ITEM 1. BUSINESS
General
We are a developmental stage biotechnology company focusing on researching and developing drugs and diagnostic tests for products with a large commercial market potential as well as drugs which may qualify to treat rare diseases. We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and will therefore be subject to reduced public company reporting requirements.
We are developing a peptide as a testosterone replacement therapy by stimulating the body’s own production of testosterone rather than using synthetic steroid hormones. We believe that our peptide may be a safer alternative - to be proven after clinical studies - to currently available interventions for restoring testosterone levels in males. A second program of the company is a test for dementia which we believe will be the basis for developing an early stage blood or fluid test for Alzheimer’s disease and other similar conditions. Based on the advice of our Scientific Advisory Board (SAB) and a meeting held on November 7, 2018, management has decided to focus the R&D efforts of the company on the peptide development whereas the dementia test remains an asset of the company which we will be seeking to out-license to a 3rd party for further development and commercialization.
A major part of our research and development activities was contracted out to the Research Institute of the McGill University Health Centre in Montreal Canada. The research team was led by Dr. Vassilios Papadopoulos, one of our founders and directors, who specializes in the biochemistry of steroids and their impact on human disease and use as biomarkers for detection of disease and who also serves as Chairman of our SAB. His research provides the foundation for our initial technologies and products. Dr Papadopoulos is currently the Dean of School of Pharmacy at USC.
Our core peptide program, as described below, is “first in class”* and unique. If we are able to successfully execute our pre-clinical trial and first in human trial our business plan is to attract pharmaceutical companies and/ or biotechnology companies for potential alliances, joint ventures, licensing or partnering in order to monetize the unique benefits of IAS- 167A and share the costs of late clinical trial development.
*Drugs with a new and unique mechanism for treating a medical condition
Testosterone Replacement Program - IAS-167A
In May 2015, the FDA issued a cautionary notice 1 regarding the use of existing testosterone replacement products to treat low testosterone in aging men due to the possible increased risk of heart attack and stroke. We are developing a drug to replace current treatments for low testosterone, which we believe will not cause dangerous side effects.
Our lead testosterone replacement therapy candidate under development, IAS-167A, is a peptide compound that we have identified and patented and which is designed to use the body’s own regulatory mechanisms to produce normal levels of testosterone in men with low testosterone levels, a condition known as hypogonadism. IAS-167A is a first in class compound with a novel molecular target, eliminating the need for administering testosterone externally, by allowing the body’s own regulatory machinery to normalize production of testosterone by the testes.
IAS-167A is novel new chemical entity in a highly competitive field which management estimates represents a minimum $3 billion 2 3 market opportunity.
FDA Drug Safety Communication: FDA Cautions About Using Testosterone Products For Low Testosterone Due To Aging; Requires Labeling Change To Inform Of Possible Increased Risk Of Heart Attack And Stroke With Use, 3.3.2015 http://www.fda.gov/Drugs/DrugSafety/ucm436259.htm updating FDA Drug Safety Communication: FDA Evaluating Risk of Stroke, Heart Attack, and Death with FDA- Approved Testosterone Products issued on January 31, 2014. Investigating the risk of stroke, heart attack, and death in men taking FDA-approved testosterone products. http://www.fda.gov/Drugs/DrugSafety/ucm383904.htm
Aging Male Population& the Ensuing Increase in Prevalence of Hypogonadism to Drive Demand for Testosterone Replacement Therapy, https://www.strategyr.com/MarketResearch/Testosterone_Replacement_Therapy_TRT_Market_Trends.asp, issued October 3, 2018
Shayne, R., Hidden Dangers of Testosterone Replacement Therapy You Should Know About, https://www.cnbc.com/amp/2018/10/03/the-hidden-dangers-of-testosterone-replacement-therapy-can-be-deadly.html, issued February 2018.
Our animal data indicates that the administration of the IASO peptide either by injection or orally in hypogonadal rats elevates testosterone levels and with no apparent adverse effects in the IASO peptide treated animals. The table below describes expected attributes we believe are possible after further conducting pre-clinical and clinical trials of IAS-167A. Since we are still at an early stage of pre-clinical testing it is too early to assess the probability of achieving these results which can only be more accurately determined after human clinical trials.
Potential Benefits of IAS-167(to be proven) vs. Existing Testosterone Replacement Therapy
Research Status and Plans
IAS-167A represents, to our knowledge, the first report of induction of testicular testosterone production using non-hormonal agents. Our initial studies produced proof-of-principle data supporting a novel approach to stimulating testosterone formation in males with primary, secondary and acquired hypogonadism that increase both serum and intra-testicular testosterone levels without a suppressive effect on gonadotropins.
We have conducted animal studies using laboratory rats. Treatment with IAS-167A (1st generation peptide) and newer versions of the peptide (2nd generation) resulted in the recovery of both intra-testicular testosterone production and circulating testosterone levels in both normal rats and rats rendered hypogonadal.
Our proof of concept experiments so far have demonstrated that:
●The identified lead peptide IAS-167A rescued intra-testicular and serum testosterone formation in testes cultures ex vivo of adult male rats; these rats were induced in a hypogonadism state by treating them with GnRH antagonist (Cetrorelix) which suppressed LH and testosterone production.
●Normal rats treated with the IAS-167A by subcutaneous injections of the peptide resulted in increased serum testosterone levels.
●Rats treated with shorter versions of the IAS-167A peptide have also resulted in increased serum testosterone levels in a time and dose-effect manner.
●New versions of the shorter versions of the IAS-167A peptide have also been shown to be active orally and have resulted in increasing serum testosterone levels in a time and dose-effect manner.
●Oral administration of our 2nd generation peptides resulted in > 3X mean testosterone recovery
●after 2 hours post treatment
●We have identified several “first in class” lead product candidates and a clinical candidate peptide has been selected for pivotal animal studies and if successful and allowance by regulatory agencies to transition to First in Man clinical trials.
Future studies will focus on formulation, study frequency of treatment and long-term effects, as well as pharmacokinetics studies. Our work has gone through peer review process and published in reputable journals: Aghazadeh et al. Molecular Therapy (Nature), 2014;22:1779-1791; ibid. In: Hormones and Transport Systems, Liwack G (editor). Vitamins Hormones, 2015;98:189-227; Aghazadeh and Papadopoulos. Drug Discovery Today, 2016; 21:278-287.
The Basic Science Behind IAS-167A
On a fundamental level testosterone production is regulated by the hypothalamus. When the hypothalamus determines that the body’s testosterone levels are low, it releases a hormone called a gonadotropin-releasing hormone. The gonadotropin-releasing hormone sends a message to the pituitary gland which produces follicle-stimulating hormone (FSH) and luteinizing hormone (LH) which travel through the bloodstream to the testes. FSH stimulated sperm production and LH stimulates the Leydig cells in the testicles to create more testosterone by converting cholesterol into a series of steroid intermediates and, ultimately, into testosterone. The biological process of creating steroids, including testosterone, is called steroidogenesis and begins in the mitochondria organelles of the Leydig cells.
Within mitochondria, cholesterol is converted to pregnenolone by an enzyme in the inner membrane called CYP11A1. Pregnenolone is the immediate precursor for the synthesis of all of the steroid hormones. Cholesterol import into mitochondria is mediated by a hormone- induced multiprotein complex called the transduceosome, which is composed of cytosolic and outer mitochondrial membrane proteins that control the rate of cholesterol entry into the mitochondria. These proteins interact to produce testosterone. One of these proteins, 14-3-3ε, binds to VDAC1 protein in mitochondria acting as an inhibitor to the production of testosterone. It is the mechanism by which the body tells the Leydig cells that enough testosterone has been produced. We have discovered a compound (IAS- 167A) that blocks the interaction of 14-3-3ε with VDAC1, relieving the inhibition induced by the 14-3-3ε - VDAC1 interaction, and thus resulting in increased testosterone production as shown in pre-clinical tests in animal (rat) models of hypogonadism (stage 1, 2, 3 shown in the graphics below).
Stage 1 - Mitochondrial function for steroid production inside the Leydig cells of the testis
The mitochondrion (singular) organelle is where steroidal genesis begins.
The mitochondria (plural) organelles are located inside the Leydig cell. The Leydig cell, site of testosterone synthesis in the male, is located inside the testis.
Cholesterol used for steroid productions could be either manufactured de novo by the Leydig cells of provided by the diet and body (via HDL or LDL). For steroid formation to begin cholesterol must pass through the outer mitochondrial membrane in order to be converted into pregnenolone in the mitochondria. Pregnenolone is then released from mitochondria into the endoplasmic reticulum to be transformed into testosterone.
The VDAC1 and cholesterol-binding TSPO proteins in the outer mitochondrial membrane are the gatekeepers that control the passage of cholesterol into the mitochondria.
Stage 2 - Cholesterol import into mitochondria is under tight control
An adaptor protein called 14-3-3ε, is naturally present in high levels in the testis and in Leydig cells and it’s purpose is to maintain the balance of the endocrine (hormone) system so that testosterone is not formed in excess. To achieve that 14-3-3ε binds to the VDAC1 on the surface of the mitochondrial membrane. This binding limits the amount of cholesterol moving into mitochondria for conversion to pregnenolone that will give rise to testosterone. Thus, a controlled amount of pregnenolone and thus testosterone are formed by the Leydig cells of the testis.
Because 14-3-3ε binding to VDAC1 controls the passage of cholesterol through the mitochondrial membrane and thus the conversion of cholesterol to pregnenolone and formation of testosterone we hypothesized that if we blocked the 14-3-3-VDAC1 interaction we may be able to induce testosterone formation. If successful, this would allow us to recover the ability of Leydig cells to make testosterone in hypogonadal men.
Stage 3 - Mitochondrial function for steroid production is restored
IASO’s propriety, novel and first in class small peptide was designed to bind to the VDAC1 outer mitochondrial membrane protein so that it blocks its interaction with the 14-3-3ε protein adaptor.
This action allows cholesterol to enter into mitochondria and be converted into pregnenolone. Pregnenolone is then released by the mitochondria to the endoplasmic reticulum of the Leydig cell to be metabolized to testosterone.
Our future studies are expected to validate our proof-of-principle data to support the IAS-167A novel approach to recovering testosterone formation in males with primary, secondary and acquired hypogonadism that should increase both intra-testicular and serum testosterone levels without a suppressive effect on gonadotropins and without the side-effects cited for exogenous testosterone administration. If proven successful and safe, the potential impact of the use of the proposed approach to testosterone elevation could be a paradigm shifting for the clinical treatment of hypogonadism both in aging and in young infertile men.
Background
Testosterone levels in men physiologically decrease at a rate of 0.4 to 2% per year starting at age 30. The hypothalamic-pituitary-gonadal (HPG) axis regulates these testosterone levels via a series of feedback loops. Briefly, testosterone is produced in the testes by Leydig cells in response to luteinizing hormone (LH), which is released by the gonadotrophic cells of the anterior pituitary. The release of LH, which is pulsatile and follows a circadian rhythm, is controlled by the hypothalamic release of gonadotropin-releasing hormone (GnRH).
Low testosterone, or “Hypogonadism,” is a condition in males in which the body does not produce enough testosterone. In men, testosterone is thought to regulate sex drive (libido), bone mass, fat distribution, muscle mass and strength, and the production of red blood cells and sperm. A small amount of circulating testosterone is converted to estradiol, a form of estrogen. As men age, they often make less testosterone, and so they produce less estradiol as well.
The decrease of testosterone levels is often accompanied by erectile dysfunction, decreased muscle mass, gynecomastia, and osteoporosis, as well as, physiological symptoms like fatigue, mental fogginess, and decreased libido. Furthermore, it has been proposed that hypogonadism may predispose men to obesity, insulin resistance, hypertension, and abnormal lipid profile.4 5 The World Health Organization, or WHO, has ranked androgen (testosterone) 18 on the essential medicine list for priority diseases (WHO Model List of Essential Medicines 19th List, April 2015).
Primary hypogonadism occurs when Leydig cell androgen production is insufficient. However, in most of the cases (85%), hypogonadism is secondary, where GnRH or LH signaling is inadequate to maintain testosterone levels. There is also a subgroup of males with a mix of central (hypothalamic and/or pituitary) and gonadal deficiency known as late-onset hypogonadism. This group is characterized by decreased testosterone levels, where the symptoms of aging overlap with those of hypogonadism, leading to confusion in their therapeutic options. Other forms of hypogonadism include compensated hypogonadism, where LH levels are increased to maintain testosterone levels in the low-normal range, and which most often evolves into primary hypogonadism. Additionally, testosterone levels can decrease during trauma and may be a biomarker for surgical prognosis.
Miner MM, Sadovsky R. Evolving issues in male hypogonadism: evaluation, management, and related comorbidities. Cleve Clinic Journal of Med. 2007;74 Suppl 3:S38 S46
(http://www.nih.gov/news-events/nih-research-matters/understanding-how-testosterone-affects-men)
Testosterone replacement therapy (TRT) is currently the only approved therapy to treat hypogonadism and uses synthetic testosterone analogs to improve the symptoms of patients. Testosterone replacement can induce and maintain secondary sex characteristics, improve bone mineral density, sexual function, sense of well-being, and muscle mass and strength. The Endocrine Society recommends replacement therapy for symptomatic men with androgen deficiency. The goal of testosterone replacement is to achieve testosterone concentrations in the eugonadal range in order to treat the symptoms and prevent the complications of the deficiency. Side effects of TRT include polycythemia, gynecomastia, and infertility. Other side effects, like cross-contamination in patients using gels and rashes in those using patches, are associated with the route of administration. There are also concerns about suppression of reproduction and abuse. Moreover, cardiovascular concerns were raised in retrospective and prospective studies. However, some studies showed no effects or even cardiovascular improvements.
It would be highly desirable to be provided with therapeutic agents, preferably suitable for oral dosage, for the treatment or the alleviation of symptoms associated with hypogonadism.
Our goal, although not our initial focus, is to build additional value in our novel peptide technology by seeking orphan drug designations for IAS-167A family of peptides, and by continuing work to advance this promising product candidate toward pre-clinical testing in multiple therapeutic areas. For example, we will investigate either in our own research or in alliance and/or in collaboration with third parties if our IAS-167A peptide can be used in restoring testosterone levels for rare disorders such as Klinefelter’s syndrome (KS) and congenital hypogonadotropic hypogonadism. KS describes a group of chromosomal disorder in which there is at least one extra X chromosome to a normal male karyotype, with prevalence of one in 500 males (47,XXY) characterized by hypogonadism and infertility. This is not so uncommon (1:1000 live male births but most of the time they are missed until puberty where hypogonadism becomes obvious) TRT has been used as a treatment. Congenital hypogonadotropic hypogonadism (CHH) is a rare disorder of sexual maturation characterized by gonadotropin deficiency with low sex steroid levels associated with low levels of follicle stimulating hormone (FSH) and luteinizing hormone (LH). STAR inactivating mutations: linked to adrenal hyperplasia but they also affect the testis Prader-Willi syndrome: secondary hypogonadism (low gonadotropin and low testosterone levels but not necessarily linked) hypogonadism and infertility are part of a complicated phenotype due to deletion of part of chromosome 15. TRT is used for therapy.
Additional areas of investigation of the effect of IAS-167A peptide are - cachexia in cancer patients, Chemotherapy-induced testicular failure, HIV patients and opioid users where TRT has been used as a treatment.
However, the use of testosterone to treat low testosterone by using current testosterone replacement therapy has potentially damaging side effects. In May 2015, the FDA cautioned using testosterone products for low testosterone due to aging due to possible increased risk of heart attack and stroke and now requires appropriate labeling in all such products.6 A recent publication demonstrated increased risk of adverse cardiovascular outcomes associated with testosterone replacement in a cohort of 8709 men in the VA health care system who underwent coronary angiography and had low serum testosterone levels. Further reports showed increased risks of myocardial infarction following testosterone prescription in men.7 Another factor to consider with regard to safety of testosterone replacement therapy is the potential for testosterone replacement therapy to elevate estrogens, specifically estradiol. During testosterone replacement, estradiol may increase and, in some cases, exceed the upper limit of normal, which may contribute to the development of nipple or breast tenderness or gynecomastia.8
Reduced serum testosterone is common among (i) sub fertile and infertile young men, including most men diagnosed with idiopathic infertility (primary and secondary hypogonadism); (ii) aging men, because testosterone levels decline after age 40; and are low in the majority of men older than 60 (mainly primary but occasionally secondary hypogonadism); (iii) men with orchitis, and following trauma (injury to genitalia, spinal cord injury), torsion, surgery, chemotherapy, irradiation; and in response to some medications (acquired hypogonadism). The degradation of quality of life is readily apparent in low testosterone situations.
Research Facilities
Certain aspects of our development program were outsourced under research agreements to the world-class laboratory facilities at the Research Institute of the McGill University Heath Centre (RIMUHC) in Montreal, Canada and in the future in other contract research facilities as deemed appropriate. By outsourcing our research activities to academic research laboratory facilities and contract research organizations (CROs) we have access to specialized and world class research resources in order to expedite our research without requiring lab space and a large full-time research staff. We expect that part of our future research may continue at the research facilities at USC under the appropriate research contract agreements.
Dr. Papadopoulos serves as the Dean of the USC School of Pharmacy and holds the John Stauffer Dean’s Chair in Pharmaceutical Sciences. See Risk Factors “Drs. Vassilios Papadopoulos and Costas Karatzas, IASO BioMed Scientific Advisory Board, or SAB, members hold positions with USC and RIMUHC respectively. These interrelationships may give rise to potential conflicts of interests which we will try to mitigate but can give no assurances that we will be able to remove conflicts between us and these parties.
Alzheimer’s Disease Diagnosis Program - IAS-OSS
The Alzheimer’s Association estimates that approximately 5.7 million Americans had Alzheimer’s disease in 2018 with 5.5 million being 65 years of age and older. By 2025 they estimate that 7.1 million people will be inflicted with Alzheimer’s disease. The disease is the 6th leading cause of death in the United States and at this time the disease cannot be prevented or slowed. Approximately 1 in 3 seniors die of Alzheimer’s disease or related dementias. Most people living with Alzheimer’s are not aware of their diagnosis making advanced health care planning and decision making about their lives quite difficult. Dementia is a general term for a decline in mental ability that interferes with daily life. Alzheimer’s disease is the most common type of dementia. At this time there is no accurate diagnostic test for Alzheimer’s disease 9 Patients are interviewed and observed for symptoms with scans and blood tests being used to rule out other potential issues and not to positively identify the presence of the disease.
FDA Drug Safety Communication: FDA Cautions About Using Testosterone Products For Low Testosterone Due To Aging; Requires Labeling Change To Inform Of Possible Increased Risk Of Heart Attack And Stroke With Use, 3.3.2015 http://www.fda.gov/Drugs/DrugSafety/ucm436259.htm updating FDA Drug Safety Communication: FDA Evaluating Risk of Stroke, Heart Attack, and Death with FDA- Approved Testosterone Products issued on January 31, 2014. Investigating the risk of stroke, heart attack, and death in men taking FDA-approved testosterone products.
Yeap BB, Hyde Z, Almeida OP, et al. Lower testosterone levels predict incident stroke and transient ischemic attack in older men. J Clin Endocrinol Metab. 2009; 94(7):2353 2359. Ohlsson C, Barrett-Connor E, Bhasin S, et al. High serum testosterone is associated with reduced risk of cardiovascular events in elderly men. The MrOS (Osteoporotic Fractures in Men) study in Sweden. J Am Coll Cardiol. 2011; 58 (16):1674 1681.
Kacker R, Traish AM, Morgentaler A. Estrogens in men: clinical implications for sexual function and the treatment of testosterone deficiency. J Sex Med. 2012; 9(6):1681 1696.
