Advaxis (ADXS) Risk Analysis

New Ayala is a clinical stage biotechnology company with a history of losses and can provide no assurance as to future operating results. As a result of losses that will continue throughout New Ayala's clinical stage, it may exhaust its financial resources and be unable to complete the development of its products. New Ayala anticipates that it will continue to incur significant operational costs as New Ayala executes its clinical development strategy. New Ayala's deficit will continue to grow during its drug development period. New Ayala has sustained losses from operations in each fiscal year since its inception, and it expects losses to continue for the foreseeable future due to its substantial investment in research and development. As of October 31, 2022, New Ayala had an accumulated deficit of approximately $443 million and stockholders' equity of approximately $23.6 million. New Ayala expects to spend substantial additional sums on the continued administration and research and development of proprietary products and technologies with no certainty that its immunotherapies will become commercially viable or profitable as a result of these expenditures. If New Ayala fails to raise a significant amount of capital, it may need to significantly curtail operations or cease operations in the near future. If any of New Ayala's product candidates fail in clinical trials or does not gain regulatory approval, New Ayala may never become profitable. Even if New Ayala achieves profitability in the future, it may not be able to sustain profitability in subsequent periods.

New Ayala is not currently marketing its product candidates, nor can it until they are approved; however, New Ayala is seeking partnering and commercial opportunities for its products. New Ayala cannot assure you that it will be able to commercialize any of its product candidates itself or find a commercialization partner or that it will be able to agree to acceptable terms with any partner to launch and commercialize its products. The commercial success of New Ayala's product candidates is subject to risks in both the United States and European countries. In addition, in European countries, pricing and payment of prescription pharmaceuticals is subject to more extensive governmental control than in the United States. Pricing negotiations with European governmental authorities can take six to 12 months or longer after the receipt of regulatory approval and product launch. If reimbursement is unavailable in any country in which reimbursement is sought, limited in scope or amount, or if pricing is set at or reduced to unsatisfactory levels, New Ayala's ability or any potential partner's ability to successfully commercialize in such a country would be impacted negatively. Furthermore, if these measures prevent New Ayala or any potential partner from selling on a profitable basis in a particular country, they could prevent the commercial launch or continued sale in that country and could adversely impact the commercialization market opportunity in other countries. Moreover, as a condition of approval, the regulatory authorities may require that New Ayala conduct post-approval studies. Those studies may reveal new safety or efficacy findings regarding New Ayala's drug that could adversely impact the continued commercialization or future market opportunity in other countries. In addition, New Ayala predominantly relies on a network of suppliers and vendors to manufacture its products. Should a regulatory authority make any significant findings on an inspection of New Ayala's own operations or the operations of those companies, the ability for it to continue producing its products could be adversely impacted and further production could cease. Regulatory GMP requirements are extensive and can present a risk of injury or recall, among other risks, if not manufactured or labeled properly under GMPs. New Ayala's potential revenues from the commercialization of its product candidates are subject to these and other factors, and therefore it may never reach or maintain profitability. Even if New Ayala is successful in obtaining market approval, commercial success of any of its product candidates will also depend in large part on the availability of coverage and adequate reimbursement from third-party payers, including government payers such as the Medicare and Medicaid programs and managed care organizations, which may be affected by existing and future health care reform measures designed to reduce the cost of health care. Third-party payers could require New Ayala to conduct additional studies, including post-marketing studies related to the cost effectiveness of a product, to qualify for reimbursement, which could be costly and divert its resources. If government and other health care payers were not to provide adequate coverage and reimbursement levels for one any of New Ayala's products once approved, market acceptance and commercial success would be reduced. In addition, if one of New Ayala's products is approved for marketing, it will be subject to significant regulatory obligations regarding product promotion, the submission of safety and other post-marketing information and reports and registration, and will need to continue to comply (or ensure that New Ayala's third-party providers comply) with cGMPs, and GCPs for any clinical trials that it conducts post-approval. In addition, there is always the risk that New Ayala or a regulatory authority might identify previously unknown problems with a product post-approval, such as adverse events of unanticipated severity or frequency. Compliance with these requirements is costly, and any failure to comply or other issues with New Ayala product candidates' post-market approval could have a material adverse effect on its business, financial condition and results of operations.

The FDA has granted a designation to facilitate development and expedite the review of therapies with the potential to treat a serious condition where there is an unmet medical need (the "Fast Track" designation) for AXAL for adjuvant therapy for high-risk locally advanced cervical cancer patients, and has granted Fast Track designation for ADXS-HER2 for patients with newly-diagnosed, non-metastatic, surgically-resectable osteosarcoma. New Ayala may seek Breakthrough Therapy Designation for its product candidates or Fast Track designation for certain of its other product candidates. There is no guarantee, however, that New Ayala will be able to obtain or maintain such designations. The FDA has broad discretion whether or not to grant any special designation, so even if New Ayala believes one of its product candidates is eligible for this designation, it cannot assure you that the FDA would decide to grant it. Additionally, even if New Ayala receives a special designation, it may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may also withdraw the designation if it believes that the designation is no longer supported by data from New Ayala's clinical development program.

