What changed in this filing

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Item 1. Business

2024-03-29 compared with 2023-03-29 · 138 added, 152 removed, 488 unchanged (37% of the section changed)

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On October 17, 2022, we announced commercial availability of PEDMARK ® in the United States.

Further, PEDMARQSI ® (PEDMARK ® brand name outside of U.S.) received European Commission Marketing Authorization in June 2023 and received U.K.

approval in October 2023.

In March 2024, we announced that we entered into an agreement with Norgine, a leading European specialist pharmaceutical company.

This is an exclusive licensing agreement under which Norgine will commercialize PEDMARQSI ® in Europe, Australia and New Zealand.

PEDMARQSI ® is the first and only approved therapy in the EU and U.K.

for the prevention of ototoxicity (hearing loss) induced by cisplatin chemotherapy in patients 1 month to < 18 years of age with localized, non-metastatic solid tumors.

Under the terms of the licensing agreement, Fennec will receive approximately $43 million in upfront consideration and up to approximately $230 million in additional commercial and regulatory milestone payments and double-digit tiered royalties on net sales of PEDMARQSI ® in the licensed territories up to the mid-twenties.

Norgine will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations in the licensed territories.

We sell our product through an experienced field force including Regional Pediatric Oncology Specialists and medical science liaisons who are helping to educate the medical communities and patients about cisplatin induced ototoxicity and our programs supporting patient access to PEDMARK ® .

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The program offers assistance and resources, regardless of insurance type, that can address co-pays or lack of coverage when certain eligibility requirements are met.

Fennec HEARS also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK ® and provide tips and resources for managing treatment.

We received Orphan Drug Exclusivity for PEMARK in January 2023, which provides seven years of market exclusivity from its FDA approval on September 20, 2022 until September 20, 2029.

We currently have three patents listed for PEDMARK ® in the FDA’s Orange Book.

In March 2020, the United States Patent and Trademark Office, or USPTO,

allowed Patent No.

10,596,190 (“US ‘190”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using our PEDMARK ® product.

In September 2022, the USPTO issued Patent No.

11,291,728 (“728”) and, in December 2022, the USPTO issued Patent No.

11,510,984 (‘984) that covers PEDMARK ® pharmaceutical formulation.

The “728” and “984” patents will expire in 2039 and the “190” patent will expire in 2038.

Additionally, in January 2023, the USPTO issued Notices of Allowance for an additional patent application that covers the PEDMARK ® pharmaceutical formulation.

We expect this additional U.S.

patent to issue in Q1 or Q2 of 2023.

This patent will expire in 2039, unless held invalid or unenforceable by a court of final jurisdiction.

HEARS ® also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK ® and provide tips and resources for managing treatment.

We received Orphan Drug Exclusivity for PEDMARK © in January 2023, which provides seven years of market exclusivity from its FDA approval on September 20, 2022, until September 20, 2029.

We have been granted three additional U.S.

patents that cover the PEDMARK ® formulation, each of which have been listed in the U.S.

FDA’s “Orange Book” (U.S.

11,291,728 (issued April 5, 2022), U.S.

11,510,984 (issued November 29, 2022), and U.S.

11,617,793 (issued April 4, 2023)), and additional United States patent applications from this family remain pending at the USPTO.

Our ‘363 issued patent covers a process of manufacture, which is a patent category that does not qualify for FDA orange book listing.

Seven additional US patent applications are pending, three of which cover methods of using our PEDMARK ® formulation and are eligible for listing on the FDA Orange Book if issued.

We are also pursuing additional patent applications in both the U.S.

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PEDMARK ® is also the only therapeutic agent with proven efficacy and safety data with an established dosing paradigm, across two open-label, randomized Phase 3 clinical studies, the Clinical Oncology Group (COG) Protocol ACCL0431 and SIOPEL 6.

and Europe, it is estimated that, annually, more than 10,000 children may receive platinum-based chemotherapy.

and Europe, it is estimated that more than 10,000 children may receive platinum-based chemotherapy on an annual basis.

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids.

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Both studies have been completed.

The COG ACCL0431 protocol enrolled childhood cancers typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma, medulloblastoma, and other solid tumors.

The COG ACCL0431 protocol enrolled childhood cancer patients typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma, medulloblastoma, and other solid tumors.

SIOPEL 6 enrolled only hepatoblastoma patients with localized tumors.

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Infants and young children that are affected by ototoxicity at critical stages of development lack speech and language development and literacy, and older children and adolescents often lack social-emotional development and educational achievement.

