Biostax Corp. - Annual Report: 2017 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2017

OR

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

For the Transition Period From ____________ to ____________

Commission File Number: 001-34918

IMMUNE THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

37 North Orange Ave, Suite 607,
Orlando, Florida 32801

(Address of principal executive offices)

(888) 613-8802

Registrant’s telephone number, including area code:

None

Securities Registered Pursuant to Section 12(b) of the Act:

Common Stock, par value $0.0001 per share

Securities Registered Pursuant to Section 12(g) of the Act:

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 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 time 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 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. Yes [X] No [  ]

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]

The aggregate market value of voting stock held by non-affiliates of the registrant on June 30, 2017, the last business day of the registrant’s most recently completed second quarter, was $15,232,785, based on the last reported sale price of the registrant’s Common Stock on the OTC Markets on that date.

As of April 2, 2018, the registrant had outstanding 389,846,113 shares of common stock, $0.0001 par value per share.

IMMUNE THERAPEUTICS, INC.

2017 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained or incorporated by reference in this Annual Report on Form 10-K are considered forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) concerning our business, results of operations, economic performance and/or financial condition, based on management’s current expectations, plans, estimates, assumptions and projections. Forward-looking statements are included, for example, in the discussions about:

Any statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Forward-looking statements generally are identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “aims,” “plans,” “may,” “could,” “will,” “will continue,” “seeks,” “should,” “predict,” “potential,” “outlook,” “guidance,” “target,” “forecast,” “probable,” “possible” or the negative of such terms and similar expressions. Forward-looking statements are subject to change and may be affected by risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events, except as required by law, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities laws and other applicable laws.

We caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements, and therefore you should not place too much reliance on them. These factors include, among others, those described herein, under “Risk Factors” and elsewhere in this Annual Report and in our other public reports filed with the Securities and Exchange Commission. It is not possible to predict or identify all such factors, and therefore the factors that are noted are not intended to be a complete discussion of all potential risks or uncertainties that may affect forward-looking statements. If these or other risks and uncertainties materialize, or if the assumptions underlying any of the forward-looking statements prove incorrect, our actual performance and future actions may be materially different from those expressed in, or implied by, such forward-looking statements. We can offer no assurance that our estimates or expectations will prove accurate or that we will be able to achieve our strategic and operational goals.

Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

Moreover, new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are based on information available to us on the date of this Annual Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Annual Report.

JUMPSTART OUR BUSINESS STARTUPS ACT

We qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,000,000,000 in annual gross revenue and did not have such amount as of December 31, 2017, the last day of our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

As an emerging growth company, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

We will remain an emerging growth company until the earliest to occur of: (i) our reporting $1 billion or more in annual gross revenues; (ii) the end of fiscal year 2019; (iii) our issuance, in a three year period, of more than $1 billion in non-convertible debt; and (iv) the end of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million on the last business day of our second fiscal quarter.

PART I

Item 1. Business

Company Overview

Immune Therapeutics, Inc. (the “Company”) was initially incorporated in Florida on December 2, 1993 as Resort Clubs International, Inc. (“Resort Clubs”). It was formed to manage and market golf course properties in resort markets throughout the United States. Galliano International Ltd. (“Galliano”) was incorporated in Delaware on May 27, 1998 and began trading in November 1999 through the filing of a 15C-211. On November 10, 2004, Galliano merged with Resort Clubs. Resort Clubs was the surviving corporation. On August 23, 2010, Resort Clubs changed its name to pH Environmental Inc. (“pH Environmental”).

On April 23, 2012, pH Environmental completed a name change to TNI BioTech, Inc., and on April 24, 2012, we executed a share exchange agreement for the acquisition of all of the outstanding shares of TNI BioTech IP, Inc. On September 4, 2014, a majority of our shareholders approved an amendment to our Amended and Restated Articles of Incorporation, as amended, to change our name to Immune Therapeutics, Inc. We filed our name change amendment with the Secretary of State of Florida on October 27, 2014 changing our name to Immune Therapeutics, Inc.

The Company currently operates out of Orlando, Florida. In July 2012, the Company’s focus turned to acquiring patents that would protect and advance the development of new uses of opioid-related immune- therapies, such as low dose naltrexone (“LDN”) and Methionine [Met5]-enkephalin (“MENK”). The Company’s therapies are believed to stimulate and/or regulate the immune system in such a way that they provide the potential to treat a variety of diseases. We believe our therapies may be able to correct abnormalities or deficiencies in the immune system in diseases such as HIV infection, autoimmune disease, immune disorders, or cancer; all of which can lead to disease progression and life-threatening situations when the immune system is not functioning optimally.

In October 2012, the Company formed TNI BioTech International, Ltd., a BVI company in Tortola, British Virgin Islands, which was set up to allow the Company to market and sell LDN in those countries outside the U.S. in which we have been able to obtain approval to sell the Company’s products.

In August 2013, the Company formed its United Kingdom subsidiary, TNI BioTech, LTD (the “UK Subsidiary”). The UK Subsidiary received approval to be considered a micro, small or medium-sized enterprise (“SME”) with the European Medicines Agency (“EMA”) on August 21, 2013. The designation provides the UK Subsidiary with significant discounts when holding meetings or submitting filings to the EMA. On September 19, 2013, the UK Subsidiary submitted a pre-submission package to the EMA regarding Crohn’s Disease. The EMA granted the UK Subsidiary a meeting that took place on September 27, 2013. The UK Subsidiary is eligible to benefit from the provisions for administrative and financial assistance for SMEs set out in Regulation (EC) No 2049/2005. The Company will apply to obtain EMA benefits once funding becomes available.

In December 2013, the Company formed a subsidiary, Cytocom Inc., to focus on conducting LDN and MENK clinical trials in the United States. In December 2014, the Company finalized the distribution of common stock of Cytocom Inc. to its shareholders. As part of the transaction, the Company transferred to Cytocom certain of its rights, title and interest in or relating to intellectual property (i) patents, patent applications, and all divisional, continuations and continuations-in-part thereof, together with all reissues, reexaminations, renewals and extensions thereof and all rights to obtain such divisionals, continuations and continuations-in-part, reissues, reexaminations, renewals and extensions, and all utility models and statutory invention registrations and any other such analogous rights, (ii) trademarks, service marks, Internet domain names, trade dress, trade styles, logos, trade names, services names, brand names, corporate names, assumed business names and general intangibles and other source identifiers of a like nature, together with the goodwill associated with any of the foregoing, and all registrations and applications for registrations thereof, together with all renewals and extensions thereof and all rights to obtain such renewals and extensions, (iii) copyrights, mask work rights, database and design rights, moral rights and rights in Internet websites, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof and all applications in connection therewith, together with all renewals, continuations, reversions and extensions thereof and all rights to obtain such renewals, continuations, reversions and extensions, and (iv) confidential and proprietary information, including, trade secrets and know-how. Cytocom licensed back to the Company a perpetual, non-exclusive, royalty-free right and license to use the assigned intellectual property for veterinary indications and for the marketing rights to emerging markets, access to all clinical data, use of the formulation for LDN and MENK. The parties have informally agreed that until such time as Cytocom was funded, the Company would be responsible for all payments to employees, ongoing general and administrative expenses, licensing fees, patent fees, and drug development costs. When Cytocom becomes self-sustaining and fully funded, it expects to reimburse the Company for all funds spent by the Company since the spin-out.

On December 8, 2014, the number of Cytocom Inc. shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom Inc. issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% stake in Cytocom Inc. on that date. In April 2016, the Board of Directors and a majority of shareholders of Cytocom approved a reverse stock split of Cytocom’s outstanding common stock with one new share of stock for each twenty old shares of common stock. Cytocom effectuated and finalized the reverse split in June 2016. At December 31, 2017, the Company’s equity interest had been further reduced to 9.3%, by subsequent issuances of Cytocom common stock.

In March 2014, the Company incorporated Airmed Biopharma Limited, an Irish corporation with an address in Dublin, Ireland, and Airmed Holdings Limited, an Irish company domiciled in Bermuda. The Irish companies were set up to benefit from incentives granted by the Irish government for the establishment of pharmaceutical companies (many of the world’s leading pharmaceutical companies have located in Ireland), and so that the Company could take advantage of Ireland’s status as a member of the European Union and the European Economic Area. An Irish limited liability company enjoys a low corporate income tax rate of 12.5%, one of the lowest in the world. The Irish-domiciled company hopes to qualify for tax incentives for Irish holding/headquartered companies and to benefit from the network of double tax treaties that reduce withholding taxes. TNI BioTech International, Ltd. will manage our international distribution, using product that is manufactured in Ireland and elsewhere.

Today, Immune Therapeutics is focused on the commercialization of affordable non-toxic immunotherapies focused on the activation and rebalancing of the body’s immune system. Stimulating the body’s immune system remains one of the most promising approaches in the treatment of Cancers, HIV, Autoimmune Diseases, inflammatory conditions and other opportunistic infections for chronic often life-threatening diseases through the mobilization of the body’s immune system in Emerging Nations using existing clinical data.

Cytocom Inc, is a clinical-stage pharmaceutical company focused on the development of the first affordable non-toxic immunodulator for the treatment of inflammatory diseases, immune-related disorders, and cancer and is responsible for the development of our patented therapies with the FDA and EMA.

As of this date, neither we nor our collaboration partners are permitted to market our drug candidates in the United States until we receive approval of a New Drug Application from the FDA. Neither we nor our collaboration partners have submitted an application for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and uncertain process.

Some of the Company’s more substantial risks include, but are not limited to, its lack of operating history, its high needs for capital, strict government regulation, risk of law suits from trial participants and otherwise, requirement for drug approvals which may never occur, changes in the industry, failure of the Company’s products to make it through trials, reliance on third parties to conduct trials and manufacture and distribute the Company’s drugs, and fierce competition. All of these factors and more could affect investors’ investments in the Company.

The Company is a clinical late stage biopharmaceutical company focused on the development two immunomodulating therapies - IRT-103 Low-Dose Naltrexone, LDN or “Lodonal^TM,” and IRT-101 Methionine Enkephalin or “MENK” - for the treatment of autoimmune diseases, inflammatory diseases, cancer and HIV/AIDs. Our product candidates are also intended to combine with other mechanisms of action across the oncology and autoimmune landscape including chemotherapy radiation, and immunosupressive drugs.

Current treatments for autoimmune disease are hampered by the non-specificity of immunomodulatory interventions, having to accept broad suppression of immunoresponsiveness with potentially serious side effects, such as infection or malignancy.

The development of antigen-specific approaches, downregulating pathogenic immune responses while maintaining protective immunity, would be a major step forward. Clinical trials with our immunomodulating therapies have been shown to bolster immune response without the serious side effects of existing therapies.

In clinical trials, Lodonal has been shown to modulate the immune system by increasing the production of T cells, which block TLR signaling and decrease glial cell activation, decrease cytokines, decrease neuroinflammation, modulate T and B lymphocyte production, and shift of immune response from TH2 to TH1 to increase the benefit to patients. Lodonal potentially places the Company at a central place in the treatment paradigm, including Crohn’s Disease, Rheumatoid Arthritis (RA), HIV/AIDs and Chronic Pain due to inflammation.

LDN and MENK work by triggering a number of receptors, including the opioid and T Cell receptors on immune cells, which then activate or balance various cells of the immune system. Other receptors triggered by IRT-101 include tolling receptors to shift Th1 (pro-inflammatory) to Th2 (anti-inflammatory), which is critical when dealing with autoimmune and inflammatory disease.

While traditional drug development targets each drug to a particular disease, such as drug A for disease A, drug B for disease B, etc., we are approaching the process by identifying and targeting survival or activation immunology pathways that cross over between different disease indication. Lodonal, our lead product, has shown the success of this model with the approval for use in Nigeria as an immune system regulator in the management of HIV patients.

Lodonal/LDN

IRT-103/Lodonal/LDN is an immune modulating drug “IMD” that inhibits Toll-Like receptors including TLR2, TRL4 and TRL9 as well as p receptors to mediated inflammation. In addition to binding to Toll Like receptors, IRT-103 works on the body’s natural opioid system to restore immune balance by Shifting Th1 (pro-inflammatory) to Th2 (anti-inflammatory-). Through its effect on the opiate receptor, IRT-103 has been shown to increase production of Natural Kills Cells, Helper T-Cell CD4, CD8, T-Cells and cytokine production. IRT-103 has completed over 40 Phase II clinical trials that have provided proof of concept for Crohn’s Disease, Fibromyalgia, Complex Regional Pain Syndrome, Diabetic Neuropathy and Neuropathic Corneal Pain, Hematologic Cancer Patients, Advanced Brain Tumor. At this time the Company is only focused on developing treatments for HIV/AIDS and Crohn’s Disease.

The Company plans to initiate a Phase 3 study in Moderate to Severe Crohn’s Disease as an adjunct to the standard of care in patients ages 12 and over, using 505(b)(2) pathway study in children with moderate to severe Crohn’s disease. The Company met recently with the FDA to review the planned study. In addition to the trials for Crohn’s Disease, the Company plans to file for a New Drug Application for Crohn’s Disease in patients with HIV/AIDS as HIV patients are unable to use the existing therapies. Currently, IMUN is marketing LDN in Nigeria where it has obtained approval for the management of patients with HIV/AIDS. Since Naltrexone is a repurposed drug with a strong safety profile, we hope we will be able to fast track our development program through the FDA for use in the U.S.

IRT-101/MENK

Our second product candidate, IRT-101 or MENK, is a member of a group of agents collectively known as “Modulators of Opioid and Receptor Activity.” MENK interacts directly with the OGFr, which, in nonclinical studies, has delayed the cell cycle by modulating cyclin-dependent inhibitory kinase pathways. The IRT-101/MENK axis is an inhibitory pathway that plays a role in the onset and progression of autoimmune diseases, viral diseases, such as HIV/AIDS, and cancer. MENK’s role is to maintain cell growth, function and homeostasis. Exogenous MENK administration has been shown to significantly inhibit growth of multiple cancer cell lines in culture compared to control cells; these cancer types include: thyroid cancer, ovarian cancer, triple negative breast cancer, hepatocellular carcinoma, squamous cell carcinoma of the head and neck, pancreatic cancer, renal cancer, neuroblastoma, and colon cancer.

MENK has established Proof of Concept in HIV/AIDS, Pancreatic Cancer and Kaposi Sarcoma. Clinical Trials suggest activity in treatment of solid tumors, blood cancer, lung and melanoma.

In clinical trials MENK showed significant increase in a subpopulations of individual CD4+T cells, CD8+T cells, CD4+CD25+ regulatory T-cells (Treg), natural killer cells (NK). Our results indicated that MENK showed a strong inhibiting effect on Treg cells while it stimulated marked proliferation of other lymphocyte subpopulations. MENK when you in conjunction with the standard of care provided evidence of to extend life and most importantly, there were no changes in the blood laboratory tests with MENK. Compared to standard chemotherapy that reduces the blood count from bone marrow toxicity, the blood count remained stable with MENK. Lin E, Freedman JE, Beaulieu LM. Cardiovasc Ther. 2009 Summer; 27(2):117-23. doi: 10.1111/j.1755-5922.2009.00077.x. Review. The role of inflammation in regulating platelet production and function: Toll-like receptors in platelets and megakaryocytes. Beaulieu LM, Freedman JE.

The recent scientific literature suggests that tackling the initiating pathways of the innate immune system, e.g. the Toll-Like Receptors (TLRs) (Opiate Receptor) and inflammation, may lead to improved drugs for the treatment and prevention of autoimmune and inflammatory diseases. (Infect Disord Drug Targets. Author manuscript; available in PMC 2009 Sep 15, and Journal List HHS Author

Our Product Pipeline

The following table describes our intended product pipeline:

Our goal is to become a leading biopharmaceutical company focused on the development of novel immunotherapy treatment of autoimmune diseases, HIV and cancer without the toxic side effects of existing drugs. The Company plans to use Cytocom, Inc. to supervise and perform all development work for Lodonal and MENK that will require approval of the FDA, EMA or any of the G7 countries. The Company will submit all trials and pay fees on Cytocom’s behalf until such time as Cytocom is sufficiently funded to cover the cost of these trials. At this time, the INDs have not been transferred to Cytocom. Studies and trials in countries that are not part of the G7 are being conducted directly by the Company.

The key elements of our strategy include:

Industry

Immunology Therapeutics Markets

The immune system is a network of cells and tissues throughout the human body that work together to protect the body from invasion and/or infection. The immune system consists of two parts: acquired and innate immunity. Acquired immunity is developed by the body as a person ages and the body is exposed to invasions; the body “remembers” these invaders so that it can fight if they return. When the immune system is working properly, foreign invaders provoke the body to activate immune cells against the invaders and to produce antibodies that will recognize and destroy the foreign invaders. Innate immunity activates white blood cells to destroy invaders, without the use of the antibodies.

When a person has an autoimmune disease they have a problem with the acquired immune system’s reactions. In an autoimmune reaction, antibodies and immune cells will target and attack the body’s own healthy tissues. Autoimmune diseases can affect almost any part of the body, including the heart, brain, nerves, muscles, skin, eyes, joints, lungs, kidneys, digestive tract and blood vessels. A typical symptom of an autoimmune disease is inflammation, which can cause redness, heat, pain, and swelling. Many autoimmune diseases don’t restrict themselves to one part of the body and can affect many parts of the body simultaneously. The cause of autoimmune diseases is not fully understood and in most cases, a combination of factors may be the underlying cause.

Prevalence rates for all autoimmune disorders are expected to continue to rise in the next several years. Autoimmune diseases represent a diverse collection of diseases in terms of their demographic profile and primary clinical manifestations. There are as many as 80 types of autoimmune diseases. Many of them have similar symptoms, which makes them very difficult to diagnose. It is also possible to have more than one at the same time. They usually fluctuate between periods of remission (little/no symptoms) and flare-ups (worsening symptoms). There are currently no cures for autoimmune diseases, so treatment focuses on relieving the symptoms.

Autoimmune disorders include inflammatory bowel disease, such as Crohn’s disease and ulcerative colitis, MS, rheumatoid arthritis, lupus, myasthenia gravis and type-1 diabetes. According to a 2015 report from the Centers for Disease Control and Prevention (“CDC”), it is estimated 1.3% of U.S. adults (3 million) reported being diagnosed with IBD (either Crohn’s disease or ulcerative colitis).¹. This was a large increase from 1999 (0.9% or 2 million adults).². According to the CDC, fibromyalgia prevalence in the U.S. affects about 4 million US adults, about 2% of the adult population. The USA had approximately 1.12 million people living with HIV at the end of 2015 (https://www.cdc.gov/hiv/statistics/overview/ataglance.html). Nearly one in eight of these people are unaware they have HIV. A crude estimate of the prevalence of myasthenia gravis in the U.S. is approximately 50,000 patients and Multiple sclerosis (MS) is the most widespread disabling neurological condition of young adults around the world. The Multiple Sclerosis Foundation estimates that more than 400,000 people in the United States and about 2.5 million people around the world have MS. About 200 new cases are diagnosed each week in the United States. For many of these autoimmune diseases, there is a chronic inflammation without known cause and continuous chronic therapy is required to maintain remission.

Thus, the identification of an alternative, safer therapy prior to the use of medications that hold the potential for severe side effects, like TNF-alpha inhibitors, is very important; especially for those patients who cannot tolerate or who do not want to be placed on such medications. With its excellent safety profile and potential clinical efficacy, Lodonal^TM may be able to address this unmet medical need as a first line therapy in patients with autoimmune diseases.

Crohn’s Disease, a form of inflammatory bowel disease, is an autoimmune disease that is characterized by transmural, patchy, granulomatous inflammation of the ileum and/or colon, resulting in symptoms such as abdominal pain, diarrhea, malabsorption, and weight loss. Crohn’s disease accounts for significant morbidity and decreased quality of life. Although clinical response rates to anti-TNF agents are about 50%, mucosal healing is reported in only approximately 30% of patients with Crohn’s disease (SONIC trial, Colombel, J. F., Sandborn, W. J., Reinisch, W., Mantzaris, G. J., Kornbluth, A., Rachmilewitz, D., Lichtiger, S., D’Haens, G., Diamond, R. H., Broussard, D. L., Tang, K. L., van der Woude, C. J., and Rutgeerts, P. Infliximab, azathioprine, or combination therapy for Crohn’s disease. N.Engl.J.Med. 2010; 362: 1383-1395).Clinical Trials and data have shown that antiretroviral therapy for the treatment of HIV/AID treatments do not fully restore immune health; in fact suppress the immune system as a consequence, a number of inflammation-associated and/or immunodeficiency complications such as cardiovascular disease, chronic infections and cancer are increasing in numbers. Cumulative toxicities from exposure to antiretroviral drugs for decades cause clinically relevant metabolic disturbances and end-organ damage.

There are growing concerns that the multi-morbidity associated with HIV disease may impact healthy aging and could overwhelm some health care systems, particularly those in resource-limited regions that have yet to fully develop a chronic care model. Given the problems inherent in treating and caring for a chronic disease that might persist for several decades, a global effort to identify a cure or a therapy to offset the toxic side effects if needed.

Lodonal™ in clinical trials has shown to provide an alternative and safe approach for immune dysfunction, cancer and chronic inflammatory state. In FDA phase II trials for HIV, Crohn’s Disease, Fibromyalgia, Adjunct to Chemotherapy, MS, RA, that have been proven to increase CD 4 count, decrease viral loads, suppress autoimmune reactions; decrease inflammatory cytokines, slows growth of malignant cells and Increases production of T-Cell, Helper, NK, Toll-Like receptor TRL4 and TRL9 as well as p receptors. Lodonal works on the body’s natural opioid system to restore immune balance by Shifting Th1 (pro-inflammatory) to Th2 (anti-inflammatory). TNI BioTech International, a subsidiary of Immune, received NAFDAC (National Agency for Food and Drug Administration and Control) approval to market and distribute Lodonal^TM, the Company’s breakthrough treatment for HIV/AIDS. The Company and its strategic partners received regulatory approvals and contracts for the first sales of the product in Nigeria in 2018.

The approval is for a one-day Immune System Regulator for the management of HIV/AIDS, which is based on the results of the Company’s 90-day bridging trial in Nigeria that resulted in a 44% increase in CD4 count versus an 11% increase for standard of care patients. Additionally, there was a reduction in opportunistic infections plus several Phase II multi-center, randomized studies that demonstrated improvements for patients treated with Lodonal™ when compared to placebo or standard of care.

MS is an autoimmune inflammatory disease of the central nervous system that is characterized by progressive neuronal loss that manifests clinically as worsening physical disability occurs. The key pathophysiological hallmark of MS is the loss of myelin, a layer of lipids and proteins produced by cells called oligodendrocytes that wrap around the neuron and act like an insulating sheath to facilitate electrical conduction along the nerve. Destruction of myelin by an inflammatory cascade leads to neuronal degeneration. As a result, we believe that there is a substantial unmet need for effective treatments for chronic progressive MS as well as a need for therapies that are more conveniently delivered, such as oral agents or less frequently administered injectable drugs.

Fibromyalgia is an autoimmune disorder characterized by widespread musculoskeletal pain accompanied by fatigue, sleep, memory and mood issues. Researchers believe that fibromyalgia amplifies painful sensations by affecting the way your brain processes pain signals. Symptoms sometimes begin after a physical trauma, surgery, infection or significant psychological stress. In other cases, symptoms gradually accumulate over time with no single triggering event. Women are much more likely to develop fibromyalgia than are men. Many people who have fibromyalgia also have tension headaches, temporomandibular joint disorders, irritable bowel syndrome, anxiety and depression. While there is no cure for fibromyalgia, a variety of medications can help control symptoms. Most of those drugs are immuno-suppression drugs with numerous side effects.

