RENOVARO BIOSCIENCES INC. - Annual Report: 2016 (Form 10-K)

United states

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒  Annual report under section 13 Or 15( d ) of the securities exchange act of 1934  

For the fiscal year ended June 30, 2016

☐  transition report under section 13 Or 15( d ) of the securities exchange act of 1934  

For the transition period from

Commission file number 000-54478  

+45 391 79840

(Registrant’s telephone number, including area code)

DanDrit Biotech USA, Inc.

Fruebjergvej 3, Box 62

2100 Copenhagen, Denmark

+45 39179840

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

Securities registered pursuant to Section 12(b) of the Act:  

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.0001 par value 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐  Yes      ☒  No  

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  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 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  ☒      No  ☐  

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  

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

 On December 31, 2015, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $32,509,226.

 Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 

 As of September 25, 2016, the number of shares of the registrant’s classes of common stock outstanding was 9,533,290. 

DOCUMENTS INCORPORATED BY REFERENCE   

Not applicable.  

CONTENTS 

Cautionary Language Regarding Forward-Looking Statements and Industry Data

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are based upon our current assumptions, expectations and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “may,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential” or the negative of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not forward-looking. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. These forward-looking statements are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed under "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations". Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this Annual Report on Form 10-K and any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Factors that may cause or contribute actual results to differ from these forward-looking statements include, but are not limited to, the following:

All forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements or other information contained herein. Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements in this report are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Information regarding market and industry statistics contained in this report is included based on information available to us that we believe is accurate. It is generally based on academic and other publications that are not produced for purposes of securities offerings or economic analysis. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. Except as required by U.S. federal securities laws, we have no obligation to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those statements.

PART I

Unless otherwise indicated or the context otherwise requires, all references in this prospectus to “DanDrit,” “we,” “us,” “our” or the “Company” are to DanDrit Biotech USA, Inc., a Delaware corporation (“DanDrit USA”), together with its wholly-owned subsidiary DanDrit Biotech A/S, a Danish limited company, organized under the Danish Act on Limited Companies of the Kingdom of Denmark (“DanDrit Denmark,” or the “Subsidiary”).

Item 1. Business

Overview of Our Business

DanDrit a biotechnology company seeking to develop what we believe could be the world’s first vaccine approved for the treatment of colorectal cancer. For more than a decade we have developed and patented vaccines successfully used in initial clinical trials in Europe and Asia including: (i) MelCancerVac™ (MCV) for treatment of cancer (one phase I/II trial in Denmark and two phase II trials in Denmark and Singapore), (ii) Tolerogenic (producing immunologic tolerance) dendritic cell (TDC) (pre-clinical stage in Denmark) and (iii) Melvaccine (MV) a melanoma cell lysate used as stand-alone vaccine (pre-clinical state in Denmark). We plan to continue our clinical development program in Europe and the United States. Springing from academic roots in Denmark, DanDrit has built upon its scientific and medical skills to advance candidate therapies, targeted initially at non-small-cell-lung-cancer (NSCLC) and colorectal cancer (sometimes referred to herein as CRC). In 2001, MCV was developed as a result of the combined efforts and research of DanDrit researchers and employees. On September 22, 2008, the Singapore government granted to DanDrit Denmark a named-patient compassionate use program of MCV. DanDrit’s dendritic cell vaccine, MCV, was evaluated in three single-arm Phase II clinical trials in cancer where MCV demonstrated potential efficacy. However, these three clinical trials generated data reported in published papers which indicated that the data needed to be confirmed in a larger, comparative randomized clinical trial. As a result, DanDrit, with the assistance of experienced practitioners in colorectal cancer treatment, designed a randomized trial with stage IV colorectal cancer patients and plans to conduct this randomized Phase III trial to assess the ability of MCV to prevent relapse of stage IV NED colorectal cancer patients with No Evidence of Disease (NED). Neither the US Federal Drug Administration (FDA) nor any other comparable governmental agency has reviewed MCV. Therefore, any assessment of its safety or efficacy only reflects the opinion of the Company. Furthermore, it does not indicate that MCV will achieve favorable results in any later stage trials or that the FDA or comparable agency will ultimately determine that MCV is safe and effective for purposes of granting marketing approval.

In June 2015, DanDrit’s Board of Directors approved a change to DanDrit’s fiscal year end from December 31 to June 30.

Our Biotechnology

We believe that DanDrit's next generation of dendritic cell vaccine technology may benefit of the following technological competitive advantages over other cancer vaccines, such as Dendreon’s FDA approved Provenge™ cancer vaccine :

MCV demonstrated efficacy in three separate Phase II clinical trials in colorectal and non-small cell lung cancer. Even if MCV can be used for various cancers, DanDrit has decided to focus MCV’s clinical development specifically on the treatment of advanced CRC.

History

DanDrit USA was originally incorporated in Delaware on January 18, 2011 under the name “Putnam Hills Corp.” as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. We filed a Registration Statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on August 12, 2011.

On February 12, 2014, in accordance with the terms and conditions of a Share Exchange Agreement (the “Share Exchange Agreement”), we completed the acquisition of approximately 100% of the issued and outstanding capital stock  of  DanDrit Denmark (the “Share Exchange”) and as a result became DanDrit Denmark’s parent company (the “Parent”). In connection with the Share Exchange, each outstanding share of common stock of DanDrit Denmark was exchanged for 1.498842 shares of DanDrit USA’s common stock, par value $.0001 per share (the “Common Stock”) for an aggregate of 6,000,000 shares, including 185,053 shares of Common Stock reserved for issuance, in accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark, to the DanDrit Denmark shareholders who did not consent to the Share Exchange and deemed issued and outstanding for accounting purposes. In addition, in connection with the Share Exchange (1) the sole shareholder prior to the Share Exchange agreed to cancel 4,400,000 shares of outstanding Common Stock owned by it and (2) the board of directors and executive management of DanDrit Denmark was appointed to serve as the Board of Directors and executive management of DanDrit USA effective upon the resignation of the sole officer and director of DanDrit USA prior to the closing of the Share Exchange.

Emerging Growth Company

As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012. An “emerging growth company” may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

As a smaller reporting company, each of the foregoing exemptions is currently available to us. We may take advantage of these exemptions until the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act, which such fifth anniversary will occur in 2018 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenues as of the end of a fiscal year, if we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or if we issue more than $1.0 billion of non-convertible debt over a three-year-period. The JOBS Act permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies; provided, however, that an emerging growth company may elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have not elected to opt out of the transition period.

Because we have elected to take advantage of certain of the reduced disclosure obligations and may elect to take advantage of other reduced reporting requirements in future filings, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

Our Business Strategy

Our clinical development strategy is focused on conducting a Phase III clinical trial in advanced colorectal cancer. DanDrit intends to conduct a randomized multicenter Phase III clinical trial to determine the ability of MCV to prevent recidivism in stage IV colorectal patients with no evidence of disease (NED) after resection of metastasis and chemotherapy. This randomized trial is planned to be enrolled within two years. We believe that positive clinical data will be the catalyst to unlock commercial revenues for DanDrit through either MCV acquisition by a pharmaceutical partner or licensing arrangements that would yield upfront and milestone payments as well as royalties.

Furthermore, parallel to the previously described clinical trial, DanDrit may pursue a registration trial to support potential approval of MCV in China. This trial would be conducted under China’s State Food and Drug Administration (the “SFDA”) regulations with a Chinese oncology pharmaceutical partner. China has recently put in place a drug approval system.

DanDrit is headquartered in the USA and also runs operations from its subsidiary in Denmark. 

Our Proposed Clinical Trial

DanDrit intends to develop globally the use of MCV in the treatment of colorectal cancer, and to follow that expansion with the treatment of other types of cancer. DanDrit currently intends to focus its development program, a randomized multicenter Phase III clinical trial in stage IV colorectal cancer in Italy, known as VIVA (MelCancerVac vaccine in patients with stage IV colorectal cancer with no evidence of disease after standard of care, a randomized Phase III adjuvant study).

The VIVA clinical trial with an adaptive design plans to first enroll 174 stage IV colorectal cancer patients after resection of metastases and chemotherapy. These patients have no evidence of disease but are not cured of cancer. Their Relapse Free Survival (an endpoint used to analyze the results of the treatment for the cancer which renders the patient apparently disease free, such as surgery plus adjuvant therapy, where, in the Relapse-Free Survival, the event is relapse rather than death) is only 24 to 26 months. The objective of the VIVA Phase III clinical study is to lengthen the survival of these patients. Treatment will be randomized against reference therapy. Patients will be included after resection of their primary tumor and metastases and after appropriate peri-operative or post-operative chemotherapy by random assignment to a non-vaccine control group or a vaccine group receiving five vaccinations with 14-day administration intervals followed by ten vaccines with two-month intervals. Inclusion will take place ten weeks after finishing the last round of chemotherapy (FOLFOX or FOLFIRI) and after a negative tumor scan (head, thoracic and abdominal cavities) and normal carcinoembryonic antigen (CEA) prior to inclusion in the vaccine or the control groups. The control group will receive standard therapy. In the event of disease progression, as verified by tumor scan and biomarker levels during the vaccination schedule, MCV vaccinations will be discontinued.

Products

DanDrit’s MCV demonstrated potential efficacy in three separate Phase II clinical trials in colorectal and non-small cell lung cancer. Even if MCV can be used for various cancers, DanDrit has decided to initiate MCV’s clinical development with advanced colorectal cancer. We believe that a maintenance therapy for advanced colorectal cancer represents a genuine commercial opportunity for MCV.   A clear and unmet medical need for a safe maintenance therapy offers the opportunity to confirm the potential efficacy of MCV in a favorable setting. 

The purpose of the VIVA trial will be to determine the ability of MCV to prevent recidivism in stage IV colorectal patients with no evidence of disease after resection of metastasis and chemotherapy. Using an Adaptive Design Clinical Study, which allows modification made to trial and/or statistical procedures of ongoing clinical trials based on accrued data, the VIVA trial will evaluate MCV with standard of care against standard of care alone in 174 colorectal cancer patients using as primary endpoints Relapse Free Survival (RFS) at 18 months and Overall Survival (OS). We anticipate that the first step of the VIVA trial can be completed within three years.

DanDrit has learned how to manufacture dendritic cells, immune cells forming part of the mammalian immune system with the main function of processing antigen material and presenting it on the surface to other cells of the immune system, functioning as antigen-presenting cells, in vitro from monocyte (a type of white blood cell) precursor cells taken from patients eligible for DanDrit’s therapies. The preparation of tumor lysate containing selections of cancer-specific non-self-antigens allows DanDrit to sensitize patients’ dendritic cells. The use of the patient’s own monocyte cells from peripheral blood (autologous cell therapy) overcomes the issues associated with non-self-allergic reactions to immune therapies.

DanDrit’s intellectual property is protected with patents and trademarks. DanDrit’s candidate vaccines are based on the MCV platform that is protected by a family of issued or submitted patents. DanDrit’s lead product has completed Phase II clinical trials in Denmark and Singapore. Following the results of DanDrit’s Singapore Phase II clinical trials, Singapore authorities allowed the use of MCV for CRC on a humanitarian named patient basis.  Named patient programs provide controlled, pre-approval access to drugs in response to requests by physicians on behalf of specific, or “named”, patients before those medicines are licensed in the patient’s home country. Governments worldwide, such as Singapore’s government, have created provisions for granting access to drugs prior to approval for patients who have exhausted all alternative treatment options and do not match clinical trial entry criteria. Often grouped under the labels of compassionate use, expanded access, or named patient supply, these programs are governed by rules which vary by country defining access criteria, data collection, promotion, and control of drug distribution.  Through these programs, patients are able to access drugs in late-stage clinical trials or approved in other countries for a genuine, unmet medical need, before those drugs have been licensed in the patient’s home country. In September 2008, DanDrit Denmark and the National Cancer Centre of Singapore (NCC) entered into a collaboration agreement regarding a clinical named patient program conducted in Singapore at NCC with the dendritic cell vaccine MCV.  NCC has established a GMP approved laboratory in which the manufacturing of MCV takes place. NCC has received approval from the relevant governmental authorities for the import of lysate necessary for production of MCV. The clinical and research and development activities of the named patient program relate to the Company’s product, MCV. The purpose for the Singapore named patient program is to provide patients with advanced colorectal cancer or other forms of cancer(s) with the presence of MAGE antigen expression an alternative treatment for the vaccination with MCV, where there is no further indication for surgery or treatment with chemotherapy. Patients are recruited on named patient basis according to the patient inclusion and exclusion criteria stated in the phase II study protocol. However, there may be some exceptional cases where treatment will be made based on a doctor’s discretion regarding the patient’s quality of life.

To date, clinical trials of MCV have been targeted to patients in terminal stages of cancer with non-resectable bulky tumors who failed to respond to surgery and chemotherapy. Several patients showed extended overall survival with good quality of life. Several patients showed stable disease with no progression of tumors. There was evidence of tumor regression in some patients (see “Clinical Trials Data and Product Approvals”).

These achievements have been built on a carefully executed R&D program that generated practical solutions to scientific and medical challenges. Through this development program, DanDrit gained advanced understanding of the role of dendritic cells in immunoregulation and cancer.

We believe that non-core applications of dendritic cell technologies mastered by DanDrit have applications in infectious diseases and auto-immune diseases such as diabetes (seventh leading cause of death in the US). We believe that these other applications may represent opportunities for potential out-licensing and cooperation.   

DENDRITIC CELLS, THE THERAPEUTIC PLATFORM

Summary

Early academic work at the Danish Cancer Society was spun-out into DanDrit Denmark. None of the personnel at the Danish Cancer Society, or any other third-party, retains any rights to the intellectual property underlying the Company’s business, technology or product candidates, including MCV. The fundamental scientific postulate of DanDrit is the fact that key cells in the immune system can be sensitized to cancer cells that carry foreign (or non-self) antigens. These key antigen-presenting cells are the dendritic cells. Dendritic cells encounter and recognize foreign antigens. Dendritic cells can assimilate and process the cells expressing these antigens. The key components of these antigens (known as epitopes and several epitopes are known as polytopes) are subsequently presented on the cell surface of the dendritic cell. Dendritic cells travel to lymph nodes and other lymphatic tissues where the epitopes are presented to other immune cells, including cell-killing T lymphocytes. T lymphocytes sensitized by dendritic cells can then recognize and kill tumor cells carrying tumor-specific antigens recognized by the dendritic cells. The main aim is to kill tumor cells without killing normal body tissues.

From DanDrit’s point of interest, this might represent a dendritic cell instructing a T-lymphocyte to kill tumor cells presents itself as a “Cancer Vaccine” company and its lead product, MelCancerVac® (MCV), a polytopic vaccine, targets colorectal cancer in the first instance. In addition, DanDrit has developed several technologies relevant to dendritic cell production, including:

DanDrit’s vaccine candidates are based on the MCV platform and are protected by a family of issued and submitted patents. DanDrit’s lead product has completed Phase II clinical trials in Denmark and Singapore. 

To date, clinical trials of MCV have been targeted to patients in terminal stages of disease who failed to respond to surgical resection and chemotherapies. Some patients showed extended overall survival with good quality of life. Many patients showed stable disease with no progression of tumor. There was evidence of tumor regression in some patients. (see “Clinical Trials Data and Product Approvals”).

Some of this research in dendritic cells could have implications that reach beyond DanDrit’s cancer vaccine vision.

Dendritic Cells and the immune response

Dendritic cells were first recognized by Paul Langerhans in the late 19th century. For this reason such cells in the skin may still be referred to as Langerhans cells. The term “dendritic cell” was first used by Ralph Steinman and Zanvil Cohn in 1973. Steinman received the 2007 Lasker Award for this work and the 2011 Medicine Nobel Prize.

