Item 1. Business
Item 1. BUSINESS
Corporate Information
We were incorporated in the state of Delaware on January 3, 2011. Our wholly owned subsidiaries as of December 31, 2025 include HealthCare Pharmaceuticals Pty Ltd. (“HCP Australia”), Leap Securities Corp., Flame Biosciences LLC, and Leap Therapeutics, Inc. (“Leap”).
Prior to October 2025, we devoted substantially all of our resources to development efforts related to biomarker-targeted antibody therapies designed to treat patients with cancer. Our clinical stage program is sirexatamab (DKN-01), a monoclonal antibody that inhibits Dickkopf-related protein 1, or DKK1, for the treatment of colorectal cancer patients. We also have a preclinical antibody program, FL-501, that is designed to treat cachexia-related indications.
In October 2025, we announced a $58.88 million private placement, led by Winklevoss Capital, and the intent to initiate a digital asset treasury strategy. Immediately following the financing, we initiated a strategy to deploy a portion of our capital raised that is not required to provide working capital for our ongoing operations to accumulate digital assets, focused on Zcash. Zcash is a protocol and blockchain network of connected devices all over the world, working together to validate transactions and maintain the Zcash ledger. ZEC is the monetary unit, or coin, of Zcash. Zcash allows for transactional privacy, providing users with options for fully shielded transactions in which the sender, recipient, and amount are encrypted.
On November 12, 2025, we changed our name from “Leap Therapeutics, Inc.” to “Cypherpunk Technologies Inc.” and changed our trading symbol from “LPTX” to “CYPH”. We were renamed to Cypherpunk to reflect the strategic focus on acquiring ZEC, participating in the development of Zcash, and the values of privacy and liberty. Our ongoing biotechnology research and development operations are conducted under a wholly-owned subsidiary named “Leap Therapeutics, Inc.”.
We are a privacy technology company implementing a digital asset treasury strategy anchored by Zcash and, through our subsidiary Leap, are developing novel therapies for patients with cancer.
Overview of Cypherpunk
Cypherpunk is a privacy technology company. Our mission is to advance technologies that guarantee privacy for all humans on the internet. Our vision is a future where technology defends self-sovereignty and secures human freedom.
We are not a typical digital asset treasury company. While we hold digital assets as part of our strategy, our core business is identifying, developing, investing in, and, where appropriate, acquiring or building privacy-enhancing technologies. Our initial and primary focus is the Zcash ecosystem, which we believe represents the most mature implementation of private digital money. Over time, we intend to assemble a portfolio of complementary privacy technologies that, together, are designed to secure privacy for individuals across the digital economy.
We believe that privacy is a precondition for the meaningful exercise of individual freedoms, including freedom of speech, thought, and association. As digital systems expand and personal data generation accelerates, we believe demand for privacy-preserving infrastructure will grow and that the companies and protocols best positioned to provide it will capture significant long-term value.
There are public companies focused on delivery, social networking, search, payments, and entertainment, among other sectors. To our knowledge, there is no publicly traded company whose core mission is the advancement of privacy technology. We intend to fill that gap. Our strategy is to combine disciplined capital allocation with active investment in privacy infrastructure, positioning the Company to benefit from what we believe is a structural increase in global demand for privacy-preserving technologies as digital surveillance capabilities expand and the volume of personal data generated continues to grow.
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Privacy Strategy
We are focused on identifying, developing, and investing in privacy-enhancing technologies that address the growing global demand for data protection, digital autonomy, and secure communications. We believe that privacy is an increasingly vital component of the digital economy and that technologies enabling responsible data protection, user control, and cryptographic security will play a critical role in future digital infrastructure. We intend to execute a broad corporate strategy designed to make Cypherpunk a globally recognized leader in the privacy field.
We believe that demand for privacy-enhancing technologies will increase as digital systems expand and data generation accelerates. Our objective is to position Cypherpunk as a disciplined capital allocator and strategic partner in this sector, supporting innovation while maintaining a focus on sustainable value creation and risk management.
Zcash Overview
Zcash is a cryptographic digital asset that operates on a decentralized, open-source blockchain network known as the Zcash Network. The network consists of a distributed group of independent computers that collectively maintain and validate a shared transaction ledger. No central authority owns, controls, or operates the Zcash Network; instead, its infrastructure and rules are maintained through consensus among network participants.
Transactions on the Zcash Network are recorded on a publicly accessible blockchain. ZEC functions as the native unit of value on the network and may be used to transfer value between users, pay transaction fees, or facilitate exchange for fiat currencies or other digital assets through trading platforms or private transactions.
Zcash was launched in 2016 using a modified version of the Bitcoin codebase, with a fixed maximum supply of 21 million coins. Its distinguishing technical feature is the use of zero-knowledge proofs (zk-SNARKs), which allow transactions to be validated by the network without revealing the sender, receiver, or transaction amount. This cryptographic approach has been adopted or referenced by other blockchain projects, including Ethereum and Solana. The Zcash protocol has undergone several upgrades since launch, including the introduction of Halo 2, a recursive proof system that eliminates the need for trusted setup ceremonies. Since inception, Zcash has processed tens of millions of transactions and has generally ranked among the larger privacy-focused digital assets by market capitalization.
Privacy-Preserving Transaction Features
Zcash was developed to advance blockchain technology. A core feature of the Zcash Network is optional privacy: the protocol supports both transparent transfers, which disclose transaction data in a manner similar to many other blockchains like Bitcoin, and privacy-preserving transfers that allow users to selectively disclose information associated with a transaction.
Privacy on Zcash is enabled through zero-knowledge cryptography which can conceal transaction amounts and counterparties while still permitting network validation. Transactions using these privacy features are commonly referred to as “shielded” transactions. As of December 31, 2025 approximately 31% of all ZEC was shielded. Since the launch of the Zcash Network in 2016, the amount of shielded ZEC has been consistently growing suggestive of utility and adoption of Zcash’s advantage to other blockchain networks without enhanced privacy, such as Bitcoin.
Zcash History, Network Development, and Governance
Zcash was launched on October 28, 2016 by scientists, advisers, and engineers affiliated with Electric Coin Company (“ECC”) (formerly the Zcash Company) as a new blockchain network based on the Bitcoin codebase but designed with enhanced privacy functionality. Rather than created through a true network fork, Zcash was independently launched using a modified version of Bitcoin’s underlying software architecture. As a result, ownership of bitcoin did not confer ownership of ZEC at the time of launch.
From its launch through early 2026, ECC played a significant role in supporting protocol research and development, including advancing scalability and usability improvements and contributing to upgrades that became part of the primary Zcash client implementation. This development model was broadly comparable to the role played by core developer communities in other open-source blockchain ecosystems, although ultimate adoption of changes depended on the decentralized network.
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Ongoing development of the Zcash protocol is supported by a combination of open-source contributors and organizations that propose, review, and implement software updates. Changes to the protocol are adopted only if accepted by the broader network, and participants may choose whether to implement proposed upgrades. The protocol has been upgraded over time to improve the usability, efficiency, and security of shielded transactions.
In January 2026, all employees of ECC resigned from their positions following a governance dispute with the board of Bootstrap, the nonprofit organization that had overseen ECC. The former ECC team, led by former CEO Josh Swihart, subsequently announced the formation of a new company, Zcash Open Development Lab (ZODL) to continue Zcash protocol development. In connection with this transition, the Bootstrap board authorized the transfer of the Zashi wallet technology and related intellectual property to the new entity, and announced an orderly wind-down of ECC. Certain digital assets, including the Z.cash domain and the official Zcash social media accounts, were transferred to the Zcash Foundation.
