10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission File Number: 001-40657

 

Omega Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

81-3247585

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

140 First Street

Suite 501

Cambridge, MA

02141

(Address of principal executive offices)

(Zip Code)

(617) 949-4360

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.001 per share

 

OMGA

 

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of August 1, 2023, the registrant had 55,138,695 shares of common stock, $0.001 par value per share, outstanding.

 

 

i


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

6

Item 1.

Financial Statements (Unaudited)

6

Condensed Consolidated Balance Sheets

6

Condensed Consolidated Statements of Operations and Comprehensive Loss

7

Condensed Consolidated Statements of Stockholders’ Equity

8

Condensed Consolidated Statements of Cash Flows

9

Notes to Condensed Consolidated Financial Statements (Unaudited)

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

94

Item 3.

Defaults Upon Senior Securities

94

Item 4.

Mine Safety Disclosures

94

Item 5.

Other Information

94

Item 6.

Exhibits

95

Signatures

96

 

2


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, the sufficiency of our cash, cash equivalents and marketable securities to fund our operating expenses and capital expenditure requirements, our ability to continue as a going concern, business strategy, product candidate development, prospective products, product candidate approvals, research and development activities and costs, future revenue, timing and likelihood of success of our business plans, plans and objectives of management, future results and timing of clinical trials, treatment potential of our product candidates, and the market potential of our product candidates are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “would” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions, including those described under Part II, Item 1A. “Risk Factors” in this Quarterly Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

3


 

SUMMARY RISK FACTORS

 

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:

 

Our product candidates are based on a novel technology, which makes it difficult to predict the time and cost of preclinical and clinical development and of subsequently obtaining regulatory approval, if at all.
No epigenomic controller medicines have been approved in this potentially new class of medicines, and may never be approved as a result of efforts by others or us. mRNA drug development has substantial development and regulatory risks due to the novel and unprecedented nature of this new category of medicines.
We have a limited operating history and no history of successfully developing or commercializing any approved product candidates, which may make it difficult to evaluate the success of our business to date and to assess the prospects for our future viability.
We have incurred significant losses since inception and expect to incur significant additional losses for the foreseeable future.
We require substantial additional financing, which may not be available on acceptable terms, or at all.
Volatility in capital markets and general economic conditions in the United States may be a significant obstacle to raising required funds. This raises substantial doubt about the Company's ability to continue as a going concern.
We have invested, and expect to continue to invest, in research and development efforts that further enhance the OMEGA platform. Such investments may affect our operating results, and, if the return on these investments is lower or develops more slowly than we expect, our revenue and operating results may suffer.
Preclinical development is uncertain, especially for a new class of medicines such as epigenomic controllers, and therefore our preclinical programs or development candidates may be delayed, terminated, or may never advance into the clinic, any of which may have a material adverse impact on our platform or our business.
Our product candidate, OTX-2002, was cleared by the United States Food and Drug Administration to advance to clinical development. Clinical development of OTX-2002 may be delayed or terminated, and we may never obtain regulatory approval of OTX-2002, which may have a material adverse impact on our platform or our business. Furthermore, clinical development requires substantial capital investment, which we may not be able to support. We may incur unforeseen costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of OTX-2002 and our other product candidates.
Our product candidates may be associated with serious adverse events, undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences.
Our ability to manufacture our Omega Epigenomic ControllerTM candidates, or OEC candidates, for preclinical or clinical supply could be limited, especially with the increased demand for the manufacture of mRNA- and LNP-based vaccines to treat COVID-19, which could adversely affect our development plans.
Our OEC candidates are based on novel technology and may be complex and difficult to manufacture. We may encounter difficulties in manufacturing, product release, shelf life, testing, storage, supply chain management or shipping.
We must adapt to rapid and significant technological change and respond to introductions of new products and technologies by competitors to remain competitive.
We will rely on third parties for the foreseeable future for the manufacture and supply of materials for our research programs, preclinical studies and clinical trials and we do not have long-term contracts with many of these parties. This reliance on third parties increases the risk that we will not have sufficient quantities of such materials, including drug supplies for combination therapy, product candidates, or any therapies that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.