European Marketing Authorization Application

In August 2018, the Pediatric Committee (“PDCO”) of the European Medicines Agency (“EMA”) accepted our pediatric investigation plan (“PIP”) for sodium thiosulfate with the trade name Pedmarqsi for the condition of the prevention of

platinum-induced hearing loss.

European Commission Marketing Authorization

An accepted PIP is a prerequisite for filing a Marketing Authorization Application (“MAA”) for any new medicinal product in Europe.

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We were also advised that PEDMARQSI ® is eligible for submission of an application for a Pediatric Use Marketing Authorization (“PUMA”).

A PUMA is a dedicated marketing authorization covering the indication and appropriate formulation for medicines developed exclusively for use in the pediatric population and provides market protection up to 10 years.

Therefore, this decision allows us to proceed with the submission of a PUMA in the European Union (“EU”) with incentives of automatic access to the centralized procedure and up to 10 years of data and market protection.

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The EMA continues its review of our MAA.

In June 2023, we received European Commission Marketing Authorization for PEDMARQSI ® (known as PEDMARK ® in the U.S.) Further, the decision included the receipt of a PUMA in the European Union (“EU”).

This PUMA exclusivity is effective until May 26, 2033.

As stated earlier, in March 2024, Fennec and Norgine announced an exclusive licensing agreement under which Norgine will commercialize PEDMARQSI ® in Europe, Australia and New Zealand.

Third-Party Reimbursement

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We currently wholly own two patent families directed to formulations that cover PEDMARK ® and other potential future sodium thiosulfate formulations, and methods of using and manufacturing the same.

Three US patents have been issued from these two families, and two of the issued patents (US ‘984 Patent;

US ‘728 Patent) qualify for and have been listed in the FDA Orange Book.

The USPTO has now granted three additional U.S.

patents that cover the PEDMARK ® formulation, each of which have been listed in the U.S.

FDA’s “Orange Book” (U.S.

11,291,728 (issued April 5, 2022), U.S.

11,510,984 (issued

November 29, 2022), and U.S.

11,617,793 (issued April 4, 2023)), and additional United States patent applications from this family remain pending at the USPTO.

Our ‘363 issued patent covers a process of manufacture, which is a patent category that does not qualify for FDA orange book listing.

One additional US pending patent application covering our PEDMARK formulation has been allowed (US App.

17/871,825), and on issuance will be listed in the FDA Orange Book.

Six additional US patent applications are pending, three of which applications cover methods of using our PEDMARK ® formulation and are eligible for listing on the FDA Orange Book if issued.

The three other applications cover additional sodium thiosulfate formulations for potential future use.

Additional applications from these families are pending in Australia, Brazil, Canada, China, the European Patent Office (EPO), Hong Kong, Indonesia, Israel, Japan, South Korea, Mexico, Malaysia, New Zealand, Russia, Singapore, and Thailand.

Seven additional US patent applications are pending, three of which cover methods of using our PEDMARK ® formulation and are eligible for listing on the FDA Orange Book if issued.

The four other applications cover additional sodium thiosulfate formulations for potential future use.

A patent in this family has been granted in Indonesia.

Additional applications from these families are pending in Australia, Brazil, Canada, China, the European Patent Office (EPO), Hong Kong, Israel, Japan, South Korea, Mexico, Malaysia, New Zealand, Russia, Singapore, and Thailand.

Applications from these patent families, where granted, valid, and enforceable, will expire in July 2039, exclusive of any patent term adjustment or extension.

We have exclusively in-licensed from Oregon Health & Science University (“OHSU”) one patent family directed to the use of sodium thiosulfate to reduce the occurrence of ototoxicity.

This family includes the granted US ‘190 Patent and

one pending US patent application.

The US ‘190 Patent has been listed in the FDA Orange Book.

The US ‘190 Patent will expire in January 2038, unless held invalid or unenforceable by a court of final jurisdiction.

The pending US patent application, if granted, valid, and enforceable, will expire in November 2037, exclusive of any patent term adjustment or extension.

In 2022, OHSU abandoned applications from this family in all ex-US jurisdictions.

This family includes the granted US ‘190 Patent and two pending US patent application.

The US ‘190 Patent had been listed in the FDA Orange Book.

On April 18, 2023, the PTAB invalidated the only claim of the‘190 Patent.

The final written decision became effective June 20, 2023.

In light of PTAB’s final written decision on the invalidity of the ‘190 Patent, we requested that the FDA remove the ’190 Patent from the Orange Book.

Two United States patent applications claiming priority through the ‘190 Patent remain pending at the United States Patent and Trademark Office (“USPTO”).

