Exhibit 99.2
BRIAPRO THERAPEUTICS CORP.
MANAGEMENT’S
DISCUSSION AND ANALYSIS
For
the Year Ended July 31, 2023
(Expressed
in U.S. Dollars)
The
following Management’s Discussion and Analysis (“MD&A”) for BRIAPRO THERAPEUTICS CORP. (“BriaPro”
or the “Company”) is prepared as of October 25, 2023 and relates to the financial condition and results of operations
of the Company for the year ended July 31, 2023. Past performance may not be indicative of future performance. This MD&A should
be read in conjunction with the Company’s audited annual financial statements for the period ended July 31, 2023,
which have been prepared using accounting policies consistent with International Financial Reporting Standards as issued by the International
Accounting Standards Board (“IFRS”).
All
amounts are presented in United States dollars (“USD” or “$”), the Company’s presentation
currency, unless otherwise stated.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
of the statements made and information contained herein is “forward-looking information” within the meaning of the Ontario
Securities Act. These statements relate to future events or the Company’s future performance. All statements, other than statements
of historical fact, may be forward-looking statements. Generally, these forward-looking statements can be identified by the use of forward
looking terminology such as “anticipates”, “plans”, “budget”, “scheduled”, “continue”,
“estimates”, “forecasts”, “expect”, “is expected”, “project”, “propose”,
“potential”, “targeting”, “intends”, “believes” or variations of such words and phrases
or statements that certain actions, events or results “may”, “could”, “would”, “might”,
or “will be taken”, “occur” or “be achieved” or the negative connotation thereof. These statements
involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those
anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements
are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included
in this MD&A should not be unduly relied upon by readers, as actual results may vary. These statements speak only as of the date
of this MD&A and are expressly qualified, in their entirety, by this cautionary statement.
The
Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of the
risk factors set forth above. Although the Company has attempted to identify important factors that could cause results to differ materially
from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated
or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Readers are cautioned that the foregoing lists of factors are not exhaustive. Forward looking statements are made as of the date hereof
and accordingly are subject to change after such date. The forward-looking statements contained in this MD&A are expressly qualified
by this cautionary statement. The Company does not undertake to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, except in accordance with applicable securities laws.
Name,
Address and Incorporation
BriaPro
was incorporated under the laws of Business Corporations Act (British Columbia) on May 15, 2023. BriaPro has not conducted any
business to date and is currently a private company and is a subsidiary of BriaCell Therapeutics Corp (“BriaCell”).
No material amendments have been made to BriaPro’s articles or other constating documents since its incorporation. The Company
is an unlisted reporting issuer in Canada.
BriaPro’s
head and principal business address are all located at 234 15th Street, Suite 300, West Vancouver B.C., V7T 2X1. BriaPro’s
registered office address is located at Suite 2500 Park Place, 666 Burrard Street, Vancouver B.C., V6C 2X8.
Significant
developments during the period
On
August 31, 2023, the Company and Briacell, an immuno-oncology biotechnology company
listed on the Toronto Stock Exchange NASDAQ (“Briacell”), closed a plan of arrangement spinout transaction (the “Arrangement”)
pursuant to which certain pipeline assets of the Briacell, including Bria-TILsRx™ and protein kinase C delta (PKCδ) inhibitors
for multiple indications including cancer (the “BriaPro Assets”), were spun-out to the Company.
Pursuant
to the terms of the Arrangement, the Company has acquired the entire right and interest in and to the BriaPro Assets in consideration
for the issuance by the Company to Briacell of the Company’s common shares. Under the terms of the Arrangement, for each BriaCell
share held immediately prior to closing, BriaCell Shareholders receive one (1) common share of BriaPro.
As
a result of the Arrangement, there are 47,945,178 common shares issued and outstanding. BriaCell beneficially owns or controls approximately
31,963,452 common shares, representing 2/3rd of the issued and outstanding common shares.
Equity
Incentive Plan
The
BriaPro Board has adopted the BriaPro incentive plan, The purpose of the BriaPro incentive plan is to allow BriaPro to issue stock options,
performance share units (“PSUs”), restricted share units (“RSUs”), and deferred share units (“DSUs”
and together with the PSUs and RSUs, “Share Units”) to directors, officers, employees and consultants, as additional compensation,
and as an opportunity to participate in the success of BriaPro. The granting of such Awards is intended to align the interests of such
persons with that of the shareholders.
Pursuant
to the Arrangement, all Briacell option holders received the same amount of BriaPro options (“BriaPro Option”) under the
BriaPro incentive plan. The exercise price of the BriaCell options will be apportioned between the BriaCell options and the BriaPro options,
as follows:
Each
one (1) BriaPro Option to acquire one (1) Share shall have an exercise price equal to the product obtained by multiplying the original
exercise price of the BriaCell Option by the quotient obtained by dividing (A) the fair market value of a BriaPro Share at the Effective
Date by (B) the aggregate fair market value of a BriaCell Share and a BriaPro Share at the Effective Date.
As the date of this report, the Company has
2,131,400 stock options outstanding as follows:
Exercise Price(*) | | |
Options outstanding
| | |
Expiry Date |
| | | |
| | |
|
| $ | 6.03 | | |
| 440,000 | | |
June 20, 2028 |
| $ | 7.16 | | |
| 21,000 | | |
February 27, 2028 |
| $ | 6.36 | | |
| 180,100 | | |
August 02, 2027 |
| $ | 4.71 | | |
| 31,000 | | |
May 20, 2027 |
| $ | 7.51 | | |
| 150,000 | | |
February 16, 2027 |
| $ | 8.47 | | |
| 524,700 | | |
January 13, 2027 |
| $ | 7.53 | | |
| 12,600 | | |
November 01, 2026 |
| $ | 5.74 | | |
| 100,000 | | |
September 01, 2026 |
| $ | 4.24 | | |
| 60,000 | | |
April 19, 2026 |
| $ | 4.24 | | |
| 612,000 | | |
March 29, 2026 |
| | | | |
| 2,131,400 | | |
|
(*) The proceeds from the exercise price are
split with BriaCell in accordance with the formula above.
As
the date hereof, there is no current market for the BriaPro Shares. As such, the market value of the BriaPro Shares underlying the awards
has not been determined.
As
the date hereof, each BriaCell RSU holder received the same amount of BriaPro RSU’s. As of the date hereof, the Company had 19,200
RSU’s outstanding.
Warrant
Treatment
In
connection with the Arrangement, each BriaCell warrant shall, in accordance with its terms, entitle the holder thereof to receive, upon
the exercise thereof, one BriaCell Share and one BriaPro Share for the original exercise price.
Upon
the exercise of BriaCell Warrants, BriaCell shall, as agent for BriaPro, collect and pay to BriaPro an amount for each one (1) BriaPro
Share so issued that is equal to the exercise price under the BriaCell Warrant multiplied by the fair market value of one (1) BriaPro
Share at the Effective Date divided by the total fair market value of one (1) BriaCell Share and one (1) BriaPro Share at the Effective
Date.
As
of the date of this report there are issued and outstanding an aggregate of 8,121,650 BriaCell Warrants as follows:
Number
of
Warrants | | |
Exercise
Price ($) | | |
Expiry Date |
| | 51,698 | | |
| 4.14 | | |
November 16, 2025 |
| | 3,896,809 | | |
| 5.31 | | |
February 26, 2026 – April 26, 2026 |
| | 4,173,143 | | |
| 6.19 | | |
June 7, 2026 - December 7, 2026 |
| | 8,121,650 | | |
| | | |
|
As
such, the maximum number of Shares issuable should the BriaCell Warrants be exercised in full is 8,121,650.
Transition
Services Agreement
On
August 31, 2023, the Company and BriaPro executed a transition services agreement (the “Agreement”), pursuant to which BriaCell
will provide certain research and development and head office services (the “Services”) to BriaPro for a fixed monthly fee
of $20,000
Briacell
and BriaPro acknowledged the transitional nature of the Services and accordingly, as promptly as practicable, BriaPro agreed to use commercially
reasonable efforts to transition each Service to its own internal organization or to obtain alternate third party providers to provide
the Services
BUSINESS
OF BRIAPRO
Overview
of BriaPro
BriaPro
is a wholly-owned subsidiary of BriaCell Therapeutics Corp., a clinical stage biotechnology company focused on the development of Bria-TILsRx™,
and PKCδ inhibitors for multiple indications including cancer.
BriaPro’s
novel and highly selective PKCδ inhibitors may be developed as candidates for multiple disease indications including several tumor
types. BriaPro’s two novel Bria-TILsRx™s are multi-specific binding reagents designed to act as potent immune cell activators
and/or immune checkpoint inhibitors. They are expected to selectively target and destroy cancer cells without harming normal (non-cancerous)
cells. This may mean less severe side effects for the treated cancer patients compared with those of alternative therapies.
BriaPro’s
operations are conducted in compliance with local laws where such activities are permissible and either (a) do not require any specific
legal or regulatory approvals, or (b) BriaPro has all necessary legal and/or regulatory approvals. See “Risk Factors.”
Corporate
Highlights
BriaPro
is a spin-out from BriaCell Therapeutics (NASDAQ: BCTX); two-thirds retained ownership. BriaPro is a pre-clinical stage immunotherapy
company developing binding agents and proteins with the intention to boost the ability of the body’s own cancer-fighting cells
to destroy cancerous tumors. Using artificial intelligence (“AI”) [with ImmunoPrecise Antibodies and Receptor AI],
BriaPro will identify drug candidates.
The
lead drug discovery candidates for BriaPro include:
| |
● |
Bria-TILsRx™: Multi-Specific
Binding Reagents - Immunotherapy for Cancer: being developed in collaboration with ImmunoPrecise Antibodies. |
| |
|
|
| |
● |
Small Molecule Program:
Protein Kinase C delta (PKCδ) Inhibitors being developed with Receptor AI. |
The
power of AI in drug candidate selection has been hailed by experts and investments in AI-driven drug discovery companies have tripled
over the past four years, reaching $24.6 billion in 2022.2 Using AI technology to identify the next blockbuster therapies
can help eliminate some of the guesswork that typically requires hundreds of lab experiments—often spread over many years—to
identify promising molecules.