4


 

We continue to evaluate plans to acquire and establish our own manufacturing facility and infrastructure in addition to or in lieu of relying on contract development and manufacturing organizations for the manufacture of our product candidates. Any plan to establish our own manufacturing facility and infrastructure will be costly and time-consuming and we may not be successful.
We have a limited number of suppliers for the lipid excipients used in our product candidates and certain of our suppliers are critical to our production. If we were to lose a critical supplier, it could have a material adverse effect on our ability to complete the development of our product candidates. If we obtain regulatory approval for any of our product candidates, we would need to expand the supply of lipid excipients in order to commercialize them.
We are very early in our development efforts. Most of our product candidates are in preclinical development or discovery, and we received FDA clearance for our IND application for OTX-2002 and have initiated the associated clinical trial. It will be many years before we commercialize a product candidate, if ever. If we are unable to advance our product candidates to clinical development, obtain regulatory approval and ultimately commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed.
If we are unable to obtain, maintain, enforce and adequately protect our intellectual property rights with respect to our technology and product candidates, or if the scope of the patent or other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and product candidates may be adversely affected.
Third parties may obtain or control intellectual property rights that may prevent or limit the development of our technology or products. Third-party claims of intellectual property infringement, misappropriation or other violation may result in substantial costs or prevent or delay our development and commercialization efforts.

 

5


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Omega Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

105,537

 

 

$

70,615

 

Marketable securities

 

 

7,444

 

 

 

54,063

 

Accounts receivable, due from related party

 

 

1,201

 

 

 

618

 

Prepaid expenses and other current assets

 

 

10,746

 

 

 

12,294

 

Total current assets

 

 

124,928

 

 

 

137,590

 

Property and equipment, net

 

 

5,530

 

 

 

4,195

 

Operating lease right-of-use assets, net

 

 

98,073

 

 

 

3,668

 

Restricted cash

 

 

341

 

 

 

341

 

Other assets

 

 

150

 

 

 

204

 

Total assets

 

$

229,022

 

 

$

145,998

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

6,325

 

 

$

3,107

 

Accrued expenses

 

 

7,199

 

 

 

13,841

 

Other current liabilities

 

 

616

 

 

 

159

 

Lease liabilities, current

 

 

11,183

 

 

 

1,524

 

Long-term debt, current portion

 

 

8,333

 

 

 

3,333

 

Total current liabilities

 

 

33,656

 

 

 

21,964

 

Lease liabilities, non-current

 

 

87,484

 

 

 

1,120

 

Long-term debt, net

 

 

11,623

 

 

 

16,603

 

Other liabilities

 

 

340

 

 

 

340

 

Total liabilities

 

 

133,103

 

 

 

40,027

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized as of June 30, 2023 and December 31, 2022; no shares issued and outstanding as of June 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 55,136,908 and 48,072,517 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

 

 

55

 

 

 

48

 

Additional paid-in capital

 

 

388,207

 

 

 

343,608

 

Accumulated other comprehensive loss

 

 

(171

)

 

 

(479

)

Accumulated deficit

 

 

(292,172

)

 

 

(237,206

)

Total stockholders’ equity

 

 

95,919

 

 

 

105,971

 

Total liabilities and stockholders’ equity

 

$

229,022

 

 

$

145,998

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


 

Omega Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Collaboration revenue from related party

$

759

 

 

$

476

 

 

$

1,274

 

 

$

743

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

25,012

 

 

 

19,387

 

 

 

44,979

 

 

 

33,659

 

General and administrative

 

6,206

 

 

 

6,202

 

 

 

12,160

 

 

 

11,336

 

Related party expense, net

 

381

 

 

 

741

 

 

 

793

 

 

 

1,562

 

Total operating expenses

 

31,599

 

 

 

26,330

 

 

 

57,932

 

 

 

46,557

 

Loss from operations

 

