What changed in this filing

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Item 1A. Risk Factors

2020-11-05 compared with 2020-08-05 · 37 added, 31 removed, 787 unchanged (8% of the section changed)

14 unchanged sentences

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 transition patients off of therapy in Study 211, we may not observe sustained virologic response and such patients may need to resume NrtI therapy.

With respect to our ongoing Phase 2 trials, with patients transitioned 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.

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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 (1) impact patient enrollment, retention or compliance with clinical study protocols;

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;

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(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.

and (5) disrupt supply chains and cause delays of shipments of critical reagents, PPE 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.

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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.

While governments have been in various stages of relaxing these measures, recent surges in COVID-19 cases, including in Europe and the United States, have prompted some governments to reimplement these restrictions.

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 business travel worldwide for our employees.

These measures could negatively affect our business.

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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:

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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 rely on third-party manufacturers to supply the quantities of VBR, 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;

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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.

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.

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regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies;

regulatory authorities may require a medication guide outlining the risks of such side effects for distribution to patients, or that we implement a Risk Evaluation Mitigation Strategy (REMS) plan to ensure that the benefits of the product outweigh its risks;

regulatory authorities may require a medication guide outlining the risks of such side effects for distribution to patients, or that we implement a Risk Evaluation Mitigation Strategy (REMS) to ensure that the benefits of the product outweigh its risks;

we may be required to change the way a product is administered, conduct additional clinical studies or change the labeling of a product;

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

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

As of September 30, 2020, we had 140 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.

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We anticipate that our expenses will continue to be substantial in the foreseeable future as we:

advance H0731, H2158 and H3733, our first three HBV product candidates, through clinical development;

advance VBR, H2158 and H3733, our first three HBV product candidates, through clinical development;

advance M201, our first candidate from our Microbiome program, through Phase 1b clinical development;

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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.

For example, with the termination of the Allergan Agreement and return of the rights licensed thereunder, we are currently exploring strategic alternatives to continue development of our Microbiome programs.

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.

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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.

If we breach any of our obligations under our license agreement, we could lose our rights to H0731.

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

If we breach any of our obligations under our license agreement, we could lose our rights to VBR.

Our license with Therabiome, from whom we have licensed a delivery platform for our Microbiome program, also requires us to pay regulatory and clinical milestones as well as royalty payments to Therabiome.

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

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.

For example, following its acquisition of Allergan, AbbVie terminated the Allergan Agreement effective 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 Agreement.

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

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Our internal information technology systems and infrastructure, and those of our current and any future collaborators, contractors and consultants and other third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyberattacks or cyber intrusions over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization.

The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments and cyberterrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

sophistication of attempted attacks and intrusions from around the world have increased.

In addition, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information or other intellectual property.

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These third parties are not our employees, and except for remedies available to us under our agreements with such third parties, we cannot control whether or not they devote sufficient time and resources to our clinical and nonclinical programs.

If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our research, nonclinical studies or clinical studies may be extended, delayed or terminated and we may not be able to obtain, or may be delayed in obtaining, regulatory approvals for our product candidates.

requirements or for other reasons, our research, nonclinical studies or clinical studies may be extended, delayed or terminated and we may not be able to obtain, or may be delayed in obtaining, regulatory approvals for our product candidates.

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.

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Once a product candidate is approved, numerous post-approval requirements apply.

Among other things, we and our collaborators will be subject to requirements regarding testing, manufacturing, quality control, clinical studies, post-marketing studies, labeling, advertising, promotion, distribution, import and export, governmental pricing, price reporting and rebate requirements.

Among other things, we and our collaborators will be subject to requirements regarding testing, manufacturing, quality control, clinical studies, post-

marketing studies, labeling, advertising, promotion, distribution, import and export, governmental pricing, price reporting and rebate requirements.

The holder of an approved NDA or BLA is subject to ongoing FDA oversight, monitoring and reporting obligations, including obligations to monitor and report adverse events and instances of the failure of a product to meet the specifications in the NDA or BLA.

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Physicians may be reluctant to take their patients off their current medications and switch their treatment regimen.

Further, patients often acclimate to the treatment regime that they are currently taking and do not want to switch unless their physicians recommend switching products or they are required to switch due to lack of coverage and adequate reimbursement.

Further, patients often acclimate to the treatment regime that they are currently taking and do not want to switch unless their physicians recommend

switching products or they are required to switch due to lack of coverage and adequate reimbursement.

