AIM ImmunoTech Inc 10-K for FY2022
AIM ImmunoTech Inc. (AIM)
About this 10-K
AIM ImmunoTech Inc filed this 10-K on March 31, 2023, covering the fiscal year ended December 31, 2022 (FY2022).
Headline figures
Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $141K
- up 4.4% from $135K a year earlier
- Net loss
- $19.45M
- compared with a net loss of $19.13M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
SECURITIES EXCHANGE ACT OF 1934
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the fiscal year ended
OR
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
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DOCUMENTS
INCORPORATED BY REFERENCE:
TABLE OF CONTENTS
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PART I
| ITEM 1. | Business |
GENERAL
AIM ImmunoTech Inc. and its subsidiaries (collectively, “AIM”, “Company”, “we” or “us”) are an immuno-pharma company headquartered in Ocala, Florida, and focused on the research and development of therapeutics to treat multiple types of cancers, viral diseases and immune-deficiency disorders. We have established a strong foundation of laboratory, pre-clinical and clinical data with respect to the development of nucleic acids and natural interferon to enhance the natural antiviral defense system of the human body, and to aid the development of therapeutic products for the treatment of certain cancers and chronic diseases.
Our flagship products are Ampligen® (rintatolimod) — a first-in-class drug of large macromolecular RNA (ribonucleic acid) molecules — and Alferon N Injection® (Interferon alfa-n3). Ampligen has not been approved by the FDA or marketed in the United States. Ampligen is approved for commercial sale in the Argentine Republic for the treatment of severe CFS.
Our primary present business focus involves Ampligen. Ampligen represents a dsRNA being developed for globally important cancers, viral diseases and disorders of the immune system.
We currently are proceeding primarily in four areas:
| ● | Conducting a randomized, controlled study to evaluate efficacy and safety of Ampligen compared to a control group to treat locally advanced pancreatic cancer patients. | |
| ● | Evaluating Ampligen in other cancers, as a potential therapy that modifies the tumor microenvironment with the goal of increasing anti-tumor responses to check point inhibitors. | |
| ● | Exploring Ampligen’s antiviral activities and potential use as a prophylactic or treatment for existing viruses, new viruses and mutated viruses thereof. | |
| ● | Evaluating Ampligen as a treatment for myalgic encephalomyelitis/chronic fatigue syndrome (“ME/CFS”) and fatigue and/or Post-COVID conditions of fatigue. |
We are prioritizing our activities in an order related to the stage of development, with those clinical activities such as pancreatic cancer, ME/CFS and Post-COVID conditions having priority over antiviral experimentation. We intend that priority clinical work be conducted in FDA- or EMA-authorized trials which could support a potential future NDA. However, our antiviral experimentation is designed to accumulate additional preliminary data supporting our hypothesis that Ampligen is a powerful, broad-spectrum prophylaxis and early-onset therapeutic that may confer enhanced immunity and cross-protection. Accordingly, we will conduct our antiviral programs in those venues most readily available and able to generate valid proof-of-concept data, including foreign venues.
Immuno-Oncology.
We are focused on pancreatic cancer because testing results, to date, primarily conducted in the Netherlands, have been very promising. The Netherlands study generated statistically significant data indicating that Ampligen extended survival well beyond the Standard of Care (“SOC”), when compared to well-matched historical controls. These data support the proposition that Ampligen, when administered to either patients with locally advanced or metastatic pancreatic cancer after systemic chemotherapy showed a statistically significant increase in survival rate. In October 2021, we and our Contract Research Organization, Amarex, submitted an Investigational New Drug (“IND”) application to the U.S. Food and Drug Administration (“FDA”) for a planned Phase 2 study of Ampligen as a therapy for locally advanced or metastatic late-stage pancreatic cancer. In August 2022, we received Institutional Review Board (“IRB”) approval of the trial protocol and so announced the trial’s commencement. Assuming this trial and subsequent planned clinical trials confirm the existing data, our goal is to then submit an NDA for use of Ampligen in pancreatic cancer patients.
Because of the differences in the scale of necessary trials, our initial primary focus when it comes to pancreatic cancer will be cases that are locally advanced, rather than metastatic. The number of different approaches to treating metastatic pancreatic cancer — approaches which would be determined by treating physicians — would require a much larger, far more expensive trial than would a trial for locally advanced pancreatic cancer. Therefore, we are focusing on patients who have completed FOLFIRINOX and have stable disease. Ampligen has also demonstrated in the clinic the potential for standalone efficacy in a number of other solid tumors. We have also seen success in increasing survival rates and efficacy in the treatment of animal tumors when Ampligen is used in combination with checkpoint blockade therapies. In fact, in March 2022 we announced interim data from an investigator-initiated, Phase 2, single-arm, efficacy/safety trial to evaluate the effectiveness of combining intensive locoregional intraperitoneal (IP) chemoimmunotherapy of cisplatin with IP Ampligen (TLR-3 agonist) and IV infusion of the checkpoint inhibitor pembrolizumab for patients with recurrent platinum-sensitive ovarian cancer. We believe that data from the study, which is being conducted by the University of Pittsburgh Medical Center and funded by a Merck grant, demonstrated that when combining three drugs – Ampligen and pembrolizumab, which are both immune therapies, with cisplatin, a chemotherapy – evidence of increased biomarkers associated with T cell chemotaxis and cytolytic function has been seen. Importantly, increases of these biomarkers in the tumor microenvironment have been correlated with favorable tumor responses. These successes in the field of immuno-oncology have guided our efforts toward the potential use of Ampligen as a combinational therapy for the treatment of a variety of solid tumor types. The first of our patent applications in this space was granted by the Netherlands on March 15, 2021.
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Please see “Immuno-Oncology” below.
Ampligen as an Antiviral.
We have a research and pre-clinical history that indicates broad-spectrum antiviral capability of Ampligen in animals. We hope to demonstrate that it has the same effect in humans. To do this, among other things, we need a population infected with a virus. That is why we have spent significant resources on COVID-19 (the disease caused by SARS-CoV-2) which is active and still infecting many subjects. While much would need to be done to get Ampligen to market as a broad-spectrum antiviral, we believe that it is important to focus our efforts first and foremost on thoroughly proving the concept, especially while there is still a large COVID-19-infected population. Previously, animal studies were conducted that yielded positive results utilizing Ampligen to treat numerous viruses, such as Western Equine Encephalitis Virus, Ebola, Vaccinia Virus (which is used in the manufacture of smallpox vaccine) and SARS-CoV-1. We have conducted experiments in SARS-CoV-2 showing Ampligen has a powerful impact on viral replication. The prior studies of Ampligen in SARS-CoV-1 animal experimentation may predict similar protective effects against SARS-CoV-2.
The FDA has requested that we provide additional data to assist the agency in evaluating the potential risks and benefits of administering Ampligen to asymptomatic and mild COVID-19 individuals. However, as discussed in more detail below, where the threat to the patient from COVID-19 is high, the FDA has already authorized Ampligen in a clinical trial of patients with COVID-19 who have a pre-existing cancer. We have also elected to explore studies (initially with healthy volunteers) outside the United States and have already conducted a study in the Netherlands to determine the safety profile of the intranasal delivery of Ampligen.
In this regard, CHDR, a foundation located in Leiden in the Netherlands, managed a Phase 1 randomized, double-blind study for us to evaluate the safety, tolerability and biological activity of repeated administration of Ampligen intranasally. A total of 40 healthy subjects received either Ampligen or a placebo in the trial, with the Ampligen given at four escalating dosages across four cohorts, to a maximum level of 1,250 micrograms. All patients had completed study by June 2021 and the study is completed. The Final Safety Report reported no Serious or Severe Adverse Events at any dosage level.
Today, over two years after COVID-19 first appeared, the world has a number of vaccines and some promising therapeutics. Our quest to prove the antiviral activities of Ampligen continues. If Ampligen has the broad-spectrum antiviral properties that we believe that it has, it could be a very valuable tool in treating variants of existing viral diseases, including COVID-19, or novel ones that arise in the future. Unlike most developing therapeutics which attack the virus, Ampligen works differently. We believe that it activates antiviral immune system pathways that fight not just a particular virus or viral variant, but other similar viruses as well.
In October 2022, our IND application cleared the FDA approval process and we are proceeding with a Phase 2 study evaluating Ampligen as a therapeutic for patients with post-COVID conditions (“AMP-518”). Additional comments were received from the FDA, which have been addressed in an amended protocol approved by the IRB on March 30, 2023.
Please see “Ampligen as a Potential Antiviral” below.
Ampligen as a treatment for ME/CFS and Post-COVID Conditions
We have long been focused on seeking the FDA’s approval for the use of Ampligen to treat myalgic encephalomyelitis/chronic fatigue syndrome (“ME/CFS”). In fact, in February 2013, we received a Complete Response letter (“CRL”) from the FDA for our Ampligen NDA for ME/CFS, stating that we should conduct at least one additional clinical trial, complete various nonclinical studies and perform a number of data analyses.
While developing a comprehensive response to the FDA and a plan for a confirmatory trial for the FDA NDA, we proceeded independently in Argentina and, in August 2016, we received approval of an NDA from ANMAT for commercial sale of Ampligen in the Argentine Republic for the treatment of severe CFS. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. On June 10, 2020, we received import clearance from ANMAT to import the first shipment of commercial grade vials of Ampligen into Argentina. The next steps in the commercial launch of Ampligen include ANMAT conducting a final inspection of the product and release tests before granting final approval to begin commercial sales. This testing and approval process is currently delayed due to ANMAT’s internal processes and the ongoing effects of COVID-19 and. Once final approval by ANMAT is obtained, GP Pharm will be responsible for distributing Ampligen in Argentina.
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The FDA authorized an open-label treatment protocol (“AMP-511”) allowing patient access to Ampligen for treatment in a study under which severely debilitated CFS patients have the opportunity to be on Ampligen to treat this very serious and chronic condition. The data collected from the AMP-511 protocol through a consortium group of clinical sites provide safety information regarding the use of Ampligen in patients with CFS. The AMP-511 protocol is ongoing. In October 2020, we received IRB approval for the expansion of the AMP-511 protocol to include patients previously diagnosed with SARS-CoV-2 following clearance of the virus, but who still demonstrate chronic fatigue-like symptoms that we refer to as Post-COVID conditions. As of December 31, 2022, there were 10 patients enrolled in this open-label expanded access treatment protocol (including two patients with Post-COVID-19 Conditions). As of January 31, 2023, there have been seven such Post-COVID patients treated in the study. AIM previously reported positive preliminary results based on data from the first four Post-COVID Condition patients enrolled in the study. The data show that, by week 12, compared to baseline, there was what the investigators considered a clinically significant decrease in fatigue-related measures.
We plan on a comprehensive follow through with the FDA regarding the use of Ampligen as a treatment for ME/CFS. We have learned a great deal since the FDA’s CRL and plan to adjust our approach to concentrate on specific ME/CFS symptoms. Responses to the CRL and a proposed confirmatory trial are being worked on now by our R&D team and consultants.
Please see “Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS)” below.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND SUMMARY RISK FACTORS
Certain statements in this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. These statements are based on our management’s current beliefs, expectations and assumptions about future events, conditions and results and on information currently available to us. Discussions containing these forward-looking statements may be found, among other places, in this Report in Part I, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; Part II, Item 1. “Legal Proceedings”; and Part II, Item 1A. “Risk Factors”, as well as the following sections of our Annual Report on Form 10-K for the year ended December 31, 2021: Item 1. “Business”, Part I; Item 1A. “Risk Factors”, Part I; Item 3. “Legal Proceedings”, Part I and Part II; Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
All statements, other than statements of historical fact, included or incorporated herein regarding our strategy, future operations, financial position, future revenues, projected costs, plans, prospects and objectives are forward-looking statements. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “think,” “may,” “could,” “will,” “would,” “should,” “continue,” “potential,” “likely,” “opportunity” and similar expressions or variations of such words are intended to identify forward-looking statements but are not the exclusive means of identifying forward-looking statements and their absence does not mean that a statement is not forward-looking. Our forward-looking statements are not guarantees of performance, and actual results could vary materially from those contained in or expressed by such statements due to risks and uncertainties.
Among the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties inherent in our business including, without limitation: our ability to adequately fund our projects as we will need additional funding to proceed with our objectives; the potential therapeutic effect of our products; the possibility of obtaining regulatory approval; our ability to find senior co-development partners with the capital and expertise needed to commercialize our products and to enter into arrangements with them on commercially reasonable terms; our ability to manufacture and sell any products; our ability to enter into arrangements with third party vendors; market acceptance of our products; our ability to earn a profit from sales or licenses of any drugs; our ability to discover new drugs in the future, changing market conditions, changes in laws and regulations affecting our industry; and future matters related to our New Jersey facility, which by definition we cannot define at this time.
We are in various stages of seeking to determine whether Ampligen will be effective in the treatment of multiple types of viral diseases, cancers, and immune-deficiency disorders. We discuss in this Report our current and anticipated future activities, all of which are subject to change for a number of reasons. Significant testing and trials will be required to determine whether Ampligen will be effective in the treatment of these conditions. Results obtained in animal models do not necessarily predict results in humans. Human clinical trials will be necessary to prove whether or not Ampligen will be efficacious in humans. No assurance can be given as to whether current or planned clinical trials will be successful or yield favorable data and the trials are subject to many factors including lack of regulatory approval(s), lack of study drug, or a change in priorities at the institutions sponsoring other trials. We cannot assure that the clinical studies will be successful or yield any useful data or require additional funding.
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With the outbreak of the COVID-19 coronavirus and our prior research into Ampligen’s antiviral activity against Severe Acute Respiratory Syndrome, or SARS, we have been focused on the potential role that Ampligen could play in the treatment of SARS-CoV-2 — from a protective prophylaxis/early-onset therapeutic to a treatment for post-COVID conditions. Our beliefs rely on a number of studies. No assurance can be given that future studies will not result in findings that are different from those reported in the studies we refer to. The pandemic is disrupting world health and world economies and most likely will continue to do so for a long time. While we are able to continue to operate, clearly, like all businesses, we are unable to gauge how bad this pandemic will affect our operations in the future. We reached out to numerous foreign governments related to COVID-19 and, if successful, may be working in these countries. Operating in foreign countries carries with it a number of risks, including potential difficulties in enforcing intellectual property rights. We cannot assure that our potential operations in foreign countries will not be adversely affected by these risks. We have filed provisional patent applications related to the COVID-19 coronavirus. However, these filings do not assure that patents will ultimately be granted.
In February 2013, we received a Complete Response Letter (CRL) from the Food and Drug Administration, or FDA, for our Ampligen New Drug Application, or NDA, for the treatment of CFS. The FDA communicated that we should conduct at least one additional clinical trial, complete various nonclinical studies and perform a number of data analyses. Accordingly, the remaining steps to potentially gain FDA approval of the Ampligen NDA, the final results of these and other ongoing activities could vary materially from our expectations and could adversely affect the chances for approval of the Ampligen NDA. These activities and the ultimate outcomes are subject to a variety of risks and uncertainties, including but not limited to risks that (i) the FDA may ask for additional data, information or studies to be completed or provided; and (ii) the FDA may require additional work related to the commercial manufacturing process to be completed or may, in the course of the inspection of manufacturing facilities, identify issues to be resolved. A proposed confirmatory trial and responses to the CRL are being worked on now by our R&D team and consultants.
In August 2016, we received approval of our NDA from Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica (“ANMAT”), for commercial sale of rintatolimod (U.S. tradename: Ampligen®) in the Argentine Republic for the treatment of severe CFS. The product will be marketed by GP Pharm, our commercial partner in Latin America. We believe, but cannot assure, that this approval provides a platform for potential sales in certain countries within the European Union under regulations that support cross-border pharmaceutical sales of licensed drugs. In Europe, approval in a country with a stringent regulatory process in place, such as Argentina, should add further validation for the product as the Early Access Program, or EAP, as discussed below and underway in Europe in pancreatic cancer. ANMAT approval is only an initial, but important, step in the overall successful commercialization of our product. There are a number of actions that must occur before we could be able to commence commercial sales in Argentina. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. In June 2020, we received import clearance from ANMAT to import the first shipment of commercial grade vials of Ampligen into Argentina. We are currently working with GP Pharma on the commercial launch of Ampligen in Argentina. Commercialization in Argentina will require, among other things, an appropriate reimbursement level, appropriate marketing strategies, completion of manufacturing preparations for launch and ANMAT conducting a final inspection of the product and release tests before granting final approval to begin commercial sales. This testing and approval process is currently delayed due to the COVID-19 pandemic and ANMAT’s internal processes. Approval of rintatolimod for severe CFS in the Argentine Republic does not in any way suggest that the Ampligen NDA in the United States or any comparable application filed in the European Union or elsewhere will obtain commercial approval.
In May 2016, we entered into a five-year agreement with myTomorrows, a Netherlands based company, for the commencement and management of an EAP in Europe and Turkey related to CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor in this territory, is performing EAP activities. In January 2017, the EAP was extended to pancreatic cancer patients beginning in the Netherlands. In February 2018, we signed an amendment to extend the territory to cover Canada to treat pancreatic cancer patients, pending government approval. In March 2018, we signed an amendment to which myTomorrows will be our exclusive service provider for special access activities in Canada for the supply of Ampligen for the treatment of CFS. MyTomorrows provides services related to the supply and distribution of Ampligen to patients in Early Access Programs (EAPs) which are initiated through a physician’s request; there have been no physician requests that have led to government approval, therefore no patients have been treated under an EAP for either pancreatic cancer or CFS in Canada. No assurance can be given that we can sufficiently supply product should we experience an unexpected demand for Ampligen in our clinical studies, the commercial launch in Argentina or pursuant to the EAPs. No assurance can be given that Ampligen will prove effective in the treatment of pancreatic cancer. The agreement was automatically extended for one year periods on May 20, 2021 and 2022, and is anticipated to extend again on May 20, 2023.
Multiple Ampligen clinical trials are underway, in various phases of development and activity, with subjects enrolled at university cancer centers testing whether tumor microenvironments can be reprogrammed to increase the effectiveness of cancer immunotherapy, including checkpoint blockade. One site of clinical trials is Roswell Park and the other is the University of Pittsburgh Medical Center. (See: “Research and Development; Immuno-oncology”). No assurance can be given as to the results of these underway trials. No assurance can be given as to whether some or all of the planned additional oncology clinical trials will occur and they are subject to many factors, including lack of regulatory approval(s), lack of study drug, or a change in priorities at the sponsoring universities or cancer centers. Even if these additional clinical trials are initiated, as we are not the sponsor, we cannot assure that these clinical studies or the studies underway will be successful or yield any useful data. In addition, initiation of planned clinical trials may not occur secondary to many factors including lack of regulatory approval(s) or lack of study drug.
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Our overall objectives include plans to continue seeking approval for commercialization of Ampligen in the United States and abroad as well as seeking to broaden commercial therapeutic indications for Alferon N Injection presently approved in the United States and Argentina. We continue to pursue senior co-development partners with the capital and expertise needed to commercialize our products and to enter into arrangements with them on commercially reasonable terms. Our ability to commercialize our products, widen commercial therapeutic indications of Alferon N Injection and/or capitalize on our collaborations with research laboratories to examine our products are subject to a number of significant risks and uncertainties including, but not limited to our, ability to enter into more definitive agreements with some of the research laboratories and others that we are collaborating with, to fund and conduct additional testing and studies, whether or not such testing is successful or requires additional testing and meets the requirements of the FDA and comparable foreign regulatory agencies. We do not know when, if ever, our products will be generally available for commercial sale for any indication.
We strived to maximize the outsourcing of certain components of our manufacturing, quality control, marketing and distribution while maintaining control over the entire process through our quality assurance and regulatory groups. We cannot provide any guarantee that the facility or our contract manufacturers will pass an FDA pre-approval inspection for Alferon N Injection manufacturing.
In May 2021, we exercised our option to re-purchase the New Brunswick manufacturing facility, pursuant to the terms of the March 2018 sale and lease-back agreement. We thereafter sold certain equipment and machinery that we determined to be obsolete and no longer needed for current or future manufacturing. On March 3, 2022, we entered into an Agreement of Sale and Purchase with Acellories, Inc. to purchase the property for an estimated $3.9 million, with AIM’s intention to keep some space specifically for its Alferon activity. The sale was finalized on November 1, 2022, for $3.7 million net of normal closing cost.
In June 2022 we entered into a lease agreement with the New Jersey Economic Development Authority for a 5,210 square-foot, state-of-the-art R&D facility at the New Jersey Bioscience Center (“NJBC”), primarily consisting of two separate laboratory suites. The facility is AIM’s operations, research and development center.
The production of new Alferon N Injection Active Pharmaceutical Ingredient, or API, is currently on hold. The New Brunswick facility is approved by the FDA under the Biological License Application, or BLA, for Alferon N Injection. While we have sold the New Brunswick facility, we maintain a certain amount of space at that facility for Alferon activities, the sale of the facility will move up the timeline for contracting with a CMO, or CMOs, capable of producing Alferon, and receiving FDA approval to do so, prior to commercial sale of newly produced inventory product. If and when we obtain a reaffirmation of FDA BLA status and have begun production of new Alferon N Injection API, it will need FDA approval as to the quality and stability of the final product before commercial sales can resume. We may need additional funds to finance the validation process. If we are unable to gain the necessary FDA approvals related to the manufacturing process and/or final product of new Alferon N Injection inventory, our operations most likely will be materially and/or adversely affected. In light of these contingencies, there can be no assurances that the approved Alferon N Injection product will be returned to production on a timely basis, if at all, or that if and when it is again made commercially available, it will return to prior sales levels.
In December 2020, we added Pharmaceutics International Inc. (“Pii”) as a “Fill & Finish” provider to enhance our capacity to produce Ampligen. This addition amplifies our manufacturing capability by providing redundancy and cost savings. The contracts augment our active and in-process fill and finish capacity.
Due to continuing delays and other obstacles related to importing Ampligen to China, on August 10, 2022, we ended our contract with Shenzhen Smoore Technology for the development of an Ampligen delivery device for the treatment of SARS-CoV-2.
We believe, and are investigating, Ampligen’s potential role in enhancing the activity of influenza vaccines. While certain studies involving rodents, non-human primates (monkeys) and healthy human subjects indicate that Ampligen may enhance the activity of influenza vaccines by conferring increased cross-reactivity or cross-protection, further studies will be required and no assurance can be given that Ampligen will assist in the development of a universal vaccine for influenza or other viruses.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
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This Report also refers to estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.
SUMMARY RISK FACTORS
General Risk Related to our Business
| ● | The COVID-19 coronavirus could adversely impact our business, including our clinical trials. We cannot predict the ultimate effects of the Covid-19 pandemic on our business | |
| ● | We may require additional financing which may not be available. | |
| ● | We may continue to incur substantial losses and our future profitability is uncertain. | |
| ● | Our drug and related technologies are investigational and subject to regulatory approval. If we are unable to obtain regulatory approval in a timely manner, or at all, our operations will be materially harmed and our stock adversely affected. | |
| ● | We may be subject to product liability claims from the use of Ampligen, Alferon N Injection, or other of our products which could negatively affect our future operations. We have limited product liability and clinical trial insurance. | |
| ● | Uncertainty of health care reimbursement for our products. | |
| ● | There are risks of liabilities associated with handling and disposing of hazardous materials. | |
| ● | We rely upon information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm our ability to operate our business effectively. | |
| ● | The loss of services of key personnel could hurt our chances for success. | |
| ● | Our financial statements are prepared in accordance with GAAP. GAAP requires estimates, judgements and assumptions which inherently contain uncertainties. |
Risks Associated with Our Products
| ● | Possible side effects from the use of Ampligen or Alferon N Injection could adversely affect potential revenues and physician/patient acceptability of our product. |
Risks Related to our activities associated with Ampligen’s potential effectiveness as a treatment for SARS-CoV-2
| ● | It is not possible to predict the future of the ongoing SARS-CoV-2 global pandemic or the development of potential treatments. There are available a couple of treatments for COVID-19. No assurance can be given that Ampligen will aid in or be applied to the treatment of this virus. | |
| ● | Operating in foreign countries carries with it many risks. |
Risks Associated with Our Intellectual Property
| ● | We may not be profitable unless we can protect our patents and/or receive approval for additional pending patents. | |
| ● | The patent position of biotechnology and pharmaceutical firms is highly uncertain and involves complex legal and factual questions. | |
| ● | There can be no assurance that we will be able to obtain necessary licenses if we cannot enforce patent rights we may hold. In addition, the failure of third parties from whom we currently license certain proprietary information or from whom we may be required to obtain such licenses in the future, to adequately enforce their rights to such proprietary information, could adversely affect the value of such licenses to us. | |
| ● | There is no guarantee that our trade secrets will not be disclosed or known by our competitors. |
Risks Associated with Our R&D
| ● | We cannot predict what additional studies and/or additional testing or information may be required by the FDA. Accordingly, we are unable to estimate the nature, timing, costs and necessary efforts to complete these projects nor the anticipated completion dates. In addition, we have no basis for estimating when material net cash inflows may commence. We have yet to generate significant revenues from the sale of these developmental products. |
Risks Associated with Our Manufacturing
| ● | Our Alferon N Injection Commercial Sales were halted due to lack of finished goods inventory. If we are unable to gain the necessary FDA approvals related to Alferon N Injection, or if we are unable to identify a CMO or CMOs that meet our requirements, then our operations would most likely be materially and/or adversely affected. |
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| ● | There are no long-term agreements with suppliers of required materials and services for Ampligen and there are a limited number of raw material suppliers. If we are unable to obtain the required raw materials and/or services, we may not be able to manufacture Ampligen. | |
| ● | There are a limited number of organizations in the United States available to provide the final manufacturing steps of formulation, fill, finish and packing sets for Alferon N Injection and Ampligen. | |
| ● | There is no assurance that upon successful manufacture of a drug on a limited scale basis for investigational use will lead to a successful transition to commercial, large-scale production. | |
| ● | We have limited manufacturing experience for Ampligen and Alferon N Injection. We may not be profitable unless we can produce Ampligen, Alferon N Injection or other products in commercial quantities at costs acceptable to us. |
Risks Associated with Our Licensing/Collaborations/Joint Ventures
| ● | If we are unable to achieve licensing, collaboration and/or joint ventures, our marketing strategy for Ampligen will be part of the differing health care systems around the world along with the different marketing and distribution systems that are used to supply pharmaceutical products to those systems. |
Risks Associated with Our Marketing and Distribution
| ● | We have limited marketing and sales capability. If we are unable to obtain additional distributors and our current and future distributors do not market our products successfully, we may not generate significant revenues or become profitable. |
Risks Associated with Our Competition
| ● | Rapid technological change may render our products obsolete or non-competitive. | |
| ● | Our products may be subject to substantial competition. |
Risks Associated with an Investment in Our Common Stock
| ● | The market price of our stock may be adversely affected by market volatility | |
| ● | Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock. | |
| ● | Provisions of our Certificate of Incorporation and Delaware law could defer a change of our Management which could discourage or delay offers to acquire us. | |
| ● | Our business, financial condition and operating results could be negatively affected as a result of actions by activist investors. In this regard, an activist stockholder unsuccessfully attempted to take control of us by proposing director nominees at our last annual stockholders meeting. |
AVAILABLE INFORMATION
We file electronically with the United States Securities and Exchange Commission, or SEC, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. We make available on our website at www.ao-inc.com free of charge, copies of these reports as soon as reasonably practicable after filing these reports with, or furnishing them to, the SEC.We are subject to the information and periodic reporting requirements of the Exchange Act and, in accordance therewith, we file periodic reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements and other information are available for inspection and copying at the website of the SEC www.sec.gov. You also may obtain a free copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports on the day of filing with the SEC on our website at http://www.aimimmuno.com under the Investor Relations tab for SEC Filings or by contacting the Investor Relations Department by calling (833) 475-8247 or (352) 448-7797 or sending an e-mail message to AIM@jtcir.com. Our Internet website and the information contained on that website, or accessible from our website, is not intended to be incorporated into this Annual Report on Form 10-K or any other filings we make with the SEC.
OUR PRODUCTS
Our primary pharmaceutical product platform consists of Ampligen (rintatolimod), a first-in-class drug of large macromolecular double-stranded (ds) RNA (ribonucleic acid) molecules, and our FDA-approved natural alpha-interferon product, Alferon N Injection.
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Ampligen®
Ampligen is approved for sale in Argentina (to 2026) for severe CFS and is an experimental drug in the United States currently undergoing clinical development for the treatment of certain cancers and ME/CFS. Over its developmental history, Ampligen has received various designations, including Orphan Drug Product Designation (FDA and EMA), Treatment protocol (e.g., “Expanded Access” or “Compassionate” use authorization) with Cost Recovery Authorization (FDA) and “promising” clinical outcome recognition based on the evaluation of certain summary clinical reports (“AHRQ” or Agency for Healthcare Research and Quality). Based on the results of published, peer-reviewed pre-clinical studies and clinical trials, we believe that Ampligen may have broad-spectrum antiviral and anti-cancer properties.
We believe that nucleic acid compounds represent a potential new class of pharmaceutical products designed to act at the molecular level for treatment of many human diseases. Ampligen represents the first drug in the class of large (macromolecular) dsRNA molecules to apply for NDA review. There are two forms of nucleic acids: deoxyribonucleic acid (“DNA”) and ribonucleic acid (“RNA”). DNA is a group of naturally occurring molecules found in chromosomes, the cell’s genetic machinery. RNA is a group of naturally occurring informational molecules which orchestrate a cell’s behavior which, in turn, regulates the action of groups of cells, including the cells which comprise the body’s immune system. RNA directs the production of proteins and regulates certain cell activities including the activation of an otherwise dormant cellular defense against viruses and tumors. Our drug technology utilizes specifically configured RNA and is a selective Toll-like Receptor 3 (“TLR3”) agonist that can be administered intravenously, intranasally and intraperitoneally. Ampligen has been assigned the generic name rintatolimod by the United States Adopted Names Council (“USANC”) and has the chemical designation poly(I):poly(C12U).
Expanded Access Program/Early Access Programs/clinical trials of Ampligen that have been conducted or that are ongoing include studies of the potential treatment of patients with pancreatic cancer, renal cell carcinoma, malignant melanoma, non-small cell lung cancer, ovarian cancer, breast cancer, colorectal cancer, prostate cancer, ME/CFS, Hepatitis B, HIV, COVID-19 and Post-COVID conditions.
We have received approval of our NDA from ANMAT for the commercial sale of Ampligen in the Argentine Republic for the treatment of severe CFS. The product will be marketed by GP Pharm, our commercial partner in Latin America. Shipment of the drug product to Argentina was initiated in 2018 to complete the release testing by ANMAT needed for commercial distribution. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. In June 2020, we received import clearance from ANMAT to import the first shipment of commercial grade vials of Ampligen into Argentina. We are currently working with GP Pharm on the commercial launch of Ampligen in Argentina. Commercialization in Argentina will require, among other things, GP Pharm to establish disease awareness, medical education, creation of an appropriate reimbursement level, design of marketing strategies and completion of manufacturing preparations for launch and ANMAT conducting a final inspection of the product and release tests before granting final approval to begin commercial sales. AIM has supplied GP Pharm with the Ampligen required for testing and ANMAT release. This testing and approval process is currently delayed due to ANMAT’s internal processes and the ongoing effects of COVID-19. Once final approval by ANMAT is obtained, GP Pharm will be responsible for distributing Ampligen in Argentina. We continue to pursue our Ampligen NDA, for the treatment of CFS with the FDA.
The FDA has authorized an open-label expanded access treatment protocol (fAMP-511) allowing patient access to Ampligen in a study under which severely debilitated CFS patients have the opportunity to be on Ampligen to treat this very serious and chronic condition. The AMP-511 protocol started in the 1990s and is ongoing. The data collected from the AMP-511 protocol through clinical sites provide safety information regarding the use of Ampligen in patients with CFS. We are establishing an enlarged database of clinical safety information which we believe will provide further documentation regarding the absence of autoimmune disease associated with Ampligen treatment. We believe that continued efforts to understand existing data, and to advance the development of new data and information, will ultimately support our future filings for Ampligen and/or the design of future clinical studies that the FDA requested in a CRL. The FDA approved an increased reimbursement level from $200 to $345 per 200 mg vial of Ampligen, due to increased production costs; which was re-authorized in 2021 and again in 2022. At this time, we do not plan on passing this adjustment along to the patients in this program. In October 2020, we received IRB approval for the expansion of the AMP-511 Expanded Access Program clinical trial for ME/CFS to include patients previously diagnosed with SARS-CoV-2 following clearance of the virus, but who still demonstrate chronic fatigue-like symptoms that we refer to as Post-COVID conditions. As of December 31, 2022, there were 10 patients enrolled in this open-label expanded access treatment protocol), with seven Post-COVID patients receiving or having received treatment. AIM previously reported positive preliminary results based on data from the first four Post-COVID Condition patients enrolled in the study. The data show that, by week 12, compared to baseline, there was what the investigators considered a clinically significant decrease in fatigue-related measures.
In May 2016, we entered into a five-year agreement with myTomorrows, a Netherlands based company, for the commencement and management of an Early Access Program (“EAP”) in Europe and Turkey related to ME/CFS. Pursuant to the agreement, as amended, myTomorrows also is managing all Early Access Programs and Special Access Programs in Europe, Canada and Turkey to treat pancreatic cancer and ME/CFS patients. The agreement was automatically extended for a period of 12 months on May 20, 2021, and again for an additional period of 12 months on May 20, 2022.
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In June 2018, Ampligen was cited as outperforming two other TLR3 agonists — poly IC and natural double stranded RNA — in creating an enhanced tumor microenvironment for checkpoint blockade therapy in the journal of Cancer Research (http://cancerres.aacrjournals.org/content/early/2018/05/31/0008-5472.CAN-17-3985).In a head-to-head study in explant culture models, Ampligen activated the TLR3 pathway and promoted an accumulation of killer T cells but, unlike the other two TLR3 agonists, it did so without causing regulatory T cell (Treg) attraction. These findings were considered important because they indicate that Ampligen selectively reprograms the tumor microenvironment by inducing the beneficial aspects of tumor inflammation (attracting killer T cells), without amplifying immune-suppressive elements such as regulatory T cells. The study was conducted at the University of Pittsburgh and Roswell Park as a part of the NIH-funded P01 CA132714 and Ovarian Cancer Specialized Program of Research Excellence (“SPORE”).
In 2018, we completed production of two commercial-size batches of more than 16,000 vials of Ampligen, following its “Fill & Finish” at Jubilant HollisterStier, the Contract Manufacturing Organization. These lots passed all required testing for regulatory release for human use and are being used for multiple programs, including: the treatment of ME/CFS; the pancreatic cancer EAP in the Netherlands; and will continue to be used for ongoing and future clinical studies in oncology. Additionally, two lots of Ampligen were manufactured in December 2019 and January 2020 at Jubilant HollisterStier. The current manufactured lots of Ampligen have been fully tested and released for commercial product launch in Argentina and for clinical trials. Additionally, in December 2020, we added Pii as a “Fill & Finish” provider. The contracts augment our active and in-process fill and finish capacity.
Alferon N Injection®
Alferon N Injection is the registered trademark for our injectable formulation of natural alpha interferon. Alferon N Injection is the only natural-source, multi-species alpha interferon currently approved for sale in the United States and Argentina for the intralesional (within lesions) treatment of refractory (resistant to other treatment) or recurring external genital warts in patients 18 years of age or older. Alferon N Injection is also approved in Argentina for the treatment of refractory patients that failed or were intolerant to treatment with recombinant interferons. Certain types of human papilloma viruses (“HPV”) cause genital warts, a sexually transmitted disease (“STD”). According to the CDC, HPV is the most common sexually transmitted infection, with approximately 79 million Americans — most in their late teens and early 20s — infected with HPV. In fact, the CDC states that “HPV is so common that nearly all sexually active men and women get the virus at some point in their lives.” Although they do not usually result in death, genital warts commonly recur, causing significant morbidity and entail substantial health care costs.
Interferons are a group of proteins produced and secreted by cells to combat diseases. Researchers have identified four major classes of human interferon: alpha, beta, gamma and omega. Alferon N Injection contains a multi-species form of alpha interferon. The worldwide market for injectable alpha interferon-based products has experienced rapid growth and various alpha interferon injectable products are approved for many major medical uses worldwide. Alpha interferons are manufactured commercially in three ways: by genetic engineering, by cell culture, and from human white blood cells. All three of these types of alpha interferon are or were approved for commercial sale in the United States. Our natural alpha interferon is produced from human white blood cells. The potential advantages of natural alpha interferon over recombinant (i.e., synthetic) interferon produced and marketed by other pharmaceutical firms may be based upon their respective molecular compositions. Natural alpha interferon is composed of a family of proteins containing many molecular species of interferon. In contrast, commercial recombinant alpha interferon products each contain only a single species. Researchers have reported that the various species of interferons may have differing antiviral activity depending upon the type of virus. Natural alpha interferon presents a broad complement of species, which we believe may account for its higher activity in laboratory studies. Natural alpha interferon is also glycosylated (i.e., partially covered with sugar molecules). Such glycosylation is not present on the currently U.S.-marketed recombinant alpha interferons. We believe that the absence of glycosylation may be in part responsible for the production of interferon-neutralizing antibodies seen in patients treated with recombinant alpha interferon. Although cell culture-derived interferon is also composed of multiple glycosylated alpha interferon species, the types and relative quantity of these species are different from our natural alpha interferon.
Alferon N Injection [Interferon alfa-n3 (human leukocyte derived)] is a highly purified, natural-source, glycosylated, multi-species alpha interferon product. There are essentially no neutralizing antibodies observed against Alferon N Injection to date and the product has a relatively low side-effect profile. The recombinant DNA derived alpha interferon formulations have been reported to have decreased effectiveness after one year of treatment, probably due to neutralizing antibody formation (See “Manufacturing” and “Marketing/Distribution” sections below for more details on the manufacture and marketing/distribution of Alferon N Injection).
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PATENTS AND NON-PATENT EXCLUSIVITY RIGHTS
We consider patent exclusivity as a crucial component of our business. As of December 31, 2022, we had 46 patents worldwide with 68 additional pending patent applications comprising our intellectual property.
We continually review our patents to determine if they have continuing value. Please see “Note 4: Patents, Trademark Rights and Other Intangibles (FASB ASC 350 General Intangibles Other than Goodwill)” under Notes to the Consolidated Financial Statements for more information on these patents.
There are no current patent litigation proceedings involving us.
Orphan drug designation
U.S. Orphan drug designation qualifies sponsors for incentives including:
| ● | Tax credits for qualified clinical trials | |
| ● | Exemption from user fees | |
| ● | Potential seven years of market exclusivity after FDA approval |
We have received Orphan Drug Designation (ODD) from the FDA for Ampligen used in the treatment of Chronic Fatigue Syndrome, HIV, Metastatic Melanoma, Renal Cell Carcinoma, Pancreatic Adenocarcinoma and Ebola Virus Disease.
In the European Union, ODD carries ten years of market exclusivity after receiving marketing authorization. We have received ODD from the EU for Ampligen used in the treatment of Ebola Virus Disease and Pancreatic Adenocarcinoma and for Alferon used in the treatment of Middle East Respiratory Syndrome.
RESEARCH AND DEVELOPMENT (“R&D”)
Our general focus during the past several fiscal years has been on expanding the market potential of Ampligen through investigation of efficacy (in vitro and in vivo) in different immune-based disorders including cancer and CFS. While we have previously estimated milestone dates when significant progress could be reported, the reality of the ongoing SARS-CoV-2 pandemic could mean the re-direction of resources away from ongoing clinical trials and toward the research and development of potential treatments for the coronavirus. In this regard, we have widened our focus to include research and development of potential prophylactic and therapeutic applications for the treatment of COVID-19, including the long-term effects of COVID-19.
Immuno-Oncology
The potential of Ampligen as an immuno-oncology therapeutic has been a major focus of AIM since our current leadership took over in 2016. We have been working with the University of Pittsburgh’s chemokine modulation research initiative, which includes the use of Ampligen as a potential adjuvant to modify the tumor microenvironment (“TME”) with the goal of increasing anti-tumor responses to check point inhibitors (“CPI”). As part of this collaboration, we have supplied Ampligen to the University. The study, under the leadership of Robert P. Edwards, MD, chair of gynecologic services at Magee-Women’s Hospital of the University of Pittsburgh School of Medicine, and Professor of Surgery Pawel Kalinski, M.D., Ph.D., at Roswell Park, Buffalo, N.Y., involved the chemokine modulatory regimen developed by Dr. Kalinski’s group and successfully completed the Phase 1 dose escalation in patients with resectable colorectal cancer.
Multiple Ampligen clinical trials are underway or recently completed at major university cancer centers testing whether tumor microenvironments can be reprogrammed to increase the effectiveness of cancer immunotherapy, including checkpoint inhibitors. The underway trials include:
| ● | Pancreatic Cancer Trial - The Phase 2 AMP-270 clinical trial is a randomized, open-label, controlled, parallel-arm study with the primary objective of comparing the efficacy of Ampligen versus a no treatment control group following FOLFIRINOX for subjects with locally advanced pancreatic adenocarcinoma. Secondary objectives include comparing safety and tolerability. The AMP-270 is expected to enroll approximately 90 subjects in up to 30 centers across the U.S. and Europe. The Buffett Cancer Center at the University of Nebraska Medical Center (UNMC) and Erasmus MC in the Netherlands are expected to be the primary study sites. In March 2022, the FDA granted clearance to proceed with the study. In April 2022, we executed a work order with Amarex to manage the clinical trial. In August 2022, we received IRB approval of the trial protocol and so announced the trial’s commencement. (https://clinicaltrials.gov/ct2/show/NCT05494697). For the year ended December 31, 2022, we incurred expense of approximately $1,730,000. |
See “Immuno-Oncology; Additional Progress and Analysis Related to Pancreatic Cancer” for more analysis.
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| ● | Advanced Recurrent Ovarian Cancer |
| ○ | Results of the Phase 1 portion of a Phase 1/2 study of intraperitoneal chemo-immunotherapy in advanced recurrent ovarian cancer were published in the American Association for Cancer Research publication, Clinical Cancer Research (Clin Cancer Res January 19, 2022 DOI: 10.1158/1078-0432.CCR-21-3659). The study results represent an important extension of prior studies using human tumor explants that showed Ampligen’s potentially important role as a TLR3 agonist acting synergistically with high-dose IFNα and celecoxib to selectively enhance Teff cell-attractants while suppressing Treg-attractants in the tumor microenvironment with a concomitant increase in the Teff/Treg ratio. The importance of boosting the Teff/Treg ratio in the tumor microenvironment is that it is associated with the conversion of ‘cold’ tumors into ‘hot’ tumors, which have an increased sensitivity to chemo-immunotherapy and an improved chance of showing tumor regression. The Phase 1 portion was designed to establish intraperitoneal safety. The Phase 2 portion of the study is planned to be conducted in the future. https://clinicaltrials.gov/ct2/show/NCT02432378 | |
| ○ | A Phase 2 study of advanced recurrent ovarian cancer using cisplatin, pembrolizumab, plus Ampligen; up to 45 patients to be enrolled; enrollment has commenced, and numerous patients have commenced treatment. We announced interim data from the study demonstrating that evidence of increased biomarkers associated with T cell chemotaxis and cytolytic function was seen when combining Ampligen, pembrolizumab and cisplatin. Increases of these biomarkers in the tumor microenvironment have been correlated with favorable tumor responses. Interim results announced March 2022 detailed an observed clinical response rate of 61% includes two complete and three partial tumor responses, plus three patients with stable disease among the 13 evaluable patients. An important priority will be to confirm these findings through continuing to enroll patients onto this study. https://clinicaltrials.gov/ct2/show/NCT03734692 |
In March 2021, we were granted a patent by the Netherlands Patent Office with granted patent claims that include, but are not limited to, the use of Ampligen as a combination cancer therapy with checkpoint blockade inhibitors (e.g. pembrolizumab, nivolumab). Interim data from an investigator-initiated, Phase 2, single-arm, efficacy/safety trial demonstrated that evidence of increased biomarkers associated with T cell chemotaxis and cytolytic function was seen when combining Ampligen, pembrolizumab and cisplatin. It is critical to note that increases of these biomarkers in the tumor microenvironment have been correlated with favorable tumor responses. All told, the study has seen an Objective Response Rate (ORR) 38.5%; a study of pembrolizumab alone in the treatment of advanced recurrent ovarian cancer found ORR of 8.1% and 9.9% across two cohorts. We believe that the positive data makes this patent have heightened potential. Similar patents are pending in other countries.
| ● | Stage 4 Metastatic Triple Negative Breast Cancer - Phase 1 study of metastatic triple-negative breast cancer using chemokine modulation therapy, including Ampligen and pembrolizumab. Eight patients were enrolled and 6 patients were evaluable. https://www.clinicaltrials.gov/ct2/show/NCT03599453. The key findings announced April 2022 included: |
| ○ | The pre-determined primary endpoint of efficacy was met (increase in CD8 in TME). | |
| ○ | Uniform increase of immune markers upon treatment was observed: CD8 mRNA (6.1-fold; p-0.034), GZMB mRNA (3.5-fold; p=0.058), ratios of CD8 /FOXP3 and GZMB/FOXP3 (5.7-fold; p=0.036, and 7.6-fold; p=0.024 respectively), thus successfully meeting the pre-determined primary endpoint in the study (increase in CD8 in TME). | |
| ○ | In addition, an increase in CTL attractants CXCL10 (2.6-fold; p=0.104) and CCL5 (3.3-fold; p=0.019) was observed. In contrast, Treg marker FOXP3 or Treg attractants CCL22 or CXCL12 were not enhanced. | |
| ○ | Three patients had stable disease lasting 2.4, 2.5 and 3.8 months, as of data cut off September 1, 2021. | |
| ○ | An additional patient (non-evaluable) had a partial response (breast tumor autoamputation) with massive tumor necrosis in the post-CKM biopsy. |
| ● | Stage 4 Colorectal Cancer Metastatic to the Liver - Phase 2a study of Ampligen as a component of chemokine modulatory regimen on colorectal cancer metastatic to liver; recruitment has been completed; 19 patients were enrolled and 12 patients were evaluable for the primary endpoint https://clinicaltrials.gov/ct2/show/NCT03403634. The key findings announced April 2022 included: |
| ○ | The study’s primary endpoint was met, evidenced by increased CD8a expression post-treatment (p=0.046). | |
| ○ | Saw increase in the CD8a/CD4 (p=0.03), CD8a/FOXP3 (p<0.01) and GZMB/FOXP3 (p<0.01) ratios. | |
| ○ | The expression of CTL-attracting chemokines CCL5 (p=0.08), CXCL9 (p=0.05), and CXCL10 (p=0.06) were increased, while expression of the Treg/MDSC attractant CXCL12 (p=0.07) was decreased post-treatment. |
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| ○ | Median OS was 10.5 (90% CI 2.2-15.2) months, and the median PFS was 1.5 (90% CI 1.4, 1.8) months. | |
| ○ | No tumor responses were seen. The treatment was well tolerated. Of all enrolled patients (N=19), adverse events were noted in 74% of patients, with the most common being fatigue (58%). Grade 3 or higher adverse events were rare (5%). |
| ● | Early-Stage Prostate Cancer - Phase 2 study investigating the effectiveness and safety of aspirin and Ampligen with or without interferon-alpha 2b (Intron A) compared to no drug treatments in a randomized three-arm study of patients with prostate cancer before undergoing radical prostatectomy. Patient enrollment has been initiated in this study designed for up to 45 patients. https://clinicaltrials.gov/ct2/show/NCT03899987 | |
| ● | Early-Stage Triple Negative Breast Cancer - Phase 1 study of chemokine modulation plus neoadjuvant chemotherapy in patients with early-stage triple negative breast cancer has received FDA authorization; the objective of this study is to evaluate the safety and tolerability of a combination of Ampligen, celecoxib with or without Intron A, when given along with chemotherapy; the goal of this approach is to increase survival. Interim results announced in March 2022 detailed data gathered from evaluating paclitaxel’s impact on chemokine production in the human breast tumor microenvironment (TME) and the ability of a chemokine modulatory regimen (CKM) of Ampligen and Interferon-α to mitigate potentially undesirable aspects of taxane chemotherapy. Based on the results, we believe that the combination chemokine modulatory regimen including Ampligen has the potential to mitigate undesirable aspects of taxane chemotherapy. Investigators are currently analyzing data. https://clinicaltrials.gov/ct2/show/NCT04081389 | |
| ● | Refractory Melanoma — Roswell Park Comprehensive Cancer Center (“Roswell Park”), in a clinical trial fully funded by the National Cancer Institute (NCI), has commenced patient enrollment in its Phase 2 study in subjects with primary PD-1/PD-L1 resistant melanoma. The Phase 2 study will evaluate type-1 polarized dendritic cell (αDC1) vaccine in combination with tumor-selective chemokine modulation (“CKM”) comprised of Interferon alpha 2b, Ampligen (rintatolimod) and Celecoxib. Up to 24 patients are to be enrolled (See: https://www.clinicaltrials.gov/show/NCT04093323). |
Additional Progress and Analysis Related to Pancreatic Cancer
In January 2017, the EAP established under our agreement with myTomorrows to enable access of Ampligen to ME/CFS patients was extended to pancreatic cancer patients beginning in the Netherlands. myTomorrows is our exclusive service provider in Europe and Turkey and will manage all EAP activities relating to the pancreatic cancer extension of the program. In February 2018, the agreement with myTomorrows was extended to cover Canada to treat pancreatic cancer patients, pending government approval. There have been no physician requests to date that would cause the program to move forward with the approval process.
A total of 42 pancreatic cancer patients initially received treatment with Ampligen immuno-oncology therapy under the EAP program at Erasmus MC in the Netherlands; that initial program has since continued to expand and proceed with additional patients to be treated with Ampligen Supervised by Prof. C.H.J. van Eijck, MD. The team at Erasmus MC in September 2020 reported data which demonstrated a statistically significant positive survival benefit when using Ampligen in patients with locally advanced or metastatic pancreatic cancer after systemic chemotherapy, compared with historical control patients. We are working with our Contract Research Organization, Amarex Clinical Research LLC, to seek FDA “fast-track.” We have applied for fast-track status; have received denials to date; and are currently working through the FDA process to provide all the materials and information required to achieve fast-track status. The IND authorization to proceed with the Phase 2 pancreatic cancer clinical trial has been received with potential sites in the Netherlands at Erasmus MC under Prof. C.H.J. van Eijck, and also at major cancer research centers in the United States such as The Buffett Cancer Center at the University of Nebraska Medical Center (UNMC).
In January 2023, we entered into an external sponsored collaborative clinical research agreement with Erasmus MC and AstraZeneca. Under the agreement, Erasmus MC is planning to perform an investigator-initiated clinical study, entitled “Combining anti-PD-L1 immune checkpoint inhibitor durvalumab with TLR-3 agonist rintatolimod in patients with metastatic pancreatic ductal adenocarcinoma for therapy effect. DURIPANC Study,” in which it will use both study drugs provided by AstraZeneca and AIM ImmunoTech.
