As filed with the Securities and Exchange Commission on January 11, 2023 

Registration No. 333-

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1 

REGISTRATION STATEMENT

under 

The Securities Act of 1933

CHROMOCELL THERAPEUTICS CORPORATION

(Exact name of registrant as specified in its charter)

4400 Route 9 South, Suite 1000
Freehold, NJ 07728
732-514-2636

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Christian Kopfli 

Chief Executive Officer 

4400 Route 9 South, Suite 1000
Freehold, NJ 07728 

Tel. No.: 732-514-2636

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:  ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Exchange Act. ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 EXPLANATORY NOTE

This registration statement contains disclosure that will be circulated as two separate final prospectuses: (i) a prospectus (the “IPO Prospectus”) to be used in connection with the initial public offering by Chromocell Therapeutics Corp. (the “Company”) of                units (the “Units”), each Unit consisting of one share of common stock, par value $0.0001 per share (the “Common Stock”), of the Company, and one warrant to purchase one share of Common Stock (the “Warrants”), being registered for sale by the Company (the “IPO”) through the underwriters named on the cover page of the IPO Prospectus, and (ii) a prospectus (the “Resale Prospectus”) to be used in connection with the offer and potential resale by selling stockholders identified in this registration statement (the “Selling Stockholders”) of up to                shares of Common Stock (the “Stockholder Shares”). The IPO Prospectus also relates to shares of Common Stock issuable upon exercise of the Warrants.

The disclosure to be included in the IPO Prospectus and the Resale Prospectus is contained in the preliminary prospectus included in this registration statement, as amended to date, of which each of the IPO Prospectus and Resale Prospectus will form a part. The IPO Prospectus and the Resale Prospectus will be substantively identical in all respects except for the following principal points:

The Company has included in this registration statement, after the IPO Prospectus back cover page, a set of alternate front and back cover pages to reflect the differences between the cover pages of the Resale Prospectus as compared to the cover pages of the IPO Prospectus.

The Selling Stockholders have represented to the Company that they will consider selling some or all of their respective Stockholder Shares registered pursuant to this registration statement immediately after the pricing of the IPO, as requested by the underwriters for the IPO in order to create an orderly, liquid market for the Common Stock. As a result, the sales of our Common Stock (including the Common Stock included in the Units) registered in this registration statement will result in two offerings taking place concurrently or sequentially, which could affect the price and liquidity of, and demand for, our securities. This risk and other risks are included in “Risk Factors” in each of the IPO Prospectus and the Resale Prospectus.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

Prospectus

SUBJECT TO COMPLETION, DATED JANUARY 11, 2023

UNITS

EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK
AND ONE WARRANT TO PURCHASE ONE SHARE OF COMMON STOCK

This is an initial public offering of units (the “Units”), each Unit consisting of one share of common stock, par value $0.0001 per share (the “Common Stock”), of Chromocell Therapeutics Corporation (“Chromocell”, the “Company”, “we”, “us” or “our”), and one warrant to purchase one share of our Common Stock (the “Warrants” and the shares of Common Stock that are issuable from time to time upon exercise of the Warrants, the “Warrant Shares”). The Warrants included in the Units are immediately exercisable following the consummation of this offering, have an exercise price equal to the initial public offering price, and expire five years from the date of issuance. The Common Stock and Warrants are immediately separable and will be issued separately in this offering. The shares of Common Stock and Warrants may be transferred separately immediately upon issuance. This prospectus also relates to the Warrant Shares issuable upon exercise of the Warrants sold in this offering.

In addition, concurrently with the offering of Units, and pursuant to this prospectus, we intend to sell an aggregate of (i) $450,000 in Units at the public offering price per Unit directly to a lender holding a promissory note in the aggregate principal amount of $450,000 (the “Investor Note”) (          Units, assuming an initial public offering price of $     per Unit, the midpoint of the price range set forth below) and (ii) $175,000 in Units at the public offering price per Unit directly to one of our directors holding a promissory note in the aggregate principal amount of $175,000 (the “Director Note”) (          Units, assuming an initial public offering price of $           per Unit, the midpoint of the price range set forth below). Such Units are being offered as repayment of the Investor Note and Director Note in full satisfaction of our obligations thereunder and, accordingly, the amount of net proceeds we receive in the offering of Units will not increase as a result. However, neither the lender nor the director are obligated to accept Units in this offering in full (or partial) satisfaction of our obligations under the Investor Note and Director Note, as applicable. Accordingly, we may be required to use a portion of the net proceeds received in the offering pursuant to the IPO Prospectus to repay the amounts outstanding under the Investor Note and/or Director Note, in lieu of issuing Units to the investor and director.

Prior to this offering of Units, there has been no public market for our Common Stock or Warrants. It is currently estimated that the initial public offering price per Unit will be between $       and $        . We have applied for the listing of our Common Stock and Warrants on The Nasdaq Capital Market under the symbols “CHRO” and “CHRO W,” respectively.

The registration statement of which this prospectus forms a part also registers on behalf of certain selling stockholders (the “Selling Stockholders”) an aggregate of                shares of Common Stock (the “Stockholder Shares”) issued by us prior to the consummation of this offering. The Stockholder Shares offered by the Selling Stockholders is part of and conditioned on the closing of our initial public offering of Units. The sales price to the public of the Stockholder Shares will be fixed at the initial public offering price per Unit, less $            attributable to the Warrants included in the Units, until such time as the Common Stock is listed on Nasdaq; thereafter, the Stockholder Shares may be sold at prevailing market prices, prices related to prevailing market prices or at privately negotiated prices. We will not receive any proceeds from the sale of any of the Stockholder Shares sold by the Selling Stockholders. The offering of the Stockholder Shares by the Selling Stockholders will terminate at the earlier of such time as all of the Stockholder Shares have been sold pursuant to this registration statement and the date on which it is no longer necessary to maintain the registration of the Stockholder Shares as a result of such shares being permitted to be offered and resold without restriction pursuant to the provisions of Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”), and the offering of the Stockholder Shares may extend for a longer period of time than the offering of the Units. The Stockholder Shares will be resold from time to time by the Selling Stockholders.

We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See “Prospectus Summary — Implications of Being an Emerging Growth Company and a Smaller Reporting Company.”

Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 9 of this prospectus and under similar headings in any amendments or supplements to this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

We have granted the underwriters an option to purchase from us up to an additional            shares of our Common Stock and/or up to an additional            Warrants within 45 days from the date of this prospectus solely to cover over-allotments, if any. The underwriters may exercise the over-allotment option with respect to shares of our Common Stock only, Warrants only, or any combination thereof. The aggregate amount of shares of our Common Stock and Warrants sold pursuant to the underwriters’ option may not exceed 15% of the total shares of our Common Stock and Warrants sold in the offering of Units. The purchase price to be paid per additional share of Common Stock will be equal to the public offering price of one Unit (less the purchase price allocated to the Warrant, $            per Warrant), less the underwriting discounts and commissions, and the purchase price to be paid per additional Warrant will be $            . If the underwriters exercise the option in full for shares of Common Stock only, the total underwriting discounts and commissions payable will be $            and the total proceeds to us, before expenses, will be $            . No underwriting discounts and commissions will be payable by us if the underwriters exercise the option for Warrants only, and the total additional proceeds to us, before expenses, if the underwriters exercise the option in full for Warrants only, will be $                 .

The underwriters expect to deliver the shares of Common Stock and Warrants included in the Units against payment in New York, New York on         , 2023.

Lead Managing Underwriter

Maxim Group LLC

The date of this prospectus is           , 2023

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

Neither we, the Selling Stockholders nor the underwriters have authorized anyone to provide you with information or make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We, the Selling Stockholders and the underwriters take no responsibility for, and provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus only. Our business, financial condition, results of operations and prospects may have changed since that date.

For investors outside the United States: we, the Selling Stockholders and the underwriters have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.

Solely for convenience, our trademarks and tradenames referred to in this prospectus and the registration statement of which it forms a part may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and tradenames.

Information contained in, and that can be accessed through our website,                                           , does not constitute part of this prospectus or the registration statement of which it forms a part.

INDUSTRY AND MARKET DATA

We obtained the industry, statistical and market data in this prospectus from our own internal estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. In presenting this information, we have made assumptions based on such data and other similar sources, and on our knowledge of, and our experience to date in, the potential markets for our compounds. Although we believe the data from these third-party sources is reliable, the industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us.

BASIS OF PRESENTATION

We were incorporated in Delaware on March 19, 2021. On August 10, 2022, we entered into that certain Contribution Agreement (the “Contribution Agreement”) with Chromocell Corporation, a Delaware corporation (“Chromocell Holdings”). Pursuant to the Contribution Agreement, effective July 12, 2022 (the “Contribution Date”), Chromocell Holdings contributed all assets, liabilities and results of operations related to Chromocell Holdings’ therapeutic business, including all patents, pre-clinical and Phase I study results and data, and trade secrets related to the CC8464 compound, in exchange for the issuance by us of 10,000,000 shares of Common Stock and (ii) 600,000 shares of Series A Preferred Stock. Prior to the Contribution Date, we had only nominal assets and liabilities. Accordingly, the financial statements presented in this prospectus for periods prior to the Contribution Date have been prepared on a “carve-out” basis from the financial statements of Chromocell Holdings to represent our financial position and performance as if it had existed on a stand-alone basis. The financial statements presented in this prospectus for periods from and after the Contribution Date reflect our financial position and performance as a stand-alone entity.

All of the assets, liabilities and results of operations of the Company as of and for the periods prior to the Contribution Date were identified based on the assets contributed to the Company from Chromocell Holdings. Management believes the assumptions underlying the Company’s carve-out financial statements are reasonable. Nevertheless, the financial statements may not include all of the actual expenses that would have been incurred had the Company operated as a standalone company during the periods presented, and may not reflect the Company’s results of operations, financial position and cash flows had the Company operated as a standalone company during the periods presented. Actual costs that would have been incurred if the Company had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

In connection with the completion of the offering of Units, we will effect a 1-for-         stock split with respect to our Common Stock. In addition, in connection with completion of the offering of Units, all 600,000 issued and outstanding shares of our Series A Preferred Stock will automatically convert into                shares of Common Stock and                Warrants, based on an assumed initial public offering price of $               per Unit, the midpoint of the price range set forth on the cover page of the IPO Prospectus. We refer to these actions as the “IPO Transactions.” In this prospectus, we include certain metrics on an “as adjusted” basis to give effect to the IPO Transactions.

RISK FACTORS

Investing in our securities involves a high degree of risk. You should carefully consider the following risks and all other information contained in this prospectus, including our financial statements and the related notes, before investing in our securities. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, also may become important factors that affect us. If any of the following risks occur, our business, financial condition, results of operations and prospects could be materially and adversely affected. In these circumstances, the market price of our Common Stock and Warrants could decline, and you may lose all or part of your investment.

Risks Related to Our Business

We are a clinical stage biopharmaceutical company with a limited operating history.

The operations of our company, contributed to us by Chromocell Holdings, to date have been limited to financing and staffing our Company, developing and licensing compounds, conducting preclinical and clinical studies of CC8464 for EM and other pain indications. We have not yet demonstrated the ability to successfully complete a large-scale, pivotal clinical trial, obtain marketing approval, manufacture a commercial scale product, arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, predictions about our future success or viability may not be as accurate as they could be if we had a history of successfully developing and commercializing pharmaceutical products.

Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development, especially early-stage clinical pharmaceutical companies such as ours. Potential investors should carefully consider the risks and uncertainties that a company with a limited operating history will face. In particular, potential investors should consider that we cannot assure you that we will be able to, among other things:

If we cannot successfully execute any one of the foregoing, our business may fail and your investment will be adversely affected.

We have incurred net losses since inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

There are numerous risks and uncertainties associated with pharmaceutical product and biological development, and we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.

We have had net losses since inception, and we had an accumulated deficit of approximately $5.4 million and $3.7 million as of September 30, 2022 and December 31, 2021, respectively, which includes a net loss of approximately $1.7 million and $0.6 million for the nine months ended September 30, 2022 and the year ended December 31, 2021, respectively. Overall, these conditions have raised substantial doubt regarding our ability to continue as a going concern beyond one year of the filing of our financial statements. Our ability to continue as a going concern is dependent upon the ability to complete clinical studies and implement our business plan, raise capital, generate sufficient revenues and to control operating expenses. 

We have primarily financed our operations through a combination of a series of cash advances, equity raises, licensing arrangements and government grants. Our ability to achieve significant profitability depends on our ability to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize, CC8464 and/or additional lead compounds. We expect that it will take several years, if ever, before we have a commercialized lead compound. The net losses we incur may fluctuate significantly from quarter to quarter.