Alzheimer’s disease currently claims over 5,000,000 American lives, most of whom are 65 years of age or older and approximately 200,000 are younger. Alzheimer’s disease is the most common form of dementia and its most common risk factors are aging and family history. Currently, Alzheimer’s disease diagnosis is based on an examination of the patient’s history, followed by physical and neurological examinations, including late stage testing which cannot conclusively identify the presence of Alzheimer’s disease until followed up by post-mortem analysis of the brain. Due to the complex and interrelated nature of dementia diseases, an accurate early stage, non-invasive test that can distinguish Alzheimer’s disease from other forms of dementia has eluded the efforts of medical researchers.
We are developing a method (IAS-OSS) for a blood or fluid based diagnostic device for neurodegenerative diseases, which we believe will be able to identify the early onset of Alzheimer’s disease. Our research is based on the measurement of synthesized steroids and accumulated levels of oxidation in the brain which we believe will show a presence in the blood or fluids of humans. We refer to this as our AD Diagnosis Program. Our AD Diagnosis Program is intended to provide a commercially available blood test to determine at an early stage if Alzheimer’s disease is present.
Our initial research has identified an oxidative stress mediated pathway for DHEA, a major neurosteroid in the brain, and demonstrated that in the analytic procedure being used we identify steroidal metabolites responding to oxidative stress and their presence or absence from the blood of AD patients when compared to normal controls. The proposed Oxidative-Stress dependent Steroidal metabolite profiling test (OSS-test) will also be tested for its potential ability to diagnose other neurodegenerative diseases linked to increased oxidative stress in brain.
We have conducted initial testing procedures and assays for the neurosteroid called dehydroepiandrosterone, or DHEA, observing differences between patients with Alzheimer’s disease and normal controls or other samples from dementia conditions. The oxidation biochemical test identifies the production of DHEA in blood taken from non-Alzheimer’s patients whereas the same oxidation process performed with blood from Alzheimer’s patients has minimal effects on DHEA levels. In parallel, we have identified a steroidal signature in the blood specific for individuals with neurodegenerative diseases.
When fully developed, under a license to a 3rd party the diagnostic test for Alzheimer’s Disease in the United States may initially be offered in conjunction with a comprehensive panel of laboratory services provided in a laboratory that has been accredited under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) to perform high complexity testing. We believe that if our test is solely available through a CLIA-certified lab, we may market the test as a laboratory developed test (“LDT”). We believe our plan will permit us to monetize our IAS OSS at an earlier stage than applying for FDA approval of our device to test patients directly.
By responding to the demand from the pharmaceutical industry for effective Alzheimer’s disease screening in drug development programs, our early monetization strategy is consistent with our overall business strategy to attract partnering and licensing opportunities or potential acquirers to reduce or eliminate expenditures for clinical testing to obtain FDA approvals for commercialization.
Assay validation for our future assay may be conducted at accredited labs to enable our test to be offered to the pharmaceutical industry for diagnosis of patients entering clinical trials in Alzheimer’s. In addition, we intend to validate/qualify our test in order to commercialize it as a Laboratory Developed Test (“LDT”) under the Clinical Laboratory Improvement Amendments (“CLIA”) in 2018. As part of such commercialization process, the Company will be actively evaluating its options with respect to appropriate CLIA labs. We expect our test to be offered to the pharmaceutical industry for diagnosis of patients entering clinical trials for Alzheimer’s disease, as a means of selecting the proper patient cohorts while reducing the risk of selecting the wrong patients for inclusion in clinical studies. We expect our test to become available to the pharmaceutical industry under Investigational Use Only (IUO), in therapeutic clinical development programs.
Source www.alz.org
We plan to offer our diagnostic test for Alzheimer’s disease in the United States solely in in a laboratory that has been accredited under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) to perform high complexity testing. We believe that if our test is solely available through a CLIA- certified lab, we may market the test as a laboratory developed test (“LDT”)
We believe our diagnostic assay will be initially be regulated as Laboratory Developed Tests (“LDTs”) under the Clinical Laboratory Improvement Amendments (“CLIA”), and thereafter the Company may seek to gain FDA approval for its diagnostic candidates as In-Vitro Diagnostics (“IVDs”). CLIA provides that laboratories must demonstrate how well an LDT performs using certain performance standards. Laboratories that perform testing on human specimens for the diagnosis, prevention, or treatment of disease, or for the assessment of health, must comply with all applicable CLIA ’88 regulations. These regulations establish standards to help ensure the quality and accuracy of laboratory testing. While most common laboratory tests are commercial tests, manufactured and marketed to multiple laboratories, some new tests are developed, evaluated, and validated within one particular laboratory. These LDTs are used solely within that laboratory and are not distributed or sold to any other labs or health care facilities.
Because LDTs are not marketed to other labs or facilities, they do not require approval for marketing from the U.S. Food and Drug Administration (FDA) as do commercially developed and marketed tests. However, these types of tests must go through rigorous validation procedures and must meet several criteria before results can be used for decisions regarding patient care. These include demonstration of test accuracy, precision, sensitivity, and specificity. If we are unable to engage a CLIA-certified lab to process our diagnostic test at its facilities, the commercialization of our diagnostic test may be unsuccessful.
Research Status and Plans.
The concept behind the development of the blood-based diagnostic tool for neurodegenerative diseases, such as Alzheimer’s disease, is based on research that the brain has the ability to synthesize steroids and observations that oxidative stress that accumulates with aging is particularly high in Alzheimer’s disease brains, where increased levels of beta-amyloid (A) and iron deposition are among the driving forces for increased oxidative stress and hallmarks of Alzheimer’s disease pathology. Neurosteroids are steroids made by brain cells independently of peripheral steroidogenic sources. DHEA is a major neurosteroid identified in the brain. The research underlying our license to We have used the GC/MS testing method and have recorded the following results:
● Confirmed that the amount of DHEA present in sera from age-matched controls is higher than that found in sera from Alzheimer’s disease patients.
● Demonstrated the presence of an oxidative stress-dependent alternative pathway of DHEA biosynthesis in the human.
● A dramatic increase of DHEA production was observed following incubation of sera from age-matched controls compared to that seen with sera from Alzheimer’s disease patients. This significant difference of the DHEA increase, indicated that its precursor, is present at a high level in the control human serum.
● We have analyzed samples from AD and control and other dementia patients.
● Changes in DHEA levels in blood in response to ferrous treatment distinguished in a significant manner between:
o Control samples (patients with Hydrocephalia, Psychiatric and Peripheral System diseases) and NDG pathologies (patient with Lewy body dem., Fronto temporal dem., Alzheimer’s, Vascular dem., Multiple Sclerosis, Mild Cognitive Impairment, Parkinson’, and Amyotrophic Lateral Sclerosis) (1:1 matched by age; p=0.02)
We believe that the data supports the investigational use of this biochemical pathway as a diagnostic means for Alzheimer’s disease. Based on current data, we believe validation of the assay in key patient population groups will establish the specific sensitivity and specificity performance of the assay. Our focus is on licensing out to a 3rd party by the end of 2019.
License
In January 2016, the Company signed a worldwide, exclusive license agreement The Royal Institution for the Advancement of Learning/McGill University, for a patent titled Therapeutics for the Induction of Endogenous Steroidogenesis and Methods Associated with Their Identification underlying the basis of our Testosterone Replacement Therapy. The term of the agreement is 10 years or upon the expiration of the patent, whichever is later. The agreement may be terminated by the Company after one year from signing if it gives 60 day’s written notice, ceases to use the intellectual property, paying expense incurred by McGill, submitting reports, terminating all sublicenses and returning all confidential information. The agreement may be terminated by McGill upon in the event of a Company payment default, bankruptcy, material breach of the agreement or failure to use diligent efforts to commercialize and sublicense the intellectual property.
Licensed Intellectual Property - IAS-167A
Program
I.D.
Applicant
Title
IAS-167A Hypogonadism
U.S. Patent No. WO2014197979A1
The Royal Institution For The Advancement Of Learning/McGill University
Therapeutics for the induction of endogenous steroidogenesis and methods associated with their identification.
IAS-167A Hypogonadism
Patent application
Oral administration of VDAC1-derived small molecule peptides increases circulating testosterone levels
Our patent is categorized as composition of matter covering our peptide and also categorized as a method patent for the use of our peptide to treat hypogonadism. The expiration date of our U.S. patent is in May 2034. We have filed national phase applications in Canada, Australia, India and Europe filings. We have received a notice of intent to grant our patent in Europe and have notice of allowance in Australia. We also have federal common law rights in the trademarks, IASO BioMed, and other trademarks used in the conduct of our business that are not registered.
Our success will depend in large part on our ability to develop and protect our proprietary technology. We intend to rely on a combination of patent, trade secret and know-how, copyright and trademark laws, as well as confidentiality agreements, licensing agreements, non-compete agreements and other agreements, to establish and protect our proprietary rights. Our success will also depend upon our ability to avoid infringing upon the proprietary rights of others, for if we are judicially determined to have infringed such rights, we may be required to pay damages, alter our services, products or processes, obtain licenses or cease certain activities. We conduct prior rights searches before launching any new product development or service to put us in the best position to avoid claims of infringement
This license agreement with McGill requires, for each of the Company’s potential products, a payment of annual net revenues, with a minimum royalty of CAD $5,000 each, per year starting on the date of commercialization of the first product developed using the intellectual property covered by the license agreement. The Company must pay milestone payments in the aggregate amount of $480,000. The Company has not made any payments to McGill as of this date under the Licensing Agreement, however we have reimbursed them approximately $8,300 for prior IP expense. The Company must also pay McGill an aggregate amount of $255,000 as milestone payments for the out of body test to identify Alzheimer’s disease.
These agreements, payable in Canadian dollars, expose the Company to foreign exchange transaction gains and losses. In addition, the Company and McGill agreed to issue 300,000 shares of our common stock to McGill in lieu of the pre-existing anti-dilution provisions.
The description of the License Agreement, as amended, and the Research Agreement, as amended, are not complete and are qualified by reference to Exhibits 10.1, 10.2, 10.3, 10.6 and 10.10 to this Form 10-K.
Also in January 2016 the Company signed a Research Agreement, amended in March 2017 to extend its term by one year, with Research Institute of the McGill University Health Centre, or RIMUHC, and Dr. Vassilios Papadopoulos which is necessary to continue the fundamental research required to develop the patent licensed to the Company from McGill. Dr. Papadopoulos is significant stockholder and member of the Company’s board of directors and he will conduct the research and serve as the principal investigator. The agreement provides that Dr. Vassilios Papadopoulos, and his staff will study “Peptide-based pharmacological induction of androgen formation in male hypogonadism” which is the underlying science behind our product candidate and necessary to develop the product. The research will be conducted at RIMUHC and improvements to the licensed intellectual property will be the property of the Company. The results of the research will be reviewed by the parties and the program may be extended upon mutual agreement. The agreement required the Company to pay a total of $130,000; $65,000 of which was paid upon execution of the agreement and $65,000 was paid in May 2016. The first amended Research Agreement called for $20,000 which was paid at signing, $55,000 paid in July 2017 and $55,000 paid in October 2017. The term of the agreement was the earlier one year or until the Research Program has been completed and that the agreement may be terminated without cause by either party upon 30 days’ advance written notice. The first amendment extended the term by one year. In May 2018 the Company paid RIMUHC an additional $65,000 to continue the research under the first amendment and began negotiating an additional amendment. A second amendment was executed in January 2019 encompassing the $65,000 payment made in May 2018 as well as an additional $35,000 to be paid in 2019. There are limited confidentiality provisions which are subject to the principal investigator’s right to publish findings of the research. The agreements do not enumerate specific termination provisions.
Technology; Research and Development
We intend to cover some of our main research activities in Dr. Papadopoulos’ laboratory at USC under the proper contractual arrangements with USC; we will also be seeking collaborations with other academic and industry partners in order to advance our R&D programs. Certain aspects of our work will be contracted to contract research organizations, for example the peptide synthesis part, animal toxicology etc. The Nonclinical Studies for our peptide are similar to other drugs and must undergo laboratory and animal testing to define their pharmacologic and toxicological effects before they can be studied in humans. Animal species, such as rats and dogs, and a variety of tests, such as functional tests, to identify that our peptides are pharmacologically active, assess our peptide’s pharmacologic activity and define their mechanism of action.
With respect to our Testosterone Replacement Program we have established the following timelines:
Results of Year 1 of Operations
During year 1 of operations we accelerated the optimization of our lead peptide IAS-167A. We have identified a series of peptides, which show effective increase of T levels in animal models.
More specifically we have shown that our peptides are efficacious in animal models in increasing circulating testosterone levels in normal rats and restoring testosterone levels in hypo-gonadal young LH-suppressed rats.). Furthermore, we have optimized the peptide sequences and have developed a series of smaller peptides which can be administered orally and induce the T levels in normal rats. We have performed single- and repeat-dose administration of our IAS-167A series of peptides in rats and have not observed any toxicity.
Year 2 of Operations
We established lead peptide(s) which were orally bioavailable and bioactive.
Year 3 of operations
Assuming adequate financing of the company we will expand animal toxicity studies examining the long term and short term impact (typically in two animal species rat and dog) and safety pharmacology studies assessing absorption, disposition, exposure, and clearance and explore dose response relationships (to evaluate our formulated peptide’s functional effects on major body systems and specific organs). We will perform preclinical pharmacology and pharmacokinetics studies (used to support the clinical dosing route and regimen at later phases of the program). The formulated IAS-167A series of peptides will be tested in various dose response studies in animals to evaluate the efficacy (time- and dose- effects) and guide the dosing regimen in early clinical development in humans. This information is used to predict margins of safety for future human studies. We will be formalizing a regulatory strategy in order to advance our program to perform studies under Good Laboratory Practice (GLP) regulations by contracting the work to a CRO. We have also identified experts to run the phase I testing. We will be contracting work with a Contract Research Organizations (CRO) to delineate our regulatory path and initiate the regulatory package required to initiate discussions with FDA. We have also initiated discussions with various contract manufacturing organizations (CMOs) for the manufacturability of our lead peptide, for assays and a process to prepare large quantities of required material to perform the animal GLP studies. The legal framework for preclinical testing of peptides is essentially similar to that for drugs in that, for example, the FDA’s good laboratory practice (GLP) regulations typically apply. Information to be submitted to FDA include our peptide’s pharmacologic effects and mechanism of action, information on its absorption, distribution, metabolism, and excretion, also details on chemistry, manufacturing, and controls information of our peptide sufficient to allow evaluation of safety, uniformity, consistency, reliability, reproducibility, quality, and integrity of our product candidate.
With respect to our Alzheimer’s Disease Diagnosis Program IAS-OSS program during the first year of Operations we focused on testing the sensitivity and specificity of our test in blood samples from patients with various neurodegenerative and neurological/neuropsychiatric diseases. The sensitivity of a clinical test refers to the ability of the test to correctly identify those patients with the disease. For example, a test with 80% sensitivity detects 80 of patients with the disease (true positives) but 20 with the disease go undetected (false negatives). The specificity of a clinical test refers to the ability of the test to correctly identify those patients without the disease. For example, a test with 80 specificity correctly reports 80 of patients without the disease as test negative (true negatives) but 20 patients without the disease are incorrectly identified as test positive (false positives).
For our IAS-OSS program while it remains a valuable asset for the Company, we will not be performing additional R&D, but we will be seeking partners to license our technology. A potential partner may continue working on the performance metrics of the test such as: Positive Predictive Value (PPV) and Negative Predictive Value (NPV). The PPV of a test is a proportion that is useful to clinicians since it answers the question: How likely is it that this patient has the disease given that the test result is positive. The NPV of a test answers the question: How likely is it that this patient does not have the disease given that the test result is negative. The validity (ability of our test to indicate which individuals may have the disease and which do not) in key patient population groups, will be determined in addition to reproducibility, repeatability, reliability (which indicates that the results of our test are identical or closely similar each time it is conducted). Our key commercial milestone in the development of our blood-based test would be to out license the test by the end of year 3 of our operations or earlier.
Competition
We will compete with many pharmaceutical, biotechnology, and diagnostic companies, as well as other private and public companies involved in the development and commercialization of testosterone replacement therapy and Alzheimer’s diagnostics.
Companies in the pharmaceutical, diagnostic and biotechnology fields are subject to intense competition. We compete with numerous larger companies that have substantially greater financial and other resources and more experience. The principal factors affecting our competitive markets include scientific and technological factors, the availability of patent and other protection for technology and products, the ability, length of time and cost required to obtain governmental approval for testing, manufacturing and marketing and in the future upon product approval physician acceptance. Companies that complete clinical trials, obtain regulatory approvals and commence commercial sales of their products before us may achieve a significant competitive advantage. In addition, such companies may succeed in developing products that are more effective and less costly than products that may be developed by us. There can be no assurance that developments by other companies will not render our products or technologies obsolete or noncompetitive or that we will be able to keep pace with the technological developments of our competitors.
We believe that some of our competitors are in the process of developing technologies that are, or in the future may be, the basis for competitive products. Some of these products may have an entirely different approach or means of accomplishing the desired therapeutic or diagnostic effect than products being developed by us. These competing products may be more effective and less costly than the products developed by us.
Significant levels of research within our fields of interest occur at universities, non-profit institutions, and for-profit organizations. These entities compete with us in recruiting skilled scientific talent.
We believe that our ability to compete successfully will depend upon our ability to create and maintain scientifically advanced technology, obtain adequate funding, develop proprietary products, attract and retain scientific personnel, obtain patent or other protection for our products, develop strategic alliances to enhance the likelihood of success, obtain required regulatory approvals and manufacture and successfully market our products.
Set forth below are companies we know of that are either supplying testosterone replacement therapies or are in some stage of testing therapies. However, we are not aware of any company that is conducting research of the same class of drugs as our IAS-167A.
COMPANY
DRUG
SOURCE
MEREO BIOPHARMA
BGS-649 (leflutrozole) is a novel once weekly oral aromatase inhibitor being developed as a first-line therapy for the treatment of obese men with hypogonadotropic hypogonadism (HH).
https://www.mereobiopharma.com/
pipeline/
ANTARES PHARMA
XYOSTED is used to treat adult men who have low or no testosterone due to certain medical conditions. The FDA approved this drug in September 2018.
https://www.antarespharma.com/
medicines/our-medicines
ACERUS
PHARMACEUTICALS
Natesto is the first and only FDA approved intranasal TRT. The FDA approved this drug in May 2014.
http://www.aceruspharma.com/
English/products-and-pipeline/
default.aspx
CLARUS
THERAPEUTICS
JATENZO is a proprietary soft gel capsule that contains a testosterone (T) prodrug, T undecanoate, or TU, formulated to foster absorption via the intestinal lymphatic system. The FDA approved this drug in March 2019.
http://www.clarustherapeutics.com/
content/product-development/
overview.htm
DIURNAL
Diurnal is developing a first-in-class physiological native oral testosterone replacement treatment for patients suffering from hypogonadism (preclinical).
https://www.diurnal.co.uk/
products-pipeline/
native-oral-testosterone/
FERRING
TESTAVAN is a testosterone replacement therapy for adult male hypogonadism administered as a topical gel. This drug has been filed for FDA approval.
https://www.ferring.com/en/
research-development/pipeline/
LIPOCINE
TLANDO™ is an oral testosterone replacement therapy product candidate containing Testosterone Undecanoate (TU). TLANDO is being studied for both Primary and Secondary hypogonadism. Resubmission of the NDA should occur in the first half of 2019 followed by a six-month review by the FDA.
https://www.lipocine.com/pipeline/
lpcn-1021/
AQUESTIVE
THERAPEUTICS
MSRX-110 is T on dissolvable film, a minimally invasive alternative to pills, injections and gels. MonoSol Rx became Aquestive Therapeutics in 2017 and MSRX-110 is no longer listed.
https://aquestive.com/pipeline/
ENDO
PHARMACEUTICALS
AVEED (testosterone undecanoate) injection is an ester of the androgen, testosterone. Aveed is specifically indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone: primary hypogonadism (congenital or acquired) or hypogonadotropic hypogonadism (congenital or acquired). The FDA approved this drug in March 2014.
http://www.endo.com/endopharma/
our-products
UPSHER-SMITH
VOGELXO is a topical gel formulation of testosterone. Vogelxo is specifically indicated for testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone: primary hypogonadism (congenital or acquired) or hypogonadotropic hypogonadism (congenital or acquired). The FDA approved this drug in June 2014.
https://www.upsher-smith.com/
We do not know of any FDA-approved diagnostic to detect Alzheimer’s disease, although there are tests available under the CLIA exemption through reference labs. If any of our current diagnostic programs are ultimately successfully marketed, they would compete against, or augment, the most widely used current practice of detecting Alzheimer’s disease through a battery of tests, namely neurological and psychiatric examinations, extensive laboratory tests and brain imaging to rule out other conditions (such as stroke, brain tumor, or depression) with similar symptoms.
