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Item 1. Business

2024-03-29 compared with 2023-03-29 · 304 added, 378 removed, 275 unchanged (71% of the section changed)

AN2 Therapeutics, Inc.

is a Delaware corporation incorporated on February 24, 2017.

We launched operations in November 2019.

We are a clinical-stage biopharmaceutical company developing treatments for rare, chronic, and serious infectious diseases with high unmet needs.

Our initial candidate is epetraborole, which we are studying as a once-daily, oral treatment with a novel mechanism of action for patients with non-tuberculous mycobacterial (“NTM”) lung disease, a rare, chronic and progressive infectious disease caused by bacteria known as mycobacteria, which leads to irreversible lung damage and can be fatal.

We are enrolling patients in a pivotal Phase 2/3 clinical trial evaluating epetraborole in treatment-refractory Mycobacterium avium complex (“MAC”), the most common form of NTM lung disease.

If the data from the Phase 2/3 trial is positive, we plan to file for regulatory and marketing approval initially in the United States and Japan and potentially other territories.

We are also planning to develop epetraborole for treatment-naïve MAC lung disease and M.

abscessus lung disease.

Epetraborole has broad-spectrum antimycobacterial activity through inhibition of an essential and universal step in bacterial protein synthesis.

(also referred to in this document as “AN2,” “we,” the “Company” or the “Registrant”) is a clinical-stage biopharmaceutical company developing treatments for rare, chronic, and serious infectious diseases with high unmet needs.

Our initial candidate is epetraborole, which we are studying as a potential once-daily, oral treatment with a novel mechanism of action for patients with non-tuberculous mycobacterial (“NTM”) lung disease, a rare, chronic and progressive infectious disease caused by bacteria known as mycobacteria, which leads to irreversible lung damage and can be fatal.

In February 2024, we voluntarily paused Phase 3 enrollment in the seamless Phase 2/3 clinical trial (“EBO-301”) evaluating epetraborole in treatment-refractory MAC lung disease, pending further study-data review and discussion with the FDA, due to potentially lower-than-expected efficacy results following a blinded aggregate analysis.

The decision to pause enrollment was not due to safety concerns.

We met with the study’s independent Data Safety Monitoring Board (“DSMB”) in March 2024 and plan to meet with the FDA in the coming months.

In the meantime, patients enrolled in the study before the enrollment pause will continue to be dosed with blinded study drug and undergo all study assessments.

The Phase 2 portion of the trial has completed enrollment, with topline data expected in August 2024.

Epetraborole is designed to produce broad-spectrum antimycobacterial activity through inhibition of an essential and universal step in bacterial protein synthesis.

Its novel mechanism of action is enabled by boron chemistry, our core technology approach.

In 2022, the FDA granted us Fast Track designation to investigate epetraborole for treatment-refractory MAC lung disease, Qualified Infectious Disease Product (“QIDP”) designation for treatment-refractory MAC lung disease, and orphan drug designation for the treatment of infections caused by NTM.

We in-licensed the exclusive worldwide development and commercialization rights for epetraborole from Anacor, acquired by Pfizer Inc.

(“Pfizer”) in 2019.

The FDA granted us Fast Track designation to investigate epetraborole for treatment-refractory MAC lung disease, Qualified Infectious Disease Product (“QIDP”) designation for treatment-refractory MAC lung disease, and orphan drug designation for the treatment of infections caused by NTM.

We have also received orphan medicinal product designation from the European Commission for the treatment of NTM lung disease using epetraborole.

Based on clinical and preclinical data generated with epetraborole, its novel mechanism of action, and the convenience associated with once-daily, oral dosing, we believe that epetraborole has the potential to become an important component of a multi-drug treatment regimen for patients suffering from NTM lung disease.

We in-licensed the exclusive worldwide development and commercialization rights for epetraborole from Anacor Pharmaceuticals, Inc.

(“Anacor”), acquired by Pfizer Inc.

(“Pfizer”) in 2016.

We believe our boron chemistry platform has the potential to address biological targets that have been difficult to inhibit using molecules that are solely carbon-based.

Our research team is focused on bringing forward development candidates that address significant unmet needs in rare, chronic and serious infectious diseases.

In addition to our NTM development programs for epetraborole, we intend to pursue epetraborole and other compounds for global health initiatives, including melioidosis, using non-dilutive funding from sources such as public and private agencies and foundations.

In 2022 we received a cost-reimbursement contract award from the National Institute of Allergy and Infectious Diseases (“NIAID”), part of the National Institutes of Health (“NIH”), under which we are able to receive up to $17.8 million in cost reimbursements to advance the development of epetraborole for acute systemic melioidosis and other biothreat pathogens.

The below table summarizes our development plans for epetraborole:

The status of each of our epetraborole programs is listed below:

Treatment-refractory MAC lung disease :

We are initially focused on advancing our first product candidate, epetraborole, to commercialization in treatment-refractory MAC lung disease.

We are conducting a pivotal Phase 2/3 study of epetraborole in treatment refractory MAC in the United States, Japan, Australia, and South Korea.

For additional details, see the section titled “

Ongoing Phase 2/3 Pivotal Clinical Trial .”

We expect to complete enrollment in the Phase 2 portion of the pivotal Phase 2/3 clinical trial in mid-2023 and plan to seamlessly begin enrollment of the Phase 3 portion of the trial immediately thereafter.

We expect to announce top-line data for each of the Phase 2 and Phase 3 portions of the trial approximately nine months after the completion of enrollment in each respective portion of the trial.

Based on interactions with the FDA and PDMA and prior approval of Arikayce, currently the only approved therapy for treatment-refractory MAC lung disease in both jurisdictions, we believe that positive data from EBO-301 will be sufficient to support regulatory filings for approval in the United States, Japan and potentially other territories.

Treatment-naïve MAC lung disease :

We plan to review Phase 2 clinical data in treatment-refractory MAC lung disease from EBO-301, when available, to inform further investigation of epetraborole as part of a first-line combination regimen in treatment-naïve MAC lung disease.

Based on clinical and preclinical data generated with epetraborole, its novel mechanism of action, and the convenience associated with once-daily, oral dosing, we believe that epetraborole, if approved, has the potential to become an important component of a multi-drug treatment regimen for patients suffering from NTM lung disease.

We are also conducting Investigational New Drug Application (“IND”) enabling studies with AN2-502998 (formerly known as AN15368), an investigational, boron-based small molecule in development for the treatment of chronic Chagas disease.

In October 2023, we announced an exclusive license agreement with the University of Georgia Research Foundation to advance its development.

AN2-502998 was originally discovered by researchers at Anacor, in close collaboration with the University of Georgia.

AN2-502998 is the only compound of which we are aware to have demonstrated curative activity in preclinical studies across multiple species, including in non-human primates with long-term, naturally acquired chronic infections of diverse T.

cruzi genetic types.

In addition to these programs, we intend to pursue epetraborole and other compounds for diseases associated with global health initiatives, including melioidosis, tuberculosis and malaria, primarily using non-dilutive funding from sources such as public and private agencies and foundations.

In September 2023 we announced that we received a research grant from the Bill and Melinda Gates Foundation to discover novel, boron containing small molecules for the treatment of tuberculosis and malaria.

The status of each of our other programs is listed below:

• Frontline MAC lung disease:

We plan to review Phase 2 clinical data in treatment-refractory MAC lung disease from EBO-301, when available, to inform further investigation of epetraborole as part of a frontline combination regimen in MAC lung disease.

abscessus lung disease :

We are currently conducting nonclinical studies as part of a dose selection study to support clinical development of epetraborole in M.

We intend to pursue development of epetraborole as a first-line therapy in M.

abscessus lung disease, which represents a smaller subset of NTM (~20% of NTM patients) but also has a high unmet need.

We are currently conducting nonclinical studies as part of dose selection to support clinical development of epetraborole in this disease.

Current treatments for M.

abscessus lung disease have poor efficacy (~50%), are often delivered by intravenous infusion and have significant tolerability and safety issues.

We believe that oral epetraborole, in combination with other drugs, has the potential to treat M.

abscessus lung disease based on the in vitro and in vivo potency observed against multiple isolates.

• Melioidosis :

In September 2022 we received a cost-reimbursement contract award under which we are able to receive up to $17.8 million in non-dilutive funding in the form of cost reimbursements from the NIAID to support preclinical, Phase 1 studies, and other activities to enable advancement of epetraborole into a pivotal Phase 2/3 clinical trial for acute systemic melioidosis.

In 2023, we plan to initiate nonclinical studies as part of our agreement with the NIAID to support clinical development of intravenous epetraborole in acute systemic melioidosis.

We aim to develop a portfolio of therapies to treat rare, chronic, and serious infectious diseases.

Key components of our strategy to achieve this goal include:

Advance epetraborole through clinical development in NTM lung disease with an initial focus on patients with treatment-refractory MAC lung disease.

We believe epetraborole has a high potential to bring therapeutic benefit to patients with treatment-refractory MAC lung disease as a once-daily, oral antibiotic with a novel mechanism of action.

We are focused on advancing epetraborole in our ongoing pivotal Phase 2/3 trial in treatment-refractory MAC lung disease.

We estimate that there are approximately 200,000 patients living with NTM lung disease in the United States (accounting for both diagnosed and undiagnosed cases), approximately 15,000 to 20,000 of whom have treatment-refractory MAC.

The number of cases in Japan is among the highest in the world and is estimated to exceed the number of cases in the United States or Europe.

Given the high unmet medical need for the treatment of NTM lung disease in Japan, and its major market potential, we plan to include Japanese patients in our pivotal Phase 2/3 clinical trial.

Based on our discussions with the FDA and PMDA, we believe this Phase 2/3 pivotal clinical trial has the potential to be sufficient for regulatory approval in the United States and Japan.

If approved, we intend to commercialize epetraborole in both the United States and Japan and potentially other territories.

We are also enrolling patients from Australia and South Korea and, like Japan, we believe there are significant numbers of NTM patients in each country.

Develop epetraborole for treatment-naïve MAC lung disease and M.

In September 2022 we received a cost-reimbursement contract award from the NIAID under which we are able to receive up to $17.8 million in non-dilutive funding to support preclinical, Phase 1 studies, and other activities to enable advancement of epetraborole into advanced clinical trials for acute systemic melioidosis.

