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Item 1. Business

2024-02-15 compared with 2023-02-23 · 391 added, 273 removed, 638 unchanged (51% of the section changed)

We are a biopharmaceutical company committed to transforming patients’ lives through leadership in the field of cellular metabolism, with the goal of creating differentiated, small molecule medicines for rare diseases.

With a history of focused study on cellular metabolism, we have a deep and mature understanding of this biology, which is involved in the healthy functioning of nearly every system in the body.

Building on this expertise, these learnings can be rapidly applied to our clinical trials with the goal of developing medicines that can have a significant impact for patients.

We accelerate the impact of our portfolio by cultivating connections with patient communities, healthcare professionals, partners and colleagues to discover, develop and deliver potential therapies for rare diseases.

Sale of Oncology Business to Servier Pharmaceuticals, LLC (Servier)

On March 31, 2021, we completed the sale of our oncology business to Servier Pharmaceuticals, LLC, or Servier, which represented a discontinued operation.

The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200.0 million in cash, if, prior to January 1, 2027, vorasidenib is granted new drug application, or NDA, approval from the U.S.

Food and Drug Administration, or FDA, with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an isocitrate dehydrogenase 1 or 2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), as well as a royalty of 5% of U.S.

net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, and a royalty of 15% of U.S.

net sales of vorasidenib from the first commercial sale of vorasidenib through loss of exclusivity.

The milestone payment for approval of vorasidenib and royalty payments related to vorasidenib and TIBSOVO® represent contingent consideration.

Servier also acquired our co-commercialization rights for Bristol Myers Squibb’s IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene Corporation, and following the sale Servier will conduct certain clinical development activities within the IDHIFA® development program.

We recorded income from royalties of approximately $9.9 million and $6.6 million on U.S.

net sales of TIBSOVO® by Servier in the royalty income from gain on sale of oncology business line item within the consolidated statements of operation s for the year ended December 31, 2022 and December 31, 2021, respectively.

Sale of Contingent Payments

The consideration for the sale of our oncology business to Servier includes a royalty of 5% of U.S.

net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, referred to as contingent payments.

We recognize the contingent payments in the royalty income from gain on sale of oncology business line item in our consolidated statements of operations in the period when realizable.

On October 27, 2022, we sold our rights to future contingent payments to entities affiliated with Sagard Healthcare Partners, or Sagard, and recognized income of $127.9 million within the gain on sale of contingent payments line item in our consolidated statements of operations for the year ended December 31, 2022.

We retained our rights to the potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA.

Evolution of our Research Organization

In May 2022, we announced our determination to evolve our approach to exploratory research and drug discovery to focus on our existing late-lead optimization programs and to prioritize in-licensing or acquiring assets for pipeline growth.

We reduced approximately 45 roles focused on exploratory research in connection with this evolution of our research organization, and plan to retain an internal research team focused on roles critical to advancing our current and future late-stage

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research and early clinical programs.

We estimate that this initiative may provide annual average cost savings of approximately $40 million to $50 million associated with research and related expenses between 2023 and 2026.

Business Overview

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The lead product candidate in our portfolio, PYRUKYND® (mitapivat), is an activator of both wild-type and mutant pyruvate kinase, or PK, enzymes for the potential treatment of hemolytic anemias.

In February 2022, the FDA approved PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in the United States.

In February 2022, the U.S.

Food and Drug Administration, or FDA, approved PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in the United States.

In November 2022, we received marketing authorization from the European Commission for PYRUKYND® for the treatment of PK deficiency in adult patients in the European Union, or EU.

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In addition, we are currently evaluating PYRUKYND® in clinical trials for the treatment of thalassemia, sickle cell disease, or SCD, and in pediatric patients with PK deficiency.

We are also developing AG-946, a novel PK activator, for the potential treatment of lower-risk myelodysplastic syndrome, or LR MDS, and hemolytic anemias.

In addition to the aforementioned clinical development programs, we continue to invest in our late-stage research program focused on advancing a phenylalanine hydroxylase, or PAH, stabilizer for the treatment of phenylketonuria, or PKU.

With nearly 15 years of focused study in cellular metabolism, we have a deep understanding of this biology, which is involved in the healthy functioning of nearly every system in the body.

Building on this expertise, these learnings can be rapidly applied to our clinical trials with the goal of developing medicines that can have a significant impact for patients.

We are also developing (i) AG-946, a novel PK activator, for the potential treatment of lower-risk myelodysplastic syndrome, or LR MDS, and hemolytic anemias, and (ii) AG-181, our phenylalanine hydroxylase, or PAH, stabilizer for the potential treatment of phenylketonuria, or PKU.

In addition to the aforementioned development programs, in July 2023 we entered into a license agreement with Alnylam Pharmaceuticals, Inc., or Alnylam for the development and commercialization of products containing or comprised of an siRNA preclinical development candidate discovered by Alnylam and targeting the transmembrane serine protease 6, or TMPRSS6, gene and we intend to pursue development of a licensed product for the potential disease-modifying treatment of patients with polycythemia vera, or PV, a rare blood disorder.

Alnylam License Agreement

In accordance with the license agreement with Alnylam, in the year ended December 31, 2023, we made an up-front payment to Alnylam and recognized in-process research and development of $17.5 million.

We will also pay Alnylam for certain expenses associated with the development of the TMPRSS6 gene.

Additionally, we are responsible to pay up to $130.0 million in potential development and regulatory milestones, in addition to sales milestones as well as tiered royalties on annual net sales, if any, of licensed products, which may be subject to specified reductions and offsets.

Because the acquired assets under the license agreement with Alnylam do not meet the definition of a business in accordance with ASC 805, Business Combinations, we accounted for the agreement as an asset acquisition.

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Sale of Oncology Business to Servier and Sale of Contingent Payments

On March 31, 2021, we completed the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs, to Servier, for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200.0 million in cash, if, prior to January 1, 2027, vorasidenib is granted new drug application approval from the FDA with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an isocitrate dehydrogenase 1 or 2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), as well as a royalty of 5% of U.S.

net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, and a royalty of 15% of U.S.

net sales of vorasidenib from the first commercial sale of vorasidenib through loss of exclusivity, with these royalties referred to as contingent payments and recognized as income when realizable.

Servier also acquired our co-commercialization rights for Bristol Myers Squibb’s IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene Corporation, or Celgene, and Servier is responsible for conducting certain clinical development activities within the IDHIFA® development program.

In October 2022, we sold our rights to future contingent payments associated with the royalty of 5% of U.S.

net sales of TIBSOVO® from the close of the transaction through the loss of exclusivity to entities affiliated with Sagard Healthcare Partners, or Sagard, and recognized income of $127.9 million within the gain on sale of contingent payments line item in our consolidated statements of operations for the year ended December 31, 2022.

We retain our rights to the potential milestone payment and royalties from Servier if a new drug application for vorasidenib is approved by the FDA.

In November 2023, Servier announced that it was planning to submit a new drug application, or NDA, for vorasidenib for the treatment of IDH-mutant diffuse glioma to the FDA by the end of 2023 and to the European Medicines Agency, or EMA, in early 2024.

Our Strategy and Long-term Goals

As part of our long-term strategy, we have developed and articulated a strategic vision that delineates our expected evolution in light of our singular focus on rare diseases.

As part of our long-term strategy, we have developed and articulated a strategic vision that delineates our expected evolution in light of our focus on rare diseases.

We aim to build a sustainable, value-creating company, based on our expertise in cellular metabolism and classical hematology, that develops and delivers differentiated medicines for patients.

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establish a classical hematology franchise with PYRUKYND® approvals across PK deficiency, thalassemia and SCD;

expand our portfolio by advancing AG-946 and our preclinical pipeline as well as through disciplined business development aligned with our core therapeutic focus areas and capabilities;

and achieve cash-flow positivity.

and expand our portfolio by advancing AG-946, AG-181 and our preclinical pipeline as well as through disciplined business development aligned with our core therapeutic focus areas and capabilities.

Our Core Values

Our company’s values cultivate an environment that promotes collaboration, contribution, engagement and high regard for others’ points of view.

Our values cultivate an environment that promotes collaboration, contribution, engagement and high regard for others’ points of view.

This foundation helps our people push the boundaries of our science and create transformative medicines, which we believe will provide long-term benefits for all our stakeholders.

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Additionally, metabolites serve as key regulators of diverse aspects of cellular biology, and pharmacologic targeting of metabolism can therefore have disease-modifying effects in a wide variety of pathologies.

The chemical reactions of metabolism are organized into metabolic pathways, in which one chemical is transformed through a series of steps into another chemical, by a sequence of enzymes.

Enzymes catalyze quick and efficient reactions, serve as key regulators of metabolic pathways, and respond to changes in the cell’s environment or signals from other cells.

We believe our deep understanding of

The chemical reactions of metabolism are organized into metabolic pathways, in which one chemical is transformed through a series of steps into another

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cellular metabolism can be rapidly applied to our clinical trials with the goal of developing medicines that can have a significant impact for patients.

chemical, by a sequence of enzymes.

Enzymes catalyze quick and efficient reactions, serve as key regulators of metabolic pathways, and respond to changes in the cell’s environment or signals from other cells.

Rare diseases

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In addition, treatment of polygenic conditions such as achondroplasia by Vosoritide® and the monogenic condition, spinal muscular atrophy by gene therapy with Zolgensma® and Spinraza® represent novel technologic approaches to addressing rare diseases.

Most mutations driving rare diseases are intracellular and not amenable to corrective treatment with enzyme replacement therapies.

Most mutations driving rare diseases are intracellular and not amenable to corrective treatment with ERTs.

Novel technologic approaches such as gene therapy are also being tested in a minority of conditions and are technologies with limited application based on cost, complexity and patient selection factors.

Despite the promising progress made for patients with a small group of rare diseases, the majority of patients with these diseases have few therapeutic options, and the standard of care for many such conditions is palliative, meaning treatment of symptoms with no effect on underlying disease mechanisms.

Our goal is to develop mechanistically specific, small molecule approaches with the potential to have disease modifying and long-term rather than palliative effects.

Our goal is to develop mechanistically specific, small molecule approaches with the potential to have disease modifying and long-term effects, rather than palliative effects.

We are taking a novel small molecule approach to correct the defects within diseased cells with a goal of developing transformative medicines for patients.

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The following summarizes our approved product and most advanced clinical product candidates, each of which is described in further detail below.

PK Activator Program

PK is the enzyme involved in the second to last reaction in glycolysis — the conversion of glucose into lactic acid.

PK Activator Programs

PK is an enzyme involved in glycolysis — the conversion of glucose into lactic acid.

This enzyme has several tissue-specific isoforms (PKR, PKL, PKM1 and PKM2).

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Glycolysis is the only pathway available for RBCs to maintain the production of adenosine triphosphate, or ATP, which is a form of chemical energy within cells.

Accordingly, we believe that activation of mutant forms of PKR can restore glycolytic pathway activity and increase RBC health in patients with PK deficiency, and activation of wild-type (non-mutated) PKR can increase ATP which can then meet the increased demands resulting from metabolic stress in RBCs of patients with hemolytic anemias such as thalassemia and SCD.

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Accordingly, we believe that activation of mutant forms of PKR can restore glycolytic pathway activity and increase RBC health in patients with PK deficiency, and activation of wild-type (non-mutated) PKR can increase ATP which can then meet the increased energy demands resulting from metabolic stress in RBCs of patients with hemolytic anemias such as thalassemia and SCD.

PK Deficiency

PK deficiency is a rare genetic disorder and disease understanding is still evolving.

We estimate that the prevalence of PK deficiency is between approximately 3,000 and 8,000 individuals in the United States and EU5 and we believe that the disease is likely under-diagnosed.

We estimate that the prevalence of PK deficiency is between approximately 3,000 and 8,000 individuals in the United States and EU5, and believe that the disease is likely under-diagnosed.

PK deficiency leads to a shortened life span for RBCs and is the most common form of non-spherocytic hemolytic anemia in humans.

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The disease manifests by mild to severe forms of anemia caused by the excessive premature destruction of RBCs.

The chronic hemolysis can lead to long-term complications and comorbidities, regardless of the degree of the anemia, often resulting in jaundice and lifelong conditions associated with chronic anemia and secondary complications.