In addition, even if we are able to demonstrate our product candidates’ safety and efficacy to the FDA and other regulators, safety or efficacy concerns in the medical community may hinder market acceptance.

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Reimbursement rates may vary according to the use of the medicine and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost medicines and may be incorporated into existing payments for other services.

Net prices for medicines may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of medicines from countries where they may be sold at lower prices than in the United States.

United States.

Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies.

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(2) allow the importation of certain drugs from other countries through individual waivers, permitting the re-importation of insulin products and prioritizing finalization of FDA’s December 2019 proposed rule to permit the importation of drugs from Canada;

(3) ensure that payment by the Medicare program for certain Medicare Part B drugs is not higher than the payment by other comparable countries (depending on whether pharmaceutical manufacturers agree to other measures);

(3) ensure that payment by the Medicare program for certain Medicare Part B drugs is not higher than the payment by other comparable countries (depending on whether pharmaceutical

manufacturers agree to other measures);

and (4) allow certain low-income individuals receiving insulin and epinephrine purchased by a Federally Qualified Health Center (FQHC) as part of the 340B drug program to purchase those drugs at the discounted price paid by the FQHC.

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While there is currently an exception for protected health information that is subject to HIPAA and clinical trial regulations, as currently written, the CCPA may impact our business activities.

The California Attorney General has proposed final proposed regulations, which have not been approved to date, that may further impact our business activities if they are adopted.

The uncertainty surrounding the implementation of CCPA exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data and protected health information.

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If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.

The Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act) requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.

We are continuing to refine our disclosure controls and other procedures that are designed to ensure that the information that we are required to disclose in the reports that we will file with the SEC is properly recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

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Our inability to obtain sufficient product liability/clinical study insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of pharmaceutical products we develop.

We cannot predict all of the possible harms or side effects that might result and, therefore, the amount of insurance coverage we maintain

might not be adequate to cover all liabilities we might incur.

We cannot predict all of the possible harms or side effects that might result and, therefore, the amount of insurance coverage we maintain might not be adequate to cover all liabilities we might incur.

We intend to expand our insurance coverage to include product liability insurance covering the sale of commercial products if we obtain marketing approval for our drug candidates in development, but we might be unable to obtain commercially reasonable product liability insurance for any products approved for marketing.

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Misconduct could also involve the improper use or misrepresentation of information obtained in the course of clinical studies, creating fraudulent data in our nonclinical studies or clinical studies or illegal misappropriation of product materials, which could result in regulatory sanctions, delays in clinical studies, or serious harm to our reputation.

We have adopted a code of conduct for our directors, officers and employees (the Code of Conduct), but it is not always possible to identify and deter employee misconduct.

We have adopted a code of conduct for our directors, officers and employees (the Code of Conduct), but

it is not always possible to identify and deter employee misconduct.

The precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.

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These license agreements impose various diligence, milestone payment, royalty and other obligations on us.

If we fail to comply with our obligations under our license agreements, we could lose some or all of our rights to develop, market and sell products covered by these licenses, and our ability to form collaborations or partnerships may be impaired.

If we fail to comply with our obligations under our license agreements, we could lose some or all of our rights to develop, market and

sell products covered by these licenses, and our ability to form collaborations or partnerships may be impaired.

In addition, disputes may arise under our license agreements with third parties, which could prevent or impair our ability to maintain our current licensing arrangements on acceptable terms and to develop and commercialize the affected product candidates.

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(3) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets and (4) impairing our ability to provide equity incentives to our employees.

We may be subject to securities litigation, which is expensive and could divert management attention.

We may be subject to securities litigation, which is expensive and could divert management’s attention.

The market price of our common stock may be volatile, and in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation.

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As a public company, we face increased legal, accounting, administrative and other costs and expenses not faced by private companies.

We have incurred and will continue to incur significant additional legal, accounting and other expenses to which we were not subject to as a private company, including expenses related to our efforts in complying with the requirements of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and other public company disclosure and corporate governance requirements and responding to requests of government regulators.

We have incurred and will continue to incur significant additional legal, accounting and other expenses to which we were not subject to as a private company, including expenses related to our efforts in complying with the requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and other public company disclosure and corporate governance requirements and responding to requests of government regulators.

We are subject to the reporting requirements of the Exchange Act, which requires that we file annual, quarterly and current reports with respect to our business and financial condition, and the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act, and the listing standards of the Nasdaq Global Select Market, each of which imposes additional reporting and other obligations on public companies.

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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-Q

Item 1A. Risk Factors