(30,840

)

 

 

(25,854

)

 

 

(56,658

)

 

 

(45,814

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

957

 

 

 

(55

)

 

 

1,639

 

 

 

(210

)

Other income (expense), net

 

196

 

 

 

(3

)

 

 

53

 

 

 

(52

)

Total other income (expense), net

 

1,153

 

 

 

(58

)

 

 

1,692

 

 

 

(262

)

Net loss

$

(29,687

)

 

$

(25,912

)

 

$

(54,966

)

 

$

(46,076

)

Net loss per common stock attributable to common stockholders, basic and diluted

$

(0.54

)

 

$

(0.54

)

 

$

(1.04

)

 

$

(0.96

)

Weighted-average common stock used in net loss per share attributable to common stockholders, basic and diluted

 

55,071,469

 

 

 

47,849,639

 

 

 

52,861,655

 

 

 

47,828,594

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(29,687

)

 

$

(25,912

)

 

$

(54,966

)

 

$

(46,076

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

57

 

 

 

(147

)

 

 

308

 

 

 

(944

)

Comprehensive loss

$

(29,630

)

 

$

(26,059

)

 

$

(54,658

)

 

$

(47,020

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7


 

Omega Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

 

SHARES

 

 

PAR
VALUE

 

 

ADDITIONAL PAID-IN
CAPITAL

 

 

ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS)

 

 

ACCUMULATED
DEFICIT

 

 

TOTAL
STOCKHOLDERS'
EQUITY

 

As of January 1, 2023

 

 

48,072,517

 

 

$

48

 

 

$

343,608

 

 

$

(479

)

 

$

(237,206

)

 

$

105,971

 

Issuance of common stock for registered direct offering, net of issuance costs

 

 

6,920,415

 

 

 

7

 

 

 

39,720

 

 

 

 

 

 

 

 

 

39,727

 

Issuance of common stock for options exercised

 

 

30,157

 

 

 

 

 

 

108

 

 

 

 

 

 

 

 

 

108

 

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

251

 

 

 

 

 

 

251

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,222

 

 

 

 

 

 

 

 

 

2,222

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,279

)

 

 

(25,279

)

As of March 31, 2023

 

 

55,023,089

 

 

$

55

 

 

$

385,658

 

 

$

(228

)

 

$

(262,485

)

 

$

123,000

 

Issuance of common stock for options exercised

 

 

113,819

 

 

 

 

 

 

371

 

 

 

 

 

 

 

 

 

371

 

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

57

 

 

 

 

 

 

57

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,178

 

 

 

 

 

 

 

 

 

2,178

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,687

)

 

 

(29,687

)

As of June 30, 2023

 

 

55,136,908

 

 

$

55

 

 

$

388,207

 

 

$

(171

)

 

$

(292,172

)

 

$

95,919

 

 

 

 

SHARES

 

 

PAR
VALUE

 

 

ADDITIONAL PAID-IN
CAPITAL

 

 

ACCUMULATED OTHER COMPREHENSIVE LOSS

 

 

ACCUMULATED
DEFICIT

 

 

TOTAL
STOCKHOLDERS'
EQUITY

 

As of January 1, 2022

 

 

47,793,469

 

 

$

48

 

 

$

335,147

 

 

$

(62

)

 

$

(134,505

)

 

$

200,628

 

Issuance of common stock for options exercised

 

 

46,576

 

 

 

 

 

 

83

 

 

 

 

 

 

 

 

 

83

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(797

)

 

 

 

 

 

(797

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,604

 

 

 

 

 

 

 

 

 

1,604

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,164

)

 

 

(20,164

)

As of March 31, 2022

 

 

47,840,045

 

 

$

48

 

 

$

336,834

 

 

$

(859

)

 

$

(154,669

)

 

$

181,354

 

Issuance of common stock for options exercised

 

 

12,463

 

 

 

 

 

 

35

 

 

 

 

 

 

 

 

 

35

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(147

)

 

 

 

 

 

(147

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,054

 

 

 

 

