What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2020-08-05 compared with 2020-05-08 · 109 added, 110 removed, 709 unchanged (24% of the section changed)

12 unchanged sentences

If we are unable to develop and commercialize any product candidates from our HBV Cure and Microbiome programs, we will be unable to generate revenues from the sale of products or build a sustainable or profitable business.

In addition, all of our product candidates are currently in early clinical development or in varying stages of nonclinical development and their risk of failure is high.

In addition, all of our product candidates are currently in clinical development or in varying stages of nonclinical development and their risk of failure is high.

The data supporting our drug discovery and nonclinical and clinical development programs are derived from either laboratory, nonclinical studies, Phase 1 and Phase 2 clinical data.

With respect to our ongoing Phase 2 trials, as we begin transitioning patients off of therapy in Study 211 later this year, we may not observe sustained virologic response and such patients may need to resume NrtI therapy.

With respect to our ongoing Phase 2 trials, as we transition patients off of therapy in Study 211, we may not observe sustained virologic response and such patients may need to resume NrtI therapy.

In addition, there is no guarantee that Phase 3 clinical studies, if and when completed, will result in data consistent with that observed in prior studies.

1 unchanged sentence

The scientific evidence to support the feasibility of our product candidates and therapeutic approaches is limited, and many companies, some with more resources than we have, are and may be developing competitive product candidates.

For these and other reasons, our drug discovery and development may not be successful, and we may not generate viable products or revenue.

For these and other reasons, our drug discovery and development may not be successful, and we may be unable to continue clinical development of our programs and may not generate product approvals or product revenue.

If any of those occur, it will have a material adverse impact on our business, results of operations, financial condition and share price.

The spread of the coronavirus and resulting COVID-19 pandemic may materially and adversely affect our business.

The recent outbreak of COVID-19 began in December 2019 and has since spread globally, reaching pandemic status.

The continued spread of the coronavirus that causes COVID-19 could adversely impact our research and development through delay, modification or suspension of our clinical and/or nonclinical studies.

The COVID-19 outbreak began in December 2019 and has since spread globally, reaching pandemic status.

The continued spread of COVID-19 could adversely impact our research and development through delay, modification or suspension of our clinical and/or nonclinical studies.

Other clinical-stage biotechnology companies, like us, have already had their clinical and nonclinical studies affected by the COVID-19 pandemic.

The COVID-19 pandemic has and may continue to (i) impact patient enrollment, retention or compliance with clinical study protocols ;

(ii) require modifications to or deviations from study protocols and procedures, such as the use of telehealth and home health visits instead of on-site monitoring and treatment, that could increase the cost of conducting clinical studies;

(iii) disrupt or suspend the business operations of our third-party contract research organizations (CROs) , manufacturers of our drug candidates and the clinical sites conducting our clinical studies;

(iv) delay regulatory meetings and filings with regulatory agencies in the United States and other countries;

and (v) disrupt supply chains and cause delays of shipments of critical reagents, personal protective equipment and disinfectants, each of which are necessary for our laboratories and the laboratories of our CROs to maintain normal workflows.

For example, in our Phase 1 trial of H3733 in New Zealand, which we initiated in the first quarter of this year , patient enrollment has been delayed as a result of the New Zealand government’s mandat ed shutdown of all clinical studies other than those for clinical candidates for COVID-19.

We cannot provide any assurances about when any of our clinical studies that have delayed enrollment as a result of COVID-19 might reinitiate enrollment or that their enrollment will be reinitiated at all.

The COVID-19 pandemic has and may continue to (1) impact patient enrollment, retention or compliance with clinical study protocols;

(2) require modifications to or deviations from study protocols and procedures, such as the use of telehealth and home health visits instead of on-site monitoring and treatment, that could increase the cost of conducting clinical studies;

(3) disrupt or suspend the business operations of our third-party contract research organizations (CROs), manufacturers of our drug candidates and the clinical sites conducting our clinical studies;

(4) delay regulatory meetings and filings with regulatory agencies in the United States and other countries;

and (5) disrupt supply chains and cause delays of shipments of critical reagents, personal protective equipment and disinfectants, each of which are necessary for our laboratories and the laboratories of our CROs to maintain normal workflows.

We cannot provide any assurances about when any of our clinical studies that have delayed or may in the future delay enrollment as a result of COVID-19 might reinitiate enrollment or that their enrollment will be reinitiated at all.