If we are required by the FDA, the European Medicines Agency (“EMA”), or other regulatory authorities, including, among others, China’s National Medical Products Administration, Japan’s Pharmaceuticals and Medical Devices Agency, and the Australian National Health and Medical Research Council’s Therapeutics Goods Administration, to perform studies in addition to those currently expected, or if there are any delays in completing our clinical trials or the development of CC8464 and/or other lead compounds, our expenses could increase and revenue could be further delayed. We anticipate that our expenses will increase substantially if, and as, we:

To become and remain profitable, we must develop and eventually commercialize one or more lead compounds with significant market potential. This will require us to be successful in a range of challenging activities, including completing the clinical trials, developing and validating commercial scale manufacturing processes, obtaining marketing approval for this lead compound, manufacturing, marketing. licensing and selling any future lead compounds for which we may obtain marketing approval and satisfying any post-marketing requirements. If we were required to discontinue development of CC8464, if CC8464 does not receive regulatory approval, if we do not obtain our targeted indication(s) for CC8464, or if CC8464 fails to achieve sufficient market acceptance for any indication, we could be delayed by many years in our ability to achieve profitability. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause you to lose all or part of your investment.

We will need to raise additional funding to receive approval for CC8464 or any other lead compound. Such funding may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit, sell or terminate certain of our product development efforts or other operations.

To complete the process of obtaining regulatory approval for CC8464 and to build the sales, marketing, licensing and distribution infrastructure that we believe will be necessary to commercialize CC8464, if approved, we will require substantial additional funding. In addition, if we obtain marketing approval for CC8464, we expect to incur significant expenses related to product sales, medical affairs, marketing, manufacturing and distribution.

Our future capital requirements will depend on many factors, including:

Identifying potential lead compounds and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. Our lead compounds, if approved, may not achieve commercial success. Our future lead compound’s revenues, if any, will be derived from or based on sales of lead compounds that may not be commercially available for many years, if at all. Accordingly, it is unlikely that we will generate product or licensing revenue during the next twelve months and will need to continue to rely on additional financing to achieve our business objectives. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize future lead compounds. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities would dilute all our stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and a portion of our operating cash flows, if any, being dedicated to the payment of principal and interest on such indebtedness, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Furthermore, existing securityholders may not agree with our financing plans or the terms of such financings. Adequate additional financing may not be available to us on acceptable terms, or at all. The terms of additional financing may be impacted by, among other things, general market conditions, and the market’s perception of future lead compounds. If adequate funds are not available, we may be required to curtail our operations or other business activities or obtain funds through arrangements with strategic partners or others that may require us to relinquish rights to certain technologies or potential markets.

Risks Related to Development, Clinical Testing, and Regulatory Approval

We are early in our efforts to develop CC8464, which is the only compound that we have advanced into clinical development. If we are unable to advance CC8464 through clinical trials, obtain regulatory approval and ultimately commercialize CC8464, or if we experience significant delays in doing so, our business will be materially harmed.

We are early in our development of CC8464. The development and commercialization of CC8464 (or any other compound that we may advance towards clinical development in the future) is subject to many uncertainties, including the following:

If we fail in one or more of these factors, we could experience significant delays or an inability to successfully commercialize CC8464, which would materially harm our business. If we do not receive regulatory approvals for CC8464, our business, financial condition, results of operations and prospects could be materially and adversely affected. Advancing a different compound than CC8464 towards clinical development would take substantial time and resources and be subject to the same risks as described here for CC8464.

Our lead compound, CC8464, is in early-stage development, and there is no guarantee that the results from prior clinical and preclinical studies will be indicative of our ability to complete or the results to be obtained in the current or future studies and clinical trials. CC8464 is our only compound in clinical development and advancing a different compound would require substantial time and resources as well as being subject to the same risks and uncertainties as described here for CC8464.

There is no guarantee that results of our potential future clinical trials will be positive or that we will be able to complete this or any potential future clinical trials on the anticipated timelines or at all. Furthermore, research and discoveries by us or others may identify serious adverse events, undesirable side effects or other unexpected properties of our current and future lead compounds, including CC8464, that could delay, prevent or cause the withdrawal of regulatory approval, limit the commercial potential, or result in significant negative consequences following marketing approval.

The regulatory authorities may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of product development, clinical trials and the review process.

Regulatory authorities also may approve a future lead compound for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings or post-approval safety monitoring program. These regulatory authorities may require precautions or contra-indications with respect to conditions of use or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of CC8464. Any of the foregoing scenarios could materially harm the commercial prospects for CC8464 and materially and adversely affect our business, financial condition, results of operations and prospects.

We may encounter substantial delays in our clinical trials, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

Before obtaining marketing approval from regulatory authorities for the sale of our drug candidates, CC8464 included, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the drug candidate for its intended indications. Clinical trials are expensive, time consuming and uncertain as to outcome. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing. As CC8464 is our only compound in clinical development, any setback may have a significant negative effect on our business. Events that may prevent successful or timely completion of clinical development include:

In addition, if we had to make manufacturing or formulation changes to CC8464, we would need to conduct additional studies to bridge our modified lead compound to earlier versions. Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize CC8464 or allow our competitors to bring products to market before we do, which could limit our potential revenue or impair our ability to successfully commercialize CC8464and may harm our business, financial condition, results of operations and prospects. Any delays, setbacks or failures in our clinical trials could materially and adversely affect our business, financial condition, results of operations and prospects.

Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our drug candidates, we may:

As CC8464 is our only compound in clinical development, any setback may have a significant negative effect on our business.

Our drug development costs will increase if we experience delays in testing or obtaining marketing approvals. We do not know whether any of our preclinical studies or clinical trials will begin as planned, need to be restructured or be completed on schedule, if at all.

We, the FDA or an Institutional Review Board may suspend our clinical trials at any time if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice (“GCP”), regulations, that we are exposing participants to unacceptable health risks, or if the FDA finds deficiencies in our IND applications or the conduct of these trials. Therefore, we cannot predict with any certainty the schedule for commencement and completion of future clinical trials. If we experience delays in the commencement or completion of our clinical trials, or if we terminate a clinical trial prior to completion, the commercial prospects of our drug candidates could be negatively impacted, and our ability to generate revenues from our drug candidates may be delayed. As CC8464 is our only compound in clinical development, any setback may have a significant negative effect on our business.

Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize CC8464 and the approval may be for a narrower indication than we seek.

We cannot commercialize a lead compound until the appropriate regulatory authorities have reviewed and approved the lead compound. Even if CC8464 meets its safety and efficacy endpoints in clinical trials, the regulatory authorities may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of product development, clinical trials and the review process.

Regulatory authorities also may approve a lead compound for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings or a post-approval safety monitoring program. These regulatory authorities may require precautions or contra-indications with respect to conditions of use or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of CC8464. Any of the foregoing scenarios could materially harm the commercial prospects for CC8464 and materially and adversely affect our business, financial condition, results of operations and prospects as CC8464 is our only compound in clinical development.

CC8464 may cause undesirable side effects or have other properties that could delay or prevent its regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval.

Our Phase 1 clinical trials have shown that CC8464 can lead to rashes. In addition to this side effect and possibly others caused by the lead compound, the administration process or related procedures also can cause adverse side effects. If any such adverse events occur, our clinical trials could be suspended or terminated. If in the future we are unable to demonstrate that such adverse events were caused by the administration process or related procedures, the FDA, the European Commission, the EMA or other regulatory authorities could order us to cease further development of, or deny approval of, CC8464 for any or all targeted indications. Even if we can demonstrate that any serious adverse events are not product- related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete the trial. Moreover, if we elect, or are required, to delay, suspend or terminate any clinical trial of CC8464, the commercial prospects of such lead compound may be harmed and our ability to generate revenues from this lead compound may be delayed or eliminated. Any of these occurrences may harm our ability to develop other product candidates, and may harm our business, financial condition and prospects significantly. As CC8464 is our only compound in clinical development, any setback may have a significant negative effect on our business.

Additionally, if CC8464 receives marketing approval, the FDA could require us to adopt a post-approval safety monitoring program to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners. Furthermore, if we or others later identify undesirable side effects caused by CC8464, several potentially significant negative consequences could result, including:

Any of these events could prevent us from achieving or maintaining market acceptance of CC8464 and could significantly harm our business, financial condition, results of operations and prospects.

Additionally, other regulatory regimes in other geographies, such as the European Union (“EU”), Australia, China and Japan, where we are initially targeting our products, may impose similar conditions or post-monitoring requirements as a result of such findings.

CC8464 is based on a specific mode of administration (dose escalation regime), which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval.

The clinical trial requirements of the FDA, EMA and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a compound vary substantially according to the type, complexity, novelty and intended use and market of such compounds. The regulatory approval process for novel compounds such as ours can be more expensive and take longer than for other, better known or more extensively studied compounds.

Regulatory requirements governing pain medication products have been changing as side effects and the addictive nature of opioids became more apparent. The regulatory framework for pain medications has been tightened and these changes may affect our programs and its commercial potential despite our expectations that CC8464 will not show addictive features. Other regulatory regimes that may impact us include: the EU’s European Medicines Agency, China’s National Medical Products Administration, Japan’s Pharmaceuticals and Medical Devices Agency, and the Australian National Health and Medical Research Council’s Therapeutics Goods Administration. These are not the only regulatory regimes to which we may be subject in the event we are able to execute on our objectives.

These regulatory review committees and advisory groups and the new guidelines they promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of CC8464 or future lead compounds or lead to significant post-approval limitations or restrictions. As we advance CC8464, we will be required to consult with these regulatory and advisory groups and comply with applicable guidelines. If we fail to do so, we may be required to delay or discontinue development of CC8464. These additional processes may result in a review and approval process that is longer than we otherwise would have expected. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product revenue, and our business, financial condition, results of operations and prospects would be materially and adversely affected.

Even if we obtain regulatory approval for CC8464, our only compound in clinical development will remain subject to regulatory oversight.

Even if we obtain any regulatory approval for CC8464, our lead compound, it will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information. Any regulatory approvals that we receive for CC8464 may also be subject to a post-approval safety monitoring program, limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the quality, safety and efficacy of the product. For example, the holder of an approved NDA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the NDA. The holder of an approved NDA also must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.

In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP requirements and adherence to commitments made in the NDA or foreign marketing application. If we, or a regulatory authority, discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured or disagrees with the promotion, marketing or labeling of that product, a regulatory authority may impose restrictions relative to that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

If we fail to comply with applicable regulatory requirements following approval of CC8464 or any future lead compound, a regulatory authority may:

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize CC8464 and adversely affect our business, financial condition, results of operations and prospects.

The FDA’s policies, and those of equivalent foreign regulatory agencies, may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of CC8464. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would materially and adversely affect our business, financial condition, results of operations and prospects.

Even if we obtain and maintain approval for our lead compound CC8464 from the FDA, we may never obtain approval for them outside of the United States, which would limit our market opportunities and adversely affect our business.

Approval of a compound in the United States by the FDA does not ensure approval of such compound by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. Sales of CC8464 or other future lead compounds outside of the United States will be subject to foreign regulatory requirements governing clinical trials and marketing approval. Even if the FDA grants marketing approval for a compound, comparable regulatory authorities of foreign countries also must approve the manufacturing and marketing of the compound in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and more onerous than, those in the United States, including additional preclinical studies or clinical trials. In many countries outside the United States, a compound must be approved for reimbursement before it can be approved for sale in that country. In some cases, the price that we intend to charge for our compounds, if approved, is also subject to approval. We intend to submit a marketing authorization application to the EMA for approval of CC8464in the European Union, but obtaining such approval from the European Commission following the opinion of the EMA is a lengthy and expensive process. Even if a compound is approved, the FDA or the European Commission, as the case may be, may limit the indications for which the product may be marketed, require extensive warnings on the product labeling or require expensive and time-consuming additional clinical trials or reporting as conditions of approval. Regulatory authorities in countries outside of the United States and the European Union also have requirements for approval of compounds with which we must comply prior to marketing in those countries. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our compounds in certain countries.

Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Also, regulatory approval for any of our compounds may be withdrawn. If we fail to comply with the regulatory requirements, our target market will be reduced and our ability to realize the full market potential of CC8464 or our future compounds will be harmed and our business, financial condition, results of operations and prospects will be adversely affected.

While we plan to apply for orphan drug designation for CC8464 in the future, it may not effectively protect us from competition, and we may be unable to obtain similar designations for our future lead compounds. For instance, if our competitors are able to obtain orphan drug exclusivity for products that constitute the same drug and treat the same indications as our lead compounds before us, we may not be able to have competing products approved by the applicable regulatory authority for a significant period of time. To date, we have not submitted an application for orphan drug designation.

In connection with the application for our lead compound, CC8464, for the treatment of EM, we also plan to seek orphan drug designation from the FDA. As of the date of this prospectus, we have not submitted an application for orphan drug designation for CC8464. Under the Orphan Drug Act of 1983, the FDA may designate a lead compound as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States.

Generally, if a compound with an orphan drug designation receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing application for a product that constitutes the same drug treating the same indication for that marketing exclusivity period, except in limited circumstances. If another sponsor receives such approval before we do (regardless of our orphan drug designation), we will be precluded from receiving marketing approval for our product for the applicable exclusivity period. The applicable period is seven years in the United States.

Even though we may obtain orphan drug exclusivity for CC8464, that exclusivity may not effectively protect the compound from competition because different drugs can be approved for the same condition. In the United States, even after an orphan drug is approved, the FDA may subsequently approve another drug for the same condition if the FDA concludes that the latter drug is not the same drug or is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. In the EU, marketing authorization may be granted to a similar medicinal product for the same orphan indication if:

If we are not able to secure an orphan drug designation, or if the exclusivity associated with such designation does not effectively protect us from competition, our business, financial condition, results of operations and prospects will be adversely affected.

