UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] (Mark One)

☒ANNUAL REPORT UNDERPURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED - OCTOBERFor the fiscal year ended December 31 2017, 2023

ORor

[  ]☐TRANSITION REPORT UNDERPURSUANT TO SECTION 13 OR 15 (d)

15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______ TO ______For the transition period from ________to________

COMMISSION FILE NUMBER 000-28489Commission File Number 001-36138

ADVAXIS,AYALA PHARMACEUTICALS, INC.

(NameExact name of Registrantregistrant as specified in Its Charter)its charter)

(609)452-9813

(Issuer’s Telephone Number)Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act.

Common Stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [  ] ☐ No [X] ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes [  ] ☐ No [X] ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] ☒ No [  ]☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] ☒ No [  ]☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]☐ No [X]☒

As of AprilJune 30, 2017,2023, the aggregate market value of the voting common equity held by non-affiliates was approximately $336,054,000$3.7 million based on the closing bid price of the registrant’s Common Stockcommon stock on the NASDAQ Capital Market. (For- OTCQX ® Best Market (for purposes of determining this amount, only directors, executive officers, and 10% or greater shareholders and their respective affiliates have been deemed affiliates). [X]☒

The registrant had 41,303,98842,633,400 shares of Common Stock,common stock, par value $0.001 per share, outstanding as of December 15, 2017.April 8, 2024.

DOCUMENTS INCORPORATED BY REFERENCEDocuments Incorporated by Reference

Portions of the Proxy Statementdefinitive proxy statement for the registrant’s 20182024 Annual Meeting of Stockholders (the “Proxy“2024 Proxy Statement”) to be filed within 120 days of the end of the fiscal year ended October 31, 2017 are incorporated by reference into Items 10, 11, 12, 13 and 14 in Part III hereof. Except with respect to information specifically incorporated by reference inof this Annual Report on Form 10-K,10-K. If the 2024 Proxy Statement is not deemedfiled by April 29, 2024 (the day that is 120 days after the last day of the registrant’s 2023 fiscal year), an amendment to this annual report on Form 10-K setting forth this information will be duly filed as a part hereof.with the Securities and Exchange Commission.

Table of Contents

Form 10-K Index

PART 1

INTRODUCTORY NOTE

Merger of Advaxis, Inc. with Ayala Pharmaceuticals, Inc.

On October 18, 2022, the Registrant entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Registrant, Old Ayala, Inc. (f/k/a Ayala Pharmaceuticals, Inc.), a Delaware corporation (“Old Ayala”), and Doe Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and a wholly-owned subsidiary of the Registrant. On January 19, 2023 (the “Closing Date”), pursuant to the Merger Agreement, Merger Sub merged with and into Old Ayala, with Old Ayala continuing as the surviving company and a wholly-owned subsidiary of the Registrant (the “Merger”).

The Merger Agreement and additional information on the details of the Merger may be found in the Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) by the Registrant on October 19, 2022.

At the effective time of the Merger (the “Effective Time”), which occurred on January 19, 2023, (i) each share of the common stock, par value $0.01 per share, of Old Ayala (the “Old Ayala Common Stock”) issued and outstanding immediately prior to the Merger was automatically converted into the right to receive 0.1874 shares (the “Exchange Ratio”) of the common stock, par value $0.001 per share, of the Registrant (the “Common Stock”), (ii) each outstanding option to purchase shares of the Old Ayala Common Stock (each, an “Old Ayala Option”) was substituted and converted automatically into an option (each, an “New Ayala Replacement Option”) to purchase the number of shares of New Ayala Common Stock equal to the product obtained by multiplying (a) the number of shares of Old Ayala Common Stock subject to such Old Ayala Option immediately prior to the effective time of the Merger, by (b) the Exchange Ratio, with any fractional shares rounded down to the nearest whole share, with each such New Ayala Replacement Option to have an exercise price per share of Common Stock equal to (x) the per share exercise price for the shares of Old Ayala Common Stock subject to the corresponding Old Ayala Option immediately prior to the effective time of the Merger, divided by (y) the Exchange Ratio, rounded up to the nearest whole cent, and (iii) each restricted stock unit of Old Ayala (each, an “Old Ayala RSU”) outstanding immediately prior to the effective time of the Merger, whether or not vested or issuable, was substituted and converted automatically into a restricted stock unit award of New Ayala with respect to a number of shares of Common Stock equal to the product obtained by multiplying (a) the total number of shares of Old Ayala Common Stock subject to such Old Ayala RSU immediately prior to the effective time of the Merger by (b) the Exchange Ratio, with any fractional shares rounded down to the nearest whole share.

The issuance of Common Stock in connection with the Merger Agreement was registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to The Registrant’s registration statement on Form S-4 (Registration No. 333-268586) declared effective by the SEC on December 12, 2022 (the “Registration Statement”). The proxy statement/prospectus in the Registration Statement contains additional information about the Merger.

As a result of the consummation of the Merger, Old Ayala, the surviving entity in the Merger, became a wholly-owned subsidiary of the Registrant. For accounting purposes, the Merger was treated as a “reverse acquisition” and Old Ayala was considered the accounting acquirer. Accordingly, Old Ayala will be reflected as the predecessor and acquirer in the financial statements of the Registrant (the legal acquirer) for periods ending after December 31, 2022. The Registrant’s historical financial condition and results of operations shown for comparative purposes in periodic filings for periods ending after December 31, 2022 reflect Old Ayala’s historical results.

Merger with Biosight Ltd.

FORWARD LOOKING STATEMENTSOn July 26, 2023, the Registrant, Advaxis Israel Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of the Registrant (“ADXS Merger Sub”) and Biosight, Ltd., a company organized under the laws of the State of Israel (“Biosight”) entered into an Agreement and Plan of Merger and Reorganization (the “Biosight Merger Agreement”). On October 18, 2023 (the “Closing Date”), pursuant to the Merger Agreement, ADXS Merger Sub consummated the merger with and into Biosight, with Biosight continuing as the surviving company and a wholly-owned subsidiary of the Registrant (the “Biosight Merger”).

The Biosight Merger Agreement and additional information on the details of the Biosight Merger may be found in the Current Report on Form 8-K filed with the SEC by the Registrant on October 20, 2023.

The Biosight Merger Agreement provided, among other things, that on the terms and subject to the conditions set forth therein, each share of Biosight issued and outstanding immediately prior to the effective time of the Merger (excluding any shares held by any of Biosight’s subsidiaries, the Registrant, ADXS Merger Sub or any of their respective subsidiaries, which will remain outstanding, and certain dormant shares under Israeli law, which will be cancelled, retired and cease to exist) was automatically deemed to have been transferred to the Registrant in exchange for the right to receive 1.82285 shares (the “Exchange Ratio”) of Common Stock. The Exchange Ratio was subject to equitable adjustment pursuant to the terms of the Biosight Merger Agreement. Each outstanding option or other right to purchase ordinary or preferred shares of Biosight was cancelled as of the Effective Time and will have no further force or effect. In connection with the closing of the Biosight Merger, the Registrant issued approximately 5,913,480 shares of the Common Stock to former holders of Biosight shares.

The issuance of the shares of Common Stock in the Biosight Merger was made pursuant to exemptions from the registration requirements of the Securities Act pursuant to Regulations D and S thereunder.

Sale of Assets to Immunome, Inc.

On February 5, 2024, the Registrant and Immunome, Inc. (“Immunome”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) pursuant to which Immunome agreed to acquire certain of the Registrant’s assets and liabilities related to its AL101 and AL102 programs (the “Asset Sale”), which constitute substantially all of the Registrant’s assets.

On March 25, 2024, the Registrant and Immunome consummated the Asset Sale pursuant to the Asset Purchase Agreement. Immunome paid to the Registrant an aggregate purchase price of $20,000,000 in cash (of which $4,000,000 had been paid upon entering into the Asset Purchase Agreement), subject to certain adjustments and issued to the Registrant 2,175,489 shares (the “Shares”) of Immunome’s common stock, $0.0001 par value. The Asset Purchase Agreement further provides that Immunome may pay the Registrant up to $37,500,000 in cash due upon the achievement of certain development and commercial milestone events set forth in the Asset Purchase Agreement. At the March 25, 2023 closing, Immunome paid the remaining $16,000,000 of the cash consideration to the Company, at the Company’s direction, to certain vendors of the Company.

The Asset Purchase Agreement contains customary representations, warranties, conditions and covenants, including covenants (i) concerning the conduct of business by the Registrant prior to the closing of the Asset Sale, (ii) prohibiting the Registrant and its representatives from soliciting, initiating or knowingly inducing, encouraging or facilitating any competing acquisition proposal, (iii) prohibiting the Registrant and its controlled affiliates from competing with Immunome for five years following the closing of the Asset Sale in certain fields, and (iv) restricting the Registrant’s ability to make distributions to stockholders, dissolve or wind up its business or file for bankruptcy for six months following the closing of the Asset Sale.

The Asset Purchase Agreement and additional information on the details of the Asset Sale may be found in the Current Report on Form 8-K filed with the SEC by the Registrant on February 6, 2024.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K for the year ended December 31, 2023 (“Form 10-K”) includes statements that are, or may be deemed to be, “forward-looking statements.” In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,” “should,” “approximately” or, in each case, their negative or other variations thereon or comparable terminology, although not all forward-looking statements contain these words. They appear in a number of places throughout this Form 10-K and include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things, our ongoing and planned discovery and development of drug candidates, the strength and breadth of our intellectual property, our ongoing and planned preclinical studies and clinical trials, our available cash, liquidity, prospects, growth and strategies, the timing of and our ability to make regulatory filings and obtain and maintain regulatory approvals for our product candidates, the degree of clinical utility of our product candidates, particularly in specific patient populations, expectations regarding clinical trial data, our results of operations, financial condition, liquidity, prospects, growthimpacts of the ongoing conflicts in the Ukraine and strategies,the Middle East, inflation and the Federal Reserve’s responses thereto, including increasing interest rates, the length of time that we will be able to continue to fund our operating expenses and capital expenditures, our expected financing needs and sources of financing, the industry in which we operate and the trends that may affect theour industry or us.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics, and healthcare, regulatory and scientific developments and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Form 10-K, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Form 10-K. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Form 10-K, they may not be predictive of results or developments in future periods.

Some of the factors that we believe could cause actual results to differ from those anticipated or predicted include:

Any forward-looking statements that we make in this Form 10-K speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Form 10-K. You should also read carefully the factors described in the “Risk Factors” section of this Form 10-K to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-K will prove to be accurate.

This Form 10-K includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third-parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data.

In this Form 10-K, unless otherwise stated or the context otherwise indicates, references to “New Ayala,” “Advaxis,” the “Company,” “we,” “us,” “our” and similar references refer to Ayala Pharmaceuticals, Inc., a Delaware corporation, which prior to the change of its name effected on January 19, 2023 was known as Advaxis, Inc.

We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

PART I

Item 1. Business.

General

Advaxis, Inc. (“Advaxis” or the “Company”) is a late-stage biotechnology Company focused on the discovery, development and commercialization of proprietaryLm Technology antigen delivery products based on a platform technology that utilizes live attenuatedListeria monocytogenes (“Lm”) bioengineered to secrete antigen/adjuvant fusion proteins. TheseLm-based strains are believed to be a significant advancement in immunotherapy as they integrate multiple functions into a single immunotherapy by accessing and directing antigen presenting cells to stimulate anti-tumor T cell immunity, stimulate and activate the immune system with the equivalent of multiple adjuvants, and simultaneously reduce tumor protection in the Tumor Microenvironment (“TME”) to enable the T cells to eliminate tumors. The Company believes thatLm Technology immunotherapies can complement and address significant unmet needs in the current oncology treatment landscape. Specifically, their product candidates have the potential to optimize checkpoint performance, while having a generally well-tolerated safety profile, and most of their product candidates are immediately available for treatment with a low cost of goods. The Company’s passion for the clinical potential ofLm Technology is balanced by focus and fiscal discipline and driven towards increasing shareholder value.

Advaxis is focused on four franchises in various stages of clinical and pre-clinical development, which they believe will provide the greatest opportunity to have a significant impact on patients and their families:

All four clinical franchises are anchored in the Company’sLm Technology^TM, a unique platform designed for its ability to safely and effectively target various cancers in multiple ways. As an intracellular bacterium,Lm is an effective vector for the presentation of antigens through both the Major Histocompatibility Complex (“MHC”) I and II pathways, due to its active phagocytosis by Antigen Presenting Cells (“APCs”). Within the APCs,Lm produces virulence factors which allow survival in the host cytosol and potently stimulate the immune system.

Through a license from the University of Pennsylvania, Advaxis has exclusive access to a proprietary formulation of attenuatedLmcalledLmTechnology.Lm Technology optimizes this natural system, and one of the keys to the enhanced immunogenicity ofLm Technology is thetLLO – fusion protein, which is made up of tumor associated antigen (“TAA”) fused to a highly immunogenic bacterial protein that triggers potent cellular immunity. ThetLLO-fusion protein also helps to reduce immune tolerance in the TME and promotes antigen spreading, thereby improving activity in the TME. Multiple copies of thetLLO-fusion protein within each construct may increase antigen presentation and TME impact.

As the field of immunotherapy continues to evolve, the flexibility of theLm Technology platform has allowed Advaxis to develop highly innovative products. To date,Lm Technology has demonstrated preclinical synergy with multiple checkpoint inhibitors, co-stimulatory agents and radiation therapy, with clinical trials currently underway or planned in combination with Merck & Co., Inc. (“Merck”), AstraZeneca PLC (“AstraZeneca”), and Bristol-Myers Squibb Company’s (“BMS”) PD-1/PDL-1 inhibitors. The safety profile of allLm Technology constructs seen to date has been predictable and manageable, consisting mostly of mild to moderate flu-like symptoms that have been transient and associated with infusion.

The Advaxis Corporate Strategy

The Advaxis corporate strategy is to advance theLm Technology platform and leverage its unique capabilities to design and develop an array of cancer treatments. The Company and its collaborators are currently conducting or planning clinical studies ofLm Technology immunotherapies in HPV-associated cancers (including cervical and head and neck), prostate cancer, non-small cell lung cancers, and microsatellite stable colorectal cancer. Advaxis’ partners and collaborators include Amgen, Inc. (“Amgen”), BMS, Merck, AstraZeneca, the Gynecological Oncology Group (“GOG”) Foundation, Inc. (now a member of NRG Oncology), the European Network for Gynaecological Oncological Trial groups (“ENGOT”), the Parker Institute for Cancer Immunotherapy, Baylor College of Medicine and the Prostate Cancer Foundation.

Moving forward, the Company will continue to invest in its core clinical franchises and will also remain opportunistic in evaluating Investigator Sponsored Trials (“ISTs”) as well as licensing opportunities. TheLmTechnology platform is protected by a range of patents, covering both product and process, some of which the Company believes can be maintained into 2037.

Lm Technology and the Immunotherapy Landscape

The challenge of cancer immunotherapy has been to find the best overall balance between efficacy and side effects when mobilizing the body’s immune system to fight against cancer. The development of immune checkpoint inhibitors was a significant step forward, and brought with it impressive clinical activity in many different types of cancers, including melanoma and lung cancer. However, a literature review published inPharmacy and Therapeuticsin 2016 noted that checkpoint inhibitor monotherapy response rates are only in the 15-20% range, and rise to around 50% higher only in selected groups of patients with melanoma or lung cancer. Therefore, for most cancer patients, there is room for improvement. Checkpoint inhibitors can expand existing cancer fighting cells that may already be present in low numbers and support their activity against cancer cells, but if the right cancer-fighting cells are not present, checkpoint inhibitors may not provide clinical benefit. Similarly, there are many mechanisms of immune tolerance that are distinct from the checkpoints which, may also be blocking the immune system from fighting cancer. Based on both pre-clinical and early clinical data, Advaxis believes that checkpoint inhibitors, when combined with treatments such asLm Technology, can have an amplified anti-tumor effect.LmTechnology incorporates several complementary elements that include innate immune stimulation, potent generation of cancer-targeted T cells, ability to boost immunity through multiple treatments, enhancing lymphocyte infiltration into tumors, reduction of non-checkpoint mediated immune tolerance within the tumor microenvironment, and promotion of antigen spreading which may amplify the effects of treatment. These results provide rationale for further testing ofLm Technology agents in combination with checkpoint inhibitors.

Traditional cancer vaccines were another development within immunotherapy and have a history beginning over 30 years ago. Unfortunately, these vaccines have largely been unsuccessful for a variety of potential reasons. These include poor selection of targets, imbalanced antigen presentation by inclusion of certain immune enhancing agents (adjuvants), failure to consider the blocking actions of immune tolerance, and choice of vaccine vectors. In some cases, patients may develop neutralizing antibodies, preventing further treatments. In contrast to traditional cancer vaccines,Lm Technology takes advantage of a natural pathway in the immune system that evolved to protect us againstListeria infections, that also happens to generate the same type of immunity that is required when fighting cancer. The live but weakened (attenuated) bacteria stimulate a balanced concert of innate immune triggers and present the tumor antigen target precisely where it needs to be to generate potent cancer fighting cells from within the immune system itself. The multitude of accompanying signals serves to broadly mobilize most of the immune system in support of fighting what seems to be aListeriainfection, and is then “re-directed” against cancer cell targets. Additionally, the unique intracellular lifecycle ofListeria avoids the creation of neutralizing antibodies, thereby allowing for repeat administration as a chronic therapy with a sustained enhancing of tumor antigen-specific T cell immunity.

More recently, a new category of immunotherapies called Adoptive Cell Transfer (“CAR-Ts”, “TCRs”, “TILs”) has provided further evidence of the benefits of providing an enhanced T cell presence to fight cancer. As published in theJournal of the American Medical Association in November 2017, CAR-T has achieved dramatic results in liquid tumors, and can provoke clinical responses when other treatments stop working. These cells are artificially engineered outside the body and early versions have suffered from unanticipated side effects. The therapies are also limited in activity against a specific target, and have a limited persistence within the patient. To date, CAR-Ts activity has been limited to liquid tumors and have shown potentially meaningful toxicity concerns. Moreover, CAR-Ts are complex therapeutic products that are primarily manufactured and released for each patient, leading to costly manufacturing and a number of treatments.

Looking back on the last two decades, there have been promising technology advancements to harness and activate killer T cells against cancers and every day more is learned about the interplay between immunity and cancer that can lead to improved treatments. However there are still significant unmet needs in the immunotherapy landscape that Advaxis feelsLm Technology can address and complement. Specifically,Lm Technology has the potential to optimize and expand checkpoint inhibitor activity in combination. It also avoids many of the limitations of previous cancer vaccine attempts by tapping into the pathway reserved for defense againstListeriainfection while incorporating the best cancer-targets science can identify, including neoantigens that result from mutations in the cancer. To date,Lm Technology products have a generally well-tolerated safety profile, do not generate neutralizing antibodies lending themselves to retreatments, and most of the products are immediately available for treatment without the complication and expense of modifying a patient’s own cells in a laboratory.

Lm Technology: An optimizedListeria-based antigen delivery system

Advaxis’Listeria-based immunotherapies are optimized for antigen delivery through a process of insertion of multiple copies of the proprietarytLLO-fusion protein into each extrachromosomal protein expression and secretion plasmid that makes and secretes the target protein right inside the patient’s antigen presenting cells to initiate and/or boost their immune response. ThetLLO-fusion protein approach was developed at the University of Pennsylvania as an improvement over insertion of a single copy of the target gene, as an ACT-A (or otherLmpeptide) fusion, within the bacterial genome for four key reasons:

Through a license from the University of Pennsylvania, Advaxis has exclusive access to this proprietary formulation of attenuatedLmwhich further enhances this nearly ideal natural system. Clinical application in the Company’s four franchise areas is the core focus of current development efforts.