Our success is significantly dependent on our ability to obtain and maintain patent protection for PEDMARK ® , both in the United States and abroad.

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11,510,984 (the “US ‘984 Patent”) that also covers the PEDMARK ® pharmaceutical formulation.

On January 23, 2023, the USPTO issued a Notice of Allowance for an additional patent application (US App.

17/871,825) that covers the PEDMARK ® pharmaceutical formulation.

We expect this application to issue as a patent in Q2 of 2023.

We own three additional pending US patent applications directed to methods of treatment using the PEDMARK ® formulation.

On April 4, 2023, the USPTO issued U.S.

11,617,793 (the “US ‘793”) that covers the PEDMARK ® pharmaceutical formulation.

We own three additional pending US patent applications directed to methods of treatment using the PEDMARK ® formulation, which, if granted, will be eligible for listing in the Orange Book.

These patents where granted will expire in July 2039, exclusive of patent term adjustment and/or extension, unless held invalid or unenforceable by a court of final jurisdiction.

We have exclusively licensed from OHSU U.S.

10,596,190 (“the US ‘190 Patent”) and a pending US patent application directed to a method of reducing ototoxicity using sodium thiosulfate.

The US ‘190 Patent will expire in January 2038, unless held invalid or unenforceable by a court of final jurisdiction.

The pending US patent application, if granted, valid, and enforceable, will expire in November 2037, exclusive of any patent term adjustment or extension, unless held invalid or unenforceable by a court of final jurisdiction.

On approval of PEDMARK ® , we listed the US ‘190 Patent and US ‘728 Patent in the United Stated Food and Drug Administration’s (FDA) Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book.

The US’984 Patent was listed in the FDA Orange Book on December 14, 2022, following its issuance.

A third formulation application, USSN 17/871,825 has been allowed by the U.S.

Patent Office and will be listed when issued.

If issued, the three additional US pending patent applications owned by us and the exclusively licensed pending US patent application owned by OHSU are eligible for listing in the FDA Orange Book.

Orphan Drug Exclusivity

10,596,190 (“the US ‘190 Patent”) and two pending US patent application directed to a method of reducing ototoxicity using sodium thiosulfate.

On April 18, 2023, the PTAB invalidated the only claim of the‘190 Patent.

The final written decision became effective June 20, 2023.

The ‘190 Patent was previously listed in Orange Book.

In light of PTAB’s final written decision on the invalidity of the ‘190 Patent, we requested that the FDA remove the ’190 Patent from the Orange Book.

Two United States patent applications claiming priority through the ‘190 Patent remain pending at the United States Patent and Trademark Office (“USPTO”), and if granted, will be eligible for listing in the Orange Book.

Orphan Drug Exclusivity and European Union Pediatric-Use marketing Exclusivity

We were granted Orphan Drug Exclusivity (“ODE”) in January 2023 for the use of PEDMARK ® in the indication to reduce the risk of ototoxicity, or hearing loss, associated with cisplatin use in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

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We plan to pursue PUMA upon approval of the MAA, which would allow for 10 years of market exclusivity upon PUMA approval.

Following the approval of PEDMARQSI ® (EU Brand name for PEDMARK ® ) in Europe on May 26, 2023, we were granted PUMA in the European Union pursuant to Regulation (EC) No.

1901/2006 and Regulation (EC) No.

1902/2006, which provides for 10 years of exclusivity (8 years of data exclusivity + 2 years of market exclusivity).

This exclusivity is effective until May 26, 2033.

Hope Medical Enterprises, Inc.

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On October 29, 2021, Hope Medical Enterprises, Inc.

(“Hope”) filed two petitions for inter partes review (“IPR”) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO.

In its petitions, Hope seeks to invalidate our U.S.

10,596,190 (“US ‘190 Patent”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using our PEDMARK ® product, and our U.S.

10,792,363 (“US ’363 Patent”), which relates to an anhydrous form of STS and its method of manufacture, which is the active pharmaceutical

ingredient in our PEDMARK ® product.

The US ‘190 Patent was issued on March 24, 2020.

The US ‘363 Patent was issued on October 6, 2020.

On January 11, 2022, OHSU filed a Request for Supplemental Examination of US ‘190 requesting the consideration by the Central Re-examination Unit (“CRU”) of the USPTO of certain prior art references, including references cited by Hope in its Petition for IPR that are relevant to the granted claim of the patent.

On May 9, 2022, the PTAB granted Hope’s Petition to Institute the IPR against the ‘190 patent and a stayed the Supplemental Examination pending the result of the ‘190 IPR.