We are aware of other companies and academic institutions pursuing the development of biochemical markers to be utilized in the diagnosis of Alzheimer’s disease. Competitive diagnostics in development, as well as some that are marketed through reference laboratories, include approaches which attempt to identify Alzheimer’s disease patients by measuring: (i) normal tau, total tau or phosphorylated tau in CSF, either individually, or as part of a panel, (ii) beta amyloid, (iii) neural thread protein in CSF and/or urine, (iv) amyloid derived diffusible ligands (“ADDL’s”) in CSF, (v) imaging plaques in the brain, or (vi) employing proteomic or genetic markers for Alzheimer’s disease. Athena Diagnostics has “research use only” type CSF-based tests available, Acumen Pharmaceuticals (based on detection of soluble A oligomer levels in the cerebrospinal fluid of Alzheimer patients).
Companies and academic centers are in the process of developing blood-based test to diagnose the Alzheimer’s disease at early stages. University of Calgary investigators (they use special molecular probes and advanced spectral microscopy to detect minute amounts of abnormal proteins in blood). Georgetown University Medical Center (Howard J. Federoff, identified 10 phospholipids present at consistently lower levels in blood samples of most of the group that developed Alzheimer’s). Proteome Sciences and researchers at Kings College, London (identified a combination of 10 proteins capable of predicting whether individuals with MCI would develop Alzheimer’s disease within a year, with an accuracy of 87 percent). National Institute on Aging (focusing on a protein in the brain called insulin resistance signaling IRS-1 that may signal the earliest stages of Alzheimer’s, participants who had Alzheimer’s had higher amounts of the inactive form of IRS-1 and lower amounts of the active form than those adults who were healthy. The participants who were diabetic had intermediate levels of IRS-1); Israeli based NeuroQuest (develops a novel blood-based diagnostic test for Alzheimer’s disease based on a specific cellular immune response which reflects the failure of the immune system to cope with the disease and thereby contributes to disease escalation). NanoSomiX has developed a unique process to measure a specific panel of Alzheimer’s disease linked neural proteins in blood based on amyloid beta 1-42, total tau, p-tau T181, p-tau S396, as well as exosome marker CD81. We are not aware of any company that is conducting research of early detection of Alzheimer’s disease using the same technology and methodologies that we are using.
Many of our competitors and potential competitors have substantially greater financial, technological, research and development, marketing and personnel resources than we do. We cannot, with any accuracy, forecast when or if these companies are likely to bring their products and therapies to market in competition with those that we are pursuing.
GLOSSARY OF SELECT TERMS USED
Customers
Since our products are in pre-clinical trial, we do not have any existing customers. Our testosterone replacement and Alzheimer’s diagnostic’s products are intended to be marketed to physicians, other health care professionals, hospitals, research institutions, pharmaceutical companies and the military. It is anticipated that physicians who specialize in urology, men’s health and internists will be the physicians most likely to use our testosterone replacement therapy and physicians that specialize in geriatrics, neurology and will be the physicians most likely to use our diagnostic tests.
Governmental Regulation
U.S. Government Regulation
The health care industry is highly regulated in the United States. The federal government, through various departments and agencies, state and local governments, and private third-party accreditation organizations regulate and monitor the health care industry, associated products, and operations. The following is a general overview of the laws and regulations pertaining to our business.
Drug and Biological Product Regulation
The FDA has broad regulatory authority over drugs and biologics marketed for sale in the United States. The FDA regulates the research, clinical testing, manufacturing, safety, effectiveness, labeling, storage, recordkeeping, promotion, distribution, and production of drugs and biological products. The FDA also regulates the export of drugs and biological products manufactured in the United States to international markets. With the assistance of a regulatory CRO will delineate our regulatory strategy for the T peptide(s). If T peptide will be regulated as a drug, or biological product then the applicable laws and regulations under the FDCA and/or Section 351 of the Public Health Service Act (PHSA) will apply.
For products that are regulated as drugs, an investigational new drug, or IND, application and an approved new drug application, or NDA, are required before marketing and sale in the United States pursuant to the requirements of 21 C.F.R. Parts 312 and 314, respectively. An IND application notifies the FDA of prospective clinical testing and allows the test product to be shipped in interstate commerce. Approval of a NDA requires a showing that the drug is safe and effective for its intended use and that the methods, facilities, and controls used for the manufacturing, processing, and packaging of the drug are adequate to preserve its identity, strength, quality, and purity. If regulated as a biologic, the product must be subject to an IND to conduct clinical trials and a manufacturer must obtain an approved biologics license application, or BLA, before introducing a product into interstate commerce. To obtain a BLA, a manufacturer must show that the proposed product is safe, pure, and potent and that the facility in which the product is manufactured, processed, packed, or held meets established quality control standards.
Drug and biological products must also comply with applicable registration, product listing, and adverse event reporting requirements as well as the FDA’s general prohibition against misbranding and adulteration. Additionally, the FDA actively enforces regulations prohibiting marketing and promotion of drugs and biologics for indications or uses that have not been approved by the FDA (i.e., “off label” promotion).
In the event the FDA does not regulate our services in the United States solely under the HCT/P regulation, our products and activities could be regulated as drug or biological products under the FDCA. If regulated as drug or biological products, we will need to expend significant resources to ensure regulatory compliance. If an IND and NDA or BLA are required for any of our products, there is no assurance as to whether or when FDA approval of the product will be received. The process of designing, conducting, compiling and submitting the non-clinical and clinical studies required for NDA or BLA approval is time-consuming, expensive and unpredictable. The process can take many years, depending on the product and the FDA’s requirements.
If the FDA determines that we have failed to comply with applicable regulatory requirements, it can impose a variety of enforcement actions from public warning letters, fines, injunctions, consent decrees and civil penalties to suspension or delayed issuance of approvals, seizure of our products, total or partial shutdown of our production, withdrawal of approvals, and criminal prosecutions. If any of these events were to occur, it could materially adversely affect us.
Medical Device Regulation
The FDA also has broad authority over the regulation of medical devices marketed for sale in the United States. The FDA regulates the research, clinical testing, manufacturing, safety, labeling, storage, recordkeeping, premarket clearance or approval, promotion, distribution, and production of medical devices. The FDA also regulates the export of medical devices manufactured in the United States to international markets.
Under the FDCA, medical devices are classified into one of three classes - Class I, Class II, or Class III, depending upon the degree of risk associated with the medical device and the extent of control needed to ensure safety and effectiveness. Class I devices are subject to the lowest degree of regulatory scrutiny because they are considered low risk devices and need only comply with the FDA’s General Controls. The General Controls include compliance with the registration, listing, adverse event reporting requirements, and applicable portions of the Quality System Regulation as well as the general misbranding and adulteration prohibitions.
Class II devices are subject to the General Controls as well as certain Special Controls such as 510 (k) premarket notification. Class III devices are subject to the highest degree of regulatory scrutiny and typically include life supporting and life sustaining devices and implants. They are subject to the General Controls and Special Controls that include a premarket approval application, or PMA. “New” devices are automatically regulated as Class III devices unless they are shown to be low risk, in which case they may be subject to de novo review to be moved to Class I or Class II. Clinical research of an investigational device is regulated under the investigational device exemption, or IDE, regulations of 21 C.F.R. Part 812. Nonsignificant risk devices are subject to abbreviated requirements that do not require a submission to the FDA but must have Institutional Review Board (IRB) approval and comply with other requirements pertaining to informed consent, labeling, recordkeeping, reporting, and monitoring. Significant risk devices require the submission of an IDE application to the FDA and the FDA’s approval of the IDE application.
Before FDA approval for general sale, under certain conditions, companies can supply either “investigational use only” or “research use only” assays under the Clinical Laboratory Improvement Amendment (“CLIA”) of 1988. Whether we will be able to market kits under these regulatory categories or obtain final approval for a kit for specific claims, is uncertain given changing regulatory environments in most major markets.
Current Good Manufacturing Practices
Products that are regulated as drugs, biological products, or devices must comply with applicable good manufacturing practice regulations. The current Good Manufacturing Practices, or cGMPs, regulations for drug products are found in 21 C.F.R. Parts 210 and 211; the General Biological Product Standards for biological products are found in 21 C.F.R. Part 610; and the Quality System Regulation for medical devices are found in 21 C.F.R. Part 820. These cGMPs and quality standards are designed to ensure the products that are processed at a facility meet the FDA’s applicable requirements for identity, strength, quality, sterility, purity, and safety. In the event that our domestic United States operations are subject to the FDA’s drug, biological product, or device regulations, we intend to comply with the applicable cGMPs and quality regulations.
If the FDA determines that we have failed to comply with applicable regulatory requirements, it can impose a variety of enforcement actions from public warning letters, fines, injunctions, consent decrees and civil penalties to suspension or delayed issuance of approvals, seizure of our products, total or partial shutdown of our production, withdrawal of approvals, and criminal prosecutions. If any of these events were to occur, it could materially adversely affect us.
Good Laboratory Practices
The FDA prescribes good laboratory practices, or GLPs, for conducting nonclinical laboratory studies that support applications for research or marketing permits for products regulated by the FDA. These regulations are published in Part 58 of Title 21 of the C.F.R. GLPs are intended to assure the quality and integrity of the safety data filed in research and marketing permits. GLPs provide requirements for organization, personnel, facilities, equipment, testing facilities operation, test and control articles, protocol for nonclinical laboratory study, records, reports, and disqualification by the FDA. To the extent that we are required to, or the above regulation applies, we intend that our domestic laboratory activities will comply with GLPs.
Federal Regulation of Clinical Laboratories
Congress passed the Clinical Laboratory Improvement Amendments, or CLIA, in 1988, which provided the Centers for Medicare and Medicaid Services, or CMS, authority over all laboratory testing, except research that is performed on humans in the United States. The Division of Laboratory Services, within the Survey and Certification Group, under the Center for Medicaid and State Operations, or CMSO, has the responsibility for implementing the CLIA program.
The CLIA program is designed to establish quality laboratory testing by ensuring the accuracy, reliability, and timeliness of patient test results. Under CLIA, a laboratory is a facility that does laboratory testing on specimens derived from humans and used to provide information for the diagnosis, prevention, treatment of disease, or impairment of, or assessment of health. Under the CLIA program, laboratories must be certified by the government, satisfy governmental quality and personnel standards, undergo proficiency testing, be subject to inspections, and pay fees. The failure to comply with CLIA standards could result in suspension, revocation, or limitation of a laboratory’s CLIA certificate. In addition, fines or criminal penalties could also be levied. To the extent that our business activities require CLIA certification, we intend to obtain and maintain such certification. We plan to outsource our laboratory testing to CLIA certified laboratories.
Foreign Government Regulation
In general, we will need to comply with the government regulations of each individual country in which our products are to be distributed and sold. These regulations vary in complexity and can be as stringent, and on occasion even more stringent, than FDA regulations in the United States. The level of complexity and stringency is not always precisely understood today for each country, creating greater uncertainty for the international regulatory process. Furthermore, government regulations can change with little to no notice and may result in up-regulation of our product(s), thereby creating a greater regulatory burden for our products. We have not yet thoroughly explored the applicable laws and regulations that we will need to comply with in foreign jurisdictions. It is possible that we may not be permitted to expand our business into one or more foreign jurisdictions.
We do not have any definitive plans or arrangements with respect to the establishment by us of our products in any other country. We intend to explore any such opportunities as they arise.
Offices
Our executive offices are located at 7315 East Peakview Avenue, Englewood, Colorado 80111 and are provided to us on a month to month basis by a corporation in which our Corporate Secretary is affiliated. Beginning January 2017 and through the filing of this report, we pay $400 per month for general office expenses related to these facilities. This monthly fee includes the use of office space as well as the use of business machines, telephone equipment and other office equipment and supplies. It is anticipated this arrangement will continue for 2019 but can be canceled at any time.
Employees
We currently have 2 employees, our executive officers, both of whom are part-time employees. We believe that our employee relations are good.
Glossary of Terms.
The medical and scientific terms used in this Annual Report have the following meanings:
Assay means qualitative or quantitative analysis of a substance or a drug to determine its components. For example, a drug to be so analyzed may provide results used to determine the level of testosterone in the blood of a person suspected of being hypogonadal.
Alzheimer’s disease means a progressive mental deterioration that can occur in middle or old age, due to generalized degeneration of the brain. It is the most common cause of premature senility.
DHEA means dehydroepiandrosterone. DHEA is a hormone that comes from the adrenal gland. It is also made in the brain. DHEA leads to the production of androgens and estrogens (male and female sex hormones).
Eugonadal levels mean having healthily functioning gonad levels. FDA means the Food and Drug Administration.
First in class means a new and unique mechanism of action for treating a medical condition.
GC/MS means gas chromatography/mass spectrometry, which is an instrumental technique by which complex mixtures of chemicals may be separated, identified and quantified.
GnRH means a Gonadotropin-releasing hormone which is released by the hypothalamus and is responsible for the release of follicle-stimulating hormone and luteinizing hormone from the anterior pituitary gland.
GnRH antagonists mean receptor blockers that block the gonadotropin-releasing hormone receptor and thus the action of GnRH.
Gonadotropins mean any of a group of hormones secreted by the pituitary that stimulate the activity of the gonads.
Gynecomastia means swelling of the breast tissue in boys or men, caused by an imbalance of the hormones estrogen and testosterone.
Hematocrit means the ratio of the volume of red blood cells to the total volume of blood. In vitro tests mean studies of biological properties that are done in a test tube.
Hypogonadism means decreased testicular function that results in testosterone deficiency and infertility in men.
In vivo tests mean studies in which the effects of various biological entities are tested on whole, living organisms usually animals including humans, and plants.
Kallmann syndrome means a condition characterized by delayed or absent puberty and an impaired sense of smell. The disorder is a form of hypogonadotropic hypogonadism, which is a condition affecting the production of hormones that direct sexual development.
Leydig cells mean cells that produce testosterone in the testes under the control of pituitary luteinizing hormone.
Luteinizing hormone means a hormone secreted by the anterior pituitary gland that stimulates ovulation in females and the synthesis of androgen in males.
Neurosteroids mean steroids made by brain cells independently of peripheral steroidogenic sources.
Novel drug means an active compound, complex, molecule that previously has not been approved by the FDA/EMA.
Organelle means a cellular structure that performs specific functions within a cell. Orchitis means the inflammation of one or both of the testicles.
“Orphan Drug Designation” program provides orphan status to drugs and biologics which are defined as those intended for the safe and effective treatment, diagnosis or prevention of rare diseases/disorders that affect fewer than 200,000 people in the U.S., or that affect more than 200,000 persons but are not expected to recover the costs of developing and marketing a treatment drug.
Prader syndrome means a genetic disorder characterized especially by short stature, mental retardation, hypotonia, functionally deficient gonads, and uncontrolled appetite leading to extreme obesity.
Peptide means a compound consisting of two or more amino acids linked in a chain, the carboxyl group of each acid being joined to the amino group of the next by a bond of the type -OC-NH. Many hormones and antibiotics are peptides. Peptides consist of smaller chains of amino acids than proteins.
Steroidogenesis means the formation of steroids, as by the adrenal cortex, testes, and ovaries.
ITEM 1A.
ITEM 1A. RISK FACTORS
The following factors should be carefully considered before making a decision to invest in our securities. Any of the following risks, either alone or taken together, could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, we could be materially and adversely affected. There may be additional risks that we do not presently know or that we currently believe are immaterial that could also materially and adversely affect our business, financial condition, liquidity, results of operations and prospects. In any such case, the market price of our common stock could decline substantially, and you could lose all or a part of your investment.
Risk Factors
Risks Related to Our Business Generally
We have a very limited operating history; we have incurred substantial losses since inception; we expect to continue to incur losses until we commercialize or license our product which may not occur in the near term; we have a substantial working capital deficiency and a stockholders’ deficiency; the report of our independent registered public accounting firm contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern.
We have a very limited operating history. Since our inception in March of 2015, we have incurred net losses. As of December 31, 2018, and December 31, 2017, our accumulated deficit was $3,041,165 and $1,403,928, respectively, our stockholders’ (deficit) equity was $(602,519) and $(292,377), and our working capital (deficit) was $(602.519) and $(292,377), respectively. Our losses have principally been operating expenses incurred in start-up research and development costs, general and administrative, legal, and intellectual property expenses. We expect to continue to incur substantial costs for these activities over at least the next year. At December 31, 2018 and December 31, 2017, the Company had cash and cash equivalents of $146,234 and $20,191, respectively. Through December 31, 2018 we have sold $971,842 in common stock. The reports of our independent registered public accounting firms with respect to our financial statements as of December 31, 2018 and 2017 indicate there is substantial doubt about our ability to continue as a going concern. The reports state that, since we have incurred net losses since inception and we need to raise additional funds to meet our obligations and sustain our operations, there is substantial doubt about our ability to continue as a going concern. Our plans in regard to these matters are described in Note 2 to our audited financial (see “Index to Financial Statements”). Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We will need to obtain a significant amount of additional financing to complete our preclinical program, implement our business plan and continue as a viable business.
Since our inception, we have not generated any significant revenues from our operations and have funded our operations through the sale of our equity securities). The implementation of our business plan, as discussed in “Business”, will require the receipt of sufficient equity and/or debt financing to purchase necessary to fund our research and development efforts, and otherwise fund our operations. We had an effective registration statement under which we were offering up to $5,000,000 of our common stock. To date, we have not raised a material amount of funds pursuant to this offering an we have not attracted a placement agent or underwriter to assist us and it is no longer in effect. The offering was being made on a “best efforts” basis. As a result of us no longer attempting to raise funds under this offering, we will be required to employ other means to raise the funds necessary to continue our business activities including, but not limited to, private placements of our equity securities. These sales of our equity securities will result in dilution to our current investors, which dilution may be significant.
In addition, if we do not attract partners, co-developers, licensees or acquirers of our technologies, as contemplated by our business plan, we anticipate that we will need significant additional financing to commence and complete pre-clinical trials, PMA or 510-K approvals for our products. We are funding our current operations through grants and private placements of our common stock. No assurance can be given that the anticipated amounts of required funding are correct or that we will be able to accomplish our goals within the timeframes projected. In addition, no assurance can be given that we will be able to obtain any required financing on commercially reasonable terms or otherwise. In the event we do not obtain the financing required for the above purposes, we may have to curtail our development, marketing and promotional activities, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately we could be forced to discontinue our operations and liquidate.
We are a development stage company without any products currently being validated under CLIA regulations or in FDA clinical trials.
We are a development stage company. Our proposed products will require significant additional research and development efforts prior to any commercial use, including extensive preclinical and clinical testing as well as lengthy regulatory approval, whether under CLIA regulations, or under the FDA drug approval process. There can be no assurances that our research and development efforts will be successful, that our potential products will prove to be safe and effective in future clinical trials or that we will develop any commercially successful products. We currently have no approved products on the market and have not received any commercial revenues from the sale or license of any diagnostic or therapeutic products.