In February 2026, ZODL released an update to the Zashi wallet and renamed the wallet Zodl. ZODL aims to make Zcash easier to use, with continued development of the wallet as well as supporting Zcash at the protocol level. We believe that Zodl represents critical privacy infrastructure and will support the adoption of Zcash and demand for ZEC.
On March 9, 2026, ZODL announced a financing of over $25 million with investments from a16z, Winklevoss Capital, Coinbase, Paradigm, Chapter One, David Friedberg, Balaji Srinivasan, and others. We invested $5 million in ZODL as part of our commitment to the Zcash ecosystem and the team with the leading Zcash wallet and development expertise.
Zcash Decentralization and Mining
Zcash functions on a distributed network architecture that allows participants to transact directly without reliance on centralized authorization, clearing entities, or custodial intermediaries. The issuance of ZEC and the validation of transactions are governed by protocol-defined rules embedded in the network software rather than by discretionary actions of any organization. No single entity controls or operates the Zcash Network. Prices for ZEC are not fixed or managed by any party and instead emerge from trading activity across digital asset marketplaces and from negotiated transactions between counterparties.
Transaction integrity on the Zcash Network is maintained through a computational consensus process in which independent participants, known as miners, compete to confirm transfers and record them in sequential data structures, known as blocks. These blocks collectively form the Zcash blockchain, which serves as a continuously updated record of confirmed network activity.
To generate a block, miners compete by performing computational work defined by the protocol, selecting unconfirmed transactions and proposing a valid block for network acceptance. Transaction data is propagated across the network, evaluated under consensus rules, and permanently recorded once accepted. Only one miner succeeds in adding each block, and the protocol dynamically adjusts mining difficulty to maintain consistent block timing as total network hash power fluctuates. Miners are economically incentivized through protocol-defined rewards, consisting of newly issued ZEC and transaction fees associated with the transactions included in a block. New blocks are produced at an average interval of approximately 1.25 minutes, with block rewards allocated probabilistically based on the relative computing power contributed by individual miners or mining pools.
Once validated by network nodes, the block is appended to the blockchain, and the associated reward is issued to the successful miner. This process governs transaction finality and represents the sole mechanism through which new ZEC is introduced into circulation.
ZEC Transactions
The Zcash Network accommodates both standard transactions that disclose details on the blockchain and privacy-focused transactions that limit public visibility of transaction information. Users who interact directly with the network typically do so through a “wallet”, which generates cryptographic credentials and enables the sending and receipt of ZEC. Each wallet is controlled by private keys, and possession of the relevant private key is required to authorize transfers; loss or compromise of those keys may result in permanent loss of access to the associated ZEC.
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Privacy-enabled Zcash transfers employ zero-knowledge cryptographic methods which allow transactions to be validated without revealing transaction amounts or counterparties. These mechanisms enable the network to confirm authorization and prevent double spending while preserving confidentiality. In addition to on-chain transfers, some ZEC ownership changes occur off-chain, such as internal ledger movements within exchanges or custodial platforms. Because these off-chain activities are not recorded on the blockchain, they are not protected by the protocol’s consensus mechanisms and may expose participants to additional counterparty and operational risks.
Maximum Supply and Halving Schedule
The Zcash protocol establishes a fixed maximum supply of 21 million ZEC, which are introduced into circulation over time through block rewards. New ZEC is issued as part of the mining process at regular intervals. The block subsidy is reduced by 50% at predetermined intervals, commonly referred to as “halvings,” which occur based on block height rather than calendar date and are designed to slow the rate of new issuance over time.
Since its launch, Zcash has undergone multiple halving events. The first occurred in November 2020, reducing the block reward from 6.25 ZEC to 3.125 ZEC. The second halving occurred in November 2024, further reducing the block reward to 1.5625 ZEC. Future halvings are expected to occur at approximately four-year intervals thereafter based on the current network hash rate, with each event continuing to reduce the rate of new ZEC issuance until the maximum supply is reached.
Trading ZEC
The market price of ZEC is determined by supply and demand for ZEC among buyers and sellers and the overall utility of the Zcash Network, and is typically quoted in fiat currencies or relative to other digital assets on trading platforms. Centralized exchanges generally publish real-time pricing and volume data that serve as common market reference points. ZEC may also be traded through over-the-counter arrangements or private transactions, which are typically less transparent than exchange-based trading.
As of December 31, 2025, the following exchanges have been registered as money services businesses with FinCEN, and have state money transmitter licensing: Coinbase, Kraken, Binance.US, and Gemini Space Station, which is an affiliate of our largest stockholder, Winklevoss Capital. However, there are several additional exchanges that trade ZEC including: KuCoin, Binance (Global), OKX, Bitget and Gate.io.
Our ZEC Digital Asset Treasury Holdings
Our investment thesis for ZEC rests on two premises. First, Zcash is built on the same sound monetary principles as Bitcoin: a fixed supply of 21 million coins, open-source development, and decentralized consensus, but adds privacy-preserving transaction capabilities through zero-knowledge cryptography. We view Bitcoin as a store of value and Zcash as private digital money: one protects value across time, the other protects privacy in daily transactions. Second, we believe that the market has not yet priced in the growing structural demand for financial privacy. Transaction data reveals patterns of life: location, associations, habits, and financial capacity. As data collection and surveillance capabilities expand, we expect demand for privacy-preserving financial infrastructure to increase. Zcash, as the most technically mature privacy-preserving blockchain with a fixed monetary supply, is, in our view, well-positioned to capture a meaningful share of that demand.
As of March 11, 2026, we held a total of 294,743.10 ZEC, at an average purchase price of $335.89, representing approximately 1.76% of the total circulating supply of the Zcash Network. Our stated objective is to accumulate holdings representing at least 5% of the total circulating supply over time. This objective is subject to change, and we may suspend, reduce, or modify acquisition activity at any time based on our assessment of market conditions, capital availability, and strategic priorities.
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Competition Related to our Cypherpunk Business
The privacy technology, cryptocurrency, and digital asset treasury industries are characterized by continuing technological advancement and significant competition. Our digital asset treasury strategy involves, from time to time and subject to market conditions, acquiring ZEC using proceeds from offerings of equity securities or other capital raising transactions. While we believe that our focus on privacy technologies and the Zcash Network provides us with competitive advantages, we compete for capital with, among others: Exchange Traded Products, such as Grayscale Zcash Trust; other digital assets with a larger market value than ZEC, such as bitcoin; digital asset treasury companies focused on other digital assets, such as Strategy Inc.; miners; digital asset exchanges that sell ZEC directly to investors; traditional financial firms that have entered into the digital assets market; and other entities that pursue strategies to accumulate or gain exposure to digital assets. In addition, numerous venture capital firms have established investment strategies around privacy technologies and digital assets, including a16z crypto. Many of the entities against which we may compete for capital or for investment in or development of privacy technologies have significantly greater financial resources and expertise than we do. This competition could adversely affect the availability and cost of capital for our ZEC purchases and our privacy technology strategy, and thereby could affect the market price of our securities.
Government Regulation Related to our Cypherpunk Business
The U.S. Congress and a number of U.S. federal and state agencies (including FinCEN, the Treasury Department Office of Foreign Assets Control (“OFAC”), SEC, CFTC, the Financial Industry Regulatory Authority (“FINRA”), the Consumer Financial Protection Bureau (“CFPB”), the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the U.S. Internal Revenue Service, a bureau of the U.S. Department of the Treasury (the “IRS”), the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Reserve and state financial institution and securities regulators) have been examining, among other issues: digital asset market structure and regulation, and a bill known as the Digital Assset Market Clarity Act of 2025 is currently under consideration in Congress; and the operations of digital asset networks and digital asset users, with particular focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, evade sanctions or fund criminal or terrorist enterprises and the safety and soundness of trading platforms and other service providers that hold or custody digital assets for users.