New Ayala outsources the management of its clinical trials to third parties. Agreements with CROs, clinical investigators and medical institutions for clinical testing and data management services, place substantial responsibilities on these parties that, if unmet, could result in delays in, or termination of, New Ayala's clinical trials. For example, if any of New Ayala's clinical trial sites or CROs fail to comply with FDA-approved good clinical practices, New Ayala may be unable to use the data gathered at those sites. If these clinical investigators, medical institutions or other third parties do not carry out their contractual duties or regulatory obligations or fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to New Ayala's clinical protocols or for other reasons, its clinical trials may be extended, delayed or terminated, and New Ayala may be unable to obtain regulatory approval for, or successfully commercialize, its agents. New Ayala is not certain that it will successfully recruit enough patients to complete its clinical trials nor that it will reach its primary endpoints. Delays in recruitment, lack of clinical benefit or unacceptable side effects would delay or prevent the initiation of future development of New Ayala's agents. While New Ayala has agreements governing the activities of such third parties and are responsible for its third-party service provider's activities and regulatory compliance, it has limited influence and control over their actual performance and activities and cannot control whether or not they devote sufficient time and resources to New Ayala's ongoing clinical, non-clinical, and preclinical programs and cannot control whether they maintain regulatory compliance. New Ayala's third-party service providers may also have relationships with other entities, some of which may be its competitors, for whom they may also be conducting trials or other therapeutic development activities that could harm New Ayala's competitive position. Agreements with third parties conducting or otherwise assisting with New Ayala's clinical or preclinical studies might terminate for a variety of reasons, including a failure to perform by the third parties. If any of New Ayala's relationships with these third parties terminate, it may not be able to enter into arrangements with alternative providers or to do so on commercially reasonable terms. Switching or adding additional third parties involve additional cost and requires management time and focus. In addition, there is a natural transition period when a new third party commences work. As a result, if New Ayala needs to enter into alternative arrangements, it could delay its product development activities and adversely affect its business. Though New Ayala carefully manages its relationships with third parties, there can be no assurance that it will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on New Ayala's business, financial condition and prospects, and results of operations. New Ayala or its regulators may suspend or terminate its clinical trials for a number of reasons. New Ayala may voluntarily suspend or terminate its clinical trials if at any time it believes they present an unacceptable risk to the patients enrolled in its clinical trials or do not demonstrate clinical benefit. In addition, regulatory agencies may order the temporary or permanent discontinuation of New Ayala's clinical trials, or place its products on temporary or permanent hold, at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements or that they present an unacceptable safety risk to the patients enrolled in New Ayala's clinical trials. New Ayala's clinical trial operations are subject to regulatory inspections at any time. If regulatory inspectors conclude that New Ayala or its clinical trial sites are not in compliance with applicable regulatory requirements for conducting clinical trials, it may receive reports of observations or warning letters detailing deficiencies, and it will be required to implement corrective actions. If regulatory agencies deem New Ayala's responses to be inadequate or are dissatisfied with the corrective actions it or its clinical trial sites have implemented, New Ayala's clinical trials may be temporarily or permanently discontinued, may be fined, New Ayala or its investigators may be precluded from conducting any ongoing or any future clinical trials, the government may refuse to approve its marketing applications or allow it to manufacture or market its products, and New Ayala may be criminally prosecuted. The lengthy approval process as well as the unpredictability of future clinical trial results may result in New Ayala failing to obtain regulatory approval for its product candidates, which would materially harm its business, results of operations and prospects.

Interim or preliminary data from clinical trials that New Ayala may conduct may not be indicative of the final results of the trial and are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Interim or preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the interim or preliminary data. As a result, interim or preliminary data should be viewed with caution until the final data are available. Even if New Ayala's clinical trials are completed as planned, it cannot be certain that their results will support its proposed indications.