Additionally:
| ● | In December 2020, the FDA granted Ampligen Orphan Drug Designation status for the treatment of pancreatic cancer. The Orphan Drug Designation program provides orphan status to drugs and biologics which are defined as those intended for the treatment, prevention or diagnosis of a rare disease or condition, which is one that affects less than 200,000 persons in the United States or meets cost recovery provisions of the act. The status helps incentivize the treatment of therapies to treat unmet medical needs by providing a company with seven years of exclusivity rights once a drug reaches market. |
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| ● | In February 2021, our subsidiary, NV Hemispherx Biopharma Europe, received formal notification from the European Commission (“EC”) granting Orphan Medicinal Product Designation for Ampligen as a treatment for pancreatic cancer. Orphan products, once commercially approved in the European Union (“EU”), receive benefits including up to ten years of protection from market competition from similar medicines with similar active component and indication for use that are not shown to be clinically superior. |
In June 2021, Ampligen was featured in a publication containing state-of-the-art methodologies in the peer-reviewed medical journal Cancers as a potential treatment option for cancer patients who are infected with SARS-CoV-2. The study’s authors stated that Ampligen has the potential to reduce the severity of the deadly respiratory disease COVID-19. According to laboratory data presented in the publication, “Rintatolimod [Ampligen] activated the innate and the adaptive immune systems by activating a cascade of actions in human pancreatic cancer cells”, including:
| ● | Stimulation of interferon regulatory factors and activation of the interferon signaling pathway, | |
| ● | Production of immunomodulatory activity and | |
| ● | Induction of the expression of MHC class I and II histocompatibility |
The full journal article is titled: “Rintatolimod Induces Antiviral Activities in Human Pancreatic Cancer Cells: Opening for an Anti-COVID-19 Opportunity in Cancer Patients?” Cancers is a peer-reviewed, open access journal of oncology published semimonthly online by MDPI. The study’s authors include Prof. C.H.J. van Eijck, MD, PhD, the lead investigator at Erasmus Medical Center in the Netherlands.
In October 2021, we and Amarex submitted an IND application with the FDA for a planned Phase 2 study of Ampligen as a therapy for locally advanced or metastatic late-stage pancreatic cancer. In December 2021, the FDA responded with a Clinical Hold on the proposed study. We submitted our response to the FDA in February 2022. In March 2022, we received notification from the FDA that the Clinical Hold was released and cleared, meaning that we are now able to proceed with the study specifically to treat locally advanced pancreatic cancer patients. In August 2022, we received IRB approval of the trial protocol and so announced the trial’s commencement.
Positive data was published in March 2022 in a manuscript titled, “Rintatolimod (Ampligen®) enhances numbers of peripheral B cells and is associated with longer survival in patients with locally advanced and metastasized pancreatic cancer pre-treated with FOLFIRINOX: a single-center named patient program,” in Cancers Special Issue: Combination and Innovative Therapies for Pancreatic Cancer. In the single-center, named-patient program, patients with locally advanced pancreatic cancer (LAPC) or metastatic disease were treated with Ampligen for 6 weeks, at 2 doses per week with 400 mg per infusion. The study found that Ampligen improved the median survival of these patients. The study’s primary endpoints were the Systemic Immune-Inflammation Index (SIII), the Neutrophils to Lymphocyte Ratio (NLR), and absolute counts of 18 different populations of circulating immune cells as measured by flow cytometry. Secondary endpoints were progression-free survival (PFS) and overall survival (OS). The median overall survival in the Ampligen group was 19 months, compared to a historical control group and subgroup (7.5 and 12.5, respectively) that did not receive Ampligen.
Also in March 2022, we announced that study data evaluating the direct effects of Ampligen on human pancreatic ductal adenocarcinoma (PDAC) cells was accepted for presentation at the 15th Annual International Hepato-Pancreato-Biliary Association World Congress in New York, NY. For the study, three PDAC cell lines (CFPAC-1, MIAPaCa-2, and PANC-1) were treated with various concentrations of Ampligen and their corresponding vehicle control. The proliferation and migration effects were examined using in-vitro assays and the molecular effect was examined by targeted gene expression profiling. Additionally human PDAC samples were used to validate the expression of toll-like receptor 3 (TLR3) by immunohistochemistry. Results from the study demonstrated Ampligen decreased the proliferation and migration ability of CFPAC-1 cells. In addition, it decreased the proliferation of MIAPaCa-2 cells and the migration of PANC-1 cells. However, it did not have a dual effect in MIAPaCa-2 and PANC-1 cells. Interestingly, TLR3 was highly expressed in CFPAC-1 cells, low expressed in MIAPaCa-2 and not expressed in PANC-1. Gene expression analysis revealed the upregulation of interferon-related genes, chemokines, interleukins and cell cycle regulatory genes. The heterogeneity of TLR3 expression was confirmed in human PDAC samples. Based on these results, treating pancreatic cancer with Ampligen may have a direct anti-tumor effect in pancreatic cancer cells expressing TLR-3.
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Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS)
Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS), also known as Chronic Fatigue Immune Dysfunction Syndrome (“CFIDS”) and Chronic Fatigue Syndrome (CFS), is a serious and debilitating chronic illness and a major public health problem. ME/CFS is recognized by both the government and private sector as a significant unmet medical need, including the U.S. National Institutes of Health (“NIH”), FDA and the CDC. The CDC states on its website at https://www.cdc.gov/me-cfs/ that “Myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS) is a serious, long-term illness that affects many body systems. People with ME/CFS are often not able to do their usual activities. At times, ME/CFS may confine them to bed. People with ME/CFS have severe fatigue and sleep problems. ME/CFS may get worse after people with the illness try to do as much as they want or need to do. This symptom is called post-exertional malaise (PEM). Other symptoms can include problems with thinking and concentrating, pain, and dizziness.”
Many severe ME/CFS patients become completely disabled or totally bedridden and are afflicted with severe pain and mental confusion even at rest. ME/CFS is characterized by incapacitating fatigue with profound exhaustion and extremely poor stamina, sleep difficulties and problems with concentration and short-term memory. It is also accompanied by flu-like symptoms, pain in the joints and muscles, tender lymph nodes, sore throat and new headaches. A distinctive characteristic of the illness is a worsening of symptoms following physical or mental exertion, which do not subside with rest.
The high number of younger people being hospitalized for COVID-19 suggests considerable numbers of people in the prime of their lives may have a COVID-induced ME/CFS-like illness in their future. According to a 2016 journal article, the estimated annual cost of lost productivity related to ME/CFS was $9-37 billion in the United States, and for direct medical costs it was $9-14 billion.
In June of 2020, we filed a provisional patent application for, among other discoveries, the use of Ampligen as a potential early-onset therapy for the treatment of COVID-19 induced chronic fatigue.
Many survivors of the first SARS-CoV-1 epidemic in 2003 continued to report chronic fatigue, difficulty sleeping and shortness of breath months after recovering from the acute illness. “After one year, 17% of patients had not returned to work and 9% more had not returned to their pre-SARS work levels,” according to Simmaron Research. Now there is increasing evidence that patients with COVID-19 can develop a similar, ME/CFS-like illness. These patients are commonly referred to as “Long Haulers.”
In October 2020, we received IRB approval for the expansion of the AMP-511 Expanded Access Program clinical trial for ME/CFS to include patients previously diagnosed with SARS-CoV-2 following clearance of the virus, but who still demonstrate chronic fatigue-like symptoms. For more information on our AMP-511 Expanded Access Program, please see “OUR PRODUCTS: Ampligen” above.
In November 2020, we announced the publication of statistically significant data detailing how Ampligen could have a considerable positive impact on people living with ME/CFS when administered in the early stages of the disease. The data were published in PLOS ONE, a peer-reviewed open access scientific journal published by the Public Library of Science. AIM researchers found that the TLR3 agonist Ampligen substantially improved physical performance in a subset of ME/CFS patients.
As noted above in Overview; General; Ampligen as a treatment for ME/CFS and Post-COVID Conditions, we have long been focused on seeking the FDA’s approval for the use of Ampligen to treat ME/CFS. In fact, in February 2013, we received a CRL from the FDA for our Ampligen NDA for ME/CFS, stating that we should conduct at least one additional clinical trial, complete various nonclinical studies and perform a number of data analyses.
While developing a comprehensive response to the FDA and a plan for a confirmatory trial for the FDA NDA, we proceeded independently in Argentina and, in August 2016, we received approval of an NDA from ANMAT for commercial sale of Ampligen in the Argentine Republic for the treatment of severe CFS. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. On June 10, 2020, we received import clearance from ANMAT to import the first shipment of commercial grade vials of Ampligen into Argentina. The next steps in the commercial launch of Ampligen include ANMAT conducting a final inspection of the product and release tests before granting final approval to begin commercial sales. This testing and approval process is currently delayed due to the COVID-19 pandemic and ANMAT’s internal processes. The ongoing impact of COVID-19 in Argentina is taxing the nation’s health care system and is, understandably, the main priority of its regulators. Once final approval by ANMAT is obtained, GP Pharm will begin distributing Ampligen in Argentina.
We plan on a comprehensive follow through with the FDA regarding the use of Ampligen as a treatment for ME/CFS. We have learned a great deal since the FDA’s CRL and plan to adjust our approach to concentrate on specific ME/CFS symptoms. Responses to the CRL and a proposed confirmatory trial are being worked on now by our R&D team and consultants.
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Ampligen as a Potential Antiviral
Following the SARS-CoV-1 outbreak in 2002-03, Ampligen exhibited excellent antiviral properties and protective survival effect in NIH-contracted studies of SARS-CoV-1-infected mice, which is very similar to SARS-CoV-2, the novel virus that causes COVID-19.
| ● | The Barnard 2006 study (https://journals.sagepub.com/doi/abs/10.1177/095632020601700505) found that Ampligen reduced virus lung levels to below detectable limits. | |
| ● | The Day 2009 study (https://www.sciencedirect.com/science/article/pii/S0042682209005832) found that, instead of 100% mortality, there was 100% protective survival using Ampligen. |
We compared key transcription regulatory sequences of SARS-CoV-1 to SARS-CoV-2 and found significant similarities, suggesting highly probable extension of the antiviral effects of Ampligen in the earlier NIH-contracted SARS experiments to COVID-19. The SARS-CoV-2 virus – which causes COVID-19 – shares important genomic and pathogenic similarities with SARS-CoV-1 (hence its name). Since Ampligen has shown antiviral activity against more distantly related coronaviruses, there was a reasonable probability that the antiviral effects of Ampligen against SARS-CoV-1 will likely extend to SARS-CoV-2, and as discussed below, recently, Ampligen has demonstrated ex vivo antiviral activity against SARS-CoV-2. We believe that this creates a compelling case for clinical trials to evaluate Ampligen as a potential tool in the fight against COVID-19.
Since the late 2019 outbreak of SARS-CoV-2, we have been actively engaged in determining whether Ampligen could be an effective treatment for this virus or could be part of a vaccine. We believe that Ampligen has the potential to be both an early-onset treatment for and prophylaxis against SARS-CoV-2. We believe that prior studies of Ampligen in SARS-CoV-1 animal experimentation may predict similar protective effects against the new virus.
In February 2020, we filed three provisional patent applications related to Ampligen in our efforts toward joining the global health community in the fight against the deadly coronavirus (See: https://aimimmuno.com/press-release/aim-immunotech-files-provisional-patent-application-for-the-use-of-ampligenr-as-a-potential-therapy-for-covid-19-induced-chronic- fatigue/). Our three provisional patent applications include: 1) Ampligen as a therapy for the coronavirus; 2) Ampligen as part of a proposed intranasal universal coronavirus vaccine that combines Ampligen with inactivated coronavirus, conveying immunity and cross-protection and; 3) a high-volume manufacturing process for Ampligen. Under the Patent Cooperation Treaty of 1970, which provides international protections for patents, these three provisional patent applications were converted in to two international patent applications based on the date of their filings.
In April 2020, we entered into a Material Transfer and Research Agreement (“MTA”) with Shenzhen Smoore Technology to study the utilization of an innovative Smoore inhalation delivery device and Ampligen as a potential treatment approach for the SARS-CoV-2 pandemic. The MTA was extended for two years in May 2021. Due to continuing delays and other obstacles related to importing Ampligen to China, we ended our contract with Smoore on August 10, 2022.
In August 2020, we contracted Amarex to act as our Clinical Research Organization and provide regulatory support with regard to a possible clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal delivery.
Beginning in April 2020, we entered into confidentiality and non-disclosure agreements with numerous companies for the potential outsourcing of the production of polymer, enzyme, placebo as well as Ampligen, and one Contract Research Organization, Amarex, which will provide regulatory and monitoring support related to a clinical trial testing Ampligen’s intranasal safety and potential as a COVID-19 prophylaxis via intranasal delivery.
In May 2020, the FDA authorized an IND for Roswell Park to conduct a Phase 1/2a study of a regimen of Ampligen and interferon alpha in cancer patients with COVID-19 infections. This clinical trial, sponsored by Roswell Park in collaboration with us, will test the safety of this combination regimen in patients with cancer and COVID-19, and the extent to which this therapy will promote clearance of the SARS-CoV-2 virus from the upper airway. Several subjects have been treated. It is planned that the phase 1/2a study will enroll up to 44 patients in two stages. Phase 1 will see 12-24 patients receiving both Ampligen and interferon alpha-2b at escalating doses. Once that initial phase is complete, further study participants will be randomized to two arms: one receiving the two-drug combination and a control group who will not receive Ampligen or interferon alpha but will receive best available care. We are a financial sponsor of the study and will provide Ampligen at no charge for this study. In November 2020, the first patient in the study had been enrolled and treated. This study was amended to add 20 patients, with 10 randomized to receive a single dose of Ampligen and 10 patients to receive current best therapies. (See clinicaltrials.gov/NCT04379518). Due to a shortage of qualifying subjects with COVID-19 and cancer as a result of the positive impact of vaccinations and treatments for COVID-19, Roswell is seeking approval to expand the qualifying subject criteria to include other diseases lethal to immuno-compromised cancer patients, such as influenza. Accordingly, the study is temporarily suspended while seeking said approvals.
We also entered into a specialized services agreement with Utah State University and have supplied Ampligen to support the University’s Institute for Viral Research in its research into SARS-CoV-2. The Utah State results show that Ampligen was able to decrease SARS-CoV-2 infectious viral yields by 90% at clinically achievable intranasal Ampligen dosage levels.
In October 2020, we received IRB approval for the expansion of the AMP-511 Expanded Access Program clinical trial for ME/CFS to include patients previously diagnosed with SARS-CoV-2, but who still demonstrate chronic fatigue-like symptoms. Patients in the trial are treated with our flagship pipeline drug Ampligen. In January 2021, we commenced with the treatment of the first previously diagnosed COVID-19 patient with long-COVID symptoms (i.e., Long Hauler) also known as Post-COVID Conditions in the AMP-511 study. Enrollment of post-COVID patients continues in the study.
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In January 2021, we entered into a Sponsor Agreement with CHDR to manage a Phase 1 randomized, double-blind study to evaluate the safety and activity of repeated intranasal administration of Ampligen. AIM funded and sponsored the study. This study was designed to assess the safety, tolerability and biological activity of repeated administration of Ampligen intranasally. A total of 40 healthy subjects received either Ampligen or a placebo in the trial, with the Ampligen given at four escalating dosages across four cohorts, to a maximum level of 1,250 micrograms. All patients had completed the study by June 2021 and the study is completed. The Final Safety Report reported no Serious or Severe Adverse Events at any dosage level. We believe that the trial is a critical step in our ongoing efforts to develop Ampligen as a potential prophylaxis or treatment for COVID-19 and other respiratory viral diseases. Amarex provided us with monitoring support during the trial.
Additionally, we filed two COVID-19-related provisional patent applications in the third quarter of 2021. In August, we filed an application for Ampligen as both an intranasal and an intravenous therapy for what we describe as Post-COVID conditions. The people suffering from Post-COVID conditions, including some young adults, can be afflicted with severe difficulties in concentrating; serious memory problems; and the inability to live an active lifestyle, to work and even to perform everyday tasks. Early data has demonstrated that patients with symptoms of Post-COVID conditions being treated with Ampligen in the ongoing AMP-511 Expanded Access Program have reported improvements in fatigue symptoms. Similarly, in ME/CFS, data supports the claim that Ampligen improves fatigue symptoms. Then in September, we filed a patent application for Ampligen as a potential early-onset intranasal therapy designed to enhance and expand infection-induced immunity, epitope spreading, cross-reactivity and cross-protection in patients exposed to a wide range of RNA respiratory viruses, such as influenza, Rhinoviruses and SARS-CoV-2.
In addition to securing these two provisional patent applications, we also moved forward with proposed studies in these areas and with Pre-Investigational New Drug Applications in September 2021. One pre-IND was for a Phase 2, two-arm, randomized, double-blind, placebo-controlled, multicenter study to evaluate the efficacy and safety of Ampligen in patients experiencing Post-COVID conditions (originally referred to as Post-COVID Cognitive Dysfunction (PCCD) and being revised to Post-COVID conditions).
In October 2022, our IND application cleared the FDA approval process and we are proceeding with a Phase 2 study evaluating Ampligen as a therapeutic for patients with post-COVID conditions (“AMP-518”). Additional comments were received from the FDA, which have been addressed in an amended protocol approved by the IRB on March 30, 2023.
Other Diseases
In Europe, the EMA has approved the Orphan Medicinal Products Designation for Ampligen as a potential treatment of Ebola virus disease and for Alferon N Injection as a potential treatment of MERS.
We concluded our series of collaborations designed to determine the potential effectiveness of Ampligen and Alferon N Injection as potential preventive and/or therapeutic treatments for Ebola-related disorders. Although we believe that the threat of both MERS and Ebola globally may reemerge in the future, it appears that the spread of these disorders has diminished.
In April 2021, we entered into an MTA with the University of Cagliari Dipartimento di Scienze della Vita e dell’Ambiente (“UNICA”), an educational institution, under the laws of Italy, located in Monserrato (Cagliari), Italy. The MTA relates to the research and development of the effects of Ampligen and its ability to induce interferon production in several cell lines, and also on the ability of the Ebola virus protein VP35 to bind to viral dsRNA and impede interferon’s upregulation and activity, and on Ampligen’s ability to reverse VP35 inhibition of interferon production in biological systems. The research is active and ongoing.
In May 2021, we filed a U.S. Provisional Patent Application for Ampligen as a potential therapeutic to possibly slow, halt, or reverse the progression of Alzheimer’s disease.
In November 2022, we received notice that the FDA had granted Orphan Drug Designation to Ampligen for the treatment of Ebola virus disease.
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Alferon N Injection®
Alferon N Injection is the registered trademark for our injectable formulation of natural alpha interferon. Alferon N Injection is the only natural-source, multi-species alpha interferon currently approved for sale in the United States and Argentina for the intralesional (within lesions) treatment of refractory (resistant to other treatment) or recurring external genital warts in patients 18 years of age or older. Alferon N Injection is also approved in Argentina for the treatment of refractory patients that failed or were intolerant to treatment with recombinant interferons. Certain types of human papilloma viruses (“HPV”) cause genital warts, a sexually transmitted disease (“STD”). According to the CDC, HPV is the most common sexually transmitted infection, with approximately 79 million Americans — most in their late teens and early 20s — infected with HPV. In fact, the CDC states that “HPV is so common that nearly all sexually active men and women get the virus at some point in their lives.” Although they do not usually result in death, genital warts commonly recur, causing significant morbidity and entail substantial health care costs.
Interferons are a group of proteins produced and secreted by cells to combat diseases. Researchers have identified four major classes of human interferon: alpha, beta, gamma and omega. Alferon N Injection contains a multi-species form of alpha interferon. The worldwide market for injectable alpha interferon-based products has experienced rapid growth and various alpha interferon injectable products are approved for many major medical uses worldwide. Alpha interferons are manufactured commercially in three ways: by genetic engineering, by cell culture, and from human white blood cells. All three of these types of alpha interferon are or were approved for commercial sale in the United States. Our natural alpha interferon is produced from human white blood cells. The potential advantages of natural alpha interferon over recombinant (i.e., synthetic) interferon produced and marketed by other pharmaceutical firms may be based upon their respective molecular compositions. Natural alpha interferon is composed of a family of proteins containing many molecular species of interferon. In contrast, commercial recombinant alpha interferon products each contain only a single species. Researchers have reported that the various species of interferons may have differing antiviral activity depending upon the type of virus. Natural alpha interferon presents a broad complement of species, which we believe may account for its higher activity in laboratory studies. Natural alpha interferon is also glycosylated (i.e., partially covered with sugar molecules). Such glycosylation is not present on the currently U.S.-marketed recombinant alpha interferons. We believe that the absence of glycosylation may be in part responsible for the production of interferon-neutralizing antibodies seen in patients treated with recombinant alpha interferon. Although cell culture-derived interferon is also composed of multiple glycosylated alpha interferon species, the types and relative quantity of these species are different from our natural alpha interferon.
Alferon N Injection [Interferon alfa-n3 (human leukocyte derived)] is a highly purified, natural-source, glycosylated, multi-species alpha interferon product. There are essentially no neutralizing antibodies observed against Alferon N Injection to date and the product has a relatively low side-effect profile. The recombinant DNA derived alpha interferon formulations have been reported to have decreased effectiveness after one year of treatment, probably due to neutralizing antibody formation (See “Manufacturing” and “Marketing/Distribution” sections below for more details on the manufacture and marketing/distribution of Alferon N Injection). The production of new Alferon N Injection Active Pharmaceutical Ingredient, or API, is currently on hold. We do not know when, if ever, our products will be generally available for commercial sale for any indication.
MANUFACTURING
ANMAT in Argentina approved Ampligen for commercial distribution for the treatment of CFS in 2016. Shipment of the drug product to Argentina was initiated in 2018 to complete the release testing by ANMAT needed for commercial distribution. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. In June 2020, we received import clearance from ANMAT to import the first shipment of commercial grade vials of Ampligen into Argentina. We are currently working with GP Pharm on the commercial launch of Ampligen in Argentina (See “Our Products; Ampligen” above).
Following our approval in Argentina, in 2017 we engaged Jubilant HollisterStier (“Jubilant”) to be our authorized CMO for Ampligen. Two lots of Ampligen consisting of more than 16,000 units were manufactured and released in 2018; these lots have been designated for human use in the United States in the cost recovery CFS program and for expanded oncology clinical trials. The production of additional polymer (Ampligen intermediates) took place in 2019 at our New Brunswick facility. Additionally, Jubilant manufactured two more lots of Ampligen in December 2019 and January 2020. The current manufactured lots of Ampligen have been fully tested and released for commercial product launch in Argentina and for clinical trials. In addition, we have supplied GP Pharm with the Ampligen required for testing and ANMAT release. Once final approval by ANMAT is obtained, we anticipate that GP Pharm will begin distributing Ampligen in Argentina.
In December 2020, we added Pii as a “Fill & Finish” provider to enhance our capacity to produce Ampligen. This addition amplifies our manufacturing capability by providing redundancy and cost savings. The contracts augment our existing fill and finish capacity. We are prepared to initiate the production of additional Ampligen when and if needed.
In May 2021, we exercised our option to re-purchase the New Brunswick manufacturing facility, pursuant to the terms of the March 2018 sale and lease-back agreement. We thereafter sold certain equipment and machinery that we determined to be obsolete and no longer needed for current or future manufacturing. On March 3, 2022, we entered into an Agreement of Sale and Purchase with Acellories, Inc. as purchaser pursuant to which we would sell our property for $3.9 million; we have kept some space specifically for Alferon activity. The sale was completed on November 1, 2022 for $3.7 million net of normal closing cost.
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In June 2022 we entered into a lease agreement with the New Jersey Economic Development Authority for a 5,210 square-foot, state-of-the-art R&D facility at the New Jersey Bioscience Center (NJBC), primarily consisting of two separate laboratory suites. The lease commenced on July 1, 2022, and runs through August 31, 2027, but can be extended for an additional five-year period. The facility is AIM’s operations, research and development center.
Our business plan calls for the utilization of one or more CMOs to produce Ampligen API. While we believe we have sufficient Ampligen API to meet our current needs, we are also continually exploring new efficiencies so as to maximize our ability to fulfill future obligations. In this regard, in April 2021, we approved a proposal from Polysciences for the manufacture of our Poly I and Poly C12U polynucleotides and associated test methods at Polysciences’ Warrington, PA location to enhance our capacity to produce the polymer precursors to the drug Ampligen. We are utilizing Polysciences’ expertise to refine our approach to polymer production. Additionally, we continue to be open to the possibility of agreements with other CMOs, so as to create redundancy and to meet the potential need for larger quantities of API.
Our second product, Alferon N Injection, is approved by the FDA for commercial sales in the United States for the treatment of genital warts. It is also approved by ANMAT in Argentina for commercial sales for the treatment of genital warts and in patients who are refractory to treatment with recombinant interferons. Commercial sales of Alferon N Injection in the United States will not resume until new batches of commercial filled and finished product are produced and released by the FDA. While our New Brunswick facility has FDA approval under the Biologics License Application (“BLA”) for Alferon N Injection, and we maintain a certain amount of space at this facility, we will need the FDA’s approval to release commercial product once we have identified our new manufacturing approach and submitted satisfactory stability and quality release data; the FDA has conducted any required inspections; and the FDA has approved our new manufacturing process. Currently, we are not manufacturing Alferon N Injection and there is no definitive timetable to resume production.
Licensing/Collaborations/Joint Ventures
To enable potential availability of Ampligen to patients on a worldwide basis, we have embarked on a strategy to license the product and/or to collaborate and/or create a joint venture with companies that have the demonstrated capabilities and commitment to successfully gain approval and commercialize Ampligen in their respective global territories of the world. Ideal partners would have the following characteristics: well-established global and regional experience and coverage; robust commercial infrastructure; a strong track record of successful development and registration of in-licensed products; and a therapeutic area fit (ME/CFS, immuno-oncology, e.g.).
MARKETING/DISTRIBUTION
In May 2016, we entered into a five-year exclusive Renewed Sales, Marketing, Distribution and Supply Agreement (the “Agreement”) with GP Pharm. Under this Agreement, GP Pharm was responsible for gaining regulatory approval in Argentina for Ampligen to treat severe CFS in Argentina and for commercializing Ampligen for this indication in Argentina. We granted GP Pharm the right to expand rights to sell this experimental therapeutic into other Latin America countries based upon GP Pharm achieving certain performance milestones. We also granted GP Pharm an option to market Alferon N Injection in Argentina and other Latin America countries (See “Our Products; Ampligen” above). The GP Pharm contract was extended in May 2021, and will now end on May 24, 2024. In August 2021, ANMAT granted a five-year extension to a previous approval to sell and distribute Ampligen to treat severe CFS in Argentina. This extends the approval until 2026.
In May 2016, we entered into a five-year agreement (the “Impatients Agreement”) with Impatients, N.V. (“myTomorrows”), a Netherlands-based company, for the commencement and management of an EAP in Europe and Turkey (the “Territory”) related to ME/CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor in the Territory, is performing EAP activities. These activities will be directed to (a) the education of physicians and patients regarding the possibility of early access to innovative medical treatments not yet the subject of a Marketing Authorization (regulatory approval) through named-patient use, compassionate use, expanded access and hospital exemption, (b) patient and physician outreach related to a patient-physician platform, (c) the securing of Early Access Approvals (exemptions and/or waivers required by regulatory authorities for medical treatments prior to Marketing Authorization) for the use of such treatments, (d) the distribution and sale of such treatments pursuant to such Early Access Approvals, (e) pharmacovigilance (drug safety) activities and/or (f) the collection of data such as patient-reported outcomes, doctor-reported experiences and registry data. We are supporting these efforts and supplying Ampligen to myTomorrows at a predetermined transfer price. In the event that we receive Marketing Authorization in any country in the Territory, we will pay myTomorrows a royalty on products sold. Pursuant to the Impatients Agreement, the royalty would be a percentage of Net Sales (as defined in the Impatients Agreement) of Ampligen sold in the Territory where Marketing Authorization was obtained. The formula to determine the percentage of Net Sales will be based on the number of patients that are entered into the EAP. We believe that disclosure of the exact maximum royalty rate and royalty termination date could cause competitive harm. However, to assist the public in gauging these terms, the actual maximum royalty rate is somewhere between 2% and 10% and the royalty termination date is somewhere between five and fifteen years from the First Commercial Sale of a product within a specific country. The parties established a Joint Steering Committee comprised of representatives of both parties to oversee the EAP. No assurance can be given that activities under the EAP will result in Marketing Authorization or the sale of substantial amounts of Ampligen in the Territory. The agreement was automatically extended for a period of 12 months on May 20, 2021, and again for an additional 12 months on May 20, 2022.
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In January 2017, ANMAT granted a five-year extension to a previous approval to sell and distribute Alferon N Injection (under the brand name “Naturaferon”) in Argentina. This extends the approval until 2022. A request to extend the approval beyond 2022 has been filed and is still under review. In February 2013, we received ANMAT approval for the treatment of refractory patients that failed or were intolerant to treatment with recombinant interferon, with Naturaferon in Argentina.
In January 2017, the EAP through our agreement with myTomorrows designed to enable access of Ampligen to ME/CFS patients was extended to pancreatic cancer patients beginning in the Netherlands. myTomorrows is our exclusive service provider in the Territory and will manage all EAP activities relating to the pancreatic cancer extension of the program.
In August 2017, we extended our agreement with Asembia LLC, formerly Armada Healthcare, LLC, to undertake the marketing, education and sales of Alferon N Injection throughout the United States. This agreement has expired. We are in discussions with Asembia about the possibility of continuing the relationship, while also exploring the possibility of working with other, similar companies. However, we do not foresee an immediate need for this service and so may push this search further out in our expected timeline.
In February 2018, we signed an amendment to the EAP with myTomorrows. This amendment extended the Territory to cover Canada to treat pancreatic cancer patients, pending government approval. In March 2018, we signed an amendment to the EAP with myTomorrows, pursuant to which myTomorrows will be our exclusive service provider for special access activities in Canada for the supply of Ampligen for the treatment of ME/CFS.
In December 2020, we entered into a signed Letter of Agreement with myTomorrows for the delivery of Ampligen for the treatment of up to 16 pancreatic cancer patients. In November 2021, we entered into a signed Letter of Agreement with myTomorrows for the delivery of Ampligen for the treatment of up to an additional 5 pancreatic cancer patients. In March 2022, we entered into a signed Letter of Agreement with myTomorrows for the delivery of Ampligen for the treatment of up to an additional 10 pancreatic cancer patients. In November 2022, we entered into a signed Letter of Agreement with myTomorrows for the delivery of Ampligen for the treatment of up to an additional 10 pancreatic cancer patients.
COMPETITION
The major pharmaceutical competitors for Ampligen include Pfizer, GlaxoSmithKline, Merck & Co., Novartis and AstraZeneca. Biotech competitors include Baxter International, Fletcher/CSI, AVANT Immunotherapeutics, AVI BioPharma and Genta.
GOVERNMENT REGULATION
Regulation by governmental authorities in the U.S. and foreign countries is and will be a significant factor in the manufacture and marketing of Alferon N Injection products and our ongoing research and product development activities. Ampligen and other products developed from the ongoing research and product development activities will require regulatory clearances prior to commercialization. In particular, new drug products for humans are subject to rigorous pre-clinical and clinical testing as a condition for clearance by the FDA and by similar authorities in foreign countries. The process of seeking these approvals, and the ongoing process of compliance with applicable statutes and regulations, has and will continue to require the expenditure of substantial resources. Any failure by us or our collaborators or licensees to obtain, or any delay in obtaining, regulatory approvals could materially adversely affect the marketing of any products developed by us and our ability to receive product or royalty revenue. We have received Orphan Drug designation for certain therapeutic indications, which we believe might under certain conditions help to accelerate the process of drug development and commercialization. Alferon N Injection is only approved for use in intralesional treatment of refractory or recurring external genital warts in patients 18 years of age or older. Use of Alferon N Injection for other applications requires regulatory approval.
We are subject to various federal, state and local laws, regulations and recommendations relating to such matters as safe working conditions, laboratory and manufacturing practices, the experimental use of animals and the use of and disposal of hazardous or potentially hazardous substances, including infectious disease agents, used in connection with our research work.
For more information about the current status of Alferon N Injection and Ampligen, please see “Our Products” above.
HUMAN CAPITAL
As of December 31, 2022, we had personnel consisting of 22 full-time employees and two part-time employees. Five of the combined personnel are engaged in our research, development, clinical and manufacturing efforts, with 17 performing regulatory, general administration, data processing, including bio-statistics, financial and investor relations functions. We have no union employees.
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Employee Engagement
Our business results depend in part on our ability to successfully manage our human capital resources, including attracting, identifying, and retaining key talent. Factors that may affect our ability to attract and retain qualified employees include employee morale, our reputation, competition from other employers, and availability of qualified individuals. We believe our commitment to our human capital resources is an important component of our mission. We provide all employees with the opportunity to share their opinions in open dialogues with our human resources department and senior management.
Compensation, Benefits and Wellness
We offer fair, competitive compensation and benefits that support our employees’ overall wellness. Further, the health and wellness of our employees are critical to our success. While we have been successful in attracting skilled and experienced scientific personnel, there can be no assurance that we will be able to attract or retain the necessary qualified employees and/or consultants in the future.
| ITEM 1A: | Risk Factors |
The following cautionary statements identify important factors that could cause our actual results to differ materially from those projected in the forward-looking statements made in this Form 10-K. Please see “Special Note Regarding Forward Looking Statements and Summary Risk Factors” above.
Risks Associated with Our Business
The COVID-19 coronavirus or other global pandemics could adversely impact our business, including our clinical trials. We cannot predict the ultimate effects of the Covid-19 pandemic on our business.
The COVID-19 pandemic had and continues to have a major disruptive effect in the US and worldwide, including in countries in which there are planned or active clinical trial sites studying Ampligen. The COVID-19 pandemic or a future major pandemic could severely impact our business and clinical trials, including:
| ● | delays or difficulties in enrolling patients in our clinical trials; | |
| ● | delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; | |
| ● | diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials; | |
| ● | interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others; | |
| ● | limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; | |
| ● | delays in issuing reports, results and publishing papers; | |
| ● | delays in receiving approval from local regulatory authorities to initiate our planned clinical trials; | |
| ● | delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials; | |
| ● | interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our clinical trials; | |
| ● | changes in local regulations as part of a response to the COVID-19 coronavirus outbreak which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether; | |
| ● | delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and | |
| ● | refusal of the FDA to accept data from clinical trials in affected geographies outside the United States. |
As noted elsewhere in this Report, progress of our commercial launch in Argentina has been delayed due to pandemic factors. The ongoing impact of COVID-19 in Argentina is taxing the nation’s health care system and is, understandably, a main priority of its regulators.
While we are not able to estimate the effects of the COVID-19 outbreak or future pandemics, they may have a material adverse effect on our results of future operations, financial position and liquidity.
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We may require additional financing which may not be available.
The development of our products requires the commitment of substantial resources to conduct the time-consuming research, preclinical development, and clinical trials that are necessary to bring pharmaceutical products to market. As of December 31, 2022 we had approximately $34,190,000 in cash and cash equivalents. We believe, based on our current financial condition, that we have adequate funds to meet our anticipated operational cash needs and fund current clinical trials over approximately the next sixteen months. At present we do not generate any material revenues from our operations and we do not anticipate doing so in the near future. We may need to obtain additional funding in the future for new studies and/or if current studies do not yield positive results, require unanticipated changes and/or additional studies. In February 2022, the SEC declared our universal shelf registration statement on Form S-3 effective. Pursuant to that registration statement, we can sell up to $100 million of our securities and raise additional capital as needed in the future. No assurance can be given as to the amount of funds that could be raised pursuant to this registration statement or the potential dilution to current stockholders.
We will need to allocate capital to eventually commercialize and sell Ampligen and/or recommence sales of Alferon N Injection.
We believe, based on our current financial condition, that we have adequate funds to meet our anticipated operational cash needs and fund current clinical trials over approximately the next sixteen months. If our funds are not adequate, and we are subsequently unable to obtain additional funding, through joint venturing, sales of securities and/or otherwise, our ability to develop our products, commercially produce inventory or continue our operations may be materially adversely affected.
We may continue to incur substantial losses and our future profitability is uncertain.
As of December 31, 2022, our accumulated deficit was approximately $380,308. As with many biotechnology companies, we have not yet generated significant revenues from our products and may incur substantial and increased losses in the future. We cannot assure that we will ever achieve significant revenues from product sales or become profitable. We require, and will continue to require, the commitment of substantial resources to develop our products. We cannot assure that our product development efforts will be successfully completed or that required regulatory approvals will be obtained or that any products will be manufactured and marketed successfully, or be profitable.
Our drug and related technologies are investigational and subject to regulatory approval. If we are unable to obtain regulatory approval in a timely manner, or at all, our operations will be materially harmed and our stock adversely affected.
While we have received regulatory approval for the commercialization of Ampligen in Argentina (pending additional release testing and subsequent steps), all of our drugs and associated technologies, other than Alferon N Injection, are investigational in the U.S. and must receive prior regulatory approval by appropriate regulatory authorities for commercial distribution and sale and are currently legally available only through clinical trials in the U.S. with specified disorders. At present, Alferon N Injection is approved for the intralesional treatment of refractory or recurring external genital warts in patients 18 years of age or older. However, it is not at present available for purchase on the market. Use of Alferon N Injection for other indications will require regulatory approval in the United States and abroad.
Our products, including Ampligen, are subject to extensive regulation by numerous governmental authorities in the U.S. and other countries, including, but not limited to, the U.S. FDA, the Health Protection Branch (“HPB”) of Canada, the Agency for the European Medicines Agency (“EMA”) in Europe; and the Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica (“ANMAT”) in Argentina. Obtaining regulatory approvals is a rigorous and lengthy process and requires the expenditure of substantial resources. In order to obtain final regulatory approval of a new drug, we must demonstrate to the satisfaction of the regulatory agency that the product is safe and effective for its intended uses and that we are capable of manufacturing the product to the applicable regulatory standards. We require regulatory approval in order to market Ampligen or any other proposed product and receive product revenues or royalties. We cannot assure you that Ampligen will ultimately be demonstrated to be safe and efficacious. While Ampligen is authorized for use in clinical trials in the U.S., we cannot assure you that additional clinical trial approvals will be authorized in the United States or in other countries, in a timely fashion or at all, or that we will complete these clinical trials. In addition, although Ampligen has been authorized by the FDA for treatment use under certain conditions, including provision for cost recovery, there can be no assurance that such authorization will continue in effect.
While we received approval of our Argentinian NDA from ANMAT for commercial sale of rintatolimod (U.S. tradename: Ampligen) in the Argentine Republic for the treatment of severe ME/CFS, ANMAT approval is only an initial, but important, step in the overall successful commercialization of our product. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. However, there are a number of additional actions that must occur before we would be able to commence commercial sales in Argentina. For example, Ampligen is still in the process of release testing the product that has already been sent.
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The FDA’s regulatory review and approval process is extensive, lengthy, expensive and inherently uncertain. To receive approval for a product candidate, we must, among other things, demonstrate to the FDA’s satisfaction with substantial evidence from well-controlled pre-clinical and clinical trials that the product candidate is both safe and effective for each indication for which approval is sought. Before we can sell Ampligen for any use or promote Alferon N Injection for any use other than as Alferon N Injection for treatment of refractory or recurring genital warts, we will need to file the appropriate NDA with the FDA in the U.S. and the appropriate regulatory agency outside of the U.S. where we intend to market and sell such products. At present the only NDA we have filed with the FDA is the NDA for the use of Ampligen to treat CFS. The FDA issued a Complete Response Letter (“CRL”) in February 2013 for this NDA and provided recommendations to address certain outstanding issues before they could approve Ampligen for Commercial Sales. The Agency stated that the submitted data do not provide substantial evidence of efficacy of Ampligen for the treatment of CFS and that the data do not provide sufficient information to determine whether the product is safe for use in CFS due to the limited size of the safety database and multiple discrepancies within the submitted data. The FDA indicated that we needed to conduct additional work. Therefore, ultimate FDA approval, if any, may be delayed indefinitely and may require us to expend more resources than we have available. It is also possible that additional studies, if performed and completed, may not be successful or considered sufficient by the FDA for approval or even to make our applications approvable. If any of these outcomes occur, we may be forced to abandon one or more of our future applications for approval, which might significantly harm our business and prospects. As a result, we cannot predict if or when we might receive regulatory approval for the use of Ampligen to treat CFS or for the use of any other products. Even if regulatory approval from the FDA is received for the use of Ampligen to treat CFS or eventually, for the use of any other product, any approvals that we obtain could contain significant limitations in the form of narrow indications, patient populations, warnings, precautions or contra-indications or other conditions of use, or the requirement that we implement a risk evaluation and mitigation strategy. In such an event, our ability to generate revenues from such products could be greatly reduced and our business could be harmed.
If we are unable to gain necessary FDA approvals related to Ampligen and Alferon N Injection on a timely basis, or we are unable to generate the additional data, successfully complete inspections or obtain approvals as required by the FDA on a timely manner, or at all, or determine that any of our clinical studies are not cost/justified to undertake or if, for that or any other reason, Ampligen, Alferon N Injection or one of our other products or production processes do not receive necessary regulatory approval in the U.S. or elsewhere, our operations most likely will be materially and/or adversely affected.
Generally, obtaining approval of an NDA by the FDA, or a comparable foreign regulatory authority, is inherently uncertain. Even after completing clinical trials and other studies, a product candidate could fail to receive regulatory approval for many reasons, including the following:
| ● | not be able to demonstrate to the satisfaction of the FDA that our product candidate is safe and effective for any indication; | |
| ● | the FDA may disagree with the design or implementation of our clinical trials or other studies; | |
| ● | the results of the clinical trials or other studies may not demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; | |
| ● | the FDA may disagree with our interpretation of data from clinical trials or other studies; | |
| ● | the data collected from clinical trials and other studies of a product candidate may not be sufficient to support the submission of an NDA; | |
| ● | the approval policies or regulations of the FDA may significantly change in a manner rendering our clinical and other study data insufficient for approval; and | |
| ● | the FDA may not approve the proposed manufacturing processes and facilities for a product candidate. |
We may be subject to product liability claims from the use of Ampligen, Alferon N Injection, or other of our products which could negatively affect our future operations. We have limited product liability and clinical trial insurance.
We maintain a limited amount of Products Liability and Clinical Trial insurance coverage worldwide for Ampligen and Alferon N Injection due to the minimal amount of historical loss claims regarding these products in the marketplace. Any claims against our products, Ampligen and Alferon N Injection, could have a materially adverse effect on our business and financial condition.
We face an inherent business risk of exposure to product liability claims in the event that the use of Ampligen, Alferon N Injection or other of our products results in adverse effects. This liability might result from claims made directly by patients, hospitals, clinics or other consumers, or by pharmaceutical companies or others manufacturing these products on our behalf. Our future operations may be negatively affected from the litigation costs, settlement expenses and lost product sales inherent to these claims. While we will continue to attempt to take appropriate precautions, we cannot assure that we will avoid significant product liability exposure.
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Uncertainty of health care reimbursement for our products.
Our ability to successfully commercialize our products will depend, in part, on the extent to which reimbursement for the cost of such products and related treatment will be available from government health administration authorities, private health coverage insurers and other organizations. Significant uncertainty exists as to the reimbursement status of newly approved health care products, and from time to time legislation is proposed, which, if adopted, could further restrict the prices charged by and/or amounts reimbursable to manufacturers of pharmaceutical products. We cannot predict what, if any, legislation will ultimately be adopted or the impact of such legislation on us. There can be no assurance that third party insurance companies will allow us to charge and receive payments for products sufficient to realize an appropriate return on our investment in product development.
There are risks of liabilities associated with handling and disposing of hazardous materials.
Our business involves the controlled use of hazardous materials, carcinogenic chemicals, and flammable solvents. Although we believe that our safety procedures for handling and disposing of such materials comply in all material respects with the standards prescribed by applicable regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident or the failure to comply with applicable regulations, we could be held liable for any damages that result. However, we have obtained insurance coverage to mitigate any potential significant loss in this area.
We rely upon information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm our ability to operate our business effectively.
Our operations could be disrupted if our information systems fail, if we are unsuccessful in implementing necessary upgrades or if we are subject to cyber-attacks. Our business depends on the efficient and uninterrupted operation of our computer and communications systems and networks, hardware and software systems and our other information technology. We collect and maintain information, which includes confidential and proprietary information, as well as personal information regarding our customers and employees, in digital form. Data maintained in digital form is subject to risk of cyber-attacks, which are increasing in frequency and sophistication. Cyber-attacks could include the deployment of harmful malware, viruses, worms, and other means to affect service reliability and threaten data confidentiality, integrity and availability. Despite our efforts to monitor and safeguard our systems to prevent data compromise, the possibility of a future data compromise cannot be eliminated entirely, and risks associated with intrusion, tampering, and theft remain. In addition, we do not have insurance coverage with respect to system failures or cyber- attacks. A failure of our systems, or an inability to successfully expand the capacity of these systems, or an inability to successfully integrate new technologies into our existing systems could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
The Company and its vendors’ sophisticated information technology operations are spread across multiple, sometimes inconsistent, platforms, which pose difficulties in maintaining data integrity across systems. The ever-increasing use and evolution of technology, including cloud-based computing, creates opportunities for the unintentional or improper dissemination or destruction of confidential information stored in the Company’s systems.
Any breach of our security measures or the accidental loss, inadvertent disclosure, unapproved dissemination, misappropriation or misuse of trade secrets, proprietary information or other confidential information, whether as a result of theft, hacking, fraud, trickery or other forms of deception, or for any other cause, could enable others to produce competing products, use our proprietary technology or information and/or adversely affect our business position. Further, any such interruption, security breach, loss or disclosure of confidential information could result in financial, legal, business and reputational harm to our company and could have a material adverse effect on our business, financial condition, results of operations, cash flows and stock price.
The loss of services of key personnel could hurt our chances for success.
Our success is dependent on the continued efforts of our staff, especially certain doctors and researchers. The loss of the services of personnel key to our operations could have a material adverse effect on our operations and chances for success. The loss of key personnel or the failure to recruit additional personnel as needed could have a materially adverse effect on our ability to achieve our objectives.
GAAP requires estimates, judgements and assumptions which inherently contain uncertainties.
There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP. Any future changes in estimates, judgments and assumptions used or necessary revisions to prior estimates, judgments or assumptions could lead to a restatement of our results.
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The financial statements included in this Annual Report on Form 10-K are prepared in accordance with GAAP. This involves making estimates, judgments and assumptions that affect reported amounts of assets (including intangible assets), liabilities, mezzanine equity, stockholders’ equity, operating revenues, costs of sales, operating expenses, other income, and other expenses. Estimates, judgments, and assumptions are inherently subject to change in the future and any necessary revisions to prior estimates, judgments or assumptions could lead to a restatement. Any such changes could result in corresponding changes to the amounts of assets (including goodwill and other intangible assets), liabilities, mezzanine equity, stockholders’ equity, operating revenues, costs of sales, operating expenses, other income and other expenses.
We currently, and may in the future, have assets held at financial institutions that may exceed the insurance coverage offered by the Federal Deposit Insurance Corporation (“FDIC”), and the loss of such assets would have a severe negative affect on our operations and liquidity.
On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. A statement by the Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts. Although we do not have any funds deposited with SVB and Signature Bank, We currently have deposits with Bank of America and Truist Bank, each exceeding $250,000. In the future, we may maintain our cash assets at these and other financial institutions in the United States in amounts that may be in excess of the FDIC insurance limit of $250,000. In the event of a failure of any of these financial institutions where we maintain our deposits or other assets, we may incur a loss to the extent such loss exceeds the FDIC insurance limitation, which could have a material adverse effect upon our liquidity, financial condition and our results of operations.
Risks Associated with Our Products
In addition to the risks disclosed above, the development of Ampligen is subject to a number of significant risks. Ampligen may be found to be ineffective or to have adverse side effects, fail to receive necessary regulatory clearances, be difficult to manufacture on a commercial scale, be uneconomical to market or be precluded from commercialization by proprietary right of third parties. Our investigational products are in various stages of clinical and pre-clinical development and require further clinical studies and appropriate regulatory approval processes before any such products can be marketed. We do not know when, if ever, Ampligen or our other products will be generally available for commercial sale for any indication. Generally, only a small percentage of potential therapeutic products are eventually approved by the FDA for commercial sale.
To the extent that we are required by the FDA, pursuant to the Ampligen NDA, to conduct additional studies and take additional actions, approval of any applications that we submit may be delayed by several years, or may require us to expend more resources than we have available. It is also possible that additional studies, if performed and completed, may not be successful or considered sufficient by the FDA for approval or even to make our applications approvable. If any of these outcomes occur, we may be forced to abandon one or more of our future applications for approval, which might significantly harm our business and prospects. As a result, we cannot predict when or whether regulatory approval will be obtained for any product candidate we develop.
If approved, one or more of the potential side effects of the drug might deter usage of Ampligen in certain clinical situations and, therefore, could adversely affect potential revenues and physician/patient acceptability of our product.
Although Alferon N Injection is approved for marketing in the United States for intralesional treatment of refractory or recurring external genital warts in patients 18 years of age or older, to date it has not been approved for other indications.
Possible side effects from the use of Ampligen or Alferon N Injection could adversely affect potential revenues and physician/patient acceptability of our product.
Ampligen. We believe that Ampligen has been generally well tolerated with a low incidence of clinical toxicity, particularly given the severely debilitating or life-threatening diseases that have been treated. A mild flushing reaction has been observed in approximately 15-20% of patients treated in our various studies. This reaction is occasionally accompanied by a rapid heartbeat, a tightness of the chest, urticaria (swelling of the skin), anxiety, shortness of breath, subjective reports of “feeling hot”, sweating and nausea. The reaction is usually infusion-rate related and can generally be controlled by reducing the rate of infusion. Other adverse side effects include liver enzyme level elevations, diarrhea, itching, asthma, low blood pressure, photophobia, rash, visual disturbances, slow or irregular heart rate, decreases in platelets and white blood cell counts, anemia, dizziness, confusion, elevation of kidney function tests, occasional temporary hair loss and various flu-like symptoms, including fever, chills, fatigue, muscular aches, joint pains, headaches, nausea and vomiting. These flu-like side effects typically subside within several months.
The FDA in its February 1, 2013, CRL, provided recommendations to address certain outstanding issues before they could approve Ampligen for Commercial Sales. The Agency stated that the submitted data do not provide sufficient information to determine whether the product is safe for use in CFS due to the limited size of the safety database and multiple discrepancies within the submitted data.
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If approved, one or more of the potential side effects of the drug might deter usage of Ampligen in certain clinical situations and therefore, could adversely affect potential revenues and physician/patient acceptability of our product.
Alferon N Injection. At present, Alferon N Injection is approved for the intralesional (within the lesion) treatment of refractory or recurring external genital warts in adults. In clinical trials conducted for the treatment of genital warts with Alferon N Injection, patients did not experience serious side effects; however, there can be no assurance that unexpected or unacceptable side effects will not be found in the future for this use or other potential uses of Alferon N Injection which could threaten or limit such product’s usefulness.