Myasthenia gravis is an autoimmune neuromuscular disease that leads to fluctuating muscle weakness and fatigue. The hallmark symptom of myasthenia gravis is muscle weakness that increases during periods of activity and improves after periods of rest. Certain muscles such as those that control eye and eyelid movement, facial expressions, chewing, talking, and swallowing are often involved in the disorder. The muscles that control breathing and neck and limb movements may also be affected. Current therapies help patients to have a normal life expectancy; however, quality of life and relief from symptoms still needs significant improvements in patients with this disease.

Oncology Therapeutics Markets

Cancer is a term used for diseases in which abnormal cells divide without control and these cells have the ability to invade other tissues within the body by traveling through the blood and lymph systems. Cancer consists of many different types of diseases. Currently, there are more than 100 different types of cancer with the majority of cancers named for the organ or type of cell in which they start. For example, cancer that begins in the colon is called colon cancer. Cancer can also be grouped into broader categories, which include:

The American Cancer Society estimates that in 2014 over 1.6 million people in the United States are expected to be diagnosed with cancer and over 585,000 people will die from cancer. Cancer remains the second most common cause of death in the U.S. contributing to one in four deaths. As evidence by these numbers, and despite advances in the field of cancer research, there remains a significant unmet medical need in the treatment of cancer.

A common treatment option for cancer is surgery, chemotherapy and/or radiation therapy. While these therapies are the most widely used class of anti-cancer agents, they are associated with extremely high levels of toxicity, potentially severe adverse events and at times a lack of efficacy. As a result, there is a substantial unmet medical need for alternatives or adjunct treatments to existing chemotherapy drugs and/or radiation therapy in order to address the associated toxicities and lack of efficacy from these drugs.

Background

Naltrexone is short for Naltrexone Hydrochloride and is an orally effective opioid receptor antagonist, used as a treatment for opiate addiction. Naltrexone was originally synthesized in 1963 and was originally patented in 1967 by the specialty pharmaceutical company Endo Health Solutions Inc. At the time, it seemed unlikely that naltrexone would be developed because the experimental drug had relatively low market potential, and naltrexone’s patent protection would likely expire before the completion of clinical trials. With the assistance of DuPont, a division of Merck & Co. that acquired Endo Health Solutions, Inc. in 1969, the U.S. government’s National Institute on Drug Abuse advanced naltrexone through the FDA approval process, leading to approval for marketing as a treatment for heroin addiction in a 50 mg dose in 1984. Although its patent expired that same year, Naltrexone gained seven additional years of marketing exclusivity for DuPont when the FDA designated it an orphan drug.

Marketing exclusivity provides a pharmaceutical company the right to sell its drug for a certain length of time free of competition from generic versions of the drug and is often granted to encourage companies to develop a use for a drug whose patent has expired or to encourage a company to develop an already approved drug for a new use. With market exclusivity, the anticipated returns on investment are higher, improving the profitability of a drug. With funding provided by the U.S. National Institute on Alcohol Abuse and Alcoholism and the potential to gain three additional years of post-approval market exclusivity for naltrexone, DuPont advanced naltrexone through additional clinical trials, and gained FDA approval for a 50 mg dose as a treatment for alcohol abuse in 1995. As naltrexone had already been on the market for 10 years as a treatment for heroin addiction, the FDA’s confidence in its safety resulted in approval only six months after naltrexone’s regulatory application was submitted.

Naltrexone has a black box warning for liver toxicity, which is included based on liver enzyme elevations reported with daily dosing at 100 mg-300 mg. These doses were evaluated in clinical trials conducted by third parties for obesity; however, they have not been approved for this use. Review of the literature and adverse effect reports in naltrexone clinical trials did not demonstrate a risk for liver damage with daily dosing at 50 mg or lower. Although the black box warning does remain, the FDA has stated that Naltrexone does not appear to be a hepatotoxin at the recommended doses for the currently approved indications. Other than its small potential association with liver toxicity at high doses, the most common adverse effects reported with naltrexone are non-specific gastrointestinal complaints such as diarrhea, mild nausea, and abdominal cramping. Naltrexone has not shown any significant increase in adverse effects in placebo-controlled trials in patients known to be free of opioids for at least seven days.

At lower doses (approximately 1-10 mg/day), Naltrexone has been termed LDN and has been gaining popularity as a treatment for signs and symptoms of autoimmune diseases and immune disorders such as Crohn’s disease, viral infections such as HIV/AIDS and cancer. Research studies conducted by Dr. Zagon and colleagues at Penn State University have indicated that the short-term blockage of opioid receptors on circulating and tissue cells by administration of LDN was followed by a substantial rebound in opioid receptor expression and increased levels of β-endorphin and met-enkephalin. In addition to Dr. Zagon’s findings, Dr. Bernard Bihari, a New York physician who previously studied immune responses primarily in AIDs patients, provided a 3-fold mechanistic approach to the use of LDN, showing that LDN administration has the following effects on the immune system:

To date, Lodonal™ (“low dose naltrexone” and “LDN”) has been administered to patients across multiple indications to include autoimmune diseases and disorders, viral infections and cancer; both under clinical trials and through off-label prescription use. It has been estimated, based upon Dr. Bihari’s research and direct interactions with pharmacies, that just within the U.S. there are approximately 30,000-40,000 people taking Lodonal™ daily. Most of the states in the U.S. have licensed compounding pharmacies to prepare the appropriate formulations of LDN for these indications and at least one compounding pharmacy in the U.S. is licensed to dispense LDN to 48 of the 50 states.

LDN is currently being studied in a number of clinical trials by other companies in the U.S., as is shown in the following tabular summary.

Clinical Data has shown that LDN has the potential to be a successful treatment for immune dysfunction, immune dysregulation, inflammatory diseases, autoimmune diseases and cancer. LDN in HIV/AID’s has shown to slow disease progression, reduce inflammation that cannot only control the disease itself, with no toxic side effects. For example, in Crohn’s disease, five published clinical trials in patients with moderate to severe disease have been conducted, two in adults and one in children, and have shown significant disease and quality of life improvement by 12-weeks. LDN was able to reverse the inflammatory activity, promote mucosal healing, and significantly decrease histologic inflammation when compared to placebo-treated controls.

Clinical Trials

Significant published clinical trial evidence indicates that LDN, particularly daily dosing at 3mg - 4.5 mg, stimulates the immune system and is effective in the treatment of some immunodeficiency diseases, such as HIV/AIDS, and advanced cancer. In addition, LDN has been used quite widely for treatment of a variety of autoimmune diseases and immune disorders.

Clinical Trials: Crohn’s Disease

The first clinical trial results with LDN for immune disorders were published only recently in a peer-reviewed medical journal in 2007 which evaluated LDN treatment in a pilot Phase II study of 17 patients with moderate to severe, active Crohn’s disease. The open-label pilot study was conducted by Penn State University to evaluate LDN response, safety and toxicity. Patients were treated with LDN orally each evening at a dose of 4.5 mg for 3 months. A total of 17 patients were enrolled, 16 of whom completed the study. No laboratory abnormalities were noted. The most common side effect was sleep disturbances (occurred when dosing at night, at about bed-time), occurring in seven patients (41%). Two-thirds of patients in this study went into remission after 4.5 mg daily LDN treatment (p < 0.001), with 89% of patients overall showing some degree of response. Blood inflammatory markers were also analyzed, specifically c-reactive protein, or c-RP and erythrocyte sedimentation rate, or ESR. C-RP levels decreased from a median value of 2.6 (normal <0.8) at baseline to a value of 0.9 by the twelfth week of treatment, which was statistically significant (p = 0.03). The ESR decreased from a mean baseline value of 23.3 ± 0.4 mm/h to 17.9 ± 0.3 mm/h, which was also significant (p = 0.04). Baseline plasma enkephalin levels were 9.5 ± 2.8 pg/mL, and decreased to a value of 3.6±1.0 pg/mL at week 12 of LDN therapy.

A second clinical study was conducted by Penn State University as a randomized double-blind, placebo-controlled study to test the efficacy and safety of LDN for 12 weeks in adults with moderate to severe active Crohn’s disease. Forty subjects were enrolled in the study. Randomized patients received daily oral administration of LDN (4.5 mg/day) or placebo. Fatigue was the only side effect reported of statistical significance, and it was greater in subjects receiving placebo. Thirty percent of patients in this study went into remission (defined as a Crohn’s Disease Activity Index (“CDAI”) score ≤ 150), with 88% of patients overall showing some degree of response. Blood inflammatory markers, c-RP and ESR, were analyzed. Patients who exhibited a 70-point drop in CDAI scores with LDN had higher c-RP values at baseline (2.0 ± 0.5 mg/dl) compared to those subjects on LDN who did not exhibit a response (0.8 ± 0.3 mg/dl); however, this difference was not statistically significant (all values were included in the analysis including those subjects who flared during the study). Based upon this data, patients with high c-RP levels may be more likely to demonstrate a clinical response to treatment with LDN.

A pilot Phase II clinical trial was conducted by Penn State University in children with moderate to severe active Crohn’s disease. Fourteen subjects were enrolled, 12 subjects were randomized and treated with a mean age of 12.3 years (range 8-17 years). Children were randomized to placebo or LDN (0.1 mg/kg or a maximum dose of 4.5 mg) orally for 8 weeks followed by open-label treatment for an additional 8 weeks of LDN at the same dose of 0.1 mg/kg or 4.5 mg. Results showed a significantly greater reduction of baseline pain in those taking LDN than in those taking placebo (28.8% reduction versus 18.0% reduction; p = 0.016). LDN was also associated with improved general satisfaction with life (p = 0.045) and with improved mood (p = 0.039), but not improved fatigue or sleep. Thirty-two percent of participants met the criteria for response (defined as a significant reduction in pain plus a significant reduction in either fatigue or sleep problems) during LDN therapy, as contrasted with an 11% response rate during placebo therapy p = 0.05). LDN was rated equally tolerable as placebo and no serious side effects were reported. Laboratory parameters for inflammation, specifically white blood count, c-RP and ESR all improved from baseline to Week eight; however, the results were not significant.

An open-label Phase II trial was conducted for Naltrexone as Therapy for Inflammatory Bowel Disease: Ulcerative Colitis and Crohn’s Disease Twelve patients received naltrexone 4.5 mg/day. Duration (mean ±SD) of naltrexone treatment was 46 ±75 weeks (maximum 270 weeks). One patient withdrew after 8 weeks owing to insomnia. Positive clinical responses were reported in 6/12 patients. Two clinical responders had colonoscopy before and after naltrexone and each had complete mucosal healing. (Leonard B. Weinstock, MD, FACG Journal of Clinical Gastroenterology: September 2014 - Volume 48 - Issue 8 - p 742)

Low Dose Naltrexone Reduces In Vitro Endoplasmic Reticulum Stress and Stimulates Wound Healing in Intestinal Epithelial Cells: A total, 40 patients (43% male, median age 40y, IQR 28–52 years) were treated with 5 mg NTX/day. Response was seen in 23 patients (13 CD; 10 UC), with a median duration of 2 months Conclusion

Low Dose Naltrexone may have a beneficial effect in the treatment of IBD by directly stimulating epithelial wound healing and reducing intestinal ER stress. G. Fuhler*, M. Lie, P. Dimitrijevic, C. J. van der Woude, M. Peppelenbosch Erasmus MC University Medical Centre Rotterdam, Gastroenterology and Hepatology, Rotterdam, Netherlands

Low Dose Naltrexone in the treatment of Crohn’s Disease open label 17 patients were treated with LDN for 12 weeks and showed a 70% reduction in CDAI score with endoscopy 88% in the LDN group and 28% in the control group endoscopic remission 33% in the LDN group 8% in the control group with no adverse events. 10 Dig Dis Sci 2011 Jul;56(7):2088-9 7Michael Arata, MD.

Low Dose Naltrexone in the Treatment of Crohn’s Disease: A Case Series 56 patients on 4.5mg IBS patients show clinical response to LDN (54%) and should be considered as an adjunct to conventional therapy in patients with resistant disease or as a bridge while another treatment plan is formulated. Further studies are required to evaluate the degree of mucosal healing while on LDN. University of Florida http://www.gastrojournal.org/article/S0016-5085(15)32952-8/abstract.

Clinical Trials: HIV/AIDS

A single blind 90 day with 4 week f/u randomized completed a 90-day bridging trial for the treatment of patients with HIV AIDS. The National Agency for Food and Drug Administration and Control (NAFDAC) approval is based on previous clinical data and the Nigeria Bridging Trial. The trial was a single center, open labeled, randomized, bridging study consisting of one hundred and fifty [150] patients of both genders between the ages of 18-60, each of whom was infected with the human immunodeficiency virus (HIV).

The 90-Day Bridging Trial was undertaken at the State Specialist Hospital in Asubiaro, Osogbo, Osun State, Nigeria with the primary objective to confirm Lodonal™ has a beneficial effect on the immune system of immune deficient patients and that it is safe. The trial separated the patients into a Control (placebo) Group and a Treatment Group (which was administered Lodonal™). The efficacy of increasing CD4 count [cell/mm3] between Day-1 and Day-90 by at least 25% was set as the criteria for demonstrating beneficial effect on the immune system. Safety was demonstrated through quality of life assessment and vitals both of which were not adversely affected. Treatment Group patients were given a daily dose of 4.5-mg/kg of Lodonal™.

The results yielded an average increase of 44% increase in CD4 count in the Lodonal™ Treatment Group compared to an 11% increase in the Control Group. Additionally, there were no reported opportunistic infections and no toxicity levels uncovered. Liver function remained normal and there was no negative impact on other systems based on blood results. No significant sleep disturbance or vivid dreams were present enough to justify trial discontinuation. No significant adverse CNS, renal, cardiac, hepatic, musculoskeletal, hematopoietic side effects were present. NAFDAC issued drug and marketing approval of Lodonal™ in July of 2017 in the management of HIV/AID’s and immune dysfunction.

A single blind nine-month randomize clinical trial and a single prospective cohort study were conducted in Mali to evaluate the impact of LDN on asymptomatic HIV+ adults. Results of the nine-month study showed an improvement in cluster of differentiation 4 (“CD4”) count in the treatment groups that was significantly greater than the control group at 6 months (p = 0.041) and marginally at 9 months (p = 0.067). Results of the single prospective cohort study showed 71% of subjects that completed the study did not show any indication of clinical AIDS symptoms, side effects or a loss of CD4 count that would warrant initiation of antiretroviral therapy (“ART”) medication.

A 12-week, placebo-controlled trial of LDN was conducted from 1985-1986 in 38 patients with AIDS by Dr. Bihari and his colleagues. Patients who participated in this trial showed a significant difference in the incidence of opportunistic infections with 5 out of 16 patients (31%) on placebo developing opportunistic infections in comparison to 0 of the 22 patients in the LDN group. Other differences between placebo and LDN treated patients included: lymphocyte mitogen responses declined on placebo and not on LDN; pathologically elevated levels of acid-labile alpha interferon declined significantly in the patients on LDN and not in those patients on placebo.

After the conclusion of the above clinical trial, Dr. Bihari began to use LDN in his own medical practice. Of 158 patients in his practice that were evaluated, only ten (6%) were on antivirals. Patients of Dr. Bihari who had taken the drug regularly as prescribed showed no drop in CD4 cells. The average CD4 number in these patients before starting LDN was 358, and the average 18 months later increased to 368. There were 55 patients who had not taken the drug, or had taken it only sporadically (non-compliant). These patients showed a drop of CD4 cells from an average of 297 to 176 in 18 months. This represented a drop in CD4 of approximately 80 per year, which corresponds to the average drop observed in patients with HIV receiving no treatment. The stabilization of CD4 cells in patients who were administered LDN was also accompanied by disease stabilization. The 55 patients who were non-compliant experienced 25 opportunistic infections, in comparison to the 103 compliant patients who only experienced eight. Survival between the two groups was also significantly different, 13 deaths occurred in the 55 non-compliant patients compared to only one death in the compliant group of 103. At the time of this referenced article (Bihari et al., Sept 1996), patients in Dr. Bihari’s practice had been on LDN for seven to eight years, with no disease progression, no drop in CD4 levels and no evidence of resistance to the beneficial effects of LDN. None of the patients experienced side effects while on LDN.

Dr. Bihari also examined CD4 changes in 19 patients who were on the combination treatment regimen of 3TC (Epivir), azidothymidine (“AZT”), and LDN. The rise in CD4 counts at 6 months in Dr. Bihari’s patients was compared with the rise in CD4 counts reported by an investigator working for Glaxo Smith Kline. In both groups, none of the patients had taken AZT previously; however, Dr. Bihari’s patients simultaneously were treated with LDN, which the Glaxo Smith Kline group did not receive. The patients on LDN had an average baseline CD4 count of 88 while the Glaxo Smith Kline group had an average baseline value of 352. The Glaxo Smith Kline patients experienced an average rise in CD4 of 40 at six months; or an increase of 11.3%. The LDN patients experienced an average rise of 106 CD4’s at 6 months, representing a 128% increase. Of the 19 LDN patients, each patient experienced an increase of at least 30%. In 18 of the 19 LDN patients, a significant increase in energy, appetite and mood was observed. In those LDN patients who were severely underweight, weight gains of ten to 50 pounds were observed in the first two months of treatment.

Clinical Trials: Fibromyalgia

LDN has been utilized in a number of trials to investigate its use for the treatment of fibromyalgia. Studies conducted to date in adult patients have typically used an LDN dose of 4.5 mg/day in comparison to placebo.

LDN was assessed for the treatment of fibromyalgia, in a single-blind, crossover trial in which ten women were enrolled. This study utilized the following treatment schedule: Baseline (2 weeks) →Placebo (2 weeks) → LDN 4.5 mg/day (8 weeks) →Washout (2 weeks) LDN reduced fibromyalgia symptoms in the entire cohort, with a greater than 30% reduction of symptoms over placebo. As observed in other studies with LDN, side effects were rare, minor and transient, and included sleep disturbances such as insomnia and vivid dreams.

In a second study, 31 women with fibromyalgia participated in a randomized, double-blind, placebo-controlled, counterbalanced, crossover study. During the active drug phase of the study, participants were administered oral LDN at a dose of 4.5 mg daily. This study showed a benefit with LDN in comparison to placebo for the treatment of fibromyalgia. A significantly greater reduction of baseline pain was observed in those taking LDN in comparison with those taking placebo (28.8% reduction versus 18.0% reduction). LDN was also associated with improved general satisfaction with life and with improved mood. Thirty-two percent (32%, n=9) of participants met the criteria for response (defined by the study as at least a 30% reduction in pain, plus a 30% reduction in fatigue or a 30% improvement in sleep) during LDN therapy, as contrasted with an 11% (n=3) response rate during placebo therapy. Both LDN and placebo were tolerated equally and no serious adverse events were reported.

Clinical Trials: MS

A PILOT TRIAL OF LOW-DOSE NALTREXONE IN PRIMARY PROGRESSIVE MULTIPLE SCLEROSIS was run at the University of Pennsylvania by Dr. Ian Zagon and Pat McLaughlin:

OBJECTIVE: To evaluate the efficacy of 4.5mg nightly naltrexone on the quality of life of multiple sclerosis (MS) patients.

METHOD: A sixth month phase II multicenter-pilot trial with a low dose of the opiate antagonist Naltrexone (LDN) has been carried out in 40 patients with primary progressive multiple sclerosis (PPMS). The primary end points were safety and tolerability. Secondary outcomes were efficacy on spasticity, pain, fatigue, depression, and quality of life. Clinical and biochemical evaluations were serially performed. Protein concentration of beta-endorphins (BE) and mRNA levels and allelic variants of the mu-opioid receptor gene (OPRM1) were analyzed.

RESULTS: Five dropouts and two major adverse events occurred. The remaining adverse events did not interfere with daily living. Neurological disability progressed in only one patient. A significant reduction of spasticity was measured at the end of the trial. BE concentration increased during the trial, but no association was found between OPRM1 variants and improvement of spasticity. The data indicates that LDN is safe and well tolerated in patients with PPMS.

PILOT TRIAL ON LOW-DOSE NALTREXONE AND QUALITY OF LIFE IN MULTIPLE SCLEROSIS:

OBJECTIVE: evaluate the efficacy of 4.5mg nightly naltrexone on the quality of life of multiple sclerosis (MS) patients.

METHODS: This single-center, double-masked, placebo-controlled, crossover study evaluated the efficacy of 8 weeks of treatment with 4.5mg nightly naltrexone (low-dose naltrexone, LDN) on self-reported quality of life of MS patients.

RESULTS: Eighty subjects with clinically definite MS were enrolled, and 60 subjects completed the trial. Ten withdrew before completing the first trial period: 8 for personal reasons, 1 for a non-MS-related adverse event, and 1 for perceived benefit. Database management errors occurred in 4 other subjects, and quality of life surveys were incomplete in 6 subjects for unknown reasons. The high rate of subject dropout and data management errors substantially reduced the trial’s statistical power. LDN was well tolerated, and serious adverse events did not occur. LDN was associated with significant improvement on the following mental health quality of life measures: a 3.3-point improvement on the Mental Component Summary score of the Short Form-36 General Health Survey (p = 0.04), a 6-point improvement on the Mental Health Inventory (p < 0.01), a 1.6-point improvement on the Pain Effects Scale (p =. 04), and a 2.4-point improvement on the Perceived Deficits Questionnaire (p = 0.05). LDN significantly improved mental health quality of life indices. Further studies with LDN in MS are warranted.

A PILOT TRIAL OF LOW-DOSE NALTREXONE IN PRIMARY PROGRESSIVE MULTIPLE SCLEROSIS:

OBJECTIVE: To evaluate the efficacy of 4.5mg nightly naltrexone on the quality of life of multiple sclerosis (MS) patients some with relapsing-remitting MS and some with secondary progressive MS.

METHODS: This single-center, placebo-controlled, study evaluated the efficacy of 17 weeks of treatment with 4.5mg nightly naltrexone (low-dose naltrexone, LDN) on self-reported quality of life of MS patients.

RESULTS: The results on LDN’s effect on quality of life (as measured by physical and mental health) was not clearly proven, with no statistically significant differences shown between the LDN-dosed group and the placebo group many have argued the reason for the problem with this trial was the crossover design which have shown in the past not to provide good results when treating with LDN. Data indicates that LDN is safe and well tolerated in patients with PPMS.

RETROSPECTIVE CHART REVIEW OF MS PATIENTS RECEIVING LOW DOSE NALTREXONE (LDN) TO ASSESS SAFETY, TOLERABILITY, AND EFFECT ON FATIGUE:

OBJECTIVE: This study investigated the safety, tolerability, and benefits (fatigue, reduction) of LDN in patients with MS. It reviewed the number of patients who stopped taking LDN and if there were specific reasons for stopping the LDN. The frequency and variety of side effects that were specific to LDN use are reported.

METHODS: A retrospective review was performed on 435 charts of MS patients who were seen in the Penn State Hershey out- patient Multiple Sclerosis Clinic between 1/1/2005 and 5/31/2012. There were 215 MS patients having exposure to LDN during the time of this study. RESULTS: The study confirmed an improvement in quality of life with the use of LDN over a long period of time. In addition to the assessment we review Brain MRIs and Spinal Cord MRIs that were obtained as part of the clinical status of the patient and standard of care. There were essentially no MRIs obtained immediately before LDN was started as would have been ideal in a prospective study. The average number of days of the Brain MRI before treatment with LDN was started was 444 days with a maximum of 4751 days. The average number of days to the latest Brain MRI after LDN was started was 708 with a maximum of 1772 days of 215 patients on LDN 113 MRI scans showed stable, 14 showed improvement, 28 slightly worse. The Slightly Worse MRI series indicated that new but inactive lesion(s) were identified when compared to the pretreatment study MRI. On the quality of life surveys showed 83 patients said they had improved, 92 patients said they were stable and 9 worse. The remainder of the patients did not continue on LDN.

Despite the number of small studies conducted to date, as well as all of the antidotal evidence from patients and doctors that either take LDN for MS or prescribe LDN for MS, Cytocom believes that results are promising, which the Company feels could bode well in larger studies as existing treatments are not every effective.