Various foreign jurisdictions have, and may continue to, in the near future, adopt laws, regulations or directives that affect the Zcash Network and its users. For example, beginning on July 1, 2027, regulations in the European Union will prohibit transactions involving anonymous wallets and privacy-focused digital assets such as ZEC. There remains significant uncertainty regarding foreign governments’ future actions with respect to the regulation of digital assets, particularly digital assets with privacy features such as Zcash. Such laws, regulations or directives may conflict with those of the United States and may negatively impact the acceptance of ZEC by users, merchants, and service providers outside the United States and may therefore impede the growth or sustainability of the Zcash ecosystem in the United States and globally, or otherwise negatively affect the value of the ZEC that we hold in our treasury.
Drug Development Through Our Leap Therapeutics Subsidiary
Our subsidiary, Leap, is a biopharmaceutical company developing novel biomarker-targeted antibody therapies designed to treat patients with cancer and other diseases with high unmet medical need. Our lead program is sirexatamab (DKN-01), a monoclonal antibody that inhibits Dickkopf-related protein 1 (“DKK1”). We recently completed a Phase 2 study of sirexatamab in patients with colorectal cancer. We also have a preclinical program to develop a monoclonal antibody inhibiting the GDF-15 protein, known as FL-501. FL-501 has potential to treat patients with a broad variety of difficult-to-treat diseases such as: cancer cachexia, hyperemesis gravidarum and pregnancy-related nausea and vomiting, and many others associated with aging and frailty.
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Market Opportunity
Colorectal Cancer
Colorectal cancer (“CRC”), is the third most frequent cancer globally and the second leading cause of death. According to the World Health Organization (“WHO”), there will be over 2.3 million new cases of CRC in 2030, with nearly 1.1 million deaths. CRC includes colon cancer (64%), rectal cancers (29.4%), and anal cancer (6.6%). According to the American Cancer Society (“ACS”), in the United States, there will be 158,850 newly diagnosed cases of CRC and 55,230 estimated deaths from CRC.
When the symptoms of CRC appear, such as rectal bleeding, anemia, or abdominal pain, most patients are already in the advanced stage where cancers are aggressive, malignant, and metastatic. Mutations in the pathways modulated by DKK1, such as APC, and activation of the Wnt pathway are highly prevalent in CRC patients. For patients who have microsatellite stable (“MSS”) colorectal cancer, and who do not have a specific mutation that can be targeted with approved therapies, outcomes are extremely poor for patients who have progressed on first-line therapy. A clinical trial of the antibody bevacizumab in combination with chemotherapy generated a response rate of approximately 5% and PFS of 5.7 months in second-line patients.
Our Product and Clinical Studies
Sirexatamab (DKN-01)
DKK1 is a cell secreted protein that research has found plays a crucial role in embryonic development. DKK1 binds to specific cell surface receptors and affects the signaling of key cellular pathways, known as the canonical and non-canonical Wnt signaling pathways. DKK1 serves as one of the inhibitors of the canonical Wnt signaling pathway and modulates the non-canonical Wnt signaling pathways. DKK1 is also a modulator of CKAP4/PI3K/AKT signaling. Changes in these pathways can lead to the expression of several cancer causing genes and factors associated with cell growth, angiogenesis, and metastasis. DKK1 also has a role in suppressing the immune system from effectively targeting and clearing the cancer.
Published data, including from The Cancer Genome Atlas (“TCGA”) and real world evidence from our collaboration with Tempus, indicate that DKK1 levels are significantly higher or have an important high DKK1 population in many cancers, including esophagogastric cancer, non-small cell lung cancer, endometrial cancer, CRC, and pancreatic cancer. In addition, elevated DKK1 is associated with worse overall survival or time to treatment discontinuation for patients with CRC and several other cancers. Researchers have shown that when the DKK1 protein is added in certain animal models, the cancer grows larger.
Sirexatamab is a high affinity, neutralizing monoclonal antibody targeting DKK1. We have shown that sirexatamab reduces free DKK1 levels and has demonstrated an anti-tumor effect in preclinical models.
The FDA granted orphan drug designation to sirexatamab for the treatment of gastric and gastroesophageal junction cancer. In addition, on September 24, 2020, the FDA granted Fast Track designation to sirexatamab in combination with tislelizumab for the treatment of patients with gastric and gastroesophageal junction adenocarcinoma whose tumors express high DKK1, following disease progression on or after prior fluoropyrimidine- and platinum- containing chemotherapy and if appropriate, human epidermal receptor growth factor (HER2)/neu-targeted therapy.
We are currently developing sirexatamab in patients with CRC and have also conducted clinical trials in patients with gastric/gastroesophageal junction cancer and with endometrial cancer.
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Colorectal Cancer
Mechanism of Action and Preclinical Data
We have evaluated sirexatamab in multiple preclinical CRC models. Sirexatamab showed additive activity with 5-fluorouracil (5-FU) chemotherapy, which is commonly used in CRC patients, and in two CRC models that were resistant to 5-FU therapy. Treatment with sirexatamab can result in tumor regressions as a monotherapy and can overcome 5-FU-resistance to have further activity in combination with 5-FU chemotherapy. We believe that these 5-FU-resistant models are reflective of the second-line CRC population. We believe that sirexatamab also work through an anti-angiogenic mechanism of action, preclinical models have also shown fewer and smaller blood vessels in response to sirexatamab treatment, and an additive effect of sirexatamab in combination with bevacizumab at reducing xenograft tumor size.
DeFianCe Study –Second-Line Patients in combination with bevacizumab and chemotherapy
The DeFianCe study is a Phase 2, randomized, open-label, multicenter study of sirexatmab (DKN-01) in combination with standard of care bevacizumab and chemotherapy in patients with advanced microsatellite stable (“MSS”) CRC who have received one prior systemic therapy. Part A of the study enrolled 33 patients as a single arm trial. Based on the results of these first 33 patients, the study expanded into Part B, a 188-patient randomized controlled trial against bevacizumab and standard of care chemotherapy.
Part A – Single Arm
In January 2025, we presented ORR and PFS data from Part A of DeFianCe. In the 27 response-evaluable patients, the ORR was 33% and the disease control rate (“DCR”) was 93%. Of these responding patients, the median DoR experienced was 9.92 months. In the 15 patients who had never received prior bevacizumab, the ORR was 53%, the DCR was 93%, and their median PFS was 8.05 months.
Part B – Randomized Controlled Trial
In October 2025, we presented final clinical data from Part B at the European Society for Medical Oncology (ESMO) Congress 2025.