The chronic hemolysis can lead to long-term complications and comorbidities, regardless of the degree of the anemia, often resulting in jaundice and lifelong conditions

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associated with chronic anemia and secondary complications.

The precise mechanism for the hemolysis is not well understood but is thought to result from membrane instability secondary to the metabolic defect caused by the low level of PKR enzyme.

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Boston Children’s Hospital, in collaboration with us, is conducting a Natural History Study to better understand the symptoms and complications of PK deficiency, identify patients and treatment centers, and capture other clinical data, including genetic information.

We initiated a global registry, called Peak, for up to 500 adult and pediatric patients with PK deficiency in the first quarter of 2018 to increase understanding of the long-term disease burden of this chronic hemolytic anemia.

We maintain a global registry, called Peak, for up to 500 adult and pediatric patients with PK deficiency to increase understanding of the long-term disease burden of this chronic hemolytic anemia.

Thalassemia is a hereditary blood disorder in which mutations in the α- or β-globin chains of hemoglobin lead to globin chain precipitates and aggregates that disturb the RBC membrane and induce oxidative stress, leading to decreased survival of RBC precursors, ineffective erythropoiesis, hemolysis of mature RBCs, and anemia.

We estimate that the prevalence of thalassemia is between 18,000 and 23,000 individuals in the United States and EU5;

approximately 70,000 individuals in Saudi Arabia, United Arab Emirates, Kuwait, Bahrain, Qatar and Oman, also known as the Gulf Council Countries, or GCC;

and greater than one million individuals worldwide.

In addition to anemia, patients with thalassemia can experience enlarged spleen, bone deformities, iron overload, fatigue, and infection.

Current treatment strategies for thalassemia include blood transfusion and bone marrow transplantation, as well as newer therapies such as Reblozyl® for the treatment of β-thalassemia.

Current treatment strategies for thalassemia include blood transfusion and bone marrow transplantation, as well as newer therapies such as Reblozyl® (luspatercept-aamt) for the treatment of beta-thalassemia or Casgevy® for the treatment of transfusion-dependent beta-thalassemia.

We believe that the activation of wild-type PKR may increase ATP production and improve red cell fitness and survival of thalassemic RBCs, by increasing the clearance globin chain aggregates through ATP-dependent proteolytic mechanisms.

Sickle Cell Disease

Sickle Cell Disease (SCD)

SCD is an inherited blood disorder caused by mutations in hemoglobin that enable the hemoglobin to form long polymeric chains under certain conditions such as low oxygenation, or deoxygenation.

Polymerization of this irregular hemoglobin results in RBCs taking on a sickle shape, causing them to aggregate and obstruct small blood vessels, restricting blood flow to organs resulting in pain, cell death and organ damage.

We estimate that the prevalence of SCD is between 120,000 and 135,000 individuals in the United States and EU5.

We estimate that the prevalence of SCD is between 120,000 and 135,000 individuals in the United States and EU5 and greater than three million individuals worldwide.

RBC deoxygenation is modulated by several factors, including the levels of 2,3-diphosphoglycerate, or 2,3-DPG, which is found to be elevated in sickle cell patient RBCs.

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Reducing the level of 2,3-DPG in RBCs would increase the oxygenation state of hemoglobin to reduce sickling, while increasing the levels of ATP may improve RBC hydration status which may also inhibit the sickling process.

Lower Risk MDS

MDS is a heterogeneous group of rare hematological malignancies characterized by dysfunctional hematopoiesis (or formation of blood cells), progressive cytopenia (or lower-than-normal number of blood cells) and an increased risk of progression to acute myeloid leukemia.

The most common type of MDS is lower risk, or LR, MDS, but many existing therapies and therapies under development focus on high risk MDS.

Among patients with LR MDS, which is less likely to progress to acute myeloid leukemia, the primary concern is symptomatic anemia.

Lower Risk MDS (LR MDS)

The most common type of MDS is LR MDS, but many existing therapies and therapies under development focus on high risk MDS.

Among patients with LR MDS, which is less likely to progress to AML, the primary concern is symptomatic anemia.

We estimate that the prevalence of LR MDS in the United States and EU5 is between 75,000 and 80,000 individuals.

We believe that activation of wild-type PK in LR MDS patients may improve deficient PK activity in MDS erythrocytes.

Current treatment options for LR MDS often require in-office visits and transfusions, and erythropoiesis stimulating agents and Reblozyl® (luspatercept-aamt) are the only approved therapies to treat

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anemia in a subset of patients.

Current treatment options for LR MDS often require in-office visits and transfusions, and erythropoiesis stimulating agents and Reblozyl® are the only approved therapies to treat anemia in a subset of patients.

Despite approved therapies in subsets of patients, LR MDS associated anemia remains a disease with a high unmet medical need.

Phenylketonuria

Phenylketonuria, or PKU, is a rare, genetic disease caused by deficiency of the PAH enzyme.

Phenylketonuria (PKU)

PKU, is a rare, genetic disease caused by deficiency of the PAH enzyme.

Lack of PAH activity leads to the accumulation of phenylalanine and downstream neurocognitive deficits.

Patients with PKU are therefore often advised to consume a highly restricted diet to in order to minimize phenylalanine intake, which can further reduce patient quality of life.

We estimate that the prevalence of PKU in the United States and EU5 is between 35,000 and 40,000 individuals.

To directly address the underlying cause of PKU, we are developing a PAH stabilizer with a goal of reducing phenylalanine levels.

We estimate that the

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prevalence of PKU in the United States and EU5 is between 35,000 and 40,000 individuals.

To directly address the underlying cause of PKU, we are developing AG-181, a PAH stabilizer with a goal of reducing phenylalanine levels.

Polycythemia Vera (PV)

PV is a rare blood disorder with no disease-modifying treatments that affects approximately 100,000 individuals in the United States.

PV is characterized by excessive production of RBCs, which leads to increased blood volume and viscosity, and can result in thrombosis, cardiovascular events, and death.

Phlebotomy, which is the procedure of withdrawing blood, is the current standard of care for patients with PV.

PYRUKYND® (mitapivat):

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We have worldwide development and commercial rights to PYRUKYND® and expect to fund the future development and commercialization costs related to this program.

PYRUKYND® has been granted orphan drug designation for the treatment of PK deficiency by the FDA and the European Medicines Agency, or EMA.

PYRUKYND® has been granted orphan drug designation for the treatment of PK deficiency by the FDA and the EMA.

Additionally, PYRUKYND® has received orphan drug designation from the FDA for the treatment of thalassemia and SCD.

We have built our commercial infrastructure to support the commercial launch of PYRUKYND® in adult PK deficiency in the United States.

We are currently providing access to PYRUKYND® free of charge for eligible patients in the EU and Great Britain through a global managed access program.

In connection with our regulatory approvals in the EU and Great Britain, we are currently providing access to PYRUKYND® free of charge for eligible patients in those jurisdictions through a global managed access program.

We may provide access to PYRUKYND® for adult patients with PK deficiency in other jurisdictions upon request through the global managed access program, on either a free of charge or for charge basis.

Beyond the global managed access program, we continue to evaluate options for the commercialization of PYRUKYND® outside of the United States, including through exploring potential partnership opportunities.

We are evaluating PYRUKYND® in the following clinical trials:

• ENERGIZE, a phase 3, double-blind, randomized, placebo-controlled multicenter study evaluating the efficacy and safety of PYRUKYND® as a potential treatment for adults with non-transfusion-dependent α- or β-thalassemia, defined as ≤5 RBC units during the 24-week period before randomization and no RBC transfusions ≤8 weeks before providing informed consent or during the screening period.

The primary endpoint of the trial is percentage of patients with hemoglobin response, defined as a ≥1.0 g/dL increase in average hemoglobin concentration from Week 12 through Week 24 compared with baseline.

Secondary endpoints include markers of hemolysis and ineffective erythropoiesis, as well as patient-reported outcome measures.

This trial is enrolling patients, and we expect to complete enrollment by mid-year 2023.

• ENERGIZE-T, a phase 3, double-blind, randomized, placebo-controlled multicenter study evaluating the efficacy and safety of PYRUKYND® as a potential treatment for adults with transfusion-dependent α- or β-thalassemia, defined as 6 to 20 RBC units transfused and ≤6-week transfusion-free period during the 24-week period before randomization.

• An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from ENERGIZE, our completed phase 3, double-blind, randomized, placebo-controlled multicenter study pivotal trial of PYRUKYND® in adults with non-transfusion-dependent alpha- or beta-thalassemia.

We announced topline data for ENERGIZE in January 2024.

A total of 194 patients were enrolled in the study, with 130 randomized to PYRUKYND® 100 mg twice-daily, and 64 randomized to matched placebo.

122 patients (93.8%) in the PYRUKYND® arm and 62 patients (96.9%) in the placebo arm completed the 24-week double-blind period of the study.

The study met the primary endpoint of hemoglobin response, where treatment with PYRUKYND® demonstrated a statistically significant increase in hemoglobin response compared to placebo, as 42.3% of patients in the PYRUKYND® arm achieved a hemoglobin response, compared to 1.6% of patients in the placebo arm (2-sided p<0.0001).

Treatment with PYRUKYND® also demonstrated statistically significant improvements compared to placebo for both key secondary endpoints:

(i) change from baseline in average Functional Assessment of Chronic Illness Therapy-Fatigue, or FACIT-Fatigue, subscale score from week 12 to week 24 and (ii) change from baseline in average emoglobin concentration from week 12 to week 24.

During the 24-week double-blind period, four (3.1%) subjects in the PYRUKYND® arm experienced adverse events, or AEs, leading to discontinuation, and there were no AEs in the placebo arm leading to discontinuation.

We plan to provide a more detailed analysis of the data from this trial at an upcoming medical meeting and we aim to submit an NDA for PYRUKYND® in thalassemia to the FDA by the end of 2024.

• ENERGIZE-T, a phase 3, double-blind, randomized, placebo-controlled multicenter study evaluating the efficacy and safety of PYRUKYND® as a potential treatment for adults with transfusion-dependent alpha- or beta-thalassemia, defined as 6 to 20 RBC units transfused and ≤ six-week transfusion-free period during the 24-week period before randomization.

The primary endpoint of the trial is percentage of patients with transfusion reduction response, defined as a ≥50% reduction in transfused RBC units with a reduction of ≥2 units of transfused RBCs in any consecutive 12-week period through week 48 compared with baseline.

Secondary endpoints include additional transfusion reduction measures and percentage of participants with transfusion-independence.

This trial is enrolling patients, and we expect to complete enrollment by mid-year 2023.

This trial has completed enrollment and we plan to announce topline data from this trial in mid-2024.

• RISE UP, a phase 2/3 study evaluating the efficacy and safety of PYRUKYND® in SCD patients who are 16 years of age or older, have had between two and 10 sickle cell pain crises in the past 12 months, and have hemoglobin within the range of 5.5 to 10.5 g/dL during screening.

The phase 2 portion of the trial includes a 12-week randomized, placebo-controlled period in which participants will be randomized in a 1:1:1 ratio to receive 50 mg PYRUKYND® twice daily, 100 mg PYRUKYND® twice daily or matched placebo.

The primary endpoints are hemoglobin response, defined as ≥1 g/dL increase in average hemoglobin concentration from Week 10 through Week 12 compared to baseline, and safety.

These data will be used to establish a clear dosing paradigm for the phase 3 portion.

The phase 3 portion includes a 52-week randomized, placebo-controlled period in which participants will be randomized in a 2:1 ratio to receive the recommended PYRUKYND® dose level or placebo.

We enrolled 79 patients in the phase 2 portion of the trial, with 26 patients in

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the 50 mg twice daily mitapivat arm, 26 patients in the 100 mg twice daily mitapivat arm and 27 patients in the placebo arm.

The primary endpoints of the phase 2 portion of the trial were hemoglobin response, defined as defined as ≥ 1 g/dL increase in average hemoglobin concentration from week 10 to week 12 compared to baseline, and safety.

In June 2023, we announced the phase 2 portion of this trial had achieved its primary endpoint of hemoglobin response in patients in both 50 mg and 100 mg twice daily mitapivat arms.

46.2% of patients (n=12) in the 50 mg twice daily mitapivat arm and 50.0% of patients (n=13) in the 100 mg twice daily mitapivat arm achieved a hemoglobin response, compared to 3.7% of patients (n=1) in the placebo arm (2-sided p=0.0003 and 0.0001, respectively).