Our Clinical Trial Program for Lodonal™/LDN

The Company held a Type C meeting in January 2018 with the FDA to discuss clinical protocol design and to seek guidance for the clinical development program in the treatment of adult and pediatric patients with Crohn’s disease using a 505(b)(2) pathway to support an NDA. Use of the 505(b)(2) pathway will allow us to seek FDA approval of Lodonal^TM without the need to conduct a full development program consisting of both safety and efficacy trials. This will help us to shorten our development pathway and time to NDA submission. We plan to rely on the two drugs using naltrexone that have been approved by the FDA. The first drug approved 50 mg product as the reference listed drug, published literature and historical data and all of the historical data from the 50mg trials and to leverage recent Contrave® approval for safety/PK support at 4mg, 6mg and 8mg with approval granted for Naltrexone at 16mg with Wellbutrin to support the Phase II/III clinical trials and the ultimate filing of the NDA as a 505(b)(2) submission to the FDA. To date, nonclinical pharmacology and toxicology data and clinical safety data has been established from these sources, in addition to multiple Phase I/II studies conducted under our INDs.

To support the NDA filing, we plan to conduct the following pivotal studies:

If NDA approval of Lodonal is granted, in addition to the patents the FDA grants three-year marketing exclusivity granted by law, we expect this product to be protected by patents that extend through at least 2023 for adults 7 year exclusive rights from date of approval for pediatric Crohn’s disease due to orphan indication. During which time it should not be subject to generic substitution. We plan to continue to support the Lodonal program with new patent applications as we obtain data from the clinical evaluation of our new formulation in healthy human subjects and in patients.

If the Phase 2B study of Lodonal is successful, we expect to quickly rollover into the Phase 3 confirmatory study to support product registration.

Based upon the indication chosen, the FDA has stated that a long-term (approximately 1 year) safety study of Lodonal™ will need to be conducted; however, all nonclinical studies to support the safety of the product and NDA submission are complete.

Developing LDN using the 505(b)(2) regulatory pathway lowers the hurdle for FDA approval. Because naltrexone is an FDA-approved product for alcohol or opiate dependence, the FDA’s 505(b)(2) pathway for approval is available and opens the door for us to gain FDA approval of LDN for new diseases. With the opportunity to use previous findings of safety, we intend to use the 505(b)(2) pathway to study and gain approval for our own product.

IRT-101/MENK

The role of opioid peptides in cancer cell growth have been examined in both tissue culture models and in vivo studies. These studies have revealed that the pentapeptide MENK, or IRT-101, is the most potent opioid peptide that influences DNA synthesis and cell growth. Because of MENK’s ability to have a direct impact on the growth factor action, MENK has also been termed Opioid Growth Factor (“OGF”). MENK or OGF is an endogenous opioid peptide that interacts with the OGFr, which delays the cell cycle by modulating cyclin-dependent inhibitory kinase pathways. The OGF-OGFr axis is an inhibitory pathway that plays a role in the onset and progression of autoimmune diseases and cancer.

The OGF-OGFr peptide and receptor have been detected in a wide variety of cancers, including thyroid cancer (e.g. follicular-derived thyroid cancers), ovarian cancer, triple negative breast cancer, hepatocellular carcinoma, squamous cell carcinoma of the head and neck, pancreatic cancer, renal cancer, neuroblastoma, and colon cancer.

It has been shown in a number of research studies that the OGF-OGFr axis can be directly targeted by the administration of exogenous MENK. MENK, at suitable doses, can inhibit cancerous cell growth by MENK’s direct interaction with OGFr creating a competitive inhibition profile and subcellular location that is different from other well-known opioid receptors [mu (µ), delta (δ) and kappa (κ)]. The other “classic” opioid receptors [mu (µ), delta (δ) and kappa (κ)] have not been found to have any impact on cell growth; thus there is specificity in the MENK-OGFr interaction which regulates cell proliferation. MENK has been shown to act directly on cells to inhibit proliferation as documented by tissue culture models that lack feedback loops or whole animal autocrine systems. Studies in vitro have shown that MENK has no effects on the apoptosis pathways or cell differentiation.

Based upon data from multiple in vivo and in vitro studies conducted by Zagon et al. over the past 15 years, the onset and/or progression of some cancers may be related to defects in MENK and/or OGFr, which would promote or exacerbate tumorigenesis. These findings show there may be an advantage in up-regulating the peptide (e.g., MENK administration) to enhance anti-cancer activity.

The Ian Zagon/Patricia McLaughlin-led team at Penn State University has focused their non-clinical in vitro and in vivo research studies on the direct anti-tumor effects of MENK and inhibition of OGFr. These studies have shown that OGFr is required for the action of MENK, and overexpression of OGFr can delay progression, or even prevent appearance of pancreatic tumors in nude mice.

The researchers at Penn State University have also demonstrated in tissue culture that the combination of MENK and gemcitabine show a potent inhibitory effect on the growth in vitro of at least two cell lines of human pancreatic cancer. In a mouse xenograft model of pancreatic cancer, the effects of MENK and/or gemcitabine on tumor incidence, appearance, and size, as well as metastasis, were examined in vivo. MIA PaCa-2 cells of human origin (106 cells/mouse) were injected into the right scapular region via a subcutaneous injection followed by treatment within one hour of the injection with MENK, gemcitabine or MENK + gemcitabine. The anti-growth action of the combination of MENK and gemcitabine was greater than that observed with the individual drugs. In a number of instances the effect of the combination of drugs exceeded that of the sum of the individual drugs, suggesting that the action of a combination of MENK and gemcitabine was synergistic.

Dr. Nicholas Plotnikoff, while a faculty member at Oral Roberts University, discovered that all three of the classical opioid receptors are expressed on most subsets of immune cells, and that either in vitro incubation with MENK or parenteral administration of MENK in vivo increased the number and functional activities of T cells, including cytotoxic CD8+ T cells, and also NK cells. Several other investigators observed that administration of MENK to mice and humans, especially those with immunodeficiencies associated with cancer or HIV/AIDS, increased CD4+ and CD8+ T cells, and increased various immune functions, including cytotoxic activities of both T cells and NK cells. More recently, Drs. Fengping Shan and Nicholas Plotnikoff have reported that MENK treatment of mice stimulates the cytotoxic activities of T cells and NK cells and reduces levels of T regulatory cells, and augments therapeutic effects in tumor-bearing immunocompetent mice. Additional published results show that MENK alone or in combination with Interleukin-2 (“IL -2”) or Interferon-γ (“IFN-γ”) can enhance the production of IFN-γ or IL-2 from CD4+T cells, respectively. MENK also appears to be more potent than IL-2 or IFN-γ, alone, two widely known cytokines that have been approved by the FDA for marketing.

Studies in the laboratories of Zagon and McLaughlin have demonstrated that MENK/OGF inhibited in a direct, receptor-mediated, and reversible manner stimulated T and B cells isolated from spleens of normal mice and grown in culture. Thus, the immunomodulatory effects of MENK/OGF appear to result from the repression of proliferative T and B lymphocytes.

Research results to date indicate that MENK, at suitable doses, in addition to inhibiting cancerous cell growth, can also boost the immune system through the following possible mechanisms:

Background

Standard therapy for patients with advanced cancer include chemotherapy, or treatment options that are toxic to the cells, that suppress the immune system and carry significant risks of life-threatening infections and other toxicities. Despite effective cancer therapies that induce clinical response, including complete remission, minimal residual disease (“MRD”), a term referring to disease that is undetectable by conventional morphologic methods, often remains and serves as a source of cancer recurrence. For years, scientists have studied ways to enhance the patient’s immune system to target cancer cells, maintain remission and possibly even eradicate all cancer cells in the body. Researchers believe that a cure for cancer might be possible if immunotherapy is successfully applied to the treatment of cancer.

The most common immunotherapy studied to date involves the use of targeted humanized monoclonal antibodies such as rituximab (anti-CD20) or trastuzumab (anti-HER2/neu). These antibodies bind targets that are over-expressed on cancer cells and promote cell death by a number of immune mechanisms, including antibody dependent cell-mediated cytotoxicity (“ADCC”). In ADCC, the most common mechanism of tumor killing, the antibody tags the cancer cell and recruits the cells from the patient’s immune system to attack the tumor. Immune cells recruited by the antibody to kill the cancer include granulocytes, macrophages and NK cells.

Another common therapy that activates the innate immune system involves the administration of high dose Interleukin-2, or IL-2. Through binding to the IL-2 receptor, IL-2 activates NK cells to attack cancer cells. After high-dose IL-2 therapy, NK cells are activated to search out and kill cancer cells. Unfortunately, the use of IL-2 therapy is limited because of its severe side effects, which include severe life-threatening infusion reactions and induction of autoimmune disease.

The importance of cytokines to NK cells in the host system’s defense against cancer was recognized by Dr. Nicholas Plotnikoff at Oral Roberts University in Tulsa and Dr. Ian Zagon and others from Penn State Medical Center at Hershey where they noted that patients who could mount an immune response to their HIV/AIDS infection or cancer, specifically pancreatic or liver had a higher survival rate compared to standard historical medications used. Researchers identified that a key to the successful immune response of the patient’s immune system was the NK cell. Dr. Zagon and Dr. Plotnikoff both determined that activated NK cells were the key to eliminating certain cancer cells and that NK cells require two signals to kill a tumor cell—a priming signal followed by a trigger signal. The “priming signal” can be provided by either cytokines, such as high dose IL-2 or IL-15 or possibly by administration of IRT-101. In contrast to IL-2 or IL-15, NK cells activated by IRT-101 ex vivo retain their activated state after cryopreservation and thawing. One of the most important features of IRT-101 therapy in cancer patients with advanced metastatic disease is the marked improvement in clinical benefit that has been observed in the Phase I/II clinical trials conducted to date. Clinical benefit is based upon parameters that reflect the overall wellbeing of the patient, including pain control, performance status, and body weight.

Clinical Trials

MENK has been safely used in several clinical studies to treat human subjects with cancer. Wybran and Schandené (1987) administered MENK intravenously to seven previously untreated patients with lung cancer and found significant increases in T-cell immunity. Plotnikoff, Wybran and colleagues have reported improvement in the size and coloration of Kaposi’s sarcoma nodules in AIDS patients. Phase I and Phase II studies have been conducted under IMUN’s IND (previously held by Penn State University) that have demonstrated that MENK can be delivered safely to patients suffering from advanced pancreatic cancer, hepatocellular carcinoma (PI: Eric Kimchi, M.D. at Penn State University) and advanced head and neck cancer (PI: David Goldenberg, M.D., FACS at Penn State University).

The maximum tolerated dose has been found to be 250 µg/kg using the intravenous route of administration over a 30-min infusion time in a Phase I trial in fourteen normal volunteers and eight cancer patients. This maximum tolerated dose was later confirmed in Phase I and Phase II trials in patients with advanced unresectable pancreatic cancer.

Patients with Kaposi’s sarcoma (9 patients), lung cancer (12 patients), melanoma (3 patients), hypernephroma (1 patient), or pancreatic cancer (1 patient) were treated with MENK for one week to 12 months at doses of 10 µg/kg three times per week up to 80 µg/kg 3 times per week. After 1-2 weeks increases in T cell subsets (CD3, CD4, CD8, and CD2 positive cells) were observed. An increase also occurred in IL-2 receptor expression. NK cell activity was measured in 14 patients and an increased NK activity was present in 12/14 patients. No toxicity attributable to treatment with MENK was observed in any patient.

Two case studies have been reported in an infant and a 20-month old child who were treated with MENK. The infant was diagnosed with hepatoblastoma and was treated with one course of neoadjuvant chemotherapy at approximately one week of age. Due to significant complications from the chemotherapy (neutropenic fever, pneumonia and sepsis), the patient’s parents declined further chemotherapy, and the infant was treated with surgical resection and MENK/LDN. She is currently close to ten years disease–free survival. The 20-month-old child was diagnosed with hepatoblastoma. Due to existing comorbidities (including autosomal recessive polycystic kidney disease and hypertension), and biopsy results that indicated the tumor might be insensitive to chemotherapy, the parents elected not to proceed with neoadjuvant chemotherapy. The patient was treated with surgical resection and MENK/LDN, and is currently at more than five years disease-free survival.

Multiple clinical trials have been performed by Dr. Jill Smith and her colleagues at the Penn State University School of Medicine. A total of five advance cancer studies have been conducted with MENK via intravenous infusion or subcutaneous injection. Three studies were conducted in patients with advanced pancreatic cancer, one study in patients with hepatocellular carcinoma, and one study in patients with advanced head and neck cancer. Across the five studies, MENK therapy has been observed to be safe with limited toxicity when given to adults with advanced cancer. The patients with pancreatic cancer had failed prior chemotherapy regimens and were either treated with MENK or were entered into a hospice program. Clinical benefits were experienced by 53% of MENK-treated patients, whereas historical controls with similarly advanced disease had only 23.8% and 4.8% for gemcitabine and 5-fluorouracil (5-FU), respectively. Of the MENK- treated patients surviving more than eight weeks, 62% showed either a decrease or stabilization in tumor size by computed tomography. The median survival time for the MENK-treated patients was three times that of the untreated hospice patients (65.5 versus 21 days, p < 0.001). No adverse effects on hematologic or chemistry parameters were noted, and quality of life surveys suggested improvement with MENK.

The use of MENK therapy at earlier stages of disease or in combination with chemotherapeutic agents may further improve the outcome of these and other very aggressive malignancies.

Our Clinical Trial Program for IRT-101/MENK

To date MENK has been administered in multiple indications including a range of cancers (including pancreatic, hepatocellular, and head and neck) and viral diseases, such as HIV/AIDS. When utilized for such indications, the typical dose administered to adults for efficacy while not compromising safety has been 150-250 µg/kg. Dosages up to 400 µg/kg have been used in other trials without toxicity in certain indications.

We will rely on available information and historical data to support the Phase II/III clinical trials and the ultimate filing of the NDA to the FDA. Clinical safety data has been established from multiple Phase I/II studies conducted under IMUN’s INDs and initial toxicology studies that have been completed.

To support the NDA filing, we plan to conduct the following studies:

Phase III, randomized, double-blind study in oncology patients is to be anticipated in Q2 2018 in Kenya and by Q4 of 2018 in the United States.

International Drug Development Plan

Nigeria

The Company, through its wholly owned subsidiary TNI BioTech International., completed a 90-day bridging trial for the treatment of patients with HIV/AIDS in Nigeria in 2017. The trial consisted of a total of one hundred and fifty patients of both genders between the ages of 18-60, each of whom was infected with the human immunodeficiency virus (HIV). The trial was undertaken at the State Specialist Hospital in Asubiaro, Osogbo, Osun State, Nigeria and the primary objective was to confirm that Lodonal^TM has a beneficial effect on the immune system of immune deficient patients and that it is safe. The trial separated the patients into a Control (placebo) Group and a Treatment Group (which was administered Lodonal^TM). The efficacy of increasing CD4 count [cell/mm³] between Day-1 and Day-90 by at least 25% was set as the criteria for demonstrating beneficial effect on the immune system. Safety was demonstrated through quality of life assessment and vitals both of which were not adversely affected. Treatment Group patients were given a daily dose of 4.5-mg/kg of Lodonal™.

The results yielded an average increase of 44% increase in CD4 count in the Lodonal Treatment Group compared to an 11% increase in the Control Group. Additionally, there were no reported opportunistic infections and no toxicity levels uncovered. Liver function remained normal and there was no negative impact on other systems based on blood results. No sleep disturbance or vivid dreams were present enough to justify trial discontinuation. No appreciable adverse CNS, renal, cardiac, hepatic, musculoskeletal, hematopoietic side effects were present.

In May 2017, the Company received approval from the National Agency for Food and Drug Administration and Control of Nigeria (“NAFDAC”) to market and distribute LodonalTM in Nigeria. The approval is for a one-day Immune System Regulator for the management of HIV/AIDS

Malawi

The Company, through its wholly owned subsidiary TNI BioTech International, received permission from the Pharmacy, Medicines and Poisons Board (PMPB) and The College of Medicine, University of Malawi to initiate a clinical trial for a Single Visit Approach to Cervical Cancer Prevention in the Republic of Malawi. The PMPB issued drug approval to import the drug in 2016 for the trial.

The Malawi Clinical Trial’s primary endpoint includes Safety, Acceptability, and Feasibility of a Single Visit Approach to Cervical Cancer Prevention in patients. (Trial number: VIA-LDN-401 -0 I). The secondary objective is to determine life extension; to improve the immune system of HIV and Cancer positive patients by starting treatment with LDN (“Lodonal^TM”) and to ensure marked improvement in Clinical benefit based upon parameters that reflect the overall well- being of the patient, including Pain control, performance status, and body weight under the supervision of Dr. Frank Taulo, Dr. Gladys Gadama, Dr. Effie Chipeta as Principal Investigators. The recruitment of study participants, testing and follow up is still on-going. The first evaluation report from the doctors involved is expected by the end of the second quarter as per the study protocol.

The Company intends to initiate a number of additional trials in Africa in the next 12 months, which will include trials as an adjunct to chemotherapy in Kenya and Ghana and HIV/AIDS in Malawi.

Competitive Advantage

The Company believes many of the same advantages of our therapies apply to both the US market as well as the African market. Lodonal^TM could provide the first affordable, non-toxic approach for treatment of immune dysfunction, cancer and chronic inflammatory state.

Some of the Competitive Advantages and Benefits of Lodonal^TM include the following:

Lower production costs and sales price of treatments

Today the majority of the drugs under development are both more expensive and more toxic. We do not believe this is the right way to move forward. Biologic agents cost between $12,000 and $150,000 a year.

Lodonal^TM/ IRT-103 can be manufactured and delivered in Emerging Nations for under $.90 cents a day and we estimate a price of $3,600 a year in developed country underwritten to $10 to $15 per month. When costs are not underwritten, the Company will provide Lodonal^TM to patients for $30 a month.

Lodonal™ should be able to substantially reduce health care costs for a number of reasons, including:

Recent Accomplishments

In May 2017, the Company received approval from the National Agency for Food and Drug Administration and Control of Nigeria (“NAFDAC”) to market and distribute LodonalTM in Nigeria. The approval is for a one-day Immune System Regulator for the management of HIV/AIDS, which is based on the results of the Company’s 90-day bridging trial in Nigeria. The first shipments of product under this approval took place in February 2018.

In September 2017, the Company became registered under the U.S. Government’s System for Award Management to sell Lodonal^TM to Nigeria through the United States Agency for International Development (“USAID”) and UNAIDS. At the same time, the Company and AHAR filed for regulatory approval of the use of Lodonal^TM with the National Agency for the Control of AIDS in Nigeria (“NACA”). Once NACA approves the use of Lodonal^TM as a treatment for AIDS, it will be able to purchase Lodonal^TM directly from the Company and AHAR.

In addition to the work with NACA, USAID and UNAIDS, AHAR and the Company are moving forward with applications to NAFDAC to permit the sale of Lodonal™ in Nigeria for additional indications. We expect to submit those applications in the first quarter of 2018. Those indications include the use of the drug as an adjunct to treatment of chemotherapy, opportunistic infections and cancer.

In September of 2016, the Company retained the services of GLOBALMEDLINE SARL in Senegal to assist the drug registration of Lodonal™ in Senegal for HIV/AIDS and Cancer. The filing in Senegal is part of the Company’s program to register Lodonal™ throughout the francophone (French-speaking) countries in Africa using our approval in Senegal to fast track the process.

The Company is currently in the process of filing in Kenya, Ghana, Liberia, Mali, Senegal and Uganda. We expect to file in additional countries in 2018. The Company expects to have responses from regulatory authorities in Kenya by the end of the second quarter of 2018.

The Company has been assigned three provisional patent applications in the United States: No. 62/296,759, a Method for Inducing a Sustained Immune Response; No. 62/379,272, a Method for Treating and Preventing Protozoan Infection; and No. 62/450,635, Methods and Compositions Useful for Treating Cancer Application. The Company expects to file additional patent applications in the U.S. in the coming months. Our intellectual property portfolio includes biotech assets acquired either through acquisition or exclusive licensing. The Company converted the provisional patent for method for inducing immune response into a US patent, and a PCT application was filed on February 17, 2017 under number PCT/IB2017/000124.

The Company’s Board has authorized continued discussions with a number of potential partners in Far East as well as discussion with drug development partners in both the US and EU.

Patent License Agreements

On August 13, 2012, the Company signed an exclusive License Agreement with Ms. Jacqueline Young (the “Young Agreement”) for the intellectual property developed by Dr. Bernard Bihari relating to treatments with opioid antagonists such as naltrexone and Met-enkephalin for a variety of diseases and conditions including malignant lymphoma, chronic lymphocytic leukemia, Hodgkin’s lymphoma, and non-Hodgkin’s lymphoma, chronic herpes virus infections, chronic herpes viral infections such as chronic genital herpes caused by the herpes simplex virus Type 2 and chronic infections due to the Epstein-Barr virus and a treatment method for humans infected with HTLV-III (AIDS) virus, including patients clinically diagnosed as suffering from AIDS and those suffering from AIDS-related complex (ARC). The Bihari patents were acquired in exchange for 540,000 shares of the Company’s common stock with a fair value of $972,000 and assumed liabilities of $400,000, which was payable to Ms. Young over a twenty-four month period in equal installments to reimburse her for the costs of a New York City office in accordance with the Young Agreement. The cost of the patent totaled $1,372,000. Additionally, the Company will pay the licensor a royalty payment of 1% of gross sales. Due to the fact that there have been no sales of licensed product to date, the Company has been required, since the beginning of 2015, to make a minimum royalty payment of $100,000 annually to the licensor. The Young Agreement is valid for the life of the patents and expires on a country by country basis in each country where patent rights exist, upon the expiration of the last to expire patent in each country or in the event the patent in such country is held to be invalid and/or unenforceable (by a court or government body of competent jurisdiction) or admitted to be invalid or unenforceable. Additionally, the Company can cancel the Young Agreement upon 120 days’ written notice and shall pay all royalties and fees that have accrued under the Young Agreement. We have the exclusive rights to the intellectual property; however, Ms. Young retains a right to practice the patents licensed under the Young Agreement solely for noncommercial, academic research purposes.

The Young Agreement allows for the sub-license of the Bihari intellectual property from the Company to Cytocom. In accordance with the Agreement, In December 2014 the Company assigned the sub-license to Cytocom. In 2017, Ms. Young wrote to the Company alleging breach of the Young Agreement. The Company has responded denying any breach. Since inception of the Young Agreement, the Company has made payments to Ms. Young in excess of US$650,000, which it believes meets the requirements of the Young Agreement.

On December 24, 2012, the Company signed an agreement for the acquisition of patent rights (the “Smith Agreement”) for the intellectual property of Dr. Jill Smith and LDN Research Group, LLC (collectively, the “Licensor Parties”), whose members are Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Moshe Rogosnitzky and orphan drug designation by the FDA to a novel late-stage drug, trademarked “LDN,” for the treatment of Pediatric Crohn’s disease. The patent covers methods and formulations for treatment of the inflammatory and ulcerative diseases of the bowel, using naltrexone in low doses as an opioid antagonist. These patents were acquired in exchange for 300,000 shares of our common stock with a fair value of $2,715,000 and payment of $165,384 (consisting of a $100,000 initial license fee and payment of $65,384 of expenses), which totaled $2,880,384.

The Smith Agreement requires the Company to (i) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan, (ii) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable, (iii) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use, and (iv) make the first commercial sale of a licensed product by March of 2017. As of December 31, 2017, the Company had not made a commercial sale of licensed product. Under the Smith Agreement, if the licensors determine that the Company has not fulfilled its obligations, they may furnish the Company with written notice of such determination, in which case the Company must either fulfill the obligation or negotiate a mutually acceptable revised commitment. As of the date of the filing of this Form 10-K, the licensors had not provided any such notice of determination under the agreement.