On August 12, 2022, we filed a Motion to Amend the single claim of the ‘190 Patent in the IPR to focus on the treatment of medulloblastoma.

We expect a decision in the ‘190 IPR in May 2023, which can be appealed by the losing party.

Further, in May 2022, the PTAB granted Hope’s Petition to Institute the IPR against the ‘363 patent.

(“Hope”) filed a Petition for inter partes review (IPR2022-00123) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO to invalidate U.S.

10,596,190 (the “‘190 Patent”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using PEDMARK ® .

The ‘190 Patent was issued on March 24, 2020.

On April 18, 2023, the PTAB invalidated the only claim of the‘190 Patent.

The final written decision became effective June 20, 2023.

The ‘190 Patent was previously listed in the United States Approved Drug Products with Therapeutic Equivalence Evaluations (also known as the “Orange Book”).

In light of PTAB’s final written decision on the invalidity of the ‘190 Patent, we requested that the FDA remove the ’190 Patent from the Orange Book.

Two United States patent applications claiming priority through the ‘190 Patent remain pending at the United States Patent and Trademark Office (“USPTO”).

On October 29, 2021, Hope Medical Enterprises, Inc.

(“Hope”) filed a Petition for inter partes review (IPR2022-00125) to invalidate our wholly owned U.S.

10,792,363 (the “’363 Patent”), which relates to an anhydrous form of STS and its method of manufacture, which is the active pharmaceutical ingredient in the PEDMARK ® product.

The ‘363 Patent was issued October 6, 2020.

During the ‘363 IPR, we disclaimed the patent claims directed to the anhydrous morphic form of STS and continued with claims directed to its method of manufacture.

We expect a decision in the ‘363 IPR in May 2023, which can be appealed by the losing party.

Further, in May 2022, the PTAB granted Hope Medical’s Petition to Institute the IPR against the ‘363 Patent.

During the ‘363 Patent IPR, we disclaimed the ‘363 Patent claims directed to the anhydrous morphic form of STS, and filed a Motion to Amend the remaining method of manufacture claims.

On December 14, 2022, we filed a Revised Motion to Amend the remaining claims in the ‘363 Patent.

We expect a decision in the ‘363 IPR in May 2023, which can be appealed by the losing party.

We plan to vigorously defend our intellectual property rights related to PEDMARK ® .

However, we are unable to predict the outcome of Hope’s IPR petitions, or the Reexamination.

While we now have, or will shortly receive, additional U.S.

patents that cover PEDMARK ® over the IPR challenged patents, an invalidation of our patents covering PEDMARK ® could have a material adverse effect on our ability to protect our rights in PEDMARK ® beyond periods of marketing exclusivity for PEDMARK ® possible in the United States under Orphan Drug Designation and in Europe under European Market Exclusivity for Pediatric Use (“PUMA”).

Because the remaining claims in the ‘363 patent are directed to a method of manufacture, the ‘363 patent is not eligible for listing in the Orange Book.

In September 2023, the PTAB issued a Final Written Decision in favor of Fennec and upholding the amended claim.

The USPTO has now granted three additional U.S.

patents that cover the PEDMARK ® formulation, each of which have been listed in the U.S.

FDA’s “Orange Book” (U.S.

11,291,728 (issued April 5, 2022), U.S.

11,510,984 (issued November 29, 2022), and U.S.

11,617,793 (issued April 4, 2023)), and seven additional United States patent applications from this family are pending at the USPTO.

We plan to vigorously defend our intellectual property rights to PEDMARK ® if challenged.

An invalidation of our patents covering PEDMARK ® could have a material adverse effect on our ability to protect our rights in PEDMARK ® beyond periods of marketing exclusivity for PEDMARK ® in the United States under Orphan Drug Designation.

CIPLA ANDA Litigation

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218028) for a generic version of PEDMARK ® (sodium thiosulfate solution) that contains Paragraph IV Certifications on two of our patents covering PEDMARK ® :

the OHSU licensed US ‘190 Patent, expiration date January 2038;

and our US 11,291,728 Patent, expiration date July 2039.

On January 6, 2023, we received a letter dated January 5, 2023, notifying us that CIPLA submitted to the FDA a Paragraph IV Certification on our newly issued US 11,510,984 Patent.

the OHSU licensed ‘190 Patent, expiration date January 2038;

and our US 11,291,728 Patent (the “’728 Patent”), expiration date July 2039.

On January 6, 2023, we received a letter dated January 5, 2023, notifying us that CIPLA submitted to the FDA a Paragraph IV Certification on our newly issued US 11,510,984 Patent (the “’984 Patent”).