Instead
of coming up with tens of thousands of compounds to figure out, computers suggest testing ten compounds in a lab, then getting feedback
from the lab results. The machines learn from those results to make a better prediction to provide the next hundred candidates for testing
and ultimately filter to one molecule.
Over
the course of the next year, BriaPro expects to screen several different multi specific binding reagents for activity in vitro as well
as in mouse models of cancer. BriaPro also expects to select at least one candidate to advance into IND enabling studies. Human clinical
studies are expected to be initiated in the first half of 2025. In parallel, BriaPro will continue to optimize the structure of its proprietary
protein kinase C delta inhibitors and advance to the candidates election stage. Human clinical studies are expected to be initiated in
the second half of 2025.
BriaPro’s
Business Strategy
BriaPro’s
business strategy includes using AI to guide the design of novel multi specific binding reagents known as Bria-TILsRx™. BriaPro
will also use AI to further enhance the selectivity and potency of novel protein kinase C delta inhibitors. These agents will be tested
in vitro and in animal models to optimize their characteristics. They will then enter preclinical IND, enabling studies which are expected
to take up to one year in duration. They will then be introduced into the clinic in phase one clinical studies in patients with cancer.
As the activity and safety of these assets is confirmed, BriaPro will advance their clinical programs, culminating in applying for biological
licensing applications or new drug applications to the FDA and other regulatory authorities around the world. Bria-TILsRx™ and
protein kinase C delta inhibitors will then be marketed for the treatment of patients with cancer.
BriaPro’s
Research and Development Programs
Bria-TILSRx™:
BriaPro Lead Assets
T
cells typically recognize and attack cancer cells. But cancer can suppress the immune response. Bria-TILsRx™ work in one of two
ways:
| |
● |
Directly linking killer
T cells to cancer cells and activating them to kill the cancer cells; or |
| |
|
|
| |
● |
Blocking the molecules
on the cancer cells that suppress the immune response. |
2
“AI Drug Discovery Is a $50 Billion Opportunity for Big Pharma,” (https://www.bloomberg.com/news/articles/2023-05-09/pharmaceutical-companies-embrace-ai-to-develop-new-drugs).
Bria-TILsRx™
Rationale:
The
global cancer immunotherapy market was estimated at $115 billion in 2022. Current immunotherapies only work in some cancers, and then
not in all patients. Recent entrees into the cancer immunotherapy field are bi-specific T cell engagers (BITEs). These work by linking
killer T cells to cancer cells and activating the killer T cells to kill the cancer cells. Hailed as a potentially major advance in cancer
therapy, they still suffer from side effects and don’t work in all patients. BriaPro’s Bria-TILsRx™ platform is quadrivalent,
enhancing the ability to specifically target tumor cells and potently activate T cells, and to block the ability of the cancer cells
to shut down the immune system. Bria-TILsRx™: Multivalent Binding Reagents are designed to activate the immune system against cancer
more specifically and more potently than current approaches.
Bria-TILsRx™
Advantages:
Multi-specific
Binding Reagents have the potential to (i) bind more selectively to cancer cells and link them with T cells to kill the cancer cells;
and (ii) block the ability of cancer cells to shut down the T cells more potently that current agents.
There
are two approved BITEs to date, with many others in development: BLINCYTO® for leukemia and KIMMTRAK® for melanoma. These are
limited by the cancer cell targets available. By using artificial AI, BriaPro can rapidly develop novel binding agents that can target
more and different types of cancer than other BITEs. The BriaPro molecules are also able to engage more than one target, as shown below.
Current
immunotherapies (Keytruda®, Opdivo®, Tecentriq®, etc) block the ability of selected molecules on cancer cells to shut down
the immune response (so-called immune checkpoints). Their mechanism of action is shown here.
However,
cancer cells express multiple different immune checkpoints. Bria-TILsRx™ can block multiple immune checkpoints with a single molecule
making them potentially more effective, as shown below.
Protein
Kinase C delta (PKCδ) Inhibitors: BriaPro Small Molecule Program
Rationale:
30%
of all human malignancies display activating RAS mutations. As well, another 60% show over-activity of Ras-signaling pathways. Ras has
been termed “undruggable” (as it is difficult to make a Ras inhibitor drug). BriaPro’s novel, proprietary PKCδ
inhibitors have shown activity against multiple RAS transformed tumors. Lung cancer, Melanoma, Breast cancer, Neuroendocrine cancer,
Pancreatic cancer, Colorectal cancer. This target has an attractive safety profile based on in vivo studies and knock out mouse studies.
PKCδ inhibitors should qualify for an accelerated clinical development plan and regulatory pathway. PKCδ inhibitors potentially
offer a safe treatment for up to 90% of all human cancers.
Protein
Kinase C delta (PKCδ) Inhibitors: Advantages:
BriaPro
will have access to novel structures with extended patent life and large number of chemical moieties covered. Fourth generation inhibitors
are under development using AI in collaboration with Receptor AI to optimize drug-like characteristics.
Studies
have also shown that PKCδ inhibitors lack endothelial cell cytotoxicity & PKCδ deficient mice develop normally and are
fertile. This portends an excellent safety profile.
The
below graphic shows three generations of PKCδ inhibitors. The first generation is the natural compound rottlerin, which corresponds
to Generation 1 in the table below. The low potency and selectivity of rottlerin for PKCδ was enhanced by making a hybrid struction,
combining part of the staurosporine molecular structure (shown in red) with part of the rottlerin structure (shown in blue) to produce
KAM1. Note that staurosporine is a highly potent but non-selective PKC inhibitor. The improvement in selectivity of KAM1 over rottlerin
is shown in the table (Generation 2). KAM1 was further modified for produce BP-106 with enhances potency and selectivity (Generation
3).
| Generation |
|
PKC-δ
IC50 |
|
PKC-α
IC50 |
|
PKC-δ/
PKC-α Selectivity Ratio |
| 1 |
|
3 μM |
|
75 μM |
|
28-fold |
| 2 |
|
2 μM |
|
157 μM |
|
56-fold |
| 3 |
|
0.05 μM |
|
50 μM |
|
1000-fold |
High
selectivity of the currently available inhibitors suggests an excellent safety profile with potent anti-cancer activity. Novel PKCδ
inhibitors with excellent safety in vitro and in animal models have been developed and are being optimized. New generation molecules
are being designed using AI.
Several
in vitro and animal model studies have shown efficacy against various human cancers as depicted by the charts below.
PKCδ
inhibitor reduces tumor burden in a human lung cancer model (left; the red line shows increasing tumor size in the control animals while
the blue line shows the tumor size shrinking in the animals treated with a PKCδ inhibitor) and a human pancreatic cancer model
(right) with decreases in tumor amounts (right top; the blue line shows increasing tumor size in the control animals while the purple
line shows the tumor size shrinking in the animals treated with a PKCδ inhibitor) and increased survival (right bottom; survival
is shown, which quickly goes to 0 in the control animals (purple line), but survival of the treated animals (green line) stabilizes at
50% and is maintained for up to 300 days).
Production
and Services
BriaPro
contains the expertise to both discover and develop novel drug candidates, take them through clinical testing and have them approved
for use and marketing in humans. BriaPro will operate as a virtual company using contract research organizations for the bulk of the
research that will be performed. This includes the molecular biology aspect of developing novel protein therapeutics, having them tested
in vitro and tested in animal models, and performing IND enabling toxicology pharmacology and pharmacokinetics studies. BriaPro may develop
a small laboratory presence to perform some of these activities in house.
Specialized
Skill and Knowledge
BriaPro
possesses individuals with expertise in multiple scientific areas relevant to drug discovery and development. This includes molecular
biology, immunology, immuno oncology, clinical pharmacology, preclinical evaluation, basic pharmacology, interpretation of toxicological
studies, regulatory interactions, design and implementation of phase one, phase two, and phase three clinical studies. In addition BriaPro
works with consultants who are experts in medicinal chemistry, artificial intelligence, structural biology, and other relevant disciplines.
Competitive
Conditions
The
market for cancer therapeutics is highly competitive. BriaPro will compete with other research teams who are also examining potential
therapeutics with regards to cancer, both immunotherapies and targeted approaches. Many of its competitors have greater financial and
operational resources and more experience in research and development than BriaPro. Other companies may have developed, or could in the
future develop, new technologies that compete with BriaPro’s technologies or render its technologies obsolete. Competition in cancer
therapeutics markets is primarily driven by (i) timing of technological introductions; (ii) the ability to develop, maintain and protect
proprietary products and technologies; and (iii) expertise of research and development team. BriaPro possesses particular unique expertise
and approaches that differentiate BriaPro from its competition. Very few competitors are using a quadrivalent platform to develop immunotherapies,
and even fewer are targeting the specific receptors that BriaPro is targeting. As well, small molecules that combat RAS transformed tumors
are not common and even less so protein kinase C delta inhibitors.
New
Products
Bria-TILsRx™:
Multi-Specific Binding Reagents - Immunotherapies for Cancer
Developed
as potential immunotherapies for cancer, BriaPro’s two novel Bria-TILsRx™s are multi-specific binding reagents designed to
act as potent immune cell activators and/or immune checkpoint inhibitors. They are expected to selectively target and destroy cancer
cells without harming normal (non-cancerous) cells. This may mean less severe side effects for the treated cancer patients compared with
those of alternative therapies.
PKCδ
Inhibitors: Therapeutics for multiple disease indications including cancer
PKCδ,
also called novel PKC, has been associated with a number of diseases including cancer. Selective inhibitors of PKCδ, have been
shown to be effective treatments for several animal models of cancer and other diseases. BriaPro’s novel and highly selective PKCδ
inhibitors may be developed as candidates for multiple disease indications, including several tumor types.