Our business strategy is high-risk.
We are focusing our resources and efforts primarily on the development of our Testosterone Replacement Program and AD Diagnosis Program which will require extensive cash for research, development, licensing and/or commercialization activities. This is a high-risk strategy because there is no assurance that our products and services, including our Testosterone Replacement Program and AD Diagnosis Program research initiatives, will ever become commercially viable (commercial risk), that we will prevent other companies from depriving us of market share and profit margins by offering services and products based on our inventions and developments (legal risk), that we will successfully manage a company in new areas of business in a competitive marketplaces, Testosterone Replacement Program and AD Diagnosis Program, and on a different scale than we have operated in the past (operational risk), that we will be able to achieve the desired therapeutic results using Testosterone Replacement Program and or test results in patients for the AD Diagnosis Program (scientific risk), or that our cash resources will be adequate to develop our products and services until we become profitable, if ever (financial risk). We are using our cash in one of the riskiest industries in the economy (strategic risk). This may make our stock an unsuitable investment for many investors.
We will need to enter into agreements in order to implement our business strategy.
Except for certain license and research and development agreements described in “Business”, we do not have any material agreements or understandings in place with respect to the implementation of our business strategy. No assurances can be given that we will be able to enter into any necessary agreements with respect to the development of our business. Our inability to enter into any such agreements would have a material adverse effect on our results of operations and financial condition.
We have agreed to indemnify our officers and directors against lawsuits to the fullest extent of the law.
We are a Colorado corporation. Colorado law permits the indemnification of officers and directors against expenses incurred in successfully defending against a claim. Colorado law also authorizes Colorado corporations to indemnify their officers and directors against expenses and liabilities incurred because of their being or having been an officer or director. Our organizational documents provide for this indemnification to the fullest extent permitted by Colorado law.
We must rely on third party relationships to develop, manufacture our products without which we may fail.
We do not possess all the resources necessary to complete the development, pre-clinical testing, regulatory process, manufacturing, marketing and commercialization of our diagnostic and therapeutic products and we will need to obtain such resources from third parties. In order to obtain such resources, we will need to enter into collaborations with corporate partners, licensors, licensees and possibly relationships with third parties from whom we will outsource the necessary expertise and resources. Our success may depend on securing such relationships. This business strategy would utilize the expertise and resources of third parties in several areas including:
● performing various activities associated with our pre-clinical and validation studies with human samples;
● preparing submissions seeking regulatory approvals;
● manufacture of our peptide
We face intense competition for qualified employees and consultants. Large pharmaceutical companies and other competitors, which have greater resources and experience than we have, can, and do, offer superior compensation packages to attract and retain skilled personnel. As a result, we may have difficulty retaining such employees and consultants because we may not be able to match the packages offered by such competitors and large pharmaceutical companies, and we may have difficulty attracting suitable replacements.
We expect that our potential expansion into areas and activities requiring additional expertise, such as regulatory, preclinical, preparing submissions for engaging with regulatory agencies, governmental approvals, contract and manufacturing, will be done by working with outside contractors who have the appropriate expertise or by utilizing collaborators / partners. The management of these processes may require an increase in management and the development of additional expertise by existing management personnel. The failure to attract and retain such personnel or to develop such expertise could materially adversely affect prospects for our success.
We depend on our executive officers and our directors, with whom we do not have any contracts and on our ability to attract and retain additional qualified personnel.
Our performance is substantially dependent on the performance of Dr. Vassilios Papadopoulos who is our Director and co-founder, as well as Dr. Costas Karatzas who has significant experience in strategic planning, intellectual property, business development, technology transfer, fund raising, operations and managing research and product development at RIMUHC and biotechnology and pharmaceutical companies. On October 1, 2016, Dr. Papadopoulos left RIMUHC to become the dean of the USC School of Pharmacy and hold the John Stauffer Dean’s Chair in Pharmaceutical Sciences. While our research has continued at RIMUHC in 2018, we may at any time elect to outsource our research to another facility, including the research facilities at USC, which may be at considerable expense. We rely upon Dr. Papadopoulos to conduct our research and development with respect to our product candidates. Dr. Papadopoulos is not our employee and we maintain a relationship with him through a SAB agreement. In the event that we are not able to meet our obligations under our agreements with RIMUHC or if Dr. Papadopoulos disassociates himself with us, it is highly unlikely that we will be able to obtain another research group to carry on the work on our program candidates or be able to meet our obligations under our licensing agreement with McGill University. As a result, we would not be able to execute our business plan. We are also dependent on the performance of Richard M. Schell, our Chairman and Chief Executive Officer, for his business and financial acumen as well as his experience in launching new ventures. We are also dependent on Duane C. Knight, our Chief Financial Officer, for his accounting and finance experience and extensive public accounting experience with publicly traded companies and medical device companies. We have agreements with Dr. Papadopoulos and Dr. Karatzas as members of our SAB. We do not have any key-man insurance policies on the lives of any of our executive officers. We believe that our future success in developing marketable products and services and achieving a competitive position will depend in large part upon whether we can attract and retain additional qualified management and scientific personnel. Competition for such personnel is intense, and there can be no assurance that we will be able to attract and retain such personnel. The loss of the services of Dr. Papadopoulos, Dr Karatzas, Mr. Schell and/or Mr. Knight or the inability to attract and retain additional personnel, and develop expertise as needed would have a substantial negative effect on our results of operations and financial condition.
Dr. Vassilios Papadopoulos previously ran a laboratory at RIMUHC and Dr. Karatzas serves as the Director Business Development and Contracts at RIMUHC where we conducted part of our research and development; these activities may give rise to potential conflicts of interests.
Dr. Papadopoulos served as the former Executive Director and Chief Scientific Officer Director of RIMUHC and Dr. Karatzas serves as the Director Business Development and Contracts office at RIMUHC, and they are our board members of IASO BioMed. We entered into an agreement with the RIMUHC to conduct research and development efforts on behalf of us with respect to our Testosterone Replacement Program conducted by Dr. Papadopoulos through his former laboratory at the RIMUHC. A conflict of interest may arise regarding the cost and the terms of the services provided by RIMUHC and Dr. Papadopoulos’ and Dr. Karatzas’ respective roles in our company. We have conducted negotiation of the terms of our contractual arrangements with the RIMUHC at arm’s length by excluding Dr. Papadopoulos and Dr. Karatzas from representing us with respect to any negotiations, including financial terms. Although norms, fees and services established and followed for all contracts at RIMUHC and other Canadian Institutions were followed, we can give no assurances that the agreement will be fair from a financial point of view and these relationships inherently are not free of conflicts of interests. Dr. Papadopoulos now serves as the dean of the USC School of Pharmacy and holds the John Stauffer Dean’s Chair in Pharmaceutical Sciences at USC. We do not expect that our research will continue at RIMUHC, but we may at any time elect to outsource our research to other facilities, including the research facilities at USC under the appropriate contractual arrangements. Any future agreements with a laboratory run by Dr. Papadopoulos may still have similar conflicts of interest.
Continued turmoil in the economy could harm our business.
Negative trends in the general economy, including, but not limited to, trends resulting from an actual or perceived recession, tightening credit markets, increased cost of commodities, actual or threatened military action by the United States and threats of terrorist attacks in the United States and abroad, could cause a reduction of investment in and available funding for companies in certain industries, including ours. Our ability to raise capital has been and may in the future be adversely affected by downturns in current credit conditions, financial markets and the global economy.
Risks Related to Our Product Development Efforts
Our future success is significantly dependent on the timely and successful development and commercialization of our lead product candidates for the treatment of low testosterone levels in men and IAS-OSS, our lead product candidate for early diagnosis of Alzheimer’s disease through a non-invasive blood test and; if we encounter delays or difficulties in the development of these product candidates, as well as any other product candidates, our business prospects would be significantly harmed.
We are dependent upon the successful development, approval and commercialization of our product candidates. Before regulatory approval for our product candidates, extensive pre-clinical and clinical trials will need to be completed demonstrating their safety and efficacy in humans. Our lead product candidates, IAS-167A series of peptides and IAS-OSS, are in their early stages of development and we must first complete pre- clinical work prior to submitting an investigational new drug, or IND, application for FDA clearance to commence clinical trials for IAS-167A series of peptides
Pre-clinical testing is expensive, difficult to design and implement and can take many years to complete. Importantly, a failure of one or more of these or any other pre-clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of pre-clinical trials that could delay or prevent our ability to receive regulatory approval to proceed with clinical studies and thus commercialize our product candidates, including the following:
● suspensions, delays or changes in the design, initiation, implementation or completion of required pre-clinical trials; adverse changes in our financial position or significant and unexpected increases in the cost of our pre-clinical development program; changes or uncertainties in, or additions to, the regulatory approval process that require us to alter our current development strategy; pre-clinical trial results that are negative, inconclusive or less than desired as to safety and/or efficacy, which could result in the need for additional pre-clinical studies or the termination of the product’s development; delays in our ability to manufacture the product in quantities or in a form that is suitable for any required clinical trials;
● intellectual property constraints that prevent us from making, using, or commercializing any of our product candidates;
● the supply or quality of our product candidates or other materials necessary to conduct pre- clinical studies in preparation of clinical trials of these product candidates may be insufficient or inadequate;
● inability to generate sufficient pre-clinical, toxicology, or other in vivo or in vitro data to support the initiation of clinical studies;
● delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, needed for GLP toxicology studies, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs;
● delays in obtaining required IRB for the AD Diagnosis Program;
● occurrence of adverse events observed in preclinical studies associated with the product candidate that are viewed to outweigh its potential benefits;
● transfer of manufacturing processes from initial contracting facilities to larger-scale facilities operated by a contract manufacturing organization, or CMO and delays or failure by our CMOs or us to make any necessary changes to such manufacturing process;
Any inability to successfully complete pre-clinical development could result in additional costs to us or impair our ability to generate revenue. In addition, if we make manufacturing or formulation changes to our product candidates, we may be required to, or we may elect to, conduct additional studies to bridge our modified product candidates to earlier versions. Preclinical study delays could also shorten any periods during which our products have patent protection and may allow our competitors to bring products to the clinic before we do, which could impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.
Even if we are able to successfully complete our pre-clinical development program for our product candidates, and ultimately receive regulatory approval to move to the clinic one or more of the products, we may, among other things:
● obtain approval to test for indications that are not as broad as the indications we sought;
● encounter issues with respect to the manufacturing of commercial supplies;
While our current business plan anticipates licensing, partnering or selling one or more of our product candidates prior to commencing clinical studies, there can be no assurance that we can find suitable licensees, partners or purchasers of one or more of our product candidates.
We may not successfully complete our pre-clinical trials for our product candidates and, if we do, we may not be able to attract suitable licensees, partners or purchasers to assist us in commencing the clinical trials required for our product candidates. If we are not able to execute a strategy to license, partner or sell our business, we will be required to raise substantial additional funds in order to commence our clinical trials which may not be feasible at such time and would have material adverse effect on our results of operations and financial condition if funds are not successfully raised.
We may have other delays in completing our pre-clinical trials and we may not complete them at all.
We have not commenced the clinical trials necessary to obtain FDA approval to market IAS-167A series of peptides and IAS-OSS or any other related products in development. Our management lacks significant experience in completing clinical trials and bringing a drug through commercialization. IASO BioMed’s focus is (i) on preclinical studies to bring IAS-167A to Phase I clinical trials and (ii) on IAS-OSS test development using clinical samples from AD and other neurodegenerative disorder patients, as well as control subjects, coming from various institutions performing trials. At this stage studies on IAS-167 and IAS-OSS and other related products may be delayed or terminated as a result of many factors, including the following:
● suspension or termination of research for many reasons, including concerns about animal safety, failure of our contract manufacturers, to comply with current Good Manufacturing Practices, or GMP, requirements for the development of IAS-167A;
● inability to continue to fund pre-clinical trials or to find a partner to fund the completion of pre-clinical studies and transition to clinical trials;
● delays in completing data collection and analysis for pre-clinical studies.
Any delay or failure to complete pre-clinical studies and thus been able to proceed with FDA submissions to initiate clinical trials for our product candidates could have a material adverse effect on our cost to develop and commercialize, and our ability to generate revenue through for example license or collaboration from, a particular product candidate.
Products that appear promising in research and development may be delayed or may fail to reach later stages of clinical development.
The successful development of our product candidates is highly uncertain. Product candidates that appear promising in research and development may be delayed or fail to reach later stages of development. Decisions regarding the further development of product candidates must be made with limited and incomplete data, which makes it difficult to ensure or even accurately predict whether the allocation of limited resources and the expenditure of additional capital on specific product candidates will result in desired outcomes. Pre-clinical data can be interpreted in different ways, and negative or inconclusive results or adverse events during pre-clinical studies could delay, limit or prevent the development of a product candidate.
The clinical trials to be undertaken in the future for our product candidates are, and the manufacturing and marketing of our products will be, subject to extensive and rigorous review and regulation by numerous government authorities in the United States and in other countries where we intend to test and market our product candidates. Before obtaining regulatory approvals for the commercial sale of any of our product candidates, we must demonstrate through lengthy, complex and expensive preclinical testing and in the future clinical trials that our product candidates are both safe and effective for use in each target indication. In particular, because our testosterone replacement IAS-761 product candidate is subject to regulation as biological drug products, we will need to demonstrate that it is safe, pure, and potent for use in their target indications. Because our Alzheimer’s diagnostic IAS-OSS product candidate is likely subject to regulation as class III diagnostic product, we will need to demonstrate that it is safe, accurate, and reliable for use in diagnosis. Each product candidate must demonstrate an adequate risk versus benefit profile in its intended patient population and for its intended use. The risk/benefit profile required for product licensure will vary depending on these factors.
In addition, even if in the future such trials are successfully completed, we cannot guarantee that the FDA will interpret the results as we do, and more trials could be required before we submit our product candidates for approval. To the extent that the results of the trials are not satisfactory to the FDA for support of a marketing application, we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.
If successful with the pre-clinical and in future clinical studies, the commercial potential and profitability of our products are unknown and subject to significant risk and uncertainty.
Even if we successfully develop and obtain regulatory approval for our product candidates, the market may not understand or accept the products, which could adversely affect both the timing and level of future sales. Ultimately, the degree of market acceptance of our product candidates (or any of our future product candidates) will depend on a number of factors, including:
● the clinical effectiveness, safety and convenience of the product particularly in relation to alternative treatments;
● our ability to differentiate our products; and
● the cost of the product, the reimbursement policies of government and third-party payors and our ability to obtain sufficient third-party coverage or reimbursement.
Even if we are successful in achieving sales of our product candidates, it is not clear to what extent, if any, the products will be profitable. The costs of goods associated with production of our products are significant. In addition, some changes in manufacturing processes or procedures generally require FDA or foreign regulatory authority review and approval prior to implementation. We may need to conduct additional pre-clinical studies and clinical trials to support approval of any such changes. Furthermore, this review process could be costly and time-consuming and could delay or prevent the commercialization of product candidates.
We are required to pay certain minimum amounts to maintain our exclusive license rights with regard to the technology underpinning our Testosterone Replacement Program and our AD Diagnosis Program; we need to meet certain milestones before McGill University will assign their rights to the intellectual property to us; we need to maintain patents or loose partial or entire rights to license the intellectual property under the agreement. The loss of such exclusive rights would have a material adverse effect upon us.
Pursuant to our license agreement with The Royal Institution of the Advancement of Learning/McGill University, or McGill, we are required to diligently develop the patents, develop vigorous sub-licensing programs and prosecute and maintain our existing patents. If we fail to meet these requirements or otherwise breach the agreement, McGill may terminate the agreement which would materially and adversely affect our financial condition and business operations. McGill did not make any representations or warranties that the license would not infringe on the intellectual property rights of any other party. In the event that our license infringes on the intellectual property rights of others, it would have a material adverse effect upon our business, results of operations and financial condition. In addition, with respect to our license required for our AD Diagnosis Program, we are required to make minimum royalty payments of CAD $5,000 per year. With respect to our license required for our Testosterone Replacement Program, we are required to make minimum royalty payments of CAD $5,000 per year. No assurances can be given that we will have sufficient funds to pay such minimum amounts. Any loss of our exclusive rights would have a material adverse effect upon our business, results of operations and financial condition.
The Company is required to pay milestone payments for the testosterone replacement therapy as follows:
● CAD $5,000 on the issuance of the first US patent
● CAD $25,000 on the filing of an investigational new drug application or regulatory filing
● CAD $50,000 on the initiation of the first Phase II clinical study
● CAD $100,000 on the initiation of the first Phase III clinical study
● CAD $300,000 on receipt of regulatory approval
The Company is also required to pay milestone payments as follows for the out of body test to identify Alzheimer’s disease as follows:
● CAD $5,000 on the issuance of the first US patent
● CAD $50,000 on the filing of a 510(k) or PMA application
● CAD $200,000 on receipt of regulatory approval
The demand for diagnostic products for Alzheimer’s disease may be limited because there is currently no cure or effective therapeutic products to treat the disease.
Since there is currently no cure or therapy that can stop the progression of Alzheimer’s disease, the market acceptance and financial success of a diagnostic technology capable of detecting Alzheimer’s disease may be limited. As a result, even if we successfully develop a safe and effective diagnostic technology for identifying this disease, its commercial value might be
We will need to raise addition capital prior to funding our operations as currently planned.
We have raised $971,842 in equity financing through December 31, 2018. We plan to receive research agreement revenues, collaboration revenues and grant revenues to partially fund our operations. We will also need to raise additional capital prior to funding our operations for the complete development as currently planned. We cannot be certain that any financing will be available when needed, or on terms acceptable to us. If we fail to raise additional financing as we need it, we may have to delay our own product development programs or pass on opportunities to in-license or otherwise acquire new products and/or technologies that we believe may be beneficial to our business or discontinue our operations in their entirety. We may spend capital on:
● research and development programs;
● pre-clinical studies
● regulatory processes
● and clinical trials if we decide to transition ourselves to that stage;
The amount of capital we may require will depend on many factors, including the:
● progress, timing and scope of research and development programs and
● progress, timing and scope of our pre-clinical studies
● time and cost necessary to obtain regulatory approvals to transition our testosterone replacement candidate peptide to first in human trials;
● time and cost necessary to seek third party manufacturers to manufacture testosterone replacement candidate for preclinical trials;
● time and cost necessary to seek co-development partners for our products
● time and cost necessary to respond to technological and market developments;
● changes made to, or new developments in, our existing collaborative, licensing and other commercial relationships; and
● new collaborative, licensing and other commercial relationships that we may establish.
We may also need to enter clinical trials for our products in the event that our partnerships or licensing arrangement do not provide sufficient cash flow in which case we will need to obtain additional financing.
Our expenditures may fluctuate from quarter-to-quarter and year-to-year depending upon the resources available, our development schedule, and our progress. Results of preclinical studies, regulatory decisions and competitive developments for our programs may significantly influence the amount of our research and development expenditures. In addition, if we incur clinical development costs of any program, research and development spending will significantly increase.
We are vulnerable to competition and technological change, and also to resistance from physicians and health care providers to using new therapies.
We will compete with many domestic and foreign companies in developing our technology and products, including biotechnology, medical device and pharmaceutical companies. Many current and potential competitors have substantially greater financial, technological, research and development, marketing, and personnel resources. There is no assurance that our competitors will not succeed in developing alternative products and/or services that are more effective, easier to use, or more economical than those which we may develop, or that would render our products and/or services obsolete and non- competitive. In general, we may not be able to prevent others from developing and marketing competitive products and/or services similar to ours or which perform similar functions or which are marketed before ours.