FDA designations to expedite drug development and review, including “orphan drug” designation, Breakthrough Therapy designation, and/or Fast Track designation, even if granted for any of our lead compounds, may not lead to a faster development, regulatory review or approval process and do not increase the likelihood that any of our lead compounds will receive marketing approval in the United States.

As with any future application for “orphan drug” designation for CC8464 from the FDA, there is no assurance that any of our other compounds that we may develop in the future will receive a similar designation from the FDA or that we will receive Breakthrough Therapy or Fast Track designations lead compound. Further, even if we do receive favorable designations from the FDA, the receipt of any of these designations for a lead compound may not result in a faster development process, review or approval compared to products considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.

We may expend our limited resources to pursue a compound or indication and fail to capitalize on lead compounds or indications that may be more profitable or for which there is a greater likelihood of success.

We have limited financial and managerial resources. As a result, we may forego or delay pursuit of opportunities with other lead compounds or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to timely capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and lead compounds for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular lead compound, we may relinquish valuable rights to that lead compound through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such lead compound.

If we are not successful in discovering, developing and commercializing additional lead compounds, our ability to expand our business and achieve our strategic objectives would be impaired.

Although a substantial amount of our effort initially focuses on developing CC8464 towards approval in the US and other countries, an additional component of our strategy is to discover, develop and potentially commercialize a portfolio of lead compounds to treat orphan diseases and potentially, non-orphan diseases. Identifying new lead compounds requires substantial technical, financial and human resources, whether any lead compounds are ultimately identified. We may not be able to identify new molecules with the potential for clinical development and ultimate approval. Even if we identify lead compounds that initially show promise, we may fail to successfully develop and commercialize such lead compounds for many reasons, including the following:

If we are unsuccessful in identifying and developing additional lead compounds, our potential for growth may be impaired.

We face significant competition in an environment of rapid technological change and the possibility that our competitors may achieve regulatory approval before us or develop therapies that are more advanced or effective than ours, which may adversely affect our financial condition and our ability to successfully market or commercialize our lead compound, CC8464.

Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and other resources, such as larger research and development, clinical, marketing and manufacturing organizations. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of competitors. Our commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any compound that we may develop. Competitors also may obtain FDA or other regulatory approval for their products more rapidly or earlier than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Additionally, technologies developed by our competitors may render CC8464 uneconomical or obsolete, and we may not be successful in marketing CC8464 against competitors.

In addition, as a result of the expiration or successful challenge of our patent rights, we could face more litigation with respect to the validity and/or scope of patents relating to our competitors’ products. The availability of our competitors’ products could limit the demand, and the price we are able to charge, for any compound that we may develop and commercialize.

Risks Related to Manufacturing

Delays in obtaining regulatory approvals of the process and facilities needed to manufacture CC8464 or any of our lead compounds or disruptions in our manufacturing process may delay or disrupt our product development and commercialization efforts.

Before we can begin to commercially manufacture CC8464 or any of our lead compounds, whether in a third-party facility or in our own facility, if established, we must pass a pre-approval inspection of our manufacturing facility by the FDA. A manufacturing authorization must also be obtained from the appropriate regulatory authorities. The timeframe required for us to obtain such approvals is uncertain. To obtain approval, we will need to ensure that all our processes, methods and equipment are compliant with cGMP, and perform extensive audits of vendors, contract laboratories and suppliers. If any of our vendors, contract laboratories or suppliers is found to be out of compliance with cGMP, we may experience delays or disruptions in manufacturing while we work with these third parties to remedy the violation or while we work to identify suitable replacement vendors. The cGMP requirements govern quality control of the manufacturing process and documentation policies and procedures. In complying with cGMP, we will be obligated to expend time, money and effort in production, record keeping and quality control to assure that the product meets applicable specifications and other requirements. If we fail to comply with these requirements, we would be subject to possible regulatory action and may not be permitted to sell any compound that we may develop.

In addition, the manufacturing process used to produce our lead compounds is complex, novel and has not been validated for commercial use. To produce enough quantities of our lead compounds for future clinical trials and initial US commercial demand, we will need to increase the scale of our manufacturing process. We employ multiple steps to control our manufacturing process to assure that the process works and that CC8464 is made strictly and consistently in compliance with the process. Problems with, or deviations from, the manufacturing process, even if minor, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory. We may encounter problems achieving adequate quantities and quality of clinical-grade materials that meet FDA, EMA or other applicable standards or specifications with consistent and acceptable production yields and costs.

Any contamination in our manufacturing process, shortages of raw materials or failure of any of our key suppliers to deliver necessary components could result in delays in our clinical development or marketing schedules.

Given the nature of sterile product manufacturing, there is a risk of contamination. Any contamination could materially adversely affect our ability to produce CC8464 on schedule and could, therefore, harm our results of operations and cause reputational damage.

Some of the raw materials required in our manufacturing process may be derived from biologic sources. Such raw materials are difficult to procure and may be subject to contamination or recall. A material shortage, contamination, recall or restriction on the use of biologically derived substances in the manufacture of CC8464 could adversely impact or disrupt the commercial manufacturing or the production of clinical material, which could materially and adversely affect our development timelines and our business, financial condition, results of operations and prospects.

Risks related to Commercialization of Our Lead Compounds

If we are unable to expand our market development capabilities or enter into agreements with third parties to market and sell our lead compounds, we may be unable to generate any revenue.

We currently do not have a market development organization. To successfully commercialize CC8464, if approved, we will need to expand our capabilities to promote market access and build awareness. To successfully commercialize any other products that may result from our development programs, we will need to further expand our market development organization, either on our own or with a third party. The development of our own market development team will be expensive and time-consuming and could delay any product launch. Moreover, we cannot be certain that we will be able to successfully develop this capability. We may enter into collaboration agreements regarding any of our lead compounds with third parties to utilize their established marketing and distribution capabilities, but we may be unable to enter into such agreements on favorable terms, if at all. If any future collaborators do not commit sufficient resources to commercialize our products, or we are unable to develop the necessary capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We compete with many companies that currently have extensive, experienced and well-funded medical affairs, marketing and sales operations to recruit, hire, train and retain marketing and sales personnel. We also face competition in our search for third parties to assist us with the sales and marketing efforts of our lead compounds. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.

Our efforts to educate the medical community and third-party payors on the benefits of our lead compounds may require significant resources and may never be successful. Such efforts may require more resources than are typically required due to the complexity and uniqueness of our potential products. If any of our lead compounds is approved but fails to achieve market acceptance among physicians, patients or third-party payors, we will not be able to generate significant revenues from such product, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

If the market opportunities for CC8464 or our future lead compounds are smaller than we believe they are, our revenues may be adversely impacted, and our business may suffer.

We are currently focusing our research and product development efforts on CC8464 for the management of EM and, potentially, other fields of neuropathic pain. Our understanding of both the number of people who have EM, as well as the subset of people with this disease who have the potential to benefit from treatment with CC8464, are based on estimates in published literature. These estimates may prove to be incorrect and new studies may reduce the estimated incidence or prevalence of this disease. The number of patients in the United States, the EU and elsewhere may turn out to be lower than expected or these patients may not be otherwise amenable to treatment with CC8464 or may become increasingly difficult to identify and access, all of which would adversely affect our business, financial condition, results of operations and prospects.

Further, there are several factors that could contribute to making the actual number of patients who receive CC8464 less than the potentially addressable market. These include the increased use of currently available medication for mild cases as physicians gain a better understanding diagnosis and treatment of EM, the discovery of novel medications for EM and the lack of widespread availability of, and limited reimbursement for, new therapies in many underdeveloped markets.

Government price controls or other changes in pricing regulation could restrict the amount that we are able to charge for CC8464, if approved, or any of our other lead compounds that may be approved in the future, which would adversely affect our revenue and results of operations.

We expect that coverage and reimbursement of pharmaceutical costs may be increasingly restricted both in the U.S. and internationally. The escalating cost of health care has led to increased pressure on the health care industry to reduce costs. Drug pricing by pharmaceutical companies recently has come under increased scrutiny and continues to be subject to intense political and public debate in the U.S. and abroad. Government and private third-party payors have proposed health care reforms and cost reductions. A number of federal and state proposals to control the cost of health care, including the cost of drug treatments, have been made in the US. Specifically, there have been several recent U.S. Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drugs. In some international markets, the government controls the pricing, which can affect the profitability of drugs. Current government regulations and possible future legislation regarding health care may affect coverage and reimbursement for medical treatment by third-party payors, which may render our lead compounds, if approved, not commercially viable or may adversely affect our anticipated future revenues and gross margins.

We cannot predict the extent to which our business may be affected by these or other potential future legislative or regulatory developments. However, future price controls or other changes in pricing regulation or negative publicity related to the pricing of pharmaceutical drugs generally could restrict the amount that we are able to charge for our future products, which would adversely affect our anticipated revenue and results of operations.

The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for our products, if approved, could limit our ability to market those products and decrease our ability to generate product revenue.

We expect that coverage and reimbursement by government and private payors will be essential for most patients to be able to afford these treatments. Accordingly, sales of our lead compounds will depend substantially, both domestically and abroad, on the extent to which the costs of our lead compounds will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or will be reimbursed by government authorities, private health coverage insurers and other third-party payors. Coverage and reimbursement by a third- party payor may depend upon several factors, including the third-party payor’s determination that use of a product is:

Obtaining coverage and reimbursement for a product from third-party payors is a time-consuming and costly process that could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. If coverage and reimbursement are not available, or are available only at limited levels, we may not be able to successfully commercialize our lead compounds. Even if coverage is provided, the approved reimbursement amount may not be adequate to realize a sufficient return on our investment.

There is significant uncertainty related to third-party coverage and reimbursement of newly approved products. In the United States, third-party payors, including government payors such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs and biologics will be covered and reimbursed. The Medicare and Medicaid programs increasingly are used as models for how private payors and government payors develop their coverage and reimbursement policies.

Outside the United States, international operations generally are subject to extensive government price controls and other market regulations and increasing emphasis on cost-containment initiatives in the European Union, Canada and other countries may put pricing pressure on us. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. It also can take a significant amount of time after approval of a product to secure pricing and reimbursement for such product in many counties outside the United States. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medical products but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our lead compounds. Accordingly, in markets outside the United States, the reimbursement for our products will be reduced compared with the United States and may be insufficient to generate commercially reasonable product revenues.

Moreover, increasing efforts by government and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our lead compounds. Payors increasingly are considering new metrics as the basis for reimbursement rates, such as average sales price, average manufacturer price, and Actual Acquisition Cost. The existing data for reimbursement based on some of these metrics is relatively limited, although certain states have begun to survey acquisition cost data for the purpose of setting Medicaid reimbursement rates, and CMS has begun making pharmacy National Average Drug Acquisition Cost and National Average Retail Price data publicly available on at least a monthly basis. Therefore, it may be difficult to project the impact of these evolving reimbursement metrics on the willingness of payors to cover candidate products that we or our partners are able to commercialize. We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become intense. As a result, increasingly high barriers are being erected to the entry of new products such as ours.

Risks Related to Our Business Operations

We may not be successful in our efforts to identify or discover additional compounds and may fail to capitalize on programs or compounds that may be a greater commercial opportunity or for which there is a greater likelihood of success.

Beyond the development and commercialization of CC8464, the future success of our business depends upon our ability to identify, develop and commercialize compounds based on the platform technology. CC8464 was discovered in our labs using our technologies. Research programs to identify new compounds will require to invest substantial technical, financial and human resources. We may fail to identify other potential compounds for clinical development for several reasons. For example, our research may be unsuccessful in identifying potential compounds or our potential compounds may be shown to have harmful side effects, may be commercially impracticable to manufacture or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.

Additionally, because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or compounds or for indications that later prove to have greater commercial potential. Our spending on current and future research and development programs may not yield any commercially viable products. If we do not accurately evaluate the commercial potential for a particular compound, we may relinquish valuable rights to that compound through strategic collaboration, licensing or other arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such compound. Alternatively, we may allocate internal resources to a compound in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.

If any of these events occur, we may be forced to abandon our development efforts with respect to a particular compound or fail to develop a potentially successful compound, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

If we are unable to manage expected growth in the scale and complexity of our operations, our performance may suffer.

If we are successful in executing our business strategy, we will need to expand our managerial, operational, financial and other systems and resources to manage our operations, continue our research and development activities and, in the longer term, build a commercial infrastructure to support commercialization of any of our lead compounds that are approved for sale. Future growth would impose significant added responsibilities on members of management. It is likely that our management, finance, development personnel, systems and facilities currently in place may not be adequate to support this future growth. Our need to effectively manage our operations, growth and lead compounds requires that we continue to develop more robust business processes and improve our systems and procedures in each of these areas and to attract and retain enough numbers of talented employees. We may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our research, development and growth goals.

Our future success depends on our ability to retain key employees and scientific advisors and to attract, retain and motivate qualified personnel.

