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Item 1. Business

2026-03-19 compared with 2025-03-19 · 234 added, 244 removed, 472 unchanged (50% of the section changed)

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We are a clinical stage biopharmaceutical company with an initial focus on developing our two Tyrosine Kinase 2 (“TYK2”) inhibitors:

ESK-001, a second-generation inhibitor that we are developing to maximize target inhibition and optimize tolerability, and A-005, a central nervous system (“CNS”) penetrant molecule.

ESK-001 has demonstrated significant therapeutic effect in our Phase 2 program in patients with PsO, which we define as moderate-to-severe plaque psoriasis (“PsO”), and is currently being evaluated in an additional Phase 2 clinical trial in patients with systemic lupus erythematosus (“SLE”), for which we expect to report results in 2026.

With the favorable results in our Phase 2 clinical trial in PsO, we have initiated our Phase 3 ONWARD clinical program, which consists of two parallel Phase 3 clinical trials of ESK-001 in this indication and for which we expect to report topline results in the first quarter of 2026.

These parallel Phase 3 clinical trials also include one long-term extension (“LTE”) study, ONWARD3.

In addition, the open-label extension (“OLE”) of our Phase 2 clinical trial in PsO remains ongoing.

TYK2 genetic mutations are associated with a strong protective effect in multiple sclerosis (“MS”), motivating us to develop our second product candidate, A-005, as a CNS-penetrant, allosteric TYK2 inhibitor for neuroinflammatory and neurodegenerative diseases.

envudeucitinib (“envu”), formerly known as ESK-001, a second-generation inhibitor that we are developing to maximize target inhibition and optimize tolerability, and A-005, a central nervous system (“CNS”) penetrant allosteric TYK2 inhibitor.

Envu is currently being evaluated in an ongoing Phase 2 open-label extension (“OLE”) trial, as well as a Phase 3 long-term extension (“LTE”) trial in patients with moderate-to-severe plaque psoriasis (“PsO”), and we plan to submit a New Drug Application (“NDA”) for envu in PsO to the FDA in the second half of 2026.

Envu completed enrollment in the pivotal Phase 3 ONWARD1 and ONWARD2 clinical trials in patients with PsO, and we reported positive topline results in the first quarter of 2026.

In addition, envu is currently being evaluated in a Phase 2 clinical trial in patients with systemic lupus erythematosus (“SLE”), for which we expect to report topline results in the third quarter of 2026.

We are currently evaluating additional immune-mediated disease indications for envu, beyond PsO and SLE, and for A-005 in CNS and peripheral diseases.

In April 2024, we initiated our Phase 1 program of A-005 in healthy volunteers and reported initial results in December 2024.

In addition, in connection with the ACELYRIN Merger (as defined below), we acquired lonigutamab, a subcutaneously delivered, monoclonal antibody targeting IGF-1R for the potential treatment of Thyroid Eye Disease (“TED”).

We are continuing to evaluate the development program for lonigutamab and its potential differentiation in a capital efficient manner.

Alumis was incubated by Foresite Labs and incorporated on January 29, 2021, as a Delaware corporation under the name FL2021-001, Inc.

FL2021-001, Inc.’s name was changed to Esker Therapeutics, Inc.

in March 2021, and to Alumis Inc.

in January 2022.

We utilize our proprietary precision data analytics platform, biological insights and team of experienced research and development experts to deepen our understanding of disease pathologies, accelerate research and development and increase the probability of clinical success.

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We believe that combining our insights with an integrated approach to drug development will produce the next generation of treatments to address immune dysfunction.

Proposed Merger with ACELYRIN

On February 6, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ACELYRIN, Inc., a Delaware corporation (“ACELYRIN”), and Arrow Merger Sub, Inc., a Delaware corporation and our direct wholly owned subsidiary (“Merger Sub”).

Under the terms of the Merger Agreement, Merger Sub will merge with and into ACELYRIN, with ACELYRIN continuing as our direct wholly owned subsidiary (the “Merger”).

The Merger Agreement was approved by the disinterested directors on our board of directors and the board of directors of ACELYRIN and is subject to stockholder approval by the stockholders of each company and satisfaction or waiver of other closing conditions.

In connection with the Merger, all of the issued and outstanding shares of common stock of ACELYRIN, par value $0.00001 per share, will be cancelled and converted into the right to receive 0.4274 shares of our voting common stock, without interest (the number of shares of our common stock in exchange for each share of ACELYRIN common stock, the “Exchange Ratio”) and, if applicable, cash in lieu of fractional shares, subject to any applicable withholding.

Consummation of the Merger is subject to certain closing conditions, including the absence of any law or judgment that restrains, enjoins or otherwise prohibits consummation of the Merger, the effectiveness of a registration statement on Form S-4 to be filed by us with the Securities and Exchange Commission (the “SEC”), the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of ACELYRIN common stock at ACELYRIN’s stockholders’ meeting and the approval of the share issuance by the holders of a majority of votes of the our common stock cast at our stockholders’ meeting.

The Merger Agreement contains certain termination rights for both us and ACELYRIN, including the right of either party to terminate the Merger Agreement if the transactions have not been consummated prior to July 7, 2025.

We or ACELYRIN will pay a termination fee of $10.0 million or $10.0 million, respectively, under certain circumstances, including termination to accept and enter into a definitive agreement with respect to a superior proposal.

Immediately following the Merger, our pre-Merger equityholders are expected to collectively own approximately 55% of the shares of the combined company and the pre-Merger equityholders of ACELYRIN as of immediately prior to the Merger are expected to collectively own approximately 45% of the combined company, in each case, calculated on a fully diluted basis as of January 31, 2025.

ACELYRIN Merger

On February 6, 2025, we entered into an Agreement and Plan of Merger, and, on April 20, 2025, we entered into an Amendment to Agreement and Plan of Merger (collectively the “Merger Agreement”) with ACELYRIN, Inc.

(“ACELYRIN”) and Arrow Merger Sub, Inc., a Delaware corporation and our direct wholly owned subsidiary (“Merger Sub”).

Under the terms of the Merger Agreement, Merger Sub merged with and into ACELYRIN, with ACELYRIN continuing as our direct wholly owned subsidiary (the “ACELYRIN Merger”).

The Merger Agreement was approved by the disinterested directors on our board of directors and the board of directors of ACELYRIN and was approved by the

stockholders of each company on May 13, 2025.

On May 21, 2025 (the “Closing Date”), we completed the ACELYRIN Merger in a common stock transaction valued at approximately $238.1 million settled through the issuance of 48,653,549 shares of our common stock to acquire net assets with a fair value of $426.0 million.

See Note 3 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Our Product Candidates and Pipeline

We are building a pipeline of molecules with the potential to address a broad range of immune-mediated diseases as monotherapy or combination therapies.

Within our TYK2 franchise, we are developing our most advanced product candidate, ESK-001, an allosteric TYK2 inhibitor for the treatment of PsO and SLE.

We are developing our second TYK2 product candidate, A-005, as a CNS-penetrant allosteric TYK2 inhibitor, to offer the therapeutic benefit of TYK2 inhibition within the CNS for a broad range of neuroinflammatory and neurodegenerative diseases, and are pursuing MS as its initial indication.

The following chart summarizes the status of our current pipeline.

Within our TYK2 franchise, we are developing our most advanced product candidate, envu, an allosteric TYK2 inhibitor for the treatment of PsO and SLE.

In connection with the ACELYRIN Merger, we acquired lonigutamab, a subcutaneously delivered, monoclonal antibody targeting IGF-1R for the potential treatment of TED.

Our mission is to significantly improve the lives of patients by replacing broad immunosuppression with targeted therapies.

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The core components of our business strategy include:

● Maximize the opportunity presented by ESK-001’s differentiated pharmacological profile and breadth of potential indications.

We believe that ESK-001 is a foundational asset that exemplifies our approach.

● Maximize the opportunity presented by envu’s differentiated pharmacological profile and breadth of potential indications.

We believe that envu is a foundational asset that exemplifies our approach.

Genetic and biologic data generated to date highlight the important role of TYK2 inhibition across multiple diseases where we have current clinical programs (PsO and SLE) and future clinical ambitions.

We intend to expand clinical

development of ESK-001 to additional therapeutic areas and indications where TYK2 inhibition and our differentiated profile have the potential to deliver significant improvements for patients.

We intend to expand clinical development of envu to additional therapeutic areas and indications where TYK2 inhibition and our differentiated profile have the potential to deliver significant improvements for patients.

● Expand our TYK2 franchise with A-005, our allosteric TYK2 inhibitor selected to penetrate the CNS to treat neuroinflammation.