In patients with high circulating DKK1 plasma levels (upper quartile as measured by the SomaLogic SomaScan platform, n=44), the sirexatamab experimental arm has improved ORR, by both investigator-assessment (“IA”) and blinded independent central review (“BICR”), PFS, and OS compared to the control arm:
Sirexatamab
Experimental Arm
Control Arm
(n=25)
(n=19)
ORR by IA
44.0%
15.8%
p = 0.0149
ORR by BICR
40.0%
15.8%
p = 0.0301
Median PFS
9.36 months
5.88 months
HR 0.46,
95% CI: 0.22,
0.96
p = 0.0168
Median OS
NYR
9.49 months
HR 0.17,
95% CI: 0.05,
0.53
p < 0.001
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Figure 2: PFS K-M curve in DKK1-high upper quartile patients
Figure 3: OS K-M curve in DKK1-high upper quartile patients
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● In patients with high circulating DKK1 plasma levels (upper median as measured by the SomaLogic SomaScan platform, n=88), the sirexatamab experimental arm has improved ORR, by both IA and BICR, PFS, and OS compared to the control arm:
Sirexatamab
Experimental Arm
Control Arm
(n=50)
(n=38)
ORR by IA
38.0%
23.7%
p = 0.0706
ORR by BICR
40.0%
15.8%
p = 0.0039
Median PFS
9.03 months
7.06 months
HR 0.61,
95% CI: 0.37,
1.00
p = 0.0255
Median OS
NYR
14.39 months
HR 0.42,
95% CI: 0.19,
0.91
p = 0.0118
● Across the intent-to-treat (ITT) population with second-line MSS CRC (n=188), the sirexatamab experimental arm had higher ORR and longer PFS compared to the control arm, although this did not reach the pre-defined statistical signficance:
Sirexatamab
Experimental Arm
Control Arm
(n=94)
(n=94)
ORR by IA
35.1%
26.6%
p = 0.1009
ORR by BICR
33.0%
20.2%
p = 0.0203
PFS
9.2 months
8.31 months
HR 0.84
95% CI: 0.58,
1.21
p = 0.1712
DKK1 levels correlated with increasing clinical benefit in those patients receiving sirexatamab compared to patients in the control arm who had poorer outcomes and shorter survival as DKK1 levels increased.
FL-501
FL-501 is a potential best in class monoclonal antibody in preclinical development that targets growth and differentiation factor 15 (GDF15), which is a cytokine that is produced at elevated levels in response to various stresses, including chronic inflammation, obesity, cancers, and chemotherapy treatment. High GDF15 expression is associated with cachexia including loss of appetite, nausea and weight loss, and is also a validated target with a successful randomized clinical trial from Pfizer. FL-501 was engineered for higher target affinity and a longer plasma half-life compared to competing therapies. In preclinical cachexia models, FL-501 increased body weight and restored muscle mass. FL-501 is being developed through a collaboration agreement with Adimab.
Intellectual Property
We strive to protect and enhance the proprietary technology, inventions and improvements that are commercially important to our business, including seeking, maintaining and defending patent rights. We also rely on confidential know-how that may be important to the development of our business. We protect our confidential know-how as trade secrets and through confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors and others. We additionally expect to rely on regulatory protection afforded through data exclusivity as well as patent term extensions, where available.
Our commercial success may depend in part on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business; to defend and enforce our patents; to preserve the confidentiality of our know-how and trade secrets; and to operate without infringing on the valid and enforceable patents and proprietary rights of third parties.
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Our ability to prevent third parties from making, using, selling, offering to sell or importing competing products to ours, including a competitor to sirexatamab depends on the validity, enforceability and/or scope of our patents. We have several patents and patent applications relating to sirexatamab and its therapeutic uses, and possess substantial know-how relating to the development and commercialization of sirexatamab. We are the licensee of patents and patent applications relating to sirexatamab. We cannot be sure that any of our pending patent applications or future patent filings will lead to the issuance of new patents, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be adequate to protect our market.
We plan on pursuing in-licensing opportunities to develop, strengthen and maintain our proprietary position in our field. We expect to use trademark protection for our products as they are marketed.
Patents
We exclusively license from Eli Lilly and Company (“Lilly”), rights under 26 issued patents and 1 pending patent application, all of which belong to the same patent family. The patents and applications in this patent family are directed to the composition of matter and use of sirexatamab, and include (i) one issued U.S. Patent, (ii) issued patents in the following jurisdictions: Argentina, Australia, Brazil, Canada, China, Eurasia, Europe, Gulf Cooperation Council, India, Israel, Japan, Lebanon, Macao, Mexico, New Zealand, Pakistan, Singapore, South Africa, Taiwan, Ukraine, Hong Kong, Thailand and South Korea and (iii) a pending application in Venezuela. The base 20-year term for patents in this family would expire in 2030. The U.S. patent will expire 87 days after the base term due to patent term adjustment. Patent term extensions for delays in marketing approval may also extend the terms of patents in this family.
We own two issued U.S. Patents, granted patents in Australia, Japan, Korea, Mexico, and Israel and pending applications directed to the use of a biomarker in patients receiving DKN-01 therapy in the following jurisdictions: Brazil, Canada, Europe and Hong Kong,. The issued U.S. Patents will expire in 2037, absent any terminal disclaimer, patent term adjustment due to administrative delays by the United States Patent and Trade Office (“USPTO”) or patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act or Hatch-Waxman Amendment, and provided that all required maintenance fee payments are timely paid. The non-USPatents and any other patents that may issue in foreign jurisdictions will likewise expire in 2037, provided that all required annuities are timely paid.
We also own two additional patent families both directed to the treatment of cancer using DKN-01 in specific subpopulations of patients. In the first patent family, the patient subpopulation is defined by its DKK-1 expression level. A patent has granted in South Korea and applications are pending in the following jurisdictions: the United States of America, China, Australia, Canada, Hong Kong, Mexico, Brazil, Israel and Europe. In the second patent family, the patient subpopulation is defined as harboring a specific genetic mutation. Applications are pending in the following jurisdictions: the United States of America, South Korea, Australia, Canada, Hong Kong, Mexico, Brazil, Israel and Europe.
Any patents that may issue in the United States based on the applications in these two patent families will expire in 2040, absent any terminal disclaimers, patent term adjustment due to administrative delays at the USPTO or patent term extension under the Hatch-Waxman Act, and provided that all required maintenance fee payments are timely paid. The Korean Patent and any other patents that may issue in foreign jurisdictions will likewise expire in 2040, provided that all required annuities are timely paid.
We also own another patent family directed to the treatment of colorectal cancer using combination therapy comprising sirexatamab and additional therapeutic agents. Applications are pending in the following jurisdictions: the United States of America, China, Japan, South Korea, Australia, New Zealand, Canada, Mexico, Brazil, Hong Kong, Israel and Europe. Any patent that may issue in the United States based on the pending U.S. application will expire no earlier than 2043 absent any terminal disclaimer. Any patents issued in foreign jurisdictions will likewise expire in 2043.
We also own one pending international patent application filed under the Patent Cooperation Treaty (“PCT”) directed to the treatment of colorectal cancer using combination therapy comprising sirexatamab and additional therapeutic agents in specific subpopulations of patients. The PCT is an international patent law treaty that provides a unified procedure for filing a single initial patent application to seek patent protection for an invention simultaneously in each of the member states. Although a PCT Application is not itself examined and cannot issue as a patent, it allows the applicant to seek protection in any of the member states through national phase applications. Any patents that may issue in the United States based on the PCT application will expire no earlier than 2045 absent any terminal disclaimer. Any patents issued in foreign jurisdictions will likewise expire in 2045.
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We also own a pending U.S. Provisional application directed to, among other things, FL-501 (a monoclonal antibody that inhibits GDF-15). If non-Provisional patent applications (e.g., a regular U.S. application, a PCT Application or direct foreign applications) claiming the benefit of the U.S. Provisional application are filed in 2026, any patents that may issue in the United States will expire no earlier than 2046 absent any terminal disclaimer. Any patents issued in foreign jurisdictions will likewise expire in 2046.
Patent Term
The base term of a U.S. patent is 20 years from the filing date of the earliest-filed non-provisional patent application to which the patent is entitled to priority. The term of a U.S. patent can be lengthened by patent term adjustment, which compensates the owner of the patent for administrative delays at the USPTO. In some cases, the term of a U.S. patent is shortened by a terminal disclaimer that reduces its term to that of an earlier-expiring U.S. patent.
