company intends to enter into a
Phase 2a, placebo-controlled trial following positive feedback from the FDA.
On April 20,2023, Tiziana announced its plan to submit an IND for intranasal foralumab in patients with mild to moderate Alzheimer’s Disease in Q2
2023. Tiziana is also seeking $3,000,000 in non-dilutive funding from a prestigious Alzheimer’s foundation to support the Phase 2a trial. It is expected that this
funding application will receive a response in Q3 2023.
On June 5, 2023, Tiziana announced 3-month PET scan results from the first patient cohort in its Intermediate Size Patient Population Expanded
Access Program. Data showed a reduction in microglial activation in 3 out of 4 patients confirming that previously reported in the first two EA patients.
Overall, 5 of the 6 na-SPMS patients treated with intranasal foralumab in its Expanded Access program have exhibited a reduction in microglial activation.
On June 5, 2023, Tiziana announced 3-month PET scan results from the first patient cohort in its Intermediate Size Patient Population Expanded
Access Program. Data showed a reduction in microglial activation in 3 out of 4 patients confirming that previously reported in the first two EA patients.
Overall, 5 of the 6 na-SPMS patients treated with intranasal foralumab in its Expanded Access program have exhibited a reduction in microglial activation.
On August 15, 2023, Tiziana announced that the U.S. Food and Drug Administration (FDA) has cleared the Investigational New Drug (IND)
application for intranasal foralumab to be studied in Alzheimer’s disease. The clinical trial will be overseen by Brigham and Women’s Hospital.
On August 24, 2023, Tiziana announced an oral presentation by Howard Weiner, MD entitled “Nasal anti-CD3 mAb induces Tregs that dampen
microglial activation and treat neuroinflammatory diseases including MS, AD and ALS” at the 16th International Society of Neuroimmunology (ISNI)
Congress in Quebec City, Canada, held on August 21-24, 2023.
On September 6, 2023, Tiziana announced acceptance of a publication entitled, “Nasal Administration of anti-CD3 monoclonal antibody (mAb)
ameliorates disease in a mouse model of Alzheimer’s disease”, in the journal, Proceedings of the National Academy of Sciences (PNAS), validating foralumab’s
mechanism of action (MOA) as a potential treatment for Alzheimer’s disease (AD), a difficult-to-treat neuroinflammatory disease. This was the second
publication pertaining to intranasal administration of anti-CD3 monoclonal antibody in 2023 to be published in PNAS. This study shows that intranasal anti-
CD3 ameliorates disease in a rodent model of AD by targeting microglial activation in the brain and brain gene expression independent of affecting amyloid
beta deposition. These studies identify a novel approach to treat Alzheimer’s disease.
On September 26, 2023, Tiziana announced initiation of the Phase 2a multicenter clinical trial for treatment of non-active Secondary Progressive
Multiple Sclerosis (na-SPMS) patients with intranasal foralumab. Tiziana announced that it held an Investigator’s Meeting with principal investigators at
Brigham and Women’s Hospital to begin site initiation for the clinical trial. In total, six to ten new clinical trial sites will be recruited.
On October 11, 2023, Tiziana announced a late breaking poster entitled, “Treatment Of Six Non-Active Secondary Progressive MS With Nasal Anti-
CD3 Monoclonal Antibody (Foralumab): Safety, Biomarker, And Disability Outcomes”, that was presented at the 39th Congress of the European Committee for
Treatment and Research of Multiple Sclerosis (ECTRIMS) held in Milan, Italy, October 11-13, 2023.
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On October 13, 2023, Tiziana announced that a reduction in activated microglia, as seen in six-month Positron Emission Tomography (PET) scans,
was observed in a total of five of the six patients with non-active secondary-progressive multiple sclerosis treated with intranasal foralumab in its Expanded
Access Program (EAP). Activated microglia play a prominent role in the pathogenesis of neuroinflammatory and neurodegenerative diseases including multiple
sclerosis, Alzheimer’s disease, and amyotrophic lateral sclerosis, or ALS.
On October 16, 2023, Tizana announced six-month data showing positive clinical improvements related to Modified Fatigue Impact Scale (MFIS)
scores and similar important clinical measures of physical function in foralumab-treated, non-active Secondary Progressive Multiple Sclerosis patients
participating in an Expanded Access (EA) Program. This follows on from previously announced positive six-month PET scan data which was presented at
ECTRIMS 2023.
The findings, which are summarized in Table 1 below, show broad-based six-month improvements across various key measures for multiple sclerosis.
Secondary progressive multiple sclerosis is hallmarked by an increase of disability over time. The table below shows a stabilization or an improvement in
physical function of the various clinical measures over a six-month period. Various degrees of improvement were also observed in the Expanded Disability
Status Scale (EDSS), Timed 25-Foot Walk Test (T25FW), pyramidal function scores and NeuroQoL Fatigue scores in a disease state that typically shows a
decline in function over time.
Table 1. Six Month Test Scores in Expanded Access na-SPMS Patients
EA Patient
EA1
EA2
EA3
EA4
EA5
EA6
— Denotes stabilization
↓ Denotes improvement
EDSS
—
↓
—
↓
—
—
Pyramidal
score
↓
—
—
—
↓
—
T25FW
—
↓
↓
—
↓
—
MFIS
—
↓
—
↓
↓
↓
Fatigue, as measured above in MFIS, refers to an overwhelming sense of physical, mental, and emotional exhaustion that is disproportionate to the
level of activity or effort exerted. It is a major, common, and often debilitating symptom experienced by many individuals with MS. It differs from the typical
tiredness that everyone experiences from time to time. In the context of MS, it is called ‘primary fatigue’ and is a direct result of damage to the central nervous
system. This kind of fatigue can significantly impact a person’s daily life and functioning.
On October 18, 2023, Tiziana announced that the U.S. Food and Drug Administration (FDA) had allowed multiple sclerosis patients to take home and
self-administer Intranasal Foralumab. Delivery Device Training materials have been developed and refined in collaboration with the FDA, and patients trained
in the use of the nasal device in accordance with these materials. Patients in the Expanded Access program that have been exposed to intranasal foralumab for
more than 1 year have demonstrated acceptable tolerability and safety. At-Home Dosing is likely to Improve patient compliance to treatment and outcomes.
On November 1, 2023, Tiziana announced that Chief Operating Officer and Chief Medical Officer, Matthew Davis, MD, RPh, will present at BIO-
Europe, Munich, Germany, November 6-8, 2023. The presentation will be primarily focused on the recent clinical updates of intranasal foralumab, for the
treatment of non-active secondary progressive multiple sclerosis and other neuroinflammatory and neurodegenerative diseases such as Alzheimer’s.
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On November 20, 2023, Tiziana announced that the company had successfully enrolled and dosed four new patients with non-active secondary
progressive multiple sclerosis in the Brigham and Women’s Hospital’s Expanded Access pgrogam. A total of ten patients are now being followed in the EA
Program.
On December 19, 2023, Tiziana announced “first patient dosed” in its Phase 2a study comparing two doses of intranasal foralumab and placebo in
patients with non-active secondary-progressive multiple sclerosis. Six investigational centers have been recruited for this double-blind, placebo-controlled
trial, with up to 18 patients per treatment arm. The primary endpoint of the trial will be the change in microglial activation based on PET scans. Clinical
evaluations include the Expanded Disability Status Scale (EDSS), QoL assessments, and the Modified Fatigue Impact Scale (MFIS), which assess parameters
that are essential to a patient’s everyday life. Novel immuno-biomarkers will be measured also and assessed for predictive relevance. Central review of PET
scans and images is an integral component of this study.
The Company plans to continue treatment of EA SPMS patients at Brigham and Women’s Hospital and continue evaluation of foralumab treatment.
Phase 2a Clinical Trial of Nasally-Administered Foralumab for Treatment of Secondary Progressive Multiple Sclerosis
A multisite Phase 2a study evaluating intranasal foralumab for treatment of SPMS was initiated on September 26, 2023 by holding the first
investigator’s meeting. This is a double-blinded, placebo-controlled study of two (2) doses of foralumab nasal solution (50 µg and 100 µg) delivered
intranasally compared to placebo, administered in non-active secondary progressive MS patients who are continuing to deteriorate despite standard of care
therapy. The first patient was dosed on December 19, 2023. Topline results are anticipated by Q4 2024.
Earlier Phase 1 and 2 Studies Conducted by Novimmune with Intravenous Administration of Foralumab
Intravenous Foralumab has been studied in a total of three Phase 1 and Phase 2 clinical trials conducted by Novimmune. A total of 68 patients were
exposed to Foralumab:
Study NI-0401-01: a Phase 1/2a randomized, double-blind, placebo-controlled and dose escalation study NI-0401-01 in subjects with moderate to
severe active CD. The study was completed and 33 subjects were exposed to Foralumab. The study NI-0401-01 was designed to assess tolerability of
Foralumab and was not powered to evaluate efficacy parameters included the proportion of patients achieving, clinical response and change from baseline of
Crohn’s Disease Endoscopy Index of Severity. A trend, although not statistically significant, was seen when analyzing the clinical response and endoscopic
response. Single and repeat intravenous doses of 0.05, 0.1, 0.5, 1.0, 2.0 and 10.0 mg Foralumab were administered to subjects and serum pharmacokinetics
evaluated for up to five days. Limited pharmacokinetic data was collected, however it was observed that at doses over 1.0 mg, severe infusion related reactions
(IRRs) were observed that led to discontinuation of the 2 and 10 mg groups. Therefore, the 1.0 mg dose was considered the MTD in this study. CD3 modulation
on CD4 positive and CD8 positive T cells was related to Foralumab dose. There was a dose response for the reduction of peripheral T-cell (CD2 positive) count.
The main adverse events were infusion related reactions related to the route of administration of the drug.
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Study NI-0401-02: an open-label, dose titration, multicenter Phase 1 study of Foralumab for the treatment of subjects with biopsy-proven acute
cellular renal allograft rejection (BpACR). The study was completed and 11 subjects were exposed to Foralumab. Patients were dosed with 1.0 mg, 1.5 mg, 2.0
mg and 2.5 mg of Foralumab daily for five days and most were pre-treated with methylprednisolone. The data from study NI-0401-02 has confirmed the dose
response in terms of CD3 modulation and reduction of peripheral T-cell count. A CD3 modulation of up to 90% was achieved at study NI-0401-02 day five with
a daily dose of 2.5 mg during the 5 days of treatment period. Although there was no dose-response relationship, treatment with foralumab seems to be globally
effective to reverse protocol defined acute cellular rejection and in the mormalization of serum creatinine levels, a primary efficacy objective. The main adverse
events were infusion related reactions in patients that were not premedication with prednisolone.
Study NI-0401-03: a Phase 2a study with an open label dose escalation phase followed by a double-blind phase to assess safety and efficacy of
Foralumab in subjects with moderate to severe active CD. The study NI-0401-03 was completed and 24 subjects were exposed to Foralumab. 74% of patients
had achieved a clinical response at week 2 and 87% of patients at week 4. At weeks 6, 8 and 12 the proportion of patients with a clinical response decreased to
75%, 70% and 67%, respectively. 30% of patients had achieved clinical remission at week 2, 42% by weeks 4, 38% by week 6, 43% at week 8 and 46% at week
12. Treatment failures were 12.5%. There was a reduction in the mean Crohn’s Disease Activity Index (CDAI) scores in all treatment cohorts and an overall
improvement in the Crohn’s Disease Endoscopic Index of Severity (CDEIS) scores across all treatment groups following 5 daily doses of Foralumab treatment.
Pharmacokinetic evaluations were performed, and no dose-response relationship was established due to variability between patients. The observed half-life of
Foralumab was approximately 180 hours. A rapid and almost complete disappearance of CD45 positive lymphocytes, CD3 positive T-cells, CD3 positive and
CD4 positive helper T-cells and CD3 positive and CD8 positive cytotoxic T-cells from the circulation was observed was observed within 24 hours of infusion
for all dose cohorts. The lowest unit dose in the study NI-0401-03 was equivalent to the 1 mg daily unit dose that was the maximum tolerated dose in study NI-
0401-01. Pre-medication with prednisolone reduced the severity and frequency of infusion related reactions.
In two Phase 2a trials conducted by Novimmune, patients with Crohn’s disease and renal allograft rejection in kidney transplants demonstrated
Foralumab’s immunomodulatory activity in humans. We have decided not to pursue evaluation of intravenous Foralumab in Crohn’s Disease because we
believe the market for this disease is saturated by other FDA approved drugs. Further, while intravenous administration of antibodies has been widely used, side
effects from the intravenous administration still are prevalent as well as patient compliant issues come into play. We intend to move forward with an oral
formulation of Foralumab for treatment of Crohn’s disease at a later date.
Two of Novimmune’s clinical trials were in patients with Crohn’s disease and the third clinical trial was conducted in patients undergoing kidney
transplantation and suffering with renal allograft rejection. Sixty-eight subjects with active Crohn’s disease and 11 subjects with acute cellular renal allograft
rejection were treated with Foralumab. The route of administration of Foralumab in these studies was via intravenous administration.
In these trials, it was observed that:
● The short-term tolerability profile of Foralumab was very similar to those reported with other anti CD3 antibodies and no new emerging concerns
have been identified.
● Total daily doses of up to 1mg (~ 500 µg/m2) per patient were generally well tolerated without corticosteroid premedication. The most common
adverse events following exposure to Foralumab were IRRs, which occurred in all patients treated with the compound. In the majority of cases,
these symptoms were mild (66%) in intensity and were reported following the first two infusions of the 5-infusion treatment course. The number
of affected patients and the severity of symptoms tended to increase with increasing dose level, or DL.
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● A clear reduction of CRS and its associated IRRs were observed with steroid pre-medication. All patients who received pre-medication with
steroids had mild or no IRRs, and CRS was reduced. Only one patient who did not receive steroid pre-medication had significant levels of CRS, in
particularly IL-6.
● Usage of steroid pre-medication allows the administration of higher doses.
● Both the magnitude and duration of CD3 modulation increased in a dose related manner.
● No anti-drug antibodies were detected.
Prior Clinical Experience
Oral anti-CD3 antibodies, as opposed to the narrow therapeutic window of its intravenous counterpart, have been shown to impact the gut immune
system and mesenteric lymph nodes, thereby promoting regulatory T-cells activity, without inducing immunosuppression. The treatment alleviated experimental
autoimmune encephalitis and T1D mellitus, which was associated with regulatory T-cells induction. Orally and nasally administered anti-CD3 suppressed
autoantibody production in a mouse lupus model. Oral anti-CD3 yielded reduced pancreatic hyperplasia, hepatic fat accumulation and muscle inflammation in a
leptin-deficient model of NASH and diabetes.
Pharmacology Summary (In Vitro Studies)
The key conclusions arising from the non-clinical studies of Foralumab by Novimmune are:
● Foralumab is a specific anti-CD3 epsilon mAb, as it binds to human T-cells and the recombinant human CD3 epsilon chain, and can be displaced
by another specific anti-CD3 epsilon mAb, muromonab CD3.
● When bound to its target, Foralumab triggers calcium flux into the cell and modulates the CD3/TCR complex causing its’ transient removal from
the cell surface.
● The combination of the two-point mutations introduced into the Fc portion (the constant region of the antibody that has limited structural
variability and is responsible for adverse side effects) of Foralumab, resulting in the abrogation of the binding to Fc gamma receptors, and C1q,
consequently eliminates T-cell proliferation and the release of numerous cytokines including TNF, and interferon gamma, or IFNγ in vitro.
● Foralumab does not cross react with CD3 molecules expressed by T-cells of other species including baboon, Rhesus monkey, Cynomolgus
monkey, rabbit, dog, rat and mouse. As a consequence, options for the most relevant species selection for pharmacology and toxicology
assessment of Foralumab are limited. Novimmune addressed this limitation by studying LCD3 transgenic mice. This transgenic mouse line
expresses the human as well as the mouse CD3 epsilon chain on the surface of their T-cells.
● Using a transgenic line of mice expressing both human and mouse CD3 molecules (1:1 ratio) at the surface of T-cell (LCD3), following a single
intravenous injection, Foralumab dose dependently:
● Modifies human CD3 epsilon expression; that is, more than 80% of the cell surface protein was removed within 24 hours when given at a
saturating dose. This modulation was transient as receptor expression levels returned to baseline values within 7 days of dosing.
● Caused a reduction of 70-80% in the number of circulating T-cells when given at a saturating dose. The maximal effect was observed at hour 6
post dose. Cell counts returned to baseline levels within 3.5 days.
● Demonstrated a half-life of 1.4 and 1.7 days for doses of 5 and 200 µg per mouse, respectively. This seemingly short half-life is similar to that
observed in vivo for other anti-CD3 mAbs and reflects internalization of Foralumab by the human CD3 molecule on the T-cells of these transgenic
mice. It was therefore expected that Foralumab will be internalized by human T-cells in patients and consequently have a half-life comparable to
other therapeutic anti-CD3 mAbs.
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Safety Toxicology Studies
Tiziana conducted Intranasal and Subcutaneous Safety Toxicology Studies in HuGEMM Transgenic Mice Expressing human CD3 and mouse CD3
molecules.
Study 700656 14 Days Intranasal Dosing Duration/7 days Recovery
Three times/week intranasal dosing of 1, 10 and 50 µg foralumab /animal
● There were no test item related mortalities during the course of the study.
● The three times weekly intranasal instillation of Foralumab at doses of up to 50 µg of Foralumab/animal were well tolerated. There were no
foralumab related changes in clinical signs, body weights, hematology or clinical pathology.
● Intranasal instillation of a high dose (50 µg) of Foralumab promoted a neat depletion of the mCD3/hCD3 coexpressing T lymphocyte
compartment, including the mCD3+hCD3+mCD4+ and mCD3+hCD3+mCD8+ subsets.
Study 700800 13 Weeks Dosing Duration/8 weeks Recovery
Three times/week intranasal dosing of 1, 10 and 50 µg foralumab /animal
● There were no test item related mortalities during the course of the study.
● There were no Foralumab related changes in clinical signs, body weights, hematology or clinical pathology.
● Intranasal instillation of Foralumab to mouse three times weekly for 13 weeks was well tolerated at dose levels up to 50 μg/dose and did not
produce Foralumab-related macroscopic or microscopic pathology findings
● The no-observed-adverse-effect level (NOAEL) is considered to be 50 μg/animal (equivalent to a 10 mg dose administered to a 60 kg adult
human).
Study 700657 26 Weeks Dosing Duration/8 weeks Recovery
Threetimes/week intranasal dosing of 1, 10 and 50 µg Foralumab /animal
● There were no Foralumab related mortalities. All deaths observed were unrelated to the administration of Foralumab.
● There was no Foralumab related clinical sign, change in body weight, body temperature, ophthalmology parameters, clinical pathology parameters
(hematology, coagulation, and clinical chemistry), organ weight, or functional observational battery finding.
● Over the dose range, exposure to Foralumab (based on maximum mean AUC0-Tlast values) on Days 1 and 29 generally increased dose
dependently but not consistently in a dose-proportional manner.
● The Foralumab sex ratios based on maximum mean AUC0-Tlast (male vs female), on Days 1 and 29, ranged between 0.3 and 2.2 and were not
consistent with sex-related differences in exposure. Other TK parameter ratios were consistent with no sex-related differences in Foralumab
exposures.
● In animals surviving to scheduled termination, there was no Foralumab-related pathological finding at doses up to 50 µg Foralumab/animal.
● Intranasal instillation of Foralumab to mice three times weekly for 26 weeks was well tolerated at dose levels up to 50 µg Foralumab/animal and
did not produce any signs of toxicity.
Study 700680 14 Days Subcutaneous Dosing Duration/7 days Recovery
Once daily subcutaneous dosing of 5, 15 and 50 µg Foralumab /animal
● There was no evidence of local (subcutaneous injection site) or systemic toxicity.
● The administration at 50 µg/animal of Foralumab promoted a neat reduction of the mCD45+mCD3/hCD3 co-expressing T lymphocyte
compartment, especially in the mCD3+hCD3+mCD8+ subset. Meanwhile, the number of mCD45+mCD3+hCD3- cells increased including the
mCD3+hCD3-mCD4+ and mCD3+hCD3-mCD8+ subsets
● The no observable adverse effect level (NOAEL) was determined to be 50 µg/animal based on parameters monitored on the study.
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Study 700681 28 Days Subcutaneoous Dosing Duration/28 days Recovery
Three times/week intranasal dosing of 1, 10 and 50 µg Foralumab /animal
● The three times weekly (Day 1, 3 and 5 of the week) administration of Foralumab for 4 consecutive weeks by subcutaneous injection at doses of 5,
15 and 50 µg/animal/dose to HuGEMM mice was well-tolerated.
● There was no evidence of local (subcutaneous injection site) or systemic toxicity.
● The administration of Foralumab promoted the decrease of mCD3/hCD3 co-expressing T cells and subsets in a dose-independent manner.
● The no observable adverse effect level (NOAEL) was determined to be 50 µg/animal/dose based on parameters monitored on the study.
Milciclib (TZLS-201)
Milciclib is an orally bioavailable, small molecule broad spectrum inhibitor of CDKs (CDKs): 1, 2, 4, 5 and 7 and Src family kinases. CDKs are a
family of highly conserved enzymes that are involved in regulating the cell cycle, which is a series of events that takes place in cells leading to division and
duplication of its DNA to produce two daughter cells. Src family kinases regulate cell growth and potential transformation of normal cells to cancer cells. A
novel feature of Milciclib is its ability to reduce microRNAs, miR-221 and miR-222, that silence gene expression. miR-221 and miR-222 promote the
formation of blood vessels (angiogenesis) that are important for spread of cancer cells (metastasis). Levels of these microRNAs are consistently increased in
HCC patients and may contribute towards resistance to treatment with Sorafenib. As a result, we are investigating Milciclib both as a monotherapy and plan a
combination treatment with Sorafenib. To date, Milciclib has been studied in a total of eight completed and ongoing Phase 1 and Phase 2 clinical trials in 316
patients. In these trials, Milciclib was observed to be well-tolerated and showed initial signals of anti-tumor action. A Phase 2a trial (CDKO-125a-010) for
Milciclib as a single therapy in patients with HCC was completed in June 2019.
Hepatocellular Cancer
Tiziana plans to conduct a Phase 2 study combination therapy of milciclib and gemcitabine in Non-Small Cell Lung Cancer (NSCLC) patients with a
broad-spectrum of KRAS mutations (except G12C mutation) after failure of at least one line of standard-of-care (SoC) therapy. NSCLC is the most common
type of lung cancer, occurring in approximately 80% of patients. Due to the asymptomatic nature of early disease, many patients are diagnosed with later stages
of disease, and typically have short overall survival. In the United States, at initial diagnosis of NSCLC, approximately 55% of patients have distant metastases
with a 5-year survival rate of 7%, despite the recent development of novel anticancer therapies and regimens. The results of clinical trials with sotorasib
(Lumakras™) demonstrated that selective targeting of a single KRAS mutation is a promising therapeutic strategy. Although there is a clear benefit to target
KRAS directly, KRAS represents a challenging molecular target due to the lack of suitable drug pockets where a small molecule can bind. An alternative
approach is to target downstream signaling pathways. The rationale for evaluation of milciclib in combination with gemcitabine is suggested by preclinical
studies conducted on a non-small cell lung xenograft model that demonstrated the efficacy of milciclib in terms of antitumor activity, both as a single agent and
in combination with gemcitabine, at well tolerated doses. Given that gemcitabine is used for treatment of both pancreatic cancer (for which gemcitabine is the
standard therapy) and NSCLC (for which gemcitabine is used in combination with cisplatin), an evaluation of the feasibility of the combination of milciclib and
gemcitabine is considered appropriate in view of future uses in these diseases. In addition, the 2 compounds showed non-overlapping toxicities when
administered as single agents, providing an additional rationale for their evaluation in combined treatment in the clinical setting.
Furthermore, in the Phase 1 CDKO-125a-004 study, 16 patients were treated with milciclib at 3 dose levels administered once daily for 7 days,
followed by 7 days off treatment in a 4-week cycle and with a fixed dose of gemcitabine administered intravenously on Days 1, 8, and 15 in a 4-week cycle1,
Overall, the combination was well tolerated and showed clinical benefit with 1 PR and 10 patients with SD. The PR was documented in a patient with NSCLC
whose disease was refractory to gemcitabine.
Clinical Data
Milciclib has been studied in a total of eight completed Phase 1 and Phase 2 clinical trials in approximately 316 patients. Milciclib was observed to be
well tolerated by patients with thymoma in Phase 1 and Phase 2 clinical trials.
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Phase 1 Development
Milciclib has been investigated in each of the below, open-label, multi-center, non-randomized, dose-escalation Phase 1 clinical trials.
Trial
CDKO-125a-001
Patient Population
Advanced/metastatic
solid tumors
37 patients
Treatment Schedule / Dosing
1st Schedule: Orally, once daily
for 7 consecutive days every 14 days in a 2-
week cycle at escalating doses of 50, 100,
150, 200 and 300 mg
2nd Schedule: Orally, once daily for 4
consecutive days a week for 3 weeks in a 4-
week cycle at escalating doses of 150, 180
and 200 mg
CDKO-125a-002
Recurrent malignant
glioma 28 patients
(Phase 1)
Escalating oral doses of 18, 36, 54 and 72
mg/m2 once a day for 14 consecutive days
followed by 7 days of rest in a 3-week cycle
34 patients (Phase 2)
54 mg/m2 (RP2D)
Pharmacokinetics:
Key Findings
Comparable plasma pharmacokinetic parameters between
the two schedules were observed.
The exposure to Milciclib increased with the dose and
there was a 3-fold accumulation in the daily systemic
exposure after repeated dosing, in good agreement with
expectations on the basis of the half-life of the compound
(24-43 h).
Clinical observations:
No objective responses were achieved on 1st schedule;
Disease stabilizations, defined as cancer disease that is
neither increasing nor decreasing in extent or severity, was
observed in 6 of 14 evaluable patients (42.9%).
A partial response, or PR, was achieved in 2 out of 14
evaluable patients (14.3%) on 2nd schedule; Disease
stabilization (no change in extent or severity of disease
state) was reported in 3 patients (21.4%), all treated at 180
mg/day DL, including a stabilization lasting 31 weeks in a
patient with pancreatic cancer and stable disease, or SD,
lasting 29 weeks in a patient with carcinoid.
Pharmacokinetics:
Results indicated that the pharmacokinetics of Milciclib
was dose-independent in the dose range 18
– 72 mg/m2.
Systemic
exposure
values
of Milciclib maleate
accumulated by a factor of 3
Clinical observations:
Phase 1: No evidence of clinical effect was observed in all
the 28 treated patients. However 5 patients seemed to have
benefitted from therapy with SD observed (no change in
extent or severity of cancer).
Phase 2: One out of 34 patients achieved the primary
endpoint. PFS at 6 months or PFS-6 rate was 2.9%. No
complete response, or CR (disappearance of all signs of
cancer in response to treatment) or PR (decrease in tumor
size or extent of cancer in the body) were reported. 4
patients showed SD as best overall response (11.8%).
Prolonged SD (≥ 6 months) was observed in one patient
whose SD lasted for 24.9 months.
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Trial
Patient Population
Treatment Schedule / Dosing
Key Findings
Safety:
34 patients were enrolled and treated: 29 patients of non-
Enzyme Inducing Anti-Epileptic Drugs, or non-EIAED,
population and 5 of EIAEDs population. The primary
clinical endpoint was not met. Only one patient (non-
EIAEDs) achieved the study primary endpoint out of 34
treated patients. PFS-6 rate evaluated in the treated patients
was 2.9% (95% CI, 0.07-15.33). No CR or PR was
reported; 4 patients in the treated patients showed SD as
best overall response on treatment (11.8%). Prolonged SDs
(≥6 months) was observed in one patient whose SD lasted
for 24.9 months. Median OS in treated patients was 7.03
months (95% CI, 5.72-10.58). The exploration of the role
play
as
prognostic
Karnofsky Performance Scale (≥90 vs. <90), age (<40 vs.
≥40) and interval between initial diagnosis and current
recurrence (≥52 weeks vs. <52 weeks) indicated a better
survival outcome for patients whose interval between
initial diagnosis and current recurrence was (≥52 weeks).
Given the non-comparative nature of the study, it cannot be
said whether the treatment played any role in this result.
potential
factors,
such
by
CDKO-125a-003
Advanced/metastatic
solid tumors
30 patients
1st Schedule: Orally, once daily for 21
consecutive days followed by 7 days of rest
in a 4-week cycle at escalating doses of 16
and 24 mg/m2
2nd Schedule: Orally, once daily for 14
consecutive days followed by 7 days of rest
in a 3-week cycle at escalating doses of 24,
48, 54 and 72 mg/m2
61
The influence of other factors cannot be excluded but was
not apparent in the current sample.
Pharmacokinetics:
No differences in the pharmacokinetics were observed
between the two schedules after both single and repeated
dosing.
The systemic exposure to Milciclib (amount of Milciclib
available systemically in the patient) increased with dose
in terms of both Cmax (maximum concentration of
Milciclib in plasma) and daily Area Under the Plasma
Drug Concentration, or AUC, vs Time Curve, a measure of
drug bioavailability without deviations
from dose-
proportionality (plasma concentration changes in a linear
relationship to amount of drug dosed).
After repeated administrations, Milciclib Cmax and AUC
accumulated by a factor of 2-4, independent of the dose-
level.
Clinical observations:
No objective (measurable) responses were achieved. SDs
were reported in 5 out of 16 evaluable patients (31.3%),
starting from the dose of 48 mg/m2/day. One disease
stabilization maintained for 12 cycles (10.5 months) at 48
mg/m2/day, was achieved in a parotid gland patient.
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Phase 2 Development
Trial
CDKO-125a-004
Patient Population
Advanced/metastatic
solid tumors
16 patients
Treatment Schedule / Dosing
Orally administered at 45, 60 and 80 mg/m2
once daily for 7 days on / 7 days off (Days 1
to 7 and 15 to 21) in a 4-week cycle in
combination with
IV
gemcitabine (1000 mg/m2/day) on Days 1,
8, 15 over 30 minutes every 4 weeks
fixed dose of
CDKO-125a-005
Malignant pleural
mesothelioma
150 mg/day orally administered for 7
consecutive days every 14 days in 2-week
cycles
38 patients
Pharmacokinetics:
Key Findings
Pharmacokinetic parameters (Cmax, AUC) of Milciclib
after Milciclib maleate/ gemcitabine combination were
consistent with those previously observed after Milciclib
maleate administration as single agent, suggesting no
influence of gemcitabine on the pharmacokinetics of the
compound.
Clinical observations:
One PR in 14 evaluable patients (7.1%) and one SD in 10
patients (71.4%).
Disease stabilizations lasting z 6 months were recorded in
4 cases (28.6%) in thyroid, prostatic, pancreatic carcinoma
and peritoneal mesothelioma, in 2 of them lasting 13.4
months (peritoneal mesothelioma) and 14.3 months
(prostate cancer).
The PR and 3 of the 4 long lasting disease stabilizations
were obtained at the recommended Phase 2 dose (RP2D)
of 80 mg/m2/day plus 1000 mg/m2/day gemcitabine,
supporting development of combination therapies with
Milciclib in advanced cancer patients.
Results of trial CDKO-125a-004 were published: S.
Aspeslagh et.al. Cancer Chemother. Pharmacol (2017) 79:
1257-1265
Pharmacokinetics:
Plasma levels of Milciclib were comparable to those
previously obtained in the Phase 1 study CDK0-125a-001
at the same dosage and with the same schedule, confirming
the reliability of the pharmacokinetic profile of the
compound.
Clinical observations:
No objective responses were reported; prolonged SDs were
observed in 2 patients, lasting 8.9 months and 8.7 months,
respectively.
CDKO-125a-006
Malignant B3 thymoma
/ thymic carcinoma 72
patients
Trial cutoff: 1/9/2017
Single agent (flat dose)
Clinical Observations:
150 mg once daily 7days on/7days off
q2wks
Treatment with Milciclib met the primary endpoint of PFS
at 3 months (PFS-3). 56 of 72 treated patients had median
PFS of 5.78 months with upper and lower 95% confidence
limits of 3.48 months and 7.89 months, respectively. The
secondary endpoint, OS, was also met in this trial. 36 of 72
patients (50%) had median OS of 24.44 months with upper
and lower 95% confidence limits of 22.05 and 54.55
months, respectively. Five patients from this study are
continuing treatment with Milciclib.
CDKO-125a-007
Malignant B3 thymoma
/ thymic carcinoma 30
patients
Trial cutoff: 1/9/2017
Single agent (flat dose) 150 mg once daily
Clinical Observations:
7days on/7days off q2wks
Treatment with Milciclib met the primary endpoint of PFS-
3. 18 of 30 patients had median PFS of 5.65 months with
upper and lower 95% confidence limits of 3.94 months and
17.45 months, respectively. The secondary endpoint, OS,
was met in this trial. 18 of 30 treated patients (54.5%) had
OS of 48 months. Upper and lower 95% confidence limits
could not be calculated because the median survival
probability was not reached.
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Trial
CDKO-125a-010
Patient Population
Recurrent or metastatic
unresectable HCC
Treatment Schedule / Dosing
Key Findings
Single agent (flat dose)
100 mg once daily
The trial successfully met the primary endpoint that oral
treatment with Milciclib was well
tolerated with
manageable toxicities and no recorded drug related deaths.
4days on/3days off x 4 wks q4 wks
● The secondary endpoints for clinical activity assessment
were based on the independent radiological review
using the modified Response Evaluation Criteria in
Solid Tumors (mRECIST)
● Positive demonstrated clinical activity included:
1. 50% (14 out of 28) evaluable patients completed 6-
month duration of the trial.
2. 64% (9 out of 14) patients requested and were
approved by their respective ethical committees to
continue the treatment.
3.
Both median time to progression (TTP) and
progression free survival (PFS) were 5.9 months (95%
Confidence Interval (“CI”) 1.5-6.7 months) out of the
6-months duration of the trial.
4. Approximately 57% of evaluable patients showed
’Stable Disease’ (SD; met at least once in an 8-week
interval) and 3.6% patients showed ‘Partial Response’
(PR).
5. Approximately 61% of patients showed ‘Clinical
Benefit Rate’ defined as CBR=CR+PR+SD (with CR
representing Complete Remission).
6. Five patients on compassionate use continued the
treatment for a total of 9, 9, 11, 13 and 16 months,
respectively. Two patients continuing the treatment
have reached 16 months.