Risks Related to our activities associated with Ampligen’s potential effectiveness as a treatment for COVID-19
It is not possible to predict the future of the ongoing SARS-CoV-2 global pandemic or the development of potential treatments. No assurance can be given that Ampligen will aid in or be applied to the treatment of this virus.
Significant additional testing and trials will be required to determine whether Ampligen will be effective in the treatment of COVID-19 and no assurance can be given that it will be the case. We base our belief that Ampligen may be effective in the treatment of COVID-19 on the result of studies that we reviewed and referenced. No assurance can be given that future studies will not result in findings that are different from those in the studies that we have relied upon. We are one of many companies working to develop a treatment for this virus, most of whom have far greater resources than us. This includes research into a range of COVID-19-related circumstances, from prophylactic and early-onset treatments to therapies for Post-COVID conditions. If one of these companies develops an effective treatment along the same lines as a therapy being developed by AIM, the development of Ampligen for this virus most likely will be adversely affected. Moreover, there already are available treatments.
Operating in foreign countries carries with it many risks.
Some of our studies are being conducted in the Netherlands and we may conduct other studies and or we may enter into agreements such as supply agreements. Operating in foreign countries carries with it a number of risks, including potential difficulties in enforcing intellectual property rights. We cannot assure that our potential foreign operations will not be adversely affected by these risks.
Risks Associated with Our Intellectual Property
We may not be profitable unless we can protect our patents and/or receive approval for additional pending patents.
We need to preserve and acquire enforceable patents covering the use of Ampligen for a particular disease in order to obtain exclusive rights for the commercial sale of Ampligen for such disease. We obtained all rights to Alferon N Injection, and we plan to preserve and acquire enforceable patents covering its use for existing and potentially new diseases once we have had a successful FDA Pre Approval Inspection. Our success depends, in large part, on our ability to preserve and obtain patent protection for our products and to obtain and preserve our trade secrets and expertise. Certain of our know-how and technology is not patentable, particularly the procedures for the manufacture of our experimental drug, Ampligen. We also have been issued a patent which affords protection on the use of Ampligen in patients with Chronic Fatigue Syndrome. We have not yet been issued any patents in the United States for the use of Ampligen as a sole treatment for any of the cancers which we have sought to target. For more information on Patents, please see PART I, Item 1 “Business; Patents”.
We cannot assure that our competitors will not seek and obtain patents regarding the use of similar products in combination with various other agents, for a particular target indication prior to our doing so. If we cannot protect our patents covering the use of our products for a particular disease, or obtain additional patents, we may not be able to successfully market our products.
The patent position of biotechnology and pharmaceutical firms is highly uncertain and involves complex legal and factual questions.
To date, no consistent policy has emerged regarding the breadth of protection afforded by pharmaceutical and biotechnology patents. There can be no assurance that new patent applications relating to our products, process or technology will result in patents being issued or that, if issued, such patents will afford meaningful protection against competitors with similar technology. It is generally anticipated that there may be significant litigation in the industry regarding patent and intellectual property rights. Such litigation could require substantial resources from us and we may not have the financial resources necessary to enforce the patent rights that we hold. No assurance can be made that our patents will provide competitive advantages for our products, process and technology or will not be successfully challenged by competitors. No assurance can be given that patents do not exist or could not be filed which would have a materially adverse effect on our ability to develop or market our products or to obtain or maintain any competitive position that we may achieve with respect to our products. Our patents also may not prevent others from developing competitive products or processes using related technology.
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There can be no assurance that we will be able to obtain necessary licenses if we cannot enforce patent rights we may hold. In addition, the failure of third parties from whom we currently license certain proprietary information or from whom we may be required to obtain such licenses in the future, to adequately enforce their rights to such proprietary information, could adversely affect the value of such licenses to us.
If we cannot enforce the patent rights we currently hold we may be required to obtain licenses from others to develop, manufacture or market our products. There can be no assurance that we would be able to obtain any such licenses on commercially reasonable terms, if at all. We currently license certain proprietary information from third parties, some of which may have been developed with government grants under circumstances where the government maintained certain rights with respect to the proprietary information developed. No assurances can be given that such third parties will adequately enforce any rights they may have or that the rights, if any, retained by the government will not adversely affect the value of our license.
There is no guarantee that our trade secrets will not be disclosed or known by our competitors.
To protect our rights, we require all employees and certain consultants to enter into confidentiality agreements with us. There can be no assurance that these agreements will not be breached, that we would have adequate and enforceable remedies for any breach, or that any trade secrets of ours will not otherwise become known or be independently developed by competitors.
Risks Associated with Our R&D
Due to the inherent uncertainty involved in the design and conduct of clinical trials and the applicable regulatory requirements, including the factors discussed above in “Our Products”, we cannot predict what additional studies and/or additional testing or information may be required by the FDA. In addition, most of our studies to date have involved only a small group of participants and positive results in such a small group does not mean that such results will prove true in studies with a much larger group of participants. Accordingly, we are unable to estimate the nature, timing, costs and necessary efforts to complete these projects nor the anticipated completion dates. In addition, we have no basis for estimating when material net cash inflows may commence. We have yet to generate significant revenues from the sale of these developmental products. As of December 31, 2022, we had approximately $34,190,000 in Cash, Cash Equivalents. Please see “We may require additional financing which may not be available” above.
Risks Associated with Our Manufacturing
Our Alferon N. Injection commercial sales were halted due to lack of finished goods inventory. If we are unable to gain the necessary FDA approvals related to Alferon N Injection, our operations most likely will be materially and/or adversely affected.
We are exploring engaging a Contract Manufacturing Organization (“CMO”) to produce Alferon API. At present, we do not have a supply of Alferon N Injection or the requisite API. Additionally, although our old New Brunswick facility was FDA approval under the BLA for Alferon N Injection and we intend to maintain a certain amount of space at that facility, this status will need to be reapproved when a CMO or a new facility is identified for the production of the drug. We cannot provide any guarantee that a CMO or other future facility will pass an FDA pre-approval inspection for Ampligen or Alferon N Injection manufacture.
If we are unable to gain the necessary FDA approvals related to the manufacturing process and/or final product of new Alferon N Injection inventory or contract with a CMO, our operations most likely will be materially adversely affected. For more information on Alferon N Injection regarding potential commercial sales, please see PART I, Item 1 - “Business; Manufacturing”.
There are no long-term agreements with suppliers of required materials and services for Ampligen and there are a limited number of raw material suppliers. If we are unable to obtain the required raw materials and/or services, we may not be able to manufacture Ampligen.
A number of essential raw materials are used in the production of Ampligen as well as packaging materials utilized in the fill and finish process. We do not have, but continue to work toward having, long-term agreements for the supply of such materials, when possible. There can be no assurance we can enter into long-term supply agreements covering essential materials on commercially reasonable terms, if at all.
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There are a limited number of suppliers in the United States and abroad available to provide the raw and packaging materials/reagents for use in manufacturing Ampligen and Alferon N Injection. At present, we do not have any agreements with third parties for the supply of any of these materials or we are relying on a limited source of reagent suppliers necessary for the manufacture of Alferon N Injection. Jubilant HollisterStier LLC has manufactured batches of Ampligen for us pursuant to purchase orders. We anticipate, but cannot assure, that additional orders will be placed upon approved quotes and purchase orders provided by us to Jubilant. On December 22, 2020, we added Pharmaceutics International Inc. (“Pii”) as a “Fill & Finish” provider to enhance our capacity to produce the drug Ampligen. This addition amplifies our manufacturing capability by providing redundancy and cost savings. The contracts augment our existing fill and finish capacity. If we are unable to place adequate acceptable purchase orders with Jubilant or Pii in the future at acceptable prices upon acceptable terms, we will need to find another manufacturer. If we need to find another contract manufacturer to produce Ampligen, it would create a significant delay and expense to get the manufacturer up and running. The costs and availability of products and materials we would need for the production of Ampligen are subject to fluctuation depending on a variety of factors beyond our control, including competitive factors, changes in technology, ownership of intellectual property, FDA and other governmental regulations. There can be no assurance that we will be able to obtain such products and materials on terms acceptable to us or at all.
While we have produced limited quantities of active pharmaceutical ingredients (“API”) for our products in our old New Brunswick, NJ facility, the sale of this facility necessitates our exploring the engagement of a CMO to produce API for both Ampligen and Alferon. While we believe we have sufficient API to meet our current Ampligen needs, we are also continually exploring new efficiencies so as to maximize our ability to fulfill future obligations. Currently, the Alferon N Injection manufacturing process is on hold and there is no definitive timetable for its restart. Please see “Our Alferon N. Injection commercial sales were halted due to lack of finished goods inventory. If we are unable to gain the necessary FDA approvals related to Alferon N Injection, our operations most likely will be materially and/or adversely affected” above.
If we are unable to obtain or manufacture the required materials/reagents, and/or procure services needed in the final steps in the manufacturing process, we may be unable to manufacture Ampligen. The costs and availability of products and materials we need for the production of Ampligen are subject to fluctuation depending on a variety of factors beyond our control, including competitive factors, changes in technology, ownership of intellectual property, FDA and other governmental regulations. There can be no assurance that we will be able to obtain such products and materials on terms acceptable to us or at all. For more information on Ampligen manufacturing, please see PART I, Item 1 - “Business; Our Products; Manufacturing” above.
There are a limited number of organizations in the United States available to provide the final manufacturing steps of formulation, fill, finish and packing sets for Alferon N Injection and Ampligen.
There are a limited number of organizations in the United States available to provide the final steps in the manufacturing for Alferon N Injection and Ampligen. To formulate, fill, finish and package our products (“fill and finish”), we require an FDA approved third party CMO.
In January 2017, we approved a quote and provided a purchase order with Jubilant HollisterStier LLC pursuant to which Jubilant manufactured batches of Ampligen for us. We anticipate, but cannot assure, that additional orders will be placed upon approved quotes and purchase orders provided by us to Jubilant. If we are unable to place adequate acceptable purchase orders with Jubilant in the future at acceptable prices upon acceptable terms our business would be materially and adversely affected. Please see the prior risk factor.
In December 2020, we added Pii as a “Fill & Finish” provider to enhance our capacity to produce the drug Ampligen. This addition amplifies our manufacturing capability by providing redundancy and cost savings. The contracts augment our existing fill and finish capacity.
Should there be an unanticipated delay in receiving new product or should we experience an unexpected demand for Ampligen, our ability to supply Ampligen most likely will be adversely affected. If we are unable to procure services needed in the final steps in the manufacturing process, we may be unable to manufacture Alferon N Injection and/or Ampligen. The costs and availability of products and materials we need for the production of Ampligen and the commercial production of Alferon N Injection and other products which we may commercially produce are subject to fluctuation depending on a variety of factors beyond our control, including competitive factors, changes in technology, and FDA and other governmental regulations and there can be no assurance that we will be able to obtain such products and materials on terms acceptable to us or at all. For more information on Ampligen and Alferon N Injection manufacturing, please see PART I, Item 1 - “Business; Our Products; Manufacturing” above.
There is no assurance that, upon successful, manufacture of a drug on a limited-scale basis for investigational use will lead to a successful transition to commercial, large-scale production.
Changes in methods of manufacturing, including commercial scale-up, may affect the chemical structure of Ampligen and other RNA drugs, as well as their safety and efficacy. The transition from limited production of pre-clinical and clinical research quantities to production of commercial quantities of our products will involve distinct management and technical challenges, and may require additional management, technical personnel and capital. While we intend to identify a CMO (or CMOs) with a state-of-the-art facility capable of meeting potential increased demand for Ampligen, there can be no assurance that our manufacturing will be successful or that any given product will be determined to be safe and effective, or capable of being manufactured under applicable quality standards, economically, and in commercial quantities, or successfully marketed.
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We have limited manufacturing experience for Ampligen and Alferon N Injection. We may not be profitable unless we can produce Ampligen, Alferon N Injection or other products in commercial quantities at costs acceptable to us.
Ampligen has been produced to date in limited quantities for use in our clinical trials, Early Access Program and Expanded Access Program. In addition, in Argentina, Ampligen is still in the process of release testing the product that has already been sent. To be successful, our products must be manufactured in commercial quantities in compliance with regulatory requirements and at acceptable costs. We believe, but cannot assure, that it will not be necessary to increase our current product plans to meet our production obligations. We intend to utilize third-party facilities if and when the need arises. We will need to comply with regulatory requirements for such facilities, including those of the FDA pertaining to cGMP requirements or maintaining our BLA status. There can be no assurance that such facilities can be used, built, or acquired on commercially acceptable terms, or that such facilities, if used, built, or acquired, will be adequate for the production of our proposed products for large-scale commercialization or our long-term needs.
We have never produced Ampligen, Alferon N Injection or any other products in large commercial quantities. We must manufacture our products in compliance with regulatory requirements in large commercial quantities and at acceptable costs in order for us to be profitable. We intend to utilize third-party manufacturers and/or facilities if and when the need arises or, if we are unable to do so, to build or acquire commercial-scale manufacturing facilities. If we cannot manufacture commercial quantities of Ampligen and/or Alferon N Injection, or continue to maintain third party agreements for its manufacture at costs acceptable to us, our operations will be significantly affected. If and when the Ampligen NDA is approved, we may need to find an additional vendor to manufacture the product for commercial sales. Also, each production lot of Alferon N Injection is subject to FDA review and approval prior to releasing the lots to be sold. This review and approval process could take considerable time, which would delay our having product in inventory to sell, nor can we provide any assurance as to the receipt of FDA approval of our finished inventory product. There can be no assurances that the Ampligen and/or Alferon N Injection can be commercially produced at costs acceptable to us.
Risks Associated with Our Licensing/Collaborations/Joint Ventures
If we are unable to achieve licensing, collaboration and/or joint ventures, our marketing strategy for Ampligen will be part of the differing health care systems around the world along with the different marketing and distribution systems that are used to supply pharmaceutical products to those systems.
We have received approval of our NDA from ANMAT for commercial sale of rintatolimod (U.S. tradename: Ampligen) in the Argentine Republic for the treatment of severe CFS. The product will be marketed by GP Pharm, our commercial partner in Latin America. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. We are currently working with GP Pharma on the commercial launch of Ampligen in Argentina. Commercialization in Argentina will require, among other things, GP Pharm to establish disease awareness, medical education, creation of an appropriate reimbursement level, design of marketing strategies and completion of manufacturing preparations for launch.
The next steps in the commercial launch of Ampligen include ANMAT conducting a final inspection of the product and release tests before granting final approval to begin commercial sales. This testing and approval process is currently delayed due to the COVID-19 pandemic and ANMAT’s internal processes. Once final approval by ANMAT is obtained, GP Pharm will begin distributing Ampligen in Argentina. We continue to pursue our Ampligen NDA, for the treatment of CFS with the FDA.
Risks Associated with Our Marketing and Distribution
We have limited marketing and sales capability. If we are unable to obtain additional distributors and our current and future distributors do not market our products successfully, we may not generate significant revenues or become profitable.
We have limited marketing and sales capability. We are dependent upon existing, and possibly future, marketing agreements and third-party distribution agreements for our products in order to generate significant revenues and become profitable. As a result, any revenues received by us will be dependent in large part on the efforts of third parties, and there is no assurance that these efforts will be successful.
Our commercialization strategy for Ampligen, if and when it is approved for marketing and sale by the FDA, may include licensing/co-marketing agreements utilizing the resources and capacities of a strategic partner(s). We continue to seek a world-wide marketing partner with the goal of having a relationship in place before approval is obtained. In parallel to partnering discussions, appropriate pre-marketing activities will be undertaken. It is our current intention to control manufacturing of Ampligen on a world-wide basis.
Our commercialization strategy for Alferon N Injection may include the utilization of internal functions and/or licensing/co-marketing agreements that would utilize the resources and capacities of one or more strategic partners.
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We cannot assure that our U.S. or foreign marketing strategy will be successful or that we will be able to establish future marketing or third-party distribution agreements on terms acceptable to us, or that the cost of establishing these arrangements will not exceed any product revenues. Our inability to establish viable marketing and sales capabilities would most likely have a materially adverse effect on us. There can be no assurances that the approved Alferon N Injection product will be returned to prior sales levels.
Risks Associated with Our Competition
Rapid technological change may render our products obsolete or non-competitive.
The pharmaceutical and biotechnology industries are subject to rapid and substantial technological change. Technological competition from pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into the field is intense and is expected to increase. Most of these entities have significantly greater research and development capabilities than us, as well as substantial marketing, financial and managerial resources, and represent significant competition for us. There can be no assurance that developments by others will not render our products or technologies obsolete or noncompetitive, or that we will be able to keep pace with technological developments.
Our products may be subject to substantial competition.
Ampligen. Our flagship product, Ampligen is being evaluated as a potential treatment for COVID-19, myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS) and COVID-induced CFS symptoms (“Long Haulers”); as well as multiple types of cancers. With regard to COVID-19, multiple global companies are actively working to develop therapies for COVID-19, including several companies which have successfully developed vaccines and treatments. It is possible that these or other companies may be developing therapies that are similar to that which we are attempting to develop, and could therefore develop them first. Some of these potential products may have an entirely different approach or means of accomplishing similar therapeutic effects to products being developed by us. These competing products may be more effective and less costly than our products. In addition, conventional drug therapy, surgery and other more familiar treatments may offer competition to our products. Furthermore, many of our competitors have significantly greater experience than we do in preclinical testing and human clinical trials of pharmaceutical products and in obtaining FDA, The Health Protection Branch of the Canada Department of National Health and Welfare (HPB) and other regulatory approvals of products. Accordingly, our competitors may succeed in obtaining FDA, HPB or other regulatory product approvals more rapidly than us. There are no drugs approved for commercial sale with respect to treating CFS in the United States, and standard of care is to focus on symptom relief, such as addressing pain specifically or depression specifically The dominant competitors with drugs to treat disease indications which we plan to address include Pfizer, GlaxoSmithKline, Merck & Co., Novartis and AstraZeneca. Biotech competitors include Baxter International, Fletcher/CSI, AVANT Immunotherapeutics, AVI BioPharma and Genta. These potential competitors are among the largest pharmaceutical companies in the world, are well known to the public and the medical community, and have substantially greater financial resources, product development, and manufacturing and marketing capabilities than we have. Although we believe our principal advantage is the unique mechanism of action of Ampligen on the immune system, we cannot assure that we will be able to compete.
Alferon N Injection. Our competitors are among the largest pharmaceutical companies in the world, are well known to the public and the medical community, and have substantially greater financial resources, product development, and manufacturing and marketing capabilities than we have. Alferon N Injection currently competes with Merck’s injectable recombinant alpha interferon product (Intron® A) for the treatment of genital warts. In addition, other pharmaceutical firms offer self-administered topical cream, for the treatment of external genital and perianal warts such as Graceway Pharmaceuticals (Aldara®), Perrigo Company (Imiquimod Cream - Generic Equivalent to Aldara®), Watson Pharma (Condylox®) and MediGene (Veregen®). Alferon N Injection also competes with surgical, chemical, and other methods of treating genital warts. We cannot assess the impact products developed by our competitors, or advances in other methods of the treatment of genital warts, will have on the commercial viability of Alferon N Injection. If and when we obtain additional approvals of uses of this product, we expect to compete primarily on the basis of product performance. Our competitors have developed or may develop products (containing either alpha or beta interferon or other therapeutic compounds) or other treatment modalities for those uses. There can be no assurance that, if we are able to obtain regulatory approval of Alferon N Injection for the treatment of new indications, we will be able to achieve any significant penetration into those markets. In addition, because certain competitive products are not dependent on a source of human blood cells, such products may be able to be produced in greater volume and at a lower cost than Alferon N Injection. Currently, our wholesale price on a per unit basis of Alferon N Injection is higher than that of the competitive recombinant alpha and beta interferon products. Please see risk factor “We may not be profitable unless we can protect our patents and/or receive approval for additional pending patents” above for additional information.
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Other companies may succeed in developing products earlier than we do, obtaining approvals for such products from the FDA more rapidly than we do, or developing products that are more effective than those we may develop. While we will attempt to expand our technological capabilities in order to remain competitive, there can be no assurance that research and development by others or other medical advances will not render our technology or products obsolete or non-competitive or result in treatments or cures superior to any therapy we develop.
Risks Associated with an Investment in Our Common Stock:
The market price of our stock may be adversely affected by market volatility
The market price of our common stock has been and is likely to be volatile. This is especially true given the current significant instability in the financial markets, in part caused by the COVID-19 coronavirus and the major adverse effects it has had and will continue to have on U.S. and worldwide economies and markets as well as the adverse effects and disruptions caused by the war in the Ukraine. Should our progress slow or results of testing or activities by others negatively impact our efforts, it is just as likely that our stock price will be significantly adversely affected, and in such case, investors could sustain substantial losses. In addition to the foregoing and, general economic, political and market conditions, the price and trading volume of our stock could fluctuate widely in response to many factors, including:
| ● | announcements of the results of clinical trials by us or our competitors; | |
| ● | announcements of availability or projections of our products for commercial sale; | |
| ● | announcements of legal actions against us and/or settlements or verdicts adverse to us; | |
| ● | adverse reactions to products; | |
| ● | governmental approvals, delays in expected governmental approvals or withdrawals of any prior governmental approvals or public or regulatory agency comments regarding the safety or effectiveness of our products, or the adequacy of the procedures, facilities or controls employed in the manufacture of our products; | |
| ● | changes in U.S. or foreign regulatory policy during the period of product development; | |
| ● | developments in patent or other proprietary rights, including any third-party challenges of our intellectual property rights; | |
| ● | announcements of technological innovations by us or our competitors; | |
| ● | announcements of new products or new contracts by us or our competitors; | |
| ● | actual or anticipated variations in our operating results due to the level of development expenses and other factors; | |
| ● | changes in financial estimates by securities analysts and whether our earnings meet or exceed the estimates; | |
| ● | conditions and trends in the pharmaceutical and other industries; | |
| ● | new accounting standards; | |
| ● | overall investment market fluctuation; | |
| ● | restatement of prior financial results; | |
| ● | notice of NYSE American non-compliance with requirements; and | |
| ● | occurrence of any of the risks described in these risk factors and the risk factors incorporated by reference herein. |
Our common stock is listed for quotation on the NYSE American. For the year ended December 31, 2022, the trading price of our common stock has ranged from $0.31 to $1.03 per share. We expect the price of our common stock to remain volatile. The average daily trading volume of our common stock varies significantly.
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Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock.
We may issue shares to be used to meet our capital requirements or use shares to compensate employees, consultants and/or Directors. We have registered securities for public sale pursuant to a universal shelf registration statement which will allow us to raise additional capital as needed in the future from the sale of our securities.
We are unable to estimate the amount, timing or nature of future sales of outstanding common stock or instruments convertible into or exercisable for our common stock. Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur as a result of our utilization of our shelf registration statement or otherwise could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock or the market perception that we are permitted to sell a significant number of our securities would have on the market price of our common stock. Please see Item 7- “Management’s Discussion and Analysis of Financial Condition and Result of Operations; Liquidity and Capital Resources” in PART II.
Provisions of our Certificate of Incorporation and Delaware law could defer a change of our Management which could discourage or delay offers to acquire us.
Provisions of our Certificate of Incorporation and Delaware law may make it more difficult for someone to acquire control of us or for our stockholders to remove existing management, and might discourage a third party from offering to acquire us, even if a change in control or in Management would be beneficial to our stockholders. For example, our Certificate of Incorporation allows us to issue shares of preferred stock without any vote or further action by our stockholders. Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors also has the authority to issue preferred stock without further stockholder approval. As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. On November 14, 2017, at the direction of the Board, we amended and restated the Rights Agreement between us and, American Stock Transfer & Trust Company, LLC, its current Rights Agent. Pursuant to the original Rights Agreement, our Board of Directors declared a dividend distribution of one Right for each outstanding share of common stock to stockholders of record at the close of business on November 29, 2002. Each Right entitles the registered holder to purchase from us a unit consisting of one one-hundredth of a share (a “Unit”) of Series A Junior Participating Preferred Stock, par value $0.01 per share at a Purchase Price of $21.00 per Unit, subject to adjustment. While our Rights Agreement was scheduled to expire in late 2022, we have extended it for a short period of time and expect to again extend it for a longer period of time.
Risks associated with Stockholder activism.
Our business, financial condition and operating results could be negatively affected as a result of actions by activist investors.
An activist stockholder (the “Activist”) submitted a notice to our Board, purporting to nominate two nominees to our three-member Board at the 2022 Annual Meeting of Stockholders. We informed the Activist that our Board determined its purported notice of nomination was invalid, as it did not comply with our Amended and Restated Bylaws. We initiated a lawsuit against the Activist, the Activist’s two nominees, and four additional individuals–all of whom we believe to be acting as a group, orchestrated and funded by two convicted securities law felons, to attempt to effectuate a takeover of our Board without registering as a group pursuant to U.S. securities laws and some of whom we believe have committed other unlawful actions. The Activist subsequently sued AIM and each of our board members in the Court of Chancery of the State of Delaware, seeking a declaratory judgment that the purported notice of nominations was valid and certain injunctive relief. The Delaware Chancery Court denied the Activist’s motion on October 28, 2022, and the Activist announced on November 2, 2022, that it did not intend to appeal the decision. Had the Activist prevailed in its lawsuit, we most likely would have been involved in a proxy contest for control of our Board, despite the deficiencies in the Activist’s purported notice of nominations. Certain members of this group also persistently disparaged the stock using alias names on message boards. Even though we prevailed in the Delaware litigation, the litigation and the campaign by the Activist and those with whom the Activist is acting in concert against us (which includes two convicted securities law felons) has, and will have, likely diverted the time and energies of management and required us to incur substantial expense, possibly causing a decrease in stockholder value.
A proxy contest and related litigation, along the lines discussed above, could have a material adverse effect on us for the following reasons:
| ● | Activist investors may attempt to effect changes in our governance and strategic direction or to acquire control over the Board or AIM. In particular, if the Activist is successful in its litigation and subsequent proxy contest, it may gain control of the Board. |
| ● | While we welcome the opinions of all stockholders, responding to proxy contests and related litigation by activist investors is likely to be costly and time-consuming, disrupt our operations, and potentially divert the attention of our Board, management team and other employees away from their regular duties and the pursuit of business opportunities to enhance stockholder value. |
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| ● | Perceived uncertainties as to our future direction as a result of potential changes to the composition of the Board may lead to the perception of a change in the strategic direction of the business, instability or lack of continuity, which may cause concern to our existing or potential strategic partners, customers, employees and stockholders; may be exploited by our competitors; may result in the loss of potential business opportunities or limit our ability to timely initiate or advance clinical trials; and may make it more difficult to attract and retain qualified personnel and business partners. |
| ● | Proxy contests and related litigation by activist investors could cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business. |
| ITEM 1B. | Unresolved Staff Comments. |
None.
| ITEM 2. | Properties. |
Our principal executive office and finance is located at 2117 SW Highway 484, Ocala FL 34473 and our human resource office is located at 604 Main Street, Riverton, NJ 08077. We currently lease our principal executive office for $2,700 per month and our accounting and human resource office for about $2,500 per month.
In March 2018, we sold our property located at 783 Jersey Ave., New Brunswick, NJ. This property houses our development and production facilities. The purchase price was $4,080,000 gross and purchaser received 3,225,806 warrants to purchase common stock.
In May 2021, we exercised the option to re-purchase the New Brunswick manufacturing facility, pursuant to the terms of the March 2018 sale and lease-back agreement. We thereafter sold certain equipment and machinery that it determined to be obsolete and no longer needed for current or future manufacturing. On March 3, 2022, we entered into an Agreement of Sale and Purchase with Acellories, Inc. to purchase the property for an estimated $3.9 million, and maintained some space specifically for its Alferon activity. The sale closed on November 1, 2022 for $3.7 million net of normal closing cost.
| ITEM 3. | Legal Proceedings. |
We commenced an action against BioLife in December of 2017 for Breach of Contract. The amount of damages we are seeking in this matter have yet to be determined. Damages are not covered by insurance. BioLife, the defendant, has filed its Answer, Affirmative Defenses and a Counterclaim in the amount of $96,676 representing the invoices withheld after BioLife indicated that they were not intending to fulfill the balance of the contract. We have denied the allegations of the counterclaim. We have conducted two mediation sessions, but have been unable to resolve the matter. The parties are still currently engaged in discovery, which we believe will now lead to a trial date in the later part of 2023. The scheduled dates for these events to transpire were extended several times as they were dependent on the safe and full reopening of the Courts. Although it cannot be reasonably determined at this time, we believe the likelihood of an unfavorable outcome on the defendant’s counterclaim is remote.
On July 8, 2022, we received a notice from Jonathan Jorgl (the “Jorgl Notice”), an AIM stockholder who first purchased 1,000 AIM shares on June 27, 2022, seeking to nominate a control slate of two individuals for election to the three-member AIM Board of Directors (the “Board”) at the 2022 Annual Meeting of Stockholders. The Board unanimously determined the Jorgl Notice to be invalid due to numerous deficiencies, including failure to comply with the Company’s bylaws. The rejection of the Jorgl Notice was announced on July 18, 2022.
Also on July 18, 2022, we filed a complaint in the U.S. District Court for the Middle District of Florida, Ocala Division, against individuals we believe failed to register as a group pursuant to U.S. securities laws and committed other unlawful actions in the context of their attempt to effectuate a takeover of the Company’s Board. The court granted the defendants’ motion to dismiss, but allowed the filing of an amended complaint. Defendants’ renewed motion to dismiss is pending, and AIM is in the process of obtaining discovery from the defendants.
On August 12, 2022, a hearing was held in the Delaware Court of Chancery concerning a motion for a temporary restraining order sought by Jorgl to require the AIM Board of Directors to accept his director nominations and include his nominees on a universal proxy card for the upcoming Annual Meeting of Stockholders. The court denied the motion several days later and scheduled a hearing on Jorgl’s motion for a preliminary injunction to be held on October 5, 2022. Extensive discovery was conducted in advance of the hearing, which was then held as scheduled.
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On October 5, 2022, the Delaware Court of Chancery held a hearing regarding a motion to require the AIM Board of Directors to accept the Jorgl Group’s director nominations and include the group’s nominees on a universal proxy card for the 2022 Annual Meeting of Stockholders. On October 28, 2022, the court denied Jorgl’s motion, citing that he failed to meet the burden of proof in light of the evidence showing that he was part of efforts by convicted securities law felons working toward taking control of the AIM Board. The Jorgl Group announced on November 2, 2022, that it did not intend to appeal the decision.
| ITEM 4. | Mine Safety Disclosures. |
Not Applicable.
PART II
| ITEM 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Market Information
Our common stock is listed and traded on the NYSE American under the symbol AIM.
Holders of Common Stock
As of March 25, 2023, there were approximately 150 holders of record of our Common Stock. This number was determined from records maintained by our transfer agent and does not include beneficial owners of our securities whose securities are held in the names of various dealers and/or clearing agencies.
Securities Authorized for Issuance Under Equity Compensation Plans
Information about securities authorized for issuance under our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report.
Dividends
We have not paid any cash dividends on our Common Stock in recent years. It is management’s intention not to declare or pay dividends on our Common Stock, but to retain earnings, if any, for the operation and expansion of our business.
Recent Sales of Unregistered Securities
During the year ended December 31, 2022, we issued and sold the following unregistered securities under the 2018 Equity Incentive Plan, effective September 12, 2018, which will continue in effect for a period of 10 years from its effective date:
On July 7, 2020, the board of directors approved a plan pursuant to which all directors, officers, and employees could purchase from us up to an aggregate of $500,000 worth of shares at the market price. Pursuant to NYSE American rules, this plan was effective for a sixty-day period commencing upon the date that the NYSE American approved the our Supplemental Listing Application. We issued 10,730 shares of our common stock at a price of $2.33 for a total of $25,000 under this plan. When this plan expired, the board of directors approved subsequent similar $500,000 plans for all directors, officers and employees to buy shares from us at the market price. Subsequent plans were approved by the board of directors upon the expiration of prior plans. The last plan approved by the board of directors for the fiscal year ending December 31, 2022, was on November 16, 2022.
During the fiscal year ended December 31, 2020, we issued a total of 27,501 shares of our common stock at prices ranging from $1.72 to $2.03 for a total of $50,000.
During the fiscal year ended December 31, 2021, we issued a total of 132,238 shares of our common stock at prices ranging from $1.16 to $2.35 for a total of $205,000.
During the fiscal year ended December 31, 2022, we issued a total of 86,817 shares of our common stock at prices ranging from $0.76 to $1.02 for a total of $80,000.
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The offers, sales and issuances of securities described above was deemed to be exempt from registration under the Securities Act in reliance on either Section 4(a)(2) in that the issuance of securities to the accredited investors did not involve a public offering, or Rule 701 in that the transactions were under compensatory benefit plans and contracts relating to compensation as provided under Rule 701.
| ITEM 6. | [Reserved] |
| ITEM 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The following discussion and analysis is related to our financial condition and results of operations for the two years ended December 31, 2022 This information should be read in conjunction with our consolidated financial statements and related notes thereto beginning on F-1 of this Form 10-K. Please also see “Special Note Regarding Forward Looking Statements and Summary Risk Factors” in ITEM 1. Business.
Fair Value
We have issued warrants (the “Warrants”) in February 2017, June 2017, August 2017, April 2018, and March 2019 that are single compound derivatives containing both an embedded right to obtain stock upon exercise (a “Call”) and a series of embedded rights to settle the Warrants for cash upon the occurrence of certain events (each, a “Put”). Generally, the Put provisions allow the Warrant Holders liquidity protection; the right to receive cash in certain situations where the Holders would not have a means of readily selling the shares issuable upon exercise of the Warrants (e.g., where there would no longer be a significant public market for our common stock). However, because the contractual formula used to determine the cash settlement value of the embedded Put requires use of certain assumptions, the cash settlement value of the embedded Put can differ from the fair value of the unexercised embedded Call option at the time the embedded Put option is exercised.
We recompute the fair value of the Warrants at the end of each quarterly reporting period. Such value computation includes subjective input assumptions that are consistently applied each period. If we were to alter our assumptions or the numbers input based on such assumptions, the resulting fair value could be materially different.
RESULTS OF OPERATIONS
Year ended December 31, 2022 versus year ended December 31, 2021
Our net loss was approximately $19,445,000 and $19,127,000 for the years ended December 31, 2022 and 2021, respectively, representing an increase in net loss of approximately $318,000 when compared to the same period in 2021. This increase in net loss for the year ended December 31, 2022, was primarily due to the following:
| ● | an increase in general and administrative expenses of $4,402,000; | |
| ● | an increase in loss on investments of $1,478,000; offset by | |
| ● | an increase in interest/other income of $629,000; | |
| ● | a decrease in interest expense and finance costs $2,768,000; and | |
| ● | a decrease in impairment losses of $1,779,000; | |
| ● | a decrease in research and development expenses of $682,000; | |
| ● | a decrease in production costs of $850,000; | |
| ● | a decrease in gain from sale of Income tax operating losses of $829,000; | |
| ● | a decrease in gain of sale of fixed assets of $213,000 | |
| ● | a decrease of the quarterly revaluation of certain redeemable warrants of $110,000; |
Net loss per share was $ (0.40) and $(0.40) for the years ended December 31, 2022, and 2021, respectively. The weighted average number of shares of our common stock outstanding as of December 31, 2022, was 48,047,288 as compared to 47,339,975 as of December 31, 2021.
Revenues
Revenues from our Ampligen® Cost Recovery Program were $141,000 and $135,000 for the years ended December 31, 2022, and 2021, representing an increase of $6,000 which is primarily related to the timing of orders.
For the years ended December 31, 2022 and 2021, we had no Alferon N Injection® Finished Good product to commercially sell and all revenue was generated from the EAP and our FDA approved open-label treatment protocol, (“AMP 511”), that allows patient access to Ampligen® for treatment in an open-label safety study.
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Production Costs
Production costs were approximately $0 and $850,000, respectively, for the years ended December 31, 2022, and 2021, representing a decrease of $850,000 in production costs in the current period. The decrease was due primarily to the sale of the facility and no production for 2022 compared to 2021.
Research and Development Costs
Overall Research and Development (“R&D”) costs for the year ended December 31, 2022, were approximately $6,990,000 as compared to $7,672,000 for the same period a year ago, reflecting a decrease of approximately $682,000. The primary reason for the decrease in research and development costs was due to decreases in Company sponsored clinical trials expenses of $1,728,000, offset by increases in salaries and outside consultant costs of $607,00, $66,000 in rent and $304,000 in patents & trademarks.
General and Administrative Expenses
General and Administrative (“G&A”) expenses for the years ended December 31, 2022, and 2021, were approximately $13,074,000 and $8,672,000, respectively, reflecting an increase of approximately $4,402,000. The increase in G&A expenses during the current period was mainly due to increases in legal fees of $4,582,000, public relations expenses of $348,000, insurance expenses of $439,000 and general expense of $51,000 net of decreases in stock compensation of $613,000, salary expenses of $243,000 and depreciation of $12,000.
Gain (loss) on Investments
Gain (loss) on investments for the years ended December 31, 2022, and 2021 were approximately ($1,679,000) and ($201,000), respectively, reflecting an increase in the loss on investments of approximately ($1,478,000). The loss was due to the change in the fair value of equity investments.
Impairment of plant property and equipment and other assets
During the year ended December 31, 2022, there was a loss of $0 related to the impairment of plant property and equipment (see Note 2 Summary of Significant Accounting Policies).
During the year ended December 31, 2021, there was a loss of $1,779,000 related to the impairment of plant property and equipment (see Note 2 Summary of Significant Accounting Policies).
Interest expense and finance costs for the year ended December 31, 2022, was $0 compared to $2,768,000 in the prior year, a decrease of $2,768,000 primarily due to the extinguishment of debt of $2,768,000 in 2021.
Redeemable Warrants
The quarterly revaluation of certain redeemable warrants resulted in a non-cash adjustment to the redeemable warrants liability amounted to a gain of $35,000 for the year ended December 31, 2022, compared to a gain of approximately $145,000 in December 31, 2021 (see “Financial Statements: Note 15: Fair Value” for the various factors considered in the valuation of redeemable warrants).
Gain from sale of income tax operating losses
We effectively sold $20,500,000 New Jersey state operating losses from 2021 for approximately $1,676,000. Additionally, we recorded a deferred tax asset in the amount of $1,118,000 for the current year 2022 operating losses to be sold in 2023. (see Note 12 Income Taxes (FASB ASC 740 Income Taxes).
Liquidity and Capital Resources
Cash used in operating activities for the year ended December 31, 2022, was approximately $16,108,000 compared to approximately $13,965,000 for the same period in 2021, an increase of $2,143,000. The primary reasons for this increase in cash used in operations in 2022 was related to the loss on marketable securities of $1,679,000, as well as in increase in the prepaid expenses of $151,000 and an increase in accounts payable of $179,000.
Cash provided by investing activities for the year ended December 31, 2022, was approximately $10,988,000 compared to cash used in 2021 was approximately $631,000, representing a change of $11,619,000. The primary reason for the change during the current period is the net purchase and sale of marketable securities activity of $7,359,000 compared to the $243,000 for the same period in 2021, and by the proceeds from the sale of the asset held for sale of $3,900,000 in 2022.
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Cash provided by financing activities for the year ended December 31, 2022, was approximately $80,000 compared to approximately $8,188,000 for the same period in 2021, a decrease of $8,108,000. The primary reason for this decrease was our receipt of $13,042,000 in net proceeds from the sale of shares in 2021compared to $80,000 from the proceeds from sale of stock, net of issuance costs in 2022. As of December 31, 2022, we had approximately $34,190,000 in cash, cash equivalents and marketable securities, inclusive of approximately $7,137,000 in Marketable Securities, representing a decrease of approximately $14,078,000 from December 31, 2021.
We are committed to a focused business plan oriented toward finding senior co-development partners with the capital and expertise needed to commercialize the many potential therapeutic aspects of our experimental drugs and our FDA approved drug Alferon N Injection.
Today, some two years after COVID-19 first appeared, the world has a number of vaccines and some promising therapeutics. Our quest to prove the antiviral activities of Ampligen continues. If Ampligen has the broad-spectrum antiviral properties that we believe that it has, it could be a very valuable tool in treating variants of existing viral diseases, including COVID-19, or novel ones that arise in the future. Unlike most developing therapeutics which attack the virus, Ampligen works differently. We believe that it activates antiviral immune system pathways that fight not just a particular virus or viral variant, but other similar viruses as well.
The development of our products requires the commitment of substantial resources to conduct the time-consuming research, preclinical development, and clinical trials that are necessary to bring pharmaceutical products to market. We believe, based on our current financial condition, that we have adequate funds to meet our anticipated operational cash needs and fund current clinical trials over approximately the next sixteen months. In February 2022, the SEC declared our universal shelf registration statement on Form S-3 effective. Pursuant to that registration statement, we can sell up to $100 million of our securities and raise additional capital as needed in the future. No assurance can be given as to the amount of funds that could be raised pursuant to this registration statement or the potential dilution to current stockholders.
At present we do not generate any material revenues from operations and we do not anticipate doing so in the near future. We may need to obtain additional funding in the future for new studies and/or if current studies do not yield positive results, require unanticipated changes and/or additional studies. If we are unable to commercialize and sell Ampligen and/or recommence material sales of Alferon N Injection, our operations, financial position and liquidity may be adversely impacted, and additional financing may be required. There can be no assurances that, if needed, we will be able to raise adequate funds or enter into licensing, partnering or other arrangements to advance our business goals. We may seek to access the public equity market whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. We are unable to estimate the amount, timing or nature of future sales of outstanding common stock or instruments convertible into or exercisable for our common stock. Any additional funding may result in significant dilution and could involve the issuance of securities with rights, which are senior to those of existing stockholders. See Part I, Item 1A - “Risk Factors; We may require additional financing which may not be available”.
Certain Relationships and Related Transactions
Refer to PART III, ITEM 13 - “Certain Relationships and Related Transactions, and Director Independence.”
New Accounting Pronouncements
Refer to “Note 2(h) – Recent Accounting Standards and Pronouncements” under Notes to Consolidated Financial Statements.
Critical Accounting Estimates
Our significant accounting estimates are described in the Notes to Consolidated Financial Statements. The significant accounting estimates that we believe are most critical to aid in fully understanding our reported financial results are the following:
Long-Lived Assets
We assess long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable. Factors that we consider in deciding when to perform an impairment review include significant under-performance of a business or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. We measure the recoverability of assets that we will continue to use in our operations by comparing the carrying value of the asset grouping to our estimate of the related total future undiscounted net cash flows. If an asset grouping’s carrying value is not recoverable through the related undiscounted cash flows, the asset grouping is considered to be impaired.
In the event if the carrying value exceeds the future undiscounted net cash flows, we would estimate the fair values using a combination of market and income approaches. Under the market approach, fair values would be estimated using published market multiples for comparable companies. Under the income approach, a discounted cash flow methodology would be used, considering: (i) management estimates, such as projections of revenue, operating costs and cash flows, taking into consideration historical and anticipated financial results; (ii) general economic and market conditions; and (iii) the impact of planned business and operational strategies.
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We measure the impairment by comparing the difference between the asset grouping’s carrying value and its fair value. We measure our long-lived assets, in accordance to ASC 360 impairment (patents, trademarks, intangibles, fixed assets) Long-lived assets are considered a non-financial asset and are recorded at fair value only if an impairment charge is recognized. Impairments are determined for groups of assets related to the lowest level of identifiable independent cash flows. We make subjective judgments in determining the independent cash flows that can be related to specific asset groupings. In addition, as we review our manufacturing process and other manufacturing planning decisions, we must make subjective judgments regarding the remaining useful lives of assets. When we determine that the useful lives of assets are shorter than originally estimated, we accelerate the rate of depreciation over the assets’ new, shorter useful lives. At the end of fiscal year December 31, 2022, we engaged an outside third party to provide a valuation for the impairment of our patents and trademarks. The determination was, from a qualitative standpoint, it would appear highly unlikely that there would be any impairment to the patnets. (see Note 2 Summary of Significant Accounting Policies)
Redeemable Warrants
We utilize the guidance contained in ASC 480 Distinguishing Liabilities from Equity in the determination of whether to record warrants and options as Equity and/or Liability. If the guidance of ASC 480 is deemed inconclusive, we continue our analysis utilizing ASC 815 Derivatives and Hedging.
Our method of recording the related value is consistent with the standards as defined by the Financial Accounting Standards Board utilizing the concept of “Fair Value” from ASC 820-10-55-1 that states that any fair value measurement requires that the reporting entity, to determine the valuation technique(s) appropriate for the measurement, consider the availability of data with which to develop inputs that represent the assumptions that market participants would use in pricing the asset or liability and the level in the fair value hierarchy within which the inputs fall.
We recomputed the value of the redeemable warrants at the end of each quarterly period. We use the Monte Carlo Simulation approach which includes subjective input assumptions that are consistently applied each quarter. If we were to alter our assumptions or the numbers input based on such assumptions, the resulting fair value could be materially different. As discussed in greater detail in “Fair Value” at the beginning of this ITEM 7, the significant assumptions using this model are: (i) Risk-Free Interest Rate; (ii) Expected Holding Period; (iii) Expected Volatility; (iv) Expected Dividend Yield; (v) Expected Probability of a Fundamental Transaction; (vi) Expected Timing of Announcement of a Fundamental Transaction; (vii) Expected 100 Day Volatility at Announcement of a Fundamental Transaction; (viii) Expected Risk-Free Interest Rate at Announcement of a Fundamental Transaction; and (ix) Expected Time Between Announcement and Consummation of a Fundamental Transaction. The derivative is values using Level 3 inputs which are highly subjective and require a high degree of judgment.
Concentration of Credit Risk
Our policy is to limit the amount of credit exposure to any one financial institution and place investments with financial institutions evaluated as being credit worthy, or in short-term money markets, which are exposed to minimal interest rate and credit risks. We have bank deposits and overnight repurchase agreements that exceed federally insured limits.
Concentration of credit risk, with respect to receivables, is limited through our credit evaluation process. We do not require collateral on our receivables. Our receivables historically consisted principally of amounts due from wholesale drug companies.
| ITEM 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
Not Applicable.
| ITEM 8. | Financial Statements and Supplementary Data. |
Please see the “Index to Financial Statements and Financial Statement Schedule” on page F-1.
| ITEM 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. |
None.
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| ITEM 9A. | Controls and Procedures. |
Effectiveness of Control Procedures
As of December 31, 2022, the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our Management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the reports that we file or submit under the Securities Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as the principal executive and financial officers, respectively, to allow final decisions regarding required disclosures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the controls and procedures were effective as of December 31, 2022, to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management has concluded that the financial statements included in this Form 10-K present fairly, in all material respects our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.
Changes in Internal Control over Financial Reporting
We made no changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
Management’s Report on Internal Control over Financial Reporting
Our Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) or 15d-15(f), under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and affected by our Board of Directors, Management and other personnel, and to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on its financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, Management used the criteria set forth in the framework in 2013 established by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control—Integrated Framework, (COSO). Based on this assessment, Management has not identified any material weaknesses as of December 31, 2021. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Management has concluded that we did maintain effective internal control over financial reporting as of December 31, 2022, based on the criteria set forth in “Internal Control—Integrated Framework” issued by the COSO.
| ITEM 9B. | Other Information. |
On March 28, 2023, our Board approved an amendment and restatement of the our bylaws (as amended and restated, the “Restated and Amended Bylaws”), effective as of such date.
The amendments set forth in the Restated and Amended Bylaws, among other things: (a) revise procedures and disclosure requirements for stockholders to provide notice of nominations of directors and the submission of proposals for consideration at meetings of our stockholders including, among other things, disclosure of specified information about the noticing stockholder(s), any nominees, and persons acting in concert with them, and information about agreements, arrangements, and understandings between the noticing stockholder(s) and others (including any nominees) relating to AIM or the proposal or nominations; (b) clarify the powers of the Board and the chair of a stockholder meeting to establish rules for the conduct of any meeting of stockholders, as well as the chair’s power to convene, recess, or adjourn the meeting; (c) revise procedures related to stockholder and Board actions taken by written consent to more closely reflect delivery mechanisms contemplated by the General Corporation Law of the State of Delaware (the “DGCL”); (d) adopt a forum selection bylaw to provide that the state and federal courts of the State of Delaware shall be the exclusive forum for litigating derivative actions, claims arising under the DGCL, the certificate of incorporation, or the bylaws, breach of fiduciary duty claims against AIM, its directors or officers, or claims relating to AIM’s internal affairs, and that the federal courts shall be the exclusive forum for the resolution of claims under the Securities Act of 1933, as amended; and (e) make certain administrative, modernizing, clarifying, and conforming changes, including making updates to reflect recent amendments to the DGCL.
The foregoing summary of the Restated and Amended Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Restated and Amended Bylaws, which is attached hereto as Exhibit 3.7(ii) and incorporated herein by reference.
In addition, the Board increased its size to four and appointed Nancy Bryan to fill the new slot, appointed her to a number of Board committees and reduced compensation to directors. Please see “Item 10. Directors and Executive Officers and Corporate Governance” and “Item 11. Executive Compensation.”
| ITEM 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. |
None.
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PART III
| ITEM 10. | Directors and Executive Officers and Corporate Governance. |
The following sets forth biographical information about each of our Directors and Executive Officers as of the date of this report:
| Name | Age | Position | ||
| Thomas K. Equels, Esq | 70 | Chief Executive Officer, President, and Director | ||
| Peter W. Rodino III | 71 | Chief Operating Officer, General Counsel & Secretary | ||
| William M. Mitchell, M.D., Ph.D. | 88 | Chairman of the Board and Director | ||
| Stewart L. Appelrouth | 69 | Director | ||
| Nancy Bryan | 65 | Director | ||
| Robert Dickey IV | 66 | Chief Financial Officer |
Each Director has been elected to serve until the next annual meeting of stockholders, or until their earlier resignation, removal from office, death or incapacity. Each Executive Officer serves at the discretion of the Board of Directors, subject to rights, if any, under contracts of employment.
We believe our Board Members represent a desirable diversity of backgrounds, skills, education and experiences, and they all share the personal attributes of dedication to be effective directors. In recommending Board candidates, Corporate Governance and Nomination Committee considers a candidate’s: (1) general understanding of elements relevant to the success of a publicly traded company in the current business environment; (2) understanding of our business; and (3) diversity in educational and professional background. The Committee also gives consideration to a candidate’s judgment, competence, dedication and anticipated participation in Board activities along with experience, geographic location and special talents or personal attributes. The following are qualifications, experience and skills for Board members which are important to our business and its future:
Leadership Experience: We seek directors who have demonstrated strong leadership qualities. Such leaders bring diverse perspectives and broad business insight to our Company. The relevant leadership experience that we seek includes a past or current leadership role in a large or entrepreneurial company, a senior faculty position at a prominent educational institution or a past elected or appointed senior government position.
Industry or Academic Experience: We seek directors who have relevant industry experience, both with respect to the disease areas where we are developing new therapies as well as with the economic and competitive dynamics of pharmaceutical markets, including those in which our drugs will be prescribed.
Scientific, Legal or Regulatory Experience: Given the highly technical and specialized nature of biotechnology, we desire that certain of our directors have advanced degrees, as well as drug development experience. Since we are subject to substantial regulatory oversight, both here and abroad by the FDA and other agencies, we also desire directors who have legal or regulatory experience.