For those clinical studies that are currently ongoing, we cannot provide any assurances that the measures that we have taken to date, or may in the future take, will continue to allow us to mitigate and manage results of negative impacts to site initiation, participant recruitment and enrollment, participant randomization and dosing, distribution of clinical study materials, study monitoring or data analysis.

Even if we are able to collect clinical data while the outbreak is ongoing, COVID-19 may negatively affect the quality, completeness, integrity, interpretability and cost of such clinical study data.

Even if we are able to collect clinical data while the outbreak is ongoing, COVID-19 may negatively affect the quality, completeness, integrity, interpretability and cost of obtaining such clinical study data.

Any of these effects could adversely affect our ability to advance our product candidates in the manner and on the timelines presently planned, obtain regulatory approval for and to commercialize our product candidates, increase our operating expenses and have a material adverse effect on our business, results of operations, financial results and our share price.

As a result of the COVID-19 pandemic, governments around the world continue implementing significant measures to control the spread of the virus, including quarantines, travel restrictions, stay-at-home orders and business shutdowns.

We have taken precautionary measures intended to help minimize the risk of the virus to our employees, including temporarily requiring all employees who are able to do so to work remotely and suspending all non-essential travel worldwide for our employees.

As a result of the COVID-19 pandemic, governments around the world implemented significant measures to control the spread of the virus, including quarantines, travel restrictions, stay-at-home orders and business shutdowns.

While governments are in various stages of relaxing these measures, we continue to take precautionary measures intended to help minimize the risk of the virus to our employees, including temporarily requiring all employees who are able to do so to work remotely and suspending all non-essential travel worldwide for our employees.

These measures could negatively affect our business.

12 unchanged sentences

We have not submitted a biologic license application (BLA) or new drug application (NDA) to the FDA or comparable applications to other regulatory authorities and do not expect to be in a position to do so in the foreseeable future.

All of our product candidates are currently in early clinical development or in varying stages of nonclinical development.

It may be years before the larger, pivotal trials necessary to support regulatory approval of our product candidates are initiated, if ever.

All of our product candidates are currently in clinical development or in varying stages of nonclinical development.

It may be years before the larger, pivotal trials necessary to support regulatory approval of our product candidates are completed, if ever.

The clinical studies of our product candidates are, and the manufacturing and marketing of our product candidates will be, subject to extensive and rigorous review and regulation by numerous government authorities in the United States and in other countries where we intend to test and, if approved, market any product candidate.

9 unchanged sentences

If we are unable to complete clinical development of our HBV or microbiome therapies, or any other product candidates that we may identify, we will be unable to generate revenue from the sale of products or build a sustainable or profitable business.

Nonclinical studies may not be representative of disease behavior in clinical studies.

The outcomes of nonclinical testing and clinical studies are uncertain, and results of nonclinical studies and earlier clinical studies may not be predictive of future clinical study results.

The results of nonclinical studies may not be representative of disease behavior in a clinical setting and thus may not be predictive of the outcomes of our clinical studies.

In addition, the results of nonclinical studies and early clinical studies of product candidates may not be predictive of the results of later-stage clinical studies, and the results of any study or trial for any of our product candidates may not be as favorable as the results for any prior studies or trials, if at all.

Nonclinical studies and clinical testing are expensive, can take many years to complete and their outcomes are highly uncertain.

Failure can occur at any time during the nonclinical study and clinical study processes due to inadequate performance of a drug candidate or inadequate adherence by patients or investigators to clinical study protocols.

Further, clinical studies might not provide statistically significant data supporting a product candidate’s

safety and effectiveness to obtain the requisite regulatory approvals.

In addition, there is a high failure rate for drugs and biologics proceeding through clinical studies.

Our failure to replicate earlier positive results in later-stage clinical studies or otherwise demonstrate the required characteristics to support marketing approval for any of our product candidates would substantially harm our business, prospects, financial condition and results of operations.

Top-line or initial data may not accurately reflect the complete results of a particular study or trial.

We may publicly disclose top-line or initial data from time to time, which is based on a preliminary analysis of then-available efficacy, tolerability, PK and safety data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial.

We also make assumptions, estimates, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to evaluate fully and carefully all data.

As a result, the top-line or initial results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results once additional data have been received and fully evaluated.

Top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the initial or preliminary data we previously published.

As a result, top-line and initial data should be viewed with caution until the final data are available.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular drug candidate or biotherapeutic and our company in general.

In addition, the information we may publicly disclose regarding a particular nonclinical or clinical study is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, drug candidate or our business.

If the top-line or initial data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed or delayed, which could harm our business, financial condition, operating results or prospects.