Following contract initiation, we have conducted nonclinical studies to support clinical development of intravenous (IV) epetraborole for acute melioidosis.

We have also initiated CMC studies to manufacture a suitable IV formulation of epetraborole for planned clinical trials.

In 2023, we initiated a prospective observational study in Thailand and Laos to evaluate the clinical characteristics, current practice and outcomes in adult patients with suspected or confirmed acute melioidosis.

• Broad spectrum MAC and M.

abscessus lung disease:

We believe epetraborole has the potential to meet the ideal target product profile (“TPP”) for treatment-naïve NTM lung disease caused by MAC due to its once-daily, oral dosing, potential tolerability profile, and novel mechanism of action.

In addition, we believe that the broad-spectrum antimycobacterial activity and ideal target product profile demonstrated by epetraborole may allow for the development in other infectious diseases caused by mycobacteria, including M.

abscessus lung infections.

To expand epetraborole’s potential to address significant unmet needs for the broader NTM patient population and to maximize the market potential, we plan to review clinical data from the pivotal Phase 2/3 clinical trial in treatment-refractory MAC lung disease, when available, to inform further investigation of epetraborole in both these indications.

Build and scale organizational capabilities to support commercialization of epetraborole in NTM lung disease.

We have in-licensed the exclusive worldwide development and commercialization rights for epetraborole and have entered into a strategic partnership with and licensed out our rights in China, Hong Kong, Taiwan, and Macau to Brii Biosciences.

We plan to build a specialized commercial organization to launch epetraborole in the United States, Japan, and potentially other territories, if approved.

We also are working with several contract development and manufacturing organizations (“CDMOs”) to be launch-ready and in position to maximize the commercial potential of epetraborole should it gain regulatory approval in the United States, Japan, and potentially other territories.

Continue to invest in expanding our pipeline of product candidates.

We are conducting research activities to develop novel targets for broad spectrum MAC and M.

abscessus lung disease.

• Tuberculosis and Malaria:

We plan to continue to invest in expanding our pipeline of product candidates.

We have several research programs targeting the development of novel antimicrobial compounds based on our boron chemistry platform.

There is a significant need for novel NTM drugs that improve upon the currently available antibiotics that have variable efficacy, safety and tolerability profiles.

We anticipate that these compounds will have the potential to be developed in combination with epetraborole and other NTM drugs for the treatment of NTM lung disease.

We are also applying our boron research capabilities to discover and develop novel therapeutics for other rare or chronic infectious diseases.

In addition to our internal research efforts, our strategy also includes seeking in-licensing of other development-stage compounds that are complementary to our mission.

Apply our expertise in antimicrobial drug design and development to other global health problems.

Our leadership team is committed to developing novel therapeutics to treat rare, chronic, and serious infectious diseases in areas of high unmet medical need.

We have identified several serious infectious diseases, including melioidosis, where we believe our technology and global health development expertise has the potential to help deliver therapies to underserved populations.

In September 2022, we announced receipt of a cost-reimbursement contract award under which we are able to receive up to $17.8 million of non-dilutive funding in the form of cost reimbursements from the NIAID to support preclinical, Phase 1 studies, and other activities to enable the advancement of epetraborole into a pivotal Phase 2/3 clinical trial for acute systemic melioidosis, where we believe there is a potential to significantly lower unacceptably high mortality rates in patients.

We intend to continue to collaborate with both public and private entities and foundations and are seeking non-dilutive capital to advance these global health initiatives.

Key Attributes

We believe there is a significant need for novel NTM drugs that improve upon the currently available antibiotics that have variable efficacy, safety and tolerability profiles.

We anticipate that such compounds could have the potential to be developed in combination with epetraborole and other NTM therapies for the treatment of NTM lung disease.

We are also applying our boron research capabilities to discover and develop novel therapeutics for other rare or chronic infectious diseases, including tuberculosis and malaria.

In addition to our internal research efforts, our strategy also includes seeking in-licensing or other acquisitions of other compounds that are complementary to our mission.

Epetraborole Key Attributes

We believe the development of epetraborole in NTM lung disease represents an attractive opportunity for the following reasons:

• Large market opportunity.

Treatment-refractory MAC lung disease requires long-term, daily antimycobacterial therapy.

Treatment-refractory and frontline MAC lung disease requires long-term, daily antimycobacterial therapy.

There is a high unmet need in NTM lung disease and an opportunity for a safe, tolerable, effective, and oral antibacterial drug that could significantly improve patient outcomes.

• Novel mechanism of action with a broad spectrum of antimycobacterial activity.

Epetraborole has a novel mechanism of action –

inhibition of bacterial leucyl-tRNA synthetase, a bacterial target for which there are no approved drugs.

Epetraborole has a novel mechanism of action – inhibition of bacterial leucyl-tRNA synthetase, a bacterial target for which there are no approved therapies.

Epetraborole has demonstrated broad antimycobacterial activity in preclinical studies against MAC, including but not limited to M.

intracellulare , and M.

chimaera , which is the most common group of NTM that causes human disease (~80% cases) and is the initial focus of epetraborole’s clinical development.

Furthermore, because epetraborole works through a novel mechanism of action, it is also active against strains that are resistant to other antibiotics currently used to treat NTM lung disease.

Additionally, epetraborole has demonstrated potent in vitro activity as compared to.

chimaera , which is the most common group of NTM that causes human disease (~80% cases) and is the initial focus of epetraborole’s clinical development.

Furthermore, epetraborole has also shown activity against strains that are resistant to other antibiotics currently used to treat NTM lung disease.

For example, epetraborole has demonstrated potent in vitro activity as compared to M.

abscessus, a rapid-growing NTM species that has a high unmet need for new effective antibiotics.

Substantial data package supports ongoing clinical studies.

Epetraborole has been investigated by AN2 in three completed Phase 1 studies and eight additional studies by Anacor and Anacor's previous partner, GSK.

• Substantial data support ongoing clinical studies.

Epetraborole has been investigated by AN2 in four completed Phase 1 studies and eight additional studies by Anacor and Anacor’s previous partner, GSK.

The Anacor and GSK studies, in intravenous and oral formulations of epetraborole, included six Phase 1 and two truncated Phase 2 clinical trials in over 200 subjects at a wide range of clinical doses.

We are currently conducting a pivotal Phase 2/3 clinical trial in treatment-refractory MAC lung disease.

In parallel, we plan to initiate enrollment this year in a thorough QT (“TQT”) study (EBO-104) and a Phase 1 study evaluating the pharmacokinetics of epetraborole in patients with varying degrees of hepatic impairment (EBO-105).

We believe that these additional studies, once completed, will support NDAs in the United States and Japan if a positive outcome in the Phase 3 portion of EBO-301 is achieved.

In 2023, we completed a Phase 1 thorough QT study (EBO-104).

• Compatibility with guideline-based combination treatments.

The current standard of care therapy for NTM lung disease includes administration of three or more antimycobacterial agents, the combination of which improves efficacy, shortens the duration of therapy, and significantly reduces the chance that resistance to individual drugs would develop.

Given epetraborole’s novel mechanism of action and low potential for drug-drug interactions with existing antibiotics, we believe it has the potential to become an important component of a multi-drug treatment regimen for patients living with treatment-refractory MAC lung disease.

Given epetraborole’s novel mechanism of action and low observed potential for drug-drug interactions with existing antibiotics, we believe epetraborole, if approved, has the potential to become an important component of a multi-drug treatment regimen for patients living with treatment-refractory MAC lung disease.

Additionally, in nonclinical pharmacokinetic models of NTM MAC infection, epetraborole added on top of a triple-drug guideline-based regimen demonstrated significantly improved bacteria reductions vs.

guideline therapy alone.

Twelve years of regulatory exclusivity anticipated in the United States, if approved.

In addition to current and potential future patent protection in the major geographies, epetraborole, if approved, is expected to receive 12 years of post-approval marketing exclusivity in the U.S.

from its existing QIDP and orphan drug designations.

Mechanism of Action

Epetraborole is a boron-containing, orally bioavailable, small molecule inhibitor of bacterial leucyl-tRNA synthetase, or LeuRS, an enzyme that catalyzes the attachment of leucine to transfer RNA, or tRNA, molecules, an essential step in protein synthesis.

As shown in Figure A below, epetraborole forms a complex with a tRNA Leu molecule, trapping the terminal ribonucleotide of tRNA Leu in the editing site of the enzyme, which prevents the synthetic site from attaching leucine to tRNA Leu thus shutting down tRNA leucylation and leading to a block in protein synthesis.

Epetraborole inhibits the protein synthesis enzyme leucyl-tRNA synthetase, or LeuRS, by binding to the terminal adenosine ribose of tRNALeu in the editing site.

• Potential for up to twelve years of non-patent regulatory exclusivity in the United States, if approved.

In addition to current and potential future patent protection in the major geographies, epetraborole, if approved for patients with treatment-refractory MAC lung disease, has the potential to receive up to 12 years of post-approval, non-patent regulatory exclusivity in the U.S.

based on its existing QIDP and orphan drug designations.

Epetraborole Mechanism of Action

Epetraborole is an investigational, boron-containing, orally bioavailable, small molecule inhibitor of bacterial leucyl-tRNA synthetase, or LeuRS, an enzyme that catalyzes the attachment of leucine to transfer RNA, or tRNA, molecules, an essential step in protein synthesis.

As shown in Figure A below, epetraborole forms a complex with a tRNA Leu molecule, trapping the terminal ribonucleotide of tRNA Leu in the editing site of the enzyme, to prevent the synthetic site from attaching leucine to tRNA Leu thus shutting down tRNA leucylation and leading to a block in protein synthesis.

Epetraborole is designed to inhibit the protein synthesis enzyme leucyl-tRNA synthetase, or LeuRS, by binding to the terminal adenosine ribose of tRNALeu in the editing site.

As shown in Table 1 below, epetraborole has demonstrated antimicrobial activity against a broad panel of 161 isolates of MAC, with minimum inhibitory concentrations, or MICs, of 0.25 mg/ml to 16 mg/ml.

Because epetraborole works via a novel mechanism of action, it also maintained activity against MAC isolates that are resistant to clarithromycin, a current therapy for NTM treatment regimens.

Epetraborole also maintained activity against MAC isolates that are resistant to clarithromycin, a current therapy for NTM treatment regimens.

