Investing in our common stock involves a high degree of risk.
−Removed: You should carefully consider the risks and uncertainties described below, together with all other information in this Quarterly Report on Form 10-Q, before you decide to purchase our common stock.
+Added: You should carefully consider the risks and uncertainties described below, together with all other information in this Report, before you decide to purchase our common stock.
If any of the possible adverse events described below actually occurs, we may be unable to conduct our business as currently planned and our financial condition and operating results could be harmed.
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Additional risks that we currently do not know about, or that we currently believe immaterial, may also impair our business.
−Removed: Risks Related to the Reverse Merger
−Removed: The risks arising with respect to the historic Sevion business and operations may be different from what we anticipate, which could lead to significant, unexpected costs and liabilities and could materially and adversely affect our business going forward.
−Removed: We may not have fully anticipated the extent of the risks associated with the reverse merger between Sevion and Eloxx Limited.
−Removed: After the reverse merger, Sevion’s historic business was discontinued, but prior to the transaction Sevion had a long operating history.
−Removed: As a consequence, we may be subject to claims, demands for payment, regulatory issues, costs and liabilities that were not and are not currently expected or anticipated.
−Removed: Notwithstanding our exercise of due diligence pre-transaction and risk mitigation strategies post-transaction, the risks involved with taking over a business with a long operating history and the costs and liabilities associated with these risks may be greater than we anticipate.
−Removed: Further, we do not have rights of indemnification against the pre-transaction stockholders of Sevion.
−Removed: We may not be able to contain or control the costs or liabilities associated with Sevion’s historic business, which could materially and adversely affect our business, liquidity, capital resources or results of operation, and may divert management’s time and attention from conducting the business of the Company.
−Removed: Risks Related to Our Financial Position and Need for Additional Capital
−Removed: We have incurred significant operating losses since our inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future.
−Removed: We may never achieve or maintain profitability.
−Removed: Since our inception, we have incurred significant operating losses.
−Removed: Our net loss was $33.2 million and $10.6 million for the nine months ended September 30, 2018 and 2017, respectively.
−Removed: As of September 30, 2018, we had an accumulated deficit of $72.1 million.
−Removed: On April 30, 2018, we completed an underwritten public offering of 5,899,500 shares of our common stock at a price to the public of $9.75 per share, including 769,500 shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares, or the Public Offering.
−Removed: The gross proceeds from the Public Offering were approximately $53.6 million, before deducting the underwriting discounts and commissions and offering expenses.
−Removed: Historically, we have financed our operations primarily through equity capital investments, and to a lesser extent from loans and grants from the Israeli Innovation Authority of the Ministry of Economy and Industry, or the IIA.
−Removed: We have devoted substantially all of our financial resources and efforts to research and development.
−Removed: We expect that it will be many years, if ever, before we receive regulatory approval and have a product candidate ready for commercialization.
−Removed: Although we recently completed the Public Offering, we expect to continue to incur significant expenses and increasing operating losses for the foreseeable future.
−Removed: Our net losses may fluctuate significantly from quarter to quarter and year to year.
−Removed: We anticipate that our expenses will increase substantially if and as we:
−Removed: advance ELX-02 further into clinical trials;
−Removed: continue the preclinical development of our research programs and advance candidates into clinical trials;
−Removed: identify additional product candidates and advance them into preclinical development;
−Removed: pursue regulatory authorization to conduct clinical trials of additional product candidates;
−Removed: seek marketing approvals for our product candidates that successfully complete clinical trials;
−Removed: establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we obtain marketing approval;
−Removed: maintain, expand and protect our intellectual property portfolio;
−Removed: hire additional clinical, regulatory, management and scientific personnel;
−Removed: add operational, financial and management information systems and personnel, including personnel to support product development;
−Removed: acquire or in-license other product candidates and technologies;
−Removed: operate as a public company.
−Removed: We have never generated any revenue from product sales and may never be profitable.
−Removed: To become and remain profitable, we and our collaborators must develop and eventually commercialize one or more product candidates with significant market potential.
−Removed: This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing and selling those product candidates for which we may obtain marketing approval, securing coverage and reimbursement for those product candidates for which we may obtain marketing approval, and satisfying any post-marketing requirements.
−Removed: We may never succeed in these activities and, even if we do, may never generate revenue that is significant or large enough to achieve profitability.
−Removed: Our failure to become and remain profitable would decrease the value of the company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations.
−Removed: A decline in the value of our Company could also cause you to lose all or part of your investment.
−Removed: We will need substantial additional funding.
−Removed: If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our product development programs or commercialization efforts.
−Removed: We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue and initiate clinical trials of, and seek marketing approval for ELX-02, and as we become obligated to make milestone payments pursuant to our outstanding license agreements.
−Removed: In addition, if we obtain marketing approval for any of our current or future product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution of the approved product.
−Removed: Our future capital requirements will depend on many factors, including:
−Removed: the scope, progress, results and costs of drug discovery, clinical development, laboratory testing and clinical trials for ELX-02;
−Removed: the costs, timing and outcome of any regulatory review of ELX-02;
−Removed: the cost of any other product candidate programs we pursue;
−Removed: the costs and timing of commercialization activities, including manufacturing, marketing, sales and distribution, and securing coverage and reimbursement for any product candidates that receive marketing approval;
−Removed: the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
−Removed: our ability to establish and maintain collaborations on favorable terms, if at all;
−Removed: the extent to which we acquire or in-license other product candidates and technologies.
−Removed: Identifying potential product candidates and conducting preclinical studies and clinical trials are time consuming, expensive and uncertain processes that take years to complete, and we may never generate the necessary data or results required to obtain marketing approval or achieve product sales for any of our current or future product candidates.
−Removed: In addition, our product candidates, if approved, may not achieve commercial success.
−Removed: Our commercial revenue, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if at all.
−Removed: Acc ordingly, even with the Public Offering, we will need substantial additional funding in connection with our continuing operations and to achieve our goals.
−Removed: However, our existing cash and cash equivalents may prove to be insufficient for these activities.
−Removed: I f we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs, product portfolio expansion or future commercialization efforts.
−Removed: Adequate additional financing may not be available to us on acceptable terms, or at all.
−Removed: In addition, we may seek additional financing due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our operating plans.
−Removed: Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
−Removed: Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity and debt financings, as well as entering into new collaborations, strategic alliances and licensing arrangements.
−Removed: We do not have any committed external source of funds.
−Removed: To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder.
−Removed: Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and may be secured by all or a portion of our assets.
−Removed: If we raise funds by entering into new collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.
−Removed: If we are unable to raise additional funds through equity or debt financings or through collaborations, strategic alliances or licensing arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Risks Related to Drug Discovery, Development, Regulatory Approval and Commercialization
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Before obtaining regulatory approval for the commercial distribution of our therapeutic product candidates, we or a collaborator must conduct extensive preclinical studies and clinical trials to demonstrate the safety and efficacy in humans of our product candidates.
−Removed: The clinical trials, manufacturing and marketing of ELX-02, and any future product candidates, will be subject to extensive and rigorous review and regulation by numerous governmental authorities in the United States, the European Union and other jurisdictions where we intend to test and, if approved, market our current and future product candidates.
+Added: The clinical trials, manufacturing and marketing of ELX-02, and any future product candidates, will be subject to extensive and rigorous review and regulation by numerous governmental authorities in the U.S., the EU and other jurisdictions where we intend to test and, if approved, market our current and future product candidates.
Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate through preclinical studies and clinical trials that the product candidate is safe and effective for use in each target indication, and potentially in specific patient populations, including the pediatric population.
This process can take many years and may include post-marketing studies and surveillance, which would require the expenditure of substantial resources.
−Removed: Of the large number of drugs in development for approval in the United States and the European Union, only a small percentage successfully complete the FDA or EMA regulatory approval processes and are commercialized.
+Added: Of the large number of drugs in development for approval in the U.S.