Nonclinical and clinical testing required for our product candidates is expensive and time-consuming and may result in delays or may fail to demonstrate safety and efficacy for desired indications.

4 unchanged sentences

The length of time might vary substantially according to the type, complexity, novelty, and intended use of the product candidate, and often can be several years or more per trial.

Delays associated with product candidates for which we are directly conducting nonclinical studies or clinical studies might cause us to incur additional operating expenses.

Delays associated with product candidates for which we are directly conducting nonclinical studies or clinical studies might

cause us to incur additional operating expenses.

The commencement and rate of completion of clinical studies might be delayed by many factors, including, for example:

3 unchanged sentences

the emergence of unforeseen safety issues;

insufficient quantities of qualified materials under cGMP for use in clinical studies due to manufacturing challenges or delays;

insufficient quantities of qualified materials under cGMP for use in clinical studies due to manufacturing challenges, delays or due to interruption in the supply chain due to shipment delays or custom holds;

slower than expected rates of patient recruitment;

16 unchanged sentences

Any change in, or termination of, our clinical studies could materially harm our business, financial condition, and results of operations.

Top-line or initial data may not accurately reflect the complete results of a particular study or trial.

We also make assumptions, estimates, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to evaluate fully and carefully all data.

Top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the initial or preliminary data we previously published.

As a result, top-line and initial data should be viewed with caution until the final data are available.

We will need to either establish our own clinical and commercial manufacturing capabilities or rely on third parties to formulate and manufacture our product candidates.

We rely on third parties to manufacture products that we study in combination with our product candidates.

Our use of third parties to manufacture these materials may increase the risk that we will not have sufficient quantities of our product candidates or other products, or necessary quantities of such materials on time or at an acceptable cost.

We currently rely on third-party manufacturers to supply the quantities of H0731, H2158 and H3733 used in our clinical and nonclinical studies and the drug substance for our Microbiome program.

We currently manufacture our microbiome drug product for use in our planned nonclinical studies and early-stage clinical studies;

however, we may require third-party manufacturers for subsequent clinical studies or other microbiome drug products.

In addition, if any product candidate we might develop or acquire in the future receives FDA or other regulatory approval, we will need to either manufacture commercial quantities of the product on our own or rely on one or more third-party contractors to manufacture our products.

The establishment of internal manufacturing capabilities is difficult and costly, and we may not be successful in doing so.

If, for any reason, we are unable to establish our own manufacturing capabilities and we are unable to rely on any third-party sources we have identified to manufacture our product candidates, either for clinical studies or, at some future date, for commercial quantities, then we would need to identify and contract with additional or replacement third-party manufacturers to manufacture compounds, drug substance and drug products for nonclinical, clinical and commercial purposes.

We might not be successful in identifying additional or replacement third-party manufacturers, or in negotiating acceptable terms with any that we do identify.

If we are unable to establish and maintain manufacturing capacity either on our own or through third parties, the development and sales of our products and our financial performance will be materially and adversely affected.

In addition, before we or any of our collaborators can begin to commercially manufacture our product candidates, each manufacturing facility and process is subject to regulatory review.

Manufacturing of drugs for clinical and commercial purposes must comply with FDA and applicable non-U.S.

regulatory requirements, including cGMPs.

The cGMP requirements govern compliance and documentation policies and procedures.

Complying with FDA and non-U.S.

regulatory requirements will require that we expend time, money, and effort in production, recordkeeping, and compliance to assure that the product meets applicable specifications and other requirements.

Any manufacturing facility must also pass a pre-approval inspection prior to regulatory approval.

Failure to pass a pre-approval inspection might significantly delay regulatory approval of our product candidates.

If we or any of our future collaborators fails to comply with these requirements with respect to the manufacture of any of our product candidates, regulatory action could limit the jurisdictions in which we are permitted to sell our products, if approved.

As a result, our business, financial condition, and results of operations might be materially harmed.

We are exposed to the following risks with respect to the manufacture of our product candidates:

If we are unable to establish our own manufacturing capabilities, we will need to identify manufacturers for commercial supply on acceptable terms, which we may not be able to do because the number of potential manufacturers is limited, and the FDA must evaluate any new or replacement contractor.

This evaluation would generally require compliance inspections.

In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for, production of our products after receipt of regulatory approval, if any.

We or any third-party manufacturers with whom we contract might be unable to formulate and manufacture our product candidates in the volume and of the quality required to meet our clinical and, if approved, commercial needs in a timely manner.