 

 

 

 

 

2,054

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,912

)

 

 

(25,912

)

As of June 30, 2022

 

 

47,852,508

 

 

$

48

 

 

$

338,923

 

 

$

(1,006

)

 

$

(180,581

)

 

$

157,384

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8


 

Omega Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

Operating activities

 

 

 

 

 

 

Net loss

 

 

(54,966

)

 

$

(46,076

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

705

 

 

 

786

 

Amortization of debt issuance costs and debt discount

 

 

20

 

 

 

23

 

Amortization of operating lease right-of-use assets

 

 

2,421

 

 

 

1,768

 

Accretion of discounts on marketable securities

 

 

(206

)

 

 

633

 

Change in fair value of success fee obligation

 

 

82

 

 

 

13

 

Gain on disposal of fixed assets

 

 

(232

)

 

 

 

Stock-based compensation expense

 

 

4,400

 

 

 

3,657

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable due from related party

 

 

(583

)

 

 

(325

)

Prepaid expenses and other current assets

 

 

791

 

 

 

(5,126

)

Other assets

 

 

(350

)

 

 

(2,944

)

Accounts payable

 

 

3,211

 

 

 

541

 

Accrued expenses and other current liabilities

 

 

(5,809

)

 

 

(1,716

)

Other liabilities

 

 

(867

)

 

 

(677

)

Net cash used in operating activities

 

 

(51,383

)

 

 

(49,443

)

Investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,034

)

 

 

(760

)

Purchases of marketable securities

 

 

(19,768

)

 

 

(57,415

)

Proceeds from maturities of marketable securities

 

 

66,901

 

 

 

11,875

 

Net cash provided by (used in) investing activities

 

 

46,099

 

 

 

(46,300

)

Financing activities

 

 

 

 

 

 

Proceeds from equity offering

 

 

40,000

 

 

 

 

Payments of equity offering costs

 

 

(273

)

 

 

 

Proceeds from issuance of common stock under equity incentive plans

 

 

479

 

 

 

118

 

Net cash provided by financing activities

 

 

40,206

 

 

 

118

 

Net change in cash, cash equivalents and restricted cash

 

 

34,922

 

 

 

(95,625

)

Cash, cash equivalents and restricted cash—beginning of period

 

 

70,956

 

 

 

186,823

 

Cash, cash equivalents and restricted cash—end of period

 

$

105,878

 

 

$

91,198

 

Reconciliation of cash, cash equivalents and restricted cash

 

 

 

 

 

 

Cash and cash equivalents

 

$

105,537

 

 

$

90,857

 

Restricted cash

 

 

341

 

 

341

 

Cash, cash equivalents and restricted cash

 

$

105,878

 

 

$

91,198

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

Cash paid for interest

 

$

822

 

 

$

521

 

Supplemental disclosure of noncash investing and financing activities

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued
   expenses

 

$

368

 

 

$

380

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

9


 

Omega Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of the Business and Basis of Presentation

Organization

Omega Therapeutics, Inc. (the “Company” or “Omega”) is a clinical-stage biotechnology company pioneering the development of a new class of programmable epigenomic mRNA medicines by leveraging its OMEGA platform. The OMEGA platform harnesses the power of epigenetics, the mechanism that controls gene expression and every aspect of an organism’s life from cell genesis, growth and differentiation to cell death. The OMEGA platform enables control of fundamental epigenetic processes to correct the root cause of disease by restoring aberrant gene expression to a normal range without altering native nucleic acid sequences. The Company was incorporated in July 2016 (“inception”) as a Delaware corporation and its offices are in Cambridge, Massachusetts.

Liquidity and Going Concern

Since its inception, the Company has devoted substantially all of its resources to building its platform and advancing development of its portfolio of programs, establishing and protecting its intellectual property, conducting research and development activities, organizing and staffing the Company, business planning, raising capital and providing general and administrative support for these operations. The Company is subject to risks and uncertainties common to early clinical-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, risks related to clinical development of product candidates, developments by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.