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We plan to strategically evaluate potential partnerships to maximize the value of our lead programs and broader portfolio.

We believe that our product candidates, indications, clinical data and data analytics make our company an attractive partner.

We believe that our product candidates, indications, clinical data and data analytics make our company an

attractive partner.

Given our scientific expertise and significant therapeutic depth, and the broad addressable populations of our product candidates, the right partner could help us expand the breadth of indications we pursue and increase our commercial reach.

For example, in February 2025, we announced the Merger.

If we are successful in consummating the Merger, we expect to have the financial flexibility and runway to advance an expanded late-stage pipeline.

Immune Dysfunction Overview

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TYK2 functions to relay signals into the cell through phosphorylation of signal transducing and activators of transcription (STATs), to initiate a cascade of protein-signaling interactions resulting in cytokine-responsive gene transcription and cell activation, which drives downstream immune responses including Th17, IL-17 pathways, and type I IFN responsive genes that are known drivers of inflammation and immune mediated disease.

Therapeutic inhibition of TYK2 and associated cytokine pathways, in particular IL-23/IL-17 and type I IFN, have been broadly validated to address immune dysfunction in immune-mediated diseases, such as psoriasis, psoriatic arthritis and

TYK2 is expressed in circulating and tissue-resident immune cells, and is also active in CNS-resident immune cells, such as microglia, which are thought to play a key role in neuroinflammation.

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Our Allosteric TYK2 Inhibitor

ESK-001 is a potent, highly selective, allosteric TYK2 inhibitor.

Envu is a potent, highly selective, allosteric TYK2 inhibitor.

Key Differentiating Features

We believe ESK-001 is differentiated from first-generation TYK2 inhibitors for the following reasons:

We believe envu is differentiated from first-generation TYK2 inhibitors for the following reasons:

● Intrinsic Selectivity and Preclinical Pharmacology .

Due to ESK-001’s design as an allosteric inhibitor, the molecule is both potent and intrinsically selective for TYK2 over other protein kinases, including the related JAK family members.

No JAK-related pharmacology has been observed with ESK-001 to date.

● Optimized Molecular Properties and PK .

At the core of ESK-001’s differentiation from other clinical-stage allosteric inhibitors of TYK2 are its physicochemical properties that we believe impart highly desirable drug-like features.

ESK-001 is highly permeable with low efflux resulting in high and rapid systemic absorption and favorable tissue distribution in vivo .

Due to envu’s design as an allosteric inhibitor, the molecule is both potent and intrinsically selective for TYK2 over other protein kinases, including the related JAK family members.

No JAK-related pharmacology has been observed with envu to date.

● Optimized Molecular Properties and Pharmacokinetics (“PK”) .

At the core of envu’s differentiation from

other clinical-stage allosteric inhibitors of TYK2 are its physicochemical properties that we believe impart highly desirable drug-like features.

Envu is highly permeable with low efflux resulting in high and rapid systemic absorption and favorable tissue distribution in vivo .

These properties result in its highly predictable, linear PK profile in humans with low variability.

In addition, ESK-001 has a desirable half-life in humans of approximately 8 to 12 hours and we have not observed any concerns for drug-drug interactions with other therapies.

In addition, envu has a desirable half-life in humans of approximately 8 to 12 hours and we have not observed any concerns for drug-drug interactions with other therapies.

● Maximal Target Inhibition.

ESK-001 demonstrated a robust and predictable PK/PD relationship in Phase 1 studies, enabling the identification of a dose level that achieved maximal TYK2 inhibition for 24 hours a day to take into Phase 2 clinical trials.

Envu demonstrated a robust and predictable PK/PD relationship in Phase 1 studies, enabling the identification of a dose level that achieved maximal TYK2 inhibition for 24 hours a day to take into Phase 2 clinical trials.

We define maximal inhibition as reaching the plateau of biological inhibition in the assay readout with no further impact seen with higher drug concentrations.

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● Clinical Tolerability.

There have been no clinically limiting findings across our clinical trials to date that prevent ESK-001 from being dosed to achieve maximal target inhibition.

In contrast to what has been reported with first-generation allosteric TYK2 inhibitors, skin rashes have been observed at much lower frequency with ESK-001 to date, even at very high and sustained levels of target inhibition, suggesting that skin toxicities may not be an on-target, class effect of TYK2 inhibitors.

There have been no clinically limiting findings across our clinical trials to date that prevent envu from being dosed to achieve maximal target inhibition.

In contrast to what has been reported with first-generation allosteric TYK2 inhibitors, skin rashes have been observed at much lower frequency with envu to date, even at very high and sustained levels of target inhibition, suggesting that skin toxicities may not be an on-target, class effect of TYK2 inhibitors.

Strategic Indication Selection

TYK2-mediated cytokine signaling is involved in a broad range of immune-mediated diseases.

TYK2 loss-of-function mutations have been shown to be protective for several conditions including psoriasis, psoriatic arthritis, Crohn’s disease,

ulcerative colitis and MS.

Therefore, ESK-001 has the potential to provide benefit in a large number of indications.

TYK2 loss-of-function mutations have been shown to be protective for several conditions including psoriasis, psoriatic arthritis, Crohn’s disease, ulcerative colitis and MS.

Therefore, envu has the potential to provide benefit in a large number of indications.

We have selected PsO and SLE as our initial indications.

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Because of the complexity, overlap and redundancy of inflammatory pathways, combination approaches targeting complementary pathways may be needed to achieve high-hurdle endpoints such as remission.

We believe that ESK-001’s pharmacological properties, including its lack of drug-drug interaction potential and its clinical profile, positions it well as a partner for future combination therapies.

ESK-001 is currently being evaluated in two parallel Phase 3 clinical trials in PsO as well as in a Phase 2b clinical trial in SLE.

ESK-001 for the Treatment of Moderate-to-Severe Plaque Psoriasis (PsO)

We believe that envu’s pharmacological properties, including its lack of drug-drug interaction potential and its clinical profile, positions it well as a partner for future combination therapies.

Envu is currently being evaluated in an ongoing Phase 2 open-label extension trial, as well as a parallel Phase 3 LTE trial in patients with PsO, as well as in a Phase 2b clinical trial in SLE.

Envu for the Treatment of PsO

Psoriasis is a chronic immune-mediated skin disease characterized by abnormal epidermal growth, usually presenting as red, scaly patches, papules or plaques (plaque psoriasis).

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According to the World Health Organization, psoriasis significantly impacts quality of life—physical and emotional challenges of disfiguration, low self- esteem, loss of productivity and depression.

ESK-001 has advanced to Phase 3 development in PsO.

In March 2024, we announced positive data from our randomized, double-blind, placebo-controlled Phase 2 clinical trial in patients with PsO (“Phase 2 STRIDE trial”).

Our Phase 2 STRIDE trial met its primary endpoint, the proportion of patients achieving a 75% improvement in the Psoriasis Area and Severity Index (“PASI 75”) at week 12 compared to placebo, and key secondary efficacy endpoints at all clinically relevant doses tested.

Clear dose-dependent responses were observed with maximal TYK2 inhibition achieved, and highest clinical response rates observed, at the highest dose of 40 mg twice daily.

ESK-001 was found to be generally well tolerated at all dose levels.

Upon completion of the Phase 2 STRIDE trial, patients were eligible to be enrolled in an OLE study evaluating two ESK-001 doses (40 mg once daily and 40 mg twice daily), which we designed to evaluate the safety and efficacy of long-term treatment with ESK-001 in patients with PsO.

The OLE study remains ongoing and, at Week 40, all participants on the 40 mg once daily cohort transitioned to the 40 mg twice daily dose.

In September 2024, we announced positive 28-week data from the OLE, which showed dose-dependent sustained increases in Psoriasis Area and Severity Index (“PASI”) endpoint responses observed over time, with the majority of patients achieving PASI 75, the primary endpoint, at the highest dose of 40 mg twice daily.

ESK-001 was generally well-tolerated in the OLE Week 28 data.

In March 2025, we announced positive 52-week data from the OLE, which demonstrated sustained PASI 90 and increased PASI 100 response rates in the 40 mg twice daily cohort.

ESK-001 was generally well-tolerated in the OLE Week 52 data.

See “—Safety Profile of ESK-001” below for further information.

With the favorable results in our Phase 2 STRIDE trial in PsO, we have initiated our Phase 3 ONWARD clinical program, which consists of two parallel global Phase 3, multi-center, randomized, double-blind placebo-controlled clinical trials, ONWARD1 and ONWARD2, designed to evaluate the efficacy and safety of ESK-001 in this indication.