The term of a U.S. patent may be eligible for patent term extension under the Hatch-Waxman Act, to account for at least some of the time a product is under development and regulatory review after the patent is granted. With regard to a product for which FDA approval is the first permitted marketing of the active ingredient, the Hatch-Waxman Act allows for extension of protection of one U.S. patent that includes at least one claim covering the composition of matter of an FDA-approved product, an FDA-approved method of treatment using the product, and/or a method of manufacturing the FDA-approved product. The extended protection cannot exceed the shorter of five years beyond the non-extended expiration of the patent or fourteen years from the date of the FDA approval of the product. Some foreign jurisdictions, including Europe, have patent extension provisions (e.g., supplementary protection certificates), which allow for extension of the protection of a patent that covers a drug approved by the applicable foreign regulatory agency. In the future, if and when sirexatamab or any of our other products receives FDA approval, we expect to apply for patent term extension to extend the protection of one of our U.S. patents covering the product, its use, or a method of manufacturing this product. We also may pursue extensions in foreign jurisdictions where applicable.
Lilly License Agreement
On January 3, 2011, we entered into a license agreement with Lilly (the “Lilly Agreement”), pursuant to which Lilly granted us an exclusive license for certain intellectual property rights relating to pharmaceutically active compounds that may be useful in the treatment of bone healing, cancer and, potentially, other medical conditions. The license includes a right to sublicense, under certain Lilly intellectual property rights to further develop and commercialize, on a worldwide basis, pharmaceutical products containing such licensed compounds.
Pursuant to the Lilly Agreement, we granted to Lilly 65,761 shares of common stock and agreed to pay Lilly a royalty in the low single digits of net sales of a particular product in the territory during the applicable royalty term, with certain adjustments to be made to the royalty rate in connection with third person intellectual property, sales of competing products, and sales of biosimilar or generic products. We have not yet paid any royalties to Lilly pursuant to this agreement.
The royalty term, with respect to each country in which a product is sold, on a country-by-country and product-by-product basis, begins on first commercial sale of the product in the country and the later of (i) the tenth anniversary of the first date of commercial sale of the product in the country, (ii) expiration of the last-to-expire issued patent included within the patents licensed under the Lilly Agreement having a valid claim covering the sale of the product, and (iii) the expiration of any data exclusivity period for the product in the country.
The term of the Lilly Agreement began on January 3, 2011 and, unless earlier terminated pursuant to the termination provisions described below, will continue on a country-by-country basis until we have no remaining royalty or other payment obligations in a specific country. Upon expiration in a given country, the licenses granted with respect to such country shall become fully paid up, perpetual and irrevocable.
Either party may terminate the Lilly Agreement with immediate effect if the other party enters into bankruptcy or takes similar action. We may terminate the Lilly Agreement (i) at any time without cause upon ninety (90) days written notice to Lilly or (ii) upon material breach of the Lilly Agreement by Lilly upon ninety (90) days written notice to Lilly, unless Lilly cures such breach or violation during such ninety (90) day period. Lilly may terminate the agreement (i) upon our material breach of the Lilly Agreement upon ninety (90) days written notice to us, unless we cure such breach or violation during such ninety day period or (ii) if we challenge, or materially assist any third person to challenge, the validity or enforceability of the licensed intellectual property that is the subject of the Lilly Agreement upon thirty (30) days written notice to us, unless we cure such breach or violation during such thirty (30) day period.
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If Lilly terminates the Lilly Agreement or if we terminate the Lilly Agreement without cause, (i) all rights under the licensed intellectual property rights will terminate and immediately and automatically revert to Lilly, (ii) any sublicense will be assigned by us to Lilly so that such sublicense becomes a direct license between Lilly and such sublicensee, (iii) subject to certain limitations, we will be required to grant to Lilly an irrevocable, non-exclusive, perpetual, fully paid up license under all patent rights developed or acquired by us during the term of the Lilly Agreement that relate to the Lilly licensed intellectual property, (iv) subject to certain limitations, we will be required to grant to Lilly an irrevocable, non-exclusive, perpetual, fully paid up license to the results of data from all preclinical and clinical studies of any compound or product covered by the Lilly Agreement, (v) subject to certain limitations, we will be required to take all steps necessary to permit Lilly to commence marketing product covered by the Lilly Agreement, and (vi) we will be required to assign or re-assign to Lilly all Lilly patents covered by the Lilly Agreement and that were assigned by Lilly to us. If we terminate the Lilly Agreement for material breach by Lilly or Lilly’s bankruptcy, the licenses will remain in full force and effect and we will remain liable for the payment of all royalty obligations under the Lilly Agreement. However, in this case, we may offset against such royalties any damages that we are entitled to for breach of the Lilly Agreement by Lilly.
The Lilly Agreement also contains certain standard representations and warranties and certain standard confidentiality and indemnification provisions.
Adimab Collaboration Agreement
On August 10, 2020, we entered into a collaboration agreement with Adimab, LLC (the “Adimab Agreement”), pursuant to which Adimab will conduct research programs to develop monoclonal antibodies to certain targets identified by us and provide us with an option to acquire exclusive rights to such antibodies. Upon payment of an option fee, on a product-by-product basis, Adimab will grant us a world-wide, exclusive license for, or assign ownership to us of, certain intellectual property rights and grant us a non-exclusive license with respect to the Adimab platform technology. Each such license includes a right to sublicense. Pursuant to the Adimab Agreement, after exercising an option and making the option payment, we agreed to pay Adimab milestones upon the completion of clinical development and regulatory milestones, along with a royalty in the low-single digits of net sales of each product during the applicable royalty term, with certain adjustments to be made to the royalty rate in connection with third person intellectual property or a challenge to the royalty term. FL-501 was discovered under the Adimab Agreement and is in the evaluation phase. We have not yet paid any option payments or royalties to Adimab pursuant to this agreement.
The royalty term, with respect to each country in which a product is sold, on a country-by-country and product-by-product basis, begins on the first commercial sale of the product in the country and the later of (i) the expiration of the last-to-expire issued patent included within the patents licensed under the Adimab Agreement having a valid claim covering the sale of the product, and (ii) the twelfth anniversary of the first date of commercial sale of the product in the country.
The term of the Adimab Agreement began on August 10, 2020, and, shall, unless earlier terminated pursuant to the termination provisions described below, expire (a) in the event that no option payment is made by us on any program under the Adimab Agreement, the conclusion of the last-to-expire evaluation term or (b) in the event that an option is exercised, on a country-by-country basis until we have no remaining royalty payment obligations in a specific country. Upon expiration in a given country, the licenses granted with respect to such country shall become fully paid up, perpetual and irrevocable.
Either we or Adimab may terminate the Adimab Agreement for the material breach of this Agreement by the other Party, if such breach remains uncured ninety (90) days following notice. If the Adimab Agreement expires or terminates (other than following an option exercise after all applicable royalties have been paid), we shall not research, develop or commercialize any Adimab-related product except as if it were part of the Adimab Agreement, and we shall not grant any right or options to any third party regarding any Adimab-related product. If we have entered into any sublicense and the Adimab Agreement is terminated, then such sublicenses will survive the termination of the Adimab Agreement and become direct licenses with Adimab.
If Adimab terminates the Adimab Agreement for our uncured material breach, then we shall assign to Adimab all right, title and interest in and to the intellectual property and all data with respect to Adimab-related products, transfer cell lines and manufacturing information to Adimab, transfer all filings with regulatory authorities, and Adimab shall pay us a royalty in low single digits.