Source: Milciclib Investigators Brochure version 14
Safety
Overall, Milciclib has indicated a similar pattern of toxicity across studies. Consistent with preclinical findings, the safety profile of the compound in
humans is characterized by a dose-limiting neurological toxicity and, to a lesser extent, by GI toxicity. Asthenia (weakness) and fatigue have also been
observed, as well as effects on liver, especially with prolonged schedules of administration. Mild/moderate tremors are a common finding, reported also at
recommended Phase 2 doses (RP2Ds) (only one case of grade 3), whereas ataxia (loss of muscle control and balance) was observed primarily during the first
dose-escalation study (one case of grade 3 ataxia occurred also at the RP2D in the combination study CDKO-125a-004 and one in CDKO-125a-006 trial). Both
tremor and ataxia were generally reversible in all cases in up to 7-9 days, upon drug discontinuation or dose reduction in some cases. Grade 1-2 dizziness was
also reported, with only one grade 3 occurrence, overall. Mild dysgeusia (disorder of sense of taste) is another event that was reported across studies, as well as
headache and anorexia (loss of appetite). Grade 3 myasthenia (muscle weakness) was also reported in two patients. Nausea and/or vomiting and/or diarrhea
were mostly of grade 1-2 in severity and were manageable with appropriate therapy. Diarrhea was occasionally severe, leading to dehydration in several
instances. Skin disorders were also reported across studies; the events were mainly of grade 1-2 in severity except for one case of grade 3 rash maculopapular
and one case grade 3 of erythema multiforme. Hematological toxicity was mainly represented by lymphocytes (white blood cells) decrease and, to a lesser
extent by all the other hematological parameters. Severe thrombocytopenia (decrease in number of platelets in blood) was sporadically observed, especially at
the highest doses tested and in combination with gemcitabine. Effects on liver were dose-dependent and mainly represented by transient transaminase elevation
(with bilirubin slightly less affected). ALT/AST (liver enzymes measured to monitor liver damage) elevations were usually mild using the 7 days on / 7 days off
schedule (even if prolonged transaminases (liver enzymes) were occasionally observed). The more prolonged administrations were associated with a more
frequent and pronounced effect on liver function tests. Asymptomatic grade 3-4 lipase (a pancreatic enzyme that breaks down fats, measured to monitor
pancreatic function) elevations were sometimes reported, without clinical manifestation. No important effects on renal function were noted.
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Monitoring of visual function was performed through visual acuity, funduscopy (ophthalmic examination of the back of the eye) and, in a subset of
studies, electroretinography examinations, or ERG. Overall, no clinically relevant abnormalities for these parameters emerged during treatment across studies,
except for ERG worsening, compared to baseline, observed in three patients, who for this reason discontinued study treatment as per protocol, and one case of
retinal detachment reported as a serious event in one patient (CDKO-125a-006 trial) and assessed as probably related to Milciclib maleate.
Our interim review in trial CDKD-125A-010, as noted above, found Milciclib to be well-tolerated with no drug-related serious adverse events in 6
patients with unresectable or metastatic HCC who had concluded a first cycle of treatment with Milciclib.
Preclinical Data
The pharmacokinetics of Milciclib were investigated in mouse, rat, dog and monkey models after single intravenous and oral administration of the
compound. Since the compound is intended for the oral administration route, the pharmacokinetics were further characterized after single and repeated oral
administrations. These preclinical studies were performed with Milciclib formulated as maleate or mono/di/tri-hydrochloride salt. Following intravenous
administration, Milciclib was characterized by a moderate clearance in mice, rats and monkeys and a high clearance in dogs. The volume of distribution was
higher than the total body water in all tested species, suggesting an extensive tissue distribution. Following oral administration to rats and monkeys, Milciclib
crossed the blood-brain barrier and distributed in the brain. In all species, Milciclib plasma levels increased largely in direct proportion with the dose.
Preclinical toxicology studies conducted with Milciclib have shown that the hemolymphopoietic system, the GI tract and the male reproductive organs
are the major target organs considered related to the pharmacological activity of the compound in all species. The effects on the hemolymphopoietic system and
GI tract were reversible after drug withdrawal. Reversibility could not be demonstrated in the male reproductive organs at the end of the 2-3-week recovery
period because of the longtime of maturation of the seminiferous epithelium. Additional toxicities, that are considered not related to the mechanism of action of
the compound, were Central Nervous System, or CNS, ocular and renal toxicities. In addition, hemorrhages in different organs were observed in dogs and
monkeys. Clinical signs of CNS toxicity were observed at high doses given as single or repeated administrations in all species.
Anti-IL6R Fully Human mAb TZLS-501 (formerly known as NI-1201)
TZLS-501 is a fully human mAb targeting the IL-6R. We licensed the intellectual property from Novimmune in January 2017. This fully human mAb
has a novel mechanism of action, binding to both the membrane-bound and soluble forms of the IL-6R and depleting circulating levels of the IL-6 in the blood.
An excessive production of IL-6 is regarded as a key driver of chronic inflammation, associated with autoimmune diseases such as multiple myeloma, oncology
indications and rheumatoid arthritis, and we believe that TZLS-501 may have potential therapeutic value for these indications.
In preclinical studies, TZLS-501 demonstrated the potential for overcoming the limitations of other IL-6 blocking pathway drugs. Compared to
tocilizumab and sarilumab, while binding to the membrane-bound IL-6R complex, TZLS-501 has been observed to have a higher affinity for the soluble IL-6
receptor from antibody binding studies conducted in cell culture. TZLS-501 also demonstrated the potential to block or reduce IL-6 signaling in mouse models
of inflammation. The soluble form of IL-6 has been implicated to have a larger role in disease progression compared to the membrane- bound form (Kallen,
K.J. (2002). “The role of transsignaling via the agonistic soluble IL-6 receptor in human diseases.” Biochimica et Biophysica Acta. 1592 (3): 323–343.).
Originally TZLS-501 clinical development was intended or treatment of “cytokine storm”-induced lung damage in COVID-19 patients by aerosol
delivery to lung, however, with the increasing number of effective therapies and vaccines now available for COVID patients the Company decided to refocus
TZLS-501 development for SSc-ILD indication.
On April 9, 2020 The Company announced that it had developed investigational new technology to treat COVID-19 infections, consisting of direct
delivery of anti-IL-6 receptor (anti-IL-6R) monoclonal antibodies (mAbs) into the lungs using a handheld inhaler or nebulizer for treatment of patients infected
with COVID-19 (SARS-CoV-2) coronavirus. On June 29, 2020 the Company announced that it was advancing GMP manufacturing of TZLS-501 with STC
Biologics concurrently with the development of inhalation technology using a hand-held nebulizer with Sciarra Laboratories and safety toxicology studies in
Cynomolgus monkeys with ITR Canada Laboratories. GMP batches were initiated in January 2021 and completed in March 2021. Safety inhalation toxicology
studies were initiated in November 2020 and completed in March 2021. Technological assessment of nebulizers for inhalation treatment of patients was
initiated in September 2020 and completed in February 2021.
An additional 250L cGMP batch of TZLS-501 drug substance was manufactured using an improved downstream process to support future
development activities. An IND for a Phase 1 Clinical Trial in Healthy Subjects for treatment of interstitial lung disease associated with systemic sclerosis (SSc
ILD) was filed in December 2021. This program has been temporarily paused to pursue the Company’s short-term focus on clinical development of intranasal
foralumab administration for treatment of SPMS patients
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Competition
The biotechnology and pharmaceutical industries are characterized by rapidly changing technologies, significant competition and a strong emphasis on
intellectual property. We face substantial competition from many different sources, including large and specialty pharmaceutical and biotechnology companies,
academic research institutions, government agencies and public and private research institutions.
We are aware of a number of companies focused on developing therapies in various indications. Any advances made by a competitor may be used to
develop therapies that could compete against any of our product candidates.
For our specific product candidates, the main competitors include:
● We believe that Foralumab is currently the only fully human anti-CD3 mAb in clinical development for treatment of Crohn’s disease, progressive
MS and other autoimmune and inflammatory diseases.
Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and other resources than we do,
such as larger R&D, clinical, marketing and manufacturing organizations. Mergers and acquisitions in the biotechnology and pharmaceutical industries may
result in even more resources being concentrated among a smaller number of competitors. Our commercial opportunity could be reduced or eliminated if
competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive
than any products that we may develop. Competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain
approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Additionally, technologies
developed by our competitors may render our potential product candidates uneconomical or obsolete, and we may not be successful in marketing our product
candidates against competitors.
Intellectual Property
We strive to protect and enhance the proprietary technologies, inventions and improvements that we believe are important to our business, including
seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties. Our policy is to seek to protect our proprietary
position by, among other methods, pursuing and obtaining patent protection in the United States and in jurisdictions outside of the United States related to our
proprietary technology, inventions, improvements, platforms and our product candidates that are important to the development and implementation of our
business.
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As of April 4, 2024, our intellectual property portfolio was made up as follows:
Family
Subject
Methods of use
(autoimmune or
inflammatory diseases
and disorders)
Foralumab
TZLS-401
Composition and
methods of use
Cooley Ref.
TIZI-010
Priority
2004
Status
Issued
Expires
Jurisdiction
2025
Issued: Australia, Canada, China,
Hong Kong, Israel, Japan, Mexico,
Norway, Singapore, South Africa,
Ukraine, Armenia, Austria,
Azerbaijan, Belgium, Belarus,
Switzerland, Germany, Denmark,
Spain, France, United Kingdom,
Ireland, Italy, Kyrgyzstan,
Kazakhstan, Luxembourg, Moldova,
Netherlands, Norway, Portugal,
Russian Federation, Sweden,
Tajikistan, and Turkmenistan
TIZI-011
2004
Issued/Pending
2025
Issued: Australia, Armenia,
Azerbaijan, Belarus, Brazil, Canada,
China, Austria, Denmark, France,
Germany, Hong Kong, India, Israel,
Italy, Japan, Kazakhstan, Kyrgyzstan,
Mexico, Moldova, Netherlands,
Norway, Republic of Korea, Russian
Federation, Singapore, South Africa,
Spain, Switzerland, Tajikistan,
Turkmenistan, U.S. United Kingdom,
and Ukraine; Pending: US.
Methods of use (in
combination with anti-
IL- 6/IL-6R antibodies)
Formulations and
dosing regimen
TIZI-012
2011
Issued/Pending
2032
Issued: United States
TIZI-013
2016
Issued/Pending
2037
Issued: United States, China, Japan,
Israel
Pending: Australia, Canada, China,
Europe, Hong Kong, Israel, Japan,
United States
Methods of use (CNS
disorders)
TIZI-019 (co-owned
with The Brigham and
Women’s Hospital,
Inc.)
2017
Pending
2038
Pending: Canada, Europe, Japan,
United States
Methods of use (CAR-
TIZI-027
2020
Pending
2041
Pending: United States, Australia,
T therapies)
Methods of use
(coronavirus)
TIZI-028
2020
Pending
2041
Pending: United States, Australia,
Canada, China, Europe, Israel, Japan,
Hong Kong
Canada, China, Europe, Israel, Japan
Method of
TIZI-029
2021
Pending
2042
Pending: United States, Europe
administering
Foralumab by
subcutaneous injection
Nasal formulations of
TIZI-033
2022
Pending
2043
Pending: PCT
Foralumab
Methods of suppressing
micrglial activation
TIZI-034 (co-owned
with The Brigham and
Women’s Hospital,
Inc.)
2021
Pending
2042
Pending: PCT
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Milciclib
TZLS-201
Composition of matter,
methods of use, process
of manufacturing
Methods of use
(multiple indications)
Methods of use
(combination therapies
with cytotoxics)
Compositions of related
entities (salts and
crystal forms),
formulations and
methods of treatment
Methods of use
(combination therapies
with therapeutic
antibodies)
Therapeutic
combinations of
Milciclib for use in the
treatment of cancer
Enteric-coated
pharmaceutical
formulations
comprising Milciclib
Method of treating
KRAS mutated cancers
by administering
Micliclib and a
chemotherapy
2003
Issued/Pending
2024
United States, Europe, Brazil,
Eurasia, Africa, Algeria, Argentina,
Australia, Barbados, Bosnia &
Herzegovina, Canada, Colombia,
Costa Rica, Croatia, Cuba, Ecuador,
Georgia, Iceland, India, Indonesia,
Israel, Japan, Korea, Kosovo,
Malaysia, Mexico, Mongolia,
Montenegro, New Zealand,
Nicaragua, Norway, Pakistan,
Philippines, Serbia, Singapore, South
Africa, Sri Lanka, Taiwan, Thailand,
Trinidad & Tobago, Tunisia, Ukraine,
Uzbekistan, Vietnam
Pending: United States, Egypt,
Venezuela
2008;
2009
2008;
2009
Issued
Issued
2029;
2030
2029;
2030
United States, Europe, China, Hong
Kong, Japan
United States, Europe, China, Hong
Kong, Japan
2009
Issued
2030
United States, Europe, China, Hong
Kong, Japan
2006
Issued
2027
United States, Europe, China, Japan
2017
Issued/Pending
2038
United States, Japan
Pending: United States, Europe,
Canada, Japan, Hong Kong
2024
Pending
2045
United States (provisional)
2021
Pending
2042
Pending: Australia, Canada, Europe,
Israel, New Zealand, United States
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Composition of matter
and methods of use
TIZI-016
2009
Issued
2029 Issued: United States, Austria, Australia,
Belgium, Canada, China, Denmark,
France, Germany, India, Ireland, Israel,
Italy, Japan, Luxembourg, Mexico,
Netherlands, Spain, Sweden, Switzerland
and United Kingdom
Compositions of IL-
TIZI-022
2020
Pending
2041 Pending: United States, Europe,
Anti IL-6/IL-
6R Antibody
TZLS-501
6/IL-6R antibodies and
methods of use thereof
(coronavirus includes
combinations with
dactinomycin)
Australia, Canada, China, Israel, Japan
Actinomycin D Use of Actinomycin D
2015
Issued
2036 United States, Europe, Japan, Australia,
in the treatment of
acute myeloid leukemia
Actinomycin D
compositions and use
of the same in the
treatment of
myelodysplactic
syndrome and acute
myeloid leukemia
Canada
2016
Issued/Pending
2037 United States, Australia, Japan
Pending: United States, Europe, Canada,
Japan
We have rights to a patent family that discloses the Milciclib compound, methods of using the compound, and processes for making the compound
licensed from Nerviano Medical Sciences S.R.L. (which is further described below). This patent family includes six granted U.S. patents, one granted European
patent, and one granted Eurasian patent. This patent family also includes granted patents in Africa (African Intellectual Property Organization, African Regional
Intellectual Property Organization), Algeria, Argentina, Australia, Brazil , Barbados, Bosnia & Herzegovina, Canada, Colombia, Costa Rica, Croatia, Cuba,
Ecuador, Georgia, Iceland, India, Indonesia, Israel, Japan, Korea, Kosovo, Malaysia, Mexico, Mongolia, Montenegro, New Zealand, Nicaragua, Norway,
Pakistan, Philippines, Serbia, Singapore, South Africa, Sri Lanka, Taiwan, Thailand, Trinidad & Tobago, Tunisia, Ukraine, Uzbekistan, and Vietnam.
Applications are also pending in the U.S., Egypt, and Venezuela. The patents in this family will expire in April 2024, excluding any patent term adjustment and
patent term extension in the U.S. and similar regulatory extensions available in several other jurisdictions, such as Europe.
We also have rights to a patent family which covers related entities, such as salts and crystal forms, of Milciclib, and methods of using the salts and
crystal forms licensed from Nerviano Medical Sciences S.R.L. This patent family comprises one granted U.S. patent and one granted patent in each of Europe,
China, Japan, and Hong Kong. The patents in this family will expire in April 2030, excluding any patent term adjustment and patent term extension in the U.S.
and several other jurisdictions, such as Europe.
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In addition, we have rights to five patent families which cover methods of using Milciclib in the treatment of multiple indications licensed from
Nerviano Medical Sciences S.R.L. These patent families comprise five granted U.S. patents, and granted patents in Europe, China, Hong Kong, and Japan, and
one pending patent application in Europe. The patents in these families will expire between February 2027 and March 2030, excluding any patent term
adjustment and patent term extension in the U.S. and similar regulatory extensions available in several other jurisdictions, such as Europe.
Among the above five patent families, two families also cover combination therapies of Milciclib with cytotoxic agents. These families comprise two
granted U.S. patents, and granted patents in Europe, China, Hong Kong, and Japan. The patents in these families will expire between November 2029 and
March 2030, excluding any patent term adjustment and patent term extension in the U.S. and similar regulatory extensions available in several other
jurisdictions, such as Europe.
One family of the above five patent families also covers combination therapies of Milciclib with therapeutic antibodies. This patent family includes
one granted U.S. patent, and granted patents in Europe, China, and Japan. The patents in this family will expire in February 2027, excluding any patent term
adjustment and patent term extension in the U.S. and similar regulatory extensions available in several other jurisdictions, such as Europe.
In addition, we have rights to a patent family which covers methods of using Milciclib together with a second anti-cancer agent in the treatment of
cancer. This patent family includes granted patents in the U.S. and Japan and pending applications in the U.S., Europe, Canada, Japan, and Hong Kong. The
patent and patent applications in this family, if issued as patents, will expire in November 2038, excluding any patent term adjustment and patent term extension
in the U.S. and similar regulatory extensions available in several other jurisdictions, such as Europe.
We also have rights to a U.S. provisional application which covers enteric-coated pharmaceutical formulations comprising Milciclib. The patent
applications in this family, if issued as patents, will expire in March 20432045, excluding any patent term adjustment and patent term extension in the U.S. and
similar regulatory extensions available in several other jurisdictions, such as Europe.
We also have rights to a patent family that discloses method of treating KRAS mutated cancers by administering Milciclib and a chemotherapy. This
patent family includes pending applications in the United States and in Australia, Canada, Europe, Israel, and New Zealand. Any patents issued in this family
will expire in August 2042, excluding any patent term adjustment and patent term extensions available in the U.S and several other jurisdictions.
We have rights to a patent family that discloses methods of using Foralumab, licensed from NovImmune S.A. (which is further described below). This
patent family includes one granted European patent and one granted Eurasian patent. This patent family also includes granted patents in Australia, Canada,
China, Hong Kong, Israel, Japan, Mexico, Norway, Singapore, and South Africa, and Ukraine. The patents in this family will expire in April 2025, excluding
any patent term extensions available in several jurisdictions, such as Europe.
We also have rights to a patent family that discloses the Foralumab compound and methods of using the compound also licensed from NovImmune
S.A. This patent family comprises four granted U.S. patents, one granted European patent, and one granted Eurasian patent. This patent family also includes
granted patents in Australia, Brazil, Canada, China, Hong Kong, India, Israel, Japan, Mexico, Republic of Korea, Singapore, and South Africa, and Ukraine. An
application is pending in the U.S. The patents in this family will expire in June 2025, excluding any patent term adjustment in the U.S. and patent term
extensions available in the U.S. and several other jurisdictions, such as Europe.
We have rights to a patent family that discloses formulations of Foralumab and dosing regimens for treating various disorders. This patent family has
an issued patent in the U.S., issued patents in China, Israel and Japan, and applications pending in the U.S, Australia, Canada, China, Europe, Israel, Hong
Kong, and Japan. The patents in this family will expire in August 2037, excluding any patent term adjustment and patent term extensions available in the U.S
and several other jurisdictions.
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We have rights to a patent family that discloses methods of using Foralumab for treating central nervous system (CNS) disorders, licensed from
Brigham and Women’s Hospital, Inc. (which is further described below). This patent family has applications pending in Canada, Europe, Japan, and the United
States that, if issued as patents, will expire in June 2038, excluding any patent term adjustment and patent term extensions available in the U.S and several other
jurisdictions.
We have rights to a PCT application that discloses methods of using Foralumab for microglial activation, which is co-owned with Brigham and
Women’s Hospital Inc. The patent applications in this family, if issued as patents, will expire in 2042, excluding any patent term adjustment and patent term
extensions available in the U.S and several other jurisdictions.
We have rights to a patent family that discloses methods of using Foralumab for treating gastrointestinal, autoimmune, and inflammatory disorders.
This family has pending applications in the U.S., Europe, Australia, Canada, China, Hong Kong, and Japan. The applications in this family, if issued as patents,
will expire in October 2039, excluding any patent term adjustment and patent term extensions that may be available.
We also have rights to a patent family that discloses methods of using Foralumab in the treatment of coronavirus. This family has pending applications
in the U.S., Australia, Canada, China, Europe, Hong Kong, Israel and Japan. The patent applications in this family, if issued as patents, will expire in 2041,
excluding any patent term adjustment and patent term extensions available in the U.S and several other jurisdictions.
We also have rights to a patent family that discloses methods of using Foralumab to enhance cell adoptive therapies. This family has pending
applications in the U.S., Australia, Canada, China, Europe, Israel and Japan. The patent applications in this family, if issued as patents, will expire in 2041,
excluding any patent term adjustment and patent term extensions available in the U.S and several other jurisdictions.
We also have rights to a PCT application patent family that discloses methods of administering Foralumab subcutaneously for the treatment of various
diseases. This family has pending applications in the U.S. and Europe. Any patents issued in this family will expire in April 2042, excluding any patent term
adjustment and patent term extensions available in the U.S and several other jurisdictions.
We also have rights to a U.S. provisional PCT application that discloses nasal formulations of Foralumab for the treatment of various diseases. Any
patents issued in this family will expire in 2043, excluding any patent term adjustment and patent term extensions available in the U.S and several other
jurisdictions.
We have rights to a patent family that discloses methods of using TZLS-501 to treat various disorders, licensed from NovImmune S.A. This patent
family includes five six granted U.S. patents, one granted European patent, and granted patents in Australia, Canada, China, India, Israel, Japan, and Mexico.
Applications are pending in U.S. and Japan. The patents in this family will expire in May 2029, excluding any patent term extensions available in several
jurisdictions, such as Europe.
We have rights to a second patent family that discloses methods of using TZLS-501 to treat coronavirus alone and in combination with Actinomycin D.
This patent family includes pending applications in the U.S., Australia, Canada, China, Europe, Israel, and Japan. The patent applications in this family, if
issued as patents, will expire in March 2041, excluding any patent term extensions available in several jurisdictions.
We also have rights to two patent families related to Actinomycin D (ActD). The first family covers the use of ActD in the treatment of acute myeloid
leukemia, and includes granted patents in the U.S., Australia, Canada, Japan, and Europe. The patents in this family will expire in September 2036, excluding
any patent term adjustment and patent term extension in the U.S. and similar regulatory extensions available in several other jurisdictions, such as Europe.
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The second ActD family covers nanoparticle formulations of ActD and the use of the same in the treatment of acute myeloid leukemia and
myelodysplastic syndrome. In this family, there are granted patents in the U.S., Australia, and Japan and pending applications in the U.S., Europe, Australia,
Canada, and Japan. The patents and patent applications in this family, if issued as patents, will expire in September 2037, excluding any patent term adjustment
and patent term extension in the U.S. and similar regulatory extensions available in several other jurisdictions, such as Euro
Individual patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term
of patents in the countries in which they are obtained. Generally, patents issued for regularly filed applications in the United States are granted a term of 20
years from the earliest effective non-provisional filing date. In addition, in certain instances, a patent term can be extended to recapture a portion of the USPTO
delay in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period. However, as to the FDA component,
the restoration period cannot be longer than five years and the total patent term including the restoration period must not exceed 14 years following FDA
approval. The duration of foreign patents varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective
filing date. However, the actual protection afforded by a patent varies on a product by product basis, from country to country and depends upon many factors,
including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country
and the validity and enforceability of the patent.
Furthermore, we rely upon trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We
seek to protect our proprietary information, in part, using confidentiality agreements with our collaborators, employees and consultants and invention
assignment agreements with our employees. We also have confidentiality agreements or invention assignment agreements with our collaborators and selected
consultants. These agreements are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us
ownership of technologies that are developed through a relationship with a third party. These agreements may be breached, and we may not have adequate
remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our
collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting
know-how and inventions.
Our commercial success will also depend in part on 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. Our breach of any license agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our
future product candidates may have an adverse impact on us. If third parties have prepared and filed patent applications prior to March 16, 2013 in the United
States that also claim technology to which we have rights, we may have to participate in interference proceedings in the USPTO, to determine priority of
invention. For more information, see “Risk Factors—Risks Related to Our Intellectual Property.”
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Material Agreements
Nerviano Agreement
In January 2015, we entered into an agreement with Nerviano, or the Nerviano Agreement, pursuant to which we obtained a worldwide, exclusive
license to patents owned or controlled by Nerviano, or the Nerviano License to develop and commercialize products and services incorporating Milciclib as an
active ingredient, and any product or service controlled or owned by Nerviano that is used to diagnose or assess responsiveness to Milciclib therapy or dosage.
The Nerviano License confers the right on us grant sub-licenses, and otherwise to employ third party manufacturers and distributors to produce and sell licensed
products and services.
Each party to the Nerviano Agreement agreed to a development plan, or the Nerviano Development Plan, approved by a joint development committee,
or the JDC. The JDC is comprised of at least two members of each party, meets at least twice a year and endeavors to make decisions by consensus, save that
where there is a disagreement with respect to any aspect of the licensed products or services we shall have a deciding vote.
Under the Nerviano Development Plan, we (or, as the case may be, our sub-licensee(s)) are obliged to use commercially reasonable efforts to develop
and commercialize a licensed product or service in at least one therapeutic indication that arises out of the Nerviano Development Plan, and Nerviano is obliged
to use commercially reasonable efforts to manufacture such product(s) or service(s). Pursuant to the Nerviano Development Plan, we have sole responsibility
for costs for further clinical development and Nerviano is obliged to perform Phase 2 studies of licensed products and services, save that the amounts to be
invoiced by Nerviano to us for Phase 2 studies shall be commercially reasonable and not be greater than a low-double-digit percentage in excess than amounts
estimated to be invoiced by another reputable clinical research organization.
During the term of the Nerviano Development Plan, or the Nerviano Exclusivity Period, we and our affiliates may not, directly or indirectly, develop,
make, use, sell, offer for sale or import any small molecule compound or other biological or chemical molecule other than Milciclib that directly binds to, with
an affinity indicated by an IC50 of 100nM or less, and modulates the following specified pharmacological targets hit by Milciclib: Cdk-2, Cdc-4 and Cdc6.
Upon entry into the Nerviano Agreement, we paid an upfront, non-refundable initial license fee of $3,500,000 to Nerviano. We issued 4,233,616 of
ordinary shares, fully paid with a nominal value of three pence each, or the Consideration Shares, to Nerviano at an issue price of 50.5 pence (equivalent to an
aggregate value of £2,137,976.08).
Nerviano granted us an option, or the Nerviano Option, to buy-back all the Consideration Shares for a de minimis aggregate consideration exercisable
on written notice at any time after the earlier of:
(i) an unsuccessful Phase 2 trial for HCC or breast cancer with a licensed product or service and the concomitant decision of the company, our
affiliates or sub-licensees to discontinue development of a licensed product or service;
(ii) the fifth anniversary of the Nerviano Agreement, (provided that if on such date a Phase 2 trial has commenced but has not been completed our
ability to exercise the Nerviano Option shall be delayed until the outcome of the Phase 2 trial has become clear); or
(iii) our abandonment of any licensed product or service for bona fide scientific reasons.
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The Nerviano Option cannot be exercised if any of the following events (each, a Release Event), occurs:
(i) a successful completion of a Phase 2 trial for HCC or breast cancer with a licensed product or service, where such successful conclusion renders
the licensed product or service eligible for entry into a Phase 3 trial with no further clinical study; or
(ii) our abandonment of the development of, or failure to exercise commercially reasonable efforts develop any, licensed product or service, save for
where we have bona fide scientific reasons.
The Nerviano Option effectively allows us to recover the Consideration Shares if it transpires that Milciclib proves to be unsuccessful in the
indications for which we licensed it or we fail to see satisfactory results in a period of 5 years from the date of the license agreement.
Prior to a Release Event, Nerviano has agreed to not transfer, dispose of, or grant options or other rights over directly or indirectly any interests in the
Consideration Shares nor to derive any financial benefit from the Shares, but is entitled to exercise all voting rights arising from the Consideration Shares.
Following a Release Event, Nerviano has agreed to a 12 month lock-up, or the Nerviano Lock-Up, in respect of the Consideration Shares, subject to
customary exceptions, including the prior written consent of the company and our nominated adviser from time to time (which consent may be approved,
provided or provided subject to conditions as each may determine in its absolute discretion), acceptance of takeover bids, share buy-backs by the company, or
where required by law.
Following the lapse of the term of the Nerviano Lock-Up, Nerviano has agreed to not directly or indirectly, transfer, sell, mortgage, charge or
otherwise dispose of more than 10% of the Consideration Shares (i.e. 423,362 ordinary shares) per calendar month, and to utilize the company’s broker from
time to time to execute those transactions in respect of the legal and or beneficial ownership or any other interest in the Consideration Shares so as to ensure an
orderly market.
We are obligated to pay Nerviano the following additional amounts in respect of the first licensed product or service which achieves the stated
development milestones:
(a) $100,000 upon initiation, first patient dosed, or FPD, of the first Phase 3 registration trial in thymic carcinoma.
(b) $4,000,000 upon FPD of the first Phase 3 registration trial in HCC.
(c) $6,000,000 upon FPD of the first Phase 3 registration trial in breast cancer.
(d) Upon the first NDA equivalent in: thymic carcinoma, $900,000; HCC, $9,000,000; breast cancer, $15,000,000.
We are obliged to pay Nerviano a low-single-digit percentage royalty fee of the annual net sales of licensed products or services, subject to certain
royalty off-sets on a country-by-country basis and, subject to certain exclusions, a low-double-digit percentage of sub-licensing revenues from the sale of
licensed products or services for the life of the licensed patents.
During the Nerviano Exclusivity Period, we have the right to terminate activities and funding to Nerviano after 24 months from the beginning of the
Nerviano Exclusivity Period but not prior thereto. If we exercise our termination right, we are obliged to transfer to Nerviano all relevant data, licensed products
and services and an exclusive license pertaining to the licensed product or services, and Nerviano shall pay us a low-single-digit percentage royalty on annual
net sales of licensed products and services, subject to certain exceptions.
Following the expiry of the Nerviano Exclusivity Period, we may terminate the Nerviano Agreement at any time on 90 days’ written notice, and either
party may terminate the Nerviano Agreement for material breach by the other party of any material obligation or condition of the Nerviano Agreement by
written notice, subject to a 45 day cure period for a payment breach, and a 120 day cure period for any other breach.
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Absent early termination, the Nerviano Agreement shall remain in force until the later of, in all countries in which licensed products and services are
marketed pursuant to the Nerviano Agreement, (a) the expiration of the last claim in an issued, unexpired patent within the licensed patents, subject to certain
exceptions, which covers the sale of such licensed products or services, or (b) five years from the date of first commercial sale of such licensed product or
service in such country.
Novimmune CD3 Agreement
In December 2014, we entered into a license and sublicense agreement with Novimmune, or the Novimmune CD3 Agreement, pursuant to which we
obtained a worldwide, exclusive license to certain patents owned or controlled by Novimmune, or the Novimmune CD3 License, together with a sublicense to
certain patent licenses from Bristol-Myers Squibb Company, or BMS, or the BMS CD3 Sublicense, and any associated know-how, biologic materials, clinical
data or other technology relating to CD3 receptor mAbs and their use in order to research, develop and commercialize products and services. The Novimmune
CD3 License and BMS CD3 Sublicense both confer the right to us to grant sublicenses, and otherwise to employ third party manufacturers and distributors to
produce and sell licensed products and services, respectively.
Pursuant to the Novimmune CD3 Agreement, Novimmune granted the BMS CD3 Sub-License to us. Novimmune effected such grant pursuant to a
research and commercialization agreement between Novimmune and BMS dated September 20, 2014, or the BMS R&C Agreement, and the agreement for the
exclusive commercial license for the CD3 licensed product (NI-0401) between Novimmune and BMS dated February 2005.
Under the Novimmune CD3 Agreement, we have full control and authority over the research, development and commercialization of licensed products
and services, and are required to exercise commercially reasonable efforts to commercialize such licensed products and services at all times.
Upon our entry into the Novimmune CD3 Agreement we paid an upfront fee of $750,000 to Novimmune (to be on paid by Novimmune to BMS
pursuant to the terms of the BMS R&C Agreement), and a further upfront fee of $500,000 to Novimmune. We are required to pay Novimmune installments of
$250,000 on each of the 14 month, 26 month and 38 month anniversaries of the date of the Novimmune CD3 Agreement. For the term of the Novimmune
Agreement, we are obligated to pay to Novimmune a royalty of a low-single-digit percentage on net sales of licensed products and services, together with any
amounts owed to BMS incurred pursuant to the BMS CD3 Sub-License.
We may terminate the Novimmune CD3 Agreement at any time on 90 days’ written notice, and either party may terminate the Novimmune CD3
Agreement by written notice for a payment breach or any other breach, subject to 45 day and 120 day cure periods, respectively. Absent early termination, the
Novimmune CD3 Agreement will continue until the later of, in all countries in which licensed products are marketed pursuant to the Novimmune CD3
Agreement, (a) the expiration of the last claim in an issued, unexpired patent within the licensed patents or a claim that has not been pending more than five
years, subject to certain exceptions, which covers the sale of such licensed product or service, or (b) the end of any market exclusivity period granted by the
relevant governmental authority in a country that prevents another party from marketing the same licensed product or service.
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Novimmune IL-6r Agreement
In December 2016, we entered into a license and sublicense agreement with Novimmune, or the Novimmune IL-6r Agreement, pursuant to which we
obtained a worldwide, exclusive license to certain patents owned or controlled by Novimmune, or the Novimmune IL-6r License, together with a sub-license to
certain patent licenses from BMS, or the BMS IL-6r Sub-License, and any associated know-how, biologic materials, clinical data or other technology relating to
IL-6r mAbs and their use in order to research, develop, commercialize products and services. The Novimmune IL-6r License and BMS IL-6r Sub-License both
confer the right to us to grant sub-licenses, and otherwise to employ third party manufacturers and distributors to produce and sell licensed products and
services, respectively.
Pursuant to the Novimmune IL-6r Agreement, Novimmune granted the BMS IL-6r Sub-License. Novimmune effected such grant pursuant to the BMS
R&C Agreement and the agreement for the IL-6r exclusive commercial license for the IL-6r antibody licensed product (NI-1201) between Novimmune and
BMS dated September 20, 2009, or the IL-6r Commercial License Agreement.
Under the Novimmune IL-6r Agreement, we have full control and authority over the research, development and commercialization of licensed
products and services, and are required to exercise commercially reasonable efforts to commercialize such licensed products and services at all times.
Upon our entry into the Novimmune IL-6r Agreement we paid an upfront fee of $100,000 to Novimmune. For the term of the Novimmune IL-6r
Agreement, we are obligated to pay to Novimmune a royalty of a low-single-digit percentage on net sales of licensed products and services, or low-double-digit
percentage of any sub-license royalty revenue which we receive that arises from sales of licensed products and services, together with any amounts owed to
BMS incurred pursuant to the BMS IL-6r Sub-License.
The BMS R&C Agreement and the IL-6r Commercial License Agreement were amended pursuant to an agreement between Novimmune and BMS
dated December 2016, or the Novimmune Amendment Agreement. Pursuant to the Novimmune Amendment Agreement, in the event that Novimmune (or, as
the case may be, a sublicensee) commercializes a combination product comprising NI-1201 and NI-0401, then such product shall be subject to a single royalty.
We may terminate the Novimmune IL-6r Agreement at any time on 90 days’ written notice, and either party may terminate the Novimmune IL-6r
Agreement by written notice for a payment breach or any other breach, subject to 45 day and 120 day cure periods, respectively. Absent early termination, the
Novimmune IL-6r Agreement will continue until the later of, in all countries in which licensed products are marketed pursuant to the Novimmune IL-6r
Agreement, (a) the expiration of the last claim in an issued, unexpired patent within the licensed patents or a claim that has not been pending more than five
years, subject to certain exceptions, which covers the sale of such licensed product or service, or (b) the end of any market exclusivity period granted by the
relevant governmental authority in a country that prevents another party from marketing the same licensed product or service.