These parallel Phase 3 clinical trials also include one LTE study, ONWARD3.

ESK-001 for the Treatment of Systemic Lupus Erythematosus (SLE)

On January 6, 2026 we announced positive topline results from our Phase 3 ONWARD1 and ONWARD2 global Phase 3, multi-center, randomized, double-blind placebo-controlled clinical trials, evaluating envu in patients with PsO.

Envu met all primary and secondary endpoints with high statistical significance in both trials.

In each of these trials, envu achieved superior skin clearance compared with placebo (p < 0.0001) on the co-primary endpoints of Psoriasis Area and Severity Index (“PASI”) 75, and static Physician’s Global Assessment (“sPGA”) 0/1 at Week 16.

On average across both ONWARD1 and ONWARD2, 74% of patients achieved PASI 75 and 59% of patients achieved sPGA 0/1, with responses

deepening over time.

Rapid responses were observed, with clear separation from placebo on PASI 90 as early as Week 4.

At Week 24, on the higher hurdle skin clearance measures, approximately 65% of patients achieved PASI 90 and more than 40% achieved PASI 100, on average across both trials.

In addition, consistent and clinically meaningful improvements across patient-reported outcomes relating to itch and quality of life were observed.

Envu also achieved superior skin clearance compared with apremilast in each trial (p<0.0001) on all PASI endpoints at Week 24.

We also announced that treatment with envu was generally well tolerated through Week 24 in both trials, with a safety profile consistent with our Phase 2 trial for envu in PsO, including the LTE trial.

Treatment-emergent adverse event (“TEAE”) frequency and severity were similar across ONWARD1 and ONWARD2, with the majority being mild to moderate, transient, and responding to standard therapy, if required.

The most common TEAEs were headaches, nasopharyngitis, upper respiratory tract infections, and acne.

No safety signals were observed.

See “—Safety Profile of Envu” below for further information.

We plan to submit an NDA for envu in PsO to the FDA in the second half of 2026.

Envu for the Treatment of SLE

SLE is a chronic autoimmune disease predominantly affecting women at childbearing age.

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While mortality in SLE has decreased since the mid-20th century as a result of improved treatments, the disease remains associated with increased disability and loss of social and occupational functioning and high utilization of health care resources.

We are currently conducting LUMUS, a Phase 2b, 48-week, global, placebo-controlled, double-blind, randomized, clinical trial evaluating ESK-001 in patients with moderate-to-severe active SLE, in the United States, Europe, the United Kingdom (“UK”), Latin America and Asia-Pacific (“APAC”) countries.

We are currently conducting LUMUS, a Phase 2b, 48-week, global, placebo-controlled, double-blind, randomized, clinical trial evaluating envu in patients with moderate-to-severe active SLE, in the United States, Europe, the United Kingdom (“UK”), Latin America and Asia-Pacific (“APAC”) countries.

The primary endpoint in Part A of such trial is BILAG-Based Composite Lupus Assessment response (a validated composite measure of lupus disease activity) at Week 48.

Eligible patients may enroll in Part B (an OLE) or participate in a four-week follow-up period.

Safety Profile of ESK-001

ESK-001 has been administered to more than 800 participants and in some cases administered for up to two years.

ESK-001 has been generally well-tolerated in our Phase 2 STRIDE and OLE clinical trials to date, with the majority of AEs observed in such clinical trials having been graded mild-to-moderate in severity.

As of December 31, 2024, the most common AEs reported by patients across active (ESK-001) trial arms were headaches, upper respiratory tract infections and nasopharyngitis, and the most common AEs deemed related to study drug by the principal investigator included headaches, upper respiratory tract infections, nasopharyngitis, rash and nausea.

The safety profile of ESK-001 continues to be evaluated in our ongoing Phase 2 OLE and Phase 3 trials.

ESK-001 is an allosteric inhibitor of TYK2.

Safety Profile of Envu

Envu has been administered to more than 2,000 participants and in some cases administered for up to three years.

Envu has been generally well-tolerated in our Phase 2 STRIDE and OLE and Phase 3 ONWARD clinical trials to date, with the majority of AEs observed in such clinical trials having been graded mild-to-moderate in severity.

As of December 31, 2025, the most common AEs reported by patients across active (envu) trial arms were headaches, upper respiratory tract infections, nasopharyngitis and acne, and the most common AEs deemed related to study drug by the principal investigator included headaches, upper respiratory tract infections, nasopharyngitis, rash and nausea.

The safety profile of envu continues to be evaluated in our ongoing Phase 2 OLE in PsO, Phase 3 LTE trial in PsO, and our Phase 2b trial in SLE.

Envu is an allosteric inhibitor of TYK2.

TYK2 is an intracellular tyrosine kinase protein shown to play an essential role in mediating cytokine receptor signaling pathways in both innate and adaptive immunity.

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Given our similar mechanism of action, we closely monitor and characterize these potential safety risks in our clinical studies.

We have observed, and expect to continue to observe that additional AEs and SAEs, consistent with known side effects of TYK2 inhibition may emerge in our ongoing and future clinical trials of ESK-001, and we have also observed and expect to continue to observe trial participant withdrawals or discontinuations due to AEs.

As of December 31, 2024, four SAEs (one serious infection, one arthritis and two malignancy cases) were reported in the STRIDE OLE trial and considered related to ESK-001 treatment by the principal investigator.

We observed these cases of serious infection and malignancy were reported in participants with relevant comorbidities and/or (in one malignancy case) relevant family history.

We have observed and expect to continue to observe that additional AEs and SAEs, consistent with known side effects of TYK2 inhibition, may emerge in our ongoing and future clinical trials of envu, and we have also observed and expect to continue to observe trial participant withdrawals or discontinuations due to AEs.

Our CNS-Penetrant Allosteric TYK2 Inhibitor

The second clinical product candidate in our TYK2 franchise, A-005, is a highly differentiated, CNS-penetrant, allosteric TYK2 inhibitor that has potential applications in multiple sclerosis and other neurological diseases.

as well as peripheral diseases.

A loss-of-function mutation in the TYK2 gene has been shown by our proprietary genetic data set as well as scientific literature, to reduce the risk of developing MS.

We are currently evaluating indications for our A-005 program

and intend to provide an update on an A-005 Phase 2 trial commencement following completion of this evaluation.

Role of TYK2 in Neuroinflammatory and Neurodegenerative Diseases

TYK2 pathways are active in CNS-resident immune cells and may play a localized role in the CNS contributing to the pathology of several CNS inflammatory disorders, including MS.

Genome-wide association studies have shown the loss-of-function TYK2 genetic variant, P1104A, has a protective effect for the development of MS.

Genome-wide association studies (“GWAS”) have shown the loss-of-function TYK2 genetic variant, P1104A, has a protective effect for the development of MS.

An additional missense variant in TYK2, Rs35018800, has the largest effect on MS risk of any variant outside the MHC/HLA region discovered to date.

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We believe TYK2 inhibition has the potential to treat the neuroinflammatory component of other neurodegenerative diseases where activated microglia and/or TYK2 proinflammatory cytokines including interferon are implicated such as Alzheimer’s disease, ALS, optic neuritis, neuromyelitis optica, and Parkinson’s disease.

A-005 for the Treatment of Multiple Sclerosis

A-005 for the Treatment of MS

MS is a chronic immune-mediated disease of the central nervous system.

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Agents directly targeting the CNS pathology and CNS resident cells, including activated microglia, are of increasing interest as these are thought to impact progressive neurological impairment.

The unmet need lies in finding safe and more effective targeted therapies that can halt or reverse the disease progression, alleviating the burden on patients and their families and improving their overall quality of life.

The unmet need lies in finding safe and more effective targeted therapies that can halt or reverse disease progression, alleviating the burden on patients and their families and improving their overall quality of life.

In December 2024, we announced positive data from a Phase 1 clinical trial evaluating the safety, tolerability and PK of single- and multiple-ascending doses of A-005 in healthy participants.

In the clinical trial, A-005 was well tolerated with no SAEs reported.

Our Lonigutamab (IGF-1R Monoclonal Antibody) Program

Lonigutamab is a subcutaneously delivered, monoclonal antibody targeting IGF-1R for the treatment of TED, a potentially vision-threatening progressive autoimmune ocular disease in which the eye muscles, eyelids, tear glands and fatty tissues behind the eye become inflamed.

ACELYRIN announced data from its Phase 1/2 dose ranging trial of lonigutamab in TED in March 2024 and January 2025.