New Ayala clinical trials may be suspended at any time for a number of reasons. A clinical trial may be suspended or terminated by New Ayala, an Institutional Review Board ("IRB"), the FDA or other regulatory authorities due to a failure to conduct the clinical trial in accordance with regulatory requirements or its clinical protocols, presentation or identification of unforeseen safety signals or issues, failure to demonstrate a benefit from using the investigational drug, changes in governmental regulations or administrative actions, lack of adequate funding to continue the clinical trial, or for other business-related reasons. For example, in June 2019, New Ayala announced that it was closing its AIM2CERV Phase 3 clinical trial with AXAL in cervical cancer due to the delays New Ayala incurred as a result of the recent FDA partial clinical hold on the trial, as well as the estimated cost and time to completion of the trial. Furthermore, New Ayala has completed the clinical study report from Part A of the ADXS-NEO study and plans to close its ADXS-NEO program IND as next step. In addition, clinical trials for New Ayala's product candidates could be suspended due to adverse side effects. Drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. New Ayala may also voluntarily suspend or terminate its clinical trials if at any time it believes that they present an unacceptable risk to patients or do not demonstrate clinical benefit. If New Ayala elects or is forced to suspend or terminate any clinical trial of any product candidates that it develops, the commercial prospects of such product candidates will be harmed and its ability to generate product revenues from any of these product candidates will be delayed or eliminated. Any of these occurrences may significantly harm New Ayala's business, financial condition, results of operations and prospects.

Factors affecting New Ayala research and development expenses include, but are not limited to: - competition from companies that have substantially greater assets and financial resources than New Ayala has;         - need for market acceptance of New Ayala's immunotherapies if it receives regulatory approval;         - ability to anticipate and adapt to a competitive market and rapid technological developments;         - ability to raise sufficient capital to fund New Ayala research and development activities;         - amount and timing of operating costs and capital expenditures relating to expansion of New Ayala business, operations and infrastructure;         - need to rely on multiple levels of outside funding due to the length of drug development cycles and governmental approved protocols associated with the pharmaceutical industry; and         - dependence upon key personnel including key independent consultants and advisors. There can be no guarantee that New Ayala research and development expenses will be consistent from period to period. New Ayala may be required to accelerate or delay incurring certain expenses depending on the results of its studies and the availability of adequate funding.

New Ayala immunotherapies are at various stages of development. Further development and extensive testing will be required to determine their technical feasibility and commercial viability. New Ayala will need to complete significant additional clinical trials demonstrating that its product candidates are safe and effective to the satisfaction of the FDA and other non-U.S. regulatory authorities. The drug approval process is time-consuming, involves substantial expenditures of resources, and depends upon a number of factors, including the severity of the illness in question, the availability of alternative treatments, and the risks and benefits demonstrated in the clinical trials. New Ayala's success will depend on its ability to achieve scientific and technological advances and to translate such advances into licensable, FDA-approvable, commercially competitive products on a timely basis. Failure can occur at any stage of the process. If such programs are not successful, New Ayala may invest substantial amounts of time and money without developing revenue-producing products. As New Ayala enters a more extensive clinical program for its product candidates, the data generated in these studies may not be as compelling as the earlier results. The proposed development schedules for New Ayala immunotherapies may be affected by a variety of factors, including technological difficulties, clinical trial failures, regulatory hurdles, clinical holds, competitive products, intellectual property challenges and/or changes in governmental regulation, many of which will not be within its control. Any delay in the development, introduction or marketing of New Ayala products could result either in such products being marketed at a time when their cost and performance characteristics would not be competitive in the marketplace or in the shortening of their commercial lives. In light of the long-term nature of New Ayala's projects, the unproven technology involved, and the other factors described elsewhere in this section, there can be no assurance that New Ayala will be able to successfully complete the development or marketing of any new products which could materially harm its business, results of operations and prospects.

New Ayala's success will depend in part on its ability to operate without infringing the proprietary rights of third parties. The pharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights. Other parties may obtain patents in the future and allege that the products or use of New Ayala's technologies infringe these patent claims or that it is employing their proprietary technology without authorization. In addition, third parties may challenge or infringe upon New Ayala's existing or future patents. Proceedings involving New Ayala's patents or patent applications or those of others could result in adverse decisions regarding: - the patentability of New Ayala's inventions relating to its product candidates; and/or         - the enforceability, validity or scope of protection offered by New Ayala's patents relating to its product candidates. Even if New Ayala is successful in these proceedings, it may incur substantial costs and divert management time and attention in pursuing these proceedings, which could have a material adverse effect on New Ayala. If New Ayala is unable to avoid infringing the patent rights of others, it may be required to seek a license, defend an infringement action or challenge the validity of the patents in court. Patent litigation is costly and time consuming. New Ayala may not have sufficient resources to bring these actions to a successful conclusion. In addition, if New Ayala does not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or have infringed patents declared valid, New Ayala may: - incur substantial monetary damages;         - encounter significant delays in bringing New Ayala product candidates to market; and/or         - be precluded from participating in the manufacture, use or sale of New Ayala product candidates or methods of treatment requiring licenses.