The Adimab Agreement also contains certain standard representations and warranties and certain standard confidentiality and indemnification provisions.
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Competition Related to our Leap Therapeutics Business
The biotechnology and pharmaceutical industries are characterized by continuing technological advancement and significant competition. While we believe that our product candidates, technology, knowledge, experience and scientific resources provide us with competitive advantages, we face competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future. Key product features that would affect our ability to effectively compete with other therapeutics include the efficacy, safety and convenience of our products and the ease of use and effectiveness of any companion diagnostics. The level of generic competition and the availability of reimbursement from government and other third-party payors will also significantly affect the pricing and competitiveness of our products. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.
Many of the companies against which we may compete have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. For example, Novartis, Merck, Amgen, Pfizer, Junshi Biosciences, and Twist Biosciences are all currently developing or have previously been developing anti-DKK1 monoclonal antibodies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
Manufacturing and Distribution
We do not have, and we do not currently plan to acquire or develop, the facilities or capabilities to manufacture clinical trial material for use in human clinical trials or finished drug product for commercialization. We depend on third-party contract manufacturers (“CMOs”), for the production of clinical trial material for our studies. Our sirexatamab bulk drug substance (“DS”), is produced at our CMO, ThermoFisher Scientific, which is required to comply with the FDA’s Current Good Manufacturing Practice (“cGMP”) regulations. Our finished drug product is produced at a contract fill/finisher provider, which is also required to comply with cGMP regulations. We have personnel with significant technical, manufacturing, analytical, quality and project management experience to oversee our third-party CMOs and to manage manufacturing and quality data and information for regulatory compliance purposes.
We must manufacture drug product for clinical trial use in compliance with cGMP regulations. The cGMP regulations include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and drug product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports, and returned or salvaged products. Our third-party CMOs are also subject to periodic inspections of facilities by the FDA and other authorities, including procedures and operations used in the testing and manufacture of our products to assess our compliance with applicable regulations. Failure to comply with statutory and regulatory requirements subjects a manufacturer to possible legal or regulatory action, including warning letters, the seizure or recall of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations and civil and criminal penalties. These actions could have a material impact on the availability of our products. CMOs often encounter difficulties involving production yields, quality control and quality assurance, as well as shortages of qualified personnel.
We have not yet established a sales, marketing or product distribution infrastructure because our lead candidates are still in clinical development. We eventually may, however, choose to build (or obtain through strategic acquisition) our own sales and marketing team to commercialize some or all of our products if they receive FDA approval and if it is in our long -term interests. We may choose to enter into distribution agreements with strategic partners with their own robust distribution channels for the United States, Europe, Japan, and other territories.
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Government Regulation and Product Approval
Government authorities in the United States, at the federal, state, and local level, and in other countries, extensively regulate, among other things, the research, development, testing, approval, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, post-approval monitoring and reporting, marketing, import, and export of biopharmaceutical products such as those we are developing. In addition, manufacturers of biopharmaceutical products participating in Medicaid and Medicare are required to comply with mandatory price reporting, discount, and rebate requirements. The processes for obtaining regulatory approvals in the United States and in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources. The following is a summary of the primary government regulations applicable to our business.
FDA Regulation
In the United States, the FDA regulates biologics under the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Public Health Services Act (“PHSA”), and their implementing regulations. Any product we may develop must be cleared by the FDA before it is marketed in the United States. The process required by the FDA before product candidates may be marketed in the United States generally involves the following:
● completion of preclinical laboratory tests, animal studies, and formulation studies in compliance with the FDA’s Good Laboratory Practice (“GLP”), regulations;
● submission to the FDA of an Investigational New Drug application (“IND”), which must become effective before human clinical trials may begin;
● approval by an Institutional Review Board (“IRB”), for each clinical site, or centrally, before each trial may be initiated;
● adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed product candidates for its intended use, performed in accordance with GCPs;
● development of manufacturing processes to ensure the product candidate’s identity, strength, quality, and purity;
● submission to the FDA of a Biologics License Application (“BLA”);
● 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 products are produced to assess compliance with cGMPs, and to assure that the facilities, methods, and controls are adequate to preserve the therapeutic’s identity, strength, quality, and purity, as well as satisfactory completion of an FDA inspection of selected clinical sites and selected clinical investigators to determine GCP compliance; and
● FDA review and approval of the BLA to permit commercial marketing for particular indications for use.
Preclinical Studies and IND Submission
The testing and approval process of product candidates requires substantial time, effort, and financial resources. Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease. Preclinical studies include laboratory evaluation of chemistry, pharmacology, toxicity, and product formulation, as well as animal studies to assess potential safety and efficacy. Such studies must generally be conducted in accordance with the FDA’s GLPs. Prior to commencing the first clinical trial with a product candidate, an IND sponsor must submit the results of the preclinical tests and preclinical literature, together with manufacturing information, analytical data, any available clinical data or literature, and proposed clinical study protocols among other things, to the FDA as part of an IND.
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An IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, notifies the applicant of safety concerns or questions related to one or more proposed clinical trials and places the 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 trials due to safety concerns or non-compliance. As a result, submission of an IND may not result in FDA authorization to commence a clinical trial. A separate submission to an existing IND must also be made for each successive clinical trial conducted during product development.
Clinical Trials
Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with federal regulations and GCP requirements, which include the requirements that all research subjects provide their informed consent in writing for their participation in any clinical trial, as well as review and approval of the study by an IRB. Investigators must also provide certain information to the clinical trial sponsors to allow the sponsors to make certain financial disclosures to the FDA. Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the trial procedures, the parameters to be used in monitoring safety, the effectiveness criteria to be evaluated, and a statistical analysis plan. A protocol for each clinical trial, and any subsequent protocol amendments, must be submitted to the FDA as part of the IND. In addition, an IRB at each study site participating in the clinical trial or a central IRB must review and approve the plan for any clinical trial, informed consent forms, and communications to study subjects before a study commences at that site. An IRB considers, among other things, whether the risks to individuals participating in the trials are minimized and are reasonable in relation to anticipated benefits and whether the planned human subject protections are adequate. The IRB must continue to oversee the clinical trial while it is being conducted. Once an IND is in effect, each new clinical protocol and any amendments to the protocol must be submitted to the IND for FDA review, and to the IRB for approval. Progress reports detailing the results of the clinical trials must also be submitted at least annually to the FDA and the IRB and more frequently if serious adverse events or other significant safety information is found.
The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or if the trial poses an unexpected serious harm to subjects, or may impose other conditions. We may also discontinue clinical trials as a result of risks to subjects, a lack of favorable results, or changing business priorities.
Information about certain clinical trials, including a description of the study and study results, must be submitted within specific timeframes to the National Institutes of Health for public dissemination on their clinicaltrials.gov website.
Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group regularly reviews accumulated data and advises the study sponsor regarding the continuing safety of trial subjects, potential trial subjects, and the continuing validity and scientific merit of the clinical trial. The data safety monitoring board receives special access to unblinded data during the clinical trial and may advise the sponsor to halt the clinical trial if it determines there is an unacceptable safety risk for subjects or on other grounds, such as no demonstration of efficacy.
The manufacture of investigational biologics for the conduct of human clinical trials is subject to cGMP requirements. Investigational biologics and active ingredients imported into the United States are also subject to regulation by the FDA relating to their labeling and distribution. Further, the export of investigational products outside of the United States is subject to regulatory requirements of the receiving country as well as U.S. export requirements under the FDCA.
In general, for purposes of BLA approval, human clinical trials are typically conducted in three sequential phases, which may overlap or be combined.