We are continuing to evaluate the development program for lonigutamab and its potential differentiation in a capital efficient manner.

Our Discovery Programs

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In addition, we have chosen targets that could be complementary for use in combination with our existing TYK2 franchise and to each other.

For example, interferon regulatory factor 5 (“IRF5”) is a transcription factor that mediates signaling of several cytokines including type I IFN, IL-6, IL-12, IL-23, and TNF.

It is a genetically supported target across multiple immune indications with known functional roles in both innate and adaptive immunity.

For example, IRF5 is a transcription factor that mediates signaling of several cytokines including type I IFN, IL-6, IL-12, IL-23, and TNF.

It is a genetically supported target across multiple immune indications with known functional roles in

both innate and adaptive immunity.

IRF5 has been implicated in macrophage polarization, cell growth regulation, and apoptosis.

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The original Services Agreement between us and Foresite Labs was entered into in January 2021, was amended and restated in August 2021, was amended and restated for a second time in December 2023, and expires in December 2026, unless terminated earlier by the parties.

Work under the Services Agreement is memorialized in a series of Statements of

Work and we pay Foresite Labs for the estimated costs of its services in advance on a quarterly basis, with a true-up to actuals at the end of each quarter.

Work under the Services Agreement is memorialized in a series of Statements of Work and we pay Foresite Labs for the estimated costs of its services in advance on a quarterly basis, with a true-up to actuals at the end of each quarter.

Intellectual Property

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and to defend and enforce our proprietary rights, including our patent rights.

As of December 31, 2024, our solely owned patent portfolio included four issued U.S.

patents, over five pending U.S.

provisional patent applications, over five pending non-provisional U.S.

patent applications, over five granted foreign patents, which includes a granted European patent validated in over 35 countries, over 80 pending foreign patent applications, and five pending Patent Cooperation Treaty (“PCT”) patent applications.

ESK-001 and A-005

In regard to ESK-001 and A-005, we own one patent family with claims directed to composition of matter and methods of use that includes four issued U.S.

As of December 31, 2025, our solely owned patent portfolio included five issued U.S.

patents, three pending U.S.

provisional patent applications, over ten pending non-provisional U.S.

patent applications, and over twenty granted foreign patents.

Envu and A-005

In regard to envu and A-005, we own one patent family with claims directed to composition of matter and methods of use that includes five issued U.S.

patents, one pending U.S.

patent application, over five granted foreign patents in Europe (validated in over 35 countries), and certain other countries, and over 10 foreign patent applications pending in various jurisdictions, such as Europe, Canada, China, Australia, Japan and India.

patent application, over fifteen granted foreign patents in Europe (each validated in over 35 countries), and certain other countries, and over 10 foreign patent applications pending in various jurisdictions, such as Europe and Japan.

Not accounting for any patent term adjustment or extensions or terminal disclaimers, and assuming that all applicable annuity and/or maintenance fees are paid timely, the issued patents, and, if granted, the pending patent applications in this family, are expected to expire in 2039.

We also own three patent families with claims directed to crystalline and salt forms of ESK-001, which includes two pending PCT applications, one pending U.S.

application, and over 20 foreign patent applications pending in various jurisdictions such as Europe, Canada, China, Australia and Japan.

We also own three patent families with claims directed to crystalline and salt forms of envu, which includes three pending U.S.

applications, and over 30 foreign patent applications pending in various jurisdictions such as Europe and Japan.

Not accounting for any patent term adjustment or extension and assuming that all applicable annuity and/or maintenance fees are paid timely, the patent applications, if issued, and any patent applications claiming the benefit of these PCT applications, if issued, will be expected to expire in 2043.

We own one patent family with claims directed to methods of treating a TYK2-mediated disease using ESK-001, that includes a pending U.S.

application and over 10 foreign applications pending in various jurisdictions such as Europe, Brazil, Canada, China, Australia and Japan.

We own one patent family with claims directed to methods of treating a TYK2-mediated disease using envu, that includes a pending U.S.

application and over 10 foreign applications pending in various jurisdictions such as Europe and Japan.

Not accounting for any patent term adjustment or extension and assuming that all applicable annuity and/or maintenance fees are paid timely, any patent applications, if issued, will be expected to expire in 2043.

We own two pending PCT applications and one pending U.S.

provisional patent application that disclose and/or contain claims directed to methods of treating various diseases with ESK-001.

Not accounting for any patent term adjustment or extension and assuming that all annuity and/or maintenance fees are paid timely, any patent applications claiming the benefit of the PCT applications, or patent applications claiming priority to the PCT applications or the provisional patent application, if issued, will be expected to expire between 2044 and 2045.

We own three pending U.S.

provisional patent applications with claims directed to crystalline and salt forms of A-005, one pending U.S.

provisional patent application with claims directed to processes for making ESK-001, and one pending U.S.

provisional patent application with claims directed to formulations of ESK-001.

We own three additional patent families that disclose and/or contain claims directed to methods of treating various diseases with envu that include two pending U.S.

non-provisional applications, four pending foreign applications and one pending U.S.

provisional application.

Not accounting for any patent term adjustment or extension and assuming that all annuity and/or maintenance fees are paid timely, patent applications from these patent families, if issued, will be expected to expire between 2044 and 2046.

We own three pending PCT applications and three additional foreign applications with claims directed to crystalline and salt forms of A-005, one pending PCT application and one additional foreign application with claims directed to methods of treating various diseases with A-005, one pending PCT application and one additional foreign application with claims directed to processes for making envu, and one pending PCT application and one additional foreign application with claims directed to formulations of envu.

Not accounting for any patent term adjustment or extension and assuming that all applicable annuity and/or maintenance fees are paid timely, any patent applications claiming priority to the provisional applications, if issued, will be expected to expire in 2045.

We continue to assess the extent to which we may seek additional patent protection for aspects of our product engine.

The term of individual patents depends upon the date of filing of the patent application, date of patent issuance and the legal term of the patents in the countries in which they are obtained.

In most countries in which we file, the patent term is 20 years from the earliest date of filing of the first non-provisional application to which priority is claimed.

Outside of the United States, the duration of patents varies in accordance with applicable local law, but typically is also 20 years from the earliest non-provisional filing date.

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

Moreover, in context of approved products, there may be other additional exclusivity for the patents covering such approved product.

In the United States, the term of a patent that covers an FDA-approved drug may also be eligible for a patent term extension of up to five years under the Hatch-Waxman Act, which is designed to compensate for the patent term lost during the FDA regulatory review process.

The length of the patent term extension is calculated based on the length of time it takes for regulatory review.

A patent term extension under the Hatch-Waxman Act cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent applicable to an approved drug may be restored and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended.

Moreover, a patent can only be restored once, and thus, if a single patent is applicable to multiple products, it can only be extended based on one product.

Similar provisions are available in Europe and certain other foreign jurisdictions to extend the term of a patent that covers an approved drug.

We intend to pursue, in the normal course of business and when possible, composition, method of use, process, dosing and formulation patent protection for the product candidates we develop and commercialize.

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When available to expand market exclusivity, we intend to strategically obtain or license additional intellectual property related to current or contemplated product candidates.

In some instances, we submit patent applications directly to the USPTO as provisional patent applications.

Corresponding non-provisional patent applications must be filed within 12 months after the provisional application filing date.

The corresponding non-provisional application may be entitled to the benefit of the earlier provisional application filing date(s), and the patent term of the finally issued patent is calculated from the later non-provisional application filing date.

Provisional applications for patents were designed to provide a lower-cost first patent filing in the United States.

This system allows us to obtain an earlier priority date, add material to the patent application(s) during the priority period, obtain a later start to the patent term and to delay prosecution costs.

The PCT system allows a single application to be filed within 12 months of the original priority date of the patent application, and to designate all of the PCT member states in which national or regional patent applications can later be pursued based on the international patent application filed under the PCT.

The PCT searching authority performs a patentability search and issues a non-binding patentability opinion which can be used to evaluate the chances of success for the national or regional applications prior to having to incur the filing fees and prosecution costs.

Although a PCT application does not issue as a patent, it allows the applicant to seek protection in any of the member states through national/regional-phase applications.

At the end of the period of two and a half years from the first priority date of the patent application, separate patent applications can be pursued in any of the PCT member states either by direct national filing or, in some cases by filing through a regional patent organization, such as the European Patent Organisation.

The PCT system delays expenses, allows a limited evaluation of the chances of success for national/regional patent applications and enables substantial savings where applications are abandoned within the first two and a half years of filing.