Clinical PipelineRecent Developments

Advaxis is focused on the discovery, development and commercialization of proprietaryLmRecent Strategic TransactionsTechnology antigen delivery products, with the lead program for cervical cancer in Phase 3 development. The Company and its collaborators are currently conducting or planning clinical studies ofLm Technology immunotherapies in four franchises:

As a late stage biotechnology company with no commercial products, Advaxis is aware of the need for fiscal responsibility, and is focusing our investment into the four franchises listed above. Additionally, the company will continue to be opportunistic by exploring ISTs, licensing and other external opportunities.

In October of 2015, the Company received notification from the FDA that the INDs for axalimogene filolisbac were putSee “Introductory Note” beginning on clinical hold in response to its submission of a safety report to the FDA. The clinical hold also included the INDs for ADXS-PSA and ADXS-HER2. Following discussions with the FDA and in accordance with their recommendations, the Company agreed to implement certain risk mitigation measures, including revised trial protocol inclusion / exclusion criteria, post administration antibiotic treatment and patient surveillance and monitoring measures. In December 2015, the FDA notified the Company that the hold had been lifted with respect to its INDs.

Advaxis Pipeline of Product Candidates

HPV Related Cancers: Proof of Concept ofLmTechnology

The Company is developing a franchise in HPV-related cancers including both axalimogene filolisbac and ADXS-DUAL. Axalimogene filolisbac is anLm–based antigen delivery product directed against HPV and designed to target cells expressing HPV. ADXS-DUAL, the Company’s second immunotherapy targeting HPV-associated cancers, builds on the learnings from the clinical development of axalimogene filolisbac and incorporates an additional HPV target antigen into theLm Technology vector. The company’s HPV-related products are currently under investigation in two HPV-associated cancers: cervical cancer and head and neck cancer, either as a monotherapy or in combination. Advaxis has also completed treatment in two Phase 2 studies of axalimogene filolisbac for the treatment of anal cancer, and is evaluating the potential for collaborative external opportunities to further develop this program.

Cervical Cancer: axalimogene filolisbac and ADXS-DUAL

HPV is the most common viral infection of the reproductive tract and is the cause of a range of conditions in both females and males. In women, persistent infection with specific oncogenic types of HPV (most frequently alpha7 and alpha9 families) may lead to precancerous lesions which, if untreated, may progress to cervical cancer. There are approximately 527,000 new cases of cervical cancer caused by HPV worldwide every year, and 12,000 new cases in the U.S. alone, according to the World Health Organization (“WHO”) Human Papillomavirus and Related Cancers in the World Summary Report 2017. There are approximately 4,250 deaths from cervical cancer each year according to the National Institutes of Health. Current preventative HPV vaccines such as Gardasil^®and Cervarix^® cannot treat or protect the large population of adults already infected with the virus, leaving several generations of women vulnerable. Furthermore, challenges with acceptance, accessibility, and compliance have resulted in suboptimal vaccination rates, with approximately 50% of young women and 38% of young men being fully vaccinated in the United States, according to statistics published by the Centers for Disease Control in 2017. Vaccination rates are even lower in other countries around the world.

Current treatments for metastatic cervical cancer can only extend life for about 6-8 months. Axalimogene filolisbac and ADXS-DUAL areLm Technology immunotherapies designed to secrete thetLLO-E7 fusion protein to target HPV-positive tumors.

Axalimogene filolisbac has received FDA orphan drug designation for invasive International Federation of Gynecology and Obstetrics (“FIGO”) Stage II-IV cervical cancer, and has received Fast Track designation from the FDA for the treatment of high-risk locally advanced cervical cancer. Axalimogene filolisbac has also been classified as an advanced-therapy medicinal product (“ATMP”) for the treatment of cervical cancer by the European Medicines Agency’s (“EMA”) Committee for Advanced Therapies (“CAT”). The CAT is the EMA’s committee responsible for assessing the quality, safety and efficacy of ATMPs. The Company has completed the CAT certification procedure and the CAT has certified that the preclinical and quality information have met the scientific and technical standards for a MAA.

Phase 2 Trial Results – axalimogene filolisbac

In 2014, the company completed a randomized Phase 2 clinical trial (Lm-LLO-E7-15) in 109 women with recurrent/refractory cervical cancer. The final results were presented at the 2014 American Society of Clinical Oncology (“ASCO”) Annual Meeting, and showed that 32% (35/109) of patients were alive at 12 months, 22% (24/109) of patients were Long-term Survivors (“LTS”) alive greater than 18 months, and 18% (16/91) evaluable with adequate follow-up of patients were alive for more than 24 months. Of the 109 patients treated in the trial, LTS included not only patients with tumor shrinkage but also patients who had experienced stable disease or increased tumor burden. 17% (19/109) of the patients in the trial had recurrence of disease after at least two prior treatments for their cervical cancer; these patients comprised 8% (2/24) of LTS. Among the LTS, 25% (3/12) of patients had a baseline Eastern Cooperative Oncology Group (“ECOG”) performance status of 2, a patient population that is often excluded from clinical trials. Furthermore, a 10% objective response rate (including 5 complete responses and 6 partial responses) and a disease control rate of 38% (42/109) were observed. The addition of cisplatin chemotherapy to axalimogene filolisbac in this trial did not significantly improve overall survival or objective tumor response (p =0.9981).

In this trial, 109 patients received 254 doses of axalimogene filolisbac. Axalimogene filolisbac was found to be well tolerated with 38% (41/109) of patients experiencing mild to moderate Grade 1 or 2 transient adverse events associated with infusion; 1 patient experienced a Gradepage 3 Serious Adverse Events (“SAE”). All observed treatment-related adverse events either self-resolved or responded readily to symptomatic treatment.

Based on these results, the Gynecological Oncology Group (“GOG”) Foundation, Inc. (now a member of NRG Oncology), under the sponsorship of the Cancer Therapy Evaluation Program (“CTEP”) of the National Cancer Institute (“NCI”), conducted GOG-0265, an open-label, single arm Phase 2 trial of axalimogene filolisbac in persistent or recurrent cervical cancer (patients must have received at least 1 prior chemotherapy regimen for the treatment of their recurrent/metastatic disease, not including that administered as a component of primary treatment) at numerous clinical sites in the U.S. The trial was a Simon 2-stage design, with the primary efficacy endpoint being 12-month survival, with the objective of the secondary efficacy endpoints to evaluate progression-free survival, overall survival and objective tumor response. The primary safety endpoints were to evaluate the number of patients with dose-limiting toxicities and the frequency and severity of adverse effects.

To evaluate the trial’s primary endpoint of 12-month overall survival rate, the GOG’s protocol featured a prospectively-defined logistic model-based calculation of the expected 12-month survival rate using key predictive factors significantly related to survival and derived from 17 serially conducted GOG/NRG 2-stage studies of inactive agents in persistent/recurrent metastatic cervical cancer (“PRmCC”) involving approximately 500 patients. This accumulated data by GOG used a consistent protocol design and a similar data collection methodology resulting in a robust and homogeneous patient dataset for the per protocol analysis of the primary endpoint. Per the trial protocol, this logistic model-based calculation was then used as a comparator for evaluating the 12-month survival rate of axalimogene filolisbac observed in GOG-0265.

The first stage of enrollment in GOG-0265 was successfully completed with 26 patients treated and met the predetermined safety and efficacy criteria required to proceed into the second stage of patient enrollment. Clinical data from the first stage of GOG-0265 was presented at the American Gynecological & Obstetrical Society (“AGOS”) annual meeting on September 17, 2015. Overall survival at 12 months was 38.5% (10/26) (the predefined criteria for 12-month survival in order to progress to Stage 2 was ≥20%), and, among patients who had received the full treatment regimen of 3 doses of axalimogene filolisbac, the 12-month survival rate was 55.6% (10/18). The adverse events observed in the first stage of the trial have been consistent with those reported in other clinical studies with axalimogene filolisbac.

Stage 2 of the trial began enrollment in February 2015 which included a protocol amendment to allow patients to continue to receive repeat cycles of therapy until disease progression. Stage 2 enrollment was temporarily suspended with a clinical hold in October 2015 that resolved in mid-December 2015. Prior to re-initiating enrollment of a new cohort of Stage 2 patients, Advaxis and the GOG Foundation/NRG Oncology examined the 12-month survival rate and safety data obtained from the 24 patients who had previously enrolled in Stage 2. The Stage 2 population demonstrated that treatment with axalimogene filolisbac resulted in a 37.5% (9/24) 12-month survival rate. This data was consistent with the findings in Stage 1 that showed a 38.5% 12-month survival rate, despite a greater proportion of Stage 2 patients having failed bevacizumab treatment. Taken together, the available data from both stages of GOG-0265 comprise a Phase 2 clinical trial in 50 subjects with a 12 month survival rate of 38% (19/50). The protocol defined logistic model-based calculation of the expected 12-month milestone survival rate was calculated to be 24.5% using the key predictors from the patients enrolled in the trial. The 12 month survival rate of 38% for patients receiving axalimogene filolisbac in the trial represented a 52% improvement over the expected 12-month milestone survival rate of 24.5%.

Overall, 28 out of 50 (56%) patients experienced a Grade 1 or Grade 2 TRAE associated with axalimogene filolisbac infusion. The most common (>30%) Grade 1 or Grade 2 TRAEs were fatigue, chills, anemia, nausea and fever. Eighteen (36%) patients experienced a Grade 3 TRAE and two patients experienced a Grade 4 AE, including a Klebsiella lung infection in one patient, and hypotension/cytokine related symptoms in another patient, which were considered possibly related to treatment.

In October 2016, upon review of these encouraging findings, the Company announced early closure of GOG-0265. Results from the GOG-0265 trial were presented as an oral late-breaker presentation at the Society of Gynecologic Oncology (“SGO”) annual meeting on March 14, 2017. Based on these data, the Company has made a strategic decision to submit for conditional Marketing Authorization (“MA”) in Europe.

Advaxis is also conducting an ongoing clinical trial with axalimogene filolisbac through a collaboration agreement with MedImmune, the global biologics research and development arm of AstraZeneca. This is a Phase 1/2, open-label, multicenter, dose determination and expansion cohort trial to determine the recommended Phase 2 dose (“RP2D”) and evaluate the safety and efficacy of axalimogene filolisbac, in combination with MedImmune’s investigational anti-PD-L1 immune checkpoint inhibitor, IMFINZI^TM(“durvalumab”), as a treatment for patients with metastatic squamous or non-squamous carcinoma of the cervix and metastatic HPV-associated squamous cell carcinoma of the head and neck (“SCCHN”). The dose determination phase of the trial is complete. Two dose cohorts were enrolled. Cohort 1 enrolled 5 patients with metastatic cervical cancer who received 1 x 10⁹ cfu of axalimogene filolisbac + 3 mg/mg durvalumab. Cohort 2 enrolled 3 patients with metastatic cervical cancer and 2 patients with SCCHN who received 1 x 10⁹cfu of axalimogene filolisbac + 10 mg/mg of durvalumab. No dose-limiting toxicities were observed in either cohort. The RP2D was determined to be 1 x 10⁹ cfu for axalimogene filolisbac + 10 mg/mg for durvalumab. Preliminary data showed that two patients with metastatic cervical cancer achieved a durable complete response (with confirmation) and a partial response (without confirmation), respectively.

Treatment-related adverse events (“TRAE”) were reported in 91% of patients; the majority were either Grade 1 (64%) or Grade 2 (55%) events. The most commonly reported TRAEs were chills, fever, nausea and hypotension. Three patients reported Grade 3 TRAEs (1 x 10⁹+ 3 mg/kg rigor/chills; 1 x 10⁹ + 10 mg/kg - rigor/chills; and 1 x 10⁹ + 10 mg/kg - diarrhea and shortness of breath). One patient experienced a grade 4 TRAE of hypotension. The safety profile of the combination of axalimogene filolisbac + durvalumab was consistent with previous reported findings for both axalimogene filolisbac and durvalumab administered as monotherapy.

Enrollment in the Part A expansion phase (N = 20 patients with SCCHN) and Part B expansion phase (N=90 patients with metastatic cervical cancer) are open to enrollment. As of the latest data cut-off date of October 18, 2017, 7 patients receiving 1 x 10⁹ axalimogene filolisbac + 10 mg/kg durvalumab have been enrolled. In the Part B expansion, a total of 32 patients with metastatic cervical cancer were randomized to receive either 10 mg/kg durvalumab alone (N=16 patients) or 1 x 10⁹ axalimogene filolisbac + 10 mg/kg durvalumab (N = 16 patients) expansion phases. The Company expects an interim readout of the safety and efficacy data from the Part B expansion in 2019.

Ongoing Registrational and Phase 3 Studies: ADXS-DUAL and axalimogene filolisbac

In evaluating the data from GOG-0265, Advaxis observed that there was a significantly higher representation of alpha7 family viruses in the PRmCC patient population than are typically seen at an initial diagnosis of cervical cancer. Although axalimogene filolisbac had already been shown to improve survival in both alpha7 and alpha9 family cancers, the Company made the decision that late stage, metastatic patients need a potent therapy that presents antigens to both families, in order to give them the best chance to impede their disease progression. As a result, ADXS-DUAL was developed to have the potential to be even more potent against the alpha7 family strains found in metastatic cervical cancer. ADXS-DUAL incorporates additional peptides to increase potency against these alpha7 strains. ADXS-DUAL may give patients the best chance of benefit in the PRmCC setting, especially if combined with a checkpoint inhibitor.

To this end, the Company has entered into a clinical development collaboration agreement with BMS to evaluate their PD-1 immune checkpoint inhibitor, OPDIVO^®(“nivolumab”), in combination with ADXS-DUAL as a potential treatment option for women with PRmCC. Advaxis plans to file an IND application for ADXS-DUAL in early 2018. Pending FDA feedback, we plan to initiate a global, randomized, registrational quality trial in 1H 2018 and will evaluate this combination regimen in women with persistent, recurrent or metastatic (squamous or non-squamous cell) carcinoma of the cervix who have failed at least one prior line of systemic chemotherapy (“ADVANCE” or “ADVAxis Immunotherapy withNivolumab to Treat Recurrent or MetastaticCErvical Cancer”). Under the terms of the agreement, each party will bear its own internal costs and provide its immunotherapy agents. Advaxis will sponsor the trial and pay third-party costs. Subject to the positive outcome of this trial, the Company plans to file a Biologics License Application (“BLA”) for approval of ADXS-DUAL for metastatic cervical cancer in combination treatment.

Women who are diagnosed with high risk, locally advanced carcinoma of the cervix (“HRLACC”) face a higher chance that their cancer may recur following initial treatment when compared to earlier stages of the disease. When cervical cancer recurs, there are very few treatment options and the prognosis is dire. To address this unmet need, in 2016 the Company reached an agreement with the FDA, under the Special Protocol Assessment (“SPA”) process, for a Phase 3 trial evaluating axalimogene filolisbac in patients with HRLACC (“AIM2CERV” or “AdvaxisImmunotherapy2 PreventCervical Recurrence”) to be conducted in collaboration with the GOG/NRG Oncology.

AIM2CERV is a double-blind, randomized, placebo-controlled, Phase 3 trial of adjuvant axalimogene filolisbac following primary chemoradiation treatment of women with HRLACC. The primary objective of AIM2CERV is to compare the disease free survival of axalimogene filolisbac to placebo administered in the adjuvant setting following standard concurrent chemotherapy and radiotherapy (“CCRT”) administered with curative intent to patients with HRLACC. Secondary endpoints include examining overall survival and safety. The company’s goal is to develop a treatment to prevent or reduce the risk of cervical cancer recurrence after primary, standard of care treatment in women who are at high risk of recurrence. The AIM2CERV trial is expected to enroll 450 patients globally and, subject to the positive outcome, is designed to support a BLA submission in the U.S. and in other territories around the world.

The trial is active in ten countries and is currently enrolling.

Axalimogene filolisbac EU conditional approval Filing

BasedAnnual Report on scientific advice provided by the Paul Ehrlich Institute in Germany and the Medical Products Agency in Sweden, the Company has made a strategic decision to submit for conditional Marketing Authorization (“MA”) in Europe. The company plans to file for conditional MA under the requirements in the EMA’s Commission Regulation and Committee for Medicinal Products for Human Use (“CHMP”) Guideline on MAs, which includes criteria such as a positive risk/benefit balance, unmet medical needs being fulfilled, benefits to public health outweighing the additional data required, and a high likelihood that comprehensive clinical data will be provided in the future.

Progress to date towards submission of the filing includes axalimogene filolisbac’s designation as an ATMP, certification of quality and non-clinical data by the CAT, CHMP confirmation of eligibility for Union Marketing Authorization, assignment of EU rapporteurs, and pre-submission meetings held with the rapporteurs. Feedback from the rapporteurs advising the provision of additional clinical information in the submission package led to a delay of the filing which is now planned for Q1 2018. Once the package is submitted, the CHMP review process is expected to take approximately 13 months, and the Company plans to provide an update at the end of the review.

HPV Franchise Licensing Agreements

Biocon Limited (“Biocon”), our co-development and commercialization partner for axalimogene filolisbac in India and key emerging markets, filed a Marketing Authorization Application (“MAA”) for licensure of this immunotherapy in India. The companies are currently evaluating next steps.

Especificos Stendhal SA de CV (“Stendhal”), the Company’s co-development and commercialization partner for axalimogene filolisbac in Mexico, Brazil, Colombia and other Latin American countries, will pay $10 million in support payments towards the expense of AIM2CERV over the duration of the trial, contingent upon Advaxis achieving annual project milestones.

Knight Therapeutics Inc. (“Knight”), holds an exclusive license to commercialize axalimogene filolisbac in Canada, as well as our other product candidates.

Advaxis granted Global BioPharma (“GBP”) an exclusive license for the development and commercialization of axalimogene filolisbac for the treatment of cervical cancer in Asia. GBP is responsible for all development and commercial costs and activities associated with the development in their territories.

Head and Neck Cancer

Squamous Cell Carcinoma of the Head and Neck (“SCCHN”) is the most frequently occurring malignant tumor of the head and neck and is a major cause of morbidity and mortality worldwide. More than 90% of SCCHNs originate from the mucosal linings of the oral cavity, pharynx, or larynx and 70% of these cancers are caused by HPV. According to the American Cancer Society, head and neck cancer accounts for about 3% of all cancers in the United States. But while the Pap smear and other HPV tests have reduced rates of cervical cancer, rates of oral cancer are growing, with 12,000 new cases projected to be diagnosed in the United Stated in 2016 according to the Surveillance, Epidemiology, and End Results (“SEER”) database.

A study published in the Annals of Internal Medicine found that 11.5% percent of U.S. men and 3% of women were actively infected with oral HPV between 2011 and 2014. That adds up to 11 million men and 3 million women who are at risk for developing SCCHN. SCCHN is typically asymptomatic until it has metastasized, and screening options do not exist. The only way to prevent infection is the HPV vaccine, but compliance has been low to date. Another challenge is that preventative vaccines cannot protect those already infected or older than 26, leaving several generations of Americans vulnerable to SCCHN with no way of knowing if cancer is silently growing.