The Company is required to pay an annual license fee, an annual running royalty on net sales of each licensed product or a minimum royalty, whichever is greater, and a sublicense fee on payments received by the Company from sublicensees. The Company has an exclusive, worldwide license to make, have made, use, lease, import, offer for sale and sell licensed products and to use the method under the patent rights. The Smith Agreement will terminate on the expiration or abandonment of the last patent to expire or ten years after the sale of the first licensed product. The Company may terminate the Smith Agreement upon 90 days’ written notice, provided all sublicenses are terminated and all amounts due and owing are paid to the Licensor Parties. The Licensor Parties may terminate the agreement ten days’ after notice to the Company if the Company is ten days late in payment or there is a breach that remains uncured for ten days after written notice of such breach.

The Company is also required to pay milestone payments after substantial achievement of certain milestone events for each licensed product including payment: upon initiation of each Phase III trial; upon positive completion of each Phase III clinical trial of the therapeutic use of an LDN compound in the field of use; when a New Drug Application (“NDA”) is accepted for review by the FDA; and when FDA approval to market the NDA is approved. The Company will issue shares upon reaching certain milestones including upon the first dosing of the first patient in a Phase III clinical trial for each licensed product, upon the first sale of each licensed product, and upon the achievement of a set dollar amount in cumulative sales for each licensed product covered by NDAs.

As part of the Smith Agreement, the Company has the right to apply to the FDA for the transfer of the orphan drug status for the use of naltrexone for the treatment of pediatric Crohn’s disease and ulcerative colitis, the Investigation New Drug Application (“IND”), and the right to acquire the relevant clinical data set from Dr. Jill Smith. Dr. Jill Smith made arrangements to transfer the IND to the Company as well as the relevant clinical data set, and the FDA has acknowledged that the Company is now the sponsor for this IND.

On September 24, 2014, the Company and the Licensor Parties jointly agreed to terminate the Smith Agreement, and in place thereof, have the Licensor Parties grant a similar license in their patent rights to Cytocom Inc. pursuant to a Patent License Agreement between the Licensor Parties, Cytocom Inc. and the Company with substantially similar terms as set forth in the Smith Agreement. Pursuant to this agreement, the Company issued 1,000,000 shares of its common stock valued at $270,000 to the Licensor Parties and the Company guaranteed the obligations of Cytocom Inc. to the Licensor Parties under the agreement.

On January 18, 2013, the Company signed an exclusive licensing agreement with The Penn State Research Foundation to license all of the intellectual property developed by Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Dr. Jill P. Smith for the treatment of cancer titled “Opioid Growth Factor and Cancer” and “Combination Therapy with Opioid Growth Factor and Taxanes for the Treatment of Cancer” (the “Foundation Agreement”).

The Foundation Agreement requires the Company to: (a) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan; (b) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable; (c) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use; and (d) make the first commercial sale of a licensed product by December 31, 2016. As of December 31, 2017, the Company had not made a commercial sale of licensed product. Under the Foundation Agreement, if the licensor determines that the Company has not fulfilled its obligations, it may furnish the Company with written notice of such determination, in which case the Company must either fulfill the obligation or negotiate a mutually acceptable revised commitment. As of the date of the filing of this Form 10-K, the licensor had not provided any such notice of determination under the agreement.

The Foundation Agreement provides that the Company must pay to the licensor an initial license fee, a license maintenance fee on each anniversary of the effective date of the Foundation Agreement, and an annual running royalty on net sales for each licensed product or a minimum royalty, whichever is greater. In addition, the Company must pay a sublicense fee on payments received by the Company from sublicensees.

The Foundation Agreement also requires the Company to make payments upon the achievement of certain milestone events including: initiation of each Phase II trial; initiation of each Phase III trial; when the NDA is accepted for review by the FDA; and when FDA approval to market is approved. The Company must also issue shares upon certain milestones including upon the first dosing of the first patient in a Phase II clinical trial for each licensed product, upon the first dosing of the first patient in a Phase III clinical trial for each licensed product, upon the first sale of each licensed product, and upon the achievement of a set dollar amount of cumulative sales for each licensed product covered by NDAs.

The Foundation Agreement terminates on the expiration or abandonment of the last patent to expire or become abandoned. The Company may terminate the Foundation Agreement at any time upon 60 days’ prior written notice and ceasing to make and sell all licensed products, the termination of all sublicenses and payment of all monies owed under the Foundation Agreement. The licensor may terminate the agreement 30 days after notice to the Company if the Company is 30 days late in payment or a breach that remains uncured for 45 days after written notice of such breach.

The Penn State Research Foundation has agreed to make the assignment of the Company’s rights to Cytocom under the Foundation Agreement effective only when Cytocom is fully funded and able to meet its financial obligations independently. Until such time, the Company is obligated to make all payments and perform all other obligations owed under the Foundation Agreement on behalf of Cytocom 

In May of 2013, the Company executed a Patent License Agreement with Professor Fengping Shan (the “Shan Agreement”) pursuant to which it obtained exclusive rights to develop and commercialize the licensed technology. The licensed technology is the intellectual property developed and owned by Professor Shan (i) relating to the treatment of a variety of diseases and conditions with MENK including multiple forms of lymphoma and cancer and (ii) a treatment method for humans infected with the HLTV-III (AIDS) virus including AIDS and AIDS related complex (ARC). The licensed technology includes the methods and formulations for these treatments including all INDs, communications with regulatory agencies, patient data, and letters relating to these treatments. The licensed technology also includes certain patents developed by Professor Shan. Under the Shan Agreement, the Company must issue 500,000 shares to Professor Shan upon final transfer of the licenses, and reimburse Professor Shan for all out of pocket expenses in connection with the patents. The Company will pay Professor Shan a running royalty on gross sales subject to decreases if third party intellectual property is needed to complete such sale or product. The Shan Agreement lasts for the duration of each of the licensed patents however the Company may terminate the Shan Agreement on 120 days’ written notice to Professor Shan.

On August 6, 2014, Professor Fengping Shan executed an Assignment pursuant to which he transferred to the Company his entire right, title and interest in and to the licensed patents under the Shan Agreement and CN 201210302259 Application of combination of low-dose naltrexone and methionine-enkephalin to preparation of anti-cancer drug for the consideration of 500,000 shares of common stock valued at $140,000. The Company has not assigned any of the patents in China to Cytocom.

Patents Overview:

Employees

As of December 31, 2017, the Company had 4 full time employees.

Reports to Security Holders

Our common stock is registered under the Securities Exchange Act of 1934 and we are required to file current, quarterly and annual reports and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its public reference facilities. Our SEC filings are available to you free of charge at the SEC’s web site at www.sec.gov. We are an electronic filer with the SEC and, as such, our information is available through the Internet site maintained by the SEC that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. This information may be found at www.sec.gov and posted on our website at www.immunetherapeutics.com.

Research and Development

Our research and development (“R&D”) organization focuses primarily on new uses for the opioid-related immuno-therapies, such as LDN and MENK. These therapies stimulate the immune system in such a way that provides the potential to treat a variety of diseases that have abnormalities in the immune system.

Our R&D priorities include development of MENK IRT-101, a small synthetic pentapeptide that is naturally occurring in the body, and LDN IRT-103, an opioid receptor antagonist. Our pipeline provides two therapies with an extremely wide range of indications that can be pursued. Both molecules have the ability to stimulate and/or regulate the immune system in order to treat a variety of autoimmune diseases including multiple sclerosis, immune disorders such as Crohn’s disease, cancer, and viral infections such as HIV/AIDS.

Our R&D is overseen and managed internally, working with individuals, universities, and Contract Research Organizations (“CROs”) in order to utilize patents that we have licensed or acquired since our inception. We continue to seek to expand our pipeline by reviewing other compounds, technologies or capabilities. We also seek out promising compounds and innovative technologies developed by third parties to incorporate into our discovery and development processes or projects.

Drug discovery and development is time-consuming, expensive and unpredictable. According to the Pharmaceutical Research and Manufacturers of America (PhRMA), out of 5,000-10,000 screened compounds, only 250 enter preclinical testing, five enter human clinical trials and one is approved by the FDA. The process from early discovery or design to development to regulatory approval can take more than 10 years. Drug candidates can fail at any stage of the process, and candidates may not receive regulatory approval even after many years of research.

As of December 31, 2015, we had two compounds (IRT-101 and IRT-103) in research and development. In 2015 our development programs focused on both compounds, one in oncology and one in Crohn’s disease; which we are expecting to move into Phase II clinical trials.

The following table provides information about notable regulatory actions by, and filings pending with the FDA and regulatory authorities in the EU, as well as additional indications and new drug candidates in late-stage development.

The Company expects it will incur future research and development expenditures in the next 12 months through Cytocom. Cytocom plans to conduct a Phase III trial for patients with Moderate to Severe Crohn’s Disease age 12 and over as an adjunct therapy to the standard of care and a phase IIb/III trial for Mild to Severe Crohn’s Disease in age 2 to 11. The cost of both trials would be $16,500,000. If the trials do not commence before the end of 2018, the Company will be required to make a payment of $100,000 in December 2018 under its license agreements. In prior years, the Company has been able to raise funds through sales of notes payable, and it expects to do the same for the payment due in 2018. With its own funding, Cytocom will be responsible for the development of IRT-101 MENK for pancreatic cancer.

Government Regulations

United States

The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries with regulations differing from country to country. Neither we nor our collaboration partners are permitted to market our drug candidates in the United States until we receive approval of a New Drug Application (“NDA”) from the FDA. Neither we nor our collaboration partners have submitted an application for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and uncertain process.

Prior to receiving approval to commercialize any of our drug candidates in the United States or abroad, we and our collaboration partners must demonstrate with substantial evidence from well controlled clinical trials, and to the satisfaction of the FDA and other regulatory authorities abroad, that such drug candidates are safe and effective for their intended uses. Results from preclinical studies and clinical trials can be interpreted in different ways. Regulatory approval of an NDA or NDA supplement is not guaranteed, and the approval process is expensive and may take several years.

Before a drug can be tested in people, the sponsor (in this case the Company) performs laboratory and animal tests to discover how the drug works and whether it’s likely to be safe and effective in humans. As LDN and MENK have previously been used in clinical trials, this phase of development was not required by the Company to initiate clinical trials under its applications.

Next, a series of tests in people (i.e. clinical trials) is begun to determine whether the drug is safe when used to treat a disease and whether it provides a real health benefit. The clinical phase typically starts at Phase 1 and progresses to Phase 3. The Company will have an abbreviated list of clinical trials that need to be conducted due to published literature on previously conducted studies, as well as utilizing the approval of naltrexone previously at 50 mg by the FDA.

Upon completion of the clinical trials, the Company will send the FDA and/or the EMA the evidence from these tests to prove the drug is safe and effective for its intended use (New Drug Application (NDA) in the US or Marketing Authorization Application in the EU). The regulatory bodies will review these data and determine if the sponsor has approval to market the product at the specified dose(s) and formulation(s) for the specified indication(s) (http://www.fda.gov/Drugs/DevelopmentApprovalProcess/default.htm).

Once regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA and/or non-U.S. regulatory authorities. Any regulatory approval that we or our collaboration partners receive for our drug candidates may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing follow-up studies to monitor the safety and efficacy of the product. In addition, if the FDA and/or non-U.S. regulatory authorities approve any of our drug candidates, we will be subject to extensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting, storage, advertising, promotion and recordkeeping for our products. In addition, manufacturers of our drug products are required to comply with current cGMP regulations which include requirements related to quality control and quality assurance, as well as the corresponding maintenance of records and documentation. Further, regulatory authorities must approve these manufacturing facilities before they can be used to manufacture our drug products, and these facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations.

European Union

We intend to seek distribution and marketing partners for IRT-101 (MENK) and IRT-103 (LDN) in the European Union (“EU”). To market our future products in the European Economic Area (“EEA”) (which is comprised of the 27 member states of the EU plus Norway, Iceland and Liechtenstein) and many other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely, in the EEA, medicinal products can only be commercialized after obtaining a Marketing Authorization (“MA”).

Under the procedures described above, before granting the MA, the EMA or the competent authorities of the member states of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

Our IND is being conducted per 21 Code of Federal Regulations Title 21, Part 312. In addition, we follow ICH guidelines, including good clinical practices (ICH E6) and current good manufacturing practice (ICH Q7) throughout the development process. After completion of Phase III clinical trials, the Company will file our NDA for LDN (IRT-103) as a 505(b)(2) application. IRT-103 products will follow the 505(b)(2) pathway relying on the Reference Listed Drug (RLD) REVIA to support the safety of the product. Efficacy will be submitted by the Company directly to the LDN NDA. IRT-101 products will follow the traditional approval pathway as a Reference Listed Drug (“RLD”, a drug used to compare effects and safety with FDA trial drug) is not available for MENK. However, published literature will support this program.

Nigeria

NAFDAC is the equivalent in Nigeria of the FDA. It undertakes registration of food, drugs, medical devices, cosmetics, agrochemicals and other similar products in Nigeria. At the end of the process, a registration number is given to the product and a registration certificate is issued to the applicant.

In May 2017, the Company received approval from NAFDAC to market and distribute Lodonal^TM in Nigeria. The approval is for a one-day Immune System Regulator for the management of HIV/AIDS, which is based on the results of the Company’s 90-day bridging trial in Nigeria.

Many of the African countries do not have a local FDA equivalent organization or agency. We plan to use the NAFDAC Registration as the guideline for submission in Africa for countries that do not have their own application and approval procedures.

Malawi

No formal governmental agency is in place in Malawi to govern the application of a new drug. Malawi is a member of the Southern Africa Development Community (“SADC”). The SADC has been making efforts to synchronize the regulation of medication in the SADC countries.

The guidelines require filing an application prior to approval of registration. However, these guidelines are preliminary. The Regional Indicative Strategic Development Plan (“RISDP”) is a comprehensive development and implementation framework guiding the Regional Integration agenda of the SADC over a period of fifteen years (2005-2020). It is designed to provide clear strategic direction with respect to SADC programs, projects and activities in line with the SADC Common Agenda and strategic priorities, as enshrined in the SADC Treaty of 1992.

In July 2014, the Republic of Malawi approved Lodonal™ as an adjunct for the treatment of cancer. Protocols for a Lodonal™ trial were approved in November 2015. The Brewer Group, Inc. paid for production of the first shipment to Malawi of Lodonal™ in 2015.

The Company and the Brewer Foundation arranged for the donation of the Wallach LL100 Cryosurgical system that were necessary to run the trial and treat patients with cervical cancer. In July 2014, the Republic of Malawi approved Lodonal™ as an adjunct for the treatment of cancer. Protocols for a Lodonal™ trial were approved in November 2015.

In 2012, the Company started its collaboration with the Brewer Foundation and the Brewer Group. Over the last two years, The Brewer Group and Foundation has worked directly with the Government of Malawi on the approval of the clinical trials and protocols. Once the protocols were approved the Brewer Group help to arrange funding for the trials.

The Brewer Group has entered into a distribution agreement with Airmed Bioparhma Limited, a wholly owned subsidiary of the Company, to distribute Lodonal™ in emerging markets. The distribution agreement was entered into in 2014 and has a term of 5 years. Pursuant to the distribution agreement the Company shall sell Lodonal™ to The Brewer Group at a 25% discount to the list price. The Brewer Group has also arranged a number of meetings with various hedge funds in New York to assist with the funding of the company.

The Company’s relationships with the Brewer Group and Brewer Foundation are contractual, with the rights and obligations of the parties dictated by their respective agreements. The Brewer Group, Brewer Foundation and certain of their affiliates may also now own, or in the past owned, minority share positions in the Company via their investments or shares granted for services.

China

On October 18, 2012, the Company and Hubei Qianjiang Pharmaceutical Co., Ltd. (“Qianjiang Pharmaceutical”), signed a Venture Cooperation Agreement on New Drug Methionine Enkephalin (the “Venture Agreement”) pursuant to which Qianjiang Pharmaceutical acquired an exclusive license for the production of MENK in China. The Venture Agreement requires that Qianjiang Pharmaceutical conduct drug research and pilot testing for MENK, organize pre-clinical studies, and apply for clinical trials for MENK with the Chinese State Food and Drug Administration. Under the Venture Agreement, Qianjiang Pharmaceutical must open a co-administration account for the development of MENK in China. Qianjiang Pharmaceutical must pay the Company, upon the marketing of MENK products, a half-year amount equaling 6% of its gross sales from MENK of the preceding half year.

Qianjiang Pharmaceutical is required to obtain all approvals and permits required for the importation and sale of the Company’s products in China.

The Company may cancel the Venture Agreement if Qianjiang Pharmaceutical does not pay expenses for a period exceeding nine months or does not commence clinical trials within 12-months after receiving certain approvals. Qianjiang Pharmaceutical may cancel the Venture Agreement if the Company fails to perform its obligations for a period of nine months or the failure to receive approval of clinical trials is due to the Company’s MENK technologies.

On August 6, 2014, the Company entered into a Supplementary Agreement on New Drug Methionine – Enkephalin Cooperation (the “Amendment”) with Qianjiang Pharmaceutical, amending the Venture Agreement, as amended. The Company and Qianjiang Pharmaceutical executed the Amendment to accelerate clinical trials in both the United States and China, and agreed to immediately initiate three month Good Laboratory Practice (“GLP”) Toxicology Studies (rat and dog) within 30 days of signing the Amendment. The Amendment requires that the GLP Toxicology Studies Trials are conducted in China in accordance with international standards and standards acceptable to the FDA.

The Company modified the agreement one more time due to the fact toxicology studies were not completed by the end of 2015 as others steps were required before the studies could start.

Qianjiang has completed the formulation and required Chemistry, Manufacturing, and Controls (“CMC”) for Methionine–Enkephalin. All work was completed in China in accordance with international cGMP standards acceptable to the U.S. Food and Drug Administration with Chinese Peptide Company (“CPC”). CPC is among only a handful of companies in the world that can claim both ISO Certification and cGMP licensing. In February 2012, we became the first peptide company to successfully pass US FDA inspection outside of US and Europe regions.

Dominican Republic

In October 2016, the Company and Acromax Dominicana, SA (“Acromax”) entered into a contract for the manufacture of LDN tablets, capsules and/or creams (“Agreement”). Acromax is located in Santo Domingo; in the Dominican Republic. It is both cGMP certified and ISO 9001: 2008 certified. Acromax exports over 160 products and has sold throughout the Caribbean and Central and South America. More information about Acromax is available at http://acromaxdominicana.com/.

The Agreement has an initial term of five years unless terminated by either party in accordance with the terms. Subject to the terms and conditions of the Agreement, Acromax will obtain all necessary licenses and permits to carry out the manufacturing and packaging of LDN in exchange for a fixed fee per tablet plus an additional fee for packaging, shipping and customs clearance. In 2017, Acromax received approval from the Ministry of Public Health and Social Assistance to manufacture and sell Naltrexone both in the Dominican Republic as well as for export on behalf of TNI BioTech International under the trademark name Lodonal™. The company was granted and issued a Certificate of Pharmaceutical Product (“COPP”) for the following countries: Nigeria, Senegal, Kenya and Malawi. We expect to add additional countries to the COPP in 2017.

In January of 2017, Acromax obtained from the Dominican Republic Ministry of Public Health and Social Assistance and Medications a Specialized Pharmaceuticals Registration Certification for Lodonal^TM, which allows for the manufacture and sale of Lodonal^TM in the Dominican Republic and for export. The Ministry also issued a Certificate of Pharmaceutical Product for Nigeria, Kenya, Senegal and Malawi, which will allow for the export of Lodonal^TM to those countries where we have drug and marketing approval.

Business Strategy

The Company’s short-term business strategy focuses on several key areas described below, all of which are being undertaken simultaneously.

International Regulatory Approval in 2017: The Company has been in discussions with drug regulators regarding the regulatory and approvals process for sale of its products in 2017 in a number of countries: South Africa, Nigeria, Malawi, Kenya, Angola, Niger, Gabon, Egypt, Sri Lanka, and China. The process can take between four to 12 months depending on the local authorities. In May 2017, the Company received approval from the National Agency for Food and Drug Administration and Control of Nigeria (“NAFDAC”) to market and distribute Lodonal^TM in Nigeria. The approval is for a one-day Immune System Regulator for the management of HIV/AIDS, which is based on the results of the Company’s 90-day bridging trial in Nigeria.

In 2017, using the results from the trial in Nigeria, the Company applied to the Kenyan Pharmacy and Poisons Board for approval to distribute Lodonal in Kenya. The Company is currently completing the submission of the trial data in Kenya, and expects to receive approvals to distribute the product by the end of the second quarter of 2018.

While working on regulatory approval throughout Africa, The Company has begun discussions with a number of international organizations including the World Health Organization, the Joint United Nations Programme on HIV/AIDS (UNAIDS), and PATH, an international nonprofit organization dedicated to saving lives and improving health, especially among women and children. The Company expects to reach agreements with them in the coming year.

Establish Partnerships in Africa: Receipt of the recent approvals in Nigeria will allow the Company to establish partnerships in Africa with large employers that maintain onsite clinics; there is increasing recognition that health creates wealth and advances GDP. HIV and AIDS have had a significant negative impact on labor and productivity. The vast majority of people living with HIV in Africa are of working age 15-49 years old. The Company believes that Lodonal™ can be used as a prophylactic to avoid many of the standard opportunistic infections accompanied with HIV and cancer. The Company will now move forward on this program if it receives approval for Lodonal™ sales in Nigeria.

Funding Cytocom Inc. Clinical Trials: As of the date of filing of this Form 10-K, there is no formal agreement in place between the Company and Cytocom for the Company to fund research and development to be undertaken by Cytocom. Cytocom is currently pursuing its own initiatives to raise funds to support its R&D initiatives in the U.S. If the Company generates significant revenue from sales to Africa, and if Cytocom is not successful in raising its own funding, we believe that in 2018 we will be able to enter into a formal arrangement to commit financial resources to help fund Cytocom’s clinical trials in the United States and Europe to validate the use of Lodonal LDN in a number of indications.

Clinical Studies:

In 2017, the Company focused on receipt of approvals in Nigeria to conduct clinical development programs for Lodonal™. We completed a trial in Nigeria in December 2017, and in December 2017 we received final NAFDAC approval to commence sales in Nigeria. The first shipments took place in February 2018.

The Company also expects to complete a bridging trial for cancer in 2018 in the Republic of Malawi for Lodonal™ as a stand-along therapy. The recruitment of study participants, VIA testing and follow up of patients is still on-going. The first evaluation report from the doctors involved is expected by the end of June 2018 as per the study protocol. Since we have a cancer trial with Lodonal as an adjunct, we decided to hold off requesting final approval for the second trial until we complete our first trial, which is expected to occur in the third quarter of 2018.

On the regulatory front, Cytocom has held constructive dialogue with the FDA with respect to appropriate trial designs and study protocols for Lodonal™ for Crohn’s Disease. According to minutes from a Type C meeting held on January 16, 2018, the Company, on behalf of Cytocom, and the US Food and Drug Administration (“FDA”) met to discuss next steps in the development of Lodonal™ as an adjunct therapy to the standard of care for moderate to severe Crohn’s disease in patients age 12 and over and mild to severe Crohn’s in pediatric patients aged 2 to 11. Cytocom will move forward with its IND 067442 submission for the Phase 3 pivotal clinical program for moderate to severe Crohn’s disease in patients 12 and over and will file for a New Drug Application for its pediatric trial. Subject to the availability of funding, the Company expects to start recruitment for this Phase 3 trial before the end of 2018.