In December 2023, we announced the following additional results of the phase 2 portion of the trial:

(i) the least-squares mean (95% confidence interval) for average change from baseline in hemoglobin levels, from week 10 through week 12, for patients in the 50 mg twice daily mitapivat, 100 mg twice daily mitapivat, and placebo arms, respectively, was 1.11 (0.77, 1.45) g/dL, 1.13 (0.79, 1.47) g/dL, and 0.05 (−0.28, 0.39) g/dL;

(ii) we observed improvements in annualized rates of sickle cell pain crises as the annualized rate of sickle cell pain crises (95% confidence interval) for patients in the 50 mg twice daily and 100 mg twice daily mitapivat arms, respectively, was 0.83 (0.34, 1.99) and 0.51 (0.16, 1.59), compared to 1.71 (0.95, 3.08) for patients in the placebo arm;

(iii) we observed improvement in patient-reported fatigue scores in the 50 mg twice daily mitapivat arm compared to the placebo arm, and the least-squares mean (95% confidence interval) for average changes from baseline in patient-reported fatigue score, from week 10 through week 12, for patients in the 50 mg twice daily mitapivat, 100 mg twice daily mitapivat, and placebo arms, respectively, was −3.80 (−7.16, −0.45), −0.10 (−3.27, 3.08), and −0.17 (−3.40, 3.07).

The safety profile for mitapivat observed in the phase 2 portion of the trial was generally consistent with previously reported data in other studies of SCD and other hemolytic anemias.

The most common treatment-emergent AEs in the 50 mg BID, 100 mg BID, and placebo arms, respectively, were:

headache (n=6, 6, 7), arthralgia (n=3, 5, 9), dysmenorrhea (n=0, 3, 0), pain (n=3, 3, 2), pain in extremity (n=1, 3, 6), back pain (n=4, 2, 3), nausea (n=1, 2, 4), fatigue (n=4, 1, 5), and influenza-like illness (n=1, 1, 3).

There were no serious treatment-emergent adverse events, or TEAEs, attributed to mitapivat and there were no adverse events leading to drug reduction, discontinuation, interruption or death in either the mitapivat or the placebo arms.

Of the 79 patients enrolled in the study, 73 continued into the Phase 2 open-label extension period.

In October 2023, we enrolled the first patient in the phase 3 portion of this trial.

The phase 3 portion includes a 52-week randomized, placebo-controlled period in which participants will be randomized in a 2:1 ratio to receive the recommended (100 mg twice daily) PYRUKYND® dose level or the placebo.

The primary endpoints are hemoglobin response, defined as ≥1 g/dL increase in average hemoglobin from baseline to week 52, and annualized rate of sickle cell pain crises.

Participants who complete either the phase 2 or phase 3 portion will have the option to move into a 216-week open-label extension period to continue to receive PYRUKYND®.

The phase 2 portion of this trial has been fully enrolled, and we expect to

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announce the data from the phase 2 portion of this trial and decide whether we are initiating the phase 3 portion of this trial by mid-year 2023.

We anticipate completing enrollment by the end of 2024 and announcing topline data for this trial in 2025.

• ACTIVATE-kids and ACTIVATE-kidsT, double-blind phase 3 studies evaluating the efficacy and safety of PYRUKYND® as a potential treatment for PK deficiency in not regularly transfused and regularly transfused patients between one and 18 years old, respectively.

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The primary endpoint of ACTIVATE-kidsT is transfusion reduction response, defined as ≥33% reduction in total RBC transfusion volume from week 9 through week 32 of the double-blind period.

Both trials are enrolling patients, and we expect to enroll at least half of the patients by year-end 2023.

ACTIVATE-kidsT has completed enrollment and we expect to announce topline data for this trial by the end of 2024.

ACTIVATE-kids is currently enrolling patients, we expect to complete enrollment for this trial by mid-2024, and we anticipate announcing topline data for this trial in 2025.

• An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from ACTIVATE and ACTIVATE-T, our completed pivotal trials of PYRUKYND® in not regularly transfused and regularly transfused adult patients with PK deficiency.

• An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from DRIVE PK, our completed global phase 2, first-in-patient, open-label safety and efficacy clinical trial of PYRUKYND® in adult, not regularly transfused patients with PK deficiency.

• An extension study evaluating the safety, tolerability and efficacy of treatment with PYRUKYND® in patients from our completed phase 2, open-label safety and efficacy clinical trial of PYRUKYND® in adults with non-transfusion-dependent α- and β-thalassemia.

• In collaboration with the Company, the National Institutes of Health, or NIH, is evaluating PYRUKYND® in a phase 1 trial in patients with SCD pursuant to a cooperative research and development agreement.

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In June 2020, clinical proof of concept was established based on a preliminary analysis of the data from this trial.

• In collaboration with the Company, UMC Utrecht, or UMC, is evaluating PYRUKYND® in patients with SCD pursuant to an investigator sponsored trial agreement.

The trial has completed enrollment and patient follow-up is ongoing, and a 2-year extension study has been activated for patients who complete the follow-up period.

AG-946 and Other Programs

• In collaboration with the Company, University Medical Center Utrecht, or UMC Utrecht, is evaluating PYRUKYND® in patients with SCD pursuant to an investigator sponsored trial agreement.

The trial has completed enrollment and

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patient follow-up is ongoing, and a 2-year extension study has been initiated for patients who complete the follow-up period.

Novel PK Activator

We are developing AG-946, a novel PK activator, for the potential treatment of LR MDS and hemolytic anemias.

We are evaluating AG-946 in a phase 1 trial of AG-946 in healthy volunteers and in patients with SCD.

We have presented data from the healthy volunteer cohort, and we have initiated the SCD patient cohort of this trial.

We are evaluating AG-946 in a phase 2a study in adults with LR MDS, and we expect to complete enrollment by year-end 2023.

In addition to the aforementioned development programs, we are advancing our late-stage research program focused on a PAH stabilizer for the treatment of PKU, for which we expect to file an investigational new drug application by year-end 2023.

We have presented data from the healthy volunteer cohorts, and we have initiated the SCD patient cohort of this phase 1 trial.

We initiated a phase 2a clinical trial of AG-946 in adults with LR MDS in the third quarter of 2022, and the trial has completed enrollment with 22 patients, including 12 patients classified as non-transfused and 10 patients classified as low transfusion burden.

Patients received 5 mg of AG-946 once daily for up to 16 weeks.

The two primary endpoints of the trial were transfusion independence (for patients classified as low transfusion burden), defined as transfusion-free for ≥ eight consecutive weeks during the 16-week treatment period, and hemoglobin response, defined as a ≥ 1.5 g/dL increase from baseline in the average hemoglobin concentration measured from week 8 through week 16.

In November 2023, we announced that we achieved clinical proof-of-concept in the phase 2a portion of the trial.

We observed that four of the 10 patients with low transfusion burden achieved the transfusion independence endpoint, and one of the 22 patients achieved the hemoglobin response endpoint in the 16-week treatment period.

The safety profile observed was consistent with data reported in the healthy volunteer study of AG-946.

19 patients elected to enroll in the extension period for up to 156 weeks.

We intend to complete a full evaluation of the phase 2a trial results and assess the impact on the phase 2b portion of the protocol in 2024.

We anticipate initiating a phase 2b trial of AG-946 in adults with LR MDS in mid-2024.

Other Programs

In addition to the aforementioned development programs, we are developing AG-181, a PAH stabilizer for the potential treatment of PKU, for which we filed an investigational new drug, or IND, application in December 2023, and plan to initiate a phase 1 study in healthy volunteers in the first half of 2024.

Also, in July 2023, we entered into a license agreement with Alnylam for the development and commercialization of products containing or comprised of an siRNA preclinical development candidate discovered by Alnylam and targeting the TMPRSS6 gene, and we intend to pursue development of a licensed product for the potential treatment of patients with PV.

Intellectual Property

Our commercial success depends in part on our ability to obtain and maintain proprietary or intellectual property protection for our product candidates and our core technologies, including novel biomarker and diagnostic discoveries, and other know-how, to operate without infringing on the proprietary rights of others and to prevent others from infringing on our proprietary or intellectual property rights.

Our policy is to seek to protect our proprietary and intellectual property position by, among other methods, filing U.S.

and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business.

We also rely on confidential information, know-how and continuing technological innovation to develop and maintain our proprietary and intellectual property position.

Our policy is to seek to protect our proprietary and intellectual property position by, among other methods, filing United States and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business.

We also rely on confidential information, know-how, in-licensing opportunities and continuing technological innovation to develop and maintain our proprietary and intellectual property position.

We may also choose to rely on trade secrets to protect certain aspects of our business that are not suitable or appropriate for patent protection.

We file, or may collaborate with third parties to file, patent applications directed to our key products and product candidates, including PYRUKYND® and AG-946, in addition to related compounds and potential back-up compounds, in an effort to establish intellectual property positions to protect these new chemical entities as well as methods of using these compounds in the treatment of diseases, formulations, solid state forms, and manufacturing processes.

We file, or may collaborate with third parties to file, patent applications directed to our key products and product candidates, including PYRUKYND®, AG-946 and AG-181, in addition to related compounds and potential back-up compounds, in an effort to establish intellectual property positions to protect these new chemical entities as well as methods of using these compounds in the treatment of diseases, formulations, solid state forms, and manufacturing processes.

We may also seek patent protection for certain biomarkers that may be useful in identifying the appropriate patient population for therapies with our product candidates.

PK activator program

The patent portfolio for our PK activator program contains issued patents and pending patent applications directed to compositions of matter for PYRUKYND®, as well as to related compounds, various solid state forms of PYRUKYND®, compositions of matter for additional PKR activators, such as AG-946, as well as methods of use for these novel compounds.

As of February 1, 2023, we owned 11 issued U.S.

patents and 190 issued foreign patents, and have pending patent applications

As of February 1, 2024, we owned 16 issued United States patents and 401 issued foreign patents, and have pending patent applications in the United States and in various foreign jurisdictions.

The patents that have issued or will issue for PYRUKYND® will have a statutory expiration date of at least 2030 to 2042, and the patents that have issued or will issue for AG-946 will have a statutory expiration date of at least 2038 to 2044.

Patent term adjustments or patent term extensions could result in later expiration dates.

In some cases, the term of a United States patent can be shortened by the filing of a terminal disclaimer which operates to reduce the term of a patent to that of an earlier expiring patent.

The foreign issued patents and pending patent applications are in a number of jurisdictions, including

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in the US and in various foreign jurisdictions.

The patents that have issued or will issue for our PK activator program will have a statutory expiration date of at least 2030 to 2042.

Argentina, Australia, Austria, Belgium, Brazil, Canada, China, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Lebanon, Lithuania, Mexico, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Saudi Arabia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Turkey, and the United Kingdom.

Prosecution is a lengthy process, during which the scope of the claims initially submitted for examination can be significantly narrowed by the time they issue, if they issue at all.

We expect this could be the case with respect to some of our pending patent applications referred to above.

PAH stabilizer program

The patent portfolio for our PAH stabilizer program contains an issued patent and pending patent applications directed to compositions of matter and methods of use for AG-181 and other novel PAH stabilizers.

As of February 1, 2024, we owned one issued foreign patent and have pending patent applications in the United States and in various foreign jurisdictions.

We expect to file national stage patent applications in additional foreign jurisdictions in accordance with Patent Cooperation Treaty timelines.

The patents that have been issued or will issue for our PAH stabilizer program will have a statutory expiration date of at least 2043.

Patent term adjustments or patent term extensions could result in later expiration dates.

In some cases, the term of a US patent can be shortened by the filing of a terminal disclaimer which operates to reduce the term of a patent to that of an earlier expiring patent.

The foreign issued patents and pending patent applications are in a number of jurisdictions, including Argentina, Australia, Austria, Belgium, Brazil, Canada, China, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Lebanon, Lithuania, Mexico, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Saudi Arabia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Turkey, and the United Kingdom.

Prosecution is a lengthy process, during which the scope of the claims initially submitted for examination by the U.S.

Patent and Trademark Office, or USPTO, can be significantly narrowed by the time they issue, if they issue at all.

In some cases, the term of a United States patent can be shortened by the filing of a terminal disclaimer which operates to reduce the term of a patent to that of an earlier expiring patent.