Any third-party manufacturers with whom we contract might not perform as agreed or might not remain in the contract manufacturing business for the time required to supply our clinical studies or to produce, store and successfully distribute our products.

One or more of any third-party manufacturers with whom we contract could be foreign, which increases the risk of shipping delays and adds the risk of import restrictions.

Drug manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with cGMP and other government regulations and corresponding foreign requirements.

Any internal manufacturing facilities we establish may fail to comply, and we would not have complete control over any third-party manufacturers’ compliance, with these regulations and requirements.

We may be required to obtain additional intellectual property rights from third parties in order to manufacture our product candidates, and if any third-party manufacturer makes improvements in the manufacturing process for our product candidates, we might not own, or might have to share, the intellectual property rights to the innovation with our licensors.

We may be required to share our trade secrets and know-how with third parties, thereby risking the misappropriation or disclosure of our intellectual property by or to third parties.

If we contract with third-party manufacturers, we might compete with other companies for access to these manufacturers’ facilities and might be subject to manufacturing delays if the manufacturers give other clients higher priority than us.

Each of these risks could delay our development efforts, nonclinical studies and clinical studies or the approval, if any, of our product candidates by the FDA or applicable non-U.S.

regulatory authorities or the commercialization of our product candidates and could result in higher costs or deprive us of potential product revenues.

As a result, our business, financial condition, and results of operations might be materially harmed.

Any product candidates that we may discover and develop may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

14 unchanged sentences

Any of these events could prevent us or any collaborators from achieving or maintaining market acceptance of our product candidates or could substantially increase commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenue from the sale of our product candidates.

Nonclinical studies may not be representative of disease behavior in clinical studies.

The outcomes of nonclinical testing and clinical studies are uncertain, and results of nonclinical studies and earlier clinical studies may not be predictive of future clinical study results.

The results of nonclinical studies may not be representative of disease behavior in a clinical setting and thus may not be predictive of the outcomes of our clinical studies.

Nonclinical studies and clinical testing are expensive, can take many years to complete and their outcomes are highly uncertain.

Further, clinical studies might not provide statistically significant data supporting a product candidate’s safety and effectiveness to obtain the requisite regulatory approvals.

In addition, there is a high failure rate for drugs and biologics proceeding through clinical studies.

If we are unable to hire and retain additional qualified personnel, our ability to grow our business might be harmed.

As of March 31, 2020, we had 120 employees and contracts with a number of temporary contractors, consultants and CROs.

As of June 30, 2020, we had 139 employees and contracts with a number of temporary contractors, consultants and CROs.

We will need to hire or contract with additional qualified personnel with expertise in clinical research and testing, formulation and manufacturing and sales and marketing to commercialize our HBV drug candidates and our microbiome biotherapeutic candidates or any other product candidate we may seek to develop.

23 unchanged sentences

maintaining patent protection for our products, methods, processes and technologies and/or obtaining regulatory exclusivity;

establishing manufacturing, sales, and marketing arrangements internally and/or with third parties for any approved products;

establishing manufacturing, distribution, sales, and marketing arrangements internally and/or with third parties for any approved products;

raising sufficient funds to finance our activities, if and when needed.

25 unchanged sentences

To our knowledge, no companies have received regulatory approval for, or manufactured on a commercial scale, any microbiome-based therapeutics.

Our microbiome therapy candidates are in nonclinical and early clinical development, and our GEMICEL® dual-targeted release capsule formulation is novel and has not yet shown to successfully deliver live bacteria in patients.

Our microbiome therapy candidates are in nonclinical and early clinical development, and our GEMICEL® dual-targeted release capsule formulation is novel and has not yet been shown to successfully deliver live bacteria in patients.

The ability to deliver bacteria effectively and reliably to the GI tract is unproven, and, even if it can be proven, it may be difficult or impossible to provide the treatment economically.

5 unchanged sentences

The FDA has broad discretion whether or not to grant this designation, and even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it.

In 2018, the FDA granted Fast Track designation to H0731 for the treatment of patients with chronic HBV infection.

In 2018 and July 2020, the FDA granted Fast Track designation to H0731 and H2158, respectively, for the treatment of patients with chronic HBV infection.

We may seek Fast Track designation for other product candidates, but there is no assurance that it will be granted.

16 unchanged sentences

If that happens, we may need additional financing to continue the development of our HBV and microbiome product candidates, which we might seek and receive from the public financial markets, third-party commercial partners, private placements, debt financings or other sources.

There is no assurance that we will be able to generate sufficient revenue from our Collaboration Agreement with Allergan or that we will be successful in raising any necessary additional capital on terms that are acceptable to us, or at all.