Our success is dependent upon certain key management and technical personnel, the loss of whose services may adversely impact the achievement of our objectives. Currently, Christian Kopfli is our Chief Executive Officer, and Mr. Francis Knuettel II is our Chief Financial Officer, Treasurer and Corporate Secretary. These executives have played key roles in the founding, management, technology development and/or promotion of the Company. We currently do not hold key man insurance on our executives. Even if we do seek to obtain such insurance, we cannot assure you that such insurance will be available on acceptable terms or at all. The loss of the services of either Mr. Kopfli or Mr. Knuettel could have a material adverse effect on our business, financial condition, and results of operations.

We employ additional staff that are critical to implementing our clinical development and business strategy, and further development of our products will require that we recruit additional employees or consultants, particularly qualified scientific and technical personnel. Any inability to retrain and attract key employees or advisors may impede the progress of our research, development and commercialization objectives which could have a material adverse effect on our business, financial condition, results of operations and prospects.  In addition, failure to succeed in preclinical or clinical trials or applications for marketing approval may make it more challenging to recruit and retain qualified personnel.

Our employees, principal investigators and advisors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.

We are exposed to the risk of fraud or other misconduct by our employees, principal investigators and advisors. Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the EU and other jurisdictions, provide accurate information to the FDA, the EMA and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. Sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct also could involve the improper use of information obtained during clinical trials or interactions with the FDA or other regulatory authorities, which could result in criminal and civil penalties or sanctions and cause serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations and prospects, including the imposition of significant fines, criminal penalties, or other sanctions.

In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the trial. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of our current and future drug candidates.

We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

If we obtain FDA approval for CC8464 and begin commercializing it in the United States, our operations will be directly, or indirectly through our prescribers, customers and purchasers, subject to various federal and state fraud and abuse laws and regulations, including, without limitation, the federal Anti-Kickback Statute, federal civil and criminal false claims laws and the Physician Payments Sunshine Act and regulations. These laws will impact, among other things, our proposed sales, marketing and educational programs. In addition, we may be subject to patient privacy laws by both the federal government and the states in which we conduct our business as well as other jurisdictions. The laws that will affect our operations include, but are not limited to:

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations.

The risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. The shifting compliance environment and the need to build and maintain a robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the generation, handling, use, storage, treatment, manufacture, transportation and disposal of, and exposure to, hazardous materials and wastes, as well as laws and regulations relating to occupational health and safety. Our operations involve the use of hazardous and flammable materials, including chemicals and biologic materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties. We do not carry specific biological or hazardous waste insurance coverage, and our property, casualty and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury, we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended.

Although we maintain workers’ compensation insurance for certain costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for toxic tort claims that may be asserted against us in connection with our storage or disposal of biologic, hazardous or radioactive materials.

We also may incur substantial costs to comply with current or future environmental, health and safety laws and regulations, which have tended to become more stringent over time. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities, which could materially adversely affect our business, financial condition, results of operations and prospects.

Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of our control, such as the impact of health and safety concerns, including SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2) (“COVID-19”) pandemic and the Omicron COVID-19 variant, as well as the recent inflation in the United States, foreign and domestic government sanctions imposed on Russia as a result of its recent invasion of Ukraine, and other disruptions to global supply chains. Each of these events has caused or may continue to result in extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, whether due to inflationary pressures or otherwise, could result in a variety of risks to our business, including weakened demand for our lead compounds and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain our suppliers, possibly resulting in supply disruption, or cause delays in payments for our services by third-party payors or our collaborators. Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business.

A pandemic, epidemic, or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business and our financial results and could cause a disruption to the development of our compounds.

Public health crises such as pandemics or similar outbreaks could adversely impact our business. In December 2019, COVID-19 surfaced in Wuhan, China and has since spread worldwide, including to New Jersey where our primary office and laboratory space is located. The COVID-19 pandemic is evolving, and to date has led to the implementation of various responses, including government-imposed quarantines, travel restrictions and other public health safety measures. During our 2021 fiscal year, in response to the COVID-19 pandemic, we reduced staff and slowed down development activities as capital and testing options available to us were more limited. The extent to which COVID-19 will impact our future operations or those of our third-party partners, including our clinical trial operations, will also depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, adverse impacts of the Omicron COVID-19 variant or other COVID-19 variants, new information that will emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

The continued spread of COVID-19 globally could adversely impact our preclinical or clinical trial operations, including our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19. COVID-19 may also affect employees of third-party CROs located in affected geographies that we rely upon to carry out our clinical trials.

In addition, the patient populations that our lead and other compounds target may be particularly susceptible to COVID-19, which may make it more difficult for us to identify patients able to enroll in our future clinical trials and may impact the ability of enrolled patients to complete any such trials. Any negative impact COVID-19 has to patient enrollment or treatment or the execution of our lead compounds could cause costly delays to clinical trial activities, which could adversely affect our ability to obtain regulatory approval for and to commercialize our lead compounds, increase our operating expenses, and have a material adverse effect on our financial results.

Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.

Our internal computer systems and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed, and the further development and commercialization of our compounds could be delayed.

Cyber-security incidents, including data security breaches or computer viruses, could harm our business by disrupting our delivery of services, damaging our reputation or exposing us to liability.

We receive, process, store and transmit, often electronically, confidential data of others. Unauthorized access to our computer systems or stored data could result in the theft or improper disclosure of confidential information, the deletion or modification of records, or could cause interruptions in our operations. These cyber-security risks increase when we transmit information from one location to another, including transmissions over the Internet or other electronic networks. Despite implemented security measures, our facilities, systems, and procedures, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, software viruses, misplaced or lost data, programming and/or human errors, or other similar events which may disrupt our delivery of services or expose the confidential information of our customers and others. Any security breach involving the misappropriation, loss or other unauthorized disclosure or use of confidential information of others, whether by us or a third party, could: (i) subject us to civil and criminal penalties; (ii) have a negative impact on our reputation; or (iii) expose us to liability to our customers, third parties or government authorities.

Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

Our business exposes us to significant potential product liability risks that are inherent in the development, manufacturing, marketing and sale of human device and drug products. Product liability claims could delay or prevent completion of its development programs, clinical or otherwise. If we succeed in marketing and selling products, such claims could result in a recall of any products or a limitation or other change in the indications for which they may be used. If we cannot successfully defend ourselves against claims that our compounds or drugs caused injuries, we will incur substantial liabilities. lead of merit or eventual outcome, liability claims may result in:

In addition, we currently do not have product liability insurance, but plan to obtain such insurance at appropriate levels prior to initiating studies in humans or clinical trials and prior to marketing and selling any drug or device products. Any insurance we obtain may not provide sufficient coverage against potential liabilities. These liabilities could prevent or interfere with our product development and commercialization efforts. Furthermore, if we were unable or otherwise failed to obtain and maintain sufficient insurance at a reasonable cost to protect it against any such liabilities, that inability could have a material adverse effect on its business.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain adequate U.S. and foreign patent protection for our lead compounds, including CC8464, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technologies similar or identical to ours, and our ability to successfully commercialize CC8464 and any of our other current or future lead compounds may be adversely affected.

Our success depends, in large part, on our ability to obtain and maintain patent protection in the United States and other countries with respect to CC8464, additional lead compounds in our product pipeline, and our institutional knowledge. The patent prosecution process is expensive, time- consuming and complex. In particular, we may not be able to file, prosecute, maintain, and/or enforce all necessary or desirable patent applications and issued patents at a reasonable cost or in a timely manner.

We have secured U.S. Patent No. 9,458,118 (the “CC8464 Patent”), covering the chemical composition and use of our clinical-stage NaV1.7 blocker. Apart from the CC8464 Patent, we have filed multiple patent applications in foreign jurisdictions, including China, Japan and Europe. It is possible that some of our pending patent applications in foreign jurisdictions will not result in issued patents in a timely fashion or at all, and even if we are granted the patents we are currently pursuing in foreign jurisdictions, the patents may not be issued in a form that will provide us with the full scope of protection that we desire, they may not prevent competitors or other third parties from competing with us, and/or they may not otherwise provide us with a competitive advantage. Our competitors, or other third parties, may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner. For example, there is no assurance that the CC8464 Patent, or any other patent that we may be granted, will prevent third parties from developing competing technologies. Moreover, our patent estate, including the CC8464 Patent, does not preclude third parties from obtaining intellectual property rights that could interfere with our freedom to use our platform for other indications. Even assuming patents issue from our pending and future patent applications, changes in either the patent laws or interpretation of the patent laws in the United States and foreign jurisdictions may diminish the value of our patents or narrow their scope of protection. 

We may not be able to protect our intellectual property or enforce our intellectual property rights adequately throughout the world. 

Filing and prosecuting patent applications on CC8464 and future lead compounds, current and future innovations related to our technology, and our institutional knowledge in all countries throughout the world would be prohibitively expensive, and intellectual property protections available in some countries outside the United States, and the enforceability thereof, may differ in scope from those in the United States. Thus, in some cases, we will not seek to obtain patent protection for certain technologies in some jurisdictions outside the United States. In addition, the laws of some foreign countries do not protect intellectual property to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from utilizing our inventions in all countries outside the United States, even in jurisdictions where we do pursue patent protection. Competitors may use our technologies in jurisdictions where we have not pursued and obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our lead compounds, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting intellectual property and enforcing intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protections, particularly those relating to biotechnology products and those of foreign entities. Such challenges in enforcing rights in these countries could make it difficult for us to stop the infringement of our patents, if pursued and obtained, or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our current and future patent rights in foreign jurisdictions could result in substantial costs and may divert our efforts and attention from other aspects of our business; could put our asserted patents at risk of being invalidated or interpreted narrowly; could put any future patent applications, including continuation and divisional applications, at risk of not issuing; and could provoke third parties to assert their own patent claims against us or to attack the validity of our other patents. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce any intellectual property rights around the world stemming from intellectual property that we develop may be inadequate to obtain a significant commercial advantage in these foreign jurisdictions. 

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business. 

Our commercial success depends upon our ability (and the ability of any potential future collaborators) to develop, manufacture, market and sell CC8464 and future lead compounds, and to freely use our proprietary technologies (e.g., without infringing the intellectual property rights of others). Many companies and institutions have filed, and continue to file, patent applications related to various aspects of pain management and opioid sparing technology. Because patent applications can take many years to issue, may be confidential for 18 months or more after filing, and can be revised before and after issuance, there may be issued patents and patent applications now pending which may later result in issued patents that a third party asserts are infringed by the manufacture, use, sale, or importation of our products. The biotechnology and pharmaceutical industries are characterized by extensive and complex litigation regarding patents and other intellectual property rights. Our competitors or other third parties may assert infringement claims against us, alleging that our therapeutics, manufacturing methods, formulations or administration methods are covered by their patents. Moreover, we may face patent infringement claims from non-practicing entities that have no relevant product revenue, and against whom our patent portfolio may therefore have no deterrent effect.

Third parties may initiate legal or administrative proceedings attacking the validity of our patents protecting CC8464 and future lead compounds the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to CC8464 or any other lead compound, or related technologies, including, for example, interference proceedings, post grant review challenges, and inter partes review before the United States Patent and Trademark Office (“USPTO”). For example, a third party may bring an inter partes review challenging our patents and any future patent that may be granted to us. Such proceedings often are used as a tactic by defendants in a patent litigation suit to threaten a patentee’s patents, both asserted in the litigation and unasserted. Thus, a competitor, either in response to litigation initiated by us or in the ordinary course, may threaten the validity, enforceability, and breadth of our patents which could have a negative impact on our business and render our patents or other intellectual property rights ineffective or insufficient to prevent competition.

Instituting and defending against patent and other types of intellectual property litigation and administrative proceedings could cause us to spend substantial resources, distract our personnel from their normal responsibilities, and have uncertain outcomes. 

Patent and other types of intellectual property litigation and administrative proceedings can involve complex factual and legal questions, and their outcomes are uncertain. A finding of infringement could prevent us from manufacturing and commercializing our technologies, including CC8464, or force us to cease some or all our business operations. If we are found, or believe there is a risk that we may be found, to infringe a third party’s valid and enforceable intellectual property rights, we could be required (or may choose) to obtain a license from such a third party to continue developing, manufacturing and marketing our technologies. However, we may not be able to obtain any required license on commercially reasonable terms, if at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and further, it could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technologies, including CC8464. We also could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent or other intellectual property right. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business, financial condition, results of operations and prospects. 

Litigation or other legal or administrative proceedings relating to intellectual property claims, with or without merit, is unpredictable and generally expensive and time consuming. Competitors may infringe our current or future patents, should such patents issue, or we may be required to defend against claims of infringement or other unauthorized use of third-party intellectual property or third party attacks against our intellectual property rights. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property may cause us to incur significant expenses and could distract our scientific and management personnel from their normal responsibilities. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation and administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation despite our attempts to prevent such disclosure. In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments and, if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our Common Stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. 

We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing, misappropriating, or successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. 

Changes in United States patent law and its administrative and judicial interpretation could diminish the value of patents in general, thereby impairing our ability to protect our lead compounds.

Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. As patent reform legislation can inject serious uncertainty into the patent prosecution and litigation processes, it is not clear what impact future patent reform legislation will have on the operation of our business. However, such future legislation, and its implementation, could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. 