Prosecution is a lengthy process, during which the scope of the claims initially submitted for examination can be significantly narrowed by the time they issue, if they issue at all.

We expect this could be the case with respect to some of our pending patent applications referred to above.

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In most countries, including the United States, the patent term is 20 years from the earliest filing date of a non-provisional patent application, although term extensions may be available.

In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent.

In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the United States Patent and Trademark Office, or USPTO, in examining and granting a patent or may be shortened if a patent is terminally disclaimed over an earlier filed patent.

The term of a patent that covers a drug or biological product may also be eligible for patent term extension when FDA approval is granted, provided statutory and regulatory requirements are met.

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In addition, because of the extensive time required for clinical development and regulatory review of a product candidate we may develop, it is possible that, before any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of any such patent.

In the future, if and when our product candidates receive approval by the FDA or foreign regulatory authorities, we expect to apply for patent term extensions on issued patents covering those products, depending upon the length of the clinical trials for each medicine and other factors.

There can be no assurance that any of our pending patent applications will issue or that we will benefit from any patent term extension or favorable adjustment to the term of any of our patents.

There can be no assurance that any of our pending patent applications will be issued or that we will benefit from any patent term extension or favorable adjustment to the term of any of our patents.

Additional Considerations

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The confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses requiring invention assignment, to grant us ownership of technologies that are developed through a relationship with a third party.

With respect to our proprietary cellular metabolism technology platform, we consider confidential information and know-how related to our cellular metabolism technology platform to be our primary intellectual property in this space.

Confidential information and know-how can be difficult to protect.

In particular, we anticipate that with respect to this technology platform, at least some of the technical information and know-how will, over time, become known within the industry through independent development, the publication of journal articles describing the methodology, and the movement of personnel skilled in the art from academic to industry scientific positions.

Nevertheless, confidential information and know-how can be difficult to protect.

In particular, we anticipate that at least some of our technical information and know-how will, over time, become

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known within the industry through independent development, the publication of journal articles, and the movement of personnel skilled in the art from academic to industry scientific positions.

The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products.

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PYRUKYND® and any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

We compete in the areas of pharmaceutical, biotechnology and other related markets that address rare diseases, particularly hemolytic anemias and PKU.

There are other companies working to develop therapies in the field of rare diseases, including divisions of large pharmaceutical companies and biotechnology companies of various sizes.

Our competitors include:

We compete in pharmaceutical, biotechnology and other related markets that address rare diseases, particularly hemolytic anemias, PKU and PV.

There are other companies working to develop rare disease therapies, including divisions of large pharmaceutical companies and biotechnology companies of various sizes.

Our competitors include but are not limited to:

Bristol-Myers Squibb Company, or BMS;

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Pfizer, Inc., or Pfizer;

Rocket Pharma LTD, or Rocket Pharma;

Vertex Pharmaceuticals Incorporated, or Vertex, Emmaus Life Sciences, or Emmaus, Fibrogen, Inc., or Fibrogen, Fulcrum Therapeutics, Inc., or Fulcrum, and Geron Corporation, or Geron.

The most common methods for treating patients with rare diseases include dietary restriction, dietary supplementation or replacement, treatment of symptoms and complications, gene therapy, blood transfusions, stem cell transplant and enzyme replacement therapies.

There are a number of marketed therapies available for treating patients with hemolytic anemias and PKU.

For example, recently approved treatments for thalassemia, SCD, LR MDS and PKU include Reblozyl® from Merck/BMS (formerly Acceleron/BMS);

Rocket Pharmaceuticals, Inc., or Rocket Pharma;

Vertex Pharmaceuticals Incorporated, or Vertex;

CRISPR Therapeutics AG, or CRISPR;

Emmaus Life Sciences, Inc., or Emmaus;

Fulcrum Therapeutics, Inc., or Fulcrum;

Geron Corporation, or Geron;

Keros Therapeutics, Inc., or Keros;

PTC Therapeutics, Inc., or PTC;

Jnana Therapeutics Inc., or Jnana;

Homology Medicines Inc., or Homology;

Silence Therapeutics plc, or Silence;

Protagonist Therapeutics, Inc., or Protagonist;

Ionis Pharmaceuticals, Inc., or Ionis;

PharmaEssentia USA Corporation, or PharmaEssentia;

and Incyte Corporation, or Incyte.

The most common methods for treating patients with rare diseases include dietary restriction, dietary supplementation or replacement, treatment of symptoms and complications, gene therapy, blood transfusions, phlebotomies, stem cell transplant and ERTs and there are several marketed therapies available for treating patients with hemolytic anemias, PKU and PV.

For example, recently approved treatments for thalassemia, SCD, LR MDS, PKU and PV include Reblozyl® from Merck/BMS (formerly Acceleron/BMS);

Revlimid® from BMS;

Lentiglobin® from bluebird;

Zynteglo® and Lyfgenia® from bluebird;

Adakveo® from Novartis;

Oxbryta® from Pfizer;

Kuvan® and Palynziq® from BioMarin and Endari® from Emmaus.

Casgevy® from Vertex/CRISPR;

Kuvan® and Palynziq® from BioMarin;

Endari® from Emmaus;

Besremi® from PharmaEssentia;

and Jakafi® from Incyte.

While our product and product candidates may compete with existing medicines and other therapies, to the extent they are ultimately used in combination with or as an adjunct to these therapies, our product or product candidates may not be competitive with them.

In addition to currently marketed therapies, there are also a number of products that are either small molecules, biologics, enzyme replacement therapies or gene therapies in various stages of clinical development to treat hemolytic anemias and PKU.

For example, Rocket Pharma is conducting a clinical trial of a gene therapy targeting PK deficiency, Novo is developing etavopivat (a PKR activator) for the treatment of hemolytic anemias, including thalassemia, SCD and MDS, Pfizer is developing inclacumab and GBT-601 for the treatment of SCD, Fibrogen is developing roxadustat for the treatment of anemia in MDS patients, Geron is developing imetelstat for the treatment of LR MDS, Vertex is developing a gene therapy targeting SCD, and Fulcrum is developing FTX-6058 in SCD, and a number of companies, including PTC Therapeutics, Inc., or PTC, Synlogic, Inc., or Synlogic, and Jnana Therapeutics, Inc., or Jnana, are developing therapies to treat PKU.

These products in development may provide efficacy, safety, convenience and other benefits that are not provided by currently marketed therapies.

In addition to currently marketed therapies, there are also several products that are either small molecules, biologics, ERTs or gene therapies in various stages of development to treat hemolytic anemias, PKU and PV.

For example, Rocket Pharma is conducting a clinical trial of a gene therapy targeting PK deficiency;

Novo is developing etavopivat (a PKR activator) for the treatment of hemolytic anemias, including alpha and beta thalassemia, SCD and MDS;

Pfizer is developing inclacumab and GBT-601 for the treatment of SCD;

Geron is developing imetelstat for the treatment of LR MDS (for which they have a Prescription Drug User Fee Act, or PDUFA, goal date of June 16, 2024 for their new drug application);

Fulcrum is developing pociredir (FTX-6058) in SCD;

Keros is developing KER-050 for the treatment of anemia in LR MDS;

a number of companies, including PTC, Jnana and Homology are developing therapies to treat PKU;

and a number of companies, including Silence, Protagonist and Ionis are developing therapies to treat PV.

These products may provide efficacy, safety, convenience and other benefits not provided by current marketed therapies or the current standards of care.

As a result, they may provide competition for any of our product or product candidates for which we obtain market approval.

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Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize medicines that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any medicines that we may develop.

Our competitors also may obtain FDA or other regulatory approval for their medicines more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.

Our competitors also may obtain FDA or other regulatory approval for their medicines more rapidly than we

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may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.

In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic or other branded medicines.

There are many generic medicines currently on the market for the indications that we are pursuing, and additional medicines are expected to become available on a generic basis over the coming years.

There are generic medicines currently on the market for indications that we are pursuing, and additional medicines are expected to become available on a generic basis over the coming years.

We expect that PYRUKYND® and any of our product candidates that may receive marketing approval in the future will be priced at a significant premium over competitive generic medicines.

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Manufacturing and Supply Chain

PYRUKYND®, AG-946, and PAH are organic compounds of low molecular weight, generally called small molecules.

They can be manufactured in reliable and reproducible synthetic processes from readily available starting materials.

PYRUKYND®, AG-946, and AG-181 are organic compounds of low molecular weight, generally called small molecules.

Our siRNA program targeting the TMPRSS6 gene is an oligonucleotide intended for use as a sterile parenteral administration.

Each can be manufactured in reliable and reproducible synthetic processes from readily available starting materials.

The chemistry is amenable to scale-up and does not require unusual equipment in the manufacturing process.

We expect to continue to develop drug candidates that can be produced cost-effectively at contract manufacturing facilities.

We expect to continue to develop product candidates that can be produced cost-effectively at contract manufacturing facilities.

We do not own or operate, and currently have no plans to establish, any manufacturing or supply chain related facilities.

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We conduct extensive prequalification programs to ensure the compliance, quality and reliability of third-party manufacturing and supply operations.

To date, we have obtained materials for PYRUKYND® and AG-946 for our ongoing and planned clinical testing from third-party manufacturers.

To date, we have obtained materials for PYRUKYND®, AG-946, AG-181 and our siRNA program for our ongoing and planned clinical testing and ongoing preclinical testing from third-party manufacturers.

We have long-term commercial manufacture and supply agreements in place for PYRUKYND®, and we obtain our supplies from these manufacturers on a purchase order basis.

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We do not currently have arrangements in place for redundant supply for drug product, but maintain a broad safety stock program.

As we have done for PYRUKYND®, we intend to identify and qualify additional manufacturing and supply related services for our other product candidates prior to submission of an NDA to the FDA.

As we have done for PYRUKYND®, we intend to identify and qualify additional manufacturing and supply related services for our other product candidates.

Government Regulation and Product Approvals

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In the United States, drug products are regulated under the Federal Food, Drug and Cosmetic Act, or FDCA, and applicable implementing regulations and guidance.

A company, institution, or organization which takes responsibility for the initiation and management of a clinical development program for such products, and for their regulatory approval, is typically referred to as a sponsor.

A company, institution, or organization responsible for initiating and managing a clinical development program for such products, and for their regulatory approval, is typically referred to as a sponsor.

A sponsor seeking approval to market and distribute a new drug in the United States generally must satisfactorily complete each of the following steps before the product candidate will be approved by the FDA:

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• performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for each proposed indication, in accordance with current good clinical practices, or GCP;

• preparation and submission to the FDA of a NDA for a drug product which includes not only the results of the clinical trials, but also, detailed information on the chemistry, manufacture and quality controls for the product candidate and proposed labeling for one or more proposed indication(s);

• preparation and submission to the FDA of an NDA for a drug product which includes not only the results of the clinical trials, but also, detailed information on the chemistry, manufacture and quality controls for the product candidate and proposed labeling for one or more proposed indication(s);

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• review of the product candidate by an FDA advisory committee, where appropriate or if applicable;

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• satisfactory completion of any FDA audits of the non-clinical and clinical trial sites to assure compliance with GCP and the integrity of clinical data in support of the NDA;

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• payment of user fees and securing FDA approval of the NDA to allow marketing of the new drug product;

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Before a sponsor begins testing a product candidate with potential therapeutic value in humans, the product candidate enters the preclinical testing stage.

Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as other studies to evaluate, among other things, the toxicity of the product candidate.

Preclinical tests include laboratory evaluations of product chemistry, formulation and stability and other studies to evaluate, among other things, the toxicity of the product candidate.

The conduct of the preclinical tests and formulation of the compounds for testing must comply with federal regulations and requirements, including GLP regulations and standards, and the United States Department of Agriculture’s Animal Welfare Act, if applicable.

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Such authorization must be secured prior to interstate shipment and administration of any product candidate that is not the subject of an approved NDA.

In addition to reviewing an IND to assure the safety and rights of patients, the FDA also focuses on the quality of the investigation and whether it will be adequate to permit an evaluation of the drug's safety and efficacy.

In support of a request for an IND, sponsors must submit a protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.

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When a foreign clinical study is conducted under an IND, all FDA IND requirements must be met unless waived.

When a foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain regulatory requirements, including GCP requirements, of the FDA in order to use the study as support for an IND or application for marketing approval.