Clarithromycin

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We believe there is significant unmet need for new treatments, particularly in an oral dosage form with differentiated tolerability and mechanism of action.

In a clinical trial, the addition of Arikayce to standard of care (SOC) combination antibiotic therapy resulted in the resolution of MAC infection in 29% of patients as compared to 9% for SOC alone.

In a clinical trial, the addition of Arikayce to standard of care (SOC) combination antibiotic therapy resulted in the resolution of MAC infection in 29% of patients as compared to 9% for SOC alone (based on an intent to treat population).

Arikayce has boxed warnings for risk of increased respiratory adverse reactions, and warnings and precautions including ototoxicity, a known class effect with aminoglycosides, and other safety findings.

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Epetraborole Development Program

Ongoing Phase 2/3 Pivotal Clinical Trial

In June 2022, we announced the initiation of our pivotal Phase 2/3 trial evaluating epetraborole in treatment-refractory MAC lung disease.

We are enrolling patients with treatment-refractory MAC lung disease in this double-blind, placebo-controlled trial, with planned enrollment of 80 patients in the Phase 2 portion and approximately 234 patients in the Phase 3 portion (the final number of patients for the Phase 3 portion to be determined based on Phase 2 portion of the trial and assuming an 80% evaluability rate in the primary analysis population).

To date we have activated nearly 60 sites worldwide.

We designed this trial to include Japanese patients in sufficient numbers to support regulatory approval in Japan.

The Phase 2 portion of the trial consists of one cohort of approximately 40 patients treated with epetraborole plus an optimized background regimen (“OBR”) consisting of two or more standard-of-care drugs, and one cohort of approximately 40 patients treated with placebo plus an OBR.

The primary objectives in the Phase 2 portion of the trial are to assess the measurement properties of a novel patient-reported outcome (“PRO”) instrument and to provide validation evidence in treatment-refractory MAC lung disease including determination of clinical response, microbiological response, and safety of oral epetraborole plus OBR compared to placebo plus OBR.

Data from the Phase 2 portion of the trial will be used to inform the clinical response measures evaluated in the Phase 3 portion of the trial.

While the Phase 2 portion of the trial is not powered for statistical significance, we believe these data will provide a meaningful indication of epetraborole’s activity in humans in treatment-resistant MAC lung disease.

The primary objective in the Phase 3 portion of the trial will be to determine if epetraborole plus OBR is superior to placebo plus OBR in clinical response or microbiological response.

The trial includes four PRO tools for measuring clinical improvement, including the Macro2 PRO, which we developed specifically for this trial.

To support a U.S.

NDA, the primary endpoint in the Phase 3 part of the trial may include a symptom-based clinical response measure as measured by a PRO at month six or culture conversion at month six.

The primary endpoint will be confirmed upon FDA review of Phase 2 data.

Based on our discussions with the PMDA, we expect that the primary endpoint for the Phase 3 portion of the trial in Japan will be culture conversion at month six, with supportive data on durability response required to support marketing authorization.

We expect that secondary endpoints will include other microbiological, clinical, or safety measures.

We expect that the Phase 3 portion of the trial will consist of one cohort of approximately 156 patients treated with epetraborole plus an OBR and one cohort of approximately 78 patients treated with placebo plus an OBR.

These anticipated enrollment figures may change as our sample-size and trial-design will be informed by the ongoing Phase 2 portion of our trial.

We expect to announce top-line data for each of the Phase 2 and Phase 3 portions of the trial approximately nine months after the completion of enrollment in each respective portion of the trial.

Based on interactions with FDA, the PMDA, and the prior approval of Arikayce in both jurisdictions, we believe that positive data from EBO-301 has the potential to be sufficient to support regulatory filings for approval in the United States, Japan and potentially other countries.

An overview of our pivotal Phase 2/3 clinical trial design is below in Figure B.

Pivotal Phase 2/3 pivotal clinical trial of epetraborole in treatment-refractory MAC lung disease

Clinical and Non-Clinical Data Package to Support Regulatory Filings

In addition to the ongoing EBO-301 trial, we have completed three Phase 1 studies and are in the process of initiating two additional Phase 1 studies:

a TQT study and a study evaluating the pharmacokinetics of epetraborole in subjects with varying degrees of hepatic impairment.

We believe that these studies, once completed, in conjunction with a positive outcome in EBO-301, will support marketing applications in the United States, Japan and other potential markets.

Ongoing clinical studies

In 2022, we initiated our pivotal Phase 2/3 trial evaluating once-daily, oral epetraborole for treatment refractory MAC lung disease.

See the section titled “EBO-301:

Ongoing Phase 2/3 Pivotal Clinical Trial.”

In 2023, we plan to initiate enrollment in a Phase 1 TQT study (EBO-104) and a Phase 1 study evaluating the pharmacokinetics of epetraborole in subjects with varying degrees of hepatic impairment (EBO-105).

EBO-301 Clinical Trial

In 2023, we initiated enrollment in a Phase 2/3 seamless-design trial to support potential marketing applications in the U.S., Japan, and other countries for epetraborole in treatment-refractory MAC lung disease.

We completed enrollment of the Phase 2 portion of the trial in September 2023 and immediately began enrollment of the Phase 3 portion.

In February 2024, we voluntarily paused Phase 3 enrollment after observing potentially lower-than-anticipated efficacy results in an analysis of blinded aggregate data from the Phase 2 portion, in part because we had experienced rapid enrollment of the Phase 3 portion, where we had enrolled 97 of 234 planned patients.

The aggregate baseline characteristics reveal patients with complex comorbidities, prolonged NTM lung disease, and high levels of cavitary disease, as well as patients who are refractory to Arikayce, the only FDA-approved drug for refractory NTM caused by MAC, as part of their background regimen.

After having met with the study’s DSMB in March 2024, we plan to continue the review of data and meet with the FDA in the coming months.

Patients enrolled before the pause will continue to be dosed with blinded study drug and undergo all study assessments.

Completed Clinical Studies

In previous development work with epetraborole conducted by Anacor and GSK, its pharmacokinetics was well characterized using substantially higher doses.

• In previous development work with epetraborole conducted by Anacor and GSK, its pharmacokinetics were well characterized using substantially higher doses than we are currently evaluating in our ongoing and planned clinical trials.

Results from a previous Phase 1 clinical trial showed the exposures of epetraborole in alveolar (lung) macrophages, the human cells that are infected with mycobacteria in NTM lung disease, were approximately five-fold higher than in plasma.

These results suggest potentially therapeutic exposures of epetraborole could be achieved in these macrophages with orally administered doses that are substantially lower than the maximum tolerated doses and exposures identified in previous trials.

• In 2021, we completed EBO-101, a dose-ranging study in healthy volunteers, which assessed the pharmacokinetics and safety of oral epetraborole doses relevant for treatment-refractory MAC lung disease and administered for 28 days, including a food-effect cohort.

Results from our Phase 1 clinical trial showed the exposures of epetraborole in alveolar (lung) macrophages, the human cells that are infected with mycobacteria in NTM lung disease, was approximately five-fold higher than in plasma.

These results suggest therapeutically relevant exposures of epetraborole may be achieved in these macrophages with orally administered doses that are substantially lower than the maximum tolerated doses and exposures in previous trials.

• In 2022, we completed EBO-102, which assessed the pharmacokinetics of epetraborole in subjects with varying degrees of renal function.

• In 2022, we completed EBO-103, which assessed the pharmacokinetics of epetraborole in Japanese subjects to support initiation of clinical trials in Japan.

• In 2023, we completed EBO-104, a Phase 1 thorough QT study.

Completed Non-Clinical Studies

We have completed toxicology and safety pharmacology studies, including chronic toxicology studies by oral administration in both rats (for a period of six months) and non-human primates (for a period of nine months) where epetraborole was tolerated at much higher exposures compared to the once-daily dose of 500 mg that we intend to use to treat patients with treatment-refractory MAC lung disease in our Phase 2/3 pivotal clinical trial.

Additionally, we recently completed the last of the three standard reproductive toxicity studies (segment 3) that are necessary to support regulatory filings.

No findings of concern were identified.

We have completed toxicology and safety pharmacology studies, including chronic toxicology studies by oral administration in both rats (for a period of six months) and non-human primates (for a period of nine months) where epetraborole was tolerated at much higher dose levels compared to the once-daily dose of 500 mg that we are evaluating in treatment-refractory MAC lung disease in our Phase 2/3 pivotal clinical trial.

Additionally, we recently completed the last of the three standard reproductive toxicity studies (segment 3) that we believe are necessary to support regulatory application.

No findings of material concern were identified.

We have completed non-clinical studies to characterize the antimicrobial activity of epetraborole in vitro and in animal models.

In one study, we tested the antimicrobial activity of epetraborole against 51 isolates of MAC compared to clarithromycin and amikacin resulting in an MIC 90 of 8 µg/mL.

Furthermore, we recently completed testing of epetraborole against 110 MAC clinical isolates from Japan and an MIC 90 of 4 µg/mL was reported.

These studies demonstrated that, preclinically, epetraborole has broad anti-mycobacterial activity as compared to MAC isolates both regionally as well as against resistant strains of amikacin and clarithromycin.

In one study, we tested the antimicrobial activity of epetraborole against 51 isolates of MAC compared to clarithromycin and amikacin resulting in an MIC90 of 8 µg/mL.

Furthermore, we completed testing of epetraborole against 110 MAC clinical isolates from Japan and an MIC90 of 4 µg/mL was reported.

These studies demonstrated that, preclinically, epetraborole showed broad anti-mycobacterial activity as compared to MAC isolates both regionally as well as against resistant strains of amikacin and clarithromycin.

In another study, we compared epetraborole to clarithromycin in a chronic model of MAC lung disease in mice.

This study indicated that epetraborole has improved antibacterial activity at all doses as compared to a 250 mg/day clarithromycin human dose equivalent.

A third study in a mouse model indicated that epetraborole showed a superior ability to decrease colony forming units as monotherapy and in combination with standard of care versus standard of care alone.

Chemistry, Manufacturing and Controls

In 2022, we commenced work to enable manufacturing of registration batches of epetraborole drug substance and drug product.

In 2023, we plan to complete drug substance and drug product registration batches and initiate stability studies that are necessary to support NDA filings.