● Phase 1 — Studies are initially conducted in healthy human volunteers or subjects with the target disease or condition and test the product candidate for safety, dosage tolerance, target engagement, mechanism of action, absorption, metabolism, distribution, and excretion. If possible, Phase 1 trials may also be used to gain an initial indication of product effectiveness.
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● Phase 2 — Controlled studies are conducted in limited subject populations with a specified disease or condition to evaluate preliminary efficacy, identify optimal dosages, dosage tolerance and schedule, possible adverse effects and safety risks, and expanded evidence of safety.
● Phase 3 — These adequate and well-controlled clinical trials are undertaken in expanded subject populations, generally at geographically dispersed clinical trial sites, to generate enough data to provide statistically significant evidence of clinical efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product. Typically, two Phase 3 trials are required by the FDA for product approval.
The FDA may also require, or companies may conduct, additional clinical trials for the same indication after a product is approved. These so-called Phase 4 studies may be made a condition to be satisfied after approval. The results of Phase 4 studies can confirm the effectiveness of a product candidate and can provide important safety information.
Phase 1, Phase 2, and Phase 3 clinical trials may not be completed successfully within any specified period, or at all. Regulatory authorities, an IRB, or the sponsor may suspend or discontinue a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk, the clinical trial is not being conducted in accordance with the FDA’s or the IRB’s requirements, the product has been associated with unexpected serious harm to the subjects, or based on evolving business objectives or competitive climate.
Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the product candidate as well as 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, must develop methods for testing the identity, strength, quality, potency, and purity of the final product. Additionally, 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.
During the development of a new therapeutic, a sponsor may be able to request a Special Protocol Assessment (“SPA”), the purpose of which is to reach agreement with the FDA on the Phase 3 clinical trial protocol design and analysis that will form the primary basis of product approval and an efficacy claim as well as preclinical carcinogenicity trials and stability studies. An SPA may only be modified with the agreement of the FDA and the trial sponsor, or if the director of the FDA reviewing division determines that a substantial scientific issue essential to determining the safety or efficacy of the product was identified after the testing began. An SPA is intended to provide assurance that, in the case of clinical trials, if the agreed upon clinical trial protocol is followed, the clinical trial endpoints are achieved, and there is a favorable risk-benefit profile, the data may serve as the primary basis for an efficacy claim in support of a BLA. However, SPA agreements are not a guarantee of an approval of a product candidate or any permissible claims about the product candidate. In particular, SPAs are not binding on the FDA if, among other reasons, previously unrecognized public health concerns arise during the performance of the clinical trial, other new scientific concerns regarding the product candidate’s safety or efficacy arise, or if the sponsoring company fails to comply with the agreed upon clinical trial protocol.
BLA Submission, Review by the FDA, and Marketing Approval
Assuming successful completion of the required clinical and preclinical testing, the results of product development, including chemistry, manufacture, and controls, non-clinical studies, and clinical trial results, including negative or ambiguous results as well as positive findings, are all submitted to the FDA, along with the proposed labeling, as part of a BLA requesting approval to market the product for one or more indications. In most cases, the submission of a BLA is subject to a substantial application user fee. These user fees must be paid at the time of the first submission of the application, even if the application is being submitted on a rolling basis. Fee waivers or reductions are available in certain circumstances. One basis for a waiver of the application user fee is if the applicant employs fewer than 500 employees, including employees of affiliates, the applicant does not have an approved marketing application for a product that has been introduced or delivered for introduction into interstate commerce, and the applicant, including its affiliates, is submitting its first marketing application. Product candidates that are designated as orphan drugs, which are further described below, are also not subject to application user fees unless the application includes an indication other than the orphan indication.
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In addition, under the Pediatric Research Equity Act (“PREA”), a BLA or supplement to a BLA for a new active ingredient, indication, dosage form, dosage regimen, or route of administration, must contain data that are adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.
The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, to ensure that the benefits of the biologic outweigh the risks. The REMS plan could include medication guides, physician communication plans, and elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools. An assessment of the REMS must also be conducted at set intervals. Following product approval, a REMS may also be required by the FDA if new safety information is discovered and the FDA determines that a REMS is necessary to ensure that the benefits of the biologic outweigh the risks.
Once the FDA receives an application, it has 60 days to review the BLA to determine if it is substantially complete to permit a substantive review, before it accepts the application for filing. The FDA may request additional information rather than accept a BLA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review.
Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act (“PDUFA”), the FDA has set the review goal of completing its review of 90% of all applications within ten months from the 60-day filing date for its initial review of an initial BLA. Such deadlines are referred to as the PDUFA date. The PDUFA date is only a goal, thus, the FDA does not always meet its PDUFA dates. The review process and the PDUFA date may also be extended if the FDA requests or the sponsor otherwise provides substantial additional information or clarification regarding the submission.
The FDA may also refer certain applications to an advisory committee. An advisory committee is typically a panel that includes clinicians and other experts, which reviews, evaluates, and makes a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
The FDA reviews applications to determine, among other things, whether a product is safe, pure and potent and whether the manufacturing methods and controls are adequate to assure and preserve the product’s identity, strength, quality, safety, potency, and purity. Before approving a BLA, the FDA typically will inspect the facility or facilities where the product is manufactured, referred to as a Pre-Approval Inspection. The FDA will not approve an application unless it determines that the manufacturing processes and facilities, including contract manufacturers and subcontractors, are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving a BLA, the FDA will inspect one or more clinical trial sites to assure compliance with GCPs.
The approval process is lengthy and difficult, and the FDA may refuse to approve a BLA if the applicable regulatory criteria are not satisfied or may require additional clinical data or other data and information. Even if such data and information are submitted, the FDA may ultimately decide that the BLA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than an applicant interprets the same data.
After evaluating the BLA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a Complete Response Letter (“CRL”). If a CRL is issued, the applicant may either: resubmit the BLA, addressing all of the deficiencies identified in the letter; withdraw the application; or request an opportunity for a hearing. A CRL indicates that the review cycle of the application is complete, and the application is not ready for approval and describes all of the specific deficiencies that the FDA identified in the BLA. A CRL generally contains a statement of specific conditions that must be met in order to secure final approval of the BLA and may require additional clinical or preclinical testing in order for the FDA to reconsider the application. The deficiencies identified may be minor, for example, requiring labeling changes; or major, for example, requiring additional clinical trials. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA may issue an approval letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.
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Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings, or precautions be included in the product labeling, including a boxed warning, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a product’s safety and efficacy after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms under a REMS which can materially affect the potential market and profitability of the product. The FDA may also not approve label statements that are necessary for successful commercialization and marketing.
After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval. The FDA may also withdraw the product approval if compliance with the pre- and post-marketing regulatory standards is not maintained or if problems occur after the product reaches the marketplace. Further, should new safety information arise, additional testing, product labeling, or FDA notification may be required.
Biosimilars, Orphan Drugs, and Exclusivity
The Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), creates an abbreviated approval pathway for biological products shown to be highly similar to or interchangeable with an FDA-licensed reference biological product. Biosimilarity sufficient to reference a prior FDA-approved product requires a high similarity to the reference product notwithstanding minor differences in clinically inactive components, and no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency. Biosimilarity must be shown through analytical studies, animal studies, and at least one clinical trial, absent a waiver by the FDA. There must be no difference between the reference product and a biosimilar product in conditions of use, route of administration, dosage form, and strength. A biosimilar product may be deemed interchangeable with a prior approved product if it meets the higher hurdle of demonstrating that it can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. Complexities associated with the larger, and often more complex, structures of biological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation which are still being evaluated by the FDA.