+Added: and the EU, only a small percentage successfully complete the FDA or EMA regulatory approval processes and are commercialized.
Accordingly, even if we are able to obtain the requisite financing to continue to fund our research, development and clinical programs, we cannot assure you that ELX-02 or any of our future product candidates will be successfully developed or commercialized.
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Rates of patient enrollment are affected by many factors, including the size of the patient population, the eligibility criteria for the clinical trial, the age and condition of the patients, the stage and severity of disease, the nature of the protocol, the proximity of patients to clinical sites and the availability of effective treatments for the relevant disease.
−Removed: We and our collaborating partners may be subject, directly or indirectly, to federal and state he althcare fraud and abuse and false claims laws and regulations.
+Added: We and our collaborating partners may be subject, directly or indirectly, to federal and state healthcare fraud and abuse and false claims laws and regulations.
If we or our collaborating partners are unable to comply , or have not fully complied, with such laws, we could face substantial penalties.
−Removed: All marketing activities associated with product candidates that are approved for sale in the United States, if any, will be, directly or indirectly through our customers, subject to numerous federal and state laws governing the marketing and promotion of pharmaceutical products in the United States, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act and HIPAA.
+Added: All marketing activities associated with product candidates that are approved for sale in the U.S., if any, will be, directly or indirectly through our customers, subject to numerous federal and state laws governing the marketing and promotion of pharmaceutical products in the U.S., including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act and the Health Insurance Portability and Accountability Act (“HIPAA”).
These laws may adversely impact, among other things, our proposed sales, marketing and education programs.
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When an entity is determined to have violated the False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties up to approximately $22,000 for each separate false claim.
−Removed: The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created several new federal crimes, including health care fraud, and false statements relating to health care matters.
−Removed: The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including private third-party payers.
+Added: The HIPAA created several new federal crimes, including health care fraud, and false statements relating to health care matters.
+Added: The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including private third-party payors.
The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.
We are unable to predict whether we could be subject to actions under any of these or other fraud and abuse laws, or the impact of such actions.
−Removed: Moreover, to the extent that any of our product candidates, if approved for marketing, will be sold in a foreign country, we and our future collaborators, may be subject to similar foreign laws and regulations.
−Removed: If we or any of our future collaborators are found to be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government healthcare reimbursement programs and the curtailment or restructuring or our operations, any of which could have a material adverse effect on our business, results of operations and financial condition.
+Added: Moreover, to the extent that any of our product candidates, if approved for marketing, will be sold in a foreign country, we and our current or future collaborators, may be subject to similar foreign laws and regulations.
+Added: If we or any of our current or future collaborators are found to be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government healthcare reimbursement programs and the curtailment or restructuring or our operations, any of which could have a material adverse effect on our business, results of operations and financial condition.
Positive results from preclinical or in vitro and in vivo testing of ELX-02 are not necessarily predictive of the results of future clinical trials of ELX-02.
−Removed: If we cannot achieve positive results in our clinical trials for ELX-02, we may b e unable to successfully develop, obtain regulatory approval for and commercialize ELX-02.
−Removed: Positive results from our preclinical testing of ELX-02 in vitro and in vivo may not necessarily be predictive of the results from our planned clinical trials in humans.
+Added: If we cannot achieve positive results in our clinical trials for ELX-02, we may be unable to succ essfully develop, obtain regulatory approval for and commercialize ELX-02.
+Added: Positive results from our preclinical testing of ELX-02 in vitro and in vivo may not necessarily be predictive of the results from our ongoing and planned clinical trials in humans.
Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical trials after achieving positive results in preclinical and in vitro and in vivo studies, and we, or the third parties whose product candidates we expect to be co-administered with ELX-02, may face similar setbacks.
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Undesirable side effects caused by our product candidates, such as ELX-02, could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other comparable foreign regulatory authorities.
−Removed: It is possible that, during the course of the clinical development of ELX-02, results of our clinical trials could reveal an unacceptable severity and prevalence of side effects.
+Added: It is possible that, during the course of the clinical development of ELX-02 or other product candidates, results of our clinical trials could reveal an unacceptable severity and prevalence of side effects.
For example, in preclinical testing of ELX-02, we observed renal toxicities in the animals we tested following administration of this compound at doses in excess of the doses we expect to administer in our clinical trials.
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Additionally, if one or more of our product candidates receive marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:
−Removed: regulatory authorities may withdraw approvals of such product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy;
+Added: regulatory authorities may withdraw approvals of such product or impose restrictions on its distribution in the form of a new or modified risk evaluation and mitigation strategy;
regulatory authorities may require additional labeling, such as additional warnings or contraindications, which may negatively impact sales;
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inability to monitor patients adequately during or after treatment;
−Removed: inability or unwillingness of medical investigators and institutional review boards to follow our clinical protocols;
+Added: inability or unwillingness of medical investigators and IRBs to follow our clinical protocols;
lack of sufficient funding to finance the clinical trials.
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Some of the diseases that our product candidates are intended to treat are rare and ultra-rare and we expect only a subset of the patients with these diseases will be eligible for our clinical trials.
−Removed: Because ELX-02 targets small populations and patient numbers have not been determined definitively, we must be able to identify patients in order to complete our development programs and commercialize ELX-02 successfully.
+Added: Because ELX-02 targets small populations and patient numbers have not been determined definitively, we must be able to identify patients in order to complete our development programs, secure regulatory approval and commercialize ELX-02 successfully.
In addition, the protocol for our clinical trials generally mandates that a patient cannot be involved in more than one clinical trial for the same indication.
Therefore, subjects that participate in ongoing clinical trials for products that are competitive with our product candidates are not available to participate in our clinical trials.
−Removed: We cannot guarantee that any of our programs will identify a sufficient number of patients to complete clinical development and market our product candidates if approved.
−Removed: The combined number of patients in the United States, Japan and Europe and elsewhere may turn out to be lower than expected, may not be otherwise amenable to treatment with ELX-02, or new patients may become increasingly difficult to identify, all of which would adversely affect our results of operations and our business.
+Added: We cannot guarantee that any of our programs will identify a sufficient number of patients to complete clinical development, pursue regulatory approval and market our product candidates if approved.
+Added: The combined number of patients in the U.S., Japan and Europe and elsewhere may turn out to be lower than expected, may not be otherwise amenable to treatment with ELX-02, or new patients may become increasingly difficult to identify, all of which would adversely affect our results of operations and our business.
An inability to recruit and enroll a sufficient number of patients for any of our current or future clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether, which could impact our ability to develop our product candidates and may have a material adverse effect on our business, results of operations and financial condition.
1 unchanged sentence
We depend on independent investigators, consultants, researchers, medical experts, collaborators, chemists, toxicologist and a small number of medical institutions and third-party contract research organizations to assist with our research efforts and conduct our preclinical and clinical trials and related activities.
−Removed: These collaborators, scientists, consultants and other third parties have provided, and we expect that they will continue to provide, valuable advice and service regarding our clinical development programs and product candidates.
+Added: These collaborators, scientists, consultants and other third parties have provided, and we expect that they will continue to provide, valuable advice and services regarding our clinical development programs and product candidates.
These collaborators, scientists, consultants and other third parties are not our employees, may have other commitments that would limit their future availability to us and typically will not enter into non-compete agreements with us.
We cannot control the amount or timing of resources that they devote to our preclinical and or clinical development programs and they may not assign as great a priority to our preclinical or clinical development programs or pursue them as diligently as we would if we were undertaking such programs directly.
−Removed: If outside collaborators fail to devote sufficient time and resources to our preclinical and clinical development programs, or if their performance is substandard, the authorization of investigational new drugs (“INDs”) and pre-clinical trial applications (“CTAs”) and the approval of anticipated new drug applications (“NDAs”) and other marketing applications, and our introduction of new drugs, if any, may be delayed, which could impair our clinical development programs and would have a material adverse effect on our business and results of operations.