In addition to the trial design as described immediately above, the Company intends to undertake a Toxicologist and PK study in China with its partner, Hubei Qianjiang Pharmaceutical Co., Ltd, for IRT-101 for the purpose of furthering its understanding of the effect of the pharmacokinetics of IRT-101. The trial has been delayed until 2018 because the State Food and Drug Administration of the People’s Republic of China on the Safety of Drugs and Medical Devices (SFDA) has required chemistry, manufacturing and controls to be completed before the start of the toxicology study. Quinjiang expects to have the PK and Toxicology studies completed before the end of the year. This will allow the Company to better understand the potential for drug interactions to further optimize treatment for Phase 3 development of IRT-101 for cancer in both the United States and China. These trials are required before Hubei can file for a phase III trial for liver cancer with the SFDA

The Company recently received the pharmacology and toxicology reports for MENK completed at GLP Lab by Hubei Qianjiang on. In addition to the pharmacology and toxicology, China Peptide Company has completed the Chemistry, Manufacturing, and Controls (CMC) required to file with both the SFDA and the FDA, as no pivotal trial can be started without CMC.

Strategy for Growth:

Since 2015, the Company has worked aggressively to build the business both upward and outward. It has worked to create a multi-faceted leader in immunotherapies by exploring opportunities beyond HIV/AIDS and cancer in emerging nations.

The goal and strategic vision is to build a diverse pipeline and to develop and commercialize novel drug treatments to improve the lives of patients suffering from chronic often life-threating disease.

To fulfill these goals, the Company has received funding from the sale of stock, the exercise of stock warrants and issuance of notes payable totaling approximately $2 million in 2017. The Company anticipates generating revenues in 2018 from a number of sources, including revenues from the use of its formulation and patents and the sale of Lodonal™ in Nigeria and Kenya.

Company Growth:

To build visibility and positive awareness of the Company, management has made presentations at key investor and industry conferences internationally.

The Company believes it will be able to use approvals for the sale of LDN in Nigeria to “fast track” the approval process in a number of African nations that will accept NAFDAC Nigeria’s approval of Lodonal™ for the treatment of HIV/AIDS.

Focus on HIV/AIDS

HIV/AIDS remains one of the three global public health threats. This disease results in substantial morbidity, mortality, negative socioeconomic consequences, and human suffering. Despite the significant increase in financial support and recent progress in addressing HIV/AIDS, many obstacles and unmet priorities remain.

Disease-specific interventions must be developed to ensure successful treatments of this disease. Apart from human suffering, the associated high adult mortality caused by HIV/AIDS, negatively impacts the socioeconomic development in some countries, especially in Nigeria and South Africa.

Adopting a treatment regimen for life that involves taking daily medication with potential side effects, presents many challenges that must be overcome if patients are to successfully remain on treatment. If drug resistance occurs through failure to adhere to antiretroviral treatments (“ARVs”), far more expensive second line therapy may be necessary. In some cases drug-resistant strains of HIV are transmitted, which can impact national treatment programs. Drug resistance has been found to be more prevalent the longer a country has provided antiretroviral therapies.

The Company believes Lodonal™ can provide an alternative in areas where patients have stopped taking their therapies due to side effects, or cost; Lodonal™ has been shown in trials to lessen the toxic side effects of ARVs. In those countries where people must travel monthly for a medical check-up (and lose a day’s pay), Lodonal™ can cost-effectively provide the ability to slow the progression of the disease without any toxic side effects.

Nigeria: In Nigeria, it is estimated that more than 3.6 million people are living with HIV/AIDS, with the annual number of new infections for adults at 323,000 and 57,000 for children. Currently, only 600,000 people receive HIV treatment (see http://www.unaids.org/en/regionscountries/).

South Africa: Based on a wide range of data including the household and antenatal studies, UNAIDS (see http://www.unaids.org/en/regionscountries) estimated that HIV prevalence was 17.3% among 15-49 year olds at the end of 2011. The high and low estimates were 16.6% and 18.1%, respectively. This implies that approximately 5.6 million South Africans were living with HIV at the end of 2011, including 460,000 children under 15 years old. By October 2012, only two million people were receiving ARVs. The biggest problem is compliance with prescribed treatment, as people are required to take pills 2 to 3 times a day at specific times and many times with food with considerable toxic side effects. In contrast, Lodonal™ is taken only once per day, does not have to be taken with food, and has no toxic side effects.

Agreements to Promote Development and Sale of Company Products

The Company is focused on its lead therapies designed for the treatment of cancer, HIV/AIDS, Crohn’s disease, fibromyalgia and MS. Management believes the pharmaceutical industry is eager to acquire advanced clinical-phase and approved products. However, despite the strong demand for advanced clinical-phase products, nearly 4,000 known compounds have had their development suspended in Phase II or earlier. Many of these are promising therapeutic drug candidates, but their development was discontinued because of strategic or financial constraints rather than for clinical reasons. Therefore, management believes there are clear market opportunities with a significant amount of unmet needs and a robust potential for partnering activities.

To further the business strategy, the Company has entered into relationships with a number of groups to promote the sale of its products outside the U.S., focusing initially on countries in Africa. They include: The Brewer Group, Inc.; GB Oncology & Imaging Group, LLC; American Hospitals and Resorts Limited (“AHAR”), an advanced surgical and medical facility, as well as a number of U.S. doctors that own and operate clinics in the U.S. and Nigeria.

The Brewer Group, Inc. is an international business advisory firm engaged in the business of identifying and capitalizing on opportunities with international governments, non-government organizations and professional athletes. The CEO of The Brewer Group is also the founder and Executive Director of The Jack Brewer Foundation. The Jack Brewer Foundation seeks to provide the Company with medical equipment where it is needed. Under the Engagement Agreement for Corporate Advisory Services dated February 5, 2013, the Brewer Group agreed to evaluate the Company’s options for expansion and growth into certain international markets, including Africa and, upon request, markets in Haiti, the Dominican Republic and/or Panama. Pursuant to the Engagement Agreement, the Brewer Group agreed to endorse the Company publicly and assist the Company in securing strategic partnership deals to enhance brand and market awareness. The initial term of the Engagement Agreement was 12 months, with an option for either party to terminate upon 30 calendar days with written notice to the other party. The agreement has been extended through 2017.

Since the receipt of NAFDAC approval to sell Lodonal^TM in Nigeria, AHAR and the Company have held discussions to commence distribution of Lodonal under their agreement. The Company has received an initial order for 400,000 capsules over a 12-month period in equal quarterly instalments. The first order was shipped in February 2018. AHAR has opened discussions with a small number of wholesalers in Nigeria for the purchase of Lodonal^TM.

On August 22, 2017, the Company entered into a Distribution Agreement with TNI BioTech International Ltd. (“TNI”), a wholly-owned subsidiary, and Omaera Pharmaceuticals Ltd. (“Omaera”). Pursuant to the Agreement, Omaera will be the sole distributor of the Company’s Products, as listed in Section 2 of the Agreement, for sale in Kenya. The Products to be distributed by Omaera will be manufactured by Acromax Dominicana, SA. The term of the Agreement began on August 22, 2017 and is to continue for a period of three (3) years, unless earlier terminated.

On October 18, 2012, the Company and Hubei Qianjiang Pharmaceutical Co., Ltd. (“Qianjiang Pharmaceutical”), signed a Venture Cooperation Agreement on New Drug Methionine Enkephalin (the “Venture Agreement”) pursuant to which Qianjiang Pharmaceutical acquired an exclusive license for the production of MENK in China. The Venture Agreement requires that Qianjiang Pharmaceutical conduct drug research and pilot testing for MENK, organize pre-clinical studies, and apply for clinical trials for MENK with the Chinese State Food and Drug Administration. Under the Venture Agreement, Qianjiang Pharmaceutical must open a co-administration account for the development of MENK in China. Qianjiang Pharmaceutical must pay the Company, upon the marketing of MENK products, a half-year amount equaling 6% of its gross sales from MENK of the preceding half year. The Company may cancel the Venture Agreement if Qianjiang Pharmaceutical does not pay expenses for a period exceeding nine months or does not commence clinical trials within 12-months after receiving certain approvals. Qianjiang Pharmaceutical may cancel the Venture Agreement if the Company fails to perform its obligations for a period of nine months or the failure to receive approval of clinical trials is due to the Company’s MENK technologies. The Venture Agreement was amended on February 24, 2013 to expand the clinical trials from pancreatic to both pancreatic and liver cancer and amended on March 6, 2014 to require Qianjiang Pharmaceutical to commence studies and clinical trials in China and place funds in the co-administration account.

On August 6, 2014, the Company entered into a Supplementary Agreement on New Drug Methionine – Enkephalin Cooperation (the “Amendment”) with Qianjiang Pharmaceutical, amending the Venture Agreement, as amended. The Company and Qianjiang Pharmaceutical executed the Amendment to accelerate clinical trials in both the United States and China, and agreed to immediately initiate three month Good Laboratory Practice (“GLP”) Toxicology Studies (rat and dog) within 30 days of signing the Amendment. The Amendment requires that the GLP Toxicology Studies Trials are conducted in China in accordance with international standards and standards acceptable to the FDA.

In February 2013, the Company signed a Strategic Framework Agreement for Cooperation with Qianjiang Pharmaceutical. Under the agreement, the parties will work together to further the development of new products and conduct research and development on the Company’s licensed patented technology. Specifically, the parties aim to co-invest to develop and market products focusing on HIV, cancer and related autoimmune system therapies, develop co-ventured manufacturing facilities in China, and develop co-ventured distribution of the developed products in China and Africa. The agreement does not have a definitive term, as each new agreement resulting from the cooperation will set forth the material terms, including, but not limited to, fees, duration and termination therein.

In accordance with these agreements, Qianjiang Pharmaceutical has acquired MENK material for the preclinical and clinical trial. MENK toxicology studies are in process under the trial, including a six-month toxicology study in animals. Other studies, including stability and general pharmacology (on normal animals to determine the effect to heart, blood pressure, etc.) have commenced. All FDA-required tests, including formulation and quality control tests, are in process in China.

The Company recently received the pharmacology and toxicology reports for MENK at GLP lab completed by Hubei Qianjiang. In addition to the pharmacology and toxicology, China Peptide has completed the Chemistry, Manufacturing, and Controls (CMC) required to file with both the SFDA and the FDA, as no pivotal trial can be started without CMC.

Production

On October 25, 2016, the Company and Acromax Dominicana, SA (“Acromax”) entered into a contract for manufacturing of LDN tablets, capsules and/or creams (“Agreement”). In accordance with the terms and conditions of the Agreement, Acromax will obtain all necessary licenses and permits to carry out the manufacturing and packaging of LDN in exchange for a fixed fee per tablet plus an additional fee for packaging, shipping and customs clearance. The Agreement has an initial term of five years unless terminated by either party in accordance with its terms.

In January 2017, Acromax obtained from the Ministry of Public Health and Social Assistance a Medications and Specialized Pharmaceuticals Registration Certification for Lodonal^TM, which allows for the manufacture and sale of Lodonal^TM in the Dominican Republic and for export. The Ministry also issued a Certificate of Pharmaceutical Product for Nigeria, Kenya, Senegal and Malawi, which will allow for the export of Lodonal^TM to those countries where the Company has drug and marketing approval.

In February 2018, the Company shipped the first Lodonal products made by Acromax to Nigeria.

The Company has contracted with QS Pharma, located in Boothwyn, PA, to formulate Low Dose Immediate Release in 1mg, 1.5mg, 3mg and 4.5mg and liquid for pediatric purposes in the USA. QS Pharma’s facility consists of over 43,000 sq. ft. of Analytical Laboratories and Drug Product Manufacturing space available which include cGMP suites and non-GMP development laboratories. There are 14 manufacturing suites with dedicated Air and HVAC systems and the suites and equipment can accommodate batch sizes ranging from <1kg to over 500kg. Cytocom will assume all rights and obligations under the contract.

Immune has also contracted with Complete Pharmacy & Medical Solutions, LLC (“Complete Pharmacy”), located in Miami Lakes, FL., to manufacture Lodonal for all clinical trials initiated by Cytocom. Complete Pharmacy is registered with the FDA as a 503B outsourcing facility under the Drug Quality and Security Act. A 503B outsourcing facility must report specific information about the products that it compounds, including a list of all of the products it has compounded during the previous six months, and information about the compounded products, such as the source of the ingredients used to compound (section 503B(3)). In addition, the outsourcing facility must meet other conditions described in the law, including reporting adverse events and labeling its compounded products with certain information (section 503B(b)(5) and section 503B(a)(10)). The facility specializes in the manufacture of sterile and non-sterile prescription drugs. Complete Pharmacy offers high quality, custom or statutory formulations for hospital and clinical operations.

Raw Materials and Principal Suppliers

The Company has decided to enter into third-party manufacturing agreements; accordingly, we rely on third parties for clinical production of our products and product candidates.

The active pharmaceutical ingredient (“API”) for initiating clinical trials in the United States has been and will continue to be sourced from a cGMP-established vendor that has filed or will file a Type II Drug Master File in the United States. Prior to sourcing, a quality due diligence/vendor qualification will be completed that will include, but is not limited to, a review of the vendor’s inspection and compliance history with the FDA and, as relevant, the vendor’s inspection and compliance history with other regulatory bodies (i.e. the European Medicines Agency, or EMA).

The Company expects that the Finished Pharmaceutical Product (“FPP”) for initiating the proposed clinical trials will be prepared by a U.S. vendor with extensive cGMP experience, a strong record of compliance with FDA regulations as evidenced by a site Quality Audit, and an extensive history of manufacturing products administered to humans in the U.S.

American Peptide Company is the Company’s supplier of the API in MENK. S.A.L.A.R.S SpA supplies the API in LDN.

Competition

Our industry is highly competitive and subject to rapid and significant technological change. While we believe that our technology, knowledge, experience and scientific resources provide us with competitive advantages, we face potential competition from many different sources including large pharmaceutical and biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research institutions. We believe that key competitive factors that will affect the development and commercial success of our product candidates are efficacy, safety, tolerability, reliability, and price and reimbursement level.

Many of our potential competitors, including many of the organizations named below, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of products and the commercialization of those products. Accordingly, our competitors may be more successful than we may be in obtaining FDA approval for drugs and achieving widespread market acceptance. Our competitors’ drugs may be more effective, or more effectively marketed and sold, than any drug we may commercialize and may render our product candidates obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates. We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become available. Further, the development of new treatment methods for the conditions we are targeting could render our drugs non-competitive or obsolete.

Lodonal™/LDN

The key competitive factors affecting the success of Lodonal™, if approved, are likely to be efficacy, safety, tolerability, frequency and route administration, convenience and price, the level of branded and generic competition and the availability of coverage and reimbursement from government and other third-party payors.

The markets for medicines to treat Crohn’s disease, fibromyalgia, MS, HIV and other autoimmune diseases are well developed and populated with established drugs marketed by large and small pharmaceutical, biotechnology and generic drug companies. Pfizer (Lyrica), Eli Lilly (Cymbalta) and Forest Laboratories/Cyprus Biosciences (Savella) market FDA approved drugs for fibromyalgia. We are aware of several companies pursuing treatments for fibromyalgia, including Chelsea Therapeutics, Johnson and Johnson, Meda, Pfizer, Synthetic Biologics, Teva Pharmaceutical Industries Ltd., and Theravance. Clinical trials in the U.S. are registered with the FDA and reported on the FDA’s website at www.clinicaltrials.gov.

Large pharmaceutical companies have extensive experience in clinical testing and obtaining regulatory approval for drugs. In addition, many universities and private and public research institutes are active in cancer research, some in direct competition with us. We also may compete with these organizations to recruit scientists and clinical development personnel. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

We expect Lodonal™, if approved for the treatment of Crohn’s disease, to compete directly with Centocor Ortho Biotech Inc.’s Remicade (infliximab), UCB S.A.’s Cimzia (certolizumab pegol) and Abbott Laboratories’ Humira (adalimumab), each of which is currently approved for the treatment of various diseases, including inflammatory bowel disease, ulcerative colitis and Crohn’s disease, and several other products. Lodonal, if developed and approved for the treatment of MS, would compete with Biogen Idec’s Avonex (interferon beta-1a), Bayer Healthcare Pharmaceuticals’ Betaseron (interferon beta-1b) and Teva Pharmaceuticals Industries Ltd.’s Copaxone (Glatiramer Acetate) and several other products. New developments, including the development of other pharmaceutical technologies and methods of treating disease, occur in the pharmaceutical and life sciences industries at a rapid pace.

IRT-101/MENK

The key competitive factors affecting the success of IRT-101, if approved, are likely to be efficacy, safety, tolerability, frequency and route administration, convenience and price, the level of branded and generic competition and the availability of coverage and reimbursement from government and other third-party payors.

Each cancer indication for which we are developing products has a number of established therapies with which our candidates will compete. Most major pharmaceutical companies and many biotechnology companies are aggressively pursuing new cancer development programs, including both therapies with traditional, as well as novel, mechanisms of action. Some of the anticipated competitor treatments for acute myelogenous leukemia include Genzyme Corporation’s Clolar (clofarabine), currently approved as a treatment for acute lymphoblastic leukemia, Eisai Corporation’s Dacogen (decitabine), currently approved as a treatment for myelodysplastic syndrome, Celgene Corporation’s Vidaza (azacitidine), currently approved as a treatment for myelodysplastic syndrome, and Vion Pharmaceuticals, Inc.’s Onrigin (laromustine) currently being developed as a treatment for acute myelogenous leukemia, any or all of which could change the treatment paradigm of acute leukemia. Each of these compounds is further along in clinical development than is IRT-101 activated NK cell product.

Customers

In 2017, there were no product sales to customers. In 2016, the Company recorded Lodonal™ sales totaling $3,463 to individuals in the USA.

In 2018, the Company commenced shipment of Lodonal^TM tablets to Nigeria under its agreement with AHAR.

The Company expects to commence deliveries to Kenya under its agreement with Omaera in 2018.

Available Information

Our Current Reports on Form 8-K, and Quarterly Reports are electronically filed with or furnished to the Securities and Exchange Commission (SEC), and all such reports and amendments to such reports have been and will be made available, free of charge, through our website (http://www.immunetherapeutics.com) as soon as reasonably practicable after such submission to the SEC. Such reports will remain available on our website for at least 12 months. The contents of our website are not incorporated by reference into this Annual Report on Form 10-K. The public may read and copy any materials filed by us with the SEC at the SEC’s Public Reference Room at 100 F Street, NW, Washington, D.C. 20549.

Item 1A. Risk Factors

You should carefully consider the following factors and other information in this Annual Report and our other SEC filings before making a decision to invest in our common stock. Additional risks and uncertainties that we are unaware of may become important factors that affect us. If any of the following events occur, our business, financial conditions and operating results may be materially and adversely affected. In that event, the trading price of our common stock may decline, and you could lose all or part of your investment.

Risks Related to our Business

We have a limited operating history and are expected to incur significant operating losses during the early stage of our corporate development.

We have a limited operating history. Our historical financial information consists only of an audit of our financial results at and for the years ended December 31, 2017, 2016, 2015, 2014, 2013 and 2012. There is limited historical financial information upon which to base an evaluation of our performance. We are an emerging company, and thus our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operation, particularly in the pharmaceutical industry.

Since inception, we have invested a substantial portion of our time and financial resources in the acquisition and development of our most advanced drug candidate, LDN. We have generated cumulative losses of approximately $373 million and $11 million stockholders’ deficit since inception, and we expect to continue to incur losses until IRT-103 (LDN) is approved by the FDA and foreign regulatory authorities. Even if regulatory approval is obtained, there is a risk that we will not be able to generate material sales of IRT-103 (LDN), which would cause us to continue to incur losses.

We may never generate revenue, are not profitable and may never become profitable.

We expect to incur substantial losses and negative operating cash flow for the foreseeable future, and we may never achieve or maintain profitability. Even if we are able to launch IRT-103 (LDN) we expect to incur substantial losses for the foreseeable future and may never become profitable.

We may not generate significant revenue from the sale of our products for the foreseeable future. In addition, if approved, we expect to incur significant costs to commercialize our drug candidates and our drugs may never gain market acceptance. If our drug candidates fail to demonstrate safety and efficacy in clinical trials, do not gain regulatory approval, or do not achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or whether we will become profitable.

We will see losses from our clinical trials conducted either directly or through our subsidiaries for the foreseeable future, and if we fail at one or more of our clinical trials, it could affect the value of the Company’s stock.

We rely on financings to fund and conduct clinical trials directly or through our subsidiaries needed for NDA submission with respect to IRT-103 (LDN). Any of the following events or factors could have a material adverse effect on our ability to generate revenue from the commercialization of IRT-103 (LDN):

To obtain approval from the FDA of an NDA, for IRT-103 (LDN), The Company will need to demonstrate through evidence of adequate and well-controlled clinical trials that IRT-103 (LDN) is safe and effective for each proposed indication. However, IRT-103 (LDN) may not be approved even though it achieved its specified endpoints in future Phase III clinical trials intended to support an NDA, which may be conducted by the Company. The FDA may disagree with the trial design and the interpretation of data from clinical trials, may ask the Company to conduct additional costly and time consuming clinical trials in order to obtain marketing approval or approval to enter into an advanced phase of development, or may change the requirements for approval even after it has reviewed and commented on the design for our future clinical trials. The FDA may also approve IRT-103 (LDN) for fewer or more limited indications than the Company may request, or may grant approval contingent on the performance of costly post-approval clinical trials. In addition, the FDA may not approve the labeling claims that we believe are necessary or desirable for the successful commercialization of IRT-103 (LDN).

The Company anticipates that if Cytocom initiates a clinical trial in the next 12 months, Cytocom would need approximately $7-$15 million to fully develop products and for Phase III clinical trials for Crohn’s disease. We expect that two-thirds of this amount will be spent by Cytocom in the USA, the balance by Immune Therapeutics, Inc. and/or its subsidiaries for international trials. Cytocom trials are expected to be split evenly between LDN and MENK. The international trials will focus the use of MENK for treatment of cancer in Africa.

The development of new drugs is a highly risky undertaking which involves a lengthy process, and therefore our drug discovery and development activities may not result in products that are approved by the applicable regulatory authorities on the time schedule we have planned, or at all.

Our drug candidates are in early stages of drug discovery or clinical trials and are prone to the risks of failure inherent in drug development. As of the date of this Form 10-K, both of our current drug candidates, IRT-101 (MENK) and IRT-103 (LDN) have been tested on human beings. We will need to conduct additional clinical trials before we can demonstrate that our drug candidates are safe and effective to the satisfaction of the FDA and other regulatory authorities. Clinical trials are expensive and uncertain processes that can take multiple years to complete. We cannot assure you that our ongoing clinical trials or any future clinical trial of any of our other drug candidates, will be completed on schedule, or at all, or whether our planned clinical trials will start in a timely manner. The commencement of our planned clinical trials could be substantially delayed or prevented by a number of factors, including:

The completion of our clinical trials could also be substantially delayed or prevented by a number of factors, including:

Any failure or significant delay in completing clinical trials for our drug candidates will harm the commercial prospects for our drug candidates and adversely affect our financial results.

Additionally, changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs or ECs for reexamination, which may impact the costs, timing or successful completion of a clinical trial. If we experience delays in completion of a clinical trial, or if we terminate any of our clinical trials, the commercial prospects for our drug candidates may be harmed and our ability to generate product revenues will be delayed. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a drug candidate.

If we are required to suspend or discontinue clinical trials due to side effects or other safety risks, or if we are required to conduct studies on the long-term effects associated with the use of our drug candidates, our efforts to commercialize our products could be delayed or halted.

Our clinical trials may be suspended or terminated at any time for a number of safety-related reasons. For example, administering any drug candidate to humans may produce undesirable side effects. We may voluntarily suspend or terminate our clinical trials if at any time we believe that our drug candidates present an unacceptable safety risk to the clinical trial patients. In addition, IRBs, ECs or regulatory agencies may order the temporary discontinuation or termination of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, including if they present an unacceptable safety risk to patients. The existence of undesirable side effects resulting from our drug candidates could cause us or regulatory authorities, such as the FDA, to interrupt, delay or halt clinical trials of our drug candidates and could result in the FDA or other regulatory agencies denying further development or approval of our drug candidates for any or all targeted indications.