We intend to file U.S.

nonprovisional applications and PCT applications that claim the benefit of the priority date of earlier filed provisional applications, when applicable.

For all patent applications, we determine claiming strategy on a case-by-case basis.

Advice of counsel, country-specific patent laws and our business model and needs are always considered.

We may file patents containing claims for protection of all useful applications of our proprietary product candidates, as well as all new applications and/or uses we discover for existing product candidates, assuming these are strategically valuable.

We continuously reassess the number and type of patent applications in our portfolio, as well as the pending and issued patent claims, to help ensure that maximum coverage and value are obtained for our processes, and compositions, given existing patent office rules and regulations.

claims may be modified during patent prosecution, to the extent allowed, to meet our intellectual property and business needs.

There can be no assurance that we will be able to obtain, maintain, enforce and defend all patents and other intellectual property rights necessary to conduct our business.

The patents that issue from our patent applications or any that we may in-license in the future, if any, may be challenged by third parties, may not effectively prevent third parties from commercializing competitive technologies or may not otherwise provide us with a competitive advantage.

We may also rely on trade secrets relating to our product candidates and technology, and seek to protect and maintain the confidentiality of proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

However, trade secrets are difficult to protect and may provide us with only limited protection.

It is our policy and practice to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us, and for employees and consultants to enter into invention assignment agreements with us.

These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances.

Where applicable, the agreements provide that all inventions to which the individual contributed as an inventor shall be assigned to us, and as such, will become our property.

There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for our trade secrets in the event of unauthorized use or disclosure of such information.

As of December 31, 2025, we exclusively in-licensed from Pierre Fabre Medicament SAS (“Pierre Fabre”) two issued U.S.

patents, over 55 corresponding foreign patents and 5 foreign patent applications directed to composition of matter.

Such issued patents are expected to expire in 2035, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate fees.

The portfolio further includes 12 pending patent applications directed primarily to formulations and methods of use.

Patents, if issued from these pending applications are expected to expire in 2043 or 2045, respectively, without giving effect to any potential patent term extensions and patent term adjustments, and assuming payment of all appropriate fees.

For more information regarding the risks related to our intellectual property, see Item 1A.

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We have stage-appropriate commercial capabilities and we intend to build a commercial infrastructure to support sales of any approved products.

We also intend to continue evaluating opportunities to work with partners that enhance our capabilities with respect to the development and commercialization of ESK-001 and A-005, if approved.

We also intend to continue evaluating opportunities to work with partners that enhance our capabilities with respect to the development and commercialization of our product candidates, if approved.

In addition, we intend to commercialize our product candidates, if approved, in key markets in the United States, the European Union (“EU”) and APAC, either alone or with partners in order to maximize the worldwide commercial potential of our programs.

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We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for clinical testing, as well as for manufacture of any products that we may commercialize, if approved.

To date, we have obtained active pharmaceutical ingredients (“API”) for ESK-001 and A-005 for our preclinical and clinical testing from different third-party API manufacturers and bulk drug product from other third-party manufacturers.

To date, we have obtained active pharmaceutical ingredients (“API”) for envu and A-005 for our preclinical and clinical testing from different third-party API manufacturers and bulk drug product from other third-party manufacturers.

We obtain our preclinical and clinical supplies from these manufacturers on a purchase order basis and currently do not have long-term supply arrangements in place.

Our principal suppliers of critical raw materials are located in India and in Taiwan.

We are in the process of implementing a redundant supply chain for ESK-001 API, drug product and critical raw material.

We are in the process of implementing a redundant supply chain for envu API, drug product and critical raw material.

For all our product candidates, we intend to identify and qualify redundant manufacturers to provide the API and drug product and prior to submission of the NDA to the FDA and/or a marketing authorization application to the European Medicines Agency (“EMA”) and/or other health authorities.

ESK-001 and A-005 are compounds of low molecular weight, generally called small molecules.

ESK-001 can be manufactured in reliable and reproducible processes from readily available starting materials.

envu and A-005 are compounds of low molecular weight, generally called small molecules.

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

A-005 has been produced in small quantities to support our preclinical studies and is currently being manufactured at larger quantities for clinical testing.

The chemistries for ESK-001 and A-005 are amenable to scale-up and do not require unusual equipment in the manufacturing process.

The chemistries for envu and A-005 are amenable to scale-up and do not require unusual equipment in the manufacturing process.

Additional contract manufacturers are used to package, label, and distribute investigational drug products.

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We believe the key competitive factors that will affect the development and commercial success of our product candidates, if approved, will be efficacy, safety, tolerability profile, convenience of dosing, price and coverage by governmental and third-party payors.

We are currently developing ESK-001 for the treatment of PsO and SLE, with multiple other potential indications to follow.

We are currently developing envu for the treatment of PsO and SLE, with multiple other potential indications to follow.

Other emerging and established life sciences companies have been focused on similar therapeutics.

If approved, ESK-001 would compete with several currently approved or late-stage oral clinical therapeutics in each such indication as well as other drugs used to treat such patients.

If approved, envu would compete with several currently approved or late-stage oral clinical therapeutics in each such indication as well as other drugs used to treat such patients.

Our second TYK2 product candidate, A-005, is a highly differentiated CNS-penetrant allosteric TYK2 inhibitor that has a potential application in MS and other neuroinflammatory diseases.

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Patients who are provided with prescriptions as part of their medical treatment generally rely on such third-party payors to reimburse all or part of the costs associated with their prescriptions and therefore adequate coverage and reimbursement from such third-party payors are critical to new and ongoing product acceptance.

Coverage and reimbursement policies for drug products can differ significantly from payor to payor as there is no uniform policy of coverage and reimbursement for drug products among third-party payors in the United States.

reimbursement policies for drug products can differ significantly from payor to payor as there is no uniform policy of coverage and reimbursement for drug products among third-party payors in the United States.

There may be significant delays in obtaining coverage and reimbursement as the process of determining coverage and reimbursement is often time consuming and costly.

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government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic drugs.

For example, the U.S.

Department of Health and Human Services (“HHS”) imposes rebates on many Medicare Part B and Medicare Part D products to penalize price increases that outpace inflation on an annual basis.

HHS has also been empowered to negotiate the price of certain single-source drugs that have been on the market for at least seven years and biologics that have been on the market for at least 11 years covered under Medicare as part of the Medicare Drug Price Negotiation Program.

Each year up to 20 products will be selected by HHS for the Medicare Drug Price Negotiation Program.

Products subject to the Medicare Drug Price Negotiation Program are expected to experience a significant reduction in reimbursement from the Medicare program on a per unit basis.

Adoption or expansion of price controls and cost-containment measures could further limit manufacturers’ net revenue and results.

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The processes for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financial resources.

Drug Development Process

Drug and Biologic Development Process

In the United States, pharmaceutical products are subject to extensive regulation by the FDA under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations.

Biologics are additionally subject to the Public Health Service Act and its implementing regulations.

The process required by the FDA before a drug may be marketed in the United States generally involves the following:

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● performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice regulations (“GCPs”) to evaluate the safety and efficacy of the drug for its intended use;

● submission to the FDA of a New Drug Application (“NDA”);

● a determination by the FDA within 60 days of its receipt of the NDA to file the submission for review;

● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice (“cGMP”) requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and of inspection of selected clinical investigation sites to assess compliance with GCPs;

● FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States.

● submission to the FDA of an NDA or Biologics License Application (“BLA”);

● a determination by the FDA within 60 days of its receipt of the NDA or BLA to file the submission for review;

● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current Good Manufacturing Practice (“cGMP”) requirements to assure that the facilities, methods and controls are adequate to preserve its identity, strength, quality and purity, and of inspection of selected clinical investigation sites to assess compliance with GCPs;

● FDA review and approval of the NDA or BLA to permit commercial marketing of the product for particular indications for use in the United States.

Nonclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product.

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In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

Clinical trials involve the administration of the investigational drug to healthy volunteers or patients under the supervision of a qualified investigator.

Clinical trials involve the administration of the investigational product to healthy volunteers or patients under the supervision of a qualified investigator.

Clinical trials must be conducted:

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(ii) in compliance with GCPs, which are standards meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors;

as well as (iii) under protocols detailing the objectives of the trial, the parameters

to be used in monitoring safety, and the effectiveness criteria to be evaluated.

as well as (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated.

Each protocol involving testing on U.S.

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

In Phase 1, the initial introduction of the drug into healthy subjects or patients, the drug is tested to assess safety, dosage tolerance, metabolism, pharmacokinetics, pharmacological actions, side effects associated with drug exposure and, if possible, to gain early evidence on effectiveness.