Components
BriaPro
depends on third party suppliers to obtain BriaPro’s raw ingredients, intermediate drug substances and specialized equipment, which
are necessary for the production of BriaPro’s products.
BriaPro
currently obtains ingredients and API for the manufacturing of BriaPro’s pipeline products from specialized suppliers. For some
components, including raw ingredients, BriaPro has so far identified only one supplier which is qualified for outsourcing and/or current
good manufacturing practice (“cGMP”) process. If that supplier were to stop supplying the required ingredient(s),
BriaPro would need to identify an alternative source of such components, if possible, and may need to wait until it is qualified for
BriaPro’s outsourcing and/or cGMP process before procuring the components. This could cause substantial delays and a significant
increase in costs to one or all of BriaPro’s development programs. If no alternate suppliers were identified, such supply issues
could terminate the program.
Intellectual
Property Rights
Protection
of intellectual property is integral to BriaPro’s success. As such, BriaPro has and will continue to pursue patent protection,
register trademarks, and protect other intellectual property through trade secrets, copyright, confidential disclosure agreements, and
other mechanisms as appropriate. This includes the use of confidential disclosure agreements with all prospective vendors and partners,
reviewed by legal counsel under the direction of BriaPro.
In
order to maximize the duration of patent protection during the commercial life of a potential product and/or allow the generation of
data to strengthen a potential patent, BriaPro may on occasion delay patent filing. However, BriaPro will ensure it does not risk the
product protection during such delay.
To
ensure protection of all trade secrets, BriaPro will put in place strict confidentiality agreements with its directors, executive officers
and staff and stores research and development materials and data in secure facilities.
Patents
and Proprietary Information
Licensing
Agreement between Faller & Williams Technology LLC (“FWT”) and Sapientia Pharmaceuticals, Inc. (“Sapientia”)
This
Licensing Agreement (the “Agreement”) was entered into on March 16, 2017 between FWT and Sapientia, a subsidiary of
BriaCell (The assets that were transferred to BriaPro as part of the Arrangement were owned by Sapientia.) FWT is the owner of
certain patents set forth in Exhibit A, which were assigned to them from the inventors recorded at Reel/Frame 041014/0095 on January
19, 2017, and FWT, pursuant to this Agreement, licensed the patents to Sapientia. Within 30 days of the date of this Agreement, Sapientia
must pay to FWT $75,000 to be paid half in cash ($37,500) and the other half in Sapientia common shares, fully vested, valued at $37,500,
representing Sapientia’s reimbursement of FWT’s prior expenses associated with the Patents and execution of the Agreement,
in addition to certain milestone payments.
Royalties
are also payable pursuant to this Agreement. Following the first Commercial Sale of a first Product in the United States, Sapientia shall
pay to FWT 5% of Net Sales of Products encompassed by one or more valid claims of the Patents and/or the Improvement within the Territory,
and 2.5% of Net Sales of Products not encompassed within one or more valid claims of the Patents within the Territory. Payment must be
made on or before January 1st and on or before July 1st of every year. If sales of Product require the payment of a royalty to a Third
Party for a prior art patent, Royalties payable to FWT shall be reduced by the amount of the Third Party royalty actually paid, but in
no event shall the Royalty payments payable to FWT be reduced by more than one half of the amounts set forth in this Section. Three years
after receiving marketing approval from the regulatory bodies listed in Section 3.5, Sapientia must make minimum royalty payments to
FWT of US$250,000 per year. Within 30 days of sublicensing to a Third Party, Sapientia must pay to FWT 25% of all consideration received
by Sapientia for the sublicense.
FWT
retains all rights to use and practice the Patents and any Improvement for research, education, and other non-commercial purposes, and
may exercise those rights with or without Notice or compensation to Sapientia.
Patents
licensed to Sapientia pursuant to this Agreement include:
| |
● |
U.S. Provisional Application
No. 61/703,081 entitle “PKC Delta Inhibitors for use as Therapeutics” filed 19 September 2012. |
| |
|
|
| |
● |
International Application
No. PCT/US2013/60638 entitled “PKC Delta Inhibitors for use as Therapeutics” filed 19 September 2013. |
| |
|
|
| |
● |
U.S. Patent No. 9,364,460
entitled “PKC Delta Inhibitors for use as Therapeutics” issued 14 June 2016. |
| |
|
|
| |
● |
U.S. Patent Application
No. 15/148,420 entitled “PKC Delta Inhibitors for use as Therapeutics” filed 06 May 2016. |
| |
|
|
| |
● |
U.S. Patent Application
No. 15/425,381 entitled “PKC Delta Inhibitors for use as Therapeutics” filed 06 February 2017. |
| |
|
|
| |
● |
EP Patent Application No.
13839158.6 “PKC Delta Inhibitors for use as Therapeutics” filed 25 March 2015. |
Pursuant
to the Agreement, Sapientia agrees that the Patents are the property of FWT and agrees to not challenge their validity or ownership.
Sapientia has no rights to the Patents except as expressly contained in the Agreement. Improvements made by Sapientia during the term
of this Agreement shall be assigned to FWT and included as a part of the Agreement. The license granted to Sapientia from FWT is exclusive,
and Sapientia has an exclusive license to make, use, sell, offer to sell, import, and export the rights afforded under the Patents in
the Field and in the Territory, subject to rights reserved by FWT pursuant to the Agreement.
Cycles
The
nature of BriaPro’s business is not seasonal or cyclical.
Economic
Dependence
BriaPro
does not have a contract upon which its business is substantially dependent.
Changes
to Contracts
BriaPro
does not anticipate any aspect of its business in the current financial year that would be affected by renegotiation or termination of
contracts or sub-contracts.
Environmental
Protection
BriaPro
does not anticipate any financial or operational effects of environmental protection requirements on the capital expenditures, profit
or loss and competitive position in the current financial year or in future years.
Management
and Employees
BriaPro
will initiate operations with four employees.
Foreign
Operations
BriaPro
does not have any foreign operations. Several of BriaPro’s contractors are located in other countries and this could present a
risk to ongoing operations.
Lending
BriaPro
does not have any lending operations.
Market
Opportunity
BriaPro
is dedicated to the development of novel immunotherapies to fight cancer and improve the lives of patients whose medical needs are currently
unmet. The global cancer immunotherapy market is estimated at $115 billion in 2022.3 However, current immunotherapies only
work in some cancers, and even then, not in all patients. Recent entries into the cancer immunotherapy field are bi-specific T cell engagers
(BITEs). To date, there are two approved BITEs, with many others in development: BLINCYTO® for leukemia and KIMMTRAK® for melanoma.
These existing options are limited by the cancer cell targets available. By using AI, BriaPro can rapidly develop novel binding agents
that can target more and different types of cancer. Currently, one of BriaPro’s lead drug discovery candidates, Protein Kinase
C Delta (PKCδ) Inhibitors, is being developed with AI with the intention of boosting the ability of the body’s own cancer-fighting
cells to destroy various types of cancerous tumors. Technology and discovery like this allows BriaPro to also exist and be an early competitor
in a market subset of AI-driven drug discovery, a sector that has seen investments triple over the past four years, reaching $24.6 billion
in 2022.4
BriaPro
expects any products that it develops and commercializes to compete on the basis of, among other things, efficacy, safety, price and
the availability of reimbursement from government and other third-party payors. BriaPro’s commercial opportunity is significantly
influenced by its ability to obtain regulatory approval for current product candidates or any future product candidate more rapidly than
BriaPro’s competitors.
3
“Cancer Immunotherapy Market Size, Share & Trends Analysis Report by Product (Monoclonal Antibodies, Immunomodulators),
By Application, By Distribution Channel, By End-use, By Region, And Segment Forecsts, 2023-2030),” https://www.grandviewresearch.com/industry-analysis/cancer-immunotherapy
market#:~:text=Report%20Overview,8.7%25%20from%202023%20to%202030.
4
“Who owns drugs developed with AI?” https://bio.news/bios-view/who-owns-ai-developed-drugs-artificial-intelligence-machine-learning.
Regulatory
Environment
Drug
products must be approved by the appropriate governing body before it can be sold in that country or area. The FDA approves products
for the United States market and Health Canada approves products for the Canadian market. The European Medicines Agency (“EMA”)
approves products for the European Union. While the process by which products are approved by the FDA and Health Canada is very similar,
each regulatory body has its own unique requirements for a product. In both cases, the development of a product through to approval can
be a lengthy process and, in some cases, can take over ten years. While early studies conducted in one jurisdiction will usually be accepted
in the other, further and somewhat modified studies may be required to have a product approved in another jurisdiction.
The
process required by the FDA before drug products may be marketed in the United States generally involves the following:
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completion of extensive
preclinical laboratory tests and preclinical animal studies, some performed in |
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accordance with the GLP
regulations; |
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submission to the FDA of
a pre-investigational new drug (“IND”), which must be reviewed by the FDA and become active before human clinical
trials may begin and must be updated annually; |
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approval by an independent
review board (“IRB”) or ethics committee representing each clinical site before each clinical trial may be initiated; |
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performance of adequate
and well-controlled human clinical trials conducted under Good Clinical Practices (“GCP”) to establish the safety
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preparation of and
submission to the FDA of an NDA or BLA after completion of all pivotal clinical trials; |
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a determination by the
FDA within 60 days of its receipt of an NDA or BLA to file the application for review; |
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potential review of the
product application by an FDA advisory committee, where appropriate and if applicable; |
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satisfactory completion
of an FDA pre-approval inspection of the manufacturing facilities where the proposed product is produced to assess compliance with
cGMP. |
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a potential FDA audit of
the preclinical research and clinical trial sites that generated the data in support of the NDA or a Biological License Application
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FDA review and approval
of an NDA or BLA prior to any commercial marketing or sale of the product in the United States. |
The
preclinical research, clinical testing and approval process require substantial time, effort, and financial resources, and BriaPro cannot
be certain that any approvals for BriaPro’s product candidates will be granted on a timely basis, if at all. An IND is a request
for authorization from the FDA to administer an investigational new drug product to humans in clinical trials. The central focus of an
IND submission is on the general investigational plan and the protocol(s) for human clinical trials. The IND also includes results of
animal studies assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product; chemistry,
manufacturing, and controls information; and any available human data or literature to support the use of the investigational new drug.