The safety and immunogenicity of axalimogene filolisbac is being evaluated in a Phase 2 IST at Mount Sinai and Baylor College of Medicine in a pre-surgery “window of opportunity” trial in patients with HPV-positive head and neck cancer. This clinical trial is the first to evaluate the immunologic and pathologic effects of axalimogene filolisbac in patients at the time of initial diagnosis of HPV-associated head and neck cancer. The trial is designed to show that axalimogene filolisbac is highly immunogenic and worth further investigation if the overall rate of vaccine-induced T-cell responses is 75 percent or more. Preliminary clinical data from this trial was presented at the American Association of Cancer Research (“AACR”) annual meeting on April 18, 2016. The data from eight of the nine patients enrolled in Stage 1 who were treated with axalimogene filolisbac confirmed that the trial met the target for the overall rate of vaccine-induced T-cell response. The results demonstrated that HPV E7- and/or E6-specific T cell responses increased in the peripheral blood in five of the trial patients. Increased infiltration of both CD4+ and CD8+ T cells were observed in the TME of four patients, with a reduction of FOXP3+ regulatory T cells within the tumors of 3/6 patients. Increased T cell responses to HPV E6 supports enhanced immune activity against additional tumor targets. Changes to the TME included cytotoxic T cell infiltration into the post-resection tumor, increased immune activation, a reduction of regulatory T cells, infiltration of cytotoxic T cells, and increased expression of inflammatory activation markers. In addition, fluctuations of circulating serum cytokine (IL-15, IL-9, TNFa, IL-2 and MIP-1b) levels were observed potentially suggesting consumption by activated T cells and migration of T cells to the TME. These results confirmed that the trial met its Stage 1 primary objective which allowed accrual to proceed in the second stage of the trial which is intended. The Stage 2 objective is consistent with Stage 1 and enrollment is ongoing.

As stated above, we have entered into a clinical trial collaboration agreement with MedImmune to collaborate on a Phase 1/2, open-label, multicenter, two part trial to evaluate safety and efficacy of axalimogene filolisbac, in combination with durvalumab (MEDI4736), for patients with metastatic squamous or non-squamous carcinoma of the cervix and metastatic HPV-associated SCCHN. Part 1 of this trial is complete, and the Company has commenced enrollment in the Part A (20 patients with SCCHN) and B (90 patients with cervical cancer) expansion phases.

We will continue to be opportunistic towards alternative funding approaches for continued development in HPV-positive head and neck cancer, and plan to announce an IST with a prestigious academic institution in 2018. Axalimogene filolisbac has received FDA orphan drug designation for HPV-associated head and neck cancer.

Anal Cancer

According to the American Cancer Society, nearly all squamous cell anal cancers are linked to infection by HPV, the same virus that causes cervical cancer. According to the SEER database, approximately 7,500 new cases will be diagnosed in the United States in 2016.

The safety and efficacy of axalimogene filolisbac is being evaluated in a Phase 2 IST by Brown University in patients with high-risk locally advanced anal cancer. As of December 2017, no further enrollment in this trial is planned. 10 patients were treated including one with N2 and four with N3 disease. Two patients had grade 3 acute toxicities following the initial dose of axalimogene filolisbac including chills/rigors (n = 2), back pain (n = 1), and hyponatremia (n = 1). All toxicities occurred within 24 hours of administration. There was no apparent increase in chemoradiation toxicities or myelosuppression. One patient had a Grade 5 cardiopulmonary event shortly after beginning 5-FU treatment. This patient did not receive a dose of axalimogene filolisbac. All 9 assessable patients had complete clinical responses by sigmoidoscopy. Eight of the 9 patients (89%) are progression-free at a median follow-up of 42 months. These data were accepted and published in the International Journal of Radiation Oncology.

We conducted a Phase 2 multi-center, open-label, Simon two-stage trial (“FAWCETT” or “FightingAnal-CancerwithCTLEnhancingTumorTherapy”), testing axalimogene filolisbac in patients with persistent or recurrent metastatic anal cancer. FAWCETT is designed to evaluate the efficacy and safety of axalimogene filolisbac as a monotherapy in patients with HPV-associated metastatic anal cancer who have received at least one prior treatment regimen for the advanced disease. Patients will receive intravenous axalimogene filolisbac monotherapy (1x10⁹ CFU) every 3 weeks for ≤ 2 years or until a discontinuation criterion is met. Stage 1 of the trial targeted enrollment of 36 patients with anal cancer whose disease recurred after receiving treatment, with an interim analysis planned on enrollment of 31 evaluable pts (≥ 1 post-baseline scan) and met the predetermined safety and efficacy criteria required to proceed into the second stage of patient enrollment.

Preliminary Stage 1 results from 29 of the planned evaluable patients showed 1 (3.5%) patient had a durable partial response lasting > 6 months (after progression on prior anti-PD-1 therapy) and 7 had stable disease (24%). Disease control rate was 28%. The current Kaplan Meier 6-month PFS estimate is 22%, indicating the trial met the criteria to proceed to Stage 2 of enrollment. Common (≥ 30%) TRAEs were grade 1-2 chills/rigors, fever, hypotension and vomiting. Grade 3 TRAEs of cytokine related symptoms (n=1; SAE), infusion related reactions (n=2; 1 SAE) and hypotension (n=2; 1 SAE) were reported. These results were reported at the annual meeting of the European Society for Medical Oncology (“ESMO”) in September 2017.Form 10-K.

The Company has decidedincurred recurring losses since inception as a research and development organization. For the year ended December 31, 2023, the Company used approximately $29.5 million of cash in operations and incurred a net loss of $48.1 million. As of December 31, 2023, the Company had $4.9 million in cash and cash equivalents, $25.0 million in current liabilities and an accumulated deficit of $197.2 million.

Upon closing of the Asset Sale, on March 25, 2024, the Company received $13.0 million in cash, and Immunome paid $3.0 million of the Company’s liabilities directly to vendors of the Company. In addition, under the Asset Sale Agreement the Company received 2,175,489 shares of Immunome’s common stock (the “Immunome Shares”). The Asset Sale Agreement prohibits the Company from selling more than 50% of the Immunome Shares in the first six months following the closing of the Asset Sale. In addition, on March 1, 2024, the Company issued additional convertible notes and warrants in exchange for $2.0 million in funding from the Convertible Notes investors. As of the date of this filing, the cash proceeds received from the Asset Sale and the convertible notes sold on March 1, 2024 were not sufficient to initiatepay the Stage 2Company’s existing liabilities. Therefore, the Company has limited available cash resources and requires additional financing, through the sale of a portion of the trialImmunome Shares or otherwise, in order to focuscontinue to fund its resourcescurrent operations beyond May 2024.

Raising additional funds or the satisfactory sale of a portion of the Immunome Shares prior to the end of May 2024 is essential to provide sufficient cash flow to meet future liabilities and other obligations, such as tax payments arising from the Asset Sale. Furthermore, even if the Company is successful in selling a portion of the Immunome Shares or raising additional funds through other means, the Company cannot give any assurance that it will, in the future, be able to achieve a level of profitability from the sale of its products to sustain its operations.

If the Company is unable to obtain funding, or able to receive sufficient funds from the sale of a portion of the Immunome Shares, the Company would be forced to delay, reduce, or eliminate its research and development programs, or the Company may be unable to continue operations. As such, those factors raise substantial doubt about the Company’s ability to continue as a going concern.

As part of a cost reduction plan, during the year ended December 31, 2023, the Company had a reduction in workforce in which the employment of approximately 50% of the Company’s employees was terminated. During the first quarter of 2024, the Company gave notice of termination to 18 additional employees and two officers (including the Chief Financial Officer, whose employment will terminate on June 25, 2024). After the effectiveness of such terminations, the Chief Executive Officer will be the only employee of the Company. The Company expects to be able to meet its financial obligations to its employees.

The Company can give no assurances that it will be successful in raising funds through the sale of a portion of the Immunome Shares or any other clinical priorities at this time. Wealternative. Any inability to so obtain additional financing or funding will likely cause the Company to cease business operations. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Therefore, the consolidated financial statements for the year ended December 31, 2023, do not include any adjustments to evaluate alternative funding sourcesreflect the possible future effects on the recoverability and collaborationsclassification of assets or the amounts and classification of liabilities that may result from uncertainty related to further develop this program. Axalimogene filolisbac has received FDA and EMA orphan drug designation for anal cancer.the Company’s ability to continue as a going concern.

Neoantigen Therapy (ADXS-NEO)Overview

LmTechnology is an effective vector for immunotherapy, andFollowing the completion of the Asset Sale on March 25, 2024, the Company madeis a clinical-stage oncology company whose primary clinical assets currently include aspacytarabine (BST-236), a novel proprietary anti-metabolite for first line treatment in unfit acute myeloid leukemia (AML). BST-236 is a novel prodrug of cytarabine, enabling delivery of high cytarabine doses with reduced systemic toxicity, creating a potential new backbone for AML combination regimens. We believe that our novel product candidates, if approved, have the decisionpotential to branch into the growing field of individualized cancer treatments with ADXS-NEO. ADXS-NEO is designedtransform treatment outcomes for patients suffering from solid and hematological cancers. We also continue to create individualized therapies by activating the patient’s immune systemconduct certain operations relating to respond against multiple mutations, or neoantigens, identified from an individual patient’s tumor through DNA sequencing. In August 2016, Advaxis entered into a global agreement with Amgen Inc. (“Amgen”) forformer Advaxis’ operations as clinical-stage biotechnology company focused on the development and commercialization of ADXS-NEO.proprietary Listeria monocytogenes (“Lm”)-based antigen delivery products. These efforts are primarily focused on the development of ADXS-504, an Lm-based therapy for early-stage prostate cancer.

ADXS-NEO is an individualizedLm Technology antigen delivery product developed using whole-exome sequencing of a patient’s tumor to identify neoantigens. ADXS-NEO is designed to work by presenting a large payload of neoantigens directly into dendritic cells within the patient’s immune system and stimulating a T cell response against cancerous cells.

The FDA has cleared the initial IND application of ADXS-NEO and we will file an IND amendment in early 2018. This amendment is largely driven by enhancements to the manufacturing and antigen selection processes.  We do not expect this to impact our project timelines, and we plan to initiate a Phase 1 trial in first half of 2018. The initial tumor types for the Phase 1 are non-small cell lung cancer, microsatellite stable colorectal cancer, and head and neck cancer. The Company has entered into various research collaborations, including the Parker Institute for Cancer Immunotherapy, to advance the trial of neoepitope-based, personalized cancer therapy as part of the Tumor neoantigEn SeLection Alliance (“TESLA”) initiative.

Disease focused hotspot / cancer antigen therapies (ADXS-HOT)

Advaxis is creating a new group of immunotherapy constructs for major cancers that combines our optimizedLmTechnology vector with promising targets to generate potent anti-cancer immunity. The ADXS-HOT franchise is a series of novel cancer immunotherapies that will target somatic mutations (“hotspots”), cancer testis antigens (“CTAs”) and oncofetal antigens (“OFAs”). These three types of targets form the basis of the ADXS-HOT program because they are more capable of generating potent, tumor specific, and high strength killer T cells, versus more traditional over-expressed native sequence TAAs. Most hotspot mutations and OFA/CTA proteins play critical roles in oncogenesis; targeting both at once could significantly impair cancer proliferation. The ADXS-HOT products will combine many of the potential high avidity targets that are expressed in all patients with the target disease into one “off-the-shelf”, ready to administer treatment. The ADXS-HOT technology has a strong Intellectual Property (“IP”) position, with potential protection into 2037, and an IP filing strategy providing for broad coverage opportunities across multiple disease platforms and combination therapies.

The Company is currently prioritizing product development in the most prevalent cancers, with the first indication planned to be Non Small Cell Lung Cancer (“NSCLC”). Advaxis plans to file multiple ADXS-HOT INDs in 2018, including NSCLC, with our first in human trial in one of the ADXS-HOT products to commence in 2018.

Prostate Cancer (ADXS-PSA)

We have incurred significant net operating losses in every year since our inception and expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and year to year and could be substantial. Our net losses were approximately $48.1 million and $38.0 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $197.2 million.

According to the American Cancer Society, prostate cancer is the second most common type of cancer found in American men, and is the second leading cause of cancer death in men, behind only lung cancer. More than 161,000 men are estimated to be diagnosed with prostate cancer in 2017, with over 26,000 deaths each year. Unfortunately, in about 10 – 20% of cases, men with prostate cancer will go on to develop castration-resistant prostate cancer (“CRPC”), which refers to prostate cancer that progresses despite androgen deprivation therapy. Metastatic CRPC (“mCRPC”) occurs when the cancer spreads to other partsFollowing closing of the bodysale of AL102 and there isAL101 to Immunome, we anticipate that our expenses will decrease as we:

We do not expect to generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a rising prostate-specific antigen (“PSA”) level. This stage of prostate cancer has an average survival of 9-13 months, isproduct candidate. Additionally, we currently use contract research organizations, or CROs, to carry out our clinical development activities. Furthermore, we incur additional costs associated with deterioration in quality of life, and has few therapeutic options available.operating as a public company.

The Company has incurred recurring losses since inception as a research and development organization. For the year ended December 31, 2023, the Company used approximately $29.5 million of cash in operations and incurred a net loss of $48.1 million. As of December 31, 2023, the Company had $4.9 million in cash and cash equivalents, $25.0 million in current liabilities and an accumulated deficit of $197.2 million.

According to a data review published by MD Anderson Cancer Center in 2016, checkpoint inhibitor monotherapy has not shown significant activity in mCRPC to date. The authors hypothesize that may be due to the inability

Upon closing of the checkpoint inhibitorAsset Sale, on March 25, 2024, the Company received $13.0 million in cash, and Immunome paid $3.0 million of the Company’s liabilities directly to infiltratevendors of the tumor microenvironment, and that combination therapy with agents that induce T cell infiltration withinCompany. In addition, under the tumor may improve performanceAsset Sale Agreement the Company received 2,175,489 shares of checkpoints in prostate cancer.

Lm Technology constructs have been shown by multiple labs to reduce number and suppressive functionImmunome’s common stock (the “Immunome Shares”). The Asset Sale Agreement prohibits the Company from selling more than 50% of Tregs and MDSCsthe Immunome Shares in the tumor microenvironment and causefirst six months following the destruction of Tregs in the TME as soon as 5 days after dosing in models. This reduction of immune suppression in the tumors has been attributed to our proprietarytLLO-fusion peptides expressed by multiple copiesclosing of the plasmidsAsset Sale. In addition, on March 1, 2024, the Company issued additional convertible notes and warrants in each bacteria. Advaxis feels thatexchange for $2.0 million in funding from the combinationConvertible Notes investors. As of ADXS-PSA, our immunotherapy designedthe date of this filing, the cash proceeds received from the Asset Sale and the convertible notes sold on March 1, 2024 were not sufficient to targetpay the PSA antigen, withCompany’s existing liabilities. Therefore, the Company has limited available cash resources and requires additional financing, through the sale of a checkpoint inhibitor may provide an alternative treatment option for patients with mCRPC. Clinical benefit in prostate cancer could be a significant value creator to expand theLmTechnology platform into the prostate cancer market.

Advaxis has entered into a clinical trial collaboration and supply agreement with Merck to evaluate the safety and efficacy of ADXS-PSA as monotherapy and in combination with KEYTRUDA^® (“pembrolizumab”), Merck’s anti PD-1 antibody, in a Phase 1/2, open-label, multicenter, dose determination and expansion trial in patients with previously treated metastatic, castration-resistant prostate cancer (Keynote-046). For the ADXS-PSA monotherapy dose escalation and determination portion of the trial, cohorts were started at a dose of 1 x 10⁹ cfu (n=7) and successfully escalatedImmunome Shares or otherwise, in order to higher dose levels of 5x10⁹ cfu (n=3) and 1x10¹⁰ cfu (n=3) without achieving a maximum tolerated dose. Treatment emergent adverse events noted at these higher dose levels were generally consistent with those observed atcontinue to fund its current operations beyond May 2024.

Raising additional funds or the lower dose level (1 x 10⁹ cfu) other than a higher occurrence rate of Grade 2/3 hypotension. The ADXS-PSA monotherapy dose-determination phasesatisfactory completion of the trial has been completed. The RP2Dsell of ADXS-PSA monotherapy was determined to be 1x 10⁹cfu based on a review of the totality of the clinical data. This dose was used in combination with 200 mg of pembrolizumab in a cohort of 6 patients to evaluate the safety of the combination before moving into an expanded cohort of patients (N=30 patients). The safety of the combination was confirmed and enrollment in the expansion cohort phase was initiated. Enrollment in this phase of the trial was completed in January 2017.

Preliminary data correlating clinical observations with immune data in mCRPC patients treated with ADXS-PSA monotherapy were presented at the third annual CRI-CIMT-EATI-AACR International Cancer Immunotherapy Conference in September 2017. By profiling and quantifying immune-related gene expression in patients before and after ADXS-PSA monotherapy, differences were noted between the pre- and post-treatment immune status of stable disease (“SD”) and non-stable disease patients. 100% of the patients who achieved SD (31%; 4/13) showed expansion of pre-existing, as well as generation of new T cells. There were significantly higher expression levels of genes indicative of CD4+ and CD8+ T cell activation and genes supporting M1 macrophages, and lower expression levels of immunosuppressive (protumor) genes. Patients with non-stable disease (69%; 9/13) exhibited gene expression profiles suggesting a more immunosuppressive myeloid profile with asynchronous and unsustained clonal T cell expansions, and increased expression of prostate cancer tumor markers in peripheral circulation. Together, these findings suggest that SD patients treated with ADXS-PSA may have a more pro-inflammatory immunologic picture, fewer circulating tumor cells, and potentially less tumor burden.

In November 2017 at the Society for Immunotherapy of Cancer (“SITC”), the Company presented additional preliminary data from this monotherapy arm that shows that after administration of ADXS-PSA, all 9 patients who received all three doses saw increasing numbers and strength of T cells targeting PSA, using an ELISpot data analysis. In 56% (5/9) patients, this increase was 3-fold. This data shows, for the first time clinically, that anLm Technology construct has shown specific T cell generation against a specific target. In addition, the Company evaluated four other markers expressed by prostate cancers and 100% (9/9) patients had an increased frequency of T cells to at least one of these targets, demonstrating that antigen spreading after administration of ADXS-PSA does occur in the clinic and can expand activity.

Preliminary safety data shows the most common side effects include chills, fever, rigors, hypertension, fatigue, hypotension and vomiting which are consistent with cytokine release in response to ADXS-PSA administration.

Viewed collectively, the data presented at CRI-CIMT-EATI-AACR 2017 and SITC 2017 is an encouraging signal that ADXS-PSA allows for generation of sustained, strengthened T cells against prostate cancer, while weakening the TME and allowing T cells accessImmunome Shares prior to the tumor. The Company looks forwardend of May 2024 is essential to providing additional data in 2018provide sufficient cash flow to meet future liabilities and other obligations, such as tax payments resulted from the combination arm of this trial with pembrolizumab.

In addition,Asset Sale. Furthermore, even if the Company is actively developing ansuccessful in selling the Immunome Shares or raising additional product candidate for prostate cancer, currentlyfunds, the Company cannot give any assurance that it will, in preclinical testing, which could complement ADXS-PSA.the future, be able to achieve a level of profitability from the sale of its products to sustain its operations.

Other Lm Technology ProductsIf the Company is unable to obtain funding, or able to receive sufficient funds from sale of Immunome Shares the Company would be forced to delay, reduce, or eliminate its research and development programs, or the Company may be unable to continue operations. As such, those factors raise substantial doubt about the Company’s ability to continue as a going concern.

HER2 Expressing Solid Tumors

HER2 is overexpressedAs part of a cost reduction plan, during the year ended December 31, 2023, the Company had a reduction in a percentageworkforce in which the employment of solid tumors including osteosarcoma. Accordingapproximately 50% of the Company’s employees was terminated. During the first quarter of 2024, the Company gave notice of termination to published literature, up18 additional employees and two officers (including the Chief Financial Officer, whose employment will terminate on June 25, 2024). After the effectiveness of such terminations, the Chief Executive Officer will be the only employee of the Company. The Company expects to 60% of osteosarcomas are HER2 positive, and this overexpression is associated with poor outcomes for patients.be able to meet its financial obligations to its employees.