Finance Experience: We believe that our directors should possess an understanding of finance and related reporting processes, particularly given the complex budgets and long timelines associated with drug development programs.
THOMAS K. EQUELS, has been a Director and serves as our Executive Vice Chairman (since 2008), Chief Executive Officer (since 2016) and President (since 2015). Mr. Equels was the owner of and former President and Managing Director of the Equels Law Firm headquartered in Miami, Florida that focused on litigation. For over a quarter century, Mr. Equels represented national and state governments as well as companies in the banking, insurance, aviation, pharmaceutical and construction industries. Mr. Equels received his Juris Doctor degree with high honors from Florida State University. He received his Bachelor of Science, summa cum laude, from Troy University and also obtained his Master of Science Degree from Troy University. Mr. Equels began his professional career as a military pilot. Equels is a member of the Board of Directors of BioFlorida Inc., an life science industry organization representing 6,700 establishments and research organizations in the biopharmaceutical, medical technology, and bioagriculture sectors that collectively employ 94,000 Floridians. He served in Vietnam and was awarded two Distinguished Flying Crosses, the Bronze Star, the Purple Heart, and fifteen Air Medals. In 2012, he was Knighted by Pope Benedict.
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THOMAS K. EQUELS – Director Qualifications:
| ● | Leadership Experience – Military; Owner and former President; Managing Director of Equels Law Firm, Court-appointed receiver in numerous industries; | |
| ● | Industry Experience –legal counsel, General Counsel, CFO and CEO of the company; and | |
| ● | Scientific, Legal or Regulatory Experience – Law degree with over 25 years as a practicing attorney specializing in litigation, development of clinical trials, creating intellectual property concepts, and established plan to finance drug development. |
WILLIAM M. MITCHELL, M.D., Ph.D., has been a Director since July 1998 and Chairman of the Board since February 2016. Dr. Mitchell is a Professor of Pathology at Vanderbilt University School of Medicine and is a board-certified physician. Dr. Mitchell earned a M.D. from Vanderbilt and a Ph.D. from Johns Hopkins University, where he served as House Officer in Internal Medicine, followed by a Fellowship at its School of Medicine. Dr. Mitchell has published over 200 papers, reviews and abstracts that relate to viruses, anti-viral drugs, immune responses to HIV infection, and other biomedical topics. Dr. Mitchell has worked for and with many professional societies that have included the American Society of Investigative Pathology, the International Society for Antiviral Research, the American Society of Clinical Oncology, the American Society of Biochemistry and Molecular Biology, the American Chemical Society, and the American Society of Microbiology. Dr. Mitchell is a member of the American Medical Association. He has served on numerous government review committees, among them the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health, including the initial AIDS and Related Research Review Group. Dr. Mitchell previously served as one of our Directors from 1987 to 1989. The Board has determined Dr. Mitchell to be an Independent Director as required under Section 803(2) of the NYSE: American Company Guide and Rule 10A-3 under the Exchange Act.
WILLIAM M. MITCHELL, M.D., Ph.D. – Director Qualifications:
| ● | Leadership Experience – Professor at Vanderbilt University School of Medicine. He was a member of the Board of Directors of Chronix Biomedical, a company involved in next generation DNA sequencing for medical diagnostics, until its recent acquisition/merger by the public company, Oncocyte, and was the former Chairman of its Medical Advisory Board. Additionally, he has served on multiple governmental review committees of the National Institutes of Health, Centers for Disease Control and Prevention and for the European Union, including key roles as Chairman; | |
| ● | Academic Experience – Well published medical researcher with extensive investigative experience on virus and immunology issues relevant to our scientific business; and | |
| ● | Scientific, Legal or Regulatory Experience – M.D., Ph.D. and professor at a top ranked school of medicine, and inventor of record on numerous U.S. and international patents who is experienced in regulatory affairs through filings with the FDA. |
STEWART L. APPELROUTH, CPA was appointed as a director and head of the Audit Committee in August 2016 and is a certified public accountant and partner at Appelrouth Farah & Co., P.A. and, since March 2022, a partner at Citrin Cooperman Advisors, LLP, both Certified Public Accountants. Mr. Appelrouth is also a certified forensic accountant and possesses 40 years of experience in Accounting and Consulting. He is a member of or has affiliations with the AICPA, American College of Forensic Examiners, FINRA Arbitrator, Association of Certified Fraud Examiners, past member of the Florida Bar Grievance Committee, Florida Institute of Certified Public Accountants and InfraGard Member, a national information sharing program between the Federal Bureau of Investigation and the private sector.
Mr. Appelrouth graduated from Florida State University in 1975 and received his Master’s Degree in Finance from Florida International University in 1980. The Board has determined Mr. Appelrouth to be an Independent Director as required under Section 803(2) of the NYSE: American Company Guide and Rule 10A-3 under the Exchange Act.
STEWART L. APPELROUTH – Director Qualifications:
| ● | Leadership Experience –has served in leadership positions on numerous Boards and other organizations; | |
| ● | Industry Experience – Partner at certified public accounting and advisory firm; Certified Public Accountant and Certified Fraud Examiner; | |
| ● | Regulatory Experience – FINRA Arbitrator. | |
| ● | Financial Expert – over 40 years of accounting and audit experience. |
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NANCY K. BRYAN was appointed as a director in March 2023. Ms. Bryan is the President and CEO of BioFlorida. In this role, she leads the development and execution of strategies to strengthen Florida’s life sciences industry and advance innovative products and technologies that improve lives. She has 25 years of experience in the life sciences in commercial positions of increasing responsibility involving primary care, biologics and specialty markets. Her experience began with major pharmaceutical companies (MERCK, GlaxoSmithKline) and progressed to executive leadership positions in specialty pharmaceuticals and smaller, start-up biotech companies (Indevus Pharmaceuticals, NPS Pharmaceuticals). She has served on executive leadership teams and played a key role in companies’ successes including marketing, sales, business development, financing initiatives and investor and PR communications. Throughout her career, Ms. Bryan has developed, launched and commercialized many products including: blockbusters (Zantac, Levitra), major biologics (Tysabri) and orphan drugs for rare diseases (Valstar for bladder cancer, Supprelin LA for central precocious puberty) and has established franchises in a wide variety of therapeutic areas including: Oncology, Anti-infectives, GI and Autoimmune (MS,CD).
Ms. Bryan earned a BA in Economics from the University of Virginia and an MBA from Columbia University. Academic honors include Phi Beta Kappa and Beta Gamma Sigma.
The Board has determined Ms. Bryan to be an Independent Director as required under Section 803(2) of the NYSE: American Company Guide and Rule 10A-3 under the Exchange Act.
NANCY K. BRYAN – Director Qualifications:
| ● | Leadership Experience – President and CEO of BioFlorida; served on executive leadership teams and played a key role in companies’ successes including marketing, sales, business development, financing initiatives and investor and PR communications; and | |
| ● | Scientific, Legal or Regulatory Experience – 25 years of experience in the life sciences in commercial positions of increasing responsibility involving primary care, biologics and specialty markets; throughout her career, she has developed, launched and commercialized many products, major biologics and orphan drugs for rare diseases and has established franchises in a wide variety of therapeutic areas including: Oncology, Anti-infectives, GI and Autoimmune (MS,CD). |
Information about our Executive Officers
In addition to Mr. Equels (discussed above), the following are (or were) our Executive Officers during fiscal 2022:
PETER W. RODINO III was a Director from July 2013 until September 30, 2016, at which time he resigned as a member of our Board to permit him to serve us in a new capacity. Effective October 1, 2016, we retained Mr. Rodino as our Executive Director for Governmental Relations, and as our General Counsel and, as of October 16, 2019, Mr. Rodino assumed the role of Chief Operating Officer. Mr. Rodino has been our Secretary since November 2016. Mr. Rodino has broad legal, financial, and executive experience. In addition to being President of Rodino Consulting LLC and managing partner at several law firms during his many years as a practicing attorney, he served as Chairman and CEO of Crossroads Health Plan, the first major Health Maintenance Organization in New Jersey. He also has had experience as an investment executive in the securities industry and acted as trustee in numerous Chapter 11 complex corporate reorganizations. Previously, as founder and president of Rodino Consulting, Mr. Rodino provided business and government relations consulting services to smaller companies with a focus on helping them develop business plans, implement marketing strategies and acquire investment capital. Mr. Rodino holds a B.S. in Business Administration from Georgetown University and a J.D. degree from Seton Hall University.
ROBERT DICKEY IV, has been our Chief Financial Officer since April 4, 2022. Mr. Dickey has more than 25 years of experience of C-suite financial leadership for life science and medical device companies, both private and public, ranging from preclinical development to commercial operations and across a variety of disease areas and medical technologies. Earlier in his career, Mr. Dickey spent 18 years in investment banking, primarily at Lehman Brothers, with a background split between mergers and acquisitions and capital markets transactions. Mr. Dickey was a senior vice president of the Company from 2008 until 2013. Throughout his career he has demonstrated C-level (CFO, COO and CEO) and Board level experience in public, private, revenue stage and development stage life sciences and medical device companies, and has played a leading role in two start-ups. His prior career as an investment banker included 14 years at Lehman Brothers. Mr. Dickey is experienced in all stages of the business lifecycle, including start-up, high-growth and turnarounds, and in building businesses and achieving an exit. He also has international experience and has expertise in public and private financings, M&A, partnering/licensing transactions, project management and Chapter 11 reorganizations, as well as interacting with Boards, VCs, shareholders and Wall Street. Mr. Dickey has an MBA from The Wharton School and an AB from Princeton University.
DAVID R. STRAYER, M.D., has acted as our Medical Director and Chief Scientific Officer since 1986. He has served as Professor of Medicine at the Medical College of Pennsylvania and Hahnemann University. Dr. Strayer is Board Certified in Medical Oncology and Internal Medicine with research interests in the fields of cancer and immune system disorders. He has served as principal investigator in studies funded by the Leukemia Society of America, the American Cancer Society, and the National Institutes of Health. Dr. Strayer attended the School of Medicine at the University of California at Los Angeles where he received his M.D. in 1972.
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Audit Committee and Audit Committee Expert
The Audit Committee of our Board consists of Stewart L. Appelrouth (Chair) and Dr. Mitchell, both determined by the Board to be Independent Directors as required under Section 803(2) of the NYSE: American Company Guide and Rule 10A-3 under the Exchange Act. The Board has determined that Mr. Appelrouth qualifies as an “audit committee financial expert” as that term is defined by Section 803B(2) of the NYSE: American Company Guide and the rules and regulations of the SEC. On March 28, 2023, Ms. Bryan was appointed as an additional member of the Audit Committee.
We believe Dr. Mitchell and Mr. Appelrouth to be independent of management and free of any relationship that would interfere with their exercise of independent judgment as members of this Committee. The principal functions of the Audit Committee are to (1) assist the Board in fulfilling its oversight responsibility relating to the annual independent audit of our consolidated financial statements and management’s assessment of internal control over financial reporting, the engagement of the independent registered public accounting firm and the evaluation of the independent registered public accounting firm’s qualifications, independence and performance; (2) select the independent registered public accounting firm, oversee the work of the independent registered public accounting firm, pre-approve all auditing services of the independent registered public accounting firm and evaluate the independent registered public accounting firm’s qualifications, independence and performance; (3) prepare the reports or statements as may be required by NYSE American or the securities laws; (4) assist the Board in fulfilling its oversight responsibility relating to the integrity of our financial statements and financial reporting process and our system of internal accounting and financial controls; (5) discuss the financial statements and reports with management and the independent registered public accounting firm, including critical accounting policies and practices, our disclosures in our Annual Report and any significant financial reporting that arose in the preparation of the audited financial statements; and (6) oversee the Disclosure Control Committee. The Audit Committee is authorized to engage independent counsel and other advisors as it deems necessary.
This Audit Committee formally met six times in 2022 with all committee members in attendance. Our General Counsel and Chief Financial Officer support the Audit Committee in its work. The full text of the Audit Committee’s Charter, as approved by the Board, is available on our website: http://www.aimimmuno.com in the “Investor Relations” tab under “Corporate Governance”.
Scientific Advisory Board (“SAB”)
The SAB was established to leverage its member’s scientific and pharmaceutical expertise and advice to advance our drug development programs by providing guidance on steering us forward and capitalizing on business opportunities as well as interactions with the FDA. It is responsible for: (i) reviewing all submissions made by us to the FDA and other regulators to ensure that the submissions fully, accurately, and timely describe the status of any clinical trials, tests, or other studies or analyses of drug safety and efficacy undertaken by us, and any agreements, protocols, or guidance provided by relevant regulatory agencies; and (ii) monitoring and supervising our relationship with the FDA. The SAB shall have free and open access to our scientific and executive personnel, including the Chief Scientific Officer and the members of our Board of Directors. The SAB is comprised of William Mitchell, M.D., Chairman, and Ronald Brus, M.D., W. Neal Burnette, M.D., Christopher Nicodemus, M.D., and Philip Ransom Roane, Ph.D. all of whom are members. The SAB did not meet in 2022,
Disclosure Controls Committee
The Disclosure Controls Committee (“DCC”) reports to the Audit Committee and is responsible for procedures and guidelines on managing disclosure information. The purpose of the DCC is to make certain that information required to be publicly disclosed is properly accumulated, recorded, summarized and communicated to the Board and management. This process is intended to allow for timely decisions regarding communications and disclosures and to help ensure that we comply with related SEC rules and regulations. The DCC is responsible for (1) implementing, monitoring and evaluating our disclosure controls and procedures; (2) reviewing and evaluating our interactions with the FDA and other similar regulatory bodies; and (3) reviewing with the Audit Committee our earnings and other press releases and periodic reports and proxy statements that are to be filed with the SEC. Robert Dickey, our CFO, is the DCC’s Investor Relations Coordinator and Chair. The other members of the DCC are Peter Rodino, our COO and General Counsel, William Mitchell, one of our Independent Directors, Dr. David Strayer, Chief Scientific Officer, Diane Young, our Clinical Project Manager, Jodie Pelz, our Director of Finance, and Ann Marie Coverly, Director of HR and Administration serving as the Deputy Investor Relations Coordinator. The full text of the DCC’s Charter, as approved by the Board, is available on our website: www.aimimmuno.com in the “Investor Relations” tab under “Corporate Governance.” The DCC actively met on numerous occasions in 2021.
The DCC actively met on numerous occasions in 2022.
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Executive Committee
In February 2016, our Board formed the Executive Committee. The Executive Committee reports to the Board, and its purpose is to aid the Board in handling matters which, in the opinion of the Chairman of the Board, should not be postponed until the next scheduled meeting of the Board. Mr. Equels, our Chief Executive Officer is the chair of the Committee, and is a member of the Committee along with two of our independent directors, Mr. Appelrouth and Dr. Mitchell. The full text of the Executive Committee Charter, as approved by the Board, is available on our website: www.aimimmuno.com in the “Investor Relations” tab under “Corporate Governance”. The Committee did not meet in 2022. On March 28, 2023, Ms. Bryan was appointed as an additional member of this committee.
Corporate Governance and Nomination Committee
The Corporate Governance and Nomination Committee consists of Dr. William M. Mitchell (Chair) and Director, and Mr. Stewart L. Appelrouth, Director. In 2022, the Corporate Governance and Nomination Committee met three times. All committee members were in attendance for the meetings. On March 28, 2023, Ms. Bryan was appointed as an additional member of this committee.
All of the members of the Committee meet the independence standards contained within the NYSE American Company Guide and AIM’s Corporate Governance Guidelines. The full text of the Corporate Governance and Nomination Committee Charter as well as the Corporate Governance Guidelines, are available on our website: https://aimimmuno.com/corporate-governance/.
The Corporate Governance and Nomination Committee is responsible for (1) assisting the Board in identifying, recommending, assessing, recruiting and selecting candidates to serve as members of the Board, including in connection with filling vacancies; (2) assisting the Board in developing criteria for identifying and selecting individuals for nomination to the Board; (3) advising the Board with respect to the Board’s composition, procedures and committees; (4) reviewing, assessing and recommending appropriate Corporate Governance Guidelines; (5) reviewing the charter of each committee of the Board and recommending to the Board the number, identity and responsibilities of each committee; (6) reviewing our business practices as they relate to preserving our good reputation; (7) developing and recommending to the Board procedures for succession planning for our executives and continuity of the Board; and (8) assessing the effectiveness of the Board in meeting the long-terms interest of the stockholders. The Committee is authorized to retain search firms and other consultants to assist it in identifying candidates and fulfilling its other duties.
Stockholders who wish to suggest qualified candidates should write to the Corporate Secretary, AIM ImmunoTech Inc., 2117 SW Highway 484, Ocala, Florida 34473, stating in detail the qualifications of such persons for consideration by the Committee. Director candidates should demonstrate the qualifications, experience and skills for Board members which are important to AIM’s business and its future, as outlined in Proposal 1 below.
We aspire to the highest standards of ethical conduct; reporting results with accuracy and transparency; and maintaining full compliance with the laws, rules and regulations that govern our business. AIM’s Corporate Governance Guidelines embody many of our policies and procedures which are at the foundation of our commitment to best practices. The guidelines are reviewed annually and revised if deemed necessary, to continue to reflect best practices.
Code of Ethics
Our Board of Directors adopted a revision to the 2003 Code of Ethics and business conduct for officers, directors, employees, agents and consultants. The principal amendments included broadening the Code’s application to our agents and consultants, adoption of a regulatory compliance policy and adoption of a policy for protection and use of Company computer technology for business purposes only. On an annual basis, this Code is reviewed and signed by each Officer, Director, employee and strategic consultant with none of the amendments constituting a waiver of provision of the Code of Ethics on behalf of our Chief Executive Officer, Chief Financial Officer, or persons performing similar functions.
You may obtain a copy of this Code by visiting our website at www.aimimmuno.com (Investor Relations / Corporate Governance) or by written request to our office at 2117 SW Highway 484, Ocala, FL 34473.
| ITEM 11. | Executive Compensation. |
COMPENSATION DISCUSSION AND ANALYSIS
This discussion and analysis describes our executive compensation philosophy, process, plans and practices as they relate to our “Named Executive Officers” (“NEO”) listed below and gives the context for understanding and evaluating the more specific compensation information contained in the narratives, tables and related disclosures that follow. For the purposes of discussion and analysis, the following NEOs are included in the narratives, tables and related disclosures that follow:
| ● | Thomas K. Equels, Chief Executive Officer (“CEO”) and President; | |
| ● | Robert Dickey IV, Chief Financial Officer (“CFO”); and | |
| ● | Peter Rodino, Chief Operating Officer (“COO”), General Counsel and Company Secretary (“CS”). |
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In November 2020, we entered into an employment agreement with Thomas Equels, the agreement runs for five years with a base salary of $850,000. Mr. Equels will be awarded a year end target bonus of $350,000. In March 2021, subsequent to the fiscal year ended December 31, 2020, we entered into employment agreements with Peter Rodino. The agreement runs for three years, respectively. Compensation is divided into both short- and long-term compensation. Short term (cash) compensation will consist of a base salary of $425,000. Mr. Rodino will be awarded a year-end target bonus based on performance and goals established by the Compensation Committee. Long term compensation will be provided by 100,000 non-qualified yearly stock options with one-year vesting commencing on November 30, 2021. In addition, Mr. Equels and Mr. Rodino will be be entitled to awards (“Event Awards”) equal to 3% for Mr. Equels and 1% for Mr. Rodino of the “Gross Proceeds” from specific events such as Acquisitions, licensing agreements or “therapeutic indication” (each, an “Event”). Gross Proceeds means those cash amounts paid to us by the other parties for licensing agreements, therapeutic acquisitions or any other one time cash generating event. Therapeutic indications are for example target organ specific pathologically defined cancer indications, vaccine enhancers, broad spectrum antiviral indications, or medical entities associated with persistent severe fatigue. Mr. Equels and Mr. Rodino also will each be entitled to an award (an “Acquisition Award”) equal to 3% for Mr. Equels and 1% for Mr. Rodino of the Gross Proceeds, upon the sale of our Company or substantially all of its assets (an “Acquisition”). An Event Award or Acquisition Award shall be paid in cash within 90 days of our receipt of the Gross Proceeds. On March 2022, the Company entered into a consulting agreement with Foresite Advisors, LLC, a company wholly-owned by Robert Dickey IV, for $375 an hour pursuant to which Mr. Dickey will serve as our new Chief Financial Officer effective April 4, 2022.
Governance of Compensation Committee
The Compensation Committee consists of the following two directors, each of whom is “independent” under applicable NYSE American rules, a “Non-Employee Director” as defined in Rule 16b-3 under the Exchange Act, and an “Outside Director” as defined under the U.S. Treasury regulations promulgated under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”): William Mitchell, M.D., Ph.D. (Chair) and Stewart L. Appelrouth. On March 28, 2023, Ms. Bryan was appointed as an additional member of this committee.
The Compensation Committee oversees implementation and administration of our compensation and employee benefits programs with the goal of attracting, retaining and motivating executives and officers, as well as other employees, to improve their performance and our financial performance. In that regard, the Compensation Committee (1) reviews and approves corporate goals and objectives relevant to compensation; (2) evaluates the performance and compensation of our officers and executives and reviews the compensation of all other non-officer executives that are considered highly paid; (3) reviews and approves employment agreements, severance agreements, change of control agreements, deferred compensation agreements, perquisites and similar compensation arrangements of our executive officers; (4) makes recommendations to the Board on the compensation of non-employee members of the Board; (5) administers our incentive and equity-based compensation plans, including, approving the grant of equity awards under such plans, reviewing such plans and making recommendations to the Board regarding the adoption, amendment or termination of such plans; (6) selects and determines the fees and scope of work of its compensation consultants; and (7) reviews our compensation strategy to assure that it continues to advance our objectives and promote stockholder value. The full text of the Compensation Committee’s Charter, as approved by the Board, is available on our website: www.aimimmuno.com in the “Investor Relations” tab under “Corporate Governance”.
This Committee formally met four times in 2022 and all committee members were in attendance for the meetings. Our General Counsel, Chief Financial Officer and Director of Human Resources support the Compensation Committee in its work.
Results of Stockholder Advisory Vote on Executive Compensation
At the November 2022 Annual Meeting of Stockholders, the Stockholders did not approve the annual, non-binding advisory vote on Executive Compensation.
Objectives and Philosophy of Executive Compensation
The primary objectives of the Compensation Committee of our Board of Directors with respect to Executive compensation are to attract and retain the most talented and dedicated Executives possible, to tie annual and long-term cash and stock incentives to achievement of measurable performance objectives, and to align Executives’ incentives with stockholder value creation. To achieve these objectives, the Compensation Committee expects to implement and maintain compensation plans that tie a substantial portion of Executives’ overall compensation to key strategic financial and operational goals such as the establishment and maintenance of key strategic relationships, the development of our products, the identification and advancement of additional products and the performance of our common stock price. The Compensation Committee evaluates individual Executive performance with the goal of setting compensation at levels the Committee believes are comparable with Executives in other companies of similar size and stage of development operating in the biotechnology industry while taking into account our relative performance, our own strategic goals, governmental regulations and the results of Stockholder Advisory Votes regarding executive compensation.
EXECUTIVE COMPENSATION
The following table provides information on the compensation during the fiscal years ended December 31, 2022 and 2021 of Thomas Equels, our Chief Executive Officer, Peter Rodino our Chief Operating Officer, General Counsel and Secretary, Robert Dickey IV our Chief Financial Officer and Ellen Lintal, our former Chief Financial Officer.
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Summary Compensation Table
| Name & Principal Position | Year | Salary / Fees $ (2) | Bonus $ | Stock Awards $ | Option Awards $ (1) | Non-Equity Incentive Plan Compensation $ | Change in Pension Valued and NQDC Earnings $ | All Other Compensation $ | Total $ (1) | |||||||||||||||||||||||||||
| Thomas K Equels | 2022 | 850,000 | 300,000 | — | 111,556 | — | — | 90,472 | 1,352,028 | |||||||||||||||||||||||||||
| CEO & President (2)3 | 2021 | 850,000 | 352,500 | — | 473,038 | — | — | 86,106 | 1,761,644 | |||||||||||||||||||||||||||
| Ellen Lintal | 2022 | 90,417 | — | — | 32,110 | — | — | 18,699 | 141,226 | |||||||||||||||||||||||||||
| Former CFO (4)(7) | 2021 | 350,000 | 102,500 | — | 132,346 | — | — | 49,893 | 634,739 | |||||||||||||||||||||||||||
| Robert Dickey IV | 2022 | 37,815 | $ | 10,000 | — | — | — | — | — | 47,815 | ||||||||||||||||||||||||||
| CFO (5) | 2021 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Peter Rodino | ||||||||||||||||||||||||||||||||||||
| COO, General Counsel | 2022 | 425,000 | 150,000 | — | 69,295 | — | — | 55,003 | 699,298 | |||||||||||||||||||||||||||
| & Secretary (6) | 2021 | 425,000 | 102,500 | — | 132,346 | — | — | 57,949 | 717,795 | |||||||||||||||||||||||||||
Notes:
| (1) | All option awards were valued using the Black-Scholes method. |
| (2) | For Named Executive Officers, who are also Directors that receive compensation for their services as a Director, the Salary/Fees and Option Awards columns include compensation that was received by them for their role as a member of the Board of Directors. As is required by Regulation S-K, Item 402(c), compensation for services as a Director have been reported within the “Summary Compensation Table” (above) for fiscal years of 2022 and 2021 as well as reported separately in the “Compensation of Directors” section (see below) for calendar year 2022. |
Pursuant to his current employment agreement, Mr. Equels is entitled to 3% of the “Gross Proceeds” (as defined in the employment agreement) for “significant events” (as described in the employment agreement) There were no payments during 2022 and 2021.
| (3) | Mr. Equels’ All Other Compensations consists of: |
| 2022 | 2021 | |||||||
| Life & Disability Insurance | $ | 31,375 | $ | 22,037 | ||||
| Healthcare Insurance | 26,764 | 26,479 | ||||||
| Car Expenses/Allowance | 18,000 | 18,000 | ||||||
| 401(k) Matching Funds | 14,333 | 19,500 | ||||||
| Total | $ | 90,472 | $ | 86,016 | ||||
| (4) | Ms. Lintal’s All Other Compensations consists of: |
| 2022 | 2021 | |||||||
| Life & Disability Insurance | $ | 803 | $ | 3,014 | ||||
| Healthcare Insurance | 12,146 | 12,978 | ||||||
| Car Expenses/Allowance | 3,600 | 14,400 | ||||||
| 401(k) Matching Funds | 2,150 | 19,500 | ||||||
| Total | $ | 18,699 | $ | 49,892 | ||||
| (5) | Mr. Dickey’s All Other Compensations consists of: |
| 2022 | 2021 | |||||||
| Life & Disability Insurance | $ | — | $ | — | ||||
| Healthcare Insurance | — | — | ||||||
| Car Expenses/Allowance | — | — | ||||||
| 401(k) Matching Funds | — | — | ||||||
| Total | $ | — | $ | — |
| (6) | Mr. Rodino’s All Other Compensations consists of: |
| 2022 | 2021 | |||||||
| Life & Disability Insurance | $ | 2,450 | $ | 2,521 | ||||
| Healthcare Insurance | 23,820 | 21,528 | ||||||
| Car Expenses/Allowance | 14,400 | 14,400 | ||||||
| 401(k) Matching Funds | 14,333 | 19,500 | ||||||
| Total | $ | 55,003 | $ | 57,949 | ||||
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| (7) | On April 4, 2022, the Company entered into a consulting agreement with Ms. Lintal, who stepped down as the Company’s Chief Financial Officer on April 4, 2022. |
| Outstanding Equity Awards at Fiscal Year End | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Options Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | ||||||||||||||||||||||||||
| Thomas K Equels | 568 | — | — | 163.68 | 6/6/2023 | — | — | — | — | ||||||||||||||||||||||||||
| President and Chief | 284 | — | — | 132.00 | 8/2/2023 | — | — | — | — | ||||||||||||||||||||||||||
| Executive Officer | 568 | — | — | 190.08 | 6/6/2024 | — | — | — | — | ||||||||||||||||||||||||||
| 568 | — | — | 132.00 | 6/8/2025 | — | — | — | — | |||||||||||||||||||||||||||
| 568 | — | — | 73.92 | 6/8/2026 | — | — | — | — | |||||||||||||||||||||||||||
| 6,818 | — | — | 24.64 | 6/8/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 323 | — | — | 21.56 | 6/15/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 323 | — | — | 21.56 | 6/30/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 412 | — | — | 21.12 | 7/15/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 472 | — | — | 18.48 | 7/31/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 485 | — | — | 18.04 | 8/15/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 556 | — | — | 15.84 | 8/31/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 8,446 | — | — | 16.28 | 2/13/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 2,841 | — | — | 16.72 | 4/12/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 6,818 | — | — | 13.20 | 5/16/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 5,682 | — | — | 13.20 | 5/16/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 3,666 | — | — | 13.64 | 7/18/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 6,457 | — | — | 9.68 | 10/17/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 23 | — | — | 9.68 | 11/14/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 9,685 | — | — | 9.68 | 1/28/2029 | — | — | — | — | |||||||||||||||||||||||||||
| 300,000 | — | — | 3.05 | 8/12/2030 | — | — | — | — | |||||||||||||||||||||||||||
| 300,000 | — | — | 1.96 | 11/11/2030 | — | — | — | — | |||||||||||||||||||||||||||
| — | 300,000 | 1.71 | 11/11/2031 | — | — | — | — | ||||||||||||||||||||||||||||
| Total | 955,563 | 300,000 | — | — | — | — | — | ||||||||||||||||||||||||||||
| Ellen Lintal | 23 | — | — | 9.68 | 11/14/2029 | — | — | — | — | ||||||||||||||||||||||||||
| Former Chief Financial Officer | 75,000 | 75,000 | — | 1.85 | 12/9/2030 | — | — | — | — | ||||||||||||||||||||||||||
| 100,000 | — | 1.44 | 11/30/2031 | — | — | — | — | ||||||||||||||||||||||||||||
| 50,000 | — | — | 0.70 | 3/3/2023 | — | — | — | — | |||||||||||||||||||||||||||
| — | 50,000 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Total | 225,023 | 50,000 | — | — | — | — | — | ||||||||||||||||||||||||||||
| Robert Dickey IV | 50,000 | — | — | 0.70 | 03/03/2032 | — | — | — | — | ||||||||||||||||||||||||||
| Chief financial Officer | |||||||||||||||||||||||||||||||||||
| Total | 50,000 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Peter Rodino | 285 | — | — | 132.00 | 8/2/2023 | — | — | — | — | ||||||||||||||||||||||||||
| COO, General Counsel and Secretary | 285 | — | — | 68.65 | 6/21/2026 | — | — | — | — | ||||||||||||||||||||||||||
| 151 | — | — | 21.56 | 6/15/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 151 | — | — | 21.56 | 6/30/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 192 | — | — | 21.12 | 7/15/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 220 | — | — | 18.48 | 7/31/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 226 | — | — | 18.04 | 8/15/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 259 | — | — | 15.84 | 8/31/2027 | — | — | — | — | |||||||||||||||||||||||||||
| 3,941 | — | — | 16.28 | 2/13/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 2,273 | — | — | 16.72 | 4/12/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 2,652 | — | — | 13.20 | 5/16/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 1,711 | — | — | 13.64 | 7/18/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 3,013 | — | — | 9.68 | 10/17/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 23 | — | — | 9.68 | 11/14/2028 | — | — | — | — | |||||||||||||||||||||||||||
| 4,520 | — | — | 9.68 | 1/28/2029 | — | — | — | — | |||||||||||||||||||||||||||
| 75,000 | — | — | 1.85 | 12/9/2030 | — | — | — | — | |||||||||||||||||||||||||||
| 100,000 | — | — | 1.44 | 11/30/2031 | — | — | — | — | |||||||||||||||||||||||||||
| 50,000 | — | — | 0.70 | 03/03/2032 | — | — | — | — | |||||||||||||||||||||||||||
| — | 100,000 | 0.41 | 11/30/2032 | — | — | — | — | ||||||||||||||||||||||||||||
| Total | 244,902 | 100,000 | — | — | — | — | — | ||||||||||||||||||||||||||||
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Payments on Disability
As of December 31, 2020, we had an employment agreement with Mr. Equels which entitled him to his base salary, applicable benefits otherwise due and payable through the last day of the month in which disability occurs and for an additional two year period. All of his unvested options vest too. On March 24, 2021, we entered into employment agreements with Mr. Rodino and Ms. Lintal which entitled them to their base salary, applicable benefits otherwise due and payable through the last day of the month in which disability occurs and for an additional two year period. All of each NEO’s unvested options vest too. In addition, each NEO has the same short and long-term disability coverage which is available to all eligible employees. The coverage for short-term disability provides up to six months of full salary continuation up to 60% of weekly pay, less other income, with a $1,500 weekly maximum limit. The coverage for group long-term disability provides coverage at the exhaustion of short-term disability benefits of full salary continuation up to 60% of monthly pay, less other income, with a $10,000 monthly maximum limit. The maximum benefit period for the group long-term disability coverage is 60 months for those age 60 and younger at the time of the claim with the coverage period proportionately reduced with the advanced age of the eligible employee to a minimum coverage period of 12 months for those of 69 years old and older as of the date of the claim. For the period June 2010 through December 2022, Mr. Equels was entitled to receive total disability coverage of $400,000 pursuant to his employment agreement and payable by us.
Payments on Death
Pursuant to their employment agreements, the NEOS are entitled to their base salary and applicable benefits otherwise due and payable through the last day of the month in which death occurs and for an additional two year period. In addition, all of their unvested options vest. Each NEO, has coverage of group life insurance, along with accidental death and dismemberment benefits, consistent to the dollar value available to all eligible employees. The benefit is equal to two times current salary or wage with a maximum limit of $300,000, plus any supplemental life insurance elected and paid for by the NEO. For the period June 2010 and through December 2022, Mr. Equels is entitled to receive total death benefit coverage of $3,000,000 pursuant to his employment agreement and payable by us.
Estimated Payments Following Severance — Named Executive Officers (NEO)
Pursuant to his employment agreement, Mr. Equels is entitled to severance benefits on certain types of employment terminations not related to a change in control or termination not for cause. Mr. Rodino and Mr. Dickey are not covered by an employment severance agreement and therefore would only receive severance as determined by the Compensation Committee in its discretion.
The dollar amounts below assume that the termination occurred on January 1, 2023. The actual dollar amounts to be paid can only be determined at the time of the NEO’s separation from us based on their prevailing compensation and employment agreements along with any determination by the Compensation Committee in its discretion.
| Name | Event | Cash Severance ($) | Value of Stock Awards That Will Become Vested (1) ($) | Continuation of Medical Benefits ($) | Additional Life Insurance ($) | Total ($) | ||||||||||||||||
| Thomas K. Equels, | Involuntary (no cause) | $ | 3,654,000 | $ | 111,556 | — | — | $ | 3,765,556 | |||||||||||||
| CEO & President | Termination (for cause) | — | — | — | — | — | ||||||||||||||||
| Death or disability | $ | 868,000 | $ | 111,556 | — | — | $ | 979,556 | ||||||||||||||
| Termination by employee or retirement | — | $ | 111,556 | — | — | $ | 111,556 | |||||||||||||||
| Robert Dickey IV | Involuntary (no cause) | — | — | — | — | — | ||||||||||||||||
| CFO | Termination (for cause) | — | — | — | — | — | ||||||||||||||||
| Death or disability | — | — | — | — | — | |||||||||||||||||
| Termination by employee or retirement | — | — | — | — | — | |||||||||||||||||
| Peter Rodino | Involuntary (no cause) | $ | 647,280 | $ | 69,295 | — | — | $ | 716,575 | |||||||||||||
| COO, General Counsel and | Termination (for cause) | — | — | — | — | — | ||||||||||||||||
| Secretary | Death or disability | $ | 439,400 | $ | 69,295 | — | — | $ | 508,695 | |||||||||||||
| Termination by employee or retirement | — | $ | 69,295 | — | — | $ | 69,295 | |||||||||||||||
Notes:
| (1) | Consists of stock options contractually required per the employee’s respective employment agreement or arrangement to be granted during each calendar year of the term under our 2018 Equity Incentive Plan. The stock options have a ten-year term and an exercise price equal to the closing market price of our common stock on the date of grant. The value was obtained using the Black-Scholes-Merton pricing model for stock-based compensation in accordance with FASB ASC 718. |
Payments on Termination in Connection with a Change in Control of Named Executive Officers
Pursuant to their employment agreements, each NEO is entitled to severance benefits on certain types of employment terminations related to a change in control. In such event, the term of their employment agreements would automatically be extended for three additional years, except where such change in control occurs as a result of certain “significant events” (as described in his or her employment agreement).
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The dollar amounts in the chart below assume that change in control termination occurred on January 1, 2023, based on the employment agreements that existed at that time. The actual dollar amounts to be paid can only be determined at the time of the NEO’s separation from us based on their prevailing compensation and employment agreements along with any determination by the Compensation Committee in its discretion.
Estimated Benefits on Termination Following a Change in Control — December 31, 2022
The following table shows potential payments to the NEO if employment terminates following a change in control under contracts, agreements, plans or arrangements at December 31, 2022. The amounts assume a January 3, 2023, termination date regarding base pay and use of the opening price of $0.32 on the NYSE American for our common stock at that date.
| Name | Aggregate Severance Pay ($) | PVSU Acceleration (2) ($) | Early Vesting of Restricted Stock (4) (5) ($) | Early Vesting of Stock Options and SARs (3) ($) | Acceleration and Vesting of Supplemental Award (5) ($) | Welfare Benefits Continuation ($) | Outplacement Assistance ($) | Parachute Tax Gross-up Payment ($) | Total ($) | ||||||||||||||||||||||||||||
| Thomas K. Equels | $ | 5,208,000 | (1) | — | — | — | $ | 576,000 | (4) | — | — | — | $ | 5,784,000 | |||||||||||||||||||||||
| Robert Dickey IV | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Peter Rodino | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Notes:
| (1) | This amount represents the Base Salary and benefits for the remaining current term of the NEO’s employment agreement plus a three-year extension in the term upon the occurrence of a termination from a change in control. The employment agreement with Mr. Equels has a term through December 31, 2025. This amount excludes the following payments as they cannot be calculated unless and until certain events occur: Mr. Equels is entitled to 3% of the “Gross Proceeds” (as defined in the employment agreement) for “significant events” (as described in his employment agreement) and 3% of the Gross Proceeds from any sale of our Company or substantially all of our assets. |
| (2) | This amount represents the payout of all outstanding performance-vesting share units (“PVSU”) awarded on a change in control at the target payout level with each award then pro-rated based on the time elapsed for the applicable three-year performance period. |
| (3) | This amount is the intrinsic value [fair market value] on January 3, 2023 ($0.32 per share) minus the weighted average per share exercise price of $0.43 of all unvested stock options for each NEO, including Stock Appreciation Rights (“SAR”). Any option with an exercise price of greater than fair market value was assumed to be cancelled for no consideration and, therefore, had no intrinsic value. |
| (4) | This amount represents the options to be issued annually for the remaining term of the NEO’s employment agreement plus a three-year extension in the occurrence of termination from a change in control. For the purpose of this schedule, a NYSE American closing price at January 3, 2023 of $0.32 was used with an estimated exercise price of $0.32 for Mr. Equels. The value was obtained using the Black-Scholes-Merton pricing model for stock-based compensation in accordance with FASB ASC 718. |
| (5) | Any purchase rights represented by the Option not then vested shall, upon a change in control, shall become vested. |
Post-Employment Compensation
The following is a description of post-employment compensation payable to the respective NEO. If a NEO does not have a specific benefit, they will not be mentioned in the subsection. In such event, the NEO does not have any such benefits upon termination unless otherwise required by law.
Termination for Cause
All of our NEOs can be terminated for cause. For each NEO “Cause” means willful engaging by any NEO in illegal conduct, gross misconduct or gross violation of our Code of Ethics and Business Conduct for Officers, which is demonstrably and materially injurious to our Company. Mr. Equels’ agreement provides that he shall not be deemed to have been terminated for Cause unless and until we initiate a process by delivery to him a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the directors of the Board specifying the grounds for termination. After reasonable notice to Mr. Equels and an opportunity for him to be heard, the issues shall be adjudicated by a retired Florida judge or a Florida certified mediator mutually acceptable to the Board of Directors and Mr. Equels. Termination requires a finding that Mr. Equels was guilty of intentional and material misconduct according to the standards set forth above, and specifying the particulars thereof in detail supported by legally admissible evidence and utilizing the legal standard of beyond reasonable doubt. In the event that an NEO’s employment is terminated for Cause, we shall pay such NEO, at the time of such termination, only the compensation and benefits otherwise due and payable to him or her through the last day of his actual employment by us.
Termination without Cause
In the event that an NEO is terminated at any time without “Cause”, we shall pay to him or her, at the time of such termination, the compensation and benefits otherwise due and payable through the last day of the then current term of his or her Agreement. However, benefit distributions that are made due to a “separation from service” occurring while he or she is a Named Executive Officer shall not be made during the first six months following separation from service. Rather, any distribution which would otherwise be paid to him or her during such period shall be accumulated and paid to him or her in a lump sum on the first day of the seventh month following the “separation from service”. All subsequent distributions shall be paid in the manner specified.
| 50 |
Death or Disability
An NEO can be terminated for death or disability. “Disability” means the NEO’s inability effectively to carry out substantially all of his or her duties by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. In the event his or her employment is terminated due to his or her death or disability, we will pay him or her (or their estate as the case may be), at the time of such termination, his or her base salary, applicable benefits, and immediate vesting of unvested stock options. In the event of permanent disability, we will provide an additional two years of base salary.
Compensation of Directors
Our Compensation, Audit and Corporate Governance and Nomination Committees, consist of Dr. William M. Mitchell, Compensation and Corporate Governance and Nomination Committee Chair, and Stewart L. Appelrouth, Audit Committee Chair, both of whom are independent Board of Director members.
We reimburse Directors for travel expenses incurred in connection with attending board, committee, stockholder and special meetings along with other Company business-related expenses. We do not provide retirement benefits or other perquisites to non-employee Directors under any current program.
There was no cost of living increase granted in 2021 or 2022.
All Directors have been granted options to purchase common stock under our Stock Option Plans and/or Warrants to purchase common stock. We believe such compensation and payments are necessary in order for us to attract and retain qualified outside directors. Options shares for stock compensation were issued under the 2009 and 2018 Equity Incentive Plans.
Director Compensation – 2022 & 2021
| Name and Title of Director | Year | Fees Earned or Paid in Cash $ | Stock Award $ | Option Award $ | Non-Equity Incentive Plan Compensation $ | Change in Pension Value & Nonqualified Deferred Compensation Earnings $ | All Other Compensation As Director $ | Total $ | ||||||||||||||||||||||||
| T. Equels | 2022 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Executive Vice Chairman | 2021 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| W. Mitchell | 2022 | 182,462 | — | 50,703 | — | — | — | 233,165 | ||||||||||||||||||||||||
| Chairman of the Board | 2021 | 182,462 | — | 78,673 | — | — | — | 261,135 | ||||||||||||||||||||||||
| S. Appelrouth | 2022 | 182,462 | — | 50,703 | — | — | — | 233,165 | ||||||||||||||||||||||||
| Director | 2021 | 182,462 | — | 78,673 | — | — | — | 261,135 | ||||||||||||||||||||||||
In March 2023, the Board reduced annual cash compensation from $182,462 to $125,000 to make room for more Board members.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth as of March 25, 2023, the number and percentage of outstanding shares of Common Stock beneficially owned by:
| ● | Each person, individually or as a group, known to us to be deemed the beneficial owners of five percent or more of our issued and outstanding Common Stock; |
| ● | Each of our Directors and the Named Executives Officers; and |
| ● | All of our officers and directors as a group. |
| ● | Total number of shares of Common Stock at March 24, 2023 was ~48,407,326. |
| 51 |
| Name and Address of | Shares Beneficially |
% Of Shares Beneficially |
||||||
| Beneficial Owner | Owned | Owned | ||||||
| Thomas K. Equels, Executive Vice Chairman, Chief Executive Officer, President* | 1,499,558 | (1 | ) | **0.03 | % | |||
| Peter W. Rodino III, Chief Operating Officer, General Counsel, Secretary* | 388,741 | (2 | ) | ** | % | |||
| William M. Mitchell, M.D., Chairman of the Board of Directors* | 256,286 | (3 | ) | ** | % | |||
| Stewart L. Appelrouth, Director* | 238,454 | (4 | ) | ** | % | |||
| Robert Dickey IV, Chief Financial Officer* | 50,000 | (5 | ) | ** | % | |||
| All directors and executive officers as a group (5 persons) | 2,433,039 | 0. 05 | % | |||||
| ** Less than 1% | ||||||||
(1) For Mr. Equels, shares beneficially owned include 955,563 shares issuable upon exercise of options and excludes 300,000 shares issuable upon exercise of options not vested or not exercisable within the next 60 days.
(2) For Mr. Rodino, shares beneficially owned include 244,902 shares issuable upon exercise of options and excludes 100,000 shares issuable upon exercise of options not vested or not exercisable within the next 60 days.
(3) For Dr. Mitchell, shares beneficially owned include 179,874 shares issuable upon exercise of options and excludes 50,000 shares issuable upon exercise of options not vested or not exercisable within the next 60 days. Also includes 190 shares of common stock owned by his spouse and 190 shares owned by family trusts.
(4) For Mr. Appelrouth, shares beneficially owned include 89,599 shares issuable upon exercise of options and excludes 50,000 shares issuable upon exercise of options not vested or not exercisable within the next 60 days.
(5) For Mr. Dickey IV, shares beneficially owned include 50,000 shares issuable upon exercise of options.
The following table gives information about our Common Stock that may be issued upon the exercise of options, warrants and rights under all of our equity compensation plans as of December 31, 2021:
| Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted Average Exercise Price Per Share | Number of securities Remaining available for future issuance under equity compensation plans (excluding securities reflected in column) (a) | |||||||||
| (a) | (c) | |||||||||||
| Equity compensation plans approved by security holders: | 2,599,370 | $ | 4.03 | 466,120 | ||||||||
| Equity compensation plans not approved by security holders: | 288,077 | $ | 9.10 | — | ||||||||
| Total | 2,887,447 | $ | 4.54 | 466,120 | ||||||||
| 52 |
ITEM 13. Certain Relationships and Related Transactions, and Director Independence.
Review, Approval or Ratification of Transactions with Related Persons
Our policy is to require that any transaction with a related party required to be reported under applicable SEC rules, other than compensation related matters and waivers of our code of business conduct and ethics, be reviewed and approved or ratified by a majority of independent, disinterested Directors. We have adopted procedures in which the Audit Committee shall conduct an appropriate review of all related party transactions for potential conflict of interest situations on an annual and case-by-case basis with the approval of this Committee required for all such transactions.
We have employment agreements with certain of our executive officers and have granted such Officers and Directors options and warrants to purchase our Common Stock, as discussed under the headings, Item 11. “Executive Compensation”, and Item 12. “Security Ownership of Certain Beneficial Owners and Management”, as noted above.
ITEM 14. Principal Accountant Fees and Services.
All audit and professional services are approved in advance by the Audit Committee to assure such services do not impair the auditor’s independence from us. The total fees by BDO USA, LLP (“BDO”) for 2022 were $517,000 and total 2021 were $485,000.
| Amount ($) | ||||||||
| 2022 | 2021 | |||||||
| Description of Fees: | ||||||||
| Audit Fees | $ | 503,000 | $ | 370,000 | ||||
| Audit-Related Fees | - | 42,000 | ||||||
| Tax Fees | 14,000 | 73,000 | ||||||
| Total | $ | 517,000 | $ | 485,000 | ||||
Audit Fees
Audit fees include the audit of our annual financial statements and the review of our financial statements included in our quarterly reports and services in connection with statutory and regulatory filings.
Audit-Related Fees
Represents the fees for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements. Audit-related fees include professional services related to the Company’s filing of SEC Form S-3 and S-8 (i.e., stock shelf offering procedures).
The Audit Committee has determined that BDO’s rendering of these audit-related services and all other fees were compatible with maintaining auditor’s independence. The Board of Directors considered BDO to be well qualified to serve as our independent public accountants. The Committee also pre-approved the charges for services performed in 2022 and 2021.
The Audit Committee pre-approves all auditing and accounting services and the terms thereof (which may include providing comfort letters in connection with securities underwriting) and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Public Company Accounting Oversight Board) to be provided to us by the independent auditor; provided, however, the pre-approval requirement is waived with respect to the provisions of non-audit services for us if the “de minimus” provisions of Section 10A (i)(1)(B) of the Exchange Act are satisfied. This authority to pre-approve non-audit services may be delegated to one or more members of the Audit Committee, who shall present all decisions to pre-approve an activity to the full Audit Committee at its first meeting following such decision.
| 53 |
PART IV
ITEM 15. Exhibits and Financial Statement Schedules.
Financial Statements and Schedules - See index to financial statements on page F-1 of this Annual Report. All other schedules called for under regulation S-X are not submitted because they are not applicable or not required, or because the required information is included in the financial statements or notes thereto.
| (i) | Exhibits - See exhibit index below. |
| 54 |
| 55 |
| 56 |
| 57 |
| 58 |
| 59 |
| 60 |
| 61 |
| * | Filed herewith. |
(b) Financial Statement Schedules
All schedules have been omitted because either they are not required, are not applicable or the information is otherwise set forth in the financial statements and related notes thereto.
Item 16. Form 10-K Summary
None.
| 62 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AIM IMMUNOTECH INC. | ||
| By: | /s/ Thomas K. Equels | |
| Thomas K. Equels | ||
| Chief Executive Officer | ||
March 31, 2023
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange of 1934, as amended, this report has been signed below by the following persons on behalf of this Registrant and in the capacities and on the dates indicated.
| /s/ Thomas K Equels | Chief Executive Officer & President, | March 31, 2023 | ||
| Thomas K. Equels | Director of the Board | |||
| /s/ William Mitchell | Chairman of the Board | March 31, 2023 | ||
| William Mitchell, M.D., Ph.D. | and Director | |||
| /s/ Stewart L Appelrouth | Director | March 31, 2023 | ||
| Stewart L. Appelrouth | ||||
/s/ Robert Dickey IV |
Chief Financial Officer | March 31, 2023 | ||
| Robert Dickey IV |
| 63 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements
| F-1 |
Report of Independent Registered Public Accounting Firm
Stockholders and Board of Directors
AIM ImmunoTech Inc.
Ocala, Florida
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of AIM ImmunoTech Inc. (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Redeemable Warrants
As discussed in Note 15 to the consolidated financial statements, the Company has certain redeemable warrants issued in conjunction with offerings that contain a cash settlement feature upon the occurrence of a Fundamental Transaction. The Company calculates the fair value of the redeemable warrants at the end of each quarterly reporting period using a Monte Carlo Simulation, which includes subjective assumptions. Subsequent changes in the fair value of the redeemable warrants are recorded in the consolidated statement of comprehensive loss. The estimated fair value of the redeemable warrants was approximately $0 as of December 31, 2022.