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Brigham and Women’s Hospital License
On May 29, 2018, we entered into a license agreement, or the BWH License, with BWH pursuant to which we obtained a worldwide exclusive license
to a patent owned by BWH for a novel technology discovered by Dr. Howard Weiner. The patent relates to a formulation of Foralumab in a medical device
developed for nasal administration of Foralumab. The BWH License extends to any associated know-how, clinical data and use in order to research, develop
and commercialize products and services. The BWH License confers on us the right to grant sub-licenses, and otherwise to employ third party manufacturers
and distributors to sell licensed products and services.
Under the BWH License we have full control and amnesty over the research, development and commercialization of licensed products and services
and are required to exercise commercially reasonable efforts to commercialize such licensed products and services at all times.
Upon our entry into the BWH License we paid an upfront fee of $10,000 to BWH. We are required to pay annual maintenance fees, all ongoing patent
maintenance and prosecution costs and a low single-digit royalty on annual net sales (and a 12% royalty of non-royalty sub-license revenues for the life of the
intellectual property). We are also obliged to make certain milestone payments of: (a) US$300,000 within 60 days of first patient enrolled in a Phase 1 human
clinical trial; (b) US$600,000 within 60 days of first patient enrolled in a Phase 2 human clinical trial; (c) US$1,500,000 within 60 days of first patient enrolled
in a Phase 3 clinical trial; and (d) US$3,000,000 within 60 days of first commercial sale of a licensed product.
We may terminate the BWH License at any time on 90 days’ written notice, and either party may terminate the BWH License by written notice for
payment or other breach, subject to a 60 day cure period. Absent early termination the BWH License will remain in effect until the date on which all patents and
filed patent applications have expired or been abandoned.
C. Organizational Structure
The following table sets out details of the Company’s significant subsidiaries:
Name
Principal activity
Registered address
Percentage
shareholding
Country of
incorporation
Tiziana Life Sciences Ltd
Tiziana Pharma Limited
Tiziana Therapeutics Inc.
Longevia Genomics S.r.l.
Clinical stage biotechnology company 107 Cheapside, London EC2V 6DN
Clinical stage biotechnology company 107 Cheapside, London EC2V 6DN
Clinical stage biotechnology company
Biotechnology discovery company
420 Lexington Ave, Suite 1402
New York , NY 10170
Via Constantinopli 42
09100- Cagliria (CA)
100% England & Wales
100% England & Wales
100%
USA
100%
Italy
D. Property, Plant and Equipment
The below table contains information regarding existing or planned material tangible fixed assets owned or leased by Tiziana and its subsidiaries. We
believe that suitable additional or substitute space will be available as needed to accommodate any future expansion of our operations.
Location
14-15 Conduit Street
London W1S 2XJ, United Kingdom
601 New Britain Road
Building 100, Suite 102
Doylestown, PA, United States
3-year Lease
Annual lease
Tenure
Principal Use
Size
Principal Office
821 square feet
Research & Development Centre
408 square feet
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ITEM 4A: UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis of our financial condition and results of operations together with “Selected Consolidated
Financial Data” and our consolidated financial statements and the related notes thereto appearing at the end of this Annual Report. We present our
consolidated financial statements in U.S. dollars and in accordance with International Financial Reporting Standards, or IFRS, as issued by the International
Accounting Standards Board, or IASB.
Some information included in this discussion and analysis, including statements regarding industry outlook, our expectations regarding our future
performance, liquidity and capital resources and other statements regarding our plans and strategy for our business and related financing, are forward-looking
statements. These forward-looking statements are subject to numerous risks and uncertainties. You should read 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.
We maintain our books and records in Pounds Sterling, and we prepare our financial statements in accordance with IFRS as issued by the IASB. We
report our financial results in U.S. dollars.
Overview
Introduction to Tiziana
We are a biotechnology company that specializes in developing transformative therapies for neurodegenerative and lung diseases . Our clinical
pipeline includes drug assets for Secondary Progressive Multiple Sclerosis, ALS. Alzheimer’s, Crohn’s Disease and KRAS+ NSCLC.. Our lead product
candidate in immunology is Foralumab (TZLS-401), which we believe is the only fully human anti-CD3 monoclonal antibody, or mAb, in clinical
development. MAbs represent a single pure antibody produced by single clones and are an important class of human therapeutics for treating cancers and
autoimmune diseases. Generation of antibodies for use in humans developed in animals, leads to strong, immune responses limiting their effectiveness and
potentially leading to severe side effects. A process known as “humanization” removes most of the animal components of the antibody thereby lowering the
immune response from the human immune system. The entire omission of other animal material, as in fully human antibodies, is the optimal goal to avoid
incompatibility with the human immune system. Our lead product candidate in oncology is Milciclib (TZLS-201), which is an orally bioavailable, small
molecule broad spectrum inhibitor of cyclin-dependent kinases, or CDKs, and Src family kinases. CDKs are a highly conserved family of enzymes that
phosphorylate a specific group of proteins that are involved in regulating the cell cycle. The cell cycle is a series of events that takes place in cells leading to
division and duplication of its DNA to produce two daughter cells. Src family kinases are non-receptor tyrosine kinase proteins encoded by the Src gene also
involved in regulating cell growth and potential transformation of normal cells to cancer cells. We are developing a fully human mAb targeting the IL-6R
(TZLS-501) for which the intellectual property was licensed from Novimmune in January 2017. This fully human mAb has a novel mechanism of action,
binding to both the membrane-bound and soluble forms of the IL-6R as well as depleting circulating levels of the IL-6 in the blood. Excessive production of IL-
6 is regarded as a key driver of acute inflammation resulting from infection with viral agents such as Coronaviruses and of chronic inflammation, associated
with autoimmune diseases such as multiple myeloma, oncology indications and rheumatoid arthritis, and we believe that TZLS-501 may have potential
therapeutic value for these indications.
We employ a lean and virtual research and development, or R&D, model using highly experienced teams of experts for each business function to
maximize value accretion by focusing resources on the drug discovery and development processes. Our mission is to design and deliver next generation
therapeutics and diagnostics for oncology and immune diseases of high unmet medical need by combining deep understanding of disease biology with clinical
development expertise.
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We are developing Foralumab, for which we in-licensed the intellectual property from Novimmune SA, or Novimmune, in December 2014, as a
potential treatment for neurodegenerative diseases such as Secondary Progressive Multiple Sclerosis (SPMS), Crohn’s disease and delayed onset of Type I
Diabetes (T1D). On November 10, 2022, Tiziana announced a short-term focus on administration of intranasal Foralumab for treatment of neurodegenerative
diseases, especially SPMS, based on positive clinical findings of Expanded Access (EA) SPMS patients at Brigham and Women’s Hospital treated with
intranasal Foralumab for up to 1 year. As the only fully human engineered human anti-CD3 mAb in clinical development, Foralumab has significant potential
advantages such as a shorter treatment duration and reduced immunogenicity. We believe that oral or intranasal administration of Foralumab has the potential to
reduce inflammation while minimizing the toxicity and related side effects. To date, Foralumab has been studied in one Phase 1 and two Phase 2a clinical trials
conducted by Novimmune in 68 patients dosed by the intravenous route of administration. In these trials, Foralumab was observed to be safe and well-tolerated
and produced immunologic effects consistent with potential clinical benefit while demonstrating mild to moderate infusion related reactions, or IRRs. With
completion of the intravenous dosing for Phase 2a trial in Crohn’s Disease, Foralumab’s ability to modulate T-cell response enables potential extension into a
wide range of other autoimmune and inflammatory diseases, such as Graft versus Host Disease (GvHD), ulcerative colitis (UC), multiple sclerosis(MS), type-1
diabetes (T1D), inflammatory bowel disease (IBD), psoriasis (PSA) and rheumatoid arthritis (RA).
Foralumab is being developed as both an immunosuppressive and immunomodulatory agent, with therapeutic benefits of rendering T-cells unable to
orchestrate an immune response and induction of immune tolerance via maintenance of regulatory T-cells. There is further potential for Foralumab to be
combined with the Company’s TZLS-501, a fully human anti-IL-6R mAB in development to target autoimmune and inflammatory diseases.
In November 2016, Tiziana announced new data for oral efficacy in humanized mouse models with Foralumab, a major milestone and a potential
breakthrough for the treatment of NASH and autoimmune disease. This unique oral technology stimulates the natural gut immune system and potentially
provides a therapeutic effect in inflammatory and autoimmune diseases with greatly reduced toxicity. Positive therapeutic effects with Foralumab were
consistently demonstrated in animal studies conducted by Prof. Kevan Herold (Yale University) and Prof. Howard Weiner (Harvard University).
On April 16, 2018, Tiziana entered into an exclusive license agreement with The Brigham and Women’s Hospital, Inc. relating to a novel formulation
of Foralumab dosed in a medical device for nasal administration. An investigational new drug application (IND) for the first-in-human evaluation of the nasal
administration of Foralumab in healthy volunteers for progressive multiple sclerosis indication was filed in the second quarter of 2018. Subsequent to IND
approval, a single-site, double-blind, placebo-controlled, dose-ranging Phase 1 trial with nasally administered Foralumab at 10, 50 and 250 µg per day,
consecutively for 5 days to evaluate biomarkers of immunomodulation of clinical responses was initiated in November 2018. The trial conducted at the
Brigham and Women’s Hospital, Harvard Medical School, Boston, MA, in healthy volunteers. 18 subjects received Foralumab treatment and 9 patients received
placebo. The study was completed in September 2019. Phase 1 clinical data demonstrated that nasally administered Foralumab, was well-tolerated and no drug-
related safety issues were reported at any of the doses. No drug-related changes were observed in vital signs among subjects at predose, during treatment and at
discharge. Nasally administered Foralumab at the 50 µg dose suppressed cytotoxic CD8+ as well as perforin-secreting CD8+ cells, which have been implicated
in neurodegeneration in multiple sclerosis (MS). Treatment at 50 µg stimulated production of anti-inflammatory cytokine IL-10 and suppressed production of
pro-inflammatory cytokine IFN-γ. Taken together, the treatment showed significant positive effects on the biomarkers for activation of mucosal immunity,
which are capable of inducing site-targeted immunomodulation to elicit anti-inflammatory effects. . Systemic levels of Foralumab were below the lower
quantitation limit of 8 ng/mL suggesting that nasally administered Foralumab appears to exert its effects via nasal epithelium utilizing local and lymphatic
immune systems directly. These data support other clinical and pre-clinical studies showing that this route of administration is capable of inducing site-targeted
immunomodulation and anti-inflammatory effects. Furthermore, these pharmacodynamic data point to a clinical dose range that Tiziana intends to test in further
clinical development among MS patients.
On September 9, 2019, the FDA granted approval to initiate the Phase 1 clinical trials to evaluate the safety and pharmacokinetics of a novel enteric-
coated capsule formulation of oral Foralumab at 1.25, 2.5 and 5.0 mg/day as a single ascending dose study. The study was completed in December 2019 at
Brigham and Women’s Hospital (Boston, MA USA). A total of 12 subjects were enrolled; 9 received the single dose of foralumab and 3 received placebo. The
median age (range) for the oral foralumab subjects was 23 (21 – 55) years, and for the placebo subjects it was 34 (27 – 51). Of the foralumab subjects, 6 were
male and 3 were female. All 3 of the placebo subjects were female. No subjects discontinued the study. Formulated Foralumab powder blend encapsulated in
enteric-coated capsule was well-tolerated at all doses tested and there were no drug-related safety issues observed even at the highest dose of 5 mg in this trial.
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Tiziana initiated a Phase 1b clinical trial in Crohn’s disease patients to evaluate oral capsules of foralumab, a fully human anti-CD3 monoclonal
antibody. The revised protocol allowed for the study of a broader patient population and a shorter dosing period. These protocol amendments or revisions were
intended to expedite patient enrollment with study completion targeted for the fourth quarter of 2022. This study was the first multiple-dose study with orally
administered enteric-coated capsules of foralumab in patients with Crohn’s disease. Due to the refocus of the company after the first six months of 2022, this
study has been withdrawn.
A collaborative clinical trial was initiated on November 2, 2020 in Brazil investigating nasally administered Foralumab, either alone or in combination
with orally administered dexamethasone (“Dexa”) in COVID-19 patients. The clinical study was completed in collaboration with scientific teams at the Harvard
Medical School (Boston, USA), and INTRIALS, a full-service Latin American CRO based in São Paulo, Brazil. The objectives of the trial were to assess safety
of the treatment and to evaluate if progression of the diseases is delayed with nasally administered 100mcg/day Foralumab (50mcg/nostril). This study enrolled
39 patients randomized in three cohorts: cohort 1, control with no treatment (n=16); cohort 2; nasally administered Foralumab plus 3 days of priming with
orally administered 6 mg Dexamethasone (n=11) and cohort 3; nasally administered Foralumab (n=12). The Foralumab treatment regimen was once a day
dosing for 10 consecutive days. The trial was completed in January 2021. There were no significant differences between cohort 2 and 3. All treatments were
well-tolerated. There were no grade 3 or 4 severe adverse events (“SAEs”) in any of the cohorts. The CT scans of the lungs showed the improvement was
approximately double that shown in patients treated with Foralumab as compared to those in the control group. The results of the study were published in
the peer-reviewed journal, Frontiers in Immunology entitled “Nasal Administration of Anti-CD3 Monoclonal Antibody (Foralumab) Reduces Lung
Inflammation and Blood Inflammatory Biomarkers in Mild to Moderate COVID-19 Patients: A Pilot Study” in August 2021. This program has been temporarily
paused to pursue the short-term focus on clinical development of intranasal foralumab administration for treatment of SPMS patients.
On September 2, 2021 the Company and Precision BioSciences Inc announced an exclusive license agreement to explore Foralumab as an agent to
induce tolerance of allogeneic CAR T cells to potentially improve the clinical outcome of CAR T cell therapy. Precision’s approach to manufacturing produces
CAR T cells that are virtually CD3-negative. Foralumab will be used as a lymphodepletion or tolerizing agent, either alone or in combination with other co-
stimulatory molecules, to improve the long-term survival of CAR T cells in cancer treatment. Tiziana has completed manufacture of foralumab solution for
injection to be used by Precision Biosciences.
On May 25, 2021 the Company announced that the first expanded access (EA) patient with secondary progressive multiple sclerosis (SPMS) was
dosed with nasally administered Foralumab at the Brigham and Women’s Hospital (BWH), Harvard Medical School, Boston, MA. Nasal Foralumab 50 mcg (25
mcg/nostril) was administered in 3-week cycles, with 3 times/week dosing for the first 2 weeks followed by 1 week of rest period. This first-ever clinical study
in SPMS patients, under an Individual Patient Expanded Access IND, was to continue for six months to evaluate routine safety, tolerability, and neurological
behaviors. The study also examined microglial activation, by positron emission tomography (PET), immunological and neurodegenerative markers to assess
clinical responses following the dosing regimen
On March 10, 2022, the Company reported positive clinical data in the first EA SPMS patient following completion of six months of treatment with
intranasally administered foralumab, at the Brigham and Women’s Hospital (BWH), Harvard University, Boston, MA. In addition to being well-tolerated, both
biological and clinical improvements were seen in this patient using Tiziana’s novel immunotherapy technology, which, importantly overcame the challenge of
delivering this antibody across the blood-brain barrier to affect immunomodulation in the brain using nasal administration.
Foralumab was given to an EA SPMS patient intranasally into each nostril on a regimen of M-W-F for two weeks followed by one week off therapy
for a period of six months. This regimen was well-tolerated with associated beneficial clinical and biomarker changes. Importantly, the PET imaging data
indicated inhibition of microglial cell activation observed at 3 months following treatment initiation and was sustained at 6 months after treatment start (see
Table 1). The reduction in microglial activation was seen in all parts of the brain.
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Table 1. Percent Reduction* in Activated Microglial Cells (AMCs) PET Signal After Starting Intranasal Foralumab as Compared to Baseline, in
Whole Brain and Selected Brain Regions
3 MONTHS
6 MONTHS
WHOLE
BRAIN
CEREBRAL
CORTEX
THALAMUS
WHITE
MATTER
CEREBELLUM
-23%
-38%
-23%
-38%
-20%
-50%
-25%
-36%
-22%
-38%
*
Percent reduction is based on changes from baseline in SUVR-1, a surrogate index for PET binding potential. SUVR=Standardized Uptake Value Ratio,
calculated with reference to a pseudo reference region in cerebral white matter that showed minimal change in PET SUV, across time points.
Consistent with clinical and PET observations, intranasally administered foralumab also downregulated serum levels of pro-inflammatory cytokines,
including interferon-gamma (IFN-g), interleukin (IL-18), IL-1β and IL-6, which are associated with multiple sclerosis pathogenesis and progression. Clinical
evaluation showed improvement in Timed 25-Foot Walk Test (T25FW), 9-Hole Peg Test (9HPT) and Symbol Digit Modality Test (SDMT). Other published
PET studies have shown an increase in activated microglial cells (AMCs) in patients with secondary progressive MS (SPMS), and the increase in AMCs
associated with higher scores on the Expanded Disability Status Scale (EDSS), a widely-used scale to measure disability1,2. Several FDA-approved drugs, such
as TYSABRI®, MAYZENT® and ZEPOSIA® have been shown to suppress microglial activation and exert neuroprotective effects in the central nervous
system (CNS) in animal studies but longitudinal assessment of drug effects on microglial activation in exclusive cohorts of SPMS patients are lacking.
Prior to treatment, this patient had continued to experience worsening disease progression despite several MS therapies, including B cell depletion. The
patient’s gait and limb strength had been deteriorating over the prior two years. The patient then started on intranasal foralumab, which stabilized his disease
course. Tiziana also received FDA authorization to continue treating this patient for an additional 6 months to determine if 12 months of consistent treatment
maintains clinical stabilization and provides sustained clinical benefits.
On January 20, 2022, FDA approved enrollment of a second EA SPMS patient for treatment with intranasal foralumab.
These data were presented in a virtual Key Opinion Leader (KOL) event hosted by Tiziana on March 14th, 2022, entitled “Foralumab Clinical Update
in Multiple Sclerosis; A Landmark Study with Intranasal Immunotherapy” featuring four Key Opinion Leaders and a live Q&A session. The company plans to
continue treatment of EA SPMS patients at Brigham and Women’s Hospital and elsewhere and continue evaluation of foralumab treatment.
On April 5, 2022, Tiziana announced that FDA granted permission to enroll up to eight additional (SPMS) patients in Intermediate Size Patient
Population in the EAP with intranasal foralumab. As part of the original treatment plan, the foralumab dose will remain 50 mcg three times a week (MWF),
which is the same dose administered previously to the first two SPMS patients. The dosing regimen in this IND also has a provision for dose escalation up to
100 mcg three times a week (MWF) as an option to improve clinical benefit, if needed.
Data from a Secondary Progressive Multiple Sclerosis patient treated with intranasal foralumab were presented on June 2, 2022 at the consortium of
multiple sclerosis centers (CMSC) 2022 annual meeting. Dr. Tanuja Chitnis, MD, Professor of Neurology and the Principal investigator of the clinical study at
the at the Brigham and Women’s Hospital (BWH), Boston, MA., presented a poster discussing clinical data from a patient with SPMS, who was treated with
intranasal foralumab for six months.
On June 8, 2022, Tiziana announced positive clinical results for the second patient (EA2) in the non-active SPMS Expanded Access (EA) Program
following three months of dosing with intranasal foralumab. These results confirm the previously reported data, from the first non-active SPMS patient (EA1)
that after three months of treatment, intranasal foralumab. was well-tolerated and improved clinical and PET imaging analyses. The second patient was
diagnosed with SPMS in 2014. Since then, the disease has been progressive, resulting in an accumulation of disability. Patient EA2 started ocrelizumab in 2018
and stopped this treatment in 2021. During this time EA2’s non-active SPMS progressed as measured by EDSS worsening from 3.5 in 2018 to 6.0 in 2021. At
this point in time EA2 needed a cane to walk 100 meters. Patient EA2 was subsequently enrolled in the intranasal foralumab expanded access program.
On September 2022, 8 months after starting treatment with intranasal foralumab, EA2 was able to walk 100 meters without a cane or need to rest. This
improved the EDSS from 6.0 to 5.5. EA2’s pyramidal score remained stable during this time. In December 2022, 11 months after starting treatment with
intranasal foralumab, EA2 was able to walk 200 meters without a cane or need to rest, resulting in further improvement in EDSS from 5.5 to 5.0. EA2’s
pyramidal score continued to remain stable. Lastly preliminary reading of EA2’s 11-month PET Scan (December 2022) demonstrated improvement in
microglial activation over baseline.
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On September 20, 2022, Tiziana announced that the second patient (“EA2”) with non-active secondary progressive multiple sclerosis (SPMS)
receiving intranasal foralumab had shown additional clinical improvements as measured by the Expanded Disability Status Scale (EDSS), a standard clinical
assessment.
On October 12, 2022, Tiziana announced that it planned to submit an Investigational New Drug Application (IND) for a Phase 1 Trial of intranasal
foralumab in Alzheimer’s disease patients after receiving an affirmative written response from the FDA on a Pre-Investigational New Drug Application (PIND).
Tiziana plans on filing the IND for Alzheimer’s disease by the third quarter of 2023 upon the completion of requested toxicology studies, then starting its Phase
1 program by the end of 2023.
On November 2, 2022, Tiziana announced the completion of enrollment of the first patient cohort in its Intermediate Size Patient Population Expanded
Access Program to evaluate foralumab in non-active SPMS patients.
On November 10, 2022, Tiziana announced its near-term focus on developing intranasal foralumab for inflammatory diseases of the Central Nervous
System (CNS) such as non-active SPMS, Alzheimer’s disease and amyotrophic lateral sclerosis (ALS).
On November 23,2022, Tiziana announced publication of a scientific article in the peer-reviewed journal Frontiers in Immunology entitled “Nasal
administration of anti-CD3 monoclonal antibody modulates effector CD8+ T cell function and induces a regulatory response in T cells in human
subjects”. The study was completed by researchers at the Brigham and Womens Hospital (BWH) and Harvard Medical School. The goal of the study was to
assess safety and the immune effects of an entirely human, previously uncharacterized nasal anti-CD3 mAb (foralumab) in humans and it’s in vitro stimulatory
properties. The findings support Tiziana’s intranasal foralumab platform as a new modality for the treatment of autoimmune and CNS diseases.
On January 3, 2023, Tiziana announced that the second patient (“EA2”) with na-SPMS receiving intranasal foralumab exhibited additional clinical
improvements since their last reported improvement in September 2022. The improvements were measured by EDSS. Before foralumab treatment, EA2’s non-
active SPMS disability had progressed and EDSS worsened from 3.5 in 2018 to 6.0 in 2021 despite ocrelizumab therapy. Ocrelizumab was discontinued in
2021. At this point, EA2 required a cane to walk 100 meters. EA2 was subsequently enrolled in the intranasal foralumab Expanded Access program in January
2022. In September 2022, 8 months after starting treatment with nasal foralumab, EA2 was able to walk 100 meters without a cane. EDSS score improved from
6.0 to 5.5. EA2’s pyramidal score remained stable during this time. In December 2022, 11 months after starting treatment with intranasal foralumab, EA2 was
able to walk 200 meters without a cane, resulting in an even greater improvement in EDSS; with EDSS falling from a score of 5.5 to 5.0. EA2’s pyramidal score
continued to remain stable.
On March 8, 2023, Tiziana announced a publication in the preeminent1 journal, Proceedings of the National Academy of Sciences (PNAS), that
illustrates the immunological basis of the mechanism of action (MoA) for intranasal foralumab.
On March 28, 2023, Tiziana announced it has received feedback based on the U.S. Food and Drug Administration (FDA) Type C meeting minutes
related to the Phase 2 clinical trial of intranasal foralumab in patients with na-SPMS. Tiziana plans to accept the FDA’s recommendations and intends to start a
Phase 2 study in the third quarter of 2023.
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On April 4, 2023, Tiziana announced pre-clinical data on the effects of intranasal anti-CD3 monoclonal antibody in a model of intracerebral
hemorrhage (hemorrhagic stroke) demonstrating a behavioral outcome improvement at one month. The data showed that modulation of neuroinflammation by
induction of FoxP3+ Tregs appeared to have beneficial effect in intracerebral hemorrhage. Dr. Saef Izzy presented this data from the podium on April 23, 2023
at the Neurocritical Care Scientific Platform Session at the prestigious Annual American Academy of Neurology (AAN) conference in Boston, MA.
On April 13, 2023, Tiziana announced it’s plans to investigate intranasal foralumab for the treatment of Long COVID. The work is supported by
foralumab’s well-established role in de-activating microglia cells, a key component in the pathogenesis of this disease. The company intends to enter into a
Phase 2a, placebo-controlled trial following positive feedback from the FDA.
On April 20,2023, Tiziana announced its plan to submit an IND for intranasal foralumab in patients with mild to moderate Alzheimer’s Disease in Q2
2023. Tiziana is also seeking $3,000,000 in non-dilutive funding from a prestigious Alzheimer’s foundation to support the Phase 2a trial. It is expected that this
funding application will receive a response in Q3 2023.
On June 5, 2023, Tiziana announced 3-month PET scan results from the first patient cohort in its Intermediate Size Patient Population Expanded
Access Program. Data showed a reduction in microglial activation in 3 out of 4 patients confirming that previously reported in the first two EA patients.
Overall, 5 of the 6 na-SPMS patients treated with intranasal Foralumab in its Expanded Access program have exhibited a reduction in microglial activation.
On June 5, 2023, Tiziana announced 3-month PET scan results from the first patient cohort in its Intermediate Size Patient Population Expanded
Access Program. Data showed a reduction in microglial activation in 3 out of 4 patients confirming that previously reported in the first two EA patients.
Overall, 5 of the 6 na-SPMS patients treated with intranasal Foralumab in its Expanded Access program have exhibited a reduction in microglial activation.
On August 15, 2023, Tiziana announced that the U.S. Food and Drug Administration (FDA) has cleared the Investigational New Drug (IND)
application for intranasal Foralumab to be studied in Alzheimer’s disease. The clinical trial will be overseen by Brigham and Women’s Hospital.
On August 24, 2023, Tiziana announced an oral presentation by Howard Weiner, MD entitled “Nasal anti-CD3 mAb induces Tregs that dampen
microglial activation and treat neuroinflammatory diseases including MS, AD and ALS” at the 16th International Society of Neuroimmunology (ISNI)
Congress in Quebec City, Canada, held on August 21-24, 2023.
On September 6, 2023, Tiziana announced acceptance of a publication entitled, “Nasal Administration of anti-CD3 monoclonal antibody (mAb)
ameliorates disease in a mouse model of Alzheimer’s disease”, in the journal, Proceedings of the National Academy of Sciences (PNAS), validating foralumab’s
mechanism of action (MOA) as a potential treatment for Alzheimer’s disease (AD), a difficult-to-treat neuroinflammatory disease. This was the second
publication pertaining to intranasal administration of anti-CD3 monoclonal antibody in 2023 to be published in PNAS. This study shows that intranasal anti-
CD3 ameliorates disease in a rodent model of AD by targeting microglial activation in the brain and brain gene expression independent of affecting amyloid
beta deposition. These studies identify a novel approach to treat Alzheimer’s disease.
On September 26, 2023, Tiziana announced initiation of the Phase 2a multicenter clinical trial for treatment of non-active Secondary Progressive
Multiple Sclerosis (na-SPMS) patients with intranasal Foralumab. Tiziana announced that it held an Investigator’s Meeting with principal investigators at
Brigham and Women’s Hospital to begin site initiation for the clinical trial. In total, six to ten new clinical trial sites will be recruited.
On October 11, 2023, Tiziana announced a late breaking poster entitled, “Treatment Of Six Non-Active Secondary Progressive MS With Nasal Anti-
CD3 Monoclonal Antibody (Foralumab): Safety, Biomarker, And Disability Outcomes”, that was presented at the 39th Congress of the European Committee for
Treatment and Research of Multiple Sclerosis (ECTRIMS) held in Milan, Italy, October 11-13, 2023.
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On October 13, 2023, Tiziana announced that a reduction in activated microglia, as seen in six-month Positron Emission Tomography (PET) scans,
was observed in a total of five of the six patients with non-active secondary-progressive multiple sclerosis treated with intranasal foralumab in its Expanded
Access Program (EAP). Activated microglia play a prominent role in the pathogenesis of neuroinflammatory and neurodegenerative diseases including multiple
sclerosis, Alzheimer’s disease, and amyotrophic lateral sclerosis, or ALS.
On October 16, 2023, Tizana announced announced six-month data showing positive clinical improvements related to Modified Fatigue Impact Scale
(MFIS) scores and similar important clinical measures of physical function in foralumab-treated, non-active Secondary Progressive Multiple Sclerosis patients
participating in an Expanded Access (EA) Program. This follows on from previously announced positive six-month PET scan data which was presented at
ECTRIMS 2023.
The findings, which are summarized in Table 1 below, show broad-based six-month improvements across various key measures for multiple sclerosis.
Secondary progressive multiple sclerosis is hallmarked by an increase of disability over time. The table below shows a stabilization or an improvement in
physical function of the various clinical measures over a six-month period. Various degrees of improvement were also observed in the Expanded Disability
Status Scale (EDSS), Timed 25-Foot Walk Test (T25FW), pyramidal function scores and NeuroQoL Fatigue scores in a disease state that typically shows a
decline in function over time.
Table 1. Six Month Test Scores in Expanded Access na-SPMS Patients
EA Patient
EA1
EA2
EA3
EA4
EA5
EA6
— Denotes stabilization
↓ Denotes improvement
EDSS
—
↓
—
↓
—
—
Pyramidal
score
↓
—
—
—
↓
—
T25FW MFIS
—
↓
↓
—
↓
—
—
↓
—
↓
↓
↓
Fatigue, as measured above in MFIS, refers to an overwhelming sense of physical, mental, and emotional exhaustion that is disproportionate to the
level of activity or effort exerted. It is a major, common, and often debilitating symptom experienced by many individuals with MS. It differs from the typical
tiredness that everyone experiences from time to time. In the context of MS, it is called ‘primary fatigue’ and is a direct result of damage to the central nervous
system. This kind of fatigue can significantly impact a person’s daily life and functioning.
On October 18, 2023, Tiziana announced that the U.S. Food and Drug Administration (FDA) had allowed multiple sclerosis patients to take home and
self-administer Intranasal Foralumab. Delivery Device Training materials have been developed and refined in collaboration with the FDA, and patients trained
in the use of the nasal device in accordance with these materials. Patients in the Expanded Access program that have been exposed to intranasal foralumab for
more than 1 year have demonstrated acceptable tolerability and safety. At-Home Dosing is likely to Improve patient compliance to treatment and outcomes.
On November 1, 2023, Tiziana announced that Chief Operating Officer and Chief Medical Officer, Matthew Davis, MD, RPh, will present at BIO-
Europe, Munich, Germany, November 6-8, 2023. The presentation will be primarily focused on the recent clinical updates of intranasal foralumab, for the
treatment of non-active secondary progressive multiple sclerosis and other neuroinflammatory and neurodegenerative diseases such as Alzheimer’s.
On November 20, 2023, Tiziana announced that the company had successfully enrolled and dosed four new patients with non-active secondary
progressive multiple sclerosis in the Brigham and Women’s Hospital’s Expanded Access pgrogam. A total of ten patients are now being followed in the EA
Program.
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On December 19, 2023, Tiziana announced “first patient dosed” in its Phase 2a study comparing two doses of intranasal Foralumab and placebo in
patients with non-active secondary-progressive multiple sclerosis. Six investigational centers have been recruited for this double-blind, placebo-controlled trial,
with up to 18 patients per treatment arm. The primary endpoint of the trial will be the change in microglial activation based on PET scans. Clinical evaluations
include the Expanded Disability Status Scale (EDSS), QoL assessments, and the Modified Fatigue Impact Scale (MFIS), which assess parameters that are
essential to a patient’s everyday life. Novel immuno-biomarkers will be measured also and assessed for predictive relevance. Central review of PET scans and
images is an integral component of this study.
During 2022, Tiziana completed compatibility, stability and characterization studies of Foralumab nasal solution in unit dose devices for nasal
administration. Compatibility, stability and characterization studies of Foralumab intranasal solution in multi dose device for intranasal administration will be
completed in Q1 2023.
We are evaluating administrations of Foralumab to delay onset and progression of T1D in at-risk individuals. T1D is characterized as a chronic and
progressive autoimmune disease leading to the destruction of insulin-producing β-cells of the pancreas. Teplizumab (Provention Bio), a humanized Fc-mutated
anti-CD3 monoclonal antibody that alters the function of the T-lymphocytes that mediate the destruction of the insulin-producing β-cell is seeking FDA
approval. The Company believes that Foralumab, a fully human anti-CD3 mAb, would have a better safety profile and clinical benefit than Teplizumab based
on Foralumab’s fully human protein sequence and binding affinity for CD3e compared to Teplizumab. cGMP manufacturing of Foralumab solution for
subcutaneous injection was initiated in April 2022 and IND submission is anticipated in 2023. This program has been temporarily paused to pursue the short-
term focus on clinical development of intranasal Foralumab administration for treatment of SPMS patients.
In 2022, Tiziana initiated five Good Laboratory Practice (GLP) safety toxicology studies of Foralumab administered intranasally and subcutaneously
in HuGEMM CD3 transgenic mice. The five studies consisted of three intranasal toxicology studies of 14 days, 13 weeks and 26 weeks dosing duration and
two subcutaneous safety toxicology studies of 14 days and 28 days dosing duration. On December 15, 2022 the Company announced that it had successfully
completed the 13-week toxicology trial and that intranasal Foralumab was well-tolerated.
In addition, on August 18, 2020 the United States Patent and Trademark Office, or USPTO, granted us a patent on use and methods of treatment of
Crohn’s disease with Foralumab, its proprietary fully human monoclonal antibody, and all other anti-CD3 mAbs. The CD3 (cluster of differentiation 3) is a
protein complex on T-cells, which is important for the regulation of the immune system. The patent was published by the USPTO on September 1, 2020 as
Patent No. 10,759,858. Recently, we also announced the issuance of the first-ever patent on oral administration of anti-CD3 mAbs for treatment of human
diseases (Patent No. 10,688,186). We believe the grant of this additional composition-of-matter and use patent further strengthens our intellectual property,
consisting of proprietary technologies on oral and nasal administration of Foralumab and other anti-CD3 mAbs for the treatment of human diseases.
On July 16, 2020, we announced that we had submitted a patent application on the potential use of Foralumab, a fully human anti-CD3 mAbs, to
improve success of chimeric antigen receptor T-cell, or CAR-T, therapy for cancer and other human diseases. The patent application conveys inventions related
lymphodepletion to improving CAR-T expansion and/or survival using anti-CD-3 mAbs administered either alone or in combination with other co-stimulatory
molecules, such as an anti-IL-6R mAb, an anti-CD28 mAb or specific inhibitors of signaling pathways of phosphatidylinositol 3-kinase (PI3K), protein kinase
B (AKT), or mammalian target of rapamycin (mTOR).
On July 31, 2020, we announced that we had submitted a patent application for the potential use of nasally administered Foralumab, a fully human
anti-CD3 mAb, for the treatment of COVID-19 either alone or in combination with other anti-viral drugs. Recent clinical studies implied that a combination of
anti-inflammatory and anti-viral drugs may be more effective to treat patients at different stages of COVID-19 disease.