An IND must become effective before human clinical trials may begin. An IND will automatically become effective 30 days after receipt
by the FDA, unless before that time the FDA raises concerns or questions related to the proposed clinical trials. In such a case, the
IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before clinical
trials can begin. Accordingly, submission of an IND may or may not result in the FDA allowing clinical trials to commence. As drug product
programs continue in development, clinical trial protocols, additional preclinical testing results, and manufacturing information is
submitted with the IND to facilitate discussions with the FDA and approval of additional clinical trials. See “Risk Factors.”
Options
and Other Rights to Purchase Shares
The
BriaPro Board adopted the BriaPro Incentive Plan, and the BriaCell Shareholders subsequently approved same. The purpose
of the BriaPro Incentive Plan is to allow BriaPro to issue performance share units (“PSUs”), restricted share units
(“RSUs”), and deferred share units (“DSUs” and together with the PSUs and RSUs, “Share Units”)
and BriaPro Options (together with the Share Units, “Awards”) to directors, officers, employees and consultants, as additional
compensation, and as an opportunity to participate in the success of BriaPro. The granting of such options is intended to align the interests
of such persons with that of the shareholders.
Following
the closing of the Arrangement and the exchange of BriaCell Options for BriaCell Replacement Options and BriaPro Options under the Plan
of Arrangement, BriaCell Replacement Options (and, any new options of BriaCell granted thereafter) will continue to be governed by the
BriaCell Omnibus Plan or BriaCell Stock Option Plan, as applicable, based on the original issuance of such BriaCell Options, and BriaPro
Options shall be governed by the BriaPro Incentive Plan. The exercise price of the BriaCell Options exchanged will be apportioned between
the BriaCell Replacement Options and the BriaPro Options, subject to adjustments as provided for therein.
There
are no other immediate plans to grant BriaPro Options under the BriaPro Incentive Plan. As the date hereof, there is no current market
for the BriaPro Shares. As such, the market value of the BriaPro Shares underlying the Awards has not been determined.
Prior
Sales
On May 15, 2023, BriaPro
has issued one (1) incorporation BriaPro Share to BriaCell for consideration of C$1.00.
Following completion of the Arrangement,
on August 31, 2023, the Company issued BriaCell and BriaCell shareholders, 31,963,451 and 15.981.726 BriaPro shares, respectively for
no consideration.
Escrowed
Securities and Securities Subject to Contractual Restriction on Transfer
There
are no BriaPro Shares currently held in escrow or that are subject to a contractual restriction on transfer.
Resale
Restrictions
There
is currently no market through which the BriaPro Shares may be sold and, unless the BriaPro Shares are listed on a stock exchange, BriaCell
Shareholders may not be able to resell the BriaPro Shares. There can be no assurances that BriaPro will be obtain such a listing on the
TSX, NASDAQ or any other recognized North American stock exchange.
Principal
Shareholders
Except
as described below, to the knowledge of the directors and executive officers of BriaPro, and based on existing information as of the
date hereof, no person or company, upon completion of the Arrangement will, beneficially own, or control or direct, directly or indirectly,
voting securities of BriaPro carrying 10.0% or more of the voting rights attached to any class of voting securities of BriaPro, except
from Briacell, who will initially own 66.67% ownership of BriaPro.
DISCUSSION
OF OPERATIONS
The
Company was incorporated on May 15, 2023 and the Transaction was completed on August 31, 2023. As such, the Company was inactive
for the period from inception through to July 31, 2023.
LIQUIDITY
AND CAPITAL RESOURCES
Liquidity
is a measure of a company’s ability to meet potential cash requirements.
The
Company is an early-stage biotech company focused on research and development of its products, and currently does not generate any revenues
from its operations.
The
Company’s current financial resources are not sufficient to meet its short-term liquidity requirements and to fund its operations
for at least the coming 12 months, and will require additional proceeds to be raised through an offering of securities.
Capital
Management
The
Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits
to other stakeholders. The capital structure of the Company consists of cash and equity comprised of issued capital.
The
Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its
Board of Directors, will balance its overall capital structure through new share issuances or by undertaking other activities as deemed
appropriate under the specific circumstances.
The
Company is not subject to externally imposed capital requirements and the Company’s overall strategy with respect to capital risk
management remains unchanged.
Off
Balance Sheet Arrangements
There
are no off-balance sheet arrangements to which the Company is committed.
Transactions
With Related Parties
There
were no transactions with related parties for the period of inception through to July 31, 2023.
Additional
Disclosure for Companies Without Significant Revenue
An
analysis of material components of the Company’s general and administrative expenses is disclosed in the financial statements for
the period from inception through to July 31, 2023, to which this MD&A relates.
Disclosure
of Outstanding Share Data
Authorized
share capital consists of unlimited number of common shares without par value.
As
of July 31, 2023, and October 25, 2023, the Company had 1 and 47,945,178 common shares issued and outstanding, respectively.
As
of July 31, 2023, and October 25, 2023, the Company had nil and 2,131,400 stock options outstanding.
As
of July 31, 2023, and October 25, 2023, the Company had no share purchase warrants outstanding. However, Briacell has 8,121,650 warrants
outstanding, and these warrants entitle holders thereof to receive, upon the exercise thereof, one BriaCell Share and one
BriaPro Share for the original exercise price.
As
of July 31, 2023, and October 25, 2023, the Company had nil and 19,200 RSU’s outstanding, respectively.
Risk
Factors
The
Company business, and investing in the Company’s securities, are subject to numerous risks. If any of these risks actually occur,
the Company’s business, financial condition or results of operations would likely be materially adversely affected. In each case,
the trading price of the Company’s securities would likely decline, and investors may lose all or part of their investment. The
following is a summary of some of the principal risks the Company faces:
Risks
Associated with the Business
Nature
of the Securities and No Assurance of any Listing
BriaPro
Shares are not currently, and will not as a result of the Arrangement, be listed on any stock exchange and there is no assurance that
the BriaPro Shares will ever be listed on any stock exchange. Even if a listing is obtained in the future, the holding of BriaPro Shares
will involve a high degree of risk and should be undertaken only by investors whose financial resources are sufficient to enable them
to assume such risks and who have no need for immediate liquidity in their investment. BriaPro Shares should not be held by persons who
cannot afford the possibility of the loss of their entire investment. Furthermore, an investment in securities of BriaPro should not
constitute a major portion of an investor’s portfolio.
Future
Sales or Issuances of Securities
BriaPro
may issue additional securities to finance future activities. BriaPro cannot predict the size of future issuances of securities or the
effect, if any, that future issuances and sales of securities will have on the market price of the BriaPro Shares. Sales or issuances
of substantial numbers of BriaPro Shares, or the perception that such sales could occur, may adversely affect prevailing market prices
of the BriaPro Shares. With any additional sale or issuance of BriaPro Shares, investors will suffer dilution to their voting power and
BriaPro may experience dilution in its earnings per share.
Limited
Operating History
BriaPro
was incorporated on May 15, 2023 and has a limited operating history and no operating revenues.
Lack
of Supporting Clinical Data
The
clinical effectiveness and safety of any of BriaPro’s developmental products is not yet supported by extensive clinical data and
the medical community has not yet developed a large body of peer reviewed literature that supports the safety and efficacy of BriaPro’s
products. If future studies call into question the safety or efficacy of BriaPro’s products, BriaPro’s business, financial
condition, and results of operations could be adversely affected.
Unproven
Market for Product Candidates
BriaPro
believes that the anticipated market for its potential products and technologies if successfully developed will continue to exist and
expand. These assumptions may prove to be incorrect for a variety of reasons, including competition from other products and the degree
of commercial viability of the potential product.
Growth
of Business
Anticipated
growth in all areas of BriaPro’s business is expected to continue to place a significant strain on its managerial, operational
and technical resources. BriaPro expects operating expenses and staffing levels to increase in the future. To manage such growth, BriaPro
must expand its operational and technical capabilities and manage its employee base while effectively administering multiple relationships
with various third parties. There can be no assurance that BriaPro will be able to manage its expanding operations effectively. Any failure
to implement cohesive management and operating systems, to add resources on a cost-effective basis or to properly manage BriaPro’s
expansion could have a material adverse effect on its business and results of operations.
Reliance
on Third Parties
BriaPro
does not expect to have any in-house manufacturing, pharmaceutical development or marketing capability. To be successful, a product must
be manufactured and packaged in commercial quantities in compliance with regulatory requirements and in reasonable time frames and at
accepted costs. BriaPro intends to contract with third parties to develop its products. No assurance can be given that BriaPro or its
suppliers will be able to meet the supply requirements in respect of the product development or commercial sales. Production of therapeutic
products may require raw materials for which the sources and amount of supply are limited, or may be hindered by quality or scheduling
issues in respect of the third party suppliers over which BriaPro has limited control. An inability to obtain adequate supplies of raw
materials could significantly delay the development, regulatory approval and marketing of a product. BriaPro has limited in-house personnel
to internally manage all aspects of product development, including the management of multi-center clinical trials. BriaPro is significantly
reliant on third-party consultants and contractors to provide the requisite advice and management. There can be no assurance that the
clinical trials and product development will not encounter delays which could adversely affect prospects for BriaPro’s success.