ADXS-HER2 is anLm Technology antigen delivery product candidate designed to target HER2 expressing solid tumors including human and canine osteosarcoma. ADXS-HER2 has received FDA and EMA orphan drug designation for osteosarcoma and has received Fast Track designation from the FDA for patients with newly-diagnosed, non-metastatic, surgically-resectable osteosarcoma.

The dose finding phase of a Phase 1b trial in HER2 expressing tumors has been completed.  Based on priorities and focus, the Company has decided not to proceed to the expansion phase of the trial. The Company remains open to investigator-initiated research or licensing proposals for ADXS-HER2.

Canine Osteosarcoma

On March 19, 2014, we entered into a definitive Exclusive License Agreement (the “Aratana Agreement”) with Aratana Therapeutics Inc. (“Aratana”), where we granted Aratana an exclusive, worldwide, royalty-bearing license, with the right to sublicense, certain of our proprietary technologycan give no assurances that enables Aratana to develop and commercialize animal health products thatit will be targeted for treatment of osteosarcoma and other cancer indicationssuccessful in animals. A product license request was filed by Aratana for ADXS-HER2 (also known as AT-014 by Aratana) for the treatment of canine osteosarcoma with the United States Department of Agriculture (“USDA”). Aratana received communication in December 2017 that the USDA granted Aratana conditional licensure for AT-014 for the treatment of dogs diagnosed with osteosarcoma, one year of age or older. Aratana plans to conduct an extended field study in a clinical setting and anticipates initiating the study in early 2018, which will be fully funded by Aratana. Initially, Aratana plans to make the therapeutic available for purchase at approximately two dozen veterinary oncology practice groups across the United States who participate in the study.

Aratana has been granted exclusive worldwide rights by us to develop and commercialize ADXS-HER2 in animals. Aratana is further responsible for the conduct of clinical research with ADXS-Survivin in canine/feline lymphoma, as well as pending investigations of two additional Advaxis constructs in animals.

Under the terms of the Aratana Agreement, Aratana paid an upfront payment to us in the amount of $1,000,000 upon signing of the Aratana Agreement. Aratana will also pay us (a) up to $36.5 million based on the achievement of milestone relating to the advancement of productsraising funds through the approval process with the USDA in the United States and the relevant regulatory authorities in the European Union (“E.U.”) in all four therapeutic areas and up to an additional $15 million in cumulative sales milestones based on achievement of gross sales revenue targets for sales of any and all products for use in non-human animal health applications (the “Aratana Field”) (regardless of therapeutic area), and (b) tiered royalties starting at 5% and going up to 10%, which will be paid based on net sales of any and all products (regardless of therapeutic area) in the Aratana Field in the United States. Royalties for sales of products outside of the United States will be paid at a rate equal to half of the royalty rate payable by Aratana on net sales of products in the United States (starting at 2.5% and going up to 5%). Royalties will be payable on a product-by-product and country-by-country basis from first commercial sale of a product in a country until the later of (a) the 10th anniversary of first commercial sale of such product by Aratana, its affiliates or sub licensees in such country or (b) the expirationportion of the last-to-expire valid claimImmunome Shares or any other alternative. Any inability to so obtain additional financing or funding will likely cause the Company to cease business operations. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Therefore, the consolidated financial statements for the year ended December 31, 2023, do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern. See “— Liquidity and Capital Resources.” Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our patentscommon stock, and it may be more difficult for us to obtain financing. If potential collaborators decline to do business with us or joint patents claiming or coveringpotential investors decline to participate in any future financings due to such concerns, our ability to increase our cash position may be limited. We will need to generate significant revenues to achieve profitability, and we may never do so. Because of the compositionnumerous risks and uncertainties associated with the development of matter, formulation or methodour current and any future product candidates and because the extent to which we may enter into collaborations with third parties for the development of useany of suchour product in such country. Aratana will also pay us 50%candidates is unknown, we are unable to estimate the amounts of all sublicense royalties received by Aratanaincreased capital outlays and its affiliates.operating expenses required for completing the research and development of our product candidates.

Corporate Information

We were originally incorporated in the State of Colorado on June 5, 1987 under the name Great Expectations, Inc. We were a publicly-traded “shell” company without any business until November 12, 2004 when we acquired Advaxis, Inc.,New Ayala, a Delaware corporation, through a Share Exchange and Reorganization Agreement, dated as of August 25, 2004, which we refer to as the Share Exchange, by and among Advaxis,New Ayala, the stockholders of AdvaxisNew Ayala and us. As a result of the Share Exchange, AdvaxisNew Ayala became our wholly-owned subsidiary and our sole operating company. On December 23, 2004, we amended and restated our articles of incorporation and changed our name to Advaxis, Inc.New Ayala. On June 6, 2006, our stockholders approved the reincorporation of our company from Colorado to Delaware by merging the Colorado entity into our wholly-owned Delaware subsidiary. Our date of inception, for financial statement purposes, is March 1, 2002 and the Company was uplisted to NASDAQlisted on The Nasdaq Capital Market (“Nasdaq”) in 2014. In December 2021, the Company was delisted from Nasdaq and accepted onto the OTCQX. Shares of New Ayala’s common stock are currently quoted on the OTCQX under the symbol “ADXS.”

Our principal executive offices and manufacturing facility isare located at 305 College Road East, Princeton,9 Deer Park Drive, Suite K-1, Monmouth Junction, New Jersey 0854008852, and our telephone number is (609) 452-9813. We maintain a corporate website at www.advaxis.comwww.ayalapharma.com which contains descriptions of our technology, our product candidates and the development status of each drug. We make available free of charge through our Internetinternet website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reportsCurrent Reports on Form 8-K, and any amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. We are not including the information on our website as a part of, nor incorporating it by reference into, this report. You may read and copy any materials we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 on official business days during the hours of 10:00 a.m. to 3:00 p.m. Please call the SEC at 1-800-SEC-0330 for information on the Public Reference Room. Additionally, theThe SEC maintains a website that contains annual, quarterly, and current reports, proxy statements, and other information that issuers (including us) file electronically with the SEC. The SEC’s website address is http://www.sec.gov.

Intellectual Property

Protection of our intellectual property is important to our business. We have a robust and extensive patent portfolio that protects our product candidates andLm -based Lm-based immunotherapy technology. Currently, we own or have rights to approximately 433numerous patents and applications, which are owned, licensed from, or co-owned with University of Pennsylvania, (“Penn”) , Merck,or Penn, National Institute of Health, (“NIH”),or NIH, and/or Augusta University. We continuously grow this portfolio by filing new applications to protect our ongoing research and development efforts. We aggressively prosecute and defend our patents and proprietary technology. Our patents and applications are directed to the compositions of matter, use, and methods thereof, of ourLm -LLO Lm-LLO immunotherapies for our product candidates, including axalimogene filolisbac, ADXS-DUAL,AXAL, ADXS-PSA, ADXS-NEO, ADXS-HOT, ADXS-HER2. We have and may continue to abandon prosecuting certain patents that are not strategically aligned with the direction of the Company.

Our approach to the intellectual property portfolio is to create, maintain, protect, enforce and defend our proprietary rights for the products we develop from our immunotherapy technology platform. We endeavor to maintain a coherent and aggressive strategic approach to building our patent portfolio with an emphasis in the field of cancer vaccines.

Issued patents which are directed to axalimogene filolisbac,AXAL, ADXS-PSA, and ADXS-HER2 in the United States, will expire between 20172024 and 2032. Issued patents directed to our product candidates axalimogene filolisbac,AXAL, ADXS-PSA, and ADXS-HER2 outside of the United States, will expire in 2032. Issued patents directed to ourLm -based immunotherapy platform in the United States, will expire between 20172024 and 2031. Issued patents directed to ourLm -based Lm-based immunotherapy platform outside of the United States, will expire between 20182024 and 2033.

We have pending patent applications directed to our product candidates axalimogene filolisbac,AXAL, ADXS-PSA, ADXS-HER2, ADXS-NEO, ADXS-DUAL and ADXS-HOT that, if issued would expire in the United States and in countries outside of the United States between 20202024 and 2037. We have pending patent applications directed to methods of using of our product candidates axalimogene filolisbac, ADXS-DUAL,AXAL, ADXS-PSA, ADXS-NEO, ADXS-HOT, ADXS-HER2 directed to the following indications and others: HPV-related cervical cancer, prostate cancer and her2/neu-expressing cancer, that, if issued would expire in the United States and in countries outside of the United States between 20202024 and 2037, depending on the specific indications.

We will be able to protect our technology from unauthorized use by third parties only to the extent it is covered by valid and enforceable patents or is effectively maintained as trade secrets. Patents and other proprietary rights are an essential element of our business.

BST-236

Our commercial success will dependdepends, in part, on our ability to obtain and maintain proprietary protection for our product candidate, BST-236, as well any future product candidates, technology,novel discoveries, product development technologies and know-how,know-how. We own all of our intellectual property relating to operate without infringing on the proprietaryBST-236 and have a patent portfolio that includes several patent families that cover composition, methods and use. We protect these intellectual property rights, of others, and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions, and improvements thatwhich are importantcritical to the development, formulation and marketing of our business. We alsoproduct candidate, by filing patents or patent applications with the U.S. Patent & Trademark Office and the comparable patent offices of Israel, Europe and other countries. In addition, we rely on trade secrets, know-how, continuing technological innovation, orphan drug exclusivity and potential in-licensing opportunities to develop and maintain our proprietary position.

Any patent applications which As of April 4, 2024, we have filed or will file orpatent applications relating to which we have or will have license rights may not issue,BST-236 in multiple jurisdictions, including Australia, Brazil, Canada, China, Europe, India, Japan, Israel, Russia, Korea, Hong Kong and patents that do issue may not contain commercially valuable claims. In addition, any patents issued to us or our licensors may not afford meaningful protection for our products or technology, or may be subsequently circumvented, invalidated, narrowed, or found unenforceable. Our processes and potential products may also conflict with patents which have been or may be granted to competitors, academic institutions or others. As the pharmaceutical industry expands and more patents are issued, the risk increases that our processes and potential products may give rise to interferences filed by others in the U.S. Patent and Trademark Office, or to claims of patent infringement by other companies, institutions or individuals. These entities or persons could bring legal actions against us claiming damages and seeking to enjoin clinical testing, manufacturing and marketing of the related product or process. In recent years, several companies have been extremely aggressive in challenging patents covering pharmaceutical products, and the challenges have often been successful. If any of these actions are successful, in addition to any potential liability for damages, we could be required to cease the infringing activity or obtain a license in order to continue to manufacture or market the relevant product or process. We may not prevail in any such action and any license required under any such patent may not be made available on acceptable terms, if at all. Our failure to successfully defend a patent challenge or to obtain a license to any technology that we may require to commercialize our technologies or potential products could have a materially adverse effect on our business. In addition, changes in either patent laws or in interpretations of patent laws in the United States, and other countries may materially diminish the value of our intellectual property or narrow the scope of our patent protection.

We also rely upon unpatented proprietary technology, and in the future may determine in some cases that our interests would be better served by reliance on trade secrets or confidentiality agreements rather than patents or licenses. We may not be able to protect our rights to such unpatented proprietary technology and others may independently develop substantially equivalent technologies. If we are unable to obtain strong proprietary rights to our processes or products after obtaining regulatory clearance, competitors may be able to market competing processes and products.

Others may obtain patents having claims which cover aspects of our products or processes which are necessary for, or useful to, the development, use or manufacture of our services or products. Should any other group obtain patent protection with respect to our discoveries, our commercialization of potential therapeutic products and methods could be limited or prohibited.

The Drug Development Process

The product candidates in our pipeline are at various stages of preclinical and clinical development. The path to regulatory approval includes multiple phases of clinical trials in which we collect data that will ultimately support an application to regulatory authorities to allow us to market a product for the treatment, of a specific type of cancer. There are many difficulties and uncertainties inherent in research and development of new products, resulting in high costs and variable success rates. Bringing a drug from discovery to regulatory approval, and ultimately to market, takes many years and significant costs.

Clinical testing, known as clinical trials or clinical studies, is either conducted internally by pharmaceutical or biotechnology companies or is managed on behalf of these companies by Clinical Research Organizations (“CRO”). The process of conducting clinical studies is highly regulated by the FDA, as well as by other governmentalunder the Patent Cooperation Treaty. We have been issued five patents in United States, two in Europe two in each of Australia, Israel, Canada, Japan and professional bodies. In a clinical trial, participants receive specific interventions accordingRussia and one in each India and Macau. Issued patents and currently pending patent applications are summarized below:

BIOST/011. We have one patent under the PCT to the research plan or protocol created by the study sponsor and implemented by study investigators. Clinical trials may compare a new medical approach to a standard one that is already available or to a placebo that contains no active ingredients or to no intervention. Some clinical trials compare interventions that are already available to each other. When a new product or approach is being studied, it is not usually known whether it will be helpful, harmful, or no different than available alternatives. The investigators try to determine the safety and efficacy of the intervention by measuring certain clinical outcomes in the participants.cover Impurities.

Phase 1. Phase 1 clinical trials begin when regulatory agencies allow initiation of clinical investigation of a new drug or product candidate. They typically involve testing an investigational new drug on a limited number of patients. Phase 1 studies determine a drug’s basic safety, maximum tolerated dose and how the drug is absorbed by, and eliminated from, the body. Typically, cancer therapies are initially tested on late-stage cancer patients.

Phase 2. Phase 2 clinical trials involve larger numbers of patients that have been diagnosed with the targeted disease or condition. Phase 2 clinical trials gather preliminary data on effectiveness (where the drug works in people who have a certain disease or condition) and to determine the common short-term side effects and risks associated with the drug. If Phase 2 clinical trials show that an investigational new drug has an acceptable range of safety risks and probable effectiveness, a company will continue to evaluate the investigational new drug in Phase 3 studies.

Phase 3. Phase 3 clinical trials are typically controlled multi-center trials that involve a larger number of patients to ensure the study results are statistically significant. The purpose is to confirm effectiveness and safety on a large scale and to provide an adequate basis for physician labeling. These trials are generally global in nature and are designed to generate clinical data necessary to submit an application for marketing approval to regulatory agencies.

U.S. Drug Development Process

Biologic License Application (BLA). The results of the clinical trials using biologics are submitted to the FDA as part of a BLA. Following the completion of Phase 3 studies, if the sponsor of a potential product in

In the United States, believes it has sufficient information to support the safety and effectiveness of the investigational new drug, the sponsor submits a BLA to the FDA requesting thatregulates drugs under the investigational new drug be approved for marketing.federal Food, Drug, and Cosmetic Act, or the FDCA, and its implementing regulations. The application is a comprehensive filing that includes the resultsprocess of all preclinical and clinical studies, information about the drug’s composition,obtaining regulatory approvals and the sponsor’s plans for manufacturing, packaging, labelingsubsequent compliance with appropriate federal, state, local and testingforeign statutes and regulations require the investigational new drug. expenditure of substantial time and financial resources.

The FDA’s review of an application is designated either as a standard review with a target review time of 10 months or a priority review with a target of 6 months. Depending upon the completeness of the application and the number and complexity of follow-up requests and responses betweenprocess required by the FDA and the sponsor, the review time can take months to many years. Once approved through this process,before a drug may be marketed in the United States generally involves the following:

● completion of preclinical laboratory tests, animal studies and formulation studies in accordance with FDA’s good laboratory practice requirements and other applicable regulations;

● submission to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may begin;

● approval by an independent institutional review board, or IRB, or ethics committee at each clinical site before each trial may be initiated;

● performance of adequate and well-controlled human clinical trials in accordance with good clinical practice requirements, or GCPs to establish the safety and efficacy of the proposed drug for its intended use;

● submission to the FDA of an NDA after completion of all pivotal trials;

● satisfactory completion of an FDA advisory committee review, if applicable;

● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and of selected clinical investigation sites to assess compliance with GCPs; and

● FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States.

Prior to beginning the first clinical trial with a product candidate in the United States, we must submit an IND to the FDA. An IND is a request for authorization from the FDA to administer an investigational new drug product to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies. The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamics characteristics of the product; chemistry, manufacturing, and controls information; and any available human data or literature to support the use of the investigational product. An IND must become effective before human clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial. 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 the clinical trial can begin. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical study. Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A separate submission to the existing IND must be made for each successive clinical trial conducted during product development and for any subsequent protocol amendments. While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the drug, findings from animal or in vitro testing suggesting a significant risk to humans exposed to the drug, and any clinically important increased rate of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure.

Furthermore, an independent IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent form before the clinical trial begins at that site and must monitor the study until completed. Regulatory authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives. Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy. There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

● Phase 1: The product candidate is initially introduced into healthy human subjects or patients with the target disease or condition. These studies are designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness. In the case of some products for severe or life-threatening diseases, such as cancer, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.

● Phase 2: The product candidate is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

● Phase 3: The product candidate is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.

Post-approval trials, sometimes referred to as Phase 4 studies, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA.

During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA is submitted. Meetings at other times may be requested. These meetings can provide an opportunity for the sponsor to share information about the data gathered to date, for the FDA to provide advice, and for the sponsor and the FDA to reach consensus on the next phase of development. Sponsors typically use the meetings at the end of the Phase 2 trial to discuss Phase 2 clinical results and present plans for the pivotal Phase 3 clinical trials that they believe will support approval of the new drug.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug. In addition, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

U.S. Review and Approval Process

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, preclinical and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product. The submission of an NDA is subject to any conditions imposedthe payment of substantial user fees; a waiver of such fees may be obtained under certain limited circumstances. Additionally, no user fees are assessed on NDAs for products designated as orphan drugs, unless the product also includes a non-orphan indication. The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review The FDA may request additional information rather than accept an NDA for filing. In this event, the NDA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. Once filed, the FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality and purity. Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission. This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision after it the application is submitted.

The FDA may refer an application for a novel drug to an advisory committee. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the FDA.recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving an NDA, the FDA will typically inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP and adequate to assure consistent production of the product within required specifications. Additionally, before approving a NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.

After the FDA evaluates an NDA, it will issue an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the drug with prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A Complete Response Letter usually describes the specific deficiencies in the NDA identified by the FDA and may require additional clinical data, such as an additional clinical or other significant and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing. If a Complete Response Letter is issued, the sponsor must resubmit the NDA or, addressing all of the deficiencies identified in the letter, or withdraw the application. Even if such data and information are submitted, the FDA may decide that the NDA does not satisfy the criteria for approval.

If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed. For example, the FDA may approve the NDA with a Risk Evaluation and Mitigation Strategy, or REMS, to ensure the benefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries, and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace. The FDA may also require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing studies.

In addition, the Pediatric Research Equity Act, or PREA, requires a sponsor to conduct pediatric clinical trials for most drugs, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs and supplements must contain a pediatric assessment unless the sponsor has received a deferral or waiver. The required assessment must evaluate the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the drug is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness data need to be collected before the pediatric clinical trials begin. The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

Government Regulations

General

Government authorities in the United States and other countries extensively regulate, among other things, the preclinical and clinical testing, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of drugs.biopharmaceutical and drug products. In the United States, the FDA subjects drugs to rigorous review under the Federal Food, Drug and Cosmetic Act, or FDCA, the Public Health Service Act, or PHSA, and other federal statutes andimplementing regulations.