We identified the calculation of the fair value of the redeemable warrants as a critical audit matter. Specifically, there was a high degree of management subjectivity and judgment in selecting the assumptions used in the Monte Carlo Simulation, including the expected probability of a Fundamental Transaction and the expected stock price volatility. Auditing these elements involved especially subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the use of personnel with specialized skill and knowledge to evaluate the Company’s Monte Carlo Simulation.
The primary procedures we performed to address this critical audit matter included:
| ● | Evaluating management’s process for developing the fair value estimate by analyzing significant assumptions used in the calculation, including the probability of a Fundamental Transaction. | |
| ● | Testing the accuracy and completeness of data used by management to estimate the fair value of the redeemable warrants, including considering evidence obtained in other areas of the audit to determine if contradictory evidence existed. | |
| ● | Utilizing personnel with specialized skills and knowledge in valuation to assist in evaluating (i) the appropriateness of the Monte Carlo Simulation model, and (ii) the expected stock price volatility range, including independent development of the equity volatilities, considering the daily historical stock price volatility information. |
/s/
We have served as the Company’s auditor since 2021.
March 31, 2023
| F-2 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2022 and 2021
(in thousands, except for share and per share amounts)
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable securities | ||||||||
| Funds receivable from New Jersey net operating loss | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use asset, net | ||||||||
| Patent and trademark rights, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Current portion of operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Operating lease liability | ||||||||
| Redeemable warrants | ||||||||
| Commitments and contingencies (Notes 8, 10, 11, and 16) | ||||||||
| Stockholders’ equity: | ||||||||
| Series B Convertible Preferred Stock, stated value $ per share, issued and outstanding and , respectively | ||||||||
| Common Stock, par value $per share, authorized shares; issued and outstanding and , respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| F-3 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share data)
| Years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues: | ||||||||
| Clinical treatment programs – US | $ | $ | ||||||
| Total Revenues | ||||||||
| Costs and Expenses: | ||||||||
| Production costs | ||||||||
| Research and development | ||||||||
| General and administrative | ||||||||
| Impairment of assets | ||||||||
| Total Costs and Expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Loss on investments | ( | ) | ( | ) | ||||
| Interest expense and other finance costs | ( | ) | ||||||
| Interest and other income | ||||||||
| Extinguishment of financing obligation | ( | ) | ||||||
| Gain on sale of fixed assets | ||||||||
| Redeemable warrants valuation adjustment | ||||||||
| Gain from sale of income tax operating losses | ||||||||
| Net Loss | ( | ) | ( | ) | ||||
| Other comprehensive loss | ||||||||
| Reclassification adjustment for realized investment loss | ||||||||
| Change in unrealized loss on marketable securities available for sale | ( | ) | ||||||
| Net comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares outstanding basic and diluted | ||||||||
See accompanying notes to consolidated financial statements.
| F-4 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands except share data)
| Accumulated | ||||||||||||||||||||||||||||
| Series B | Common | Common | Additional | other | Total | |||||||||||||||||||||||
| Preferred | Stock | Stock .001 | Paid-in | Comprehensive | Accumulated | Stockholders’ | ||||||||||||||||||||||
| Shares | Shares | Par Value | Capital | Income (Loss) | Deficit | Equity | ||||||||||||||||||||||
| Balance December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Shares issued for: | ||||||||||||||||||||||||||||
| Common Stock issuance, net of costs | — | |||||||||||||||||||||||||||
| Shares issued to pay accounts payable | — | |||||||||||||||||||||||||||
| Series B preferred shares converted to Common shares | ( | ) | — | |||||||||||||||||||||||||
| Net comprehensive loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance December 31, 2021 | ( | ) | ||||||||||||||||||||||||||
| Shares issued for: | ||||||||||||||||||||||||||||
| Common Stock issuance, net of costs | — | |||||||||||||||||||||||||||
| Warrant modification | — | |||||||||||||||||||||||||||
| Equity-based compensation | — | — | ||||||||||||||||||||||||||
| Series B preferred shares converted to Common shares | ( | ) | — | |||||||||||||||||||||||||
| Net comprehensive loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance December 31, 2022 | $ | | $ | $ | $ | ( | ) | $ | | |||||||||||||||||||
| Balance | $ | | $ | $ | $ | ( | ) | $ | | |||||||||||||||||||
See accompanying notes to consolidated financial statements.
| F-5 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
| Years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of property and equipment | ||||||||
| Redeemable warrants valuation adjustment | ( | ) | ( | ) | ||||
| Gain on sale of fixed assets | ( | ) | ||||||
| Extinguishment of financing obligation | ||||||||
| Amortization of patent, trademark rights | ||||||||
| Changes in ROU assets | ( | ) | ||||||
| Impairment of plant property equipment and other assets | ||||||||
| Loss (gain) from sale of income tax operating losses | ( | ) | ||||||
| Equity-based compensation | ||||||||
| Loss on sale of marketable securities | ||||||||
| Amortization of finance and debt issuance costs | ||||||||
| Change in assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Funds receivable from New Jersey operating loss sales | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets and other non current assets | ( | ) | ||||||
| Lease liability | ( | ) | ||||||
| Other Assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of marketable securities | ||||||||
| Purchase of marketable securities | ( | ) | ( | ) | ||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sales of property and equipment | ||||||||
| Purchase of patent and trademark rights | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Financing obligation payments | ( | ) | ||||||
| Payoff of financing obligation | ( | ) | ||||||
| Proceeds from sale of stock, net of issuance costs | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosures of non-cash investing and financing cash flow information: | ||||||||
| Stock issued to settle accounts payable | $ | $ | ||||||
| Unrealized loss on marketable securities | $ | ( | ) | $ | ( | ) | ||
| Conversion of Series B preferred | $ | |||||||
| Operating Lease - Right of Use Assets | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| F-6 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Business
AIM ImmunoTech Inc. and its subsidiaries (collectively, “AIM”, “Company”, “we” or “us”) are an immuno-pharma company headquartered in Ocala, Florida, and focused on the research and development of therapeutics to treat multiple types of cancers, viral diseases and immune-deficiency disorders. We have established a strong foundation of laboratory, pre-clinical and clinical data with respect to the development of nucleic acids and natural interferon to enhance the natural antiviral defense system of the human body, and to aid the development of therapeutic products for the treatment of certain cancers and chronic diseases.
AIM’s flagship products are Ampligen (rintatolimod), a first-in-class drug of large macromolecular RNA (ribonucleic acid) molecules, and Alferon N Injection (Interferon Alfa-N3). Ampligen has not been approved by the FDA or marketed in the United States. Ampligen is approved for commercial sale in the Argentine Republic for the treatment of severe Chronic Fatigue Syndrome (“CFS”).
The Company’s primary present business focus involves Ampligen. Ampligen is a double-stranded RNA (“dsRNA”) molecule being developed for globally important cancers, viral diseases and disorders of the immune system.
AIM currently is proceeding primarily in three areas:
| ● | Ampligen plus Standard of Care (“SOC”) to treat pancreatic cancer patients, and in other cancers, as a potential therapeutic that modifies the tumor microenvironment with the goal of increasing anti-tumor responses to check point inhibitors and with SOC. | |
| ● | Exploring Ampligen’s antiviral activities and potential use as a prophylactic or treatment for existing viruses, mutations thereof or new viruses. | |
| ● | Ampligen as a treatment for myalgic encephalomyelitis/chronic fatigue syndrome (“ME/CFS”) and what we refer to as Post-COVID-19 chronic fatigue-like conditions. |
Alferon N Injection is approved in Argentina for a category of sexually transmitted disease infections and patients that are not responsive or are intolerant to recombinant interferon. Alferon N Injection is the only natural-source, multi-species alpha interferon currently approved for sale in the United States for the intralesional treatment of refractory (i.e., resistant to other treatment) or recurring external condylomata acuminata/genital warts in patients 18 years of age or older. Certain types of human papilloma viruses cause genital warts. AIM also has approval from ANMAT for the treatment of refractory patients that failed or were intolerant to treatment with recombinant interferon in Argentina.
The
Company recently sold its
(2) Summary of Significant Accounting Policies
(a) Cash, Cash Equivalents and Marketable Securities
Cash,
Cash Equivalents and marketable securities total $
| F-7 |
(b) Property and Equipment, net
Schedule of Property and Equipment
(in thousands) December 31, | ||||||||
| 2022 | 2021 | |||||||
| Land, buildings and improvements | $ | $ | ||||||
| Furniture, fixtures, and equipment | ||||||||
| Total property and equipment | ||||||||
| Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Property
and equipment are recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful
lives of the respective assets, ranging from to
The
Company made a strategic shift on in-house manufacturing and recorded an impairment of the facility in the amount of $
(c) Patent and Trademark Rights, net
Patents
and trademarks are stated at cost (primarily legal fees) and are amortized using the straight-line method over the established useful
life of
(d) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure (“GAAP”) of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates, and those differences may be material. Accounts requiring the use of significant estimates include determination of other-than-temporary impairment on securities, valuation of deferred taxes, patent and trademark valuations, stock-based compensation calculations, building valuation, fair value of warrants, and contingency accruals.
| F-8 |
(e) Revenue
The Company accounts for revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (“Topic 606”), Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Revenue from the sale of Ampligen under cost recovery clinical treatment protocols approved by the FDA is recognized when the product is shipped. The Company has no other obligation associated with its products once shipment has been accepted by the customer.
Revenue from the sale Ampligen under the EAP is recognized as the product is distributed and administered to patients involved in the cost recovery program.
(f) Accounting for Income Taxes
Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits which are not expected to be realized. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted.
The Company applies the provisions of FASB ASC 740-10 Uncertainty in Income Taxes. As a result of the implementation, there has been no material change to the Company’s tax positions as they have not paid any corporate income taxes due to operating losses. With the exception of net operating losses generated in New Jersey, all tax benefits will likely not be recognized due to the substantial net operating loss carryforwards which will most likely not be realized prior to expiration. With no tax due for the foreseeable future, the Company has determined that a policy to determine the accounting for interest or penalties related to the payment of tax is not necessary at this time.
(g) Recent Accounting Standards and Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the guidance, ASU 2018-19 in November 2018 and ASU 2020-02 in February 2020. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The amendment will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2018-19 clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. This ASU will be effective for us beginning the first day of our 2023 fiscal year. Early adoption is permitted. We have evaluated the impact of adoption of this ASU on our financial condition, results of operations and cash flows, and, as such, have determined that the adoption of the new standard is not applicable and has no impact on our financial statements.
| F-9 |
Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires recognition of compensation expense related to stock-based compensation awards over the period during which an employee is required to provide service for the award. Compensation expense is equal to the fair value of the award at the date of grant, net of estimated forfeitures.
Basic and diluted net loss per share is computed using the weighted average number of shares of Common Stock outstanding during the period. Equivalent Common shares, consisting of and of stock options and warrants, are excluded from the calculation of diluted net loss per share for the years ended December 31, 2022 and 2021, respectively, since their effect is antidilutive due to the net loss of the Company.
(j) Long-Lived Assets
The Company assesses long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant under-performance of a business or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in its use of the assets. The Company measures the recoverability of assets that it will continue to use in its operations by comparing the carrying value of the asset grouping to our estimate of the related total future undiscounted net cash flows. If an asset grouping’s carrying value is not recoverable through the related undiscounted cash flows, the asset grouping is considered to be impaired.
The Company measures the impairment by comparing the difference between the asset grouping’s carrying value and its fair value. Long-lived assets are considered a non-financial asset and are recorded at fair value only if an impairment charge is recognized. Impairments are determined for groups of assets related to the lowest level of identifiable independent cash flows. The Company makes subjective judgments in determining the independent cash flows that can be related to specific asset groupings. In addition, as the Company reviews its manufacturing process and other manufacturing planning decisions, the useful lives of assets are shorter than the Company had originally estimated, it accelerates the rate of depreciation over the assets’ new, shorter useful lives.
| F-10 |
(3) Marketable Securities
Marketable
securities consist of mutual funds and debt securities. At December 31, 2022 and 2021, it was determined that none of the marketable
securities had an other-than-temporary impairment. At December 31, 2022 and December 31, 2021, all securities were measured as Level
1 instruments of the fair value measurements standard (See Note 15: Fair Value). As of December 31, 2022, and December 31, 2021, the
Company held $
Mutual Funds classified as available for sale consisted of:
Schedule of Available of Sale
December 31, 2022 (in thousands) | ||||||||
| Securities | Fair Value | Short-Term Investments | ||||||
| Mutual Funds | $ | $ | ||||||
| Totals | $ | $ | ||||||
Schedule of Equity Securities
December 31, 2022 (in thousands) | ||||
| Securities | ||||
| Net losses recognized during the period on equity securities | $ | ( | ) | |
| Less: Net gains and losses recognized during the period on equity securities sold during the period | ( | ) | ||
| Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date | $ | ( | ) | |
Mutual Funds classified as available for sale consisted of:
| December 31, 2021 (in thousands) | ||||||||
| Securities | Fair Value | Short-Term Investments | ||||||
| Mutual Funds | $ | $ | ||||||
| Totals | $ | $ | ||||||
December 31, 2021 (in thousands) | ||||
| Securities | ||||
| Net losses recognized during the period on equity securities | $ | ( | ) | |
| Less: Net gains and losses recognized during the period on equity securities sold during the period | ||||
| Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date | $ | ( | ) | |
| F-11 |
(4) Patents, and Trademark Rights, Net
Schedule of Patents, Trademark Rights
| December 31, 2020 | $ | |||
| Acquisitions | ||||
| Amortization | ( | ) | ||
| December 31, 2021 | $ | |||
| Acquisitions | ||||
| Abandonments | ( | ) | ||
| Amortization | ( | ) | ||
| December 31, 2022 | $ |
Patents
and trademarks are stated at cost (primarily legal fees) and are amortized using the straight-line method of the estimated useful life
of
As
described in Note 2, the Company reviews its patents and trademark rights periodically to determine whether they have continuing value,
or their value has become impaired. Since the Company is a pre-revenue entity that is currently undergoing clinical trial for its products,
it has current and historical operating and cash flow losses. The Company requires, and will continue to require, the commitment of substantial
resources to develop its products, and, as of December 31, 2022, the Company’s accumulated deficit is approximately $
ASC 360, Property, Plant and Equipment, specifies that a long-lived asset (or asset group) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. A current period operating, or cash flow loss combined with a history of operating or cash flow losses associated with the use of a long-lived asset was identified by the Company as the triggering event to assess whether impairment indicators are present for the Company’s long-lived assets, including the patents and trademark rights. In connection therewith, the Company engaged an outside third party to provide a valuation for the impairment of the Company’s long-lived assets, including the patents and trademark rights. Based upon the analysis performed, there is no impairment to the Company’s long-lived assets as of December 31, 2022.
Amortization of patents and trademarks for each of the next five years is as follows:
Schedule of Amortization of Patents and Trademarks
| Year Ending December 31, | ||||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total | $ | |||
(5) Accrued Expenses
Accrued expenses at December 31, 2022 and 2021 consist of the following:
Schedule of Accrued Expenses
(in thousands) December 31, | ||||||||
| 2022 | 2021 | |||||||
| Compensation | $ | $ | ||||||
| Professional fees | ||||||||
| Clinical trial expenses | ||||||||
| Other expenses | ||||||||
| Accrued expenses | $ | $ | ||||||
(6) Stockholders’ Equity
(a) Preferred Stock
The Company is authorized to issue shares of $ par value preferred stock with such designations, rights and preferences as may be determined by the Board of Directors. Of our authorized preferred stock, shares have been designated as Series A Junior Participating Preferred Stock and shares have been designated as Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock has a stated value $ per share.
| F-12 |
The
Company is authorized to issue Series B Convertible Preferred Stock,
Pursuant
to a registration statement relating to a rights offering declared effective by the SEC on February 14, 2019, AIM distributed to its
holders of common stock and to holders of certain options and warrants as of February 14, 2019, at no charge, one non-transferable subscription
right for each share of common stock held or deemed held on the record date. Each right entitled the holder to purchase one unit, at
a subscription price of $
(b) Common Stock and Equity Finances
The Company has authorized shares of with specific limitations and restrictions on the usage of of the authorized shares.
On
July 7, 2020, the board of directors approved a plan pursuant to which all directors, officers, and employees could purchase from the
Company up to an aggregate of $
On
September 27, 2019, the Company closed a public offering underwritten by A.G.P./Alliance Global Partners, LLC (the “Offering”)
of (i) shares of Common Stock; (ii) pre-funded warrants exercisable for
On
July 19, 2019, the Company entered into a new Equity Distribution Agreement (the “2019 EDA”) with Maxim Group LLC (“Maxim”),
pursuant to which it could sell, from time to time, shares of its Common Stock through Maxim, as agent (the “Offering”).
The 2019 EDA replaced a prior EDA with Maxim. For the year ended December 31, 2020, the Company sold shares under the 2019
EDA for total gross proceeds of $
| F-13 |
The 2018 Equity Incentive Plan, effective September 12, 2018, authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of shares of Common Stock is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. Unless sooner terminated, the 2018 Equity Incentive Plan will continue in effect for a period of years from its effective date. On October 17, 2018, the Board of Directors issued options to the officers and directors at the exercise price of $ expiring in years, and on November 14, 2018, the Board of Directors issued options to each employee, officer and director at the exercise price of $ expiring in ten years. On January 28, 2019, options were issued to each of these officers with an exercise price of $ for a period of with a vesting period of one year. In August 2020, options were issued to each of these officers with an exercise price range of $ to $ for a period of with a vesting period of one year. During the fiscal year ending December 31, 2022, options were issued to employees with an exercise price range of $ to $ for a period of with a vesting period of one year. During fourth quarter of 2021, options were issued to employees with an exercise price range of $ to $ for a period of with a vesting period of one year.
As of December 31, 2022, and 2021, there were and shares outstanding, respectively.
(c) Common Stock Options and Warrants
(i) Stock Options
The 2018 Equity Incentive Plan, effective September 12, 2018, authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of shares of common stock is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. Unless sooner terminated, the 2018 Equity Incentive Plan will continue in effect for a period of years from its effective date.
The Equity Incentive Plans of 2018 are administered by the Board of Directors. The Plans provide for awards to be made to such Officers, other key employees, non-employee Directors, consultants and advisors of the Company and its subsidiaries as the Board may select.
Stock options awarded under the Plans may be exercisable at such times (not later than 10 years after the date of grant) and at such exercise prices (not less than fair market value at the date of grant) as the Board may determine. The Board may provide for options to become immediately exercisable upon a “change in control”, which is defined in the Plans to occur upon any of the following events: (a) the acquisition by any person or group, as beneficial owner, of 20% or more of the outstanding shares or the voting power of the outstanding securities of the Company; (b) either a majority of the Directors of the Company at the annual stockholders meeting has been nominated other than by or at the direction of the incumbent Directors of the Board, or the incumbent Directors cease to constitute a majority of the Company’s Board; (c) the Company’s stockholders approve a merger or other business combination pursuant to which the outstanding common stock of the Company no longer represents more than 50% of the combined entity after the transaction; (d) the Company’s stockholders approve a plan of complete liquidation or an agreement for the sale or disposition of all or substantially all of the Company’s assets; or (e) any other event or circumstance determined by the Company’s Board to affect control of the Company and designated by resolution of the Board as a change in control.
The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton pricing option valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option and equity warrant. The Company uses historical data to estimate expected dividend yield, life and forfeiture rates. The expected life of the options and equity warrants was estimated based on historical option and equity warrant holders’ behavior and represents the period of time that options and equity warrants are expected to be outstanding. The fair values of the options granted were estimated based on the following weighted average assumptions:
| Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Risk-free interest rate | % - % | % - % | ||||||
| Expected dividend yield | ||||||||
| Expected life | years | years | ||||||
| Expected volatility | % - % | % - % | ||||||
| Weighted average grant date fair value for options issued | $ | $ | ||||||
| F-14 |
The exercise price of all stock options and equity warrants granted was equal to or greater than the fair market value of the underlying common stock on the date of the grant.
Schedule of Stock Option Activity
| 2022 | 2021 | |||||||||||||||||||||||
| Shares | Option Price | Weighted Average Exercise Price | Shares | Option Price | Weighted Average Exercise Price | |||||||||||||||||||
| Outstanding, beginning of year | $ | – | $ | $ | – | $ | ||||||||||||||||||
| Granted | ||||||||||||||||||||||||
| Forfeited | ( | ) | - | ( | ) | - | ||||||||||||||||||
| Exercised | ||||||||||||||||||||||||
| Outstanding, end of year | $ | - | $ | $ | - | $ | ||||||||||||||||||
| Exercisable, end of year | $ | - | $ | - | ||||||||||||||||||||
| Weighted average remaining contractual life (years) | years | years | ||||||||||||||||||||||
Schedule of Stock Option Activity
| 2022 | 2021 | |||||||||||||||||||||||
| Shares | Option Price | Weighted Average Exercise Price | Shares | Option Price | Weighted Average Exercise Price | |||||||||||||||||||
| Outstanding, beginning of year | $ | - | $ | $ | – | $ | ||||||||||||||||||
| Granted | $ | - | $ | $ | – | $ | ||||||||||||||||||
| Forfeited | ( | ) | $ | – | $ | ( | ) | $ | – | $ | ||||||||||||||
| Exercised | ||||||||||||||||||||||||
| Outstanding, end of year | $ | - | $ | $ | – | $ | ||||||||||||||||||
| Exercisable, end of year | $ | - | $ | $ | – | $ | ||||||||||||||||||
| Weighted average remaining contractual life (years) | years | years | ||||||||||||||||||||||
| Available for future grants | ||||||||||||||||||||||||
| F-15 |
Stock option activity during the years ended December 31, 2022 and 2021 is as follows:
Schedule of Vest Stock Option Activity
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contracted Term (Years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding December 31, 2020 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Forfeited | ( | ) | — | |||||||||||||
| Expired | — | |||||||||||||||
| Outstanding December 31, 2021 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Expired | — | |||||||||||||||
| Outstanding December 31, 2022 | $ | |||||||||||||||
| Vested and expected to vest at December 31, 2022 | $ | |||||||||||||||
| Exercisable at December 31, 2022 | $ | |||||||||||||||
The weighted-average grant-date fair value of employee options granted during the year 2022 was $ for options at $ per option and during year 2021 was $ for options at $ per option.
Schedule of Unvested Stock Option Activity
| Number of Options | Weighted Average Exercise Price | Average Remaining Contracted Term (Years) | Aggregate Intrinsic Value | |||||||||||||
| Unvested December 31, 2020 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Vested | ( | ) | ||||||||||||||
| Forfeited | — | |||||||||||||||
| Unvested December 31, 2021 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Vested | ( | ) | ||||||||||||||
| Forfeited | ( | ) | — | |||||||||||||
| Unvested December 31, 2022 | $ | |||||||||||||||
| F-16 |
Schedule of Vest Stock Option Activity
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contracted Term (Years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding December 31, 2020 | $ | |||||||||||||||
| Granted | — | |||||||||||||||
| Exercised | — | |||||||||||||||
| Forfeited | ( | ) | — | |||||||||||||
| Outstanding December 31, 2021 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Exercised | — | |||||||||||||||
| Forfeited | ( | ) | — | |||||||||||||
| Outstanding December 31, 2022 | $ | |||||||||||||||
| Vested and expected to vest at December 31, 2022 | $ | |||||||||||||||
| Exercisable at December 31, 2022 | $ | |||||||||||||||
The weighted-average grant-date fair value of non-employee options granted during year 2022 was $ for options at $ per option and during the year 2021 was $ for options at $ per option.
Schedule of Unvested Stock Option Activity
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contracted Term (Years) | Aggregate Intrinsic Value | |||||||||||||
| Unvested December 31, 2020 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Vested | ( | ) | — | |||||||||||||
| Forfeited | — | |||||||||||||||
| Unvested December 31, 2021 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Vested | ( | ) | — | |||||||||||||
| Forfeited | — | |||||||||||||||
| Unvested December 31, 2022 | $ | |||||||||||||||
Stock-based compensation expense was approximately $ and $ for the years ended December 31, 2022, and 2021 resulting in an increase in general and administrative expenses and loss per share of $ and $, respectively.
As of December 31, 2022, and 2021, there was $ and $, respectively, of unrecognized stock-based compensation cost related to options granted under the Equity Incentive Plans. Stock-based compensation related to options granted under the Equity Incentive Plans will be recorded over the vesting period which is typically one year or upon reaching agreed upon Company and/or individual performance milestones being met which is indefinite.
(ii) Stock Warrants
Stock warrants are issued as needed by the Board of Directors and have no formal plan.
| F-17 |
The fair value of each warrant award is estimated on the date of grant using a Black-Scholes-Merton pricing option valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the warrant. The Company uses historical data to estimate expected dividend yield, life and forfeiture rates. The expected life of the warrants was estimated based on historical option holder’s behavior and represents the period of time that options are expected to be outstanding. There were granted in 2019 at $ - $ per warrant. No warrants were granted in 2022, 2021 or 2020.
Schedule of Warrants Outstanding and Exercisable
| 2022 | 2021 | |||||||||||||||||||||||
| Shares | Warrant Price | Weighted Average Exercise Price | Shares | Warrant Price | Weighted Average Exercise Price | |||||||||||||||||||
| Outstanding, beginning of year | $ – | $ | $ – | $ | ||||||||||||||||||||
| Granted | ||||||||||||||||||||||||
| Expired | ( | ) | ( | ) | – | |||||||||||||||||||
| Exercised | ( | ) | ( | ) | ||||||||||||||||||||
| Outstanding, end of year | $ | - | $ | $ | - | $ | ||||||||||||||||||
| Exercisable | $ | - | $ | $ | - | $ | ||||||||||||||||||
| Weighted average remaining contractual life | years | years | ||||||||||||||||||||||
| Years exercisable | - | - | ||||||||||||||||||||||
Stock
warrants are issued at the discretion of the Board. In 2022 and 2021 there were
(7) Segment and Related Information
The Company operates in one segment, which performs research and development activities related to Ampligen and other drugs under development. The Company’s revenues for the two-year period ended December 31, 2022, were earned in the United States. All assets are maintained in the United States of America.
(8) Research, Consulting and Supply Agreements
In 2016, the Company entered into a five-year agreement (the “Impatients Agreement”) with Impatients, N.V. (“myTomorrows”), a Netherlands-based company, for the commencement and management of an EAP in Europe and Turkey (the “Territory”) related to ME/CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor in the Territory, is performing EAP activities. The agreement was automatically extended for a period of 12 months on May 20, 2021; automatically extended again for an additional period of 12 months on May 20, 2022; and will be automatically extended again on May 20, 2023.
Jubilant HollisterStier (Jubilant) is AIM’s authorized CMO for Ampligen for the approval in Argentina. In 2017, the Company entered into a purchase order with Jubilant pursuant to which Jubilant will manufacture batches of Ampligen® for the Company. Since the 2017 engagement of Jubilant, four lots of Ampligen consisting of more than 16,000 units have been manufactured and released in year 2018. The first lot was designated for human use in the US in the cost recovery CFS program and for expanded oncology clinical trials. The second lot has been designated for these programs in addition to commercial distribution in Argentina for the treatment of CFS.
The production of additional polymer (Ampligen intermediates) took place in 2019 at the Company’s New Brunswick facility. Additionally, two lots of Ampligen were manufactured in December 2019 and January 2020 at Jubilant. The current manufactured lots of Ampligen have been fully tested and released for commercial product launch in Argentina and for clinical trials.
In
August 2020, we contracted Amarex Clinical Research LLC (“Amarex”) to act as our Clinical Research Organization and provide
regulatory support with regard to a possible clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal
delivery, and for the development of Ampligen as a therapy for pancreatic cancer. For the year ended December 31, 2022, and
for the year ended December 31, 2021 the Company has incurred an expense and paid Amarex approximately $
| F-18 |
In
December 2020, AIM added Pharmaceutics International Inc. (“Pii”) as a “Fill & Finish” provider to enhance
the Company’s capacity to produce the drug Ampligen. This addition amplifies AIM’s manufacturing capability by providing
redundancy and cost savings. The contracts augment AIM’s existing fill and finish capacity. As agreed to in the Master Services
Agreement, the terms of each of AIM’s projects with Pii will be negotiated separately and defined in individual Service Contracts.
For the year ended December 31, 2022, the Company has incurred an expense and paid Pii approximately $
In
January 2021, the Company entered into a Sponsor Agreement with the Centre for Human Drug Research (“CHDR”) for a Phase 1
clinical study to assess the safety, tolerability, and biological activity of Ampligen as a potential intranasal therapy. For the year ended December
31, 2022, the Company has incurred an expense and paid CHDR approximately $
In
April 2021, the Company approved a proposal from Polysciences Inc. (“Polysciences”) for the manufacture of our Poly I and
Poly C12U polynucleotides and associated test methods at Polysciences’ Warrington, PA location to enhance our capacity to produce
the polymer precursors to the drug Ampligen. We are working with Polysciences to negotiate and finalize both a Service Agreement and
a Quality Agreement. For the year ended December 31, 2022 the Company has incurred an expense and paid Polysciences approximately $
In
July 2021, the Company executed a Reservation and Start-Up Agreement (the “Agreement”) with hVIVO Services Limited (“hVIVO”),
and subsequently signed a clinical trial agreement (“CTA”) in September. For the year ended December 3, 2021, the Company had incurred
an expense and paid hVIVO approximately $
(9) 401(k) Plan
The
Company has a defined contribution plan, entitled the AIM ImmunoTech Employees 401(k) Plan and Trust Agreement (the “401(k) Plan”).
Full time employees of the Company are eligible to participate in the 401(k) Plan following one year of employment. Subject to certain
limitations imposed by federal tax laws, participants are eligible to contribute up to
Each
participant immediately vests in his or her deferred salary contributions, while Company contributions will vest over one year. A
(10) Employment Agreements
The
Company had contractual agreements with Named Executive Officers (“NEO”) in 2022, and 2021. The aggregate annual base compensation
for these NEO under their respective contractual agreements for 2022 and 2021 was $and $,
respectively. In addition, certain of these Officers were entitled to receive performance bonuses of up to
In 2022, equity was granted as a form of compensation to these Officers.
| a. | The Company granted options to purchase common stock with an exercise price of $ per share to vest in a year to Thomas K. Equels, Chief Executive Officer. |
| b. | The Company granted options to purchase common stock with an exercise price of $ to $ per share which vest in to Peter Rodino, Chief Operating Officer and General Counsel. |
| c. | The Company granted options to purchase common stock with an exercise price of $per share which vest in to Ellen Lintal, former Chief Financial Officer. |
The Company recorded stock compensation expense of approximately $ during the year ended December 31, 2022. With regard to these issuances to Officers Equels, Rodino, and former Officer Lintal.
In 2021, equity was granted as a form of compensation to these Officers.
| d. | The Company granted options to purchase common stock with an exercise price of $ per share to vest in a year to Thomas K. Equels, Chief Executive Officer. |
| e. | The Company granted options to purchase common stock with exercise price of $ per share which vest in to Peter Rodino, Chief Operating Officer and General Counsel. |
| f. | The Company granted options to purchase common stock with exercise price of $ per share which vest in to Ellen Lintal, Chief Financial Officer. |
The Company recorded stock compensation expense of approximately $ during the year ended December 31, 2021. with regard to these issuances to Officer Equels, Officer Rodino, and former Officer Lintal.
| F-19 |
(11) Leases
The
Company leases office and storage space, and other equipment under non-cancellable operating leases with initial terms typically ranging
from
The Company’s lease terms may include options to extend or terminate the lease. The Company exercises judgment to determine the term of those leases when extension or termination options are present and include such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.
The Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.
At lease commencement, lease-related assets and liabilities are measured at the present value of future lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company exercises judgment in determining the incremental borrowing rate based on the information available when the lease commences to measure the present value of future payments.
Operating leases are included in other assets, current operating lease obligations, and operating lease obligations (less current portion) on the Company’s consolidated balance sheet. Short term leases with an initial term of 12 months or less are not presented on the balance sheet with expense recognized as incurred.
The
Company entered into a Lease Agreement for a term of
On
June 13, 2018, the Company entered into a Lease Agreement for a term of
On
May 1, 2019, the Company entered into a Lease Agreement for a term of
The
expected lease term includes both contractual lease periods and, when applicable, cancelable option periods when it is reasonably certain
that the Company would exercise such options. The Company’s leases have remaining lease terms between
The
Company has determined that the incremental borrowing rate is
Future minimum payments as of December 31, 2022, are as follows:
Schedule of Operating lease Future Payments
Year Ending December 31, (in thousands) | ||||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Less imputed interest | ( | ) | ||
| Total | $ | |||
As
of December 31, 2022, and 2021, the balance of the right of use assets was $
(12) Income Taxes (FASB ASC 740 Income Taxes)
The Company applies the provisions of FASB ASC 740-10 Uncertainty in Income Taxes. As a result of the implementation, there has been no material change to the Company’s tax positions as they have not paid any corporate income taxes due to operating losses. With the exception of net operating losses and research and development credits generated in New Jersey, all tax benefits will likely not be recognized due to the substantial net operating loss carryforwards which will most likely not be realized prior to expiration.
| F-20 |
As
of December 31, 2022, the Company has approximately $
The utilization of certain state net operating loss carryforwards may be subject to annual limitations. With no tax due for the foreseeable future, the Company has determined that a policy to determine the accounting for interest or penalties related to the payment of tax is not necessary at this time.
Under the Tax Reform Act of 1986, the utilization of a corporation’s net operating loss carryforward is limited following a greater than 50% change in ownership. As noted above, due to the Company’s prior and current equity transactions, some of the Company’s net operating loss carryforwards are subject to an annual limitation generally determined by multiplying the value of the Company on the date of the ownership change by the federal long-term tax-exempt rate. Any unused annual limitation may be carried forward to future years for the balance of the net operating loss carryforward period.
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the carrying amounts used for income tax purposes. In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. With the exception of net operating losses generated in New Jersey which can be surrendered for 80% of their value, due to the uncertainty of the Company’s ability to realize the benefit of the deferred tax asset, the remainder of our deferred tax assets are fully offset by a valuation allowance at December 31, 2022 and 2021.
The components of the net deferred tax assets and liabilities as of December 31, 2022 and 2021 consist of the following:
Schedule of Components of Net Deferred Tax Assets and Liabilities
| 2022 | 2021 | |||||||
| (in thousands) | ||||||||
| Deferred tax assets: | December 31, | |||||||
| 2022 | 2021 | |||||||
| Net operating losses | $ | $ | ||||||
| Research and Development costs | ||||||||
| Amortization & depreciation | ||||||||
| R&D credits | ||||||||
| Other | ||||||||
| ROU | ||||||||
| Stock compensation | ||||||||
| Total deferred tax assets | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
Deferred tax assets are included within other assets in the accompanying Consolidated Balance Sheets. The benefits of deferred tax assets are included within the gain from sale of income tax operating losses in the accompanying Consolidated Statements of Comprehensive Loss. The Company’s deferred tax asset estimates the projected sale of 2022 and 2021 New Jersey state operating losses to be sold in the subsequent year, respectively.
Rate Reconciliation
Reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows (in thousands):
Schedule of Effective Tax Rate and Statutory Tax Rate
| Pre Tax Book Loss | $ | ( | ) | |||||
| Federal Rate | ( | ) | % | |||||
| State Taxes | ( | ) | % | |||||
| RTP | ( | ) | % | |||||
| Other | - | % | ||||||
| Valuation Allowance | - | % | ||||||
| Total | % |
(13) Certain Relationships and Related Transactions
The Company has an employment agreement with its NEOs and has granted its NEOs and directors options to purchase its common stock. Please see details of these Employment Agreements in Note 10 - Employment Agreements.
| F-21 |
(14) Concentrations of Risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, cash equivalents, investments and accounts receivable. The Company places its cash with high-quality financial institutions and, at times, such amounts in non-interest-bearing accounts may be in excess of Federal Deposit Insurance Corporation insurance limits. There were no credit-based sales for 2022 and 2021.
There are a limited number of suppliers in the United States and abroad available to provide the raw and packaging materials/reagents for use in manufacturing Ampligen and Alferon N Injection. At present, we do not have any agreements with third parties for the supply of any of these materials or we are relying on a limited source of reagent suppliers necessary for the manufacture of Alferon N Injection. Jubilant HollisterStier LLC has manufactured batches of Ampligen for us pursuant to purchase orders. We anticipate that additional orders will be placed upon approved quotes and purchase orders provided by us to Jubilant. On December 22, 2020, we added Pharmaceutics International Inc. (“Pii”) as a “Fill & Finish” provider to enhance our capacity to produce the drug Ampligen. This addition amplifies our manufacturing capability by providing redundancy and cost savings. The contracts augment our existing fill and finish capacity. If we are unable to place adequate acceptable purchase orders with Jubilant or Pii in the future at acceptable prices upon acceptable terms, we will need to find another manufacturer. The costs and availability of products and materials we would need for the production of Ampligen are subject to fluctuation depending on a variety of factors beyond our control, including competitive factors, changes in technology, ownership of intellectual property, FDA and other governmental regulations. There can be no assurance that we will be able to obtain such products and materials on terms acceptable to us or at all.
Currently, the Alferon N Injection manufacturing process is on hold and there is no definitive timetable to restart production. If we are unable to acquire FDA approvals related to the manufacturing process and/or final product of new Alferon N Injection inventory or contract with a CMO, our operations most likely will be materially and/or adversely affected. In light of these contingencies, there can be no assurances that the approved Alferon N Injection product will be returned to production on a timely basis, if at all, or that if and when it is again made commercially available, it will return to prior sales levels.
(15) Fair Value
The Company is required under U.S. GAAP to disclose information about the fair value of all the Company’s financial instruments, whether or not these instruments are measured at fair value on the Company’s consolidated balance sheets.
The Company estimates that the fair values of cash and cash equivalents, other assets, accounts payable and accrued expenses approximate their carrying values due to the short-term maturities of these items. The Company also has certain warrants with a cash settlement feature in the occurrence of a Fundamental Transaction, which is defined if the Company, directly or indirectly, in one or more related transactions, consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person or group of persons, whereby such other person or group acquires more than 50% of the outstanding shares of common stock (not including any shares of common stock held by the other person or group of persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination). The fair value of the redeemable warrants (“Warrants”) related to the Company’s April 2018, and March 2019 common stock and warrant issuance, are calculated using a Monte Carlo Simulation. While the Monte Carlo Simulation is one of a number of possible pricing models, the Company has determined it to be industry accepted and fairly presented the fair value of the Warrants. As an additional factor to determine the fair value of the Put’s liability, the occurrence probability of a Fundamental Transaction event was factored into the valuation.
The Company recomputes the fair value of the Warrants at the issuance date and the end of each quarterly reporting period. Such value computation includes subjective input assumptions that are consistently applied each period. If the Company were to alter its assumptions or the numbers input based on such assumptions, the resulting fair value could be materially different.
The Company utilized the following assumptions to estimate the fair value of the April 2018 Warrants:
Schedule of Assumptions to Estimate Fair Value of Warrants
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Underlying price per share | $ | $ | ||||||
| Exercise price per share | $ | $ | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected holding period | ||||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | ||||||||
| F-22 |
The Company utilized the following assumptions to estimate the fair value of the March 2019 Warrants:
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Underlying price per share | $ | $ | ||||||
| Exercise price per share | $ | $ | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected holding period | ||||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | ||||||||
The significant assumptions using the Monte Carlo Simulation approach for valuation of the Warrants are:
| (i) | Risk-Free Interest Rate. The risk-free interest rates for the Warrants are based on U.S. Treasury constant maturities for periods commensurate with the remaining expected holding periods of the warrants. | |
| (ii) | Expected Holding Period. The expected holding period represents the period of time that the Warrants are expected to be outstanding until they are exercised. The Company utilizes the remaining contractual term of the Warrants at each valuation date as the expected holding period. | |
| (iii) | Expected Volatility. Expected stock volatility is based on daily observations of the Company’s historical stock values for a period commensurate with the remaining expected holding period on the last day of the period for which the computation is made. | |
| (iv) | Expected
Dividend Yield. Expected dividend yield is based on the Company’s anticipated dividend payments over the remaining expected
holding period. As the Company has never issued dividends, the expected dividend yield is | |
| (v) | Expected Probability of a Fundamental Transaction. The possibility of the occurrence of a Fundamental Transaction triggering a Put right is extremely remote. As discussed above, a Put right would only arise if a Fundamental Transaction 1) is an all cash transaction; (2) results in the Company going private; or (3) is a transaction involving a person or entity not traded on a national securities exchange. The Company believes such an occurrence is highly unlikely because: |
| 1. | The Company only has one product that is FDA approved but is currently not available for commercial sales. |
| 2. | The Company will have to perform additional clinical trials for FDA approval of its flagship product. |
| 3. | Industry and market conditions continue to include uncertainty, adding risk to any transaction. |
| 4. | Available capital for a potential buyer in a cash transaction continues to be limited. |
| 5. | The nature of a life sciences company is heavily dependent on future funding and high fixed costs, including Research & Development. |
| 6. | The Company has minimal revenues streams which are insufficient to meet the funding needs for the cost of operations or construction at their manufacturing facility; and |
| 7. | The Company’s Rights Agreement and Executive Agreements make it less attractive to a potential buyer. |
With the above factors utilized in analysis of the likelihood of the Put’s potential Liability, the Company estimated the range of probabilities related to a Put right being triggered as:
Schedule of Range of Probabilities
| Range of Probability | Probability | |||
| Low | % | |||
| Medium | % | |||
| High | % | |||
The
Monte Carlo Simulation has incorporated a
| (vi) | Expected Timing of Announcement of a Fundamental Transaction. As the Company has no specific expectation of a Fundamental Transaction, for reasons elucidated above, the Company utilized a discrete uniform probability distribution over the Expected Holding Period to model in the potential announcement of a Fundamental Transaction occurring during the Expected Holding Period. |
| F-23 |
| (vii) | Expected
100 Day Volatility at Announcement of a Fundamental Transaction. An estimate of future volatility is necessary as there is no
mechanism for directly measuring future stock price movements. Daily observations of the Company’s historical stock values
for the 100 days immediately prior to the Warrants’ grant dates, with a floor of | |
| (viii) | Expected Risk-Free Interest Rate at Announcement of a Fundamental Transaction. The Company utilized a risk-free interest rate corresponding to the forward U.S. Treasury rate for the period equal to the time between the date forecast for the public announcement of a Fundamental Transaction and the Warrant expiration date for each simulation. | |
| (ix) | Expected Time Between Announcement and Consummation of a Fundamental Transaction. The expected time between the announcement and the consummation of a Fundamental Transaction is based on the Company’s experience with the due diligence process performed by acquirers and is estimated to be six months. The Monte Carlo Simulation approach incorporates this additional period to reflect the delay Warrant Holders would experience in receiving the proceeds of the Put. |
While
the assumptions remain consistent from period to period (e.g., utilizing historical stock prices), the numbers input change from period
to period (e.g., the actual historical prices input for the relevant period). The carrying amount and estimated fair value of the above
Warrants was approximately $
The Company applies FASB ASC 820 (formerly Statement No. 157 Fair Value Measurements) that defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The guidance does not impose any new requirements around which assets and liabilities are to be measured at fair value, and instead applies to asset and liability balances required or permitted to be measured at fair value under existing accounting pronouncements. The Company measures its warrant liability for those warrants with a cash settlement feature at fair value.
FASB ASC 820-10-35-37 (formerly SFAS No. 157) establishes a valuation hierarchy based on the transparency of inputs used in the valuation of an asset or liability. Classification is based on the lowest level of inputs that is significant to the fair value measurement. The valuation hierarchy contains three levels:
| 1. | Level 1 – Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes debt and equity securities that are traded in an active market. |
| 2. | Level 2 – Observable inputs other than Level 1 prices such as quote prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Generally, this includes debt and equity securities that are not traded in an active market. |
| 3. | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. As of December 2022, the Company has classified the warrants with cash settlement features as Level 3. Management evaluates a variety of inputs and then estimates fair value based on those inputs. As discussed above, the Company utilized the Monte Carlo Simulation Model in valuing the warrants and the convertible note. |
The table below presents the balances of assets and liabilities measured at fair value on a recurring basis by level within the hierarchy as:
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis
| (in thousands) As of December 31, 2022 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Marketable securities | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Redeemable warrants | $ | $ | $ | $ | ||||||||||||
| F-24 |
| (in thousands) As of December 31, 2021 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Marketable securities | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Redeemable warrant | $ | $ | $ | $ | ||||||||||||
The changes in Level 3 Liabilities measured at fair value on a recurring basis are summarized as follows (in thousands):
Schedule of Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis
| Redeemable warrants: | ||||
| Balance at December 31, 2021 | $ | |||
| Fair value adjustments | ( | ) | ||
| Balance at December 31, 2022 | $ |
The table below presents the balances of assets and liabilities measured at fair value on a nonrecurring basis by level within the hierarchy as:
Schedule of Assets and Liabilities Measured at Fair Value on a Non Recurring Basis
| (in thousands) As of December 31, 2021 | ||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total Gains (Losses) | ||||||||||||||||
| Assets: | ||||||||||||||||||||
| Long lived assets held and used(a) | $ | $ | $ | $ | $ | |||||||||||||||
| (a) |
(16) Financing Obligation Arising from Sale Leaseback Transaction
On
March 16, 2018, the Company sold land and a building for $
On
May 13, 2021, the Company completed its repurchase of the property for cash of $
For
the period ended December 31, 2021, the loss on extinguishment was $
(17) Subsequent Events
On March 28, 2023, Nancy K. Bryan was appointed a Director to the Company’s Board of Directors. See “PART III ITEM 10. / Directors and Executive Officers and Corporate Governance” for biographical information.
| F-25 |
Exhibit 3.7(ii)
RESTATED AND AMENDED BYLAWS
Of
AIM IMMUNOTECH INC.
[f/k/a HEMISPHERX BIOPHARMA, INC.]
(March 28, 2023)
ARTICLE I.
MEETINGS OF STOCKHOLDERS.
Section 1.1. Annual Meeting. The annual meeting of stockholders shall be held at such date, time and place, either within or without the State of Delaware, as may be designated by resolution of the Board of Directors from time to time. In lieu of holding an annual meeting of stockholders at a designated place, the Board of Directors may, in its sole discretion, determine that any annual meeting of stockholders may be held solely by means of remote communication. At the annual meeting, directors shall be elected and such other business transacted as shall have been properly brought before the meeting.
Section 1.2. Special Meeting. Special meetings of stockholders for any purpose or purposes may be called by the Chair of the Board, the President, a majority of the Board of Directors, or a majority of the Executive Committee, and shall be called by the Secretary upon the request, in writing, of the stockholders owning a majority of the shares of capital stock of the Corporation issued and outstanding and entitled to vote at such meeting. A stockholder request for a special meeting shall be signed, dated and delivered to the Secretary, shall state the purpose of the proposed meeting, and shall provide the information required by Section 1.4(c) hereof. The Board of Directors or, in the absence of action by the Board of Directors, the Chair of the Board, shall have the sole power to determine the date, time and place for any special meeting of stockholders and to set a record date for the determination of stockholders entitled to vote at such meeting pursuant to Section 1.11 hereof. Following such determination, it shall be the duty of the Secretary to cause notice to be given to the stockholders entitled to vote at such meeting, in the manner set forth in Section 1.3 hereof, that a meeting will be held at the place, time and date and in accordance with the record date determined by the Board of Directors or the Chair of the Board. The stockholders requesting the special meeting shall not have the power to give notice of the meeting. In lieu of holding a special meeting of stockholders at a designated place, the Board of Directors may, in its sole discretion, determine that any special meeting of stockholders may be held solely by means of remote communication.
Section 1.3. Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given in accordance with Article VII hereof that shall state the place (if any), date and hour of the meeting and the means of remote communication (if any) by which stockholders and proxy holders may be deemed present in person vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the Certificate of Incorporation or these by-laws, the written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to notice of and to vote at such meeting. If mailed, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation.
Section 1.4. Advance Notice Requirements for Stockholder Nominations of Directors and Other Stockholder Proposals. The procedures in this Section 1.4 shall govern all cases in which a stockholder seeks to nominate persons for election or re-election to the Board of Directors or to propose business other than nominations to be addressed at a meeting of stockholders. No business shall be transacted at a meeting of stockholders except in accordance with the following procedures. Only persons who are nominated in accordance with the procedures set forth in this Section 1.4 shall be eligible for election or re-election as directors of the Corporation. Notwithstanding any language in these by-laws to the contrary, this Section 1.4 shall not apply to any right of holders of preferred shares of the Corporation to nominate and elect a specified number of directors in certain circumstances to the extent such procedures are set forth in the Certificate of Incorporation (including any Certificate of Designation).
(a) Annual Meetings of Stockholders.
(1) Nominations of persons for election or re-election to the Board of Directors and the proposal of business other than nominations to be considered by the stockholders may be brought before an annual meeting of stockholders only (i) pursuant to the Corporation’s notice of meeting delivered pursuant to Section 1.3 hereof (or any supplement thereto), (ii) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or the Chair of the Board or (iii) by any stockholder of the Corporation who was a stockholder of record of the Corporation at the time the notice provided for in this Section 1.4 is delivered to the Secretary of the Corporation and at the time of the annual meeting, who is entitled to vote at the annual meeting and who complies with the notice procedures set forth in subparagraphs (2) and (3) of this paragraph (a) in this Section 1.4.