Phase 2 usually involves trials in a limited patient population with the specified disease or conditions to evaluate the effectiveness of the drug for a particular indication, to determine optimal dose and regimen, and to identify common AEs and safety risks.

In Phase 1, the initial introduction of the investigational product into healthy subjects or patients, safety, dosage tolerance, metabolism, pharmacokinetics, pharmacological actions, side effects and, if possible, to early evidence on effectiveness are assessed.

Phase 2 usually involves trials in a limited patient population with the specified disease or conditions to evaluate the effectiveness of the investigational product for a particular indication, to determine optimal dose and regimen, and to identify common AEs and safety risks.

If preliminary evidence of effectiveness and an acceptable safety profile is obtained in Phase 2 evaluations, Phase 3 trials are conducted.

Phase 3 trials are undertaken to obtain additional information about clinical efficacy and safety in an expanded patient population, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug.

In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the safety and efficacy of a novel drug product.

A single Phase 3 trial may be sufficient in rare instances, including (1) where the study is a large, multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible or (2) when the single trial is supported by confirmatory evidence.

Phase 3 trials are undertaken to obtain additional information about clinical efficacy and safety in an expanded patient population, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the investigational product and to provide adequate information for labeling.

In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the safety and efficacy of a product.

A single Phase 3 trial may be sufficient (1) where the study is a large, multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible or (2) when the single trial is supported by confirmatory evidence.

Post-approval trials, sometimes referred to as Phase 4 studies, may be conducted after initial marketing approval.

These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication.

In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product in commercial quantities in accordance with cGMPs.

The manufacturing process must be capable of consistently producing quality batches of the drug and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug.

In addition, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug does not undergo unacceptable deterioration over its shelf life.

trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication.

In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA or BLA.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the product and finalize a process for manufacturing the product in commercial quantities in accordance with cGMPs.

The manufacturing process must be capable of consistently producing quality batches and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the finished product.

In addition, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product does not undergo unacceptable deterioration over its shelf life.

Review and Approval Process

After completion of the required clinical testing, the sponsor prepares and submits an NDA to the FDA.

FDA approval of the NDA is required before marketing and distribution of the product may begin in the United States.

The NDA must include, among other information, the results of all nonclinical, clinical, and other testing along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, and proposed labeling.

The cost of preparing and submitting an NDA is substantial.

The submission of most NDAs is additionally subject to a substantial application user fee.

Under an approved NDA, the applicant is also subject to an annual program fee.

After completion of the required clinical testing, the sponsor prepares and submits an NDA or BLA to the FDA.

FDA approval of the application is required before marketing and distribution of the product may begin in the United States.

The application must include, among other information, the results of all nonclinical, clinical, and other testing along with descriptions of the manufacturing process, analytical tests conducted on the product, and proposed labeling.

The cost of preparing and submitting an application is substantial.

The submission of most applications is additionally subject to a substantial user fee.

Under an approved NDA or BLA, the applicant is also subject to an annual program fee.

These fees are typically increased annually.

The FDA has 60 days from its receipt of an NDA to determine whether the application will be filed based on the FDA’s threshold determination that it is sufficiently complete to permit substantive review.

The FDA has 60 days from its receipt of an NDA or BLA to determine whether the application will be filed based on the FDA’s threshold determination that it is sufficiently complete to permit substantive review.

Once the submission is filed, the FDA begins an in-depth review.

Under the Prescription Drug User Fee Act, as amended (“PDUFA”), the FDA has agreed to certain performance goals in its review of NDAs.

For new molecular entity (“NME”) NDAs that are granted Standard

Review, the FDA’s goal is to review and act on the NDA within ten months of the date the FDA files the application.

For NME NDAs granted a Priority Review, the FDA’s goal is to review the NDA within six months of the date the FDA files the application.

The FDA may extend its PDUFA goal date for reviewing both standard and priority-review NDAs for three additional months to allow the FDA to consider certain late-submitted information or information intended to clarify information already provided in the NDA submission.

The FDA may also refer applications for novel drugs, as well as drugs that present difficult questions of safety or efficacy, to an advisory committee—typically a panel that includes clinicians and other experts—for review, evaluation and a recommendation as to whether the NDA should be approved.

Under the Prescription Drug User Fee Act, as amended (“PDUFA”), the FDA has agreed to certain performance goals.

The FDA’s goal is to review and act on applications granted Standard Review within ten months of the date the FDA files the application.

For applications granted a Priority Review, the FDA’s goal is to review the application within six months from the date the FDA files the application.

The FDA may extend its PDUFA goal date for reviewing both standard and priority-review applications for three additional months to allow the FDA to consider certain late-submitted information or information intended to clarify information already provided in the submission.

The FDA may also refer applications for novel products, as well as those that present difficult questions of safety or efficacy, to an advisory committee—typically a panel that includes clinicians and other experts—for review, evaluation and a recommendation as to whether the application should be approved.

The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations.

Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

Additionally, the FDA will generally inspect the facility or the facilities at which the drug is manufactured.

The FDA will not approve a drug unless the facility at which the drug is manufactured has a satisfactory cGMP compliance status.

After the FDA evaluates the NDA and completes any clinical and manufacturing site inspections, it issues either an approval letter or a complete response letter.

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

Before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

Additionally, the FDA will generally inspect the facility or the facilities at which the product is manufactured.

The FDA will not approve a product unless the facility at which it is manufactured has a satisfactory cGMP compliance status.

After the FDA evaluates the NDA or BLA and completes any clinical and manufacturing site inspections, it issues either an approval letter or a complete response letter.

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

A complete response letter indicates that the review cycle of the application is complete, and the application will not be approved in its present form.

A complete response letter generally outlines the deficiencies in the NDA and may require substantial additional testing or information that must be provided in order for the FDA to reconsider the NDA for approval.

If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.

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

As a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy (“REMS”) to help ensure that the benefits of the drug outweigh the potential risks.

A complete response letter generally outlines the deficiencies in the application and may require substantial additional testing or information that must be provided in order for the FDA to reconsider the application for approval.

If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the application, the FDA will issue an approval letter.

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

As a condition of approval, the FDA may require a risk evaluation and mitigation strategy (“REMS”) to help ensure that the benefits of the product outweigh the potential risks.

REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use (“ETASU”).

ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries.

The requirement for a REMS can materially affect the potential market and profitability of the drug.

Moreover, the FDA may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy.

ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring,

and the use of patient registries.

The requirement for a REMS can materially affect the potential market and profitability of the product.

Moreover, the FDA may require substantial post-approval testing and surveillance to monitor the product’s safety or efficacy.

FDA Expedited Development and Review Programs

The FDA has a number of programs intended to expedite the development or review of a marketing application for an investigational drug product.

The FDA has a number of programs intended to expedite the development or review of a marketing application for an investigational product.

For example, the Fast Track designation program is intended to expedite or facilitate the process for developing and reviewing drug products that meet certain criteria.

Specifically, investigational drugs are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.

The sponsor of a Fast Track drug candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the application may be eligible for priority review.

With regard to a Fast Track drug candidate, the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.

A drug intended to treat a serious or life-threatening disease or condition may also be eligible for Breakthrough Therapy designation to expedite its development and review.

An investigational drug can receive Breakthrough Therapy designation if preliminary clinical evidence indicates that the drug, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The designation includes all of the Fast Track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the drug, including involvement of senior managers.

Any drug product submitted to the FDA for approval, including a drug with a Fast Track designation or Breakthrough Therapy Designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as Priority Review.

An NDA is eligible for Priority Review if the applicable drug is designed to treat a serious condition, and if approved, would provide a significant improvement in safety or efficacy compared to available therapies.

The FDA will attempt to direct additional resources to the evaluation of an NDA for a drug designated for priority review in an effort to facilitate the review.

The FDA endeavors to review NDAs for NMEs with Priority Review designations within six months of the filing date as compared to ten months for Standard Review NDAs under its current PDUFA review goals.

Specifically, investigational drugs and biologics are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.

The sponsor of a Fast Track designated investigational product has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA or BLA is submitted, the application may be eligible for priority review.

The FDA may consider for review sections of the NDA or BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

A drug biologic intended to treat a serious or life-threatening disease or condition may also be eligible for Breakthrough Therapy designation to expedite its development and review.

Breakthrough Therapy designation is provided if preliminary clinical evidence indicates that the drug or biologic, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

Any drug or biologic product submitted to the FDA for approval may also be eligible for Priority Review.