A reference biologic is granted 12 years of exclusivity from the time of first licensure of the reference product, and no application for a biosimilar can be submitted for four years from the date of licensure of the reference product. However, certain changes and supplements to an approved BLA, and subsequent applications filed by the same sponsor, manufacturer, licensor, predecessor in interest, or other related entity do not qualify for the twelve-year exclusivity period.
The Orphan Drug Act provides incentives for the development of products intended to treat rare diseases or conditions, which generally are diseases or conditions affecting less than 200,000 individuals annually in the United States, or affecting more than 200,000 in the United States and for which there is no reasonable expectation that the cost of developing and making the product available in the United States will be recovered from United States sales. Additionally, sponsors must present a plausible hypothesis for clinical superiority to obtain orphan designation if there is a product already approved by the FDA that is intended for the same indication and that is considered by the FDA to be the same as the already approved product. This hypothesis must be demonstrated to obtain orphan exclusivity. If granted, prior to product approval, Orphan Designation entitles a party to financial incentives such as opportunities for grant funding towards clinical study costs, tax advantages, and user-fee waivers. In addition, if a product receives FDA approval for the indication for which it has orphan designation, the product is generally entitled to orphan exclusivity, which means the FDA may not approve any other application to market the same product for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity.
Special FDA Expedited Review and Approval Programs
The FDA has various programs, including Fast Track designation, priority review, and breakthrough designation, that are intended to expedite or simplify the process for the development and FDA review of certain products that are intended for the treatment of serious or life threatening diseases or conditions, and demonstrate the potential to address unmet medical needs or present a significant improvement over existing therapy. The purpose of these programs is to provide important new therapeutics to patients earlier than under standard FDA review procedures.
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To be eligible for a Fast Track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need. The FDA will determine that a product will fill an unmet medical need if the product will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapies based on efficacy, safety, or public health factors. If Fast Track designation is obtained, sponsors may be eligible for more frequent development meetings and correspondence with the FDA. In addition, the FDA may initiate reviews of certain sections of an application before the application is complete. This “rolling review” is available if the applicant provides and the FDA approves a schedule for the remaining information. In some cases, a Fast Track product may be eligible for accelerated approval or priority review. On September 24, 2020, the FDA granted Fast Track designation to DKN-01 for the treatment of patients with gastric and gastroesophageal junction adenocarcinoma whose tumors express high DKK1, following disease progression on or after prior fluoropyrimidine- and platinum- containing chemotherapy and if appropriate, human epidermal receptor growth factor (HER2)/neu targeted therapy.
The FDA may give a priority review designation to products that are intended to treat serious conditions and, if approved, would provide significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions. A priority review means that the goal for the FDA is to review an application within six months, rather than the standard review of ten months under current PDUFA guidelines, of the 60-day filing date.
Drug or biological products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means the FDA may approve the product based upon 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. A drug or biologic candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug or biologic from the market on an expedited basis. All promotional materials for drug or biologic candidates approved under accelerated regulations are subject to prior review by the FDA.
Moreover, under the provisions of the Food and Drug Administration Safety and Innovation Act (“FDASIA”), enacted in 2012, a sponsor can request designation of a product candidate as a “breakthrough therapy”. A breakthrough therapy is defined as a product that is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Products designated as breakthrough therapies are eligible for the Fast Track designation features as described above, intensive guidance on an efficient development program beginning as early as Phase 1 trials, and a commitment from the FDA to involve senior managers and experienced review staff in a proactive collaborative, cross-disciplinary review.
Even if a product 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.
Post- approval Requirements
Any products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements related to manufacturing, recordkeeping, and reporting, including adverse experience reporting, shortage reporting, periodic reporting, product sampling and distribution, advertising, marketing, promotion, certain electronic records and signatures, and post-approval obligations imposed as a condition of approval, such as Phase 4 clinical trials, REMS, and surveillance to assess safety and effectiveness after commercialization.
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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 user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data. In addition, manufacturers and other entities involved in the manufacture and distribution of approved therapeutics are required to register their establishments with the FDA and certain state agencies, list their products, and are subject to periodic announced and unannounced inspections by the FDA and these state agencies for compliance with cGMP and other requirements, which impose certain procedural and documentation requirements upon a company and its third-party manufacturers. Manufacturers must continue to expend time, money, and effort in the areas of production and quality -control to maintain compliance with cGMPs. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.
Changes to the manufacturing process are strictly regulated and often require prior FDA approval or notification before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and specifications, and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.
Moreover, the enacted Drug Quality and Security Act (“DQSA”) imposes obligations on manufacturers of biopharmaceutical products related to product tracking and tracing. Among the requirements of this legislation, manufacturers are required to provide certain information regarding the products to individuals and entities to which product ownership is transferred, will be required to label products with a product identifier, and are required to keep certain records regarding the product. The transfer of information to subsequent product owners by manufacturers will eventually be required to be done electronically. Manufacturers must also verify that purchasers of the manufacturers’ products are appropriately licensed. Further, under this legislation, manufacturers will have product investigation, quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products that would result in serious adverse health consequences or death to humans, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death. Similar requirements additionally are and will be imposed through this legislation on other companies within the biopharmaceutical product supply chain, such as distributors and dispensers.
Adverse event reporting and the submission of periodic reports, including annual reports and deviation reports, are required following FDA approval of a BLA. 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 significant regulatory actions. Such actions may include refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, imposition of a clinical hold or termination of clinical trials, warning letters, untitled letters, cyber letters, modification of promotional materials or labeling, provision of corrective information, imposition of post-market requirements including the need for additional testing, imposition of distribution or other restrictions under a REMS, product recalls, product seizures or detentions, refusal to allow imports or exports, total or partial suspension of production or distribution, FDA debarment, injunctions, fines, consent decrees, corporate integrity agreements, debarment from receiving government contracts, new orders under existing contracts, exclusion from participation in federal and state healthcare programs, restitution, disgorgement, or civil or criminal penalties, including fines and imprisonment, and result in adverse publicity, among other adverse consequences.
Other Regulation Related to our Leap Therapeutics Business
In addition to any FDA restrictions on marketing and promotion of drugs and devices, other federal and state laws restrict our business practice including, without limitation, anti-kickback and false claims laws, data privacy and security laws, as well as transparency laws regarding payment or other items of value provided to healthcare providers. Future legislative proposals to reform healthcare may also impact us.
We are also governed by other federal, state and local laws of general applicability, such as laws regulating working conditions, employment practices, as well as environmental protection.
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Research and Development Expenses Related to Our Leap Therapeutics Business
Our total research and development expenses were $25.7 million and $57.2 million, during the years ended December 31, 2025 and 2024, respectively. See Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for additional details regarding our research and development activities.
Employees
As of December 31, 2025, we had 6 full-time employees. None of our employees are represented by a labor union or subject to a collective bargaining agreement. We have not experienced a work stoppage and consider our relations with our employees to be good.
Web Availability
We make available free of charge through our website, www.leaptx.com, our Annual Report on Form 10-K, other reports that we file with the Securities and Exchange Commission and any amendments to the reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as certain of our corporate governance policies, including the charters for the audit, compensation and nominating and governance committees of our board of directors and our code of ethics and corporate governance guidelines. We make these reports available as soon as reasonably practicable after they are filed with or furnished to the SEC. The information contained on, or that can be accessed through our website is not a part of or incorporated by reference into this Annual Report on Form 10-K. We will also provide to any person without charge, upon request, a copy of any of the foregoing materials. Any such request must be made in writing to us at: Cypherpunk Technologies Inc. c/o Investor Relations, 47 Thorndike Street, Suite B1, Cambridge, MA 02141.
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