Moreover, the patent positions of companies engaged in the development and commercialization of pharmaceuticals are particularly uncertain. We cannot assure you that our efforts to seek patent protection for CC8464 and future lead compounds will not be negatively impacted by the future court decisions or changes in guidance or procedures issued by the USPTO. These decisions, and any guidance issued by the USPTO (or changes thereto), could have a material adverse effect on our existing patent portfolio and our ability to protect and enforce our intellectual property rights in the future.

Intellectual property rights and regulatory exclusivity rights do not necessarily address all potential threats.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

Should any of these events occur, they could significantly harm our business, financial condition, results of operations and prospects.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.

In addition to patent protection, we also rely on the protection of trade secrets, know-how and confidential and proprietary information. The disclosure of our trade secrets would impair our competitive position and could harm our business. However, trade secrets are difficult to protect.  To maintain the confidentiality of trade secrets and proprietary information, we rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsored researchers, and/or other advisors, and inventions agreements with employees, consultants, and advisors, to protect our trade secrets and other proprietary information.  These agreements require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. Our agreements with employees and consultants also provide that inventions conceived by the individual in the course of rendering services to us will be our exclusive property. Despite these efforts, we cannot provide any assurances that these agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information.

In the event of unauthorized use or disclosure of trade secrets or proprietary information, these agreements, even if obtained, may not provide sufficient protection for our trade secrets or other confidential information. Further, to the extent that our employees, consultants or contractors use technology or know-how owned by others in their work for the Company, disputes may arise as to the rights in related inventions. This can be of particular concern with respect to university collaborators with us, who typically have preexisting obligations to their universities to assign intellectual property rights, which university rights generally are superior to assignment rights that we might receive from such individuals.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. Moreover, third parties may still obtain this information or may come upon this or similar information independently, and we would have no right to prevent them from using that technology or information to compete with us. Trade secrets will over time be disseminated within the industry through independent development, the publication of journal articles, and the movement of personnel skilled in the art from company to company or academic to industry scientific positions. Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors, and/or consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position. Because from time to time we expect to rely on third parties in the development, manufacture, and distribution of our products and provision of our services, we must, at times, share trade secrets with them. Despite employing the contractual and other security precautions described above, the need to share trade secrets increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. If any of these events occurs or if we otherwise lose protection for our trade secrets, the value of this information may be greatly reduced and our competitive position would be harmed. If we do not apply for patent protection prior to such publication or if we cannot otherwise maintain the confidentiality of our proprietary technology and other confidential information, then our ability to obtain patent protection or to protect our trade secret information may be jeopardized.

Risks Related to this Offering and Ownership of our Common Stock and Warrants

Nasdaq may delist our Common Stock and Warrants from trading, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

Should we fail to satisfy the continued listing requirements for remaining listed on Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, The Nasdaq Stock Market LLC may take steps to delist our Common Stock and Warrants. Such a delisting would likely have a negative effect on the price of our Common Stock and would impair your ability to sell or purchase our Common Stock and Warrants when you wish to do so. In the event of a delisting, we would take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our Common Stock and Warrants to become listed again, stabilize the market price or improve the liquidity of our Common Stock, prevent our Common Stock from dropping below Nasdaq’s minimum bid price requirement or prevent future non-compliance with such listing requirements.

If we cannot maintain the listing of our Common Stock for trading on Nasdaq, we could face significant material adverse consequences, including:

Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”), which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Our certificate of incorporation and our bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our certificate of incorporation and our bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the DGCL, our certificate of incorporation or our bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. Notwithstanding the foregoing, the exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any other claim for which the federal courts have exclusive or concurrent jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act of the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, and notwithstanding the provisions of our Certificate of Incorporation and our Bylaws, compliance with the federal securities laws and the rules and regulations thereunder may not be waived by our investors. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation and our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially and adversely affect our business, financial condition, and results of operation.

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future, which could cause the market price of our Common Stock to drop significantly, even if our business is performing well.

Sales of substantial amounts of our Common Stock or Warrants in the public market following this offering, or the perception that these sales could occur, could cause the market price of our securities to decline. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

After giving effect to the IPO Transactions and sale of Units in the offering pursuant to the IPO Prospectus, we will have              outstanding shares of Common Stock. All of the shares sold as part of the Units in this offering, and all of the Stockholder Shares, will be immediately tradable without restriction under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by “affiliates,” as that term is defined in Rule 144 under the Securities Act, or Rule 144.

The remaining                 shares of Common Stock will be restricted securities within the meaning of Rule 144 under the Securities Act but will be eligible for resale subject to applicable volume, means of sale, holding period and other limitations of Rule 144 under the Securities Act or pursuant to an exception from registration under Rule 701 under the Securities Act, subject to the lock-up agreements executed in conjunction with the offering of Units. See “Shares Eligible for Future Sale” for more information.

Upon completion of the offering of Units, we intend to file one or more registration statements on Form S-8 under the Securities Act to register the shares of Common Stock to be issued under our equity compensation plans and, as a result, all shares of Common Stock acquired under our plans will also be freely tradable under the Securities Act, subject to the terms of the lock-up agreements, unless purchased by our affiliates. In addition,                  shares of our Common Stock will be reserved for future issuances under the equity incentive plan we expect to adopt in connection with the offering of Units.

In the future, we may issue additional shares of Common Stock or other equity or debt securities convertible into Common Stock in connection with a financing, acquisition, litigation settlement or employee arrangement or otherwise. Any of these issuances could result in substantial dilution to our existing stockholders and could cause the trading price of our securities to decline.

If you purchase Units in the offering pursuant to the IPO Prospectus, you will suffer immediate dilution of your investment.

The public offering price of the Units will be substantially higher than the pro forma net tangible book value per share of our Common Stock. Therefore, if you purchase Units in this offering, you will pay a price per Unit that substantially exceeds our pro forma net tangible book value per share of Common Stock after the offering of Units. To the extent outstanding warrants, options or other convertible securities may be exercised, you will incur further dilution. Based on the assumed public offering price of $                  per Unit, which is the midpoint of the price range set forth on the cover page of the IPO Prospectus, you will experience immediate dilution of $                 per share, representing the difference between the assumed public offering price of the Units and our pro forma as adjusted net tangible book value per share of $                  after giving effect to the IPO Transactions and sale of Units in the IPO. See “Dilution.”

If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline.

The trading market for our Common Stock will rely, in part, on the research and reports that industry or financial analysts publish about us or our business. If securities analysts do not commence coverage of us, the trading price of our stock could decrease. Additionally, if one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.

The price of our securities may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our securities in this offering.

The offering price for the securities sold thereby may not reflect the market price of our securities following this offering. In addition, the market price of our securities is likely to be highly volatile due to many factors, including:

In particular, we cannot assure you that you will be able to resell your securities at or above your purchase price. The stock markets have experienced extreme volatility in recent years that has been unrelated to operating performance. These broad market fluctuations may adversely affect the trading price of our securities. In the past, following periods of volatility in the market price of a company’s securities, class action litigation has often been instituted against the affected company. Any litigation of this type brought against us could result in substantial costs and a diversion of our management’s attention and resources, which would harm our business, results of operations, financial condition and cash flows.

No public market for our Common Stock or the Warrants currently exists, and an active trading market may not develop or be sustained.

Prior to the IPO, there has been no public market for our Common Stock or Warrants. Although we have applied to have our Common Stock and the Warrants on Nasdaq, an active trading market may not develop following the closing of the offering of Units or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your shares of Common Stock or Warrants at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares of Common Stock or Warrants. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration. The initial public offering price was determined by negotiations between us and the underwriters and may not be indicative of the future prices of our Common Stock or Warrants.

Provisions of the Warrants offered by the IPO Prospectus could discourage an acquisition of us by a third party.

In addition to the discussion of the provisions of our certificate of incorporation, our bylaws, certain provisions of the Warrants offered by the IPO Prospectus could make it more difficult or expensive for a third party to acquire us. The Warrants prohibit us from engaging in certain transactions constituting “fundamental transactions” unless, among other things, the surviving entity assumes our obligations under the Warrants. These and other provisions of the Warrants offered by the IPO Prospectus could prevent or deter a third party from acquiring us even where the acquisition could be beneficial to you.

The Warrants included in the Units are speculative in nature.

Following the offering of Units, the market value of the Warrants included in the Units, if any, is uncertain and there can be no assurance that the market value of the Warrants included in the Units will equal or exceed their imputed offering price. In the event that our Common Stock price does not exceed the exercise price of the Warrants included in the Units during the period when such Warrants are exercisable, such Warrants may not have any value. Furthermore, each Warrant included in the Units will expire five years from its original issuance date.

Holders of the Warrants included in the Units will not have rights of holders of our shares of Common Stock until such Warrants are exercised.

The Warrants included in the Units in this offering do not confer any rights of share ownership on their holders, but rather merely represent the right to acquire shares of our Common Stock at a fixed price. Until holders of such Warrants acquire shares of our Common Stock upon exercise of such Warrants, holders of such Warrants will have no rights with respect to our shares of Common Stock underlying such Warrants.

We have broad discretion in the use of our cash, including the net proceeds from the offering of Units, and may not use them effectively.

Our management will have broad discretion in the application of our cash, including the net proceeds from the offering of Units, and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our Common Stock or Warrants. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our Common Stock or Warrants to decline and delay the development of CC8464 and any other lead compounds that we may develop. Pending their use, we may invest our cash, including the net proceeds from the offering of Units, in a manner that does not produce income or that loses value. See “Use of Proceeds.”

There may be substantial sales of our Common Stock by the Selling Stockholders after the effective date of the registration statement of which this prospectus forms a part, which could have a material adverse effect on the price of our Common Stock.

The registration statement of which this prospectus forms a part also registers on behalf of the Selling Stockholders an aggregate of               shares of Common Stock. In connection with the offering of Units and the Company’s registration of the Stockholder Shares, each of the Selling Stockholders have agreed that, and have provided a representation to the Company to the effect that, they will immediately consider selling some portion (or even all) of their respective Stockholder Shares if requested by the underwriters in order to create an orderly, liquid market for the Common Stock after the offering of the Units. The Selling Stockholders, however, will not be required to sell any or all of their respective Stockholder Shares even if requested to do so by the underwriters, or, conversely, the Selling Stockholders may choose to sell their respective Stockholder Shares at their own initiative.

Other than as described above, there are currently no agreements or understandings in place with the Selling Stockholders to restrict the sale of the Stockholder Shares after the effective date of the registration statement of which this prospectus forms a part. Sales of a substantial number of shares of our Common Stock by the Selling Stockholders at such time, independent of any request by the underwriters, could cause the market price of our Common Stock to drop (possibly below the initial public offering price of the Units) and could impair our ability to raise capital in the future by selling additional Company securities.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or CC8464.

We may seek additional capital through a combination of public and private equity offerings, debt financings, collaborations and licensing arrangements. To the extent that we raise additional capital through the sale of equity or debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or CC8464 or grant licenses on terms unfavorable to us.

We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular, while we are an “emerging growth company: (i) we will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; (ii) we will be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements; (iii) we will be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and (iv) we will not be required to hold nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments not previously approved. Investors may find our common stock less attractive if we rely on the exemptions and relief granted by the JOBS Act. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline or become more volatile.

We have taken advantage of reduced reporting burdens in this prospectus. In particular, we have not included all of the executive compensation information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on certain or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, the JOBS Act provides that an emerging growth company may take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

We will incur increased costs as a result of operating as a smaller reporting public company, and our management will be required to devote substantial time to new compliance initiatives.

As a smaller reporting public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance.

Pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial reporting, including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Forward-looking statements include information concerning our strategy, future operations, future financial position, future revenue, projected expenses, prospects and plans and objectives of management. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict, “project,” “seek,” “should,” “target,” “will,” “would” or similar expressions and the negatives of those terms.

Forward-looking statements contained in this prospectus include, but are not limited to, statements about the following:

Forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of Units pursuant to the IPO Prospectus will be approximately $                  million (or $                  million if the underwriters exercise in full their option to purchase additional shares of Common Stock and Warrants), assuming an initial public offering price of $                  per Unit, the midpoint of the price range set forth on the cover page of the IPO Prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed initial public offering price of $                  per Unit, the midpoint of the price range set forth on the cover page of the IPO Prospectus, would increase (decrease) the net proceeds to us from the offering of Units by approximately $                  million, assuming that the number of Units offered by us, as set forth on the cover page of the IPO Prospectus, remains the same.  Similarly, each 1.0 million increase (decrease) in the number of Units offered by us, as set forth on the cover of the IPO Prospectus, would increase (decrease) the net proceeds to us from the offering of Units by approximately $                  million, assuming the assumed initial public offering price per Unit remains the same.

We intend to use the net proceeds from the offering of Units as follows:

We intend to use the remaining net proceeds from the offering of Units, if any, for general corporate purposes.

The expected net proceeds of the offering of Units will not be sufficient for us to fund any of our future lead compounds, including CC8464, through regulatory approval, and we will need to raise substantial additional capital to complete the development and potential commercialization of our current and any future lead compounds, as well as to establish commercial supply and a sales organization.

The amounts and timing of our actual expenditures will depend on numerous factors, including the progress of our preclinical and clinical trials and other development and potential commercialization efforts for CC8464 and any future lead compounds, as well as the amount of cash used in our operations. Although we have no present intention or commitment to do so, we may use a portion of the net proceeds for the acquisition of, or investment in, technologies, intellectual property or businesses that complement our business.