An NDA or BLA is eligible for Priority Review if the product is designed to treat a serious condition, and if approved, would provide a significant improvement in safety or efficacy compared to available therapies.

The FDA will attempt to direct additional resources to the evaluation of an application designated for priority review.

Fast Track designation, Breakthrough Therapy designation, and Priority Review do not change the standards for approval but may expedite the development or approval process.

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Pediatric Information

Under the Pediatric Research Equity Act, NDAs or supplements to NDAs must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is determined by the FDA to be safe and effective.

Under the Pediatric Research Equity Act, NDAs, BLAs or supplements thereto must contain data to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is determined by the FDA to be safe and effective.

The FDA may grant full or partial waivers or deferrals for submission of data.

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

The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or submit a request for approval of a pediatric formulation.

The Best Pharmaceuticals for Children Act (“BPCA”) provides NDA holders a six-month extension of any exclusivity—patent or nonpatent—for a drug if certain conditions are met.

Conditions for exclusivity include the FDA’s determination that information relating to the use of a new drug in the pediatric population may produce health benefits in that population, the FDA making a “written request” for pediatric studies, and the applicant agreeing to perform, and reporting on, the requested studies within the statutory timeframe.

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

FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or submit a request for approval of a pediatric formulation.

The Best Pharmaceuticals for Children Act (“BPCA”) provides NDA and BLA holders a six-month extension of any exclusivity—patent or nonpatent—for a product if certain conditions are met.

Conditions for exclusivity include the FDA’s determination that information relating to the use of the product in the pediatric population may produce health benefits in that population, the FDA making a “written request” for pediatric studies, and the applicant agreeing to perform, and reporting on, the requested studies within the statutory timeframe.

Applications or supplements to an approved application that propose a labeling change as a result of pediatric studies conducted pursuant to the BPCA are treated as priority applications or supplements, with all of the benefits that designation confers.

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After approval, many changes to the approved product, such as adding new indications, certain manufacturing changes and additional labeling claims, are subject to further FDA review and approval.

Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies.

Drug and biologic manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies.

Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the FDA inspects manufacturing facilities to assess compliance with cGMP.

Changes to the manufacturing process

are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented.

Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented.

Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality-control to maintain compliance with cGMP.

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● injunctions, fines or the imposition of civil or criminal penalties.

The FDA strictly regulates marketing, labeling, advertising and promotion of drugs that are placed on the market.

Advertising and promotion of drugs must be in compliance with the FDCA and its implementing regulations and only for the approved indications and in a manner consistent with the approved labeling.

The FDA strictly regulates marketing, labeling, advertising and promotion of drugs and biologics that are placed on the market.

Advertising and promotion of drugs and biologics must be in compliance with the FDCA and its implementing regulations and only for the approved indications and in a manner consistent with the approved labeling.

The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including investigation by federal and state authorities.

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Similarly to the United States, the various phases of non-clinical and clinical research in the EU are subject to significant regulatory controls.

The regulatory landscape related to clinical trials in the EU has been subject to recent changes.

In the EU, clinical trials are governed by the Clinical Trials Regulation (EU) No 536/2014 (the “CTR”), which entered into application on January 31, 2022, repealing and replacing the former Clinical Trials Directive 2001/20 (the “CTD”).

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The CHMP is also responsible for several post-authorization and maintenance activities, such as the assessment of variations or extensions to an existing MA.

The maximum timeframe for the evaluation of an MAA under the centralized procedure is 210 days, excluding clock stops during which additional information or written or oral explanations are provided by the applicant in

response to questions of the CHMP.

Accelerated assessment may be granted by the CHMP in exceptional cases, when a medicinal product that targets an unmet medical need is expected to be of major interest from the point of view of public health and, in particular, from the viewpoint of therapeutic innovation.

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Once subsequently definitively renewed, the MA shall be valid for an unlimited period.

Any authorization which is not followed by the actual placing of the medicinal product on the EU market (for a centralized MA) or on the market of the authorizing EU member state within three years after authorization ceases to be valid (the so-called sunset clause) unless, in justified circumstances, authorization is extended.

Any authorization which is not followed by the actual placing of the medicinal product on the EU market (for a centralized MA) or on the market of the authorizing

EU member state within three years after authorization ceases to be valid (the so-called sunset clause) unless, in justified circumstances, authorization is extended.

Innovative products that target an unmet medical need and are expected to be of major public health interest may be eligible for a number of expedited development and review programs, such as the PRIority MEdicines (“PRIME”) scheme, which provides incentives similar to the breakthrough therapy designation in the U.S.

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(iii) the medicinal product fulfils an unmet medical need;

and (iv) the benefit of the immediate availability to patients of the medicinal product is greater than the risk inherent in the

fact that additional data are still required.

and (iv) the benefit of the immediate availability to patients of the medicinal product is greater than the risk inherent in the fact that additional data are still required.

The conditional MA is subject to conditions to be fulfilled for generating the missing data or ensuring increased safety measures.

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However, the details are governed by regulations in individual EU member states and can differ from one country to another.

For example, applicable laws require that promotional materials and advertising in relation to medicinal products comply with the product’s Summary of Product Characteristics (“SmPC”), which may require approval by the competent national authorities in connection with an MA.

national authorities in connection with an MA.

The SmPC is the document that provides information to physicians and other healthcare professionals concerning the safe and effective use of the product.

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The outcome of HTA regarding specific medicinal products will often influence the pricing and reimbursement status granted to these medicinal products by the competent authorities of individual EU member states.

In December 2021, Regulation No 2021/2282 on Health Technology Assessment (the “HTA Regulation”) was adopted.

The Regulation is intended to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and providing the basis for cooperation at EU level for joint clinical assessments in these areas.

HTA Regulation has applied from January 12, 2025, although it will enter into force iteratively and initially apply to new active substances to treat cancer and to all ATMPs, it will then be expanded to orphan medical products in January 2028, and to all centrally authorized medicinal products as of 2030.

Selected high-risk medical devices will also be assessed under the HTA Regulation as of 2026.

The HTA Regulation is intended to harmonize the clinical benefit assessment of HTA across the European Union.

On January 12, 2025, Regulation No 2021/2282 on Health Technology Assessment (the “HTA Regulation”) entered into application through a phase implementation.

The Regulation initially applies to new active substances for oncology and ATMPs.

It will be expanded to orphan medicinal products in January 2028, and to all centrally authorized medicinal products as of 2030.

Select high-risk medical devices also came into scope in 2026.

The Regulation is intended to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and establishes the framework for EU level joint clinical assessments, joint scientific consultations, and the early identification of emerging health technologies.

The HTA Regulation is intended to harmonize the clinical benefit assessment of HTA across the EU.

The Regulation permits EU Member States to use common tools, methodologies, and procedures and requires them to rely on EU-level joint clinical assessment reports for the clinical components of their national HTA evaluations.

Individual EU Member States will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and making decisions on pricing and reimbursement.

UK Regulation

HTA Regulation has applied from January 12, 2025, although it will enter into force iteratively and initially apply to new active substances to treat cancer and to all ATMPs, it will then be expanded to orphan medicinal products in January 2028, and to all centrally authorized medicinal products as of 2030.

Selected high-risk medical devices will also be assessed under the HTA Regulation as of 2026.

The HTA Regulation is intended to harmonize the clinical benefit assessment of HTA across the European Union.

The UK regulatory framework in relation to clinical trials is governed by the Medicines for Human Use (Clinical Trials) Regulations 2004, as amended, which is derived from the CTD, as implemented into UK national law through secondary legislation.

On January 17, 2022, the MHRA launched an eight-week consultation on reframing the UK legislation for clinical trials, and which aimed to streamline clinical trials approvals, enable innovation, enhance clinical trials transparency, enable greater risk proportionality, and promote patient and public involvement in clinical trials.

The UK government published its response to the consultation on March 21, 2023, confirming that it would bring forward changes to the legislation.

The UK Government published its response to the consultation on March 21, 2023, confirming that it would bring forward changes to the legislation and such changes were laid in parliament on December 12, 2024.

These resulting legislative amendments will, if implemented in their current form, bring the UK into closer alignment with the CTR.

In October 2023, the MHRA announced a new Notification Scheme for clinical trials which enables a more streamlined and risk-proportionate approach to initial clinical trial applications for Phase 4 and low-risk Phase 3 clinical trial applications.

The Medicines and Healthcare products Regulatory Agency (“MHRA”) is the United Kingdom’s standalone regulator for medicinal products and medical devices.