If such events or other unforeseen circumstances occurred and we were unable to generate sufficient revenue or raise capital, we could be forced to delay, scale back or discontinue product development, sacrifice attractive business opportunities, cease operations entirely and sell or otherwise transfer all or substantially all of our remaining assets.

There is no assurance that we will be able to generate sufficient revenue from our collaborations or that we will be successful in raising any necessary additional capital on terms that are acceptable to us, or at all.

For example, AbbVie recently provided notice of termination of the Allergan Collaboration Agreement, and we are currently exploring strategic alternatives to continue development of our Microbiome programs following the return of the rights licensed under the Allergan Collaboration Agreement.

If other events such as this or other unforeseen circumstances occurred and we were unable to generate sufficient revenue or raise capital, we could be forced to delay, scale back or discontinue product development, sacrifice attractive business opportunities, cease operations entirely and sell or otherwise transfer all or substantially all of our remaining assets.

Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

6 unchanged sentences

If another prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions or our ability to raise capital through the public financial markets, either of which could have a material adverse effect on our business.

Our Microbiome program is substantially dependent on our Collaboration Agreement with Allergan, which may be terminated or may not be successful due to a number of factors, which could have a material adverse effect on our business and operating results.

In January 2017, we entered into the Collaboration Agreement for the development and commercialization of select microbiome gastrointestinal programs in ulcerative colitis, Crohn’s disease and irritable bowel syndrome.

Our collaboration with Allergan may be terminated, or may not be successful, due to a number of factors.

In particular, Allergan may terminate the Collaboration Agreement at any time upon either 90 days’ (prior to the initiation of the first POC trial of a licensed product) or 120 days’ (after the initiation of the first POC trial of a licensed product), as applicable, advance written notice to us.

The Collaboration Agreement also contains customary provisions for termination by either party, including in the event of breach of the Collaboration Agreement, subject to cure.

In addition, if we are unable to identify product candidates for the licensed indications or we are unable to protect our products by obtaining and defending patents, the collaboration could fail.

If the collaboration is unsuccessful for these or other reasons, or is otherwise terminated for any reason, we may not receive all or any of the research program funding, milestone payments or royalties under the agreement.

Any of the foregoing could result in a material adverse effect on our business, results of operations and prospects and may cause our stock price to decline.

In June 2019, Allergan and AbbVie Inc.

(AbbVie) announced that they had entered into a definitive transaction agreement under which AbbVie will acquire Allergan.

Assuming the conditions to close are satisfied, the acquisition was originally expected to close in early 2020.

AbbVie and Allergan recently received approvals from both the Federal Trade Commission and the High Court of Ireland, and the acquisition is expected to close in May 2020.

We do not know what, if any, impact this transaction will have on the Collaboration Agreement when it closes.

We are dependent on a license relationship for each of our HBV Cure program and our Microbiome program.

We are dependent on an in-license relationship for each of our HBV Cure program and our Microbiome program.

Our license agreement with IURTC from whom we have licensed H0731 and certain other HBV therapies, requires us to make milestone payments based upon the successful accomplishment of clinical and regulatory milestones related to H0731 and certain other HBV therapies and royalty payments and diligence fees.

7 unchanged sentences

However, there can be no assurance that we will successfully establish or maintain these collaborations.

In addition, should a collaboration be terminated, replacement collaborators might not be available on attractive terms, or at all.

For example, following its acquisition of Allergan, AbbVie made a strategic portfolio decision to terminate the Allergan Collaboration Agreement.

The termination will be effective on October 10, 2020.

We are currently exploring strategic alternatives to continue development of our Microbiome programs following the return of the rights licensed under the Allergan Collaboration Agreement.

If a collaboration, such as the one with AbbVie, is terminated, replacement collaborators might not be available on attractive terms, or at all.

The activities of any collaborator will not be within our control and might not be within our power to influence.

There can be no assurance that any collaborator will perform its obligations to our satisfaction or at all, that we will derive any revenue or profits from these collaborations, or that any collaborator will not compete with us.

If any collaboration is not successful, we might require substantially greater capital to undertake development and marketing of our proposed products and might not be able to develop and market these

products effectively, if at all.

In addition, a lack of development and marketing collaborations might lead to significant delays in introducing proposed products into certain markets and/or reduced sales of proposed products in such markets.

35 unchanged sentences

As a result, our results of operations and business prospects would be harmed, our costs could increase and our ability to generate revenues from the sale of products could be delayed.