Our expected use of net proceeds from the offering of Units represents our current intentions based upon our present plans and business condition. As of the date of the IPO Prospectus, we cannot predict with complete certainty all of the particular uses for the net proceeds to be received upon the completion of the offering of Units or the actual amounts that we will spend on the uses set forth above. We may find it necessary or advisable to use the net proceeds for other purposes, and our management will retain broad discretion over the allocation of the net proceeds of the offering of Units. Pending the uses described above, we plan to invest the net proceeds from the offering of Units in short- and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

In addition, concurrently with the offering of Units, and pursuant to this IPO Prospectus, we intend to sell (i) $450,000 in Units at the public offering price per Unit directly to the lender holding the Investor Note (          Units, assuming an initial public offering price of $          per Unit, the midpoint of the price range set forth on the cover page of the IPO Prospectus) and (ii) $175,000 in Units at the public offering price per Unit directly to one of our directors holding the Director Note (          Units, assuming an initial public offering price of $          per Unit, the midpoint of the price range set forth on the cover page of the IPO Prospectus). Such Units are being offered as repayment of the Investor Note and Director Note in full satisfaction of our obligations thereunder and, accordingly, the amount of net proceeds we receive in the offering of Units will not increase as a result. However, because neither the lender nor the director are obligated to accept Units in this offering in full (or partial) satisfaction of our obligations under the Investor Note and Director Note, as applicable, we may be required to use a portion of the net proceeds from the offering of Units to repay the amounts outstanding under the Investor Note and/or the Director Note. In that instance, the net proceeds available to fund our continued research and product development of CC846 would be reduced by up to $625,000, and the number of Units issued in the IPO would decrease accordingly.

The Investor Note has a maturity date of February 3, 2023 and accrues no interest beyond the original issue discount of $150,000. The proceeds received from the Investor Note were used for working capital purposes.

The Director Note has a maturity date of December 31, 2023 and accrues no interest beyond the original issue discount of $75,000 (except in the case of certain events of default). The proceeds received from the Investor Note were used for working capital purposes.

We will not receive any proceeds from the sale of shares of Common Stock by the Selling Stockholders pursuant to the Resale Prospectus.

DIVIDEND POLICY

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant.

CAPITALIZATION

The following table sets forth our cash and our capitalization as of September 30, 2022:

You should read this table together with the sections of this prospectus captioned “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Capital Stock” and our consolidated financial statements and related notes included elsewhere in this prospectus.

DILUTION

If you invest in our securities, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per Unit and the as further adjusted net tangible book value per share of our Common Stock immediately after the IPO. 

Pro forma net tangible book value per share represents the amount of our total tangible assets as adjusted to take into account: (A) the issuance of the Director Note and the receipt of $100,000 in cash in connection therewith; and (B) the IPO Transactions, which include (i) a 1-for-       stock split of Common Stock, and (ii) the issuance of shares of Common Stock and Warrants upon conversion of all issued and outstanding shares of Series A Preferred Stock, in each case, assuming an initial public offering price of $      per Unit, the midpoint of the price range on the cover of the IPO Prospectus. After giving effect to such transactions, our pro forma net tangible book value per share as of September 30, 2022 would have been approximately $         per share.

After giving effect the transactions referred to above, the sale of    Units in this offering at an assumed public offering price of $            per Unit, the midpoint of the price range on the cover of the IPO Prospectus (which number of Units includes the issuance of Units in full satisfaction of our obligations under the Investor Note and the Director Note), after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of September 30, 2022 would have been $         million, or $         per share. This represents an immediate increase in as adjusted net tangible book value of $         per share to our existing stockholders and an immediate dilution of $ per share to new investors participating in the offering of Units.

If the underwriters exercise in full their option to purchase up to                  additional shares of Common Stock and Warrants to cover over-allotments, if any, the pro forma as adjusted net tangible book value per share after giving effect to the offering of Units would be $                  per share, representing an immediate increase (decrease) to existing stockholders of $                  per share and immediate dilution to new investors participating in this offering of Units of $                  per share, assuming that the assumed initial public offering price remains the same, after deducting underwriting discounts and estimated offering expenses payable by us.

The following table summarizes, on a pro forma as adjusted basis as of September 30, 2022, the differences between the number of shares of Common Stock purchased from us, the total cash consideration and the average price per share paid to us by existing stockholders and by new investors purchasing Units in the IPO at an assumed public offering price of $          per Unit, the midpoint of the price range set forth on the cover page of the IPO Prospectus, before deducting estimated underwriting discounts and estimated offering expenses payable by us:

If the underwriters exercise their option to purchase additional shares of Common Stock and Warrants in full, the number of shares of Common Stock held by existing stockholders will be reduced to                  % of the total number of shares of Common Stock to be outstanding after this offering of Units, and the number of shares of Common Stock held by investors participating in this offering of Units will be further increased to               % of the total number of shares of Common Stock to be outstanding after the offering of Units, based on all of the assumptions described above in this section.

To the extent any outstanding securities are exercised or to the extent that we issue new securities which result in the issuance of additional shares of Common Stock, new investors would experience further dilution.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the section entitled “Summary Historical Financial Data” and our financial statements and related notes appearing in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage biotech company focused on developing and commercializing new therapeutics to alleviate pain. Our clinical focus is to selectively target the sodium ion-channel known as “NaV1.7”, as well as other receptors in the NaV family. NaV1.7 has been genetically validated as a pain receptor in human physiology. Our goal is to develop a novel and proprietary class of NaV blockers that target the body’s peripheral nervous system and have demonstrated safety in a Phase 1 study with more than 100 subjects. We plan to proceed with our clinical trials in 2023, focusing on a study to evaluate the rash mitigation strategy and a Phase 2a proof-of-concept study assessing the potential efficacy of CC8464 in EM patients with a genetic disposition.

We were incorporated in Delaware on March 19, 2021. On August 10, 2022, we entered into the Contribution Agreement with Chromocell Holdings. Pursuant to the Contribution Agreement, effective July 12, 2022, the Contribution Date, we acquired from Chromocell Holdings all assets, liabilities and results of operations related to Chromocell Holdings’ therapeutic business, including all patents, pre-clinical and Phase I study results and data, and trade secrets related to the CC8464 compound, in exchange for the issuance by us of 10,000,000 shares of Common Stock and (ii) 600,000 shares of Series A Preferred Stock. We refer to this issuance of Common Stock and Series A Preferred Stock as the “Contribution Agreement Share Issuance.”

Prior to the Contribution Date, we had only nominal assets and liabilities. Accordingly, the financial statements presented in this prospectus for periods prior to the Contribution Date have been prepared on a “carve-out” basis from the financial statements of Chromocell Holdings to represent our financial position and performance as if it had existed on a stand-alone basis. The financial statements presented in this prospectus for periods from and after the Contribution Date reflect our financial position and performance as a stand- alone entity. 

All of the assets, liabilities and results of operations of the Company as of and for the periods prior to the Contribution Date were identified based on the assets acquired by the Company from Chromocell Holdings. Management believes the assumptions underlying the Company’s carve-out financial statements are reasonable. Nevertheless, the financial statements may not include all of the actual expenses that would have been incurred had the Company operated as a standalone company during the periods presented, and may not reflect the Company’s results of operations, financial position and cash flows had the Company operated as a standalone company during the periods presented. Actual costs that would have been incurred if the Company had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

In connection with the completion of the offering of Units, we will effect a 1-for-             stock split with respect to our Common Stock. In addition, in connection with completion of the offering of Units, all 600,000 issued and outstanding shares of our Series A Preferred Stock will automatically convert into             shares of Common Stock and             Warrants (based on an assumed initial public offering price of $            , the midpoint of the price range set forth on the cover page of the IPO Prospectus). We refer to these actions as the “IPO Transactions.”

Going Concern

For the years ended December 31, 2021 and 2020, respectively, we had a net loss of $0.6 million and $0.7 million, respectively, and will require significant additional capital in order to operate in the normal course of business and fund clinical studies. As a result, these conditions have raised substantial doubt regarding our ability to continue as a going concern beyond one year of the filing of our financial statements. While we believe in the viability of management’s strategy to raise funds and control costs during the development stage, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon the ability to complete clinical studies and implement our business plan, raise capital, generate sufficient revenues and to control operating expenses.

Results of Operations

Comparison of the Nine Months Ended September 30, 2022 and 2021

The following table summarizes our results of operations for the nine months ended September 30, 2022 and 2021:

Revenue

We recognized revenues of $0 and $0 for the nine months ended September 30, 2022 and 2021, respectively.

Operating Expenses

Our operating expenses consist of general and administrative expenses, research and development expenses and professional fees.

General and Administrative Expenses

We incurred general and administrative expenses for the nine months ended September 30, 2022 and 2021 of $889,122 and $369,862, respectively. For the nine months ended September 30, 2022, compared to the same period in 2021, this represented an increase of $519,260, or 140%, primarily as a result of patent amortization expenses in the amount of $517,839 following the close of the Contribution Agreement in the current period.

Research and Development Expenses

We incurred research and development expenses for the nine months ended September 30, 2022 and 2021 of $97,147, and $148,989, respectively, for the nine months ended September 30, 2022, compared to the same period in 2021. The decline in research and development expenses from 2021 represented a decrease of $51,842, or 35%, with the details set forth in the table below:

The Company incurred higher consulting expenses and contract labor in 2021 as the Company evaluated multiple different operating and development plans to maximize value, including licensing of CC8464 to an existing life sciences company, a merger with an existing publicly traded life sciences company or an IPO, during the nine months ended September 30, 2021. Pursuing multiple different and simultaneous strategic paths increased research and development consulting expenses during the nine months ended September 30, 2021, and the conclusion of the evaluation led the Company to spin-off of the Company and pursue the IPO route.

Professional Fees

We incurred professional expenses for the nine months ended September 30, 2022 and 2021 of $634,913 and $110,177, respectively. For the nine months ended September 30, 2022, compared to the same period in 2021, this represented an increase of $524,736, or 476%, as a result of higher auditing and legal expenses associated with IPO readiness activities.

Other (Expense) Income

We incurred other expense for the nine months ended September 30, 2022 of $97,818 as compared to other income for the nine months ended September 30, 2021 of $243,609. The other income for the nine months ended September 30, 2021 was primarily the result of the forgiveness of a PPP loan and the other expense for the nine months ended September 30, 202 was primarily the result of the amortization of a debt discount for debt incurred during the nine months ended September 30, 2022.

Comparison of the Years Ended December 31, 2021 and 2020

The following table summarizes our results of operations for the years ended December 31, 2021 and 2020:

Revenue

For the years ended December 31, 2021 and 2020, the Company incurred revenue of zero and $199,934, respectively, representing a decrease of $199,934 or 100%. The decrease is due to a decrease in grant revenue.

Operating Expenses

Our operating expenses consist of general and administrative expenses, research and development expenses and professional fees. Our research and development expenses primarily consist of consultants in regulatory, clinical development and CMC matters to prepare for the Phase 2 trials as well as maintenance fees for our patent portfolio plus lab material costs in connection with work for an NIH grant.

General and Administrative Expenses

Our general and administrative expenses for the years ended December 31, 2021 and 2020 were $496,667 and $1,323,120, respectively, representing a decrease of $826,453, or 62%. The decrease is primarily due to a reduction in compensation expenses as the Company adjusted to COVID by reducing staff and slowing down development activities as capital and testing options for the Company were more limited during the pandemic.

Research and Development Expenses

For the years ended December 31, 2021 and 2020, we incurred research and development expenses of $209,047 and $138,585, respectively, representing an increase of $70,462 or 51%. Details of the research and development expenses are set forth in the table below: 

The increase in research and development expenses is primarily due to production and storage of the CC8464 compound and preparation for the planned Phase 2 trials, offset by lower intellectual property fees associated with the Company’s patent portfolio.

Professional Fees

Professional fees for the years ended December 31, 2021 and 2020 were $133,282 and $92,096, respectively, representing an increase of $41,186, or 45%. The increase is primarily due to a greater accounting and legal services expenses in preparation for the initial public offering.

Other Income

For the years ended December 31, 2021 and 2020, we recognized $243,609 and $693,283 in other income, respectively. Other income for the year ended December 31, 2021 was primarily comprised of a gain on forgiveness of a PPP loan in the amount of $243,862 and for the year ended December 31, 2020 was primarily comprised of an NOL tax credit of $694,959.

Liquidity

Sources of Liquidity and Capital

We are in our early stages of development and growth, without established records of sales or earnings. We will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or emerging growth companies. We have not yet commercialized any products, and we do not expect to generate revenue from sales of any lead candidates for several years.

Cash totaled $0.2 million and $0 million as of September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022 and December 31, 2021, we had an accumulated deficit of approximately $5.4 million and $3.7 million, respectively, and had a working capital deficit of $3.0 million and $2.6 million, respectively.

Historically, we have funded our operations from a series of cash advances from Chromocell Holdings, licensing arrangements, bridge loans and grants from the National Institutes of Health.