To be successful, an approved product must also be successfully marketed. The market for BriaPro’s product being developed by BriaPro
may be large and will require substantial sales and marketing capability. At the present time, BriaPro does not have any internal capability
to market pharmaceutical products. BriaPro intends to enter into one or more strategic partnerships or collaborative arrangements with
pharmaceutical companies or other companies with marketing and distribution expertise to address this need. If necessary, BriaPro will
establish arrangements with various partners for geographical areas. There can be no assurance that BriaPro can market, or can enter
into a satisfactory arrangement with a third party to market a product in a manner that would assure its acceptance in the marketplace.
However,
if a satisfactory arrangement with a third party to market and/or distribute a product is obtained; BriaPro will be dependent on the
corporate collaborator(s) who may not devote sufficient time, resources and attention to BriaPro’s programs, which may hinder efforts
to market the products. Should BriaPro not establish marketing and distribution strategic partnerships and collaborative arrangements
on acceptable terms, and undertake some or all of those functions, BriaPro will require significant additional human and financial resources
and expertise to undertake these activities, the availability of which is not guaranteed. BriaPro will rely on third parties for the
timely supply of raw materials, equipment, contract manufacturing, and formulation or packaging services. Although BriaPro intends to
manage these third-party relationships to ensure continuity and quality, some events beyond BriaPro’s control could result in complete
or partial failure of these goods and services. Any such failure could have a material adverse effect on the financial conditions and
results of operations of BriaPro. Due to the complexity of the process of developing pharmaceutical products, BriaPro’s business
may depend on arrangements with pharmaceutical and biotechnology companies, corporate and academic collaborators, licensors, licensees
and others for the research, development, clinical testing, technology rights, manufacturing, marketing and commercialization of its
products. Such agreements could obligate BriaPro to diligently bring potential products to market, make milestone payments and royalties
that, in some instances, could be substantial, and incur the costs of filing and prosecuting patent applications. There can be no assurance
that BriaPro will be able to establish or maintain collaborations that are important to its business on favorable terms, or at all. A
number of risks arise from BriaPro’s potential dependence on collaborative agreements with third parties. Product development and
commercialization efforts could be adversely affected if any collaborative partner terminates or suspends its agreement with BriaPro,
causes delays, fails to on a timely basis develop or manufacture in adequate quantities a substance needed in order to conduct clinical
trials, fails to adequately perform clinical trials, determines not to develop, manufacture or commercialize a product to which it has
rights, or otherwise fails to meet its contractual obligations. BriaPro’s collaborative partners could pursue other technologies
or develop alternative products that could compete with the products BriaPro is developing.
BriaPro
is expected to sign Non-Disclosure Agreements (“NDA”) with third parties with which it engages in research and development
activities. There is no guarantee that, despite the terms of the NDA which bind third parties, BriaPro will ultimately be able to prevent
such third parties from breaching their obligations under the NDA. Use of BriaPro’s confidential information in an unauthorized
manner is likely to negatively affect BriaPro.
Pre-Clinical
Studies and Initial Clinical Trials Not Necessarily Predictive of Future Results
Pre-clinical
tests and Phase I/II clinical trials are primarily designed to test safety, to study pharmacokinetics and pharmacodynamics and to understand
the side effects of product candidates at various doses and schedules. Success in pre-clinical and early clinical trials does not ensure
that later large-scale efficacy trials will be successful, nor does it predict final results. Favorable results in early trials may not
be repeated in later trials. A number of companies in the life sciences industry have suffered significant setbacks in advanced clinical
trials, even after positive results in earlier trials. Clinical results are frequently susceptible to varying interpretations that may
delay, limit or prevent regulatory approvals. Negative or inconclusive results or adverse medical events during a clinical trial could
cause a clinical trial to be delayed, repeated or terminated. Any pre-clinical data and the clinical results obtained for BriaPro’s
technology may not predict results from studies in larger numbers of subjects drawn from more diverse populations or in the commercial
setting, and also may not predict the ability of BriaPro’s products to achieve their intended goals, or to do so safely.
Results
of Early Clinical Trials May Not be Predictive of Future Trial Results
BriaPro
has limited experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including the United
States Food and Drug Administration (“FDA”) approval. Clinical trials are expensive and complex, can take many years
and have uncertain outcomes. BriaPro cannot predict whether it or its licensees will encounter problems with any of the completed, ongoing
or planned clinical trials that will cause it or its licensees or regulatory authorities to delay or suspend clinical trials, or delay
the analysis of data from completed or ongoing clinical trials. BriaPro estimates that clinical trials of their most advanced therapeutic
candidates will continue for several years, but they may take significantly longer to complete. Failure can occur at any stage of the
testing and BriaPro may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay
or prevent commercialization of their current or future therapeutic candidates, including but not limited to: delays in securing clinical
investigators or trial sites for the clinical trials; delays in obtaining institutional review board and other regulatory approvals to
commence a clinical trial; slower than anticipated patient recruitment and enrollment; negative or inconclusive results from clinical
trials; unforeseen safety issues; uncertain dosing issues; an inability to monitor patients adequately during or after treatment; and
problems with investigator or patient compliance with the trial protocols. A number of companies in the pharmaceutical and biotechnology
industries, including those with greater resources and experience than BriaPro, have suffered significant setbacks in advanced clinical
trials, even after seeing promising results in earlier clinical trials. Despite the results reported in earlier clinical trials for BriaPro’s
therapeutic candidates, BriaPro does not know whether any phase 3 or other clinical trials that BriaPro or its licensees may conduct
will demonstrate adequate efficacy and safety to result in regulatory approval to market BriaPro’s therapeutic candidates. If later-stage
clinical trials of any therapeutic candidate do not produce favorable results, BriaPro’s ability to obtain regulatory approval
for the therapeutic candidate may be adversely impacted, which will have a material adverse effect on BriaPro’s business, financial
condition and results of operations.
Inability
to Obtain Raw Materials
Raw
materials and supplies are generally available in quantities to meet the needs of BriaPro’s business. BriaPro will be dependent
on third-party manufacturers for the pharmaceutical products that it markets An inability to obtain raw materials or product supply could
have a material adverse impact on BriaPro’s business, financial condition and results of operations.
Must
Obtain Additional Capital to Continue Operations
BriaPro
anticipates that additional capital will be required to complete its current research and development programs. It is anticipated that
future research, additional pre-clinical and toxicology studies and manufacturing initiatives, including to prepare for market approval
and successful product market launch, will require additional funds. Further financing may dilute the current holdings of shareholders
and may thereby result in a loss for the shareholders. There can be no assurance that BriaPro will be able to obtain adequate financing,
or financing on terms that are reasonable or acceptable for these or other purposes, or to fulfill BriaPro’s obligations under
various license agreements. Failure to obtain such additional financing could result in delay or indefinite postponement of further research
and development of BriaPro’s technologies with the possible loss of license rights to these technologies.
Highly
Dependent on Key Personnel.
Although
BriaPro is expected to have experienced senior management and personnel, BriaPro will be substantially dependent upon the services of
a few key personnel, particularly Dr. William V. Williams, Dr. Giuseppe Del Priore, Dr. Miguel Lopez-Lago and other professionals for
the successful operation of its business. The loss of the services of any of these personnel could have a material adverse effect on
the business of BriaPro. BriaPro may not be able to attract and retain personnel on acceptable terms given the intense competition for
such personnel among high technology enterprises, including biotechnology and healthcare companies, universities and non-profit research
institutions. If BriaPro loses any of these persons, or is unable to attract and retain qualified personnel, BriaPro’s business,
financial condition and results of operations may be materially and adversely affected. BriaPro’s directors and officers and other
BriaCell personnel support made available pursuant to the Transition Services Agreement may be subject to competing commitments to BriaCell
and its research and development programs.
Conflicts
of Interest
Certain
directors and officers of BriaPro are, and may continue to be, involved in the health and biotechnology industries through their direct
and indirect participation in corporations, partnerships or joint ventures which are potential competitors of BriaPro, including BriaCell.
Situations may arise in connection with potential acquisitions in investments where the other interests of these directors and officers
may conflict with the interests of BriaPro. Directors and officers of BriaPro with conflicts of interest will be subject to the procedures
set out in applicable corporate and Securities Legislation, regulation, rules and policies.
No
History of Earnings
BriaPro
has no history of earnings or of a return on investment, and there is no assurance that BriaPro Assets or any other asset or business
that BriaPro may acquire or undertake will generate earnings, operate profitably or provide a return on investment in the future. BriaPro
has no plans to pay dividends for some time in the future, if ever. The future dividend policy of BriaPro will be determined by the BriaPro
Board.
Risks
Related to Regulatory Changes
Existing
and proposed changes in the laws and regulations affecting public companies may cause BriaPro to incur increased costs as BriaPro evaluates
the implications of new rules and responds to new requirements. Failure to comply with new rules and regulations could result in enforcement
actions or the assessment of other penalties. New laws and regulations could make it more difficult to obtain certain types of insurance,
including director’s and officer’s liability insurance, and BriaPro may be forced to accept reduced policy limits and coverage
or incur substantially higher costs to obtain the same or similar coverage, to the extent that such coverage remains available.
The
impact of these events could also make it more difficult for BriaPro to attract and retain qualified persons to serve on the Board, or
as executive officers. BriaPro may be required to hire additional personnel and utilize additional outside legal, accounting and advisory
services, all of which could cause the BriaPro’s general and administrative costs to increase beyond what BriaPro currently has
planned. Although BriaPro will evaluate and monitor developments with respect to new rules and laws, BriaPro cannot predict or estimate
the amount of the additional costs BriaPro may incur or the timing of such costs with respect to such evaluations and/or compliance and
cannot provide assurances that such additional costs will render BriaPro compliant with such new rules and laws.
Dilution
Issuances
of additional securities including, but not limited to, BriaPro Shares, BriaPro Options or some form of convertible debentures, will
result in a substantial dilution of the equity interests of any persons who may become BriaPro Shareholders as a result of or subsequent
to the Arrangement.