+Added: If outside collaborators fail to devote sufficient time and resources to our preclinical and clinical development programs, or if their performance is substandard, the authorization of investigational new drug applications (“INDs”) and pre-clinical trial applications (“CTAs”) and the approval of anticipated new drug applications (“NDAs”) and other marketing applications, and our introduction of new drugs, if any, may be delayed or impeded, which could impair our clinical development programs and would have a material adverse effect on our business and results of operations.
These collaborators may also have relationships with other commercial entities, some of whom may compete with us and we may be unable to prevent them from establishing competing businesses or developing competing products.
−Removed: We are subject to extensi ve governmental regulation including the requirements of FDA and comparable foreign regulatory authorities for approval of our product candidates before they can be marketed.
+Added: We are subject to extensive governmental regulation including the requirements of FDA and comparable foreign regulatory authorities for development and approval of our product candidates before they can be marketed.
We, our product candidates, our suppliers, our contract manufacturers, our contract testing laboratories and our clinical trial sites and clinical trial researchers are subject to extensive regulation by the FDA and comparable foreign regulatory authorities.
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unanticipated expenditures;
−Removed: holds on the initiation of clinical trials;
+Added: holds on the initiation or continuation of clinical trials;
delays in the FDA’s or other foreign regulatory authorities’ approving, or the refusal of any regulatory authority to approve, any product candidate;
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criminal prosecutions.
−Removed: In addition to the approval requirements, other numerous and pervasive regulatory requirements apply, both before and after approval of our product candidates, to us, our product candidates, and our suppliers, contract manufacturers, and contract laboratories, and our clinical trial sites and clinical trial researchers including requirements related to testing, manufacturing, quality control, labeling, advertising, promotion, distribution, exporting product materials, reporting to the FDA of certain adverse experiences associated with use of the product candidate, and obtaining additional approvals for certain modifications to the product candidate or its labeling or claims.
+Added: In addition to the approval requirements, other numerous and pervasive regulatory requirements apply, both before and after approval of our product candidates, to us, our product candidates, and our suppliers, contract manufacturers, and contract laboratories, and our clinical trial sites and clinical trial researchers including requirements related to testing, manufacturing, quality control, labeling, advertising, promotion, distribution, exporting product materials, reporting to the FDA of certain adverse experiences associated with use of the product candidate, and obtaining additional approvals for certain modifications to the product candidate or its labeling or claims following approval, if any.
We also are subject to inspection by the FDA and comparable foreign regulatory authorities, to determine our compliance with regulatory requirements, as are our suppliers, contract manufacturers, contract testing laboratories, and our clinical trial sites and clinical researchers and there can be no assurance that the FDA or any other comparable foreign regulatory authority will not identify compliance issues that may disrupt production or distribution, or require substantial resources to correct.
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Delays in obtaining regulatory approvals with respect to any product candidate may:
−Removed: delay commercialization of, and our ability to derive product revenues from, such product candidate;
+Added: delay commercialization of, and our ability to derive product revenue from, such product candidate;
delay any regulatory-related milestone payments payable under outstanding collaboration agreements;
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otherwise diminish any competitive advantages that we may have with respect to such product candidate.
−Removed: We may not obtain the nece ssary U.S., EMA or other worldwide regulatory approvals to commercialize our product candidates in a timely manner, if at all, which would have a material adverse effect on our business, results of operations and financial condition.
−Removed: We need FDA approval to commercialize our product candidates in the United States, EMA approval to commercialize our product candidates in the European Union and approvals from other foreign regulatory authorities to commercialize our product candidates elsewhere in the world.
−Removed: In order to obtain FDA approval of any of our product candidates, we must submit to the FDA an NDA demonstrating that the product candidate is safe for humans and effective for its intended use.
+Added: We may not obtain the necessary FDA, EMA or other worldwide regulatory approvals to commercialize our product candidates in a timely manner, if at all, which would hav e a material adverse effect on our business, results of operations and financial condition.
+Added: We need FDA approval to commercialize our product candidates in the U.S., EMA approval to commercialize our product candidates in the EU and approvals from other foreign regulatory authorities to commercialize our product candidates elsewhere in the world.
+Added: In order to obtain FDA approval of any of our product candidates, we must submit to the FDA a NDA demonstrating that the product candidate is safe for humans and effective for its intended use.
This demonstration requires significant research and animal tests, which are referred to as preclinical studies, as well as human tests, which are referred to as clinical trials.
−Removed: In the European Union, we must submit a Marketing Authorization Application, or MAA, to the EMA.
+Added: In the EU, we must submit a Marketing Authorization Application, or MAA, to the EMA.
Satisfaction of the FDA’s, the EMA’s and other foreign regulatory authorities’ regulatory requirements typically takes many years, depends upon the type, complexity and novelty of the product candidate and requires substantial resources for research, development and testing.
−Removed: Even if we comply with all the requests of regulatory authorities, they may ultimately reject the marketing applications that we file for our product candidates, or we might not obtain regulatory clearance in a timely manner.
+Added: Even if we comply with all the requests of regulatory authorities, they may ultimately reject any marketing applications that we file for our product candidates, or we might not obtain regulatory clearance in a timely manner if at all.
Companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in advanced or late-stage clinical trials, even after obtaining promising earlier trial results or preliminary findings or other comparable results for such clinical trials.
Further, even if favorable testing data is generated during the clinical trials of a product candidate, the applicable regulatory authority may not accept or approve the marketing application filed by a pharmaceutical or biotechnology company for the product candidate.
−Removed: Failure to obtain approval of the FDA, EMA or comparable foreign regulatory authorities of any of our product candidates in a timely manner, if at all, will severely undermine our business, financial condition and results of operation by reducing our potential marketable products and our ability to generate corresponding product revenues.
−Removed: Our research and clinical efforts may not result in drugs that the FDA, EMA or foreign regulatory authorities consider safe for humans and effective for indicated uses, which would have a material adverse effect on our business, results of operations and financial condition.
−Removed: After clinical trials are completed for any product candidate, if at all, the FDA, EMA and foreign regulatory authorities have substantial discretion in the drug approval process of the product candidate in their respective jurisdictions and may require us to conduct additional clinical testing or perform post- marketing studies, which would cause us to incur additional costs.
+Added: Failure to obtain approval of the FDA, EMA or comparable foreign regulatory authorities of any of our product candidates in a timely manner, if at all, will severely undermine our business, financial condition and results of operation by reducing our potential marketable products and our ability to generate corresponding product revenue.
+Added: Our research and clinical efforts may not result in drugs that the FDA, EMA or other foreign regulatory authorities consider safe for humans and effective for indicated uses, which would have a material adverse effect on our business, results of operations and financial condition.
+Added: After clinical trials are completed for any product candidate, if at all, the FDA, EMA and other foreign regulatory authorities have substantial discretion in the drug approval process of the product candidate in their respective jurisdictions and may require us to conduct additional clinical testing or perform post- marketing studies, which would cause us to incur additional costs.
Incurring such costs may have a material adverse effect on our business, results of operations and financial condition.
−Removed: Risks Related to Commercialization
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell any of our product candidates that obtain regulatory approval, we may be unable to generate any revenue.
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Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies or successfully commercialize any of our product candidates.
−Removed: Even though we have received orphan dr ug designation from the FDA for ELX-02 for the treatment of cystinosis, we may not be able to obtain orphan drug marketing exclusivity for ELX-02 or any of our other potential product candidates for other indications.
−Removed: Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs.
−Removed: Under the Orphan Drug Act of 1983, the FDA may designate a drug as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States.
+Added: Even though we have received orphan drug designation from the FDA for ELX-02 for the treatment of cystinosis, we may not be able to obtain orphan drug marketing exclusivity for ELX-02 or any of our other potential product candidates for other indications.
+Added: Regulatory authorities in some jurisdictions, including the U.S.