These patents are listed in FDA’s list of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book, for PEDMARK ® .

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On January 10, 2023, we filed suit against the CIPLA entities in the United States District Court for the District of New Jersey (Case No.

3:23-cv-00123), for infringement of the ‘190 Patent and the ‘728 Patent.

2:23-cv-00123), for infringement of the ‘190 Patent, the ‘728 Patent, and the ‘984 Patent.

On April 20, 2023, we filed an Amended Complaint to assert infringement of the ‘728 patent and the ‘984 Patent.

On April 4, 2023, we

were granted US 11,617,793 Patent (the “’793 Patent”) covering the formulation of the PEDMARK ® product, which was listed in the Orange Book on or around April 17, 2023, and has an expiration date of July 2039.

On May 11, 2023, we received written notice of CIPLA’s Paragraph IV Certification as to the ’793 Patent, which was dated May 10, 2023, along with an enclosed statement of alleged factual and legal bases for stating that the ’793 Patent is invalid, unenforceable, and/or will not be infringed by CIPLA’s ANDA Product.

On July 27, 2023, we filed a Second Amended Complaint to assert the ‘793 Patent.

The suit is ongoing.

We plan to pursue PUMA upon approval of the MAA, which would allow for 10 years of market exclusivity in Europe upon PUMA approval.

PEDMARQSI ® (EU Brand name for PEDMARK ® ) received European Commission approval in June 2023 and was granted 10 years of market exclusivity in Europe under PUMA.

Our success is significantly dependent on our ability to obtain and maintain patent protection for PEDMARK ® , both in the United States and abroad.

Our patent position and proprietary rights are subject to various risks and uncertainties.

read the “Risk Factors” in Item 1A of this Annual Report for information about certain risks and uncertainties that may affect our patent position and proprietary rights.

Please read the “Risk Factors” in Item 1A of this Annual Report for information about certain risks and uncertainties that may affect our patent position and proprietary rights.

We also rely upon unpatented confidential information to remain competitive.

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Further, the contractors selected would have to be inspected by the FDA and found to be in substantial compliance with federal regulations in order for an application for one of our drug candidates to be approved, and there can be no assurance that the contractors we select would pass such an inspection.

We have entered into agreements with a supplier of the active pharmaceutical ingredient (API) contained in PEDMARK ® for future requirements and we have contracted with third-party contract manufacturers who are manufacturing PEDMARK ® vials for us.

We have entered into agreements with a supplier of the active pharmaceutical ingredient (API) contained in PEDMARK ® for future requirements and we have contracted with a third-party contract manufacturer to manufacture PEDMARK ® vials for us.

Any significant change that we make for PEDMARK ® must be approved by the FDA in a supplemental new drug application (“sNDA”).

If the manufacturing plan and data are insufficient, any sNDA we submit will not be approved.

Before an sNDA can be approved, our manufacturers must also demonstrate compliance with FDA’s current Good Manufacturing Practices (cGMPs) regulations and policies.

Before an sNDA can be approved, our manufacturers must also demonstrate compliance with the FDA’s cGMPs regulations and policies.

Further, even if we receive approval of any sNDAs for PEDMARK ® , if our manufacturers do not follow cGMPs in the manufacture of our product, it may delay product launches or shipments and adversely affect our business.

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License Agreement with Oregon Health & Science University

On February 20, 2013, we entered into a new exclusive license agreement with OHSU for exclusive worldwide license rights to intellectual property directed to thiol-based compounds, including PEDMARK ® , and their use in oncology (the "OHSU Agreement").

On February 20, 2013, we entered into an exclusive license agreement with OHSU for exclusive worldwide license rights to intellectual property directed to thiol-based compounds, including PEDMARK ® , and their use in oncology (the “OHSU Agreement”).

OHSU will receive certain milestone payments, royalty on net sales for licensed products and a royalty on any consideration received from sublicensing of the licensed technology.

On May 18, 2015, we negotiated an amendment ("Amendment 1") to the OHSU Agreement, which expands our exclusive license to include the use of N-acetylcysteine as a standalone therapy and/or in combination with STS for the prevention of ototoxicity induced by chemotherapeutic agents to treat cancers.

Further, Amendment 1 adjusts select milestone payments entered in the OHSU Agreement including but not limited to the royalty rate on net sales for licensed products, royalty rate from sublicensing of the licensed technology and the fee payable upon the regulatory approval of a licensed product.

Certain milestone payments are due upon FDA approval and achievement of sufficient positive EBITDA over a specified period.