Orphan Drug Designation

Under the Orphan Drug Act (“ODA”),ODA, the FDA may grant Orphan Drug Designation (“ODD”)ODD, to a drug or biological product intended to treat a rare disease or condition, which means a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States, but for which there is no reasonable expectation that the cost of developing and making a drug or biological product available in the United States will be recovered from domestic sales of the product. Additionally, sponsors must present a plausible hypothesis for clinical superiority to obtain ODD if there is a product already approved by the FDA that that is considered by the FDA to be the same as the already approved product and is intended for the same indication. This hypothesis must be demonstrated to obtain orphan exclusivity.

The benefits of ODD can be substantial, including research and development tax credits, grants and exemption from user fees, enhanced access to advice fromfees. The tax advantages, however, were limited in the 2017 Tax Cuts and Jobs Act. Moreover, if there is no other product that the FDA whileconsiders to be the drugsame product that is being developed, andapprove for the orphan indication, the orphan designated product is eligible for 7 years of orphan market exclusivity once the product reaches approval and begins sales, providedis approved. During that period, the new product is first to market and that this new product hasFDA generally may not been previously approvedapprove any other application for the same product for the same indication, although there are exceptions, most notably when the later product is shown to be clinically superior to the product with exclusivity. Other applicants, however, may receive approval of different products for the orphan diseaseindication or condition, with or withoutthe same product for a different indication during the orphan drug designation.exclusivity period. In order to qualify for these incentives, a company must apply for designation of its product as an “Orphan Drug” and obtain approval from the FDA. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process; however,process.

In the EU, orphan drug designation provides up to 10 years of market exclusivity in Europe, in addition to the 7-year exclusivity in the U.S. as a result of the FDA’s orphan drug designation in 2019. EMA designation will also provide us with other benefits and incentives such as clinical protocol assistance, access to a centralized marketing authorization procedure that is valid in all European Union (“EU”) member states and reduced regulatory fees.

The Company has an ODD product may be eligibleBST-236 (. As well as EMA ODD for priority review. A drug that is approved for the ODD indication is granted seven years of orphan drug exclusivity. During that period, the FDA generally may not approve any other application for the same product for the same indication, although there are exceptions, most notably when the later product is shown to be clinically superior to the product with exclusivity.BST-236.

We currently have ODD with the FDA for axalimogene filolisbacAXAL for treatment of anal cancer (granted August 2013), HPV-associated head and neck cancer (granted November 2013); and treatment of Stage II-IV invasive cervical cancer (granted May 2014). We also have ODD with the FDA for ADXS-HER2 for the treatment of osteosarcoma (granted May 2014).

In Europe, the Committee for Orphan Medicinal Products, (“COMP”)COMP, has issued a positive opinion on the application for ODD of axalimogene filolisbacAXAL for the treatment of anal cancer (December 2015) and on the application for ODD of ADXS-HER2 for osteosarcoma (November 2015).

Expedited Review and Approval Programs for Serious Conditions

Four core FDA programs are intended to facilitate and expedite the development and review of new drugsbiologics to address unmet medical need in the treatment of serious or life-threatening conditions: fast trackFast Track designation, breakthrough therapy designation, accelerated approval, and priority review designation.review. We intend to avail ourselves of any and all of these programs as applicable to our products.

FDA is required to facilitate the development, and expedite the review, of products that are intended for the treatment of a serious or life-threatening disease or condition, and which demonstrate the potential to address unmet medical needs for the condition. Under the Fast Track program, the sponsor of a new biologic product candidate may request that the FDA designate the drug candidate for a specific indication as a Fast Track drug concurrent with, or after, the filing of the IND for the product candidate. FDA must determine if the product candidate qualifies for Fast Track designation within 60 days of receipt of the sponsor’s request. If Fast Track designation is obtained, sponsors may be eligible for more frequent development meetings and correspondence with the FDA. FDA may also initiate review of sections of a Fast Track product’s BLA before the application is complete. This rolling review is available if the applicant provides, and FDA approves, a schedule for the submission of the remaining information and the applicant pays applicable user fees. However, the FDA’s time period goal for reviewing an application does not begin until the last section of the BLA is submitted.

Under FDA’s accelerated approval programs, FDA may approve a product for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.

In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A product candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the product from the market on an expedited basis. All promotional materials for product candidates approved under accelerated regulations are subject to prior review by the FDA.

Under the provisions of the FDA Safety and Innovation Act, or FDASIA, enacted in 2012, a sponsor can request the designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a product that is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Products designated as breakthrough therapies are eligible for intensive guidance on an efficient development program beginning as early as Phase 1 trials, a commitment from the FDA to involve senior managers and experienced review staff in a proactive collaborative and cross-disciplinary review, rolling review, and the facilitation of cross-disciplinary review.

Another expedited pathway is the Regenerative Medicine Advanced Therapy, or RMAT, designation. Qualifying products must be a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or a combination of such products, and not a product solely regulated as a human cell and tissue product. The product must be intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and preliminary clinical evidence must indicate that the product has the potential to address an unmet need for such disease or condition. Advantages of the RMAT designation include all the benefits of the Fast Track and breakthrough therapy designation programs, including early interactions with the FDA. These early interactions may be used to discuss potential surrogate or intermediate endpoints to support accelerated approval.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Disclosure of Clinical Trial Information

Sponsors of clinical trials of FDA regulated products, including biologics, are required to register and submit certain clinical trial information within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on their clinicaltrials.gov website. Information related to the product, patient population, phase of the investigation, Trial sites and investigators, and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to discuss the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed in certain circumstances for up to two years, depending on the circumstances, after the date of completion of the trial. Competitors may use this publicly available information to gain knowledge regarding the progress of development programs.

Coverage, Pricing and Reimbursement

Successful commercialization of new drug products depends in part on the extent to which reimbursement for those drug products will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drug products they will pay for and establish reimbursement levels. The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford a drug product. Sales of drug products depend substantially, both domestically and abroad, on the extent to which the costs of drugs products are paid for by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors.

A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular drug products. In many countries, the prices of drug products are subject to varying price control mechanisms as part of national health systems. In general, the prices of drug products under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for drug products, but monitor and control company profits. Accordingly, in markets outside the United States, the reimbursement for drug products may be reduced compared with the United States. In the United States, the principal decisions about reimbursement for new drug products are typically made by CMS an agency within HHS. CMS decides whether and to what extent a new drug product will be covered and reimbursed under certain federal governmental healthcare programs, such as Medicare, and private payors tend to follow CMS to a substantial degree. However, no uniform policy of coverage and reimbursement for drug products exists among third-party payors and coverage and reimbursement levels for drug products can differ significantly from payor to payor. In the United States, the process for determining whether a third-party payor will provide coverage for a biological product typically is separate from the process for setting the price of such product or for establishing the reimbursement rate that the payor will pay for the product once coverage is approved. With respect to biologics, third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the FDA-approved products for a particular indication, or place products at certain formulary levels that result in lower reimbursement levels and higher cost sharing obligation imposed on patients. A decision by a third-party payor not to cover our product candidates could reduce physician utilization of a product. Moreover, a third-party payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable a manufacturer to maintain price levels sufficient to realize an appropriate return on its investment in product development. Additionally, coverage and reimbursement for products can differ significantly from payor to payor. One third-party payor’s decision to cover a particular medical product does not ensure that other payors will also provide coverage for the medical product, or will provide coverage at an adequate reimbursement rate. As a result, the coverage determination process usually requires manufacturers to provide scientific and clinical support for the use of their products to each payor separately and is a time-consuming process.

Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Third-party payors are increasingly challenging the prices charged for medical products and services, examining the medical necessity and reviewing the cost-effectiveness of pharmaceutical products, in addition to questioning safety and efficacy. If third-party payors do not consider a product to be cost-effective compared to other available therapies, they may not cover that product after FDA approval or, if they do, the level of payment may not be sufficient to allow a manufacturer to sell its product at a profit.

In addition, in many foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country to country. In the European Union, governments influence the price of products through their pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed to by the government. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost effectiveness of a particular product to currently available therapies. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. The downward pressure on healthcare costs in general, particularly prescription products, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross border imports from low-priced markets exert a commercial pressure on pricing within a country (particularly in the EEA where it is illegal to impede such imports from elsewhere within the EEA).

Other Healthcare Laws

Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in the United States in addition to the FDA, including CMS, the HHS Office of Inspector General and HHS Office for Civil Rights, other divisions of the HHS and the Department of Justice.

Healthcare providers, physicians, and third-party payors will play a primary role in the recommendation and prescription of any products for which we obtain marketing approval. Our current and future arrangements with third-party payors, healthcare providers and physicians may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute any drugs for which we obtain marketing approval. In the United States, these laws include, without limitation, state and federal anti-kickback, false claims, physician transparency, and patient data privacy and security laws and regulations, including but not limited to those described below.

The AKS prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, receiving or providing any remuneration, directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted to include anything of value. The AKS has been interpreted to apply to arrangements between pharmaceutical and medical device manufacturers on the one hand and prescribers, purchasers, formulary managers and beneficiaries on the other hand. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the AKS. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated. In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Moreover, a claim including items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the FCA.

Although we would not submit claims directly to payors, drug manufacturers can be held liable under the FCA, which imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be presented to federal programs (including Medicare and Medicaid) claims for items or services, including drugs, that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. The government may deem manufacturers to have “caused” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label. Several biopharmaceutical, medical device and other healthcare companies have been prosecuted under the FCA and civil monetary penalty laws for, among other things, allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of products for unapproved (e.g., or off-label), and thus non-covered, uses. In addition, the civil monetary penalties statute imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent. Claims which include items or services resulting from a violation of the federal AKS are false or fraudulent claims for purposes of the FCA.

Our future marketing and activities relating to the reporting of wholesaler or estimated retail prices for our products, if approved, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our product candidates, are subject to scrutiny under these laws.

HIPAA, created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the AKS, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians and certain other healthcare providers. The Affordable Care Act, or the ACA, imposed, among other things, new annual reporting requirements through the Physician Payments Sunshine Act for covered manufacturers for certain payments and “transfers of value” provided to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Failure to submit timely, accurately and completely the required information for all payments, transfers of value and ownership or investment interests may result in civil monetary penalties. Covered manufacturers must submit reports by the 90th day of each subsequent calendar year and the reported information is publicly made available on a searchable website.

We may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA, as amended by HITECH and their respective implementing regulations, including the Final HIPAA Omnibus Rule published on January 25, 2013, impose specified requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates. Among other things, HITECH made HIPAA’s security standards directly applicable to “business associates,” defined as independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity, although it is unclear that we would be considered a “business associate” in the normal course of our business. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same requirements, thus complicating compliance efforts.

Similar state and foreign fraud and abuse laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services. Such laws are generally broad and are enforced by various state agencies and private actions. Also, many states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant federal government compliance guidance, and require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing.

In order to distribute products commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors of drug and biological products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit certain other sales and marketing practices. All of our activities are potentially subject to federal and state consumer protection and unfair competition laws.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, imprisonment, exclusion of drugs from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, any of which could adversely affect our ability to operate our business and our financial results. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company’s attention from the business.

Current and Future Legislation

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval. We expect that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the price that we, or any collaborators, may receive for any approved products.

The ACA, for example, contains provisions that subject biological products to potential competition by lower-cost biosimilars and may reduce the profitability of drug products through increased rebates for drugs reimbursed by Medicaid programs, extend Medicaid rebates to Medicaid managed care plans, provide for mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs. With the current Congress, there will likely be additional administrative or legislative changes, including modification, repeal or replacement of all, or certain provisions of the ACA, which may impact reimbursement for drugs and biologics. On January 20, 2017, former President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. On October 13, 2017, former President Trump signed an Executive Order terminating the cost-sharing subsidies that reimburse insurers under the ACA. Several state Attorneys General filed suit to stop the administration from terminating the subsidies, but their lawsuit was dismissed by a federal judge in California on July 18, 2018. In addition, CMS has recently finalized regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces. Further, each chamber of Congress has put forth multiple bills, and may do so again in the future, designed to repeal or repeal and replace portions of the ACA.

While Congress has not passed repeal legislation, the Tax Reform Act includes a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amended the ACA, effective January 1, 2019, to increase from 50 percent to 70 percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” Congress may consider other legislation to repeal and replace elements of the ACA. On December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was repealed as part of the Tax Cuts and Jobs Act, the remaining provisions of the ACA are invalid as well. The Trump administration and CMS have both stated that the ruling will have no immediate effect, and on December 30, 2018 the same judge issued an order staying the judgment pending appeal. A Fifth Circuit U.S. Court of Appeals hearing to determine whether certain states and the House of Representatives have standing to appeal the lower court decision was held on July 9, 2019, but it is unclear when a Court will render its decision on this hearing, and what effect it will have on the status of the ACA. Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results.

Additionally, other federal health reform measures have been proposed and adopted in the United States since the ACA was enacted:

Further, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which have resulted in several recent Congressional inquiries and proposed and enacted bills designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. In addition, the U.S. government, state legislatures, and foreign governments have shown significant interest in implementing cost containment programs, including price-controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs to limit the growth of government paid healthcare costs. For example, the U.S. government has passed legislation requiring pharmaceutical manufacturers to provide rebates and discounts to certain entities and governmental payors to participate in federal healthcare programs. Further, Congress and the current administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs, and the current administration recently released a “Blueprint”, or plan, to reduce the cost of drugs. The Blueprint contains certain measures that HHS is already working to implement. For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020. This final rule codified CMS’s policy change that was effective January 1, 2019. Congress has indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. Individual states in the United States have also been increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Non-U.S. Regulation

Before our products can be marketed outside the United States, they are subject to regulatory approval of the respective authorities in the country in which the product should be marketed. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary widely from country to country. No action can be taken to market any product in a country until an appropriate application has been approved by the regulatory authorities in that country. The time spent in gaining approval varies from that required for FDA approval, and in certain countries, the sales price of a product must also be approved. The pricing review period often begins after market approval is granted. Even if a product is approved by a regulatory authority, satisfactory prices might not be approved for such product.

Collaborations, Partnerships and Agreements

Collaborations, partnerships and agreements are a key component of Advaxis’New Ayala’s corporate strategy. As a lateclinical stage biotechnology company without sales revenue, partnerships are an essential part of the ongoing strategy. Additionally, the evolution of the field of immunotherapy has resulted in combination treatments becoming ubiquitous; ongoing clinical studies and agreements with many of the leading, large oncology pharmaceutical companies and teaching institutions ensureshelps validate thatLmTechnology will bemay play a key component ofrole in the cancer treatment protocols of the future.

Our collaborators and partners include Amgen, Aratana, AstraZeneca, BMS, Biocon, GBP, Knight, Merck, Sellas Life Science Group, Stendhal, and others. For more information, see Footnote 9. Collaboration and Licensing Agreements with this Form 10-K and is incorporated herein by reference.

We entered into an exclusive worldwide license agreement with Penn, on July 1, 2002 with respect to the innovative work of Yvonne Paterson, Ph.D., Associate Dean for Research at the School of Nursing at Penn, and former Professor of Microbiology at Penn, in the area of innate immunity, or the immune response attributed to immune cells, including dendritic cells, macrophages and natural killer cells, that respond to pathogens non-specifically (subject to certain U.S. government rights). This agreement was amended and restated as of February 13, 2007, and, thereafter, has been amended from time to time.

This license, unless sooner terminated in accordance with its terms, terminates upon the latter of (a) the expiration of the last to expire of the Penn patent rights; or (b) twenty years after the effective date of the license. Penn may terminate the license agreement early upon the occurrence of certain defaults by us, including, but not limited to, a material breach by us of the Penn license agreement that is not cured within 60 days after notice of the breach is provided to us.

The license provides us with the exclusive commercial rights to the patent portfolio developed by Penn as of the effective date of the license, in connection with Dr. Paterson and requires us to pay various milestone, legal, filing and licensing payments to commercialize the technology. In exchange for the license, Penn received shares of our Common Stock. However, as of October 31, 2016, Penn does not own shares of our Common Stock. In addition, Penn is entitled to receive a non-refundable initial license fee, royalty payments and milestone payments based on net sales and percentages of sublicense fees and certain commercial milestones. Under the amended licensing agreement, Penn is entitled to receive 2.5% of net sales in the territory. Should annual net sales exceed $250 million, the royalty rate will increase to 2.75%, but only with respect to those annual net sales in excess of $250 million. Additionally, Penn will receive tiered sales milestone payments upon the achievement of cumulative global sales ranging between $250 million and $2 billion, with the maximum aggregate amounts payable to Penn in the event that maximum sales milestones are achieved is $40 million. Notwithstanding these royalty rates, upon first in-human commercial sale (U.S. & E.U.), we have agreed to pay Penn a total of $775,000 over a four-year period as an advance minimum royalty, which shall serve as an advance royalty in conjunction with the above terms. In addition, under the license, we are obligated to pay an annual maintenance fee of $100,000 commencing on December 31, 2010, and each December 31st thereafter for the remainder of the term of the agreement until the first commercial sale of a Penn licensed product. We are responsible for filing new patents and maintaining and defending the existing patents licensed to us and we are obligated to reimburse Penn for all attorney’s fees, expenses, official fees and other charges incurred in the preparation, prosecution and maintenance of the patents licensed from Penn.

Upon first regulatory approval in humans (US or EU), Penn will be entitled to a milestone payment of $600,000. Furthermore, upon the achievement of the first sale of a product in certain fields, Penn will be entitled to certain milestone payments, as follows: $2.5 million will be due upon the first in-human commercial sale (US or EU) of the first product in the cancer field and $1.0 million will be due upon the date of first in-human commercial sale (US or EU) of a product in each of the secondary strategic fields sold.

Manufacturing

Current Good Manufacturing Practices (“cGMPs”)

cGMPs, are the standards identified to conform to requirements by governmental agencies that control authorization and licensure for manufacture and distribution of drugbiologic products for either clinical investigations or commercial sale. GMPs identify the requirements for procurement, manufacturing, testing, storage, distribution and the supporting quality systems to ensure that a drug product is safe for its intended application. cGMPs are enforced in the United States by the FDA, under the authorities of the Federal Food, Drug and Cosmetic Act and its implementing regulations and use the phrase “current good manufacturing practices” (“cGMP”) to describe these standards.

Each of Advaxis’our wholly owned product candidates is manufactured using a platform process, with uniform methods and testing procedures. This allows for an acceleratedexpedited pathway from construct discovery to clinical product delivery, while keepinghelping to keep cost of goods low. The Company intends to add new constructs to this standardized manufacturing process as their pipeline evolves.

AdvaxisNew Ayala has entered into agreements with multiple third-party organizations, (“CMOs”)or CMOs, to handle the manufacturing, testing, and distribution of product candidates. These organizations have extensive experience within the biologics space and with the production of clinical and commercial GMP supplies. In 2017, the Company expanded and standardized their external clinical manufacturing network in order to access additional manufacture capacity as needed, and reduce their external manufacturing cost structure.

In parallel, the Company has also continued to invest in internal process/analytical development, quality systems, manufacturing, and quality control infrastructure with the goal of accelerating and advancing our pipeline. Advaxis has constructed a state-of-the-art manufacturing facility and laboratory to develop and manufacture clinical-grade products, supporting the clinical trials and future commercialization of the Company’s therapeutics. Increased manufacturing capability and capacity allows Advaxis to manufacture its own material and reduce reliance on CMOs, and improve supply flexibility, scalability, lead times, and costs of goods. The Company’s long-term manufacturing strategy is to leverage both their partners’ capabilities and their internal capabilities in order to build a supply chain that is reliable, flexible, and cost competitive.Competition

In support of future conditional regulatory filing and future launch of axalimogene filolisbac in Europe, the Company has completed a full mapping of supply chain requirements and has established and validated a commercial process and testing in Europe. The Company plans to continue to refine end-to-end product delivery during the ongoing regulatory review process.