Further, cytokine receptors and opiate growth factor receptors are a novel class of targets. As a result, we may experience unforeseen adverse side effects with our existing and future drug candidates, including IRT-101 (MENK) and IRT-103 (LDN). As of the date of this registration statement, although we have not observed harmful side effects in prior studies of LDN or MENK, later trials could reveal such side effects. The pharmacokinetic profile and results of preclinical studies may not be indicative of results in any clinical trial.

We have not conducted studies on the long-term effects associated with the use of our drug candidates. Studies of long-term effects and chronic dosing (approximately 1 year of dosing); will be required for regulatory approval and may delay introduction of our therapies or our other drug candidates into the market. Additional studies could also be required at any time after regulatory approval of any of our drug candidates. Some or all of our drug candidates may prove to be unsafe for human use.

Even if our drug candidates do obtain regulatory approval they may never achieve market acceptance or commercial success.

Even if we obtain FDA or other regulatory approval, our drug candidates may not achieve market acceptance among physicians, patients and/or third party payers or they may be used only in applications more restricted than we anticipate, and ultimately, may not be commercially successful. Our treatments, if successfully developed, will compete with a number of traditional products manufactured and marketed by major pharmaceutical and biotechnology companies. Our treatments may also compete with new products currently under development by such companies and others. Physicians will prescribe a product only if they determine, based on experience, clinical data, side effect profiles and other factors, that it is beneficial as compared to other products currently available and in use. Physicians also will prescribe a product based on their traditional preferences. Market acceptance of our drug candidates for which we receive approval depend on a number of factors, including:

If our drug candidates that obtain regulatory approval fail to achieve market acceptance or commercial success, the Company’s financial results will be adversely affected.

The commercial success of IRT-103 depends, in part, on Cytocom’s ability to develop and market the drug in North America, and if we fail in these initiatives, our ability to generate future revenue in the United States could be reduced.

If Cytocom successfully completes the clinical development program in the U.S. for our lead independent drug candidate, IRT-103 (LDN), we plan to retain commercial rights to IRT-103 as we have exclusive licensing rights. Any of the following events or factors could have a material adverse effect on both the ability to generate revenue in the U.S. from the commercialization of IRT-103:

Changes in pharmaceutical and biotechnology industry trends could adversely affect the Company’s operating results.

Industry trends, economic and political factors that affect pharmaceutical, biotechnology, medical device companies and academic/government entities sponsoring clinical research directly affect the Company’s business. For example, many companies in such industries and government organizations have been hiring companies (like the Company) to conduct large development projects. The Company’s operations, financial condition and growth rate could be materially and adversely affected if these industries reduce outsourcing of such projects. In the past, mergers, product withdrawals, liability lawsuits and other factors in the pharmaceutical industry have slowed decision making by pharmaceutical companies and correlating government bodies significantly delaying and/or halting drug development projects. Continuation or increases in such trends could have an adverse effect on the Company’s business. Additionally, numerous government agencies have undertaken efforts to control growing healthcare costs through legislation, regulation and voluntary agreements with medical care providers and pharmaceutical companies. If future regulatory cost-containment efforts limit potential profits derived from new drugs, the Company’s clients may reduce their drug discovery and development spending. A reduction in drug discovery and development spending could have a material adverse effect on the Company’s results and operations creating a significant reduction of the Company’s revenue.

We currently rely on third parties to conduct all our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for or commercialize any of our drug candidates.

We currently do not have the ability to independently conduct clinical trials. We rely on medical institutions, clinical investigators, contract laboratories, collaborative partners and other third parties, such as contract research organizations, to conduct clinical trials on our drug candidates. The third parties with whom we contract for execution of our clinical trials play a significant role in the conduct of these trials and the subsequent collection and analysis of data. These third parties are not our employees, and except for contractual duties and obligations, we have limited ability to control the amount or timing of resources that they devote to our programs. Our IND is being conducted per 21 Code of Federal Regulations Title 21, Part 312. In addition, we follow ICH guidelines, including good clinical practices (ICH E6) and current good manufacturing practice (ICH Q7) throughout the development process. After completion of Phase III clinical trials, the Company will file our NDA for LDN (IRT-103) as a 505(b)(2) application. Although we rely on these third parties to conduct our clinical trials, we remain responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol. Moreover, the FDA and foreign regulatory authorities require us to comply with regulations and standards, commonly referred to as current Good Clinical Practices (“cGCPs”) for conducting, monitoring, recording and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.

In addition, the execution of preclinical studies and clinical trials, and the subsequent compilation and analysis of the data produced, requires coordination among various parties. In order for these functions to be carried out effectively and efficiently, it is imperative that these parties communicate and coordinate with one another. Moreover, these third parties may also have relationships with other commercial entities, some of which may compete with us. In most cases, these third parties may terminate their agreements upon a material breach by us that is not cured within 30 days by providing us with 30 days’ prior written notice. Many of these agreements may also be terminated by such third parties under certain other circumstances, including our insolvency or our failure to comply with applicable laws. In general, these agreements require such third parties to reasonably cooperate with us at our expense for an orderly winding down of services of such third parties under the agreements. If the third parties conducting our clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical trial protocols or cGCPs, or for any other reason, we may need to enter into new arrangements with alternative third parties, which could be costly, and our clinical trials may be extended, delayed or terminated or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the drug candidate being tested in such trials.

If any of our drug candidates receive marketing approval, and the Company or others later identify undesirable side effects caused by the drug candidate, our ability to market and derive revenue from the drugs could be compromised.

If the Company or others identify undesirable side effects caused by one of our drug candidates, any of the following adverse events could occur:

Any of these could result in the loss of significant revenues, which would materially and adversely affect our results of operations and business.

We may need additional financing and may be unable to raise capital on acceptable terms, or at all, when needed, which could force us to delay, reduce or eliminate our research and development programs and other operations or commercialization efforts.

We are advancing multiple drug candidates through discovery and development and will require substantial funds to conduct development, including preclinical studies and clinical trials, of our drug candidates. Commercialization of any drug candidate will also require substantial expenditures. To further the development and commercialization efforts of our drug candidates, we may need additional financing to hire additional employees to co-promote drug candidates or to commercialize drug candidates that may not be covered by our current collaboration agreements.

At December 31, 2017, we had $14,718 in cash and cash equivalents. We do not believe that our available cash and cash equivalents will be sufficient to fund our anticipated level of operations for the next 12 months and we will likely need to seek outside sources of funding. Assuming that anticipated investment and revenue does not materialize business operations would not be able to continue more than 30 days. We believe we require at least $2,000,000 for our operations over the next 12 months. Our future financing requirements will depend on many factors, some of which are beyond our control, including:

Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and technologies. We currently have no understandings, commitments or agreements relating to any of these types of transactions.

Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private equity offerings, debt financings, government grants and contracts and/or strategic collaborations. Additional financing may not be available to us when we need it or it may not be available on favorable terms, if at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs or our commercialization efforts. We may be required to enter into collaborative partnerships for one or more of our drug candidate programs at an earlier stage of development or on less favorable terms, which may require us to relinquish rights to some of our drug candidates that we would otherwise have pursued on our own. We may also be required to pursue strategic alternatives that may affect our business or corporate structure in order to make ourselves more attractive to investors.

In addition, If the Company or any of its future collaboration partners does not perform in the manner we expect or fulfill its responsibilities in a timely manner, or at all, the clinical development, regulatory approval, and commercialization efforts related to IRT-103 (LDN) could be delayed or terminated. It may be necessary for us to assume the responsibility at our own expense for the development of IRT-103 (LDN). In that event, we would likely be required to seek additional funding.

We may form additional strategic alliances in the future with respect to our independent programs, and we may not realize any benefits of such alliances.

We may form strategic alliances, create joint ventures or collaborations or enter into licensing arrangements with third parties with respect to our independent programs that we believe will complement or augment our existing business. For example, we plan to find a partner to co-develop and commercialize IRT-101 (MENK) and IRT-103 (LDN) outside North America upon completion of clinical development of IRT-103 (LDN) for the treatment of pediatric and adult patients with Crohn’s disease. We face significant competition in seeking appropriate strategic partners. The negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for any future product candidates and programs because our research and development pipeline may be insufficient, our product candidates and programs may be deemed to be at too early a stage of development for collaborative effort and/or third parties may not view our product candidates and programs as having the requisite potential to demonstrate safety and efficacy. We cannot be certain that, following a strategic transaction or license, we will achieve the revenues or specific net income that justifies such transactions. Any delays in entering into new strategic partnership agreements related to our product candidates could also delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market.

We do not currently manufacture IRT-103 Low Dose Naltrexone (LDN) and therefore must rely on third-party manufacturing to supply the drug for clinical trials. If one of our suppliers or manufacturers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find new suppliers or manufacturers, which would cause delays in the development and commercialization of our drug candidates.

The manufacture of pharmaceutical products in compliance with cGMPs requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, including difficulties with production costs and yields, quality control, including stability of the drug candidate and quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced FDA cGMP requirements, other federal and state regulatory requirements, and foreign regulations. If our manufacturers were to encounter any of these difficulties or otherwise fail to comply with their obligations to us or under applicable regulations, our ability to provide study drugs in our preclinical studies and clinical trials would be jeopardized. Any delay or interruption in the supply of preclinical study or clinical trial materials could delay the completion of our preclinical studies and clinical trials, increase the costs associated with maintaining our preclinical study and clinical trial programs and, depending upon the period of delay, require us to commence new trials at significant additional expense or terminate the studies and trials completely.

All manufacturers of our drug candidates must comply with cGMP requirements enforced by the FDA through its facilities inspection program. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. Manufacturers of our component materials may be unable to comply with these cGMP requirements and with other FDA, state and foreign, regulatory requirements. The FDA or similar foreign regulatory agencies at any time may also implement new standards, or change their interpretation and enforcement of existing standards for manufacture, packaging or testing of products. We have little control over our manufacturers’ compliance with these regulations and standards. A failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval. If the safety of any product supplied is compromised due to our manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products, and we may be held liable for any injuries sustained as a result. Any of these factors could cause a delay of clinical trials, regulatory submissions, approvals or commercialization of our drug candidates or entail higher costs or impair our reputation.

We source the API for IRT-103 (LDN) from a third-party manufacturing vendor. Another pharmaceutical company manufactures the API for IRT-101. Our current agreements with our suppliers provide for the entire supply of the API necessary for additional clinical trials or for full-scale commercialization. In the event that we and our suppliers cannot agree to the terms and conditions for them to continue to provide some or all of our API clinical and commercial supply needs, or if any single source supplier terminates the agreement in response to a breach by us, we would not be able to manufacture the API on a commercial scale until a qualified alternative supplier is identified, which could also delay the development of, and impair our ability to commercialize, our drug candidates.

Although alternative sources of supplies exist, the number of third party suppliers with the necessary manufacturing and regulatory expertise and facilities are limited, and it could be expensive and take a significant amount of time to arrange for alternative suppliers, which could have a material adverse effect on our business. New suppliers of any API would be required to qualify under applicable regulatory requirements and would need to have sufficient rights to the method of manufacturing such ingredients under applicable intellectual property laws. Obtaining the necessary FDA approvals or other qualifications under applicable regulatory requirements and ensuring non-infringement of third party intellectual property rights could result in a significant interruption of supply and could require the new manufacturer to bear significant additional costs which may be passed on to us.

We currently have only a limited distribution organization with no sales and marketing staff. If we are unable to develop sales and marketing and expand distribution capability on our own or through collaborations with marketing partners, we will not be successful in commercializing our future products.

We currently have only a limited distribution organization with no sales or marketing staff. If our products are approved for sale in the United States we will need to execute a number of sales and marketing agreements, but there can be no assurance that the Company will be able to sign an agreement to market and distribute our products. To the extent we rely on third parties for marketing and distributing our approved products, any revenue we receive will depend upon the efforts of third parties, which may not be successful, and are only partially within our control. Our reliance on third parties makes it likely that our product revenue is likely to be lower than if we directly marketed or sold our products. If we are unable to enter into arrangements with third parties to commercialize the approved products on acceptable terms or at all, we may not be able to successfully commercialize our future products or we will have to market these products ourselves, which will be expensive and require us to build our own sales force, which we do not have experience doing. We cannot assure you we will be successful in any of these initiatives. If we are not successful in commercializing our future products, either on our own or through collaborations with one or more third parties, our future product revenue will be materially adversely affected.

We are dependent on market acceptance of compounding pharmacies and compounded formulations, and physicians may be unwilling to prescribe, and patients may be unwilling to use, our proprietary LDN compounded formulation.

We are currently distributing our proprietary LDN formulation through Complete Pharmacy and Medical Solutions, LLC and expect to distribute such formulation through other compounding pharmacies outside of the U.S. Formulations prepared and dispensed by compounding pharmacies contain FDA-approved ingredients, but are not themselves approved by the FDA. As a result, our formulation has not undergone the FDA approval process and only limited data, if any, may be available with respect to the safety and efficiency of our formulation for any particular indication. Some physicians may be hesitant to prescribe, and some patients may be hesitant to purchase and use, this non-FDA approved compounded formulation. In addition, certain compounding pharmacies have been the subject of widespread negative media coverage in recent years, and the actions of these pharmacies have resulted in increased scrutiny of compounding pharmacy activities from the FDA and state governmental agencies. As a result, physicians may be unwilling to prescribe a compounded formulation when an FDA-approved alternative is available, even if they believe the compounded formulation to be superior and less expensive. Other reasons physicians may be unwilling to prescribe or patients may be unwilling to use our proprietary LDN compounded formulation could include the following, among others: our proprietary formulation is not required to be, and has not been, approved for marketing and sale by the FDA; there may be limited or no data available with respect to the clinical efficacy or safety of our compounded formulation the physician is prescribing; and to the extent there is such data available, we are limited in our ability to discuss the efficacy or safety of our formulation with potential purchasers of our formulation.

Additionally, some third-party payors, including the government Medicare and Medicaid programs, may not provide reimbursement for compounded formulations. Physicians who may otherwise be interested in prescribing our formulation or utilizing our compounding pharmacy services may be unwilling to do so if third party payor reimbursement, including Medicare and Medicaid reimbursement, is not available for our compounded formulation. Any failure by physicians, patients and/or third-party payors to accept and embrace compounded formulations could substantially limit our market and cause our operations to suffer.

We aim to generate revenue from our proprietary LDN formulation through our licensing arrangement with Complete Pharmacy and Medical Solutions, LLC and potentially other compounding pharmacies outside of the United States, but we may not be successful in our efforts to generate revenue from such formulation.

One aspect of our business strategy is to continue to develop our licensing arrangement with Complete Pharmacy and Medical Solutions, LLC and potentially enter into other licensing arrangements with other compounding pharmacies outside of the U.S., through which we can generate revenue from the sale of our proprietary LDN formulation. On December 8, 2014, we entered into a Contract for the Compounding of Pharmaceutical Products with Complete Pharmacy and Medical Solutions, LLC pursuant to which Complete Pharmacy and Medical Solutions, LLC will carry out the services of compounding, packaging and distributing tablets of our LDN formulation in the U.S. We have limited experience commercializing our formulation through licensing arrangements with compounding pharmacies. Even if we are successful, we may be unable to generate sufficient revenue to recover our costs.

We have minimal experience licensing products to pharmacies and outsourcing facilities and we may not be successful in our efforts to develop our licensing arrangements. If we elect to license our proprietary LDN formulation to one or more pharmacies or outsourcing facilities outside of the U.S., we may not be able to enter into licensing agreements when desired, on acceptable terms, or at all. Establishing licensing or other relationships with pharmacies and outsourcing facilities could be expensive and time consuming, disrupt our other operations, require significant capital expenditures and distract management and our other employees from other aspects of our business.

Failure to achieve and maintain effective internal controls could have a material adverse effect on our business.

Effective internal controls are necessary for us to safeguard our assets and provide reliable financial reports. If we cannot provide reliable financial reports, our operating results could be harmed. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

While we continue to evaluate and improve our internal controls, we are a small company with limited staff, and we cannot be certain that the measures we implement will ensure that we design, undertake and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.

Failure to achieve and maintain an effective internal control environment could cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price. In addition, if our efforts to comply with new or changed laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

Our independent registered public accounting firm has identified material weaknesses in our financial reporting process.

Our independent registered public accounting firm has identified two material weaknesses in our financial reporting process. Specifically, our independent registered public accounting firm identified material weaknesses with respect to:

We intend to remediate this weakness by increasing the size of our accounting staff in 2018 and by appointing an audit committee with membership that is qualified to oversee the Company’s financial reporting. However, there can be no assurance that we will be able to successfully implement our plans to remediate the material weaknesses in our financial reporting process. Our failure to successfully implement our plans to remediate these material weaknesses could cause us to fail to meet our reporting obligations, to produce timely and reliable financial information, and to effectively prevent fraud. Additionally, such failure, or other weaknesses that we may experience in our financial reporting process or other internal controls, could cause investors to lose confidence in our reported financial information, which could have a negative impact on our financial condition and stock price.

We will need to increase the size of our organization, but we may experience difficulties in managing growth.

We will need to continue to expand our managerial, operational, financial and other resources in order to manage our operations and clinical trials, continue our development activities and commercialize our drug candidates. Our current management, personnel systems and facilities may not be adequate to support this future growth. Our need to effectively execute our growth strategy requires that we:

If we are unable to expand our managerial, operational, financial and other resources to the extent required to manage our development and commercialization activities, our business will be materially adversely affected.

We face substantial competition. Our competitors may discover, develop or commercialize products faster or more successfully than us.

The biotechnology and pharmaceutical industries are highly competitive. We face significant competition from companies in the pharmaceutical, biotechnology and other related markets that are researching and marketing products designed to address Crohn’s Disease, multiple sclerosis, other autoimmune diseases or immune disorders, inflammatory disorders, HIV/AIDS and cancer. Established pharmaceutical companies that currently sell or are developing drugs in our markets of interest include, for example; Abbott Laboratories, Amgen, AstraZeneca, Biogen Idec, Bayer, Elan, Johnson & Johnson, Merck, Merck Serono, Takeda, Novartis, Pfizer, Reata, Sanofi-Aventis and Teva. Many or all of these established competitors are also involved in research and drug development regarding various OGF receptors. Pharmaceutical and biotechnology companies which are known to be involved in immunotherapy research and related drug development include Pfizer, Bristol-Myers Squibb, Merck, Takeda, Sanofi-Aventis, Incyte, and UCB Pharma among others.

We are developing small molecule therapeutics that will compete with other drugs and alternative therapies that are currently marketed or are being developed to treat Crohn’s Disease, HIV/AIDS, other autoimmune diseases and inflammatory disorders, HIV/AIDS and cancer. If approved for marketing by the FDA, IRT-103 (LDN), our lead Inflammatory Bowel Disease (“IBD”) drug candidate, would compete against existing IBD treatments such as Sulfasalazine (Azulfidine); Mesalamine (Asacol, Rowasa) Corticosteroids; Azathioprine (Imuran) and mercaptopurine (Purinethol); Infliximab (Remicade); Adalimumab (Humira); Certolizumab pegol (Cimzia); Methotrexate (Rheumatrex); Cyclosporine (Gengraf, Neoral, Sandimmune) and Natalizumab (Tysabri). Similarly, other future drug candidates we are pursuing would compete against numerous existing and established drugs and potentially against other novel drugs and therapies that are currently in development. We also anticipate that we will face increased competition in the future as new companies enter our target markets and scientific developments surrounding the chemokine system continue to develop.

Many of our competitors have greater name recognition and financial, manufacturing, marketing, research and drug development resources than we do. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. Large pharmaceutical companies in particular have extensive expertise in preclinical and clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies. These organizations may also establish exclusive collaborative or licensing relationships with our competitors, thus giving our competitors a significant advantage. We may be unable to respond to competitive forces presently in the marketplace, which would severely impact our business.

In addition, in terms of the licensing of our LDN formulation to Complete Pharmacy and Medical Solutions, LLC, we compete against branded drug companies, generic drug companies, outsourcing facilities and other compounding pharmacies. We are currently and expect to continue our efforts on making available our proprietary compounded formulation through Complete Pharmacy and Medical Solutions, LLC and other compounding pharmacies outside of the U.S. The drug products available through branded and generic drug companies with which our formulation competes have been approved for marketing and sale by the FDA and are required to be manufactured in facilities compliant with cGMP standards. As a result, some physicians may be unwilling to prescribe them. Because our proprietary LDN formulation is compounded in accordance with The U.S. Federal Food, Drug, and Cosmetic Act Section 503B and is not required to be, and has not been, approved for marketing and sale by the FDA, our business may be subject to limitations our competitors with FDA-approved drugs may not face.

Under state and federal laws applicable to compounding pharmacies, Complete Pharmacy and Medical Solutions, LLC is not permitted to prepare significant amounts of a specific formulation in advance of a prescription, compound quantities for office use or utilize a wholesaler for distribution for our formulation; instead, our compounded formulation must be prepared and dispensed in connection with a physician prescription for an individually identified patient. Pharmaceutical companies typically sell most of their FDA-approved products to large pharmaceutical wholesalers, who in turn sell to and supply hospitals and retail pharmacies. As a result, the sale of our formulation by Complete Pharmacy and Medical Solutions, LLC is not scalable on the scope available to our competitors with FDA-approved drugs, which may limit our potential for revenue.

We may be subject to costly product liability claims related to our clinical trials and drug candidates and, if we are unable to obtain adequate insurance or are required to pay for liabilities resulting from a claim excluded from, or beyond the limits of, our insurance coverage, a material liability claim could adversely affect our financial condition.

Because we conduct clinical trials with human patients, we face the risk that the use of our drug candidates may result in adverse side effects to patients and to otherwise healthy volunteers in our clinical trials. We face even greater risks upon any commercialization of our drug candidates. Although we will maintain product liability insurance for clinical trials, our insurance may be insufficient to reimburse us for any expenses or losses we may suffer, and we will be required to increase our product liability insurance coverage for the advanced clinical trials that we plan to initiate. We do not know whether we will be able to continue to obtain product liability coverage and obtain expanded coverage on acceptable terms, or at all. We may not have sufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limits of, our insurance coverage. There is also a risk that third parties that we have agreed to indemnify could incur liability. An individual may bring a product liability claim against us if one of our drug candidates, products or compounded formulations cause, or is claimed to have caused, an injury or is found to be unsuitable for consumer use. Any product liability claim brought against us, with or without merit, could result in:

Our business involves the use of hazardous materials. As a result, we, including our third party manufacturers, must comply with environmental laws and regulations, which may be expensive and restrict how we do business.

Our third party manufacturers’ activities and our own activities involve the controlled storage, use and disposal of hazardous materials, including the components of our pharmaceutical products, test samples and reagents, biological materials and other hazardous compounds. We and our manufacturers are subject to federal, state and local, and foreign laws and regulations governing the use, generation, manufacture, storage, handling and disposal of these hazardous materials. We currently carry no insurance specifically covering environmental claims relating to the use of hazardous materials. Although we believe that our safety procedures for handling and disposing of these materials and waste products comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental injury or contamination from the use, storage, handling or disposal of hazardous materials. In the event of an accident, state or federal or other applicable authorities may curtail our use of these materials and/or interrupt our business operations. In addition, if an accident or environmental discharge occurs, or if we discover contamination caused by prior operations, including by prior owners and operators of properties we acquire, we could be liable for cleanup obligations, damages and fines. The substantial unexpected costs we may incur could significantly harm our financial condition and results of operations.

Future financings may adversely affect our stockholders or impose restrictions on our assets or operations, which may harm our business.