No
Independent Operating History
The
BriaPro Assets have no operating history independent from BriaCell, and estimates of future cash flows have been based upon the combined
operations of BriaPro and BriaCell. There can be no assurance that the estimates of future cash flows will prove to be accurate once
BriaPro begins operating independently.
Early
Stage Development Company
Market
perception of early stage companies may change, potentially affecting the value of investors’ holdings and the ability of BriaPro
to raise further funds through the issue of further BriaPro Shares or otherwise. BriaPro is developing novel technologies that may not
be efficacious or safe. BriaPro expects to spend a significant amount of capital to fund research and development. As a result, BriaPro
expects that its operating expenses will increase significantly and, consequently, it will need to generate significant revenues to become
profitable. Even if BriaPro does become profitable, it may not be able to sustain or increase profitability on a quarterly or annual
basis. BriaPro cannot predict when, if ever, it will be profitable. There can be no assurances that the intellectual property of BriaPro,
or other technologies it may acquire, will meet applicable regulatory standards, obtain required regulatory approvals, be capable of
being produced in commercial quantities at reasonable costs, or be successfully marketed. BriaPro will be undertaking additional laboratory
studies or trials with respect to the intellectual property of BriaPro, and there can be no assurance that the results from such studies
or trials will result in a commercially viable product or will not identify unwanted side effects.
Dividend
Policy
No
dividends on BriaPro Shares have been paid by BriaPro to date. BriaPro anticipates that it will retain all earnings and other cash resources
for the foreseeable future for the operation and development of its business. Payment of any future dividends will be at the discretion
of the BriaPro Board after taking into account many factors, including BriaPro’s operating results, financial condition and current
and anticipated cash needs.
Government
Regulations, Permits and Licenses
BriaPro’s
operations may be subject to governmental laws or regulations promulgated by various legislatures or governmental agencies from time
to time. A breach of such legislation may result in the imposition of fines and penalties. The cost of compliance with changes in governmental
regulations has the potential to reduce the profitability of operations. BriaPro intends to fully comply with all governmental laws and
regulations. While there are currently no indications that BriaPro will require approval by a governmental or regulatory authority in
Canada or the U.S., such approvals may ultimately be required. If any permits are required for BriaPro’s operations and activities
in the future, there can be no assurance that such permits will be obtainable on reasonable terms or on a timely basis, or that applicable
laws and regulations will not have an adverse effect on BriaPro’s business.
The
current and future operations of BriaPro are and will be governed by laws and regulations governing the healthcare industry, labour standards,
occupational health and safety, land use, environmental protection, and other matters. Amendments to current laws, regulations and permits
governing operations, or more stringent implementation thereof, could have a material adverse impact on BriaPro and cause increases in
capital expenditures or costs, or reduction in levels of its medical services.
Privacy
and Data Regulation
BriaPro
may be subject to federal, state and provincial data protection laws and regulations in the jurisdictions in which it operates, such
as laws and regulations that address privacy and data security. BriaPro may obtain health information from third parties, which are subject
to privacy and security requirements under applicable laws. Depending on the facts and circumstances, BriaPro could be subject to significant
civil, criminal, and administrative penalties if it obtains, uses, or discloses individually identifiable health information maintained
by entities covered by applicable health and data protection laws in a manner that is not authorized or permitted by such laws.
Compliance
with privacy and data protection laws and regulations could require BriaPro to contractually restrict its ability to collect, use and
disclose data, or in some cases, impact its ability to operate in certain jurisdictions. Failure to comply with these laws and regulations
could result in civil, criminal and administrative penalties, private litigation, or adverse publicity and could negatively affect BriaPro’s
operating results and business. Moreover, clinical trial subjects, employees and other individuals may limit our ability to collect,
use and disclose information collected. Claims that BriaPro has violated privacy rights, failed to comply with data protection laws,
or otherwise breached obligations, could be expensive and time-consuming to defend and could result in adverse publicity that could harm
BriaPro’s business.
Data
Security
BriaPro
and its customers could suffer harm if personal and health information were accessed by third parties due to a system security failure.
The collection of data requires BriaPro to receive and store a large amount of personally identifiable data. Recently, data security
breaches suffered by well-known companies and institutions have attracted a substantial amount of media attention, prompting legislative
proposals addressing data privacy and security. BriaPro may become exposed to potential liabilities with respect to the data that it
collects, manages and processes, and may incur legal costs if information security policies and procedures are not effective or if BriaPro
is required to defend its methods of collection, processing and storage of personal data. Future investigations, lawsuits or adverse
publicity relating to its methods of handling such information could have a material adverse effect on BriaPro’s business, financial
condition and results of operations due to the costs and negative market reaction relating to such developments.
Product
Liability
As
BriaPro’s drug candidates enter clinical trials, BriaPro will face an inherent risk of product liability suits and will face an
even greater risk if BriaPro obtains approval to commercialize any drugs. For example, BriaPro may be sued if its drug candidates cause
or are perceived to cause injury or are found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any
such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent
in the drug, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts.
If BriaPro cannot successfully defend itself against product liability claims, BriaPro may incur substantial liabilities or be required
to limit commercialization of BriaPro’s drug candidates. Even successful defense would require significant financial and management
resources. Regardless of the merits or eventual outcome, liability claims may result in: decreased demand for BriaPro’s drugs;
injury to BriaPro’s reputation; withdrawal of clinical trial participants and inability to continue clinical trials; initiation
of investigations by regulators; costs to defend the related litigation; diversion of management’s time and BriaPro’s resources;
substantial monetary awards to trial participants or patients; product recalls, withdrawals or labeling, marketing or promotional restrictions;
loss of revenue; exhaustion of any available insurance and BriaPro’s capital resources; the inability to commercialize any drug
candidate; and a decline in the price of BriaPro Shares.
BriaPro
shall seek to obtain the appropriate insurance once its candidates are ready for clinical trial. However, BriaPro’s inability to
obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent
or inhibit the commercialization of drugs BriaPro develops, alone or with collaborators. BriaPro does not currently have in place product
liability insurance and although BriaPro plans to have in place such insurance as and when the products are ready for commercialization,
as well as insurance covering clinical trials, the amount of such insurance coverage may not be adequate, BriaPro may be unable to maintain
such insurance, or may not be able to obtain additional or replacement insurance at a reasonable cost, if at all. BriaPro’s insurance
policies may also have various exclusions, and may be subject to a product liability claim for which BriaPro has no coverage. BriaPro
may have to pay any amounts awarded by a court or negotiated in a settlement that exceed BriaPro’s coverage limitations or that
are not covered by BriaPro’s insurance, and may not have, or be able to obtain, sufficient capital to pay such amounts. Even if
BriaPro’s agreements with any future corporate collaborators entitle BriaPro to indemnification against losses, such indemnification
may not be available or adequate should any claim arise.
Additionally,
BriaPro may be sued if the products that BriaPro commercialize, market or sell cause or are perceived to cause injury or are found to
be otherwise unsuitable, and may result in: decreased demand for those products; damage to BriaPro’s reputation; costs incurred
related to product recalls; limiting BriaPro’s opportunities to enter into future commercial partnerships; and a decline in the
price of BriaPro’s common shares.
Third
Party License Risk
BriaPro’s
intellectual property is currently under third-party licenses and may require additional third-party licenses to effectively develop
and manufacture its key products or future technologies. BriaPro is currently unable to predict the availability or cost of such licenses.
A substantial number of patents have already been issued to other biotechnology and pharmaceutical companies. To the extent that valid
third-party patent rights cover BriaPro’s products or services, BriaPro or its strategic collaborators would be required to seek
licenses from the holders of these patents in order to manufacture, use or sell these products and services, and payments under them
would reduce BriaPro’s profits from these products and services. BriaPro is currently unable to predict the extent to which it
may wish or be required to acquire rights under such patents, the availability and cost of acquiring such rights, and whether a license
to such patents will be available on acceptable terms or at all. There may be patents in the U.S. or in foreign countries or patents
issued in the future that are unavailable to license on acceptable terms. BriaPro’s inability to obtain such licenses may hinder
or eliminate an ability to manufacture and market products.
Failure
to Comply with Intellectual Property or License Agreements
BriaPro
is or may become a party to third-party agreements under which BriaPro grants or is granted rights to intellectual property that are
potentially important to BriaPro’s business and BriaPro expect that BriaPro may need to enter into additional license or collaboration
agreements in the future. BriaPro’s existing third party agreements impose, and BriaPro expect that future license agreements will
impose, various obligations related to, among other things, therapeutic development and payment of royalties and fees based on achieving
certain milestones. In addition, under several of BriaPro’s collaboration agreements, BriaPro are prohibited from developing and
commercializing therapies that would compete with the therapies licensed under such agreements.
If
BriaPro fails to comply with BriaPro’s obligations under these agreements, BriaPro’s licensor or collaboration partner may
have the right to terminate the agreement, including any licenses included in such agreement. The termination of any license or collaboration
agreements or failure to adequately protect such license agreements or collaboration could prevent BriaPro from commercializing BriaPro’s
therapeutic candidates or any future therapeutic candidates covered by the agreement or licensed intellectual property. For example,
BriaPro may rely on license agreements which grant failure BriaPro rights to certain intellectual property and proprietary materials
that BriaPro use in connection with the development of BriaPro’s therapies. If this agreement were to terminate, BriaPro would
be unable to timely license similar intellectual property and proprietary materials from an alternate source, on commercially reasonable
terms or at all, and may be required to conduct additional bridging studies on BriaPro’s therapeutic candidates or any future therapeutic
candidates, which could delay or otherwise have a material adverse effect on the development and commercialization of BriaPro’s
therapeutic candidates or any future therapeutic candidates.
Reliance
on the Transition Services Agreement
BriaPro
will enter into a Transition Services Agreement with BriaCell, whereby certain BriaCell employees will assist with the day to day operation
of BriaPro. In the short term, BriaPro will continue to rely on BriaCell to assist with operations. If such agreement is found to be
invalid or unenforceable or is terminated by the counterparty, this could have a material adverse effect on the business, prospects,
financial condition and operating results of BriaPro.