We are developing a fully human mAb targeting the IL-6R (TZLS-501) for which the intellectual property was licensed from Novimmune in January
2017. This fully human mAb has a novel mechanism of action, binding to both the membrane-bound and soluble forms of the IL-6R as well as depleting
circulating levels of the IL-6 in the blood. Excessive production of IL-6 is regarded as a key driver of acute inflammation resulting from infection with viral
agents such as Coronaviruses and of chronic inflammation, associated with autoimmune diseases such as multiple myeloma, oncology indications and
rheumatoid arthritis, and we believe that TZLS-501 may have potential therapeutic value for these indications.
In preclinical studies, TZLS-501 demonstrated the potential for overcoming the limitations of other IL-6 blocking pathway drugs. Compared to
tocilizumab and sarilumab, while binding to the membrane-bound IL-6R complex, TZLS-501 has been observed to have a higher affinity for the soluble IL-6
receptor from antibody binding studies conducted in cell culture. TZLS-501 also demonstrated the potential to block or reduce IL-6 signaling in mouse models
of inflammation. The soluble form of IL-6 has been implicated to have a larger role in disease progression compared to the membrane- bound form (Kallen,
K.J. (2002). “The role of trans-signaling via the agonistic soluble IL-6 receptor in human diseases.” Biochimica et Biophysica Acta. 1592 (3): 323–343.)
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The Company is developing TZLS-501 for treatment of SSc-ILD. Tocilizumab (Actemra®, Roche) a humanized interleukin-6 (IL-6) receptor mAb
antagonist. was approved by the FDA as a subcutaneous injection for slowing the rate of decline in pulmonary function in adult patients with systemic sclerosis-
associated interstitial lung disease (SSc-ILD), a debilitating condition with limited treatment options. Actemra® is the first biologic therapy approved by the
FDA for the treatment of the disease.
On April 9, 2020 The Company announced that it had developed investigational new technology to treat COVID-19 infections, consisting of direct
delivery of anti-IL-6 receptor (anti-IL-6R) monoclonal antibodies (mAbs) into the lungs using a handheld inhaler or nebulizer for treatment of patients infected
with COVID-19 (SARS-CoV-2) coronavirus. On June 29, 2020 the Company announced that it was advancing GMP manufacturing of TZLS-501 with STC
Biologics concurrently with the development of inhalation technology using a hand-held nebulizer with Sciarra Laboratories and safety toxicology studies in
Cynomolgus monkeys with ITR Canada Laboratories. GMP batches were initiated in January 2021 and completed in March 2021. Safety inhalation toxicology
studies were initiated in November 2020 and completed in March 2021. Technological assessment of nebulizers for inhalation treatment of patients was
initiated in September 2020 and completed in February 2021. An additional 240L cGMP batch of TZLS-501 drug substance was manufactured using an
improved downstream process to support future development activities in June 2022. An IND for a Phase 1 Clinical Trial in Healthy Subjects for treatment of
interstitial lung disease associated with systemic sclerosis (SSc ILD) was filed in December 2022. This program has been temporarily paused to pursue the
Company’s short-term focus on clinical development of intranasal foralumab administration for treatment of SPMS patients.
We are developing Milciclib, for which we in-licensed the intellectual property from Nerviano Medical Sciences S.r.l., or Nerviano, in January 2015,
as a potential treatment for pan KRAS mutations in NSCLC patients.
To date, Milciclib has been studied in a total of eight completed Phase 1 and 2 clinical trials in 316 patients.
Cumulative Patient Exposure in Completed Milciclib Clinical Studies:
Clinical Study
CDKO-125a-001 Phase 1
CDKO-125a-002 Phase 1 / Phase 2
CDKO-125a-003 Phase 1
CDKO-125a-004 Phase 1
CDKO-125a-005/-0061/-0071 Phase 2
Drug
Milciclib
Milciclib
Milciclib
Milciclib + gemcitabine
Milciclib
CDKO-125a-010 Phase 2
Milciclib
Indication
Solid tumors
Malignant glioma (Phase 1)
Glioblastoma (Phase 2)
Solid tumors
Solid tumors
Malignant Pleural
Mesothelioma (-005)
Thymic carcinoma and malignant thymoma (-0061 and
-0071)
HCC monotherapy
Total Patients Exposed
Number of
Patients
Treated
37
62
30
16
140
31
316
Source: Development Safety Update Report No. 8, February 28, 2019, Tiziana Life Sciences PLC; Investigator Brochure, Version 14, 2019.
In these trials, Milciclib was observed to be well-tolerated and showed initial signals of anti-tumor action. Prior to in-licensing, Milciclib was granted
orphan designation by the European Commission and by the U.S. Food and Drug Administration (“FDA”) for the treatment of malignant thymoma and an
aggressive form of thymic carcinoma in patients previously treated with chemotherapy. In two Phase 2a trials, CDKO-125a-006 and CDKO125a-007, Milciclib
showed signs of slowing disease progression and acceptable safety.
In the first half of 2017, the Group initiated a Phase 2a trial (CDKO-125a-010) of Milciclib to explore safety, tolerability and antitumor activity of
milciclib as a single therapy in Sorafenib-resistant patients with unresectable or metastatic HCC and good liver function.. Typically, this population of patients
have an advanced form of the disease with poor prognosis and an average overall survival expectancy of 3-5 months. The compound was administered as home-
based treatment at the dose of 100 mg/day for 4 consecutive days a week in a 4-week cycle (4 days on/3 days off x q4 wks) for a total of 24 weeks. The Phase
2a trial was completed in June 2019 with clinical safety result reported in July 2019 and efficacy results reported in September 2019. The drug was well
tolerated and the trial met clinical endpoints.
Since overexpression of CDKs and dysregulation in pRB pathway (regulates transcription factors critical for cell cycle progression) are prominently
associated with tumor cell resistance to certain chemotherapeutic drugs, inhibition of multiple CDKs is an appealing approach to improve clinical responses in
cancer patient’s refractory to existing treatment options. A Phase 1 dose-escalation study of Milciclib in combination with gemcitabine in patients with
refractory solid tumors exhibited clinical activity in patients including those refractory to gemcitabine. Milciclib shows inhibitory effects against multiple cell
lines with mutationally active G12D (non-small cell lung carcinoma), G13D (colorectal cancer), G12V(pancreatic cancer), and G12C (pancreatic cancer The
Company also intends to evaluate milciclib in combination with gemcitabine for treatment of pan KRAS mutations in NSCLC patients. cGMP manufacturing of
milciclib capsules was completed in January 2022 and IND filing was completed on December 15, 2022. This program has been temporarily paused to pursue
the short-term focus on clinical development of intranasal foralumab administration for treatment of SPMS patients.
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Since our inception in March 2014, we have devoted substantially all our resources to conducting preclinical studies and clinical trials, organizing and
staffing our company, business planning, raising capital and establishing our intellectual property portfolio. We do not have any products approved for sale and
have not generated any revenue from product sales. We have funded our operations to date primarily with proceeds from the sale of ordinary shares. Through
December 31, 2022, we had received net cash proceeds of $118.5m million from sales of our ordinary shares, issuance of convertible loans, short term loans
and warrants.
Since our inception, we have incurred operating losses. Our net loss after taxation was $17.5 million for the year ended December 31, 2023, $15.4
million for the year ended December 31, 2022 and $26.7m for the year ended December 31, 2021 respectively. As of December 31, 2023, we had cash and cash
equivalents of $1.2 million.
We expect to continue to incur significant expenses for the foreseeable future as we advance our product candidates through preclinical and clinical
development and seek regulatory approval and pursue commercialization of any approved product candidates. In addition, if we obtain marketing approval for
any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.
Trend information
Recent developments
Legal proceedings
From time to time, we may be a party to litigation or subject to claims incident to the ordinary course of business. Although the results of litigation and
claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on
our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management
resources and other factors. We are not currently a party to any material legal proceedings.
Foreign currency translations
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the
functional currency). The consolidated financial statements are presented in U.S. dollars, which is our presentation currency.
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognized in the income statement.
The financial statements of overseas subsidiary undertakings are translated into U.S. dollars on the following basis:
● Assets and liabilities at the rate of exchange ruling at the year-end date.
● Profit and loss account items at the average rate of exchange for the year.
Exchange differences arising from the translation of the net investment in foreign entities, borrowings and other currency instruments designated as
hedges of such investments, are taken to equity (and recognized in the statement of comprehensive income) on consolidation.
Components of Our Results of Operations
Revenues
To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the near future.
If our development efforts for our product candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales.
Any ad hoc sublicensing revenues have been treated as other income.
Operating Expenses
Research and Development Expenses
R&D expenses consist primarily of costs incurred in connection with the R&D of our product candidates and are expensed as incurred. These expenses
consist of:
● expenses incurred under agreements with CROs, CMOs, as well as investigative sites and consultants that conduct our clinical trials, preclinical
studies and other scientific development services;
● manufacturing scale-up expenses and the cost of acquiring and manufacturing materials for preclinical studies and clinical trial materials;
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● employee-related expenses, including salaries, related benefits, travel and share-based compensation expense for employees engaged in R&D
functions;
● costs related to compliance with regulatory requirements;
● facilities costs, depreciation and other expenses, which include rent and utilities; and
● fees for maintaining our third-party licensing agreements.
We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by
our service providers.
Our direct R&D expenses are tracked on a program-by-program basis for our product candidates and consist primarily of external costs, such as fees
paid to outside consultants, CROs and CMOs in connection with our preclinical development, manufacturing and clinical development activities. Our direct
R&D expenses by program also include fees incurred under our license agreements. We do not allocate employee costs or facility expenses, including
depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified.
We use internal resources primarily to oversee the R&D as well as for managing our preclinical development, process development, manufacturing and clinical
development activities. These employees work across multiple programs and, therefore, we do not track their costs by program.
The table below summarizes our R&D expenses incurred by program:
Direct research and development expense by program:
Foralumab
Milciclib
TZLS-501
ACT-D
CAR-T
StemPrintER
Total direct research and development expense
Indirect research and development expense
Total research and development expense
Year ended December 31,
2023
2022
2021
2020
7,570 $
80
355
54
54
-
8,113 $
(in thousands)
8,962 $
111
3,785
50
47
-
12,955 $
3,372 $
1,175
8,556
74
31
-
13,208 $
8,113 $
12,955 $
13,208 $
$
$
$
1,346
364
4,167
62
-
54
5,993
-
5,993
R&D 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 and related product
manufacturing expenses. As a result, we expect that our R&D expenses will increase substantially over the next several years as we increase personnel costs and
prepare for regulatory filings related to our product candidates. We also expect to incur additional expenses related to milestone, royalty payments and
maintenance fees payable to third parties with whom we have entered into license agreements to acquire the rights related to our product candidates.
The successful development and commercialization of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know
the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates or when,
if ever, material net cash inflows may commence from any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated
with development and commercialization, including the uncertainty of:
● the scope, progress, outcome and costs of our preclinical development activities, clinical trials and other R&D activities;
● establishing an appropriate safety profile with IND- and CTA-enabling studies;
● successful patient enrollment in, and the initiation and completion of, clinical trials;
● the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
● establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
● development and timely delivery of commercial-grade drug formulations that can be used in our clinical trials and for commercial launch;
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● obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
● significant and changing government regulation;
● launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; and
● maintaining a continued acceptable safety profile of the product candidates following approval.
We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials.
We may elect to discontinue, delay or modify clinical trials.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, related benefits, travel and share-based compensation expense for personnel in
executive, finance and administrative functions. General and administrative expenses also include professional fees for legal, consulting, accounting and audit
services.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research
activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, director
and officer insurance costs, as well as investor and public relations expenses associated with being a public company.
Impairment of an asset
This is an extraordinary expense item for 2020 and includes the expenses for the impairment of a non-current asset.
Disposal of Intellectual Property
This is an extraordinary expense item for 2020 and includes the expenses related to the disposal of intellectual property during the year.
Other Income (Expense)
Other expense consists of interest on a convertible loan note and income received from a partnership agreement.
Taxation
The tax income for a period represents the total of current taxation and deferred taxation. The charges in respect of current taxation are based on the
estimated taxable profit for the relevant year. Taxable profit for the year is based on the profit as shown in the income statement, as adjusted for items of income
or expenditure which are not deductible or chargeable for tax purposes. The current tax liability for the year is calculated using tax rates which have either been
enacted or substantively enacted at the relevant balance sheet date.
Under UK tax legislation, small and medium entity R&D relief allows us to claim back up to 14.5% of our surrenderable losses as a tax cash credit.
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A. Results of Operations
The results of operations that follow reflect the historic periods under review and should not be taken as indicative of future performance.
Comparison of Years Ended December 31, 2023 and 2022
The following tables summarizes our results of operations for the years ended December 31, 2023 and 2022:
Operating Expenses
Research and Development
Operating expenses
Realization bonus
Total operating expenses
Loss from operations
Other income/(expense):
Finance Income/(expense)
FV Loss on Investment
Other income
Total other income/(expense)
Loss from operations before income taxes
Income tax credit
Loss for the year
Other Comprehensive loss:
Gain/(Loss) on currency translation
Comprehensive loss
Research and Development Expenses
2023
Year ended December 31,
2022
(in thousands)
Change
(8,113)
(9,871)
-
(17,984)
(12,955)
(1,638)
-
(14,593)
4,842
(8,233)
-
(3,391)
(17,984)
(14,593)
(3,391)
1,144
(402)
-
742
(7)
(869)
65
(811)
1,151
467
(65)
1,553
(17,242)
(15,404)
(1,838)
(449)
-
(449)
(17,691)
(15,404)
(2,287)
1,492
(3,582)
(16,199)
(18,986)
5,074
2,787
Research and development activities were $8.1 million for the year ended December 31, 2023 compared to $12.9 million for the year ended December
31, 2022 a decrease of $4.8 million. The decrease in cost is a result of focused expenditure on initiating a Phase 2 trial for foralumab in patients with non-active
secondary progressive multiple sclerosis and developing and initiating the open label expanded access program in the same indication, offset by the absence of
manufacturing costs on TZLS-501.
General and Administrative Expenses
Operating expenses were $9.8 million for the year ended December 31, 2023 as compared to $1.6 million for the year ended December 31, 2022, an
increase of $8.2 million. The increase in operating expenses is a result of a increase in in option related expenses of $2m due to a large number of forfeitures in
2022, an increase in public relation and investor relations expense of $1.0m, an increase in travel expenses of $0.3m, an increase in directors fees due to
additional fees and a bonus to the chairman of $0.2m and a $4.7m net loss due to unfavorable foreign exchange movements.
Other Income/(expense), net
There was finance income during the year of $0.74m for the year ended December 31, 2023. There was a gain of $0.6m due to the change in fair value
of the company’s investment in Okyo Pharma Ltd, a related party. The share price for 2.1m shares, on December 31, 2023, was $1.77 compared to the
investment price of $1.50. There were financing fees and interest received for Okyo Pharma Ltd. $1.13m and Rasna Therapeutics Inc, a related party, $0.02.m.
There was a loss of $1m due to a change in fair value of the company’s investment in Accustem Sciences Inc., a related party. The share price for 1.3m shares
on December 31, 2023, was $0.63 per share compared to the investment price of $2 per share. There was lease interest paid of $0.01m.
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Income Tax Credit
A R&D tax expense was recognized for the year ended December 31, 2023 as the provisions for 2021 and 2023 were adjusted in accordance with
HMRC.
Comparison of Years Ended December 31, 2022 and 2021
The following tables summarizes our results of operations for the years ended December 31, 2021 and 2022:
Operating Expenses:
Research and development
General and administrative
Realization bonus
Impairment of asset
Disposal of Intellectual Property
Total Operating Expenses
Other Income/ (Expense)
Finance Income/(Expense)
Tax credit
Net Loss
Other comprehensive loss:
Foreign currency translation adjustment
Total Comprehensive (Loss)
Research and Development Expenses
2022
Year Ended December 31,
2021
(in thousands)
Change
$
$
$
(12,955) $
(1,638) $
-
-
-
(14,593) $
33
(844)
-
(13,208) $
(13,311) $
(855)
-
-
(27,374) $
(176)
893
3,240
253
11,673
855
-
-
12,781
209
(1,737)
(3,240)
$
(15,404) $
(23,417) $
8,013
(3,582)
(4,478)
$
(18,986) $
(27,895) $
896
8,909
Research and development activities were $13.0 million for the year ended December 31, 2022 compared to $13.2 million for the year ended
December 31, 2021 a decrease of $0.3 million. The decrease in cost is a result of focused expenditure of anti-IL-6R monoclonal antibodies (mAbs) compounds
and the manufacturing of Foralumab and less spending on Milciclib.
General and Administrative Expenses
Operating expenses were $1.6 million for the year ended December 31, 2022 as compared $13.3 million for the year ended December 31, 2021, a
decrease of $11.7 million. The decrease in operating expenses is a result of a decrease in option related expenses of $6.3mm due to options forfeitures and a
decrease in options outstanding during the year, a saving of $2.4m in labor costs due to a reduced headcount in 2022, a reduction in legal costs of $1.5m due to
a one off reorganization in 2021, a savings in insurance of $0.5m due to more favorable market conditions for D&O, $1.3m net gain due to favorable foreign
exchange movements and other general savings of $0.3m.
Realization Bonus Expense
A realization bonus of $13.2 million became payable during the year ended December 31, 2020 to the chairman of the board. This became payable
upon the Company raising funds in excess of $28m (£20m), which it successfully raised in August 2020. As the bonus was not settled until November 2021,
interest of $0.9m was accrued on the amount due in the year to December 31, 2021. No further realization bonus was paid during the year ended December 31,
2022.
Other income/(expense)
There was finance expense during the year of $0.8 million for the year ended December 31, 2022. This charge related to the change in fair value of the
company’s investment in Accustem Sciences Inc as the share price as at December 31, 2022 was $1.35 per share compared to the investment price of $2 per
share.. No further charges were incurred in the year ended December 31, 2021.
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Income Tax Credit
Income tax credits of $3.2 million were recognized for the year ended December 31, 2021. No income tax credit was recognized for the year ended
December 31, 2022 as the claim for 2020 is currently under review by HMRC, the company is awaiting the results of this review before proceeding with a
claim for year ended December 31, 2022.
B. Liquidity and Capital Resources
Since our inception, we have not generated any revenue and have incurred operating losses and negative cash flows from our operations. We have
funded our operations to date primarily with proceeds from the sale of ordinary shares, American Depository Shares, or ADSs, and convertible loan notes.
As of December 31, 2023, we had cash and cash equivalents of $1.18 million.
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
Net cash used in operating activities
Net cash used in investing activities
Net cash (used in) / provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Year ended December 31,
2022
2023
2021
$
(15,698) $
(1,253)
40
(28)
(19,615) $
(3,996)
(55)
(398)
(21,762)
(23)
130
(1,983)
Net (decrease)/increase in cash and cash equivalents
$
(16,911) $
(23,666) $
(21,655)
Net Cash Used in Operating Activities
Our use of cash in each of the years ended December 31, 2023, and 2022, resulted primarily from our net losses, adjusted for non-cash charges and
changes in components of working capital. Net cash used in operating activities of $15.7 million during the year ended December 31, 2023 decreased by $3.9
million compared to the year ended December 31, 2022.
Our use of cash in each of the years ended December 31, 2022, and 2021, resulted primarily from our net losses, adjusted for non-cash charges and
changes in components of working capital. Net cash used in operating activities of $19.6 million during the year ended December 31, 2022 decreased by $2.1
million compared to the year ended December 31, 2021
Net Cash Used in Investing Activities
During the year ended December 31, 2023, we used $1.3 million of cash in investing activities. The Company spent $1m investing in a related party,
Okyo Pharma Ltd. where we purchased 2,100,000 shares for $1.5 a share, and $0.3m on a share buyback scheme.
During the year ended December 31, 2022, we used $4 million of cash in investing activities. The Company spent $2.7m investing in a related party,
Accustem Sciences Inc, where we purchased 1,337,970 shares for $2 a share, and $1.3m on a share buyback scheme.
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Net Cash (used in)/ Provided by Financing Activities
During the year ended December 31, 2023 $0.01 million was used in the repayment of lease expenses. There was $.14 million consisting of net
proceeds for the exercise of warrants. During the year ended December 31, 2022, net cash used by financing activities was $0.01 million consisting of
repayment of lease expenses.
During the year ended December 31, 2022 $0.01 million was used in the repayment of lease expenses. During the year ended December 31, 2021, net
cash provided by financing activities was $0.01 million consisting of net cash proceeds the exercise of warrants.
Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities,
manufacturing and clinical trials of our product candidates and as we:
● seek regulatory approvals for any product candidates that successfully complete clinical trials;
● establish a sales, marketing and distribution infrastructure in anticipation of commercializing any product candidates for which we may obtain
marketing approval and intend to commercialize on our own or jointly;
● hire additional clinical, medical and development personnel;
● expand our infrastructure and facilities to accommodate our growing employee base; and
● maintain, expand and protect our intellectual property portfolio.
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We believe that our existing cash, will enable us to fund our operating expenses and capital expenditure requirements for the immediate future. We
have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If we
receive regulatory approval for our other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales,
marketing and distribution.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates,
we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase
significantly as a result of many factors, including:
● the scope, progress, outcome and costs of our preclinical development activities, clinical trials and other research and development activities;
● the costs, timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
● the costs of future activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we
receive marketing approval;
● the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval;
● the costs and timing of hiring new employees to support our continued growth;
● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims; and
● the extent to which we acquire technologies.
Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through equity
offerings. To the extent that we raise additional capital through the sale of equity, your ownership interest will be diluted. If we raise additional funds through
other third-party funding, collaboration agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to
relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be
favorable to us. If we are unable to raise additional funds through equity financings when needed, we may be required to delay, limit, reduce or terminate our
product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to
develop and market ourselves.
C. Research and Development Expenses, Patents and Licenses, etc.
See “Item 4.B.—Intellectual Property,” “Item 4.B.—Research and Development,” and “Item 5. Operating and Financial Review and Prospects.”
D. Trend Information
See “Item 5. Operating and Financial Review and Prospects—Trend Information.”
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E. Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations
of the SEC.
F. Tabular Disclosure of Contractual Obligations
The following table summarizes our contractual commitments and obligations as of December 31, 2023 and 2022.
As at December 31, 2023
(in thousands)
Borrowings
Operating lease obligations
Total
As at December 31, 2022
(in thousands)
Borrowings
Operating lease obligations
Total
Total
Less than
1 Year
Between 1
and 5
Years
More than
5 Years
$-
259
259 $
$-
148
148 $
$-
111
111 $
$-
-
-
Total
Less than
1 Year
Between 1
and 5
Years
More than
5 Years
- $
382
382 $
- $
139
139 $
- $
243
243 $
-
-
-
$
$
$
Please refer to “Item 4.B. Business Overview” and “Item 10.C. Material Contracts” for further details.
G. Safe Harbor
This Annual Report on Form 20-F contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995. See the section titled “Cautionary Statement Regarding Forward-Looking
Statements”.
ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth information regarding our directors as of March 31, 2024.
Name
Gabriele Marco Antonio Cerrone MBA (2)
Willy Simon (1,2,3)
John Brancaccio (1), (3)
(1) Remuneration Committee member
(2) Nominating Committee member
(3) Audit Committee member
Age
52
72
76
Position
Executive Chairman and acting Chief Executive Officer
Non-Executive Director
Non-Executive Director
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The following table sets forth information regarding our senior managers as of March 31, 2024:
Name
Matthew Davis
Keeren Shah
William Clementi
Jules S. Jacob
Position
Chief Medical Officer and Chief Operating Officer
Chief Financial Officer
Chief Development Officer
Executive Director, CMC & Non-Clinical Development
Gabriele Marco Antonio Cerrone – Executive Chairman
Mr. Gabriele Marco Antonio Cerrone, is the Founder of the company and has been its Executive Chairman since April 2014. Mr. Cerrone has founded
ten biotechnology companies in oncology, infectious diseases and molecular diagnostics, and has listed seven of these companies on Nasdaq two to the Main
Market and AIM Market in London. Mr. Cerrone co-founded Cardiff Oncology, Inc., an oncology company and served as its Co-Chairman; he was a co-founder
and served as Chairman of both Synergy Pharmaceuticals, Inc. and Callisto Pharmaceuticals, Inc. and was a Director of and led the restructuring of Siga
Technologies, Inc. Mr. Cerrone also co-founded FermaVir Pharmaceuticals, Inc. and served as Chairman of the Board until its merger in September 2007 with
Inhibitex, Inc. Mr. Cerrone served as a director of Inhibitex, Inc. until its US$2.5bn sale to Bristol Myers Squibb Co in 2012. Mr. Cerrone is the Executive
Chairman and Founder of Tiziana Life Sciences Ltd, an oncology focused therapeutics company; Co-Founder of Rasna Therapeutics Inc., a company focused
on the development of therapeutics for leukaemias; Co-Founder of Hepion Pharmaceuticals, Inc.; Executive Chairman and Co-Founder of Gensignia Life
Sciences, Inc., a molecular diagnostics company focused on oncology using microRNA technology; Non-Executive Chairman and Founder of Accustem
Sciences Limited; and founder of BioVitas Capital Ltd. Mr. Cerrone graduated from New York University’s Stern School of Business with a master’s degree in
business administration (MBA).
Willy Simon – Non-Executive Director
Willy Jules Simon has served as a Non-Executive Director of the company since November 2015. He is a banker and worked at Kredietbank N.V. and
Citibank London before serving as an executive member of the Board of Generale Bank NL from 1997 to 1999 and as the chief executive of Fortis Investment
Management from 1999 to 2002. He acted as chairman of Bank Oyens & van Eeghen from 2002 to 2004. He was chairman of AIM-traded Velox3 plc (formerly
24/7 Gaming Group Holdings plc) until 2014 and had been a director of Playlogic Entertainment Inc., a Nasdaq OTC listed company. Willy Simon has been the
chairman of Bever Holdings, a company listed in Amsterdam, since 2006 and Chairman of Ducat Maritime since 2015. He is also a non-executive director of
OKYO Pharma Ltd.
John Brancaccio – Non-Executive Director
John Brancaccio, a retired CPA, has served as a director of our company since July 2020. From April 2004 until May 2017, Mr. Brancaccio was the
Chief Financial Officer of Accelerated Technologies, Inc., an incubator for medical device companies. Mr. Brancaccio served as a director of Callisto
Pharmaceuticals, Inc. from April 2004 until its merger with Synergy Pharmaceuticals, Inc. in January 2013 and was a director of Tamir Biotechnology, Inc.
(formerly Alfacell Corporation) until 2019, as well as a director of Hepion Pharmaceuticals, Inc. since December 2013, Rasna Therapeutics, Inc. since
September 2016, Cardiff Oncology, Inc. from December 2005 until June 2022 and Okyo Pharma Ltd since June 2020. Mr. Brancaccio served as a director of
Synergy from July 2008 until April 2019.
Keeren Shah – Chief Financial Officer
Keeren Shah serves as our Chief Financial Officer. Ms. Shah currently also serves as the CFO of Accustem Sciences Inc, OKYO Pharma Ltd and
Rasna Therapeutics Inc., having previously served as the Group Financial Controller for these businesses from June 2016 to July 2020. Prior to joining the
Company, Ms. Shah spent 10 years at Visa, Inc. as a Senior Leader in its finance team where she was responsible for key financial controller activities, financial
planning and analysis, and core processes as well as leading and participating in key transformation programmes and Visa Inc.’s initial public offering. Before
joining Visa, Ms. Shah has also held a variety of finance positions at other leading companies including Arthur Andersen and BBC Worldwide. She holds a
Bachelor of arts with honours in Economics and is a member of the Chartered Institute of Management Accountants.
Matthew W Davis - Chief Medical Officer and Chief Operating Officer
Dr. Davis has extensive experience in new drug application, or NDA, and biologic license application, or BLA, FDA approvals and device clearances.
Notable approved brands that Dr. Davis has worked on include Lidoderm®, Sculptra®, Colcrys® and most recently QWO®. Dr. Davis previously served as
Chief Scientific Officer and Chief Medical Officer at Endo Pharmaceuticals where he restructured the R&D department and collaborated to obtain BLA
approval for QWO®. Additionally, Dr. Davis was Chief Medical Officer for Lupin Inc. and URL Pharma, Inc. where he spearheaded three NDA approvals and
was the inventor on all 17 Orange Book listed patents for Colcrys®. He also was on the executive team that sold URL Pharma to Takeda Pharmaceutical
Company for approximately $800M combined with over $1B in performance-based contingent earn out payments.
Dr. Davis matriculated to the University of Pennsylvania as an undergraduate. He received his Pharmacy Degree from Temple University and his
Medical Degree from the Medical College of Pennsylvania. Dr. Davis undertook his surgical training at Brown University and his Urology training at
Washington Hospital Center.
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William Celementi – Chief Development Officer
Dr. Clementi has followed a science-driven career path since completing his NIH Training Fellowship (under John L. McNay M.D. and Thomas M.
Ludden Ph.D.) Upon completing his Fellowship research in drug metabolism and vascular smooth muscle relaxation, Dr. Clementi joined the University of
Texas Graduate School of Biomedical Sciences (UTGBS) faculty and the College of Pharmacy faculty in Austin, Tx, in the Departments of Medicine and
Pharmacology at the Health Sciences Center in San Antonio. His primary responsibilities were interdisciplinary, and he led innovative programs in the Colleges
with teaching, research, and clinical commitments. Dr. Clementi directed the Clinical Pharmacokinetic Consultation Service, providing novel computer-based
drug dosing to the acute care settings at two major teaching hospitals.
Dr. Clementi continued his career in the pharmaceutical industry, joining Synthelabo and the U.S. affiliate Lorex Pharmaceuticals, where he held the
Worldwide Director of Market Development position. Lorex and Synthelabo launched three EMA and FDA-approved products (betaxolol, zolpidem, and
alfuzosin).was on the executive team that sold URL Pharma to Takeda Pharmaceutical Company for approximately $800M combined with over $1B in
performance-based contingent earn out payments.
Jules S. Jacob – Executive Director, CMC & Non-Clinical Development
Mr. Jules Jacob has served as Senior Director (2017-2021)_ and Executive Director of CMC and Non-Clinical Development of the company since
January 2022. He has over 25 years of drug development experience. Previously, Mr. Jacob was senior director of product development at Aprecia
Pharmaceuticals Company, a drug delivery technology platform company, from March 2009 to July 2017, where he led the development of Spritam®, the first
FDA-approved dosage form manufactured using 3-dimensional printing, and other 505(b)(2) pipeline products. Mr. Jacob was director of formulation
development at Panacos Pharmaceuticals Inc., a drug company focused on human immunodeficiency virus, or HIV, and other major human viral diseases, from
March 2007 to December 2008, where he worked on the development of first-in-class maturation inhibitors for the treatment of HIV. Mr. Jacob was a founding
scientist, director of R&D and director of technology development at Spherics, Inc., a pharmaceutical company that engaged in developing and manufacturing
oral pharmaceutical products for CNS conditions, GI disorders, and cancer, from February 2000 to February 2007. Mr. Jacob worked on the development of
bioadhesive dosage forms for treatment of CNS disorders, through the 505(b)(2) regulatory pathway at Spherics Inc. Mr. Jacob completed his undergraduate
degree and graduate education in biological and medical sciences at Brown University and has an active visiting faculty appointment in the Department of
Molecular Pharmacology, Physiology and Biotechnology at Brown University.
Family Relationships
There are no family relationships among any of our executive officers or directors.
B. Compensation
Total Compensation for the Executive Chairman and Non-Executive Directors
The table below sets out the total remuneration received by the Executive Chairman and the Non-Executive Directors for the year ended December 31,
2023.
Name
Gabriele Cerrone
Willy Simon
John Brancaccio
Position
Executive Chairman
Non – Executive Director
Non – Executive Director
Fees
earned
or paid
in cash
($000)
Bonus
earned
or paid
in cash
($000)
(2)
Options
awarded
($000)
(1)
Other
($000)
Total
($000)
717
56
56
100
-
-
-
33
33
-
-
-
817
89
89
(1) Represents the fair value of incentive stock options granted during the year to December 31, 2023 using an appropriate valuation model for computing
stock-based compensation expense as of the date of grant.
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Narrative Disclosure to the Compensation table
Gabriele Cerrone
On June 9, 2016 we entered into an agreement with our Executive Chairman, Gabriele Cerrone. Under the agreement, Mr Cerrone was to hold office
as Chairman for £80,000 per annum. The agreement was to expire no earlier than 24 April 2018 and was to continue thereafter until terminated by either party
giving written notice of 12 months. Mr Cerrone was also eligible to receive an annual bonus of up to 50% of his base salary, such bonus amount to be
determined at the discretion of the Board of Directors.
Additionally, Mr Cerrone was also eligible to receive two realization bonuses as follows:
(a)
in the event that, either: (i) the Group raises, in one or a series of transactions, new equity capital in excess of £20,000,000 (after expenses); or (ii)
there is a sale, in one or a series of transactions, of all or substantially all of the assets (calculated on the basis of book values) of the Group
Companies (or a license of the same on an exclusive or non-exclusive basis), where the Enterprise Value equals or exceeds £150,000,000; or (iii)
there is a change of control where the Enterprise Value equals or exceeds £150,000,000, in which case the Realization Bonus will be the amount
equal to the Enterprise Value multiplied by two and a half (2.5) per cent
(b) In the event that, during this Agreement, either: (i) there is a sale, in one or a series of transactions, of all or substantially all of the assets
(calculated on the basis of book values) of the Group (or a license of the same on an exclusive or non-exclusive basis), where the Enterprise Value
equals or exceeds £300,000,000 (Subsequently amended on 22 April 2024 to be expressed as US$372,000); or (ii) there is either a change of
control where the Enterprise Value equals or exceeds £300,000,000, (Subsequently amended on 22 April 2024 to be expressed as US$372,000) the
Chairman will be entitled to receive an additional Realization Bonus in the amount equal to the Enterprise Value multiplied by three and a half
(3.5) per cent.
The Enterprise Value means: (i) in the case of a change of control resulting in consideration payable to the Group (for example, on a sale of its assets or
licensing transaction), the total cash and non-cash consideration received by the Group; or (ii) in the case of a change of control resulting in consideration
payable to the shareholders of the ordinary shares in the issued share capital of the Group from time to time, the total cash and non-cash consideration payable
to the Shareholders.
The first realization bonus was satisfied on 5 August 2020, and the Chairman was unconditionally entitled to the immediate delivery of 4,763,995 new
ordinary shares credited as fully paid in lieu of a cash payment. The number of shares to be issued was fixed. Due to the delayed delivery of shares, additional
shares were granted in lieu of interest.
On October 9, 2020, we entered into an amended agreement with Mr Cerrone, increasing his base salary to £240,000 per annum. All other terms and
conditions remained the same.
On 21 October 2021, we entered into a new agreement which superseded the original consultancy agreement dated June 9, 2016 and the amended
agreement dated October 9, 2020. The duration of the consultancy agreement was fixed until December 31, 2028 and the fee remained at £240,000 per annum.
All terms regarding the second realization bonus remained the same.
On 22 April 2024, we entered into an agreement comprising of an amendment, supplement, and restatement of the consultancy agreement, fixing the
term of the agreement until 31 December 2030 and increased his compensation to US$500,000 whilst Mr. Cerrone continues to discharge his function of chief
executive officer and executive chairman of the company.