Starting in May 2021, we received a series of advances from Chromocell Holdings that were subsequently codified in the Contribution Agreement as an equity investment, pursuant to which, the Company issued 10,000,000 shares of Common Stock and 600,000 shares of Series A Convertible Preferred Stock to Chromocell Holdings in exchange for the assets contributed by Chromocell Holdings to the Company.

On February 4, 2022, the Company entered into the Investor Note for $450,000. The Investor Note has an original issuance discount of $150,000, a maturity date of February 3, 2023, and accrues no interest. As of September 30, 2022, there was an unamortized debt discount of $52,182.

On December 6, 2022, the Company and Mr. Todd Davis, one of our directors, entered into the Director Note for $175,000. The Director Note has an original issuance discount of $75,000, and matures on December 31, 2023 or, if earlier to occur, upon the closing of an underwritten offering of securities resulting in at least $15 million in gross proceeds. Mr. Davis, as lender, has the right but not the obligation to subscribe to the underwritten offering by presenting the Director Note in whole or in part to purchase such securities as legal tender therefor, on a dollar-for-dollar basis based upon the offering price of such securities to the public. The Director Note bears no interest except in the case of certain events of default.

Future Funding Requirements

Our primary use of cash is to repay assumed liabilities associated with the execution of the Contribution Agreement on July 12, 2022, and to fund operating expenses.

Pursuant to the Contribution Agreement, the Company agreed to assume $1,556,324 of liabilities directly associated with assets acquired and agreed to make a cash payment to Chromocell Holdings in an aggregate amount of $597,038 for certain expenses. These two amounts substantially comprise the accounts payable on the Company’s balance sheet.

With respect to the Company’s future expected operations expenses, the primary expense drivers will be research and development and management overhead, including costs of being a public company. Of these, it is expected that research and development will be the largest expense and comprise approximately $5.0 to 6.0 million in the twenty-four months following the offering of Units pursuant to the IPO Prospectus, which will be utilized for the Company’s escalation study and Phase II drug trial costs. We have based the research and development costs on current trial parameters and expectations on certain existing tax credits, and there is no certainty that the trial parameters or tax credits available to the Company will remain as they are, which could lead to changes in our research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.

We expect to continue to incur significant and increasing expenses and operating losses in connection with our ongoing research and development activities. In addition, upon the closing of the offering of Units, we expect to incur additional costs associated with operating as a public company. As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future.

Based on our current operating plan, we believe that the net proceeds from the offering of Units, together with our existing cash, will be sufficient to fund our operations and capital expenses through the end of 2024. However, we have based this estimate on assumptions that may prove to be incorrect, and we could exhaust our capital resources sooner than we expect.

We may also raise additional funding through strategic relationships, public or private equity or debt financings, credit facilities, grants or other arrangements. If such funding is not available or not available on terms acceptable to us, our current development plan and plans for expansion of our general and administrative infrastructure may be curtailed. If we raise additional funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or other debt could contain covenants that restrict our operations. Any other third- party funding arrangement could require us to relinquish valuable rights.

The source, timing and availability of any future financing will depend principally upon market conditions. Funding may not be available when needed, at all, or on terms acceptable to us. Lack of necessary funds may require us to, among other things, delay, scale back or eliminate expenses including some or all of our planned development. There is substantial doubt about our ability to continue as a going concern.

Cash Flows

The following table summarizes our cash flows for the nine months ended September 30, 2022 and 2021:

The following table summarizes our cash flows for the year ended December 31, 2021 and 2020:

Net Cash Used in Operating Activities

For the nine months ended September 30, 2022, we incurred a net loss of $1,719,000, and net cash flows used in operating activities was $900,531. The cash flow used in operating activities was due a net loss of $1,719,000 offset by amortization of intangibles of $517,839, amortization of debt discount of $97,818, a change in account payable and accrued expense of $82,331, and a change in accrued compensation of $120,481.

For the nine months ended September 30, 2021, we incurred a net loss of $385,419, and net cash flows used in operating activities was $1,282,200. The cash flow used in operating activities was due a net loss of $385,419, forgiveness of PPP loan of $241,793, and a change in account payable and accrued expense of $726,860.  

For the year ended December 31, 2021, we incurred a net loss of $595,387. Net cash flows used in operating activities was $1,593,011 for the year ended December 31, 2021.

For the year ended December 31, 2020, we incurred a net loss of $660,584. Net cash flows used in operating activities was $3,625,773 for the year ended December 31, 2020.

Net Cash Used in Provided by Investing Activities

The Company neither received nor used cash in investing activities during the nine months ended September 30, 2022 and 2021.

Net Cash Provided by Financing Activities

For the nine months ended September 30, 2022, net cash flows provided by financing activities were $1,073,771, consisting of cash received from the contribution agreement in the amount of $775,054, cash received from a bridge loan in the amount of $300,000, offset by cash transfers from the Company to Chromocell Holdings in the amount of $1,283.

For the nine months ended September 30, 2021, net cash flows provided by financing activities were $1,282,200, consisting of cash received from an advance by Chromocell Holdings in the amount of $789,950 and contribution to the Company associated with the carve-out of $492,250.

For the year ended December 31, 2021, net cash flows provided by financing activities were $1,593,011, consisting of cash received from an advance by Chromocell Holdings in the amount of $1,099,950 and cash transfers from Chromocell Holdings to the Company in the amount of $493,061.

For the year ended December 31, 2020, net cash flows provided by financing activities were $3,625,773, representing cash transfers from Chromocell Holdings to the Company in the amount of $3,383,980 and proceeds from PPP loan of $241,793.

Off-Balance Sheet Arrangements

During the nine months ended September 30, 2022 or 2021, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

Critical Accounting Estimates

The following discussions are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingencies. We continually evaluate the accounting policies and estimates used to prepare the financial statements. We base our estimates on historical experiences and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management.

See Note 3 - Summary of Significant Accounting Policies to the accompanying financial statements for a detailed description of our significant accounting policies.

Intangible Assets

Intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset groups, which represent the lowest level identifiable cash flows that are largely independent of the cash flows of other groups of assets and liabilities, may not be recoverable through the estimated undiscounted future cash flows to be derived from such assets.

Definite-lived intangible assets consist of intellectual property. Impairment losses are recorded if the asset’s carrying amount is not recoverable. We measure the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value.

On August 10, 2022, the Company and Chromocell Holdings entered into the Contribution Agreement effecting the contribution by Chromocell Holdings to the Company of assets related to Chromocell Holding’s Therapeutics Business, including all intellectual property related to Chromocell Holding’s NaV1.7 program and its clinical-stage CC8464 lead compound. The valuation of the intellectual property was valued at $44,808,301 by an outside valuation firm based on the cost approach of valuation. The intangible asset is amortized using the straight-line method over the estimated useful lives of assets.

Income Taxes

We are subject to income taxes in the U.S. Significant judgment is required in determining income tax expense, deferred taxes and uncertain tax positions. The underlying assumptions are also highly susceptible to change from period to period. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all the deferred tax assets will be realized. The ultimate realization of deferred taxes assets is dependent upon generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and taxable income in carryback years and tax-planning strategies when making this assessment. There is currently significant negative evidence which contributes to our recording a valuation allowance against our deferred tax assets due to cumulative losses since inception.

Although we believe our assumptions, judgments, and estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of any tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date. Adjustments to income tax expense, to the extent we establish a valuation allowance or adjust the allowance in a future period, could have a material impact on our financial condition and results of operations.

The critical accounting estimates below do not represent a material estimate in the preparation of our financial statements.

Recently Issued and Adopted Accounting Pronouncements

In December 2019, the FASB issued Accounting Standards Update, or ASU, No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, or ASU 2019-12, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The adoption of ASU 2019-12 did not have a material effect on the Company’s financial statements.

The FASB issues ASUs to amend the authoritative literature in ASC. There have been several ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact on our financial statements.

Other accounting standards that have been issued or proposed by FASB and do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. Management does not believe that any other recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying financial statements.

BUSINESS

Overview

We are a clinical-stage biotech company focused on developing and commercializing new therapeutics to alleviate pain. Our clinical focus is to selectively target the sodium ion-channel known as “NaV1.7”, as well as other receptors in the NaV family. NaV1.7 has been genetically validated as a pain receptor in human physiology. Genetic studies have shown that families with a certain inherited NaV1.7 modulation consistently show a pathology of not feeling pain. A strong correlation between such inherited NaV1.7 modulation and EM patients who suffer from burning pain in their hand and feet was confirmed in a separate study that was reported in the Journal of Clinical Investigation. The study assessed the pattern of pain, natural history, somatosensory profile, psychosocial status and olfactory testing in patients with primary inherited erythromelalgia with mutations of SCN9A, the gene encoding Na(v)1.7. All subjects reported pain and heat in the extremities (usually feet and/or hands), with pain attacks triggered by heat or exercise and relieved mainly by non-pharmacological maneuvers such as cooling. A NaV1.7 blocker is a chemical entity that modulates the structure of the sodium-channel in a way to prevent the transmission of pain perception to the CNS. Our goal is to develop a novel and proprietary class of NaV blockers that target the body’s peripheral nervous system, initially EM, a rare condition that primarily affects the feet and, less commonly, the hands (extremities). It is characterized by intense, burning pain of affected extremities, severe redness (erythema), and increased skin temperature that may be episodic or almost continuous in nature.

According to Mordor Intelligence, the global pain management market was valued at approximately $67 billion in 2021, and it is expected to have revenues of $89 billion in 2027, with a CAGR of 4.65% over the forecast period. Also according to Mordor Intelligence, the United States has the largest market for pain management pharmaceuticals and Asia-Pacific is the region showing the strongest growth. North America holds the largest share in the pain management market, with the United States being the most significant contributor to its revenue. According to data published by the Centers for Disease Control and Prevention (“CDC”), in 2019, 20.4% of adults had chronic pain, and 7.4% of adults had chronic pain that had limited work and daily activities frequently. Additionally, according to the CDC, chronic pain increased with age, and the highest level was reported in patients aged 65 years and above. The prescription pain management market in the United States is still largely dominated by opioid analgesics. Opioid analgesics decrease the perception of pain by stimulating a range of opioid receptors that modulate pain signals. The most widely used opioid analgesics, including morphine, fentanyl and hydromorphone, act primarily through the activation of mu opioid receptors in the CNS. However, because of the wide distribution of mu opioid receptors throughout the brain, morphine and other mu opioid analgesics also trigger a characteristic pattern of adverse side effects, in particular severe abuse and addiction.

The global pain market reflects total revenues of drugs mitigating different types of pain, such as backpain, osteoarthritis, post-operative pain and various orphan diseases with pain symptoms. Our current research is focused on EM; correspondingly, our commercial efforts are targeting the potential for EM therapeutics within the overall pain market. According to studies quoted by The Erythromelalgia Association, estimates of the incidence rate for EM vary from 1.3 to 15 per 100,000 persons, reflecting a potential EM patient population from 5,000 to 50,000 in the U.S. Our lead compound, CC8464, could possibly have applications in pain mitigation outside of EM, but neither biological nor clinical studies have provided sufficient data to enable meaningful predictions on the probability of an expanded range of indications.

CC8464 is designed to address both the underlying condition and mitigate the burning pain symptoms that EM patients experience by blocking the NaV1.7 sodium channel. Genetic studies presented in the Journal of Clinical Investigation have established a correlation between particular mutation in the NaV1.7 gene and the occurrence of EM where patients suffer from burning pain in their hand and feet. The study assessed the pattern of pain, and other criteria in patients with primary inherited erythromelalgia with mutations of SCN9A, the gene encoding Na(v)1.7. All subjects reported pain and heat in the extremities (usually feet and/or hands), with pain attacks triggered by heat or exercise and relieved mainly by non-pharmacological maneuvers such as cooling. Based on the correlation between the mutations and frequency of EM occurrence, we believe CC8464 has the potential to address the underlying condition and mitigate the burning pain symptoms that patients experience. The chemical characteristics of CC8464 restrict its entry into the CNS and limit its effect to the NaV1.7 receptors in the peripheral nervous system, which consists of the nerves outside the brain and spinal cord. Activation of other receptors in the CNS can result in side effects, including addiction and other psychiatric disorders. Since CC8464 is designed to modulate pain signals without activation of receptors in the CNS, it is not expected to produce psychiatric side effects. Based on its characteristics, preclinical studies (described below) and the Phase 1 study we have completed to date, we believe that our lead compound CC8464, if approved, could become an attractive option for both patients and physicians as a treatment for moderate-to-severe pain in EM.

We have observed some rashes during the trial for which we developed a mitigation strategy. We plan to proceed with our clinical trials in 2023, focusing on a study to evaluate this rash mitigation strategy and a Phase 2a proof-of-concept study assessing the potential efficacy of CC8464 in EM patients with a genetic disposition.

If approved, we believe that CC8464 could provide pain relief for EM patients while reducing the incidence of opioid-related adverse events and avoiding abuse and addiction issues associated with currently approved opioid analgesics. CC8464 is currently the only compound that we have advanced into clinical development. We may expand our pipeline with other, internal or external compounds in the future, but all other internally discovered compounds are pre-clinical and no commercial discussions about in-licensing have been initiated to date.