Like macrophages, cells whose role is to phagocytose, or engulf and then digest, cellular debris and pathogens, either as stationary or as mobile cells, dendritic cells are involved in the processing of antigens and their presentation to the cells that directly carry out the immune response through antibody generation (B lymphocytes) or cell killing activity (T- lymphocytes). Like macrophages, dendritic cells are mobile and once stimulated by an antigen, activated macrophages and dendritic cells move from their host tissue (usually skin or epithelial tissue such as gut, mucous membranes, lung etc.) to lymphatic tissues where they encounter and stimulate cells that mediate the immune response.

Unsurprisingly, macrophages and dendritic cells are closely related. Both are derived from circulating blood cells known as monocytes, a type of white blood cell which constitutes roughly 10% of all white blood cells. Monocytes, macrophages and immature dendritic cells are all phagocytic cells, that is, they engulf and process foreign antigens. On activation by the uptake of antigen, dendritic cells mature and become mobile. The mobile mature dendritic cells are capable of stimulating T-lymphocytes through the expression of T-cell stimulatory antigens on their cell surfaces.

It is possible to force monocytes to differentiate in vitro  into immature dendritic cells. This is the basis of DanDrit’s proprietary dendritic cell production process. As in nature, DanDrit’s process involves a subtle communication between monocytes and cytokines (small proteins that important in the communication process that governs basic cellular activities and coordinates cell actions). Dendritic cells produced by DanDrit are functionally, morphologically and biochemically very similar – if not identical – to natural dendritic cells.

Figure 1 Principle of Dendritic Cell cancer vaccines

DanDrit’s platform technology is based on isolating patient monocytes and transforming them into immature dendritic cells in vitro. This is achieved by exposing monocytes to cytokines (interleukin 4, IL-4; and granulocyte macrophage colony stimulating factor, GM-CSF). Still in vitro these immature dendritic cells are activated by exposure to a cancer cell line lysate. This cancer cell lysate contains many “non-self” antigens of the cancer/testis family. Although coded by the human genome, these antigens are not normally expressed in tissues other than cancer or testis (note that testis and immune system are isolated from each other). Once sensitized in vitro, the immature dendritic cells are matured by exposure to a DanDrit proprietary cytokine cocktail. The now mature dendritic cells can be re-injected to the patient via a simple 0.2 ml intra-dermal injection and they will find their way to the lymphatic tissues. There, they will stimulate multiple cell killing (T) lymphocytes which will become sensitized to the cancer-specific antigens present in the lysate.

The Platform Technology, MelCancerVac®

MelCancerVac® (MCV) is a cellular immunotherapy for treatment of cancer. MCV has been studied in two cancers: Non-Small Cell Lung cancer (NSCLC) and colorectal cancer (CRC). 

DanDrit’s platform technology comprises two arms:

The melanoma lysate component of MCV is manufactured from a melanoma cell line established by DanDrit scientists. This cell line was isolated from a melanoma tumor that expressed antigens found in a wide range of tumors but not in normal tissues (other than the testis). These antigens belong to a family of cancer/testis antigens (including mostly MAGE-A antigens) found in many tumors.

Furthermore, by exposing DanDrit’s proprietary melanoma tumor cell to 5-aza-deoxycytadine (5-aza-CdR/Decitabine), which is an inhibitor of DNA methylation, DanDrit has shown that derived tumor lysates (MCV5AZA) express a far wider range of tumor-specific antigens.

Antigen characterization

For a patient to respond favorably to MCV, it is necessary that the antigens presented by the patient’s tumor show a significant match with the antigens in the lysate. The level of expression of antigens in each batch of lysate is determined by a procedure known as Reverse Transcriptase Quantitative Polymerase Chain Reaction or “RT-QPCR”. Clearly all patient cells will present many thousands of antigens, as will the lysate. MCV’s lysate component is isolated from a melanoma cell line that expresses a great many cancer/testis antigens at significant level. This broad spectrum of cancer/testis antigens is what makes MCV a good cancer vaccine. Figure 2 (below) shows how RT-QPCR can analyze levels of antigen expression as measured by messenger RNA.

Figure 2 Comparison of tumor antigen expression in MCV with two patient biopsies

In this example, TA-1 to TA-28 are 28 known tumor antigens (antigens that are only expressed by cancer cells and not by normal cells). We can see that 14 of these antigens are present in MCV. Twenty-one cancer-specific antigens are expressed by the tumor in patient two, which indicates a good chance of promoting a cancer killing response. In patient one there is not a strong overlap of MCV antigens and the five patient’s tumor antigens. The chances of promoting a strong immune response are less but still significant (TA-3, TA-9, TA-18, and TA-19 are shared).

By analyzing patient’s tumors by RT-QPCR, it is possible to select patients that have the best chance of success with MCV. However, other uncharacterized antigens may also be present that might promote a response.

Clinical Trials Data and product approvals

Overall clinical results

No dendritic cell-based vaccination has to date demonstrated life-threatening side effects. The only potential adverse events associated with dendritic cell vaccines to date are a flu-like symptom with fevers (up to 39-40 degrees Celsius), chills, and headaches in some patients. The occurrence of these adverse events did not require additional treatment or hospitalization. Some patients may also develop a vitiligo, a skin condition in which there is a loss of brown color (pigment) from areas of skin, resulting in irregular white patches that feel like normal skin, when melanocyte differentiation antigens are used as targets in immunotherapy. However, this has not occurred, to DanDrit’s knowledge, with MCV in clinical trials that have been conducted to date.

MCV is produced according to the principles of Good Manufacturing Practice (GMP) in facilities approved by the Danish Medicine Agency and EU regulation for the production of medicines from patient blood in aseptic conditions. No products of animal origin are used during vaccine preparation. Quality control is performed for each individual batch of the vaccine as well as for the lysate used in the loading of dendritic cells.

MCV was originally developed in 2001 as a result of the combined research efforts of DanDrit researchers and employees and has been tested in clinical trials for the treatment of colorectal cancer (CRC) and non-small-cell lung cancer (NSCLC).

CRC Clinical Trials

NSCLC Clinical Trials

ColoRectal Cancer (CRC) in Denmark

The clinical trial using MCV at the University Hospital of Copenhagen, Gentofte, in Denmark was an investigator sponsored trial. The principal investigator and sponsor of the trial was Dr. Anders Fischer, a recognized specialist in surgical oncology in Demark and the department head of the Dept. of Surgical Gastroenterology at Copenhagen University Hospital in Gentofte, who received a grant to fund the trials provided by the Aase & Einar Danielsen Foundation. Dr. Jacob Rosenberg, a professor and surgeon, working in the Dept. of Surgical Gastroenterology at Copenhagen University and Dr. Mogen Claesson, a director of DanDrit designed the trial and proposed it to Dr. Fischer to act as sponsor and principal investigator. Enrollment of CRC patients started in October 2004 and the study ended in September 2006. Certain DanDrit staff, including Dr. Rosenberg and Dr. Claesson, as well as two other employees of DanDrit Denmark at the time of the study closely collaborated with the researchers at Gentofte Hospital responsible for the day to day work of the study with respect to the study design, analysis and interpretation of data obtained in the Denmark CRC Trial.  In addition, the patents and proprietary knowledge of DanDrit and its employees were utilized in connection with the analysis and interpretation of the data that resulted from the study. The results and findings of the trial were published in established scientific journals (Phase I study: J Exp Clin Cancer Res. 2006 Jun;25(2):201-6., Phase II study, clinical data: Oncol Rep. 2008 Dec;20(6):1305-11., Immunological data: Acta Oncol. 2009;48(8):1157-64.), which were co-authored by Dr. Rosenberg, Dr. Claesson and the two other DanDrit staff researchers.

The data described in this prospectus with respect to the Copenhagen CRC trial have been obtained from the published papers issued in connection with the study.  Twenty patients with advanced colorectal cancer (Dukes D - not curable by resection and no further conventional therapy options available) were included in the study (six patients in phase I and 14 in phase II).

The purpose of this open phase I/II study was to study the tolerability and effect of MCV given as intradermal injections to patients with metastasizing colorectal cancer, where there was no indication for surgery or chemotherapy. The first part was a phase I study to investigate whether treatment with MCV is in any way toxic. No toxicity was observed and the study continued into phase II to study the effect and tolerability of MCV. At the completion of the study stable disease was observed in twenty percent of the enrolled patients. This data was achieved with DanDrit’s early MCV vaccine, which has since been replaced by an improved MCV. The MCV was improved subsequent to the completion of the clinical trials described in this prospectus, but included the addition of aza-cytidine to the DDM-1 culture to de-methylize the genome in order to optimize tumor specific antigen expression. The benefit was marginal and did not justify switching to a different product during the trials. As a result, all trials we will present to the FDA and EMEA will use the same cell line and the same manufacturing process.

Inclusion criteria:

Exclusion criteria for the trial:

Study design: dendritic cells were generated from autologous peripheral blood mononuclear cells (PBMC). In order to increase the level of circulating leukocytes, patients exercised five minutes on a treadmill before 200 ml of blood was drawn. Patients were scheduled for ten vaccinations consisting of 3-5x106 dendritic cells. Vaccinations were given bi-weekly intra-dermally on the proximal thigh with two injections each thigh. Adverse events were monitored and classified according to the National Cancer Institute’s Common Toxicity Criteria (NCI’s CTC). Evaluation of responses was made according to the Response Evaluation Criteria in Solid Tumors (“RECIST”) criteria and patients were CT scanned before entering the study, after five vaccinations and after ten vaccinations. Quality of life was monitored by questionnaires bi-weekly. The study was performed at the Department of Surgical Gastroenterology at Gentofte University Hospital, Copenhagen, Denmark according to ICH Guidelines for Good Clinical Practice (European Directive on GCP 2001/20/EC).

RECIST is a set of published rules that define when tumors in cancer patients improve ("respond"), stay the same ("stabilize"), or worsen ("progress") during treatments. The criteria were published in February 2000 by an international collaboration including the European Organization for Research and Treatment of Cancer (“EORTC”), National Cancer Institute of the United States, and the National Cancer Institute of Canada Clinical Trials Group. Today, the majority of clinical trials evaluating cancer treatments for objective response in solid tumors are using RECIST.

The aim of the phase II CRC study in Denmark was to evaluate the effect of treating patients with advanced colorectal cancer with a cancer vaccine based on dendritic cells pulsed with an allogenic tumor cell lysate. Twenty patients with advanced colorectal cancer were consecutively enrolled, with 17 completed the full study. Dendritic cells (DC) were generated from autologous peripheral blood mononuclear cells and pulsed with allogenic tumor cell lysate containing high levels of cancer-testis antigens. Vaccines were biweekly administered intra-dermally with a total of 10 vaccines per patient. CT scans were performed and responses were graded according to the RECIST criteria. Quality of life was monitored with the SF-36 questionnaire. Four patients of the 17 were graded with stable disease, two of whom remained stable throughout the entire study period. Analysis of changes in the patients’ quality of life revealed stability in the sub-groups: “physical function” (p=0.872), “physical role limitation” (p=0.965), “bodily pain” (p= 0.079), “social function” (p=0.649), “emotional role limitation” (p=0.252) and “mental health” (p=0.626). The median survival from inclusion was 5.3 months (range 0.2 - 29.2 months) with one patient still being alive almost 30 months after inclusion in the trial. Toxicity and adverse events were graded according to the National Cancer Institute’s common Toxicity Criteria. At the first evaluating CT scan, four patients were categorized with stable disease and at the second evaluating CT scan two of these patients still had stable disease and one of them received additional monthly vaccines because of the remaining stability in the disease. DanDrit determined that treatment with this DC-based cancer vaccine was safe and non-toxic. Stable disease was found in 24% (4/17) of the patients participating in the full study. The quality of life remained stable for most categories stable throughout the study period. Stable disease is defined as a tumor that is neither growing nor shrinking. Stable disease also means that no new tumors have developed and that the cancer has not spread to any new regions of the body (the cancer is not getting better or worse) and quality of life, measured using a global health score, was at the baseline with no or minimal variation. Variations in the patients' self-reported quality of life during the study period, assessed by the SF-36 questionnaire, were estimated using Freidman's statistical analysis. There were no significant variation in the patients' ‘physical function’ (p=0.872), ‘physical role limitation’ (p=0.965), ‘bodily pain’ (p=0.079), ‘social function’ (p=0.649), ‘emotional role limitation’ (p=0.252) and ‘mental health’ (p=0.626). There was a significant variation concerning ‘general health perception’ (p=0.006) and ‘vitality’ (p=0.011).

Primary endpoints of the study were tumor response according to RECIST criteria and quality of life (Burgdorf SK, Fischer A, Myschetzky PS, Munksgaard SB, Zocca MB, Claesson MH, Rosenberg J. Clinical responses in patients with advanced colorectal cancer to a dendritic cell based vaccine. Oncol Rep. 2008 Dec;20(6):1305-11. PubMed PMID:19020707) and secondary endpoints for the study were responses measured by immunological parameters (Burgdorf SK, Claesson MH, Nielsen HJ, Rosenberg J. Changes in cytokine and biomarker blood levels in patients with colorectal cancer during dendritic cell-based vaccination. Acta Oncol. 2009;48(8):1157-64. doi:10.3109/02841860903099964. PubMed PMID: 19863224).

A measure of quality of life for the colorectal cancer trial in Denmark, DanDrit used the SF-36 Global Health Score questionnaire to evaluate the patients' quality of life throughout the study period.  At the time of the trial, this questionnaire from the Medical Outcome Study (MOS), conducted by the RAND Corporation, was both recommended and validated.  All patients in the trial independently filled in the questionnaire every two weeks. The SF-36 Global Health Score questionnaire consists of eight scaled scores, which are the weighted sums of the questions in their section. Each scale is directly transformed into a 0-100 scale on the assumption that each question carries equal weight. The lower the score is the more disability is reported by the patient. Higher scores reflect less disability i.e. a score of zero is equivalent to maximum disability and a score of 100 is equivalent to no disability. The eight different aspects of quality of life reflecting different aspects of the patient’s self-reported quality of life are:

The fact that patients' SF-36 Global Health Score was high signifies that when entering the study the patients’ quality of life was comparable to the healthy background population.  The fact that it remained stable signifies that there were no significant changes in the patients’ quality of life during treatment. This correlates with the fact that the treatment was well tolerated by all patients and that investigators did not observe severe adverse effects from the treatment.

A more in depth analysis of the components of the patients’ quality of life revealed a stability in certain parameters that measure quality of life. The “p” refers to the p-value.  In a statistical test, the p-value is the probability of getting the same value for a model built around two hypotheses, one is the "neutral" hypothesis, and the other is the hypothesis under testing. In the Friedman analysis that was used for QOL testing in this study, a p-value below 0.05 means that the values varied throughout the observation period (but says nothing about increase or decrease). A p-value above 0.05 means that the QOL values were stable throughout the observation period.

The graph below indicates the specific p-values of “general health perception” and “vitality” throughout the study:

The Company does not believe that any significant information can be inferred from the variation observed, even if statistically significant, with respect to these two parameters as it would have been anticipated that these extremely sick patients with a progressive disease would have resulted in variations in QOL over the course of the study.  For this same reason, it is, however, more significant that 6 of the 8 parameters showed stability as it can be inferred that the treatment had a positive impact on the QOL of patients.