(2) For nominations or other business to be properly brought before an annual meeting by a stockholder of record pursuant to clause (iii) of paragraph (a)(1) of this Section 1.4 (such nominations or other business, a “Stockholder Proposal”), (i) the stockholder of record giving the notice (a “Noticing Stockholder”) must have delivered (as defined below) timely notice thereof in proper written form to the Secretary of the Corporation at the principal executive offices of the Corporation, (ii) in the case of a Stockholder Proposal other than nominations of persons for election or re-election to the Board of Directors, the subject matter of such Stockholder Proposal must otherwise be a proper matter for stockholder action as determined, in its sole discretion, by the Board of Directors, and (iii) such stockholder of record, or his or her qualified representative, must be present, in person or by proxy, at the annual meeting. The Noticing Stockholder’s notice shall contain, at a minimum, the information required by Section 1.4(c). To be timely, a Noticing Stockholder’s notice to the Secretary, whether with respect to a Stockholder Proposal for nomination of persons for election or re-election to the Board of Directors or with respect to a Stockholder Proposal for other business, shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the Close of Business (as defined below) on the ninetieth (90th) day nor earlier than the Close of Business on the one hundred twentieth (120th) day prior to the one-year anniversary date of the immediately preceding year’s annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, the Noticing Stockholder’s notice, in order to be timely, must be so delivered not earlier than the Close of Business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the Close of Business on the later of the ninetieth (90th) day prior to such annual meeting and the tenth (10th) day following the day on which public announcement (as defined below) of the date of such meeting is first made by the Corporation. In no event shall the public announcement (as defined below) of an adjournment, recess, rescheduling, or postponement of an annual meeting of stockholders commence a new time period (or extend any time period) for the giving of a Noticing Stockholder’s notice as described above.
| 2 |
(3) Notwithstanding anything in paragraph (a)(2) of this Section 1.4 to the contrary, in the event that the Stockholder Proposal relates to the nomination of persons for election or re-election to the Board of Directors and the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting is increased and there is no public announcement (as defined below) by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least ten (10) days prior to the last day a Noticing Stockholder may deliver a notice of nominations in accordance with paragraph (a)(2) of this Section 1.4, a Noticing Stockholder’s notice required by this Section 1.4 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the Close of Business (as defined below) on the tenth (10th) day following the day on which such public announcement (as defined below) is first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been described in the Corporation’s notice of meeting given pursuant to Section 1.3 hereof. To the extent such business includes the election or re-election of directors, nominations of persons to stand for election or re-election as directors may be made at such a special meeting of stockholders only (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or the Chair of the Board, or (ii) provided that the Board of Directors has determined that directors shall be elected or re-elected at such meeting, by any stockholder of the Corporation (x) who is a stockholder of record on the date of the giving of the Noticing Stockholder’s notice provided for in this Section 1.4, on the record date for the determination of stockholders entitled to notice of and to vote at such special meeting, and at the time of such special meeting, (y) who is entitled to vote at the special meeting, and (z) who complies with the notice procedures set forth in this Section 1.4. The Noticing Stockholder’s notice of nominations of persons for election to the Board of Directors at a special meeting of stockholders called for the purpose of electing one or more directors shall contain, at a minimum, the information required by Section 1.4(c). In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, to be timely, a Noticing Stockholder’s notice of nominations of persons for election to the Board of Directors at the special meeting shall be delivered to the Secretary at the principal executive offices of the Corporation in proper written form not earlier than the Close of Business on the one hundred twentieth (120th) day prior to such special meeting and not later than the Close of Business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement (as defined below) is first made by the Corporation of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment, recess, rescheduling, or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a Noticing Stockholder’s notice as described above.
| 3 |
(c) Contents of Stockholder’s Notice. To be in proper form, a Noticing Stockholder’s notice to the Secretary of the Corporation of any Stockholder Proposal pursuant to this Section 1.4 shall also set forth:
(1) as to each person the Noticing Stockholder proposes to nominate for election or for re-election as a director of the Corporation (each such person, a “Stockholder Nominee”):
(A) the full legal name (and any alias names used), age, business address and residence address of the Stockholder Nominee;
(B) a complete biography and statement of the Stockholder Nominee’s qualifications, including the principal occupation or employment of the Stockholder Nominee (at present and for the past five (5) years);
(C) the Specified Information (as defined below) for the Stockholder Nominee and any member of the immediate family of such Stockholder Nominee, or any person acting in concert with such Stockholder Nominee;
(D) a complete and accurate description of all agreements, arrangements or understandings (whether written or oral, and including promises) between or among any two or more of any Holder, any Stockholder Associated Person (as such terms “Holder” and “Stockholder Associated Person” are defined in this Section 1.4), any Stockholder Nominee, any immediate family member of such Stockholder Nominee, any Affiliate or Associate of such Stockholder Nominee, any person or entity acting in concert with any of the foregoing persons or entities with respect to the nominations or the Corporation (including the full legal name (and any alias names) of any such person or entity acting in concert), and/or any other person or entity (including the full legal name (and any alias names) of any such person or entity), existing presently or existing during the prior twenty-four (24) months relating to or in connection with the nomination of any Stockholder Nominee or any other person or persons for election or re-election as a director of the Corporation, or pursuant to which any such nomination or nominations are being made, or relating to or in connection with the funding or financing of any nomination or nominations of any person or persons (including, without limitation, any Stockholder Nominee) for election or re-election to the Board of Directors, including, without limitation, the funding or financing of any proxy solicitation or litigation relating to such nomination or nominations;
(E) (i) a complete and accurate description of all agreements, arrangements or understandings (whether written or oral, and including promises) between or among each Holder and/or any Stockholder Associated Person (as such terms “Holder” and “Stockholder Associated Person” are defined in this Section 1.4), on the one hand, and any Stockholder Nominee, on the other hand, (x) to consult or advise on any investment or potential investment in a publicly listed company (including the Corporation), and/or (y) to nominate, submit, or otherwise recommend the Stockholder Nominee for appointment, election or re-election (or, for the avoidance of doubt, as a candidate for appointment, election or re-election) to any officer, executive officer or director role of any publicly listed company (including the Corporation), in each case, during the past ten (10) years; and (ii) a complete and accurate description of the outcome of any situations described pursuant to the foregoing clause (i);
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(F) whether the Stockholder Nominee has (i) notified the board of directors of each publicly listed company at which the Stockholder Nominee serves as an officer, executive officer or director with respect to such Stockholder Nominee’s proposed nomination for election or re-election to the Board of Directors, and, (ii) as applicable, received all necessary consents to serve on the Board of Directors of the Corporation if so nominated and elected or otherwise appointed (or, if any such consents have not been received, how the Stockholder Nominee intends to address such failure to receive such necessary consents);
(G) whether the Stockholder Nominee’s nomination, election or appointment, as applicable would violate or contravene a corporate governance policy, including, without limitation, a conflicts of interest or “overboarding” policy of any publicly listed company at which such Stockholder Nominee serves as an officer, executive officer or director and, if so, a description of how the Stockholder Nominee intends to address such violation or contravention;
(H) the dates of first contact between any Holder and/or Stockholder Associated Person, on the one hand, and the Stockholder Nominee, on the other hand, with respect to (i) the Corporation and (ii) any proposed nomination or nominations of any person or persons (including, without limitation, any Stockholder Nominee) for election or re-election to the Board of Directors;
(I) the amount and nature of any direct or indirect economic or financial interest, if any, of the Stockholder Nominee, or of any immediate family member of such Stockholder Nominee, in any funds or vehicles managed by, under common management with or affiliated with any Holder or Stockholder Associated Person;
(J) a complete and accurate description of all direct and indirect compensation and other monetary or non-monetary agreements, arrangements or understandings (whether written or oral) existing presently, that existed during the past three (3) years or that were offered during the past three (3) years (whether accepted or declined), and any other material relationships, between or among any Holder or any Stockholder Associated Person, on the one hand, and the Stockholder Nominee, any member of the immediate family of such Stockholder Nominee, and/or the Stockholder Nominee’s respective Affiliates and Associates, on the other hand (including the full legal names (and any alias names) of such persons) and all biographical, related party transaction and other information that would be required to be disclosed pursuant to the federal and state securities laws, including Rule 404 promulgated under Regulation S-K (“Regulation S-K”) under the Securities Act of 1933 (the “Securities Act”) (or any successor provision), if any Holder or any Stockholder Associated Person were the “registrant” for purposes of such rule and such Stockholder Nominee were a director or executive officer of such registrant;
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(K) any other information relating to the Stockholder Nominee that would be required to be disclosed in a proxy statement or any other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election or that is otherwise required pursuant to and in accordance with Section 14 of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), and the rules and regulations promulgated thereunder (including such Stockholder Nominee’s written consent to being named in proxy statements as a proposed nominee of the Noticing Stockholder and to serving as a director if elected); and
(L) a completed and signed questionnaire, representation and agreement and any and all other information required by paragraph (e) of this Section 1.4;
(2) as to any other business that the Noticing Stockholder proposes to bring before the meeting (other than the nomination of person(s) for election or re-election to the Board of Directors), (A) a brief description of the business desired to bring before the meeting and the reasons for conducting such business at the meeting, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend these by-laws, the text of the proposed amendment), and (C) a complete and accurate description of all agreements, arrangements and understandings (whether written or oral, and including promises) between or among each Holder, any Stockholder Associated Person and/or any other person or persons or entity or entities (including the full legal names (and any alias names) of such persons or entities) existing presently or existing during the prior twenty-four (24) months related to or in connection with the proposal of such business by the Noticing Stockholder, including, without limitation, the funding or financing of any proxy solicitation or litigation relating to the proposal of such business by the Noticing Stockholder, and (D) a complete and accurate description of any material interest of each such Holder or any Stockholder Associated Person in or with respect to such business;
(3) as to the Holders:
(A) the full legal name (and any alias names used) and address of each Holder (including, in the case of the Noticing Stockholder and any other Holder who is a stockholder of record of the Corporation, the name and address as they appear on the Corporation’s books), and the full legal name (and any alias names used) and address of each Stockholder Associated Person (as defined in this Section 1.4), if any;
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(B) as of the date of the notice (which information, for the avoidance of doubt, shall be updated and supplemented pursuant to subclause (g) of this Section 1.4), (i) the class or series and number of shares of capital stock of the Corporation of each such class and series which are, directly or indirectly, held of record or owned beneficially by each Holder and any Stockholder Associated Person (provided that, for purposes of this Section 1.4, any such person or entity shall in all events be deemed to beneficially own any shares of stock of the Corporation as to which such person has a right to acquire beneficial ownership at any time in the future (whether such right is exercisable immediately or only after the passage of time or the fulfillment of a condition, or both)), (ii) any short position, profits interest, option, warrant, convertible security, stock appreciation right or similar rights with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series or shares of the Corporation or with a value derived in whole or in part from the value or any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, including due to the fact that the value of such contract, derivative swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of shares of the Corporation, through the delivery of cash or other property, or otherwise, and without regard to whether the Holder and any Stockholder Associated Person may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation (any of the foregoing, a “Derivative Instrument”) directly or indirectly owned or held, including beneficially, by each Holder or any Stockholder Associated Person, (iii) a description of any proxy, contract, agreement, arrangement, understanding or relationship pursuant to which each Holder and/or any Stockholder Associated Person has any right to vote or has granted a right to vote any shares or stock or any other security of the Corporation, (iv) any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, involving any Holder or any Stockholder Associated Person, on the one hand, and any person acting in concert therewith, on the other hand, directly or indirectly, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such Holder or any Stockholder Associated Person with respect to any class or series of the shares or other securities of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares or other securities of the Corporation (any of the foregoing, a “Short Interest”), and any Short Interest held by each Holder or any Stockholder Associated Person within the last twelve (12) months in any class or series of the shares or other securities of the Corporation, (v) any rights to dividends or payments in lieu of dividends on the shares of the Corporation owned beneficially by each Holder or any Stockholder Associated Person that are separated or separable from the underlying shares of stock or other securities of the Corporation, (vi) any proportionate interest in shares of stock of any class or series or other underlying securities of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership or limited liability company or other entity in which any Holder or any Stockholder Associated Person is a general partner or directly or indirectly beneficially owns an interest in the manager or managing member of a limited liability company or other entity, (vii) any performance-related fees (other than an asset-based fee) that each Holder or any Stockholder Associated Person is or may be entitled to based on any increase or decrease in the value of the stock or other securities of the Corporation or Derivative Instruments, if any, including without limitation, any such interests held by members of the immediate family as such Holder or any Stockholder Associated Person, (viii) any direct or indirect legal, economic, or financial interest (including Short Interest) of each Holder and each Stockholder Associated Person, if any, in the outcome of any (X) vote to be taken at any annual or special meeting of stockholders of the Corporation or (Y) any meeting of stockholders of any other entity with respect to any matter that is related, directly or indirectly, to any nomination or business proposed by any Holder under these by-laws, (ix) any direct or indirect legal, economic or financial interest or any Derivative Instrument or Short Interests in any principal competitor of the Corporation held by each Holder or any Stockholder Associated Person, (x) any direct or indirect interest of each Holder or any Stockholder Associated Person in any contract with the Corporation, any Affiliate of the Corporation, or any principal competitor of the Corporation (including, in any such case, any employment agreement or consulting agreement); and (xi) any material pending or threatened action, suit or proceeding (whether civil, criminal, investigative, administrative or otherwise) in which any Holder or any Stockholder Associated Person is, or is reasonably likely to be made, a party or material participant involving the Corporation or any of its officers, directors or employees, or any Affiliate of the Corporation, or any officer, director or employee of such Affiliate (the information specified in this paragraph (c)(3)(B) of this Section 1.4 shall be referred to as the “Specified Information”);
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(C) a representation by the Noticing Stockholder that such stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting, will continue to be a stockholder of record of the Corporation entitled to vote at such meeting through the date of such meeting and intends to appear in person or by proxy at the meeting to propose such nomination or other business;
(D) all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to Rule 13d-2(a) if such a statement were required to be filed under the Exchange Act and the rules and regulations promulgated thereunder by each Holder and each Stockholder Associated Person, if any;
(E) any other information relating to each Holder and each Stockholder Associated Person, if any, that would be required to be disclosed in a proxy statement and form of proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;
(F) a representation by the Noticing Stockholder as to whether any Holder and/or any Stockholder Associated Person intends or is part of a group that intends: (i) to deliver a proxy statement and/or form of proxy to holders of at least a percentage of the Corporation’s outstanding capital stock required to elect the proposed nominee or approve or adopt the other business being proposed and/or (ii) to otherwise solicit proxies from stockholders in support of such nomination or other business;
(G) a certification by the Noticing Stockholder that each Holder and any Stockholder Associated Person has complied with all applicable federal, state and other legal requirements in connection with its acquisition of shares of capital stock or other securities of the Corporation and/or such person’s acts or omissions as a stockholder of the Corporation; and
(H) if any Holder and/or Stockholder Associated Person intends to solicit proxies in support of director nominees, the statement required by Rule 14a-19(b)(3) of the Exchange Act (or any successor provision);
(4) the names (including, if known, the full legal names and any alias names used) and addresses of other stockholders (including beneficial owners) known by any Holder or Stockholder Associated Person to support such Stockholder Proposal or Stockholder Proposals (including, without limitation, any nominations), and to the extent known, the class or series and number of all shares of the Corporation’s capital stock owned beneficially or of record by each such other stockholder or other beneficial owner; and
(5) a representation by the Noticing Stockholder as to the accuracy of the information set forth in the notice.
(d) Additional Information. The Corporation may also, as a condition to any such nomination or business being deemed properly brought before a meeting of stockholders, require any Holder or any Stockholder Nominee to deliver to the Secretary, within five (5) Business Days (as defined below) of any such request, such other information as may reasonably be requested by the Corporation, including (i) such other information as may be reasonably required by the Board of Directors, in its sole discretion, to determine (A) the eligibility of such Stockholder Nominee to serve as a Director, and (B) whether such proposed Stockholder Nominee qualifies as an “independent director” or “audit committee financial expert,” or otherwise meets heightened standards of independence, under applicable law, securities exchange rule or regulation or any publicly disclosed corporate governance guideline or committee charter of the Corporation and (ii) such other information that the Board of Directors determines, in its sole discretion, could be material to a reasonable stockholder’s understanding of the qualifications and independence, or lack thereof, of such proposed Stockholder Nominee.
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(e) Director Questionnaire and Written Representation. In addition to the other requirements of this Section 1.4, each Stockholder Nominee who a Noticing Stockholder proposes to nominate for election or re-election as a director must deliver in writing (in accordance with the time periods prescribed for delivery of notice under this Section 1.4) to the Secretary at the principal executive offices of the Corporation (1) a written questionnaire in the form provided by the Secretary with respect to the background, qualifications, and independence of such Stockholder Nominee (which questionnaire shall be provided by the Secretary upon written request of any stockholder of record identified by name within five (5) Business Days of such written request), and (2) a written representation and agreement (in the form provided by the Secretary upon written request of any stockholder of record identified by name within five (5) Business Days of such written request) that such Stockholder Nominee (i) is not and will not become a party to (x) any agreement, arrangement or understanding (whether written or oral) with, and has not given any commitment or assurance to, any person or entity as to how such Stockholder Nominee, if elected as a director, will act or vote on any issue or question (solely for purposes of this Section 1.4, a “Voting Commitment”) that has not been disclosed to the Corporation or (y) any Voting Commitment that could limit or interfere with such Stockholder Nominee’s ability to comply, if elected as a director, with such Stockholder Nominee’s fiduciary duties under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation, (iii) in such Stockholder Nominee’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director, and will comply with all applicable rules of the exchanges upon which the securities of the Corporation are listed and all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation, and (iv) in such Stockholder Nominee’s individual capacity and on behalf of any Holder on whose behalf the nomination is being made, intends to serve a full term if elected as a director.
(f) Only Stockholder Proposals made in accordance with the procedures set forth in this Section 1.4 shall be considered at an annual or special meeting of stockholders of the Corporation. Except as otherwise provided by law, the Certificate of Incorporation or these by-laws, the chair of the annual or special meeting of stockholders shall have the power and duty to (i) determine whether a Stockholder Proposal was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.4 (including, without limitation, whether the Noticing Stockholder or Holder, if any, on whose behalf the Stockholder Proposal is made solicited (or is part of a group that solicited) or failed to so solicit (as the case may be) proxies in support of such Stockholder Proposal in compliance with such stockholder’s representation as required by Section (c) of this Section 1.4) and (ii) if any Stockholder Proposal is not in compliance with these by-laws, to declare to the meeting that such Stockholder Proposal was not properly brought before the meeting and therefore shall be disregarded, in which case, such Stockholder Proposal shall be disregarded and shall not considered at the annual or special meeting.
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(g) In addition, to be considered timely, a Noticing Stockholder’s notice shall be further updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is ten (10) Business Days prior to the meeting or any adjournment, recess, rescheduling or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) Business Days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than six (6) Business Days prior to the date for the meeting or any adjournment, recess, rescheduling or postponement thereof in the case of the update and supplement required to be made as of ten (10) Business Days prior to the meeting or any adjournment, recess, rescheduling or postponement thereof. In addition, if the Noticing Stockholder has delivered to the Corporation a notice relating to the nomination of directors, the Noticing Stockholder shall deliver to the Corporation not later than six (6) Business Days prior to the date of the meeting or any adjournment, recess, rescheduling or postponement thereof reasonable evidence that it has complied with the requirements of Rule 14a-19 of the Exchange Act (or any successor provision). For the avoidance of doubt, the obligation to update and supplement set forth in this paragraph or any other Section of these by-laws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business and/or resolutions proposed to be brought before a meeting of stockholders.
(h) Notwithstanding anything to the contrary in these by-laws, if the Noticing Stockholder (or a qualified representative of the Noticing Stockholder) does not appear at the annual or special meeting of stockholders, as applicable, to present a nomination or other business, such nomination shall be disregarded and such other business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 1.4, to be considered a “qualified representative” of the Noticing Stockholder, a person must be authorized by a document authorizing another person or persons to act for such stockholder as proxy at the meeting of stockholders and such person must produce the document or a reliable reproduction of such document at the meeting of stockholders. A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such transmission must either set forth or be submitted with information from which it can be determined that the transmission was authorized by the stockholder. If it is determined that such transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination, shall specify the information upon which such inspectors or such persons relied.
(i) Definitions. For purposes of Section 1.4 of these by-laws:
(1) “Affiliate” shall have the meaning attributed to such term in Rule 12b-2 under the Exchange Act;
(2) “Associate” shall have the meaning attributed to such term in Rule 12b-2 under the Exchange Act;
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(3) “Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close;
(4) “Close of Business” on a particular day shall mean 5:00 p.m. local time at the principal executive offices of the Corporation, and if an applicable deadline falls on the Close of Business on a day that is not a Business Day, then the applicable deadline shall be deemed to be the Close of Business on the immediately preceding Business Day;
(5). “delivered” shall mean, both (i) hand delivery, overnight courier service, or by certified or registered mail, return receipt requested, in each case to the Secretary at the principal executive offices of the Corporation, delivered and received at the principal executive offices of the Corporation by the specified date and time, and (ii) electronic mail to the Secretary (at Secretary@aimimmuno.com or such other electronic mail address as the Corporation may publicly disclose for purposes of such delivery to the Secretary);
(6) “Holder” shall mean the Noticing Stockholder and each beneficial owner, if any, on whose behalf the nomination is made or other business is being proposed;
(7) “public announcement” shall mean disclosure: (i) in a press release released by the Corporation, provided such press release is released by the Corporation following its customary procedures, as reported by the Dow Jones News Service, Associated Press or a comparable national news service, or is generally available on internet news sites, or (ii) in a document publicly filed by the Corporation with the SEC pursuant to Sections 13, 14 or 15(d) of the Exchange Act; and
(8) “Stockholder Associated Person” shall mean, as to any Holder, (i) any person acting in concert with such Holder with respect to the Stockholder Proposal or the Corporation, (ii) any person controlling, controlled by, or under common control with such Holder or any of their respective Affiliates and Associates, or a person acting in concert therewith with respect to the Stockholder Proposal or the Corporation, and (iii) any member of the immediate family of such Holder or an Affiliate or Associate of such Holder.
(g) Notwithstanding the foregoing provisions of this Section 1.4, a stockholder also shall comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.4. Nothing in this Section 1.4 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 1.5. Postponement and Cancellation of Meeting. Any previously scheduled annual or special meeting of the stockholders may be postponed and any previously scheduled annual meeting or previously scheduled special meeting of the stockholders called by the Chair of the Board, the President, a majority of the Board of Directors, or a majority of the Executive Committee may be canceled by resolution of the Board of Directors upon public notice given prior to the time previously scheduled for such meeting of stockholders.
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Section 1.6 Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these by-laws, at each meeting of stockholders, the presence in person or by proxy of the holders of 40% in voting power of the outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum for the transaction of business. In the absence of a quorum, the chair of the meeting may adjourn the meeting from time to time in the manner provided in Section 1.10 hereof until a quorum shall attend. Shares of the Corporation’s own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any subsidiary of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. The chair of the meeting shall have the power and the duty to determine whether a quorum is present at any meeting of stockholders.
Section 1.7. Officers for Meeting of Stockholders. Meetings of stockholders shall be presided over by the Chair of the Board, if any, or in his absence by the President, or in his absence by a Vice President, or in the absence of the foregoing persons by a chair designated by the Board of Directors, or in the absence of such designation by a chair chosen at the meeting by a plurality vote. The Secretary shall act as secretary of the meeting, but in his absence the chair of the meeting may appoint any person to act as secretary of the meeting.
Section 1.8. Conduct of Meetings. Every meeting of stockholders shall be presided over by the chair of the meeting selected pursuant to Section 1.7, hereof. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be determined by the chair of the meeting and announced at the meeting. The Board of Directors may adopt by resolution such rules, regulations and proceedings for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chair of the meeting shall have the exclusive right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of the chair, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chair of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present, including regulation of the manner of voting and the conduct of discussion; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chair of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; (v) limitations on or the elimination of time allotted to questions or comments by participants; and (vi) restrictions on the use of cell phones, audio or video recording devices and other devices at the meeting. Unless and to the extent determined by the Board of Directors or the chair of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The chair of the meeting shall have the power, right and authority to convene, recess or adjourn any meeting of stockholders.
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Section 1.9. Voting; Proxies. Except as otherwise provided by applicable law, the Certificate of Incorporation or these by-laws, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by delivering a proxy in accordance with applicable law bearing a later date to the Secretary of the Corporation. Voting at meetings of stockholders need not be by written ballot. At all meetings of stockholders, a plurality of the votes cast shall be sufficient to elect directors. All other elections and questions shall, unless otherwise provided by the Certificate of Incorporation, these by-laws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, be decided by the affirmative vote of the holders of a majority in voting power of the shares of stock of the Corporation which are present in person or by proxy and entitled to vote thereon.
Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority:
(a) A stockholder, or such stockholder’s authorized officer, director, employee or agent, may execute a document authorizing another person to act for such stockholder as proxy.
(b) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such transmission must either set forth or be submitted with information from which it can be determined that the transmission was authorized by the stockholder. If it is determined that such transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information upon which they relied.
(c) The authorization of a person to act as a proxy may be documented, signed and delivered in accordance with Section 116 of the General Corporation Law of the State of Delaware, provided that such authorization shall set forth, or be delivered with information enabling the Corporation to determine, the identity of the stockholder granting such authorization.
Section 1.10. Adjournment of Meeting. Any meeting of stockholders, annual or special, may be adjourned from time to time to reconvene at the same or some other time, date and place (if any). A meeting of the stockholders, annual or special, shall be adjourned solely by the chair of the meeting or by the chair of the meeting acting at the direction of the Board of Directors. The stockholders present at a meeting shall not have authority to adjourn the meeting. Notice need not be given of any such adjourned meeting if the time, date and place thereof, if any, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are (a) announced at the meeting at which the adjournment is taken, (b) displayed, during the time scheduled for the meeting, on the same electronic network used to enable stockholders and proxy holders to participate in the meeting by means of remote communication or (c) set forth in the notice of meeting; provided, however, that if the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to notice of and to vote at such meeting in accordance with Section 1.3 hereof, and each stockholder who, by law or under the Certificate of Incorporation or these by-laws, is entitled to such notice. If the time, date and place, if any, of the adjourned meeting are not announced at the meeting at which the adjournment is taken, then the Secretary of the Corporation shall give written notice of the time, date and place of the adjourned meeting not less than ten (10) days prior to the date of the adjourned meeting. Notice of the adjourned meeting also shall be given if the meeting is adjourned in a single adjournment to a date more than 30 days or in successive adjournments to a date more than 120 days after the original date fixed for the meeting.
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At an adjourned meeting at which a quorum is present, the stockholders may transact any business which might have been transacted at the original meeting. Once a share is represented for any purpose at a meeting, it shall be present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. A new record date shall be set if the meeting is adjourned in a single or successive adjournments to a date more than 120 days after the original date fixed for the meeting. If after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting consistent with the new record date.
Section 1.11 Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action other than stockholder action by written consent, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (i) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the original date of such meeting, and (ii) in the case of any other lawful action other than stockholder action by written consent, shall not be more than sixty days prior to such other action. If no record date is fixed by the Board of Directors: (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and (ii) the record date for determining stockholders for any other purpose (other than stockholder action by written consent) shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting and shall fix a new record date for the adjourned meeting if the meeting is adjourned in a single or successive adjournments to a date more than 120 days after the original date fixed for the meeting.
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Section 1.12. Procedures for Stockholder Action by Consent.
(a) Request for Record Date. The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting shall be as fixed by the Board of Directors or as otherwise established under this Section 1.12(a). Any person seeking to have the stockholders authorize or take corporate action by written consent without a meeting shall, by written notice addressed to the Secretary and delivered to the Corporation and signed by a stockholder of record, request that a record date be fixed for such purpose. The written notice shall contain at a minimum the information required in Section 1.4(c) for a Stockholder Proposal and shall state the reasons for soliciting consents for such action. The Board of Directors shall have ten (10) days following the date of receipt of the notice to determine the validity of the request, including the sufficiency of the information provided. During the ten (10) day period, the Corporation may require the stockholder of record and/or beneficial owner requesting a record date for proposed stockholder action by consent to furnish such other information as it may reasonably require to determine the validity of the request for a record date. Following the determination of the validity of the request, and no later than ten (10) days after the date on which such request is received by the Corporation, the Board of Directors may fix a record date for such purpose, which shall be no more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors and which shall not precede the date such resolution is adopted. If the Board of Directors fails within ten (10) days after the date the Corporation receives such notice to fix a record date for such purpose, the record date shall be the day on which the first written consent is delivered to the Corporation in the manner described in Section 1.12(c) below unless prior action by the Board of Directors is required by law, in which event the record date shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
(b) Form of Consent. Unless otherwise provided by the Certificate of Incorporation, every stockholder consent purporting to take or authorize the taking of corporate action and/or related revocations (each such consent and related revocation is referred to in this Section 1.12 as a “Consent”) shall be set forth in writing or in an electronic transmission and bear the date of signature of each stockholder who signs the Consent, and no Consent shall be effective to authorize or take the corporate action referred to therein unless, within sixty (60) days of the earliest dated Consent delivered in the manner required by this Section 1.12, Consents to take or authorize such action and signed by stockholders are so delivered to the Corporation in sufficient number representing not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
(c) Delivery of Consent. A Consent shall be delivered to the Corporation by delivery (i) to the principal place of business of the Corporation, (ii) to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders is recorded, (iii) to the registered office of the Corporation in the State of Delaware by hand or by certified or registered mail, return receipt requested, or (iv) in accordance with Section 116 of the General Corporation Law of the State of Delaware to an information processing system, if any, designated by the Corporation for receiving such Consents. In case of delivery pursuant to the preceding clause (iv), such Consent must set forth or be delivered with information that enables the Corporation to determine the date of delivery of such Consent and the identity of the person giving such consent, and, if such Consent is given by a person authorized to act for a stockholder as proxy, such Consent must comply with the applicable provisions of Sections 212(c)(2) and 212(c)(3) of the General Corporation Law of the State of Delaware.
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(d) Safe-Keeping and Sufficiency Review. In the event of the delivery to the Corporation of a Consent, the Secretary of the Corporation shall provide for the safe-keeping of such Consent and shall promptly conduct such ministerial review of the sufficiency of the Consents and of the validity of the action to be taken by stockholder consent as the Secretary deems necessary or appropriate, including, without limitation, whether the holders of a number of shares having the requisite voting power to authorize or take the action specified in the Consent have given consent; provided, however, that if the corporate action to which the Consent relates is the removal or replacement of one or more members of the Board of Directors, the Secretary of the Corporation shall promptly designate two persons, who shall not be members of the Board of Directors, to serve as Inspectors with respect to such Consent and such Inspectors shall discharge the functions of the Secretary of the Corporation under this Section 1.12(d). If after such investigation the Secretary or the Inspectors (as the case may be) shall determine that the Consent is valid and that the action therein specified has been validly authorized, that fact shall forthwith be certified on the records of the Corporation kept for the purpose of recording the proceedings of meetings of stockholders, and the Consent shall be filed in such records, at which time the Consent shall become effective as stockholder action. In conducting the investigation required by this Section 1.12(d), the Secretary or the Inspectors (as the case may be) may, at the expense of the Corporation, retain special legal counsel and any other necessary or appropriate professional advisors, and such other personnel as they may deem necessary or appropriate to assist them, and shall be fully protected in relying in good faith upon the opinion of such counsel or advisors. No action by written consent without a meeting shall be effective until such date as the Secretary or the Inspectors (as the case may be) certify to the Corporation that the Consents delivered to the Corporation in accordance with this Section 1.12 represent at least the minimum number of votes that would be necessary to take the action. Nothing contained in this Section 1.12(d) shall in any way be construed to suggest or imply that the Board of Directors or any stockholder shall not be entitled to contest the validity of any Consent or revocation thereof, whether before or after such certification by the Secretary or the Inspectors, or to take any other action (including, without limitation, the commencement, prosecution, or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).
Section 1.13. Inspectors of Election. The Corporation may, and shall if required by law, in advance of any meeting of stockholders, appoint one or more inspectors of election, who may be employees of the Corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated shall, (i) ascertain the number of shares of capital stock of the Corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the Corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the Corporation represented at the meeting and such inspectors’ count of all votes and ballots. Such certification and report shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the Corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.
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Section 1.14 List of Stockholders Entitled to Vote. The Secretary (or the Corporation’s transfer agent or any other person authorized by these by-laws or by law) shall prepare, no later than the tenth day before any meeting of stockholders a complete list of the stockholders entitled to vote at the meeting; provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing contained in this Section 1.14 shall require the Corporation to include the email addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of ten (10) days ending on the day before the meeting date: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation.
ARTICLE II.
BOARD OF DIRECTORS.
Section 2.1 Powers; Number. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts or things, except as otherwise provided by the Certificate of Incorporation or as required by law. The Board of Directors shall consist of one or more members, the number thereof to be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders.
Section 2.2. Qualifications. No person who is or has been within the last five (5) years (a) under Critical Investigation by the Food and Drug Administration (“FDA”) (any such person, an “FDA Investigatee”), (b) under investigation for scientific or medical misconduct by any duly constituted regulatory, administrative or governmental authority worldwide (any such person, and “Scientific/Medical Investigatee”) and (c) under charges by or investigation for criminal charges of any nature, including misdemeanors involving moral turpitude, by any duly constituted governmental authority worldwide (any such person, and “Criminal Investigatee”) and no person who is or has been within the last five (5) years an Affiliate or Associate of any FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee (“Related Investigatee”) shall be eligible to be elected or to serve as a director of the corporation; provided, however, that a director of the corporation who is validly nominated and elected a director but who after such election becomes a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee shall not solely by reason of so becoming or being a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee cease to be a director and instead shall continue as a director for the reminder of the term for which such director was elected or until such director’s resignation or removal; provided further, however, that it shall be the duty of any such director promptly to notify the Board of Directors that such director is or has become a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee and it also shall be the duty of any such director, either to promptly take all steps as may be necessary to cause such director to be neither a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee, or, it all such steps cannot be or have not been taken and such director continues to be either a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee and the pertinent Critical Investigation has not been Finally Resolved within the pertinent Resolution Period, to resign as a director of the corporation, effective immediately, at or before the end of such Resolution Period.
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(a) For purposes of this Section 2.2, the following terms shall have the following respective meanings:
(i) “Affiliate” means any person (or group of persons having any written or unwritten agreement , arrangement or understanding, whether or not enforceable, relating to any Critical Investigation) who or which, directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, any FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee. For purposes of the foregoing definitions, the term “control” (including the terms “controlling” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise, and a “controlling” relationship between any person (or such a group) and another person shall be deemed to exist whenever (but is not limited to the situation in which) the former person (or members of such a group) directly or indirectly holds or owns at least twenty percent (20%) of the aggregate voting power with respect to, the latter person.
(ii) “Associates” means any person who or which:
(1) is an officer, partner, director, trustee or similar fiduciary of, or authorized to act in any similar capacity with respect to, any FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee, any Affiliate or any other Associate of a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee;
(2) is directly or indirectly, the holder of owner of at least ten percent (10%) any class or series of equity securities issued by any FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Associate;
(3) has a substantial beneficial interest in any FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Affiliate which is a trust or estate; or
(4) is a member of the immediate family of any FDA Investigatee, any Affiliate or any other person described in (1), (2), or (3) above.
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For purposes of the foregoing definition, a person’s “immediate family” includes such person’s spouse, children, siblings, parents-in-law, sons- and daughter-in-law, and brother- and sister-in-law.
(iii) Critical Investigation means any investigation by the FDA which has reached the stage of the issuance of a “Warning Letter” by the FDA and which might reasonably be expected, absent immediate and complete remediation, to lead to seizure of assets, injunctions or criminal indictments.
(iv) When used with respect to any particular Critical Investigation, the term “Finally Resolved” means that the FDA has issued a written statement that the Critical Investigation has been satisfactorily resolved and terminated.
(v) “Resolution Period” means, in any pertinent case, the ninety (90) day period (or longer period, not exceeding one hundred fifty (150) days, as hereafter contemplated by the proviso to this definition) beginning on the earlier of (1) the date on which a director of the corporation notifies the Board of Directors that such director is or has become a FDA Investigatee or Related Person or (2) the date on which the Board of Directors determines that a director of the corporation is or has become a FDA Investigatee or Related FDA Investigatee; provided, however, that the Board of Directors may (but is not required to) extend a Resolution Period for up to an additional sixty (60) days if the director establishes to the Board’s satisfaction a reasonable likelihood that during such extended period the pertinent Critical Investigation will be Finally Resolved or such director will cease to be both a FDA Investigatee and a Related FDA Investigatee.
(vi) “Subsidiary” means any corporation or other entity at least fifty percent (50%) of the equity of which is owned, directly or indirectly, by the corporation.
(b) The Board of Directors of the corporation (acting by at least a majority of all Directors, excluding any who have acknowledged themselves to be or have been determined to be FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee at the time of such Board action and excluding any director or directors whose status as FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee is the subject of such action) shall have the authority to determine whether any director of the corporation is or is not or has ceased to be a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee, and the Board of Directors (acting by at least a majority of all directors, excluding any who have acknowledged themselves to be or have been determined to be FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee) shall have the authority to determine whether any person nominated or proposed for nomination as a director or who is the subject of a stockholder request as hereinafter provided is ineligible to be so nominated and elected by virtue of being a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee. Each such Board determination shall be based upon such information as has been brought to the attention of the Board (whether in a stockholder request or otherwise) at the time such determination is made, and no Board determination that any director or other person is or is not or has ceased to be a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee shall preclude the Board from reconsidering the matter and making the contrary determination in light of any facts or circumstances first coming to the attention of the Board after the prior determination was made.
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(c) The Board of Directors shall not nominate any person for election as a director of the corporation, unless such prospective nominee has provided the Board with all such information as the Board (or any member thereof not excluded from determining the status of such person as a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee) has deemed necessary or appropriate to enable the Board to determine such status and with a signed statement by the prospective nominee that such person, having reviewed this Section, is aware of no reason not disclosed to the Board why he or she would or might be considered a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee (which statement also shall include an undertaking by such person that if he or she is nominated, such person now promptly will inform the Board, by written notice to the Chair of the Board or the Secretary of the corporation, if at any time prior to the election to which such person’s nomination relates he or she becomes aware of any fact or circumstance, whether in existence on the date such undertaking is given or arising afterward, which has given such person any reason to believe that he or she is or might be considered a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee), and unless after receipt of such information and such statement, the Board has determined that the prospective nominee is not a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee.
(d) Any stockholder who is uncertain whether any person such stockholder desires to nominate for election as a director of the corporation (a “candidate”) is a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Person may request a determination from the Board concerning that matter. Any such request must be in writing, identify the candidate, set forth all reasons why the stockholder has such uncertainty concerning the candidate, explain why the stockholder believes that the candidate should not be considered a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee and include an undertaking by or on behalf of the stockholder that, if the candidate is determined not to be a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee, the stockholder promptly will inform the Board in the manner specified in paragraph (e) above if any time prior to the election of directors next occurring the stockholder learns of any fact or circumstance (whether in existence on the dare of the request or arising afterward) which has given the stockholder any other reason to believe that or to be uncertain whether the candidate is or might be considered a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee and believes for the reasons stated in the request that he or she should not be considered a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee, which statement also shall include an undertaking by the candidate comparable to that of the requesting stockholder. With respect to any meeting at which directors are to be elected, a stockholder may submit requests as to any number of candidates up to and including five times at which the number of directors to be elected at such meeting. A request may be submitted at any time at which the stockholder properly may give notice of intent to nominate a candidate for election as a director (other than a time at which such giving of notice of intent is proper only by virtue of the provisions of paragraph (b) of this Section), and no request may be submitted at any other time. No request shall be deemed “submitted” for any purposes hereunder unless and until it is delivered in person to the Chair of the Board or the Secretary of the corporation or delivered to the principal offices of the corporation addressed to the attention of the Chair or the Secretary. No request shall constitute a notice of intent to nominate any candidate unless it expressly states that it is intended as such a notice and it otherwise complies with all applicable requirements for such a notice. Neither submission of a request, nor any action taken thereafter with respect to such request, shall operate as a waiver of or otherwise relieve any stockholder of any otherwise applicable procedural requirements respecting nomination of director candidates, except as and to the extent contemplated in paragraph (b).
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(e) If any request satisfying the requirements of paragraph (f) is timely and property submitted, the Board of Directors, within ten days following the date such request is submitted (i.e., if it is impossible or impracticable to do so during such period, as soon as practicable thereafter), shall consider the request and determine whether the candidate who is the subject of the request is ineligible to be nominated or elected a director by virtue of being a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee. As promptly as possible following such action, the requesting stockholder shall be notified in writing of the nature of such determination and, if the determination made is that the candidate is a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee, the basis for such determination. In any other case in which the Board determines that any candidate as to which a notice of intent to nominate has been given is ineligible to be nominated or elected a director by virtue of being a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee (including any case in which a contrary determination previously has been made in response to a stockholder request), the stockholder having given such notice of intent shall be notified in writing of such determination and the basis therefor as promptly as possible thereafter.
(f) If a candidate who is the subject of a proper and timely submitted request meeting the requirements of paragraph (f) is determined by the Board not to be a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee and the request was submitted at least five days in advance of the last date on which the requesting stockholder otherwise would have been entitled to give notice of intent to nominate such candidate, then the Board’s determination shall operate as a waiver of the time limits otherwise applicable to the giving of such notice of intent to the extent, if any, necessary to afford the stockholder a period of five days following the date on which notice of the Board’s determination is given to the stockholder within which to give notice of intent to nominate such candidate. If, in response to a timely and properly submitted request, the Board determines that the candidate who is the subject of the request is a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee and the request was submitted at least five days in advance of the last date on which the requesting stockholder otherwise would have been entitled to give notice of intent to nominate, then the Board’s determination shall operate as a waiver of the time limits otherwise applicable to the giving of notice of intent to nominate to the extent, if any, necessary to afford the requesting stockholder a period of fifteen days following the date on which notice of the Board’s determination is given to the stockholder within which to give notice of intent to nominate another person in lieu of the ineligible candidate. In any other case in which the Board determines that a candidate is a FDA Investigatee, Scientific/Medical Investigatee or Criminal Investigatee or Related Investigatee, such determination shall operate as a waiver if and only to the extent expressly so provided in the resolutions setting forth such determination or subsequent Board resolution. Whenever any stockholder is afforded an additional time period within which to give notice of intention to nominate, the Board may afford the other stockholders of the corporation a comparable additional period of time within which to give such notice.
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Section 2.3 Election; Resignation; Vacancies. At each annual meeting, the stockholders shall elect directors each of whom shall hold office for a term of one year or until such director’s successor is duly elected and qualified, subject to such director’s earlier death, resignation, disqualification or removal. Any director may resign at any time upon written notice to the Corporation. Such resignation need not be accepted to be effective. Unless otherwise provided by law or the Certificate of Incorporation, any newly created directorship or any vacancy occurring on the Board of Directors for any cause may be filled solely by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum, or by the sole remaining director, and each director so elected shall hold office until the expiration of the term of office of the director so replaced or until the director’s successor is elected and qualified. The stockholders of the Corporation shall not have the power to appoint directors to any newly created directorship or vacancy.
Section 2.4 Regular Meetings. Regular meetings of the Board of Directors may be held at such places, if any, within or without the State of Delaware and at such times as the Board of Directors may from time to time determine. It shall not be necessary to give notice of regular meetings of the Board of Directors.
Section 2.5 Special Meetings. Special meetings of the Board of Directors may be called by the Chair of the Board, the President, the Executive Committee, or by three (3) or more directors. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least twenty-four (24) hours before the special meeting if such notice is given personally or by electronic transmission. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least three (3) days before the special meeting if given by regular mail. No notice of a special meeting shall be necessary if the time and place, if any, of the special meeting was set by resolution at a validly convened meeting of the Board of Directors. The notice of a special meeting need not state the purpose or purposes of the meeting.
Section 2.6 Manner of Participation. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting thereof by means of remote communication by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting.
Section 2.7 Quorum; Vote Required for Action. At all meetings of the Board of Directors a majority of the whole Board of Directors shall constitute a quorum for the transaction of business. Except in cases in which the Certificate of Incorporation, these by-laws or applicable law otherwise provides, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
Section 2.8. Officers for Board Meetings. Meetings of the Board of Directors shall be presided over by the Chair of the Board, if any, or in his absence by the Vice Chair of the Board, if any, or in his absence by the President, or in their absence by a chair chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chair of the meeting may appoint any person to act as secretary of the meeting.
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Section 2.9. Independent Directors And Board Structure. A majority of the Board of Directors shall be comprised of independent directors. The Chief Executive Officer may be a member of the Board of Directors. In order to ensure the greatest number of independent directors on a board of manageable size, other direct management representation should be kept to a minimum and should in no event exceed two other management directors.
The Board of Directors shall make clear to Senior Management of the Corporation that board membership is neither necessary to their present positions nor a prerequisite to a higher management position in the Corporation. Attendance of management staff at Board Meetings should be at the discretion of the Chair of the Board but should be encouraged by the Board. The Board shall have full and direct access to members of Senior Management and should be encouraged to request reports directly to the Board by any member of Senior Management. Board members should use judgment in dealings with management so that they do not distract management from the business operations of the Corporation.
Conflicts of Interest. A director’s personal financial or family relationships may occasionally give rise to that director’s material personal interest in a particular issue. There will be times when a director’s material personal interest in an issue will limit that director’s ability to vote on that issue. The Governance Committee of the Board of Directors shall determine whether such a conflict of interest exists on a case-by-case basis, including the determination as to materiality under items (c) and (f) of this Section 2.9. The Governance Committee shall take appropriate steps to identify such potential conflicts and to ensure that a majority of the directors voting on an issue are both disinterested and independent with respect to that issue. A determination by the Governance Committee on any issue of independence or conflict of interest shall be final and not subject to review.
For purposes of this Section only, an “independent director” means a director who: (a) is neither a current employee nor a former member of Senior Management of the Corporation or an Affiliate; (b) is not employed by a provider of professional services to the Corporation; (c) does not have any business relationship with the Corporation, either personally or through a company of which the director is an officer or a controlling stockholder, that is material to the Corporation or to the director; (d) does not have a close family relationship, by blood, marriage or otherwise with any member of Senior Management of the Corporation or one of the Corporation’s Affiliates; (e) is not an officer of a company of which the Corporation’s chair or chief executive officer is also a board member; or (f) does not personally receive or is not an employee of a foundation, university, or other institution that receives grants or endowments from the Corporation, that are material to the Corporation or to either the recipient and/or the foundation, university, or institution.
“Senior Management” includes the chief executive, chief operating, chief financial, chief legal and chief accounting officers, president, vice president(s), treasurer, secretary and the controller of the Corporation.
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“Affiliate” includes any person or entity which, alone or by contractual obligation, owns or has the power to vote more than twenty-five (25) percent of the equity interest in another, unless some other person or entity acting alone or with another by contractual obligation owns or has the power to vote a greater percentage of the equity interest. A subsidiary is considered an affiliate if it is at least eighty (80) percent owned by the Corporation and accounts for at least twenty-five (25) percent of the Corporation’s consolidated sales or assets.
Section 2.10 Action by Written Consent of Directors. Unless otherwise restricted by the Certificate of Incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmissions are filed with the minutes of proceedings of the Board of Directors or such committee. Such writing or writings or electronic transmission or transmissions shall be treated for all purposes as a vote at a meeting of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 2.11 Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it.
Section 2.12. Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article II hereof.
Section 2.13. Executive Committee. There shall be an Executive Committee of the Board of Directors (the “Executive Committee”) to consist of that number of directors as the Board of Directors may from time to time determine. The Board of Directors shall have power at any time to change the number of the Executive Committee, except that a reduction in the number of members of the Executive Committee shall not affect any currently serving member. The Board of Directors may remove any member of the Executive Committee at any time with or without cause and may fill vacancies in the Committee by election from the members of the Board of Directors.
Subject to applicable law, when the Board of Directors is not in session, the Executive Committee shall have and may exercise all the power and authority of the Board of Directors in the management and direction of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. All actions of the Executive Committee shall be reported to the Board of Directors at the meeting next succeeding such action, provided, however, that such report need not be made to the Board of Directors if prior to such meeting copies of the written minutes of the meetings of the Executive Committee at which such action has been taken shall have been mailed or delivered to all members of the Board of Directors.
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ARTICLE III.
OFFICERS.
Section 3.1 Executive Officers; Election; Qualifications; Term of Office; Resignation; Removal; Vacancies. The Board of Directors shall elect a President and Secretary, and it may, if it so determines, choose a Chair of the Board and a Vice Chair of the Board from among its members. The Board of Directors may also choose one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers. Each such officer shall hold office until the first meeting of the Board of Directors after the annual meeting of stockholders next succeeding his election, and until his successor is elected and qualified or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Such resignation need not be accepted to be effective. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation. Any number of offices may be held by the same person. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors.
Section 3.2 Powers and Duties of Executive Officers. The officers of the Corporation shall have such powers and duties in the management of the Corporation as may be prescribed in a resolution by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his duties.
Section 3.3 Compensation. The compensation of the officers of the Corporation shall be fixed from time to time by the Board of Directors; provided, however, that the Board of Directors may authorize any officer or duly authorized committee to fix the compensation of officers and employees. Nothing contained herein shall preclude any officer from receiving compensation by reason of the fact that such officer is also a director of the Corporation.
ARTICLE IV.
SHARES OF STOCK.
Section 4.1 Certificates. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered by the Corporation. Any such certificate shall be signed by the by the Chair or Vice Chair of the Board of Directors, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation certifying the number of shares owned by him in the Corporation. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.
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Section 4.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
ARTICLE V.
MISCELLANEOUS PROVISIONS.
Section 5.1 Fiscal Year. The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.
Section 5.2 Seal. The corporate seal shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors.
Section 5.3. Signature of Checks, etc. All checks and drafts on the bank accounts of the Corporation, and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money shall be signed by such officer or officers, or agent or agents, as shall be thereunto authorized, from time to time, by the Board of Directors or the Executive Committee.
Section 5.4 Waiver of Notice of Meetings of Stockholders, Directors and Committees. Any written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written waiver of notice.
Section 5.5 Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be maintained on any information storage device or method; provided that the records so kept can be converted into clearly legible paper form within a reasonable time.
Section 5.6 Amendment of By-laws. In furtherance of and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Corporation’s by-laws. The Corporation’s by-laws may also be adopted, amended, altered or repealed by the stockholders whether adopted by them or otherwise.
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ARTICLE VI.
INDEMNIFICATION OF DIRECTORS, OFFICERS OR OTHER PERSONS.
Section 6.1 Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section 6.3, the Corporation shall be required to indemnify a Covered Person in connection with a proceeding (or part thereof) commenced by such Covered Person only if the commencement of such proceeding (or part thereof) by the Covered Person was authorized by the Board of Directors of the Corporation.
Section 6.2 Prepayment of Expenses. The Corporation shall pay the expenses (including attorneys’ fees) incurred by a Covered Person in defending any proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under this Article VI or otherwise.
Section 6.3 Claims. If a claim for indemnification or advancement of expenses under this Article VI is not paid in full within thirty days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law.
Section 6.4 Nonexclusivity of Rights. The rights conferred on any Covered Person by this Article VI shall not be exclusive of any other rights which such Covered Person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these by-laws, agreement, vote of stockholders or disinterested directors or otherwise.
Section 6.5 Insurance. To the extent obtainable, the Corporation may purchase and maintain insurance with reasonable limits on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of the General Corporation Law of the State of Delaware (as presently in effect or hereafter amended), the Certificate of Incorporation or these by-laws.
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Section 6.6 Other Sources. The Corporation’s obligation, if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such other Corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.
Section 6.7 Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article VI shall not adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such repeal or modification.
Section 6.8. Corporate Obligations. The rights conferred on any Covered Person by this Article VI are contract rights and shall continue as to a person who has ceased to be a director or officer and shall inure the benefit of the person’s heirs, executors and administrators.
Section 6.9. Other Indemnification and Prepayment of Expenses. This Article VI shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.
ARTICLE VII.
NOTICE BY ELECTRONIC TRANSMISSION.
Section 7.1 Notice by Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the General Corporation Law of the State of Delaware, the Certificate of Incorporation or these by-laws, any notice to stockholders given by the Corporation under any provision of the General Corporation Law of the State of Delaware, the Certificate of Incorporation or these by-laws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if:
(a) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices given by the Corporation in accordance with such consent; and
(b) such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice.
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed given:
(a) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;
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(b) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; and
(c) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (i) such posting and (ii) the giving of such separate notice; and if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
Section 7.2 Definition of Electronic Transmission. For the purpose of these by-laws, an “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such recipient through an automated process.
ARTICLE VIII.
EXCLUSIVE FORUM.