If we raise additional capital by issuing equity securities or convertible debt securities, our existing stockholders’ ownership will be diluted and the terms of any new equity securities may have preferences over our common stock. If we raise additional capital through the issuance of debt securities, the debt will have rights senior to the holders of our common stock and may contain covenants that restrict our operational flexibility or impose liens or other restrictions on our assets. In addition, the terms of future financings may restrict our ability to raise additional capital, which would delay or prevent the further development or commercialization of our drug candidates.

If we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish potentially valuable rights to our current drug candidates, potential products or proprietary technologies, or grant licenses on terms that are not favorable to us. Additionally, we may consider pursuing strategic opportunity for our business and corporate structure that may make us a more attractive investment candidate. If adequate funds are not available, our ability to achieve profitability or to respond to competitive pressures would be significantly limited and we may be required to delay, significantly curtail or eliminate the development of one or more of our drug candidates.

We may be adversely affected by the current economic environment.

Our ability to attract and retain collaboration partners or customers, invest in and grow our business and meet our financial obligations depends on our operating and financial performance, which, in turn, is subject to numerous factors, including the prevailing economic conditions and financial, business and other factors beyond our control, such as the rate of unemployment, the number of uninsured persons in the United States and inflationary pressures. We cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business.

We are exposed to risks associated with reduced profitability and potential financial instability of our collaboration partners or customers, many of which may be adversely affected by volatile conditions in the financial markets. For example, unemployment and underemployment, and the resultant loss of insurance, may decrease the demand for healthcare services and pharmaceuticals. If fewer patients are seeking medical care because they do not have insurance coverage, our collaboration partners or customers may experience reductions in revenues, profitability and/or cash flow that could lead them to reduce their support of our programs or financing activities. If collaboration partners or customers are not successful in generating sufficient revenue or are precluded from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us. This, in turn, could adversely affect our financial condition and liquidity. To the extent economic challenges result in fewer individuals pursuing or being able to afford our products once commercialized, our business, results of operations, financial condition and cash flows could be adversely affected.

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

Despite the implementation of security measures, our internal computer systems and the computer systems of our contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial data from completed or ongoing clinical trials for any of our drug candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our drug candidates could be delayed.

Our current and future operations substantially depend on our management team and our ability to have other key personnel, the loss of any of whom could disrupt our business operations.

The Company’s future success depends on the efforts and abilities of principal members of its senior management and scientific staff to provide strategic direction, business development, operations management and maintenance of a cohesive and stable work environment. The Company relies on the services of Dr. Nicholas P. Plotnikoff and Professor Fengping Shan. If we lost their services or the services of any other key member of management, it could be impossible to replace them.

Additionally, the Company’s ability to maintain, expand and renew existing business with its clients and maximize potential business opportunities from new clients (in both the drug development and the drug discovery areas) depends on its ability to hire and retain scientists with necessary skills. The scientists working for the Company must have the ability to lead ahead of continuing changes and trends in drug discovery and development technologies to create the most innovative products on the market in order to remain competitive within the drug development industry. The Company faces risks, challenges and competition attracting and retaining experienced scientists and healthcare providers.

The Company’s inability to hire qualified personnel may increase the workload for both existing and new personnel. The Company may not be successful in attracting new healthcare providers, scientists and management or in retaining/motivating existing personnel. The shortage of experienced healthcare providers and scientists or other factors may lead to increased recruiting, relocation and compensation costs for the Company. Such increased costs may reduce profit margins or make hiring necessary experts (i.e. healthcare providers or scientists) impracticable. If the Company is unable to attract or retain any of its key personnel its ability to execute a competitive and profitable business plan will be adversely affected. Services and products will be less competitive if not obsolete. If competing companies introduce superior technologies that compete with the Company’s services and products, the Company may not be able to make the necessary enhancements to its services and products that will maintain a competitive position in the marketplace. The Company’s competitive position, business, revenues and financial condition will be materially and adversely affected.

Any failure by the Company to comply with existing health care and drug regulations could harm its reputation, operating results, the quality of the Company’s business strategy and the quality of the Company’s products.

The Company has not experienced any failure to comply and has not received any notice or violation of either good clinical practices, laboratory practices or good manufacturing practices. Any future failure by the Company to comply with existing health care and drug regulations could result in the termination of ongoing research and/or the disqualification of data for submission to regulatory authorities. Failure to comply with existing regulations will harm the Company’s reputation, brand name, its prospects for immediate and future work and its operating results. For example, if the Company fails to verify that informed consent is obtained from patient participants in connection with a particular clinical trial or grant deviations from the inclusion/exclusion criteria in a study protocol, the data collected from that trial could be disqualified at which point the Company may be required to conduct the trial again at no further cost to its client. Furthermore, the issuance of a FDA notice based on a finding of a material violation of good clinical practice, good laboratory practice or good manufacturing practice requirements could materially and adversely affect the Company.

Proposed and future legislation or regulation may increase the cost of the Company’s business or limit its service and product offerings.

Federal, state, and/or international authorities might adopt healthcare legislation or regulations that are more burdensome than existing regulations. For example, recent product safety concerns and the creation of the Drug Safety Oversight Board could change the regulatory environment for drug products including the process for FDA product approval and post-approval safety surveillance. Such changes and other possible changes in regulation could increase the Company’s expenses or limit its ability to offer some of its services or products. For example, the confidentiality of patient-specific information and the circumstances under which it may be released for inclusion in the Company’s databases or used in other aspects of business are subject to substantial government regulation. Additional legislation or regulation governing the possession, use and dissemination of medical record information or other personal health information may require the Company to implement new security measures requiring substantial expenditures or limiting the ability to offer services and products. These regulations might also increase costs by creating new privacy requirements for the Company’s business mandating additional privacy procedures for its clinical research business.

Requirements associated with being a public company will increase our costs significantly, as well as divert significant company resources and management attention.

Prior to June 2013, we were not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We are working with our legal, independent accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, the expenses that will be required in order to adequately prepare for being a public company could be material.

Compliance with the various reporting and other requirements applicable to public companies will also require considerable time and attention of management. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and NASDAQ, has imposed various requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. In addition, the changes we make may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis.

Moreover, we anticipate that compliance with these rules and regulations will increase our legal, accounting and financial compliance costs substantially. In addition, these rules and regulations may make our activities related to legal, accounting and financial compliance more difficult, time-consuming and costly and may also place undue strain on our personnel, systems and resources. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations.

In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

We estimate the additional costs we may incur to respond to these requirements to range from $100 to $500 thousand annually, although unforeseen circumstances could increase actual costs.

As an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements, which could leave our stockholders without information or rights available to stockholders of more mature companies.

For as long as we remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (which we refer to herein as the JOBS Act), we have elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to:

We expect to take advantage of these reporting exemptions until we are no longer an “emerging growth company.” Because of these lessened regulatory requirements, our stockholders would be left without information or rights available to stockholders of more mature companies.

If we are unable to attract suitable and willing investigators and volunteers for clinical trials and product development, business may suffer.

Our clinical research studies rely on the accessibility and participation of physician investigators and volunteer subjects. Investigators are typically located at hospitals, clinics or other sites and supervise administration of the study drug to patients during the course of a clinical trial. Volunteer subjects generally include individuals from the locale where the studies are conducted. Our clinical research development business could be adversely affected if it is unable to attract suitable and willing investigators or volunteers on a consistent basis.

We may not obtain government approval for our products and/or uses.

The development and commercialization of pharmaceutical products are subject to extensive governmental regulation in the United States and foreign countries. Government approvals are required to develop, market and sell potential drug candidates. Obtaining government approval to develop, market and sell drug candidates is time-consuming and expensive. The clinical trial results for a particular drug candidate might not satisfy necessary requirements to obtain government approvals. Even if we are successful in obtaining all required approvals to market and sell a drug candidate, post-approval requirements and the failure to comply with other regulations could result in suspension or limitation of government approvals.

In connection with drug discovery activities outside of the United States, we and our strategic partners will be subject to foreign regulatory requirements governing testing, approval, manufacturing, labeling, marketing and sale of pharmaceutical products. These requirements vary with location. Even if approval has been obtained for a product in the United States, approval in a foreign country must be obtained prior to marketing the product. The approval process in foreign countries may be more or less rigorous than the United States and the time required for approval may be longer or shorter. Clinical studies conducted outside of a specific country may not be acceptable. The approval of a pharmaceutical product in one country does not guarantee approval in another.

Even if approved, the products that we may develop and market may be later withdrawn from the market or subject to promotional limitations.

We may not be able to obtain the labeling claims necessary or desirable for the promotion of our treatments if approved. We may also be required to undertake post-marketing clinical trials. If the results of such post-marketing studies are not satisfactory or if adverse events or other safety issues arise after approval, the FDA or a comparable regulatory agency in another country may withdraw marketing authorization or may condition continued marketing on commitments from us that may be expensive and/or time consuming to complete. In addition, if we or others identify adverse side effects after any of our products are on the market, or if manufacturing problems occur, regulatory approval may be withdrawn and reformulation of our products, additional clinical trials, changes in labeling of our products and additional marketing applications may be required. Any reformulation or labeling changes may limit the marketability of our products if approved.

Florida Law and our Articles of Incorporation may protect our Directors and Officers from certain types of lawsuits.

Florida law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers and directors against claims, including claims arising out of their negligence, poor judgment or other circumstances.

We may seek to grow our business through acquisitions of or investments in new or complementary businesses, products or technologies, and the failure to manage acquisitions or investments, or the failure to integrate them with our existing business, could have a material adverse effect on us.

From time to time we expect to consider opportunities to acquire or make investments in other technologies, products and businesses that may enhance our capabilities, complement our current products or expand the breadth of our markets or customer base. Potential and completed acquisitions and strategic investments involve numerous risks, including:

We have no current commitments with respect to any acquisition or investment. We do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired business, product or technology into our business or retain any key personnel, suppliers or distributors. Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete and integrate suitable target businesses and to obtain any necessary financing. These efforts could be expensive and time-consuming, and may disrupt our ongoing business and prevent management from focusing on our operations. If we are unable to integrate any acquired businesses, products or technologies effectively, our business, results of operations and financial condition will be materially adversely affected.

We may expend our limited resources to pursue a particular opportunity and fail to capitalize on current research and products that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we have focused on specific research programs, treatments, and products. As a result, we may forego or delay pursuit of opportunities with other products or research that later may prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial treatments or profitable market opportunities. Our spending on current and future research and development programs may not yield any commercially viable treatments.

We are subject to risks associated with our non-U.S. operations.

The Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The FCPA also imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign affiliates which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payments can be made. Because of the predominance of government-sponsored healthcare systems around the world, many of our customer relationships outside of the United States are with governmental entities and are therefore subject to such anti-bribery laws. Our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction and result in a material adverse effect on our business, results of operations and financial condition. We also could suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial measures, including further changes or enhancements to our procedures, policies and controls, as well as potential personnel changes and disciplinary actions.

Furthermore, we are subject to the export controls and economic embargo rules and regulations of the United States, including, but not limited to, the Export Administration Regulations and trade sanctions against embargoed countries, which are administered by the Office of Foreign Assets Control within the Department of the Treasury, as well as the laws and regulations administered by the Department of Commerce. These regulations limit our ability to market, sell, distribute or otherwise transfer our products or technology to prohibited countries or persons. A determination that we have failed to comply, whether knowingly or inadvertently, may result in substantial penalties, including fines and enforcement actions and civil and/or criminal sanctions, the disgorgement of profits, the imposition of a court-appointed monitor, the denial of export privileges and/or an adverse effect on our reputation.

These and other factors may have a material adverse effect on our international operations or on our business, results of operations and financial condition generally.

Because our some of our manufacturing activities occur in Nicaragua, which is subject to political, economic and other uncertainties, situations may arise that could have a material adverse effect on our business.

The status of Nicaragua as a developing country may make it difficult for us to obtain additional financing for our projects. Notwithstanding the progress achieved in recent years in political institutions and revitalizing the Nicaraguan economy, the present administration, or any successor government, may not be able to sustain the progress achieved. While the Nicaraguan economy has experienced growth in recent years, such growth may not continue in the future at similar rates or at all. If the economy of Nicaragua fails to continue its growth or suffers a recession, our manufacturing efforts may be affected.

Further, Nicaragua has in the past experienced a difficult security environment as well as political instability. In particular, various illegal groups that may be active in and around regions in which we are present may pose a credible threat of terrorism, extortion and kidnapping, which could have an adverse effect on our operations in such regions. In the event that continued operations in these regions compromise our security or business principles, we may withdraw from these regions on a temporary or permanent basis, which in turn, could have an adverse impact on our results of operations and financial condition. Any changes in regulations or shifts in political attitudes are beyond our control and may adversely affect our business.

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.

Due to our net losses, negative cash flow and negative working capital, in their report on our audited financial statements for the years ended December 31, 2017 and 2016, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.

We have incurred substantial losses since inception. Because of these losses, we will require additional working capital to develop our business operations. We intend to raise additional working capital through private placements, public offerings, bank financing and/or advances from related parties or shareholder loans.

There are no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or, if available, will be on terms acceptable to us. If adequate working capital is not available we may not increase our operations.

These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Risks Related to Intellectual Property

Our inability to adequately protect our intellectual property rights could hurt business.

Our commercial success will depend in part on obtaining and maintaining intellectual property protection for our products, formulations, processes, methods and other technologies. We will only be able to protect these technologies and products from unauthorized use by third parties to the extent that valid and enforceable intellectual property rights, including patents or other market exclusionary rights apply.

The patent positions of pharmaceutical companies, like ours, can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies’ patents has emerged to date in the United States. The general environment for pharmaceutical patents outside the United States also involves significant uncertainty. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced, or that the scope of these patent rights could provide a sufficient degree of future protection that could permit us to gain or keep our competitive advantage with respect to these products and technologies. For example, we cannot predict:

Some of our patents we have licensed may be subject to challenge and possibly invalidated or rendered unenforceable by third parties. Changes in either the patent laws or in the interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property.

In addition, others may independently develop similar or alternative products and technologies that may be outside the scope of our intellectual property. Furthermore, others may have invented technology claimed by our patents before our licensors or we did so, and they may have filed patents claiming such technology before we did so, weakening our ability to obtain and maintain patent protection for such technology. Should third parties obtain patent rights to similar products or technology, this may have an adverse effect on our business.

We may also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. Trade secrets, however, are difficult to protect. While we believe that we will use reasonable efforts to protect our trade secrets, our own or our strategic partners’ employees, consultants, contractors or advisors may unintentionally or willfully disclose our information to competitors. We seek to protect this information, in part, through the use of non-disclosure and confidentiality agreements with employees, consultants, advisors and others. These agreements may be breached, and we may not have adequate remedies for a breach. In addition, we cannot ensure that those agreements will provide adequate protection for our trade secrets, know-how or other proprietary information or prevent their unauthorized use or disclosure.

If competitors that have greater experience and financial resources learn our trade secrets, the competitors may copy or use our trade secrets and other proprietary information in the advancement of their products, methods or technologies. If we were to prosecute a claim that a third party had illegally obtained and was using our trade secrets, it could be expensive and time consuming and the outcome could be unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets than courts in the United States. Moreover, if our competitors independently develop equivalent knowledge, we would lack any legal or contractual claim to prevent them from using such information, and our business could be harmed.

The Company’s most important intellectual property includes:

We may become subject to intellectual property suits that could cause us to incur significant costs or pay significant damages or that could prohibit us from selling its products.

The Company’s competitors also seek to obtain patents or other protection of their proprietary rights. Third parties may claim in the future that the Company’s products infringe upon their proprietary rights. To date, there have been no claims of infringement. However, in the future, intellectual property claims could force the Company to alter its existing products or withdraw them from the market or could delay the introduction of new products.

Various patents have been issued to the Company’s competitors and these competitors may assert that the Company’s products infringe their patent or other proprietary rights. If the Company’s products are found to infringe third-party intellectual property rights, the Company may be unable to obtain a license to use such technology, and it could incur substantial costs to redesign its products or to defend legal actions.

The drug discovery and development industry has a history of patent and other intellectual property litigation; thus, we may be involved in costly intellectual property lawsuits.

There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. We or one of our collaborators may be subject to third party claims in the future that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages, including treble damages and attorney’s fees if we are found to be willfully infringing a third party’s patents. Further, if a patent infringement suit were brought against us or our collaborators, we or they could be forced to stop or delay research, development, manufacturing or sales of the product or drug candidate that is the subject of the suit. As a result of patent infringement claims, or in order to avoid potential claims, we or our collaborators may choose to seek, or be required to seek, a license from the third party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or forced to redesign it, or to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms. This could harm our business significantly.

In addition to infringement claims against us, if third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings with the United States Patent and Trademark Office (“USPTO”) to determine the priority of invention. We may also become involved in similar opposition proceedings in the European Patent Office regarding our intellectual property rights with respect to our products and technology.

The failure to obtain or maintain patents, licensing agreements and other intellectual property could impact our ability to compete effectively.

Our success will depend, in part, on our ability to obtain and maintain patent protection for our drug candidates, preserve our trade secrets, prevent third parties from infringing upon our proprietary rights and operate without infringing upon the proprietary rights of others. While the patents we own have been issued, pending patent applications we have filed may not result in issued patents or may take longer than we expect to result in issued patents. We cannot be certain that patents will be issued as a result of any of our pending applications, and we cannot be certain that any of our issued patents, whether issued pursuant to our pending applications or licensed from third parties, will give us adequate protection from competing products.

Composition of Matter patents on APIs are generally considered to be the strongest form of intellectual property protection for pharmaceutical products, as they apply without regard to any method of use. Entirely new individual chemical compounds, often referred to as new chemical entities, are typically entitled to Composition of Matter coverage. However, we cannot be certain that the current law will remain the same, or that our drug candidates will be considered novel and non-obvious by the USPTO and courts.

In addition to Composition of Matter patents and patent applications, we also have filed Method of Use patent applications. This type of patent protects the use of the product only for the specified method. However, this type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if these competitors do not actively promote their product for our targeted indication, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of Method of Use patents, the practice is common and such infringement is difficult to prevent or prosecute.

Patent applications in the United States and most other countries are confidential for a period of time until they are published. The publication of discoveries in scientific or patent literature typically lags actual discoveries by several months or more. As a result, we cannot be certain whether the Company or another inventor were the inventors of the issued patents and applications or that the Company or another inventor were the first to conceive of the inventions covered by such patents and pending patent applications or that the Company or another inventor were the first to file patent applications covering such inventions.

Others may obtain issued patents that could prevent us from commercializing our product candidates or require us to obtain licenses requiring the payment of considerable fees or royalties in order to enable us to conduct our business. As to those patents that we have licensed, our rights depend on maintaining our obligations to the licensor under the applicable license agreement, and we may be unable to do so.

We have numerous issued patents and some patent applications pending before the USPTO. The protection may lapse before we manage to obtain commercial value from the patents, which might result in increased competition and materially affect our position in the market.

We may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.

Many of our employees were previously employed at universities, biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper our ability to commercialize, or prevent us from commercializing our drug candidates, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

Some of our intellectual property that was discovered through government funded programs may be subject to federal regulation such as “march-in” rights, certain reporting requirements, and a preference for United States industry. Compliance with such regulations may limit our exclusive rights, subject us to expenditure of resources with respect to reporting requirements, and limit our ability to contract with foreign manufacturers.

Some of our existing drug candidates, including LDN and MENK, and some of the research and development work conducted before we had licensing rights may have been funded, at least in part, by the U.S. government and therefore would be subject to certain federal regulations. Under the “march-in” provisions of the Bayh-Dole Act, the government may have the right under limited circumstances to require the patent owners to grant exclusive, partially exclusive or non-exclusive rights to third parties for intellectual property discovered through the government-funded program. The government can exercise its march-in rights if it determines that action is necessary because the patent owner fails to achieve practical application of the new invention or because action is necessary to alleviate health concerns or address the safety needs of the public. Intellectual property discovered under the government-funded program is also subject to certain reporting requirements, compliance with which may require us to expend substantial resources. Such intellectual property is also subject to a preference for U.S. industry, which may limit our ability to contract with foreign product manufacturers for products covered by such intellectual property. We may apply for additional U.S. government funding, and it is possible that we may discover compounds or drug candidates as a result of such funding. Intellectual property under such discoveries would be subject to the applicable provisions of the Bayh-Dole Act.

Risks Related to Government Regulation

The regulatory approval process is expensive, time consuming and uncertain and may prevent us or our collaboration partners from obtaining approvals for the commercialization of some or all of our drug candidates.

The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries which regulations differ from country to country. Neither we nor our collaboration partners are permitted to market our drug candidates in the United States until we receive approval of a NDA from the FDA. Neither we nor our collaboration partners have submitted an application for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and uncertain process. In addition, failure to comply with FDA and other applicable U.S. and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions, including:

Regulatory approval of an NDA or NDA supplement is not guaranteed, and the approval process is expensive and may take several years. The FDA also has substantial discretion in the approval process. Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to abandon or repeat clinical trials, or perform additional preclinical studies and clinical trials. The number of preclinical studies and clinical trials that will be required for FDA approval varies depending on the drug candidate, the disease or condition that the drug candidate is designed to address, and the regulations applicable to any particular drug candidate. The FDA can delay, limit or deny approval of a drug candidate for many reasons, including, but not limited to, the following:

If any of our drug candidates fail to demonstrate safety and efficacy in clinical trials or do not gain regulatory approval, our business and results of operations will be materially and adversely harmed.

Even if we receive regulatory approval for a drug candidate, we will be subject to ongoing regulatory obligations and continued regulatory review which may result in considerable additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.

Once regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA and/or non-U.S. regulatory authorities. Any regulatory approval that we or our collaboration partners receive for our drug candidates may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing follow-up studies to monitor the safety and efficacy of the product. In addition, if the FDA and/or non-U.S. regulatory authorities approve any of our drug candidates, we will be subject to extensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting, storage, advertising, promotion and recordkeeping for our products. In addition, manufacturers of our drug products are required to comply with current cGMP regulations which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation. Further, regulatory authorities must approve these manufacturing facilities before they can be used to manufacture our drug products, and these facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations. If we or a regulatory authority discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing. If we, our drug candidates or the manufacturing facilities for our drug candidates fail to comply with regulatory requirements of the FDA and/or other non-U.S. regulatory authorities, we could be subject to administrative or judicially imposed sanctions, including:

The regulatory requirements and policies may change and additional government regulations may be enacted for which we may also be required to comply. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or in other countries. If we are not able to maintain regulatory compliance, we will not be permitted to market our future products and our business will suffer.

The availability of adequate third-party coverage and reimbursement for newly approved drugs is uncertain, and failure to obtain adequate coverage and reimbursement from third-party payers could impede our ability to market any future products we may develop and could limit our ability to generate revenue.

There is significant uncertainty related to the third-party payor coverage and reimbursement of newly approved drugs. The commercial success of our future products in both domestic and international markets depends on whether such third-party coverage and reimbursement is available for our future products. Governmental payers, including Medicare and Medicaid, health maintenance organizations and other third-party payers are increasingly attempting to manage their healthcare expenditures by limiting both coverage and the level of reimbursement of new drugs and, as a result, they may not cover or provide adequate reimbursement for our future products. These payers may not view our future products as cost-effective, and coverage and reimbursement may not be available to our customers or may not be sufficient to allow our future products to be marketed on a competitive basis. Third-party payers are exerting increasing influence on decisions regarding the use of, and coverage and reimbursement levels for, particular treatments. Such third-party payers, including Medicare, are challenging the prices charged for medical products and services, and many third-party payers limit or delay coverage and reimbursement for newly approved healthcare products. In particular, third-party payers may limit the covered indications. Cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower than anticipated product revenues. If the prices for our drug candidates decrease or if governmental and other third-party payers do not provide adequate coverage or reimbursement, our prospects for revenue and profitability will suffer.

Even if we obtain FDA approval of any product candidate we may develop or acquire in the future, we may never obtain approval or commercialize our products outside of the U.S., which would limit our ability to realize their full market potential. If foreign approval is obtained, there are risks in conducting business in international markets.