Non-small cell lung cancer (NSCLC) in Denmark

DanDrit sponsored and funded this MCV clinical trial conducted at Herlev Hospital, University of Copenhagen, in Denmark by Quintiles A/S (“Quintiles”) and ACRO Nordic A/S (“ACRO”) as contract research organizations (CROs). The title of the study is: “Vaccination with Autologous Dendritic Cells Pulsed with Allogeneic Tumor Lysate (MelCancerVac) for the Treatment of Patients with Advanced or Metastatic Non-Small Cell Lung Cancer”. The principal investigator was Dr. Anders Mellemgaard, the head of the Department of Lung Medicine at Herlev Hospital. Dr. Claesson and three other DanDrit employees worked and collaborated with the researchers at the Herley Hospital with respect to study design and the analysis and interpretation of data obtained from the NSCLC Trial.  The results of the trial were published in a recognized scientific journal (World Journal of Vaccines, 2013, 3, 68-76) in a paper that was co-authored by Dr. Claesson and the three other DanDrit employees that collaborated with the NSCLC Trial researchers.

The NSCLC trial was designed as an open-label, phase II clinical study. Enrolled patients had disseminated, inoperable NSCLC after chemotherapy; the patients did not want further chemotherapy: and no other systemic treatments could be offered to them.

The primary objective was to measure the antigen specific immunological reaction between vaccine antigens and the patients’ immune system in vivo and in vitro. The secondary objectives were to estimate the patients’ survival time, the tumor response according to RECIST criteria, and the patients’ quality of life during the study period. Primary endpoint was tumor response, assessed by clinical benefit rate, the percentage of patients with advanced or metastatic cancer who have achieved complete response, partial response and stable disease to a therapeutic intervention in clinical trials of anticancer agents (CBR), however the study also evaluated PFS and overall survival (OS) as secondary endpoints.  Complete response (CR) is a figure representing the percentage of patients whose cancer disappears after treatment. Partial response (PR) is a figure representing the percentage of patients whose cancer shrinks after treatment. PR describes a tumor that has decreased in size by at least 30%. The term stable disease (SD) describes a tumor that is neither growing nor shrinking. SD also means that no new tumors have developed, and that the cancer has not spread to any new regions of the body (the cancer is not getting better or worse). The median overall survival was 7.4 months (95% confidence interval (CI), used to indicate the reliability of an estimate, 4.5-17.5 months). Two patients were still alive at the time of analysis. An exploratory analysis showed that patients with PR and SD had significantly better survival (median, 18.1 months) compared to those with progressive disease (median, 6.2 months; P = .007).  Although the median time to tumor progression was short at 2.4 months (95% CI, 1.9-4.1 months), five patients experienced a prolonged PFS of more than 6 months; and two of them (reviewed below) continued to be progression-free at time of analysis (PFS >27 and >37 months).

The first patient was included in January 2007. A total of 28 patients were included in the trial. Treatments prior to DC vaccinations, tumor histology, smoking status, number of vaccinations, age and gender were recorded.  The median age was 58.5 years (46-74 years).  All patients received systemic anti-cancer treatment prior to inclusion. At the time of inclusion, 15 patients were in performance status (PS) 0 and seven patients were in PS 1. Fifteen months after termination of the trial, 4 patients (patient number 1, 2, 12 and 13) were still alive.  These four patients who remained in stable disease after more than 10 vaccinations had different histology subtypes: one broncho-alveolar carcinoma, one squamous cell carcinoma and two adenocarcinoma. In this Phase II trial a 43% CBR (the percentage of patients with advanced or metastatic cancer who have achieved CR, PR and SD to a therapeutic intervention in clinical trials of anticancer agents) was observed, with six patients showing stable disease. Five of these patients were immunologically responding to the vaccine (ELISPOT –IFN Gamma positive) while eight of nine patients with no clinical response had no IFN gamma response.  Sixteen patients received at minimum six vaccines and were evaluated by CT scans. Of those, nine patients showed progression on the 1st evaluation CT scan three months after initiation of treatment, and seven patients had stable disease, representing a 43% CBR. For these 7 patients remaining in stable disease (SD) for a variable period of time, the overall survival curve showed a plateau after two years.

In this NSCLC trial, quality of life was measured by self-administered questionnaire using EORTC Quality of Life Questionnaire (QLQ)-C30 version 3 and QLQ-LC13. The QLQ-C30 is composed of both multi-item scales and single-item measures. These include five functional scales, three symptom scales, a global health status/quality of life scale, and six single items.  Each of the multi-item scales includes a different set of items - no item occurs in more than one scale. All of the scales and single-item measures range in score from 0 to 100. A high scale score represents a higher response level. Thus, a high score for a functional scale represents a high/healthy level of functioning, a high score for the global health status/quality of life represents a high quality of life, but a high score for a symptom scale/item represents a high level of symptomatology/problems. Version 3.0 is currently the standard version of the QLQ-C30, and should be used for all new studies.  An essential component of the EORTC QLQ development strategy involves the use of cancer-specific supplementary questionnaire modules which, when employed in conjunction with the QLQ-C30, can provide more detailed information relevant to evaluating the quality of life in specific patient populations. The additional QLQ-LC13 questionnaire is specifically designed for lung cancer patients. The QLQ-LC13 includes questions assessing lung cancer-associated symptoms (cough, hemoptysis, dyspnea and site specific pain), treatment-related side effects (sore mouth, dysphagia, peripheral neuropathy and alopecia) and pain medication. The questionnaire was filled by the patients at baseline, and by the time of the 5th, 6th, 7th, 8th, 9th and 10th vaccinations. The data from the quality of life questionnaires was collected and coded according to EORTC. An overall evaluation of general quality of life-score for the global question of “How do you rate your overall quality of life during the past week” remained stable throughout the study period. More specific factors such as anxiety and lung specific symptoms also remained unchanged during the study-period.

The NSCLC trial in Denmark evaluated the clinical and immunological effects of dendritic cell (DC) vaccination in patients with NSCLC. Autologous DCs were pulsed with a MAGE containing allogenic melanoma cell lysate (MCV). Twenty-two patients initiated the vaccination program including a total of ten vaccinations. Seven patients remained in SD three months after the first vaccination.  After 10 vaccinations, six months after vaccine initiation, four patients still showed SD and continued vaccinations on a monthly basis. These four patients received a total of 12, 16, 26 and 35 vaccinations, respectively. Five patients showed unexpectedly prolonged survival. The treatment was well tolerated and only minor adverse events were reported. Quality of life did not change during the study period. In four out of seven patients with SD, vaccine-specific T cells were detected by interferon gamma (IFNγ) (a small protein that plays a role in immunity against infections and for tumor control mostly by activating microphages) Elispot assays, whereas only one patient with progressive disease (PD) showed vaccine-specific responses.  This DC-based vaccine trial has indicated a correlation between vaccine-specific immunity and sustained SD. The finding of a significant correlation between prolonged disease stabilization and vaccine-specific cellular responses may support the latter notion and support the hypothesis that immune responses may play a role in disease control even long time after the actual treatment. This is in sharp contrast to the rapid effect of anti-cancer treatments such as chemotherapy and radiotherapy. Furthermore, the trial demonstrated an unexpectedly prolonged survival in some patients, which may indicate delayed effect of DC vaccination after completion of the treatment. In addition, the investigators reported that this kind of vaccine treatment was feasible and the logistics were manageable in this patient group.

In conclusion, 7 out of 22 NSCLC patients vaccinated with autologous DC pulsed with an allogenic Clinical Trial Authorization (CTA) containing tumor cell lysate had prolonged disease stabilization. In the course of DC vaccination vaccine-specific IFNγ responses were detected in peripheral blood of four of patients with SD and one patient with progressive disease.  However, from this study it is not possible to conclude whether the vaccine treatment and the subsequent IFNγ responses are involved in the clinical cause of these patients. To elucidate the full efficacy of vaccine treatment of patients with NSCLC, the investigators recommended that a randomized trial should be conducted. 

Colorectal Cancer (CRC) in Singapore

A single arm phase II clinical study was also sponsored and funded by the Singapore National Cancer Centre (NCC) to investigate the efficacy of intradermal vaccination with MCV in patients with advanced colorectal cancer. The principal investigator of the Singapore CRC Trial was Dr. Han Chong Toh, a recognized specialist in medical oncology in Singapore. While Dandrit Denmark was not sponsor of the trial, it assisted in the design and proposal of the trial to the SNCC and Dr. Toh. Dr. Claesson and two other DanDrit employees collaborated with the researchers at the Singapore National Cancer Center, with respect to the study design and the analysis and interpretation of data obtained from the Singapore CRC Trial. The results and findings of the Singapore CRC trial were published in recognized scientific journals (Clinical results: Clin. Cancer Res. 2009 Dec 15;15(24):7726-7736., Immunological data: Vaccine. 2009 Dec 11;28(2):542-7.) that was co-authored by Dr. Claesson and the two other employees of DanDrit Denmark that collaborated with the researchers at the NCC in Singapore.

The study used DanDrit’s patented procedure for generating dendritic cells. All included patients had tumors which antigenically correlated with the vaccine, i.e. were MAGE-A positive. The purpose of the study was to investigate the objective efficacy and specific immunologic response of the MCV vaccination. The first patient was enrolled in June 2005, and by June 2007 a total of 20 patients had been treated and evaluated.

The vaccine was given to advanced colorectal cancer patients pre-treated with chemotherapy, where there was no further indication for surgery or treatment with chemotherapy.

Treatment with MCV did not appear to adversely affect the patient’s quality of life, measured based on a global health score of 68.3 prior to treatment with minimal variation through the course of the treatment. The health-related quality of life assessment quantifies how the individual's well-being may be affected over time by a disease, such as cancer.  Health-related quality of life is assessed using patient questionnaires. These questionnaires are multidimensional and cover physical, social, emotional, cognitive, work- or role-related and spiritual aspects, as well as a wide variety of cancer related symptoms, therapy induced side effects, and the financial impact of cancer. The questionnaire from the Eastern Cooperative Oncology Group (ECOG) is most commonly used to evaluate the impact of cancer on sufferers. MCV induced objective responses in seven of 20 patients (six responses were stable disease and one response was partial regression of tumor mass). Significant immunological and clinical correlation was observed. Results from the trial were presented orally at the AACR meeting in Singapore in November 2007.

The CRC trial in Singapore evaluated the efficacy and toxicity of MCV in advanced colorectal cancer patients expressing at least one of six MAGE-A antigens. Dendritic cells were cultured from peripheral blood mononuclear cells (PBMCs) and pulsed with allogenic lysate and matured using cytokines to achieve high CD83 and CCR7 expressing dendritic cells. Each patient received up to 10 intradermal vaccinations (3-5 x 106 cells/dose) at biweekly intervals. Twenty patients received a total of 161 vaccinations. Treatment was well-tolerated with minimal adverse events. Quality of life measurement using global health score was high at baseline and did not change during the duration of the trial. In this study, statistical testing was done with repeated t-tests comparing baseline with each time point. A “t-test” is a statistical analysis used to determine whether there is a statistical difference between averages or means of a group with a small sample size. The “baseline” is a starting point from which a comparison can be made and is typically established prior to the beginning of a study as a point of comparison for monitoring and evaluating data at various point in a study.  The term “ comparing baseline with each time point ” refers to the comparison of data at a defined point in time against the originally established “baseline”.

Since the p-values did not change during the duration of the trial, we believe that there were no statistical differences regarding quality of life in this study in any of the parameters at any time points.

The colorectal cancer patients who are eligible for the humanitarian program in Singapore must present a profile similar to the one of the patients who were recruited in the phase IIa clinical trial. However, there have been some exceptional cases where treatment has been based on a doctor’s discretion on the patient’s quality of life. Also, patients are monitored according to the previous phase II study protocol. To date we have not received a detailed report regarding the final outcomes for patients participating in the Singapore trials.

MAGE-A-expressing metastatic colorectal cancer patients with prior progressive disease treated with MCV achieved a competitive Clinical Benefit Rate of 40%. While patients with single metastatic sites in either lung or nodal regions tended to have more durable responses (see patients 1, 2 and 9 in table below), Stable Disease was also attained in patients with bulky multiple metastases (see patient 6 in table below). Five patients notably remained progression-free for over six months and two patients with significant tumor burden (see patients 1 and 9 in table below) were still progression-free for over 27 and 37 months respectively. We recognize that adopting the primary endpoint of Clinical Benefit Rate using RECIST criteria has limitations. This study protocol was designed in 2005 where objective response rate (ORR) and Clinical Benefit Rate evaluation as primary endpoints in Phase II cancer vaccine trials were not uncommon. Nevertheless, the investigators did evaluate Progression Free Survival and Overall Survival as secondary endpoints, which may better reflect true vaccine efficacy.

A meta-analysis of 32 cancer vaccine clinical studies in patients with advanced colorectal cancer reported a Clinical Benefit Rate in 11.2% of patients and an overall response rate (Complete Response and Partial Response) of 0.9%. The defined clinical benefit rate (Complete Response, Partial Response, Stable Disease) was observed in 17% (12/70) of colorectal cancer patients who received Dendritic Cell vaccines.

Patients’ Characteristics

* Indicates that the patient has not progressed at the time of analysis.

† Patients who are alive at the time of analysis have their survival time censored at the time of last follow up.

‡ Patient withdrawn due to poor performance status; survival time was censored at last date in the study.

Abbreviations: PS, performance status according to Eastern Cooperative Oncology Group; CT, chemotherapy; RT, radiotherapy; BOR, best overall response; TTP, time to tumor progression; LN, lymph node; F, female; M, male; SD, stable disease of at least 4 weeks; PD, progressive disease; ND, CT scan not done; PR, partial response.

As of 2006, there were a total of eight clinical DC vaccination studies in patients with metastatic colon cancer, all with peptide-pulsed DC. To our knowledge, this study which adopted an allogenic tumor lysate-based DC vaccine achieves the highest Clinical Benefit Rate in advanced colorectal cancer patients compared to these previous Dendritic Cell vaccination clinical trials. The clinical activity of this present Dendritic Cell-based vaccine might reflect its polytopic nature, its allogenic adjuvant-like components, the quality of the Dendritic Cell preparation (i.e. high uniform expression of CD83, CD86, HLA class II, and CCR7), the intradermal route of vaccine injection securing optimal lymph drainage to regional lymph nodes, the presence of MAGE expression in both patients and vaccine and the increased frequency of delivery (ten injections).

Quality of life measurement using global health score was high at baseline and did not vary much across time. In this study, statistical testing was done with repeated t-tests comparing baseline with each time point., Since the p. values did not vary across time, we believe that there were no statistical differences regarding quality of life in this study in any of the parameters at any time points.

Treatment with MCV did not appear to adversely affect the patient’s quality of life, measured based on a global health score of 68.3 prior to treatment with minimal variation through the course of the treatment. The health-related quality of life assessment quantifies how the individual's well-being may be affected over time by a disease, such as cancer.  Health-related quality of life is assessed using patient questionnaires. These questionnaires are multidimensional and cover physical, social, emotional, cognitive, work- or role-related and spiritual aspects, as well as a wide variety of cancer related symptoms, therapy induced side effects, and the financial impact of cancer. The questionnaire from the Eastern Cooperative Oncology Group (ECOG) is most commonly used to evaluate the impact of cancer on sufferers. MCV induced objective responses in seven of 20 patients (six responses were stable disease and one response was partial regression of tumor mass). Significant immunological and clinical correlation was observed.