Competition

The biotechnology and biopharmaceutical industries are characterized by rapid technological developments and a high degree of competition. As a result, our actual or proposed immunotherapies could become obsolete before we recoup any portion of our related research and development expenses. While we believe that our product candidates, technology, knowledge and experience provide us with competitive advantages, we face competition from established and emerging pharmaceutical and biotechnology companies, among others. The biotechnology and biopharmaceutical industries are highly competitive, and this competition comes from both biotechnology firms and from major pharmaceutical companies, including: Aduro Biotech, Agenus Inc.,BioNtech, Moderna, Gritstone, BMS, Celldex Therapeutics, Inovio Pharmaceutical Inc., ISA Pharmaceuticals, AstraZeneca, Merck, Neon Therapeutics, Oncolytics Biotech Inc., Oncothyreon Inc., et al., each of which is pursuing cancer vaccines and/or immunotherapies.

Many of these companies have substantially greater financial, marketing, and human resources than we do (including, in some cases, substantially greater experience in clinical testing, manufacturing, and marketing of pharmaceutical products). We also experience competition in the development of our immunotherapies from universities and other research institutions and compete with others in acquiring technology from such universities and institutions. In addition, certain of our immunotherapies may be subject to competition from investigational new drugs and/or products developed using other technologies, some of which have completed numerous clinical trials.

Our competition will be determined in part by the potential indications for which drugs are developed and ultimately approved by regulatory authorities. Additionally, the timing of market introduction of some of our potential immunotherapies or of competitors’ products may be an important competitive factor. Accordingly, the speed with which we can develop immunotherapies, complete preclinical testing, clinical trials and approval processes and supply commercial quantities to market are expected to be important competitive factors. We expect that competition among products approved for sale will be based on various factors, including product efficacy, safety, administration, reliability, acceptance, availability, price and patent position.

The pharmaceutical industry is characterized by rapid evolution of technologies and intense competition. While we believe that our product candidates, technology, knowledge, experience and scientific resources provide us with competitive advantages, we face competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others. Any product candidates that we successfully develop and commercialize will compete with approved treatment options, if any, including off-label therapies, and new therapies that may become available in the future. Key considerations that would impact our ability to effectively compete with other therapies include the efficacy, safety, method of administration, cost, level of promotional activity and intellectual property protection of our products. Many of the companies against which we may compete have significantly greater financial resources and expertise than we do in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products.

With respect to MM, we are aware that other companies are, or may be, developing product candidates with GSI as anti-BCMA agents, including, but not limited to, Springworks Therapeutics, Inc. in collaboration with GlaxoSmithKline plc, Janssen, Allogene, Pfizer, Precision Biosciences and Celgene Corporation, recently acquired by BMS.

With respect to BST-236, our competitors include companies such as, but not limited to, AbbVie, Aprea, Astellas, BMS, Gilead, Jazz Pharmaceuticals, Novartis and Pfizer.

Smaller or early-stage companies, including oncology-focused therapeutics companies, may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These companies may also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites, enrolling patients in clinical trials and acquiring technologies complementary to, or necessary for, our programs.

The availability of reimbursement from government and private payors will also significantly impact the pricing and competitiveness of our products. Our competitors may obtain FDA or other regulatory approvals for their products more rapidly than we may obtain approvals for our product candidates, if any, which could result in our competitors establishing a strong market position before we are able to commercialize our product candidates.

Experience and Expertise

Our management team has extensive experience in oncology development, including contract research, development, manufacturing and commercialization across a board range of science, technologies, and process operations. We have built internal capabilities supporting research, clinical, medical, manufacturing and compliance operations and have extended our expertise with collaborations.

Employees

As of OctoberDecember 31, 2017,2023, we had 10821 employees, all20 of which were full time employees, 87 of whom were engaged in research and development activities and 21 of whom were engaged in finance, business development, facilities, human resources and administrative support.employees. Of our full-time employees, 28seven hold a M.D. or Ph.D. degrees.degree. None of our employees are represented by a labor union, and we consider our relationship with our employees to be good.

As part of a cost reduction plan, during the year ended December 31, 2023, we had a reduction in workforce in which the employment of approximately 50% of our employees was terminated. During the first quarter of 2024, we gave notice of termination to 18 additional employees and two officers (including the Chief Financial Officer, whose employment will terminate on June 25, 2024). After the effectiveness of such terminations, the Chief Executive Officer will be the only employee of the Company.

Properties

Our principal office is located at Oppenheimer 4, Rehovot 7670104, Israel. Our principal U.S. office is located at 9 Deer Park Drive, Suite K-1, Monmouth Junction, New Jersey 08852. We will continue to rent necessary offices and laboratories to support our growing business. We believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed.

Item 1A: Risk Factors.Legal Proceedings

You should carefully consider the risks described below as well as other information providedThe Company is from time to youtime involved in this annual report, including informationlegal proceedings in the sectionordinary course of this document entitled “Forward-Looking Statements.”our business. The risks and uncertainties described below areCompany does not the only ones facing us. Additional risks and uncertainties not presently known to us orbelieve that we currently believe are immaterial may also impair our business operations. If any of these claims or proceedings against us is likely to have, individually or in the following risks actually occur, our business,aggregate, a material adverse effect on the financial condition or results of operations. For more information regarding legal proceedings involving the Company, please see Note 7 – Commitments and Contingencies to our consolidated financial statements.

Item 1A. Risk Factors.

Omitted.

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity.

As a regular part of our ordinary business operations, we collect and store data, including information necessary for our operations, information from our customers, employees, and our business partners. We recognize these networks and systems may be subject to increasing and continually evolving cybersecurity risks. Our Audit Committee is responsible for overseeing risk management and cybersecurity is an integral part of the Company’s overall risk management program. Our risk management process is designed to identify, prioritize, and monitor risks that could beaffect our ability to execute our corporate strategy and fulfill our business objectives and to appropriately mitigate such risks.

Our management team is involved in assessing and managing the Company’s material risks from cybersecurity threats, including by hiring appropriate personnel, considering cybersecurity risk in our enterprise risk management strategy, helping prepare for cybersecurity incidents, and participating in the cybersecurity incident response and remediation process for incidents escalated to it including determining materiality. Our management that is involved in these processes includes our Chief Financial Officer, our VP of regulatory affairs as well as an external IT company, who collectively share risk management, compliance and technical experience. Management also escalates, as appropriate, reports relating to cybersecurity incidents or threats to our Board or to its Audit Committee.

While we have not yet experienced any material impacts from a cyber-attack, any one or more future cyber-attacks could materially adversely affected,impact the valueCompany, including a loss of trust among our customers, departures of key employees, general diminishment of our Common Stock could decline,reputation and youfinancial losses from remediation actions, loss of business or potential litigation or regulatory liability. Further, evolving market dynamics are increasingly driving heightened cybersecurity protections and mandating cybersecurity standards for our products, and we may lose all or partincur additional costs to address these increased risks and to comply with such demands.

Item 2. Properties.

Our principal office is located at Oppenheimer 4, Rehovot 7670104, Israel, where we lease office and laboratory space under a lease agreement that terminates in 2025. Our principal U.S. office is located at 9 Deer Park Drive, Suite K-1, Monmouth Junction, New Jersey 08852.

We believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed.

Item 3. Legal Proceedings.

See the matters set forth in note 7, “Commitment and Contingent Liabilities – Purported Stockholder Claims” in the Notes to Consolidated Financial Statements included herein.

Item 4. Mine Safety Disclosures.

Not applicable.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth information regarding our executive officers and directors as of your investment.the filling date of this Annual Report on Form 10-K.

Executive Officers

Kenneth Berlin has served as our President and Chief Executive Officer and a member of our Board of Directors since April 2018. Mr. Berlin served as our Interim Chief Financial Officer from September 2020 to May 2022. Prior to joining the Company, Mr. Berlin served as President and Chief Executive Officer of Rosetta Genomics from November 2009 until April 2018. Prior to Rosetta Genomics, Mr. Berlin was Worldwide General Manager at cellular and molecular cancer diagnostics developer Veridex, LLC, a Johnson & Johnson company. At Veridex he grew the organization to over 100 employees, launched three cancer diagnostic products, led the acquisition of its cellular diagnostics partner, and delivered significant growth in sales as Veridex transitioned from an R&D entity to a commercial provider of oncology diagnostic products and services. Mr. Berlin joined Johnson & Johnson in 1994 and served as corporate counsel for six years. From 2001 until 2004 he served as Vice President, Licensing and New Business Development in the pharmaceuticals group, and from 2004 until 2007 served as Worldwide Vice President, Franchise Development, Ortho-Clinical Diagnostics. Mr. Berlin holds an A.B. degree from Princeton University and a J.D. from the University of California Los Angeles School of Law. Mr. Berlin’s experience in life science companies, as well as his business experience in general, qualify him to service as our director.

Roy Golan, CPA, LLM, has served as our Chief Financial Officer since October 2023. Mr. Golan is a registered CPA with a broad experience in aspects of Nasdaq, IPOs and M&As. Prior to joining Ayala, Mr. Golan served in several financial management positions in the biotech industry, including as the EVP and CFO of Biosight from 2019 until the merger with Ayala in October 2023. From 2014 to 2018 Mr. Golan served as CFO of Neuroderm, where he had a pivotal role in their successful Nasdaq IPO, two Follow-On Offerings, and Neuroderm’s acquisition by Mitsubishi Tanabe Pharmaceutical Corporation for a total of $1.1 billion. Mr. Golan started his career at PriceWaterhouseCoopers (PWC). Mr. Golan is a registered CPA, holds a B.A. in Accounting and Business from the Israeli College of Management School of Business and an LL.M. in Law from Bar Ilan University.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information and Holders

Our common stock is quoted on the OTCQX under the symbol “ADXS”.

As of December 31, 2023 there were approximately 117 holders of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees.

We have not declared or paid any cash dividends on our common stock, and we do not anticipate declaring or paying cash dividends for the foreseeable future.

Recent Sales of Unregistered Securities

All information required by Item Furnish the information required by Item 201 of Regulation S-K and Item 701 of Regulation S-K as to all equity securities that we sold during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act has been included in our previously filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K and is thus not furnished here.

Item 6. [Reserved].

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

A discussion of the fiscal year ended December 31, 2022 compared to the fiscal year ended December 31, 2021, which constitute our financial statements for such periods, has been reported previously in Old Ayala’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Risks Related toOverview

See “Introductory Note” beginning on page 3 of this Annual Report on Form 10-K for a description of certain transactions that have occurred since the beginning of our Business and Industryfiscal year ended December 31, 2023.

Because the Asset Sale was consummated following the end of our fiscal year ended December 31, 2023, the financial results discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations describe our business as it existed during that period. For a description of this business, please refer to:

Following the completion of the Asset Sale on March 25, 2024, the Company is a clinical-stage oncology company whose primary clinical assets currently include aspacytarabine (BST-236), a novel proprietary anti-metabolite for first line treatment in unfit acute myeloid leukemia (AML). BST-236 is a novel prodrug of cytarabine, enabling delivery of high cytarabine doses with reduced systemic toxicity, creating a potential new backbone for AML combination regimens. We believe that our novel product candidates, if approved, have the potential to transform treatment outcomes for patients suffering from solid and hematological cancers. We also continue to conduct certain operations relating to former Advaxis’ operations as clinical-stage biotechnology company focused on the development and commercialization of proprietary Listeria monocytogenes (“Lm”)-based antigen delivery products. These efforts are a clinical stage company.primarily focused on the development of ADXS-504, an Lm-based therapy for early-stage prostate cancer.

We arewere originally incorporated in the State of Colorado on June 5, 1987 under the name Great Expectations, Inc. We were a clinical stage biotechnologypublicly-traded “shell” company withwithout any business until November 12, 2004 when we acquired New Ayala, a historyDelaware corporation, through a Share Exchange and Reorganization Agreement, dated as of lossesAugust 25, 2004, which we refer to as the Share Exchange, by and can provide no assurance as to future operating results.among New Ayala, the stockholders of New Ayala and us. As a result of losses that will continue throughoutthe Share Exchange, New Ayala became our clinical stage,wholly-owned subsidiary and our sole operating company. On December 23, 2004, we may exhaustamended and restated our financial resourcesarticles of incorporation and be unablechanged our name to completeNew Ayala. On June 6, 2006, our stockholders approved the developmentreincorporation of our products. We anticipate thatcompany from Colorado to Delaware by merging the Colorado entity into our ongoing operational costs will increase significantly aswholly-owned Delaware subsidiary. Our date of inception, for financial statement purposes, is March 1, 2002 and the Company was listed on The Nasdaq Capital Market (“Nasdaq”) in 2014. In December 2021, the Company was delisted from Nasdaq and accepted onto the OTCQX. Shares of New Ayala’s common stock are currently quoted on the OTCQX under the symbol “ADXS.” Our operations to date have been limited to organizing and staffing our company, business planning, raising capital and conducting research and development activities for our product candidates. To date, we continue conductinghave funded our clinical development program. Our deficit will continue to grow during our drug development period.operations primarily through the sales of common stock convertible notes, warrants and convertible preferred stock.

We have sustainedincurred significant net operating losses from operations in each fiscalevery year since our inception and we expect losses to continue to incur significant expenses and increasing operating losses for the indefinite future dueforeseeable future. Our net losses may fluctuate significantly from quarter to quarter and year to year and could be substantial. Our net losses were $48.1 million and $38.0 million for the substantial investment in researchyears ended December 31, 2023 and development.2022, respectively. As of OctoberDecember 31, 2017,2023, we had an accumulated deficit of $301,142,227 and shareholders’ equity of $54,260,167.$197.2 million. We anticipate that our expenses will increase significantly as we:

We do not expect to spendgenerate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate. Additionally, we currently use contract research organizations, or CROs, to carry out our clinical development activities. Furthermore, we incur additional costs associated with operating as a public company. As a result, we will need substantial additional sums on the continued administrationfunding to support our continuing operations, pursue our growth strategy and research and development of proprietary products and technologies with no certainty that our immunotherapies will become commercially viable or profitablecontinue as a resultgoing concern. Until such time as we can generate significant revenue from product sales, if ever, we expect to fund our operations through public or equity offerings or debt financings, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or other sources. We may, however, be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our current or any future product candidates.

Because of these expenditures.the numerous risks and uncertainties associated with therapeutics product development, we are unable to predict accurately the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

The Company has incurred recurring losses since inception as a research and development organization. For the year ended December 31, 2023, the Company used approximately $29.5 million of cash in operations and incurred a net loss of $48.1 million. As of December 31, 2023, the Company had $4.9 million in cash and cash equivalents, $25.0 million in current liabilities and an accumulated deficit of $197.2 million.

Upon closing of the Asset Sale, on March 25, 2024, the Company received $13.0 million in cash, and Immunome paid $3.0 million of the Company’s liabilities directly to vendors of the Company. In addition, under the Asset Sale Agreement the Company received 2,175,489 shares of Immunome’s common stock (the “Immunome Shares”). The Asset Sale Agreement prohibits the Company from selling more than 50% of the Immunome Shares in the first six months following the closing of the Asset Sale. In addition, on March 1, 2024, the Company issued additional convertible notes and warrants in exchange for $2.0 million in funding from the Convertible Notes investors. As of the date of this filing, the cash proceeds received from the Asset Sale and the convertible notes sold on March 1, 2024 were not sufficient to pay the Company’s existing liabilities. Therefore, the Company has limited available cash resources and requires additional financing, through the sale of a portion of the Immunome Shares or otherwise, in order to continue to fund its current operations beyond May 2024.

Raising additional funds or the satisfactory sale of a portion of the Immunome Shares prior to the end of May 2024 is essential to provide sufficient cash flow to meet future liabilities and other obligations, such as tax payments arising from the Asset Sale. Furthermore, even if the Company is successful in selling a portion of the Immunome Shares or raising additional funds through other means, the Company cannot give any assurance that it will, in the future, be able to achieve a level of profitability from the sale of its products to sustain its operations.

If the Company is unable to obtain funding, or able to receive sufficient funds from the sale of a portion of the Immunome Shares, the Company would be forced to delay, reduce, or eliminate its research and development programs, or the Company may be unable to continue operations. As such, those factors raise substantial doubt about the Company’s ability to continue as a significantgoing concern.

As part of a cost reduction plan, during the year ended December 31, 2023, the Company had a reduction in workforce in which the employment of approximately 50% of the Company’s employees was terminated. During the first quarter of 2024, the Company gave notice of termination to 18 additional employees and two officers (including the Chief Financial Officer, whose employment will terminate on June 25, 2024). After the effectiveness of such terminations, the Chief Executive Officer will be the only employee of the Company. The Company expects to be able to meet its financial obligations to its employees.

The Company can give no assurances that it will be successful in raising funds through the sale of a portion of the Immunome Shares or any other alternative. Any inability to so obtain additional financing or funding will likely cause the Company to cease business operations. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Therefore, the consolidated financial statements for the year ended December 31, 2023, do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

Due to the uncertainty in securing additional funding, and the insufficient amount of capital,cash and cash equivalent resources at December 31, 2023, we have concluded that substantial doubt exists with respect to our ability to continue as a going concern through May 2024. See “—Liquidity and Capital Resources.” Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our common stock, and it may be more difficult for us to obtain financing. If potential collaborators decline to do business with us or potential investors decline to participate in any future financings due to such concerns, our ability to increase our cash position may be limited. We will need to significantly curtail operations or cease operations in the near future. If any of our product candidates fail in clinical trials or does not gain regulatory approval,generate significant revenues to achieve profitability, and we may never become profitable. Even if we achieve profitability indo so. Because of the numerous risks and uncertainties associated with the development of our current and any future product candidates, and because the extent to which we may not be able to sustain profitability in subsequent periods.

Drug discovery andenter into collaborations with third parties for the development is a complex, time-consuming and expensive process that is fraught with risk and a high rate of failure.

Product candidates are subject to extensive pre-clinical testing and clinical trials to demonstrate their safety and efficacy in humans. Conducting pre-clinical testing and clinical trials is a lengthy, time-consuming and expensive process that takes many years. We cannot be sure that pre-clinical testing or clinical trials of any of our product candidates will demonstrate the safety, efficacy and benefit-to-risk profile necessary to obtain marketing approvals. In addition, product candidates that experience success in pre-clinical testing and early-stage clinical trials will not necessarily experience the same success in larger or late-stage clinical trials, which are required for marketing approval.

Even ifis unknown, we are successful in advancing a product candidate intounable to estimate the clinical development stage, before obtaining regulatory and marketing approvals, we must demonstrate through extensive human clinical trials that the product candidate is safe and effective for its intended use. Human clinical trials must be carried out under protocols that are acceptable to regulatory authorities and to the independent committees responsible for the ethical review of clinical studies. There may be delays in preparing protocols or receiving approval for them that may delay the start or completion of the clinical trials. In addition, clinical practices vary globally, and there is a lack of harmonization among the guidance provided by various regulatory bodies of different regions and countries with respect to the data that is required to receive marketing approval, which makes designing global trials increasingly complex. There are a number of additional factors that may cause our clinical trials to be delayed, prematurely terminated or deemed inadequate to support regulatory approval, such as:

Any deficiency in the design, implementation or oversight of our development programs could cause us to incur significant additional costs, conduct additional trials, experience significant delays, prevent us from obtaining marketing approval for any product candidate or abandon development of certain product candidates, any of which could harm our business and cause our stock price to decline.