PEDMARK ® received FDA approval in September 2022, however at this time, due to significant uncertainty surrounding timing and magnitude of certain milestones, the Company has only recorded a royalty liability associated with net revenue.

On May 18, 2015, we negotiated an amendment (“Amendment 1”) to the OHSU Agreement, which expands our exclusive license to include the use of N-acetylcysteine as a standalone therapy and/or in combination with sodium thiosulfate for the prevention of ototoxicity induced by chemotherapeutic agents to treat cancers.

Further, Amendment 1 adjusts select milestone payments in the OHSU Agreement including but not limited to the royalty rate on net sales for licensed products, royalty rate from sublicensing of the licensed technology and the fee payable upon the regulatory approval of a licensed product.

The term of the OHSU Agreement, as amended by Amendment 1, expires on the date of the last to expire claim(s) covered in the patents licensed to us or 8 years, whichever is later.

PEDMARK ® is currently protected by methods of use patent that we exclusively license from OHSU in the ‘190 patent that is set to expire in the United States in 2038.

The OHSU Agreement is terminable by either us or OHSU in the event of a material breach of the agreement by either party after 45 days prior written notice.

In the event a licensed product obtains regulatory approval and is covered by the Orphan Drug Designation, the parties will in good faith amend the term of the agreement.

PEDMARK ® is currently protected by methods of use patents that we exclusively license from OHSU that expire in the U.S.

The OHSU Agreement is terminable by either us or OHSU in the event of a material breach of the agreement by the other party after 45 days prior written notice.

We also have the right to terminate the OHSU Agreement at any time upon 60 days prior written notice and payment of all fees due to OHSU under the OHSU Agreement.

Our operations may be affected by the ongoing COVID-19 pandemic.

The ultimate disruption that may be caused by the outbreak is uncertain;

however, it may result in a material adverse impact on our financial position, operations and cash flows.

Possible effects may include, but are not limited to, disruption to our product launch which includes the ability of sales reps to communicate with oncologists, absenteeism in our labor workforce, unavailability of products and supplies used in operations, and a decline in value of our assets, including inventories, property and equipment, and marketable securities.

COVID-19 has not had a material effect on our operations to date as we have historically had a workforce which works remotely, preparations for product launch have been under the assumption of a virtual launch, and product supplies have not been impacted.

The biotechnology and pharmaceutical industries are extremely competitive.

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One of these requirements restricts the universe of bulk drug substances that a compounder may use.

Specifically, every bulk drug

substance used in compounding:

Specifically, every bulk drug substance used in compounding:

(1) must comply with an applicable and current USP or NF drug monograph, if one exists, as well as the current USP chapters on pharmacy compounding;

(2) if such a monograph does not exist, the bulk drug substance must be a component of an FDA-approved drug;

or (3) if a monograph does not exist and the bulk drug substance is not a component of an FDA-approved drug, it must appear on a list of bulk drug substances that may be used in compounding (i.e., the “Section 503A bulk substances list 1”).

or (3) if a monograph does not exist and the bulk drug substance is not a component of an FDA-approved drug, it must appear on a list of bulk drug substances that may be used in

compounding (i.e., the “Section 503A bulk substances list 1”).

While the advertising provisions in Section 503A were ruled unconstitutional in part in the United States by the Supreme Court in 2002, the FDA, since 2013, has aggressively regulated and exercised oversight over the practice of pharmacy compounding following the compounding incident at the New England Compounding Center in Massachusetts that sickened hundreds and killed over 60 individuals.

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In general, our ability to compete depends in large part upon:

• our ability to obtain regulatory approvals for our drug candidates outside the U.S.;

• the demonstrated efficacy, safety and reliability of our drug candidates;

● our ability to obtain regulatory approvals for our drug candidate outside the U.S.;

● the demonstrated efficacy, safety and reliability of our drug candidate;

● the timing and scope of regulatory approvals;

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● Phase 2 Clinical Trials :

or medical condition, in order to provide an estimate of the drug’s effectiveness in that specific setting.

Phase 2 clinical trials typically take one to two years to complete and are generally carried out on a relatively small number of patients, generally between 15 and 50, in a specific setting of targeted disease or medical condition, in order to provide an estimate of the drug’s effectiveness in that specific setting.

This phase also provides additional safety data and serves to identify possible common short-term side effects and risks in a somewhat larger group of patients.

Phase 2 testing frequently relates to a specific disease, such as breast or lung cancer.