Section 8.1 Exclusive Forum. Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action, suit, or proceeding brought on behalf of the Corporation, (b) any action, suit, or proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or, to the fullest extent permitted by law, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, or a claim of aiding and abetting any such breach of fiduciary duty, (c) any action, suit, or proceeding asserting a claim arising pursuant to, or seeking to enforce any right, obligation, or remedy under, any provision of the General Corporation Law of the State of Delaware, the Certificate of Incorporation, or these by-laws, or (d) any action, suit, or proceeding asserting a claim against the Corporation or any current or former director or officer of the Corporation governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware. If the Court of Chancery of the State of Delaware lacks jurisdiction over such action, suit, or proceeding, the sole and exclusive forum for such action, suit, or proceeding shall be another court of the State of Delaware or, if no court of the State of Delaware has jurisdiction, then the federal district court for the District of Delaware. To the fullest extent permitted by applicable law, any person or entity who, or entity that, holds, purchases or otherwise acquires an interest in the capital stock of the Corporation shall be deemed to have consented to the personal jurisdiction of the Court of Chancery of the State of Delaware (or if the Court of Chancery does not have jurisdiction, another court of the State of Delaware, or if no court of the State of Delaware has jurisdiction, the federal district court for the District of Delaware) in any action, suit, or proceeding brought to enjoin any action, suit, or proceeding by that person or entity that is inconsistent with the exclusive jurisdiction provided for in this by-law. To the fullest extent permitted by applicable law, if any action, suit, or proceeding the subject matter of which is within the scope of this by-law is filed in a court other than as specified above by or in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the Court of Chancery of the State of Delaware, another court in the State of Delaware or the federal district court in the District of Delaware, as appropriate, in connection with any action, suit, or proceeding brought in any such court to enforce this by-law and (ii) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the action, suit, or proceeding as agent for such stockholder.
Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended (or any successor provision).
If any provision or provisions of this Article VIII shall be held to be invalid, illegal, or unenforceable as applied to any person or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality, and enforceability of such provision(s) with respect to any other person and in any other circumstance and of the remaining provisions of this Article VIII (including, without limitation, each portion of any sentence of this Article VIII containing any such provision held to be invalid, illegal, or unenforceable that is not itself held to be invalid, illegal, or unenforceable as to such person or circumstance) and the application of such provision to other persons and circumstances shall not in any way be affected or impaired thereby.
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Exhibit 4.25
Description of Common Stock
The following summary description of the common stock of AIM ImmunoTech Inc. (“we”, “our” or “us”) is based on the provisions of our amended and restated certificate of incorporation as amended (“Certificate of Incorporation”), as well as our amended and restated bylaws (“Bylaws”), and the applicable provisions of the Delaware General Corporation Law. This information is qualified entirely by reference to the applicable provisions of our Certificate of Incorporation, Bylaws, and the Delaware General Corporation Law. Our Certificate of Incorporation and Bylaws have previously been filed as exhibits with the Securities and Exchange Commission.
Voting Rights
Holders of our common stock are entitled to one vote per share in the election of directors and on all other matters on which stockholders are entitled or permitted to vote. Holders of our common stock are not entitled to cumulative voting rights.
Dividend Rights
Subject to the terms of any then outstanding series of preferred stock, the holders of our common stock are entitled to dividends in the amounts and at times as may be declared by our board of directors out of funds legally available therefor.
Liquidation Rights
Upon liquidation or dissolution, holders of our common stock are entitled to share ratably in all net assets available, if any, for distribution to stockholders after we have paid, or provided for payment of, all of our debts and liabilities, and after payment of any liquidation preferences to holders of any then outstanding shares of preferred stock.
Other Matters
Holders of our common stock have no redemption, conversion or preemptive rights. There are no sinking fund provisions applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to the rights of the holders of shares of any series of preferred stock that we may issue in the future.
All of our outstanding shares of common stock are fully paid and nonassessable.
Anti-Takeover Effects of Provisions of Delaware Law, Our Certificate of Incorporation,
Our Bylaws and Our Stockholders’ Rights Plan
Delaware Anti-Takeover Law
Section 203 of the Delaware General Corporation Law
We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:
| ● | before such date, our board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; | |
| ● | upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or | |
| ● | on or after such date, the business combination is approved by our board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. |
In general, Section 203 defines business combination to include the following:
| ● | any merger or consolidation involving the corporation and the interested stockholder; | |
| ● | any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; |
| ● | subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; | |
| ● | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or | |
| ● | the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation. |
In general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or within three years before the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation.
Certificate of Incorporation and Bylaws
Our certificate of incorporation and/or bylaws provide that:
| ● | our bylaws may be amended or repealed by our board of directors or our stockholders; | |
| ● | our board of directors will be authorized to issue, without stockholder approval, preferred stock, the rights of which will be determined at the discretion of our board of directors and that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our board of directors does not approve; | |
| ● | our stockholders do not have cumulative voting rights, and therefore our stockholders holding a majority of the shares of common stock outstanding will be able to elect all of our directors; and | |
| ● | our stockholders must comply with advance notice provisions to bring business before or nominate directors for election at a stockholder meeting. |
Stockholder Rights Plan
On November 19, 2002, our board of directors declared a dividend distribution of one Right (a “Right”) for each outstanding share of common stock to stockholders of record at the close of business on November 29, 2002. On November 14, 2017, at the direction of our board of directors, we amended and restated our Rights Agreement with American Stock Transfer & Trust Company, LLC, as amended and restated, or the Rights Agreement. Each Right entitles the registered holder to purchase from us a unit consisting of one one-hundredth of a share, or a Unit, of Series A Junior Participating Preferred Stock, par value $0.01 per share, or the Series A Preferred Stock, at a Purchase Price of $21.00 per Unit, subject to adjustment. The description and terms of the Rights are set forth in the Rights Agreement. Termination of the Rights Agreement was extended and now terminates on May 15, 2023, subject to further extensions. The foregoing description of the Rights and the Rights Agreement are qualified in their entire by reference to the disclosure in our Registration Statement on Form 8-A12B (No. 0-27072) as amended and the Rights Agreement filed therewith, filed with the SEC, with such filing and exhibit being herein incorporated by reference.
The Rights and the Rights Agreement are described in the Original 8-A, and such descriptions, as amended hereby, are incorporated by reference herein. The Original Agreement is included as an exhibit to the Company’s Registration Statement on Form 8-A12G (File No. 000-27072) filed with the SEC on November 20, 2002, the 2012 Amendment is included as an exhibit to the Company’s Registration Statement on Form 8-A12G/A (File No. 000-27072) filed with the SEC on November 2, 2012, the 2017 Amendment is included as an exhibit to the Company’s Registration Statement on Form 8-A12B (File No. 001-27072) filed with the SEC on November 14, 2017 and the November 2022 Amendment is included as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2022 (File No. 001-27072) filed with the SEC on November 14, 2022. All of the foregoing are incorporated by reference herein.
Potential Effects of Authorized but Unissued Stock
We have shares of common stock and preferred stock available for future issuance without stockholder approval. We may utilize these additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, to facilitate corporate acquisitions or payment as a dividend on the capital stock.
The existence of unissued and unreserved common stock and preferred stock may enable our board of directors to issue shares to persons friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity of our management. In addition, our board of directors has the discretion to determine designations, rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of each series of preferred stock, all to the fullest extent permissible under the Delaware General Corporation Law and subject to any limitations set forth in our certificate of incorporation. The purpose of authorizing our board of directors to issue preferred stock and to determine the rights and preferences applicable to such preferred stock is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection with possible financings, acquisitions and other corporate purposes, could have the effect of making it more difficult for a third-party to acquire, or could discourage a third-party from acquiring, a majority of our outstanding voting stock.
Exhibit 10.93
DATED December 5th, 2022
STERLING PHARMA SOLUTIONS LIMITED
and
AIM IMMUNOTECH INC.
MASTER SERVICES AGREEMENT
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THIS MASTER SERVICES AGREEMENT (“MSA”) is made and entered into this 5 December 2022 (the “Effective Date”), by and between:
| 1. | AIM ImmunoTech Inc. with an office at 2117 SW Highway 484, Ocala FL 34473 (“Purchaser”); |
and
| 2. | Sterling Pharma Solutions Limited, registered in England and Wales with registered number 05712796 and with its registered office at Sterling Place, Dudley, Cramlington, Northumberland, NE23 7QG, UK (“Sterling”) |
Each a Party and together the Parties.
BACKGROUND
| 1. | Sterling is in the business of Developing and Manufacturing Products and providing other services (including the Development Services defined in Setion 8.1) as described in an applicable SOW (collectively, the “Services”). |
| 2. | The Purchaser wishes to engage Sterling to provide the Services to the Purchaser pursuant to the terms and conditions contained in and referenced in this MSA. |
NOW, THEREFORE, BE IT RESOLVED, that for and in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
| 1. | Definitions and Interpretation. |
| 1.1 | In this Agreement, unless the context otherwise requires, the following definitions apply: |
“Affiliate” means, in relation to either Party, any person, firm, trust, partnership, corporation, company or other entity or combination thereof that directly or indirectly Controls such Party, is Controlled by such Party or is under the common Control with such Party (and for the purpose of this expression “Control” shall mean in relation to any Party, the beneficial ownership of fifty percent (50%) or more (including ownership by trusts with substantially the same beneficial interests) of the issued share capital of, or the legal power to direct or cause the direction of the general management of the Party in question or its holding company or parent undertaking;
“Business Day” means a day which is not Saturday or Sunday or a bank or national holiday in England or USA.
“Cancellation Fee” 100% of the sum which has been or would have been paid by the Purchaser for the Services, including the costs of Developing or Manufacturing the cancelled or reduced batch or batches of Product, and which cannot be reutilised, cancelled or reallocated (including but not limited to plant costs, the costs of raw materials, packaging and waste costs and transportation or storage costs). Such sum is outlined in the SOW;
“Cancellation Request” has the meaning given in Section 6.2
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“Confidential Information” shall have the meaning given to it in the Confidentiality Disclosure Agreement entered into between the parties prior to the Effective Date.
“Delivery Date” means the expected delivery date for completion of the Services or each batch of Product as specified in the Agreement;
“Develop” Developing” or “Development” means the tests, studies and other activities performed by Sterling under this Agreement to develop and/or validate all or part of the manufacturing process, including without limitation, analytical tests and methods, formulations and dosage forms and stability;
“End Product” means the formulated drug product manufactured by the Purchaser, of which the Product forms part. For the avoidance of doubt, the Parties understand that the End Product may be used as a medicament that may be administered directly or as a part of a composition to humans, for example, by intravenous administration;
“Force Majeure Event” means any circumstances arising from or attributable to acts, events, omissions or accidents beyond the affected Party’s reasonable control, including but not limited to: acts of God, including adverse weather conditions or other natural disaster; epidemic, pandemic or disease; war, threat of or preparation for war, armed conflict, imposition of sanctions, embargo, import or export controls, breaking off of diplomatic relations or similar actions; terrorist attack, civil commotion or riots; nuclear, chemical or biological contamination; malicious damage; loss at sea; collapse of building structures; and any labour dispute, including but not limited to strikes, industrial action or lockouts;
“Good Manufacturing Practice” or “GMP” means current practices with respect to the Manufacture of the Product being those practices from time to time required by: (a) the International Conference on Harmonisation Guidelines, ICHQ7A Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients; and (b) ICH Q10 Quality Systems, (c) the principles and guidelines of Good Manufacturing Practices for medicinal products as defined within EC Directive 2003/94/EC and associated EC Guide to Good Manufacturing Practice; pertaining to computer systems, in particular EU GMP guide annexes: Supplementary requirements: Annex 11: Computerised systems and 21 CFR 11, and/or (d) those practices from time to time required by provisions of 21 C.F.R., by the parts 210 and 211 and all applicable rules, regulations, orders and guidance published thereunder; and/or (e) subject to prior approval by Sterling, those practices from time to time required by the regulations applicable to the supply of End-Product in such locality as the Purchaser may wish to supply the End-Product provided that such requirements shall in any event be no more onerous than the requirements set out in (a) and (b) and (c) and (d) above;
“Insolvency Event” means in relation to a Party, any step or action is taken in connection with that Party entering administration, provisional liquidation, a company voluntary arrangement or any other composition or arrangement with its creditors (other than in relation to a solvent restructuring), being wound up (whether voluntarily or by order of the court, unless for the purpose of a solvent restructuring), having a receiver appointed to any of its assets or ceasing to carry on business (or any analogous step or action is taken to the foregoing whether in England and Wales or any other jurisdiction), or that Party suspends, or threatens to suspend, or ceases or threatens to cease to carry on all or a substantial part of its business;
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“Independent Laboratory” means such laboratory as shall be mutually agreed between the Parties as shall be used for the purposes of Section 8;
“Intellectual Property” includes at least copyright, patents, patent applications, provisional patent applications, trademarks, trademark applications, and trade secrets. Intellectual Property owned by or licensed to a Party prior to the effective date of this Agreement or developed or obtained independently from this MSA shall be and remain the sole property of that Party.
“Losses” means all liabilities, claims, demands, damages, losses, costs, expenses or money judgments (including fees and legal costs) resulting from any actual or threatened third party claim, demand or action;
“Manufacture” or “Manufacturing” means all steps involved in the production of Product, including processing, preparation, assembling, testing, labelling, packaging, and storage of Product by Sterling;
“Materials” means the raw materials (including starting materials) and components used in the Services, including the Development or Manufacture of the Product
“Purchaser” the purchaser identified in the Agreement;
“Purchase Order” means an order submitted by the Purchaser;
“Price” means the price of the Services as set out in the applicable SOW and calculated pursuant to Section 7;
“Product” means the product to be Developed and/or Manufactured and supplied as part of the Services as set out in the SOW;
“Purchaser Supplied Materials” means all Materials to be supplied by, or on behalf of, the Purchaser and its Affiliates for the performance of the processing activities (if any) as set forth in the SOW;
“Regulator” means any relevant authority which regulates the Manufacture of the Product and/or the sale or marketing of any End-Product;
“Specification(s)” means the specification(s) for the Product;
“Statement of Work” or “SOW” the documents produced by Sterling (and signed by Purchaser) detailing the Services, assumptions, Price, delivery terms, milestones, process for the Development or Manufacture of the Product and other key commercial terms. A template example is at Appendix 1 of this Agreement;
“Sterling Supplied Materials” means any Materials that are necessary for the performance of the Services, including Developing or Manufacturing and supplying the Products which are not included within the definition of the “Purchaser Supplied Material”; and
| 1.2 | For the purposes of this Agreement: (i) the headings and recitals are for convenience only and they shall not affect its construction or meaning; (ii) a statutory provision includes a reference to any modification, consolidation or re-enactment or replacement of the provision from time to time and all subordinate instruments, orders or regulations made under it; (iii) the singular includes the plural and vice versa; (iv) one gender includes all genders; (v) references to any person shall include the person’s permitted successors and assigns; (vi) general words shall not be given a restrictive interpretation by reason of their being preceded or followed by words indicating a particular class of acts, matters or things and each reference throughout this Agreement to “includes” or “including” shall be construed without limitation. |
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| 2. | FRAMEWORK |
| 2.1 | This MSA, together with any relevant SOW and Quality Agreement (“QA”) (together the “Agreement”) govern the overall relationship of the Parties and sets out the terms and conditions which shall govern the provision of the Services. |
| 2.2 | This MSA is structured so that a separate SOW shall be entered into between the Parties for the provision of particular Services. |
| 2.3 | Each SOW shall be negotiated in the following manner: |
| 2.3.1 | the Purchaser may request that Sterling provides the Services and shall provide Sterling with as much information as Sterling may reasonably request; |
| 2.3.2 | following receipt of the information requested from the Purchaser, Sterling shall, as soon as reasonably practicable, either: |
| (a) | inform the Purchaser that it declines to provide the requested Services; or |
| (b) | provide the Purchaser with a draft SOW for the Purchaser’s review and comment. |
| 2.4 | A SOW shall not be binding and effective unless: |
| 2.4.1 | the SOW has been signed by authorized representatives of both the Purchaser and Sterling; |
| 2.4.2 | a Purchase Order has been accepted pursuant to Section 4.2; and |
| 2.4.3 | as of the date that the SOW is signed, this MSA remains in effect. |
| 2.5 | Each binding SOW forms a separate contract incorporating the terms of this MSA. |
| 2.6 | If there is any conflict or inconsistency between (i) this MSA, (ii) SOW, (iii) the Purchase Order; (iv) the QA, (v) Confidentiality Disclosure Agreement entered into between the parties and executed on DATE and (iv) any other documents referred to in this MSA, the earlier listed document shall prevail over a latter listed document except that the QA shall prevail in respect of all quality related matters. |
| 2.7 | Sterling expressly objects to any terms or conditions in a Purchase Order or other document that modifies this Agreement. Any such modifications will not be binding upon Sterling unless accepted in writing by the Sterling’s authorized representative. |
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| 3. | Changes to SOWS |
Either Party may propose changes to a binding SOW, but no proposed changes shall be implemented until a relevant Change Order, in the form of Appendix 2 attached hereto, has been signed by both Parties.
| 4. | ORDERS |
A Purchase Order shall only be binding when accepted by Sterling in writing.
| 5. | THE PURCHASER’S OBLIGATIONS |
| 5.1 | The Purchaser shall: |
| 5.1.1 | cooperate with Sterling in all matters relating to the Services; |
| 5.1.2 | provide to Sterling in a timely manner all documents, information, items and materials in any form (whether owned by the Purchaser or a third party) or otherwise reasonably required by Sterling from Purchaser in connection with the Development or Manufacture and supply of the Services and ensure that they are accurate and complete in all material respects; and |
| 5.1.3 | supply, or cause to be supplied to Sterling at Sterling’s chosen location, at no cost to Sterling, the agreed quantity of the Purchaser Supplied Material, in accordance with the delivery schedule, Purchaser Material Specifications and any other relevant terms agreed in writing between the Parties. |
| 5.2 | Without prejudice to the application of Section 17, and any other rights and remedies of the Parties under this Agreement (express or implied), to the extent and for so long as Sterling’s performance of its obligations under this Agreement is prevented, hindered or delayed by any act or omission of the Purchaser, its agents, subcontractors, consultants or employees then, Sterling shall not be in breach of this Agreement and shall be discharged from performing its obligations under this Agreement and (where applicable) allowed an extension of time. |
| 6. | FORECASTING AND CANCELLATION OR REDUCTION OF PURCHASE ORDERS |
| 6.1 | If required by Sterling, the Purchaser shall give Sterling a forecast of the volume of Product it expects to purchase for the period specified and in the frequency outlined in the SOW or as otherwise agreed between the parties in writing. Forecasts provided under this Section 6.1 do not constitute a Purchase Order. |
| 6.1 | The Purchaser may request that:- |
| 6.1.1 | an accepted Purchase Order is cancelled or reduced; or |
| 6.1.2 | a reduction is made to a forecast issued by the Purchaser (which the parties have agreed is to be binding on the Purchaser), |
(in each case a “Cancellation Request”).
| 6.2 | A Cancellation Request ninety one (91) or more calendar days prior to the scheduled Development or Manufacturing date, shall be accepted by Sterling and no Cancellation Fee is due. |
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| 6.3 | A Cancellation Request based on the delivery of a Non-Conforming Product, until the cause for non-conformance is determined and resolved, shall be accepted by Sterling and no Cancellation Fee is due. |
| 6.4 | A Cancellation Request attributable to a Force Majeure Event, shall be accepted by Sterling and no Cancellation Fee is due. |
| 6.5 | Subject to Sections 6.2 to 6.4, if Sterling, at its discretion, accepts a Cancellation Request, this shall be conditional upon the Purchaser paying the Cancellation Fee as follows. |
6.2.1 A Cancellation Request accepted by Sterling thirty (30) or fewer calendar days prior to the scheduled Development or Manufacturing date, the Cancellation Fee payable shall be fee equivalent to 100% of the Cancellation Fee.
6.2.2.A Cancellation Request accepted by Sterling sixty (60) or fewer calendar days prior to the scheduled Development or Manufacturing date, the Cancellation Fee payable shall be fee equivalent to 75% of the Cancellation Fee.
6.2.3 A Cancellation Request accepted by Sterling ninty (90) or fewer calendar days prior to the scheduled Development or Manufacturing date, the Cancellation Fee payable shall be fee equivalent to 50% of the Cancellation Fee.
The Cancellation Fee shall be due within thirty (30) days of the date Sterling notifies the Purchaser of the Cancellation Fee shall be payable in accordance with Section 11.3.
| 6.6 | If a Purchase Order is cancelled or reduced or a forecast is adjusted in accordance with Section 6.2 and Sterling is able to utilise the Development or Manufacturing capacity reserved in anticipation of such cancelled or reduced Purchase Order for a third party, the the Cancellation Fee shall be reduced on a pro rata basis. |
| 6.7 | In addition to the payment of any Cancellation Fee, if a Purchase Order is cancelled or reduced or a forecast is adjusted in accordance with Section 6.2, the Parties shall, in good faith and acting reasonably, promptly discuss and agree the allocation of costs associated with the purchase by Sterling of any equipment Sterling has purchased or committed to purchase in order to deliver the Development and Manufacturing anticipated in the cancelled or reduced Purchase Order or adjusted forecast. |
| 7. | DELIVERY |
| 7.1 | Sterling shall use commercially reasonable efforts to deliver the Services or quantity of Product on the Delivery Date or as may otherwise be agreed in writing. All Delivery Dates of the provision of the Services and/or delivery of Products are estimates only. The time of delivery shall not be of the essence. |
| 7.2 | Sterling shall make delivery of the Product Ex Works (Incoterms 2020) at Sterling’s site, unless otherwise agreed between the Parties in writing, on the Delivery Date. |
| 7.3 | If Sterling delivers the Product on or before Delivery Date or as may otherwise be agreed in writing, and the Purchaser fails to take delivery or to give Sterling adequate delivery instructions, Sterling may charge for any reasonable additional expense incurred in storage and/or re-delivery. |
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| 7.4 | Sterling shall use commercially reasonable efforts to deliver the target quantity if and as set out in each SOW but, given the nature of the Services to be performed by Sterling, the Parties acknowledge that Sterling shall not be in shortfall in case it delivers less than the target quantity if and as set out in each SOW as long as the delivered quantity does not fall greater than 20% below the volume identified in the batch record agreed between the parties. |
| 7.5 | Sterling shall not transfer, sell or give away any Product to a third party except with the written consent of the Purchaser. |
| 8. | REJECTION AND REPLACEMENT OF NON-CONFORMING PRODUCT |
| 8.1 | The parties acknowledge that, given the fact that this process is being partially developed and transferred (“Development Services”) to Sterling, it may not always be possible to manufacture and deliver Product that complies with Section 20.1.1 prior to the completion of process validation. Provided Sterling has not been negligent in the performance of its Development Services, Sterling shall not be held liable to Purchaser under this Agreement for failure to manufacture product meeting specifications during the process validation stage. If during the performance of the Development Services and prior to the completion of process validation, Sterling becomes aware that it cannot deliver Product that conforms with Section 20.1.1, Sterling and Purchaser shall, in good faith, discuss the cause(s) or possible cause(s) for and shall discuss possible remediation activities and solutions. In good faith and using their best efforts, the parties shall, thereafter, agree the action (if any) to be taken in respect of such issues and the costs to be borne by either party. Until agreement has been reached pursuant to this Section 8.1, no further action shall be taken by Sterling. |
| 8.2 | The Purchaser may reject any Product delivered to it that does not comply with Section 20.1.1 (“Non-conforming Product”), provided that: |
| 8.2.1 | notice of rejection is given to Sterling; |
| 8.2.2 | in the case of a defect that is identified pursuant to inspections and testing which the Purchaser should, acting prudently, carry out following delivery, within thirty (30) Business days of the Delivery Date; |
| 8.3 | If the Purchaser fails to give notice of rejection in accordance with Section 8.1 within twelve (12) months of the Delivery Date of the Products, it shall be deemed to have accepted the Products and the Product shall be deemed to be in accordance with the Specification and all claims by the Purchaser concerning non-conformity of such product shall be deemed waived. |
| 8.4 | Sterling shall not be liable for a Product’s failure to comply with the warranty set out in Section 20.1.1 if: |
| 8.4.1 | the Purchaser makes any further use of those Products after giving notice in accordance with Section 8.1 and before the Parties agree whether or not the delivery in question constitutes Non-Conforming Product; |
| 8.4.2 | the defect arises because the Purchaser failed to follow Sterling’s oral or written instructions for the storage, commissioning, installation, use and maintenance of the Products or (if there are none) GMP; or |
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| 8.4.3 | the defect arises as a result of Sterling following any drawing, design or Specification supplied by the Purchaser; or |
| 8.5 | If the Purchaser rejects the Products in accordance with Section 8.1: |
| 8.5.1 | the Parties shall use commercially reasonable efforts as soon as reasonably practicable to agree whether or not the delivery in question constitutes Non-conforming Product; and |
| 8.5.2 | the Purchaser shall store the consignment concerned in a secure, product specific environment. Sterling shall be entitled at all times to inspect and/or analyse it. |
| 8.6 | The Parties shall use all commercially reasonable efforts to resolve any dispute that may arise pursuant to Section 8.4, but if the Parties fail to resolve such dispute within thirty (30) days of notification to Sterling pursuant to Section 8.4, the issue of whether or not the delivery constitutes Non-conforming Product shall be determined by the Independent Laboratory and the decision of the Independent Laboratory shall be final and binding on the Parties. The Independent Laboratory shall act as an expert and not as an arbitrator and (unless the Independent Laboratory otherwise determines) its fees shall be borne by the Party against whom the Independent Laboratory’s decision is given. |
| 8.7 | If Sterling agrees or the Independent Laboratory finds that any delivery of the Product is Non-conforming Product, Sterling will at Sterling’s option refund the Price (or a proportionate part of the Price relating to the Non-conforming Product) to the extent this has been paid or replace the Non-conforming Product with Product which complies with the requirements of this Agreement such that Sterling shall supply, at no extra cost, a replacement delivery to the Purchaser as soon as reasonably practicable. Sterling will also collect at its own expense any rejected Product from wherever the Purchaser may reasonably direct or reimburse the Purchaser for any costs reasonably incurred in its disposal of the Non-conforming Product. For the avoidance of doubt, once Sterling agrees or the Independent Laboratory finds that any delivery of the Product is Non-conforming Product, the Purchaser shall be free to use such Non-conforming Product as it reasonably desires. |
| 8.8 | Sterling shall not transfer, sell or give away any Product to a third party except with the written consent of the Purchaser. |
| 9. | PASSING OF TITLE AND RISK IN PRODUCT |
| 9.1 | Risk in and responsibility for the Product shall pass to the Purchaser in accordance with the applicable Incoterm as specified in Section 7.1 or as agreed between the Parties in writing. Notwithstanding delivery and the passing of risk in the Product to the Purchaser, the Product shall remain Sterling’s property until its full price has been received by Sterling and all other sums which are due from the Purchaser on any account with Sterling have been received by Sterling. |
| 9.2 | Until ownership passes under Section 9.1, and Purchaser is in possession of Product the Purchaser must ensure the Product is appropriately stored in a satisfactory condition and insured for the Price against all risks but shall otherwise be entitled to use the Product in the ordinary course of business. |
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| 10. | PRICE OF SERVICES/PRODUCT |
| 10.1 | Subject to Section 10.2 and 10.3, the Price payable by the Purchaser for the Services and/or Product shall be set out in the SOW. |
| 10.2 | Sterling shall, for the duration of the relevant SOW, maintain such records reasonable in the circumstances to verify the cost of Materials used in the Development and/or Manufacturing process. Once each calendar year and/or on or around the date the relevant SOW is fulfilled by Sterling, Sterling may reconcile the cost of Materials identified in the relevant SOW against the actual cost of Materials. If the increase/decrease in such costs is more than 5% (five per cent) since the commencement of the relevant SOW or since the last Price review, Sterling may vary the Price to reflect the increase or decrease, as the case may be, in the costs of Materials, including, but not limited to increases or decreases relating to currency fluctuations. Sterling shall act in good faith and endeavour to secure the best price reasonably obtainable for the Materials in the circumstances. Variations to the Price pursuant to this Section 10.2 may apply to both the Price paid for Product since the commencement date of the relevant SOW or since the last Price review. |
| 10.3 | Sterling shall, for the duration of the relevant SOW, maintain such records reasonable in the circumstances to verify the non-Material costs of Sterling used in the Development and/or Manufacturing process. Once each calendar year and/or on or around the date the relevant SOW is fulfilled by Sterling, Sterling may reconcile the reasonable non-Material costs identified in the relevant SOW against the actual non-Material costs incurred. If the increase/decrease in such non-Material costs is more than 5% (five per cent) since the commencement of the relevant SOW or since the last Price review, Sterling may vary the Price to reflect the increase or decrease, as the case may be, in the non-Material costs If the Purchaser does not consent to any change in the Price proposed by Sterling pursuant to this Section 10.3, the Price shall increase by the higher of 3% (three per cent) or the percentage increase in the Producer Price Index for Pharmaceutical Preparations published by the US Bureau of Labor Statistics since the Effective Date. Variations to the Price pursuant to this Section 10.3 may apply to both the Price paid for Product since the commencement date of the relevant SOW or since the last Price review. |
| 10.4 | Unless otherwise agreed in writing, the Price and any other amounts payable pursuant to this Agreement shall be exclusive of VAT, sales or other applicable taxes. |
| 11. | INVOICE AND PAYMENT |
| 11.1 | Subject to Section 11.2, Sterling shall be entitled to invoice the Purchaser the Price on Sterling’s release of the Product or payment milestones agreed in writing between the Parties. |
| 11.2 | Unless otherwise agreed in writing between the Parties, Sterling shall be entitled to invoice the Purchaser for Sterling Supplied Materials at any time prior to Sterling’s release of the Product or for the Cancellation Fee (if any) at any time after the date of cancellation or reduction of the relevant Purchase Order. |
| 11.3 | Unless otherwise agreed in writing between the Parties, all undisputed amounts due to Sterling hereunder shall be paid by the Purchaser in full and cleared funds in Pounds Sterling to the account designated by Sterling in writing, within thirty (30) calendar days from the date of the relevant invoice, without any set-off or counterclaim in respect of any liability of Sterling. |
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| 11.4 | Without prejudice to any other right or remedy that Sterling may have, if the Purchaser fails to pay Sterling any sum due under this Agreement on the due date the Purchaser shall pay interest on the overdue sum from the due date until payment of the overdue sum, whether before or after judgment at a rate of ten percent (10%) a year above the base rate from time to time of the Bank of England, but at ten per cent (10%) a year for any period when that base rate is below zero percent (0%). Sterling may also suspend performance of this Agreement (in whole or in part) or stop the transmission, and resume possession, of all or any of the Product and work in progress until all outstanding amounts, plus interest charged by Sterling in addition, is received in full by Sterling, and the costs of Sterling doing so are for the Purchaser’s account. |
| 11.5 | Without prejudice to any other right or remedy that Sterling may have, if the Purchaser fails to pay an invoice for ninety (90) days after the due date, then Sterling will have the right, in its sole discretion, to terminate this Agreement without penalty. |
| 11.1 | If Purchaser disputes any part of an invoice submitted by Sterling, Purchaser must inform Sterling within 21 days of receipt of the invoice. Purchaser shall include the reasons for disputing the invoice. The Parties shall, in good faith, resolve such dispute as soon as reasonably practicable. |
| 12. | SUPPLY AND STORAGE OF MATERIALS AND PRODUCT |
| 12.1 | Sterling shall be solely responsible for ordering the relevant quantities of Sterling Supplied Materials for use in the Development or Manufacture of the Product and shall ensure that they comply with the requirements of GMP and the provisions of this Agreement. Any such purchase from a supplier shall be on Sterling’s own behalf and not as an agent for the Purchaser. |
| 12.2 | If the Purchaser requests, Sterling shall store the Product at Sterling’s premises at Dudley one (1) month free of charge following release by Sterling, and thereafter at a daily rate (if applicable, invoices will include VAT) as outlined in the applicable Purchase Order. The Product shall be deemed to have been delivered upon it being placed in storage by Sterling. |
| 13. | QUALITY AGREEMENT |
A separate Quality Agreement shall be entered into in relation to quality assurance terms applicable to the Development or Manufacture of the Product. Subject to Section 2.7, each QA shall be incorporated into the Agreement.
| 14. | PRODUCT RECALL |
| 14.1 | The Purchaser shall be solely responsible in accordance with applicable laws and regulations for the reporting to Regulators of any complaints and product recalls relating to the End-Product which arise for any reason. Sterling shall promptly advise the Purchaser of any occurrence or information which arises out of Sterling’s manufacturing activities which have or could reasonably be expected to have adverse regulatory compliance and/or reporting consequences concerning the Product and/or the End-Product and promptly furnish copies of any related information or reports as further set forth and detailed in the QA. |
| 14.2 | If the Purchaser or any Regulator deems that a recall of any lots of distributed End-Product is required, the recall process and strategy shall be developed by the Purchaser and followed by Sterling. |
| 14.3 | The costs of any action required by the Purchaser under this Section 14, shall be borne by Sterling only in the event and to the extent that upon delivery of Product hereunder such Product did not conform to the Specification; the need for the action is the result of a failure on the part of Sterling to comply with its obligations under this Agreement; or the result of any negligence on the part of Sterling; subject always to the Purchaser mitigating its costs. |
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| 15. | INTELLECTUAL PROPERTY RIGHTS |
| 15.1 | This Agreement shall not affect the ownership of the respective Intellectual Property of the Parties and nothing in this Agreement shall oblige either Party to maintain any rights that it has, or may have, in its Intellectual Property for the benefit of the other Party or otherwise. Except as specifically provided herein, nothing in this Agreement shall be construed as granting any right in or license to either Party under any Intellectual Property of the other Party. |
| 15.2 | Inventions made solely by the Purchaser shall be owned solely by the Purchaser. Inventions made solely by Sterling, or by Sterling and Purchaser, that relates to Product shall be owned solely by Purchaser. Inventions made solely by Sterling that does not relate to the Product shall be owned solely by Sterling. Inventions made by both Parties that does not relate to the Product shall be owned jointly. |
| 15.3 | Subject to the provisions of this Section 15, the Purchaser’s Intellectual Property shall belong to and be the sole legal and beneficial property of the Purchaser. |
| 15.4 | To the extent that it has come to its notice, each Party shall promptly and fully notify the other Party of any actual, threatened or suspected: |
| 15.4.1 | infringement of any Intellectual Property of the other Party (to the extent it relates to this Agreement); and |
| 15.4.2 | a claim by any third party that the activities of either Party pursuant to this Agreement (including the use, distribution or sale by the Purchaser of products or of any End Product or of any other product the manufacture of which uses or incorporates the Product), infringe any rights (including Intellectual Property rights) of any other person. |
| 15.5 | The Purchaser hereby grants to Sterling and its Affiliates a free, non-exclusive license to use any Intellectual Property of the Purchaser solely for the purpose of fulfilling Sterling’s obligations under this Agreement. |
| 15.6 | Sterling hereby grants to the Purchaser and its Affiliates a free, non-exclusive license to use any Intellectual Property of Sterling to the extent required to use, distribute or sell the Products supplied by Sterling under this Agreement. |
| 16. | CONFIDENTIALITY |
| 16.1 | Each Party undertakes in relation to the Confidential Information of the other Party: |
| 16.1.1 | to keep all Confidential Information confidential; |
| 16.1.2 | not to use Confidential Information except for the purposes of performing its obligations under this Agreement (and in particular not to use Confidential Information to obtain a commercial, trading or any other advantage); and |
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| 16.1.3 | not, without the other’s prior written consent, to disclose Confidential Information to any other person except those of its employees, officers, representatives, consultants or advisers who need to know the Confidential Information. |
| 16.2 | Section 13.1 shall not apply to Confidential Information to the extent that it is or was: |
| 16.2.1 | already in the possession of the other free of any obligation of confidentiality on the date of its disclosure to such other Party; |
| 16.2.2 | in the public domain other than as a result of a breach of this Section 16; |
| 16.2.3 | required to be disclosed: (a) pursuant to applicable law, by any governmental or regulatory body or by an securities exchange of competent authority; or (b) in connection with proceedings before a court of competent jurisdiction or under any court order or for the purpose of receiving legal advice, but only to the extent and for the purpose of that disclosure. |
| 16.3 | Each Party acknowledges that Confidential Information is valuable and that damages might not be an adequate remedy for any breach of Section 16.1 and accordingly a Party will be entitled, without proof of special damage, to an injunction and other equitable relief for any actual or threatened breach of this Section 16. |
| 17. | FORCE MAJEURE |
A Party shall not be in breach of this Agreement, nor liable for any failure or delay in performance of any obligations under this Agreement arising from or attributable to a Force Majeure Event provided that it promptly notifies the other Party in writing of the nature and extent of the Force Majeure Event causing its failure or delay in performance. If the Force Majeure Event prevails for a continuous period of more than six (6) months, any Party may terminate this Agreement by giving fourteen (14) days’ written notice to the other Party whereupon this Agreement will terminate.
| 18. | SAFETY HAZARDS |
The Parties will inform one another and keep one another informed of all safety hazards and changes in regulations and guidance (statutory or otherwise) which either Party knows or believes to impact the use, handling, storage, labelling, transport, treatment and disposal of the Product and each Party will ensure that the Product is handled in accordance with the special handling procedures required for the Product.
| 19. | INDEMNITIES |
| 19.1 | The Purchaser shall indemnify, defend and hold harmless Sterling from and against any and all Losses to the extent arising out of or resulting from: |
| 19.1.1 | the breach of this Agreement by the Purchaser; |
| 19.1.2 | Product recalls, End Product recalls, personal injury, product liability or property damage arising from or relating to the Purchaser’s use, handling, design, labelling or sales of the Product or any End-Product or other product the manufacture of which uses or incorporates the Product except to the extent Sterling is obligated to indemnify the Purchaser under Section 19.2; |
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| 19.1.3 | any chemical process, procedure or materials provided by the Purchaser to Sterling for use in performing its obligations under this Agreement; |
| 19.1.4 | third party claims (including claims that third party Intellectual Property has been infringed and including from the Purchaser’s customers) except to the extent Sterling is liable to the Purchaser under this Agreement. |
| 19.2 | Subject to Section 21, Sterling shall indemnify, defend and hold harmless the Purchaser from and against any and all Losses to the extent arising out of or resulting from any Product recalls, End Product recalls, personal injury, product liability or property damage relating to or arising from any breach of Sterling’s warranty in Section 20.1 provided that in no event will Sterling be obliged to indemnify the Purchaser for any such Losses with respect to any Product concerning which the Purchaser has waived its claims pursuant to Section 8.2 above. |
| 19.3 | The provisions of this Section 19 shall continue in force after termination or expiry of the Agreement. |
| 20. | WARRANTIES AND DISCLAIMERS |
| 20.1 | Sterling warrants to the Purchaser that: |
| 20.1.1 | the Products shall meet the Specification when delivered and shall be Manufactured by Sterling in compliance with GMP; |
| 20.1.2 | it has the appropriate registrations, licenses and other governmental authorisations required to carry out its obligations under this Agreement; |
| 20.1.3 | it will perform its obligations under this Agreement in accordance with generally accepted standards of the industry and with reasonable skill and care; and |
| 20.1.4 | it shall at all times comply with all applicable laws, rules and regulations relating to its activities under this Agreement. |
| 20.2 | Except for the foregoing, Sterling makes no warranty or representation of any kind, either express or implied, including the warranties of satisfactory quality, fitness for a particular purpose and merchantability and any representation or any warranty that the development, manufacture, use or sale of Product will not infringe the intellectual property rights of any third party. |
| 20.3 | Without limiting the foregoing, Sterling does not give any warranty that the results of the Services do not infringe third party rights, are fit for any particular purpose, or that any patent applications made or licensed pursuant to this Agreement will result in valid, granted patents, or that that the Products ultimately will achieve commercially viable sales.The Purchaser represents and warrants to Sterling that: |
| 20.3.1 | the Purchaser shall at all times comply with all applicable laws, rules and regulations relating to its activities under this Agreement, and its transportation, export, handling, storage, marketing, sale, distribution or other use by the Purchaser of any Product delivered hereunder or of any End-Product or other drug product into which any Product is incorporated by or on behalf of the Purchaser; |
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| 20.3.2 | the Purchaser has the unencumbered right to disclose its Confidential Information to Sterling and to authorise Sterling to use the Confidential Information for the purposes of performing Sterling’s obligations under this Agreement; |
| 20.3.3 | use of any of the Purchaser’s Confidential Information by Sterling for the purposes of this Agreement, including without limitation, the manufacturing of the Product by Sterling and any required intermediate compounds, and the sale of the Product by Sterling contemplated hereunder, will not infringe the Intellectual Property Rights of any third party; |
| 20.3.4 | the use, distribution or sale by the Purchaser of Products, or of any End-Product or of any other product the manufacture of which uses or incorporates the Product will not infringe the Intellectual Property Rights of any third party; and |
| 20.3.5 | it shall be responsible for the completeness, suitability, legal compliance, accuracy and timely delivery of all necessary information, goods and materials to enable Sterling to Develop or Manufacture the Product in accordance with the terms of this Agreement. |
| 21. | LIMITATIONS OF LIABILITY |
| 21.1 | Sections 21.4 and 21.5 set out the entire liability of Sterling (including any liability for the acts or omissions of its officers, employees, agents or subcontractors) to the Purchaser in respect of: |
| 21.1.1 | any breach by Sterling of this Agreement; |
| 21.1.2 | non or incomplete performance or contemplated performance by Sterling of this Agreement; |
| 21.1.3 | negligence for which Sterling is liable; |
| 21.1.4 | any other tortious act or omission or breach of statutory duty on the part of Sterling or on the part of any of its employees, agents or subcontractors; and |
| 21.1.5 | any representation or statement arising under or in connection with this Agreement or by or on behalf of Sterling. |
| 21.2 | Sterling shall in all circumstances have no liability for matters which results from or is in connection with: the Purchaser’s breach of this Agreement; Sterling following any instruction, process or specification provided by the Purchaser; or which results from or is in connection with any act, omission or delay by the Purchaser. |
| 21.3 | The Price is determined on the basis of the exclusions from and limitations of liability contained in this Agreement. The Purchaser expressly agrees that these exclusions and limitations are reasonable because, for example, the likelihood that the amount of damages awardable to the Purchaser for breach by Sterling of this Agreement may be disproportionately greater than the Price. |
| 21.4 | In no event shall Sterling’s liability for any claims of the Purchaser under this Agreement including any claims concerning Product that does not meet the Specification and/or a breach by Sterling of its warranty under Section 20.1 exceed the price paid for the Services by the purchaser to Sterling under the applicable Purchase Order. |
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| 21.5 | In no event shall either Party be liable to the other for loss of profit, loss of reputation, loss of business, revenue or goodwill, loss of anticipated savings, loss or damage to data, or consequential or indirect loss. For the avoidance of doubt this shall not limit the Purchaser’s obligations to pay for the Services properly rendered when due. |
| 21.6 | Notwithstanding anything to the contrary, each Party’s liability to the other for death or personal injury resulting from the negligence of the Party concerned, its employees or fraud (including fraudulent misrepresentation), shall not be excluded or limited nor shall any other liability to the extent such liability may not be excluded or limited as a matter of law. |
| 22. | INSURANCE |
Each Party shall maintain, at its own cost, full and sufficient third party, public and product liability insurance, and such other types of insurance (including, in the case of the Purchaser, product recall insurance) as are customary in this line of business, which may be by means of self-insurance, with sufficient coverage for its actual and potential liabilities hereunder and shall provide to the other Party a certificate of such insurance (or equivalent) upon request.
| 23. | Term and Termination |
| 23.1 | This MSA shall be effective as of the Effective Date and, subject to the remaining provisions of this Section 23, shall remain in full force and effect until the earlier of (i) final completion of any SOW then active, or (ii) termination in accordance with the terms hereof. |
| 23.2 | Either Party may terminate this MSA or any SOW by written notice to the other Party in the event of a material breach of this MSA or any SOW by such other Party, provided that, if the breach is curable, the breaching Party also fails to cure such breach within thirty (30) calendar days from the date of such notice. |
| 23.3 | Either Party may, immediately by written notice, terminate this MSA and/or any SOW in the event that the other Party experiences an Insolvency Event. |
| 23.4 | If, in the reasonable opinion of Sterling, (a) the manufacture of the Product is not feasible in accordance with the Specification or otherwise, or that a safety hazard of a type described in Section 18 of this MSA exists that cannot be safely and appropriately managed by Sterling, (b) the financial safety profile of the Purchaser or the Products deteriorates, or (c) the Purchaser is associated with unethical behavior, and in the opinion of Sterling, association with the Purchaser would bring the reputation of Sterling into disrepute, Sterling may terminate the MSA and/or, any SOW immediately by written notice. |
| 23.5 | Either Party may terminate this MSA upon thirty (30) days’ prior written notice to the other Party if there are no Statements of Work then in effect. |
| 23.6 | For the avoidance of doubt, termination of a specific SOW shall not cause a termination of the MSA. |
| 16 |
| 24. | Consequences of Termination |
| 24.1 | Upon termination or expiration of this MSA (and in addition to any consequences of termination as set forth herein): |
| 24.1.1 | Each Party shall, at the request of the other Party, within five (5) Business Days of such request, and at the requesting Party’s cost, return to the requesting Party or otherwise destroy (at such Party’s election) all documents and Confidential Information, together with all know-how and/or information of a technical nature relating to the relevant Services and Products, which it has in its possession and which were provided to it by the requesting Party, together with all copies thereof (except one (1) copy, which may be retained for the purposes of complying with applicable regulatory obligations, or to perform and enforce any continuing obligations under this MSA). |
| 24.1.2 | Each Party shall, at the request of the other Party, within thirty (30) Business Days of such request, and at the requesting Party’s cost, return to the requesting Party or otherwise destroy (at the requesting Party’s election) all of the requesting Party’s property, equipment, materials and inventory, if any, except to the extent the same is required to be retained by law or as necessary to comply with such Party’s continuing obligations under this MSA. |
| 24.1.3 | Neither Party shall make any use of, for any purpose whatsoever, any Intellectual Property or Confidential Information which is the property of the other Party and shall ensure that copies thereof are handled and/or disposed of in accordance with this Agreement. |
| 24.1.4 | Sterling agrees, at the Purchaser’s cost, to provide the Purchaser with reasonable assistance with respect to any investigation or filing required by any Regulator with respect to the Services carried out prior to such termination or expiration, even after the effective date of such termination or expiration. |
| 24.1.5 | Upon termination or expiration of a SOW, Sterling shall cease to provide the Services and will issue the Purchaser with an invoice for all Services performed (including without limitation, with respect to achieved milestones) and finished Products, work in progress (which shall include, without limitation, direct labor, used Materials, overhead costs, and selling, general and administration costs), unused Materials and outstanding costs incurred by Sterling in connection with the Services and any Cancellation Fees unless terminated by the Purchaser for Sterling’s material breach. Such invoice shall be paid in accordance with Section 8 of this Agreement. |
| 24.2 | Any termination or expiration of the MSA or any SOW will not affect the survival or effectiveness of any provision that, in order to give proper effect to its intent, should survive such termination or expiration. |
| 24.3 | Termination or expiration of the MSA or any SOW shall not affect any rights, remedies, obligations or liabilities of the Parties that have accrued up to the date of termination, including the right to claim damages for any breach that existed at or before the date of termination or expiration. |
| 17 |
| 25. | AMENDMENts |
No amendment to this MSA shall be effective unless it is in writing and signed by both Parties.
| 26. | Notices |
Any notice to be given under the Agreement shall be given in writing in the English language; signed by or on behalf of the Party giving it; and addressed to the other Party at its registered office or principal place of business or such other address as may have been notified for these purposes, marked for the attention of the Chief Commercial Officer, with a copy to General Counsel, Sterling Pharma Solutions Limited, Sterling Place, Dudley, Northumberland, NE23 7QG, United Kingdom (in the case of the Sterling), and for the attention of Peter Rodino, Chief Operating Officer (in the case of the Purchaser).
| 27. | Entire Agreement |
| 27.1 | The Agreement together with the CDA and Quality Agreement constitutes the entire agreement between the Parties and supersedes all previous agreements, arrangements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter. |
| 27.2 | Each Party agrees that it will have no remedies in respect of any statement, representation, assurance or warranty that is not set out in the Agreement, CDA and Quality Agreement. |
| 28. | Severability |
Each provision of the Agreement is severable and distinct from the others. If any provision of the Agreement is held to be invalid, illegal or unenforceable, the validity of the other provisions and the remainder of the provision in question shall not be affected.
| 29. | Subcontracting and Assignment |
Sterling’s Affiliates and its’ subcontractors may, from time to time, fulfil Sterling’s obligations under this Agreement. Except as provided pursuant to this Section 29, no Party shall have the right to assign its rights or obligations under this Agreement in whole or in part without the prior written consent of the other Party.
| 30. | GENERAL |
| 30.1 | No failure or delay by a Party in exercising any of its rights under this Agreement shall be deemed to be a waiver of that right, and no waiver by a Party of any breach of the Agreement by the other party shall be effective unless in writing and shall not be deemed a waiver of any subsequent right or remedy. |
| 30.2 | Nothing in this Agreement shall establish any partnership between the Parties, constitute any Party to this Agreement the agent, fiduciary or employee of the other Party to this Agreement, or authorise any Party to make or enter into any commitments for or on behalf of the other Party. |
| 30.3 | Each Party agrees that it shall have no remedies in respect of any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this Agreement. Each Party agrees that it shall have no claim for innocent or negligent misrepresentation based on any statement in this Agreement. |
| 18 |
| 30.4 | If any provision or part-provision of this Agreement is held to be invalid, illegal or unenforceable, the validity of the other provisions of this Agreement and the remainder of the provision in question shall not be affected. |
| 30.5 | Except as provided by this Agreement, CDA and Quality Agreement no third party (as defined in the Contracts (Rights of Third Parties) Act 1999) except any permitted successor or assignee of the Party to this Agreement has any rights under that Act to enforce any term of this Agreement. |
| 30.6 | This Agreement and any dispute or claim arising out of or in connection with its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the laws of England and Wales. |
| 31. | COUNTER PARTS AND ELECTRONIC SIGNATURES |
| 31.1 | This MSA and each SOW may be executed in any number of counterparts by the Parties, each of which when executed and delivered shall constitute an original, but all of which together shall constitute one and the same agreement. |
| 31.2 | Each Party agrees to sign this MSA by electronic signature (whatever form the electronic signature takes) and that this method of signature is as conclusive of the Parties intention to be bound by this this MSA as if signed by each Party’s manuscript signature. |
IN WITNESS WHEREOF, the Parties have entered into this MSA as of the Effective Date.