When a foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain regulatory requirements, including GCP requirements, of the FDA to use the study as support for an IND or application for marketing approval.

The GCP requirements encompass both ethical and data integrity standards for clinical studies.

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An IRB must operate in compliance with FDA regulations.

An IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.

An IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not

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being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.

Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee.

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Other reasons for suspension or termination may be made based on evolving business objectives and/or competitive climate.

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Reporting Clinical Trial Results

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Information related to the product, patient population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial.

With the issuance of several notices of non-compliance since April 2021, the FDA and NIH have recently signaled the government’s willingness to begin enforcing these requirements against non-compliant clinical trial sponsors.

The failure to submit clinical trial information to clinicaltrials.gov is also a prohibited act under the FDCA with violations subject to potential civil monetary penalties of up to $10,000 for each day the violation continues.

With the issuance of pre-notices for voluntary corrective action and several notices of non-compliance during the past two years, the FDA has signaled the government’s willingness to enforce these requirements against non-compliant clinical trial sponsors.

While these notices of non-compliance did not result in civil monetary penalties, the failure to submit clinical trial information to clinicaltrials.gov is a prohibited act under the FDCA with violations subject to potential civil monetary penalties of up to $10,000 for each day the violation continues.

Violations may also result in injunctions and/or criminal prosecution or disqualification from federal grants.

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Human clinical trials are typically conducted in three sequential phases, but the phases may overlap or be combined.

Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety, including adverse effects, dose tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics in healthy humans or in patients.

Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety, including AEs, dose tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics in healthy humans or in patients.

During Phase 1 clinical trials, information about the investigational drug product’s pharmacokinetics and pharmacological effects may be obtained to permit the design of well-controlled and scientifically valid Phase 2 clinical trials.

Phase 2 clinical trials are generally conducted to identify possible adverse effects and safety risks, evaluate the efficacy of the product candidate for specific targeted indications, and determine dose tolerance and optimal dosage.

Phase 2 clinical trials are generally conducted to identify possible AEs and safety risks, evaluate the efficacy of the product candidate for specific targeted indications, and determine dose tolerance and optimal dosage.

Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more costly Phase 3 clinical trials.

Phase 2 clinical trials are well controlled, closely monitored and conducted in a limited patient population.

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Phase 3 clinical trials proceed if the Phase 2 clinical trials demonstrate that a dose range of the product candidate is potentially effective and has an acceptable safety profile.

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such Phase 3 clinical trials are referred to as “pivotal.” A Phase 2 clinical trial can be a “pivotal” trial if the design provides a well-controlled and reliable assessment of clinical benefit, particularly in an area of unmet medical need.

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A company’s designation of the phase of a trial is not necessarily indicative that the trial will be sufficient to satisfy the FDA requirements of that phase.

In December 2022, with the passage of the Food and Drug Omnibus Reform Act, or FDORA, Congress required sponsors to develop and submit a diversity action plan for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product.

These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products.

Specifically, action plans must include the sponsor’s goals for enrollment, the underlying rationale for those goals, and an explanation of how the sponsor intends to meet them.

In addition to these requirements, the legislation directs the FDA to issue new guidance on diversity action plans.

In June 2023, the FDA issued draft guidance with updated recommendations for GCPs aimed at modernizing the design and conduct of clinical trials.

The updates are intended to help pave the way for more efficient clinical trials to facilitate the development of medical products.

The draft guidance is adopted from the International Council for Harmonisation’s recently updated E6(R3) draft guideline that was developed to enable the incorporation of rapidly developing technological and methodological innovations into the clinical trial enterprise.

In addition, the FDA issued draft guidance outlining recommendations for the implementation of decentralized clinical trials.

In some cases, the FDA may approve an NDA for a product candidate but require the sponsor to conduct additional clinical trials to further assess the product candidate’s safety and effectiveness after approval.

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Failure to exhibit due diligence with regard to conducting Phase 4 clinical trials could result in withdrawal of approval for products.

Progress reports detailing the results of clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur.

Progress reports detailing the results of clinical trials must be submitted at least annually to the FDA and more frequently if serious AEs occur.

In addition, IND safety reports must be submitted to the FDA for any of the following:

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The FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the clinical data submitted.

Interactions with the FDA During the Clinical Development Program

Following the clearance of an IND and the commencement of clinical trials, a sponsor will continue to have interactions with the FDA and the sponsor may meet with the FDA at certain points in the clinical development program.

Specifically, sponsors may meet with the FDA prior to the submission of an IND, or a pre-IND meeting, at the end of Phase 2 clinical trial, or a EOP2 meeting, and before an NDA is submitted, or a pre-NDA meeting.

Meetings at other times may also be requested.

These meetings provide an opportunity for the sponsor to share information about the data gathered to date with the FDA and for the FDA to provide advice on the next phase of development.

There are five types of meetings that occur between sponsors and the FDA.

Type A meetings are those necessary for an otherwise stalled product development program to proceed or to address an important safety issue.

Type B meetings include pre-IND and pre-NDA meetings as well as end of phase meetings, such as EOP2 meetings.

A Type C meeting is any meeting other than a Type A or Type B meeting regarding the development and review of a product, including, for example, meetings to facilitate early consultations on the use of a biomarker as a new surrogate endpoint that has never been previously used as the primary basis for product approval in the proposed context of use.

A Type D meeting is focused on a narrow set of issues (typically limited to no more than two focused topics) and should not require input from more than three disciplines or divisions.

Finally, INitial Targeted Engagement for Regulatory Advice on CBER producTs, or INTERACT, meetings are intended for novel products and development programs that present unique challenges in the early development of an investigational product.

Such meetings may be conducted in person, via teleconference/videoconference, or written response only with minutes reflecting the questions that the sponsor posed to the FDA and the FDA’s responses.

The FDA has indicated that its responses, as conveyed in meeting minutes and advice letters, only constitute mere recommendations and/or advice made to a sponsor and,

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as such, sponsors are not bound by such recommendations and/or advice.

Nonetheless, from a practical perspective, a sponsor’s failure to follow the FDA’s recommendations for design of a clinical program may put the program at significant risk of failure.

In September 2023, the FDA issued draft guidance outlining the terms of such meetings in more detail.

Review and Approval of an NDA

In order to obtain approval to market a drug product in the United States, a marketing application must be submitted to the FDA that provides sufficient data establishing the safety and efficacy of the proposed drug product for its intended indication.

To obtain approval to market a drug product in the United States, a marketing application must be submitted to the FDA that provides sufficient data establishing the safety and efficacy of the proposed drug product for its intended indication.

The application must include all relevant data available from pertinent preclinical and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls and proposed labeling, among other things.

Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a product use, or from a number of alternative sources, including studies initiated by investigators.

Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a product use, or from alternative sources, including studies initiated by investigators.

To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the drug product to the satisfaction of the FDA.

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Under federal law, the submission of most NDAs is subject to an application user fee, which for federal fiscal year 2024 is approximately $4.05 million.

The sponsor of an approved NDA is also subject to an annual program fee, which for fiscal year 2023 is approximately $394,000 per product.

The sponsor of an approved NDA is also subject to an annual program fee, which for fiscal year 2024 is $416,734 per product.

Certain exceptions and waivers are available for some of these fees, such as an exception from the application fee for products with orphan designation and a waiver for certain small businesses.

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Once the submission is accepted for filing, the FDA begins an in-depth substantive review.

Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act, or PDUFA, applications seeking approval of New Molecular Entities, or NMEs, are meant to be reviewed within ten months from the date on which the FDA accepts the application for filing.

Under the goals and policies agreed to by the FDA under the PDUFA, applications seeking approval of New Molecular Entities, or NMEs, are meant to be reviewed within ten months from the date on which the FDA accepts the application for filing.

The review process and the PDUFA goal date may be extended by the FDA for three additional months to consider new information or clarification provided by the sponsor to address an outstanding deficiency identified by the FDA following the original submission.

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These pre-approval inspections may cover all facilities associated with an NDA submission, including component manufacturing, finished product manufacturing and control testing laboratories.

The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

The FDA will not approve an application unless it determines that the manufacturing processes and facilities comply with cGMP requirements and are adequate to assure consistent production of the product within required specifications.

Under the FDA Reauthorization Act of 2017, the FDA must implement a protocol to expedite review of responses to inspection reports pertaining to certain applications, including applications for products in shortage or those for which approval is dependent on remediation of conditions identified in the inspection report.

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REMS could include medication guides, communication plans for health care professionals, and elements to assure safe use, including special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring and the use of patent registries.

To determine whether a REMS is needed, the FDA will consider the size of the population

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likely to use the product, seriousness of the disease, expected benefit of the product, expected duration of treatment, seriousness of known or potential adverse events and whether the product is an NME.

To determine whether a REMS is needed, the FDA will consider the size of the population likely to use the product, seriousness of the disease, expected benefit of the product, expected duration of treatment, seriousness of known or potential adverse events and whether the product is an NME.

The FDA may refer an application for a novel product which presents difficult questions of safety or efficacy to an advisory committee or explain why such referral was not made.

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The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition.

These programs are referred to as Fast Track designation, Breakthrough Therapy designation, priority review designation and regenerative advanced therapy designation.

These programs are called Fast Track designation, Breakthrough Therapy designation, priority review designation and regenerative advanced therapy designation.

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• Fast Track Designation .

The FDA may designate a product for Fast Track review if it is intended, whether alone or in combination with one or more other products, for the treatment of a serious or life-threatening disease or condition, and it demonstrates the potential to address unmet medical needs for such a disease or condition.

The FDA may designate a product for Fast Track review if it is intended, either alone or in combination with one or more other products, for the treatment of a serious or life-threatening disease or condition, and it demonstrates the potential to address unmet medical needs for such a disease or condition.

For Fast Track products, sponsors may have greater interactions with the FDA and the FDA may initiate review of sections of a Fast Track product’s application before the application is complete.

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In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials.

With the passage of FDORA in December 2022, Congress modified certain provisions governing accelerated approval of drug and biologic products.

Specifically, the new legislation authorized the FDA to:

(i) require a sponsor to have its confirmatory clinical trial underway before accelerated approval is awarded, (ii) require a sponsor of a product granted accelerated approval to submit progress reports on its post-approval studies to the FDA every six months (until the study is completed);

and (iii) use expedited procedures to withdraw accelerated approval of an NDA or biologics license application after the confirmatory trial fails to verify the product’s clinical benefit.

Further, FDORA requires the FDA to publish on its website the rationale for why a post-approval study is not appropriate or necessary, whenever it decides not to require such a study upon granting accelerated approval.

In March 2023, the FDA issued draft guidance that outlines its current thinking and approach to accelerated approval.

The FDA’s Decision on an NDA

Based on its evaluation of the application and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete response letter.

An approval letter authorizes

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commercial marketing of the product with specific prescribing information for the approved indications.

An approval letter authorizes commercial marketing of the product with specific prescribing information for the approved indications.

A complete response letter generally indicates that the review cycle is complete and outlines the deficiencies in the submission, and may require substantial additional testing or information in order for the FDA to reconsider the application.

A sponsor has one year to respond to the deficiencies identified in the complete response letter.

The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.

The FDA has committed to reviewing such resubmissions

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in two or six months depending on the type of information included.

Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

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A product may also be subject to official lot release, meaning that the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.

If the product is subject to official release, the manufacturer must submit samples of each lot, together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot, to the FDA.

If the product is subject to official release, the manufacturer must submit samples of each lot, together with a release protocol showing a summary of the history of manufacture of the lot and the results of all the manufacturer’s tests performed on the lot, to the FDA.

The FDA may in addition perform certain confirmatory tests on lots of some products before releasing the lots for distribution.

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After approval, a drug product generally may not be promoted for uses that are not approved by the FDA, as reflected in the product’s prescribing information, although it may be permissible, under very specific, narrow conditions, for a manufacturer to engage in nonpromotional, non-misleading communication regarding off-label information, such as distributing scientific or medical journal information.

In the United States, health care professionals are generally permitted to prescribe drugs for such uses not described in the drug’s labeling, known as off-label uses, because the FDA does not regulate the

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practice of medicine.

However, FDA regulations impose rigorous restrictions on manufacturers’ communications, prohibiting the promotion of off-label uses.