Competitors may have greater experience in developing products, therapies or devices, conducting clinical trials, obtaining regulatory clearances or approvals, manufacturing and commercialization. It is possible that competitors may obtain patent protection, approval, or clearance from the FDA or achieve commercialization earlier than we can, any of which could have a substantial negative effect on our business.
Physicians and health care providers may resist implementing new therapies due to their prior experience in treating existing conditions. As a result, they may not initiate therapy despite recognition of the problem or the best intervention for a disease status. In particular, they may resist prescribing new treatments, such the IASO future therapeutic peptide, to treat hypogonadal males.
We may form or seek collaborations or strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the benefits of such alliances or licensing arrangements.
We may form or seek strategic alliances, create joint ventures or collaborations, or enter into additional licensing arrangements with third parties that we believe will complement or augment our development and commercialization efforts with respect to our product candidates and any future product candidates that we may develop. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute the shares of our existing stockholders, or disrupt our management and business. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy.
Further, collaborations involving our product candidates, such as our collaborations with third- party research institutions, are subject to numerous risks, which may include the following:
● collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration;
● collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on our results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities;
● collaborators may delay pre-clinical studies, abandon a product candidate, repeat or conduct new studies, or require a new formulation of a product candidate for testing;
● collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates;
● collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability;
● disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of our product candidates, or that result in costly litigation or arbitration that diverts management attention and resources;
● collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; and
● collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual property.
As a result, if we enter into collaboration agreements and strategic partnerships or license our products or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture, which could delay our timelines or otherwise adversely affect our business. We also cannot be certain that, following a strategic transaction or license, we will achieve the revenue or specific net income that justifies such transaction. Any delays in entering into new collaborations or strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates in certain geographies for certain indications, which would harm our business prospects, financial condition, and results of operations.
Risks Related to Our Intellectual Property
We may not be able to protect our proprietary rights.
Our commercial success will depend in large part upon our ability to protect our proprietary rights. There is no assurance, for example, that any additional patents will be issued to us or, if issued, that such patents will not become the subject of a re-examination, will provide us with competitive advantages, will not be challenged by any third parties, or that the patents of others will not prevent the commercialization of products and services incorporating our technology. Furthermore, there can be no guarantee that others will not independently develop similar products and services, duplicate any of our products and services, or design around any patents we obtain.
Our commercial success will also depend upon our ability to avoid infringing patents issued to others. If we were judicially determined to be infringing on any third-party patent, we could be required to pay damages, alter our products, services or processes, obtain licenses, or cease certain activities. If we are required in the future to obtain any licenses from third parties for some of our products and/or services, there can be no guarantee that we would be able to do so on commercially favorable terms, if at all. United States and foreign patent applications are not immediately made public, so we might be surprised by the grant to someone else of a patent on a technology we are actively using. We have not conducted a freedom to operate, or FTO, search on our licensed technology associated, modifications made, and/or further developments that may be made, to that technology may not be covered by the initial FTO.
Litigation, which would result in substantial costs to us and the diversion of effort on our part, may be necessary to enforce or confirm the ownership of any patents issued or licensed to us, or to determine the scope and validity of third-party proprietary rights. If our competitors claim technology also claimed by us and prepare and file patent applications in the United States, we may have to participate in interference proceedings declared by the U.S. Patent and Trademark Office, or the Patent Office, or a foreign patent office to determine priority of invention, which could result in substantial costs and diversion of effort, even if the eventual outcome is favorable to us. Any such litigation or interference proceeding, regardless of outcome, could be expensive and time-consuming.
Successful challenges to our patents through oppositions, re-examination proceedings or interference proceedings could result in a loss of patent rights in the relevant jurisdiction. If we are unsuccessful in actions we bring against the patents of other parties, and it is determined that we infringe upon the patents of third parties, we may be subject to litigation, or otherwise prevented from commercializing potential products and/or services in the relevant jurisdiction, or may be required to obtain licenses to those patents or develop or obtain alternative technologies, any of which could harm our business. Furthermore, if such challenges to our patent rights are not resolved in our favor, we could be delayed or prevented from entering into new collaborations or from commercializing certain products and/or services, which could adversely affect our business and results of operations.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential or sensitive information could be compromised by disclosure in the event of litigation. In addition, during the course of litigation there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
In addition to patents, we intend to also rely on unpatented trade secrets and proprietary technological expertise. We intend to rely, in part, on confidentiality agreements with our partners, employees, advisors, vendors, and consultants to protect our trade secrets and proprietary technological expertise. There can be no guarantee that these agreements will not be breached, or that we will have adequate remedies for any breach, or that our unpatented trade secrets and proprietary technological expertise will not otherwise become known or be independently discovered by competitors.
Failure to obtain or maintain patent protection, failure to protect trade secrets, third-party claims against our patents, trade secrets, or proprietary rights or our involvement in disputes over our patents, trade secrets, or proprietary rights, including involvement in litigation, could divert our efforts and attention from other aspects of our business and have a substantial negative effect on
We may not be able to protect our intellectual property in countries outside of the United States.
Intellectual property law outside the United States is uncertain and, in many countries, is currently undergoing review and revisions. The laws of some countries do not protect our patent and other intellectual property rights to the same extent as United States laws. Third parties may attempt to oppose the issuance of patents to us in foreign countries by initiating opposition proceedings. Opposition proceedings against any of our patent filings in a foreign country could have an adverse effect on our corresponding patents that are issued or pending in the United States. It may be necessary or useful for us to participate in proceedings to determine the validity of our patents or our competitors’ patents that have been issued in countries other than the United States. This could result in substantial costs, divert our efforts and attention from other aspects of our business, and could have a material adverse effect on our results of operations and financial condition.
Changes to United States patent law may have a material adverse effect on our intellectual property rights.
The Leahy-Smith America Invents Act, or AIA, which was signed into law in 2011, significantly changed United States patent law. It may take some time to establish what the law means, since it is just being interpreted by the lower courts, and any lower court decisions have not been reviewed by either the Federal Circuit Court of Appeals or the Supreme Court, a process that will take years. The first major change is that AIA switches the United States patent system from a “first to invent” system to a “first to file” system. Now that the first to file system is in effect, there is a risk that another company may independently develop identical or similar patents at approximately the same time and be awarded the patents instead of us. Further, for the second major change, AIA abolished interference proceedings, and establishes derivation proceedings to replace interference proceedings in all cases in which the time period for instituting an interference proceeding has not lapsed where an inventor named in an earlier application derived the claimed invention from a named inventor. Now that the derivation proceedings are in effect, there is a risk that the inventorship of any pending patent application can be challenged for reasons of derivation. The third major change is that AIA established post-grant opposition proceedings that will apply only to patent applications filed after “first to file” became effective. Post-grant opposition will enable a person who is not the patent owner to initiate proceedings in the Patent Office within nine months after the grant of a patent that can result in cancellation of a patent as deemed invalid. In addition to AIA, recent court decisions have created uncertainty with regard to our ability to obtain and maintain patents. Therefore, there is a risk that any of our patents once granted may be subject to post-grant opposition, which will increase uncertainty on the validity of any newly granted patent or may ultimately result in cancellation of the patent.
In addition, the Supreme Court has recently taken more limiting positions as to what constitutes patentable subject matter. As a result, many patents covering what were previously patentable inventions are now determined to cover inventions which are deemed non-statutory subject matter and are now invalid. As a result of this and subsequent opinions by the Court of Appeals for the Federal Circuit, the Patent Office is now applying more stringent limitations to claims in patent applications and is refusing to grant patents in areas of technology where patents were previously deemed available. Therefore, there is a risk that we will be unable to acquire patents to cover our products and if such patents are granted, they may subsequently be found to be invalid.
In certain countries, patent holders may be required to grant compulsory licenses, which would likely have a significant and detrimental effect on any future revenues in such country.
Many countries, including some countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, most countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may be limited to monetary relief and may be unable to enjoin infringement, which could materially diminish the value of the patent. Compulsory licensing of life-saving products is also becoming increasingly common in developing countries, either through direct legislation or international initiatives. Such compulsory licenses could be extended to our product candidates, which may limit our potential revenue opportunities, including with respect to any future revenues that may result from our product candidates.
Risks Related to Government Regulation
We operate in a highly-regulated environment and may be unable to comply with applicable federal, state, local, and international requirements. Failure to comply with applicable government regulation may result in a loss of licensure, registration, and approval or other government enforcement actions.
Our products and operations are, or will be, subject to regulation in the United States by the FDA, the Federal Trade Commission, or FTC, the Centers for Medicare and Medicaid Services, or CMS, state authorities and comparable authorities in foreign jurisdictions. Government regulation is a significant factor affecting the research, development, formulation, manufacture, and marketing of our products. If we fail to comply with applicable regulations, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, operating restrictions and criminal prosecution.
Risks Related to Our Common Stock and Our Warrants
We pay no dividends.
We have never paid cash dividends in the past, and currently do not intend to pay any cash dividends in the foreseeable future.
Our common stock is not currently quoted or listed and may never be quoted or listed by the OTC Markets OTCQB or any other listing or quotation service and if listed, no market may ever develop for our common stock, or if developed, may not be sustained in the future. Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws.
Our common stock is currently not quoted on any market. No market may ever develop for our common stock, or if developed, may not be sustained in the future. The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there might be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the shares available for trading on the OTC Markets OTCQB, investors should consider any secondary market for our common shares to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication, which permits a “manual exemption.” This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer’s balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non-issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor’s, Moody’s Investor Service, Fitch’s Investment Service, and Best’s Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
Accordingly, our common shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
There is no assurance of a public market or that our common stock will ever trade on a recognized stock exchange. Therefore, you may be unable to liquidate your investment in our stock.
There is no established public trading market for our common stock. Our shares have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA for our shares to be quoted by the OTC Markets OTCQB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment.
If our common stock is classified as a “penny stock,” the restrictions of the penny stock regulations of the Securities and Exchange Commission, or SEC, may result in less liquidity for our common stock.
The SEC has adopted regulations which define a “penny stock” to be any equity security that has a market price (as therein defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. If our common stock becomes eligible to trade on the OTC OTCQB market, we expect it will be classified as a “penny stock”. For any transactions involving a penny stock, unless exempt, the rules require the delivery, prior to any transaction involving a penny stock by a retail customer, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about commissions payable to both the broker/dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. If the market price for shares of our common stock is below $5.00, and we do not satisfy any of the exceptions to the SEC’s definition of penny stock, our common stock will be classified as a penny stock. If such classification should occur, as a result of the penny stock restrictions, brokers or potential investors may be reluctant to trade in our securities, which may result in less liquidity for our common stock.
Our stock price may fluctuate significantly and be highly volatile and this may make it difficult for you to resell shares of our common stock at the volume, prices and times you find attractive.
The market price of our common stock, when we become eligible to trade, could be subject to significant fluctuations and be highly volatile, which may make it difficult for you to resell shares of our common stock at the volume, prices and times you find attractive. There are many factors that will impact our stock price and trading volume.
Stock markets, in general, experience significant price and volume volatility, and the market price of our common stock may continue to be subject to such market fluctuations that may be unrelated to our operating performance and prospects. Increased market volatility and fluctuations could result in a substantial decline in the market price of our common stock.
There may be future issuances or resales of our common stock which may materially and adversely dilute stockholders’ ownership interest and affect the market price of our common stock.
We are not restricted from issuing additional shares of our common stock in the future, including securities convertible into, or exchangeable or exercisable for, shares of our common stock. Our issuance of additional shares of common stock in the future will dilute the ownership interests of our then existing stockholders.
As of December 31, 2018, we have warrants outstanding to purchase 12,396,112 shares of our common stock at exercise prices as follows: 1,836,112 at $.01 or less per share, 1,025,000 at $.05 per share, 3,000,000 at $.10 per share and 5,000,000 shares of Common Stock at $.50 per share, which contain cashless exercise provisions; 750,000 at $.40 per share, and 785,000 shares of common stock at an exercise price of $0.75 per share.
The sale of a substantial number of shares of our common stock or securities convertible into, or exchangeable or exercisable for, shares of our common stock in future offerings or by our existing stockholders in the secondary market, the perception that such issuances or resales could occur or the availability for future issuances or resale of shares of our common stock or securities convertible into, or exchangeable or exercisable for, shares of our common stock could materially and adversely affect the market price of our common stock and our ability to raise capital through future offerings of equity or equity-related securities on attractive terms or at all.
In addition, our Board of Directors is authorized to designate and issue preferred stock without further stockholder approval, and we may issue other equity and equity-related securities that are senior to our common stock in the future for a number of reasons, including, without limitation, to support operations and growth, and to comply with any future changes in regulatory standards.
Our principal stockholders currently own a substantial number of shares of our common stock and have, and will continue to have, the power to significantly influence the vote on all matters submitted to a vote of our stockholders.
As of March 31, 2019, VGP Discovery, Inc., or VGP, beneficially owned 14,118,400 shares of our common stock (including 3,102,400 shares of our common stock issuable pursuant to currently exercisable warrants), representing 35.0% of the outstanding shares of our common stock. Dr. Papadopoulos holds voting power and investment power over these shares of stock. VGP beneficially owned 29.6% of the outstanding shares as of that date.
As of March 31, 2019, CNKonsulting, Inc., or CNK, beneficially owned 13,180,800 shares of our common stock (including 2,896,800 shares of our common stock issuable pursuant to currently exercisable warrants), representing 32.8% of the outstanding shares of our common stock. Dr. Karatzas holds voting power and investment power over these shares of stock. CNK beneficially owned 27.6% of the outstanding shares of our common as of that date.
VGP and CNK, through their beneficial ownership of our common stock, have, and will continue to have, the power to significantly influence the vote on all matters submitted to a vote of our stockholders, including the election of directors, amendments to our certificate of incorporation or bylaws, mergers or other business combination transactions and certain sales of assets outside the usual and regular course of business. The interests of VGP and CNK may not coincide with the interests of our other stockholders, and it could take actions that advance its own interests to the detriment of our other stockholders.
We may invest or spend the proceeds from offerings of our securities in ways with which you may not agree and in ways that may not earn a profit.
We currently intend to use the net proceeds of the sales of our securities for the following purposes: (i) pre-clinical research and development for our Testosterone Replacement Program; (ii) pre-clinical research and development for our AD Diagnosis Program; and (iii) general corporate and working capital purposes. However, we will retain broad discretion over the use of the proceeds we receive from offerings of our securities and may use them for purposes other than those contemplated at the time of any offering. You may not agree with the ways we decide to use those proceeds, and our use of the proceeds may not yield any profits.
We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments, not previously approved. We could be an emerging growth company for up to five (5) years, although we could lose that status sooner if our revenues exceed $1,000,000,000, if we issue more than $1,000,000,000 in non- convertible debt in a three (3) year period, or if the market value of our common stock held by non-affiliates exceeds $100,000,000 as of any April 30th date before that time, in which case we would no longer be an emerging growth company as of the following April 30th We cannot predict whether investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2.
ITEM 2. PROPERTIES.
Our executive offices are located at 7315 East Peakview Avenue, Englewood, Colorado 80111 and are provided to us on a month to month basis by a corporation in which our corporate secretary is affiliated. Beginning January 2017 through the present, we pay $400 per month for general office expenses related to these facilities. This monthly fee includes the use of office space as well as the use of business machines, telephone equipment and other office equipment and supplies. It is anticipated this arrangement will continue for 2019 but can be canceled at any time.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or stockholder is a party adverse to the Company or has a material interest adverse to the Company.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
(a) Market information
Our common stock is not currently trading and therefore not listed on any platform or exchange and therefore no data is available for the periods ended December 31, 2018 and December 31, 2017.
(b) Holders
The number of record holders of our common stock as of March 31, 2019, was approximately 35 according to our records and those of our transfer agent.
(c) Dividends
We have never declared or paid a cash dividend on our common stock and do not anticipate paying any cash dividends in the foreseeable future.
(d) Securities authorized for issuance under equity compensation plans
Not applicable
Recent Sales of Unregistered Equity Securities
In October 2018, we issue warrants to purchase up to 1,161,112 shares of our common stock including 950,000 shares to our CFO, and 211,112 shares to our corporate secretary at an exercise price of $0.001 per shares exercisable for a period of three months. Also in October 2018 we issued a warrant to purchase up to 100,000 shares of our common stock for $0.01 per share for a period of up to five years pursuant to a consulting agreement with a member of our SAB.
In quarter ended March 31, 2019, we issued 1,296,112 shares of our $0.00001 par value common stock upon the exercise of warrants to purchase common stock including, 1,161,112 at an exercise price of $0.001 per share to two of our officers and 135,000 shares at an exercise price of $0.01 per share to a member of our SAB. As a result of these issuances the Company received total proceeds of $2,511.
We offered and sold the securities in reliance on an exemption from federal registration under Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
This information is not required for Smaller Reporting Companies.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Overview
IASO BioMed®, Inc. (IASO or the “Company”) is a developmental stage biotechnology company focusing on researching and developing drugs and diagnostic tests for products with a large commercial market potential as well and/or and drugs that may qualify for orphan drug status. The Company primarily is developing a drug that it believes will be a safer alternative to currently available testosterone replacement therapy by stimulating the body’s own testosterone production rather than using synthetic hormones and steroids; and secondarily developing an out of body test to identify Alzheimer’s disease. IASO is also developing a process, or method, which the Company believes will be the basis for developing an early stage blood or fluid test for Alzheimer’s disease. The Company was incorporated as a C-corporation in the state of Colorado on March 11, 2015. It has its primary place of business in Denver, Colorado.
JOBS Act -We are an “emerging growth company” as defined in the recently-enacted JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting and disclosure requirements that are applicable to public companies that are not “emerging growth companies.” As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain reporting and disclosure requirements, which may make our future public filings different than that of other public companies.
Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain new accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
We will remain an “emerging growth company” until the earliest of: (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement, (iii) the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which we are deemed a “large accelerated filer” as defined under the federal securities laws.
We have not generated any revenue to date, and we do not currently have a product ready for sale.
At December 31, 2018 and December 31, 2017, the Company had cash of $140,234 and $20,191, respectively. It also had working capital deficit of $602,519 and $292,377, respectively and an accumulated deficit of $3,041,165 and $1,403,928, respectively. This raises substantial doubt about the Company’s ability to continue as a going concern. Management is taking action to ensure the Company will continue as a going concern for at least one year beyond the date of the issuance of the Company’s financial statements. From March 11, 2015 (Inception) through December 31, 2018, the Company has sold $971,842 in common stock. Common stock sales will continue as the Company seeks private placement offerings of its common stock. These fundraising efforts may not be successful. While there can be no assurances, management believes that these actions will enable the Company to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
If we are unable to obtain additional financing on a timely basis, we may have to curtail our development, and business activities, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately we could be forced to discontinue our operations and liquidate. See “Liquidity and Capital Resources” below.
Recent Developments
In January 2016, the Company signed a worldwide, exclusive license agreement with The Royal Institution for the Advancement of Learning/McGill University, or McGill, for a patent titled Therapeutics for the Induction of Endogenous Steroidogenesis and Methods Associated with Their Identification underlying the basis of our Testosterone Replacement Therapy. The term of the agreement is 10 years or upon the expiration of the patent, whichever is later. The agreement may be terminated by the Company after one year from signing if it gives 60 day’s written notice, ceases to use the intellectual property, paying expense incurred by McGill, submitting reports, terminating all sublicenses and returning all confidential information. The agreement may be terminated by McGill upon in the event of a Company payment default, bankruptcy, material breach of the agreement or failure to use diligent efforts to commercialize and sublicense the intellectual property. This agreement requires, for each of the Company’s potential products, a 3% payment of annual net revenues, with a minimum royalty of CAD $5,000 each, per year starting on the date of commercialization of the first product developed using the intellectual property covered by the license agreement. The Company must pay milestone payments in the aggregate amount of $480,000. The Company has not made any payments to McGill as of this date under the Licensing Agreement.