Furthermore, we have initiated work with two additional suppliers for a key intermediate needed to manufacture epetraborole, providing redundancy and risk mitigation.

Our goal is to be NDA-ready and to maximize commercial launch potential.

This study indicated that epetraborole demonstrated improved antibacterial activity at all doses as compared to a 250 mg/day clarithromycin human dose equivalent.

A third study in a mouse model indicated that epetraborole demonstrated a superior decrease in colony forming units as monotherapy and in combination with standard of care versus standard of care alone.

Prior Clinical Experience with Epetraborole

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Epetraborole was not tested by Anacor or GSK in patients with NTM lung disease or in combination with other antimicrobial agents.

Future Development of Epetraborole

We plan to study epetraborole as part of first-line combination treatment of treatment-naive patients with MAC lung disease.

We believe that the addition of epetraborole to first-line treatment has the potential to significantly improve clinical and/or microbiological response rates without increasing the incidence of adverse events.

We plan to review treatment-refractory MAC lung disease pivotal Phase 2/3 clinical data to inform further investigation of epetraborole as a first-line therapeutic option in MAC lung disease.

We also intend to pursue development of epetraborole as a first-line therapy in M.

abscessus lung disease, which represents a smaller subset of NTM (~20% of NTM patients) but also has a high unmet need.

We are currently conducting nonclinical studies as part of dose selection to support clinical development of epetraborole in this disease.

Current treatments for M.

abscessus lung disease have poor efficacy (~50%), are often delivered by intravenous infusion and have significant tolerability and safety issues.

We believe that oral epetraborole, in combination with other drugs, has the potential to treat M.

abscessus lung disease based on its in vitro and in vivo potency against multiple isolates.

Epetraborole Regulatory Exclusivity

As an orphan and QIDP-designated product, if approved in the United States, we anticipate 12 years of regulatory exclusivity for treatment-refractory MAC lung disease, independent of any applicable patent protection we may acquire.

During the first ten years, the FDA would be prohibited from approving any 505(b)(2) or abbreviated new drug applications for any use of epetraborole.

In years 11 and 12, the FDA would be prohibited from approving another company’s epetraborole for treatment-refractory MAC lung disease.

If approved in Japan, we anticipate at least eight years of exclusivity, independent of any applicable patent protection that we may acquire.

Our AN2 Drug Discovery Platform

Boron-Based Chemistry Platform Enables the Targeting of Novel Biological Targets

Our core technology approach is based on the use of boron chemistry platform for our research and development initiatives.

Boron has both an ability to bind with biological targets through a reversible covalent bond and the potential to address biological targets that have been difficult to inhibit using traditional carbon-based molecules.

Historically, the starting points for small molecule antibiotic drug discovery have been based on natural products or peptides.

These molecules typically do not contain boron, which has led to a lack of focus on boron-based compounds and a reduced understanding of the physical and biological properties of boron, thereby limiting the incorporation of this element into drug products.

Additionally, boron-based compounds have been historically difficult to synthesize, but recent advancements in the science and practice of boron-based drug research have allowed for its incorporation in drug discovery efforts.

In particular, advanced computational techniques have been developed to improve the understanding of boron and its interaction with key biological targets relevant to drug discovery efforts.

Additionally, new tools and methods have been developed to facilitate the creation of novel boron-containing compound families.

These unique compound families expand the universe of biological targets that can be addressed by small molecule boron-based compounds.

Boron-based inhibitors typically are highly selective for their biological target, thereby minimizing their potential off-target effects.

The ability to modify boron’s reactive center, an activity known as tuning, allows drug developers to modulate key properties of the resulting compounds.

Properties such as solubility, permeability, molecular charge at different pH values, and metabolic stability, may be designed such that inhibitors can reach any compartment in the body.

Previous work at Anacor led to the generation of a class of boron compounds known as fused boron heterocyclic compounds that demonstrated greatly improved drug-like properties.

This work enabled the discovery of compounds that inhibited aminoacyl transfer RNA, or tRNA, synthetases in a novel way that is dependent on boron for activity.

One of these compounds, tavaborole, targets a fungal aminoacyl tRNA synthetase and is FDA-approved as Kerydin to treat onychomycosis of toenails.

Epetraborole is a boron-containing analog of tavaborole and was designed to specifically target bacterial leucyl-tRNA synthetase.

GSK is also researching a leucyl-tRNA synthetase inhibitor that was specifically designed to target Mycobacterium tuberculosis (“TB”) by scientists at Anacor.

The lead chemist and biologist on this program are employed by AN2 Therapeutics.

Although this TB-specific boron-based leucyl-tRNA synthetase inhibitor, GSK3036-656, is exceptionally potent against TB, it is devoid of MAC activity.

Recently GSK reported positive Phase 2 data for GSK3036-656 in a 14-day early bactericidal study in TB patients whereby a single oral dose of 30 mg per day reduced bacteria in the sputum of patients nearly to the same levels as daily therapy of the standard four-drug regimen.

While TB is a different disease to NTM lung disease, it does demonstrate proof of concept of a LeuRS inhibitor in a lung infection caused by a mycobacterium.

Expansion of Our Portfolio of Product Candidates

We have deep expertise in boron chemistry as exemplified by our team’s history of developing epetraborole and we are actively pursuing the identification of additional antimicrobial product candidates that leverage our boron chemistry capabilities.

Once identified, we plan to develop these candidates targeting NTM lung disease and other rare and chronic infectious diseases.

We are also selectively evaluating in-licensing opportunities of development-stage candidates addressing rare and chronic infectious diseases consistent with our corporate strategy.

Our Global Health Initiatives

Our leadership team is committed to applying our know-how to help solve some of the most challenging infections in global health.

Our intent is to fund these efforts primarily through non-dilutive funding from sources such as public and private agencies and foundations.

Our near-term global health priority is melioidosis, an urgent unmet global health infectious disease caused by the bacterium Burkholderia pseudomallei ( B.

As an orphan and QIDP-designated product, if approved in the United States for use in patients with treatment-refractory MAC lung disease, it is possible we could obtain up to 12 years of regulatory exclusivity, independent of any applicable patent protection.

If approved in Japan, we believe we could obtain at least eight years of exclusivity, independent of any applicable patent protection that we may acquire.

AN2-502998 Chagas Disease

Chagas disease is caused by the parasite Trypanosoma cruzi , which spreads via triatomine bugs (vector), a subspecies of blood-feeding insects more commonly known as “kissing bugs” because they tend to bite people on the face and lips.

cruzi is also transmitted congenitally from infected mothers to their babies, through consumption of contaminated food or beverages, and via blood transfusions and organ transplants.

While the disease can progress slowly, chronic infection almost inevitably results in irreparable damage to heart and digestive system tissues.

If untreated, infection is lifelong and can be life threatening.

Chagas disease kills more people in Latin America than any other infectious disease–including malaria, tuberculosis, and HIV—and is one of the major causes of infection-induced myocarditis or cardiomyopathy worldwide.

An estimated 30% of Chagas patients develop chronic and often severe heart disease that leads to premature death.

According to the World Health Organization, approximately 6-7 million people worldwide are estimated to be infected with the parasite T.

cruzi , mostly in Latin America.

An increasing number of cases of Chagas are also being documented in the United States of America and Europe.

In the United States, the CDC estimates that there more than 300,000 people infected with T.

cruzi , most of whom were infected in Chagas-endemic regions in Latin America.

Chagas disease presents in an acute phase (~2 months after infection) and a chronic phase, where the T.

cruzi parasites are hidden mainly in the heart and digestive muscles.

For over 50 years, two nitroheterocyclic compounds, benznidazole and nifurtimox, have been available for treatment of the infection and are FDA approved for use in children, but are rarely used due to their inconsistent efficacy and high frequency of side effects.

There are currently no approved therapies to cure the disease once it reaches the chronic phase;

however, benznidazole and nifurtimox may be offered to people younger than age 50 because they may help slow the progression of the disease and its most serious complications.

In October 2023, we announced that we signed an exclusive license agreement with the University of Georgia Research Foundation to advance development of AN2-502998 (formerly known as AN15368), a boron-based small molecule therapeutic candidate under development for the treatment of Chagas disease.

AN2-502998 was originally discovered by researchers at Anacor, in close collaboration with the University of Georgia, and with grant funding from Wellcome.

IND-enabling studies are well underway using non-dilutive funding from The Wellcome Trust (“Wellcome”).

AN2-502998, previously published under AN15368, is the only compound of which we are aware to have demonstrated curative activity in preclinical studies across multiple species, including in non-human primates with long-term, naturally acquired chronic infections of diverse T.

cruzi genetic types.

Melioidosis is an urgent unmet global health infectious disease caused by the bacterium Burkholderia pseudomallei ( B.

pseudomallei ).

This bacterium is also documented as a high priority biothreat pathogen.

pseudomallei is endemic to tropical regions of the world with the majority of melioidosis cases occurring in South Asia.

pseudomallei is endemic to tropical regions of the world with the majority of reported melioidosis cases occurring in South Asia.

Melioidosis is contracted from direct contact with B.

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Even with antibiotic treatment, the mortality rate is between 20% and 40%.

Without treatment, six out of ten people die.

There are an estimated 165,000 cases of melioidosis diagnosed globally each year, mostly outside the United States, although small outbreaks have occurred in the United States and the pathogen was recently discovered in soil and water sampling from the Gulf Coast region of Mississippi.

Without treatment, it is estimated that six to nine out of ten people die.

There are an estimated 165,000 cases of melioidosis diagnosed globally each year, mostly outside the United States, although small outbreaks due to bacterial exposure have occurred in the United States and the pathogen was recently discovered in soil and water sampling from the Gulf Coast region of Mississippi.

Nonclinical studies conducted by us, Anacor, the U.S.

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pseudomallei.

In September 2022, we announced receipt of a cost-reimbursement contract award under which we are able to receive up to $17.8 million from the NIAID to advance the development of epetraborole for acute systemic melioidosis and additional bacterial biothreat pathogens.

The base period contract award is $4.3 million with additional options that, if exercised, would enable us to receive up to $17.8 million in total to support preclinical, Phase 1 studies, and other activities to enable advancement of epetraborole into a pivotal Phase 2/3 clinical trial for acute systemic meliodosis.