Our operating history does not afford investors a sufficient history on which to base an investment decision.

We commenced ourLm -LLO based immunotherapy development business in February 2002 and today exist as a clinical stage company. We have no approved products and therefore have not derived any significant revenue from the sales of products and have not yet demonstrated ability to obtain regulatory approval, formulate and manufacture commercial scale products, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, there is limited information for investors to use as basis for assessing our future viability. Investors must consider the risks and difficulties we have encountered in the rapidly evolving vaccine and immunotherapy industry. Such risks include the following:

We cannot be certain that our strategy will be successful or that we will successfully address these risks. In the event that we do not successfully address these risks, our business, prospects, financial condition and results of operations could be materially and adversely affected. We may be required to reduce our staff, discontinue certain research or development programs of our future products and cease to operate.

We may face legal claims; litigation is expensive and we may not be able to afford the costs.

We may face legal claims involving stockholders, consumers, competitors, regulators and other parties. As described in “Legal Proceedings” in Part I Item 3 of this Form 10-K, we are engaged in a number of legal proceedings. Litigation and other legal proceedings are inherently uncertain, and adverse rulings could occur, including monetary damages, or an injunction stopping us from engaging in business practices, or requiring other remedies, such as compulsory licensing of patents.

The costs of litigation or any proceeding relating to our intellectual property or contractual rights could be substantial, even if resolved in our favor. Some of our competitors or financial funding sources have far greater resources than we do and may be better able to afford the costs of complex litigation. Also, a lawsuit, even if frivolous, will require considerable time commitments on the part of management, our attorneys and consultants. Defending these types of proceedings or legal actions involve considerable expense and could negatively affect our financial results.

We can provide no assurance of the successful and timely development of new products.

Our immunotherapies are at various stages of research and development. Further development and extensive testing will be required to determine their technical feasibility and commercial viability. We will need to complete significant additional clinical trials demonstrating that our product candidates are safe and effective to the satisfaction of the FDA and other non-U.S. regulatory authorities. The drug approval process is time-consuming, involves substantial expenditures of resources, and depends upon a number of factors, including the severity of the illness in question, the availability of alternative treatments, and the risks and benefits demonstrated in the clinical trials. Our success will depend on our ability to achieve scientific and technological advances and to translate such advances into licensable, FDA-approvable, commercially competitive products on a timely basis. Failure can occur at any stage of the process. If such programs are not successful, we may invest substantial amounts of timeincreased capital outlays and money without developing revenue-producing products. As we enter a more extensive clinical programoperating expenses required for our product candidates, the data generated in these studies may not be as compelling as the earlier results.

The proposed development schedules for our immunotherapies may be affected by a variety of factors, including technological difficulties, clinical trial failures, regulatory hurdles, clinical holds, competitive products, intellectual property challenges and/or changes in governmental regulation, many of which will not be within our control. Any delay in the development, introduction or marketing of our products could result either in such products being marketed at a time when their cost and performance characteristics would not be competitive in the marketplace or in the shortening of their commercial lives. In light of the long-term nature of our projects, the unproven technology involved and the other factors described elsewhere in this section, there can be no assurance that we will be able to successfully complete the development or marketing of any new products which could materially harm our business, results of operations and prospects.

Our research and development expenses are subject to uncertainty.

Factors affecting our research and development expenses include, but are not limited to:

There can be no guarantee that our research and development expenses will be consistent from period to period. We may be required to accelerate or delay incurring certain expenses depending on the results of our studies and the availability of adequate funding.

We are subject to numerous risks inherent in conducting clinical trials.

We outsource the management of our clinical trials to third parties. Agreements with clinical research organizations, clinical investigators and medical institutions for clinical testing and data management services, place substantial responsibilities on these parties that, if unmet, could result in delays in, or termination of, our clinical trials. For example, if any of our clinical trial sites fail to comply with FDA-approved good clinical practices, we may be unable to use the data gathered at those sites. If these clinical investigators, medical institutions or other third parties do not carry out their contractual duties or regulatory obligations or fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols or for other reasons, our clinical trials may be extended, delayed or terminated, and we may be unable to obtain regulatory approval for, or successfully commercialize, our agents. We are not certain that we will successfully recruit enough patients to complete our clinical trials nor that we will reach our primary endpoints. Delays in recruitment, lack of clinical benefit or unacceptable side effects would delay or prevent the initiation of future development of our agents.

We or our regulators may suspend or terminate our clinical trials for a number of reasons. We may voluntarily suspend or terminate our clinical trials if at any time we believe they present an unacceptable risk to the patients enrolled in our clinical trials or do not demonstrate clinical benefit. In addition, regulatory agencies may order the temporary or permanent discontinuation of our clinical trials, or place our products on temporary or permanent hold, at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements or that they present an unacceptable safety risk to the patients enrolled in our clinical trials.

Our clinical trial operations are subject to regulatory inspections at any time. If regulatory inspectors conclude that we or our clinical trial sites are not in compliance with applicable regulatory requirements for conducting clinical trials, we may receive reports of observations or warning letters detailing deficiencies, and we will be required to implement corrective actions. If regulatory agencies deem our responses to be inadequate, or are dissatisfied with the corrective actions we or our clinical trial sites have implemented, our clinical trials may be temporarily or permanently discontinued, we may be fined, we or our investigators may be precluded from conducting any ongoing or any future clinical trials, the government may refuse to approve our marketing applications or allow us to manufacture or market our products, and we may be criminally prosecuted.

The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval for our product candidates, which would materially harm our business, results of operations and prospects.

The successful development of immunotherapies is highly uncertain.

Successful development of biopharmaceuticals is highly uncertain and is dependent on numerous factors, many of which are beyond our control. Immunotherapies that appear promising in the early phases of development may fail to reach the market for several reasons including:

Success in preclinical and early clinical studies does not ensure that large-scale clinical studies will be successful. Clinical results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory approvals. The length of time necessary to complete clinical studies and to submit an application for marketing approval for a final decision by a regulatory authority varies significantly from one immunotherapy to the next, and may be difficult to predict.

Even if we are successful in getting market approval, commercial success of any of our product candidates will also depend in large part on the availability of coverage and adequate reimbursement from third-party payers, including government payers such as the Medicare and Medicaid programs and managed care organizations, which may be affected by existing and future health care reform measures designed to reduce the cost of health care. Third-party payers could require us to conduct additional studies, including post-marketing studies related to the cost effectiveness of a product, to qualify for reimbursement, which could be costly and divert our resources. If government and other health care payers were not to provide adequate coverage and reimbursement levels for one any of our products once approved, market acceptance and commercial success would be reduced.

In addition, if one of our products is approved for marketing, we will be subject to significant regulatory obligations regarding product promotion, the submission of safety and other post-marketing information and reports and registration, and will need to continue to comply (or ensure that our third party providers) comply with cGMPs, and Good Clinical Practices (“GCP”), for any clinical trials that we conduct post-approval. In addition, there is always the risk that we or a regulatory authority might identify previously unknown problems with a product post-approval, such as adverse events of unanticipated severity or frequency. Compliance with these requirements is costly, and any failure to comply or other issues with our product candidates’ post-market approval could have a material adverse effect on our business, financial condition and results of operations.

We must comply with significant government regulations.

The research and development, manufacturing and marketing of human therapeutic and diagnostic products are subject to regulation, primarily by the FDA in the United States and by comparable authorities in other countries. These national agencies and other federal, state, local and foreign entities regulate, among other things, research and development activities (including testing in animals and in humans) and the testing, manufacturing, handling, labeling, storage, record keeping, approval, advertising and promotion of the products that we are developing. If we obtain approval for any of our product candidates, our operations will be directly or indirectly through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statue and the federal False Claims Act, and privacy laws. Noncompliance with applicable laws and requirements can result in various adverse consequences, including delay in approving or refusal to approve product licenses or other applications, suspension or termination of clinical investigations, revocation of approvals previously granted, fines, criminal prosecution, civil and criminal penalties, recall or seizure of products, exclusion from having our products reimbursed by federal health care programs, the curtailment or restructuring of our operations, injunctions against shipping products and total or partial suspension of production and/or refusal to allow a company to enter into governmental supply contracts.

The process of obtaining requisite FDA approval has historically been costly and time-consuming. Current FDA requirements for a new human biological product to be marketed in the United States include: (1) the successful conclusion of preclinical laboratory and animal tests, if appropriate, to gain preliminary information on the product’s safety; (2) filing with the FDA of an IND to conduct human clinical trials for drugs or biologics; (3) the successful completion of adequate and well-controlled human clinical trials to establish the safety and efficacy of the investigational new drug for its recommended use; and (4) filing by a company and acceptance and approval by the FDA of a BLA for marketing approval of a biologic, to allow commercial distribution of a biologic product. The FDA also requires that any drug or formulation to be tested in humans be manufactured in accordance with its cGMP regulations. This has been extended to include any drug that will be tested for safety in animals in support of human testing. The cGMPs set certain minimum requirements for procedures, record-keeping and the physical characteristics of the laboratories used in the production of these drugs. A delay in one or more of the procedural steps outlined above could be harmful to us in terms of getting our immunotherapies through clinical testing and to market.

We can provide no assurance that our clinical product candidates will obtain regulatory approval or that the results of clinical studies will be favorable.

We are currently evaluating the safety and efficacy of several of our candidates in a number of ongoing pre-clinical and clinical trials. However, even though the initiation and conduct of the clinical trials is in accordance with the governing regulatory authorities in each country, as with any investigational new drug (under an IND in the United States, or the equivalent in countries outside of the United States), we are at risk of a clinical hold at any time based on the evaluation of the data and information submitted to the governing regulatory authorities.

There can be delays in obtaining FDA (U.S.) and/or other necessary regulatory approvals in the United States and in countries outside the United States for any investigational new drug and failure to receive such approvals would have an adverse effect on the investigational new drug’s potential commercial success and on our business, prospects, financial condition and results of operations. The time required to obtain approval by the FDA and non-U.S. regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. For example, the FDA or non-U.S. regulatory authorities may disagree with the design or implementation of our clinical trials or study endpoints; or we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks. In addition, the FDA or non-U.S. regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials or the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a New Drug Application (“NDA”) or other submission or to obtain regulatory approval in the United States or elsewhere. The FDA or non-U.S. regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and the approval policies or regulations of the FDA or non-U.S. regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

In addition to the foregoing, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. We have not submitted for nor obtained regulatory approval for any product candidate in-humans (US & EU) and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.

We may not obtain or maintain the benefits associated with orphan drug designation, including market exclusivity.

Although we have been granted FDA orphan drug designation for axalimogene filolisbac for use in the treatment of anal cancer, HPV-associated head and neck cancer, Stage II-IV invasive cervical cancer and for ADXS-HER2 for the treatment of osteosarcoma in the United States, as well as EMA orphan drug designation for axalimogene filolisbac for the treatment of anal cancer and for ADXS-HER2 for the treatment of osteosarcoma in the EU, and intend to continue to expand our designation for these uses where applicable , we may not receive the benefits associated with orphan drug designation. This may result from a failure to maintain orphan drug status, or result from a competing product reaching the market that has an orphan designation for the same disease indication. Under U.S. rules for orphan drugs, if such a competing product reaches the market before ours does, the competing product could potentially obtain a scope of market exclusivity that limits or precludes our product from being sold in the United States for seven years. Even if we obtain exclusivity, the FDA could subsequently approve the same drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. A competitor also may receive approval of different products for the same indication for which our orphan product has exclusivity, or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.

In addition, if and when we request orphan drug designation in Europe, the European exclusivity period is ten years but can be reduced to six years if the drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or EMEA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.

We rely upon patents to protect our technology. We may be unable to protect our intellectual property rights and we may be liable for infringing the intellectual property rights of others.

Our ability to compete effectively will depend on our ability to maintain the proprietary nature of our technologies, including theLm -LLO based immunotherapy platform technology, and the proprietary technology of others with whom we have entered into collaboration and licensing agreements.

Currently, we own or have rights to approximately 433 patents and applications, which are owned, licensed from, or co-owned with Penn, Merck, NIH, and/or Augusta University. We have obtained the rights to all future patent applications in this field originating in the laboratories of Dr. Yvonne Paterson and Dr. Fred Frankel, at the University of Pennsylvania.

We own or hold licenses to a number of issued patents and U.S. pending patent applications, as well as foreign patents and foreign counterparts. Our success depends in part on our ability to obtain patent protection both in the United States and in other countries for our product candidates, as well as the methods for treating patients in the product indications using these product candidates. Such patent protection is costly to obtain and maintain, and we cannot guarantee that sufficient funds will be available. Our ability to protect our product candidates from unauthorized or infringing use by third parties depends in substantial part on our ability to obtain and maintain valid and enforceable patents. Due to evolving legal standards relating to the patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope of claims made under these patents, our ability to obtain, maintain and enforce patents is uncertain and involves complex legal and factual questions. Even if our product candidates, as well as methods for treating patients for prescribed indications using these product candidates are covered by valid and enforceable patents and have claims with sufficient scope, disclosure and support in the specification, the patents will provide protection only for a limited amount of time. Accordingly, rights under any issued patents may not provide us with sufficient protection for our product candidates or provide sufficient protection to afford us a commercial advantage against competitive products or processes.

In addition, we cannot guarantee that any patents will issue from any pending or future patent applications owned by or licensed to us. Even if patents have issued or will issue, we cannot guarantee that the claims of these patents are or will be valid or enforceable or will provide us with any significant protection against competitive products or otherwise be commercially valuable to us. The laws of some foreign jurisdictions do not protect intellectual property rights to the same extent as in the United States and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. Furthermore, different countries have different procedures for obtaining patents, and patents issued in different countries offer different degrees of protection against use of the patented invention by others. If we encounter such difficulties in protecting or are otherwise precluded from effectively protecting our intellectual property rights in foreign jurisdictions, our business prospects could be substantially harmed.

The patent positions of biotechnology and pharmaceutical companies, including our patent position, involve complex legal and factual questions, and, therefore, validity and enforceability cannot be predicted with certainty. Patents may be challenged, deemed unenforceable, invalidated, or circumvented as a result of laws, rules and guidelines that are changed due to legislative, judicial or administrative actions, or review, which render our patents unenforceable or invalid. Our patents can be challenged by our competitors who can argue that our patents are invalid, unenforceable, lack utility, sufficient written description or enablement, or that the claims of the issued patents should be limited or narrowly construed. Patents also will not protect our product candidates if competitors devise ways of making or using these product candidates without infringing our patents.

We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our technologies, methods of treatment, product candidates, and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets and we have the funds to enforce our rights, if necessary.

The expiration of our owned or licensed patents before completing the research and development of our product candidates.

License Agreements

Bristol-Myers Squibb

Our financial results for the periods ended December 31, 2023 and 2022, as discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, largely related to our AL101 and AL102 programs, which we sold to Immunome on March 25, 2024. We had licensed those assets pursuant to an exclusive worldwide license agreement with Bristol-Myers Squibb Company, or BMS, which we describe herein. We transferred this license agreement to Immunome as part of the Asset Sale.

We entered into the license agreement with BMS in November 2017. Under the terms of the license agreement, we licensed the exclusive worldwide development and commercialization rights for AL101 (previously known as BMS-906024) and AL102 (previously known as BMS-986115).

Under the license agreement, we were responsible for all future development and commercialization of AL101 and AL102. In consideration for the rights granted under the agreement, we paid BMS a payment of $6 million and issued to BMS 1,125,929 shares of Series A preferred stock valued at approximately $7.3 million. We were obligated under the license agreement to pay BMS up to approximately $142 million in the aggregate upon the achievement of certain clinical development or regulatory milestones and up to $50 million in the aggregate upon the achievement of certain commercial milestones by each product containing the licensed BMS compounds. In addition, we were obligated under the license agreement to pay BMS tiered royalties ranging from a high single-digit to a low teen percentage on worldwide net sales of all products containing the licensed BMS compounds. Both we and BMS had the right to terminate the BMS License Agreement in its entirety upon written notice to the licensee under certain circumstances described therein.

Components of Results of Operations

Revenue Recognition

We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which applies to all contracts with customers. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.

In December 2018, we entered into an agreement with Novartis Agreement for which we paid for its research and development costs. This agreement was terminated in 2022.

We concluded that there is one distinct performance obligation under the Novartis Agreement: Research and development services, an obligation which is satisfied over time.

Revenue associated with the research and development services in the amount of $13 thousand was recognized in the year ended December 31, 2023, compared to $0.7 million in fiscal year 2022.

We concluded that progress towards completion of the research and development performance obligation related to the Novartis Agreement is best measured in an amount proportional to the expenses incurred from the total estimated expenses. We periodically review and update our estimates, when appropriate, which may adjust revenue recognized for the period. The transaction price to be recognized as revenue under the Novartis Agreement consists of the reimbursable research and development costs.

Operating Expenses

Our operating expenses since inception have consisted solely of research and development expenses and general and administrative expenses.

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including the development of and pursuit of regulatory approval of our lead product candidates, including AL101 and AL102 (which were disposed of in early 2024), Lm-based products and BST-236, which include:

We expense research and development costs as incurred. Our external research and development expenses consist primarily of costs such as fees paid to consultants, contractors and CROs in connection with our preclinical and clinical development activities. We typically use our employee and infrastructure resources across our development programs and we do not allocate personnel costs and other internal costs to specific product candidates or development programs with the exception of the costs to manufacture our product candidates.

The following table summarizes our research and development expenses by product candidate or development program for the years ended December 31, 2023 and 2022:

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to be significant in the future to the extent that we initiate additional clinical trials, scale our manufacturing processes, continue to develop additional product candidates and receiving all required approvalshire additional clinical and scientific personnel.

The successful development of Lm-based products and BST-236 and any future product candidate is highly uncertain. Accordingly, at this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the development of these product candidates. We are also unable to predict when, if ever, we will generate revenue and material net cash inflows from the commercialization and sale of any of our product candidates for which we may obtain marketing approval. We may never succeed in order to sellachieving regulatory approval for any of our product candidates. The duration, costs and distribute the productstiming of preclinical studies, clinical trials and development of our product candidates will depend on a commercial scale can adversely affectvariety of factors, including:

A change in the outcome of any of these variables with respect to the development, manufacture or commercialization enabling activities of any of our businessproduct candidates would significantly change the costs, timing and viability associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting, auditing, tax services and insurance costs.

We expect to continue to incur expenses associated with being a public company, including the costs of personnel, accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Securities and Exchange Commission, or SEC, requirements, director and officer insurance costs, and investor and public relations costs.

Financial Income, Net

Financial income, net primarily consists of an immediate loss and a revaluation of Convertible Note and Warrant Liability offset by interest income earned on our cash and cash equivalents and restricted bank deposits.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition and results of operations.operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience, known trends and events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ materially from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies used in the preparation of our consolidated financial statements require the most significant judgments and estimates.

Warrant Liabilities

The Company analyzes warrants issued to determine whether they meet the classification as liabilities or equity under US GAAP. Warrant liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded as finance expenses (income) in the statement of operations. The Company uses a fair valuation specialist to estimate the value of these instruments using numerous iterations using the Black–Scholes option price model.

The key assumptions used in the models are the expected future volatility in the price of the Company’s shares and the expected life of the warrants.

Convertible Notes

The Company analyzes convertible notes issued to determine whether they meet the classification as liabilities or equity under US GAAP. Convertible notes are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded as finance expenses (income) in the statement of operations. The Company uses a fair valuation specialist to estimate the value of these instruments using numerous iterations using the Monte Carlo Simulation.

The key assumptions used in the models are the expected future outcome as well as volatility in the price of the Company’s shares and the expected life of the notes.