The Company must also pay McGill an aggregate amount of $255,000 as milestone payments for the out of body test to identify Alzheimer’s disease.
These agreements, payable in Canadian dollars, expose the Company to foreign exchange transaction gains and losses. In addition, the Company and McGill agreed to issue 300,000 shares of our common stock to McGill in lieu of the pre-existing anti-dilution provisions. As McGill owns more than 5% of the Company’s outstanding common stock, it is considered a related party.
Also in January 2016 the Company signed a Research Agreement, amended in March 2017 to extend its term by one year, with Research Institute of the McGill University Health Centre, or RIMUHC, and Dr. Vassilios Papadopoulos which is necessary to continue the fundamental research required to develop the patent licensed to the Company from McGill. Dr. Papadopoulos is significant stockholder and member of the Company’s board of directors and he will conduct the research and serve as the principal investigator. The agreement provides that Dr. Vassilios Papadopoulos, and his staff will study “Peptide-based pharmacological induction of androgen formation in male hypogonadism” which is the underlying science behind our product candidate and necessary to develop the product. The research will be conducted at RIMUHC and improvements to the licensed intellectual property will be the property of the Company. The results of the research will be reviewed by the parties and the program may be extended upon mutual agreement. The agreement required the Company to pay a total of $130,000; $65,000 of which was paid upon execution of the agreement and $65,000 was paid in May 2016. The first amended Research Agreement called for $20,000 which was paid at signing, $55,000 paid in July 2017 and $55,000 paid in October 2017. The term of the agreement was the earlier one year or until the Research Program has been completed and that the agreement may be terminated without cause by either party upon 30 days’ advance written notice. The first amendment extended the term by one year. In May 2018 the Company paid RIMUHC an additional $65,000 to continue the research under the first amendment and began negotiating an additional amendment. A second amendment was executed in January 2019 encompassing the $65,000 payment made in May 2018 as well as an additional $35,000 to be paid in 2019. There are limited confidentiality provisions which are subject to the principal investigator’s right to publish findings of the research. The agreements do not enumerate specific termination provisions.
The description of the License Agreement, as amended, and Research Agreement, as amended, are not complete and are qualified by reference to Exhibits 10.1, 10.2, 10.3 and 10.6 to Form S-1 filed with the Securities and Exchange Commission.
The Company has sold $407,500 and $231,500 in common stock in 2018 and 2017, respectively.
Results of Operations
The year ended December 31, 2018 compared to year ended December 31, 2017
The following table presents a summary of our statements of operations for the years ended December 31, 2018 and 2017.
Revenues
The Company was incorporated on March 11, 2015 and has no revenues to-date and has no products ready for sale.
General and administrative
General and administrative expenses consist primarily of professional, legal and accounting fees related to the preparation and filing of the Company’s Form S-1 registration statement and subsequent SEC filings in 2018 and 2017, with the addition of significantly increased stock-based compensation in 2018. General and administrative expenses increased by $782,311 for the year ended December 31, 2018 compared to the year ended December 31, 2017. The primary reason for the increase is share-based compensation expense along with the establishment of our Scientific Advisory Board and the resulting compensation of its members. The Company expensed accrued salaries of $225,000 for the year ended December 31, 2018 versus $187,500 for the year ended December 31, 2017. Share-based compensation expense of $915,345 was recorded in the year ended December 31, 2018 for the fair value of warrants issued as compensation to outside consultants as well as the Company’s CFO and corporate secretary as compared to $224,446 recorded for warrants to purchase shares to the Company’s CEO and CFO for the year ended December 31, 2017. The Company’s CEO and CFO were not paid a salary for their part-time services during the period March 11, 2015 (inception) through February 28, 2017. The Company has recognized the value of their services as contributed services by recognizing $5,000 for the year ended December 31, 2017, and additional paid-in capital in the balance sheet as of December 31, 2017. We established our Scientific Advisory Board with six members, including two members of our board of directors and four outside members, which accounted for $140,000 of expense recorded in 2018 with no similar expense in 2017. We also incurred $213,000 in professional and consulting expense, related party in the year ended December 31, 2018 related to payments made to members of our SAB who were also directors of the Company along with the consulting agreement and payments made to our Corporate Secretary, or his affiliates, and there was no similar expense in 2017. We expect that our general and administrative expenses will increase as we expand our staff, develop our infrastructure and incur additional costs to support the execution of our business plan.
The Company incurred $20,833 and $9,866, respectively, in intellectual property expenses for the years ended December 31, 2018 and 2017 that are included as general and administrative expenses.
Research and development
Research and development costs are charged to operations in the period incurred. For the years ended December 31, 2018 and 2017, total research and development expenses were $95,000 and $171,078, respectively.
January 2016, the Company signed a worldwide, exclusive license agreement with The Royal Institution for the Advancement of Learning/McGill University, or McGill, for a patent titled Therapeutics for the Induction of Endogenous Steroidogenesis and Methods Associated with Their Identification underlying the basis of our Testosterone Replacement Therapy. The term of the agreement is 10 years or upon the expiration of the patent, whichever is later. The agreement may be terminated by the Company after one year from signing if it gives 60 day’s written notice, ceases to use the intellectual property, paying expense incurred by McGill, submitting reports, terminating all sublicenses and returning all confidential information. The agreement may be terminated by McGill upon in the event of a Company payment default, bankruptcy, material breach of the agreement or failure to use diligent efforts to commercialize and sublicense the intellectual property. This agreement requires, for each of the Company’s potential products, a 3% payment of annual net revenues, with a minimum royalty of CAD $5,000 each, per year starting on the date of commercialization of the first product developed using the intellectual property covered by the license agreement. The Company must pay milestone payments in the aggregate amount of $480,000. The Company has not made any payments to McGill as of this date under the Licensing Agreement (we have paid them the patent expenses of about $7k). The Company must also pay McGill an aggregate amount of $255,000 as milestone payments for the out of body test to identify Alzheimer’s disease.
Also in January 2016 the Company signed a Research Agreement, amended in March 2017 to extend its term by one year, with Research Institute of the McGill University Health Centre, or RIMUHC, and Dr. Vassilios Papadopoulos which is necessary to continue the fundamental research required to develop the patent licensed to the Company from McGill. Dr. Papadopoulos is significant stockholder and member of the Company’s board of directors and he will conduct the research and serve as the principal investigator. The agreement provides that Dr. Vassilios Papadopoulos, and his staff will study “Peptide-based pharmacological induction of androgen formation in male hypogonadism” which is the underlying science behind our product candidate and necessary to develop the product. The research will be conducted at RIMUHC and improvements to the licensed intellectual property will be the property of the Company. The results of the research will be reviewed by the parties and the program may be extended upon mutual agreement. The agreement required the Company to pay a total of $130,000 in 2015. In 2017 the Company and RIMUHC executed the first amended Research Agreement that called for $20,000 which was paid at signing, $55,000 paid in July 2017 and $55,000 paid in October 2017. The first amendment extended the term by one year. In May 2018 the Company paid RIMUHC an additional $65,000 to continue the research under the first amendment and began negotiating an additional amendment. A second amendment was executed in January 2019 encompassing the $65,000 payment made in May 2018 as well as an additional $35,000 to be paid in 2019. There are limited confidentiality provisions which are subject to the principal investigator’s right to publish findings of the research. The agreements do not enumerate specific termination provisions.
Interest expense
For the years ended December 31, 2018 and 2017, the Company recorded accrued interest expense of $3,600 and $2,009, respectively, for the notes payable to our CEO including $25,000 issued in October 2016 and $35,000 issued in October 2017. The total principal balance of $60,000 was outstanding on these notes at each of December 31, 2018 and 2017.
Liquidity and Capital Resources
We measure our liquidity in a number of ways, including the following:
Since our inception, we have not generated any revenues and have funded our operations through the sale of our equity securities and through notes payable from the Company’s CEO. The implementation of our business plan, as discussed in “Business,” will require the receipt of sufficient grant, equity and/or debt financing to purchase necessary technology and materials, fund our research and development efforts, and otherwise fund our operations. We anticipate our business plan will require $3-5 million to fund our anticipated operations for the next 18 to 24 months.
Net Cash Used in Operating Activities
For the years ended December 31, 2018 and 2017, we experienced negative cash flows from operating activities of $291,707 and $262,000, respectively. This is due primarily to a net loss of $1,637,237 and $716,413, respectively, in 2018 and 2017. The loss for the year ended December 31, 2018 included non-cash expense for share-based compensation of $915,345 as compared to $224,446 in 2017 due to increases in warrants issued for to consultants and officers. There was also an increase in accrued salaries of $215,000 in 2018 versus $187,500 due to the full year of executive compensation in 2018 as opposed to only partial amounts in 2017. Accounts payable of $71,474 in 2018 versus $35,361 in 2017 due to increased operating costs, non-cash contributed services of $5,000 in 2017, an increase in accrued interest from $2,006 in 2017 versus $3,600 in 2018 all contributed to the increase in cash used in operating activities in 2018 as compared to 2017. We anticipate we will continue to use cash in operating activities in 2019 and for the foreseeable future.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the year ended December 31, 2018 and 2017 totaled $411,750 and $269,000, respectively, as a result of common stock sales of $407,500 and $231,500, respectively and a warrant exercises of $4,240 and $2,500, respectively, in 2018 and 2017. We will continue to seek additional funding through private placements and other funding sources for the foreseeable future.
For the year ended December 31, 2018, the Company sold in a private placement issuing 250,000 shares of common stock at $0.40 per share as well as 1,025,000 shares of our common stock at $0.30 per share for total proceeds of $407,500. In addition, warrant to purchase 425,000 shares of our common stock were exercised at a price of $0.01 per share for total proceeds to the Company of $4,250.
For the year ended December 31, 2017, the Company sold $204,000 in its private placement, issuing 510,000 shares of our common stock at $0.40 per share. In July 2017 the Company issued 250,000 shares of its common stock at $0.01 per share upon exercise of a warrant for total proceeds of $2,500. For the year ended December 31, 2017, the Company issued 15,000 shares of commons stock for total proceeds of $7,500 through its S-1 Registration Statement at $0.50 per share.
In October 2017, the Company executed an unsecured promissory note to Richard Schell for $35,000 bearing interest at 6% per annum.
In July 2017, the Company executed an unsecured promissory note to Richard Schell for $18,000 bearing interest at 6% per annum. The principal amount of the note, together with $3.00 in accrued interest, was repaid by the Company a day after execution from the proceeds of the sale of common stock.
(c) Off-Balance sheet arrangements
During the fiscal year ended December 31, 2018, the Company did not engage in any off-balance sheet arrangements as defined in Item 303(a)(4) of the SEC’s Regulation S-K.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and a decline in the stock market. We do not enter into derivatives or other financial instruments for trading or speculative purposes. We have limited exposure to market risks related to changes in interest rates. We do not currently invest in equity instruments of public or private companies for business or strategic purposes.
The principal risks of loss arising from adverse changes in market rates and prices to which we are exposed relate to interest rates on debt. We have only fixed rate debt. We had $60,000 of debt outstanding as of December 31, 2018, which has been borrowed at a fixed rate of 6%. All of this fixed rate debt is due on demand or is due during the current fiscal year.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS.
The financial statements and related information required to be filed are indexed and begin on page and are incorporated herein.
IASO BioMed, Inc.
Financial Statements
For the Years Ended December 31, 2018 and December 31, 2017
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of IASO BioMed, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of IASO BioMed, Inc. (the “Company”) as of December 31, 2018 and 2017, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company’s auditor since 2017
Lakewood, CO
April 23, 2019
IASO BIOMED, INC.
BALANCE SHEETS
DECEMBER 31, 2018 and 2017
See accompanying notes to these financial statements
IASO BIOMED, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
See accompanying notes to these financial statements
IASO BIOMED, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIT
YEARS ENDED DECEMBER 31, 2018 AND 2017
See accompanying notes to these financial statements
IASO BIOMED, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
See accompanying notes to these financial statements
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Operations and Summary of Significant Accounting Policies:
Nature of Operations - IASO BioMed, Inc. (“IASO” or the “Company”) is a developmental stage biotechnology company focusing on researching and developing drugs and diagnostic tests for products with a large commercial market potential as well as drugs that may qualify for orphan drug status. The Company is developing a unique, first in class drug for androgen replacement treatment that it believes will be a safer alternative to currently available testosterone replacement therapy by stimulating the body’s own production rather than using synthetic hormones and steroids. It is also developing a process, or method, which the Company believes will be the basis for developing an early stage blood or fluid test for Alzheimer’s disease. There is no assurance that these research and development activities will result in products that can be sold. The Company was incorporated as a C-corporation in the state of Colorado on March 11, 2015. It has its primary place of business in Denver, Colorado.
The Company follows accounting standards set by the Financial Accounting Standards Board, commonly referred to as the FASB. The FASB sets generally accepted accounting principles (GAAP) that the Company follows to ensure they consistently report the Company’s financial condition, results of operations and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification™, sometimes referred to as the Codification or ASC.
Cash and Cash Equivalents - For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of six months or less to be cash equivalents.
Use of Estimates - The preparation of the Company’s financial statements, in conformity with generally accepted accounting principles, requires the Company’s management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to such estimates include but are not limited to the valuation of share-based awards.
Research and Development Costs - Research and development costs are charged to operations in the period incurred. For the years ended December 31, 2018 and 2017, the Company incurred $95,000 and $171,078 in research and development costs, respectively.
Share-based Compensation - Share-based payments are measured at their estimated fair value on the date of grant. Share-based awards to non-employees are re-measured at fair value each financial reporting date until performance is completed. Share-based compensation expense recognized during a period is based on the estimated number of awards that are ultimately expected to vest. For warrants that do not vest immediately but which contain only a service vesting feature, we recognize compensation cost on the unvested warrants on a straight-line basis over the remaining vesting period.
The Company uses the Black-Scholes option-pricing model to estimate the fair value of warrants and the market price of our common stock, or comparable public companies if our stock is not trading, on the date of grant for the fair value. Our determination of fair value of share-based awards is affected by those stock prices as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and certain other market variables such as the risk-free interest rate.
Income Taxes - The Company accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
Fair Value of Financial Instruments - The carrying value of cash and cash equivalents and trade accounts payable are considered to approximate fair value due to the short-term nature of these instruments.
Earnings Per Share - Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants, plus the conversion of convertible notes, if any. There were 12,396,112 and 8,760,000, respectively, shares excluded as they were anti-dilutive at December 31, 2018 and 2017.
Recently Issued Accounting Pronouncements- In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires lessees to recognize a right of use asset and related lease liability for those leases classified as operating leases at the commencement date and have lease terms of more than 12 months. This topic retains the distinction between finance leases and operating leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, and must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Although the Company currently has no lease obligations, it will adopt the new requirements if it enters into a lease obligation.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance on how certain cash receipts and cash payments should be presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. ASU 2016-15 is effective for annual periods, and interim periods within those years, beginning after December 15, 2017. This standard will not have a material impact on the Company’s results of operations or financial position.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the annual period ending September 30, 2019 and interim periods within that annual period. Early adoption is permitted. The Company does not expect ASU 2017-09 will have a significant impact on its financial statements upon adoption.
2. Going Concern:
At December 31, 2018 and December 31, 2017, the Company had cash of $140,234 and $20,191, respectively. It also had working capital deficit of $602,519 and $292,377, respectively and an accumulated deficit of $3,041,165 and $1,403,928, respectively. This raises substantial doubt about the Company’s ability to continue as a going concern. Management is taking action to ensure the Company will continue as a going concern for at least one year beyond the date of the issuance of the Company’s financial statements. From March 11, 2015 (Inception) through December 31, 2017, the Company has sold $971,842 in common stock. Common stock sales will continue as the Company seeks private placement offerings of its common stock. These fundraising efforts may not be successful. While there can be no assurances, management believes that these actions will enable the Company to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
3. Related Party Transactions:
Note Payable - In October 2016, the Company executed an unsecured note payable to Richard Schell, the Company’s Chief Executive officer, founder and stockholder for $25,000 bearing interest at 6% per annum, which remained outstanding at December 31, 2018 and December 31, 2017 with accrued interest payable of $3,197 and $1,697, respectively.
In October 2017, the Company executed an unsecured promissory note to Richard Schell for $35,000 bearing interest at 6% per annum, which remained outstanding at December 31, 2018 and December 31, 2017 with accrued interest payable of $2,606 and $506, respectively.
A total of $3,600 and $2,009 of interest expense was accrued during the years ended December 31, 2018 and 2017, respectively.
Employment Agreements - In March 2017 the Company entered into an employment agreement with its CEO for a two-year term. The base salary of $150,000 per annum is payable to the CEO only upon the Company’s raising of an additional $750,000. Mr. Schell will assume his responsibilities on a part time basis until requested by the Board of Directors to become a full-time executive. The CEO also received warrants to purchase 250,000 shares of the Company’s common stock at $0.40 per share for a period of five years after issuance. 125,000 warrants vested upon signing the agreement and the remaining 125,000 vested in March 2018. The CEO will also be eligible to earn discretionary annual performance bonuses upon meeting certain objectives as determined by the Board of Directors, none of which have been earned to date. The agreement provides for severance payments.
In March 2017 the Company entered into an employment agreement with its CFO for a two-year term. The CFO will assume his responsibilities on a part time basis until requested by the Board of Directors to become a full-time executive. The base salary of $75,000 per annum is payable to the CFO only upon the Company’s raising of an additional $750,000. When the CFO becomes a full-time executive, his salary will be increased to $125,000 per annum, which has not yet occurred. The CFO also received warrants to purchase 500,000 shares of the Company’s common stock at $0.40 per share for a period of five years after issuance; 250,000 warrants vested upon signing the agreement and the remaining 250,000 vested in March 2018. The CFO will also be eligible to earn discretionary annual performance bonuses upon meeting certain objectives as determined by the Board of Directors, none of which have been earned to date. The agreement provides for severance payments.
The Company accrued $225,000 and $187,500 in salaries related to these agreements for years ended December 31, 2018 and 2017, respectively. During the year period ended December 31, 2018, $10,000 was paid to these officers from fees accrued under these agreements.
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
Contributed Services - The Company’s CEO and CFO were not paid a salary during the period from March 11, 2015 (inception) through February 28, 2017. The Company recognized the value of their services as contributed services by recognizing $5,000 of compensation expenses in general and administration expenses in the statement of operations for the year ended December 31, 2017 and there was no similar expense in the year ended December 31, 2018.
Scientific Advisory Board Agreements - Effective March 1, 2018, the Company entered into a Scientific Advisory Board Agreement with our director Dr. Papadopoulos (the “Papadopoulos Agreement”), through which Dr. Papadopoulos agreed to serve on our Scientific Advisory Board. The term of the Papadopoulos Agreement is one year from execution and may be renewed annually by mutual consent of both parties. The Papadopoulos Agreement provides for payments as follows: an annual fee of $35,000, which includes $10,000 to serve as the Scientific Advisory Board Chairman; a signing bonus of $50,000 payable after successful closing of any cumulative minimum $1,000,000 investment in the Company; a non-discretionary bonus of $45,000 payable following a successful financing round of a minimum of $2,000,000; and should the Papadopoulos Agreement be renewed after one year, a $95,000 bonus payable only after the signing bonus and non-discretionary bonus from year one have been earned. In order to receive the non-discretionary bonus payments Dr. Papadopoulos must be actively involved in the creation and execution of strategies necessary for the Company to achieve its strategic plan including the scientific, commercial and business objectives, as applicable and as agreed upon between the Dr. Papadopoulos and the Company’s Chief Executive Officer.