In September 2022, we received a cost-reimbursement contract award to receive up to $17.8 million from the NIAID to advance the development of epetraborole for acute systemic melioidosis and additional bacterial biothreat pathogens.

The base period contract award is $4.3 million with additional options that, if exercised, would enable us to receive up to $17.8 million in total to support preclinical, Phase 1 studies, and other activities to enable advancement of epetraborole into advanced clinical trials for acute systemic melioidosis.

In July 2023, the NIAID exercised one of seven available options under the NIAID contract (No:

75N93022C00059), resulting in an increase in committed contract funding of $0.7 million, for a total of $5.0 million.

The project has been funded in whole with nondilutive federal funds from the NIAID, NIH, and the Department of Health and Human Services.

In addition to our work with the NIAID on our melioidosis program, we also have partnered with the Mahidol Oxford Tropical Medicine Research Unit in Thailand and Colorado State University on preclinical research for our meliodosis program.

We believe these partners provide substantial technical and capital resources to advance the melioidosis program and provide material benefits to our company and to our NTM lung disease program.

Our work with the NIAID on our melioidosis program has resulted in our partnering with the University of Oxford’s Mahidol Oxford Tropical Medicine Research Unit to conduct a prospective observational study in Thailand and Laos with a projected 200 melioidosis patients (NCTC 06089668).

We have also partnered with Colorado State University on preclinical research for our melioidosis program.

We believe these partners provide substantial technical and capital resources to advance the melioidosis program and provide scientific, technical, and material benefits to our NTM lung disease program.

Manufacturing

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License Agreement with Anacor Pharmaceuticals, Inc.

In November 2019, we entered into a license agreement, or the Anacor Agreement, with Anacor, pursuant to which we obtained a worldwide exclusive, sublicensable license under certain patent rights of Anacor and a non-exclusive license under certain know-how of Anacor to use, develop, manufacture, commercialize, or otherwise exploit certain compounds and products, including epetraborole, for the treatment, diagnosis, or prevention of all human diseases, and a worldwide non-exclusive license under certain chiral synthesis intellectual property rights from GSK for the sole purpose of manufacturing such compounds and products.

In November 2019, we entered into a license agreement (the “Anacor Agreement”) with Anacor, pursuant to which we obtained a worldwide exclusive, sublicensable license under certain patent rights of Anacor and a non-exclusive license under certain know-how of Anacor to use, develop, manufacture, commercialize, or otherwise exploit certain compounds and products, including epetraborole, for the treatment, diagnosis, or prevention of all human diseases, and a

worldwide non-exclusive license under certain chiral synthesis intellectual property rights from GSK for the sole purpose of manufacturing such compounds and products.

We granted Anacor a non-exclusive, sublicensable license to develop, manufacture or use (but not commercialize) licensed products under all intellectual property rights that are both (i) related to the licensed products and (ii) conceived or reduced to practice by us, our affiliates, or our sublicensees.

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Royalties are subject to certain customary reductions, including lack of patent coverage and generic product entry.

We also agreed to pay Anacor non-refundable, non-creditable sales royalties on a tiered marginal royalty rate based on the country’s status as a developing or developed country as defined in the license agreement.

Sales royalties are a percentage of net sales, as specified in the Anacor Agreement, and range from mid-single digit percentages for developing countries and single to mid-teen percentages for developed countries or the China, Hong Kong, Taiwan, and Macau territories.

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The Anacor Agreement will expire upon expiration of the last to expire royalty term.

Either party may terminate the Anacor Agreement for the other party’s material breach following a cure period or immediately upon certain insolvency events relating to the other party.

License Agreement with Brii Biosciences Limited

In November 2019, we entered into a license agreement, or the Brii Biosciences License Agreement, pursuant to which we granted Brii Biosciences an exclusive, perpetual, sublicensable license to research, develop, manufacture, and commercialize certain compounds and products, including epetraborole, in China, Hong Kong, Taiwan, and Macau for the diagnosis, treatment, and prevention of human diseases.

In November 2019, we entered into a license agreement (the “Brii Biosciences License Agreement”) pursuant to which we granted Brii Biosciences an exclusive, perpetual, sublicensable license to research, develop, manufacture, and commercialize certain compounds and products, including epetraborole, in China, Hong Kong, Taiwan, and Macau for the diagnosis, treatment, and prevention of human diseases.

Under the terms of the agreement, we licensed the intellectual property rights we licensed under the Anacor Agreement, as they apply in these jurisdictions, to Brii Bioscience.

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Global Health Agreement with Adjuvant Global Health Technology Fund

We entered into the Global Health Agreement with Adjuvant Global Health Technology Fund (Adjuvant) in connection with Adjuvant’s investment in November 2019 and March 2021 of an aggregate amount of $12.0 million in our Series A and Series B redeemable convertible preferred stock financings.

We entered into the Global Health Agreement with Adjuvant Global Health Technology Fund (“Adjuvant”) in connection with Adjuvant’s investment in November 2019 and March 2021 of an aggregate amount of $12.0 million in our Series A and Series B redeemable convertible preferred stock financings.

In connection with such investment, we issued Adjuvant an aggregate of 2,430,714 shares of our redeemable convertible preferred stock in November 2019 and March 2021.

Pursuant to the Global Health Agreement, we agreed to support the creation of innovative and affordable drugs to treat disease, through public health programs and private purchasers in low and low-middle income target countries.

Adjuvant’s investment supports the development of epetraborole for use in target countries that are melioidosis-endemic, melioidosis at-risk, tuberculosis-endemic, and tuberculosis-at-risk.

Under the Global Health Agreement, we are required to comply with certain program-related investment global access commitments.

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In addition, because of the extensive time required for clinical development and regulatory review of a product candidate we may develop, it is possible that, before our product candidate can be commercialized successfully, any related patents may expire or remain in force for only a short period following commercial launch, thereby limiting the protection such patent would afford the applicable product and any competitive advantage such patent may provide.

For more information regarding the risks related to our intellectual property, please see the section titled “Risk Factors—Risks Related to Our Intellectual Property.”

For any individual patent, the term depends on the applicable law in the country in which the patent is issued.

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In the United States, the term of a patent that covers an FDA-approved drug or biologic may be eligible for patent term extension in order to restore the period of a patent term lost during the premarket FDA regulatory review process.

Specifically, the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the natural expiration of the patent (but the total patent term, including the extension period, must not exceed 14 years following FDA approval).

Specifically, the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) permits a patent term extension of up to five years beyond the natural expiration of the patent (but the total patent term, including the extension period, must not exceed 14 years following FDA approval).

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

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The USPTO reviews and approves the application for any Patent Term Extension in consultation with the FDA.

The patent portfolio for our epetraborole product candidate is based upon our in-licensed patent portfolio, which includes patents and patent applications directed generally to compositions of matter, pharmaceutical compositions, and methods of treatment.

As of December 31, 2023, we exclusively licensed three U.S.

patents, 40 foreign patents, and approximately four pending foreign patent applications, covering our key programs and pipeline.

patents, along with patents and pending patents in various foreign jurisdictions.

We do not own any issued patents.

We own three pending PCT patent applications, which are not eligible to become issued patents until, among other things, we file a non-provisional patent application with the USPTO or a foreign patent office.

Patents and patent applications, if granted, are expected to expire beginning in 2028, without taking potential patent term extensions or patent term adjustment into account.

Prosecution is a lengthy process, during which the scope of the claims initially submitted for examination by the USPTO and other patent offices may be significantly revised before issuance, if granted at all.

The in-licensed patents and patent applications for epetraborole are detailed below.

Epetraborole Product Candidate

We have two granted patents in the United States, from the in-licensed patent portfolio, covering compositions of matter of a genus of molecules, and the epetraborole product candidate molecule specifically, pharmaceutical compositions, and methods of treating a bacterial-associated or fungal-associated disease.

We have granted foreign patents from the in-licensed patent portfolio from Argentina, Armenia, Australia, Azerbaijan, Belgium, Canada, China, Denmark, Finland, France, Germany, Hong Kong, India, Indonesia, Ireland, Israel, Italy, Japan, Kyrgyz Republic, Malaysia, Mexico, Moldovia, Netherlands, New Zealand, Norway, Russian Federation, Singapore, South Africa, South Korea, Spain, Sweden, Tajikistan, Turkey, United Kingdom, Uruguay, and Vietnam.

Patent applications from the in-licensed patent portfolio are pending in Bangladesh, Brazil, Pakistan, South Africa, Thailand, and Venezuela.

Patents and patent applications, if granted, in our in-licensed patent portfolio are expected to expire in 2028, without taking potential patent term extensions or patent term adjustment into account.

Trade Secrets

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To the extent that our collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

For more information regarding the risks related to our intellectual property, please see the section titled “Risk Factors—Risks Related to Our Intellectual Property.”

The biopharmaceutical industry is characterized by intense competition and rapid innovation.

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Finally, the development of new treatment methods for the diseases we are targeting could render our product candidates non-competitive or obsolete.

We believe the key competitive factors that will affect the development and commercial success of our initial product candidate, epetraborole, if approved, will be convenience of oral dosing, efficacy, safety, and tolerability profile, coverage of drug-resistant bacteria strains, lack of cross-resistance, price, and availability of reimbursement from governmental and other third-party payors.

We are currently developing epetraborole for treatment-refractory NTM lung disease caused by MAC isolates.

If approved, epetraborole would compete with Insmed’s Arikayce, which is the only currently approved therapy for patients with this condition.

Other drugs used to treat these patients include generic drugs such as macrolides (clarithromycin and azithromycin), ethambutol, rifabutin, fluoroquinolones such as levofloxacin, bedaquiline, linezolid, and clofazimine.

There are also a number of product candidates in clinical development by third parties that are intended to treat NTM lung disease, including mid- to late-stage product candidates such as SPR720 from Spero Therapeutics, Inc., RHB-204 from Redhill Biopharma Ltd., and omadacycline from Paratek Pharmaceuticals, Inc.

We believe the competitive factors that will affect the development and commercial success of our initial product candidate, epetraborole, if approved, will be convenience of oral dosing, efficacy, safety, and tolerability profile, coverage of drug-resistant bacteria strains, lack of cross-resistance, price, and availability of reimbursement from governmental and other third-party payors.