Compassionate Use/Named Patient Approval

Further to the data emerging from the Singapore CRC trial, the Singapore government requested and approved (22 September 2008) that named patients be offered MCV therapy at cost. This first compassionate use approval marked a significant milestone for the progress and acceptability of the MCV therapeutic model. This compassionate program could be used as a model to initiate sales of MCV in other countries of the ASEA such as Thailand or Malaysia. Outside the United States, named patient programs provide controlled, pre-approval access to drugs in response to requests by physicians on behalf of specific, or “named”, patients before those medicines are licensed in the patient’s home country.  Governments worldwide, such as Singapore’s government, have created provisions for granting access to drugs prior to approval for patients who have exhausted all alternative treatment options and do not match clinical trial entry criteria. Often grouped under the labels of compassionate use, expanded access, or named patient supply, these programs are governed by rules which vary by country defining access criteria, data collection, promotion, and control of drug distribution.  Through these programs, patients are able to access drugs in late-stage clinical trials or approved in other countries for a genuine, unmet medical need, before those drugs have been licensed in the patient’s home country. In September 2008, DanDrit Denmark and the National Cancer Centre of Singapore (NCC) entered a collaboration agreement regarding a clinical named patient program conducted in Singapore at NCC with the dendritic cell vaccine MCV. NCC has established a GMP approved laboratory in which the manufacturing of MCV takes place. NCC has received approval from the relevant governmental authorities for the import of lysate necessary for production of MCV. The clinical and research and development activities of the named patient program relate to the Company’s product, MCV. The purpose for the Singapore named patient program is to provide patients with advanced colorectal cancer or other forms of cancer(s) with the presence of MAGE antigen expression an alternative treatment for the vaccination with MCV, where there is no further indication for surgery or treatment with chemotherapy. Patients are recruited on named patient basis according to the patient inclusion and exclusion criteria stated in the phase II study protocol. However, there may be some exceptional cases where treatment will be made based on a doctor’s discretion regarding the patient’s quality of life.

100% Off-the-Shelve Vaccines

Autologous (from the patient) dendritic cells cancer vaccines are tailor made for each individual patient. This personalized medicine approach is appealing to the patients but may present several drawbacks to a pharmaceutical company. Creating a new, unique vaccine for each patient may be perceived as complex, time consuming, and expensive.  Therefore, DanDrit developed MelVaxin™. This program presented below capitalizes on the knowledge and the expertise gained with DanDrit’s proprietary lysate used for MCV but is on hold now.

Melvaxin™

A second platform product, MelVaxin™ has been also evaluated. MelVaxin™ is similar to the lysate component of MCV. DanDrit proposed injecting MelVaxin™ into the skin to promote natural dendritic cell responses that will attack the tumor expressing cancer/testis antigens. It is necessary to inject MelVaxin™ with an immuno-stimulator such as GM-CSF, BCG or an adjuvant (such as 3M’s TLR7 and TLR8 agonists). A preclinical program could be performed in minipigs. These animals have immune response profiles, particularly of skin injection, that are very close to human. This program, currently on hold, can be reinitiated when staff is available to manage this program. This takes second place to the MCV2 program and illustrates DanDrit’s professional commitment to advancing lead clinical products.

Other Future Products

Other cancers

DanDrit has already made progress with clinical trials of NSCLC and CRC. DanDrit is now focusing its clinical development on advanced colorectal cancer, but DanDrit may if opportunity arises extend its range of cancer targets to answer the desperate need for effective new therapies. As an illustration, bladder cancers or esophageal cancers may be such opportunities. The two types of esophageal cancers the esophageal squamous cell carcinoma (EC) and the esophageal adenocarcinoma (EAC) expressed MAGE -A. Worldwide, EC is the most frequent malignant esophageal cancer accounting for at least 10,000 deaths per year. But in Western countries, EAC is the most rapidly increasing cancer compared with other malignancies. Surgical resection is currently the only potential cure with or without neo-adjuvant or adjuvant chemo-and/or radiotherapy, the five year survival rate is less than 20%. At first presentation, approximately 50-60% of patients with esophageal cancer are not eligible for surgery and have a very poor outcome.

Tolerogenic Dendritic Cells

Some dendritic cells seem to instruct cell-killing T cell clones to abandon their mission by self-destructing through an apoptotic pathway. This may offer the possibility of eliminating those T cells responsible for the manifestation of auto-immune disease. In MCV dendritic cells are derived in such a way that the resulting dendritic cells promote an immune reaction. However, dendritic cells may also be derived in such a way that they are tolerogenic, they promote immune tolerance. Promoting immune tolerance can be used to treat autoimmune diseases such as early stage type I diabetes (where insulin secreting cells are still present) or even to help prevent rejection of tissue transplantation. In this way the tolerogenic dendritic cells are used to turn off an undesirable immune reaction. DanDrit has established methods to derive tolerogenic dendritic cells from peripheral blood monocytes, similar to the approach used to generate immunogenic dendritic cells in MCV. Tolerogenic dendritic cells are easily distinguished by their function in vitro. DanDrit has filed patents to cover the generation of tolerogenic dendritic cells.

Non-Core Products – Out-licensing

Non-core patents are being developed for application in dendritic cell related applications that are not cancer-related. We believe that revenues from licensing such non-core products will support core product and core technology development.

The principal non-core intellectual property relates to tolerogenic dendritic cells, their production and application in auto-immune diseases to include type 1 diabetes. DanDrit’s fast track production methods for dendritic cells might be out-licensed for non-competitive applications in areas other than cancer.

Fast-track production of Dendritic Cells

The generation of mature immunogenic dendritic cells from peripheral blood monocytes requires eight days of growth in culture. The efficiency of producing MCV could be improved if the time required to generate dendritic cells could be significantly reduced. DanDrit has tested many protocols for generating dendritic cells quickly. Two promising methods have emerged from intensive research activities to generate dendritic cells in either two days or five days. The fast track methods for generating dendritic cells produce immunogenic dendritic cells that are comparable to cells generated using DanDrit’s standard technique. These fast track methods are covered by DanDrit’s existing dendritic cell technology patent.

This fast-track production technology could be of commercial interest for other companies working in non-competitive areas of dendritic cell technology.

MicroRNAs for dendritic cell quality control

DanDrit patented a method using microRNAs to characterize dendritic cells and establish a basis for quality control. To date there are few dendritic-cell specific antigens and those existing are covered by patents. DanDrit has patented its microRNA approach developed with Bioneer (note that patents are 100% owned by DanDrit).

Proposed Clinical Trial

The proposed Phase III study with an adaptive design plans to enroll 174 stage IV colorectal cancer patients after resection of metastases and chemotherapy. Regulatory authorities in the United States and Europe have published guidance documents on the use and implementation of adaptive design trials. These documents include descriptions of adaptive trials and a requirement for prospectively written standard operating procedures and working processes for executing adaptive trials.

The proposed patients in the trial will therefore have no evidence of disease. The clinical study is designed as a randomized, multicenter, Phase III clinical study. Patients will be included after resection of their primary tumor and metastases in liver and after appropriate peri- or post-operative chemotherapy by random assignment to a non-vaccine control group or a vaccine group receiving five vaccinations with 14-day administration intervals followed by ten vaccines with two-month intervals. Inclusion is planned to take place one month after finishing the last round of peri- or post-operative chemotherapy (FOLFOX or FOLFIRI) and after a negative tumor scan (head, thoracic and abdominal cavities) and normal CarcinoEmbryogenic Antigen (CEA) blood levels prior to inclusion in the vaccine or the control groups. In the event of disease progression, as verified by tumor scan during the vaccination schedule, MCV vaccinations will be discontinued. The table below summarizes the key features of the proposed clinical study.

Traditionally drug development has consisted of a sequence of independent trials organized in different phases.  Full development typically involved (1) a learning phase II trial and (2) one or two confirmatory pivotal phase III trial(s).  The new seamless phase II/III designs are aimed at interweaving the two phases of full development by combining them into one single, uninterrupted study conducted in two steps. Adaptive seamless clinical trial designs have proved to be effective in several clinical research areas, such as the development of Velcade™ intended for multiple myeloma and non-Hodgkin's lymphoma  or a long-acting glucagon-like peptide-1 analog (dulaglutide) in a randomized, placebo-controlled, double-blind study of overweight/obese patients with type 2 diabetes: the EGO study. Adaptive seamless phase II/III designs enable a clinical trial to be conducted in steps with the sample size calculation selected on the basis of data observed in the first step to continue along to the second step. The main statistical challenge in such a design is ensuring control of the type I error rate. Most methodology for such trials is based on the same endpoint being used for interim and final analyses. However, in some settings like our clinical trial, the primary endpoint, overall survival, can be observed only after long-term follow-up.  In this case the design includes a shorter term endpoint data, in our case, relapse free survival at 18 months. If short-term data are available for some patients for whom the primary endpoint is not available, basing treatment selection on these data may lead to increase of the type I error rate (false positive).

Phase III Overview

Critical Success Factors

The points below are a specific, focused list of critical factors and challenges that need to be considered for the project, during the critical start-up phase and throughout the project life cycle. In addition to the sections noted below, during the course of the study, DanDrit will be pro-active in discussing the Critical Factors with the investigators.

Oncology studies by their nature have a degree of complexity not always encountered in other therapeutic areas. We believe success of the CRC study will be related to these Critical Success Factors. Our approach to each critical factor is detailed below. DanDrit identified the following key factors for success:

Patient accrual and site selection

The proposed VIVA clinical trial will enroll 174 patients at 35 GISCAD sites in Italy. Additional patients (number to be estimated based on interim data) will be enrolled from the US.

The selected patient population will be easier to work with than the patients in Phase II. It is reasonable to expect the response rate to be greater for MCV, or for any immunotherapy, in a patient population with minimal residual disease). Consequently, in this Phase III trial, patients will have to be NED, raising the likelihood that the immune system can generate a response against cancer as it re-occurs. We believe this may ultimately lead to better data from the Phase III trial. Careful selection of study sites using evidence based feasibility research, discussion with colorectal key opinion leaders (KOLs), contact with investigators at key sites and our past clinical experience in this indication and with cancer vaccines will be required. The GISCAD Foundation for Research on Cancer (GISCAD) in Italy (Pr. Sobrero) is recognized as among the world’s premier cancer research and treatment facilities and leaders in colorectal cancer research. As an illustration GISCAD conducted recently the TOSCA trial, a clinical trial evaluating FOLFOX-4 3 months vs. 6 Months and Bevacizumab as adjuvant therapy for patients with Stage II/III CRC.  The network of Italian hospitals enrolled 3,800 patients in the recent Thiazolidinediones or Sulfonylureas and Cardiovascular Accidents (TOSCA) trial.

Accrual rates are estimates and can be further refined. Inadequate enrollment is one of the biggest drivers of wasted cost and time in clinical trials. Therefore, DanDrit has taken a very conservative position regarding site selection and patient enrollment.

Assessment of patient response

In general, in oncology vaccine studies, the relationship between clinical response, survival (and other measures of efficacy) and immune response may be unclear. Changes in patients’ immunological profiles during vaccination protocols, their response to the vaccine components as measured by delayed-type hypersensitivity (DTH), used as the primary measure of the ability to immunize a patient to a tumor cell or specific tumor antigen; the  enzyme-linked immunosorbent spot  (ELISPOT), a common method for monitoring immune responses In humans; cluster of differentiation (CD) antigen profiles,  protocol used for the identification and investigation of  cell surface molecules ; and other strategies to attempt to correlate treatment outcome with the results of vaccination are variable. The paper describing the Phase II study in CRC patients by Toh et al indicates that a plasma protein expression profile has been identified for responding patients. Continued evaluation of immunological profiles of the patients and the collection of these data and correlation with outcomes may be desirable but for this POC study will not be necessary.

In a guidance document by the FDA, “Clinical Considerations for Therapeutic Cancer Vaccines” (September 2009), the agency recognizes that immunological approaches to tumor control may require significant time to develop, and that careful clinical assessment of patients must be performed as well as the use of methods that rely on radiological measurement of tumor size (e.g. RECIST). The guidance indicates that for cancer vaccines, patients may be observed to develop indications of progressive disease based on radiological measurement, but that these indications may also be transient and that tumor regression is still a possibility as the immunological response develops. Methods to incorporate such an approach will help avoid premature termination of study treatment for some patients.

Tumor burden has also been a confounding problem for oncology vaccine development because of tumor-induced immune-suppression in some patients and because of progression prior to immune response. These issues may be obviated in this study of no-evident-disease subjects.

Patient safety

DanDrit believes that MCV appears to be safe and well tolerated in studies to date. Adverse events related to the vaccine appear to be Grade 1-2 and consist of mostly superficial toxicities as describe above. Patients in the proposed study will have recovered from previous treatments and will be apparently disease free: thus, at this time, only general safety precautions and observations related to the patient population are recommended.

Injection site reactions and other toxicities expected in the class of DC vaccines will be included in site training. Some volume of Severe Adverse Events can be anticipated in a population of advanced CRC patients. Discrimination of events related to vaccine against a background of underlying disease and prior chemo or and/or radiotherapy will be necessary.

In addition to reviewing assignment of causality, a independent Data and Safety management Co mittee will assist in the assessment for efficacy.

Regulatory

DanDrit will seek scientific advice from AIFA (Italian agency) and the the European Medicines Agency EMEA (ATMP) in connection with the Phase III trials in Italy. GISCAD provided preparation and assistance for the Scientific Advice process in EMEA including the following activities:

We are seeking a clinical trial authorization to commence a Phase III trial in Italy which we anticipate will run over a three year period. Ordinarily a drug requires two Phase III trials before it can apply for FDA approval. Consequently the first patient for Phase III could be considered commencement of ‘pivotal’ trials for MCV. Also, DanDrit intends to move to a pivotal trial in China with a Chinese partner. Currently, the China Food and Drug Administration offers a low-cost clinical development pathway for cancer drugs developed, manufactured and commercialized in China. DanDrit intends to file an investigational new drug (IND) application with the FDA to initiate the process to permit manufacturing capability of MCV in the U.S. and to include U.S. patients in the Phase III trials initiated in Italy. Once an IND application has been filed in the U.S., we believe that we will be able to expand the Phase III trials initiated in Europe to the U.S., however we cannot estimate at this time when we will be able to begin enrolling U.S. patients in the trial.

Our Competitive Strengths

We believe our following strengths position us to increase our revenue and profitability:

Our Strategy

Our strategy is focused on conducting the VIVA clinical trial in advanced colorectal cancer that may trigger a partnership deal that, if successful, should bring a significant return on investment (based on analysis of past acquisitions of peer cancer vaccine companies).

DanDrit intends to conduct a randomized multicenter clinical trial to determine the ability of MCV to prevent recidivism in stage IV colorectal patients with no evidence of disease after surgical resection of metastasis and chemotherapy. The same need for a safe effective maintenance therapy exists for stage III colorectal cancer patients with no evidence of disease after resection.

This VIVA trial is planned to be completed within three years in Italy. DanDrit’s management is confident that upcoming clinical data will be the catalyst to unlock commercial revenues for DanDrit through either acquisition by pharmaceutical partner or licensing deals that would yield upfront and milestone payments as well as royalties.

We are also considering a registration trial to support potential approval of MCV in China. This trial would be conducted under China Food and Drug Administration regulations with a Chinese oncology pharmaceutical partner, such as the TASLY Group or 3S Bio. Contacts with 3S Bio and the TASLY Group have already been initiated. China has recently put in place a drug approval system that includes a low-cost first clinical approval pathway especially for Chinese biotechnology companies. The approval for local biotechnology players is advantageous, since costs for a pivotal clinical trial in China are estimated at one tenth of EU or U.S. costs. Therefore, we plan to collaborate with a Chinese company such as the TASLY Group to develop, manufacture and sell MCV in China. Several factors are also making a partnership with a Chinese pharmaceutical company attractive:

In addition, the China Food and Drug Administration relies more than other agencies on risk benefit assessment. Risk benefit assessment in China remains the “heart” of determining the value of products and is a more favorable assessment approach to MCV as the vaccine is, thus far, well tolerated with what DanDrit believes to be a strong safety profile (due to dendritic cell technology).