+Added: and the EU, may designate drugs for relatively small patient populations as orphan drugs.
+Added: Under the Orphan Drug Act of 1983, the FDA may designate a drug as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the U.S.
Similarly, in Europe, a medicinal product may receive orphan designation under Article 3 of Regulation (EC) 141/2000.
−Removed: This applies to products that are intended for a life-threatening or chronically debilitating condition and either the condition affects no more than five in 10,000 persons in the European Union when the application is made or the product, without the benefits derived from orphan status, would unlikely generate sufficient return in the European Union to justify the necessary investment.
−Removed: Moreover, in order to obtain orphan designation in the European Union, it is necessary to demonstrate that there exists no satisfactory method of diagnosis, prevention or treatment of the condition authorized for marketing in the European Union, or if such a method exists, that the product will be of significant benefit to those affected by the condition.
−Removed: The FDA has granted orphan drug designation for ELX-02 for the treatment of cystinosis.
+Added: This applies to products that are intended for a life-threatening or chronically debilitating condition and either the condition affects no more than five in 10,000 persons in the EU when the application is made or the product, without the benefits derived from orphan status, would unlikely generate sufficient return in the EU to justify the necessary investment.
+Added: Moreover, in order to obtain orphan designation in the EU, it is necessary to demonstrate that there exists no satisfactory method of diagnosis, prevention or treatment of the condition authorized for marketing in the EU, or if such a method exists, that the product will be of significant benefit to those affected by the condition.
+Added: The FDA has granted orphan drug designation for ELX-02 for the treatment of cystinosis as well as for the treatment of MPS I and the treatment of R ett syndrome.
We may seek orphan drug designation for our other product candidates, and with respect to other indications.
−Removed: Generally, if a drug with an orphan drug designation subsequently receives the first FDA marketing approval for the indication for which it has such designation, the drug is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing application for the same drug for the same indication for that time period.
−Removed: The applicable period is seven years in the United States.
+Added: Generally, if a drug with an orphan drug designation subsequently receives the first FDA marketing approval for the indication for wh ich it has such designation, the drug is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing application for the same drug for the same indication for that time period.
+Added: The applicable period is seven year s in the U.S.
Orphan drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.
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These organizations also compete with us to attract qualified personnel, acquisitions and joint ventures candidates and for other collaborations.
−Removed: Efforts to compete and the pursuit of activities of our competitors may impose unanticipated costs on our busin ess, which would have a material adverse effect on our business, results of operations and financial condition.
+Added: Efforts to compete and the pursuit of activities of our competitors may impose unanticipated costs on our business, which would have a material adverse effect on our business, results of operations and financial condition.
If we are unable to develop and commercialize our product candidates, our business will be adversely affected.
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Any failure to develop or commercialize any of our product candidates may have a material adverse effect on our business, results of operations and financial condition.
+Added: Risks Related to Our Financial Position and Need for Additional Capital
+Added: We have incurred significant operating losses since our inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future.
+Added: We may never achieve or maintain profitability.
+Added: We have a history of net losses and negative cash flows from operating activities since inception, and as of March 31, 2019, had an accumulated deficit of $98.1 million.
+Added: Historically, we have financed our operations primarily through equity capital investments, and to a lesser extent from loans and grants from the Israeli Innovation Authority of the Ministry of Economy and Industry, or the IIA.
+Added: We have devoted substantially all of our financial resources and efforts to research and development.
+Added: We expect that it will be many years, if ever, before we receive regulatory approval and have a product candidate ready for commercialization.
+Added: We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future.
+Added: Our net losses may fluctuate significantly from quarter to quarter and year to year.
+Added: We anticipate that our expenses will increase substantially if and as we:
+Added: advance ELX-02 further into clinical trials;
+Added: continue the preclinical development of our research programs and advance candidates into clinical trials;
+Added: identify additional product candidates and advance them into preclinical development;
+Added: pursue regulatory authorization to conduct clinical trials of additional product candidates;
+Added: seek marketing approvals for our product candidates that successfully complete clinical trials;
+Added: establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we obtain marketing approval;
+Added: maintain, expand and protect our intellectual property portfolio;
+Added: hire additional clinical, regulatory, management and scientific personnel;
+Added: add operational, financial and management information systems and personnel, including personnel to support product development;
+Added: acquire or in-license other product candidates and technologies;
+Added: operate as a public company.
+Added: We have never generated any revenue from product sales and may never be profitable.
+Added: To become and remain profitable, we and our collaborators must develop and eventually commercialize one or more product candidates with significant market potential.
+Added: This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing and selling those product candidates for which we may obtain marketing approval, securing coverage and reimbursement for those product candidates for which we may obtain marketing approval, and satisfying any post-marketing requirements.
+Added: We may never succeed in these activities and, even if we do, may never generate revenue that is significant or large enough to achieve profitability.
+Added: Our failure to become and remain profitable would decrease the value of the company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations.
+Added: A decline in the value of our Company could also cause you to lose all or part of your investment.
+Added: We will need substantial additional funding.
+Added: If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our product development programs or commercialization efforts.
+Added: We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue and initiate clinical trials of, and seek marketing approval for ELX-02, and as we become obligated to make milestone payments pursuant to our outstanding license agreements.
+Added: In addition, if we obtain marketing approval for any of our current or future product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution of the approved product.
+Added: Our future capital requirements will depend on many factors, including:
+Added: the scope, progress, results and costs of drug discovery, clinical development, laboratory testing and clinical trials for ELX-02 and other product candidates;
+Added: the costs, timing and outcome of any regulatory review of ELX-02 and other product candidates;
+Added: the cost of any other product candidate programs we pursue;
+Added: the costs and timing of commercialization activities, including manufacturing, marketing, sales and distribution, and securing coverage and reimbursement for any product candidates that receive marketing approval;
+Added: the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
+Added: our ability to establish and maintain collaborations on favorable terms, if at all;
+Added: the extent to which we acquire or in-license other product candidates and technologies.
+Added: Identifying potential product candidates and conducting preclinical studies and clinical trials are time consuming, expensive and uncertain processes that take years to complete, and we may never generate the necessary data or results required to obtain marketing approval or achieve product sales for any of our current or future product candidates.
+Added: In addition, our product candidates, if approved, may not achieve commercial success.
+Added: Our commercial revenue, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if at all.
+Added: Accordingly, despite the Public Offering, we will need substantial additional funding in connection with our continuing operations and to achieve our goals.
+Added: However, our existing cash and cash equivalents may prove to be insufficient for these activities.
+Added: If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs, product portfolio expansion or future commercialization efforts.
+Added: Adequate additional financing may not be available to us on acceptable terms, or at all.
+Added: In addition, we may seek additional financing due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our operating plans.
+Added: Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
+Added: Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity and debt financings, as well as entering into new collaborations, strategic alliances and licensing arrangements.
+Added: We do not have any committed external source of funds.
+Added: To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder.
+Added: Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and may be secured by all or a portion of our assets.
+Added: If we raise funds by entering into new collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.
+Added: If we are unable to raise additional funds through equity or debt financings or through collaborations, strategic alliances or licensing arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Risks Related to Our Business and Operations
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As a result, our failure to satisfy the requirements of Section 404 on a timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could cause the market value of our common stock to decline.
−Removed: Various rules and regulations applicable to public com panies make it more difficult and more expensive for us to maintain directors’ and officers’ liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to maintain coverage.
−Removed: If we are unable to maintain adequ ate directors’ and officers’ liability insurance, our ability to recruit and retain qualified officers and directors, especially those directors who may be deemed independent for purposes of the Nasdaq stock m arket rules, will be significantly curtailed.
+Added: Various rules and regulations applicable to public companies make it more difficult and more expensive for us to maintain directors’ and officers’ liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to maintain coverage.
+Added: If we are unable to maintain adequate directors’ and officers’ liability insurance, our ability to recruit and retain qualified officers and directors, especially those directors who may be deemed independent for purposes of the Nasdaq stock market rules, will be significantly curtailed.