If approved, epetraborole would compete with Insmed’s Arikayce, which is the only currently approved therapy for patients with treatment refractory MAC lung disease.

Other drugs used to treat these patients include generic drugs such as macrolides (clarithromycin and azithromycin), ethambutol, rifabutin, and fluoroquinolones such as levofloxacin, bedaquiline, linezolid, and clofazimine.

There are also a number of product candidates in clinical development by third parties that are intended to treat NTM lung disease, including mid- to late-stage product candidates such as SPR720 from Spero Therapeutics, Inc., omadacycline from Paratek Pharmaceuticals, Inc., and inhaled clofazimine from Mannkind Corporation.

We also expect that epetraborole, if approved, would compete with future and current generic versions of marketed antibiotics.

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Government authorities in the United States, at the federal, state, and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing, and export and import of drug products.

A new drug must be approved by the FDA through the New Drug Application, or NDA, process before it may be legally marketed in the United States.

We, along with any third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval of our products and product candidates.

A new drug must be approved by the FDA through the NDA process before it may be legally marketed in the United States.

The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local, and foreign statutes and regulations require the expenditure of substantial time and financial resources.

Drug Development Process

In the United States, the FDA regulates drugs under the federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local, and foreign statutes and regulations require the expenditure of substantial time and financial resources.

In the United States, the FDA regulates drugs under the federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state and local statutes and regulations require the expenditure of substantial time and financial resources.

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

completion of preclinical laboratory tests, animal studies, and formulation studies in accordance with FDA’s Good Laboratory Practice requirements and other applicable regulations;

submission to the FDA of an IND application, which must become effective before human clinical trials may begin;

approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before each trial may be initiated;

performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCPs, to establish the safety and efficacy of the proposed drug for its intended use;

preparation of and submission to the FDA of an NDA after completion of any or all pivotal trials;

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

• completion of certain preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice regulations and other applicable regulations;

• submission to the FDA of an IND, which must become effective before human clinical trials may begin;

• approval by an independent institutional review board (“IRB”), or ethics committee at each clinical site before each trial may be initiated;

• 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 product candidate for its intended use;

• submission to the FDA of an NDA after completion of all pivotal trials;

• satisfactory completion of an FDA advisory committee review, if applicable;

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, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and 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 indication(s) for use in the United States.

Prior to beginning the first clinical trial with a product candidate in the United States, a sponsor must submit an IND to the FDA.

An IND is a request for authorization from the FDA to administer an investigational new drug product to humans.

The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies.

The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product;

chemistry, manufacturing, and controls information;

and any available human data or literature to support the use of the investigational product.

An IND must become effective before human clinical trials may begin.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial.

In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin.

Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical study.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated.

A separate submission to the existing IND must be made for each successive clinical trial conducted during product development and for any subsequent protocol amendments.

Furthermore, an independent IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent form before the clinical trial begins at that site and must monitor the study until completed.

Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

Depending on its charter, this group may determine whether a trial may move forward at designated check points based on access to certain data from the trial.

• 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 requirements (“cGMPs”) to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

• satisfactory completion of potential 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.

Once a product candidate is identified for development, it enters the preclinical testing stage.

Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies.

An IND sponsor must submit the results of the preclinical tests, together with manufacturing information and analytical data, to the FDA as part of an IND.

An IND is a request for authorization from the FDA to administer an investigational drug product to humans.

An IND will also include a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated, if the trial includes an efficacy evaluation.

Some preclinical testing may continue even after the IND is submitted.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, places the clinical trial on a clinical hold.

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

Clinical holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns about on-going or proposed clinical trials or non-compliance with specific FDA requirements, and the trials may not begin or continue until the FDA notifies the sponsor that the hold has been lifted.

All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCPs, which include, among other things, the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.

Clinical trials must be conducted under protocols detailing the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated.

Each protocol must be submitted to the FDA as part of the IND, and a separate submission to the existing IND must be made for each successive clinical trial conducted during product development and for any subsequent protocol amendments.

While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure.

Furthermore, an independent IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations.

The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.

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

There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries.

In addition, some clinical trials are overseen by an independent group of qualified experts organized by the sponsor, known as a data safety monitoring board (DSMB) or committee.

Depending on its charter, this group may determine whether a trial may move forward at designated check points based on access to certain data from the trial.

There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries, including clinicaltrials.gov.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

The product candidate is initially introduced into healthy human subjects or patients with the target disease or condition.

These studies are designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.

The product candidate is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages, and dosing schedule and to identify possible adverse side effects and safety risks.

Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

The product candidate is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy, and to further test for safety, generally at multiple geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.

In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product.

These so-called Phase 4 studies may be conducted after initial marketing approval and may be used to gain additional experience from the treatment of patients in the intended therapeutic indication.

The product candidate is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness.

The product candidate is administered to a limited patient population with a specified disease or condition to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance and appropriate dosage.

The product candidate is administered to an expanded patient population to further evaluate dosage, to provide substantial evidence of efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk-benefit ratio of the product candidate and provide an adequate basis for product labeling.

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

The manufacturing process must be capable of consistently producing quality batches of the product candidate 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 product candidate does not undergo unacceptable deterioration over its shelf life.

While the IND is active and before approval to commercialize, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure.

In addition, during the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points.

These points may be prior to submission of an IND, at the end of Phase 2, before an NDA is submitted, and at other times as requested.

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

Sponsors typically use the meetings at the end of the Phase 2 trial to discuss Phase 2 clinical results and present plans for the pivotal Phase 3 clinical trials that they believe will support approval of the new drug.

Review and Approval Process

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, preclinical, and other nonclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling, and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product.

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

The results of product development, preclinical and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product.

The submission of an NDA is subject to the payment of substantial user fees;

a waiver of such fees may be obtained under certain limited circumstances.

Additionally, no user fees are assessed on NDAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.

The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review, The FDA may request additional information rather than accept an NDA for filing.

In addition, the Pediatric Research Equity Act (“PREA”), requires a sponsor to conduct pediatric clinical trials for most drugs, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration.

Under PREA, original NDAs and certain supplements must contain a pediatric assessment unless the sponsor has received a deferral or waiver.

The required assessment must evaluate the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is deemed safe and effective.

The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations.

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 fails to submit a request for approval of a pediatric formulation.

Once an NDA has been submitted, the FDA conducts a preliminary review of the application within the first 60 days after submission, before accepting it for filing, to determine whether it is sufficiently complete to permit substantive review.

The FDA may request additional information rather than accept an NDA for filing.

In this event, the NDA must be resubmitted with the additional information.

The resubmitted application also is subject to review before the FDA accepts it for filing.

Once filed, the FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality, and purity.

Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the filing date to complete a standard review of an NDA for a drug that is a new molecular entity, and of ten months from the date of NDA receipt to complete a standard review of an NDA for a drug that is not a new molecular entity.

Under the Prescription Drug User Fee Act (“PDUFA”), guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.

This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision after it the application is submitted.

The FDA may refer an application for a novel drug to an advisory committee.

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Before approving an NDA, the FDA will typically inspect the facility or facilities where the product is manufactured.

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

Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.

If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information.

Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

After the FDA evaluates an NDA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response Letter, or CRL.

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

A CRL will describe all of the deficiencies that the FDA has identified in the NDA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections and/or reviewing proposed labeling.

In issuing the CRL, the FDA may recommend actions that the applicant might take to place the NDA in condition for approval, including requests for additional information or clarification.

The FDA may delay or refuse approval of an NDA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed.

For example, the FDA may approve the NDA with a Risk Evaluation and Mitigation Strategy, or REMS, to ensure the benefits of the product outweigh its risks.

A REMS is a safety strategy to manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries, and other risk minimization tools.

The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.

The FDA may also require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing studies.

In addition, the Pediatric Research Equity Act, or PREA, requires a sponsor to conduct pediatric clinical trials for most drugs, for a new active ingredient, new indication, new dosage form, new dosing regimen, or new route of administration.

Under PREA, original NDAs and supplements must contain a pediatric assessment unless the sponsor has received a deferral or waiver.

The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations.

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

Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCPs.

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

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

A CRL usually describes the specific deficiencies in the NDA identified by the FDA and may require additional clinical data, including additional clinical trials, or other significant and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing.

If a CRL is issued, the sponsor must resubmit the NDA or, addressing all of the deficiencies identified in the letter, or withdraw the application.

Even if such data and information are submitted, the FDA may decide that the NDA does not satisfy the criteria for approval.

If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.

In addition, the FDA may require a sponsor to conduct Phase 4 testing, which refers to clinical trials designed to further assess a drug’s safety and/or effectiveness following NDA approval, and may require additional testing and surveillance programs to monitor the safety of approved products which have been commercialized.

The FDA may also place other conditions on approval, including the requirement for a risk evaluation and mitigation strategy (“REMS”), to assure the safe use of the drug.

If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS, which could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

The FDA will not approve the NDA without an approved REMS, if required.

Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products.

Expedited Development and Review Programs

The FDA offers a number of expedited development and review programs for qualifying product candidates.

For example, the Fast Track program is intended to expedite or facilitate the process for reviewing new products that 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.

Fast Track designation applies to the combination of the product and the specific indication for which it is being studied.

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

A Fast Track designated product may also be eligible for rolling review, where 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.

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

For example, the fast track designation program is intended to expedite or facilitate the process for developing and reviewing product candidates 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 product 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 product 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 product candidate 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.

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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 product candidate, including involvement of senior managers.

A marketing application for a drug submitted to the FDA for approval, including a product candidate with a Fast Track designation and/or Breakthrough Therapy designation, may be eligible for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review.

A product candidate is eligible for priority review if it is designed to treat a serious or life-threatening disease or condition, and if approved, would provide a significant improvement in safety or effectiveness compared to available alternatives for such disease or condition.

For new-molecular-entity NDAs, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date, or with respect to non-new-molecular-entity NDAs, within six months of the NDA receipt date.

Additionally, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may utilize an accelerated approval pathway upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.

Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing studies or if such studies fail to verify the predicted clinical benefit.

In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

Fast Track designation, Breakthrough Therapy designation, priority review designation, and the accelerated approval pathway do not change the standards for approval, but may expedite the development or approval process.

Any product candidate submitted to the FDA for approval, including a product candidate with a fast track designation or breakthrough 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 product candidate 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 designated for priority review in an effort to facilitate the review.