Also, effective March 1, 2018, we entered into a Scientific Advisory Board Agreement with our director Dr. Karatzas (the “Karatzas Agreement”), through which Dr. Karatzas agreed to serve on our Scientific Advisory Board. The term of the Karatzas Agreement is one year from execution and may be renewed annually by mutual consent of both parties. The Karatzas Agreement provides for payments as follows: an annual fee of $25,000; a signing bonus of $50,000 payable after successful closing of any cumulative minimum $1,000,000 investment in the Company; a non-discretionary bonus of $40,000 payable following a successful financing round of a minimum of $2,000,000; and should the Karatzas Agreement be renewed after one year, a $90,000 bonus payable only after the signing bonus and non-discretionary bonus from year one have been earned. In order to receive the non-discretionary bonus payments Dr. Karatzas must be actively involved in the creation and execution of strategies necessary for the Company to achieve its strategic plan including the scientific, commercial and business objectives, as applicable and as agreed upon between the Dr. Karatzas and the Company’s Chief Executive Officer.
The Company accrued a total of $150,000 in fees related to these agreements for the year ended December 31, 2018, which includes $50,000 in fees and $100,000 in signing bonuses. The company paid a total of $10,000 in accrued fees under these agreements during the year ended December 31, 2018.
Services Agreement - Effective January 1, 2017, the Company pays a company owned by the Company’s Corporate Secretary’s $400 per month for reimbursement of certain administrative office expenses such as computer, internet, phone and similar items. The agreement is on a month-to-month basis and may be terminated at any time by either party. Total expense for the years ended December 31, 2018 and 2017 was $4,800.
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
Consulting Agreement and other Payments - Effective March 1, 2018, the Company entered into a Consulting Agreement with our Corporate Secretary through which will be paid $5,000 per month for a term of two years and is automatically extended on an annual basis unless terminated by either party with thirty days written notice. A total of $45,000 was accrued, and $5,000 paid under this agreement during the year ended December 31, 2018. In addition, we paid a total of $18,000 to a company controlled by our Corporate Secretary for additional consulting services rendered during the year ended December 31, 2018.
4. Stockholders’ Equity:
The Company has the authority to issue 110,000,000 shares of $.0001 par value stock, of which 100,000,000 shares are common stock and 10,000,000 shares are preferred stock. As of December 31, 2018, and December 31, 2017 there were 35,952,632 and 34,252,632 common stock shares issued and outstanding.
For the year ended December 31, 2018, the Company sold a total of $407,500 through private placements as follows: 250,000 shares of our common stock at $0.40 per share that included warrants to purchase up to 250,000 shares of our common stock exercisable at $0.75 per share for a period of three years from issuance; and 1,025,000 shares of our common stock at $0.30 per share that included warrants to purchase up to 1,025,000 shares of our common stock exercisable at $0.05 per share for a period of three years from issuance.
During the year ended December 31, 2018, the Company issued warrants to purchase up to 960,000 shares of common stock at an exercise price of $0.01 per share to business, legal and scientific consultants; 100,000 of which expire in October 2023, 400,000 of which expire in December 2022 and 460,000 of which expire in February 2021. Subsequent to issuance, 425,000 of these warrants were exercised during the year ended December 31, 2018 for proceeds to the Company of $4,250. We incurred stock compensation expense totaling $376,668 in connection with the issuance of these warrants as more fully explained in Note 6 - Share-based Compensation.
During the year ended December 31, 2018, the Company issued warrants to purchase up to 140,000 shares of common stock at an exercise price of $0.01 per share, and expire in September 2019, through execution of agreements with new members of our Scientific Advisory Board. We incurred stock compensation expense totaling $54,876 in connection with the issuance of these warrants as more fully explained in Note 6 - Share-based Compensation.
During the year ended December 31, 2018, the Company issued warrants to purchase up to 1,161,112 shares of common stock at an exercise price of $0.001 per share, and expire in September 2019, through execution of agreements with new members of our Scientific Advisory Board. We incurred stock compensation expense totaling $463,299 in connection with the issuance of these warrants as more fully explained in Note 6 - Share-based Compensation.
For the year ended December 31, 2017, the Company sold $224,000 in its private placement, issuing 560,000 shares of our common stock at $0.40 per share that included warrants to purchase up to 310,000 shares of our common stock exercisable at $0.75 per share, as well as warrants to purchase up to 250,000 shares of our common stock at $0.01 per share, all for a period of three years from issuance. In July 2017 the Company issued 250,000 shares of its common stock at $0.01 per share upon exercise of the warrant exercisable at $0.01 per share issued in the private placement for total proceeds of $2,500.
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 2017, the Company issued 15,000 shares of commons stock for total proceeds of $7,500 through its S-1 Registration Statement at $0.50 per share.
5. Commitments and Contingencies:
Royalties - In January 2016, the Company signed a license agreement with The Royal Institution for the Advancement of Learning/McGill University in Canada on the Company’s potential products. This agreement requires, for each of the Company’s potential products, a 3% payment of annual net revenues, with a minimum royalty of CAD $5,000 each, per year starting on the date of commercialization of the first product developed using the intellectual property covered by the license agreement. The Company must pay milestone payments for the androgen replacement treatment as follows:
● CAD $5,000 on the issuance of the first US patent
● CAD $25,000 on the filing of an investigational new drug application or regulatory filing
● CAD $50,000 on the initiation of the first Phase II clinical study
● CAD $100,000 on the initiation of the first Phase III clinical study
● CAD $300,000 on receipt of regulatory approval
The Company must also pay milestone payments as follows for the out of body test to identify Alzheimer’s disease as follows:
● CAD $5,000 on the issuance of the first US patent
● CAD $50,000 on the filing of a 510(k) or PMA application
● CAD $200,000 on receipt of regulatory approval
In addition, the Company issued 5% of the total number of issued and outstanding shares in the Company’s Series A financing to the same institution, or 1,652,632 shares in March 2016. This agreement, payable in Canadian dollars, exposes the Company to foreign exchange transaction gains and losses. In August 2016, the Company issued an additional 300,000 shares of the Company’s common stock to McGill in lieu of the pre-existing anti-dilution provision. As McGill owns more than 5% of the Company’s outstanding common stock, it is considered a related party.
Research Agreement- In January 2016 the Company signed a Research Agreement with The Research Institute of the McGill University Health Centre (RIMUHC) in Canada for research activities on the Company’s potential products. The agreement covers a period of one year and required the Company to pay a total of $130,000. The Agreement was amended in March 2017 to extend the term for one year and required the payment of an additional $130,000 over that period. The Company paid these installment payments in July and October 2017 leaving no balance due. The Company agreed in June 2018 to an additional payment of $65,000 to continue research and development activities at RIMUHC and signed an extension of the agreement in January 2019 (as more fully explained in Note 8 - Subsequent Events). This amount was paid in August 2018.
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
Scientific Advisory Board - In September 2018 we executed agreements with four new members of our Scientific Advisory Board (“SAB”) through which each new member received a warrant to purchase up to 35,000 shares of our common stock at an exercise price of $0.01 per share for a period of one year. In addition, each new SAB member will be paid an annual fee of $25,000, paid quarterly, commencing with the first scheduled SAB meeting that occurred November 2018. These agreements may be renewed annually, under the same terms and conditions, should each member’s appointment to the SAB be continued. We incurred stock compensation cost of $54,876 in connection with the issuance of these warrants as explained more fully in Note 6. Share-based Compensation below.
6. Share-based Compensation
In March 2017, the Company issued 750,000 warrants to the Company’s officers to purchase shares of our common stock at $0.40 per share. Estimated fair values of warrants granted were determined using the Black-Scholes option pricing model with the following average assumptions:
Expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company’s historical stock warrant exercise experience does not provide a reasonable basis upon which to estimate expected term. As such, the simplified method was used to calculate the expected term.
The Company calculated volatility based on the volatilities of comparable public companies.
Total share-based compensation related to these warrants was $20,502 and $224,446 for the years ended December 31, 2018 and 2017, respectively.
In February and March 2018 the Company issued warrants to purchase up to 860,000 shares of common stock at an exercise price of $0.01 per share to business, legal and scientific consultants; 400,000 of which were to expire in December 2022 and 460,000 of which expire in February 2021. Estimated fair values of warrants granted were determined using the Black-Scholes option pricing model with the following average assumptions:
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
Expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company’s historical stock warrant exercise experience does not provide a reasonable basis upon which to estimate expected term. As such, the simplified method was used to calculate the expected term.
The Company calculated volatility based on the volatilities of comparable public companies.
Total share-based compensation related to these warrants was $336,926 for the year ended December 31, 2018.
In September 2018 the Company issued warrants to purchase up to 140,000 shares of common stock at an exercise price of $0.01 per share to new members of our Scientific Advisory Board that expire in September 2019. Estimated fair values of warrants granted were determined using the Black-Scholes option pricing model with the following average assumptions:
Expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company’s historical stock warrant exercise experience does not provide a reasonable basis upon which to estimate expected term. As such, the simplified method was used to calculate the expected term.
The Company calculated volatility based on the volatilities of comparable public companies.
Total share-based compensation related to these warrants was $54,876 for the year ended December 31, 2018.
In October 2018 the Company issued a warrant to purchase up to 100,000 shares of stock at an exercise price of $0.01 per share to business and scientific consultant that expires in October 2023. Estimated fair values of warrants granted were determined using the Black-Scholes option pricing model with the following average assumptions:
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
Expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company’s historical stock warrant exercise experience does not provide a reasonable basis upon which to estimate expected term. As such, the simplified method was used to calculate the expected term.
The Company calculated volatility based on the volatilities of comparable public companies.
Total share-based compensation related to this warrant was $39,741 for the year ended December 31, 2018.
In October 2018 the Company issued warrants to purchase up to 1,161,112 shares of stock at an exercise price of $0.001 per share to each of the Company’s CFO (950,000 shares) and Corporate Secretary (211,112 shares) that were due to expire, but were exercised, in January 2019 (See Note 9 - Subsequent Events below). Estimated fair values of warrants granted were determined using the Black-Scholes option pricing model with the following average assumptions:
Expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company’s historical stock warrant exercise experience does not provide a reasonable basis upon which to estimate expected term. As such, the simplified method was used to calculate the expected term.
The Company calculated volatility based on the volatilities of comparable public companies.
Total share-based compensation related to these warrants was $463,299 for the year ended December 31, 2018.
Warrants
A summary of the activity of the Company’s outstanding warrants at December 31, 2018 and December 31, 2017 is as follows:
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
The following table sets forth the exercise price range, number of shares, weighted average exercise price and remaining contractual lives of the warrants by groups as of December 31, 2018:
7. Income Taxes:
The components of the net deferred tax assets recognized as of December 31, 2018 and 2017 are as follows:
A reconciliation of statutory tax rates to effective tax rates were as follows in each of the periods presented:
As of December 31, 2018 and 2017 the Company had capitalized start-up costs for tax purposes of approximately $3,041,165 and $1,403,928, respectively, which will be amortized over 15 years upon commencement of business operations.
IASO BIOMED, INC.
NOTES TO FINANCIAL STATEMENTS
As of December 31, 2018 and 2017, an evaluation of the deferred tax asset determined that it was more likely than not that the start-up cost asset may not be realized, and therefore a valuation allowance for $638,645 and $477,336, respectively, was recorded.
The Company’s policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the periods ended December 31, 2018 and 2017, the Company did not recognize any interest or penalties in its statement of operations, nor did it have any interest or penalties accrued in its balance sheets at December 31, 2018 and 2017 relating to unrecognized tax benefits.
Under the provisions of ASC 740, Accounting for Uncertainty in Income Taxes, the Company identified no significant uncertain tax positions in 2017. The Company files income tax returns in U.S. jurisdiction. There are no federal or state income tax examinations underway for these, and tax returns for the current year are still open to examination.
8. Subsequent Events:
On November 1, 2018, the Registrant’s Board approved the issuance of warrants to purchase shares of the Corporation’s common stock to two of its executive officers. Mr. Duane C. Knight, Chief Financial Officer of the Registrant, received a warrant to purchase up to 950,000 shares of common stock exercisable for period of three months at an exercise price of $0.001 per share. Mr. Thomas B. Olson, Corporate Secretary of the Registrant, received a warrant to purchase up to 211,112 shares of common stock exercisable for period of three months at an exercise price of $0.001 per share. Messrs. Knight and Olson exercised these warrants in January 2019.
On January 5, 2019, the Board of Directors of IASO BioMed, Inc. (the “Registrant”) approved the following extensions to certain Employment and Scientific Advisory Board Agreements (together the “Agreements”) with its Officers and Directors that were set to expire during the first quarter of 2019 including:
● Extension for a period of two (2) years of the Employment Agreement between IASO BioMed, Inc. and Richard M. Schell, originally effective March 1, 2017; and
● Extension for a period of two (2) years of the Employment Agreement between IASO BioMed, Inc. and Duane Knight, originally effective March 1, 2017; and
● Extension for a period of one (1) year of the Scientific Advisory Board Agreement by and between IASO BioMed, Inc. and Dr. Vassilios Papadopoulos dated as of March 1, 2018; and
● Extension for a period of two (2) years of the Scientific Advisory Board Agreement by and between IASO BioMed, Inc. and Dr. Costas Karatzas dated as of March 1, 2018.
Each of the above Agreements were extended under the terms and conditions contained in the Agreements in effect at the time of the extensions with no alteration except for the new Agreement end dates. Each of the directors abstained on voting for extension of their Agreement.
In January 2016 the Company signed a Research Agreement with The Research Institute of the McGill University Health Centre (RIMUHC) in Canada for research activities on the Company’s potential products that was amended in March 2017. The Company agreed in June 2018 to an additional payment of $65,000 to continue research and development activities at RIMUHC and signed an extension of the agreement in January 2019 that includes an additional payment of $35,000 in 2019, which has not yet been paid.
Management has determined that there are no further events subsequent to the balance sheet date that should be disclosed in these financial statements.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
There have been no changes in or disagreements with accountants regarding our accounting, financial disclosures or any other matter.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
A review and evaluation was performed by the Company’s management, including the Company’s Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), who act as our principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report. Based on that review and evaluation, our CEO and CFO have concluded that as of December 31, 2018, disclosure controls and procedures, were effective at ensuring that the material information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported as required in the application of SEC rules and forms.
Management’s Report on Internal Controls over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;
● Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. 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.
Our CEO and CFO have evaluated the effectiveness of our internal control over financial reporting as described in Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report based upon criteria established in “Internal Control-Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to the extent possible given the limited personnel resources and technological infrastructure in place to perform the evaluation. Based upon our management’s discussions with our auditors and other advisors, our CEO and CFO believe that, during the period covered by this report, such internal controls and procedures were not effective as described below.
Due to the small size and limited financial resources, our CEO, CFO and corporate secretary are the only individuals involved in the accounting and financial reporting. As a result, there is limited segregation of duties in the accounting function, leaving all aspects of financial reporting and physical control of cash in the hands of these individuals. This limited segregation of duties represents a material weakness. We will continue periodically review our disclosure controls and procedures and internal control over financial reporting and make modifications from time to time considered necessary or desirable.
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended December 31, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
(a)(b)(c) Identification of directors and executive officers
The following table sets forth the name, age, position and office term of each executive officer and director of the Company.
NAME AGE POSITION SINCE
Richard M. Schell Chief Executive Officer, President and Chairman of the Board March
Duane C. Knight Chief Financial Officer, Director March 2015
Vassilios Papadopoulos, PhD Director March 2015
Costas Karatzas, PhD Director March 2015
(c) Significant employees
Not applicable.
(d) Family relationships
None.
(e) Business experience
Richard M. Schell
Dick Schell has served as our Chief Executive Officer and Chairman of the Board of Directors since March 2015. From December 1997 to the present, Mr. Schell served as a Vice President and Relationship Manager for Colorado Business Bank. Mr. Schell earned a Bachelor of Science degree in Finance from the University of Wyoming and a Graduate Banking degree from the Colorado School of Banking. We believe that Mr. Schell’s extensive experience in banking, finance and guidance to numerous companies, ranging from oil and gas exploration to technology and high tech production facilities during their initiation and development gives him the qualifications and skills to serve as one of our directors.
Duane C. Knight, Jr.
Duane C. Knight, Jr. has served as our Chief Financial Officer and director since March 2015. From 1999 to the present he was the owner of owner of D.C. Knight Company, Inc., a financial and accounting consulting firm. Mr. Knight served as chief financial officer of ValveXchange, Inc., Neuromonics, Inc., and Denver Biomedical, Inc., all of which are medical device manufacturers. Mr. Knight earned his BSBA degree in Accounting from Colorado State University with a Minor in Economics, and an MBA from the University of Colorado. He is a published author, speaker and a Colorado Certified Public Accountant. We believe that Mr. Knight’s extensive experience in medical device industry and his experience as a CPA and Chief Financial Officer responsible for public company financial accounting and controls gives him the qualifications and skills to serve as one of our directors.
Vassilios Papadopoulos, PhD
Dr. Papadopoulos has served as our director since March 2015. From October 1, 2016, Dr. Papadopoulos currently serves as dean of the USC School of Pharmacy and holds the John Stauffer Dean’s Chair in Pharmaceutical Sciences. From 2007 to October 1, 2016, Dr. Papadopoulos served as the Executive Director and Chief Scientific Officer of the Research Institute of the McGill University Health Centre. From 2007 to October 1, 2016, he served as a professor of medicine, biochemistry, pharmacology therapeutics at McGill University and held the Canada Research Chair in Biochemical Pharmacology and the Phil Gold Chair in Medicine. Dr. Papadopoulos was formerly a faculty member of Georgetown University’s School of Medicine in Washington D.C. and became a professor and Chairman of the Biochemistry and Molecular Biology departments, and the Director of the Biomedical Graduate Research Organization. Dr. Papadopoulos has published more than 300 articles and holds many patents and his work has been cited over 15,700 times. Dr. Papadopoulos is a graduate of the School of Pharmacy of the University of Athens, Greece, and completed his PhD in Health and Life Science at the Universit Pierre et Marie Curie in Paris. We believe that Dr. Papadopoulos extensive experience in steroid hormone biosynthesis research and his role in developing our products gives him the qualifications and skills to
Costas Karatzas, PhD.
Dr. Karatzas has served as our director since March 2015. From 2009 to the present, Dr. Karatzas serves as the Director of Business Development at the Research Institute of McGill University Health Center, Montreal, Canada responsible for business development, technology transfer, commercialization, fund raising and international alliance activities. From 1994 to 2008 he held senior management positions as Vice President and Senior Vice President of R D managing multidisciplinary teams of scientists and responsible for operations, IP strategy, technology transfer and part of senior management of NEXIA Biotechnologies Inc. during their initial public offering. He also held senior management positions at Gene Pharming Europe, AgroCultures, Pharmathene Inc. Dr. Karatzas has 47 peer review publications, and is the inventor of 16 patents and he has authored 4 book chapters. Dr. Karatzas attended McGill University where he earned a M.Sc., (Hon.) in Muscle Biochemistry and a Ph.D., in Molecular Biology (Animal Endocrinology) and has completed McGill’s Executive Development Course Mini-MBA. He Holds a B.Sc., degree from the Agricultural University of Athens. We believe that Dr. Karatzas’ extensive experience in business development, technology transfer, product development and commercialization in the biotechnology and medical device industries gives him the qualifications and skills to serve as one of our directors.
(f) Involvement in certain legal proceedings
To our knowledge, there have been no material legal proceedings during the last ten years that would require disclosure under the federal securities laws that are material to an evaluation of the ability or integrity of any of our directors or executive officers.
(g) Promoters and control persons
Richard M. Schell is a founder of the Company and paid a total of $25,237 for his equity interest in the Company.
Vassilios Papadopoulos, PhD is a founder of the Company and paid a total of $1,101 for his equity interest in the Company.
Costas Karatzas, PhD is a founder of the Company and paid a total of $1,028 for his equity interest in the Company.