Phase 2 testing frequently relates to a specific disease, such as breast or lung

Some contemporary methods of developing drugs, particularly molecularly targeted therapies, do not require broad testing in specific diseases, and instead permit testing in subsets of patients expressing the particular marker.

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While European, U.S.

and Canadian regulatory systems require that medical products be safe, effective, and manufactured according to high quality standards, the drug approval process in Europe differs from that in the United States and Canada and may require us to perform additional preclinical or clinical testing regardless of whether FDA approval has been obtained.

and Canada and may require us to perform additional preclinical or clinical testing regardless of whether FDA or TPD approval has been obtained.

The amount of time required to obtain necessary approvals may be longer or shorter than that required for FDA or TPD approval.

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

Also, any post-approval changes in the drug substance, drug product, production process, quality controls, equipment, or facilities that have a substantial potential to have an adverse effect on the identity, strength, quality, purity, or potency of the drug product

are subject to FDA review and approval.

Any such changes that have a moderate potential to have an adverse effect on the identity, strength, quality, purity, or potency of the drug product may not be implemented until 30 days after the FDA receives a supplement for the change.

All manufacturing facilities, as well as records required to be maintained under FDA regulations, are subject to inspection or audit by the FDA.

All manufacturing facilities, as well as records required to be maintained under FDA

regulations, are subject to inspection or audit by the FDA.

In addition, manufacturers generally are required to pay annual user fees for approved products and a user fee for the submission of each new or supplemental application.

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

The FDA does not regulate the

behavior of physicians in their choice of treatments for their individual patients.

The FDA does, however, regulate manufacturers’ communications about their drug products and interprets the Federal Food, Drug, and Cosmetic Act (“FFDCA”) to prohibit pharmaceutical companies from promoting their FDA-approved drug products for uses that are not specified in the FDA-approved labeling.

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

specified in the FDA-approved labeling.

Companies that market drugs for off-label uses have been subject to warning letters, related costly litigation, criminal prosecution, and civil liability under the FFDCA and the False Claims Act.

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Orphan Drug Act

Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a “rare disease or condition,” which generally is a disease or condition that affects fewer than 200,000 individuals in the U.S.

Under the Orphan Drug Act of 1983, the FDA may grant orphan drug designation to drugs intended to treat a “rare disease or condition,” which generally is a disease or condition that affects fewer than 200,000 individuals in the U.S.

If a product which has an orphan drug designation subsequently receives the first FDA approval for that drug for the indication for which it has such designation, the product is entitled to orphan exclusivity, i.e., the FDA may not approve any other application submitted by a different applicant to market the same drug for the same indication for a period of seven years following marketing approval, except in certain very limited circumstances, such as if the later product is shown to be clinically superior to the approved product with orphan drug exclusivity.

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The PUMA process was established to make it more efficient for pharmaceutical companies to invest in the development of drugs for children.

PUMA drugs receive 8 plus 2 years of regulatory data and marketing protection and the applications are, in part, exempt from fees.

PUMA drugs receive eight years of data protection plus two years of marketing protection and the

applications are, in part, exempt from fees.

The regulatory protection does not prevent off-label use of other drugs with the same active substance and indication for adults, nor pharmacy compounding.

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Orange Book Listing

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims covering the applicant’s product or approved methods of using the product.

In seeking approval for a drug through a New Drug Application (“NDA”), applicants are required to list with the FDA each patent with claims covering the applicant’s product or approved methods of using the product.

Upon approval of a drug, each of the patents listed in the application for the drug are then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book.

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Upon NDA approval of a new chemical entity (“NCE”), which is a drug product that contains an active moiety that has never been approved by FDA in any other NDA, that drug receives five years of marketing exclusivity during which FDA cannot receive any ANDA seeking approval of a generic version of that drug.

A drug may obtain a three-year period of exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for the previously

approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted/sponsored by the applicant.

A drug may obtain a three-year period of exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for the previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to

the approval of the application and was conducted/sponsored by the applicant.

During this period of exclusivity, FDA cannot approve an ANDA for a generic drug that includes the change.

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● reform of drug importation laws;

• entering into contractual agreements with payors;

● entering into contractual

● agreements with payors;

● expansion of use of managed-care systems in which healthcare providers contract to provide comprehensive healthcare for a fixed cost per person.

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The impact of this scrutiny on us and on the pricing of orphan drugs and other drug products generally cannot be determined with any certainty at this time.

Orphan Drug Exclusivity and Pediatric Exclusivity Designation

Orphan Drug Designation and Orphan Drug Exclusivity and Pediatric Exclusivity Designation

Some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs.

Under the Orphan Drug Act of 1983 (ODA), the FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug.