The FDA endeavors to review applications with priority review designations within six months of the filing date as compared to ten months for review of new molecular entity NDAs under its current PDUFA review goals.

In addition, depending on the design of the applicable clinical trials, a product candidate may be eligible for accelerated approval.

Specifically, drugs intended to treat serious or life-threatening diseases or conditions may be eligible for accelerated approval upon a determination that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

As a condition of approval, the FDA generally requires that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled confirmatory clinical trials, and may require that such confirmatory trials be underway prior to granting accelerated approval.

Drugs receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required confirmatory trials in a timely manner or if such trials fail to verify the predicted clinical benefit.

In addition, the FDA currently requires as a condition of accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

Fast Track designation, breakthrough therapy designation, priority review, and accelerated approval do not change the standards for approval but may expedite the development or approval process.

Even if a product candidate qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Orphan Drug Designation and Exclusivity

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 individuals in the United States and when there is no reasonable expectation that the cost of developing and making available the drug in the United States will be recovered from sales in the United States for that drug.

Orphan drug designation must be requested before submitting an NDA.

After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full NDA, to market the same drug for the same use for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition.

Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.

In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if a second applicant demonstrates that its product is clinically superior to the approved product with orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

The FDA provides periods of non-patent regulatory exclusivity, which provides the holder of an approved NDA limited protection from new competition in the marketplace for the innovation represented by its approved drug for a period of three or five years following the FDA’s approval of the NDA.

Five years of exclusivity are available to new chemical entities, or NCEs.

An NCE is a drug that contains no active moiety that has been approved by the FDA in any other NDA.

An active moiety is the molecule or ion, excluding those appended portions of the molecule that cause the drug to be an ester, salt, including a salt with hydrogen or coordination bonds, or other noncovalent, or not involving the sharing of electron pairs between atoms, derivatives, such as a complex (i.e., formed by the chemical interaction of two compounds), chelate (i.e., a chemical compound), or clathrate (i.e., a polymer framework that traps molecules), of the molecule, responsible for the therapeutic activity of the drug substance.

During the exclusivity period, the FDA may not accept for review or approve an Abbreviated New Drug Application, or ANDA, or a 505(b)(2) NDA submitted by another company that contains the previously approved active moiety.

An ANDA or 505(b)(2) application, however, may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed.

Five-year and three-year exclusivity will not delay the submission or approval of a 505(b)(1) NDA;

however, an applicant submitting a 505(b)(1) NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and efficacy.

In addition, under the Generating Antibiotic Incentives Now, or GAIN, Act, the FDA may designate a product as a Qualified Infectious Disease Product, or QIDP.

In order to receive this designation, a drug must qualify as an antibiotic or antifungal drug for human use intended to treat serious or life-threatening infections, including those caused by either (1) an antibiotic or antifungal resistant pathogen, including novel or emerging infectious pathogens, or (2) a so-called ‘‘qualifying pathogen’’

found on a list of potentially dangerous, drug-resistant organisms to established and maintained by the FDA.

A sponsor must request such designation before submitting a marketing application.

Upon approving a marketing application for a QIDP-designated product, the FDA will extend by an additional five years any non-patent marketing exclusivity period awarded.

This extension is in addition to any pediatric exclusivity extension awarded, and the extension will be awarded only to a drug first approved on or after the date of enactment of the GAIN Act.

The GAIN Act prohibits the grant of an exclusivity extension where the application is a supplement to an application for which an extension is in effect or has expired, is a subsequent application for a specified change to an approved product, or is an application for a product that does not meet the definition of QIDP based on the uses for which it is ultimately approved.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States or, if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug product available in the United States for this type of disease or condition will be recovered from sales of the product.

Orphan designation must be requested before submitting an NDA.

After the FDA grants orphan designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

Orphan designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or inability to manufacture the product in sufficient quantities.

The designation of such drug also entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.

However, competitors, may receive approval of different products for the disease or condition for which the orphan product has exclusivity or obtain approval for the same product but for a different disease or condition for which the orphan product has exclusivity.

Orphan exclusivity also could block the approval of a competing product for seven years if a competitor obtains approval of the “same drug,” as defined by the FDA, or if the active moiety of the product candidate is determined to be contained within the competitor’s product for the same disease or condition.

In addition, if an orphan designated product receives regulatory approval for a disease or condition broader than what is designated, it may not be entitled to orphan exclusivity.

Post-approval Requirements

Drug products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.

After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval.

There also are continuing, annual program fees for any marketed products.

Drug manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP, which impose certain procedural and documentation requirements upon us and our third-party manufacturers.

Any products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.

After approval, most 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 other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs and other laws and regulations.

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

FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements.

Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMPs and other aspects of regulatory compliance.

The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information;

imposition of post-market studies or clinical studies to assess new safety risks;

imposition of requirements for post-market studies or clinical studies to assess new safety risks;

or imposition of distribution restrictions or other restrictions under a REMS program.

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• fines, warning letters, or untitled letters;

clinical holds on clinical studies;

refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product approvals;

• clinical holds on ongoing or planned clinical studies;

• refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of approvals;

• product seizure or detention, or refusal to permit the import or export of products;

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• injunctions or the imposition of civil or criminal penalties.

The FDA closely regulates the marketing, labeling, advertising, and promotion of drug products.

A company can make only those claims relating to safety and efficacy, purity, and potency that are approved by the FDA and in accordance with the provisions of the approved label.

In addition, the FDA closely regulates the marketing, labeling, advertising and promotion of drug products.

A company can make only those claims relating to safety and efficacy that are approved by the FDA and in accordance with the provisions of the approved label.

The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.

Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.

Physicians may prescribe, in their independent professional medical judgment, legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA.

Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA.

Such off-label uses are common across medical specialties.

Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances.

The FDA does not regulate the behavior of physicians in their choice of treatments.

The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA-approved labelling.

The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

Marketing Exclusivity

Regulatory exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications.

The FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity.

A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance.

During the exclusivity period, the FDA may not accept for review an abbreviated new drug application (“ANDA”), or an NDA submitted under Section 505(b)(2) (“505(b)(2) NDA”) submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval.

However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder.

The FDCA alternatively provides three years of non-patent exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example new indications, dosages or strengths of an existing drug.

This three-year exclusivity covers only the modification for which the drug received approval on the basis of the new clinical investigations and does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for drugs containing the active agent for the original indication or condition of use.

Five-year and three-year exclusivity will not delay the submission or approval of a full NDA.

However, an applicant submitting a full NDA would be required to conduct, or obtain a right of reference to, all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

Pediatric exclusivity is another type of marketing exclusivity available in the United States.

Pediatric exclusivity provides for an additional six months of marketing exclusivity attached to another period of existing exclusivity or an available patent term if a sponsor conducts clinical trials in children in response to a “written request” from the FDA.

The issuance of a written request does not require the sponsor to undertake the described clinical trials, and the FDA’s grant of pediatric exclusivity does not require the FDA to approve labeling containing information on pediatric use based on the studies conducted.

Additionally, under the Generating Antibiotics Incentives Now (“GAIN”) Act, the FDA may designate a product as a “qualified infectious disease product,” or QIDP.

In order to receive this designation, a drug must qualify as an antibacterial or antifungal drug for human use intended to treat serious or life-threatening infections, including those caused by either (1) an antibacterial or antifungal resistant pathogen, including novel or emerging infectious pathogens, or (2) a so-called “qualifying pathogen” found on a list of potentially dangerous, drug-resistant organisms established and maintained by the FDA under the law.

The FDA interprets QIDP designation to apply to a specific drug product, including a specific dosage form of the product.

A sponsor must request such designation before submitting a marketing application, and the FDA will respond to a request for QIDP designation within 60 days of the date the FDA receives the request.

The GAIN Act permits the FDA to revoke a QIDP designation only if the request for such designation contained an untrue statement of material fact.

The benefits of QIDP designation include potential eligibility for priority review and Fast Track designation, and an extension by an additional five years of any non-patent regulatory exclusivity period awarded, such as a five-year exclusivity period awarded for a new molecular entity.

This extension is in addition to any pediatric exclusivity extension awarded, and the extension will be awarded only to a drug first approved on or after the date of enactment of the GAIN Act.

Tropical Disease Priority Review Voucher Program

In 2007, Congress authorized the FDA to award priority review vouchers (“PRVs”), to sponsors of certain tropical disease product applications.

The FDA’s Tropical Disease Priority Review Voucher Program is designed to encourage development of new drug and biological products for the prevention and treatment of certain tropical diseases affecting millions of people throughout the world.

Under this program, a sponsor who receives an approval for a drug or biologic for the prevention or treatment a tropical disease that meets certain criteria may qualify for a PRV that can be redeemed to receive priority review of a subsequent NDA or Biologics License Application (“BLA”), for a different product.

The sponsor of a tropical disease drug product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor of an NDA or BLA.

The FDCA does not limit the number of times a priority review voucher may be transferred before the voucher is used.

For a product to qualify for a PRV, (i) the sponsor must request approval of the product for the prevention or treatment of a “tropical disease” listed in Section 524 of the FDCA, (ii) the product must otherwise qualify for priority review, and (iii) the product must contain no active ingredient (including any salt or ester of an active ingredient) that has been approved by the FDA in any other NDA or BLA.

The Food and Drug Administration Reauthorization Act of 2017 made further changes to the eligibility criteria for receipt of a tropical disease PRV under this program.

Specifically, applications submitted after September 30, 2017 must also contain reports of one or more new clinical investigations (other than bioavailability studies) that were essential to the approval of the application and conducted or sponsored by the sponsor.

In addition, the applicant must attest that such report(s) were not submitted as part of an application for regulatory approval or licensure by a regulatory authority in India, Brazil, Thailand and certain other countries prior to September 27, 2007.

Other Healthcare Laws

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federal government.

A claim includes “any request or demand”

for money or property presented to the U.S.

A claim includes “any request or demand” for money or property presented to the U.S.

Actions under the civil False Claims Act may be brought by the Attorney General or as a qui tam action by a private individual in the name of the government.

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

In addition, the civil monetary penalties statute, subject to certain exceptions, prohibits, among other things, the offer or transfer of remuneration, including waivers of copayments and deductible amounts (or any part thereof), to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services reimbursable by Medicare or a state healthcare program.