Significant
Majority Shareholder
BriaCell
owns a substantial number of the outstanding BriaPro Shares (on a non-diluted and partially-diluted basis). As such, BriaCell is able
to exercise influence over matters requiring shareholder approval, including the election of directors and the determination of corporate
actions. As well, BriaCell could delay or prevent a change in control of the BriaPro that could otherwise be beneficial to the
BriaPro Shareholders.
Inflation
Inflation
has the potential to adversely affect BriaPro’s business, results of operations, financial position and liquidity by increasing
BriaPro’s overall cost structure, particularly if BriaPro is unable to achieve commensurate increases in the prices it charges
customers. The existence of inflation in the economy has the potential to result in higher interest rates and capital costs, supply shortages,
increased costs of labor and other similar effects. As a result of inflation, BriaPro may experience increases in the costs of labor,
materials, and other inputs, such as engineering consultants. Although BriaPro may take measures to mitigate the impact of this inflation,
if these measures are not effective BriaPro’s business, results of operations, financial position and liquidity could be materially
adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions
impact BriaPro’s results of operations and when the cost of inflation is incurred.
Failure
to Remediate Material Weaknesses in Internal Accounting Controls
Management
may identify material weaknesses in BriaPro’s internal control over financial reporting related to lack of segregation of duties
within account processes, and systems, inadequate documentation to evidence the operation of controls, inconsistent procedures and approvals,
lack of periodic user access reviews, lack of assessment of controls of financially significant vendors and insufficient written policies
and procedures for accounting, IT and financial reporting and record keeping. BriaPro’s management may concluded that, due to such
material weakness, BriaPro was not active during the period ended July 31, 2023. Disclosure controls and procedures will need to be
implemented going forward. Management is implementing processes to document and retain evidence to support reviews and reconciliations.
Such changes may not, however, be effective in establishing the adequacy of BriaPro’s internal control over financial reporting.
If the material weaknesses are not adequately remedied, or if BriaPro identifies further material weaknesses in its internal controls,
BriaPro’s failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting
could result in material misstatements in its financial statements and a failure to meet reporting and financial obligations, each of
which could have a material adverse effect on BriaPro’s financial condition. In addition, investors’ perceptions that BriaPro’s
internal control over financial reporting is inadequate or that BriaPro is unable to produce accurate financial statements may materially
adversely affect the price of BriaPro’s securities.
Government
Price Controls and Other Restrictions on Pricing, Reimbursement and Access to Drugs
To
the extent BriaPro’s products are developed, commercialized, and successfully introduced to market, they may not be considered
cost-effective and third-party or government reimbursement might not be available or sufficient. Globally, governmental and other third-party
payors are becoming increasingly aggressive in attempting to contain health care costs by strictly controlling, directly or indirectly,
pricing and reimbursement and, in some cases, limiting or denying coverage altogether on the basis of a variety of justifications, and
BriaPro expects pressures on pricing and reimbursement from both governments and private payors inside and outside the U.S. to continue.
In the U.S., BriaPro may in the future be subject to substantial pricing, reimbursement, and access pressures from state Medicaid programs,
private insurance programs and pharmacy benefit managers, and implementation of U.S. health care reform legislation is increasing these
pricing pressures. The Affordable Care Act instituted comprehensive health care reform, and includes provisions that, among other things,
reduce and/or limit Medicare reimbursement, require all individuals to have health insurance (with limited exceptions), and impose new
and/or increased taxes. The future of the Affordable Care Act and its constituent parts are uncertain at this time. In almost all markets,
pricing and choice of prescription pharmaceuticals are subject to governmental control. Therefore, the price of BriaPro’s products
and their reimbursement in Europe and in other countries is and will be determined by national regulatory authorities. Reimbursement
decisions from one or more of the European markets may impact reimbursement decisions in other European markets. A variety of factors
are considered in making reimbursement decisions, including whether there is sufficient evidence to show that treatment with the product
is more effective than current treatments, that the product represents good value for money for the health service it provides, and that
treatment with the product works at least as well as currently available treatments. The continuing efforts of government and insurance
companies, health maintenance organizations, and other payors of health care costs to contain or reduce costs of health care may affect
BriaPro’s future revenues and profitability or those of BriaPro’s potential customers, suppliers, and collaborative partners,
as well as the availability of capital.
U.S.
Federal and State Privacy Laws May Increase Costs of Operation and Expose BriaPro to Civil and Criminal Sanctions
Pursuant
to the Health Insurance Portability and Accountability Act (“HIPPA”), and the regulations that have been issued under
it, and similar laws outside the United States, contains substantial restrictions and requirements with respect to the use and disclosure
of individuals’ protected health information. The HIPAA privacy rules prohibit “covered entities,” such as healthcare
providers and health plans, from using or disclosing an individual’s protected health information, unless the use or disclosure
is authorized by the individual or is specifically required or permitted under the privacy rules. Under the HIPAA security rules, covered
entities must establish administrative, physical and technical safeguards to protect the confidentiality, integrity and availability
of electronic protected health information maintained or transmitted by them or by others on their behalf. While BriaPro does not believe
that it will be a covered entity under HIPAA, BriaPro believes many of its potential future customers will be covered entities subject
to HIPAA. Such customers may require BriaPro to enter into business associate agreements, which will obligate BriaPro to safeguard certain
health information obtained in the course of BriaPro’s relationship with them, restrict the manner in which BriaPro may use and
disclose such information and impose liability on BriaPro for failure to meet contractual obligations.
In
addition, under the Health Information Technology for Economic and Clinical Health Act (“HITECH”), which was signed
into law as part of the U.S. stimulus package in February 2009, certain of HIPAA’s privacy and security requirements are now also
directly applicable to “business associates” of covered entities and subject them to direct governmental enforcement for
failure to comply with these requirements. BriaPro may be deemed as a “business associate” of some of its customers. As a
result, BriaPro may be subject as a “business associate” to civil and criminal penalties for failure to comply with applicable
privacy and security rule requirements. Moreover, HITECH created a new requirement obligating “business associates” to report
any breach of unsecured, individually identifiable health information to their covered entity customers and imposes penalties for failing
to do so.
In
addition to HIPAA, most U.S. states have enacted patient confidentiality laws that protect against the disclosure of confidential medical
information, and many U.S. states have adopted or are considering adopting further legislation in this area, including privacy safeguards,
security standards, and data security breach notification requirements. These U.S. state laws, which may be even more stringent than
the HIPAA requirements, are not supplanted by the federal requirements, and BriaPro is therefore required to comply with them to the
extent they are applicable to its operations. These and other possible changes to HIPAA or other U.S. federal or state laws or regulations,
or comparable laws and regulations in countries where BriaPro conducts business, could affect BriaPro’s business and the costs
of compliance could be significant. Failure by BriaPro to comply with any of the standards regarding patient privacy, identity theft
prevention and detection, and data security may subject BriaPro to penalties, including civil monetary penalties and in some circumstances,
criminal penalties. In addition, such failure may damage BriaPro’s reputation and adversely affect BriaPro’s ability to retain
customers and attract new customers. The protection of personal data, particularly patient data, is subject to strict laws and regulations
in many countries. The collection and use of personal health data in the E.U. is governed by the provisions of Directive 95/46/EC of
the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal
data and on the free movement of such data (the “Data Protection Directive”). The Data Protection Directive imposes a number
of requirements, including an obligation to seek the consent of individuals to whom the personal data relates, the information that must
be provided to the individuals, notification of data processing obligations to the competent national data protection authorities of
individual E.U. member states and the security and confidentiality of the personal data. The Data Protection Directive also imposes strict
rules on the transfer of personal data out of the E.U. to the U.S. Failure to comply with the requirements of the Data Protection Directive
and the related national data protection laws of the E.U. member states may result in fines and other administrative penalties and harm
BriaPro’s business. BriaPro may incur extensive costs in ensuring compliance with these laws and regulations, particularly if it
is considered to be a data controller within the meaning of the Data Protection Directive.
Development,
Formulation, Manufacturing, Packaging, Labeling, Handling, Distribution, Import, Export, Licensing, Sale and Storage of Pharmaceuticals
and Medical Devices
Such
laws, regulations and other constraints can exist at the federal, provincial or local levels in Canada and at all levels of government
in foreign jurisdictions. There can be no assurance that BriaPro and BriaPro’s partners are in compliance with all of these laws,
regulations and other constraints. BriaPro and its partners may be required to incur significant costs to comply with such laws and regulations
in the future, and such laws and regulations may have an adverse effect on the business. The failure of BriaPro or its partners to comply
with current or future regulatory requirements could lead to the imposition of significant penalties or claims and may have a material
adverse effect on the business. In addition, the adoption of new laws, regulations or other constraints or changes in the interpretations
of such requirements might result in significant compliance costs or lead BriaPro and its partners to discontinue product development
and could have an adverse effect on the business.
Risks
Associated with BriaPro’s Intellectual Property
Intellectual
Property Litigation
There
is a substantial amount of litigation over patent and other intellectual property rights in the biotechnology industry. Whether or not
a product infringes a patent involves complex legal and factual considerations, the determination of which is often uncertain. BriaPro’s
management is presently unaware of any other parties’ patents and proprietary rights which BriaPro’s products under development
would infringe. Searches typically performed to identify potentially infringed patents of third parties are often not conclusive and,
because patent applications can take many years to issue, there may be applications now pending, which may later result in issued patents
which BriaPro’s current or future products may infringe or be alleged to infringe. In addition, BriaPro’s competitors or
other parties may assert that BriaPro’s product candidates and the methods employed may be covered by patents held by them. If
any of BriaPro’s products infringes a valid patent, BriaPro could be prevented from manufacturing or selling such product unless
it is able to obtain a license or able to redesign the product in such a manner as to avoid infringement. A license may not always be
available or may require BriaPro to pay substantial royalties. BriaPro also may not be successful in any attempt to redesign its product
to avoid infringement, nor does a later redesign protect BriaPro from prior infringement. Infringement and other intellectual property
claims, with or without merit, can be expensive and time-consuming to litigate and can divert BriaPro’s management’s attention
from operating BriaPro business.