We are seeking to expand our business through strategic initiatives.
Our efforts to identify opportunities or complete transactions that satisfy our strategic criteria may not be successful, and we may not realize the anticipated benefits of any completed acquisition or other strategic transaction.
−Removed: Our business strategy includes expanding our products and capabilities.
+Added: Our business strategy includes expanding our product candidates and capabilities.
We regularly evaluate potential merger, acquisition, partnering and in-license opportunities that we expect will expand our pipeline or product offerings, and enhance our research platforms.
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We may also seek to raise funds by selling shares of our capital stock, or securities convertible into our capital stock, which could dilute current stockholders’ ownership interest in our Company.
−Removed: Our business could be affected by litigation, government investigations and enforcement actions.
+Added: Our business could be affected by litigatio n, government investigations and enforcement actions.
We operate in many jurisdictions in a highly regulated industry and we could be subject to litigation, government investigation and enforcement actions on a variety of matters in the U.S.
or foreign jurisdictions, including, without limitation, intellectual property, regulatory, product liability, environmental, whistleblower, Qui Tam, false claims, privacy, anti-kickback, anti-bribery, securities, commercial, employment, and other claims and legal proceedings which may arise from conducting our business.
−Removed: Any of these actions or proceedings may result in significant costs, fines, penalties or imposition of burdensome restrictions on the Company, any of which could have a material adverse effect on our financial condition and results of operations.
+Added: Any of these actions or proceedings may result in significant costs, fines, penalties or imposition of burdensome restrictions on the Company, any of which could have a material adverse effect on our business, results of operations and financial condition.
Comprehensive tax reform bills could adversely affect our business and financial condition .
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We urge our stockholders to consult with their legal and tax advisors with respect to the Tax Cuts and Jobs Act and the potential tax consequences of investing in or holding our common stock.
−Removed: Our ability to use o ur net operating losses to offset future taxable income may be subject to certain limitations.
−Removed: As of September 30, 2018, we had U.S.
−Removed: federal and state NOL carryforwards of $77.2 million and $27.4 million, respectively, and federal research tax credit carryforwards of $0.7 million.
−Removed: net operating loss carryforwards will begin to expire, if not utilized, beginning in 2019 through 2037, and the research tax credits will expire beginning in 2027 through 2037.
+Added: Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.
+Added: As of March 31, 2019, we had U.S.
+Added: federal and state net operating loss, or “NOL”, carry forwards of $89.8 million and $40.0 million, respectively, and federal research tax credit carryforwards of $0.7 million.
+Added: NOL carryforwards will begin to expire, if not utilized, beginning in 2019 through 2037, and the research tax credits will expire beginning in 2027 through 2037.
+Added: Included in these U.S.
+Added: federal NOL carryforwards are $13.1 million of NOLs generated after the effective date of the Tax Cuts and Jobs Act which are not subject to expiration.
+Added: Under the Tax Cuts and Jobs Act, federal NOLs generated in 2018 and future years may be carried forward indefinitely but may not be carried back and are only eligible to offset up to a maximum of 80% of taxable income generated in a given year.
+Added: It is uncertain if and to what extent various U.S.
+Added: states will conform their net operating loss rules to the Tax Cuts and Jobs Act.
In general, under Section 382 of the United States Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-ownership change NOLs to offset future taxable income.
−Removed: We may have experienced ownership changes in the past, including in connection with the Reverse Merger of Sevion Therapeutics, Inc.
−Removed: on December 19, 2017 at which time our pre-change U.S.
+Added: We may have experienced ownership changes in the past, including in connection with the reverse merger on December 19, 2017 at which time our pre-change U.S.
federal NOL carryforward was $77.2 million and research tax credit was $0.7 million.
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Given the offsetting adjustments to the existing valuation allowance, any ownership change is not expected to have an adverse material effect on our Consolidated Financial Statements.
−Removed: Finally, as of September 30, 2018, we had Israeli NOL carryforwards of $24.9 million, which carryforward indefinitely.
+Added: Finally, as of March 31, 2019, we had Israeli NOL carryforwards of $34.6 million, which carry forward indefinitely.
Our ability to utilize our NOLs is dependent on attaining profitability sufficient to offset such available NOLs prior to their expiration.
−Removed: In addition, we may not be able to utilize a portion of the NOLs reflected on our balance sheet, even if we attain profitability.
−Removed: Under the Tax Cuts and Jobs Act, NOLs generated in 2018 and future years may be carried forward indefinitely but may not be carried back and are only eligible to offset up to a maximum of 80% of taxable income generated in a given year.
−Removed: It is uncertain if and to what extent various U.S.
−Removed: states will conform their net operating loss rules to the Tax Cuts and Jobs Act.
+Added: In addition, we may not be able to utilize a portion of the NOLs reflec ted on our balance sheet, even if we attain profitability.
We could be subject to additional tax liabilities.
−Removed: We are subject to federal, state and local taxes in the United States and Israel.
+Added: We are subject to federal, state and local taxes in the U.S.
Significant judgment is required in evaluating our tax positions and our worldwide provision for taxes.
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In the U.S., a number of legislative and regulatory initiatives have focused on containing the cost of healthcare.
−Removed: The Patient Protection and Affordable Care Act, or PPACA, was enacted in the U.S.
−Removed: in March 2010.
+Added: The Patient Protection and Affordable Care Act, or PPACA, was enacted in March 2010.
This law substantially changes the way healthcare is financed by both governmental and private insurers in the U.S., and significantly impacts the pharmaceutical industry.
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These regulations became effective on April 1, 2016.
−Removed: Moreover, in the future, Congress could enact legislation that further increases Me dicaid drug rebates or other costs and charges associated with participating in the Medicaid Drug Rebate Program.
+Added: Moreover, in the future, Congress could enact legislation that further increases Medicaid drug rebates or other costs and charges associated with participating in the Medicaid Drug Rebate Program.
Legislative changes to the PPACA also remain possible and appear likely under the current administration.
−Removed: The issuance of regulations and cove rage expansion by various governmental agencies relating to the Medicaid Drug Rebate Program has and will continue to increase our costs and the complexity of compliance, has been and will be time-consuming, and could have a material adverse effect on our results of operations.
+Added: The issuance of regulations and coverage expansion by various governmental agencies relating to the Medicaid Drug Rebate Program has and will continue to increase our costs and the complexity of compliance, has been and will be time-consuming, and could have a material adverse effect on our results of operations.
Governments in countries where we operate have adopted or have shown significant interest in pursuing legislative initiatives to reduce costs of healthcare.
−Removed: We expect that the implementation of current laws and policies, the amendment of those laws and policies in the future, as well as the adoption of new laws and policies, could have a material adverse effect on our industry generally and on our ability to maintain or increase our product sales or successfully commercialize our product candidates, or could limit or eliminate our future spending on development projects.
+Added: We expect that the implementation of current laws and policies, the amendment of those laws and policies in the future, as well as the adoption of new laws and policies, could have a material adverse effect on our industry generally and on our ability to generate or increase future product sales, if any, or successfully commercialize our product candidates, or could limit or eliminate our future spending on development projects.
In many cases, these government initiatives, even if enacted into law, are subject to future rulemaking by regulatory agencies.
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In the U.S., we may be subject to state security breach notification laws, state health information privacy laws and federal and state consumer protections laws which impose requirements for the collection, use, disclosure and transmission of personal information.
−Removed: Each of these laws are subject to varying interpretations by courts and government agencies, creating complex compliance issues for us.
+Added: Each of these laws is subject to varying interpretations by courts and government agencies, creating complex compliance issues for us.
If we fail to comply with applicable laws and regulations we could be subject to penalties or sanctions, including criminal penalties if we knowingly obtain individually identifiable health information from a covered entity in a manner that is not authorized or permitted by HIPAA or for aiding and abetting the violation of HIPAA.