We have and continue to seek other distribution and marketing partners for IRT-101 and IRT-103 (LDN) outside North America that will and may market future products in international markets. In order to market any of our products we may develop or acquire outside of the U.S., we must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval procedures vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approvals could result in significant delays, difficulties and costs for us and require additional preclinical studies or clinical trials which would be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries. Satisfying these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. In addition, our failure to obtain regulatory approval in the U.S. or any foreign country may delay or have negative effects on the process for regulatory approval in other countries. If we fail to comply with regulatory requirements in a foreign country or to obtain and maintain required approvals, our potential market for our products will be reduced and our ability to realize the full market potential of our products will be harmed.

The Company, either directly or through its collaborating partners, is working with drug regulatory authorities in Nicaragua, China and in those African Nations where an FDA equivalent exists. The Company is working with the agencies to obtain local approval for the therapies for each modality that we intend to market for. We believe this will reduce our risk due to The Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS”) which is an international agreement administered by the World Trade Organization (“WTO”). TRIPS allows emerging nations to manufacture drugs around existing patents.

If approved for commercialization in a foreign country, we intend to enter into agreements with third parties to market our products whenever they may be approved and wherever we have the right to market them. Consequently, we expect that we will be subject to additional risks relating to entering into international business relationships, including:

These and other risks may materially adversely affect our ability to attain or sustain revenue from international markets.

Healthcare policy changes may have a material adverse effect on us.

Our business may be affected by the efforts of government and third-party payers to contain or reduce the cost of healthcare through various means. For example, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010 (collectively, the Affordable Care Act or ACA), enacted in March 2010, substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacted the pharmaceutical industry. With regard to pharmaceutical products, among other things, ACA is expected to expand and increase industry rebates for drugs covered under Medicaid programs and make changes to the coverage requirements under the Medicare D program. ACA has been held constitutional. This adds to the uncertainty of the legislative changes enacted as part of ACA, and we cannot predict the impact that ACA or any other legislative or regulatory proposals will have on our business. We expect both government and private health plans to continue to require healthcare providers, including healthcare providers that may one day purchase our products, to contain costs and demonstrate the value of the therapies they provide.

If we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.

Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payers, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. We could be subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states in which we conduct our business. The regulations that may affect our ability to operate include, without limitation:

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert Management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly.

The FDA may not accept the results of clinical trials conducted outside of the United States.

It is possible that the FDA may not accept the results of our clinical trials; and this risk can increase when a clinical trial is conducted outside of the United States. All clinical trials and clinical trial sites that are outside of the United States but will be used to support a FDA application will be run in accordance with all US guidelines and regulations; however, this does not guarantee the FDA’s acceptance of the clinical trial results. Clinical studies to support US licensure will only be conducted in countries that are typically used to support a US licensure such as Canada, Australia, and countries within the EU. We would need to obtain approval from the FDA to conduct the trial outside of the United States and/or to allow clinical sites outside of the US, prior to initiation of such study. We would also need to ensure that the study is conducted in accordance with local legal and regulatory requirements and all applicable United States federal regulations, European Union regulations, International Conference on Harmonisation of Good Clinical Practice guidelines and any other applicable regulatory requirements for the overall conduct of the clinical investigation.

Risks Related to our Common Stock

Because of their significant stock ownership, our chief executive officer, our other executive officers, and our directors and principal stockholders may be able to exert control over us and our significant corporate decisions. Our other stockholders will have limited ability to influence corporate actions or decisions.

This concentration of ownership may harm the value of our common stock by, among other things:

As a group, our officers and directors own 14.0% of the outstanding common stock of the Company. Our other stockholders will have limited ability to influence corporate actions or decisions.

The price of our common stock may be volatile, and you may not be able to resell your shares.

An active and liquid trading market for our common stock may not develop or be sustainable. Shareholders may be unable to sell shares of common stock at or above their purchase price due to fluctuations in the market price of our common stock. The market price of our common stock may fluctuate significantly in response to factors, some of which are beyond our control. Factors that could cause volatility in the market price of our common stock include, but are not limited to:

In addition, the stock markets in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of the issuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation suits against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our management would be diverted from the operation of our business.

Future sales of our common stock or securities convertible or exchangeable for our common stock may depress our stock price.

If our existing stockholders or holders of our convertible notes, options or warrants sell, or indicate an intention to sell substantial amounts of our common stock in the public market, the trading price of our common stock could decline. The perception in the market place that these sales may occur could also cause the trading price of our common stock to decline.

Certain holders of shares of our common stock, warrants to purchase our common stock, and shares of common stock issuable upon exercise of warrants will be entitled to rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares purchased by affiliates. In addition, our directors may, and we expect that our executive officers will establish programmed selling plans under Rule 10b5-1 of the Exchange Act, for the purpose of effecting sales of our common stock. Any sales of securities by these stockholders, or the perception that those sales may occur, including the entry into such programmed selling plans, could have a material adverse effect on the trading price of our common stock.

If we sell shares of our common stock in future financings, common stockholders may experience immediate dilution and, as a result, our stock price may decline.

We may from time to time issue additional shares of common stock at a discount from the current trading price of our common stock. As a result, our common stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such a discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or common stock.

Provisions of our charter documents or Florida law could delay or prevent an acquisition of the Company, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for stockholders to change management.

Provisions of our amended and restated articles of incorporation, as amended, and amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management by making it more difficult to replace or remove our board of directors.

We do not anticipate paying any cash dividends on our capital stock in the foreseeable future, therefore capital appreciation, if any, of our common stock will be our shareholders sole source of gain for the foreseeable future.

We have never declared or paid cash dividends on our capital stock. We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of the common stock will be our shareholders sole source of gain for the foreseeable future.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our Company. If no securities or industry analysts commence coverage of our Company, the trading price for our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Our board of directors is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.

Our amended and restated articles of incorporation, as amended, authorize our board of directors, without the approval of our stockholders, to issue shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our amended and restated articles of incorporation, as amended, as shares of preferred stock in series, and to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value. We do not currently have any class of preferred stock authorized.

Our shares may be subject to the “penny stock” rules, which may subject you to restrictions on marketability and limit your ability to sell your shares.

Broker-dealer practices in connection with transactions in “Penny Stocks” are regulated by certain penny stock rules adopted by the SEC. Penny stocks generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risk associated with the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer must make a written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. The Company’s securities may be subject to the penny stock rules, and investors may find it more difficult to sell their securities.

An active and visible trading market for our common stock may not develop.

We cannot predict whether an active market for our common stock will develop in the future. In the absence of an active trading market:

Our common stock is currently quoted on the OTC Market under the trading symbol “IMUN”. The OTC Market is unorganized, inter-dealers, over-the-counter markets that provides significantly less liquidity than the New York Stock Exchange or NASDAQ. No assurances can be given that we will ever obtain a listing for our securities on a senior exchange. The trading price of our common stock is therefore expected to be subject to significant fluctuations in response to variations in quarterly operating results, changes in analysts’ earnings estimates, announcements of innovations by us or our competitors, general conditions in the industry in which we operate and other factors. These fluctuations, as well as general economic and market conditions, may have a material or adverse effect on the market price of our common stock.

Because we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth company” our financial statements may not be comparable to companies that comply with public company effective dates.

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates, and thus investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public companies, which may have a negative impact on the value and liquidity of our common stock.

We may not register or qualify our securities with any state agency pursuant to blue sky regulations.

The holders of our shares of common stock and persons who desire to purchase them in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. We currently do not intend to and may not be able to qualify securities for resale in other states which require shares to be qualified before they can be resold by our shareholders.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained or incorporated by reference in this Form S-1 are considered forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) concerning our business, results of operations, economic performance and/or financial condition, based on management’s current expectations, plans, estimates, assumptions and projections. Forward-looking statements are included, for example, in the discussions about:

Any statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Forward-looking statements generally are identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “aims,” “plans,” “may,” “could,” “will,” “will continue,” “seeks,” “should,” “predict,” “potential,” “outlook,” “guidance,” “target,” “forecast,” “probable,” “possible” or the negative of such terms and similar expressions. Forward-looking statements are subject to change and may be affected by risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events, except as required by law, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities laws and other applicable laws.

We caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements, and therefore you should not place too much reliance on them. These factors include, among others, those described herein, under “Risk Factors” and elsewhere in this Annual Report and in our other public reports filed with the Securities and Exchange Commission. It is not possible to predict or identify all such factors, and therefore the factors that are noted are not intended to be a complete discussion of all potential risks or uncertainties that may affect forward-looking statements. If these or other risks and uncertainties materialize, or if the assumptions underlying any of the forward-looking statements prove incorrect, our actual performance and future actions may be materially different from those expressed in, or implied by, such forward-looking statements. We can offer no assurance that our estimates or expectations will prove accurate or that we will be able to achieve our strategic and operational goals.

Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

Moreover, new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are based on information available to us on the date of this registration statement. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this registration statement.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

We maintain our headquarters at 37 North Orange Ave, Suite 607, Orlando, Florida 32801. The Company leases approximately 800 sq. feet at a monthly cost of approximately $1,350. The lease expires on December 31, 2018.

Item 3. Legal Proceedings

In November 11, 2016, the Company was sued by Kacem Enterprises, Inc. for $21,777 plus interest, costs and attorneys’ fees for travel related expenses incurred by certain consultants of the Company. On July 21, 2017, judgement was awarded against the Company in this amount. The Company has accrued $24,923 for these claims.

In October, 2017, the Company was served with a lawsuit by Cote Orphan LLC, alleging failure by the Company to pay $36,000 for services performed by Cote Orphan for the Company. The Company’s defense is that the services were not fully performed, and that it therefore not obligated to pay. As of the date of this Form 10-K, settlement negotiations have taken place but no agreement has been reached by the parties. The Company has made no accrual for this claim.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

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

Market Information

Our common stock is listed for quotation on the OTCQB marketplace under the symbol IMUN. Our common stock began trading in November 1999 on OTC under the name Galliano International Ltd. Trading under the name of TNI BioTech, Inc. commenced in March 2012 under the symbol TNIB. The symbol was changed to IMUN on December 11, 2014. The following table sets forth the high and low sales prices per share of our common stock for the periods indicated as reported by the OTC Markets Group, Inc.

Period

Record Holders

As of April 2, 2018, we have approximately 794 stockholders of record of our common stock.

Dividends

The Company paid no dividends in 2017 or 2016.

We do not anticipate paying any cash dividends in the foreseeable future.

The payment of dividends is within the discretion of our Board of Directors and will depend on our earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit our ability to pay dividends on its common stock other than those generally imposed by applicable state law.

Securities Authorized for Issuance under Equity Compensation Plans

On September 4, 2014, the Company’s shareholders approved the Company’s 2014 Stock Incentive Plan (“2014 Plan). The 2014 Plan is an important incentive for our employees and is critical to the Company’s ongoing effort to build shareholder value and align the interests of employees and directors with those of the Company’s shareholders. Equity awards are a significant part of the Company’s ability to attract, retain, and motivate our executives and employees whose skills and performance are critical to our success.

A total of 5,000,000 shares of the Company’s common stock will be reserved for issuance under the 2014 Plan. Awards under the 2014 Plan may be made to employees, directors, consultants and advisors of the Company and any successor entity that adopts the 2014 Plan. Awards under the 2014 Plan may be made in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards. Vesting of awards will be determined by our Board. No more than 500,000 shares may be issued to a single participant pursuant to stock options and stock appreciation rights in a calendar year. Re-pricing of outstanding stock awards is not permitted under the 2014 Plan. The 2014 Plan will terminate upon the earlier of the adoption of a resolution of the Board terminating the 2014 Plan, or September 3, 2024.

Item 6. Selected Financial Data

Not required for smaller reporting companies.

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

General

Immune Therapeutics, Inc. (the “Company”) was initially incorporated in Florida on December 2, 1993 as Resort Clubs International, Inc. (“Resort Clubs”). It was formed to manage and market golf course properties in resort markets throughout the United States. Galliano International Ltd. (“Galliano”) was incorporated in Delaware on May 27, 1998 and began trading in November 1999 through the filing of a 15C-211. On November 10, 2004, Galliano merged with Resort Clubs. Resort Clubs was the surviving corporation. On August 23, 2010, Resort Clubs changed its name to pH Environmental Inc. (“pH Environmental”).

On April 23, 2012, pH Environmental completed a name change to TNI BioTech, Inc., and on April 24, 2012, we executed a share exchange agreement for the acquisition of all of the outstanding shares of TNI BioTech IP, Inc. On September 4, 2014, a majority of our shareholders approved an amendment to our Amended and Restated Articles of Incorporation, as amended, to change our name to Immune Therapeutics, Inc. We filed our name change amendment with the Secretary of State of Florida on October 27, 2014 changing our name to Immune Therapeutics, Inc.

The Company currently operates out of Orlando, Florida. In July 2012, the Company’s focus turned to acquiring patents that would protect and advance the development of new uses of opioid-related immune- therapies, such as low dose naltrexone (“LDN”) and Methionine [Met5]-enkephalin (“MENK”). The Company’s therapies are believed to stimulate and/or regulate the immune system in such a way that they provide the potential to treat a variety of diseases. We believe our therapies may be able to correct abnormalities or deficiencies in the immune system in diseases such as HIV infection, autoimmune disease, immune disorders, or cancer; all of which can lead to disease progression and life-threatening situations when the immune system is not functioning optimally.

Subsidiaries

In October 2012, the Company formed TNI BioTech International, Ltd., a BVI company in Tortola, British Virgin Islands, which was set up to allow the Company to market and sell LDN in those countries outside the U.S. in which we have been able to obtain approval to sell the Company’s products.

In August 2013, the Company formed its United Kingdom subsidiary, TNI BioTech, LTD (the “UK Subsidiary”). The UK Subsidiary received approval to be considered a micro, small or medium-sized enterprise (“SME”) with the European Medicines Agency (“EMA”) on August 21, 2013. The designation provides the UK Subsidiary with significant discounts when holding meetings or submitting filings to the EMA. On September 19, 2013, the UK Subsidiary submitted a pre-submission package to the EMA regarding Crohn’s Disease. The EMA granted the UK Subsidiary a meeting that took place on September 27, 2013. The UK Subsidiary is eligible to benefit from the provisions for administrative and financial assistance for SMEs set out in Regulation (EC) No 2049/2005. The Company will apply to obtain EMA benefits once funding becomes available.

In December 2013, the Company formed a new subsidiary, Cytocom Inc., to focus on conducting LDN and MENK clinical trials in the United States. In December 2014, the Company finalized the distribution of common stock of Cytocom Inc. to its shareholders. As part of the transaction, the Company retained exclusive rights to all international patents, in-country approvals, formulations, trademarks, manufacturing, marketing, sales, and distributions rights in emerging nations, including Africa, Central America, South America, Russia, India, China, Far East, and The Commonwealth of Independent States (former Soviet Union). The Company will continue to have access to existing clinical data as well as any new data generated by Cytocom Inc. during drug development.

On December 8, 2014, the number of Cytocom Inc. shares of common stock that were issued to our shareholders totaled 113,242,522. In connection with the transaction, Cytocom Inc. issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% stake in Cytocom Inc. on that date. In April 2016, the Board of Directors and a majority of shareholders of Cytocom approved a reverse stock split of Cytocom’s outstanding common stock with one new share of stock for each twenty old shares of common stock. Cytocom effectuated and finalized the reverse split in June 2016. At December 31, 2017, the Company’s equity interest had been further reduced to 9.3% by subsequent issuances of Cytocom common stock. 

In March 2014, the Company incorporated Airmed Biopharma Limited, an Irish corporation with an address in Dublin, Ireland, and Airmed Holdings Limited, an Irish company domiciled in Bermuda. The Irish companies were set up to benefit from incentives granted by the Irish government for the establishment of pharmaceutical companies (many of the world’s leading pharmaceutical companies have located in Ireland), and so that the Company could take advantage of Ireland’s status as a member of the European Union and the European Economic Area. An Irish limited liability company enjoys a low corporate income tax rate of 12.5%, one of the lowest in the world. The Irish-domiciled company hopes to qualify for tax incentives for Irish holding/headquartered companies and to benefit from the network of double tax treaties that reduce withholding taxes. TNI BioTech International, Ltd. will manage our international distribution, using product that is manufactured in Ireland and elsewhere.

We are focused on the development and commercialization of therapeutic treatments for cancer, HIV/AIDS and autoimmune diseases and immune disorders by combating these severe and fatal diseases through the stimulation and/or regulation of the body’s immune system. TNI’s growth strategy includes the near-term commercialization of its existing immunotherapies targeting cancer, Crohn’s disease and/or HIV/AIDS.

Financial Operations Overview

Revenue

The Company had no revenues in the year ending December 31, 2017, compared to revenues of $3,463 in 2016. The decrease in revenues was primarily attributable to the cancellation of the Company’s manufacturing agreement with KRS in the second quarter of 2017. As of December 31, 2017, the Company had not signed an agreement with another contract manufacturer or distributor for the sale of its products in the United States.

Direct Expenses and Gross Margin

The Company incurred no direct expenses in 2017 and 2016. In future, direct expenses will include the cost of finished product to be purchased from the Company’s contract manufacturers, sales incentives, associated travel, and inventory return charges.

Gross margin, which is gross profit as a percent of revenue, will be affected by a number of factors, including the type of product sold and the geographic region in which the sale is made.

Research and Development

The Company makes investments in research and development (“R&D) in support of ongoing proprietary product development programs to support its pipeline of new drug candidates. See Item 1. “Business” for a summary the current stage of development of our new drug candidates. Expenses related to both direct research and to the use of outsourced research arrangements decreased in 2017 compared to 2016, as the Company was not able to raise the cash required to fund its planned research program in 2017.

R&D expenses consist of salaries and benefits paid to employees directly engaged in research, payments made in cash or in kind to contractors for services directly related to research and product development, product development costs, payments made for patents and licenses to which the Company has acquired rights to use, and travel, telecommunications, facilities and external legal costs incurred in relation to research activities.

We do not collect costs on a product basis or for any category of product involved in carrying out research projects. While we do perform cost calculations to facilitate our internal evaluation of individual products, these calculations include significant estimations and allocations that are not relevant to, or included in, our external financial reporting mechanisms. As a consequence, we do not report research and development costs at the product level.

Operating Expenses

Selling, general and administrative expenses primarily include salary and benefit costs for employees and contractors included in our sales, marketing, finance, legal and administrative organizations, professional services, insurance, unallocated travel expenses, telecommunications, impairment of intangibles, and office expenses. Professional services consist principally of recruiting costs, external legal, audit, tax and other consulting services.

Other Expenses, Net

Other expenses, net consists primarily of interest income on cash balances, and interest expense on borrowings. Interest expense will vary periodically depending on prevailing short-term interest rates.

Loss on settlement of debt

Loss on settlement of debt comprises the cost of issuance of common stock for the retirement of principal and accrued interest on promissory notes.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. Note 1, “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

We have identified the policies below as critical to our business operations and the understanding of its results of operations. The Company’s senior management has reviewed these critical accounting policies and related disclosures with the Company’s Board of Directors. The impact and any associated risks related to these policies on our business operations are discussed throughout this section where such policies affect our reported and expected financial results. Our preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenues and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates and such differences may be material.

Revenue Recognition

We recognize revenue on sales to customers and distributors upon satisfaction of our performance obligations when the goods are shipped. For consignment sales, we recognize revenue when the goods are pulled from consignment inventory.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. We believe the new standard will not have a material impact on our consolidated financial position and consolidated results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions once we commence revenue-generating activities.

Leases

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our consolidated financial position, but we do not expect it to have a material impact on our results of operations.

Use of Estimates

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates.

Cash, Cash Equivalents, and Short-Term Investments

The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposits, commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of a default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the condensed consolidated balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At December 31, 2017, the Company has no cash balances in excess of insured limits.

Segment and Geographic Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment and does not segment the business for internal reporting or decision making.

Fair Value of Financial Instruments

In accordance with the reporting requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. Cash, cash equivalents and accounts payable are accounted for at cost which approximates fair value due to the relatively short maturity of these instruments. The carrying value of notes payable also approximate fair value since they bear market rates of interest and other terms. None of these instruments are held for trading purposes.

Fair Value Measurements

The ASC Topic 820, Fair Value Measurement, defines fair value, establishes a framework for measuring fair value in accordance with U.S. generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

Inventory

Inventories are stated at the lower of cost or market with cost based on the first-in, first-out (FIFO) method. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in a clinical trials or clinical manufacturing campaigns.

Fixed Assets 

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is determined on a straight-line basis over the estimated useful lives of the assets, which generally range from three to five years. Maintenance and repairs are charged against expense as incurred. Depreciation expense for the years ended December 31, 2017 and December 31, 2016 was $826 and $1,557, respectively.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets for impairment whenever events or change in circumstances indicate that the carrying amount of an asset may not be recoverable as prescribed by ASC Topic 360-10-05, “Property, Plant and Equipment.” If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Company will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value.

Research and Development Costs

Research and development costs are charged to expense as incurred and are typically comprised of salaries and benefits, pre-clinical studies, clinical trial activities, drug development and manufacturing, fees paid to consultants and other entities that conduct certain research and development activities on the Company’s behalf and third-party service fees, including clinical research organizations and investigative sites. Costs for certain development activities, such as clinical trials are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as operating expenses.

Income Taxes

The Company follows ASC Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the asset will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC Topic 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2017 and 2016, the Company does not have a liability for unrecognized tax uncertainties.

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of December 31, 2017, and 2016, the Company has not accrued any interest or penalties related to uncertain tax positions.

In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which amends ASC Topic 220, Income Statement - Reporting Comprehensive Income. This ASU allows for tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act to be reclassified as retained earnings. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effect this guidance may have on its financial position, results of operations, comprehensive income, cash flows and disclosures. 

Stock-Based Compensation and Issuance of Stock for Non-Cash Consideration

The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values equaling either the market value of the shares issued or the value of consideration received, whichever is more readily determinable. The majority of the non-cash consideration pertains to services rendered by consultants and others and has been valued at the fair value of the Company’s common stock at the date of the agreement.

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC Topic 505-50, “Equity-Based Payments to Non-Employees.” The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete.

Non-controlling Interest

In accordance with ASC Topic 810, Consolidation, the Company consolidates Cytocom, Inc. The non-controlling interests in Cytocom represent the interests of outside shareholders in the equity and results of operations of Cytocom.

Net Loss Per Share of Common Stock

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period using the “as if converted” basis.

Uncertainty in Income Taxes

Management considers the likelihood of changes by taxing authorities in its filed income tax returns, and recognizes a liability for or discloses potential changes that management believes are more likely than not to occur upon examination by tax authorities. Management has not identified any uncertain tax positions in filed income tax returns that require recognition or disclosure. The Company’s income tax returns for the past three years are subject to examination by tax authorities, and may change upon examination.

We follow Accounting Standards Codification (“ASC”) 740-10, Accounting for Uncertainty in Income Taxes (“ASC 740-10”). This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. ASC 740-10 is effective for fiscal years beginning after December 15, 2006. The Company has adopted ASC 740-10 and evaluates its tax positions on an annual basis.

Results of Operations

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Revenues

We had no revenues from operations for the year ended December 31, 2017, compared to revenues of $3,463 for the year ended December 31, 2016. All 2016 revenues were earned under the agreement signed on December 8, 2015 with KRS Global Biotechnology, Inc. (“KRS”).

Operating Expenses

Selling, general and administrative

Selling, general and administrative expenses and related percentages for the years ended December 31, 2017 and 2016 were as follows (dollar amounts in thousands):

In 2017, total cash spent on in selling, general and administrative expense was $2,832, compared to $3,887 for 2016, a decrease of $1,055 or 27%. For the years ended December 31, 2017 and 2016, selling, general and administrative expenses were made up as follows (dollar amounts in thousands):