Steps
Taken to Protect Intellectual Property May be Inadequate
BriaPro’s
ability to establish and maintain a competitive position may be achieved in part by prosecuting claims against others who it believes
to be infringing its rights. In addition, enforcement of BriaPro’s patents in foreign jurisdictions will depend on the legal procedures
in those jurisdictions. In addition to filing patent applications, BriaPro relies on confidentiality, non-compete, non-disclosure and
assignment of inventions provisions, as appropriate, in BriaPro’s agreements with employees, consultants, and service providers,
to protect and otherwise seek to control access to, and distribution of, BriaPro’s proprietary information. These measures may
not be adequate to protect BriaPro’s intellectual property from unauthorized disclosure, third-party infringement or misappropriation,
for the following reasons: the agreements may be breached, may not provide the scope of protection BriaPro believes it provides or may
be determined to be unenforceable; BriaPro may have inadequate remedies for any breach; proprietary information could be disclosed to
BriaPro competitors; or others may independently develop substantially equivalent or superior proprietary information and techniques
or otherwise gain access to BriaPro’s trade secrets or disclose such technologies.
Specifically,
with respect to non-compete agreements, both state law and precedent varies greatly from state to state and BriaPro may be unable to
enforce these agreements, in whole or in part, and it may be difficult for BriaPro to restrict its competitors from gaining the expertise
that its former employees gained while working for BriaPro. If BriaPro’s intellectual property is disclosed or misappropriated,
it could harm BriaPro’s ability to protect its rights and could have a material adverse effect on its business, financial condition
and results of operations.
Need
to Initiate Lawsuits to Protect or Enforce Patents and Other Intellectual Property Rights
BriaPro
relied on patents, confidentiality and trade secrets to protect a portion of its intellectual property and competitive position. Patent
law relating to the scope of claims in the technology fields in which BriaPro operates is still evolving and, consequently, patent positions
in the biotechnology/pharmaceutical industry can be uncertain. In order to protect or enforce BriaPro’s patent rights, BriaPro
may initiate patent and related litigation against third parties, such as infringement suits or requests for injunctive relief. BriaPro’s
ability to establish and maintain a competitive position may be achieved in part by prosecuting claims against others who it believes
to be infringing its rights. In addition, enforcement of BriaPro’s patents in foreign jurisdictions will depend on the legal procedures
in those jurisdictions. Any lawsuits that BriaPro initiates could be expensive, take significant time and divert BriaPro’s management’s
attention from other business concerns and the outcome of litigation to enforce BriaPro’s intellectual property rights in patents,
copyrights, trade secrets or trademarks is highly unpredictable. Litigation also puts BriaPro’s patents at risk of being invalidated
or interpreted narrowly and BriaPro’s patent applications at risk of not issuing, or adversely affect its ability to distribute
any products that are subject to such litigation. In addition, BriaPro may provoke third parties to assert claims against BriaPro. BriaPro
may not prevail in any lawsuits that it initiates, and the damages or other remedies awarded, including attorney fees, if any, may not
be commercially valuable. The occurrence of any of these events could have a material adverse effect on BriaPro’s business, financial
condition and results of operations.
Damage
Resulting from Claims
Many
of BriaPro’s employees and contractors were previously employed at universities or other biotechnology or pharmaceutical companies,
including BriaPro’s competitors or potential competitors. Although no claims against BriaPro are currently pending, BriaPro may
be subject to claims that BriaPro or any employee or contractor have inadvertently or otherwise used or disclosed trade secrets or other
proprietary information of his or her former employers. Litigation may be necessary to defend against these claims. If BriaPro fails
in defending such claims, in addition to paying monetary damages, BriaPro may lose valuable intellectual property rights or personnel.
A loss of key research personnel or their work product could hamper or prevent BriaPro’s ability to commercialize certain therapeutic
candidates, which could severely harm BriaPro’s business, financial condition and results of operations. Even if BriaPro is successful
in defending against these claims, litigation could result in substantial costs and be a distraction to management.
Regulatory
Approval of a New Drug
Once
a new drug application is approved, the product covered thereby becomes a “reference listed drug” in the FDA’s publication,
“Approved Drug Products with Therapeutic Equivalence Evaluations,” commonly known as the Orange Book. Manufacturers may seek
approval of generic versions of reference listed drugs through submission of abbreviated new drug applications in the United States.
In support of an abbreviated new drug applications, a generic manufacturer need not conduct clinical trials. Rather, the applicant generally
must show that its product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use or
labeling as the reference listed drug and that the generic version is bioequivalent to the reference listed drug, meaning it is absorbed
in the body at the same rate and to the same extent. Generic products may be significantly less costly to bring to market than the reference
listed drug and companies that produce generic products are generally able to offer them at lower prices. Thus, following the introduction
of a generic drug, a significant percentage of the sales of any branded product or reference listed drug is typically lost to the generic
product. The FDA may not approve abbreviated new drug applications for a generic product until any applicable period of non-patent exclusivity
for the reference listed drug has expired. The United States Federal Food, Drug, and Cosmetic Act provides a period of five years of
non-patent exclusivity for a new drug containing a new chemical entity (“NCE”). Specifically, in cases where such exclusivity
has been granted, abbreviated new drug applications may not be submitted to the FDA until the expiration of five years, unless the submission
is accompanied by a Paragraph IV certification that a patent covering the reference listed drug is either invalid or will not be infringed
by the generic product, in which case the applicant may submit its application four years following approval of the reference listed
drug. While BriaPro believes that its products contain active ingredients that would be treated as NCEs by the FDA and, therefore, if
approved, should be afforded five years of data exclusivity, the FDA may disagree with that conclusion and may approve generic products
after a period that is less than five years. If the FDA were to award NCE exclusivity to someone other than BriaPro, BriaPro believes
that it would still be awarded three year “Other” exclusivity protection from generic competition, which is awarded when
an application or supplement contains reports of new clinical investigations (not bioavailability studies) conducted or sponsored by
an applicant and essential for approval. Manufacturers may seek to launch these generic products following the expiration of the applicable
marketing exclusivity period, even if BriaPro still has patent protection for its product. If BriaPro does not maintain patent protection
and data exclusivity for its product candidates, BriaPro’s business may be materially harmed. Competition that BriaPro’s
products may face from generic versions of BriaPro’s products could materially and adversely impact BriaPro’s future revenue,
profitability and cash flows and substantially limit BriaPro’s ability to obtain a return on the investments BriaPro has made in
those product candidates.
Patent
Terms may be Inadequate to protect Competitive Position on Product Candidates for an Adequate Amount of Time
Patents
have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally
20 years from its earliest United States non-provisional filing date. Various extensions may be available, but the life of a patent,
and the protection it affords, is limited. Even if patents covering BriaPro’s product candidates are obtained, once the patent
life has expired, BriaPro may be open to competition from competitive products, including generics or biosimilars. Given the amount of
time required for the development, testing, and regulatory review of new product candidates, patents protecting such candidates might
expire before or shortly after such candidates are commercialized. As a result, BriaPro’s owned and licensed patent portfolio may
not provide BriaPro with sufficient rights to exclude others from commercializing products similar or identical to BriaPro’s.
General
Risk Factors for BriaPro
BriaPro’s Operations are Subject
to Human Error
Despite
efforts to attract and retain qualified personnel, as well as the retention of qualified consultants, to manage BriaPro’s interests, and even when those efforts are successful, people are fallible and human error could result in significant
uninsured losses to BriaPro. These could include loss or forfeiture of assets for non-payment of fees or taxes, significant
tax liabilities in connection with any tax planning effort BriaPro might undertake and legal claims for errors or mistakes
by BriaPro personnel.
Difficulty
in Enforcing Judgments and Effecting Service of Process on Directors and Officers
Certain
directors and officers of BriaPro reside outside of Canada. Some or all of the assets of such persons may be located outside
of Canada. Therefore, it may not be possible for investors to collect or to enforce judgments obtained in Canadian courts predicated
upon the civil liability provisions of applicable Canadian securities laws against such persons. Moreover, it may not be possible for
investors to effect service of process within Canada upon such persons.
Litigation
BriaPro
may become party to litigation from time to time in the ordinary course of business, or a claim based in related legal theories of negligence
or vicarious liability among others, which could adversely affect BriaPro’s business. Should any litigation in which BriaPro becomes
involved be determined against BriaPro, such a decision could adversely affect BriaPro’s ability to continue operating and the
market price if ever listed, of BriaPro Shares. Even if BriaPro is involved in litigation and wins, litigation can redirect
significant resources. Litigation may also create a negative perception of BriaPro’s business.
Insurance
BriaPro
believes the Company’s insurance coverage addresses material risks to which it is exposed and that a company of its size
and nature would insure for in the context of underwriting conditions, and is adequate and customary in its current state of operations,
however such insurance is subject to coverage limits and exclusions and may not be available for the risks and hazards to which BriaPro
is exposed. Moreover, there can be no guarantee that BriaPro will be able to obtain adequate insurance coverage in the future
or obtain or maintain liability insurance on acceptable terms or with adequate coverage against all potential liabilities.
Social
Media
There
has been a recent marked increase in the use of social media platforms and similar channels that provide individuals with access to a
broad audience of consumers and other interested persons. The availability and impact of information on social media platforms is virtually
immediate and many social media platforms publish user-generated content without filters or independent verification as to the accuracy
of the content posted. Information posted about BriaPro may be averse to BriaPro’s interests or
may be inaccurate, each of which may harm BriaPro’s business, financial condition and results of operations.