On 14 March, 2023, which was subsequently amended and restated on 22 April 2024, we granted Mr Cerrone a long-term realization bonus on the
basis that were the Company to be sold, during the currency of his directorship or in the period of 6 years,(extended to 10 years pursuant to the amendment and
restatement agreement on 22 April 2024) thereafter, for a price at, or in excess of, US$1,000,000,000 that Mr Cerrone receive a bonus equal to 6.5% of the
enterprise value of the Company (and not just the excess over US$1,000,0000,000), such bonus to be in addition to the current realization bonus contained in
Mr. Cerrone’s consultancy agreement dated December, 21 2022 (as amended and restated on 22 April 2024) but on the basis that were the US$1,000,000,000
threshold to be hit, the Company would be entitled to offset any payment due under the realisation bonus contained in the December, 21 2022 Consultancy
Agreement against any amount then due under this new realization bonus. The terms of the award to make appropriate provision for any “spin-off” of assets and
for the eventuality that the Company be sold for non-cash consideration. In addition, it should be a clear condition that Mr Cerrone be responsible for all tax
liabilities in connection with any payment of the award.
Mr Cerrone was awarded a stock allocation in 2024 to compensate for (i) additional salary of $424,000 to compensate him for a salary differential with
other executive staff, covering the period from August 1, 2022 to December 31, 2023, and (ii) a one-off 2023 bonus of $100,000.
Non-Executive Director remuneration
The remuneration of our non-executive directors is determined by our board as a whole, based on independent compensation reviews. We intend to
enter into service contracts with our directors for their services or amend and restate any prior service contracts in place prior to, or as soon as practicable,
following the filing of this registration statement.
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Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding all outstanding equity awards for our directors, executive officers, and non-executive directors, as
of December 31, 2023:
Name
Gabriele Cerrone
Willy Simon
Willy Simon
John Brancaccio
John Brancaccio
Ordinary
Shares
Underlying
Options
Exercise
Price Per
Ordinary
Share (£)
915,388
1,629,702
125,000
75,000
125,000
75,000
Grant Date
25/06/2014
06/05/2020
0.70
0.70
2.95
0.57
25/08/2020
14/03/2023
2.95
0.57
25/08/2020
14/03/2023
Expiration
Date
25/06/2024
05/05/2028
24/08/2030
14/03/2033
24/08/2030
14/03/2033
The Tiziana Life Sciences Ltd (formerly Tiziana Life Sciences plc) Employee Share Option Plan with Non-Employee Sub-Plan and US Sub-Plan
The Tiziana Life Sciences Ltd (formerly Tiziana Life Sciences plc) Employee Share Option Plan with Non-Employee Sub-Plan and US Sub-Plan, or
the 2016 Plan, was adopted by the Board on March 23, 2016 and approved by shareholders on June 30, 2016 and allows for the grant of options to eligible
service providers. The material terms of the 2016 Plan are summarized below. This plan closed to new entrants on October 21, 2021 and has been superseded by
the Tiziana Life Sciences Ltd 2021 Equity Incentive Plan.
Eligibility and Administration
Prior to October 21, 2021, our employees, consultants and directors, and employees and consultants of our subsidiaries were eligible to receive options
under the 2016 Plan. The 2016 Plan was administered by our board of directors, which may delegate its duties and responsibilities to one or more committees of
our directors and/or officers (referred to collectively as the plan administrator below), subject to the limitations imposed under the 2016 Plan, stock exchange
rules and other applicable laws. The plan administrator has the authority to take all actions and make all determinations under the 2016 Plan, to interpret the
2016 Plan and option agreements and to adopt, amend and repeal rules for the administration of the 2016 Plan as it deems advisable. The plan administrator also
had the authority to determine which eligible service providers receive options, to grant options and to set the terms and conditions of all options granted under
the 2016 Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the 2016 Plan.
Options
The 2016 Plan provided for the grant of options. All options granted under the 2016 Plan were set forth in option agreements, which will detail the
terms and conditions of the options.
Options provide for the purchase of our ordinary shares in the future at an exercise price set on the grant date. The plan administrator will determine
the number of shares covered by each option, the exercise price of each option and the conditions and limitations applicable to the exercise of each option
If a holder of options dies, options may be exercised by the personal representative with 12 months following death in respect of all or such proportion
of the option as the plan administrator may specify to take account of the extent to which any exercise conditions have been achieved at the relevant date. If a
holder of options leaves as a good leaver or the plan administrator allows, options may be exercised within 90 days in respect of all or such proportion of the
option as the plan administrator may specify to take account of the extent to which any exercise conditions have been achieved at the relevant date.
Exercise Conditions
The plan administrator may specify one or more appropriate exercise conditions that must be satisfied before options may be exercised.
Change of Control and Variation of Share Capital
In the event of a change of control, the plan administrator may specify whether all or a proportion of options will be exercisable to take account of the
extent to which any exercise conditions have been achieved at the relevant date. Alternatively, holders of options may agree to accept an offer to exchange
options for options to acquire shares in an acquiring company.
If there is a variation of our ordinary shares the plan administrator may adjust the number of shares under options and/or the exercise price.
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Plan Amendment and Termination
Our board of directors may amend the 2016 Plan at any time; however, the provisions governing eligibility requirements, equity dilution, the basis for
determining the rights of holders of options and the adjustment of options cannot be altered to the advantage of existing or new holders of options without the
prior approval of our shareholders in general meeting. No options may be granted under the 2016 Plan after the tenth anniversary of the date of adoption by our
board of directors.
Transferability
Options granted under the 2016 Plan are generally non-transferrable, except on death. With regard to tax withholding and exercise price obligations
arising in connection with the exercise of options under the 2016 Plan, the plan administrator may, in its discretion, accept cash, wire transfer or cheque,
Non-Employee Sub-Plan
Under the Non-Employee Sub-Plan, options may be granted to advisers, consultants and non-executive directors on terms comparable to those
described above.
US Sub-Plan
The US Sub-Plan permits the grant of options to employees, directors and consultants who are US residents and US taxpayers, including potentially
tax efficient Incentive Stock Options (as defined in Section 422 of the Internal Revenue Code of 1986, as amended). A maximum of 9,233,392 ordinary shares
may be issued under the US Sub-Plan (which number shall be the maximum number that may be granted as Incentive Stock Options).
The Tiziana Life Sciences Ltd 2021 Equity Incentive Plan
On October 20, 2021, Tiziana adopted the Tiziana Life Sciences Ltd 2021 Equity Incentive Plan (the “Plan”) which operates over common shares in
Tiziana. The purpose of the Plan is to assist the Company and its Subsidiaries in attracting and retaining valued Employees, Consultants and Non-Employee
Directors by offering them a greater stake in the Company’s success and a closer identity with it, and to encourage ownership of the Company’s shares by such
Employees, Consultants and Non-Employee Directors. Any employee, director or consultant of Tiziana Life Sciences Ltd or any of its subsidiaries is eligible to
receive Awards under the Plan. The Plan will be administered by the Compensation Committee of the Board (the “Compensation Committee”). Awards granted
to nonemployee members of the Board will be administered by the full Board.
The Plan was approved by the shareholders of the Company, no new awards will be granted under the Tiziana Life Sciences plc Employee Share
Option Plan with Non-Employee Sub-Plan and US Sub-Plan with California Supplement, as amended and/or restated from time to time (collectively, the “Prior
Equity Plan”).
Subject to adjustment as provided in the Plan, the maximum number of shares that may be issued pursuant to Awards under the Plan is 15,000,000
shares (the “Cap”). The Cap will be increased by the number of shares corresponding (as determined by the Compensation Committee) to the securities
underlying the portion of an award granted under the 2016 Plan that is cancelled, terminated or forfeited or lapses, in any case, on or after the effective date of
the Plan. No more than 15,000,000 shares issued under the Plan may be issued pursuant to the exercise of incentive stock options.
Under the Plan, awards may be in the form of options, share appreciation rights, restricted stock, restricted stock units, performance stock,
performance stock units, and other share-based awards. Each Award will be evidenced by an Award agreement containing the terms and conditions applicable to
such Award.
Change of Control and Variation of Share Capital
A Change in Control shall not, in and of itself, accelerate the vesting, settlement or exercisability of outstanding awards, unless otherwise specified.
Transferability
Transferability of Restricted Stock shall be prohibited or restricted in the manner and to the extent prescribed in the applicable Award Agreement. Such
restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing
substantial risk of forfeiture in the hands of any transferee.
UK Supplemental Plan
The UK Supplemental plan shall apply to any Award granted to a Participant who is resident in the United Kingdom for tax purposes at the time the
Award is granted or on the occurrence of any taxable event in respect of the Award and to any Participant who is not resident in the United Kingdom at such
time(s) but who is granted the Award in respect of duties performed in the United Kingdom (a “UK Participant”).
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Additional Terms for UK Participants
Employer National Insurance Contributions Indemnity. In the case of any Award to a UK Participant in the form of Options, Restricted Stock,
Restricted Stock Units, Performance Stock, Performance Stock Units or Other Share-Based Award, if required by the Board, it shall be a condition of such
Award that the UK Participant irrevocably agrees that the Company and/or any applicable Subsidiary may recover from the UK Participant the whole or any
part of any employer National Insurance Contributions, Apprenticeship Levy or other social security contributions for which the Company and/or any
applicable Subsidiary is liable to account in respect of the Award, in each case to the extent permitted by applicable law, and/or that the UK Participant shall
enter into such election (using a form approved by HM Revenue & Customs) as may be required for the whole or any part of such taxes to be transferred to the
UK Participant.
Date of Termination. For the purposes of the Plan (and the corresponding provisions in any Award Agreement) the termination of employment of a UK
Participant for Cause or as the result of the UK Participant’s resignation shall be deemed to occur on the earlier of (i) the date on which the UK Participant’s
employment terminates, and (ii) the date on which the UK Participant gives or receives notice of the termination of employment.
Bankruptcy. Unless otherwise provided in an Award Agreement, the unvested portion of a Participant’s Award shall be immediately forfeited with no
compensation or other payment due to the Participant upon the Participant (i) being declared bankrupt, (ii) making an application for an interim order or any
proposal for a voluntary arrangement within Part VIII of the Insolvency Act 1988, or (iii) proposing any form of compromise with his creditors or any class of
creditors.
Tax Election. In the case of an Award to a UK Participant in the form of Options, Restricted Stock, Restricted Stock Units, Performance Stock,
Performance Stock Units or Other Share-Based Award, unless the Board determines otherwise, it shall be a condition of the Award that the UK Participant
enters into a joint tax election with his or her employer pursuant to Section 431(1) of the Income Tax (Earnings and Pensions) Act 2003 in respect of any Shares
acquired pursuant to such Award, such election to be made no later than 14 days following the date on which such Shares are acquired.
Relationship to Employment Contract. The rights of a UK Participant under the terms of his or her office or employment with the Company or any
Subsidiary shall not be affected by the Plan, this Supplement or any Award Agreement. The value of any benefit realized by a UK Participant in respect of an
Award shall not be taken into account in determining any pension or similar entitlement.
Limitation on Claims. A UK Participant shall have no right to compensation or damages on account of any loss in respect of an Award where the loss
arises (or is claimed to arise), in whole or in part, from termination of office or employment with, or notice to terminate office or employment given by or to,
the Company or any Subsidiary. This exclusion of liability shall apply however termination of office or employment, or the giving of notice, is caused, and
however compensation or damages are claimed. A UK Participant shall have no right to compensation or damages from the Company or any Subsidiary on
account of any loss in respect of an Award where the loss arises (or is claimed to arise), in whole or in part, from any Change in Control, any company ceasing
to be a Subsidiary or the transfer or any business from the Company or any Subsidiary to any other person
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C. Board Practices
Corporate Governance Practices
We are a “foreign private issuer,” as defined by the SEC. As a result, in accordance with Nasdaq listing requirements, we may rely on home country
governance requirements and certain exemptions thereunder rather than complying with NASDAQ corporate governance standards. While we voluntarily
follow most Nasdaq corporate governance rules, we may choose to take advantage of the following limited exemptions:
● Exemption from filing quarterly reports on Form 10-Q containing unaudited financial and other specified information or current reports on Form
8-K upon the occurrence of specified significant events.
● Exemption from Section 16 rules requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders
who profit from trades in a short period of time, which will provide less data in this regard than shareholders of U.S. companies that are subject to
the Exchange Act.
● Exemption from the Nasdaq requirement requiring disclosure of any waivers of the code of business conduct and ethics for directors and officers.
● Exemption from the requirement that our board have a compensation committee that is composed entirely of independent directors with a written
charter addressing the committee’s purpose and responsibilities.
● Exemption from the requirement to have independent director oversight of director nominations.
In connection with the migration to Bermuda, Tiziana adopted a Code of Business Conduct and Ethics which covers a broad range of matters including
the handling of conflicts of interest, compliance issues and other corporate policies such as insider trading and equal opportunity and non-discrimination
standards. Tiziana’s Code of Business Conduct and Ethics applies to all directors, executive officers and employees of Tiziana. Tiziana publishes its Code of
Business Conduct and Ethics on its website (www.tizianalifesciences.com).
● We do not follow Nasdaq Rule 5620(c) regarding quorum requirements applicable to meetings of shareholders. Such quorum requirements are not
required under English law. In accordance with generally accepted business practice, our Bye-laws will provide alternative quorum requirements
that are generally applicable to meetings of shareholders.
● We do not follow Nasdaq Rule 5605(b)(2), which requires that independent directors regularly meet in executive sessions where only independent
directors are present. Our independent directors may choose to meet in executive sessions at their discretion.
Although we may rely on certain home country corporate governance practices, we must comply with Nasdaq’s Notification of Noncompliance
requirement (Nasdaq Rule 5625) and the Voting Rights requirement (Nasdaq Rule 5640). Further, we must have an audit committee that satisfies Nasdaq Rule
5605(c)(3), which addresses audit committee responsibilities and authority and requires that the audit committee consist of members who meet the
independence requirements of Nasdaq Rule 5605(c)(2)(A)(ii).
We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance
requirements of the Sarbanes-Oxley Act, the rules adopted by the SEC and Nasdaq listing rules. Accordingly, our shareholders will not have the same
protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. For an overview of our corporate
governance principles, see the following section titled “Description of Bye-laws and Memorandum of Association”
Description of Bye-laws and Memorandum of Association
The following description includes a summary of specified provisions of our memorandum of association and our Bye-laws. This description is
qualified by reference to our memorandum of association and our Bye-laws which are incorporated by reference as exhibits to this annual report.
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Preemptive Rights
Our Bye-laws do not provide shareholders with pro rata preemptive rights to subscribe for any newly issued common shares. Additionally, the
Companies Act does not provide shareholders with a statutory preemptive right.
Repurchase of Shares
Our board of directors may exercise all of the powers to purchase for cancellation or acquire our shares as treasury shares in accordance with the
Companies Act. On a reacquisition of shares, such shares may be cancelled (in which event, our issued but not our authorized capital will be diminished
accordingly) or held as treasury shares. Such purchases may only be effected out of the capital paid up on the purchased shares or out of the funds otherwise
available for dividend or distribution or out of the proceeds of a fresh issue of shares made for the purpose.
Alteration of Share Capital
We may, if authorized by a resolution of our shareholders, increase, divide, consolidate, subdivide, change the currency denomination of, diminish or
otherwise alter or reduce the share capital in any manner permitted by the Companies Act.
Variation of Rights
If at any time we have more than one class of shares, the rights attaching to any class, unless otherwise provided for by the terms of issue of the
relevant class, may be varied with the sanction of a resolution passed by a majority of the votes cast at a general meeting of the relevant class of shareholders at
which a quorum consisting of at least two persons holding or representing one-third of the issued shares of the relevant class is present. Our Amended and
Restated Bye-laws specify that the creation or issue of shares ranking equally with existing shares will not, unless expressly provided by the terms of issue of
existing shares, vary the rights attached to existing shares. In addition, the creation or issue of preference shares ranking prior to common shares will not be
deemed to vary the rights attached to common shares or, subject to the terms of any other series of preference shares, to vary the rights attached to any other
series of preference shares.
Transfer of Shares
Our board of directors may in its absolute discretion and without assigning any reason refuse to register the transfer of a share which is not fully paid.
Our board of directors may also refuse to recognize an instrument of transfer of a share unless it is accompanied by the relevant share certificate and such other
evidence of the transferor’s right to make the transfer as our board of directors shall reasonably require. The board shall refuse to register a transfer unless all
applicable consents, authorizations and permissions of any governmental body or agency in Bermuda have been obtained. Subject to these restrictions, a holder
of common shares may transfer the title to all or any of its common shares by completing a form of transfer in the form set out in our Bye-laws (or as near
thereto as circumstances admit) or in such other common form as the board may accept. The instrument of transfer must be signed by the transferor and
transferee, although in the case of a fully paid share our board of directors may accept the instrument signed only by the transferor.
Notwithstanding anything to the contrary in the Amended and Restated Bye-laws, our shares may be transferred without a written instrument if
transferred by an appointed agent and in any form or manner which is in accordance with the rules or regulations of an appointed stock exchange (which
includes the Nasdaq Capital Market) on which the shares are listed or admitted to trading.
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General Meetings
An annual general meeting will be held each year in accordance with the requirements of the Companies Act and our Bye-laws at such time and place
as our board of directors appoints. Our board of directors or the chairman may also, whenever in its judgment it is necessary, convene general meetings other
than annual general meetings which are called special general meetings. Bermuda law and the Bye-laws provide that a special general meeting must be called
upon the request of shareholders holding not less than one-tenth of the paid-up capital of the Company carrying the right to vote at general meetings. Any
annual general meeting and special general meeting must be called by, respectively, not less than twenty-one (21) days and five (5) days’ prior notice in writing.
A notice of meeting must include the place, day and time of the meeting and, in the case of an annual general meeting, that the election of directors will take
place thereat and any other business to be conducted at the meeting, and, in the case of a special general meeting, the general nature of the business to be
considered at the meeting. This notice requirement is subject to the ability to hold such meetings on shorter notice if such notice is agreed: (i) in the case of an
annual general meeting by all of the shareholders entitled to attend and vote at such meeting; or (ii) in the case of a special general meeting by a majority in
number of the shareholders entitled to attend and vote at the meeting holding not less than 95% in nominal value of the shares entitled to vote at such meeting.
A shareholder may appoint a proxy to attend and vote at the general meeting by providing notice in writing to us at our registered office or at such other place or
in such manner as specified in the notice of the general meeting.
The chairman, if present, and if not, the chief executive officer, if present, and if not, the president, if present, and if not, any person appointed by our
board of directors will act as chairman of the meeting. In their absence and if no one is appointed by our board of directors as chairman of such meeting, a
chairman of the meeting will be appointed or elected by those present at the meeting and entitled to vote.
Board and Shareholder Ability to Call Special Meetings
Our Bye-laws provide that (a) the president or the chairman of the Company (if any) or any two Directors or any Director and the Secretary or the
Board may convene a special general meeting whenever in their judgment such a meeting is necessary and (b) the board of directors must convene a special
general meeting at the request of shareholders holding not less than one-tenth of the paid-up share capital of the Company with the right to vote at general
meetings.
Shareholder Meeting Quorum
Our Bye-laws provide that at any general meeting of shareholders, At any general meeting two or more persons present throughout the meeting and
representing in person or by proxy in excess of 331/3% of the total voting rights of all issued and outstanding shares in the Company shall form a quorum for
the transaction of business.
Voting Rights
Subject to any restrictions for the time being lawfully attached to any class of shares, every shareholder who is present in person or by proxy at a
general meeting shall be entitled to one vote on a show of hands and be entitled to one vote for every share of which he is a holder on a vote taken by poll, and
any question proposed for the consideration of the shareholders at any general meeting shall be decided by the affirmative votes of a majority of the votes cast
in accordance with the Bye-laws, and in the case of an equality of votes, the resolution will fail.
Shareholder Action by Written Consent
The Bye-laws provide that no action required to be taken or which may be taken at any general meeting of Members may be taken without a meeting,
and the power of Members to consent in writing, without a meeting, to the taking of any action is specifically denied.
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Access to Books and Records and Dissemination of Information
Members of the general public have a right to inspect the public documents of a company available at the office of the Registrar of Companies in
Bermuda. These documents include the company’s memorandum of association, including its objects and powers, and certain alterations to the memorandum of
association. The shareholders have the additional right to inspect the bye-laws of the company, minutes of general meetings and the company’s audited financial
statements, which must be presented to the annual general meeting. The register of members of a company is also open to inspection by shareholders and by
members of the general public without charge. The register of members is required to be open for inspection for not less than two hours in any business day
(subject to the ability of a company to close the register of members for not more than thirty days in a year). A company is required to maintain its share register
in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. A company is required to keep at its
registered office a register of directors and officers that is open for inspection for not less than two hours in any business day by members of the public without
charge. A company is also required to file with the Registrar of Companies in Bermuda a list of its directors to be maintained on a register, which register will
be available for public inspection subject to such conditions as the Registrar may impose and on payment of such fee as may be prescribed. Bermuda law does
not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.
Removal of Directors
Our Amended and Restated Bye-laws provide that shareholders entitled to vote for the election of directors may, at any special general meeting
convened and held in accordance with the Amended and Restated Bye-laws, remove a director only with cause, by the affirmative vote of shareholders holding
at least a majority of the total voting rights of all shareholders having the right to vote at such meeting, provided that the notice of any such meeting convened
for the purpose of removing a director must contain a statement of the intention so to do and be served on such director not less than 14 days before the meeting
and at such meeting the director will be entitled to be heard on the motion for such director’s removal.
Proceedings of Board of Directors
Our Bye-laws provide that our business is to be managed and conducted by our board of directors. Bermuda law permits individual and corporate
directors and there is no requirement in the Bye-laws or Bermuda law that directors hold any of our shares. There is also no requirement in the Bye-laws or
Bermuda law that our directors must retire at a certain age.
The remuneration of our directors is determined by the board of directors from time to time at a duly authorized meeting. Our directors may also be
paid all travel, hotel and other expenses properly incurred by them in connection with our business or their duties as directors.
Provided a director discloses a direct or indirect interest in any contract or arrangement or proposed contract or arrangement with us as required by
Bermuda law, such director is entitled to vote in respect of any such contract or arrangement in which he or she is interested and/or be counted in the quorum
for the meeting at which such contract or arrangement is to be voted on.
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Amalgamations, Mergers and Business Combinations
The amalgamation or merger of a Bermuda company with another company or corporation (other than certain affiliated companies) requires the
amalgamation or merger agreement to be approved by the company’s board of directors and by its shareholders. Unless the company’s bye-laws provide
otherwise, the approval of 75% of the shareholders voting at such meeting is required to approve the amalgamation or merger agreement, and the quorum for
such meeting must be two persons holding or representing more than one-third of the issued shares of the company. The Amended and Restated Bye-laws
provide that an amalgamation, consolidation or a merger (other than with a wholly owned subsidiary or as described below) that has been approved by the
board must only be approved by a majority of the votes cast at a general meeting of the shareholders at which the quorum shall be two or more persons present
in person and representing in person or by proxy in excess of 50% of all issued and outstanding common voting shares. Any other amalgamation or merger or
other business combination (as defined in the Amended and Restated Bye-laws) not approved by our board must be approved by the holders of not less than 66
2/3% of all votes attaching to all shares then in issue entitling the holder to attend and vote on the resolution.
Dissenter’s Rights
Under Bermuda law, in the event of an amalgamation or merger of a Bermuda company with another company or corporation, including a public
Bermuda company, a shareholder of the Bermuda company who did not vote in favor of the amalgamation or merger and is not satisfied that fair value has been
offered for such shareholder’s shares may, within one month of notice of the shareholders meeting, apply to the Supreme Court of Bermuda to appraise the fair
value of those shares. These approval rights did not apply to the Business Combination because the Company was not a party to any amalgamation or merger
contemplated by the Business Combination.
Limitations on Director Liability and Indemnification of Directors and Officers
Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability
which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases
where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further
provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings,
whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda
pursuant to section 281 of the Companies Act.
The Bye-laws provide that the directors, resident representative, secretary and other officers acting in relation to any of the affairs of the Company or
any subsidiary thereof and the liquidator or trustees (if any) acting in relation to any of the affairs of the Company or any subsidiary thereof and every one of
them shall be indemnified and secured harmless out of the assets of the Company from and against all actions, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or
supposed duty, or in their respective offices or trusts, and no indemnified party shall be answerable to the acts, receipts, neglects or defaults of the others of
them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company
shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company
shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in
relation thereto, provided that this indemnity shall not extend to any matter in respect of any fraud or dishonesty in relation to the Company which may attach to
any of the indemnified parties. We may also enter into an indemnification agreement with any director or officer of the Company.
In addition, the Bye-laws provide that the Company may (i) purchase and maintain insurance for the benefit of any director or officer against any
liability incurred by such person under the Companies Act in his or her capacity as a director or officer of the Company or indemnifying such director or officer
in respect of any loss arising or liability attaching to him or her by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of
trust of which the director or officer may be guilty in relation to the Company or any of its subsidiaries and (ii) advance moneys to a director or officer for the
costs, charges and expenses incurred by the director or officer in defending any civil or criminal proceedings against him or her, on condition that the director or
officer shall repay the advance if any allegation of fraud or dishonesty in relation to the Company is proved against him or her.
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Class Actions and Derivative Suits
Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be
expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to
be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association or bye-laws.
Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance,
where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it.
When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some part of the shareholders, one
or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the
company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.
Amendment of Memorandum of Association and Bye-laws
Bermuda law provides that the memorandum of association of a company may be amended by a resolution passed at a general meeting of
shareholders. Our Amended and Restated Bye-laws provide that no bye-law shall be rescinded, altered or amended, and no new bye-law shall be made, unless it
shall have been approved by a resolution of our board of directors and by a resolution of our shareholders.
Under Bermuda law, the holders of an aggregate of not less than 20% in par value of the company’s issued share capital or any class thereof have the
right to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association adopted by shareholders at any general
meeting, other than an amendment which alters or reduces a company’s share capital as provided in the Companies Act. Where such an application is made, the
amendment becomes effective only to the extent that it is confirmed by the Bermuda court. An application for an annulment of an amendment of the
memorandum of association must be made within 21 days after the date on which the resolution altering the company’s memorandum of association is passed
and may be made on behalf of persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose. No
application may be made by shareholders voting in favor of the amendment.
Capitalization of Profits and Reserves
Pursuant to our Bye-laws, our board of directors may (i) capitalize any part of the amount of our share premium or other reserve accounts or any
amount credited to our profit and loss account or otherwise available for distribution by applying such sum in paying up unissued shares to be allotted as fully
paid bonus shares pro-rata (except in connection with the conversion of shares) to the shareholders; or (ii) capitalize any sum standing to the credit of a reserve
account or sums otherwise available for dividend or distribution by paying up in full, partly paid or nil paid shares of those shareholders who would have been
entitled to such sums if they were distributed by way of dividend or distribution.
Certain Provisions of Bermuda Law
Share Certificates
In accordance with Bermuda law, share certificates are only issued in the names of companies, partnerships or individuals. In the case of a shareholder
acting in a special capacity (for example as a trustee), certificates may, at the request of the shareholder, record the capacity in which the shareholder is acting.
Notwithstanding such recording of any special capacity, we are not bound to investigate or see to the execution of any such trust.
Membership
Under the Companies Act, only those persons who agree to become members of a Bermuda company and whose names are entered on the register of
members of such company are deemed members. A Bermuda company is not bound to see to the execution of any trust, whether express, implied or
constructive, to which any of its shares are subject and whether or not the company had notice of such trust. Accordingly, persons holding shares through a
trustee, nominee or depository will not be recognized as members of a Bermuda company under Bermuda law and may only have the benefit of rights attaching
to the shares or remedies conferred by law on members through or with the assistance of the trustee, nominee or depository.
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Composition of Our Board of Directors
Our board of directors is currently composed of three members. Our board of directors has determined that, of our four directors, none have a
relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of two of the directors, Mr. John Brancaccio and
Mr. Simon, and that each of these directors is “independent” as that term is defined under Nasdaq rules.
In accordance with our Articles, at the first general meeting which is held after the date of adoption of the Bye-laws for the purpose of electing
Directors, the Class I Directors shall be elected for a three year term of office, the Class II Directors shall be elected for a two year term of office and the Class
III Directors shall be elected for a one year term of office. At each succeeding annual general meeting, successors to the class of Directors whose term expires at
that annual general meeting shall be elected for a three-year term. If the number of Directors is changed, any increase or decrease shall be apportioned among
the classes so as to maintain the number of Directors in each class as nearly equal as possible, and any Director of any class elected to fill a vacancy shall hold
office for a term that shall coincide with the remaining term of the other Directors of that class, but in no case shall a decrease in the number of Directors
shorten the term of any Director then in office. A Director shall hold office until the annual general meeting for the year in which his term expires.
The Class of the members of the Board of Directors is as follows:
Name
Gabriele Cerrone
John Brancaccio
Willy Simon
Committees of Our Board of Directors
Class
I
II
III
Year Current
Term Began
2023
2022
2022
Year Current
Term Expires
2026
2025
2025
Our board of directors has three standing committees: an audit committee, a remuneration committee and a nominating committee.
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Audit Committee
The audit committee, which consists of, Mr. Brancaccio and Mr. Simon, assists the board of directors in overseeing our accounting and financial
reporting processes. Mr. Brancaccio serves as chairman of the audit committee. The audit committee consists exclusively of members of our board who are
financially literate, and Mr. Simon is considered an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial
sophistication as defined under the applicable Nasdaq rules and regulations.
Our board has determined that all of the members of the audit committee satisfy the “independence” requirements set forth in Rule 10A-3 under the
Exchange Act. The audit committee will be governed by a charter that complies with Nasdaq rules.
The audit committee’s responsibilities include:
● recommending the appointment of the independent auditor to the general meeting of shareholders;
● the appointment, compensation, retention and oversight of any accounting firm engaged for the purpose of preparing or issuing an audit report or
performing other audit services;
● pre-approving the audit services and non-audit services to be provided by our independent auditor before the auditor is engaged to render such
services;
● evaluating the independent auditor’s qualifications, performance and independence, and presenting its conclusions to the full board of directors on
at least an annual basis;
● reviewing and discussing with management and our independent registered public accounting firm our financial statements and our financial
reporting process;
● reviewing, approving or ratifying any related party transactions.
● recommending the appointment of the independent auditor to the general meeting of shareholders; and
● the appointment, compensation, retention and oversight of any accounting firm engaged for the purpose of preparing or issuing an audit report or
performing other audit services;
Remuneration Committee
The remuneration committee consists of Mr. Brancaccio and Mr. Simon. Mr. Simon serves as chairman of the remuneration committee. Under SEC
and Nasdaq rules, there are heightened independence standards for members of the remuneration committee, including a prohibition against the receipt of any
compensation from us other than standard board member fees.
The remuneration committee’s responsibilities include:
● identifying, reviewing and proposing policies relevant to the compensation and benefits of our directors and executive officers;
● evaluating each executive officer’s performance in light of such policies and reporting to the board; and
● overseeing and administering our employee share option scheme or equity incentive plans in operation from time to time.
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Nominating Committee
The nominating committee consists of Mr. Cerrone and Mr. Simon. Mr. Simon serves as chairman of the nominating committee. The nominating
committee’s responsibilities include:
● drawing up selection criteria and appointment procedures for directors;
● recommending nominees for election to our board of directors and its corresponding committees;
● assessing the functioning of individual members of our board of directors and executive officers and reporting the results of such assessment to the
board of directors; and
● developing corporate governance guidelines.
None of our non-employee directors have any service contracts with Tiziana Life Sciences Ltd or any of our subsidiaries that provide for benefits upon
termination of employment.
Country of Principal Executive Offices
Foreign Private Issuer
Disclosure Prohibited Under Home Country Law
Total Number of Directors
Part I: Gender Identity
Directors
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
LGBTQ+
D. Employees
Board Diversity Matrix (As of April 24, 2023)
United Kingdom
Female
Male
Non-Binary
Yes
No
3
Did Not
Disclose
Gender
0
0
0
3
0
0
0
0
0
0
0
0
As of December 31, 2023, we had 9 full time employees. Three of our employees were engaged in research and development and six employees were
engaged in management, administration and finance. Five are located in England and four are located in the United States. None of our employees are members
of labor unions. None of our employees are covered by a collective bargaining agreement.
Insurance and Indemnification
To the extent permitted by the Companies Act, we are empowered to indemnify our directors against any liability they incur by reason of their
directorship. We maintain directors’ and officers’ insurance to insure such persons against certain liabilities. We expect to enter into a deed of indemnity with
each of our directors and executive officers prior to, or as soon as practicable, following the filing of this registration statement.
In addition to such indemnification, we provide our directors and executive officers with directors’ and officers’ liability insurance.
Insofar as indemnification of liabilities arising under the Securities Act may be permitted to our board of directors, executive officers, or persons
controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
E. Share Ownership
See “Item 7. Major Shareholders and Related Party Transactions.”
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ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth information relating to the beneficial ownership of our ordinary shares as of March 31, 2024 by:
● each person, or group of affiliated persons, known by us to own beneficially 5% or more of our outstanding ordinary shares; and
● each member of our board of directors and each of our executive officers.
The number of ordinary shares beneficially owned by each entity, person, board member, or executive officer is determined in accordance with the
rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership
includes any ordinary shares over which the individual has sole or shared voting power or investment power as well as any ordinary shares that the individual
has the right to acquire within 60 days of March 31, 2024 through the exercise of any option, warrant or other right. Except as otherwise indicated, and subject
to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all ordinary shares held by that
person.
Name and address of beneficial owner
5% or Greater Shareholders:
Gabriele Cerrone(1)
Executive Officers and Directors:
Gabriele Cerrone(1)
Willy Simon
John Brancaccio
All directors and executive officers as a group (3 persons)(2)
*
Indicates beneficial ownership of less than 1% of the total outstanding ordinary shares.
Number of Ordinary
Shares Beneficially
Owned
Shares
%
40,256,023
38.71
40,256,023
8,250
-
-
40,264,273
38.71
*
-
-
38.71
(1) Mr. Gabriele Cerrone is the ultimate beneficial owner of ordinary shares through Planwise Group Limited and Panetta Partners Limited.
Includes 915,388 stock options which are currently exercisable or exercisable within 60 days of March 31, 2024
(2) Includes of 915,388 stock options which are currently exercisable or exercisable within 60 days of March 31, 2024
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B. Related Party Transactions
The following is a description of related party transactions we have entered into since January 1, 2023, with the beneficial owners of 5% or more of
our ordinary shares, which are our only voting securities, and senior management and members of our board of directors.
Indemnity Agreements
We have entered into deeds of indemnity with each of our directors.
Related Person Transaction Policy
Our board of directors has adopted a written related person transaction policy, effective as of November 9, 2018, the date on which our registration
statement on Form F-1 was declared effective. This policy covers, any transaction or proposed transactions between us and a related person that are material to
us or the related person, including without limitation, purchases of goods or services by or from the related person or entities in which the related person has a
material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our
audit and risk committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable
to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction.
Employment Agreements
We have entered into a consultancy agreement with our Acting Chief Executive Officer, and director agreements with our remaining board members.
For further details on these agreements, see Item 6 entitled “Directors, Senior Management and Employees.”
We have entered into certain related party transactions as disclosed in Note 8 and Note 23 to the Consolidated Financial Statements in Item 18 of this
report.
C. Interests of Experts and Counsel
Not applicable.
ITEM 8: FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements”.
Legal Proceedings
Except as disclosed in this paragraph, there are no governmental, legal or arbitration proceedings (including any such proceedings which are pending
or threatened of which the Company is aware), which may have, or have had during the 12 months prior to the date of this registration statement, a significant
effect on the Company’s and/or our financial position or profitability. In addition to the proceedings set out in this section, the Company is involved in other
legal proceedings and claims in the ordinary course of business.