New Ayala's ability to compete effectively will depend on its ability to maintain the proprietary nature of its technologies, including the Lm-LLO based immunotherapy platform technology, and the proprietary technology of others with whom New Ayala has entered into collaboration and licensing agreements. Currently, New Ayala owns or have rights to several hundred patents and applications, which are owned, licensed from, or co-owned with Penn and Merck. New Ayala has obtained the rights to all future patent applications in this field originating in the laboratories of Dr. Yvonne Paterson and Dr. Fred Frankel, at the University of Pennsylvania. New Ayala owns or hold licenses to a number of issued patents and U.S. pending patent applications, as well as foreign patents and foreign counterparts. New Ayala's success depends in part on its ability to obtain patent protection both in the United States and in other countries for its product candidates, as well as the methods for treating patients in the product indications using these product candidates. Such patent protection is costly to obtain and maintain, and New Ayala cannot guarantee that sufficient funds will be available. New Ayala's ability to protect its product candidates from unauthorized or infringing use by third parties depends in substantial part on its ability to obtain and maintain valid and enforceable patents. Due to evolving legal standards relating to the patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope of claims made under these patents, New Ayala's ability to obtain, maintain and enforce patents is uncertain and involves complex legal and factual questions. Even if New Ayala's product candidates, as well as methods for treating patients for prescribed indications using these product candidates are covered by valid and enforceable patents and have claims with sufficient scope, disclosure and support in the specification, the patents will provide protection only for a limited amount of time. Accordingly, rights under any issued patents may not provide New Ayala with sufficient protection for its product candidates or provide sufficient protection to afford it a commercial advantage against competitive products or processes. In addition, New Ayala cannot guarantee that any patents will issue from any pending or future patent applications owned by or licensed to New Ayala. Even if patents have issued or will issue, New Ayala cannot guarantee that the claims of these patents are or will be valid or enforceable or will provide it with any significant protection against competitive products or otherwise be commercially valuable to New Ayala. The laws of some foreign jurisdictions do not protect intellectual property rights to the same extent as in the United States and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. Furthermore, different countries have different procedures for obtaining patents, and patents issued in different countries offer different degrees of protection against use of the patented invention by others. If New Ayala encounters such difficulties in protecting or are otherwise precluded from effectively protecting its intellectual property rights in foreign jurisdictions, its business prospects could be substantially harmed. The patent positions of biotechnology and pharmaceutical companies, including New Ayala's patent position, involve complex legal and factual questions, and, therefore, validity and enforceability cannot be predicted with certainty. Patents may be challenged, deemed unenforceable, invalidated, or circumvented as a result of laws, rules and guidelines that are changed due to legislative, judicial or administrative actions, or review, which render New Ayala's patents unenforceable or invalid. New Ayala's patents can be challenged by its competitors who can argue that its patents are invalid, unenforceable, lack utility, sufficient written description or enablement, or that the claims of the issued patents should be limited or narrowly construed. Patents also will not protect New Ayala's product candidates if competitors devise ways of making or using these product candidates without infringing its patents. New Ayala will be able to protect its proprietary rights from unauthorized use by third parties only to the extent that its technologies, methods of treatment, product candidates, and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets and New Ayala has the funds to enforce its rights, if necessary. The expiration of New Ayala's owned or licensed patents before completing the research and development of its product candidates and receiving all required approvals in order to sell and distribute the products on a commercial scale can adversely affect New Ayala's business and results of operations.

If New Ayala further expands its operations outside of the United States, it must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which it plans to operate. The U.S. Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, authorizing payment or offering anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring New Ayala to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions. Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If New Ayala expands its presence outside of the United States, it will require New Ayala to dedicate additional resources to comply with these laws, and these laws may preclude it from developing, manufacturing or selling certain products and product candidates outside of the United States, which could limit its growth potential and increase New Ayala's development costs. The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA's accounting provisions.