While the UK regulatory framework in relation to clinical trials was historically based on the Medicines for Human Use (Clinical Trials) Regulations 2004, which implemented the former EU Clinical Trials Directive, this has been significantly reformed by the Medicines for Human Use (Clinical Trials) (Amendment) Regulations 2024.

The new legislation, which was adopted in April 2025, modernizes the United Kingdom's approach to make it a more attractive location for research, and includes key features such as:

(i) a risk-proportionate approach, including a notification scheme for lower-risk trials;

(ii) a combined review process integrating ethics committee and regulatory approvals into a single, streamlined pathway;

(iii) enhanced transparency requirements mandating registration of clinical trials in a public registry and publication of trial results within 12 months of trial completion (with scope for deferrals in certain circumstances);

(iv) greater flexibility

to support innovation in clinical trial design;

and (v) measures to promote patient and public involvement.

The amendments will become applicable on April 28, 2026 following a one-year transition period.

Marketing authorizations in the UK are governed by the Human Medicines Regulations (SI 2012/1916), as amended.

Since January 1, 2021, an applicant for the EU’s centralized procedure marketing authorization can no longer be established in the UK.

As a result, since this date, companies established in the UK cannot use the EU’s centralized procedure.

To obtain a UK MA to commercialize products in the UK, an applicant must be established in the UK and must follow one of the UK national authorization procedures or one of the remaining post-Brexit international cooperation procedures.

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The MHRA has introduced changes to national licensing procedures, including procedures to prioritize access to new medicines that will benefit patients, a 150-day assessment (subject to clock-stops) and a rolling review procedure.

The rolling-review procedure permits the separate or joint submission of quality, non-clinical, and

clinical data to the MHRA which can be reviewed on a rolling basis.

The rolling-review procedure permits the separate or joint submission of quality, non-clinical, and clinical data to the MHRA which can be reviewed on a rolling basis.

After an application under the rolling-review procedure has been validated, the decision should be received within 100 days (subject to clock-stops).

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After that, the MHLW lists its National Health Insurance price within 60 days (or 90 days at the latest) from the approval, and physicians can obtain reimbursement.

For some medications, the MHLW requires additional post marketing studies (Phase 4) to further evaluate safety and/or to gather information concerning the quality, efficacy, and safety of the product under specified conditions, in addition to post marketing surveillance including Early Post-marketing Phase Vigilance (“EPPV”) based on the RMP for all new medications.

(“EPPV”) based on the RMP for all new medications.

The MHLW also requires the drug’s sponsor to submit periodic safety update reports.

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Regulatory Matters

Manufacturing, sales, promotion and other activities following drug approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, in the United States, the Centers for Medicare & Medicaid Services (“CMS”), other divisions of the Department of Health and Human Services (“HHS”), the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments.

Manufacturing, sales, promotion and other activities following drug approval are also subject to regulation by numerous

regulatory authorities in addition to the FDA, including, in the United States, the Centers for Medicare & Medicaid Services (“CMS”), other divisions of HHS, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments.

The failure to comply with regulatory requirements subjects manufacturers to possible legal or regulatory action.

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federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act;

● HIPAA, which prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program (including private health plans) or making false statements relating to healthcare matters.

● HIPAA, which, in addition to the privacy, security, and breach notification obligations described above, also prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program (including private health plans) or making false statements relating to healthcare matters.

Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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● state law equivalents of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including private insurers, state transparency laws, and state laws limiting interactions between pharmaceutical manufacturers and members of the healthcare industry, many of which differ from each other in significant ways and may not have the same effect, and often are not preempted by HIPAA.

Violations of such laws may result in significant penalties, including criminal, civil and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, contractual damages, reputational harm, integrity oversight and reporting obligations, diminished profits and future earnings, and the curtailment or restructuring of operations.

Healthcare Reform

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pharmaceutical industry.

Several healthcare reform proposals culminated in the enactment of the Inflation Reduction Act (“IRA”) in August 2022, which, among other things, allows HHS to directly negotiate the selling price of a statutorily specified number of drugs and biologics each year that CMS reimburses under Medicare Part B and Part D.

Only high-expenditure single-source drugs that have been approved for at least 7 years (11 years for biologics) can be selected by CMS for negotiation, with the negotiated price taking effect two years after the selection year.

CMS selected the Medicare Part D products in 2023, negotiations began in 2024 and the negotiated maximum fair price for each such product has been announced.

The price cap for each of these products, which cannot exceed a statutory ceiling price, will take effect in 2026.

Negotiations for Medicare Part B products will begin in 2026 with the negotiated price taking effect in 2028.

A drug or biological product that has an orphan drug designation for only one rare disease or condition will be excluded from the IRA’s price negotiation requirements, but will lose that exclusion if it receives designations for more than one rare disease or condition, or if is approved for an indication that is not within that single designated rare disease or condition, unless such additional designation or such disqualifying approvals are withdrawn by the time CMS evaluates the drug for selection for negotiation.

The IRA also imposes rebates on Medicare Part B and Part D drugs whose prices have increased at a rate greater than the rate of inflation, and in November 2024, CMS finalized regulations for the Medicare Part B and Part D inflation rebates.

The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.

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

Manufacturers that fail to comply with the IRA may be subject to various penalties, including significant civil monetary penalties.

These provisions have been and may continue to be subject to legal challenges.

For example, the provisions related to the negotiation of selling prices of high-expenditure single-source drugs and biologics have been challenged in multiple lawsuits brought by pharmaceutical manufacturers.

Thus, while it is unclear how the IRA will be implemented, it will likely have a significant impact on the biopharmaceutical industry and the pricing of prescription drug products.

Since its enactment, there have been amendments and judicial, Congressional and executive branch challenges to certain aspects of the ACA.

For example, on July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law, which narrowed access to ACA marketplace exchange enrollment and declined to extend the ACA enhanced advanced premium tax credits that expired at the end of 2025, which, among other provisions in the law, are anticipated to reduce the number of Americans with health insurance.

The OBBBA also is expected to reduce Medicaid spending and enrollment by implementing work requirements for some beneficiaries, capping state-directed payments, reducing federal funding, and limiting provider taxes used to fund the program.

Congress is considering proposed legislation intended to further reduce healthcare costs with alternatives to replace the expired ACA subsidies.

We expect that additional U.S.

federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S.

federal government will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

The current administration is pursuing policies to reduce regulations and expenditures across government agencies including at HHS, the FDA, CMS and related agencies.

These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business.

For example, the current administration has announced agreements with several pharmaceutical companies that require the drug manufacturers to offer, through a direct-to-consumer platform, U.S.

patients and Medicaid programs prescription drug Most-Favored Nation pricing equal to or lower than those paid in other developed nations, with additional mandates for direct-to-patient discounts and repatriation of foreign revenues.

Other recent actions, for

example, include (1) directing agencies to reduce agency workforce and cut programs;

(2) directing HHS and other agencies to lower prescription drug costs through a variety of initiatives, including by establishing Most-Favored-Nation pricing for pharmaceutical products and launching an online clearinghouse, referred to as TrumpRx, for patients to purchase certain products from manufacturers on a cash pay basis;

(3) ongoing trade tensions between the United States and other jurisdictions that have resulted in multiple rounds of tariffs and potential tariffs affecting pharmaceutical products;

and (4) as part of the Make America Healthy Again Commission’s Strategy Report released in September 2025, working across government agencies to increase enforcement on direct-to-consumer pharmaceutical advertising.

Additionally, the current administration recently called on Congress to enact “The Great Healthcare Plan,” to codify and expand Most-Favored Nation pricing, lower government subsidies to private insurance companies, increase healthcare price transparency, expand pharmaceutical drugs available for over-the-counter purchase, and enact restrictions on pharmacy benefit manager payment methodologies, among other things.

These actions and policies may significantly reduce U.S.

drug prices, potentially impacting manufacturers’ global pricing strategies and profitability, while increasing their operational costs and compliance risks.

In June 2024, the U.S.

Supreme Court’s Loper Bright decision greatly reduced judicial deference to regulatory agencies, which could increase successful legal challenges to federal regulations affecting our operations.

Congress may introduce and ultimately pass health care related legislation that could, among other things, impact the drug approval process and make changes to the Medicare Drug Price Negotiation Program.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical 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.

Employees and Human Capital Resources

As of December 31, 2024, we had 170 employees, consisting of clinical, scientific, development, regulatory, finance, legal and operational personnel, of which 168 were full-time employees.

As of December 31, 2025, we employed 221 full-time and 3 part-time employees, consisting of clinical, scientific, development, regulatory, finance, legal and operational personnel.

We also retain independent contractors to support certain organizational needs.

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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