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EU member states and other jurisdictions have adopted data protection laws and regulations, which impose significant compliance obligations.
−Removed: For example, in May 2016, the European Union formally adopted the General Data Protection Regulation, or GDPR, which apply to all EU member states as of May 25, 2018 and replaces the former EU Data Protection Directive.
−Removed: The regulation introduces new data protection requirements in the European Union and substantial fines for breaches of the data protection rules.
−Removed: The GDPR must be implemented into national laws by the EU member states and will impose strict obligations and restrictions on the ability to collect, analyze, and transfer personal data, including health data from clinical trials and adverse event reporting.
−Removed: Data protection authorities from different EU member states have interpreted the privacy laws differently, which adds to the complexity of processing personal data in the European Union, and guidance on implementation and compliance practices are often updated or otherwise revised.
−Removed: Any failure to comply with the rules arising from the EU Data Protection Directive and related national laws of EU member states could lead to government enforcement actions and significant penalties against us, and adversely impact our operating results.
+Added: For example, in May 2016, the EU formally adopted the General Data Protection Regulation, or GDPR, which applies to all EU member states as of May 25, 2018 and replaces the former EU Data Protection Directive.
+Added: The regulation introduces new data protection requirements in the EU and imposes substantial fines for breaches of the data protection rules.
+Added: The GDPR must be implemented into national laws by the EU member states imposes strict obligations and restrictions on the ability to collect, analyze, and transfer personal data, including health data from clinical trials and adverse event reporting.
+Added: Data protection authorities from different EU member states have interpreted the privacy laws differently, which adds to the complexity of processing personal data in the EU, and guidance on implementation and compliance practices are often updated or otherwise revised.
+Added: Any failure to comply with the rules arising from the GDPR and related national laws of EU member states could lead to government enforcement actions and significant penalties against us, and adversely impact our operating results.
The GDPR will increase our responsibility and liability in relation to personal data that we process and we may be required to put in place additional mechanisms ensuring compliance with EU data protection rules.
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Cyber-attacks are of ever-increasing levels of sophistication, and despite our security measures, our information technology and infrastructure may be vulnerable to such attacks or may be breached, including due to employee error or malfeasance.
−Removed: We have implemented information security measures to protect patients’ personal
−Removed: information against the risk of inappropriate and unauthorized external use and disclosure.
+Added: We have implemented information security measures to protect patients’ personal information against the risk of inappropriate and unauthorized external use and disclosure.
However, despite these measures, and due to the ever-changing information cyber-threat landscape, we may be subject to data breaches through cyber-attacks.
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Like other companies in our industry, we have experienced attacks to our data and systems, including malware and computer viruses.
−Removed: If our systems failed or were breached or di srupted, patient and other data and information may become compromised, we could lose product sales, and suffer reputational damage and loss of confidence by patients, investors and business partners .
+Added: If our systems failed or were breached or disrupted, patient and other data and information may become compromised, we could lose sales for approved products, if any, and suffer reputational damage and loss of confidence by patients, investors and business partners.
Such incidents would result in notification obligations to affected individuals and government agencies, legal claims or proceedings, and liability under federal and state laws that protect the privacy and security of personal information.
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Any of these third parties may terminate their engagements with us at any time.
−Removed: If we need to enter into alternative arrangements, it could delay our product development activities.
−Removed: Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibility to ensure compliance with all required regulations and study protocols.
−Removed: If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our studies in accordance with regulatory requirements or our stated study plans and protocols, we will not be able to complete, or may be delayed in completing, the preclinical studies and clinical trials required to support future NDA submissions and approval of our product candidates.
+Added: If we need to enter into alternative arrangements, it could delay our product development activitie s.
+Added: Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibility to ensure compliance with all applicable laws and regulations and study protocols.
+Added: If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our studies in accordance with regulatory requirements or our stated study plans and protocols, we will not be able to complete, or may be delay ed in completing, the preclinical studies and clinical trials required to support future NDA submissions and approval of our product candidates.
Reliance on third-party manufacturers, testing sites, and investigators entails risks to which we would not be subject if we developed, researched, tested, and manufactured the product candidates ourselves, including:
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termination or nonrenewal of manufacturing, testing, or research agreements with third parties in a manner or at a time that is costly or damaging to us;
−Removed: disruptions to the operations of our third-party manufacturers or suppliers, testing facilities, or research sites caused by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier, testing facility, or research site.
+Added: disruptions to the operations of our third-party manufacturers or suppliers, testing facilities, or research sites caused by conditions unrelated to our business or operations, including unrelated regulatory action against or the bankruptcy of the manufacturer or supplier, testing facility, or research site.
Any of these events could lead to clinical trial delays or failure to obtain regulatory approval, or impact our ability to successfully commercialize future products.
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Our business is specialized and global and we must attract and retain highly qualified individuals across many geographies.
−Removed: We may not be able to continue to attract and retain the highly qualified personnel necessary for developing, manufacturing and commercializing our products and product candidates.
+Added: We may not be able to continue to attract and retain the highly qualified personnel necessary for developing, manufacturing and commercializing our product candidates.
If we are unsuccessful in our recruitment and retention efforts, or if our recruitment efforts take longer than anticipated, our business may be harmed.
We are highly dependent on principal members of our senior management, including Robert Ward, our Chief Executive Officer.
−Removed: While we have entered into employment agreements or offer letters with each of our executive officers, any of them could leave our em ployment at any time, as all of our employees are “at will” employees.
+Added: While we have entered into employment agreements or offer letters with each of our executive officers, any of them could leave our employment at any time, as all of our employees are “at will” employees.
Recruiting and retaining other qualified employees, consultants and advisors for our business, including scientific and technical personnel, will also be critical to our success.
−Removed: Compet ition for skilled personnel is intense and the turnover rate can be high.
−Removed: We may not be able to attract and retain personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for individuals with similar sk ill sets.
+Added: Competition for skilled personnel is intense and the turnover rate can be high.
+Added: We may not be able to attract and retain personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for individuals with similar skill sets.
In addition, failure to succeed in preclinical studies or clinical trials may make it more challenging to recruit and retain qualified personnel.
−Removed: The inability to recruit or loss of the services of any executive, key employee, consultant or advis or may impede the progress of our research, development and commercialization objectives.
+Added: The inability to recruit or loss of the services of any executive, key employee, consultant or advisor may impede the progress of our research, development and commercialization objectives.
If we fail to attract and retain highly qualified personnel, we may not be able to successfully develop, manufacture or commercialize our product candidates.
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If we fail to adequately protect or enforce our intellectual property rights or secure rights to third party patents, the value of our intellectual property rights would diminish, and our business, competitive position and results of operations would suffer.
−Removed: As of September 30, 2018, we owned or licensed 17 issued patents and 36 pending patent applications in the U.S.
+Added: As of December 31, 2018, we owned or licensed 19 issued patents and 34 pending patent applications in the U.S.
and abroad, not including U.S.
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In addition, there are a number of factors that could cause our current or future issued patents to become invalid or unenforceable or that could cause our pending patent applications to not be granted, including known or unknown prior art, deficiencies in the patent application or lack of originality of the technology.
−Removed: Our competitive position and future revenues will depend in part on our ability and the ability of our licensors and collaborators to obtain and maintain patent protection for our product candidates, methods, processes and other technologies, to preserve our trade secrets, to prevent third parties from infringing on our proprietary rights and to operate without infringing the proprietary rights of third parties.
+Added: Our competitive position and future revenue will depend in part on our ability and the ability of our licensors and collaborators to obtain and maintain patent protection for our product candidates, methods, processes and other technologies, to preserve our trade secrets, to prevent third parties from infringing on our proprietary rights and to operate without infringing the proprietary rights of third parties.
However, we cannot predict:
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Furthermore, the life of our patents is limited.