The research and development, manufacturing and marketing of human therapeutic and diagnostic products are subject to regulation, primarily by the FDA in the United States and by comparable authorities in other countries. These national agencies and other federal, state, local and foreign entities regulate, among other things, research and development activities (including testing in animals and in humans) and the testing, manufacturing, handling, labeling, storage, record keeping, approval, distribution, advertising and promotion of the products that New Ayala is developing. If New Ayala obtains approval for any of its product candidates, its operations will be directly or indirectly through its customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statue and the FCA, and privacy laws. New Ayala, its product candidates, and its products, if it receives marketing approval are and will continue to be subject to extensive governmental regulation and regulatory authorities do and will continue to closely monitor New Ayala and its contractor's compliance through, among other methods, inspections. Noncompliance with applicable laws and requirements can result in various adverse consequences and regulatory enforcement actions, including delay in approving or refusal to approve product licenses or other applications, suspension or termination of clinical investigations, revocation of approvals previously granted, fines, criminal prosecution, civil and criminal penalties, restitution or disgorgement of profits, recall or seizure of products, exclusion from having its products reimbursed by federal health care programs, the curtailment or restructuring of New Ayala's operations, corporate integrity agreements or consent decrees, refusal to permit product import or export, modifications to labeling or promotional materials, issuance of corrective information, regulatory authority public statements, warning, untitled, or cyber letters, requirements for post-market studies or REMS, injunctions against shipping products and total or partial suspension of production and/or refusal to allow a company to enter into governmental supply contracts. Any of these events could prevent New Ayala from achieving or maintaining product approval and market acceptance of the particular product candidate, if approved, or could substantially increase the costs and expenses of developing and commercializing such product, which in turn could delay or prevent New Ayala from generating significant revenues from its sale. Any of these events could further have other material and adverse effects on New Ayala's operations and business and could adversely impact its stock price and could significantly harm New Ayala's business, financial condition, results of operations, and prospects. The process of obtaining requisite FDA approval has historically been costly and time-consuming. Current FDA requirements for a new human biological product to be marketed in the United States include: (1) the successful conclusion of preclinical laboratory and animal tests, if appropriate, to gain preliminary information on the product's safety; (2) filing with the FDA of an IND to conduct human clinical trials for drugs or biologics; (3) the successful completion of adequate and well-controlled human clinical trials to establish the safety and efficacy of the investigational new drug for its recommended use; and (4) filing by a company and acceptance and approval by the FDA of a BLA for marketing approval of a biologic, to allow commercial distribution of a biologic product. The FDA also requires that any drug or formulation to be tested in humans be manufactured in accordance with its cGMP regulations. This has been extended to include any drug that will be tested for safety in animals in support of human testing. The cGMPs set certain minimum requirements for procedures, record-keeping and the physical characteristics of the laboratories used in the production of these drugs. A delay in one or more of the procedural steps outlined above could be harmful to New Ayala in terms of getting its immunotherapies through clinical testing and to market.

New Ayala is currently evaluating the safety and efficacy of its product candidates in clinical trials. However, even though the initiation and conduct of the clinical trials is in accordance with the governing regulatory authorities in each country, as with any investigational new drug (under an Investigational New Drug Application, or IND, in the United States, or the equivalent in countries outside of the United States), New Ayala is at risk of a clinical hold at any time based on the evaluation of the data and information submitted to the governing regulatory authorities. There can be delays in obtaining FDA and/or other necessary regulatory approvals in the United States and in countries outside the United States for any investigational new drug and failure to receive such approvals would have an adverse effect on the investigational new drug's potential commercial success and on New Ayala's business, prospects, financial condition and results of operations. The time required to obtain approval by the FDA and non-U.S. regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. For example, the FDA or non-U.S. regulatory authorities may disagree with the design or implementation of New Ayala's clinical trials or study endpoints; or it may be unable to demonstrate that a product candidate's clinical and other benefits outweigh its safety risks. In addition, the FDA or non-U.S. regulatory authorities may disagree with New Ayala's interpretation of data from preclinical studies or clinical trials or the data collected from clinical trials of its product candidates may not be sufficient to support the submission of a BLA or New Drug Application ("NDA") or other submission or to obtain regulatory approval in the United States or elsewhere. The FDA or non-U.S. regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which New Ayala contracts for clinical and commercial supplies; and the approval policies or regulations of the FDA or non-U.S. regulatory authorities may significantly change in a manner rendering New Ayala's clinical data insufficient for approval. In addition to the foregoing, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate's clinical development and may vary among jurisdictions. New Ayala has not submitted for nor obtained regulatory approval for any product candidate in-humans (US & EU) and it is possible that none of its existing product candidates or any product candidates New Ayala may seek to develop in the future will ever obtain regulatory approval. Drug discovery and development is a complex, time-consuming and expensive process that is fraught with risk and a high rate of failure. Product candidates are subject to extensive pre-clinical testing and clinical trials to demonstrate their safety and efficacy in humans. Conducting pre-clinical testing and clinical trials is a lengthy, time-consuming and expensive process that takes many years. New Ayala cannot be sure that pre-clinical testing or clinical trials of any of its product candidates will demonstrate the safety, efficacy and benefit-to-risk profile necessary to obtain marketing approvals. In addition, product candidates that experience success in pre-clinical testing and early-stage clinical trials will not necessarily experience the same success in larger or late-stage clinical trials, which are required for marketing approval. Even if New Ayala is successful in advancing a product candidate into the clinical development stage, before obtaining regulatory and marketing approvals, it must demonstrate through extensive human clinical trials that the product candidate is safe and effective for its intended use. Human clinical trials must be carried out under protocols that are acceptable to regulatory authorities and to the independent committees responsible for the ethical review of clinical studies. There may be delays in preparing protocols or receiving approval for them that may delay the start or completion of the clinical trials. In addition, clinical practices vary globally, and there is a lack of harmonization among the guidance provided by various regulatory bodies of different regions and countries with respect to the data that is required to receive marketing approval, which makes designing global trials increasingly complex. There are a number of additional factors that may cause New Ayala's clinical trials to be delayed, prematurely terminated or deemed inadequate to support regulatory approval, such as: - safety issues up to and including patient death (whether arising with respect to trials by third parties for compounds in a similar class as tour product or product candidate), inadequate efficacy, or an unacceptable risk-benefit profile observed at any point during or after completion of the trials;         - slower than expected rates of patient enrollment, which could be due to any number of factors, including failure of New Ayala's third-party vendors, including its CROs, to effectively perform their obligations to New Ayala, a lack of patients who meet the enrollment criteria or competition from clinical trials in similar product classes or patient populations, or onerous treatment administration requirements;         - subjects may drop out of New Ayala's clinical trials, be lost to follow-up at a higher rate than it anticipates, or not comply with the required clinical trial procedures;         - New Ayala may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and its CROs;         - the cost of clinical trials may be greater than New Ayala anticipates or it may have insufficient funds for a clinical trial or to pay the substantial FDA user fees;- the FDA or comparable foreign regulatory authorities may disagree with New Ayala's study design, including endpoints, its intended indications, or its interpretation of data;         - the risk of failure of New Ayala's clinical investigational sites and related facilities, including its suppliers and CROs, to maintain compliance with the FDA's cGMP and Good Clinical Practices, or GCP, regulations or similar regulations in countries outside of the U.S., including the risk that these sites fail to pass inspections by the appropriate governmental authority, which could invalidate the data collected at that site or place the entire clinical trial at risk;         - any inability to reach agreement or lengthy discussions with the FDA, equivalent regulatory authorities, or ethical review committees on trial design that New Ayala is able to execute or it may be required to modify its trial design such that studies are impracticable;         - regulators may require New Ayala to perform additional or unanticipated clinical trials to obtain approval or it may be subject to additional post-marketing testing, surveillance, or REMS requirements to maintain regulatory approval;         - FDA refusal to accept the data from foreign clinical trial sites to the extent New Ayala uses such sites;         - changes in laws, regulations, regulatory policy or clinical practices, especially if they occur during ongoing clinical trials or shortly after completion of such trials; and         - clinical trial record keeping or data quality and accuracy issues. Any deficiency in the design, implementation or oversight of New Ayala's development programs could cause it to incur significant additional costs, conduct additional trials, experience significant delays, prevent it from obtaining marketing approval for any product candidate or abandon development of certain product candidates, any of which could harm its business and cause its stock price to decline.