HIPAA created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

The Health Insurance Portability and Accountability Act (“HIPAA”) created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

Similar to the U.S.

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.

HIPAA, as amended by HITECH, and their respective implementing regulations, which impose obligations on “covered entities,”

including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates”

and their respective subcontractors that create, receive, maintain, or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information.

The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMMS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), certain other healthcare professionals including physician assistants and nurse practitioners beginning in 2022, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMMS ownership and investment interests held by physicians and their immediate family members.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations, which impose obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” and their respective subcontractors that create, receive, maintain, or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information.

The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services (“CMMS”), information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), certain other healthcare professionals including physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMMS ownership and investment interests held by physicians and their immediate family members.

Similar state and local laws and regulations may also restrict business practices in the pharmaceutical industry, such as state anti-kickback and false claims laws, which may apply to business practices, including but not limited to, research, distribution, sales, and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves;

state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;

state laws and regulations that require drug manufacturers to file reports relating to pricing information and marketing expenditures or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities;

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Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the FDA-approved products for a particular indication, or place products at certain formulary levels that result in lower reimbursement levels and higher cost-sharing obligation imposed on patients.

One third-party payor’s decision to cover a particular medical product or service does not ensure that other payors will also provide coverage for the medical product or service and the level of coverage and reimbursement can differ significantly from payor to payor.

As a result, the coverage determination process will often require us to provide scientific and clinical support for the use of our products to each payor separately and can be a time-consuming process, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

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

Moreover, as a condition of participating in, and having products covered under, certain federal healthcare programs, such as Medicare and Medicaid, we are subject to federal laws and regulations that require pharmaceutical manufacturers to calculate and report certain price reporting metrics to the government, such as Medicaid Average Manufacturer Price, or AMP, and Best Price, Medicare Average Sales Price, the 340B Ceiling Price, and Non-Federal AMP reported to the Department of Veteran Affairs, and with respect to Medicaid, pay statutory rebates on utilization of manufacturers’

products by Medicaid beneficiaries.

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

Moreover, as a condition of participating in, and having products covered under, certain federal healthcare programs, such as Medicare and Medicaid, we are subject to federal laws and regulations that require pharmaceutical manufacturers to calculate and report certain price reporting metrics to the government, such as Medicaid Average Manufacturer Price (“AMP”), and Best Price, Medicare Average Sales Price, the 340B Ceiling Price, and Non-Federal AMP reported to the Department of Veteran Affairs, and with respect to Medicaid, pay statutory rebates on utilization of manufacturers’ products by Medicaid beneficiaries.

Compliance with such laws and regulations require significant resources and any findings of non-compliance may have a material adverse effect on our revenues.

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In the United States and certain foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system.

In the United States, by way of example, in March 2010, the Affordable Care Act (“ACA”) was signed into law, which substantially changed the way healthcare is financed by both governmental and private insurers in the United States and significantly affected the pharmaceutical industry.

The ACA, among other things, increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs;

required collection of rebates for drugs paid by Medicaid managed care organizations;

required manufacturers to participate in a coverage gap discount program, under which they must agree to offer point-of-sale discounts (increased to 70 percent, effective as of January 1, 2019) off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs”

to specified federal government programs;

imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs;

implemented a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected expanded the types of entities eligible for the 340B drug discount program;

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created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

and established a Center for Medicare Innovation at CMMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.

and established a Center for Medicare and Medicaid Innovation at CMMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.

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

For example, on June 17, 2021 the U.S.

Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress.

Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.

Thus, the ACA will remain in effect in its current form.

Further, prior to the U.S.

Supreme Court ruling, President Biden issued an executive order that initiated a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is possible that the Affordable Care Act will be subject to judicial or Congressional challenges in the future.

It is unclear how such challenges and the healthcare reform measures of the Biden administration will impact the ACA.

Other legislative changes have been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers of 2% per fiscal year, which was temporarily suspended from May 1, 2020 through December 31, 2021, and reduced payments to several types of Medicare providers.

Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed, among other things, to bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for pharmaceutical products.

By way of example, the American Taxpayer Relief Act of 2021, effective January 1, 2024, would eliminate the statutory cap on rebate amounts owed by drug manufacturers under the Medicaid Drug Rebate Program, or MDRP, which is currently capped at 100% of the AMP for a covered outpatient drug.

Other legislative changes have been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers, which was temporarily suspended from May 1, 2020 through March 31, 2022, and reduced payments to several types of Medicare providers.

In addition, the American Taxpayer Relief Act of 2021, effective January 1, 2024, eliminated the statutory cap on rebate amounts owed by drug manufacturers under the Medicaid Drug Rebate Program(“MDRP”), which was previously capped at 100% of the AMP for a covered outpatient drug.

Further, based on a recent executive order, the Biden administration expressed its intent to pursue certain policy initiatives to reduce drug prices.

Most significantly, in August 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law.

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

imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023);

and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations.

HHS has issued and will continue to issue guidance implementing the IRA, although the Medicare drug price negotiation program is currently subject to legal challenges.

While the impact of the IRA on our business and the pharmaceutical industry cannot yet be fully determined, it is likely to be significant.

Individual states in the United States have also become increasingly active in implementing 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, mechanisms to encourage importation from other countries and bulk purchasing.

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Data Privacy and Security Laws

Numerous state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality, and security of personal information, including health-related information.

In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including Health Insurance Portability and Accountability Act, or HIPAA, and federal and state consumer protection laws and regulations (e.g., Section 5 of the Federal Trade Commission Act) that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.

As a pharmaceutical company, we are subject to state, federal and foreign laws, including consumer protection laws and regulations, governing the collection, dissemination, use, access to, confidentiality, and security of personal information, including health-related information.

For example, in the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws (e.g., the Health Insurance Portability and Accountability Act (“HIPAA”)), and federal and state consumer protection laws and regulations (e.g., Section 5 of the Federal Trade Commission Act) that govern the collection, dissemination, use, protection and other processing of health-related and other personal information currently or could in the future apply to our operations or the operations of our partners.

In addition, certain state and non-U.S.

laws, such as the California Consumer Privacy Act, or CCPA, the California Privacy Rights Act, or CPRA, and the General Data Protection Regulation, or GDPR, govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to make compliance efforts more challenging, and can result in investigations, proceedings, or actions that lead to significant penalties and restrictions on data processing.

laws, such as the California Consumer Privacy Act (“CCPA”), and the General Data Protection Regulation (“GDPR”), govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways, thus complicating compliance efforts.

Failure to comply with data privacy and security laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

Privacy and security laws, regulations, and other obligations are constantly evolving, can conflict with each other to make compliance efforts more challenging, and can result in investigations, proceedings, or actions that lead to significant penalties and restrictions on data processing.

Japanese Drug Regulation

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Clinical trials of medicinal products in Japan must be conducted in accordance with Japanese regulations based on ICH guidelines governing GCP.

If the sponsor of the clinical trial is not established within Japan, it must appoint an entity within the country to act as its caretaker who should be authorized to act on the sponsor’s behalf.

The sponsor must take out a clinical trial insurance policy, and, according to the industry agreement, should put in place a common compensation policy for the injuries from the trial.

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To obtain regulatory approval of an investigational medicinal product, we must submit a new drug application.

If the product is designed for treating certain “difficult diseases”

or those whose patient size is limited, we may be able to obtain designation as an orphan drug product if it demonstrates unique therapeutic value.

If the product is designed for treating certain “difficult diseases” or those whose patient size is limited, we may be able to obtain designation as an orphan drug product if it demonstrates unique therapeutic value.

Separately, the latest amendment to the law introduced separate pathways for (i) truly innovative products with a unique mode of action and (ii) those which will satisfy unmet medical needs.

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Employees and Human Capital Resources

As of February 28, 2023, we had 35 full-time employees and one part-time employee, consisting of clinical operations, clinical development, research, development, manufacturing, regulatory, quality, finance, and operational personnel.

Thirteen of our employees hold Ph.D.

degrees, or both.

None of our employees is subject to a collective bargaining agreement.

As of February 29, 2024, we had 41 full-time employees, consisting of clinical operations, clinical development, research, manufacturing, regulatory, quality, finance, and operational personnel.

None of our employees are subject to a collective bargaining agreement.

We consider our relationship with our employees to be good.

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We strive to provide our employees with a rewarding work environment, including the opportunity for growth, success and professional development.

We provide a competitive compensation and benefits package, including bonus and equity incentive plans, a 401(k) plan—all designed to attract and retain a skilled and diverse workforce.

We provide a competitive compensation and benefits package, including bonus and equity incentive plans and a 401(k) plan—all designed to attract and retain a skilled and diverse workforce.

• Health and safety:

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• Inclusion and diversity:

We are committed to efforts to increase diversity and foster an inclusive work environment that supports our workforce.

COVID-19 Impact on Facilities

We have implemented policies that enable our employees to work remotely, and such policies may continue for an indefinite period.

As prescribed by the U.S.

Center for Disease Control, state and local guidelines, we have over time also implemented various safety protocols for all on-site personnel, including the requirements to wear masks, suspend all non-essential travel for our employees, and maintain social distance.

We continue to evaluate our protocols and practices as the global response to the COVID-19 pandemic continues to evolve.

While we are partially operating virtually to align with local COVID-19 guidelines, we believe our operational needs are being met for the time being.

To date, we have not experienced any material impact on our ability to operate our business.

We plan to periodically reassess the impact of COVID-19 on our facility needs.

We are committed to efforts to foster an inclusive work environment that supports our workforce.

Corporate Information

We incorporated in Delaware on February 24, 2017 and launched operations in November 2019.

We completed the initial public offering (the “IPO”) of our common stock in March 2022, and our common stock is listed on the Nasdaq Global Select Market under the symbol “ANTX.” Our principal executive offices are located at 1800 El Camino Real, Suite D, Menlo Park, California, 94027, and our telephone number is (650) 331-9090.

Securities Exchange Act Reports

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We make available on or through our website reports and amendments to those reports that we file with or furnish to the SEC in accordance with the Securities Exchange Act of 1934, as amended.

These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports of Form 8-K and amendments to these reports.

These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and amendments to these reports.

We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information available with, or furnish it to, the SEC.

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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