Our Strategy

We are a clinical-stage pharmaceutical company focused on non-opioid pain blockers in the NaV space. Our development programs are initially designed to address the underlying condition and mitigate the burning pain symptoms in EM. Based on genetic studies, several academic and clinical scientists have suggested that NaV1.7 could be a promising target to address EM. Studies presented in the Journal of Clinical Investigation show a correlation between a genetic mutation (SCN9A) and the expression of the disease phenotype in EM patients. The study assessed the pattern of pain, natural history, somatosensory profile, psychosocial status and olfactory testing of 13 subjects with primary inherited erythromelalgia with mutations of SCN9A, the gene encoding Na(v)1.7. All subjects reported pain and heat in the extremities (usually feet and/or hands), with pain attacks triggered by heat or exercise and relieved mainly by non-pharmacological maneuvers such as cooling. Quantitative sensory testing revealed significantly increased detection thresholds for cold and warm stimuli at affected, compared to unaffected sites of the body. By contrast, significantly decreased cold and heat pain thresholds were found at unaffected sites of the body. The NIH database of rare diseases specifically mentions the genetic causation of EM in patients with the SCN9A gene, which encodes for the NaV1.7 sodium channel. Our first aim is to assess CC8464’s potential as a drug for EM patients that have a genetic disposition to develop the phenotype.

The therapeutic benefit of CC8464 will, among other factors, be determined by its potency and selectivity. The potency reflects the compound’s effect in blocking the NaV1.7 channel. The selectivity is the absence of effects in blocking other, similar channels (e.g. NaV1.5) that could cause undesirable side effects. We conducted in vitro and in vivo studies described in more detail below that showed both a high potency and selectivity of CC8464. While positive results of in vitro and in vivo studies do not necessarily translate into human studies, we believe that the consistency of results in various in vivo models (rat, mouse, mini-pig) supports the projection of a potential positive outcome in clinical studies.

CC8464 is a potent inhibitor of the inactivated state of the human NaV1.7. We measured with our electrophysiology equipment the difference in affinity between cells with and without CC8464 added in vitro. The results showed that the compound preferentially inhibits the inactivated state of the channel with 1000-fold higher affinity as compared to the resting state. Injury or chronic inflammation is associated with persistent neuronal depolarization that shifts hNaV1.7 channels to the inactivated state. Therefore, CC8464 may preferentially affect injured or inflamed tissues while having minimal effect on the hNaV1.7 channels in uninjured/healthy tissues. CC8464 displays high target selectivity and a favorable in vitro cardiac safety profile (in vitro electrophysiology experiments where we measured differences between cells with and without CC8464 added showed a>1,000-fold selectivity for human NaV1.7 over human NaV1.5, hERG and human CaV1.2 ion channel receptors). Further, a canine cardiovascular and respiratory in vivo study where vital signs of canines were monitored after administering CC8464 showed no adverse findings. CC8464 demonstrated minimal activity against a broad array of potential targets and off-targets with only one confirmed IC50 less than 10 μM (κ-opioid receptor agonist). At predicted therapeutic doses, there is >100-fold selectivity for hNaV1.7 over the κ-opioid receptor. In vivo, CC8464 selectivity may be augmented by a lack of exposure in the central nervous system. In an in vivo tissue distribution study in rats all of the tissues in the central nervous system did not have measurable concentrations of CC8464-derived radioactivity at any time point post-dose. Behavioral effects potentially attributable to the CNS have not been observed in animals. There were no CC8464 related effects on any parameter in the functional observational battery evaluation conducted as a part of the 28-day repeat dose study in rats. In a streptozotocin-induced diabetic neuropathy model, wherein rats self-administered CC8464, there was no increase in intake in up to 8 weeks of dosing. There was no evidence of motor/balance impairments on observational measurements in the foot-fault test, where motoric/balance impairments are monitored in vivo after administering CC8464. Also, no immobility or lethargy observations were reported in cage side observations in any of the nonclinical efficacy studies performed. CC8464 has shown statistically significant efficacy in reversing pain in several nonclinical neuropathic and inflammation induced pain models, where motoric/balance impairments were monitored in vivo by comparing results from animal cohorts and preventing the emergence of neuropathic pain in neuropathic pain models. CC8464 has been shown to reverse thermal and mechanical hyperalgesia, spontaneous pain and tactile allodynia in these models. The reversal of hyperalgesia endpoints follows the pharmacokinetics of CC8464 in plasma. The reversal of tactile allodynia in rats was more gradual and disassociated from the pharmacokinetics, but the therapeutic effect is comparable to the effect on hyperalgesia endpoints and is sustained for some time after the cessation of treatment. There was no tachyphylaxis observed on efficacy parameters after repeated dose administration in the partial sciatic nerve ligation (PSNL) and streptozotocin-induced diabetic neuropathy models.

The Phase 2a results will have significance beyond EM and provide important insights about NaV1.7 as a potential target to find novel pain medications as an alternative to opioids, the continuing primary standard of care in analgesics. Despite the societal cost of opioids, no fundamental commercially available breakthroughs have been achieved in pain management over the past decades. We believe that positive results from the Phase 2a study could not only act as support for CC8464’s potential in EM but may also provide guidance of its potential for other indications of peripheral neuropathic pain. The key elements of our strategy to achieve our mission are:

We believe our strategy will allow us to minimize risk and expenses by maintaining an initial focus on CC8464 and EM.

Our Lead compound: CC8464 for the Treatment of EM

CC8464 is our lead compound for the treatment of EM.

Background on EM

EM is a condition characterized by episodes of pain, redness, and swelling in various parts of the body, particularly the hands and feet. These episodes are usually triggered by increased body temperature, which may be caused by exercise or entering a warm room. Ingesting alcohol or spicy foods may also trigger an episode. Wearing warm socks, tight shoes, or gloves can cause a pain episode so debilitating that it can impede everyday activities such as wearing shoes and walking. Pain episodes can prevent an affected person from going to school or work regularly. Strong cases are debilitating for patients and suicidal tendencies in these patients emphasize the urgent medical need in this field.

The signs and symptoms of EM typically begin in childhood, although mildly affected individuals may have their first pain episode later in life. As individuals with EM get older and the disease progresses, the hands and feet may be constantly red, and the affected areas can extend from the hands to the arms, shoulders and face, and from the feet to the entire legs.

EM is often considered a form of peripheral neuropathy because it affects the peripheral nervous system, which connects the brain and spinal cord to muscles and to cells that detect sensations such as touch, smell and pain.

Prevalence

According to Transparency Market Research:

Existing Treatment Options

The current standard-of-care for patients with EM is limited to symptom management. However, according to a case report published in the Journal of Pain Medicine, more than 50% of EM patients report that over-the-counter medications did not effectively address the symptoms. In severe cases, opioids are the only available treatment option and are accompanied by well-known risks and liabilities. Further, there is a lack of guidelines available on how it should be optimally managed. Current EM treatments are regarded as ineffective, risky, or both.

CC8464’s Unknown Mechanism of Action

The mechanism of action for EM is unknown. According to the National Institutes of Health, mutations of NaV1.7 are a leading cause for EM but it remains unclear why this defect leads to the observed phenotype. It is also unclear whether other sodium-channels or causes other than genetic mutations influence the development of EM.

Our initial focus for CC8464 is evaluating its potential therapeutic benefit to treat primary EM patients with a genetic mutation in the SCN9A gene. While we do not know the mechanism of action, we believe the empirical correlation between the genetic mutation and disease is a hypothesis to develop CC8464 as a potential drug to mitigate EM for patients with a genetic disposition. We may also evaluate CC8464 for secondary EM patients as we continue our study, although our initial focus is on CC8464’s potential therapeutic benefit to primary EM patients.

CC8464 Current Study Results

CC8464 has undergone a Phase 1 study. The study was not powered for statistical significance and no p-values are available. The result showed that CC8464 has a good overall tolerability but may cause rashes in certain patients. The occurrence of rashes is not uncommon in the class of molecules to which CC8464 belongs. A dose-escalation-regime is a standard method used in pharmaceutical drug development to mitigate rashes as a side effect. We believe that a dose-escalation-regime could reduce the occurrence of rashes to a tolerable level for CC8464. We plan to conduct a dose-escalation-study to potentially validate the concept and establish a prescription regime for patients that minimizes the risk of rashes. Even though the FDA has in the past approved drugs that listed rashes as a potential side effect, we do not know if CC8464 will be approved by the FDA (or any foreign authority) in view of its potential to cause rashes.

Currently a total of 207 healthy subjects have been dosed in four Phase 1 studies (CC8464-1001, CC8464-1002, CC8464-1003, and 1807-CL-0102) with study treatment. The studies were sponsored by Chromocell Holdings. A Phase 1 study investigating safety, tolerability and pharmacokinetics of single and multiple ascending doses of CC8464 in healthy volunteers has been conducted and the data base has been locked (Study Protocol CC8464-1001). CC8464-1002 and CC8464-1003 were relative bioavailability studies in healthy volunteers to support new formulations. CC8464 was, in general, well tolerated in these Phase 1 studies (CC8464-1001, CC8464-1002, CC8464-1003) when administered to healthy volunteers as a single dose up to 1800 mg or over 14 days of once a day dosing up to 1200 mg. Skin rash, the only clinically relevant safety finding, was seen in a total of six (6) out of the 159 subjects dosed with CC8464 in these Phase 1 studies (CC8464-1001, CC8464-1002, CC8464-1003). 

Following clinical completion of the studies CC8464-1001, CC8464-1002, and CC8464-1003, the drug-drug interaction (DDI) study 1807-CL-0102 was initiated to examine the effect of CC8464 on the PK and Pharmacodynamics (PD) of warfarin, a CYP2C9 substrate. This was the first study with a BID dosing regimen (CC8464 400 mg BID daily for two weeks) which had greater accumulation than expected. Thirteen out of eighteen (13/18) subjects dosed with CC8464 reported rash in this open label drug-drug interaction study. Clinical presentation and resolution of the rashes reported in study 1807-CL-0102 were consistent with the rash cases from CC8464-1001 except for a single case of a severe skin reaction requiring IV corticosteroid therapy (SAE). All reported skin rashes in study 1807-CL-0102 resolved within days of treatment discontinuation without sequelea.

Overview of Studies – CC8464

CC8464 Phase 2a Trials

Genetic studies have established a correlation between a mutation in the SCN9A gene and the expression of the EM phenotype in EM patients. Our initial focus in the development plan for CC8464 is assessing its therapeutic use for EM patients with such genetic disposition. We plan to conduct two key studies as part of our Phase 2a clinical trials. First, we will conduct a dose escalation study (“DES”) with healthy volunteers, where we determine the maximum tolerated dose (“MTD”) for CC8464 and the pace of increasing the dosage towards MTD and minimal risk of rashes. Second, we will conduct a proof of concept (“POC”) study, where we induce mild to moderate flares by exposing patients’ hands to cold water and record the self-assessment of patients regarding perception of pain on the 1-10 pain scale. The POC will be conducted as a double-blinded, placebo-controlled study with 20 patients.

Our Addressable Market

Based on a study published in the International Journal of Vascular Medicine, our lead product for the treatment of EM, CC8464, may be relevant for approximately 50,000 patients in the US today. Similarly, according to studies quoted by the Erythromelalgia Association, estimates of the incidence rate for EM vary from 1.3 to 15 per 100,000 persons, reflecting a potential EM patient population up to 50,000 in the U.S.

According to Transparency Market Research, Key Drivers of Global Erythromelalgia Treatment Market include:

Our Lead Drug Candidate and Pipeline

We intend to focus our efforts on the development of CC8464, our lead compound, towards approval in the United States and other jurisdictions. While CC8464 is the focus of our efforts, we may also allocate future resources towards the discovery and development of other compounds that could potentially modulate NaV1.7 or related sodium-channels. We believe that these molecules could represent alternatives in case we encounter challenges in the further development of CC8464 or, in particular, if blocking channels other than NaV1.7 (e.g., NaV1.8) become a complementary therapeutic to CC8464. Pain perception is complex and, given its essential function for human physiology, modulated through a variety of receptors. Hence, we believe that different NaV blockers may provide an additive or even synergistic effect on patients with neuropathic pain.

CC8464’s FDA Orphan Drug Designation

We are considering submitting a request to the FDA for Orphan Drug Designation, which could lead to approval for such designation and provide marketing exclusivity, as well as reduced FDA review periods and regulatory fees. We may apply for similar orphan drug designations in additional jurisdictions, including Europe and Japan, as well as additional regulatory classifications, such as FDA Breakthrough Therapy Designation, that confer an advantage during development. As of the date of this prospectus, we have not submitted an application for orphan drug designation for CC8464. 

CC8464 Manufacturing

We plan to manufacture the clinical and eventual commercial supply through CROs in the U.S. and potentially other jurisdictions. We have rights to two proprietary methods to produce CC8464. We have not yet decided which production process we will use for subsequent clinical trials and eventual commercial supply, but both appear suitable for further use and optimization.

Both manufacturing processes employ common methods of organic synthesis used in the production drug substance. We do not intend to file patents for these processes but will keep the detailed protocols (e.g. the selected crystallization solvent or the particular salt) as trade secrets.

We do not produce drug substance in house. External CROs have produced enough drug substance (based on both processes) to conduct the planned Phase 2a trials.