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In September 2021, the FDA published final regulations that describe the types of evidence that the agency will consider in determining the intended use of a drug or biologic.

If a company is found to have promoted off-label uses, it may become subject to adverse public relations and administrative and judicial enforcement by the FDA, the DOJ, or the Office of the Inspector General of the Department of Health and Human Services, as well as state authorities.

In addition, in October 2023, the FDA published draft guidance outlining the agency’s non-binding policies governing the distribution of scientific information on unapproved uses to healthcare providers.

This draft guidance calls for such communications to be truthful, non-misleading, factual and unbiased and include all information necessary for healthcare providers to interpret the strengths and weaknesses and validity and utility of the information about the unapproved use.

If a company is found to have promoted off-label uses, it may become subject to adverse public relations and administrative and judicial enforcement by the FDA, the Department of Justice, or the DOJ, or the Office of the Inspector General of the Department of Health and Human Services, as well as state authorities.

This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines, and agreements that materially restrict the manner in which a company promotes or distributes drug products.

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The FDCA also provides for a period of three years of exclusivity if the NDA includes reports of one or more new clinical investigations, other than bioavailability or bioequivalence studies, that were conducted by or for the sponsor and are essential to the approval of the application.

This three-year exclusivity period often protects changes to a previously approved drug product, such as new indications, dosage forms, route of administration, combination of ingredients.

Three-year exclusivity would be available for a drug product that contains a previously approved active moiety, provided the statutory requirement for a new clinical investigation is satisfied.

Unlike five-year NCE exclusivity, an award of three-year exclusivity does not block the

This three-year exclusivity period often protects changes to a previously approved drug

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FDA from accepting ANDAs or 505(b)(2) NDAs seeking approval for generic versions of the drug as of the date of approval of the original drug product;

product, such as new indications, dosage forms, route of administration, combination of ingredients.

Three-year exclusivity would be available for a drug product that contains a previously approved active moiety, provided the statutory requirement for a new clinical investigation is satisfied.

Unlike five-year NCE exclusivity, an award of three-year exclusivity does not block the FDA from accepting ANDAs or 505(b)(2) NDAs seeking approval for generic versions of the drug as of the date of approval of the original drug product;

rather, this three-year exclusivity covers only the conditions of use associated with the new clinical investigations and, as a general matter, does not prohibit the FDA from approving follow-on applications for drugs containing the original active ingredient.

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A deferral may be granted for several reasons, including a finding that the product or therapeutic candidate is ready for approval for use in adults before pediatric trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric trials begin.

The law now requires the FDA to send a PREA Non-Compliance letter to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required pediatric formulation.

Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation, although FDA has recently taken steps to limit what it considers abuse of this statutory exemption in PREA by announcing that it does not intend to grant any additional orphan drug designations for rare pediatric subpopulations of what is otherwise a common disease.

The law requires the FDA to send a PREA Non-Compliance letter to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required pediatric formulation.

Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation, although the FDA has recently taken steps to limit what it considers abuse of this statutory exemption in PREA by announcing that it does not intend to grant any additional orphan drug designations for rare pediatric subpopulations of what is otherwise a common disease.

The FDA maintains a list of diseases that are exempt from the requirements of the PREA.

In May 2023, the FDA issued new draft guidance that further describes the pediatric study requirements under PREA.

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Pediatric Exclusivity

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The data do not need to show the product to be effective in the pediatric population studied;

rather, if the

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clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted.

rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted.

If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months.

This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application.

This is not a patent term extension, but effectively extends the regulatory period during which the FDA cannot approve another application.

With regard to patents, the six-month pediatric exclusivity period will not attach to any patents for which a generic (ANDA or 505(b)(2) NDA) sponsor submitted a Paragraph IV certification, unless the NDA sponsor or patent owner first obtains a court determination that the patent is valid and infringed by a proposed generic product.

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This is the case despite an earlier court opinion holding that the Orphan Drug Act unambiguously required the FDA to recognize orphan exclusivity regardless of a showing of clinical superiority.

In September 2021, the Court of Appeals for the 11th Circuit held that, for the purpose of determining the scope of market exclusivity, the term “same disease or condition” in the statute means the designated “rare disease or condition” and could not be interpreted by the FDA to mean the “indication or use.” Thus, the court concluded that orphan drug exclusivity applies to the entire designated disease or condition rather than the “indication or use.” It is unclear how this court decision will be addressed by the FDA and Congress.

In September 2021, the Court of Appeals for the 11th Circuit held that, for the purpose of determining the scope of market exclusivity, the term “same disease or condition” in the statute means the designated “rare disease or condition” and could not be interpreted by the FDA to mean the “indication or use.” Thus, the court concluded that orphan drug exclusivity applies to the entire designated disease or condition rather than the “indication or use.” Although there have been legislative proposals to overrule this decision, they have not been enacted into law.

In January 2023, the FDA announced that, in matters beyond the scope of that court’s order, the FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug was approved.

Patent Term Restoration and Extension

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The restoration period granted on a patent covering a product is typically one-half the time between the effective date of when a clinical investigation involving human beings has begun and the submission date of an application for approval, plus the time between the submission date of an application and the ultimate approval date.

Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date.

Patent term restoration cannot be used to extend the remaining patent term past a total of 14 years from the product’s approval date.

Only one patent applicable to an approved product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in question.

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Health care providers and third-party payors play a primary role in the recommendation and prescription of drug products that are granted marketing approval.

Arrangements with providers, consultants, third-party payors and customers are subject to broadly applicable fraud and abuse, anti-kickback, false claims laws, patient privacy laws and regulations and other health care laws and regulations that may constrain business and/or financial arrangements.

Restrictions under applicable federal and state health care laws and regulations, include the following:

• the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or

Arrangements with providers, consultants, third-party payors and customers are subject to

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service, for which payment may be made, in whole or in part, under a federal health care program such as Medicare and Medicaid;

broadly applicable fraud and abuse, anti-kickback, false claims laws, patient privacy laws and regulations and other health care laws and regulations that may constrain business and/or financial arrangements.

Restrictions under applicable federal and state health care laws and regulations, include the following:

• the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious or fraudulent or knowingly making, using or causing to made or used a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government;

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Third-party payors are increasingly challenging the prices charged, examining the medical necessity and reviewing the cost-effectiveness of medical products and services and imposing controls to manage costs.

Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the approved products for a particular indication.

In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain FDA or other comparable marketing approvals.

Nonetheless, product candidates may not be considered medically necessary or cost effective.

A decision by a third-party payor not to cover a product

Third-party payors may limit coverage to specific

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could reduce physician utilization once the product is approved and have a material adverse effect on sales, results of operations and financial condition.

products on an approved list, also known as a formulary, which might not include all the approved products for a particular indication.

In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain FDA or other comparable marketing approvals.

Nonetheless, product candidates may not be considered medically necessary or cost effective.

A decision by a third-party payor not to cover a product could reduce physician utilization once the product is approved and have a material adverse effect on sales, results of operations and financial condition.

Additionally, a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved.

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Even if favorable coverage and reimbursement status is attained for one or more products for which a company or its collaborators receive marketing approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

There have been a number of federal and state proposals during the last few years regarding the pricing of pharmaceutical and biopharmaceutical products, limiting coverage and reimbursement for drugs, biologics and other medical products, government control and other changes to the health care system in the United States.

There have been several federal and state proposals during the last few years regarding the pricing of pharmaceutical and biopharmaceutical products, limiting coverage and reimbursement for drugs, biologics and other medical products, government control and other changes to the health care system in the United States.

In March 2010, the United States Congress enacted the ACA, which, among other things, includes changes to the coverage and payment for drug products under government health care programs.

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• expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;

• expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs, and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices;

• 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;

• expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program, or MDRP, by increasing the minimum rebate for both branded and generic drugs, and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices;

• addressed a new methodology by which rebates owed by manufacturers under the MDRP are calculated for drugs that are inhaled, infused, instilled, implanted or injected;

• expanded the types of entities eligible for the 340B drug discount program;

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A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.

This includes aggregate reductions of Medicare payments to providers up to 2% per fiscal year, which will remain in effect through 2031.

However, pursuant to the Coronavirus Aid, Relief and Economic Security Act and subsequent legislation, these Medicare reductions were reduced and suspended through the end of June 2022 with the full 2% cut resuming thereafter.

This includes aggregate reductions of Medicare payments to providers up to 2% per fiscal year, which will now remain in effect for six months into 2032.

The Consolidated Appropriations Act, which was signed into law by President Biden in December 2022, made several changes to sequestration of the Medicare program.

Section 1001 of the Consolidated Appropriations Act delays the 4% Statutory Pay-As-You-Go Act of 2010, or PAYGO, sequester for two years, through the end of 2024.

Triggered by enactment of the American Rescue Plan Act of 2021, the 4% cut to the Medicare program would have taken effect in January 2023.

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Consolidated Appropriations Act’s health care offset title includes Section 4163, which extends the 2% Budget Control Act of 2011 Medicare sequester for six months into 2032 and lowers the payment reduction percentages in years 2030 and 2031.

Since enactment of the ACA, there have been, and continue to be, numerous legal challenges and Congressional actions to repeal and replace provisions of the law.

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On November 10, 2020, the Supreme Court heard oral arguments as to whether 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 of 2017, the remaining provisions of the ACA are invalid as well.

On June 17, 2021, the Supreme Court dismissed this action after finding that the plaintiffs did not have standing

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to challenge the ACA’s minimum essential coverage provision at issue in the case.

On June 17, 2021, the Supreme Court dismissed this action after finding that the plaintiffs did not have standing to challenge the ACA’s minimum essential coverage provision at issue in the case.

Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results.

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congressional inquiries, as well as proposed and enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reduce the costs of drugs under Medicare and Medicaid.

To those ends, President Trump issued several executive orders intended to lower the costs of prescription drug products.

To those ends, the Trump Administration issued several executive orders intended to lower the costs of prescription drug products.

Certain of these orders are reflected in recently promulgated regulations, including an interim final rule implementing a most favored nation model for prices that would tie Medicare Part B payments for certain physician-administered pharmaceuticals to the lowest price paid in other economically advanced countries, effective January 1, 2021, but such rule has been subject to a nationwide preliminary injunction.

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With issuance of this rule, CMS stated that it will explore all options to incorporate value into payments for Medicare Part B pharmaceuticals and improve beneficiaries' access to evidence-based care.

In November 2020, the HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The rule went into effect on January 1, 2023.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which has been delayed until January 1, 2026 by the Infrastructure Investment and Jobs Act.

In addition, in response to an executive order from President Biden, the HHS recently released a plan to reduce pharmaceutical prices.

More recently, on August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law by President Biden.

The new legislation has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage.

In addition, the HHS and the FDA published a final rule allowing states and other entities to develop a Section 804 Importation Program to import certain prescription drugs from Canada into the United States.

That regulation was challenged in a lawsuit by the Pharmaceutical Research and Manufacturers of America, or PhRMA, but the case was dismissed by a federal district court in February 2023 after the court found that PhRMA did not have standing to sue HHS.

Nine states (Colorado, Florida, Maine, New Hampshire, New Mexico, North Dakota, Texas, Vermont and Wisconsin) have passed laws allowing for the importation of drugs from Canada.

Certain of these states have submitted Section 804 Importation Program proposals and are awaiting FDA approval.

On January 5, 2024, the FDA approved Florida’s plan for Canadian drug importation.

Further, the HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The final rule would also eliminate the current safe harbor for Medicare drug rebates and create new safe harbors for beneficiary point-of-sale discounts and pharmacy benefit manager service fees.

It originally was set to go into effect on January 1, 2022, but with passage of the Inflation Reduction Act of 2022, or IRA, has been delayed by Congress to January 1, 2032.

The IRA has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage.

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap;

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The IRA permits the Secretary of the HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

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Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and Part D.

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The new law also caps Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at $2,000 a year.

The IRA includes a provision exempting orphan drugs from Medicare price negotiation but this exclusion has been interpreted by CMS in final guidance issued in July 2023 to apply only to those orphan drugs with an approved indication (or indications) for a single rare disease or condition.

The final guidance clarifies that CMS will consider only active designations/approvals when evaluating a drug for the exclusion, such that designations/indications withdrawn before the selected drug publication date will not be considered.