Changes in regulations, statutes or the interpretation of existing regulations could impact New Ayala's business in the future by requiring, for example: (i) changes to its manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the recall or discontinuation of its products; or (iv) additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of New Ayala's business. In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, the ACA was passed, which substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacted the U.S. biopharmaceutical industry. The ACA, among other things, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs and created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer's outpatient drugs to be covered under Medicare Part D. Some of the provisions of the ACA have yet to be fully implemented, while certain provisions have been subject to judicial and Congressional challenges to repeal or replace certain aspects of the ACA. For example, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. While Congress has not passed repeal legislation, the Tax Reform Act includes a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the "individual mandate." As a result of the individual mandate repeal, subsequent litigation challenged the validity of the ACA. On December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was repealed as part of the Tax Cuts and Jobs Act, or TCJA, the remaining provisions of the ACA are invalid as well. The Trump administration and CMS have both stated that the ruling will have no immediate effect, and on December 30, 2018 the same judge issued an order staying the judgment pending appeal. A Fifth Circuit U.S. Court of Appeals hearing to determine whether certain states and the House of Representatives have standing to appeal the lower court decision was held on July 9, 2019, but it is unclear when the court will render its decision on this hearing, and what effect it will have on the status of the ACA. Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results. New Ayala will continue to evaluate the effect that the ACA and its possible repeal and replacement has on its business. Since January 2017, President Trump has signed two Executive Orders designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. Further, the Trump administration has concluded that cost-sharing reduction, or CSR, payments to insurance companies required under the ACA have not received necessary appropriations from Congress and announced that it will discontinue these payments immediately until those appropriations are made. The loss of the CSR payments is expected to increase premiums on certain policies issued by qualified health plans under the ACA. Bipartisan bills to appropriate funds for CSR payments were proposed in 2017 and 2018, but the proposals have not been enacted into law. Multiple state Attorneys General filed suit to stop the administration from terminating the subsidies, but their case was dismissed by a federal judge in California on July 18, 2018. Furthermore, on June 14, 2018, the U.S. Court of Appeals for the Federal Circuit ruled that the federal government was not required to pay more than $12 billion in ACA risk corridor payments to third-party payors who argued were owed to them. The effects of this gap in reimbursement on third-party payors, the viability of the ACA marketplace and providers, and the potential effect on New Ayala's business, are not yet known.