Keith Mazer is a founder of the Company. SMW, LLC, in which Mr. Mazer is a member, paid a total of $237 for their equity interest in the Company. Mr. Mazer disclaims all beneficial ownership over the shares held by SMW, LLC.
(h) Audit committee financial expert.
See (i) below.
(i) Identification of the audit committee
The Company does not currently have an audit committee of the board of directors, as none is required, and the board believes it can effectively serve in that function and, therefore, currently does. Management believes that certain individuals on the board of directors may have the necessary attributes to serve as a financial expert on an audit committee, if required.
Code of Ethics
We have adopted a Code of Ethics for our senior financial management, which includes our chief executive officer and chief financial officer as principal executive and accounting officers, that has been filed as exhibit 14.1 to this report.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
(a) General
We currently have two executive officers including our Chief Executive Officer, Mr. Richard M. Schell, who is also our principal executive officer and Mr. Duane C. Knight, our Chief Financial Officer, how is also our principal financial officer.
(b) Compensation discussion and analysis
In March 2017 the Company entered into an employment agreement with its CEO for a two-year term, which agreement was extended for an additional two years in January 2019. The base salary of $150,000 per annum is payable to the CEO only upon the Company’s raising of an additional $750,000. Mr. Schell will assume his responsibilities on a part time basis until requested by the Board of Directors to become a full-time executive. The CEO also received warrants to purchase 250,000 shares of the Company’s common stock at $0.40 per share for a period of five years after issuance. The CEO will also be eligible to earn discretionary annual performance bonuses upon meeting certain objectives as determined by the Board of Directors, none of which have been granted or paid as of December 31, 2018. The agreement provides for severance payments.
In March 2017 the Company entered into an employment agreement with its CFO for a two-year term, which term was extended for an additional two years in January 2019. The CFO has assumed his responsibilities on a part time basis until requested by the Board of Directors to become a full-time executive, which has not yet occurred. The current base salary of $75,000 per annum is payable to the CFO only upon the Company’s raising of an additional $750,000. When the CFO becomes a full-time executive, his salary will be increased to $125,000 per annum. The CFO also received warrants to purchase 500,000 shares of the Company’s common stock at $0.40 per share for a period of five years after issuance. The CFO will also be eligible to earn discretionary annual performance bonuses upon meeting certain objectives as determined by the Board of Directors, none of which have been granted or paid as of December 31, 2018. The agreement provides for severance payments. In October 2018, our board of directors issued our CFO a warrant to purchase up to 950,000 shares of our common stock for a period of three months at an exercise price of $0.001 per share. These warrants were subsequently exercised by our CFO in January 2019.
(c) Summary compensation table
The following table summarizes the compensation accrued to our principal executive officer, principal financial officer and any other executive officers for the years ended December 31, 2018 and 2017, whose total compensation exceeded $100,000.
(d) Grants of plan-based awards table
There were no grants made to officers in the years ended December 31, 2018 or 2017. Please see Compensation discussion and analysis above for information on warrants to purchase common stock issued to certain officers of the Company during 2018.
(e) Narrative disclosure to summary compensation table and grants
For Mr. Schell in 2018, in addition to salary listed above, other compensation represents the fair market value of warrants to purchase 125,000 shares of the Company’s common stock at $0.40 per share for a period of five years after issuance that vested in 2018. The entire salary amount of $150,000 earned by Mr. Schell in 2018 as well as $125,000 in 2017, has been accrued and remained unpaid at December 31, 2018.
For Mr. Schell in 2017, in addition to salary listed above, other compensation represents the fair market value of warrants to purchase 125,000 shares of the Company’s common stock at $0.40 per share for a period of five years after issuance that vested upon execution of Mr. Schell’s employment agreement. The entire salary amount of $125,000 earned by Mr. Schell in 2017 was accrued and remained unpaid at December 31, 2017.
For Mr. Knight in 2018, in addition to salary listed above, other compensation represents the fair market value of warrants to purchase 250,000 shares of the Company’s common stock at $0.40 per share for a period of five years after issuance that vested in 2018 valued at $20,502; as well as the fair market value of warrants to purchase 950,000 shares of the Company’s common stock at $0.001 per share for a period of three months granted in October 2018 valued at $379,062. The entire salary amount of $75,000 earned by Mr. Knight in 2018 as well as $62,500 in 2017, has been accrued and remained unpaid at December 31, 2018.
For Mr. Knight in 2017, in addition to salary listed above, other compensation represents the fair market value of warrants to purchase 250,000 shares of the Company’s common stock at $0.40 per share for a period of five years after issuance that vested upon execution of Mr. Knight’s employment agreement. The entire amount of $62,500 earned by Mr. Knight in 2017 has been accrued and remained unpaid at December 31, 2017.
(f) Outstanding equity awards at fiscal year end table
Not applicable.
(g) Option exercises and stock vested table
Not applicable.
(h) Pension benefits
Not applicable.
(i) Nonqualified defined contribution and other nonqualified deferred compensation plans
Not applicable.
(j) Potential payments upon termination or change-in-control
Not applicable.
(k) Compensation of directors
Not applicable.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
(a) Security ownership of certain beneficial owners.
(b) Security ownership of management.
The following table sets forth information known to the Company with respect to the beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the outstanding common stock of the Company as of March 31, 2019 by: (1) each person known by the Company to beneficially own 5% or more of the Company’s outstanding common stock; (2) each of the named executive officers as defined in Item 402(a)(3); (3) each of the Company’s directors; and (4) all of the Company’s named executive officers and directors as a group. The number of shares beneficially owned is determined under rules promulgated by the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Including those shares in the tables does not, however, constitute an admission that the named stockholder is a direct or indirect beneficial owner of those shares. Percentage ownership is based on 37,248,744 shares of common stock outstanding as of March 31, 2019.
(1) Includes 3,102,400 shares of common stock issuable upon the exercise of warrants that are exercisable currently or within 60 days. The shares and warrants are owned directly by VGP Discovery, Inc. Vassilios Papadopoulos holds all investment and voting power over VGP Discovery, Inc.
(2) Includes 2,896,800 shares of common stock issuable upon the exercise of warrants that are exercisable currently or within 60 days. The shares and warrants are owned directly by CNKonsulting, Inc. Costas Karatzas has voting and investment power over CNKonsulting, Inc.
(3) Includes 917,200 shares of common stock issuable upon the exercise of warrants that are exercisable currently or within 60 days. The shares and warrants are owned directly by Minerals, LLC. Richard Schell holds all investment and voting power over Minerals, LLC. Includes 250,000 shares of common stock purchased by Mr. Schell and Ms. Rebecca Rice, Mr. Schell’s wife, in a private placement of common stock by the company.
(4) Includes 667,200 shares of common stock issuable upon the exercise of warrants that are exercisable currently or within 60 days. The shares and warrants are owned directly by SMW, LLC. Minergy Group, LLC holds all investment and voting power over SMW, LLC. William S. Wagener controls Minergy Group, LLC. Keith Mazer, one of our founders, is a member of SMW, LLC. Mr. Mazer disclaims all beneficial ownership over the shares held by SMW, LLC.
(5) Includes 444,800 shares of common stock issuable upon the exercise of warrants that are exercisable currently or within 60 days. The shares and warrants are owned directly by Venture 10 Capital Partners, LLC. Mary Virginia Knight holds all investment and voting power over Venture 10 Capital Partners, LLC.
(6) Includes 500,000 shares of common stock issuable upon the exercise of warrants that are exercisable currently or within 60 days.
(c) Changes in control
We are not aware of any arrangements that could result in a change in control of the Company.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
(a) Transactions with related persons
Notes Payable - In October 2016, the Company executed an unsecured note payable to Richard Schell, the Company’s Chief Executive officer, founder and stockholder for $25,000 bearing interest at 6% per annum, which remained outstanding at December 31, 2018 and December 31, 2017 with accrued interest payable of $3,197 and $1,697, respectively.
In July 2017, the Company executed an unsecured promissory note to Richard Schell for $18,000 bearing interest at 6% per annum. The principal amount of the note, together with $3.00 in accrued interest, was repaid by the Company a day after execution from the proceeds of the sale of common stock.
In October 2017, the Company executed an unsecured promissory note to Richard Schell for $35,000 bearing interest at 6% per annum, which remained outstanding at December 31, 2018 and December 31, 2017 with accrued interest payable of $2,606 and $506, respectively.
In October 2018, our board of directors issued our CFO a warrant to purchase up to 950,000 shares of our common stock for a period of three months at an exercise price of $0.001 per share. These warrants were subsequently exercised by our CFO in January 2019. These warrants were determined by the Company to have a fair market value of $379,062 using the Black-Scholes option pricing model.
In October 2018, our board of directors issued our corporate secretary a warrant to purchase up to 211,112 shares of our common stock for a period of three months at an exercise price of $0.001 per share. These warrants were subsequently exercised in January 2019. These warrants were determined by the Company to have a fair market value of $84,236 using the Black-Scholes option pricing model.
Services Agreement - Effective January 1, 2017 and continuing at present, the Company pays the Company’s Corporate Secretary’s company $400 per month for reimbursement of certain administrative charges such as computer, internet, phone and similar items. The oral agreement is on a month-to-month basis and may be terminated at any time by either party. Total expense in each of the years ended December 31, 2018 and 2017 was $4,800.
Consulting Agreement and other Payments - Effective March 1, 2018, the Company entered into a Consulting Agreement with our Corporate Secretary through which will be paid $5,000 per month for a term of two years and is automatically extended on an annual basis unless terminated by either party with thirty days written notice. A total of $45,000 was accrued, and $5,000 paid under this agreement during the year ended December 31, 2018. In addition, we paid a total of $18,000 to a company controlled by our Corporate Secretary for additional consulting services rendered during the year ended December 31, 2018.
SAB Agreements - Effective March 1, 2018, we entered into a Scientific Advisory Board Agreement with Dr. Papadopoulos (the “Papadopoulos Agreement”), through which Dr. Papadopoulos agreed to serve on our Scientific Advisory Board. The term of the Papadopoulos Agreement is one year from execution and may be renewed annually by mutual consent of both parties. The Papadopoulos Agreement provides for payments as follows: an annual fee of $35,000, which includes $10,000 to serve as the Scientific Advisory Board Chairman; a signing bonus of $50,000 payable after successful closing of any cumulative minimum $1,000,000 investment in the Company; a non-discretionary bonus of $45,000 payable following a successful financing round of a minimum of $2,000,000; and should the Papadopoulos Agreement be renewed after one year, a $95,000 bonus payable only after the signing bonus and non-discretionary bonus from year one have been earned. In order to receive the non-discretionary bonus payments Dr. Papadopoulos must be actively involved in the creation and execution of strategies necessary for the Company to achieve its strategic plan including the scientific, commercial and business objectives, as applicable and as agreed upon between the Dr. Papadopoulos and the Company’s Chief Executive Officer.
Also, effective March 1, 2018, we entered into a Scientific Advisory Board Agreement with Dr. Karatzas (the “Karatzas Agreement”), through which Dr. Karatzas agreed to serve on our Scientific Advisory Board. The term of the Karatzas Agreement is one year from execution and may be renewed annually by mutual consent of both parties. The Karatzas Agreement provides for payments as follows: an annual fee of $25,000; a signing bonus of $50,000 payable after successful closing of any cumulative minimum $1,000,000 investment in the Company; a non-discretionary bonus of $40,000 payable following a successful financing round of a minimum of $2,000,000; and should the Karatzas Agreement be renewed after one year, a $90,000 bonus payable only after the signing bonus and non-discretionary bonus from year one have been earned. In order to receive the non-discretionary bonus payments Dr. Karatzas must be actively involved in the creation and execution of strategies necessary for the Company to achieve its strategic plan including the scientific, commercial and business objectives, as applicable and as agreed upon between the Dr. Karatzas and the Company’s Chief Executive Officer.
(b) Review, approval or ratification of transactions with related persons
Our entire board of directors is responsible for the review, approval or ratification of transactions with related persons. The board routinely reviews material related party transactions to ensure such transactions are reasonable, appropriate, and in the best interests of the Corporation. We have no written policies with respect to the review and approval of related party transactions and records of such reviews are contained in the minutes and/or reports of the board of directors as appropriate.
Our Board of Directors and management recognize that related person transactions present a heightened risk of conflicts of interest, and therefore we review all relationships and transactions in which we and our directors, director nominees and executive officers or their immediate family members, as well as holders of more than 5 percent of any class of our voting securities and their family members, have a direct or indirect material interest. As required under SEC rules, transactions that are determined to be directly or indirectly material to us or a related person are disclosed in the appropriate annual and/or quarterly statements filed with the SEC.
Director Independence
Our board of directors has four directors and has no standing sub-committees at this time due to the associated expenses and the small size of our board. We are not currently listed on a national securities exchange that has requirements that a majority of the board of directors be independent and have no members of our board considered “independent” under the definition set forth in the listing standards of the NASDAQ Stock Market, Inc., which is the definition that our board has chosen to use for the purposes of the determining independence.
In performing the functions of the audit committee, our board oversees our accounting and financial reporting process. In this function, our board performs several functions. Our board, among other duties, evaluates and assesses the qualifications of the Company’s independent auditors; determines whether to retain or terminate the existing independent auditors; meets with the independent auditors and financial management of the Company to review the scope of the proposed audit and audit procedures on an annual basis; reviews and approves the retention of independent auditors for any non-audit services; reviews the independence of the independent auditors; reviews with the independent auditors and with the Company’s financial accounting personnel the adequacy and effectiveness of accounting and financial controls and considers recommendations for improvement of such controls; reviews the financial statements to be included in our annual and quarterly reports filed with the Securities and Exchange Commission; and discusses with the Company’s management and the independent auditors the results of the annual audit and the results of our quarterly financial statements.
We do not currently have a standing compensation committee or non-employee directors. When we have non-employee directors on our board, those non-employee directors consider executive officer compensation, and our entire board participates in the consideration of director compensation. Non-employee board members would oversee would compensation policies, plans and programs. Our non-employee board members would further review and approve corporate performance goals and objectives relevant to the compensation of our executive officers; review the compensation and other terms of employment of our Chief Executive Officer and our other executive officers; and administer our equity incentive and stock option plans.
Each of our directors participates in the consideration of director nominees. In addition to nominees recommended by directors, our board will consider nominees recommended by shareholders if submitted in writing to our secretary. Our board believes that any candidate for director, whether recommended by shareholders or by the board, should be considered on the basis of all factors relevant to our needs and the credentials of the candidate at the time the candidate is proposed. Such factors include relevant business and industry experience and demonstrated character and judgment.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
BF Borgers CPA PC served as the Company’s certifying accountant for the fiscal years ended December 31, 2018 and 2017.
Audit Fees
Fees for audit services billed for the fiscal year ended December 31, 2018 by BF Borgers CPA PC are anticipated to be $15,120, and for the fiscal year ended December 31, 2017 were $14,040; and consisted of audit of the Company’s annual financial statements. For the fiscal year ended December 31, 2018, the Company paid BF Borgers CPA PC $22,260 for reviews of the Company’s quarterly financial statements.
For the fiscal year ended December 31, 2017, the Company paid Hein & Associates LLP $28,185 for reviews of the Company’s quarterly financial statements.
Audit-Related Fees
There were no other aggregate fees billed in the year ended December 31, 2018 or 2017 for assurance and related services by the principal accountants that were reasonably related to the performance of the audit or review of the financial statements that were not reported above.
Tax Fees
The fees billed for the year ended December 31, 2018 were $1,620 for professional services rendered by BF Borgers CPA PC for tax compliance, tax advice, and tax planning. The fees billed for the year ended December 31, 2017 were $3,000 for professional services rendered by Hein & Associates LLP for tax compliance, tax advice, and tax planning.
All Other Fees
The Company was billed $18,927 in the year ended December 31, 2017 for products and services provided by Hein & Associates LLP related to the Company’s Registration Statement on form S-1 for services other those reported above. There were no other fees paid by the Company during the year ended December 31, 2018.
PART IV
ITEM 15.
ITEM 15. EXHIBITS
Exhibits
3.1
Certificate of Incorporation of IASO BioMed, Inc., filed March 11, with the Secretary of State of Colorado. Incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 as filed on April 16, 2018.
3.2
Bylaws of IASO BioMed, Inc. Incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 as filed on April 16, 2018.
4.1
Form of Warrant to Purchase Common Stock. Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on July 25, 2017.
4.2
Form of Subscription Agreement, Public Offering. Incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 as filed on April 16, 2018.
10.1
License Agreement by and among IASO BioMed, Inc. the Royal Institution for the Advancement of Learning/McGill University, dated January 6, 2016. Incorporated by reference to Exhibit 10.1 of the Company’s Amendment No. 2 to the Registration Statement on Form S-1 filed on February 15, 2017.
10.2
Research Agreement by and among IASO BioMed, Inc., Dr. Vassilios Papadopoulos, and the Research Institute of the McGill University Health Center dated January 8, 2016. Incorporated by reference to Exhibit 10.2 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 filed on February 1, 2017.
10.3
Amendment No. 1 to the License Agreement by and among IASO BioMed, Inc. and the Royal Institution for the Advancement of Learning/McGill University Health Center, dated August 18, 2016. Incorporated by reference to Exhibit 10.3 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 as filed on April 16, 2018.
10.4
Employment Agreement between IASO BioMed, Inc. and Richard M. Schell, effective March 1, 2017. Incorporated by reference to Exhibit 10.4 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 filed on March 24, 2017.
10.5
Employment Agreement between IASO BioMed, Inc. and Duane Knight, effective March 1, 2017. Incorporated by reference to Exhibit 10.5 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 filed on March 24, 2017.
10.6
Amendment No. 1 to the Research Agreement by and among IASO BioMed, Inc. and the Research Institute of the McGill University Health Center, effective January 8, 2017. Incorporated by reference to Exhibit 10.6 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 filed on March 24, 2017.
10.7
Scientific Advisory Board Agreement by and between IASO BioMed, Inc. and Dr. Vassilios Papadopoulos dated as of March 1, 2018. Incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed on March 7, 2018.
10.8
Scientific Advisory Board Agreement by and between IASO BioMed, Inc. and Dr. Costas Karatzas dated as of March 1, 2018. Incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K filed on March 7, 2018.
10.9
Consulting Agreement by and between IASO BioMed, Inc. and Mr. Thomas B. Olson dated as of March 1, 2018. Incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K filed on March 7, 2018.
10.10
Amendment No. 2 to the License Agreement by and among IASO BioMed, Inc. and the Royal Institution for the Advancement of Learning/McGill University Health Center, executed January 8, 2019. Filed herewith.
14.1
IASO BioMed, Inc. Code of Ethics for Senior Financial Management. Incorporated by reference to the like numbered exhibit of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed on April 16, 2018.
16.1
Letter from Hein & Associates, LLP dated November 22, 2017. Incorporated by reference to Exhibit 16.1 of the Company’s Current Report on Form 8-K filed on November 22, 2017.
16.2
Letter from Moss Adams LLP dated March 8, 2018. Incorporated by reference to Exhibit 16.1 of the Company’s Current Report on Form 8-K filed on March 8, 2018.
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
31.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
99.1
Form of Subscription Agreement and Warrant. Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on July 25, 2017.
99.2
Form of Subscription Agreement and Warrant. Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed 8on August 24, 2018.
99.3
IASO BioMed, Inc. 2018 Stock Omnibus Plan. Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on November 6, 2018.
99.4
Form of Subscription Agreement and Warrant. Incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on November 6, 2018.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: April 24, 2019 /s/ Richard M. Schell
Richard M. Schell
Director
Date: April 24, 2019 /s/ Duane C. Knight
Duane C. Knight
Director
Date: April 24, 2019 /s/ Vassilios Papadopoulos
Vassilios Papadopoulos
Director
Date: April 24, 2019 /s/ Costas Karatzas
Costas Karatzas
Director