CMS also clarified that, if a drug loses its orphan drug exclusion status, the agency will use the earliest date of approval/licensure to determine whether the product is a qualifying single source drug subject to price negotiations.

In June 2023, Merck filed a lawsuit against HHS and CMS asserting that, among other things, the IRA’s Drug Price Negotiation Program for Medicare constitutes an uncompensated taking in violation of the Fifth Amendment of the Constitution.

Subsequently, several other parties, including the U.S.

Chamber of Commerce and pharmaceutical companies, also filed lawsuits in various courts with similar constitutional claims against HHS and CMS.

Litigation involving these and other provisions of the IRA will continue with unpredictable and uncertain results.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

For example, HHS and the FDA published a final rule

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allowing states and other entities to develop a Section 804 Importation Program, or SIP, to import certain prescription drugs from Canada into the United States.

The final rule is currently the subject of ongoing litigation, but at least six states (Vermont, Colorado, Florida, Maine, New Mexico and New Hampshire) have passed laws allowing for importation from Canada with the intent of developing SIPs for review and approval by the FDA.

A number of states have also required drug manufacturers and other entities in the drug supply chain, including health carriers, pharmacy benefit managers and wholesale distributors, to disclose information about pricing of pharmaceuticals.

Many states have required drug manufacturers and other entities in the drug supply chain, including health carriers, pharmacy benefit managers and wholesale distributors, to disclose information about pricing of pharmaceuticals.

In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs.

These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

Review and Approval of Medicinal Products in the European Union

In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy, and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of products.

In order to market any product outside of the United States, a sponsor must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy, and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of products.

Whether or not it obtains FDA approval for a product, a sponsor will need to obtain the necessary approvals by the comparable non-U.S.

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Clinical Trial Approval

Before the new Clinical Trial Regulation, (EU) No 536/2014, or the Clinical Trial Regulation came into application in January 2022, requirements for the conduct of clinical trials in the EU including GCP were set forth in the Clinical Trials Directive 2001/20/EC, or the Clinical Trials Directive, and the GCP Directive 2005/28/EC, or the GCP Directive.

Under this system, a sponsor must obtain prior approval from the competent national authority of the EU Member States in which the clinical trial is to be conducted.

Furthermore, the sponsor may only start a clinical trial at a specific study site after the competent ethics committee has issued a favorable opinion.

The clinical trial application must be accompanied by, among other documents, an investigational medicinal product dossier (the Common Technical Document) with supporting information prescribed by the Clinical Trials Directive and the GCP Directive, where relevant the implementing national provisions of the individual EU Member States and further detailed in applicable guidance documents.

In April 2014, the Clinical Trial Regulation was adopted.

The Clinical Trial Regulation aims to simplify and streamline the approval of clinical trials in the EU.

The main characteristics of the regulation include:

a streamlined application procedure via a single entry point, the EU Portal and Database;

a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for clinical trial sponsors;

On January 31, 2022, the Clinical Trials Regulation (EU) No 536/2014, or the Clinical Trials Regulation, became effective in the EU and replaced the prior Clinical Trials Directive 2001/20/EC.

The Clinical Trials Regulation aims to simplify and streamline the authorization, conduct and transparency of clinical trials in the EU.

Under the new coordinated procedure for the approval of clinical trials, the sponsor of a clinical trial to be conducted in more than one Member State of the EU, or EU Member State, will only be required to submit a single application for approval.

The submission will be made through the Clinical Trials Information System, a new clinical trials portal overseen by the EMA, and available to clinical trial sponsors, competent authorities of the EU Member States and the public.

Beyond streamlining the process, the Clinical Trials Regulation includes a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for clinical trial sponsors;

and a harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts.

Part I is assessed by the competent authorities of all EU Member States in which an application for authorization of a clinical trial has been submitted, or Concerned Member States.

Part II is assessed separately by each Concerned Member State.

Part I is assessed by the competent authorities of all EU Member States in which an application for authorization of a clinical trial has been submitted, or EU Member States

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Part II is assessed separately by each EU Member State concerned.

Strict deadlines have been established for the assessment of clinical trial applications.

The role of the relevant ethics committees in the assessment procedure will continue to be governed by the national law of the Concerned Member State.

However, overall related timelines will be defined by the Clinical Trial Regulation.

The Clinical Trial Regulation came into application on January 31, 2022 and is directly applicable in all the EU Member States, repealing the previous Clinical Trials Directive.

Conduct of all clinical trials performed in the EU were bound by previously applicable provisions until the new Clinical Trial Regulation became applicable.

If a clinical trial continues for more than three years from the day on which the Clinical Trial Regulation became applicable, the Clinical Trial Regulation will begin to apply to the clinical trial as of the time of its effectiveness.

The role of the relevant ethics committees in the assessment procedure will continue to be governed by the national law of the EU Member State concerned.

However, overall related timelines will be defined by the Clinical Trials Regulation.

The Clinical Trials Regulation did not change the preexisting requirement that a sponsor must obtain prior approval from the competent national authority of the EU Member State in which the clinical trial is to be conducted.

If the clinical trial is conducted in different EU Member States, the competent authorities in each of these EU Member States must provide their approval for the conduct of the clinical trial.

Furthermore, the sponsor may only start a clinical trial at a specific clinical site after the applicable ethics committee has issued a favorable opinion.

Parties conducting certain clinical trials must, as in the United States, post clinical trial information in the EU at the EudraCT website.

https://eudract.ema.europa.eu.

PRIME Designation in the EU

Priority Medicines (PRIME) Designation in the EU

In March 2016, the EMA launched an initiative to facilitate development of product candidates in indications, often rare, for which few or no therapies currently exist.

The priority medicines, or PRIME, scheme is intended to encourage drug development in areas of unmet medical need and provides accelerated assessment of products representing substantial innovation reviewed under the centralized procedure.

Products from small- and medium-sized enterprises may qualify for

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earlier entry into the PRIME scheme than larger companies.

Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated marketing authorization application assessment once a dossier has been submitted.

Products from small- and medium-sized enterprises may qualify for earlier entry into the PRIME scheme than larger companies.

Importantly, a dedicated agency contact and rapporteur from the Committee for Human Medicinal Products, or CHMP, or Committee for Advanced Therapies are appointed early in the PRIME scheme facilitating increased understanding of the product at EMA’s Committee level.

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Following this, further marketing authorizations can be progressively sought from other EU countries in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization produced by the reference member state.

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Under the above-described procedures, before granting the marketing authorization, the EMA or the competent authorities of the Member States of the European Economic Area, or EEA, make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

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The timelines for the centralized procedure described above also apply with respect to the review by the CHMP of applications for a conditional marketing authorization, but applicants can also request the EMA to conduct an accelerated assessment, for instance in cases of unmet medical needs.

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Regulatory Data Protection in the EU

In the EU, innovative medicinal products approved on the basis of a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Directive 2001/83/EC.

In the EU, innovative medicinal products approved based on a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Directive 2001/83/EC.

Regulation (EC) No 726/2004 repeats this entitlement for medicinal products authorized in accordance with the centralized authorization procedure.

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A marketing authorization has an initial validity for five years in principle.

The marketing authorization may be renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the EU Member State.

The marketing authorization may be renewed after five years based on a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the EU Member State.

To this end, the marketing authorization holder must provide the EMA or the competent authority with a consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced since the marketing authorization was granted, at least six months before the marketing authorization ceases to be valid.

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The Pediatric Committee of the EMA, or PDCO, may grant deferrals for some medicines, allowing a company to delay development of the medicine for children until there is enough information to demonstrate its effectiveness and safety in adults.

The PDCO may also grant waivers when development of a medicine for children is not needed or is not appropriate, such as for diseases that only affect the adult population.

The PDCO may also grant waivers when development of a medicine for children is not needed or not appropriate, such as for diseases that only affect the adult population.

Before an MAA can be filed or an existing marketing authorization can be amended, the EMA requests that companies comply with the agreed studies and measures listed in each relevant PIP.

If a sponsor obtains a marketing authorization in all EU Member States, or a marketing authorization granted in the centralized procedure by the European Commission, and the study results for the pediatric population are included in the product information, even when negative, the medicine is then eligible for an additional six month period of qualifying patent protection through extension of the term of the Supplementary Protection Certificate, or SPC, or alternatively a one year extension of the regulatory market exclusivity from ten to eleven years, as selected by the marketing authorization holder.

If a sponsor obtains a marketing authorization in all EU Member States,

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or a marketing authorization granted in the centralized procedure by the European Commission, and the study results for the pediatric population are included in the product information, even when negative, the medicine is then eligible for an additional six month period of qualifying patent protection through extension of the term of the Supplementary Protection Certificate, or SPC, or alternatively a one year extension of the regulatory market exclusivity from ten to eleven years, as selected by the marketing authorization holder.

Orphan Drug Designation and Exclusivity

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847/2000 provides that a drug can be designated as an orphan drug by the European Commission if its sponsor can establish that the product is intended for the diagnosis, prevention or treatment of:

(1) a life-threatening or chronically debilitating condition affecting not more than five in ten thousand persons in the EU when the application is made;

(1) a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the EU when the application is made;

or (2) a life-threatening, seriously debilitating or serious and chronic condition in the EU and that without incentives it is unlikely that the marketing of the drug in the EU would generate sufficient return to justify the necessary investment.

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Once authorized, orphan medicinal products are entitled to 10 years of market exclusivity in all EU Member States and a range of other benefits during the development and regulatory review process, including scientific assistance for study protocols, authorization through the centralized marketing authorization procedure covering all member countries, and a reduction or elimination of registration and marketing authorization fees.

However, marketing authorization may be granted to a similar

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medicinal product with the same orphan indication during the 10-year period with the consent of the marketing authorization holder for the original orphan medicinal product or if the manufacturer of the original orphan medicinal product is unable to supply sufficient quantities.

However, marketing authorization may be granted to a similar medicinal product with the same orphan indication during the 10-year period with the consent of the marketing authorization holder for the original orphan medicinal product or if the manufacturer of the original orphan medicinal product is unable to supply sufficient quantities.

Marketing authorization may also be granted to a similar medicinal product with the same orphan indication if this product is safer, more effective or otherwise clinically superior to the original orphan medicinal product.

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The rules and requirements for obtaining an SPC are similar to those in the United States.

An SPC may extend the term of a patent for up to five years after its originally scheduled expiration date and can provide up to a maximum of fifteen years of marketing exclusivity for a drug.

An SPC may extend the term of a patent for up to five years after its originally scheduled expiration date and can provide up to a maximum of 15 years of marketing exclusivity for a drug.

In certain circumstances, these periods may be extended for six additional months if pediatric exclusivity is obtained.

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General Data Protection Regulation

The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the EU, including personal health data, is subject to the EU General Data Protection Regulation, or GDPR, which became effective on May 25, 2018.

The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors.

The GDPR also imposes strict rules on the transfer of personal data to countries outside the EU, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater.

Many countries outside of the United States maintain rigorous laws governing the privacy and security of personal information.

The collection, use, disclosure, transfer, or other processing of personal data, including personal health data, regarding individuals who are located in the EEA, and the processing of personal data that takes place in the EEA, is subject to the European Union General Data Protection Regulation, or GDPR, which became effective on May 25, 2018.

The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating

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to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors.

The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater.

The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.

Compliance with the GDPR will be a rigorous and time-intensive process that may increase the cost of doing business or require companies to change their business practices to ensure full compliance.

There are ongoing concerns about the ability of companies to transfer personal data from the EU to other countries.

In July 2020, the Court of Justice of the European Union, or the CJEU, invalidated the EU-U.S.

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The CJEU decision also drew into question the long-term viability of an alternative means of data transfer, the standard contractual clauses, for transfers of personal data from the EEA to the United States.

This CJEU decision may lead to increased scrutiny on data transfers from the EU to the United States generally and increase our costs of compliance with data privacy legislation as well as our costs of negotiating appropriate privacy and security agreements with our vendors and business partners.

Additionally, in October 2022, President Biden signed an executive order to implement the EU-U.S.

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Privacy Shield.

The EC initiated the process to adopt an adequacy decision for the EU-U.S.

Data Privacy Framework in December 2022.

It is unclear if and when the framework will be finalized and whether it will be challenged in court.

The uncertainty around this issue may further impact our business operations in the EU.