Furthermore, due to high unmet medical need, the approval for cancer drugs is also more favorable than in other regions of the world. Because cancer is the first cause of mortality in China, the approval process for oncology drugs benefits from easier rules than those that govern drugs targeting other diseases. The State Food and Drug Administration (the predecessor of China Food and Drug Administration) granted 114 CTA approvals for oncology global/regional trials from 2005 to 2010. Generally, in order to approve a cancer drug in China:

Furthermore, a special review and approval procedure applies to oncology drugs. The review and approval procedure could shorten the review time and can enhance communication with the China Food and Drug Administration. By the end of 2010, 28 drugs obtained approval, and more than half were oncology drugs (ten chemical drugs, and five biologics).

We believe that it is important to take advantage of this development opportunity quickly as the paradigm for oncology drug development is changing rapidly in China:

Industry

DanDrit’s lead products for NSCLC and CRC address about 40% of all cancer deaths. Other important cancers include Breast (8% of deaths), Prostate (6% of deaths) and Pancreas (6% of deaths). Together these top 5 cancers are responsible for 60% of all cancer deaths.

Cancers Incidence and MortalityWorld (source GLOBCAN 2012

There were 14.1 million new cancer cases, 8.2 million cancer deaths and 32.6 million people living with cancer (within 5 years of diagnosis) in 2012 worldwide.. Cancer is still the main cause of death in developed countries – accounting for ~33% of death and remains an area of huge unmet medical need. The cancer market has a high growth potential for the coming years with an expected 7% annual growth rate for the years 2011- 2018. The American Cancer Society disclosed that there were 1,638,910 new cancer cases in the US for 2012 with 577,190 associated deaths.

In Europe the number of new cancer cases for 2012 was estimated at 3.45 million with a 1.75 million deaths. The cancer market is the fastest growing pharmaceutical market with $83 billion expected growth of the cancer drug market by 2020.

The per-treatment price of chemotherapy for CRC is approximately $30,000. We expect that, if our vaccine is approved for use in CRC patients, the cost per-treatment will be approximately equal to the per-treatment cost of chemotherapy.

Due to its safety profile, MCV should fit easily into the treatment paradigm of most cancers. The initial label of adjuvant therapy for stage IV colorectal cancer with no evidence of disease after surgical resection of metastases could be a door opener for the larger colorectal cancer market. DanDrit’s pharmaceutical partner should be able to grow the label to the larger adjuvant for stage III colorectal cancer market.

Colorectal Cancer

The figure below presents the market opportunity for MCV in advanced colorectal treatment.

Despite numerous therapeutic advances, colorectal cancer continues to be associated with one of the worst survival rates of all cancers.  Metastatic liver disease is found in 10% to 25% of patients having surgery for primary colorectal cancer instead of liver metastasis are detected in 40-50% of patients with diagnosed colon cancer . Then, standard of care “treatment” for colorectal cancer patients after resection surgery and chemotherapy is only observation. When surgical resections of liver metastases are possible, as in 20% of the affected patients, five years survival may approach 35%. According to the most recent papers, the median RFS in patients receiving combined surgery and chemotherapy with No Evidence of Disease is 24-26 months. The same need for a safe effective maintenance therapy exists for stage III colorectal cancer patients with no evidence of disease after surgical resection and chemotherapy.

  We believe that it is of great importance for colorectal cancer patients receiving surgery alone or surgery combined with peri- or post-operative chemotherapy, that new and more effective therapies are developed and offered in the post-treatment period. The aim of the proposed trial is to study whether our lead vaccine can increase the progression-free survival for these patients.

Licensing Potential and Cooperation Agreements

The following discussion represents opportunities that we believe can expand the use of our technology.

Alliance with Chinese Company

In addition of the size of their national market, Chinese biotech firms currently benefit from a low cost first clinical development path. The Chinese approval process is favorable for local biotechnology companies. With a Chinese partner, we plan to conduct a Phase III trial in China for lower costs than in the U.S. and at a faster pace. A successful Phase III trial could result in large scale commercialization in China and Southeast Asia.

Furthermore, the domestic market in China for cancer therapies is expected to grow due to a large aging population, expanded insurance coverage, higher government healthcare spending, rising disposable incomes and the high incidence of cancer among the population. In spite of recent price cuts, we believe that the market for cancer therapies in China represents a long-term opportunity based on the factors set forth above.

 It has been estimated that almost 4 million Chinese — out of a total population of 1.35 billion — develop cancer every year, and nearly 3 million die from the disease annually. In China, cancer is now the leading cause of mortality.

Although China has less than 20% of the world’s population, it accounts for more than 25% of global cancer deaths. The majority of cancers in China are now caused by unhealthy diets, increased alcohol consumption, sedentary lifestyles, obesity, smoking and environmental pollution. A rapidly aging population will further increase China’s cancer burden.

China’s population is becoming wealthier and more urbanized — meaning that more Chinese are looking for greater access to medical care and are demanding better quality medical products and services. By 2025, China’s urban middle class population is expected to represent almost 70% of the country’s total population.

Alliance Strategy

In addition to its lead compound MCV, DanDrit has built a pipeline of dendritic cell based cancer therapies, currently addressing 40% of all cancer-related deaths. MCV can be indicated to cancers over-expressing MAGE-A.  Cancers over-expressing MAGE-A include among others, lung cancer, colorectal cancer, breast cancer, and esophageal cancers.   DanDrit intends to work with strategic partners to strengthen the in-house pipeline.

We control key technologies with relevance outside our core business area and these we may out-license or co-develop with suitable partners.

MyTomorrows

In December 2013, DanDrit entered an agreement with MyTomorrows (“MT”), a Dutch company, regarding a Patient Name Use Program (PNU) for MCV. This program will allow DanDrit to sell MCV for one year of treatment (10 vaccines) to cancer patients through MT. MT offers a worldwide online platform providing access to non-registered medicines for patients with life threatening diseases.

MT is a turnkey solution and will be in charge of regulatory, recruitment, logistics, and pharmacovigilance. DanDrit’s potential liabilities are limited to quality control of cGMP manufacturing of MCV. DanDrit expects several benefits from this agreement. First,DanDrit anticipates minor short term revenue generation as MT will transfer payment as soon as a patient orders MCV. DanDrit also anticipates that this program may contribute to lowering the cost of manufacturing of the clinical lot through economy of scale. Finally, this program may also generate real life data for MCV.

Manufacturing

In 2012, DanDrit has out-sourced the GMP manufacturing of its lysate. We believe that proving that our technology transfer was possible was a key step in finding and working with a future pharmaceuticals partner. DanDrit evaluated several possible EU-based contract manufacturing organizations (CMOs) and selected Cellin Technologies, a CMO based in Tallin, Estonia. The collaboration with Cellin Technologies in Estonia demonstrated that GMP production of lysate could not only be transferred but that the production could be scaled up. We consider that the potential economy of scale that can be expected in the cost of lysate production could become a competitive advantage versus other cancer vaccine companies using recombinant production of cancer-specific antigens (i.e. Mage-A3 from GSK). Also, the collaboration with the Estonian CMO is based on a pure fee-for-services basis and can be discontinued at any time without notice.

DanDrit intends to establish a closed fully automatized manufacturing process. We learned from the Dendreon’s experience that an efficient manufacturing process should be in place before approval for commercialization. Cost saving should be expected from a fully automatized vaccine production. We also assume that a fully efficient manufacturing process may increase the value of a deal with a pharmaceutical partner.

Cell Banking

The melanoma cell lines used by DanDrit in the production of our lysate (MCL) are stored at ultra-low temperature in liquid nitrogen at Symbion Science Park, Copenhagen, Denmark. Both master- and working cell banks are stored this way and the contents of the cell banks (both master and working) are recorded in log books. Nitrogen levels are maintained by the staff of DanDrit Biotech at least once a week and any activity in regards to storage (shipment of cells, nitrogen levels etc.) are documented in the appropriate log book.

Furthermore, for security reasons, samples of the master cell banks are also stored at specialized cell storage facilities in England. In addition, samples of one working cell bank from the DDM1.7 cell line are stored at Cellin technologies in Estonia for production purposes.

Sales, Marketing and Distribution

The business model of DanDrit is to focus on early development of dendritic cell based vaccine. We have significantly reduced the fixed costs linked with our operation and do not intend to build an expensive marketing, sales and distribution organization. We will rely on pharmaceutical partners with demonstrated relevant experience in commercialization of cancer products to market, sell and distribute MCV. At completion of the comparative clinical trial, we plan to enter into a collaboration agreement with a pharmaceutical partner regarding the regulatory approval, marketing, sales and distribution of MCV.

Intellectual Property 

As a company primarily focused on pharmaceutical research, we expect that our most valuable assets are our intellectual property. This includes U.S. and foreign patents, patent applications, common-law trademarks, trade secrets and know-how. We are pursuing an aggressive intellectual property strategy.

DanDrit intends to aggressively defend its patents through legal process if necessary. Where appropriate, DanDrit may in-license intellectual property that may add to the strength and defense of our core business. DanDrit’s intellectual property comprises patents, trademarks, copyright and secret know-how.

DanDrit’s core business is cancer therapy. Where DanDrit’s patents and secret know-how are applicable to non-core business areas we will consider out-licensing for relevant non-core applications.

DanDrit filed its first Patent Cooperation Treaty (PCT) patent application on November 29, 2002 with priority claimed from 2001 with the Danish application, shortly after our formation.

DanDrit may continue to patent its innovations, such as novel dendritic cell production systems or dendritic cell quality control. To support potential income streams DanDrit may patent non-core applications of its dendritic cell technologies so as to secure future revenue streams from out-licensing activity.

Patents

All of the above patents are protected by relevant international extensions.

Trademarks

A policy of product trademarking and branding has been adopted by DanDrit. Trademarks have been obtained for

MelCancerVac™

MelVaxin™

DanDrit™

Commercial Secrets

In addition to intellectual property protected by patents and copyrights, DanDrit has commercial secrets relating to its products, production processes, know-how and future strategies. Where it is expedient to share such secret information this will be done under the protection of a confidentiality (or secrecy) agreement. Such agreements require the signing parties to keep DanDrit’s commercial secrets confidential unless:

Governmental Regulation

Orphan Drug status for MCV

The United States and Europe may designate drugs for relatively small patient populations as orphan drugs. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process, but does make the product eligible for orphan drug exclusivity, reduced filing fees and specific tax credits. Generally, if a company receives the first marketing approval for a product with an orphan drug designation in the clinical indication for which it has such designation, the product is entitled to orphan drug exclusivity. Orphan drug exclusivity means that the FDA will not approve another application to market the same drug for the same indication, except in limited circumstances, for a period of seven years in the United States. This exclusivity, however, could block the approval of our proposed product candidates if a competitor obtains marketing approval before us. We plan to apply for orphan drug status for MCV to treat stage IV CRC with NED after surgical resection and chemotherapy if we meet the eligibility criteria. However, note that, even if we obtain orphan drug exclusivity MCV, we may not be able to maintain the status. For example, if a competitive product is shown to be clinically superior to our product, any orphan drug exclusivity we have will not block the approval of such competitive product.

Fast Track designation for development of MCV

We intend to request Fast Track designation for MCV. If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address unmet medical needs for this condition, the drug sponsor may apply for FDA Fast Track designation for a particular indication. Marketing applications filed by sponsors of products in Fast Track development may qualify for priority review under the policies and procedures offered by the FDA, but the Fast Track designation does not assure any such qualification or ultimate marketing approval by the FDA. Receipt of Fast Track designation may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures. In addition, the FDA may withdraw any Fast Track designation at any time. We may seek Fast Track designation for our vaccine product candidates or any other product candidates, but the FDA may not grant this status to any of our proposed product candidates.

Approval for Commercialization

MCV and any future product candidates that we will be developing will require approval of the FDA before they can be marketed in the U.S. Although our focus at this time is primarily on the U.S. market, in the future similar approvals will need to be obtained from foreign regulatory agencies before we can market our current and proposed product candidates in other countries.

The process for   filing and obtaining FDA approval to market therapeutic products is both time-consuming and costly, with no certainty of a successful outcome. The historical failure rate for companies seeking to obtain FDA approval of therapeutic products is high and, with the exception of Dendreon Corp.’s dendritic cell vaccine for the treatment of prostate cancer, no cancer stem cell or dendritic cell-based cancer vaccine has to date been approved by the FDA. This process includes conducting extensive pre-clinical research and clinical testing, which may take longer and cost more than we initially anticipate due to numerous factors, including without limitation, difficulty in securing appropriate centers to conduct trials, difficulty in enrolling patients in conformity with required protocols in a timely manner, unexpected adverse reactions by patients in the trials to our proposed product candidates and changes in the FDA’s requirements for our testing during the course of that testing.

The time required to obtain FDA and other approvals is unpredictable but often can exceed five years following the commencement of clinical trials, depending upon the complexity of the product and other factors. Any analysis we perform of data from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. We may also encounter unexpected delays or increased costs due to a variety of reasons, including new government regulations from future legislation or administrative actions or from changes in FDA policy during the period of product development, clinical trials and FDA regulatory review.

Any delay or failure in our clinical trial program and in obtaining required approvals would have a material adverse effect on our ability to generate revenues from the particular product. Furthermore, any regulatory approval to market a product may be subject to limitations on the indicated uses for which we may market the product. These limitations may limit the size of the market for the product.

Environmental Matters

We are subject to a broad range of federal, state, local and foreign environmental laws and regulations which govern, among other things, air emissions, wastewater discharges and the handling, storage disposal and release of wastes and hazardous substances. It is our policy to comply with applicable environmental requirements at all of our facilities. We are also subject to laws, such as the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), that may impose liability retroactively and without fault for releases or threatened releases of hazardous substances at on-site or off-site locations. We are subject to similar requirements in Denmark and other European countries.

Research and Development  

Research and development costs are charged to operations as incurred and consist primarily of clinical trial costs for the Company’s VIVA Phase III clinical trial, related party manufacturing costs, consulting costs, contract research and development costs, and compensation costs. 

Discovery and preclinical research and development expenses include costs for substantial external scientific personnel, technical and regulatory advisers, and others, costs of laboratory supplies used in our internal research and development projects, travel, regulatory compliance, and expenditures for preclinical and clinical trial operation and management when we are actively engaged in clinical trials. Because we are pre-revenue company, we do not allocate research and development costs on a project basis. We adopted this policy, in part, due to the unreasonable cost burden associated with accounting at such a level of detail and our limited number of financial and personnel resources.

Competition

There is extensive competition in the biopharmaceutical industry and the technology is developing rapidly. DanDrit is developing a vaccine for the treatment of advanced colorectal cancer, where competing products may be introduced. If these newly developed products are more efficient, cheaper, more patient-friendly, safer, or better placed than DanDrit’s vaccine candidates, or if DanDrit’s competitors develop drugs that reduce or eliminate the need for DanDrit’s vaccine candidates, such competition could reduce or eliminate DanDrit’s commercial opportunities. Many of DanDrit’s competitors have substantially greater financial, technical and human resources than DanDrit and significantly more experience than DanDrit with preclinical and clinical research and development and in obtaining regulatory approval of pharmaceutical products.

DanDrit’s drugs may face competition as a result of many factors, including the route of administration (e.g. oral administration vs. injection), the availability and cost of production, efficiency of DanDrit’s partners’ marketing and sales efforts as well as the price of DanDrit’s products. DanDrit has limited or no previous experience in these areas. DanDrit’s inability to compete effectively would have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities. At this time, DanDrit does not represent a significant presence in the biopharmaceutical industry.

Several companies are trying to capitalize on the growing interest for immunotherapy in the treatment of cancer.