STERLING
| By: | /s/ Chad Telgenhof | |
| Name: | Chad Telgenhof | |
| Title: | Chief Commercial Officer | |
| AIM IMMUNOTECH INC. | ||
| By: | /s/Peter W. Rodino | |
| Name: | Peter W. Rodino, III | |
| Title: | COO & General Counsel | |
| 19 |
Appendix 1
TEMPLATE STATEMENT OF WORK
For the avoidance of doubt, and in accordance with Section 2.7 of the MSA, if and to the extent there is a conflict, discrepancy, or inconsistency between any of the provisions in the main body of the MSA and any of the provisions of this Statement of Work, the terms of the MSA shall prevail over this Statement of Work, except to the extent that this Statement of Work expressly and specifically states an intent to supersede the MSA on a specific matter.
| Statement of Work reference number | |
| Statement of Work date | |
| Term of Statement of Work | This Statement of Work shall be effective as of the Statement of Work Date and shall remain in full force and effect until the MSA is terminated[, or until [DATE], whichever is earlier]. |
| Sterling contact person for day to day communications | [NAME]
[POSITION]
[EMAIL ADDRESS]
[TELEPHONE NUMBER(S)]
[Any additional contacts in cc to emails?] |
| The Purchaser contact person for day to day communications | NAME]
[POSITION]
[EMAIL ADDRESS]
[TELEPHONE NUMBER(S)]
[Any additional contacts in cc to emails?] |
Development Site |
|
| Project Outline/Description of Services | [Describe overview of the project] |
Any other agreements that are to apply
(For example, are there any separate agreements relating to test batches, or design/build work) |
| 20 |
| Product | |
Product Specifications
(including specifications for processing, preparation, assembling) |
|
| Batch quantity of Product and batch cost | |
| Permitted Variance to Product Quantity | [X%] |
| Assumptions | [include any specific assumptions upon which Sterling performance depends, including start date, deadlines for Purchaser performance or delivery of goods or information, and other key assumptions] |
| Standard | [Good Manufacturing Practice] [Good Laboratory Practice] [Non-GMP] |
| Price | |
| Cancellation Fee | |
| Payment Terms if differs from that specified in Section 8 of this Agreement | [Specifically set out when payments are to be made]
[Where catalysts are used, and form a significant portion of Sterling’s cost, the Purchaser shall cover such costs in an up-front payment. The Purchaser shall be repaid once the catalyst has been recycled.] |
| Sterling Supplied Materials | [With regard to Sterling Supplied Materials, the Purchaser agrees to support Sterling to introduce additional suppliers, if needed.] |
Purchaser Supplied Materials
(all Materials to be supplied by the Purchaser) |
|
Purchaser Supplied Material -Specifications |
[Any reduction in the yield as a result of off specification or insufficient raw materials is the responsibility of the Purchaser.] |
| Purchaser Supplied Material – quantity and delivery schedule | [Purchaser Supplied Materials must be at the Development Site no later than [one month] before they are required for the Services.]
[In addition to the provisions of Section 2.2 of this Agreement, delays to the Development or Manufacture caused by delayed, insufficient or off specification of the Purchaser Supplied Materials may result in an additional charge to the Purchaser at a rate of [●] per day.] |
| Milestones | [if there are specific Milestones for the project, set them out in detail – for example, chemistry development and confirmation, first batch completion, qual test, etc.] |
| Sterling testing obligations | |
| Purchaser testing obligations | |
| Labelling requirements, if any | |
| Estimated date of completion of Services | |
| Delivery terms and location, if differs from that specified in Section 4 of this Agreement | |
| Other provisions, or modifications to the MSA |
| 21 |
Statement of Work Confirmation:
The Statement of Work set forth above is valid for a period of thirty (30) days from the date issued. If the terms of this Statement of Work and any other referenced document are accepted, please sign and return to Sterling:
Signed for and accepted on behalf of the Purchaser:
| SIGNATURE | ||
| NAME | ||
| POSITION | ||
| DATE | ||
| Statement of Work Acceptance: | ||
| Signed for and accepted on behalf of Sterling: | ||
| SIGNATURE | ||
| NAME | ||
| POSITION | ||
| DATE | ||
| 22 |
Appendix 2
TEMPLATE CHANGE ORDER
Statement of Work reference number:
Statement of Work date:
Change Order No:
Product:
Name of requester at Customer/Sterling:
Telephone Number of requester at Customer/Sterling:
Date of Change Order request:
This Change Order request relates to the Statement of Work dated [INSERT DATE] (with the above Statement of Work reference number) and is issued under the Master Services Agreement (MSA) between [Sterling] and [INSERT THE PURCHASER ENTITY] dated [INSERT DATE].
This Change Order forms part of the MSA and the applicable Statement of Work. The Parties agree to the following modification(s) to the applicable Statement of Work:
Detail of Requested Changes:
| Description | Additional
/ (Less) Cost | |
| Total Cost of this Contract Change: |
Revised Total Budget:
| Direct costs | Indirect costs | Totals | ||||
| Original Budget: | ||||||
| Cost of Change Order #1 (+) | ||||||
| Revised Total Budget: |
In consideration of the amended rights and obligations of the Parties pursuant to this Change Order, this Change Order amends the applicable Statement of Work as provided above. Except as specifically amended by this Change Order, all other terms and conditions of the Statement of Work shall continue in full force and effect during the term of the MSA. This Change Order shall be effective upon full execution by the Parties.
IN WITNESS WHEREOF, each of the Parties has caused this Change Order to be executed by its authorized representative as of the last date written below.
| STERLING | [NAME] | |||
| By: | By: | |||
| Name: | Name: | |||
| Title: | Title: | |||
| Date: | Date: | |||
| 23 |
Exhibit 10.94
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL
AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
INVESTIGATOR INITIATED STUDY
SUPPORT AGREEMENT
For clinical trials initiated by Erasmus University Medical Center Rotterdam
This Agreement, with an effective date of 24-11-2022
| REGARDING | Combining anti-PD-L1 immune checkpoint inhibitor durvalumab with TLR-3 agonist rintatolimod in patients with metastatic pancreatic ductal adenocarcinoma for therapy efficacy. (DURIPANC) Study. |
| Protocol number: EudraCT:2022-003780-23, NL83224.078.22 | |
| IS MADE BETWEEN | Erasmus University Medical Center Rotterdam, organized in accordance with public law of the Netherlands (article 1.13,2 WHW), with a principal place of business at Dr. Molewaterplein 40, 3015 GD Rotterdam, the Netherlands, acting exclusively for and on behalf of its Department of Pulmonary Medicine hereinafter referred to as “Erasmus MC”, lawfully represented by Prof. dr. J.G.J.V. Aerts in his function as Head of the Department of Pulmonary Medicine (Hereinafter referred to as “Erasmus MC”), |
| AND | AIM ImmunoTech Inc., 2117 SW Highway 484 Ocala, Florida, United States (Hereinafter referred to as “AIM”); |
WHEREAS:
| (A) | Erasmus MC wishes to undertake a phase II, non-randomized, open-label, single-arm, single centre study with 2 subsequent phases entitled Durvalumab and Rintatolimod for patients with metastatic pancreatic ductal adenocarcinoma (hereinafter the “Study” It is understood that “Study” also encompasses the terms “trial” and “investigator-initiated trial”), the Protocol of which is attached hereto as Annex 1, (hereinafter “Protocol”). |
| (B) | AIM is interested in the Field (“Field” shall mean research and development of therapeutics for multiple types of cancers). AIM shall therefore provide assistance to Erasmus MC with support pursuant the terms and provisions of this Agreement. |
| Investigator Initiated Study Support Agreement | 1 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
IT IS HEREBY AGREED THAT:
| 1 | CONDUCT OF THE STUDY |
| 1.1. | Erasmus MC shall undertake the Study as the “Sponsor/verrichter” of the project as set down in the Protocol attached hereto and incorporated by reference and assumes all responsibilities of the Sponsor as defined under the EU Directive 2001/20/EC. |
| 1.2 | Erasmus MC is responsible for any legal and regulatory obligations associated with being the Sponsor/verrichter of the Study, including submission of the Protocol to the competent medical ethics committees (hereinafter referred to as “Ethics Committee”) and/or the competent authorities. |
| 1.3 | Erasmus MC will undertake this Study in furtherance of its goal of seeking new knowledge and improvement of patient care, and furthering its tasks and objectives as an academic research and diagnostic institution and medical interventional centre. None of the activities by Erasmus MC under or in connection with this Agreement can or shall be construed as an undertaking that the Study under or pursuant to this Agreement will lead to any particular and/or useful results. |
| 1.4 | It is explicitly acknowledged and understood by AIM that the Study conducted at Erasmus MC under this Agreement is investigational in nature. Hence, the Study conducted at Erasmus MC is limited to “best endeavors” only – in compliance with academic standards and good clinical practice – and that no warranty, either expressed or implied, is made regarding the outcome of the Study, or the merchantability or fitness of the results thereof for any particular purpose. |
| 1.5 | Erasmus MC will use its reasonable efforts diligently to carry out the Study set out in accordance with the Protocol. |
| 1.6 | Erasmus MC will use reasonable efforts to provide the facilities, medical staff and personnel required for such purposes. |
| 1.7 | The Study shall be conducted by Erasmus MC: |
| 1.7.1 | in accordance with the Protocol (and any amendments thereto as approved by the Ethics Committee); | |
| 1.7.2 | with patients selected in accordance with and who meet, the criteria specified in the Protocol; | |
| 1.7.3 | only after all necessary legal, regulatory or other approvals have been granted including, without limitation, those of the Ethics Committee and/or competent authority, and strictly in accordance with the terms of any such approval; |
| Investigator Initiated Study Support Agreement | 2 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
| 1.7.4 | in accordance with the requirements laid down by laws applicable in the country where the Study is conducted and notably, if relevant in the concerned country, in accordance with the Declaration of Helsinki and with the principles of good clinical practice as laid down by the ICH topic E6: ‘Good Clinical Practice: Consolidated Guideline’ and the ‘Notes for Guidance on Good Clinical Practice CPMP/ICH/135/95’ and all applicable local regulations; to which AIM shall also adhere; |
| 1.8 | Erasmus MC shall, always subject to prior approval of the Ethics Committee, be entitled to make changes to the Protocol. |
| 2 | RESPONSIBILITIES |
| 2.1 | Erasmus MC shall: |
| 2.1.1 | be responsible for the Study in accordance with Article 1 of this Agreement; | |
| 2.1.2 | define its own set of SOPs (standard operating procedures) to be used for Study preparation and Study performance (including a quality assurance program and, if applicable, a delegation of tasks table). | |
| 2.1.3 | set-up and maintain a Trial Master File (TMF) of the Study containing documents and written communications essential to the management of the Study. All documents to be filed in the TMF according to ICH GCP requirements must be clearly identifiable. The TMF must be kept in a secure location for the duration of the Study and archived after completion or premature termination of the Study in a secure facility for a minimum of 15 years. | |
| 2.1.4 | be responsible for the data management of the Study, including the collection and analysis of the Study data, its inclusion in the Erasmus MC database, and its retention as required under applicable law; | |
| 2.1.5 | be responsible for and comply with safety reporting obligations and their related activities under applicable laws and regulations. Erasmus MC shall send a list of all participating investigators to AIM; | |
| 2.1.6 | will keep AIM informed on the progress and material developments in the conduct of the Study. In particular Erasmus MC will ensure that AIM is provided with: |
| 2.1.6.1 | a copy of the Ethics Committee approval and any approvals or authorizations for the Study, a notice of any withdrawal or amendments of such documents; | |
| 2.1.6.2 | a copy of the periodic or annual reports, including safety reports and Ethics Committee updates, in advance of or at the same time as submission to Regulatory Authorities and/or the Ethics Committee; | |
| 2.1.6.3 | a monthly status report, or as many times as reasonably necessary, throughout the duration of the Study, which shall summarize the work performed and the results achieved, including number of Subjects screened, enrolled, completed, withdrawn and/or in follow-up, identify any emerging safety-related issues, and an update on plans for publication of the Study; |
| Investigator Initiated Study Support Agreement | 3 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
| 2.1.6.4 | a copy of the Final Report and Publications as soon as they are available. |
| 2.1.7 | provide AIM with a copy of the final draft for submission of the publication (planned first quarter 2026) within an estimated period of 6 months after the final data lock of the Study (planned second quarter 2025), subject to section 7.1 of this Agreement ; | |
| 2.1.8 | require clinical investigators and participating centers to handle any information provided by AIM in accordance with terms equivalent to the confidentiality provisions of Article 6 of this Agreement. | |
| 2.1.9 | provide protocol and all protocol amendments to AIM which will be submitted by Erasmus MC for review by AIM which Erasmus MC will take into consideration. AIM cannot prevent amendment to the Protocol. |
| 2.2 | If changes to the Protocol are made, in such a way that AIM can be of reasonable opinion that it can no longer support the Study, AIM may terminate the Agreement upon written notice, before enrollment of any Study Subjects. |
| 2.3 | AIM shall: |
| 2.3.1 | provide full assistance and information pertaining to rintatolimod to Erasmus MC in order for Erasmus MC to undertake the Study in accordance with the Protocol and discharge its obligations and responsibilities set out in Article 1 hereto; | |
| 2.3.2 | provide input on the design of the Protocol to ensure that the results of the Study can be used, meaning input to serve that the data collected under the Study could be used for regulatory purposes. Erasmus MC will take the input into reasonable consideration; |
| 3 | STUDY DRUG / MATERIAL / EQUIPMENT |
| 3.1 | AIM shall provide Erasmus MC, at AIM’s expense, a sufficient amount of the Study Drug (rintatolimod) throughout the Study, as is required according to the Protocol provided of input by AIM. AIM is not obligated to supply any further amount of Study Drug if the input provided to the amended Protocol is not reasonably taken into consideration. |
| 3.2 | Other than supplying the Study Drug to support the Protocol, no further monetary or material compensation is required or expected from AIM by Erasmus MC. |
| 3.3 | Erasmus MC is responsible for the storage and handling of the Study Drug from the date that Erasmus MC has received the Study Drug from AIM. AIM shall not be obligated to provide additional Study Drug to replace Study Drug lost or rendered ineffective by Erasmus MC for any reason including accidents. |
| 3.4 | Erasmus MC shall promptly report to AIM any adverse findings in relation to any Study Drug delivered to it, and AIM shall take such steps as are reasonably practicable in the circumstances to provide replacement Study Drug or otherwise to minimise the impact on the Study. AIM shall be solely responsible in accordance with Applicable Laws for reporting to Regulatory Authorities any complaints and for conducting any recalls relating to Study Drug which arise for any reason. If AIM and/or any Regulatory Authority deem that a recall of Study Drug is required, the recall strategy shall be developed by AIM and followed by the Institution with strict regard to the requirements in terms of timing and/or any other conditions imposed. |
| Investigator Initiated Study Support Agreement | 4 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
| 3.5 | Erasmus MC shall only use the Study Drug for the conduct of the Study and for no other purpose. Erasmus MC shall not transfer the Study Drug to any third party including partners without approval from AIM. Erasmus MC shall maintain complete and accurate records relating to the Study Drug. |
| 3.6 | The Study Drug shall remain the property of the AIM and any unused Study Drug shall be returned to AIM at AIM’s expense at the conclusion of the Study or be destroyed per institutional procedures at the request of AIM and documentation of destruction provided to AIM. |
| 3.7 | The Parties acknowledge that the Study Drug is being provided “as is,” without any warranties or representations of any sort, express or implied, including without limitation warranties of merchantability and fitness for a particular use. AIM makes no representation and provides no warranty that the use of the Study Drug in the Study will not infringe any patent or other proprietary right of third parties. |
| 3.8 | In no event shall Erasmus MC use the Study Drugs to attempt to (i) reverse engineer or determine in any way the chemical or biological structure of the Sponsor Material; (ii) determine the distribution and size of the Sponsor Material; or (iii) conduct research on Study Samples containing Study Drugs which is not specified in the Protocol and which is not directly related to the determination of the effect of Study Drug on a Study Subject. |
| 3.9 | Erasmus MC shall report any adverse events or adverse drug reactions (each as defined in the Protocol) that arise in relation to the Study to (i) AIM and the relevant Regulatory Authorities in accordance with the Applicable Laws; and (ii) any overseeing Ethics Committee in accordance with its policies. |
| 4 | LIABILITY AND INDEMNITY |
| 4.1 | Erasmus MC does not undertake that the Study shall lead to any particular result, nor is the success of the Study guaranteed. Erasmus MC accepts no responsibility for any use that AIM may make of the data from the Study nor for advice or information given in connection with them. AIM shall indemnify Erasmus MC against consequences arising out of or in connection with any use that it may make of the results from the Study. AIM shall be liable for: |
(i) AIM’s breach of this Agreement up to a maximum of the value of the contract sum brought in by AIM under this Agreement;
(ii) willful misconduct (“opzet”), a wrongful act, failure to comply with applicable laws and regulations or conscious recklessness (“bewuste roekeloosheid”) by AIM; or
(iii) the use of the results for or on behalf of AIM.
| 4.2 | AIM will indemnify and hold harmless Investigator, Erasmus MC and its agents, officers, associated personnel and employees against any and all liability, loss, and damage they may suffer as the result of claims, demands, costs or injury (including death) to any person (patients included) or damage of any property arising out of: |
| (i) | a defect in the Study Drug, or non-compliance with applicable laws and regulations in manufacturing the Study Drug; | |
| (ii) | AIM’s breach of this Agreement, willful misconduct (“opzet”), a wrongful act, failure to comply with the applicable laws and regulations or conscious recklessness (“bewuste roekeloosheid”) by or on behalf of AIM; | |
| (iii) | The use of the Results for or on behalf of AIM. |
| Investigator Initiated Study Support Agreement | 5 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
AIM shall take out sufficient insurance for such claims.
| 4.3 | Upon request, details of the insurance coverage shall be supplied to Erasmus MC. To the extent permitted by Applicable Laws. |
| 4.4 | Erasmus MC’s liability to AIM arising out of or in connection with this Agreement shall not exceed the amount of any financial support paid by the AIM to Erasmus MC and/or the value of the medicinal products used in the Study under this Agreement. The liability of Erasmus MC to AIM shall not extend to the loss of business or profit or to any incidental or consequential losses or damages, and in no event exceed the amount of fees payable by AIM to Erasmus MC under this Agreement. However, nothing in this Agreement shall restrict or exclude the liability of any Party in relation to death or personal injury caused by the negligence of that Party or its employees or to restrict or exclude any other liability of either Party which cannot be restricted or excluded under applicable law. |
| 5 | INTELLECTUAL PROPERTY RIGHTS |
| 5.1 | All information or material and rights (including intellectual property rights) relating thereto, including at least patents, patent applications, provisional patent applications, trademarks, trademark applications, and trade secrets owned by or licensed to a Party prior to the effective date of this Agreement or developed or obtained independently from this Study (“Background”) shall be and remain the sole property of that Party. In particular, Erasmus MC understands and acknowledges that the Study Drug, rintatolimod (Ampligen®) is the property of AIM ImmunoTech Inc and/or that it may be subject to certain intellectual property rights owned by or licensed to AIM. For the avoidance of any doubt, all rights to Ampligen® belong to AIM. AIM’s Background includes specific knowledge about and rights into the Study Drug that does not arise from this Study. Nothing in this Agreement shall be deemed to constitute or imply the granting of any license, immunity or other right under the Background of one Party to the other Party. |
| 5.2 | A non-limiting list of Background that AIM considers as possibly relevant to the Study will be added in Annex 3 of this Agreement. AIM grants to ERASMUS MC a free, non-exclusive, license under the Background of AIM for the sole purpose to execute the Study using Investigational Product from the effective date of this agreement until the earlier of: (a) completion of the Study; or (b) termination in accordance with Article 7 of this Agreement. |
| 5.3 | Erasmus MC shall own all rights and title in and to the Study Data, provided that Erasmus MC shall disclose relevant Study Data to AIM, and shall permit AIM to use the disclosed Study Data for any purpose. |
| 5.4 | AIM shall own all the rights and title in and to all inventions arising directly and indirectly from the Study, related to the Study Drug owned, commercialised, controlled or licensed by AIM, or the use thereof. For the remaining inventions, which cannot be attributed to any Party, all parties involved will, in good faith, negotiate equitable distribution of the rights in the new invention. Erasmus MC shall promptly disclose such inventions to AIM in writing following its creation. |
| 5.5 | Erasmus MC shall and shall ensure that the Study Site Staff and the Principal Investigator shall, grant non-exclusive licenses of such of their background Intellectual Property to AIM, and take all other reasonable steps and execute all other documents, as AIM may reasonably require from time to time in order to allow AIM to work any new inventions, solely related to the Study Drug or new inventions which are jointly owned. |
| 5.6 | Regardless of the abovementioned, the parties agree that AIM and ERASMUS MC individually retains the right at all times to use the Study Data and Inventions for research, educational purposes and patient care. |
| Investigator Initiated Study Support Agreement | 6 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
| 6 | CONFIDENTIALITY, PUBLICATION AND DATA ACCESS |
| 6.1 | For the purpose of this Agreement “Confidential Information” means, with respect to a Party, all information relating to the Study, that has been or will be disclosed by or on behalf of that Party (the “Disclosing Party”), to the other Party (the “Receiving Party”), directly or indirectly, in whatever form, including (without limitation) any data, reports, analyses, specifications, techniques, processes, technical information, ideas, know-how, trade secrets, patents, patent applications and inventions (whether or not patentable), drawings, designs and computer software, and which is, or which should reasonably be expected to be, of a confidential nature, including this Agreement and the terms and conditions hereof (except in case disclosure is needed to any organization administrating grants). Any orally disclosed information shall be summarized in writing by Disclosing Party and shall be delivered to Receiving Party in writing within thirty (30) days of disclosure. Neither Party shall, without the prior written permission of the Disclosing Party, use or disclose Confidential Information of the other Party to any third party except to the extent this may be required by applicable law or as necessary for the conduct of the Study. Confidential Information shall only be accessible for/disclosed to employees with a need to know for the conduct of the Study. In such matters disclosure shall take place under strict confidentiality obligations. |
| 6.2 | The obligations of confidentiality set out in Article 6.1 shall not apply to Confidential Information which is: (i) published or generally available to the public through no fault of the receiving Party, (ii) in the possession of the receiving Party prior to the date of this Agreement and is not subject to the duty of confidentiality; (iii) independently developed by the receiving Party and is not subject to a duty of confidentiality, (iv) obtained by the receiving Party from a third party and, to the knowledge of the Receiving Party, is not subject to a duty of confidentiality, (v) published in accordance with the publication section hereunder (in Article 6), or (vi) required to be disclosed by governmental agencies, or information of which disclosure is otherwise required by law, regulation or governmental or court order. In case of (v), such disclosure shall be as limited and confidential as possible. |
| 6.3 | Results of the Study shall be made publically available in accordance with academic standards, and AIM acknowledges the importance of Erasmus MC’s objective of publishing academic research results independently. Erasmus MC shall have the right of first publication. Erasmus MC has the right to freely publish or present scientific papers dealing with the Study (inter alia, but not limited to, its results). |
| 6.4 | Erasmus MC shall acknowledge AIM’s support with clear indication of the type of support in the publication. AIM has no right to veto any publication. In order to secure intellectual property arrangement, the parties agree: |
Erasmus MC will provide a copy of the prospective publication at least thirty (30) days prior to publication to AIM for review. AIM may request modifications or delay within 14 working days from receipt of such draft, but these shall be considered justified only, if:
| a. | the proposed publication includes Confidential Information provided by AIM (not being the Results of the Study); | |
| b. | the proposed publication includes patentable Background and AIM anticipates that it wishes to exercise the Option to the extent such is reasonably necessary in order to protect intellectual property rights; or |
| Investigator Initiated Study Support Agreement | 7 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
| c. | the proposed publication would interfere with AIM’s patent filing efforts. |
Upon receipt of such a request, the Parties shall discuss a solution in good faith. AIM may request a publication delay of at most thirty (30) calendar days to modify the publication protecting confidential information, unless the objection is based on (b) above, in which event the intended publication can be delayed for up to ninety (90) days to allow a patent application to be filed. Upon expiration of the term, Erasmus MC will be entitled to publish the proposed publication at its discretion and without further delay.
| 6.5 | After the first publication of the Study results by Erasmus MC AIM shall be free to publish based on or referring to such results. For a period of one year following the first publication, AIM should consider the following: |
| 6.5.1 | AIM shall respect the principles of complete information, exactitude, and prudence. | |
| 6.5.2 | AIM has no right to publish the draft publication received from Erasmus MC or use any content of that draft that was not in the final publication without specific written permission of Erasmus MC. | |
| 6.5.3 | AIM shall submit its drafts to Erasmus MC prior to disclosure, regardless of their scientific or promotional objective. | |
| 6.5.4 | Should AIM fail to meet the principles of complete information, exactitude, and prudence, Erasmus MC shall send AIM modifications, amendments and/or corrections within thirty (30) days of receipt of the draft referred to in Article 6.5.3 above. | |
| 6.5.5 | AIM shall not unreasonably deny to implement or process Erasmus MC ‘s proposed comments. If AIM decides to ignore Erasmus MC’s proposed modifications, amendments and/or corrections, Erasmus MC reserves the right to publicly dissent to the publication and, if necessary, initiate all actions, including legal procedures, for the recognition and condemnation of AIM breach of its obligations under this Article 6.5 in compliance with local copyright laws. |
| 6.6. | Erasmus MC will post the Study on a publicly available trial registry such as ClinicalTrials.gov. |
| 7 | TERM AND TERMINATION |
| 7.1 | This Agreement shall continue in full force until the earlier of: |
a: completion of the Study including completion of the clinical study report and/or Manuscript/Publication of study results;
b: termination in accordance with Article 7.3 of this Agreement.
| 7.2 | Termination on other grounds will not terminate this Agreement nor any obligations arising from it. |
| 7.3 | Each Party may terminate at its option and discretion this Agreement upon written notice to the other party with immediate effect in the following events: |
| a. | if one of the Parties is dissolved, becomes or is declared insolvent or a petition in bankruptcy has been filed against it; |
| Investigator Initiated Study Support Agreement | 8 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
| b. | any material breach of or imputable failure to comply with any of the terms or conditions of this Agreement or Protocol by the other Party, which breach or failure, if capable of remedy, is not remedied within thirty (30) days after receipt of the written notice from the aggrieved Party specifying the non-compliance and demanding such remedy. It is expected that such notice to terminate this Agreement shall not be issued until the matter in question has been raised in writing and discussed during the said 30-day period; | |
| c. | if the purpose of the Study, as confirmed by the competent Ethics Committee, becomes obsolete; | |
| d. | if, for reasons beyond the reasonable control of a Party, the continuation of the Study/this Agreement reasonably cannot be required from such Party (force majeure); | |
| e. | if, through no fault of the Parties, the Study does not receive official approval from the Ethics Committee and/or competent authorities, or this approval is permanently revoked; | |
| f. | if the Study ceases to be in the interest of the health of the Study patients as determined by the Ethics Committee or Competent Authority. |
| 7.4 | If the Agreement is terminated for reasons attributable to AIM, AIM shall pay all costs incurred and falling due for payment by Erasmus MC up to the date of termination, and also all expenditure falling due for payment after the date of termination which arises from commitments reasonably and necessarily incurred by Erasmus MC to provide work performed and the work which needs to be performed in order to allow for an orderly wind-down of the Study. |
| 7.5 | Erasmus MC shall be entitled to terminate the Study if it cannot ensure the financing of such Study to its end, without possibility for AIM to claim any damages or compensation. It is the clear understanding between the Parties that once a subject has been enrolled, such termination is just allowed in case of unexpected costs which arise after initiation of the Study and which would make the financing of the Study reasonably impossible; however subject to applicable law and regulations, inter alia, the CCMO-regulations and therewith 7.3 above. |
| 7.6 | In the event of premature termination of this Agreement, either partially or totally, as well as in case of termination of this Agreement by AIM, on grounds provided for in Articles 7.1, 7.3 and/or 7.3 of this Agreement, Erasmus MC shall immediately return any unused Study Drug to AIM at AIM’s expense or be destroyed per institutional procedures at the request of AIM and documentation of destruction provided to AIM. |
| 7.7 | Articles 2, 4, 5, 6 (6.1 during 5 years from termination), 7.4, 7.5, 7.6, this article 7.7, 8, 10, 11, 12.2 12.6 and 13 of this Agreement, as well as Annexes that include obligations reasonably needed to become fulfilled thereafter, shall remain in force after termination of this Agreement. |
| Investigator Initiated Study Support Agreement | 9 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
| 8 | FORCE MAJEURE |
If performance of this Agreement by one of the Parties to this Agreement is prevented, hindered or delayed by unforeseen reason of any cause beyond this Party’s control, the other Party shall release the affected Party from its relevant contractual obligations for the duration of the event of Force Majeure and to the extent the obligations hereunder are affected by such event. The affected Party shall notify the other Party without delay, and provide a detailed description of the events, explaining the reason for its inability to perform or its delay in performance and specifying the period for which it is estimated that such inability or delay shall continue, at the latest within fifteen (15) days thereafter. If non-compliance lasts longer than thirty (30) days, the not-affected Party may terminate this agreement in accordance with Article 7.3.
| 9 | AMENDMENT |
This Agreement, including Annexes, cannot be amended or modified except by the express written consent of both Parties. No terms, conditions, understanding or Agreement purporting to modify or vary the terms of this Agreement shall be binding unless hereafter made in writing and signed by both Parties.
| 10 | ASSIGNMENT AND SUBCONTRACTING |
Neither Party shall assign or transfer this Agreement or, sub-contract any of its obligations without the prior written consent of the other Party, which consent shall not be unreasonably withheld.
| 11 | ANTI-BRIBERY AND ANTI-CORRUPTION |
| 11.1 | Prohibition. Erasmus MC each represents and warrants that it, its owners, directors, officers, employees, sub-contractors and agents will act in full compliance with any applicable anti-corruption laws and regulations, industry and professional codes of practice and will not offer, promise, pay or arrange for payment or giving of any benefit or advantage to any individual or entity, including but not limited to Public Officials, as defined below, in exchange for an improper advantage in any form either directly or indirectly. In particular, Erasmus MC may not offer, promise or pay a bribe in order to fulfill, obtain or retain (i) regulatory requirements, (ii) any kind of business including any commercial transaction to which AIM is a party, or (iii) any other improper advantage in connection with the business of AIM. Erasmus MC is prohibited to request, accept a promise of or receive any payment, benefit or advantage from any individual or entity for oneself or for a third party in return for giving another person or entity unfair preferences in the procurement of goods or commercial or other services. In case of any doubt regarding the question whether or not a particular transaction may be regarded as a bribe, Erasmus MC must seek prior advice and approval of AIM. |
| Investigator Initiated Study Support Agreement | 10 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
| 11.2 | Public Official. For the purpose of this Agreement, “Public Official” means any officer or employee of a local or foreign government or any department, agency, or instrumentality thereof, or of a public international organization as well as any person acting in an official capacity for or on behalf of any such government, department, agency, or instrumentality, or for or on behalf of any such public international organization as well healthcare professionals, working in healthcare institutions, in which the central, regional or local government owns an interest or has control or which are paid partly or as a whole by the government. Regardless of whether or not such transfer might constitute a bribe, Erasmus MC may not transfer anything of value to a Public Official without the prior approval of AIM. Erasmus MC may not transfer anything of value to agents for the purpose of offering, promising, paying, receiving, soliciting, or arranging for the payment of, or reimbursing anyone for payment of, a bribe or a transaction of anything of value to a Public Official. |
| 12 | GENERAL PROVISION |
| 12.1 | Both AIM and Erasmus MC warrant and represent to the other that both have the full right and authority to enter into this Agreement and are unaware of any impediment that would inhibit their ability to perform their obligations hereunder. |
| 12.2 | Neither Party shall use the name or logo of the other Party, not that of any member if its staff, in any press release or product advertising or for any other commercial purpose without the prior written consent of the other. |
| 12.3 | Nothing in this Agreement shall create, imply or evidence any partnership between the Parties or the relationship between them of principal and agent. |
| 12.4 | Erasmus MC can work with other partners in addition to AIM as far as these collaborations do not result in a change of the agreed study design, or substantial changes of the Protocol, and intellectual property rights in section 5 above, and, as long as the partners agree to the terms of this Agreement. Any breach of this Agreement by the partners will be considered a breach of this Agreement by Erasmus MC. Erasmus MC agrees to inform AIM immediately if Erasmus MC become aware of any breach of this Agreement by Erasmus MC’s partner. Erasmus MC agrees to inform AIM and obtain approval from AIM about the other collaboration partners involved. AIM retains the right to withhold approval if the collaboration partners that are competitors of AIM or if the partners perform any experiments outside the Protocol. |
| 12.5 | The Parties agree that this Agreement is entered into irrespective of any sales transactions and that Erasmus MC is under no obligation to procure products manufactured and/or distributed by AIM in the future. |
| 12.6 | Legal notices under this Agreement should be addressed to the below and shall have effect from the day after receipt: |
For Erasmus MC: Prof. dr. J.G.J.V. Aerts, head of Pulmonary Medicine, Erasmus MC [***]
| Investigator Initiated Study Support Agreement | 11 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
For AIM: Peter.Rodino[***]; with copy to David.Strayer[***]and Chris.McAleer[***]
Day-to-day communication (study reports, Protocol information etc.) should be addressed to:
For Erasmus MC:
Dr. J. Verhagen-Oldenampsen, project manager [***] and/or Drs. H. El Haddaoui, PhD student [***]
For AIM: David.Strayer[***] with copy to Diane.Young [***]
| 12.7 | In case of any inconsistence between this Agreement and the Protocol, the Agreement shall supersede, except for clinical matters, for which the Protocol supersedes. The Agreement supersedes other annexes thereto. For clarity, the commitment to sign any additional document if necessary (as described in the letter of commitment) shall apply hereunder. |
| 13 | APPLICABLE LAW AND JURISDICTION |
The validity and interpretation of this Agreement and the legal relation of the Parties to it and everything relating thereto, shall in all respects solely and exclusively be governed by the laws of the Netherlands, without regard to its conflicts of laws rules. The Parties shall attempt to settle all disputes arising out of or in connection with the present Agreement in an amicable way. In the event that such attempt should fail, the matter shall be exclusively brought before the competent court of Rotterdam, the Netherlands (or another Court in the Netherlands in case that would be exclusively competent in accordance with Dutch Law).
Annexes
Annex 1: Protocol
Annex 2: Investigational Products and additional materials provided by the AIM
Annex 3: A non-limiting list of AIM ImmunoTech Inc.’s Background
| Investigator Initiated Study Support Agreement | 12 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
IN WITNESS WHEREOF, the Parties by their duly authorized representatives have caused this Agreement to be executed as of the date first above written.
| Signed on behalf of | ||||
| ERASMUS UNIVERSITY MEDICAL CENTER ROTTERDAM | ||||
| acting as Sponsor: | ||||
| /s/ Prof. dr. J.G.J.V Aerts | Date: | November 24, 2022 | ||
| Name: | Prof. dr. J.G.J.V. Aerts | |||
| Title: | Department of Pulmonary Medicine | |||
| Read and acknowledged by: | ||||
| /s/ Prof. dr. C.H.J van Eijck | Date: | November 24, 2022 | ||
| Name: | Prof. dr. C.H.J. van Eijck | |||
| Title: | Principal Investigator | |||
| AIM ImmunoTech Inc.: | ||||
| /s/ Thomas K Equels | Date: | January 13 2023 | ||
| Name: | Thomas K. Equels | |||
| Title: | Chief Executive Officer | |||
| Investigator Initiated Study Support Agreement | 13 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
Annex 1
Protocol
[***]
| Investigator Initiated Study Support Agreement | 14 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
Annex 2
Investigational Products and additional materials provided by the AIM
[***]
| Investigator Initiated Study Support Agreement | 15 |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. |
Annex 3
A non-limiting list of AIM ImmunoTech Inc.’s Background
[***]
| Investigator Initiated Study Support Agreement | 16 |
Exhibit 10.95
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL
AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
CO-ORDINATION AGREEMENT
(“Agreement”)
| 1. | Erasmus University Medical Center Rotterdam, whose registered office is at Dr Molewaterplein 40, 3015 GD Rotterdam, The Netherlands, acting exclusively for and on behalf of its Department of Pulmonology, hereinafter referred to as “Erasmus MC” lawfully represented by Prof. dr. J.G.J.V. Aerts in his function of Head of the Department of Pulmonology Medicine (“Erasmus MC”) and in the presence of Principal Investigator Prof. dr. C. H..J. van Eijck (the “Principal Investigator”); |
| 2. | AIM ImmunoTech Inc., 2117 SW Highway 484 Ocala, Florida, 34473 United States (hereinafter referred to as: “AIM ImmunoTech”); and |
| 3. | AstraZeneca BV, a company incorporated in The Netherlands under no. K.v.K. Den Haag 24234576 whose registered office is at Prinses Beatrixlaan 82, 2595 BM Den Haag, The Netherlands (hereinafter referred to as: “Astra Zeneca”). |
The parties hereinafter individually referred to as “Party” and collectively as “Parties”.
This Agreement is effective as of the date of 23 DEC 2022
Whereas
| ● | AIM ImmunoTech is an immune-pharma company focused on the research and development of therapeutics to treat multiple types of cancer. AIM ImmunoTech’s flagship product is Rintatolimod. | |
| ● | AstraZeneca is a research-based pharmaceutical company whose main strategy consists of the development of new medicine in the field of Oncology, BioPharmaceuticals and Rare Disease. | |
| ● | Erasmus MC is planning to perform an investigator-initiated clinical study, entitled “Combining anti-PD-L1 immune checkpoint inhibitor durvalumab with TLR-3 agonist rintatolimod in patients with metastatic pancreatic ductal adenocarcinoma for therapy efficacy. DURIPANC Study”, in which it will use both Study Drugs provided by AIM ImmunoTech and AstraZeneca; | |
| ● | Parties collaborate with each other in order to work towards the completion of the Study; | |
| ● | Parties now wish to further record the terms and conditions relating to the collaboration between the Parties in this Agreement. |
Now, the Parties hereby agree as follows:
| 1. | Definitions | ||
| AIM ImmunoTech Study Drug | Vials of 80 ml containing 200 mg Rintatolimod; | ||
| AstraZeneca Study Drug | Vials of Durvalumab in 50 mg/ml solution;
| ||
| AIM ImmunoTech Study Support Agreement | The agreement governing the conduct of the Study between AIM ImmunoTech and Erasmus MC in respect of supplying the Study Drug dated 24-11-2022; | ||
| AstraZeneca External Sponsored Collaborative Clinical Research Agreement | The agreement governing the conduct of the Study between AstraZeneca and Erasmus MC in respect of the supplying the Study Drug dated 23 DEC 2022; | ||
| Study | The research project initiated by Erasmus MC, entitled: “Combining anti-PD-L1 immune checkpoint inhibitor durvalumab with TLR-3 agonist rintatolimod in patients with metastatic pancreatic ductal adenocarcinoma for therapy efficacy. DURIPANC Study”; | ||
| Study Support Agreements | means the AIM ImmunoTech Study Support Agreement and the AstraZeneca External Sponsored Collaborative Clinical Research Agreement collectively. |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL
AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
| 2. | Background and Order of Precedence |
| 2.1. | All information or material and rights (including intellectual property rights) relating thereto, including at least patents, patent applications, provisional patent applications, trademarks, trademark applications, and trade secrets owned by or licensed to a Party prior to the effective date of this Agreement or developed or obtained independently from this Study shall be and remain the sole property of that Party. | |
| 2.2. | AIM ImmunoTech is the rightful owner of the patent(s) which form(s) the basis of the AIM ImmunoTech Study Drug. | |
| 2.3. | AstraZeneca is the rightful owner of the patent(s) which cover the AstraZeneca Study Drug. | |
| 2.4. | AstraZeneca shall own all rights and title in and to all inventions arising from the Study solely related to the AstraZeneca Study Drug, any modification or improvement thereto, any method of manufacture thereof, or any new use thereof (each an “AstraZeneca Study Drug Invention”). AIM ImmunoTech shall own all rights and title in and to all inventions arising from the Study solely related to the AIM ImmunoTech Study Drug, any modification or improvement thereto, any method of manufacture thereof, or any new use thereof (each an “AIM ImmunoTech Study Drug Invention”). AstraZeneca and AIM ImmunoTech shall jointly own all rights and title in and to all inventions arising from the course of the Study related to any combination of both the AstraZeneca Study Drug and the AIM ImmunoTech Study Drug, or the combined use thereof, (each, a “Combination Invention”). For the remaining inventions, which cannot be attributed to any Party, all parties involved will, in good faith, negotiate equitable distribution of the rights in the new invention (each, an “Other Invention”). Inventorship of Inventions conceived or reduced to practice in the course of performing the Study shall be determined by the application of U.S. patent laws. | |
| 2.5. | In the event of any conflict between the terms of the agreements to which the Parties are subject, the order of precedence shall be as follows: |
| - | Study Support Agreements; | |
| - | This Agreement. |
| 3. | Confidentiality |
| 3.1. | The Parties acknowledge that confidentiality obligations exist between the respective Parties pursuant to the Study Support Agreements and if applicable non-disclosure agreements entered into between the Parties prior to the date of this Agreement. The Parties do not intend for any Confidential Information (defined below) to be shared pursuant to the terms of this Agreement. However, in the event any Confidential Information is shared pursuant to this Agreement which is not governed by any other agreement between any of the Parties, the following provisions of this clause 3 shall apply. | |
| 3.2. | All information in whatever form or mode of communication, which is disclosed by a Party (the “Disclosing Party”) to any other Party (the “Receiving Party”) in connection with the Study during its implementation and (i) which has been explicitly marked as “confidential” at the time of disclosure, or (ii) when disclosed orally has been identified as confidential at the time of disclosure and has been confirmed and designated in writing within 15 (fifteen) calendar days from oral disclosure at the latest as confidential information by the Disclosing Party or (iii) when the confidential or proprietary character is or should reasonably have been known to the Receiving Party is “Confidential Information”. |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL
AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
| 3.3. | Notwithstanding the foregoing, Confidential Information of a Party shall not include information that the other Party can establish, with written documentation: |
| a. | to have been publicly known prior to disclosure of such information by the Disclosing Party to the Receiving Party; | |
| b. | to have become publicly known, without the fault of the Receiving Party, subsequent to disclosure of such information by the Disclosing Party to the Receiving Party; | |
| c. | to have been received by the Receiving Party at any time from a source, other than the Disclosing Party, rightfully having possession of and the right to disclose such information; without any obligation of confidentiality; or | |
| d. | to have been otherwise known by the Receiving Party prior to disclosure of such information by the Disclosing Party to the Receiving Party without any obligation of confidentiality; or | |
| e. | to have been independently developed by employees and/or agents of the Receiving Party, on its behalf, without access to or use of such information disclosed by the Disclosing Party to the Receiving Party. |
| 3.4. | During the term of this Agreement, and for a period of five (5) years following the expiration or termination of this Agreement (subject always to the exclusions set out in clause 3.3 above), each Party shall maintain in confidence all Confidential Information disclosed by the other Parties, and agrees: |
| a. | not to use the Confidential Information for any other purpose except for which it was disclosed; | |
| b. | not to disclose Confidential Information to any third party without the prior written consent by the Disclosing Party; | |
| c. | to ensure that internal distribution of Confidential Information by a Receiving Party shall take place on a strict need-to-know basis; and | |
| d. | to return to the Disclosing Party on demand all Confidential Information which has been supplied to or acquired by such Receiving Party including all copies thereof. If needed for the recording of on-going obligations, such Receiving Party may however keep a copy for archival purposes only. |
| 3.5. | Each Receiving Party shall apply the same degree of care with regard to the Confidential Information disclosed under this Agreement as with its own confidential and/or proprietary information, but in no case less than reasonable care. | |
| 3.6. | If any Party is required to disclose Confidential Information in order to comply with applicable laws or regulations or with a court or administrative order, nothing herein shall restrict the Receiving Party from disclosing Confidential Information, but only to the extent of such order, law or regulation and it shall, to the extent it is lawfully able to do so, prior to any such disclosure (i) promptly notify the Disclosing Party, and (ii) comply with the Disclosing Party’s reasonable instructions to maximally protect the confidentiality of the information. | |
| 3.7. | Each Party shall promptly advise the other Parties in writing of any unauthorized disclosure, misappropriation or misuse by any person of Confidential Information as soon as practicable after it becomes aware of such unauthorized disclosure, misappropriation or misuse. | |
| 3.8. | After termination or expiration of the Agreement, each Receiving Party shall return to the Disclosing Party (or destroy, at the Disclosing Party’s option), all Confidential Information received under this Agreement, including any materials or documents containing Confidential Information in any form. The return or destruction of such Confidential Information shall not remove any obligations of confidence from the Receiving Party in respect of such Confidential Information. |
| 4. | Collaboration principles |
| 4.1. | This Agreement does not imply a joint venture or preferred partnership amongst the Parties, nor does this Agreement oblige Parties to do any follow-up research with each other. |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL
AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
| 4.2. | Parties remain free to collaborate with third parties, in any field. | |
| 4.3. | Upon request, each of the Parties shall disclose or provide to the requesting Party information which is necessary for the performance of the Study. Where such information is Confidential Information, the requesting Party shall only utilise such information in accordance with clause 3 above. |
| 5. | Publicity and Disclosure |
| 5.1. | Parties will not use each other’s name or logo, nor the name(s) of any employees of the other Party, in any publicity, advertising or news release, without the prior written consent of the other Party/ies concerned. | |
| 5.2. | From the date of this Agreement and for a period extending until two (2) years after the completion of the Study (as defined under the Study Support Agreements), before any news release or public statement, all Parties need to unanimously agree in writing on the content and details of such a public statement, for the avoidance if any doubt these public statements do no concern the Study Results, with each Party using reasonable endeavours to review drafts and provide comments and approvals promptly. | |
| 5.3. | Further Erasmus MC and AstraZeneca acknowledge that AIM ImmunoTech is a public company and that any agreements including this Agreement that are reached between Erasmus MC and AstraZeneca and AIM ImmunoTech will be considered material and as such AIM ImmunoTech will be filing reports in AIM ImmunoTech’s 8K, 10K and 10Qs that address AIM ImmunoTech contract relationships. This is an ongoing obligation that is required if the Parties are to engage in any business relationship. AIM ImmunoTech has attached a sample draft of such an 8K using this agreement as an example for Erasmus MC and Astra Zeneca information. |
| 6. | Progress meetings |
| 6.1. | Every 3-6 months, Erasmus MC, AIM ImmunoTech and AstraZeneca will schedule a meeting to discuss the progress of the combination study. |
| 7. | Clinical Study Report |
| 7.1. | If the Study is considered as successful by AIM ImmunoTech and AstraZeneca, a full manuscript could be drafted by Erasmus MC. |
| 8. | Duration and termination |
| 8.1. | This Agreement shall be effective on the date of execution of the last Study Support Agreement to be signed, and shall terminate automatically to the Party whose Study Support Agreement is terminated or expired. |
| 9. | Governing law |
| 9.1. | The validity and interpretation of this Agreement and the legal relation of the Parties to it shall in all respects solely and exclusively be governed by the laws of the Netherlands, without regard to its conflicts of laws rules. The Parties shall attempt to settle all disputes arising out of or in connection with the present Agreement in an amicable way. In the event that such attempt should fail, the matter shall be exclusively brought before the court of Rotterdam, the Netherlands (unless another Dutch court is exclusively competent according to Dutch law). |
EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL
AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
The Parties have caused this Agreement to be duly signed by the undersigned authorized representatives:
Erasmus MC
| Signature: | /s/Prof. dr. J.G.J.V Aerts | |
| Name: | Prof. dr. J.G.J.V. Aerts | |
| Title: | Head of the Department of Pulmonology Medicine | |
| Date: | January 5, 2023 |
Erasmus MC - As Read and Acknowledged
| Signature: | /s/ Prof. dr. C.H.J van Eijck | |
| Name: | Prof. dr. C. H..J. van Eijck | |
| Title: | Principal Investigator | |
| Date: | January 5, 2023 |
AIM ImmunoTech
| Signature: | /s/Thomas K Equels | |
| Name: | Thomas K. Equels | |
| Title: | Chief Executive Officer | |
| Date: | January 13, 2023 |
AstraZeneca BV
| Signature: | /s/ [***] | |
| Name: | [***] | |
| Title: | Medical Director | |
| Date: | January 5, 2023 |
| Signature: | /s/ [***] | |
| Name: | [***] | |
| Title: | Country President | |
| Date: | January 5, 2023 |
Exhibit 10.96
CONSULTING AGREEMENT TERM EXTENSION
The Consulting Agreement (the “Agreement”) has been made effective as of March 1, 2022, the date fully executed by both parties (the “Effective Date”), by and between AIM ImmunoTech Inc., a Delaware corporation, with its principal place of business being 2117 SW Highway 484, Ocala FL 34473 (the “Company”) and Foresite Advisors, LLC, a Pennsylvania limited liability corporation, with its principal place of business being ————Philadelphia, PA 19118 (“Foresite”).
With effect from March 1, 2023, and subject to the provisions of Section 3 of the Agreement, the term of the Agreement shall be extended to and including March 1, 2024 (the “Term”). If the parties continue to perform under the Agreement after the expiration of the foregoing Term, the Agreement will then automatically renew for successive fixed terms of twelve (12) months each unless terminated by written notice at least sixty (60) days prior to each consecutive anniversary date hereof.
If you are in agreement with the foregoing, please sign where indicated below.
| FORESITE ADVISORS, LLC | AIM IMMUNOTECH, INC. | |||
| By: | /s/Robert Dickey IV | By: | /s/ Peter W. Rodino, III | |
| Print Name: | Robert Dickey IV | Print Name: | Peter W. Rodino, III | |
| Title: | Managing Director | Title: | Chief Operating Officer & GC | |
| Date: | 03/29/2023 | Date: | 03/29/2023 | |
Exhibit 21
Subsidiaries
| US Subsidiaries: | Status | |
| BioPro Corp. | Dormant | |
| BioAegean Corp. | Dormant | |
| Foreign Subsidiaries: | ||
| Hemispherx Biopharma Europe N.V./S.A. (Belgium) |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
AIM ImmunoTech Inc.
Ocala, Florida
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-257614, 333-160499, 333-209060, 333-220296, 333-227543 and 333-240315), Form S-3 (No. 333-262280) and Form S-1 (No. 333-217671, 333-220756, 333-226057, 333-229051 and 333-233657) of AIM ImmunoTech Inc. of our report dated March 31, 2023, relating to the consolidated financial statements which appears in this Form 10-K.
/s/ BDO USA, LLP
Miami, Florida
March 31, 2023
EXHIBIT 31.1
CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
I, Thomas K. Equels certify that:
| 1. | I have reviewed this annual report on Form 10-K of AIM ImmunoTech Inc. | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; | |
| 4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| Date: March 31, 2023 | |
| /s/ Thomas K. Equels | |
| Thomas K. Equels, Esq. | |
| Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
I, Robert Dickey IV, certify that:
| 1. | I have reviewed this annual report on Form 10-K of AIM ImmunoTech Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; | |
| 4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| Date: March 31, 2023 | |
| /s/ Robert Dickey IV | |
| Robert Dickey IV | |
| Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of AIM ImmunoTech Inc. (the “Company”) on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas K. Equels, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: March 31, 2023 | |
| /s/ Thomas K. Equels | |
| Thomas K. Equels, Esq. | |
| Chief Executive Officer |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of AIM ImmunoTech Inc. (the “Company”) on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Dickey IV, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: March 31, 2023 | |
| /s/ Robert Dickey IV | |
| Robert Dickey IV | |
| Chief Financial Officer |