Following the withdrawal of the U.K.

from the EU, the U.K.

Data Protection Act 2018 applies to the processing of personal data that takes place in the U.K.

and includes parallel obligations to those set forth by GDPR, including in relation to data transfers.

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The EU initiated the process to adopt an adequacy decision for the EU-U.S.

Data Privacy Framework in December 2022 and the European Commission adopted the adequacy decision on July 10, 2023.

The adequacy decision permits U.S.

companies who self-certify to the EU-U.S.

Data Privacy Framework to rely on it as a valid data transfer mechanism for data transfers from the EU to the United States.

However, some privacy advocacy groups have already suggested that they will be challenging the EU-U.S.

Data Privacy Framework.

If these challenges are successful, they may not only impact the EU-U.S.

Data Privacy Framework, but also further limit the viability of the standard contractual clauses and other data transfer mechanisms.

The uncertainty around this issue has the potential to impact our business.

As with other issues related to withdrawal of the United Kingdom from the EU, there are open questions about how personal data will be protected in the United Kingdom and whether personal information can transfer from the EU to the United Kingdom.

Following the withdrawal of the United Kingdom from the EU, the UK Data Protection Act 2018 applies to the processing of personal data that takes place in the United Kingdom and includes parallel obligations to those set forth by GDPR.

While the Data Protection Act 2018 in the United Kingdom that “implements” and complements the GDPR has achieved Royal Assent on May 23, 2018 and is now effective in the United Kingdom, it is still unclear whether transfer of data from the EEA to the United Kingdom will remain lawful under GDPR.

The UK government has already determined that it considers all EU and EEA member states to be adequate for the purposes of data protection, ensuring that data flows from the United Kingdom to the EU/EEA remain unaffected.

In addition, a recent decision from the European Commission appears to deem the United Kingdom as being “essentially adequate” for purposes of data transfer from the EU to the United Kingdom, although this decision may be re-evaluated in the future.

Beyond GDPR, there are privacy and data security laws in a growing number of countries around the world.

While many loosely follow GDPR as a model, other laws contain different or conflicting provisions.

These laws will impact our ability to conduct our business activities, including both our clinical trials and any eventual sale and distribution of commercial products.

Brexit and the Regulatory Framework in the United Kingdom

The U.K.'s withdrawal from the EU took place on January 31, 2020.

As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or the MHRA, became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law whereas Northern Ireland continues to be subject to EU rules under the Northern Ireland Protocol.

The MHRA will rely on the Human Medicines Regulations 2012 (SI 2012/1916) (as amended), or HMR, as the basis for regulating medicines.

The HMR has incorporated into the domestic law, the body of EU law instruments governing medicinal products that pre-existed prior to the U.K.’s withdrawal from the EU.

Since a significant proportion of the regulatory framework for pharmaceutical products in the U.K.

covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from EU directives and regulations, Brexit may have a material impact upon the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our product candidates in the U.K.

For example, the U.K.

is no longer covered by the centralized procedures for obtaining EU-wide marketing authorization from the EMA, and a separate marketing authorization will be required to market any product candidates in the U.K.

Until December 31, 2023, it is possible for the MHRA to rely on a decision taken by the European Commission/EMA's CHMP on the approval of a new marketing authorization via the centralized procedure, which is the Reliance Procedure.

The United Kingdom’s withdrawal from the EU took place on January 31, 2020.

The EU and the United Kingdom reached an agreement on their new partnership in the Trade and Cooperation Agreement, which was applied provisionally beginning on January 1, 2021, and which entered into force on May 1, 2021.

The Trade and Cooperation Agreement focuses primarily on free trade by ensuring no tariffs or quotas on trade in goods, including healthcare products such as medicinal products.

The EU and the United Kingdom will form two separate markets governed by two distinct regulatory and legal regimes, except that Northern Ireland will continue to broadly follow EU laws as further described below.

As such, the Trade and Cooperation Agreement seeks to minimize barriers to trade in goods while accepting that border checks will become inevitable as a consequence that the United Kingdom is no longer part of the single market.

As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or MHRA, became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland, and Wales under domestic law whereas Northern Ireland continues to be subject to EU rules under the Northern Ireland Protocol.

On February 27, 2023, the United Kingdom government and the European Commission announced a political agreement in principle to replace the Northern Ireland Protocol with a new set of arrangements, known as the “Windsor Framework”.

This new framework fundamentally changes the existing system under the Northern Ireland Protocol, including with respect to the regulation of medicinal products in the United Kingdom.

In particular, the MHRA will be responsible for approving all

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medicinal products destined for the United Kingdom market (i.e., Great Britain and Northern Ireland), and the EMA will no longer have any role in approving medicinal products destined for Northern Ireland.

A single United Kingdom-wide marketing authorization will be granted by the MHRA for all medicinal products to be sold in the United Kingdom, enabling products to be sold in a single pack and under a single authorization throughout the United Kingdom.

The Windsor Framework was approved by the EU-United Kingdom Joint Committee on March 24, 2023.

The United Kingdom government and the EU will enact legislative measures to bring it into law.

On June 9, 2023, the MHRA announced that the medicines aspects of the Windsor Framework will apply from January 1, 2025.

The Human Medicines Regulations 2012 (SI 2012/1916) (as amended), or HMR, is the primary legal instrument for the regulation of medicines in the United Kingdom.

The HMR has incorporated into the domestic law the body of EU law instruments governing medicinal products that pre-existed prior to the United Kingdom’s withdrawal from the EU.

EU laws which have been transposed into United Kingdom law through secondary legislation continue to be applicable as “retained EU law”.

However, new legislation such as the Clinical Trials Regulation will not be applicable in Great Britain.

Since a significant proportion of the regulatory framework for pharmaceutical products in the United Kingdom covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorizations, commercial sales, and distribution of pharmaceutical products is derived from EU directives and regulations, Brexit may have a material impact upon the regulatory regime with respect to the development, manufacture, importation, approval, and commercialization of our product candidates in the United Kingdom.

For example, the United Kingdom is no longer covered by the centralized procedures for obtaining EU-wide marketing authorizations from the EMA, and a separate marketing authorization will be required to market our product candidates in the United Kingdom.

A new international recognition framework has been in place since January 1, 2024, whereby the MHRA will have regard to decisions on the approval of marketing authorizations made by the EMA and certain other regulators when determining an application for a new Great Britain marketing authorization.

Pricing Decisions for Approved Products

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As a result, increasingly high barriers are being erected to the entry of new products.

Political, economic and regulatory developments may further complicate pricing negotiations, and there negotiations may continue after reimbursement has been obtained.

Political, economic and regulatory developments may further complicate pricing negotiations, and negotiations may continue after reimbursement has been obtained.

Reference pricing used by various Member States, and parallel trade (i.e., arbitrage between low-priced and high-priced Member States), can further reduce prices.

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We understand that attracting, retaining, engaging and supporting our talented team and maintaining a diverse and inclusive organization is critical to our success and our ability to increase the value we can provide for patients, shareholders and all stakeholders.

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We strive to cultivate a positive, respectful and fair work environment guided by the following three pillars:

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We aim to ensure our teams experience psychological safety – the belief that risk-taking and failure will not be punished, which leads to higher performing teams, more creativity, candor and better results.

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• Deliberate development :

We emphasize providing ongoing opportunities for employees to grow professionally, whether through bringing in external speakers, offering preceptorships in different departments, and providing tuition reimbursement and leadership skills training.

To incentivize and reward strong performance, we have established a competitive and balanced compensation and benefits package, including short-term and long-term incentives, discretionary paid time off policy, generous parental and family leave plans and premium medical benefits.

To incentivize and reward strong performance, we have adopted a pay for performance philosophy and we provide competitive and balanced compensation and benefits package, including short-term and long-term incentives, discretionary paid time off policy, generous parental and family leave plans and premium medical benefits.

We are committed to fostering a welcoming and diverse workplace in which individuals from a variety of backgrounds can thrive.

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• Cognitive differences (unique ways of understanding and interpreting the world)

We are a majority female organization and we maintain significant representation at all levels, including the Board of Directors.

As of December 31, 2022, 59% of our workforce were women.

Racial and ethnic diversity continues to be an area of focus for improvement at the Company.

As of December 31, 2022, 31% of our workforce were ethnically diverse and 38% of all new hires that joined the Company in 2022 were ethnically diverse.

We set goals and track our progress to ensure that we continue to incorporate different voices across the business.

We have an active cross-functional diversity council that furthers our commitment to building a diverse and inclusive organization by:

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• Working in partnership with our leadership, human resources and employee resource groups to share, drive and lead our diversity, equity and inclusion efforts

We are a majority female organization and maintain significant representation at all levels, including the Board of Directors.

As of December 31, 2023, 59% of our workforce were women.

Racial and ethnic diversity continues to be an area of focus at the Company.

As of December 31, 2023, 33% of our workforce were ethnically diverse and 47% of all new hires that joined the Company in 2023 were ethnically diverse.

We recognize that there is still important progress to be made, particularly as it relates to Black and Latino representation at our company, and this remains an area of continued emphasis for us.

We regularly evaluate the effectiveness of our human capital management practices through employee surveys and fostering a culture of ongoing feedback and two-way dialogue.

We received feedback from employees that helped to inform how we approach programs and opportunities to improve the employee experience heading into 2024.

In addition, we track important human capital metrics such as turnover rate.

Voluntary and involuntary turnover rates across all levels (executives/ senior managers, mid-level managers and professionals) are in alignment with, or lower than, the industry average.

The COVID-19 pandemic evolved throughout 2022 and we continued to demonstrate our commitment to the health and well-being of our employees, our patients and our community.

We continue to monitor local and national public health data to determine if adjustment to our work practices is needed.

We have maintained a mandatory vaccination policy for all employees, regardless of their role or work locations, subject to limited exceptions.

Thoughtful management of our COVID-19 response continues to be a priority for our leadership team.

We have maintained our "Future of Work” policy providing employees whose roles do not require an onsite or in field presence with an opportunity to choose the right working arrangement for them:

whether remote;

hybrid with time split between home or the office;

or primarily onsite in our Cambridge office, and we continue to evaluate how we can enhance these arrangements for an optimal employee experience.

Voluntary and involuntary turnover rates across all levels (executives/ senior managers, mid-level managers and professionals) are in alignment with the industry average.

We are committed to providing employees with an opportunity to choose the right working arrangement for them based on their role:

whether remote, hybrid, or onsite in our Cambridge office, and we continue to evaluate how we can enhance these arrangements for an optimal employee experience.

The opportunity to work remotely has enabled us to hire a more diverse team including individuals from different locations and backgrounds and with a variety of responsibilities in their personal lives.

In 2022, 67% of our new hires chose to work remotely.

We believe our ability to embrace change and our long-standing culture and values around flexibility and connection have helped us deliver for patients.

In 2023, 84% of our new hires chose to work remotely and our overall organization now has a majority population of remote workers representing 59% of all employees.

We believe our ability to evolve with the ever-changing environment, coupled with our long-standing culture and values around flexibility and connection, continue to help us deliver for patients.

Our Corporate Information

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Our website address is www.agios.com.

References to our website are inactive textual references only and the content of our website should not be deemed incorporated by reference into this Form 10-K.

References to our website are inactive textual references only and the content of our website should not be deemed incorporated by reference into this Annual Report on Form 10-K.

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website located at www.agios.com as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission, or SEC.

These reports are also available at the SEC’s website at www.sec.gov.

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A copy of our Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of the Audit Committee, Compensation & People Committee, and Nominating and Corporate Governance Committee are posted on our website, www.agios.com, under the heading “Corporate Governance” and are available in print to any person who requests copies by contacting us by calling (617) 649-8600 or by writing to Agios Pharmaceuticals, Inc., 88 Sidney Street, Cambridge, Massachusetts 02139.

available free of charge on our website located at www.agios.com as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission, or SEC.

These reports are also available at the SEC’s website at www.sec.gov.

A copy of our Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of the Audit Committee, Compensation and People Committee, Nominating and Corporate Governance Committee, and Science and Technology Committee are posted on our website, www.agios.com, under the heading “Corporate Governance” and are available in print to any person who requests copies by contacting us by calling (617) 649-8600 or by writing to Agios Pharmaceuticals, Inc., 88 Sidney Street, Cambridge, Massachusetts 02139.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business