If any of New Ayala's product candidates are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, distribution, sampling, record-keeping, conduct of post-marketing studies and submission of safety, efficacy and other post-market information, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities. In addition, New Ayala will be subject to continued compliance with cGMP and GCP requirements for any clinical trials that it conducts post-approval. Manufacturers and manufacturers' facilities are required to comply with extensive FDA, EMA and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to cGMP regulations. As such, New Ayala and its contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any BLA, other marketing application and previous responses to inspection observations. Accordingly, New Ayala and others with whom it works must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control. Any regulatory approvals that New Ayala receives for its product candidates may be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and surveillance to monitor the safety and efficacy of the product candidate. Certain endpoint data New Ayala hopes to include in any approved product labeling also may not make it into such labeling, including exploratory or secondary endpoint data such as patient-reported outcome measures. The FDA may also require a REMS program as a condition of approval of New Ayala's product candidates, which could entail requirements for long-term patient follow-up, a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA, EMA or a comparable foreign regulatory authority approves New Ayala's product candidates, it will have to comply with requirements including submissions of safety and other post-marketing information and reports and registration. The FDA may impose consent decrees or withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with New Ayala's product candidates, including adverse events of unanticipated severity or frequency, or with its third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical trials to assess new safety risks or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things: - restrictions on the marketing or manufacturing of New Ayala's products, withdrawal of the product from the market or voluntary or mandatory product recalls;         - fines, warning letters or holds on clinical trials;         - refusal by the FDA to approve pending applications or supplements to approved applications filed by New Ayala or suspension or revocation of license approvals;         - product seizure or detention or refusal to permit the import or export of New Ayala's product candidates; and         - injunctions or the imposition of civil or criminal penalties. The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Products may be promoted only for the approved indications and in accordance with the provisions of the approved label. The policies of the FDA, EMA and comparable foreign regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of New Ayala's product candidates. New Ayala cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If New Ayala is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if New Ayala is not able to maintain regulatory compliance, it may lose any marketing approval that it may have obtained and it may not achieve or sustain profitability.

Obtaining and maintaining regulatory approval of New Ayala's product candidates in one jurisdiction does not guarantee that it will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a product candidate, the EMA or comparable foreign regulatory authorities must also approve the manufacturing, marketing and promotion of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials, as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that New Ayala intends to charge for its products are also subject to approval. New Ayala may also submit marketing applications in other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of product candidates with which it must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for New Ayala and could delay or prevent the introduction of its products in certain countries. If New Ayala fails to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, its target market will be reduced and its ability to realize the full market potential of its product candidates will be harmed.

Healthcare providers, physicians and third-party payors in the United States and elsewhere play a primary role in the recommendation and prescription of pharmaceutical products. Arrangements with third-party payors and customers can expose pharmaceutical manufacturers to broadly applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute (the "AKS") and the FCA which may constrain the business or financial arrangements and relationships through which such companies sell, market and distribute pharmaceutical products. In particular, the research of New Ayala's product candidates, as well as the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed 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, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials. The applicable federal, state and foreign healthcare laws and regulations that may affect New Ayala's ability to operate include, but are not limited to: - the AKS, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs. A person or entity can be found guilty of violating the statute without actual knowledge of the statute or specific intent to violate it. In addition, a claim including items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the FCA. The AKS has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution;- the federal civil and criminal false claims laws and civil monetary penalty laws, including the FCA, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment to, or approval by Medicare, Medicaid or other federal healthcare programs, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim or an obligation to pay or transmit money to the federal government, or knowingly concealing or knowingly and improperly avoiding or decreasing or concealing an obligation to pay money to the federal government. Manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to "cause" the submission of false or fraudulent claims. The government may deem manufacturers to have "caused" the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label. The FCA also permits a private individual acting as a "whistleblower" to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery;         - the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters. Similar to the AKS, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statute or specific intent to violate it;         - HIPAA, as amended by HITECH, and their respective implementing regulations, which impose, among other things, requirements on certain healthcare providers, health plans and healthcare clearinghouses, known as covered entities, as well as their respective business associates, independent contractors that perform services for covered entities that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys' fees and costs associated with pursuing federal civil actions;- the federal Physician Payments Sunshine Act, created under the Patient Protection and Affordable Care Act, as amended, or ACA, and its implementing regulations, which require some manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services, or CMS, of the U.S. Department of Health and Human Services, or HHS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and         - analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and may be broader in scope than their federal equivalents; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing; state and local laws that require the registration of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products. Pharmaceutical companies may also be subject to federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies continue to closely scrutinize interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time and resource-consuming and can divert a company's attention from the business. It is possible that governmental and enforcement authorities will conclude that New Ayala's business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against New Ayala, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business, including the imposition of civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of New Ayala's operations, as well as additional reporting obligations and oversight if it becomes subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws. Further, if any of the physicians or other healthcare providers or entities with whom New Ayala expects to do business is found to be not in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. Any action for violation of these laws, even if successfully defended, could cause a biopharmaceutical manufacturer to incur significant legal expenses and divert management's attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect business in an adverse way.