B. Significant Changes
See Note 25 of our consolidated financial statements at the end of this Annual Report for a description of the significant changes since December 31,
2023.
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ITEM 9: THE LISTING
A. Listing Details
Our common shares are listed on The Nasdaq Capital Market under the symbol “TLSA.”
B. Plan of Distribution
Not applicable.
C. Markets
Our common shares are listed on the Nasdaq Capital Market under the symbol “TLSA.”
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10: ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum of Association and Bye-laws
We incorporate by reference into this Annual Report the description of our memorandum of association and Bye-laws contained in Form 8-K filed with
the SEC on October 21, 2021.
C. Material Contracts
Except as otherwise disclosed in this Annual Report (including the exhibits hereto), we are not currently, and have not been in the last two years, party
to any material contract, other than contracts entered into in the ordinary course of business.
D. Exchange Controls
The permission of the Bermuda Monetary Authority is required, under the provisions of the Exchange Control Act 1972 of Bermuda and related
regulations, for all issuances and transfers of shares (which includes our common shares) of Bermuda companies to or from a non-resident of Bermuda for
exchange control purposes, other than in cases where the Bermuda Monetary Authority has granted a general permission. The Bermuda Monetary Authority, in
its notice to the public dated June 1, 2005, has granted a general permission for the issue and subsequent transfer of any securities of a Bermuda company from
and/or to a non-resident of Bermuda for exchange control purposes for so long as any “Equity Securities” of the company (which include our common shares)
are listed on an “Appointed Stock Exchange” (which include Nasdaq). In granting the general permission the Bermuda Monetary Authority accepts no
responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this annual report.
Although the Company is incorporated in Bermuda, as an exempted company it is classified as a non-resident of Bermuda for exchange control
purposes by the Bermuda Monetary Authority. Other than transferring Bermuda Dollars out of Bermuda, there are no restrictions on the Company’s ability to
transfer funds into and out of Bermuda or to pay dividends in currency other than Bermuda Dollars to non-residents of Bermuda who are holders of our
common shares
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E. Taxation
Material U.S. Federal Income Tax Considerations for U.S. Holders
U.S. Federal Income Tax Considerations for U.S. Holders
The following discussion describes the material U.S. federal income tax consequences relating to the ownership and disposition of our Common shares
by U.S. Holders. This discussion applies to U.S. Holders that purchase our Common shares pursuant to this offering and hold such Common shares as capital
assets for tax purposes. This discussion is based on the Internal Revenue Code, U.S. Treasury regulations promulgated thereunder and administrative and
judicial interpretations thereof, and the income tax treaty between the United Kingdom and the United States, or the Treaty, all as in effect on the date hereof
and all of which are subject to change, possibly with retroactive effect. This discussion does not address all of the U.S. federal income tax consequences that
may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax
law (such as certain financial institutions, insurance companies, dealers or traders in securities or other persons that generally mark their securities to market for
U.S. federal income tax purposes, tax-exempt entities or governmental organizations, retirement plans, regulated investment companies, real estate investment
trusts, grantor trusts, brokers, dealers or traders in securities, commodities, currencies or notional principal contracts, certain former citizens or long-term
residents of the United States, persons who hold our Common shares as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or
integrated investment, persons that have a “functional currency” other than the U.S. dollar, persons who are subject to the tax accounting rules of Section 451(b)
of the Internal Revenue Code, persons that own directly, indirectly or through attribution 10% or more (by vote or value) of our equity, corporations that
accumulate earnings to avoid U.S. federal income tax, partnerships and other pass-through entities, and investors in such pass-through entities). This discussion
does not address any U.S. state or local or non-U.S. tax consequences or any U.S. federal estate, gift or alternative minimum tax consequences.
As used in this discussion, the term “U.S. Holder” means a beneficial owner of our Common shares that is, for U.S. federal income tax purposes, (1)
an individual who is a citizen or resident of the United States, (2) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created
or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate the income of which is subject to U.S. federal
income tax regardless of its source or (4) a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its
administration and one or more United States persons have the authority to control all of its substantial decisions or (y) that has elected under applicable U.S.
Treasury regulations to be treated as a domestic trust for U.S. federal income tax purposes.
If an entity treated as a partnership for U.S. federal income tax purposes holds our Common shares, the U.S. federal income tax consequences relating
to an investment in such Common shares will depend upon the status and activities of such entity and the particular partner. Any such entity and a partner in any
such entity should consult its own tax advisor regarding the U.S. federal income tax consequences applicable to it (and, as applicable, its partners) of the
purchase, ownership and disposition of our Common shares.
We have not sought, nor will we seek, a ruling from the IRS with respect to the matters discussed below. There can be no assurance that the IRS will
not take a different position concerning the tax consequences of the purchase, ownership or disposition of the Common shares or that any such position would
not be sustained. Persons considering an investment in our Common shares should consult their own tax advisors as to the particular tax consequences
applicable to them relating to the purchase, ownership and disposition of our Common shares, including the applicability of U.S. federal, state and local tax
laws and non-U.S. tax laws.
Passive Foreign Investment Company Rules
In general, a corporation organized outside the United States will be treated as a PFIC for any taxable year in which either (1) at least 75% of its gross
income is “passive income,” or the PFIC income test, or (2) on average at least 50% of its assets, determined on a quarterly basis, are assets that produce
passive income or are held for the production of passive income, or the PFIC asset test. Passive income for this purpose generally includes, among other things,
dividends, interest, royalties, rents, and gains from the sale or exchange of property that give rise to passive income. Assets that produce or are held for the
production of passive income generally include cash, even if held as working capital or raised in a public offering, marketable securities, and other assets that
may produce passive income. Generally, in determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each
corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.
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Although PFIC status is determined on an annual basis and generally cannot be determined until the end of the taxable year, based on the nature of our
current and expected income and the current and expected value and composition of our assets, we do not believe we were a PFIC for our 2023 tax year and we
do not expect to be a PFIC for our current taxable year. There can be no assurance that we will not be a PFIC in future taxable years. Even if we determine that
we are not a PFIC for a taxable year, there can be no assurance that the IRS will agree with our conclusion and that the IRS would not successfully challenge
our position. Because of the uncertainties involved in establishing our PFIC status, our U.S. counsel expresses no opinion regarding our PFIC status, and also
expresses no opinion with respect to our predictions or past determinations regarding our PFIC status.
If we are a PFIC in any taxable year during which a U.S. Holder owns our Common shares, the U.S. Holder could be liable for additional taxes and
interest charges under the “PFIC excess distribution regime” upon (1) a distribution paid during a taxable year that is greater than 125% of the average annual
distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period for our Common shares, and (2) any gain recognized on a
sale, exchange or other disposition, including, under certain circumstances, a pledge, of our Common shares, whether or not we continue to be a PFIC. Under
the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the U.S.
Holder’s holding period for our Common shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is
recognized) and any year prior to the first taxable year in which we are a PFIC will be taxed as ordinary income earned in the current taxable year. The amount
allocated to other taxable years will be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each
such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax.
If we are a PFIC for any year during which a U.S. Holder holds our Common shares, we must generally continue to be treated as a PFIC by that U.S.
Holder for all succeeding years during which the U.S. Holder holds such Common shares, unless we cease to meet the requirements for PFIC status and the
U.S. Holder makes a “deemed sale” election with respect to our Common shares. If the election is made, the U.S. Holder will be deemed to sell our Common
shares it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale
would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s Common shares would not be treated as shares of a
PFIC unless we subsequently become a PFIC.
If we are a PFIC for any taxable year during which a U.S. Holder holds our Common shares and one of our non-United States subsidiaries is also a
PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would
be taxed under the PFIC excess distribution regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC
even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. Any of our non-United States subsidiaries that have elected
to be disregarded as entities separate from us or as partnerships for U.S. federal income tax purposes would not be corporations under U.S. federal income tax
law and accordingly, cannot be classified as lower-tier PFICs. However, a non-United States subsidiary that has not made the election may be classified as a
lower-tier PFIC if we are a PFIC during your holding period and the subsidiary meets the PFIC income test or PFIC asset test.
If we are a PFIC, a U.S. Holder will not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on our
Common shares if a valid “mark-to-market” election is made by the U.S. Holder for our Common shares. An electing U.S. Holder generally would take into
account as ordinary income each year, the excess of the fair market value of our Common shares held at the end of such taxable year over the adjusted tax basis
of such Common shares. The U.S. Holder would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of such Common
shares over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary
losses deducted as a result of the mark-to-market election. The U.S. Holder’s tax basis in our Common shares would be adjusted annually to reflect any income
or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange or other disposition of our Common shares in any taxable year in
which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition would be treated first as ordinary loss (to
the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss. If, after having been a PFIC for a taxable year, we
cease to be classified as a PFIC because we no longer meet the PFIC income or PFIC asset test, the U.S. Holder would not be required to take into account any
latent gain or loss in the manner described above and any gain or loss recognized on the sale or exchange of the Common shares would be classified as a capital
gain or loss.
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A mark-to-market election is available to a U.S. Holder only for “marketable stock.” Generally, stock will be considered marketable stock if it is
“regularly traded” on a “qualified exchange” within the meaning of applicable U.S. Treasury regulations. A class of stock is regularly traded during any
calendar year during which such class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.
Our Common shares will be marketable stock as long as they remain listed on Nasdaq and are regularly traded. A mark-to-market election will not
apply to the Common shares for any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which
we become a PFIC. Such election will not apply to any of our non-U.S. subsidiaries. Accordingly, a U.S. Holder may continue to be subject to tax under the
PFIC excess distribution regime with respect to any lower-tier PFICs notwithstanding the U.S. Holder’s mark-to-market election for our Common shares.
The tax consequences that would apply if we are a PFIC would also be different from those described above if a U.S. Holder were able to make a valid
QEF election. As we do not expect to provide U.S. Holders with the information necessary for a U.S. Holder to make a QEF election, prospective investors
should assume that a QEF election will not be available.
The U.S. federal income tax rules relating to PFICs are very complex. Prospective U.S. investors are strongly urged to consult their own tax
advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of our Common shares, the consequences to them of an
investment in a PFIC, any elections available with respect to the Common shares and the IRS information reporting obligations with respect to the
purchase, ownership and disposition of Common shares of a PFIC.
Distributions
Subject to the discussion above under “— Passive Foreign Investment Company Rules,” a U.S. Holder that receives a distribution with respect to our
Common shares generally will be required to include the gross amount of such distribution in gross income as a dividend when actually or constructively
received by the U.S. Holder to the extent of the U.S. Holder’s pro rata share of our current and/or accumulated earnings and profits (as determined under U.S.
federal income tax principles). To the extent a distribution received by a U.S. Holder is not a dividend because it exceeds the U.S. Holder’s pro rata share of our
current and accumulated earnings and profits, it will be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the
U.S. Holder’s Common shares. To the extent the distribution exceeds the adjusted tax basis of the U.S. Holder’s Common shares, the remainder will be taxed as
capital gain. Because we may not account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect all
distributions to be reported to them as dividends. The amount of a dividend will include any amounts withheld by the company in respect of United Kingdom
taxes.
Distributions on our Common shares that are treated as dividends generally will constitute income from sources outside the United States for foreign
tax credit purposes and generally will constitute passive category income. Subject to applicable limitations, some of which vary depending upon the U.S.
Holder’s particular circumstances, any United Kingdom income taxes withheld from dividends on Common shares at a rate not exceeding the rate provided by
the Treaty will be creditable against the U.S. Holder’s U.S. federal income tax liability. The rules governing foreign tax credits are complex and U.S. Holders
should consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a foreign tax credit, U.S.
Holders may, at their election, deduct foreign taxes, including any United Kingdom income tax, in computing their taxable income, subject to generally
applicable limitations under U.S. law. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in
the taxable year. The amount of any dividend income paid in a currency other than the U.S. dollar will be the U.S. dollar amount calculated by reference to the
exchange rate in effect on the date of actual or constructive receipt, regardless of whether the payment is in fact converted into U.S. dollars at that time. If the
dividend is converted into U.S. dollars on the date of receipt, a U.S. holder should not be required to recognize foreign currency gain or loss in respect of the
dividend amount. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt.
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Distributions paid on our Common shares will not be eligible for the “dividends received” deduction generally allowed to corporate shareholders with
respect to dividends received from U.S. corporations under the Internal Revenue Code. Dividends paid by a “qualified foreign corporation’’ to non-corporate
U.S. Holders are eligible for taxation at a reduced capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that a
holding period requirement (more than 60 days of ownership, without protection from the risk of loss, during the 121-day period beginning 60 days before the
ex-dividend date) and certain other requirements are met. Each U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax
rate on dividends to its particular circumstances. However, if we are a PFIC for the taxable year in which the dividend is paid or the preceding taxable year (see
discussion above under “— Passive Foreign Investment Company Rules’’), we will not be treated as a qualified foreign corporation, and therefore the reduced
capital gains tax rate described above will not apply.
A non-United States corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding
taxable year) generally will be considered to be a qualified foreign corporation with respect to any dividend it pays on Common shares that are readily tradable
on an established securities market in the United States.
The amount of any dividend income that is paid in Pounds Sterling will be the U.S. dollar amount calculated by reference to the exchange rate in effect
on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of
receipt (actual or constructive), a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder
may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt (actual or constructive).
Sale, Exchange or Other Taxable Disposition of Our Common shares
Subject to the discussion above under “— Passive Foreign Investment Company Rules,” a U.S. Holder generally will recognize capital gain or loss for
U.S. federal income tax purposes upon the sale, exchange or other disposition of our Common shares in an amount equal to the difference, if any, between the
amount realized (i.e., the amount of cash plus the fair market value of any property received) on the sale, exchange or other disposition and such U.S. Holder’s
adjusted tax basis in the Common shares. Such capital gain or loss generally will be long-term capital gain taxable at a reduced rate for non-corporate U.S.
Holders or long-term capital loss if, on the date of sale, exchange or other disposition, the Common shares were held by the U.S. Holder for more than one year.
Any capital gain of a non-corporate U.S. Holder that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject
to limitations. Any gain or loss recognized from the sale or other disposition of our Common shares will generally be gain or loss from sources within the
United States for U.S. foreign tax credit purposes.
Medicare Tax
Certain U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally are subject to a 3.8% tax on all or a
portion of their net investment income, which may include their gross dividend income and net gains from the disposition of our Common shares. If you are a
U.S. Holder that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of this Medicare tax to your income
and gains in respect of your investment in our Common shares.
Information Reporting and Backup Withholding
U.S. Holders may be required to file certain U.S. information reporting returns with the IRS with respect to an investment in our Common shares,
including, among others, IRS Form 8938 (Statement of Specified Foreign Financial Assets). In addition, each U.S. Holder who is a shareholder of a PFIC must
file an annual report containing certain information. U.S. Holders paying more than $100,000 for our Common shares may be required to file IRS Form 926
(Return by a U.S. Transferor of Property to a Foreign Corporation) reporting this payment. Substantial penalties and other adverse circumstances may be
imposed upon a U.S. Holder that fails to comply with the required information reporting.
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Dividends on and proceeds from the sale or other disposition of our Common shares generally have to be reported to the IRS unless the U.S. Holder
establishes a basis for exemption. Backup withholding may apply to amounts subject to reporting if the holder (1) fails to provide an accurate U.S. taxpayer
identification number or otherwise establish a basis for exemption, or (2) is described in certain other categories of persons. However, U.S. Holders that are
corporations generally are excluded from these information reporting and backup withholding tax rules.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a
credit against a U.S. Holder’s U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.
U.S. Holders should consult their own tax advisors regarding the backup withholding tax and information reporting rules.
EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF
AN INVESTMENT IN OUR COMMON SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES. IN ADDITION, SIGNIFICANT
CHANGES IN U.S. FEDERAL INCOME TAX LAWS WERE RECENTLY ENACTED. PROSPECTIVE INVESTORS SHOULD ALSO CONSULT
WITH THEIR TAX ADVISORS WITH RESPECT TO SUCH CHANGES IN U.S. TAX LAW AS WELL AS POTENTIAL CONFORMING
CHANGES IN STATE TAX LAWS.
Bermuda Tax Considerations
Under present Bermuda law, no Bermuda withholding tax on dividends or other distributions, or any Bermuda tax computed on profits or income or on
any capital asset, gain or appreciation will be payable by us or applicable to our operations, and there is no Bermuda tax in the nature of estate duty or
inheritance tax applicable to our shares, debentures or other obligations held by non-residents of Bermuda.
Tax Assurance
We have obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event
that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in
the nature of estate duty or inheritance tax, such tax shall not, until March 31,2035, be applicable to us or to any of our operations or to our shares, debentures
or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or is payable by us in respect of real property owned or leased
by us in Bermuda.
Taxation of Shareholders
Shareholders should seek advice from their tax advisor to determine the taxation to which they may be subject based on the shareholder’s
circumstances.
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F. Dividends and Paying Agents
Not applicable.
G. Statements by Experts
Not applicable
H. Documents on Display
We are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC,
including annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information filed with the SEC at the public
reference facilities of the SEC located at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by
writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The SEC also maintains a website at http://www.sec.gov from which certain filings may be accessed.
We also make available on our website, free of charge, our Annual Report and the text of our reports on Form 6-K, including any amendments to these
reports, as well as certain other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Our website
address is “www.tizianalifesciences.com.” The information contained on our website is not incorporated by reference in this Annual Report.
Members of the general public have a right to inspect the public documents of a company available at the office of the Registrar of Companies in
Bermuda. These documents include the company’s memorandum of association, including its objects and powers, and certain alterations to the memorandum of
association. The shareholders have the additional right to inspect the bye-laws of the company, minutes of general meetings and the company’s audited financial
statements, which must be presented to the annual general meeting. The register of members of a company is also open to inspection by shareholders and by
members of the general public without charge. The register of members is required to be open for inspection for not less than two hours in any business day
(subject to the ability of a company to close the register of members for not more than thirty days in a year). A company is required to maintain its share register
in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. A company is required to keep at its
registered office a register of directors and officers that is open for inspection for not less than two hours in any business day by members of the public without
charge. A company is also required to file with the Registrar of Companies in Bermuda a list of its directors to be maintained on a register, which register will
be available for public inspection subject to such conditions as the Registrar may impose and on payment of such fee as may be prescribed. Bermuda law does
not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.
I. Subsidiary Information
For information on our subsidiaries, see “Item 4C. Organizational Structure.”
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ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks in the ordinary course of our business, which are principally limited to interest rate fluctuations and foreign currency
exchange rate fluctuations. We maintain significant amounts of cash and cash equivalents that are in excess of federally insured limits in various currencies,
placed with one or more financial institutions for varying periods according to expected liquidity requirements.
Interest Rate Risk
Our exposure to interest rate sensitivity is impacted by changes in the underlying U.S. and U.K. bank interest rates. Our surplus cash and cash
equivalents have been invested in interest-bearing savings and money market accounts from time to time. We have not entered into investments for trading or
speculative purposes. Due to the conservative nature of our investment portfolio, which is predicated on capital preservation of investments with short-term
maturities, we do not believe an immediate one percentage point change in interest rates would have a material effect on the fair market value of our portfolio,
and therefore we do not expect our operating results or cash flows to be significantly affected by changes in market interest rates.
Foreign Currency Exchange Risk
We maintain our consolidated financial statements in the functional currency US Dollar. Monetary assets and liabilities denominated in currencies
other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Non-monetary assets and
liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the date of the transaction. Exchange
gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective periods.
The currencies of our subsidiaries are generally their functional currencies, In translating the financial statements of those subsidiaries or branches
whose functional currency is other than the U.S. dollar, assets and liabilities are converted into U.S. dollars using the rates of exchange in effect at the balance
sheet dates, and revenues and expenses are converted using the average foreign exchange rates for the period. Translation adjustments are not included in
determining net income (loss) but are included in foreign exchange adjustment to accumulate other comprehensive loss, a component of shareholders’ equity.
We do not currently engage in currency hedging activities in order to reduce our currency exposure, but we may begin to do so in the future.
Instruments that may be used to hedge future risks may include foreign currency forward and swap contracts. These instruments may be used to selectively
manage risks, but there can be no assurance that we will be fully protected against material foreign currency fluctuations.
ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary Shares
Not applicable.
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ITEM 13: DEFAULTS, DIVIDEND ARREARAGES AN DELINQUENCIES
None.
PART II
ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Finance Director, have evaluated the effectiveness
of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) as of December 31, 2023. Based on that evaluation, the Company’s Chief Executive Officer and the Company’s Finance Director have
concluded that as of December 31, 2023, due to the existence of the material weaknesses in the Company’s internal control over financial reporting described
below, the Company’s disclosure controls and procedures were not effective.
Management’s Annual Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and IFRIC interpretations as applicable to companies
reporting under IFRS.
Because of their inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, the Company’s Chief Executive Officer and the Company’s Finance Director, the
Company conducted an evaluation of the effectiveness of its internal control over financial over financial reporting based on the framework described in
Internal Control-Integrated Framework issued by the Commission of Sponsoring Organizations of the Treadway Commission, as revised in 2013. Based on that
evaluation, management has concluded that the Company did not maintain effective internal control over financial reporting as of the period ended December
31, 2023 due to the existence of the material weaknesses in internal control over financial reporting described below.
Material Weaknesses
A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in
the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the
Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
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Management has determined that the Company did not maintain effective internal control over financial reporting as of the period ended December 31,
2023 due to the existence of the following material weaknesses identified by management. The material weaknesses identified below did not result in a material
misstatement of our consolidated financial statements, and management believes that our consolidated financial statements present fairly the consolidated
financial position, results of operations and cash flows for the periods covered. However, management recognizes that the failure of the internal control over
financial reporting to operate effectively as described below could have resulted in a material misstatement which may not have been detected by our controls:
Control Environment
The Company did not maintain an effective control environment. The control environment, which is the responsibility of senior management, sets the
tone of the organization, influences the control consciousness of its people, and is the foundation for all other components of internal control over financial
reporting. Our control environment was ineffective because:
● We did not timely develop and communicate an employee handbook for employees to consult in the event an issue arises
Remediation efforts
Management intends to remediate this item in the following manner:
i. Develop and maintain an Employee Handbook, for employees to reference.
We intend to complete the remediation of the material weaknesses discussed above as soon as practicable, but we can give no assurance that we will be
able to do so. Designing and implementing effective disclosure controls and procedures is a continuous effort that requires us to anticipate and react to changes
in our business and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately
satisfies our reporting obligations. The remedial measures that we have taken and intend to take may not fully address the material weaknesses that we have
identified, and material weaknesses in our disclosure controls and procedures may be identified in the future. Should we discover such conditions, we intend to
remediate them as soon as practicable. We are committed to taking appropriate steps for remediation, as needed.
ITEM 16: [RESERVED]
ITEM 16A: AUDIT COMMITTEE FINANCIAL EXPERT
The members of our audit committee are Mr John Brancaccio and Mr. Willy Simon. Mr. John Brancaccio is the chair of the audit committee. Each of
our audit committee members satisfies the independence requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Marketplace Rules and the independence
requirements of Rule 10A-3(b)(1) under the Exchange Act. Our board of directors has determined that Mr. John Brancaccio is an “audit committee financial
expert” as defined in Item 16A of Form 20-F.
ITEM 16B: CODE OF ETHICS
Our Code of Business Conduct and Ethics is applicable to all of our employees, officers and directors and is available on our website at
https://www.tizianalifesciences.com. Our Code of Business Conduct and Ethics provides that our directors and officers are expected to avoid any action,
position or interest that conflicts with the interests of our company or gives the appearance of a conflict. Our directors and officers have an obligation under our
Code of Business Conduct and Ethics to advance our company’s interests when the opportunity to do so arises. We expect that any amendment to this code, or
any waivers of its requirements, will be disclosed on our website. Information contained on, or that can be accessed through, our website is not incorporated by
reference into this Annual Report, and you should not consider information on our website to be part of this Annual Report.
ITEM 16C: PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth, for each of the years indicated, the aggregate fees billed to us for services rendered by PKF and Mazars, our
independent registered public accounting firm.
PKF Littlejohn LLP
Audit fees
Other assurance services
Total
Mazars LLP
Year Ending December 31,
2023
2022
(in thousands)
165
25
190
196
10
206
Year Ending December 31,
2023
2022
(in thousands)
Audit fees
Other assurance services
Total
-
-
-
98
21
119
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ITEM 16D: EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E: PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
During the year ended December 31, 2023, we purchased 281,253 of our common shares at an average price of $0.90 (excluding fees).
ITEM 16F: CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
None.
ITEM 16G: CORPORATE GOVERNANCE
The Sarbanes-Oxley Act of 2002, as well as related rules subsequently implemented by the SEC, requires foreign private issuers, including our
company, to comply with various corporate governance practices. In addition, Nasdaq rules provide that foreign private issuers may follow home country
practice in lieu of the Nasdaq corporate governance standards, subject to certain exceptions and except to the extent that such exemptions would be contrary to
U.S. federal securities laws. The home country practices followed by our company in lieu of Nasdaq rules are described below:
● We do not follow Nasdaq’s quorum requirements applicable to meetings of shareholders. Such quorum requirements are not required under
Bermuda law. In accordance with generally accepted business practice, our Bye-laws provide alternative quorum requirements that are generally
applicable to meetings of shareholders.
● We do not follow Nasdaq’s requirements that non-management directors meet on a regular basis without management present. Our board of
directors may choose to meet in executive session at their discretion.
● We do not follow Nasdaq’s requirements to seek shareholder approval for the implementation of certain equity compensation plans, the issuances
of ordinary shares under such plans, or in connection with certain private placements of equity securities. In accordance with Bermuda law, we
are not required to seek shareholder approval to allot ordinary shares in connection with applicable employee equity compensation plans. We will
follow Bermuda. law with respect to any requirement to obtain shareholder approval prior to any private placements of equity securities.
We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance
requirements of the Sarbanes-Oxley Act of 2002, the rules adopted by the SEC and Nasdaq’s listing standards.
Because we are a foreign private issuer, our directors and senior management are not subject to short-swing profit and insider trading reporting
obligations under Section 16 of the U.S. Securities Exchange Act of 1934, as amended, or Exchange Act. They are, however, subject to the obligations to report
changes in share ownership under Section 13 of the Exchange Act and related SEC rules.
ITEM 16H: MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J: INSIDER TRADING POLICIES
Pursuant to applicable SEC transition guidance, the disclosure required by Item 16J will only be applicable to the Company from the fiscal year ending
on December 31, 2024.
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ITEM 16K: CYBERSECURITY
We believe cybersecurity is critical to advancing our technological advancements. As a biopharmaceutical company, we face a multitude of
cybersecurity threats that range from attacks common to most industries, such as ransomware and denial-of service. Our customers, suppliers, subcontractors,
and business partners face similar cybersecurity threats, and a cybersecurity incident impacting us or any of these entities could materially adversely affect our
operations, performance, and results of operations. These cybersecurity threats and related risks make it imperative that we expend resources on cybersecurity.
Our Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk
exposure with our strategic objectives. Senior leadership, including our cybersecurity consultant, regularly briefs the Board of Directors on our cybersecurity
and information security posture and the Board of Directors is apprised of cybersecurity incidents deemed to have a moderate or higher business impact, even if
immaterial to us. The full Board retains oversight of cybersecurity because of its importance. In the event of an incident, we intend to follow our detailed
incident response playbook, which outlines the steps to be followed from incident detection to mitigation, recovery, and notification, including notifying
functional areas (e.g., legal), as well as senior leadership and the Board, as appropriate. Our Cybersecurity consultant has extensive information technology and
program management experience. We have implemented a governance structure and processes to assess, identify, manage, and report cybersecurity risks.
As a biopharmaceutical company, we must comply with extensive regulations, including requirements imposed by the Federal Drug Administration
related to adequately safeguarding patient information and reporting cybersecurity incidents to the SEC. We work with our cybersecurity consultant on
assessing cybersecurity risk and on policies and practices aimed at mitigating these risks. We believe we are positioned to meet the requirements of the SEC. In
addition to following SEC guidance and implementing pre-existing third party frameworks, we have developed our own practices and frameworks, which we
believe enhance our ability to identify and manage cybersecurity risks. Third parties also play a role in our cybersecurity. We engage third-party services to
conduct evaluations of our security controls, whether through penetration testing, independent audits, or consulting on best practices to address new challenges.
Assessing, identifying, and managing cybersecurity related risks are factored into our overall business approach.
We rely heavily on our supply chain to deliver our products and services, and a cybersecurity incident at a supplier, subcontractor or business partner
could materially adversely impact us. We require that our subcontractors report cybersecurity incidents to us so that we can assess the impact of the incident on
us. Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could
have a material adverse effect on us. While we maintain cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully
insured. See “Risk Factors” for a discussion of cybersecurity risks.
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ITEM 17: FINANCIAL STATEMENTS
We have elected to furnish financial statements and related information specified in Item 18.
PART III
ITEM 18: FINANCIAL STATEMENTS
See the Financial Statements beginning on page F-1.
ITEM 19: EXHIBITS
Exhibit No.
Description
1.1
1.2
2.1*
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
8.1
12.1*
12.2*
13.1*
13.2*
Memorandum of Association of Tiziana Life Sciences Ltd, adopted as of October 20, 2021 (incorporated by reference to Exhibit 3.1 to Form 8-
K12B filed on October 21, 2021).
Amended and restated bye-laws of Tiziana Life Sciences Ltd, adopted as of October 20, 2021 (incorporated by reference to Exhibit 3.2 to Form
8-K12B filed on October 21, 2021).
Description of Securities
License Agreement relating to Milciclib between Nerviano Medical Services S.r.l. and Tiziana Life Sciences PLC, dated January 2015
(incorporated by reference to Exhibit 10.1 to Amendment No. 1 to Form F-1 filed on August 23, 2018).
License and Sublicence Agreement relating to CD3 (NI-0401) between Novimmune SA and Tiziana Life Sciences PLC, dated December 2014.
incorporated by reference to Exhibit 10.2 to Amendment No. 1 to Form F-1 filed on August 23, 2018).
License and Sublicence Agreement relating to IL-6r (NI-1201) between Novimmune SA and Tiziana Life Sciences PLC, dated December 2016.
(incorporated by reference to Exhibit 10.3 to Amendment No. 1 to Form F-1 filed on August 23, 2018).
License Agreement relating to a novel formulation of Foralumab in a medical device for nasal administration between The Brigham and
Women’s Hospital, Inc. and Tiziana Life Sciences plc, dated April 2018. (incorporated by reference to Exhibit 10.4 to Amendment No. 1 to
Form F-1 filed on August 23, 2018).
Annual Lease for 14-15 Conduit Street, London W1S 2XJ United Kingdom (incorporated by reference to Exhibit 4.5 to Form 20-F filed on
April 26, 2023).
Lease agreement for 601 New Britain Road, Suite 102, Doylestown Old Easton Road, Doylestown, Pennsylvania, 18901, United States, dated
August 29, 2022. (incorporated by reference to Exhibit 4.7 to Form 20-F filed on April 26, 2023).
Tiziana Life Sciences plc Employee Share Option Plan, with Non-Employee Sub-Plan and US Sub-Plan, adopted by the Board on 23 March
2016 and approved by shareholders on June 30, 2016. (Incorporated by reference to Exhibit 4.7 to Form 20-F filed on April 4, 2019).
Amended and Restated Service Agreement dated July 11, 2019, between the Registrant and Dr. Kunwar Shailubhai (incorporated by reference
to Exhibit 10.9 to Amendment No. 2 to Form F-1 filed on September 20, 2019)
Form of Deed of Indemnity for board members. (Incorporated by reference to Exhibit 10.10 to Amendment No. 1 to Form F-1 filed on August
23, 2018).
Tiziana Life Sciences Ltd 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to Form 8-K12B filed on October 21, 2021).
List of Subsidiaries. (Incorporated by reference to Exhibit 8.1 to Form 20-F filed on May 23, 2022).
Certification by the Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification by the Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification by the 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 by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
15.1*
15.2*
97*
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Consent of Mazars LLP
Consent of PKF Littlejohn.
Clawback policy
Inline XBRL Instance Document.
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document.
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
Filed Herewith
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The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this registration statement on its behalf.
SIGNATURES
T L S L
By:
/s/ Gabriele Cerrone
Gabriele Cerrone
Acting Chief Executive Officer
Date: May 10, 2024
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TIZIANA LIFE SCIENCES LTD
Report of Independent Registered Public Accounting Firm (PKF Littlejohn, London, United Kingdom, PCAOB ID 2814)
Report of Independent Registered Public Accounting Firm (Mazars LLP, London, United Kingdom, PCAOB ID 1401)
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
F-2
F-3
F-4
F-5
F-6
F-7
F-8
Consolidated Financial Statements and Notes to Financial Statements to be provided under separate cover.
F-1
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Tiziana Life Sciences Ltd
Opinion on the Consolidated Financial Statements
We have audited the accompanying Consolidated Balance Sheet of Tiziana Life Sciences Ltd and its subsidiaries (the “Group”) as of December 31, 2023 and
2022 and the related Consolidated Statements of Operations and Comprehensive Loss, Consolidated Statements of Cash Flows and Consolidated Statements of
Shareholders’ Equity for each of the two years ended December 31, 2023 and the related notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Group as
of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the two years ended December 31, 2023 and 2022 in conformity
with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Going Concern Uncertainty
The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern. As discussed in note 2 to
the consolidated financial statements, the Group are pre-revenue, and its business model requires significant ongoing expenditure on research and development.
The forecast prepared by management indicates that the current cash held will be utilised by July 2024 without additional financing facilities in place.
Management is currently pursuing a number of alternatives in order to raise sufficient funds, including deferred payment of existing liabilities, working capital
cost reductions and arranging short-term funding. These conditions raise substantial doubt about the Group’s ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for opinion
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated
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 Group 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 consolidated financial statements are free of material misstatement, whether due to error or fraud. The Group 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 Group’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 consolidated financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be
communicated to the audit committee and that: 1) relate to accounts or disclosures that are material to the financial statements and 2) involved our especially
challenging, subjective, or complex judgements. We determined that there are no critical audit matters.
PKF Littlejohn LLP
We have served as the Group’s auditor since 2022.
London, England
May 10, 2024
F-2
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Opinion on the Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying Consolidated Statements of Operations and Comprehensive Loss, Consolidated Statements of Shareholders’ Equity, and
Consolidated Statements of Cash Flows of Tiziana Life Sciences Ltd and it’s subsidiaries (the Group) for the year ended December 31, 2021, 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 results of its operations and its cash flows for the year ended December 31, 2021, in conformity with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated
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 Group in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB. The Group is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for
the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion.
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 consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Mazars LLP
Mazars LLP
We served as the Group’s auditor from 2016 until November 17, 2022
London, England
May 20, 2022
F-3
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TIZIANA LIFE SCIENCES LTD
Consolidated Balance Sheets
(In thousands)
ASSETS
Notes
Current assets:
Cash and cash equivalents
Prepayments and other receivables
Taxation receivable
Related party receivables
Total current assets
Non – Current Assets:
Property and equipment, net
Right of use asset
Intangible asset
Investment in related party
Total non-current assets
Total assets
Liabilities:
Current liabilities:
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued expenses
Lease Liability
Other liabilities
Total current liabilities
Lease Liability (Non-Current)
Total liabilities
Shareholders’ Equity:
Called up share capital (103,087,744 shares are issued and outstanding; 2022: 102,272,614)
Share premium
Share based payment reserve – Options
Share based payment reserve – warrants
Merger relief reserve
Treasury shares
Shares to be issued reserve
Translation reserve
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
12
12
21
22
19
18
22
22
13
13
Year ended
December 31,
2023
$
2022
$
1,183
223
3,793
2,138
7,337
10
283
-
4,554
4,847
18,122
300
4,246
1,614
24,282
17
372
-
1,806
2,195
12,184
26,477
6,387
138
14
6,539
109
6,648
103
16,492
6,905
-
118,697
(1,574)
225
(1,636)
(133,676)
5,536
12,184
6,532
122
9
6,663
243
6,906
102
15,596
5,190
697
118,697
(1,320)
-
(3,128)
(116,263)
19,571
26,477
The accompanying notes are an integral part of these consolidated financial statements.