Two Directly Competing Companies

The figure below outlines the competitive landscape for MCV. Note that colorectal cancer, while providing a large market opportunity (it is the second most killer cancer after lung cancer), offers a more robust competitive landscape than other cancers. In the colorectal cancer space DanDrit faces two main competitors:

Bavarian Nordic (BAVA.CO) and CV-301

With its lead vaccine Prostvac™ from Therion Biologics and NCI, Bavarian Nordic (BN) also acquired Panvac™ vaccine. This PANVAC™ vaccine failed to prove efficacy in patients with advanced pancreatic cancer who failed gemcitabine. BN is currently focusing its efforts on Prostvac™ for treatment of prostate cancer, currently in Phase III. However, in 2012, BN re-initiated the clinical development of Panvac™ (re-named CV-301).

CV-301 is a cancer immunotherapy product candidate incorporating two antigens, CEA and MUC-1, in a viral vector. CV-301 is an off-the-shelf immunotherapy product candidate for the treatment of multiple cancers. It originates from the same poxvirus technology platform as PROSTVAC™. Both PROSTVAC™ and CV-301 are prime-boost vaccines sequentially combining two different poxviruses (vaccinia and fowlpox).

CV-301 had been studied in different cancers in clinical trials led by the National Cancer Institute. One study was a randomized Phase II trial in patients with metastatic breast cancer. The study enrolled 48 patients to receive CV-301 in combination with docetaxel or docetaxel alone. The primary study endpoint was PFS, while secondary endpoints included overall survival and immunologic correlative studies. A preliminary analysis of the study showed PFS of 6.6 months in the CV-301 group versus 3.8 months among those receiving docetaxel alone. Final study data are pending results from five patients that remained on study at the time of the analysis. Because of its size the study was not designed to reach statistical significance.

More directly relevant to DanDrit was the colorectal Phase II study of CV-301 conducted by Morse at Duke University. The objective of the trial was to determine whether one of two vaccines based on dendritic cells and poxvectors encoding CEA and MUC1 would lengthen survival in patients with resected metastases of colorectal cancer. The studied patients were, disease-free after CRC metastasectomy and perioperative chemotherapy (n = 74). They were randomized to injections of autologous DCs modified with PANVAC (DC/PANVAC) or PANVAC with per injection GM-CSF (granulocyte-macrophage colony-stimulating factor). Endpoints were recurrence-free survival overall survival, and rate of CEA-specific immune responses. Clinical outcome was compared with that of an unvaccinated, contemporary group of patients who had undergone CRC metastasectomy, received similar perioperative therapy, and would have otherwise been eligible for the study.

The recurrence-free survival at two years was similar (47% and 55% for DC/PANVAC and PANVAC/GM-CSF, respectively). At a median follow-up of 35.7 months, there were two of 37 deaths in the DC/PANVAC arm and five of 37 deaths in the PANVAC/GM-CSF arm. The rate and magnitude of T-cell responses against CEA was statistically similar between study arms.

As a group, vaccinated patients had superior survival compared with the contemporary unvaccinated group. Both DC and pox-vector vaccines had similar activity. Survival was longer for vaccinated patients than for a contemporary unvaccinated group.

In 2013, Bavarian Nordic expanded its license with the National Cancer Institute (NCI) for CV-301 to include colon cancer. The original collaboration agreement executed in 2011, involved multiple cancers including breast, lung, ovarian and other cancers.

In 2016, BN announced that the future development of CV301 will focus on combination treatments with checkpoint inhibitors.

Immatics Biotechnologies

The second direct competitor is Immatics (previously known as Biomira), a German/ US biotech company who currently focuses its clinical efforts on a Phase III in Renal Cell Carinoma for its lead vaccine. However, Immatic also develops a vaccine in colorectal cancer (enter Phase I in 2012). Note that Immatic’s technology is peptide-based rather than a dendritic cell approach and that Immatics is targeting its vaccine toward early stage colorectal cancer rather than resected advanced colorectal cancer like Bavarian and DanDrit. This private German company only discovers and develops tumor-associated peptides for the immunotherapy of cancer. Immatics reported that they raised €53.8million in a Series C financing round to finance a Phase III pivotal trial of their lead product IMA901 which in data reported in June 2014 at ASCO demonstrated the potential to confer an overall survival benefit in patients with advanced renal cell carcinoma. In 2016, Immatics did not make any announcement regarding development in colorectal cancer patients.

Employees

The Company currently has 2 full-time employees.

Facilities and Offices 

The Company’s corporate headquarters are located in Symbion Science Park, Fruebjergvej 3, 2100 Copenhagen, Denmark and 375 Park Avenue, Suite 2607, New York, NY, 10152.   We lease approximately 1,108 square feet at our Symbion location which is used for work and storage of cells and biological material in freezers. The lease is for a term of three years. The office in New York is a virtual office space that can be terminated with one month’s notice.

Until May 31, 2015 we occupied approximately 1,620 square feet at Bredgade 75, 3rd   Floor, 1263 Copenhagen K, Denmark, which was used for office space. The Company does not anticipate renting additional office space in the near future.

Item 1A. Risk Factors

You should carefully consider and evaluate all of the information in the risk factors listed below. If any of these risks occur, our business, results of operations and financial condition could be harmed, the price of our common stock could decline, and future events and circumstances could differ significantly from those anticipated in the forward-looking statements contained in this report.

RISKS ASSOCIATED WITH DANDRIT’S BUSINESS AND INDUSTRY

We have had a history of losses and no or minimal revenues, which raise substantial doubt about our ability to continue as a going concern.

Since our inception through June 30, 2016, we have an accumulated deficit of $(26,300,694). We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future. There can be no assurance that our continuing efforts to execute our business plan will be successful and that we will be able to continue as a going concern. To date, we have generated minimal revenues from our operations. Our history of losses and minimal revenues raise substantial doubt about our ability to continue as a going concern. As a result, our management expects the business to continue to experience negative cash flow for the foreseeable future and cannot predict when, if ever, our business might become profitable. We will need to raise additional funds, and such funds may not be available on commercially acceptable terms, if at all. If we are unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations. The accompanying consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation as a going concern. 

DanDrit lacks an established operating history on which to evaluate its business and determine if it will be able to execute its business plan. The Company can give no assurance that its operations will result in profits.

DanDrit USA was formed in January 2011 as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business.  On February 12, 2014, pursuant to the Share Exchange Agreement, DanDrit USA completed the acquisition of 100% of the issued and outstanding capital stock of DanDrit Denmark, a Danish corporation formed in 2001, and as a result became DanDrit Denmark’s parent company.   DanDrit USA has a limited operating history that makes it difficult to evaluate its business.  DanDrit has not begun sales of its products, and cannot say with certainty when, if ever, it will begin to achieve profitability.  No assurance can be made that DanDrit will ever become profitable.

DanDrit has incurred losses in prior periods and expects to incur losses in the foreseeable future. DanDrit may never be profitable.

DanDrit had net losses for the year ending June 30, 2016 of $1,735,239, the six months ended June 30, 2015 of $2,673,448, as well as net loss for the year ended December 31, 2014 of $2,370,833. DanDrit expects to continue to sustain losses for the foreseeable future.

As sales of DanDrit’s products have generated minimal operating revenues, DanDrit has relied on loans and on sales of its debt and equity securities to continue operations. If DanDrit is unable to raise funds through sales of its securities or otherwise, there can be no assurance that DanDrit will be able to implement its business plan, generate sustainable revenue or ever achieve profitable operations. DanDrit expects to have operating losses until such time as it develops a substantial and stable revenue base. DanDrit cannot assure its investors that it can achieve or sustain profitability on a quarterly or annual basis in the future.

DanDrit may not be able to develop its vaccines to yield satisfactory results and they may never be approved for use by regulatory authorities. If DanDrit is unable to successfully commercialize its vaccines, the Company’s prospects, financial position, results of operations and future opportunities will be materially adversely affected.

None of DanDrit’s vaccine candidates has completed full clinical development. Because DanDrit’s vaccine candidates generally belong to new classes of cell therapy, they will require extensive further development, testing and funding before the Company can seek regulatory approval for any of these vaccines.

DanDrit’s prospects in the short term, including DanDrit’s ability to generate revenue and make new strategic alliances, depend on DanDrit’s ability to develop, obtain regulatory approval for and commercialize its current vaccine candidates with satisfactory results. If DanDrit fails to develop the vaccines DanDrit has in its pipeline, it will have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.

There can be no assurance that DanDrit will succeed in implementing its Phase III clinical trials for advanced colorectal cancer so that the results of these clinical trials will support further preclinical or clinical studies, or that DanDrit will be able to develop new vaccine candidates or successfully commercialize any of those cancer vaccine candidates at a later time. If DanDrit does not do this, it cannot achieve its growth potential and this will have a material adverse effect on DanDrit’s prospects, financial position, results of operations and future opportunities.

Results of our early clinical trials do not insure future success.

The results of early clinical trials may not necessarily be indicative of future results. Achieving positive results in preclinical testing and early clinical trials does not constitute any assurance that in future clinical trials sufficient data can be obtained to document a vaccine candidate’s efficacy and safety. The safety and efficacy of a vaccine candidate in development must be supported by extensive data from preclinical studies and clinical trials.

A number of companies in the pharmaceutical industry and in the biopharmaceutical industry, including companies that have greater resources and more experience than DanDrit, have achieved significant negative results in clinical phase IIb and III trials, even after obtaining promising results in preclinical and early clinical studies. Results that are considered acceptable in early clinical studies may not be confirmed or may be interpreted differently in subsequent studies. DanDrit cannot predict whether the clinical phase IIb and III and other clinical trials that may be implemented will demonstrate sufficient efficacy and safety to obtain regulatory approval to market any of DanDrit’s vaccine candidates.

Negative or non-satisfactory results of clinical trials involving DanDrit’s vaccine candidates could lead to DanDrit or its collaborators having to perform additional nonclinical and/or clinical trials, which could result in higher costs and significantly delay the marketing authorization application for such vaccine candidates by the regulatory authority, or could lead to an application for a more narrowly defined use, or another indication for the vaccine candidate than originally expected. Such results could also lead to the complete elimination of a vaccine candidate. If any of these risks materialize, it could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.

DanDrit is a clinical-stage biopharmaceutical company which makes it difficult to assess its future viability.

DanDrit is a clinical-stage biopharmaceutical company. It has not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical area. For example, to execute its business plan, DanDrit will need to successfully:

Even if DanDrit is unsuccessful in accomplishing these objectives, it may not be able to develop product candidates, raise capital, expand its business or continue its operations.

DanDrit will be dependent on collaboration and licensing arrangements to develop and commercialize its products. These relationships may be unsuccessful and may not result in the development of vaccine candidates. In that case, our business, financial condition and growth opportunities will be materially adversely affected.

DanDrit expects to depend on collaboration and licensing agreements with third parties who we expect will provide additional personnel and other resources and funding required to develop and commercialize its products. Until these relationships are established, our plans for developing some of our vaccines may be uncertain. There can be no assurance that DanDrit will be able to enter into or maintain these agreements, that the results of these agreements will further the development of a vaccine, or that DanDrit will receive income from these agreements. Furthermore, collaborators that we anticipate may enter into agreements with us may change their priorities; make reallocation of resources; terminate the agreements; end or further delay the development of vaccine candidates; downgrade or change plans or strategies for regulatory approval or commercialization of the vaccine candidate; find it difficult to retain key employees; or be taken over by companies that are our competitors.

We expect that these collaboration and licensing agreements will entitle us to milestone payments and a percentage of sales related to the vaccine candidates that are commercialized. If a third party with which DanDrit has established a collaboration or licensing arrangement stops the development of a vaccine candidate, there can be no assurance that all rights in respect of the vaccine candidate will be reassigned to us. A transfer of these rights may be delayed for various reasons, which may result in the delay of all work performed for the vaccine candidate.

Since we are dependent on third parties to develop and commercialize our product candidates, any adverse change in these anticipated relationships will have a material adverse effect on our business, financial condition, and future growth opportunities.

Changes in regulatory requirements and regulations could have a material adverse effect on DanDrit.

DanDrit’s products are subject to extensive regulatory requirements, including public and/or regulatory limits set by the FDA and the European Medicines Agency (“EMA”). These laws and regulations, including those relating to reporting on safety, product safety and advertising and marketing of products are applicable to all aspects of DanDrit’s business.

DanDrit and/or any future third party with which it has an effective collaboration or licensing agreement may be subject to changes in applicable governmental regulations and/or regulatory framework and be subject to additional or more onerous restrictions, which may make it necessary to make changes to personnel, facilities or procedures that could result in increased costs and adversely affect DanDrit’s business activities, including the development and commercialization of DanDrit’s vaccine candidates.

If DanDrit or its affiliates do not comply with applicable regulatory requirements or comply with significant legislative changes. DanDrit or its affiliates can be fined or risk having regulatory approvals suspended or withdrawn, risking recall or seizure of products, restrictions on activities and/or civil or criminal prosecution, which could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities. Furthermore, we cannot guarantee that our vaccine candidates will be approved by the regulating agencies.

As long as the relevant regulatory authorities have not considered and approved applications for DanDrit’s vaccine candidates (New Drug Application (NDA) or equivalent) DanDrit and its affiliates cannot commercialize DanDrit’s vaccine candidates. Production and marketing of DanDrit’s products and DanDrit’s ongoing research and development activities are subject to rules set by numerous public authorities throughout the world. The regulatory authorities of each country can set their own requirements and may refuse to approve a product or may require additional data before approving a product, even if the product is approved by another regulating agency. Approvals may include restrictions on the marketing or use of products, which could adversely affect the amount of DanDrit’s revenue from the sale of those products.

We may in the future conduct clinical trials for MCV or any future product candidates in sites outside the United States and the FDA may not accept data from trials conducted in such locations.

We have conducted, and may in the future choose to conduct, one or more of our clinical trials outside of the United States. Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of this data is subject to certain conditions imposed by the FDA. For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with ethical principles. The study population must also adequately represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. Generally, the patient population for any clinical studies conducted outside of the United States must be representative of the population for whom DanDrit intends to label the product in the United States. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will be dependent upon its determination that the studies also complied with all applicable U.S. laws and regulations. There can be no assurance the FDA will accept data from trials conducted outside of the United States. If the FDA does not accept the data from our clinical trial conducted outside the United States, it would likely result in the need for additional trials within the United States, which would be costly and time-consuming and delay or permanently halt our development of MCV or any future vaccine candidates.

In connection with the anticipated filing of our IND application with the FDA, we plan to submit trial results for trials that we did not sponsor, which the FDA may refuse to consider.

DanDrit was only a sponsor of one of the clinical trials completed to date for MCV while DanDrit Denmark employees and certain affiliates were closely involved in the design of the studies and the analysis and interpretation of the resulting data of all three studies. As a result, DanDrit intends to present all applicable data with respect to the current trials that is available to it, regardless of DanDrit’s specific role in any one of the trials.  There are no assurances that the FDA will accept any data that DanDrit submits in support of its IND application for any clinical trial in which it was not a sponsor or principal investigator.

There can be no assurance that regulators will complete their review process in a timely manner, or that DanDrit vaccine candidates will obtain regulatory approval.

If DanDrit or any third party with which we have an effective collaboration or licensing agreement experience difficulties or delays in obtaining regulatory approvals, the development and commercialization of our vaccine candidates may be significantly delayed or even discontinued. Such difficulties or delays could result in significantly increased development costs and/or a delay or elimination of payments to us from our collaborators. This would have a material adverse effect on our business, financial condition, results of operations and future growth opportunities.

DanDrit will be dependent on external suppliers of certain services and technologies.

DanDrit will be dependent on a number of external parties such as contract laboratories and clinical research organizations, and in some cases our collaborators to:

The third parties DanDrit depends on may not be available when needed, or might not, if available, comply with all statutory and contractual requirements, and/or otherwise provide their services in a timely manner or in an acceptable manner.