New Ayala may face legal claims involving stockholders, consumers, clinical trial subjects, competitors, regulators and other parties. New Ayala is engaged in legal proceedings. Litigation and other legal proceedings are inherently uncertain, and adverse rulings could occur, including monetary damages, or an injunction stopping New Ayala from engaging in business practices, or requiring other remedies, including, but not limited to, compulsory licensing of patents. The costs of litigation or any proceeding, including, but not limited to, those relating to New Ayala's intellectual property or contractual rights, could be substantial, even if resolved in its favor. Some of New Ayala's competitors or financial funding sources have far greater resources than it does and may be better able to afford the costs of complex litigation. Also, a lawsuit, even if frivolous, will require considerable time commitments on the part of management, New Ayala's attorneys and consultants. Defending these types of proceedings or legal actions involve considerable expense and could negatively affect New Ayala's financial results. Legal claims may also adversely impact New Ayala in other ways, such as the withdrawal or slower enrollment in or from its clinical trials, regulatory enforcement actions, and negative media attention, any of which could materially and negatively harm New Ayala and its operations.

The market price of New Ayala's Common Stock may be volatile, and in the past companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. New Ayala may be the target of this type of litigation in the future. Securities litigation against New Ayala could result in substantial costs and divert its management's attention from other business concerns, which could seriously harm its business.

As of October 31, 2022 New Ayala had 15 employees, 14 of which were full time employees. New Ayala's ability to attract and retain highly skilled personnel is critical to its operations and expansion. New Ayala faces competition for these types of personnel from other technology companies and more established organizations, many of which have significantly larger operations and greater financial, technical, human and other resources than it has. New Ayala may not be successful in attracting and retaining qualified personnel on a timely basis, on competitive terms, or at all. If New Ayala is not successful in attracting and retaining these personnel, or integrating them into its operations, business, prospects, financial condition and results of operations will be materially adversely affected. In such circumstances New Ayala may be unable to conduct certain research and development programs, unable to adequately manage its clinical trials and other products, unable to commercialize any products, and unable to adequately address its management needs.

New Ayala currently has agreements with third party manufacturing facilities for production of many of its immunotherapies for research and development and testing purposes. New Ayala depends on third-party manufacturers to supply all of its clinical materials, but it does not have direct control over their personnel or operations. Third-party manufacturers must be able to meet New Ayala's deadlines as well as adhere to quality standards and specifications. New Ayala's reliance on third parties for the manufacturing of its drug substance, investigational new drugs and, in the future, any approved products, creates a dependency that could severely disrupt New Ayala's research and development, its clinical testing, and ultimately its sales and marketing efforts if the source of such supply proves to be unreliable or unavailable. For instance, manufacturers may experience unforeseen problems, such as material or personnel shortages, temporary or permanent facility closures, or scale up challenges. If any contracted manufacturing operation is unreliable or unavailable, New Ayala may not be able to manufacture clinical drug supplies of its immunotherapies, and its preclinical and clinical testing programs may not be able to move forward and its entire business plan could fail. If New Ayala is able to commercialize its products in the future, there is no assurance that any third-party manufacturers will be able to meet commercialized scale production requirements in a timely manner. There is also no guarantee that New Ayala's third-party manufacturers will be able to manufacture its product candidates in accordance with current Good Manufacturing Practices, or cGMPs. Poor control of production processes can lead to the introduction of adventitious agents or other contaminants, or to inadvertent changes in the properties or stability of a product candidate that may not be detectable in final product testing. If these third-party manufacturers are not able to comply with cGMPs, New Ayala may not be able to conduct clinical trials, may need to conduct additional studies, and may not, eventually, receive and maintain FDA approval for those products. Deviations from manufacturing requirements may also require remedial measures that may be costly and/or time-consuming for a third party to implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon or by third parties with whom New Ayala contracts could materially harm its business. A failure to comply with the applicable regulatory requirements may also result in regulatory enforcement actions against New Ayala's manufacturers. While New Ayala is ultimately responsible for the manufacturing of its product candidates, other than through its contractual arrangements, New Ayala has little control over its manufacturers' compliance with these regulations and standards. If New Ayala's manufacturers encounter manufacturing difficulties, including cGMP compliance, it may need to find alternative manufacturing facilities, which it may not be able to on favorable terms or at all, and which would significantly impact New Ayala's ability to develop, obtain and maintain regulatory approval for or market its product candidates, if approved. Any new manufacturers would need to either obtain or develop the necessary manufacturing know-how, and obtain the necessary equipment and materials, which may take substantial time and investment. New Ayala must also receive FDA approval for the use of any new manufacturers for commercial supply.