F-4
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TIZIANA LIFE SCIENCES LTD
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except loss per share)
Operating Expenses
Research and Development
Operating expenses
Realization bonus
Total operating expenses
Loss from operations
Other income/(expense):
Finance (expense)/ income
FV Loss on Investment
Other income/(losses)
Total other income/(expense)
Loss from operations before income taxes
Income tax (expense)/credit
Loss for the year
Other Comprehensive loss:
Gain/(Loss) on currency translation
Comprehensive loss
Notes
9
9
4
Year ended December 31,
2022
$
2023
$
2021
$
(8,113)
(9,871)
-
(17,984)
(12,955)
(1,631)
-
(14,586)
(13,208)
(13,311)
(855)
(27,374)
(17,984)
(14,586)
(27,374)
1,144
(402)
-
742
(7)
(869)
65
(811)
(176)
-
893
717
(17,242)
(15,397)
(26,657)
(449)
-
3,240
(17,691)
(15,397)
(23,417)
1,492
(3,582)
(4,478)
(16,199)
(18,979)
(27,895)
Basic and diluted loss per share attributable to common shareholders
$
(0.17) $
(0.15) $
(0.24)
The accompanying notes are an integral part of these consolidated financial statements.
F-5
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TIZIANA LIFE SCIENCES LTD
Consolidated Statements of Shareholders’ Equity
(In thousands)
Share
Based
Payment
Reserve
(Options)
$
8,624
-
5,173
-
5,173
-
-
-
13,797
-
1,811
(3,221)
(7,197)
(8,607)
-
Share
Capital
$
Share
Premium
$
-
97
759
2
-
-
3 14,837
5 15,596
-
-
-
-
-
-
102 15,596
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
102 15,596
323
-
-
-
573
-
-
1
-
-
-
-
-
-
-
1
-
-
-
-
896
-
-
-
103 16,492
-
-
5,190
-
1,773
(39)
(19)
-
-
-
-
1,715
-
-
-
6,905
Share
Based
Payment
Reserve
(warrants)
$
Merger
Reserve
$
Treasury
Shares
$
Retained
Earnings
$
Shares
to be
issued
Reserve
$
-
-
-
-
-
-
-
697 118,697
-
-
-
-
-
-
-
697 118,697
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
697 118,697
-
-
-
-
-
-
-
-
-
-
-
(438)
(259)
-
- (84,646) 13,503
-
-
-
-
-
-
- (13,503)
-
- (13,503)
-
-
- (23,417)
-
-
-
-
- (23,417)
-
- (108,063)
-
-
(1,320)
-
-
-
-
-
-
-
7,197
-
-
-
7,197
-
- (15,397)
-
(15,397)
(1,320) (116,263)
-
-
-
19
-
259
-
-
-
-
-
-
-
(254)
-
-
-
-
-
-
-
-
-
-
-
-
-
(697)
-
-
-
-
-
-
0 118,697
-
(254)
-
278
- (17,691)
-
-
(17,691)
(1,574) (133,676)
225
-
-
-
-
225
Translation
Reserve
Total
Equity
$
$
5,414 62,386
761
-
- 5,173
(482)
855
(482) 6,789
- (23,417)
(4,478) (4,478)
(4,478) (27,895)
454 41,280
- (1,320)
-
1,811
- (3,221)
-
-
- (1,410)
- (15,397)
(3,582) (3,582)
(3,582) (18,979)
(3,128) 19,571
-
324
- 1,773
(39)
-
-
-
135
-
-
-
(254)
-
-
225
- 2,164
- (17,691)
1,492 1,492
1,492 (16,199)
(1,636) 5,536
Balance at 1 January 2021
Issue of share capital
Share based payment charge (options)
Shares issued in lieu of cash realization bonus
Total transactions with owners
Loss for Period
Translation
Total comprehensive loss
Balance at 31 December 2021
Treasury Shares
Share based payment charge (options)
Options Forfeited/Cancelled in the year
Reclass of FV for options forfeited/Cancelled
Total transactions with owners
Loss for Period
Translation
Total comprehensive loss
Balance at 31 December 2022
Issuance of Stock
Share based payment charge (options)
Options forfeited/cancelled in the year
Reclass of FV for options forfeited/Cancelled
Warrants Exercised in the year
Warrants Forfeited in the year
Buyback of Treasury Shares
Shares to be issued in lieu of directors fees
and cash bonus
Total transactions with owners
Loss for Period
Translation
Total comprehensive loss
Balance at 31 December 2023
The accompanying notes are an integral part of these consolidated financial statements.
F-6
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TIZIANA LIFE SCIENCES LTD
Consolidated Statements of Cash Flows
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss from operations before income taxes
Convertible loan interest accrued
Shares issued in lieu of directors fees
Share based payment – options
Options forfeited during the year
Fair value loss on investment, net
Loss on disposal of asset
Bonus to be settled in equity
Depreciation
(Gain)/ loss on foreign exchange
Depreciation of right-of-use asset
(Gain)/loss on disposal of right of use asset
Proceeds from finance lease reclassified as an investing activity
Cash inflow from taxation
Interest on related party loan conversion
Net (increase) in related party receivables
Net (decrease)/increase in related party payables
Net (increase)/decrease in operating assets/other receivables
Net increase/(decrease) in operating liabilities /other liabilities
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of PPE
Proceeds from finance lease
Investment in Related Party
Purchase of Treasury Shares
Net cash used in Investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of ordinary shares
Proceeds from issuance of warrants
Repayment of leasing liabilities
Net cash (used in)/provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalent, beginning of year
Exchange difference on cash and cash equivalents
Cash and cash equivalent, end of year
F-7
$
Year ended December 31,
2022
2023
2021
(17,242) $
-
425
1,773
(39)
402
-
100
7
1,519
89
-
-
-
(1,150)
(1,524)
-
80
(138)
(15,698)
-
-
(1,000)
(253)
(1,253)
24
135
(119)
40
(15,397)
-
-
1,811
(3,221)
869
129
-
1
(3,183)
50
-
-
490
-
(1,158)
(1,355)
1,002
347
(19,615)
-
-
(2,676)
(1,320)
(3,996)
-
-
(55)
(55)
(26,657)
163
-
5,173
-
-
-
855
8
(1,899)
133
(28)
(152)
1,415
-
(88)
(685)
516
(516)
(21,762)
(22)
152
-
-
130
-
129
(152)
(23)
(16,911)
(23,666)
(21,655)
18,122
(28)
1,183
42,186
(398)
18,122
65,824
(1,983)
42,186
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TIZIANA LIFE SCIENCES LTD
Notes to Consolidated Financial Statements
1. GENERAL INFORMATION
Tiziana Life Sciences Ltd, (the “company”) is a public limited company incorporated in Bermuda and at the year-end is quoted on the NASDAQ
Capital Market (NASDAQ: TLSA). The previous parent, Tiziana Life Sciences PLC, delisted from the main market of the London Stock Exchange (LSE:
TILS) on October 21, 2021. The address of its registered office is given on page 1. The principal activities of the Company and its subsidiaries (the Group) are
that of a clinical stage biotechnology company that specializes in the development of transformative therapies for neurodegenerative and lung diseases. Our
clinical pipeline includes drug assets for Secondary Progressive Multiple Sclerosis, ALS. Alzheimer’s, Crohn’s Disease and KRAS+ NSCLC.
The functional currency for the Company is also US dollars ($) indicative of the primary economic environment in which the Company operates.
These consolidated financial statements are presented in thousands of dollars ($’000) which is the presentational currency of the Company.
2. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been
applied consistently to all the years presented unless otherwise stated.
Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB), and International Financial Reporting Interpretations Committee IFRIC interpretations as
applicable to companies reporting under IFRS. These accounts have been prepared under the historical cost convention except for the following items:
-
-
Financial instruments – fair value through profit or loss
Financial instruments – fair value through other comprehensive income
Going Concern
The Group incurred losses during the year and has net assets at the year end.
The Group is in the early stages of developing its business focusing on the discovery and development of novel molecules that treat human disease in
oncology and immunology. As the Group is pre-revenue, the Directors expect the Group to incur further losses and to require significant capital expenditure in
continuing to develop clinical stage development therapeutic candidates in both oncology and immunology. The Group has successfully funded clinical trials to
date and going forward will need to continue to secure additional investment to fund the clinical trials.
The Group has experienced net losses and significant cash outflows from cash used in operating activities over the past years, and as December 31,
2023, had an accumulated loss of $134m and a net loss for the year ended December 31, 2023 of $17.7m.
The Directors have prepared cash flow projections that include the costs associated with the continued clinical trials and additional investment to fund
that operation. Based on those projections, that the company will not be able to meet its liabilities as they fall due within the next 12 months from the date
when these financial statements are issued. The Directors are however aware, through their own extensive experience in the sector, that this position is not
uncommon in the context of a pre-revenue life sciences company principally involved in cash consuming research and development activity.
The top line data for the clinical trial is expected in 2025 and the Directors are taking steps to put engagements and plans into place to ensure that
sufficient funds will be forthcoming. These steps include possible deferred payments of existing liabilities, working capital cost reductions and raising
additional equity. Until and unless the Group and Company secures sufficient investment to fund their clinical pipeline, there is a material uncertainty that may
cast significant doubt on the Group and Company’s ability to continue as a going concern, and therefore, that it may be unable to realize its assets and discharge
its liabilities in the normal course of business. Despite this material uncertainty, the Directors conclude that it is appropriate to continue to adopt the going
concern basis of accounting as the Directors are confident, based on the previous fund-raising history as well as additional measures being planned, that
sufficient funds will be forthcoming and accordingly they have prepared these financial statements on a going concern basis.
New and Revised Standards
Standards in effect in 2023
There are no new IFRS standards, amendments to standards or interpretations that are mandatory for the financial year beginning on January 1, 2023,
that are relevant to the Group and that have had any impact in the year to December 31, 2023. New standards, amendments to standards and interpretations that
are not yet effective, which have been deemed by the Group as currently not relevant and are not listed here.
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Basis of consolidation
Subsidiary undertakings are all entities over which the Group exercises control. The Group has control when it can demonstrate all, of the following:
(a) power over the investee; (b) exposure, or rights, to variable returns from its involvement with the investee; and (c) the ability to use its power over the
investee to affect the amount of the investor’s return.
The existence and effect of both current voting rights and potential voting rights that are currently exercisable or convertible are considered when
assessing whether control of an entity is exercised. Subsidiaries are consolidated from the date at which the Group obtains control and are de-consolidated from
the date at which control ceases.
Business combination
The Group undertook a group reorganization exercise during the year to December 31, 2021. As part of this process, Tiziana Life Sciences Ltd (a
Bermudan entity) was inserted above Tiziana Life Sciences Limited (formerly Tiziana Life Sciences Plc) in the Group’s structure. As both entities were under
common control of Planwise Ltd, the transaction does not constitute a business combination under IFRS 3 ‘Business combinations’ and instead has been
accounted for as a group reorganization, using the pooling of interest method. This results in assets and liabilities being measured at their carrying amount in
Tiziana Life Sciences Limited (formerly Tiziana Life Sciences Plc) but share capital being that of Tiziana Life Sciences Ltd (a Bermudan entity). Merger
accounting has been used to account for this transaction (See note 15 for details).
On 21 October 2021, Tiziana Life Sciences Ltd. (the ‘Company’) acquired the entire shareholding of the former Tiziana Life Sciences Plc and its
related subsidiaries, by a way of a share for share exchange with Tiziana Life Sciences Ltd becoming the Group’s immediate parent company.
On 21 October 2021, the Company was admitted for listing on the NASDAQ Capital Market Exchange and the former Tiziana Life Sciences Plc was
delisted from the London Stock Exchange.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board. The Board considers there to be only one
operating segment being the research and development of biotechnological and pharmaceutical products.
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Taxation
The tax expense for the year represents the total of current taxation and deferred taxation. The charge in respect of current taxation is based on the
estimated taxable profit for the year. Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted
or substantively enacted by the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted
by the balance sheet date and expected to apply when the related deferred tax is realized, or the deferred liability is settled. Deferred tax assets are recognized to
the extent that it is probable that the future taxable profit will be available against which the temporary differences can be utilized.
Research and Development tax credits are provided for in the year that the costs are incurred. These are estimated based on eligible research and
development expenditure. Any differences that are rebated are recognized in the following year, when the cash is received from the UK tax authorities.
Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in
which the entity operates (the functional currency). The consolidated financial statements are presented in US dollars, which is the Group’s presentational
currency.
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognized in the Consolidated statements of operations and comprehensive loss.
The financial statements of overseas subsidiary undertakings are translated into US dollars on the following basis:
● Assets and liabilities at the rate of exchange ruling at the year-end date.
● Profit and loss account items at the average rate of exchange for the year.
Exchange differences arising from the translation of the net investment in foreign entities, borrowings and other currency instruments designated as
hedges of such investments, are taken to equity (and recognized in the Consolidated statements of operations and comprehensive loss) on consolidation.
License fees
Payments made which provide the right to perform research are carefully evaluated to determine whether such payments are to fund research or
acquire an asset. “License fees expenses” are recognized as incurred.
Research and development
All on-going research and development expenditure is currently expensed in the period in which it is incurred. Due to the regulatory environment
inherent in the development of the Group’s products, the criteria for development costs to be recognized as an asset, as set out in IAS 38 ‘Intangible Assets’, are
not met until a product has been granted regulatory approval and it is probable that future economic benefit will flow to the Group. The Group currently has no
qualifying expenditure.
Fair Value Measurement
Management have assessed the categorization of the fair value measurements using the IFRS 13 fair value hierarchy. Categorization within the
hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:
Level 1 - valued using quoted prices in active markets for identical assets
Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within
Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.
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Financial instruments
The Group classifies a financial instrument, or its component parts, as a financial liability, a financial asset or an equity instrument in accordance with
the substance of the contractual arrangement and the definitions of a financial liability, a financial asset and an equity instrument.
The Group evaluates the terms of the financial instrument to determine whether it contains an asset, a liability or an equity component. Such
components shall be classified separately as financial assets, financial liabilities or equity instruments.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(a) Financial assets, initial recognition and measurement and subsequent measurement
All financial assets not recorded at fair value through profit or loss, such as receivables and deposits, are recognized initially at fair value plus
transaction costs. Financial assets carried at fair value through profit or loss (FVTPL) are initially recognized at fair value, and transaction costs are expensed in
the consolidated statements of operations and comprehensive loss. The measurement of financial assets depends on their classification. Financial assets such as
receivables and deposits are subsequently measured at amortized cost using the effective interest method, less loss allowance. The Group holds an investment in
Accustem Inc.as a financial asset at fair value through profit or loss or fair value through other comprehensive income.
(b) Financial liabilities, initial recognition and measurement and subsequent measurement
Financial liabilities are classified as measured at amortized cost or FVTPL.
A financial liability is classified as at FVTPL if it is a derivative. Financial liabilities at FVTPL are measured at fair value and net gains and losses,
including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective
interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in
profit or loss.
The Group’s financial liabilities include trade and other payables.
Warrants
Warrants are issued by the Group in return for services and as part of a financing transaction.
Warrants issued in return for services.
These warrants fall within the scope of IFRS 2. The Company recognizes that the fair value at the date of grant of these warrants should be expensed to
the Statement of Income and recognized over the life of the service for which the warrant was provided. These warrants have been valued by reference to the
equity instruments granted as they are all tied to Convertible loan notes. The measurement date is therefore the date that the Convertible loan note was entered
into.
Warrants issued as part of a financing transaction.
Warrants issued as part of a financing transaction fall outside the scope of IFRS 2. These are classified as equity instruments because a fixed amount of
cash is exchanged for a fixed amount of equity. The fair value is recognized within equity and is not remeasured.
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Share capital
Ordinary shares of the Company are classified as equity.
Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Costs include
expenditures that are directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is
capitalized as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of
property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying
amount of property, plant and equipment, and are recognized in profit or loss.
(ii) Depreciation
Depreciation is calculated on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.
Depreciation is recognized in consolidated statements of operations and comprehensive loss on a straight-line basis over the estimated useful life of
each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the Group will obtain ownership by the end of the lease term in which case they are depreciated over their useful lives.
The estimated useful lives for the current period and the comparative period are as follows.
Fixtures and fittings
IT and equipment
Right of use asset
5 years
3 years
Economic life of contractual relationship
Depreciation methods, useful lives and residual values are reviewed at each reporting date. Depreciation is allocated to the operating expenses line of
the Consolidated statements of operations and comprehensive loss.
Impairment
Impairment of financial assets measured at amortized cost
At each reporting date the Group recognizes a loss allowance for expected credit losses on financial assets measured at amortized cost.
In establishing the appropriate amount of loss allowance to be recognized, the Group applies either the general approach or the simplified approach,
depending on the nature of the underlying group of financial assets.
General approach
The general approach is applied to the impairment assessment of refundable lease deposits and other refundable lease contributions, and cash and cash
equivalents.
Under the general approach the Group recognizes a loss allowance for a financial asset at an amount equal to the 12-month expected credit losses,
unless the credit risk on the financial asset has increased significantly since initial recognition, in which case a loss allowance is recognized at an amount equal
to the lifetime expected credit losses.
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Simplified approach
The simplified approach is applied to the impairment assessment of trade receivables.
Under the simplified approach the Group always recognizes a loss allowance for a financial asset at an amount equal to the lifetime expected credit
losses.
Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Non-financial assets are impaired when carrying amounts exceed recoverable amounts. The recoverable amount is measured as the higher of fair value
less cost of disposal and value in use. The value in use is calculated as being net projected cash flows based on financial forecasts discounted back to present
value at a pre-tax discount rate.
Contingent Liabilities
The Company is required to make judgments about contingent liabilities including the probability of pending and potential future litigation outcomes
that, by their nature, are dependent on future events that are inherently uncertain. In making its determination of possible scenarios, management considers the
evaluation of outside counsel knowledgeable about each matter, as well as known outcomes in case law.
Leases
All leases are accounted for by recognizing a right-of-use asset and a lease liability except for:
● Leases of low value assets; and
● Leases with a duration of 12 months or less.
The Group has leases for its offices. Each lease is reflected on the consolidated balance sheet as a right-of-use asset and a lease liability. The Group
does not have any leases of low value assets. Variable lease payments which do not depend on an index or a rate (such as lease payments based on a percentage
of Group sales) are excluded from the initial measurement of the lease liability and asset. The Group classifies its right-of-use assets in a consistent manner to
its property, plant and equipment (see Note 21).
For leases over office buildings and factory premises the Group must keep those properties in a good state of repair and return the properties in their
original condition at the end of the lease. The expected costs of returning to its original condition are considered negligible.
At the lease commencement date, the Group recognizes a right-of-use asset and a lease liability in its consolidated balance sheets. The right-of-use
asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any
costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives
received).
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the
Group’s incremental borrowing rate because as the lease contracts are negotiated with third parties it is not possible to determine the interest rate that is implicit
in the lease. The incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same amount over a similar term, and with
similar security to obtain an asset of equivalent value. This rate is adjusted should the lessee entity have a different risk profile to that of the Group.
The Group depreciates the right-of-use asset on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.
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Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments
based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated between repayments of principal and finance
costs. The finance cost is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability.
Short term leases exempt from IFRS 16 are classified as operating leases. Payments made under operating leases are recognized in profit and loss on a
straight-line basis over the term of the lease.
Share – based payments
The calculation of the fair value of equity-settled share-based awards and the resulting charge to the Consolidated statements of operations and
comprehensive loss requires assumptions to be made regarding future events and market conditions. These assumptions include the future volatility of the
Company’s share price. These assumptions are then applied to a recognized valuation model in order to calculate the fair value of the awards.
Where employees and directors are rewarded using share-based payments, the fair value of the employees’, directors’ and/or advisers’ services are
determined by reference to the fair value of the share options/warrants awarded. Their value is appraised at the date of grant and excludes the impact of any
nonmarket vesting conditions (for example, profitability and sales growth targets).
In accordance with IFRS 2, a charge is made to the Consolidated statements of operations and comprehensive loss for all share-based payments
including share options based upon the fair value of the instrument used. A corresponding credit is made to an equity reserve, in the case of options/warrants
awarded to employees, directors, advisers and other consultants.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number
of share options/warrants expected to vest. Non- market vesting conditions are included in assumptions about the number of options/warrants that are expected
to become exercisable.
Estimates are subsequently revised, if there is any indication that the number of share options/warrants expected to vest differs from previous
estimates. No adjustment is made to the expense or share issue cost recognized in prior periods if fewer share options ultimately are exercised than originally
estimated.
Upon exercise of share options/warrants, the proceeds received are allocated to share capital with any excess being recorded as share premium. A
corresponding debit is made to the share–based payment reserve.
Where share options are cancelled, this is treated as an acceleration of the vesting period of the options. The amount that otherwise would have been
recognized for services received over the remainder of the vesting period is recognized immediately within the Consolidated statements of operations and
comprehensive loss.
All goods and services received in exchange for the grant of any share – based payment are measured at their fair value.
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Sub license income
In September 2021 the Company signed a collaboration agreement signed with Precision Biosciences, Inc. under which $750k was recognized as an
upfront payment in accordance with the contract for the grant of an exclusive license to use foralumab as a lymphodepletion agent in conjunction with Precision
Biosciences, Inc’s allogeneic CAR T therapeutics for the treatment of cancers. Sublicense income is included in other income on the consolidated statements of
operations and comprehensive loss.
Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated impairment losses.
At each balance sheet date non-financial assets are assessed to determine whether there is an indication that the asset or the asset’s cash generating unit
may be impaired. If there is such an indication the recoverable amount of the asset or asset’s cash generating unit is compared to the carrying amount.
Relassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results
of operations. An adjustment has been made to the consolidated statement of comprehensive income for the year ending December 31, 2022 to reclassify other
loss to finance expense totaling $804k.
3. CRITICAL ACCOUNTING JUDGEMENT
The preparation of financial information in accordance with generally accepted accounting practice, in the case of the Group being International
Financial Reporting Standards as issued by the IASB, requires the directors to make estimates and judgements that affect the reported amount of assets,
liabilities, income and expenditure and the disclosures made in the consolidated financial statements. Such estimates and judgements must be continually
evaluated based on historical experience and other factors, including expectations of future events.
The following are considered to be critical accounting estimates:
Share-based payments
The Group accounts for share-based payment transactions for employees in accordance with IFRS 2 Share-based Payment, which requires the
measurement of the cost of employee services received in exchange for the options on our ordinary shares, based on the fair value of the award on the grant
date.
The Company utilizes the Black-Scholes-Merton option pricing model as the most appropriate method for determining the estimated fair value of our
share-based awards without market conditions. For performance-based options that include vesting conditions relating to the market performance of our
ordinary shares, a Monte Carlo pricing model was used in order to reflect the valuation impact of price hurdles that have to be met as conditions to vesting.
The Company makes estimates as to the useful life of an option award, the expected price volatility of the underlying share, risk free interest rate for
the term of the award and correlations and volatilities of the shares of peer group companies. The Company also makes estimates as to the vesting period for
awards that have performance – based criteria.
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4 OTHER (EXPENSE)/ INCOME
The Group’s other (expense)/ income is made up of the following:
Sublicense income
Other Income (see note 19)
Total other income/(expense)
Year Ended December 31,
2022
$’000
2021
$’000
2023
$’000
-
-
-
-
33
33
750
143
893
Sublicense income has been classified as other income as the counterparty is not considered a customer but an entity we are collaborating with.
5. OPERATING LOSS
The Group’s operating losses are stated after charging/(crediting) the following:
License fee
Realization bonus
Depreciation of Property, plant and equipment
Depreciation (Right-of-use asset)
Foreign exchange (gains)/losses
Year Ended December 31,
2022
$’000
2021
$’000
2023
$’000
563
-
7
89
1,519
-
-
1
50
(3,183)
(1,047)
855
8
133
(1,899)
License fees relating to 2020 were waived in 2021 as a result of negotiations by the Group.
A realization bonus of $13.5 million became payable during the year ended December 31, 2020 to the chairman of the board upon the Company raising
funds in excess of $28m (£20m), which it successfully raised in August 2020. As the bonus was not settled until November 2021, interest of $0.9m was accrued
on the amount due in the year to December 31, 2021. No realization bonus is accounted for in year ended December 31, 2022.
6. SEGMENTAL REPORTING
During the year under review Management identified the Group’s only operating segment as the research and development of biotechnological and
pharmaceutical products. This one segment is monitored and strategic decisions are made based upon it and other non-financial data collated from industry
intelligence. The form of financial reporting reported to the Board is consistent with those presented in the annual consolidated financial statements.
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7. EMPLOYEES
Staff costs comprised:
Directors’ salaries (including bonus)
Employees’ wages, salaries and bonus
Social security costs
Recruitment fees
Share based payment (credit) / charge
The average monthly number of employees, including directors, employed by the group during the
year was:
Research and development
Corporate and administration
8. REMUNERATION OF KEY MANAGEMENT PERSONNEL
$’000
2023
Year ended December 31,
2022
Year ended December 31,
2022
$’000
2023
$’000
2021
$’000
929
1,777
136
24
1,730
4,596
3
6
9
2,526
1,856
176
242
5,173
9,973
8
5
13
554
2,014
135
197
(1,410)
1,490
3
6
9
2021
Director
G. Cerrone (1)
Willy Simon
J Brancaccio
K. Shailubhai
T Adams
Directors’
fee
Bonus Salary
Share
based
payments
Directors’
fee
Bonus Salary
Share
based
payments
Directors’
fee
Bonus Salary
Share
based
payments
717
56
56
-
-
829
100
-
-
100
-
-
-
-
562
98
98
-
758
296
55
55
-
-
406
148
-
-
-
-
148
-
379
-
379
-
83
83
(145)
(1,967)
(1,946)
855
-
330
59
59
-
-
-
600
413
448 1,065 1,013
-
210
-
624
93
93
492
2,197
3,499
(1) Gabriele Cerrone’s 2021 bonus is the interest charged on his 2020 bonus due to delayed issuance of shares; his 2020 bonus includes a $13.2m realization
bonus.
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All bonuses are short term. No post-employment or termination payments were made.
The following share options were granted to directors in the following periods:
2023
Number of
options
Year ended December 31,
2022
Number of
options
2021
Number of
options
W.Simon
J. Brancaccio
T Adams
75,000
75,000
-
150,000
-
-
-
-
-
3,500,000
3,500,000
Key management personnel of the Group are comprised of directors and officers of the Company.
No share options were exercised by directors during the years ended December 31, 2023,2022 and 2021.
The Company made payments totaling approximately $56K, $32K, and $24K to defined contribution pension schemes on behalf of directors and
employees during 2023, 2022, and 2021, respectively.
9. FINANCE COSTS
Group
Finance Income
Loan Interest Received
Total finance income
Finance Expense
Finance charge accrued on convertible loan notes
Interest expense on lease liabilities
Fair Value loss on Investment
Total finance Expense
Net finance income/ (expense) recognized in Consolidated statements of operations and
comprehensive loss
F-18
Year ended December 31,
2022
$’000
2023
$’000
2021
$’000
1,154
1,154
-
10
402
412
742
32
32
-
7
869
876
-
-
163
13
-
176
(844)
(176)
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10. TAXATION
Group
Current year tax (credit)
Adjustments due to prior periods
Total tax (credit) for the period
The tax charge for the year is different from the standard rate of corporation tax in the United
Kingdom of 19%. The difference can be reconciled as follows:
Loss before taxation
Loss charged at standard rate of corporation tax 23.52% 2023 19%2021/22
Movement in unrecognized deferred tax
Expenses not deductible for taxation
Adjustments due to prior periods
Research and development claim
Income not taxable for tax purposes
Fixed asset differences
Current Tax - Other
Adjustments to brought forward values
Consolidation adjustment in relation to foreign exchange movements
Year Ended December 31,
2022
$’000
2021
$’000
2023
$’000
449
-
449
-
-
-
(3,255)
(15)
(3,240)
(17,242)
(4,055)
3,194
3,961
449
-
(3,113)
-
13
-
-
449
(15,397)
(2,926)
2,319
1,036
-
-
(495)
(1)
-
67
-
-
(26,657)
(5,065)
1,722
1,550
(15)
(1,401)
(61)
-
-
-
-
(3,240)
The Research and Development claim has been calculated in accordance with the R&D tax relief available to small and medium sized entities,
whereby the entity is able to claim a cash tax credit (if loss making), worth up to 14.5% of the surrenderable losses.
The adjustments due to prior periods relate to R&D tax relief claims for the prior period. Under UK tax legislation, a 2-year window is available under
which R&D tax relief can be claimed.
No deferred tax asset has been recognized in respect of trading losses carried forward because of uncertainty as to when these losses will be
recoverable.
The amount of tax losses for which no deferred tax assets have been recognized for the year ended December 31, 2023 is $18,137k (2022 is $15,011k;
2021; $11,591k).
11. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares
in issue during the year.
(Loss) attributable to equity holders of the company ($000)
Weighted average number of ordinary shares in issue
Basic loss per share (cents per share)
Year ended December 31,
2022
2023
2021
(17,691)
102,471,016
(17.3)
(15,397)
101,526,389
(15.2)
(23,417)
97,932,055
(23.9)
As the Group is reporting a loss from continuing operations for the year then, in accordance with IAS 33, share options, warrants and convertible loan
notes are not considered dilutive because the exercise of the share options would have an anti-dilutive effect. The basic and diluted earnings per share as
presented on the face of the income statement are therefore identical. All earnings per share figures presented above arise from continuing and total operations
and therefore no earnings per share for discontinued operations are presented. The weighted average number of ordinary shares in issuance is stated as net
excluding Treasury shares.
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12. OTHER RECEIVABLES
$000
Security deposits receivable
Prepayments
Taxation Receivable
Year ended
December 31, 2023
2023
2022
121
102
3,793
4,016
130
170
4,246
4,546
There are no differences between the carrying amount and fair value of any of the trade and other receivables above.
13 SHARE CAPITAL AND SHARE PREMIUM
Group
On 21 October 2021, the Company acquired the entire shareholding of Tiziana Life Sciences Plc and its subsidiaries through a share for share
exchange transaction. On this date Tiziana Life Sciences Ltd became the Group’s parent company. This transaction does not constitute a business combination
under IFRS 3 “Business combinations” and has been accounted for as a group reorganization. Merger accounting has been applied to account for the insertion
of the new company. Due to a share consolidation, the effect of this was a decrease in share capital of the Company with an offset posted to the merger reserve.
As a common control transaction, the Group has elected to present the comparative information as if this transaction had occurred before the start of the
comparative period. The share capital arising on the share for share exchange has been presented as share capital in the comparative period.
At January 1 2021 per 20-F annual report
Group Reorganization
Elimination of share capital in Tiziana Life Sciences Plc
Shares issued pursuant to share for share exchange and
consolidation
Elimination of other reserves in Tiziana Life Sciences Plc
Restated at 1 January 2021
Shares issued in the period:
Conversion of warrants
Conversion of Loan
Issued in lieu of cash bonus
At 31 December 2021
Shares issued in the period:
At 31 December 2022
Shares issued in lieu of fees
Warrants Exercised
Issuance of Stock - ATM
At 31 December 2023
Ordinary Shares
£
£
$
$
$
$
$
$
$
$
Nominal
Value
£/$
0.03
Share
Capital
Shares
194,612,289
Share
Premium
$000
$000
Merger
Reserve
$000
10,794
111,821
-
0.03
(194,612,289)
(10,794)
(111,821)
122,615
0.001
97,306,144
0.001
97,306,144
0.001
0.001
0.001
.0001
.0001
.0001
136,854
1,866,907
2,962,709
102,272,614
102,272,614
450,000
337,501
27,629
103,087,744
97
97
-
2
3
102
102
1
-
-
103
-
-
156
603
14,837
15,596
15,596
300
573
23
16,492
(97)
(3,821)
118,697
-
-
-
118,697
118,697
118,697
Ordinary shares have a par value of $0.001. They entitle the holder to participate in dividends, and to share in the proceeds of winding up the company
in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by
proxy is entitled to one vote, and upon a poll each share is entitled to one vote. The Company has 103,087,744 shares in issue and holds 1,573,510 shares in
treasury.
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14. SHARE BASED PAYMENTS
Group and Company Options
The Company operates share-based payment arrangements to remunerate directors and key employees in the form of a share option scheme. The
exercise price of the option is normally equal to the market price of an ordinary share in the Company at the date of grant. The Company is currently operating
two plans (Tiziana Life Sciences PLC) Share Option Plan which is closed for any new issuances and the Tiziana Life Sciences Ltd 2021 Equity Incentive Plan.
Tiziana Life Sciences PLC Share Option Plan
2023
2022 Restated
2021
Weighted
Average
exercise
price
(cents)
Weighted
Average
exercise
price
(cents)
Options
(’000)
Weighted
Average
exercise
price
(cents)
Options
(’000)
Options
(’000)
Outstanding at 1 January
Granted
Forfeited/Cancelled
Exercised
Outstanding at 31 December
Exercisable at 31 December
59
-
(44)
-
62
60
6,724
-
(103)
-
6,621
2,829
90
-
(92)
-
59
58
22,234
-
(15,510)
-
67
166
-
-
17,024
5,210
-
-
6,724
90
22,234
2,732
54
7,616
No options were exercised during 2023, 2022 or 2021.
The total outstanding fair value charge of the share option instruments is deemed to be approximately $2,602k (2022: $3,223k (restated), 2021:
$12,339k).
Under the Tiziana Life Sciences PLC Share Option Plan, the total expense recognized for the year ending 31 December 2023 arising from share –
based payment transactions under the Tiziana Life Sciences PLC Share Option Plan is $703k of which $51k relates to forfeitures during the year (2022 $1,199k,
2021: $5,173k).
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Grant Date
26 June 2014
30 April 2018
6 May 2020
23 July 2020
25 August 2020
Total
Fair value of options granted
Share Options
at
31 December
2023
(’000)
Exercise
Price
0.47
1.10
0.47
2.11
1.98
1,831
500
3,690
100
500
6,621
Expiry Date
26 June 2024
30 April 2028
5 May 2028
26 July 2030
$
$
$
$
24 August 2030 $
The Directors have used the Black-Scholes-Merton option pricing model to estimate the fair value of all of the options granted during the year to
December 31, 2023, applying the assumptions below.
Historical volatility is based on the historical volatility of the Company itself.
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The Company has estimated a forfeiture rate of zero.