DanDrit’s succes is dependent on its ability to recruit and retain qualified scientific and management personnel.

Recruiting and retaining qualified scientific and management personnel for the planning and execution of research and development; preparation of applications for intellectual property rights and regulatory approvals; and negotiating and maintaining cooperation with existing and new partners is essential for DanDrit.

There can be no assurance that DanDrit will be able to attract and retain such persons considering the demand for experienced employees from numerous pharmaceutical companies, chemical companies, specialized biopharmaceutical companies, universities and other research institutions. DanDrit’s employment contracts contain no limitation on competition that would prevent DanDrit’s current employees from being employed by DanDrit’s competitors or partners, if they choose to leave DanDrit.

DanDrit may in the future require additional expertise and manpower in areas such as preclinical trials, management of clinical trials, regulatory affairs, marketing, business development and management of partnerships. Inability to obtain or develop such expertise, or hire the employees it needs, on reasonable terms, could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.

If DanDrit’s employees commit fraud or other misconduct, including noncompliance with regulatory standards and requirements and insider trading, its business may experience serious adverse consequences.

DanDrit is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, to provide accurate information to the FDA, to comply with manufacturing standards the Company has established, to comply with federal and state health-care fraud and abuse laws and regulations, to report financial information or data accurately or to disclose unauthorized activities to DanDrit.

In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. DanDrit has adopted a Code of Business Conduct and Ethics but it is not always possible to identify and deter employee misconduct, and the precautions DanDrit takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against DanDrit, and DanDrit is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business, including the imposition of significant fines or other sanctions.

DanDrit’s products may not achieve market acceptance. This would have a material adverse effect on the Company’s business, financial condition, results of operations and future growth opportunities.

The drugs DanDrit or its collaborators may develop may not gain market acceptance among physicians, patients, third-party payers and the medical community, even if they are approved by the applicable regulatory bodies for marketing. The degree of market acceptance of the products approved for sale depends on a number of factors, including:

DanDrit has no control over most of these factors. Furthermore, it may be difficult for DanDrit, to the extent that competitors are able to commercialize competing products before its vaccine candidates obtain regulatory approval, to develop a market for a vaccine because doctors, patients or third-party payers may have become accustomed to using a competing, existing product or for other reasons, even though its drug may be more effective or has other advantages.

If any of the vaccines DanDrit develops fail to achieve market acceptance in the future, the Company may not be able to generate significant revenue, which would have a material adverse effect on its business, financial condition, results of operations and future growth opportunities.

The use of DanDrit’s drugs or vaccine candidates may lead to unforeseen side effects. If any of our drugs or vaccine candidates is deemed to be unsafe, our business, financial condition, results of operations and future growth opportunities could be materially adversely affected.

All drugs are associated with a risk of allergic, immunologic genes or hypersensitivities. The Company tests for allergic and immunological genes actions in preclinical and clinical studies, but if any of its products cause other allergic or immunological reactions than those considered acceptable by patients, doctors or regulatory authorities, the Company or its collaborators may be required to conduct additional clinical trials that will cause delays and increase costs for the development of a product, or development may have to be terminated or suspended on the grounds that participants will be exposed to unacceptable health risks.

Even in cases where pre-clinical or clinical studies have been successful, or received regulatory approval, a product can later prove to be unsafe. The incidence of adverse events may make it necessary for the Company and for its collaborators to carry out further investigations and studies. If a product is determined to be unsafe, the Company and its collaborators can be fined or risk having regulatory approvals suspended or withdrawn, be required to cease selling activities relating to the product, be required to recall the product, be subject to seizure of products, or be exposed to civil or criminal prosecution. Any of these results could have a material adverse effect on the Company’s business, financial condition, results of operations and future growth opportunities.

Third party reimbursement and reform measures on health care could have a material adverse effect on the commercial success of DanDrit’s vaccine candidates.

Market acceptance of DanDrit’s vaccine candidates depends in part on the extent to which the public and private health insurance and other third-party payers will subsidize DanDrit’s drugs.

Governments, insurance companies and health organizations are increasingly seeking to reduce healthcare costs by limiting coverage, price and reimbursement levels of new vaccine products as well as in some cases rejecting coverage. Reimbursement practices vary significantly from country to country, and some countries require that products undergo a lengthy review by the authorities before they meet the public support requirements.

In the United States, in Canada and in many other countries, pricing and/or profitability of some or all prescription pharmaceuticals and biopharmaceuticals are subject to varying degrees of government control. Healthcare reform and controls on healthcare spending may limit the price we charge for any products and the amounts thereof that we can sell. In particular, in the United States, the federal government and private insurers have changed and have considered ways to change, the manner in which healthcare services are provided. In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, PPACA, became law in the United States. PPACA substantially changes the way healthcare is financed by both governmental and private insurers and significantly affects the healthcare industry. 

In addition, other legislative changes have been proposed and adopted since PPACA was enacted. These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our customers and accordingly, our financial operations.  

We anticipate that PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the reimbursement we may receive for any approved product. Moreover, payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives. For example, the Middle Class Tax Relief and Job Creation Act of 2012 required the Centers for Medicare & Medicaid Services, or CMS, to reduce the Medicare clinical laboratory fee schedule by 2% in 2013, which in turn serves as a base for 2014 and subsequent years. CMS also recently proposed to re-examine payment amounts for tests reimbursed under the Medicare clinical laboratory fee schedule due to changes in technology and, in addition, proposed to bundle the Medicare payments for certain laboratory tests ordered while a patient received services in a hospital outpatient setting. Such changes went into effect January 1, 2014. Levels of reimbursement may be impacted by current and future legislation, regulation or reimbursement policies of third-party payors in a manner that may harm the demand and reimbursement available for our products, which in turn could harm our future product pricing and sales. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.

There may be delays or difficulties in the recruitment and monitoring of patients in clinical trials. Any such delays could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.

All clinical development of new vaccine candidates depends on the recruitment of volunteer suitable patients for clinical trials. The ability to recruit patients depends on certain factors, including the prevalence of the disease in the population. It may be more difficult to find a sufficient number of patients to participate in clinical trials for drugs being developed for a disease that is common among the general population. Even if a disease is frequent among the population, there may be a number of other companies developing drugs that target the same disease who may eventually have more success in recruiting among the total group of potential patients for their clinical studies. If we or our collaborators find it difficult to recruit a sufficient number of patients to participate in clinical trials for one of its vaccine candidates DanDrit and/or its collaborators may have to postpone or discontinue ongoing clinical trials. Delays may also result in increased costs for clinical studies and may affect the implementation of studies required for a vaccine candidate’s approval. Delay or complete termination of a clinical trial program could have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.

DanDrit may not be able to make, or cause others to conduct, animal testing in the future. This could have a material adverse effect on our research and development work.

Research into dendritic cell vaccines does not generally involve animals. But, certain aspects of DanDrit’s biotechnology research and development may be carried out on animals. Changes to laws and regulations, recognized clinical procedures, or experimental protocols may have a negative impact on this research and development. Pressure from society, which may lead to restrictions on the use of animals or result in actions against DanDrit, its affiliates or its clinical research organizations from groups of people or individuals who are against animal testing may also have a material adverse effect on research and development work.

DanDrit faces extensive competition. If its vaccine candidates cannot compete successfully, its business, financial condition, results of operations and future growth opportunities could be materially, adversely affected.

There is extensive competition in the biopharmaceutical industry and the technology is developing rapidly. DanDrit is developing a vaccine for the treatment of advanced colorectal cancer, where competing products may be introduced. If these newly developed products are more efficient, cheaper, more patient-friendly, safer, or better placed than DanDrit’s vaccine candidates, or if DanDrit’s competitors develop drugs that reduce or eliminate the need for DanDrit’s vaccine candidates, such competition could reduce or eliminate DanDrit’s commercial opportunities. Many of DanDrit’s competitors have substantially greater financial, technical and human resources than DanDrit and significantly more experience than DanDrit with preclinical and clinical research and development and in obtaining regulatory approval of pharmaceutical products.

DanDrit’s drugs may face competition as a result of many factors, including the route of administration (e.g. oral administration vs. injection), the availability and cost of production, efficiency of DanDrit’s partners’ marketing and sales efforts as well as the price of DanDrit’s products. DanDrit has limited or no previous experience in these areas. DanDrit’s inability to compete effectively would have a material adverse effect on DanDrit’s business, financial condition, results of operations and future growth opportunities.

DanDrit is likely to be exposed to product liability claims. If product liability lawsuits are successfully brought against the Company, its insurance may be inadequate. If a judgment were to exceed our insurance coverage, our business could be materially, adversely affected.

DanDrit will likely be exposed, by virtue of the nature of its business, to the risk of potential product liability claims, which is typical regarding the clinical development, manufacture and marketing of drugs. Even in cases where DanDrit has granted licenses to third parties to manufacture and sell its products, there can be no assurance that DanDrit will not be included in any product liability claims relating to these medicines, or claims by third parties, including DanDrit’s partners, for indemnity or other compensation from DanDrit in connection with any such claims.

DanDrit plans to obtain product liability insurance coverage once our clinical trials commence. However, the Company’s insurance coverage may not be sufficient to reimburse it for any expenses or losses it may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, the Company may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect it against losses due to liability. If and when the Company obtains marketing approval for its product candidates, it intends to expand its insurance coverage to include the sale of commercial products; however, the Company may be unable to obtain this product liability insurance on commercially reasonable terms. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. The cost of any product liability litigation or other proceedings, even if resolved in the Company’s favor, could be substantial. A successful product liability claim or series of claims brought against the Company could cause its share price to decline and, if judgments exceed its insurance coverage, could decrease the Company’s cash and adversely affect its business.

DanDrit has insufficient funds to develop its business, which may adversely affect its future growth. Future funding may not be available to it on acceptable terms, or at all, which would force DanDrit to terminate, delay, reduce or suspend its operations, research and development programs and other commercialization efforts.

DanDrit will need to raise substantial additional capital to fund its operations and to develop and commercialize its products. As of June 30, 2016 and 2015, respective, the Company had approximately $23,368 and $1,474,134 in cash and cash equivalents, respectively. The Company currently does not have cash to sustain its operations for the next 12 months. The Company will need to sell equity securities or borrow funds in order to develop these growth strategies and its inability to raise the additional capital and/or borrow the funds needed to implement these plans may adversely affect its business and future growth. These factors create an uncertainty as to the Company's ability to continue as a going concern. The accompanying consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation as a going concern. Please see note 2 to the financials.

The Company’s future capital requirements may be substantial and will depend on many factors including:

DanDrit does not have any committed external source of funds or other support for its operational or development efforts. Until it can generate a sufficient amount of product revenue to finance its cash requirements, which it may never do, DanDrit expects to finance future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. Additional financing may not be available to the Company when it needs it or it may not be available on favorable terms. If the Company raises additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, it may have to relinquish certain valuable rights to MCV or potential future product candidates, technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable to it. If the Company raises additional capital through public or private equity offerings, the ownership interest of its existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect its stockholders’ rights.

If the Company raises additional capital through debt financing, it may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If it is unable to obtain adequate financing when needed, the Company may have to delay, reduce the scope of, or suspend one or more of its clinical studies or research and development programs or its commercialization efforts.

Raising capital in the future could cause dilution to our existing shareholders, and may restrict our operations or require us to relinquish rights.

In the future, we may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing shareholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our existing shareholders. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration, strategic alliance and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us.

We depend on intellectual property and the failure to protect our intellectual property could adversely affect our future growth and success. This would have a material adverse effect on our business, financial condition and results of operations.

We rely on patent, trademark and copyright law, trade secret protection, and confidentiality and other agreements with employees, customers, collaborators and others to protect our intellectual property. However, some of our intellectual property is not covered by any patent or patent application, and, despite precautions, it may be possible for third parties to obtain and use our intellectual property without authorization.

We do not know whether any patents will be issued from pending or future patent applications or whether the scope of the issued patents is sufficiently broad to protect our technologies or processes. The patent position of biotechnology companies is generally uncertain because it involves complex legal and factual considerations. The standards applied by the United States Patent and Trademark Office and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology and pharmaceutical patents. Consequently, patents may not issue from our pending patent applications. As such, we do not know the degree of future protection that we will have on our proprietary products and technology.

We endeavor to aggressively protect our technologies through patents covering compositions of matter, drug targets and aspects of mechanism of action, drug product formulation, methods of use and methods of manufacture, and trade secrets.   We have filed patent applications and in-licensed others with respect to our technology both domestically and internationally and anticipate filing multiple patent applications, in the future. While we believe that we will be able to secure adequate and enforceable patent protection for our products and technologies, there is no guarantee that patent protection can be obtained, and even if it is obtained that such patent protection will ultimately be deemed valid, sufficiently enforceable, sufficient to preclude competition or not infringe upon the rights of other parties. Furthermore, the laws of some foreign countries may not protect intellectual property rights to the same extent as do the laws of the United States and Denmark.

The patents protecting our proprietary technologies expire after a period of time. Currently, our patents have expiration dates ranging from 2021 through 2032. Although we have attempted to incorporate technology from our core patents into specific patented product applications, product designs and packaging to extend the lives of our patents, this approach may not be successful in protecting our proprietary technology. If we are not successful in protecting our proprietary technology, it could have a material adverse effect on our business, financial condition and results of operations.

We may not be successful in protecting our proprietary rights. Any infringement upon our intellectual property rights could have an adverse effect on our ability to develop our products and sell them commercially.

Issued patents covering one or more of our product candidates could be found invalid or unenforceable if challenged in court. If that were to happen, our business would be adversely impacted.

If we were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. Patent and Trademark Office, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on one or more of our product candidates or certain aspects of our platform technology. Such a loss of patent protection could have a material adverse impact on our business.

We may unintentionally infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing our products.

Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third parties. For example, there could be issued patents of which we are not aware that our products infringe. There also could be patents that we believe we do not infringe, but that we may ultimately be found to infringe. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our products infringe. For example, pending applications may exist that provide support or can be amended to provide support for a claim that results in an issued patent that our product infringes.

Third parties may assert that we are employing their proprietary technology without authorization. If a court held that any third-party patents are valid, enforceable and cover our products or their use, the holders of any of these patents may be able to block our ability to commercialize our products unless we obtained a license under the applicable patents, or until the patents expire. We may not be able to enter into licensing arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative technology could result in delays in the introduction of our products or lead to prohibition of the manufacture or sale of products by us.

Unfavorable outcomes in intellectual property litigation could limit our research and development activities and/or our ability to commercialize certain products.

If third parties successfully assert intellectual property rights against us, we might be barred from using certain aspects of our technology, or barred from developing and commercializing certain products. Prohibitions against using certain technologies, or prohibitions against commercializing certain products, could be imposed by a court or by a settlement agreement between us and a plaintiff. In addition, if we are unsuccessful in defending against allegations of patent infringement or misappropriation of trade secrets, we may be forced to pay substantial damage awards to the plaintiff. There is inevitable uncertainty in any litigation, including intellectual property litigation. There can be no assurance that we would prevail in any intellectual property litigation, even if the case against us is weak or flawed. If litigation leads to an outcome unfavorable to us, we may be required to obtain a license from the patent owner in order to continue our research and development programs or to market our product(s). It is possible that the necessary license will not be available to us on commercially acceptable terms, or at all. This could limit our research and development activities, our ability to commercialize certain products, or both.

Most of our competitors are larger than we are and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex patent litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our internal research programs, in-license needed technology, or enter into strategic partnerships that would help us bring our product candidates to market.