−Removed: The patents we hold, and the patents that may be issued in the future based on currently pending patent applications, relating to our lead product candidate are expected to expire between 2031 and 2038.
−Removed: If we cannot obtain new patents, maintain our existing patents and protect the confidentiality and proprietary nature of our trade secrets and other intellectual property, our business and competitive position will be harmed.
−Removed: Our success will depend in part on our ability to obtain and maintain patent and regulatory protections for our products and investigational compounds, to preserve our trade secrets and other proprietary rights, to operate without infringing the proprietary rights of third parties, and to prevent third parties from circumventing our rights.
+Added: With regard to our lead compound ELX-02, patents that have issued or that may issue in the future from our primary composition of matter patent family are currently set to expire in 2031.
+Added: We have pending patent families directed to specific methods of using and manufacturing ELX-02, and any patents that may issue from these families would be expected to expire in 2035 and 2038, respectively.
+Added: However, these applications may not issue, and even if they do issue the resultant patents may not provide adequate coverage to meaningfully block competitors from launching their products.
+Added: We will likely pursue additional patent protection relating to ELX-02 in the future, including for example additional methods of use or manufacture, specific formulations, or combinations of ELX-02 with other therapeutic agents.
+Added: However, as with our pending patent families, any applications we file in the future may not issue, or may not result in adequate coverage to adequately protect our assets.
+Added: Depending upon the timing, duration, and conditions of any FDA marketing approval for ELX-02, one or more of our patents may be eligible for patent term extension of up to five years under the Hatch-Waxman Act.
+Added: However, we may not receive an extension if we fail to exercise due diligence during the testing phase or regulatory review process, fail to apply for an extension within applicable deadlines, or otherwise fail to satisfy applicable requirements.
+Added: Moreover, the length of the extension could be less than we request.
+Added: Only one patent per approved product can be extended, the extension cannot extend the total patent term beyond 14 years from approval and only those claims covering the approved drug, an approved method of using the approved drug, or a method of manufacturing the approved drug may be extended.
+Added: If we are unable to obtain patent term extension or the term of any such extension is less than we request, the period during which we can enforce our patent rights for ELX-02 will be shortened and our competitors may obtain approval to market competing products sooner.
+Added: As a result, our revenue from applicable products could be reduced.
+Added: Further, if this occurs, our competitors may take advantage of our investment in development and trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case, and our business could be harmed.
+Added: If we cannot obtain new patents, maintain our existing patents and protect the confidentiality and proprietary nature of our trade secrets and other intellectual property, our business and competitive position may be harmed.
+Added: Our success will depend in part on our ability to obtain and maintain patent and regulatory protections for our product candidates, to preserve our t rade secrets and other proprietary rights, to operate without infringing the proprietary rights of third parties, and to prevent third parties from circumventing our rights.
Due to the time and expense of bringing new product candidates through development and regulatory approval to the marketplace, there is particular importance in obtaining patent and trade secret protection for significant new technologies, products and processes.
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There is also a risk that disputes may arise as to the rights to technology or products developed in collaboration with other parties.
−Removed: Our products and product candidates are expensive and time-consuming to test and develop.
+Added: Our product candidates are expensive and time-consuming to test and develop.
Even if we obtain and maintain patents, our business may be significantly harmed if the patents are not broad enough to protect our products from copycat products.
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If our trade secrets were exposed, it would help our competitors and adversely affect our business prospects.
−Removed: If we are found to be infringing on patents owned by others, we may be forced to pay damages to the patent owner and/or obtain a license to continue the manufacture, sale or development of our products.
−Removed: If we cannot obtain a license, we may be prevented from the manufacture, sale or development of our products, which would adversely affect our business.
+Added: If we are found to be infringing on patents owned by others, we may be forced to pay damages to the patent owner and/or obtain a license to continue the manufacture, sale or development of our product candidates.
+Added: If we cannot obtain a license, we may be prevented from the manufacture, sale or development of our product candidates, which would adversely affect our business.
If we infringe the rights of third parties we could be prevented from selling products, forced to pay damages and required to defend against litigation which could result in substantial costs and may have a material adverse effect on our business, results of operations and financial condition.
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defend litigation or administrative proceedings that may be costly whether we win or lose, and which could result in a substantial diversion of management resources;
−Removed: Any costs incurred in connection with such events or the inability to develop or sell our products may have a material adverse effect on our business, results of operations and financial condition.
+Added: Any costs incurred in connection with such events or the inability to develop or sell our products may have a material adverse effect on our busines s, results of operations and financial condition.
We rely on confidentiality agreements that could be breached and may be difficult to enforce which could have a material adverse effect on our business and competitive position.
2 unchanged sentences
Moreover, to the extent that our contractors, consultants, advisors and research collaborators apply or independently develop intellectual property in connection with any of our projects, disputes may arise as to the proprietary rights to the intellectual property.
−Removed: If a dispute arises, a court may determine that the rights belongs to a third party, and enforcement of our rights can be costly and unpredictable.
+Added: If a dispute arises, a court may determine that the rights belong to a third party, and enforcement of our rights can be costly and unpredictable.
In addition, we rely on trade secrets and proprietary know-how that we seek to protect in part by confidentiality agreements with our employees, contractors, consultants, advisors and other third parties.
4 unchanged sentences
Any breach of our confidentiality agreements or our failure to effectively enforce such agreements may have a material adverse effect on our business and competitive position.
−Removed: If we cannot meet requirements under our license agreement, we could lose the rights to our products, which could have a material adverse effect on our business.
+Added: If we cannot meet requirements under our license agreement, we could lose the rights to our product candidates, which could have a material adverse effect on our business.
We depend on the license agreement with TRDF to maintain the intellectual property rights to certain of our product candidates.
5 unchanged sentences
Potential political, economic and military instability in Israel, where our research facilities are located, may adversely affect our results of operations.
−Removed: Our research offices and lab are located in Israel.
+Added: Our research offices are located in Israel.
Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business.
3 unchanged sentences
Ongoing and revived hostilities or other Israeli political or economic factors, could negatively affect business conditions in Israel in general and our business in particular.
−Removed: In addition, since 2010 political uprisings and conflicts in various countries in the Middle East are affecting the political stability of those countries and the region in general .
+Added: In addition, since 2010 political uprisings and conflicts in various countries in the Middle East have been affecting the political stability of those countries and the region in general.
It is not clear how this instability will develop and how it will affect the political and security situation in the Middle East.
This instability has raised concerns regarding security in the region and the potential for armed conflict.
−Removed: Additionally, various group s are involved in hostiliti es in the region .
+Added: Additionally, various groups are involved in hostilities in the region.
Although these groups’ activities have not directly affected the political and economic conditions in Israel, a stated purpose is to take control of the Middle East, including Israel.
−Removed: The tension between Israel and t h ese other groups may escalate in the future and turn violent, which could affect the Israeli economy in general and us in particular.
+Added: The tension between Israel and these other groups may escalate in the future and turn violent, which could affect the Israeli economy in general and us in particular.
Such instability may lead to deterioration in the political and trade relationships that exist between Israel and certain other countries.
−Removed: Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions, could harm our results of operations and could make it more difficult for us to raise capital.
−Removed: Several countries, principally in the Middle East, still restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in Israel or political instability in the r egion continues or increases.
+Added: Any armed conflicts, terrorist
+Added: activities or political instability in the region could adversely affect business conditions, could harm our results of operations and could make it more difficult for us to raise capital.
+Added: Several countries, princ ipally in the Middle East, still restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in Israel or political instability in the region continues or increases.
Similarly, Israeli companies are limited in conducting business with entities from several countries.
−Removed: In addition, the political and security situation in Israel may result in parties with whom we have agreements involving per formance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.
+Added: In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performa nce in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.
Our insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East or for any resulting disruption in our operations.
5 unchanged sentences
These restrictive laws and policies, even though we are a U.S.-based company, may have an adverse impact on our operating results, financial conditions or the expansion of our business.
