NYRADA INC. (ASX:NYR) 22 Corporate Governance Statement The Company's corporate governance statement is located at the Company's website: https://www.nyrada.com/site/About-Us/corporate-governance Business Risks (a) Uncertainty of clinical development There are numerous regulatory requirements to address before a drug candidate can progress into human studies, including review by Human Research Ethics Committees (HREC). Further, there is no certainty that any of the drug candidates will receive that permission. The Consolidated Entity's ability to commercialise its intellectual property is reliant on clinical data. Drug development is a highly risky business with a high failure rate. Fewer than 10% of drugs that enter Phase I achieve marketing approval by the US Food and Drug Administration (FDA). There are numerous reasons for this, mainly relating to low therapeutic benefit or unacceptable toxicity, with the drug’s preclinical data failing to predict those adverse outcomes. While the Consolidated Entity will conduct its clinical programs and eventual drug submissions on the advice of consultants experienced in clinical trial design and regulatory affairs, there is no certainty that the trial design will provide appropriate data or that the data will meet the regulator’s benchmark. This may require the Consolidated Entity to conduct further clinical studies, resulting in significant additional cost and delay. Once a drug enters the clinic, a final drug development path typically takes 8-10 years, depending on the indication and regulatory pathway. Any such clinical study would most likely commence in a small number of human volunteers and be a pharmacokinetic/acute safety study using very low dosages of drug. The risk associated with a first-in-human study lies in the drug having an inappropriate pharmacokinetic profile such as being extensively metabolised and therefore inactivated or being eliminated from the body too quickly to provide a therapeutic benefit. Beyond conducting preclinical animal studies, there is no reliable way of predicting such adverse outcomes prior to testing in humans. (b) Commercialisation The Consolidated Entity's current business strategy is early-stage drug development, which may include a trade sale or out-license of its drug candidates to a third party with greater resources and expertise to undertake late-stage drug development, regulatory approvals, and sales and marketing. There is no certainty that any of the drug candidates will be of interest to such a third party or, if a drug candidate is of interest to such a third party, that terms can be negotiated that are commercially acceptable to the Consolidated Entity or will adequately realise the value of the drug candidate. (c) Additional capital requirements Research and development activities require a high level of funding over a protracted period of time. However, additional development costs may arise during this period and the Company may require additional funding to meet its stated objectives or may decide to accelerate or diversify its activities within the same area The Company’s requirement for additional capital may be substantial and will depend on many factors, some of which are beyond the Company’s control, including: • slower than anticipated research progress; • the requirement to undertake additional research; • competing technological and market developments; • the cost of protecting the Company’s intellectual property. The Company will constantly evaluate data arising from its research and development activities that may indicate new uses for its products and allow the Company to file patents, thereby providing potential new development and partnering opportunities. Accordingly, the Company may alter its funding strategies to take advantage of such new opportunities if and when they present themselves.
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