Litigation regarding patents, patent applicationsBusiness Combination

We account for business combinations in accordance with ASC 805, “Business Combinations”. ASC 805 requires recognition of assets acquired and liabilities assumed at the acquisition date, measured at their fair values as of that date. The Company determines the recognition of intangible assets based on the following criteria: (i) the intangible asset arises from contractual or other rights; or (ii) the intangible asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged. The excess of the fair value of the purchase price over the fair values of the identifiable assets and liabilities is recorded as goodwill. Determining the fair value of the identifiable assets and liabilities requires management to use significant judgment and estimates including the forecasted revenue and revenues growth rates, discount rates, customer contract renewal rates and customer attrition rates.

The process of estimating the fair values requires significant estimates, especially with respect to intangible assets. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows and discount rates. The Company estimates fair value based upon assumptions that are believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Impairment of long-lived assets

Long-lived assets, including property and equipment and finite-lived intangible assets, are reviewed for impairment whenever facts or circumstances either internally or externally may indicate that the carrying value of an asset may not be recoverable. If there are indications of an impairment, the Company tests for recoverability by comparing the estimated undiscounted future cash flows expected to result from the use of the asset to the carrying amount of the asset or asset group. If the asset or asset group is determined to be impaired, any excess of the carrying value of the asset or asset group over its estimated fair value is recognized as an impairment loss.

Goodwill and intangible assets

Goodwill and acquired intangible assets have been recorded in the Company’s financial statements resulting from the a business combinations. Goodwill represents the excess of the purchase price in a business combination over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed. Goodwill is subject to an annual impairment test.

Reporting units are evaluated when changes in the Company’s operating structure occur, and if necessary, goodwill would be reassigned using a relative fair value allocation approach. The Company operates in one operating segment, and this segment is the only reporting unit.

ASC 350, Intangibles—Goodwill and Other (“ASC 350”) requires goodwill to be tested for impairment at least annually and, in certain circumstances, between annual tests. The accounting guidance gives the option to perform a qualitative assessment to determine whether further impairment testing is necessary. The qualitative assessment considers events and circumstances that might indicate that a reporting unit’s fair value is less than its carrying amount. If it is determined, as a result of the qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative test is performed.

The Company elects to perform an annual impairment test of goodwill as of December 31 of each year, or more frequently if impairment indicators are present. The Company performed its annual goodwill impairment test on December 31, 2023, and the Company concluded that no additional goodwill impairment should be recorded. There were no impairments of goodwill during the year ended December 31, 2023.

Separately acquired intangible assets are measured on initial recognition at cost including directly attributable costs. Intangible assets acquired in a business combination are measured at fair value at the acquisition date.

In process technology are amortized on a straight-line basis over the estimated useful life of the assets: approximately four years from the start of revenue which is estimated to start in 2030. Amortization of in process technology is presented within Research and Development in the consolidated statement of operations.

Income Taxes

We calculate income tax provisions based on our results in each jurisdiction in which we operate. The calculation is based on estimated tax consequences and on assumptions as to our entitlement to various benefits under the applicable local tax laws.

Significant judgment is required in evaluating our uncertain tax positions. We establish reserves for uncertain tax positions based on the evaluation of whether or not our uncertain tax position is “more likely than not” to be sustained upon examination based on our technical merits. We record estimated interest pertaining to our uncertain tax positions in the financial statements as income tax expense.

Deferred tax assets are recognized for unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available, against which they can be used. Deferred taxes for each jurisdiction are presented as a net asset or liability, net of any valuation allowances. We estimate the need for any valuation allowance by applying significant judgment and considering all available evidence including past results and future projections. We reassess our estimates periodically and record a partial or full valuation allowance release if needed.

We cannot assure that future final tax outcomes will not be different than our tax provisions and reserves for uncertain tax positions. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.

Stock-Based Compensation

We measure stock options and other proprietary rights maystock-based awards granted to employees, directors, consultants or advisors of the company or its affiliates based on their fair value on the date of the grant and recognize compensation expense of those awards, over the requisite service period, which is generally the vesting period of the respective award. We apply the accelerated method of expense recognition to all awards with only service-based vesting conditions.

For stock-based awards granted to non-employees, compensation expense is recognized over the period during which services are rendered by such non-employees until completed.

We estimate the fair value of each stock option grant on the date of grant using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common stock and assumptions we make for the volatility of our common stock, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield.

Previously, as a private company with no active public market for our common stock, our board of directors historically determined the fair value of our common stock on each date of grant, with input from management. Our board of directors periodically determined the estimated per share fair value of our common stock at various dates using valuations performed by third parties. All options to purchase shares of our common stock were intended to be expensivegranted with an exercise price per share no less than the fair value per share of our common stock underlying those options on the date of grant, based on the information known to us on the date of grant. Our determinations of the fair value of our common stock were made using methodologies, approaches and time consuming. If we are involved in such litigation, it could cause delays in bringing product candidates to marketassumptions consistent with the American Institute of Certified Public Accountants Audit and harm our ability to operate.Accounting Practice Aid Series: Valuation of Privately Held Company Equity Securities Issued as Compensation, or the Practice Guide.

Our success will depend in part on our abilityboard of directors considered various objective and subjective factors, along with input from management, to operate without infringingdetermine the proprietary rights of third parties. The pharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights. Other parties may obtain patents in the future and allege that the products or usefair value of our technologies infringe these patent claims or that we are employing their proprietary technology without authorization.common stock, including:

In addition, third parties may challenge or infringe upon our existing or future patents. Proceedings involving our patents or patent applications or those of others could result in adverse decisions regarding:

There are significant judgments and estimates inherent in the determination of the fair value of our common stock. These judgments and estimates are management’s best estimates and include assumptions regarding our future operating performance, the time to completing an initial public offering or other liquidity event, the related company valuations associated with such events and the determinations of the appropriate valuation methods. If we had made different assumptions, our stock-based compensation expense, net loss and net loss per common share could have been different.

Results of Operations

Comparison of the year ended December 31, 2023 and 2022

The following table summarizes our results of operations for the year ended December 31, 2023 and 2022 (in thousands):

Revenue

Revenue associated with the research and development services mainly under the Novartis Agreement in the amount of $13 thousand was recognized in the year ended December 31, 2023, compared to $0.7 million recognized in fiscal year 2022.

Research and Development Expenses

Research and development expenses were $24.1 million for the year ended December 31, 2023 compared to $27.9 million for the year ended December 31, 2022, a decrease of $3.8 million. The decrease was due to the termination of the TENACITY trial and winding down of the ACCURACY trial offset by expenses incurred by the programs of former Advaxis and Biosight.

General and Administrative Expenses

General and administrative expenses were $12.2 million for the year ended December 31, 2023 compared to $9.7 million for the year ended December 31, 2022, an increase of $2.4 million. The increase was mainly due to severance agreement obligations recognized in the period to former executives of $0.9 million in salary compensation and $0.9 million in stock-based compensation due to acceleration of options as part of severance agreement.

Financial Income (expense), net

Financial expense, net was $15.7 million for the year ended December 31, 2023 compared to financial income, net of $74 thousand for the year ended December 31, 2022. The increase in financial expenses was mainly due to revaluation of convertible notes side letter agreements and warrants issued.

Liquidity and Capital Resources

Sources of Liquidity

The Company has incurred recurring losses since inception as a research and development organization. For the year ended December 31, 2023, the Company used approximately $29.5 million of cash in operations and incurred a net loss of $48.1 million. As of December 31, 2023, the Company had $4.9 million in cash and cash equivalents, $25.0 million in current liabilities and an accumulated deficit of $197.2 million.

Upon closing of the Asset Sale, on March 25, 2024, the Company received $13.0 million in cash, and Immunome paid $3.0 million of the Company’s liabilities directly to vendors of the Company. In addition, under the Asset Sale Agreement the Company received 2,175,489 shares of Immunome’s common stock (the “Immunome Shares”). The Asset Sale Agreement prohibits the Company from selling more than 50% of the Immunome Shares in the first six months following the closing of the Asset Sale. In addition, on March 1, 2024, the Company issued additional convertible notes and warrants in exchange for $2.0 million in funding from the Convertible Notes investors. As of the date of this filing, the cash proceeds received from the Asset Sale and the convertible notes sold on March 1, 2024 were not sufficient to pay the Company’s existing liabilities. Therefore, the Company has limited available cash resources and requires additional financing, through the sale of a portion of the Immunome Shares or otherwise, in order to continue to fund its current operations beyond May 2024.

Raising additional funds or the satisfactory sale of a portion of the Immunome Shares prior to the end of May 2024 is essential to provide sufficient cash flow to meet future liabilities and other obligations, such as tax payments arising from the Asset Sale. Furthermore, even if the Company is successful in selling a portion of the Immunome Shares or raising additional funds through other means, the Company cannot give any assurance that it will, in the future, be able to achieve a level of profitability from the sale of its products to sustain its operations.

If the Company is unable to obtain funding, or able to receive sufficient funds from the sale of a portion of the Immunome Shares, the Company would be forced to delay, reduce, or eliminate its research and development programs, or the Company may be unable to continue operations. As such, those factors raise substantial doubt about the Company’s ability to continue as a going concern.

As part of a cost reduction plan, during the year ended December 31, 2023, the Company had a reduction in workforce in which the employment of approximately 50% of the Company’s employees was terminated. During the first quarter of 2024, the Company gave notice of termination to 18 additional employees and two officers (including the Chief Financial Officer, whose employment will terminate on June 25, 2024). After the effectiveness of such terminations, the Chief Executive Officer will be the only employee of the Company. The Company expects to be able to meet its financial obligations to its employees.

The Company can give no assurances that it will be successful in raising funds through the sale of a portion of the Immunome Shares or any other alternative. Any inability to so obtain additional financing or funding will likely cause the Company to cease business operations. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Therefore, the consolidated financial statements for the year ended December 31, 2023, do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

On February 19, 2021, Old Ayala entered into a Securities Purchase Agreement (the “2021 Purchase Agreement”) with the purchasers named therein (the “Investors”). Pursuant to the 2021 Purchase Agreement, Old Ayala agreed to sell (i) an aggregate of 62,467 shares of Old Ayala’s common stock (the “Private Placement Shares”), par value $0.01 per share, together with warrants to purchase an aggregate of 21,863 shares of Old Ayala’s common stock with an exercise price of $96.58 per share (the “Common Warrants”), for an aggregate purchase price of $4,999,995.00 and (ii) pre-funded warrants to purchase an aggregate of 249,867 shares of our common stock with an exercise price of $0.05 per share (the “Pre-Funded Warrants” and collectively with the Common Warrants, the “Private Placement Warrants”), together with an aggregate of 87,453 Common Warrants, for an aggregate purchase price of $19,986,661.67 (collectively, the “Private Placement”). The Private Placement closed on February 23, 2021.

The exercise price and the number of shares of common stock issuable upon exercise of each Private Placement Warrant are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. In addition, in certain circumstances, upon a fundamental transaction, a holder of Common Warrants will be entitled to receive, upon exercise of the Common Warrants, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Private Placement Warrants immediately prior to the fundamental transaction. The Pre-Funded Warrants will be automatically exercised on cashless basis upon the occurrence of a fundamental transaction. Each Common Warrant is exercisable from the date of issuance and has a term of three years and each Pre-Funded Warrant is exercisable from the date of issuance and has a term of ten years. Pursuant to the 2021 Purchase Agreement, Old Ayala registered the Private Placement Shares and Private Placement Warrants for resale by the Investors on a registration statement on Form S-3 (the “Private Placement Registration Statement”).

In June 2021, Old Ayala entered into an Open Market Sales Agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, as sales agent, pursuant to which Old Ayala was able to, from time to time, issue and sell common stock with an aggregate value of up to $200.0 million in “at-the-market” offerings (the “ATM”), under a registration statement on Form S-3 filed with the SEC. Sales of common stock, if any, pursuant to the Sales Agreement, could be made in sales deemed to be an “at the market offering” as defined in Rule 415(a) of the Securities Act, including sales made directly through The Nasdaq Global Market or on any other existing trading market for our common stock. During the year ended December 31, 2022, Old Ayala sold a total of 310,417 shares of its common stock for total gross proceeds of approximately $526 thousand. The Sales Agreement was terminated in January 2023.

On October 18, 2022, the Company, which at the time was named Advaxis, Inc., entered into a Merger Agreement (the “Merger Agreement”), with an entity then known as Ayala Pharmaceuticals, Inc. (which shortly prior to the closing of the merger in January 2023 changed its name to Old Ayala, Inc., (“Old Ayala”) and Doe Merger Sub, Inc. (“Merger Sub”), a direct, wholly-owned subsidiary of the Company. Under the terms of the Merger Agreement, Merger Sub merged with and into Old Ayala, with Old Ayala continuing as the surviving company and a wholly-owned subsidiary of the Company (the “January 2023 Merger”). Immediately after the January 2023 Merger, former Advaxis stockholders as of immediately prior to the Merger own approximately 37.5% of the outstanding shares of the combined Company and former Old Ayala shareholders own approximately 62.5% of the outstanding shares of the combined Company.

At the effective time of the January 2023 Merger (the “Effective Time”), each share of share capital of Old Ayala issued and outstanding immediately prior to the Effective Time was converted into the right to receive a number of shares of the Company’s common stock, par value $0.001 per share, equal to the exchange ratio, 0.1874 shares of the Company’s common stock per Old Ayala share.

On August 7, 2023, the Company entered into an agreement for the issuance of Senior Secured Convertible Promissory Notes (the “Secured Notes”) to Israel Biotech Fund I, L.P. The Secured Notes provided for the borrowing by the Company of up to $2.0 million dollars, which borrowings which the Company received on September 1, 2023.

On November 17, 2023, the Company issued Senior Convertible Promissory Notes (collectively, the “Senior Convertible Notes”), in an aggregate amount of $4.0 million, to several existing lenders and investors in the Company, including Israel Biotech Fund I, L.P., Israel Biotech Fund II, L.P., Arkin Bio Ventures L.P. and Biotel Limited. The amounts borrowed by the Company under the Senior Convertible Notes were funded to the Company on November 20, 2023. The Senior Convertible Notes were convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at any time at the option of the noteholders, and were subject to mandatory conversion upon certain events, including a change of control transaction and certain financing transactions involving the Company, at a conversion price equal to the lower of (i) 50% of the Common Stock’s price per share as of market close on November 16, 2023 and (ii) 50% of the Common Stock’s price per share as of the close of market on the Trading Day immediately prior to the date of the Notice of Conversion, subject to certain adjustments. In connection with the issuance of the Senior Convertible Notes, the Company issued to the noteholders warrants to purchase an aggregate of 15,000,000 shares of the Common Stock with an exercise price equal to the lower of (A) 50% of the Common Stock’s price per share as of market close on November 16, 2023 and (ii) 50% of the Common Stock’s price per share as of the close of market on the Trading Day immediately prior to the date of the Notice of Exercise of the warrant, subject to adjustment, which exercise may be on a cashless basis.

The noteholders also had the right, pursuant to a Side Letter Agreement between the noteholders and the Company, to lend an additional $4.0 million dollars to the Company on the same terms.

The Company and Israel Biotech Fund I, L.P. and Israel Biotech Fund II, L.P. also agreed to amend and restate the terms of Secured Notes to conform to the terms of the Senior Convertible Notes, and issued to the holders of the Secured Notes warrants to purchase an aggregate of 7,500,000 shares of the Common Stock on the terms of the above-described warrants.

In February 2024, the Secured Notes and the Senior Convertible Notes, and the warrants issued in connection with all of them, were converted into shares of the Company’s common stock under the terms described in such notes and warrants.

Cash Flows

The following table provides information regarding our total cash and cash equivalents and restricted bank cash at December 31, 2023 and 2022 (in thousands):

Cash Flows

The following table provides information regarding our cash flows for the years ended December 31, 2023 and 2022 (in thousands):

Net Cash Used in Operating Activities

The cash used in operating activities resulted primarily from expenses associated with our clinical development programs and early-stage research and general and administrative expenses.

Net cash used in operating activities during the year ended December 31, 2023 of $29.5 million was primarily attributable to our net loss of $48.1 million, adjusted for non-cash expenses of $17.5 million, which includes revaluation of warrants and convertible notes of $15.7 and stock-based compensation of $1.2 million, and a net increase in working capital of $1.1 million.

Net cash used in operating activities during the year ended December 31, 2022 of $34.5 million was primarily attributable to our net loss of $38.0 million, adjusted for non-cash expenses of $2.7 million, which includes stock-based compensation of $2.2 million and a net increase in working capital of $0.8 million.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities of $5.9 million during the year ended December 31, 2023 was mainly attributable to $4.0 million in proceeds from the sale of our AL 101 and AL 102 assets and $1.9 million of proceeds received in connection with the merger with Biosight.

Net cash used in investing activities during the year ended December 31, 2022, of $2 thousand was attributable to purchases of property and equipment.

Net Cash Provided by Financing Activities

Net cash provided by financing activities during the year ended December 31, 2023 of $26.0 million was primarily attributable to the January 2023 Merger and the Convertible Loans.

Net cash provided by financing activities during the year ended December 31, 2022, of $0.1 million was primarily attributable to our issuance of shares at market, net of issuance costs.

Funding Requirements and Going Concern

Our future capital requirements are difficult to forecast and will depend on many factors, including our ability to raise additional funding. To the extent that we continue the research and development for, initiate later-stage clinical trials for, and seek marketing approval for, our product candidates, we expect our expenses would increase. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. Furthermore, we incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

The Company has incurred recurring losses since inception as a research and development organization. For the year ended December 31, 2023, the Company used approximately $29.5 million of cash in operations and incurred a net loss of $48.1 million. As of December 31, 2023, the Company had $4.9 million in cash and cash equivalents, $25.0 million in current liabilities and an accumulated deficit of $197.2 million.

Upon closing of the Asset Sale, on March 25, 2024, the Company received $13.0 million in cash, and Immunome paid $3.0 million of the Company’s liabilities directly to vendors of the Company. In addition, under the Asset Sale Agreement the Company received 2,175,489 shares of Immunome’s common stock (the “Immunome Shares”). The Asset Sale Agreement prohibits the Company from selling more than 50% of the Immunome Shares in the first six months following the closing of the Asset Sale. In addition, on March 1, 2024, the Company issued additional convertible notes and warrants in exchange for $2.0 million in funding from the Convertible Notes investors. As of the date of this filing, the cash proceeds received from the Asset Sale and the convertible notes sold on March 1, 2024 were not sufficient to pay the Company’s existing liabilities. The Company does not believe it has sufficient capital to fund its current obligations, as they become due, as the Company has limited available cash resources and requires additional funds in order to continue to fund its current operations , and to pay existing and future liabilities and other obligations. Our future capital requirements will depend on many factors, including:

Conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interests may be diluted.. Any debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Omitted.

Item 8. Financial Statements and Supplementary Data.

AYALA PHARMACEUTICALS, INC.

INDEX TO FINANCIAL STATEMENTS

	Kost Forer Gabbay & Kasierer	Tel: +972-3-6232525
	144 Menachem Begin Road, Building A	Fax: +972-3-5622555
	Tel-Aviv 6492102, Israel	ey.com

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

AYALA PHARMACEUTICALS, INC.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ayala Pharmaceuticals, Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, has a negative cash flows from operating activities, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

KOST FORER GABBAY & KASIERER

A Member of EY Global

We have served as the Company’s auditor since 2017.

Tel-Aviv, Israel

April 16, 2024

AYALA PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

The accompanying notes are an integral part of the consolidated financial statements.

AYALA PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except shares and per shares data)