−Removed: Our research operations may be disrupted by the obligations of our personnel to perform military service which could have a material adverse effect on our business.
+Added: Our research operations in Israel may be disrupted by the obligations of our personnel to perform military service which could have a material adverse effect on our business.
Our employees and consultants in Israel may be obligated to perform one month, and in some cases longer periods, of military reserve duty until they reach the age of 40 (or older, for citizens who hold certain positions in the Israeli armed forces reserves) and, in the event of a military conflict or emergency circumstances, may be called to immediate and unlimited active duty.
2 unchanged sentences
It is possible that there will be similar large-scale military reserve duty call-ups in the future.
−Removed: Our operations could be disrupted by the absence of a significant number of our Israeli personnel military service.
+Added: Our operations could be disrupted by the absence of a significant number of our Israeli personnel related to military service.
Such disruption could adversely affect our business and research operations.
−Removed: Additionally, the absence of a significant number of the employees of our Israeli suppliers and contractors related to military service or the absence for extended periods of one or more of their key employees for military service may disrupt their operations.
−Removed: Because a certain portion of our expenses are incurred in New Israeli Shekels, or NIS, our results of operations may be seriously harmed by currency fluctuations and inflation.
+Added: Additionally, the absence of a significant number of the employees of our Israeli vendors and contractors related to military service or the absence for extended periods of one or more of their key employees for military service may disrupt their operations.
+Added: Because a certain portion of our expenses are incurred in New Israeli Shekels, or NIS, our results of operations may be harmed by currency fluctuations and inflation.
We report our financial statements in U.S.
13 unchanged sentences
We received Israeli government grants for our research and development activities and programs.
−Removed: The terms of such grants may require us, in the future, to pay royalties and to satisfy specific conditions if and to the extent we receive future
−Removed: royalties or i n order to complete the sale of such grant-based technologies and programs.
+Added: The terms of such grants may require us, in the future, to pay royalties and to satisfy specific conditions if and to the extent we receive future royalties or in order to complete the sale of such grant-based technologies and programs.
We may be required to pay penalties in addition to payment of the royalties.
1 unchanged sentence
To date, we have received the aggregate amount of approximately $2.6 million from the IIA for the development of our technologies.
−Removed: With respect to such grants we are committed to pay certain royalties (including accrued LIBOR interest) up to $2.7 million.
+Added: With respect to such grants we are required to pay certain royalties (including accrued LIBOR interest) up to $2.7 million.
We are required to comply with the requirements of the Israeli Encouragement of Research, Development and Technological Innovation in the Industry Law, 5744-1984, as amended, and related regulations, or the R&D Law, with respect to these past grants.
If we fail to comply with the R&D Law, we may be required to refund certain grants previously received and/or to pay interest and penalties and we may become subject to criminal charges.
−Removed: We have not commenced the payment obligation of the royalties and have a contingent obligation with respect to royalty-bearing participation received or accrued, to include LIBOR interest, in the amount of approximately $2.7 million .
−Removed: In addition, with respect to such grants we are obligated to pay royalties at a rate of 3% to 6% from the revenues generated from the sale of product (as well as revenue from associated services) developed using the IIA grants.
+Added: With respect to such grants, we are obligated to pay royalties at a rate of 3% to 6% from the revenue generated from the sale of product (as well as revenue from associated services) developed using IIA grants up to a maximum amount equal to repayment of the grant proceeds received plus accrued interest.
+Added: We have not commenced the payment obligation of the royalties since we have not yet generated income, and we have a contingent obligation with respect to such royalty payments including LIBOR interest, in the amount of approximately $2.7 million .
The R&D Law and the regulations promulgated thereunder provide that when a company develops know-how, technology or products using IIA grants, the terms of these grants and the R&D Law restrict the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how outside of Israel, without the prior approval of the IIA.
−Removed: Therefore, if aspects of our technologies are deemed to have been developed with IIA funding according to the R&D Law, the discretionary approval of the IIA may be required for any assignment and/or transfer to third parties inside or outside of Israel of know-how or transfer outside of Israel of manufacturing or manufacturing rights related to those aspects of such technologies, and may result in payment of increased royalties (both increased royalty rates and increased royalties ceilings) and/or payment of additional amounts to the IIA.
−Removed: Such approvals may be subject to conditions and\or may not be received.
−Removed: Furthermore, according to the R&D Law, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development out of Israel (including for the purpose of manufacturing).
+Added: Therefore, if aspects of our technologies are deemed to have been developed with IIA funding according to the R&D Law, the discretionary approval of the IIA may be required for any assignment and/or transfer to third parties inside or outside of Israel of know-how or transfer outside of Israel of manufacturing or manufacturing rights related to those aspects of such technologies, and may result in payment of increased royalties (both increased royalty rates and increased royalty ceilings) and/or payment of additional amounts to the IIA.
+Added: Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development outside of Israel (including for the purpose of manufacturing).
+Added: Such approvals may not be granted by the IIA and any conditions imposed may not be acceptable to the Company.
The R&D Law and the regulations promulgated thereunder provide that the transfer of IIA-supported technology or know-how outside of Israel may involve the payment of additional amounts depending upon the value of the transferred technology or know-how, the amount of IIA support, the time of completion of the IIA-supported research project and other factors up to a maximum of six times the amount of grants received.
11 unchanged sentences
Subsequent court cases have not provided significant clarity on these matters.
−Removed: Risks Related to Our Common S tock
+Added: Risks Related to Our Common Stock
Our stock price may be volatile and purchasers of our common stock could incur substantial losses.
−Removed: We recently received approval for up-listing to The Nasdaq Global Market, and our common stock began trading on The Nasdaq Global Market on April 26, 2018 under the symbol “ELOX.” In addition, as mentioned above, on April 30, 2018, we completed the Public Offering, which resulted in gross proceeds to us of approximately $57.5 million.
+Added: Our common stock began trading on The Nasdaq Global Market on April 26, 2018 under the symbol “ELOX.” On April 30, 2018, we completed a public offering of our common stock, which resulted in gross proceeds to us of approximately $57.5 million.
The trading price of our common stock has been volatile and may continue to be volatile and subject to wide fluctuations in the future.
15 unchanged sentences
The 2018 Plan became effective on April 20, 2018.
−Removed: As of September 30, 2018, individuals held options to purchase an aggregate of 3,611,400 shares of our common stock.
+Added: As of March 31, 2019, individuals held share options to purchase an aggregate of 3,921,823 shares of our common stock.
If our board of directors elects to increase the number of shares available for future grant by the maximum amount each year, our stockholders may experience additional dilution, which could have a negative effect on our share price.
−Removed: Unregistered Sales of Equity Securities and Use of Proceeds
+Added: Risks Related to the Reverse Merger
+Added: The risks arising with respect to the historic Sevion business and operations may be different from what we anticipate, which could lead to significant, unexpected costs and liabilities and could materially and adversely affect our business going forward.
+Added: We may not have fully anticipated the extent of the risks associated with the reverse merger between Sevion and Eloxx Limited.
+Added: After the reverse merger, Sevion’s historic business was discontinued, but prior to the transaction Sevion had a long operating history.
+Added: As a consequence, we may be subject to claims, demands for payment, regulatory issues, costs and liabilities that were not and are not currently expected or anticipated.
+Added: Notwithstanding our exercise of due diligence pre-transaction and risk mitigation strategies post-transaction, the risks involved with taking over a business with a long operating history and the costs and liabilities associated with these risks may be greater than we anticipate.
+Added: Further, we do not have rights of indemnification against the pre-transaction stockholders of Sevion.
+Added: We may not be able to contain or control the costs or liabilities associated with Sevion’s historic business, which could materially and adversely affect our business, liquidity, capital resources or results of operation, and may divert management’s time and attention from conducting the business of the Company.
+Added: Unregistered Sales of Equit y Securities and Use of Proceeds
Not applicable.
4 unchanged sentences
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.