In addition, any future patent litigation, interference or other administrative proceedings will result in additional expense and distraction of our personnel. An adverse outcome in such litigation or proceedings may expose us or any future collaborators to loss of our proprietary position, expose us to significant liabilities, or require us to seek licenses that may not be available on commercially acceptable terms, if at all.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity. Therefore, obtaining and enforcing pharmaceutical patents is costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. The United States Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the U.S. PTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of trade secrets and other proprietary information.

In addition to patents, we rely on other methods to protect our trade secrets, technical know-how, and proprietary information. In the course of our research and development activities and our business activities, we often rely on confidentiality agreements to protect our proprietary information. Such confidentiality agreements are used, for example, when we talk to vendors of laboratory or clinical development services or potential collaborators. We take steps to protect our proprietary information, and our confidentiality agreements are carefully drafted to protect our proprietary interests. Nevertheless, there can be no guarantee that an employee or an outside party will not make an unauthorized disclosure of our proprietary confidential information. This might happen intentionally or inadvertently. It is possible that a competitor will make use of such information in spite of any legal action we might take against persons making such unauthorized disclosures.

Trade secrets are difficult to protect. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, or outside collaborators might intentionally or inadvertently disclose our trade secret information to competitors. Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States sometimes are less willing than U.S. courts to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.

Foreign currency fluctuations could adversely impact financial performance.

Our reporting currency is the United States dollar. Because of our activities in Denmark, the United Kingdom and continental Europe, we are exposed to fluctuations in foreign currency rates. We may manage the risk to such exposure by entering into foreign currency futures and option contracts. Foreign currency fluctuations may have a significant effect on our operations in the future.

Assuming that our vaccine candidates receive regulatory approval and we begin sales of these products, our results may fluctuate due to certain regulatory, marketing and competitive factors over which we have little or no control.

Assuming that our vaccine candidates receive regulatory approval and we begin the sale of these products, the factors listed below, some of which we cannot control, may cause our revenue and results of operations to fluctuate significantly:

We will incur significant costs as a result of operating as a public company, and our management may be required to devote substantial time to compliance initiatives, which may have a material effect on our business.

As a public company, we incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC, have imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls as well as mandating certain corporate governance practices. Our management and other personnel devote a substantial amount of time and financial resources to these compliance initiatives

If we fail to staff our accounting and finance function adequately, or maintain internal control systems adequate to meet the demands that are placed upon us as a public company, we may be unable to report our financial results accurately or in a timely manner and our business and stock price may suffer. The costs of being a public company, as well as diversion of management’s time and attention, may have a material adverse effect on our business, financial condition and results of operations.

A significant portion of our assets and the majority of our officers and directors are located outside of the United States and therefore it may be difficult for an investor to enforce within the United States any judgments obtained against us or such officers and directors.

A significant portion of our assets are located outside of the United States. In addition, the majority of our officers and directors are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for an investor to effect service of process or enforce within the United States any judgments obtained against us or such officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. In addition, there is uncertainty as to whether the courts of other jurisdictions would recognize or enforce judgments of United States courts obtained against us or our directors and officers predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in other jurisdictions against us, or such officers and directors predicated upon the securities laws of the United States or any state thereof.

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

Our majority stockholders will control our Company for the foreseeable future, including the outcome of matters requiring stockholder approval.

Our officers, directors, and five percent stockholders collectively own more than 50% of our outstanding shares of common stock. In addition, these stockholders and previous stockholders of the Company’s subsidiary, DanDrit Denmark entered into a voting agreement in connection with the Merger, whereby they agreed to vote in favor of nominees for directors selected by the parties to the voting agreement as described therein. As a result, such entities and individuals will have the ability, acting together, to control the election of our directors and the outcome of corporate actions requiring stockholder approval, such as: (i) a merger or a sale of our Company, (ii) a sale of all or substantially all of our assets, and (iii) amendments to our articles of incorporation and bylaws. This concentration of voting power and control could have a significant effect in delaying, deferring or preventing an action that might otherwise be beneficial to our other stockholders and be disadvantageous to our controlling stockholders. Certain of these individuals also have significant control over our business, policies and affairs as officers or directors of the Company. Therefore, you should not rely on your ability to have any control over our Company.

An investment in our Company should be considered illiquid.

An investment in our Company requires a long-term commitment, with no certainty of return. Because we became a reporting company other than by the traditional means of conducting an initial public offering of our common stock, we may be unable to establish a liquid market for our common stock. In addition, investment banks may be less likely to agree to underwrite primary or secondary offerings on behalf of our Company or its stockholders in the future than they would if we had become a public reporting company by means of an initial public offering of common stock. If all or any of the foregoing risks occur, it would have a material adverse effect on our Company.

An active, liquid trading market for our common stock may not develop or be sustained.

Presently, our common stock is traded on the Over-the-Counter Markets, or OTC.QB, and we are in our early stages, therefore, an investment in the Company will require a long-term commitment, with no certainty of return. Presently there is limited trading in our stock and in the absence of an active trading market:

The lack of an active market impairs your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire additional intellectual property assets by using our shares as consideration.

Even if an active trading market for our common stock develops, the market price of our common stock may be volatile.

Even if an active market for our common stock develops, of which no assurances can be given, the market price for our common stock may be volatile and subject to wide fluctuations in response to factors including the following:

In particular, the market prices of biotechnology companies like ours have been highly volatile due to factors, including, but not limited to:

The securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of shares of our common stock.

Penny stock regulations may impose certain restrictions on the marketability of our securities.

The SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5 per share, subject to certain exceptions. Our common stock is presently subject to these regulations which impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, excluding the net value of the person’s primary residence, or annual income exceeding $200,000, or $300,000 together with the investor’s spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a “penny stock”, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the “penny stock” market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the “penny stock” held in the account and information on the limited market in “penny stocks”. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our securities and may negatively affect the ability of purchasers of our shares of common stock to sell such securities.

Investors may face significant restrictions on the resale of your shares due to state “blue sky” laws.

Each state has its own securities laws, often called “blue sky” laws, which (1) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration, and (2) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. The applicable broker-dealer must also be registered in that state.

We do not know whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration will be made by those broker-dealers who agree to serve as market makers for our common stock. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our securities. Our investors should therefore consider the resale market for our common stock to be limited, as investors may be unable to resell their shares without the significant expense of state registration or qualification.

As an “emerging growth company” under the JOBS Act, we are permitted to rely on exemptions from certain disclosure requirements.

We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to and may rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are not choosing to “opt out” of this provision. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

We will remain an “emerging growth company” until the last day of our fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration under the Securities Act, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

Until such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

We have never paid dividends on our common stock.

We have never paid dividends on our common stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available for payment of dividends will be re-invested into the Company to further its business strategy. Because we do not anticipate paying dividends in the future, the only opportunity for our stockholders to realize the creation of value in our common stock will likely be through a sale of those shares.

We have the right to issue shares of preferred stock. If we were to issue preferred stock, it is likely to have rights, preferences and privileges that may adversely affect the common stock.

We are authorized to issue 10,000,000 shares of “blank check” preferred stock, with such rights, preferences and privileges as may be determined from time-to-time by our Board of Directors. Our Board of Directors is empowered, without stockholder approval, to issue preferred stock in one or more series, and to fix for any series the dividend rights, dissolution or liquidation preferences, redemption prices, conversion rights, voting rights, and other rights, preferences and privileges for the preferred stock. No shares of preferred stock are presently issued and outstanding and we have no immediate plans to issue shares of preferred stock. The issuance of shares of preferred stock, depending on the rights, preferences and privileges attributable to the preferred stock, could adversely reduce the voting rights and powers of the common stock and the portion of the Company’s assets allocated for distribution to common stockholders in a liquidation event, and could also result in dilution in the book value per share of the common stock being offered. The preferred stock could also be utilized, under certain circumstances, as a method for raising additional capital or discouraging, delaying or preventing a change in control of the Company, to the detriment of the investors in the common stock being offered. We cannot assure you that the Company will not, under certain circumstances, issue shares of its preferred stock. 

1B. Unresolved Staff Comments

There are no unresolved staff comments.

Item 2. Properties

Our corporate headquarters are located in Symbion Science Park, Fruebjergvej 3, 2100 Copenhagen, Denmark and 375 Park Avenue, Suite 2607, New York, NY, 10152, USA. The Company leases 2 locations as follows:

Item 3. Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not currently a party to in any legal proceeding that we believe would have a material adverse effect on our business, financial condition or operating results.

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

The Company's Common Stock is traded on the Over-The-Counter Bulletin Board. The following table sets forth the range of high and low bid quotations on the Common Stock for the quarterly periods indicated, as reported by the National Quotation Bureau, Inc. The quotations are inter-dealer prices without retail mark-ups, mark downs or commissions and may not represent actual transactions.

(1) Not available for trading.

(2) The common stock was available to be traded on the Over-The-Counter Bulletin Board, but there were no trades during the quarter.

Holders of Common Stock

As of September 22, 2016 we had 9,533,290 shares of common stock issued and outstanding and approximately 46 stockholders of record.

Dividends

The Company has not declared or paid any cash dividends on its common stock and does not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend on the Company’s earnings, if any, its capital requirements and financial condition and such other factors as the Board of Directors may consider.

Sales of Unregistered Securities

Not applicable.  

Securities Authorized for Issuance under Equity Compensation Plans

On February 6, 2014, the Board of Directors adopted and the Company’s sole stockholder approved the DanDrit Biotech USA, Inc. 2014 Equity Incentive Plan. We have reserved 1,206,000 shares of our common stock for issuance in accordance with the terms of the plan. As of the date of this report, no awards have been made from the plan.

Item 6. Selected Financial Data

The registrant is a smaller reporting company and is not required to provide this information.

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

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes to those statements included elsewhere in this report. In addition to the historical financial information, the following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements.

We are a biotechnology company currently based in Copenhagen, Denmark. We are committed to developing what we believe could be the world’s first vaccine against colorectal cancer. For more than a decade, we have developed and patented compounds successfully used in initial clinical trials in Europe and Asia including: (i) MelCancerVac ^TM (MCV) for treatment of cancer (one phase I/II trial in Denmark and two phase II trials in Denmark and Singapore), (ii) Tolerogenic dendritic cell (TDC) (pre-clinical stage in Denmark) and (iii) Melvaccine (MV) a melanoma cell lysate used as stand-alone vaccine (pre-clinical state in Denmark). We expect to continue our clinical development program in the United States, Europe and Asia. Springing from academic roots in Denmark, we have built upon our scientific and medical skills to advance a number of candidate therapies, targeted initially at non-small-cell-lung-cancer (NSCLC) and colorectal-cancer (CRC). On September 22, 2008, the Singapore government authorized MCV for a named patient compassionate use for CRC. We have conducted three single-arm Phase II clinical trials in cancer where our dendritic cell vaccine, MCV demonstrated efficacy. The three clinical trials generated data indicating prospects in a larger and different clinical setting. More specifically, this efficacy data needed to be confirmed in a comparative randomized trial with advanced colorectal cancer patients.Neither the FDA nor or any other comparable governmental agency has reviewed MCV.  Therefore, any assessment of its safety or efficacy only reflects the opinion of the Company.  Furthermore, it does not indicate that MCV will achieve favorable results in any later stage trials or that the FDA or comparable agency will ultimately determine that MCV is safe and effective for purposes of granting marketing approval.

As a result, DanDrit Denmark, with the assistance of key opinion leaders in colorectal cancer treatment, has designed a randomized trial with 174 stage IV colorectal cancer patients after surgical resection and chemotherapy. Using an adaptive design clinical study that includes a prospectively planned opportunity for modification of one or more specified aspects of the study design and hypotheses based on analysis of data (usually interim data) from subjects in the study (an “Adaptive Design Clinical Study”), we significantly reduced the cost and duration of a Phase III study and we believe we can complete the study within three years. Regulatory authorities in the United States and Europe have both published guidance documents on the use and implementation of adaptive design trials. These documents both include description of adaptive trials and include a requirement for prospectively written standard operating procedures and working processes for executing adaptive trials and a recommendation that sponsor companies engage with CROs that have the necessary experience in running such trials.

To date, our operations have been funded by sales of our securities, loans and, to a lesser extent, by sales of our products. Sales of our products alone will not support our current operations and we expect this to be the case until our MCV vaccine is approved for marketing in the United States and European. Even if we are successful in having MCV approved for sale in the United States and European, we cannot guarantee that a market for the product will develop. We may never be profitable.

Change in Fiscal Year End

In June 2015, DanDrit’s Board of Directors approved a change to DanDrit’s fiscal year end from December 31 to June 30. In view of this change, this MD&A compares the financial statements as of and for the year ended June 30, 2016 with the unaudited financial statements as of and for the year ended June 30, 2015 (the transition period). We are also including a discussion and analysis of our financial statements for fiscal years ended December 31, 2014 and 2013.

Share Exchange

On February 12, 2014, the Company closed the Share Exchange in accordance with the terms and conditions of the Share Exchange Agreement and as a result became DanDrit Denmark’s parent company. In connection with the Share Exchange, each outstanding share of common stock of DanDrit Denmark was exchanged for 1.498842 shares of DanDrit USA’s Common Stock for an aggregate of 6,000,000 shares, including 185,053 shares of Common Stock reserved for issuance, in accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark, to the DanDrit Denmark shareholders who did not consent to the Share Exchange and deemed issued and outstanding for accounting purposes. In addition, in connection with the Share Exchange (1) the sole shareholder prior to the Share Exchange agreed to cancel 4,400,000 shares of outstanding Common Stock owned by it and (2) the board of directors and executive management of DanDrit Denmark was appointed to serve as the Board of Directors and executive management of DanDrit USA effective upon the resignation of the sole officer and director of DanDrit USA prior to the closing of the Share Exchange.

Recent Developments

DanDrit Biotech A/S signs contract for collaboration contract relating to VIVA Phase III adjuvant study

In March 2015, DanDrit Denmark signed a final contract of collaboration with the University Hospital IRCCS “San Martino” - IST - National Institute for Cancer Research, better known as San Martino Hospital of Genoa (IST).  The collaboration relates to the VIVA Phase III adjuvant study of DanDrit vaccine in patients with no evidence of disease stage IV colorectal cancer (CRC). VIVA’s primary aim is to evaluate the efficacy of MCV in preventing relapse in stage IV CRC patients rendered Disease Free after completion of standard treatment according to local practices. IST is acting as Contract Research Organization for DanDrit. Prof. Alberto Sobrero is the Principal Investigator of this randomized multicenter study.

In March 2015, DanDrit Denmark also signed a contract of collaboration with the Fondazione Giscad per la Ricercasui Tumori (foundation for research on cancer) (GISCAD). GISCAD, the Gruppo Italiano per lo Studio dei Carcinoma dell’Apparato Digerente (Italian Group for the Study of Carcinoma of the Digestive Track) has conducted 46 phase II and III trials with the support and collaboration of AIFA (Italian Drug Agency) and involves 160 oncology centers in Italy. GISCAD will assist DanDrit in the identification, enrollment, compliance monitoring and management of the 30 clinical sites in Italy.

Trends, Events and Uncertainties

Research and development of new technologies is, by its nature, unpredictable. We cannot assure you that our technology will be adopted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. Furthermore, since we have no committed source of financing, we cannot assure you that we will be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations.

RESULTS OF OPERATIONS

Year ended June 30, 2016 compared to the year ended June 30, 2015 (unaudited); year ended December 31, 2014 compared to the year ended December 31, 2013

The following table sets forth our revenues, expenses and net income for the year ended June 30, 2016 and 2015 (unaudited) and for the years ended December 31, 2014 and 2013. The financial information below is derived from our audited consolidated financial statements included elsewhere in this report.