The model inputs for options granted during the year ended 31 December 2022 valued under the Black-Scholes-Merton model included:
Grant date share price
Exercise share price
Risk free rate
Expected volatility
Option life
Weighted average share price
Weighted average fair value per share option
4 November
2022
1 August
2022
$
$
$
$
0.679 $
0.679 $
-0.10% to -0.02%
99% to 122%
10 years
0.67 $
0.690 $
0.741
0.741
0.32% to 0.65%
90% to 126%
10 years
0.741
0.690
For the options issued in August 2020 with a market condition attached, the Directors have used the Monte Carlo simulation to estimate the fair value
of these options. The Company uses the following methods to determine its underlying assumptions:
● expected volatilities are based on the historical volatilities of the market;
● the expected term of the award is 4 years and is based on managements’ assessment of when the market condition is likely to be achieved; and
● a range of fair values per share were produced and management have determined the most appropriate value based on their knowledge of the
market and vesting conditions being fulfilled.
Modification of share – based payments.
In May 2020, the Company reduced the exercise price for options issued to employees and directors to $0.48 (£0.35). This was approved by
shareholders at a General Meeting held on May 6, 2020.
The fair value of the modified options at the date of modification was determined using the option pricing models as described above. The incremental
fair value was recognized as an expense over the period from the modification date to the end of the vesting period. The expense for the original option grant
will continue to be recognized as if the terms had not been modified.
The fair value of the modified options was determined using the same models and principles as described above.
Tiziana Life Sciences Ltd Share Option Plan
Outstanding at 1 January
Granted
Forfeited/Cancelled
Exercised
Outstanding at 31 December
Exercisable at 31 December
2023
2022
Weighted
Average
exercise
price
(cents)
Weighted
Average
exercise
price
(cents)
Options
(’000)
Options
(’000)
69
61
(57)
-
2,575
1,753
(60)
-
73
4,268
-
-
-
69
-
-
69
-
-
2,575
-
-
2,575
-
No options were exercised during 2023, 2022 or 2021.
The total outstanding fair value charge of the share option instruments is deemed to be approximately $974k (2022: $1,176k)
Under the Tiziana Life Sciences Ltd 2021 Equity Incentive Plan, the total expenses recognized for the year ending 31 December 2023 arising from
share - based payment transactions are $1,019k, not including a charge of $57k for forfeitures during the year. (2022:$332k)
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Grant date share price
Exercise share price
Risk free rate
Expected volatility
Option life
Weighted average share price
Weighted average fair value per share option
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
26 July
2023
14 March
2023
$
$
$
$
$
0.67
0.67
$
3.88%
118%
10 years
0.67
0.67
$
$
0.57
0.57
3.88%
119%
10 years
0.57
0.57
Grant Date
01 August 2022
04 November 2022
14 March 2023
26 July 2023
Total
Group and Company Warrants
Expiry Date
01 August 2032 $
04 November 2032 $
14 March 2033 $
$
26 July 2033
Share Options
as at 31
December
2023
(’000)
Exercise
Price
0.74
0.67
0.57
0.67
725
1,850
993
700
4,268
No warrants were issued in 2022 or 2023. For warrants issued in 2020, the Directors have estimated the fair value of the warrants using the Black-
Scholes valuation model and assumptions below:
Grant date share price
Exercise share price
Risk free rate
Expected volatility
Outstanding at 1 January
Exercised
Expired
Outstanding at 31 December
21 January
2020
21 January
2020
1 June
2020
£
£
£
0.43
0.42
£
0.64%
61.7%
£
0.43
0.35
£
0.40%
84.7%
2023
$000
2022
$000
2021
$000
697
(438)
(259)
-
697
-
-
697
1.15
0.70
0.04%
111%
697
-
-
697
No share-based payment charges relating to warrants were recorded during 2023, 2022 or 2021. Approximately $26K of share-based payment charges
are included in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2020.
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15. RESERVES
The share-based payment reserve for warrants represents the cost to issue warrants in the future based on their grant date fair value.
The share-based payment reserve for options represents the cost to issue share-based compensation, primarily share options, based on their grant date
fair value.
Retained earnings represent the cumulative profits/(losses) of the entity which have not been distributed to shareholders. This reserve has been credited
as part of the capital reduction exercise described below.
The translation reserve represents the unrealized gains or losses from the foreign currency translation of Companies within the Group.
The shares to be issued reserve represents the equity shares that are to be issued to the Chairman in lieu of his bonus and additional salary for his role
as acting CEO for the year ending December 31, 2023.
The merger reserve arises on consolidation as a result of the share for share exchange transaction that took place this year described in note 13. It
represents the difference between the share capital issued and the aggregate carrying value of assets and liabilities and other reserves of the previous parent on
the merger date.
16. FINANCIAL INSTRUMENTS
The main risks arising from the Group’s financial instruments are liquidity risk, foreign currency risk and credit risk. The directors regularly review
and agree policies for managing each of these risks which are summarized below.
Market risk
Market risk encompasses three types of risk, being foreign currency exchange risk, price risk and fair value interest rate risk. The Group policies for
managing fair value interest rate risk are considered along with those for managing cash flow interest rate risk and are set out in the subsection entitled “interest
rate risk” below. The Directors do not consider the Group’s exposure to price risk to be significant. The Group’s risk management is coordinated by the
Directors and focuses on actively securing the Group’s short to medium term cash flows by minimizing the exposure to financial markets. The Group does not
engage in the trading of financial assets for speculative purposes.
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Credit risk
Credit risk is managed on a Group basis. Credit risk arises principally from cash and cash equivalents and deposits with banks and financial institutions
as well as credit exposure to customers including committed transactions and outstanding receivables. The Group reviews its banking arrangements carefully to
minimize such risks and currently has no customers and therefore this risk is viewed as minimal. Management monitor loans between members of the Group as
part of their internal reporting and assesses outstanding receivables for ability to be repaid.
Liquidity risk
The Group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its
liquidity requirements in the short and long term. The Group ordinarily finances its activities through cash generated from private and public offerings of equity
and debt securities.
The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
$000
Trade payables
Lease liabilities
Related party payables
Total
$000
Trade payables
Lease liabilities
Related party payables
Total
Interest rate risk
Less than
3 months
2023
3 to 12
months
2,223
34
-
2,354
1,914
104
-
1,921
Less than
3 months
2022
3 to 12
months
1,230
32
-
1,262
3,732
98
-
3,830
Total
4,137
138
-
4,275
Total
4,962
130
-
5,092
The Group has limited exposure to interest-rate risk arising from its bank deposits. These deposit accounts are held at variable interest rates based on
Bank of America base rate.
The Directors do not consider the impact of possible interest rate changes based on current market conditions to be material to the net result for the
year or the equity position as of year-end for either the year ended 31 December 2023 or 31 December 2022.
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Foreign currency risk
The Group operates internationally although the majority of its operations are based in the United Kingdom and the United States, and the majority of
assets and liabilities are denominated in US Dollars, with a small amount denominated in Pound Sterling. It therefore is exposed to some foreign exchange risk
arising from exposure to various currencies primarily the Pound Sterling. The Group monitors currency exchange rates and makes judgments as to whether to
enter into currency hedging contracts. Currently no such hedging contracts are in place.
Sensitivity analysis
A reasonably possible strengthening (weakening) of the US dollar or Sterling against all other currencies at 31 December 2023 would have affected the
measurement of the financial instruments denominated in a foreign currency and affected equity and profit and loss by the amounts shown below. This analysis
assumes that all other variables remain constant.
December 31, 2023
USD (5% movement)
17. CAPITAL RISK MANAGEMENT
Profit or loss and equity
Strengthening Weakening
(467)
467
For the purpose of the Group’s capital management, capital includes called up share capital, share premium, share – based payments for options, share
- based payments for warrants, convertible loan note reserve, and all other equity reserves attributable to the equity holders of the parent as reflected in the
consolidated statement of financial position.
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern and to maximize shareholder
value through the optimization of the equity balance.
The Group adjusts its capital structure in light of changes in economic conditions and expected business demands on capital. The Group may also
return capital to shareholders or issue additional shares.
18. TRADE AND OTHER PAYABLES
Group
Trade payables
Accruals
19. INVESTMENT IN RELATED PARTY
Group
Investment in Accustem Sciences Inc
Movement in fair value
F-26
Year ended
December 31,
2023
$000
2022
$000
4,137
2,250
6,387
4,962
1,570
6,532
Year ended
December 31,
2023
$000
2022
$000
1,806
(969)
837
2,675
(869)
1,806
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The share price of Accustem as of December 31, 2023 was $.63, which has resulted in the recognition of a fair value loss of $1,049k. This has been
measured using the Level 1per IFRS 13 fair value hierarchy. Accustem Sciences Inc is listed on the OTC markets and is run by a separate management team
which is independent of the Tiziana management team. Tiziana is therefore not able to assert significant influence over Accustem Sciences Inc.
Group
Investment in Okyo Pharma Ltd
Movement in fair value
2023
$000
2022
$000
3,150
567
3,717
-
-
-
The Group acquired 2.1m shares of Okyo Pharma Ltd. on October 23, 2023 which is a 15.57% ownership. The share price of Okyo Pharma Ltd as of
December 31, 2023 was $1.77, which has resulted in the recognition of a fair value gain of $567k. This has been measured using the Level 1per IFRS 13 fair
value hierarchy. Okyo Pharma Ltd is listed on the OTC markets and is run by a separate management team which is independent of the Tiziana management
team. Tiziana is therefore not able to assert significant influence over Okyo Sciences Inc.
20. TREASURY SHARES
The company acquired 1,683,544 of its own shares through purchases on the NASDAQ stock exchange during the year ended December 31, 2022. The
amount paid to acquire the shares totaled $1,320k, and the shares are held as “treasury shares”. The Company has the right to reissue these shares later. All
shares issued by the Company are fully paid. In 2023 there was $254k in buybacks.
21. RELATED PARTY TRANSACTIONS
The ultimate controlling party of the Group is Planwise Group Ltd.
Rasna Therapeutics Inc is a related party as the entity is controlled by a person that has significant influence over the Group. Rasna is also party to a
Shared Services agreement with Tiziana whereby Rasna is charged for shared services such as the payroll and rent. During 2022, Tiziana extended a loan to
Rasna for $75,000 at an interest rate of 16% per annum. There were no additional loans to Rasna in 2023. As of December 31, 2023, $416k (2022: $206k, 2021:
$106k) was owed to Tiziana Life Sciences Ltd in respect of the loan and shared services agreement. The total charged under the shared services agreement in
the year ending 31 December 2023 was $6k (2022: $7k, 2021: $11k).
In addition to the above, on April 16, 2020, Tiziana also acquired all of the intellectual property relating to a nanoparticle-based formulation of
Actinomycin D (Act D; a.k.a. Dactinomycin), from Rasna to expand its pipeline for a consideration of an initial $120k upfront payment and milestone
payments of up to an additional aggregate $630k. There were no milestone payments due in the year ending 31 December 2023 (2022: $0k, 2021:$0k).
OKYO Pharma Ltd is a related party as the entity is controlled by a person that has significant influence over the Group. OKYO is also party to a
Shared Services agreement with Tiziana whereby OKYO is charged for shared services such as the payroll and rent. As of December 31, 2023 $398k (2022:
$274k, 2021: $42k) was owed to Tiziana Life Sciences Ltd in respect of this agreement. The total charged under the shared services agreement in the year
ending 31 December 2023 was $199k (2022: $125k, 2021: $98k).
In August 2022, the Group issued a short-term credit facility to OKYO Pharma, a related party, for $2,000k to support short term liquidity. The loan
was available for a period of 6 months upon first draw-down and carries an interest rate of 16% per annum, with additional default interest of 4% if the loan is
not repaid after the 6-month period. In October 23 the loan was converted to an investment in OKYO with 20% interest. The principal of $2,000k plus accrued
interest of $1,150k were converted into 2,100,000 Ordinary Shares, with no par value, of OKYO Pharma Ltd. As at December 31, 2022 $1,056k had been
drawn down against the loan and $19k of interest had been accrued.
Gensignia Lifesciences Inc is a related party as the entity is controlled by a person that has significant influence over the Group. As of December 31,
2023 the related party balance is $0 (2022, $0k, 2021: $295k). On December 31, 2022 $295k was written off to bad debt after management assessment and
deemed the balance to be irrecoverable.
Accustem Sciences Inc is a related party as the entity is controlled by a person that has significant influence over the Group. Accustem is also party to
a Shared Services agreement with Tiziana whereby the Company is charged for shared services such as payroll and rent as of December 31 2023, $1,324k
(2022:$72K, 2021:$1,341k). The net amount owed from Accustem, including shared service total costs of $1,324k.
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22. LEASES
All leases are accounted for by recognizing a right-of-use asset and a lease liability except for:
● Leases of low value assets; and
● Leases with a duration of 12 months or less.
The Group has leases for its offices. Each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. The Group does not have
leases of low value assets. Variable lease payments which do not depend on an index or a rate (such as lease payments based on a percentage of Group sales) are
excluded from the initial measurement of the lease liability and asset. The Group classifies its right-of-use assets in a consistent manner to its property, plant and
equipment.
For leases over office buildings and factory premises the Group must keep those properties in a good state of repair and return the properties in their
original condition at the end of the lease.
During the course of 2022, the Group entered into a new lease agreement for its London office. Any leases that have a term shorter than 12 months the
Group has applied the exemption allowed by paragraph 5a in IFRS16 in respect of short – term leases.
Right-of-use assets
At 1 January
Depreciation
Disposal of lease
Exchange differences
Lease Liabilities
At 1 January
Interest expense
Lease payments
Exchange differences
Lease liabilities are presented in the consolidated statement of financial; position as follows:
Current
Non-current
31 Dec
2023
$000
31 Dec
2022
$000
372
(104)
-
15
283
31 Dec
2023
$000
31 Dec
2022
$000
365
10
(119)
(9)
247
31 Dec
2023
$000
31 Dec
2022
$000
138
109
247
The lease liabilities are secured by the related underlying assets. Future minimum lease payments as of 31 December 2023 were as follows:
Lease payments
Finance Charges
Net Present Values
Within 1 year
148
(10)
138
F-28
Minimum lease payment due
2-5 years
1-2 years
111
(2)
109
Total
Over 5 years
-
-
-
-
-
-
448
(50)
-
(26)
372
448
6
(61)
(28)
365
122
243
365
259
(12)
247
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23. FINANCIAL COMMITMENTS
The Group’s main financial commitments relate to the contractual payments in respect of its licensing agreements. Due to the uncertain nature of
scientific research and development and the length of time required to reach commercialisation of the products of this research and development, pre-clinical,
clinical and commercial milestone obligations are not detailed until there is a reasonable certainty that the obligation will become payable.
● Milciclib project research future payments relate to the achievement of clinical milestones or the payment of royalties.
We are obligated to pay Nerviano the following additional amounts in respect of the first licensed product or service which achieves the stated
development milestones:
(a) $1,000,000 upon initiation of the first Phase II clinical trial, this is currently being negotiated with BMS.
(b) $4,000,000 upon FPD of the first Phase 3 registration trial in HCC.
(c) $3,600,000 upon first patient enrollment into a Phase II human clinical trial
(d) Upon the first NDA equivalent in: thymic carcinoma, $900,000; HCC, $9,000,000; breast cancer, $15,000,000.
● Foralumab project – Future payments relate to the achievement of clinical milestones or the payment of royalties. Diligence obligations are
payable to BMS/Medarex should the project continue to commercialisation. $750,000 has been recoded as other income in respect of diligence
obligations due to Medarex for 2021.
We are obligated to pay BMS the following additional amounts in respect of the first licensed product or service which achieves the stated
development milestones:
(a) $300,000 upon enrollment of first patient in a Phase I human clinical trial of the first Phase II Clinical trial, this is currently being negotiated with
BMS.
(b) $1,500,000 upon initiation of the first Phase III clinical trial
(c) $2,000,000 upon filing of the first BLA, or equivalent
(d) $2,000,000 upon approval of the first BLA, or equivalent
We are obligated to pay Brighams Womens Hospital the following hospital milestone payments:
(a) $300,000 upon first patient enrollment into a Phase I human clinical trial
(b) $300,000 upon first patient enrollment into a Phase II human clinical trial
(c) $1,500,000 upon first patient enrollment into a Phase III human clinical trial
(d) $3,000,000 upon first commercial sale of a product
● ACT D - Tiziana will need to make milestone payments of up to $630k depending on the issuance of a US patent from any US patent application
in Transferred IP relating to nanoparticle formulations of Act D and upon the successful completion of a Phase II clinical efficacy trial.
24. CONTINGENT LIABILITIES
The group from time to time is involved in legal proceedings, none of which have given rise to contingent liabilities. Contingencies arising in the
ordinary course of business, for which no security has been given, are not expected to result in any material financial loss.
F-29
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Edgar Agents LLC
Form Type: EX-2.1
Tiziana Life Sciences Ltd
General
Description of Securities
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Exhibit 2.1
Our share capital comprises common shares of par value $0.001 each and preference shares of par value $0.001 each. Subject to a resolution of
shareholders to the contrary and any special rights previously conferred on the holders of any existing shares or class of shares, the Board is authorized to issue
any unissued shares on such terms and conditions as it may determine.
Share Capital
Voting Rights
Each holder of our common shares is entitled to one vote for each share on all matters submitted to a vote of the shareholders. Under our Bye-laws, at
any general meeting held for the purpose of electing directors at which a quorum is present, the director nominees receiving the most votes (up to the number of
Directors to be elected) shall be elected as Directors, and an absolute majority of the votes cast shall not be a prerequisite to the election of such Directors.
Dividends
The Board may, subject to the our Bye-laws and in accordance with Section 54 of the Bermuda Companies Act, declare a dividend to be paid to the
shareholders, in proportion to the number of shares held by them, and such dividend may be paid in cash or in specie. Dividends unclaimed after seven years
from the date when the respective dividend became payable shall, if the Board so resolves, be forfeited and cease to remain owing by us.
Liquidation
On winding-up the liquidator may with the authority of a resolution of the members, divide the whole or any part of our the assets among the
shareholders, in whole or part, in specie or vest the whole or any part of the assets upon such trusts as the liquidator shall think fit.
Rights and Preferences
The rights, preferences and privileges of the holders of our common shares is subject to and may be adversely affected by the rights of the holders of
shares of any series of preference shares that we may designate in the future.
ea020387201ex12-1_tiziana.htm
Edgar Agents LLC
Form Type: EX-12.1
Tiziana Life Sciences Ltd
I, Gabriele Cerrone, certify that:
1.
I have reviewed this annual report on Form 20-F of Tiziana Life Sciences plc;
CERTIFICATION
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Exhibit 12.1
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
company and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual
report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the company’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over
financial reporting.
Date: May 10, 2024
/s/ Gabriele Cerrone
Gabriele Cerrone
Acting Chief Executive Officer
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Edgar Agents LLC
Form Type: EX-12.2
Tiziana Life Sciences Ltd
I, Keeren Shah, certify that:
1.
I have reviewed this annual report on Form 20-F of Tiziana Life Sciences plc;
CERTIFICATION
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Exhibit 12.2
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
company and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual
report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the company’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over
financial reporting.
Date: May 10, 2024
/s/ Keeren Shah
Keeren Shah
Chief Financial Officer
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Edgar Agents LLC
Form Type: EX-13.1
Tiziana Life Sciences Ltd
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Exhibit 13.1
CERTIFICATION
The certification set forth below is being submitted in connection with Tiziana Life Sciences plc’s Annual Report on Form 20-F for the fiscal year
ended December 31, 2023 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the
“Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Gabriele Cerrone, Acting Chief Executive Officer of Tiziana Life Sciences plc, certifies that, to the best of his knowledge:
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Tiziana Life
Sciences plc
1.
2.
Date: May 10, 2024
/s/ Gabriele Cerrone
Name: Gabriele Cerrone
Acting Chief Executive Officer
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Edgar Agents LLC
Form Type: EX-13.2
Tiziana Life Sciences Ltd
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Exhibit 13.2
CERTIFICATION
The certification set forth below is being submitted in connection with Tiziana Life Sciences plc’s Annual Report on Form 20-F for the fiscal year
ended December 31, 2023 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the
“Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Keeren Shah, Chief Financial Officer of Tiziana Life Sciences plc, certifies that, to the best of her knowledge:
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Tiziana Life
Sciences plc
1.
2.
Date: May 10, 2024
/s/ Keeren Shah
Name: Keeren Shah
Chief Financial Officer
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Edgar Agents LLC
Form Type: EX-15.1
Tiziana Life Sciences Ltd
Consent of Independent Registered Public Accounting Firm
The Board of Directors of Tiziana Life Sciences Ltd:
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Exhibit 15.1
We hereby consent to the incorporation by reference in Registration Statement on Form F-3 (File No. 333-252441) of our report dated May 20, 2022 with
respect to the consolidated statement of operations and comprehensive loss, cash flows and shareholders’ equity for the year ended December 31, 2021, and the
related notes, for Tiziana Life Sciences Ltd and its subsidiaries (the Group), which report appears in the December 31, 2023 Annual Report on Form 20-F to be
filed on or about May 10, 2024.
/s/ Mazars LLP
Mazars LLP
London, United Kingdom
May 10, 2024
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Edgar Agents LLC
Form Type: EX-15.2
Tiziana Life Sciences Ltd
Consent of Independent Registered Public Accounting Firm
The Board of Directors of Tiziana Life Sciences Ltd:
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Exhibit 15.2
We consent to the incorporation by reference of our report dated May 10, 2024 with respect to the consolidated balance sheet as of December 31, 2023 and
2022 and the related consolidated statement of operations and comprehensive loss, cash flows and shareholders’ equity for each of the two years ended
December 31, 2023, and the related notes, for Tiziana Life Sciences Ltd, which report appears in the December 31, 2023 annual report on Form 20-F.
/s/ PKF Littlejohn LLP.
PKF Littlejohn LLP
London
May 10, 2024
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Edgar Agents LLC
Form Type: EX-97.
Tiziana Life Sciences Ltd
I. Purpose and Scope
Tiziana Life Sciences Ltd.
CLAWBACK POLICY
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Exhibit 97
The Board of Directors (the “Board”) of the Company believes that it is in the best interests of the Company and its shareholders to create and maintain a
culture that emphasizes integrity and accountability and that reinforces the Company’s pay-for-performance compensation philosophy. The Board has therefore
adopted this Clawback Policy (this “Policy”), which provides for the recovery of erroneously awarded Incentive Compensation (as defined below) in the event
of a Triggering Event (as defined below). Unless otherwise defined herein, the capitalized terms have the meanings set forth under “XI. Definitions.”
II. Administration
This Policy is designed to comply with and shall be interpreted to be consistent with Section 10D of the Exchange Act, Rule 10D-1 of the Exchange Act,
Nasdaq Listing Rule 5608 and other regulations, rules and guidance of the Securities and Exchange Commission (the “SEC”) thereunder, and related securities
regulations and regulations of the stock exchange or association on which Company’s common shares are listed (collectively, the “Listing Standards”). This
Policy shall be administered by the Compensation Committee of the Board, or in the absence of such committee, a majority of the independent directors serving
on a subcommittee of the Board (any such committee or subcommittee of the Board, the “Committee”).
Any determinations made by the Committee shall be final and binding. In addition, the Company shall file all disclosures with respect to this Policy in
accordance with the Listing Standards. The Committee hereby has the power and authority to enforce the terms and conditions of this Policy and to use any and
all of the Company’s resources it deems appropriate to recoup any excess Incentive Compensation subject to this Policy.
III. Covered Executives
This Policy applies to the Company’s current and former Covered Executives, as determined by the Committee in accordance with the Listing Standards.
IV. Events That Trigger Recoupment Under This Policy
The Board or Committee will be required to recoup any excess Incentive Compensation received by any Covered Executive during the three (3) completed
fiscal years (together with any intermittent stub fiscal year period(s) of less than nine (9) months resulting from the Company’s transition to different fiscal year
measurement dates) immediately preceding the date the Company is deemed (as determined pursuant to the immediately following sentence) to be required to
prepare a Covered Accounting Restatement of its financial statements (the “Three-Year Recovery Period”) irrespective of any fault, misconduct or
responsibility of such Covered Executive for the Covered Accounting Restatement. For purposes of the immediately preceding sentence, the Company is
deemed to be required to prepare a Covered Accounting Restatement on the earlier of: (A) the date upon which the Board or applicable committee of the Board,
or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the
Company is required to prepare a Covered Accounting Restatement; or (B) the date a court, regulator, or other legally authorized body directs the Company to
prepare a Covered Accounting Restatement (each, a “Triggering Event”).
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Tiziana Life Sciences Ltd
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V. Excess Incentive Compensation: Amount Subject to Recovery
The amount of Incentive Compensation to be recovered shall be the excess of the Incentive Compensation “received” by the Covered Executive over the
amount of Incentive Compensation which would have been received by the Covered Executive had the amount of such Incentive Compensation been calculated
based on the restated amounts, as determined by the Committee. For purposes of this Policy, Incentive Compensation shall be deemed “received”, either wholly
or in part, in the fiscal year during which any applicable Financial Reporting Measure is attained, even if the payment, vesting or grant of such Incentive
Compensation occurs after the end of such fiscal year. Amounts required to be recouped under this Policy shall be calculated on a pre-tax basis. The date of
receipt of the Incentive Compensation depends upon the terms of the award of such Incentive Compensation. For example:
a.
b.
c.
d.
If the grant of an award of Incentive Compensation is based, either wholly or in part, on the satisfaction of a Financial Reporting Measure
performance goal, then the award would be deemed received in the fiscal period when that measure was satisfied;
If the vesting of an equity award of Incentive Compensation occurs only upon the satisfaction of a Financial Reporting Measure performance
condition, then the award would be deemed received in the fiscal period when it vests;
If the earning of a non-equity incentive plan award of Incentive Compensation is based on the satisfaction of the relevant Financial Reporting
Measure performance goal, then the non-equity incentive plan award will be deemed received in the fiscal year in which that performance goal is
satisfied; and
If the earning of a cash award of Incentive Compensation is based on the satisfaction of a Financial Reporting Measure performance goal, then the
cash award will be deemed received in the fiscal period when that measure is satisfied.
It is specifically understood that, to the extent that the impact of the Covered Accounting Restatement on the amount of Incentive Compensation received
cannot be calculated directly from the information in the Covered Accounting Restatement (e.g., if such restatement’s impact on the Company’s share price is
not clear), then such excess amount of Incentive Compensation shall be determined based on the Committee’s reasonable estimate of the effect of the Covered
Accounting Restatement on the share price or total shareholder return upon which the Incentive Compensation was received. The Company shall maintain
documentation for the determination of such excess amount and provide such documentation to the Nasdaq Stock Market (“Nasdaq”).
2
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Tiziana Life Sciences Ltd
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VI. Method of Recovery
The Committee will determine, in its sole discretion, the methods for recovering excess Incentive Compensation hereunder, which methods may include,
without limitation:
a.
requiring reimbursement of cash Incentive Compensation previously paid;
b.
seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards;
c.
offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive;
d.
cancelling outstanding vested or unvested equity awards; and/or
e.
taking any other remedial and recovery action permitted by law, as determined by the Committee.
Notwithstanding anything in this Section VI, and subject to applicable law, the Committee may cause recoupment under this Policy from any amount of
Incentive Compensation approved, awarded, granted, paid or payable to any Covered Executive prior to, on, or following the Effective Date (as defined below).
VII. Impracticability
The Committee shall recover any excess Incentive Compensation in accordance with this Policy unless such recovery would be impracticable, as determined by
the Committee in accordance with the Listing Standards. It is specifically understood that recovery will only be deemed impractical if: (A) the direct expense
paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered (before concluding that it would be impracticable to recover any
amount of erroneously awarded Incentive Compensation based on the expense of enforcement, the Committee shall make a reasonable attempt to recover such
erroneously awarded Incentive Compensation, document such reasonable attempt(s) to recover, and provide that documentation to Nasdaq); (B) recovery would
violate home country law where that law was adopted prior to the November 28, 2022 (before concluding that it would be impracticable to recover any amount
of erroneously awarded Incentive Compensation based on violation of home country law, the Committee shall obtain an opinion of home country counsel,
acceptable to the applicable national securities exchange or association on which Company’s common shares are trading, that recovery would result in such a
violation, and must provide such opinion to the exchange or association); or (C) recovery would likely cause an otherwise tax-qualified retirement plan, under
which benefits are broadly available to employees of the registrant, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a), and the
regulations promulgated thereunder.
VIII. Other Recoupment Rights; Acknowledgement
The Committee may require that any employment agreement, equity award agreement, or similar agreement entered into on or after the Effective Date shall, as
a condition to the grant of any benefit thereunder, require a Covered Executive to agree to abide by the terms of this Policy. Any right of recoupment under this
Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar
policy in any employment agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company. The Company
shall provide notice and seek written acknowledgement of this Policy from each Covered Executive; provided, that the failure to provide such notice or obtain
such acknowledgement shall have no impact on the applicability or enforceability of this Policy to, or against, any Covered Executive.
3
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Tiziana Life Sciences Ltd
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IX. No Indemnification of Covered Executives
Notwithstanding any right to indemnification under any plan, policy or agreement of the Company or any of its affiliates, the Company shall not indemnify any
Covered Executives against the loss of any excess Incentive Compensation. In addition, the Company will be prohibited from paying or reimbursing a Covered
Executive for premiums of any third-party insurance purchased to fund any potential recovery obligations.
X. Indemnification
To the extent allowable pursuant to applicable law, each member of the Board or the Committee and any officer or other employee to whom authority to
administer any component of this Policy is designated shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that
may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she
may be a party or in which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to this Policy and
against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided, however,
that he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his
or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled
pursuant to the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
XI. Effective Date
This Policy shall be effective as of the date the Policy is adopted by the Board (the “Board Adoption Date”). This Policy shall apply to any Incentive
Compensation that is received by Covered Executives on or after October 2, 2023 (the “Effective Date”), even if such Incentive Compensation was approved,
awarded, granted, or paid to Covered Executives prior to the Effective Date or the Board Adoption Date.
XII. Amendment and Termination; Interpretation
The Board may amend this Policy from time to time in its sole discretion and shall amend this Policy as it deems necessary to reflect and comply with further
regulations, rules and guidance of the SEC, and Nasdaq Listing Rules. The Board may terminate this Policy at any time. The Committee is authorized to
interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy. This Policy is
designed and intended be interpreted in a manner that is consistent with the requirements of the Listing Standards. To the extent of any inconsistency between
this Policy and such regulations, rules and guidance, such regulations, rules and guidance shall control and this Policy shall be deemed amended to incorporate
such regulations, rules and guidance until or unless the Board or the Committee expressly determine otherwise. This Policy shall be applicable, binding and
enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or other legal representatives, to the fullest extent of the law.
For the avoidance of doubt, this Policy shall be in addition to (and not in substitution of) any other clawback policy of the Company in effect from time to time
or applicable to any Covered Executive.
4
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Tiziana Life Sciences Ltd
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XIII. Definitions
For purposes of this Policy, the following terms shall have the following meanings:
1.
“Company” means Tiziana Life Sciences Ltd.
2. A “Covered Accounting Restatement” is any accounting restatement of the Company’s financial statements due to the Company’s material
noncompliance with any financial reporting requirement under U.S. securities laws. A Covered Accounting Restatement includes any required
accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements
(commonly referred to as “Big R” restatements), or that would result in a material misstatement if the error were corrected in the current period or left
uncorrected in the current period (commonly referred to as “little r” restatements). A Covered Accounting Restatement does not include (A) an out-of-
period adjustment when the error is immaterial to the previously issued financial statements, and the correction of the error is also immaterial to the
current period; (B) a retrospective application of a change in accounting principle; (C) a retrospective revision to reportable segment information due
to a change in the structure of an issuer’s internal organization; (D) a retrospective reclassification due to a discontinued operation; (E) a retrospective
application of a change in reporting entity, such as from a reorganization of entities under common control; or (F) a retrospective revision for stock
splits, reverse stock splits, stock dividends or other changes in capital structure.
3.
“Covered Executive” means any person who:
a. Has received applicable Incentive Compensation:
i. During the Three-Year Recovery Period; and
ii. After beginning service as an Executive Officer; and
b. Has served as an Executive Officer at any time during the performance period for such Incentive Compensation.
4.
“Exchange Act” means the Securities and Exchange Act of 1934, as amended.
5
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5.
6.
“Executive Officer(s)” means an “executive officer” as defined in Exchange Act Rule 10D-1(d) and the Listing Standards, and includes any person
who is the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any
vice-president of the issuer in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who
performs a policy-making function, or any other person who performs similar policy-making functions for the Company (with any executive officers
of the Company’s parent(s) or subsidiaries being deemed Covered Executives of the Company if they perform such policy making functions for the
Company), and such other senior executives/employees who may from time to time be deemed subject to the Policy by the Board in its sole discretion.
All executive officers of the Company identified by the Board pursuant to 17 CFR 229.401(b) shall be deemed “Executive Officers.”
“Financial Reporting Measure(s)” means any measures that are determined and presented in accordance with the accounting principles used in
preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measures, including share price and total
shareholder return, including but not limited to, financial reporting measures including “non-GAAP financial measures” for purposes of Exchange Act
Regulation G and 17 CFR 229.10, as well other measures, metrics and ratios that are not non-GAAP measures, like same store sales. Financial
Reporting Measures may or may not be included in a filing with the SEC, and may be presented outside the Company’s financial statements, such as in
Management’s Discussion and Analysis of Financial Conditions and Results of Operations or the performance graph. Financial Reporting Measures
include without limitation, any of the following:
a. Company share price.
b. Total shareholder return.
c. Revenues.
d. Net income.
6
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Tiziana Life Sciences Ltd
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e. Earnings before interest, taxes, depreciation, and amortization (EBITDA).
f.
Funds from operations.
g. Liquidity measures such as working capital or operating cash flow.
h. Return measures such as return on invested capital or return on assets.
i.
Earnings measures such as earnings per share.
7.
“Incentive Compensation” means any compensation which was approved, awarded or granted to, or earned by a Covered Executive (A) while the
Company had a class of securities listed on a national securities exchange or a national securities association, and (B) following on or after the
Effective Date (including any award under any long-term or short-term incentive compensation plan of the Company, including any other short-term or
long-term cash or equity incentive award or any other payment) that, in each case, is granted, earned, or vested based wholly or in part upon the
attainment of any Financial Reporting Measure (i.e., any measures that are determined and presented in accordance with the accounting principles used
in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measures, including share price and total
shareholder return). Incentive Compensation may include (but is not limited to) any of the following:
a. Annual bonuses and other short- and long-term cash incentives;
b. Stock options;
c. Stock appreciation rights;
d. Restricted shares;
e. Restricted share units;
f.
Performance shares; and
g. Performance units.
7
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APPENDIX I
Acknowledgment of Clawback Policy
I, the undersigned, agree and acknowledge that I am fully bound by, and subject to, all of the terms and conditions of the Tiziana Life Sciences Ltd. Clawback
Policy (as may be amended, restated, supplemented or otherwise modified from time to time, the “Policy”) of Tiziana Life Sciences Ltd. (the “Company”) if I
am a “Covered Executive” or become a “Covered Executive.”
In the event of any inconsistency between the Policy and the terms of any agreement to which I am a party, or the terms of any compensation plan, program or
agreement under which any compensation has been, or will be, granted, awarded, earned or paid, the terms of the Policy shall govern. In the event it is
determined by the Compensation Committee of the Board of Directors of the Company (the “Committee”) that any amounts granted, awarded, earned or paid
to me must be forfeited or reimbursed by the Company, I will promptly take any action necessary to effectuate such forfeiture and/or reimbursement. Any
capitalized terms used in this Acknowledgement without definition shall have the meaning set forth in the Policy.
By:
Name:
Title:
Date:
8