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

In the United States, Orphan Drug Designation must be requested before submitting an application for marketing approval.

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The data do not need to show the product to be effective in the pediatric population studied.

If the FDA determines that information relating to the use of the new drug in the pediatric population may produce health benefits in the population, the clinical study is deemed to fairly respond to the FDA’s request and the reports of FDA-requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection covering the product are extended by six months.

to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection covering the product are extended by six months.

This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application relying on the NDA sponsor’s data.

The European Orphan Drug Regulation is considered for drugs intended to diagnose, prevent or treat a life-threatening or very serious condition afflicting five or fewer per 10,000 people in the EU, including compounds that for serious and chronic conditions would likely not be marketed without incentives due to low market return on the sponsor’s development

The medicinal product considered should be of significant benefit to those affected by the condition.

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In Europe all drugs now seeking marketing authorization need to have a PIP agreed with the European Medicines Agency (EMA) before it can be approved, even if it is a drug being developed specifically for a pediatric indication.

If a product is developed solely for use in the pediatric population, then a Pediatric Use Marketing Authorization, or PUMA, may provide eight years of data exclusivity and ten years of marketing exclusivity.

Breakthrough Therapy Designation

Breakthrough therapy designation by the FDA is intended to expedite the development and review of drugs for serious or life-threatening conditions.

The criteria for breakthrough therapy designation require preliminary clinical evidence that demonstrates the drug may have substantial improvement on at least one clinically significant endpoint over available therapy.

A breakthrough therapy designation conveys all of the fast track program features (see below for more details on fast track designation), as well as more intensive FDA guidance on an efficient drug development program.

The FDA also has an organizational commitment to involve senior management in such guidance.

Actions taken to expedite development may include the following actions, as appropriate:

• holding meetings with the sponsor and review team throughout the development of the drug;

• providing timely advice to, and interactive communication with, the sponsor regarding the development of the drug to ensure that the development program to gather the non-clinical and clinical data necessary for approval is as efficient as possible;

• taking steps to ensure that the design of the clinical trials is as efficient as practicable, when scientifically appropriate, such as by minimizing the number of patients exposed to a potentially less efficacious treatment;

• assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve as a scientific liaison between the cross-discipline members of the review team (i.e., clinical, pharmacology-toxicology, chemistry, manufacturing and control (CMC), compliance) for coordinated internal interactions and communications with the sponsor through the review division’s Regulatory Health Project Manager;

• involving senior managers and experienced review staff, as appropriate, in a collaborative, cross-disciplinary review.

Fast Track Designation and Accelerated Approval

FDA is required to facilitate the development, and expedite the review, of drugs that are intended for the treatment of a serious or life-threatening disease or condition for which there is no effective treatment and which demonstrate the potential to address unmet medical needs for the condition.

Under the fast track program, the sponsor of a new drug candidate may request that FDA designate the drug candidate for a specific indication as a fast track drug concurrent with, or after, the filing of the IND for the drug candidate.

FDA must determine if the drug candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

Under the fast track program and FDA’s accelerated approval regulations, FDA may approve a drug for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or

other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions, or survives.

Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints.

A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint.

Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow FDA to withdraw the drug from the market on an expedited basis.

All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by FDA.

In addition to other benefits such as the ability to use surrogate endpoints and engage in more frequent interactions with FDA, FDA may initiate review of sections of a fast track drug’s NDA before the application is complete.

This rolling review is available if the applicant provides, and FDA approves, a schedule for the submission of the remaining information and the applicant pays applicable user fees.

However, FDA’s time period goal for reviewing an application does not begin until the last section of the NDA is submitted.

Additionally, the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

Priority Review

Under FDA policies, a drug candidate is eligible for priority review, or review within a six to eight-month time frame from the time a complete NDA is submitted, if the drug candidate is intended for the treatment, diagnosis, or prevention of a serious or life-threatening condition, demonstrates the potential to address an unmet medical need, or provides a significant improvement compared to marketed drugs.

If a product is developed solely for use in the pediatric population, then a Pediatric Use Marketing Authorization, or PUMA, may provide eight years of data exclusivity plus two additional years of marketing exclusivity.

Disclosure of clinical trial information

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In addition, certain marketing practices, including off-label promotion, may also violate false claims laws.

The majority of states also have statutes or regulations similar to the federal

anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer.

The majority of states also have statutes or regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer.

The Centers for Medicare & Medicaid Services (CMS) has issued a final rule that requires manufacturers of approved prescription drugs to collect and report information on payments or transfers of value to physicians, physician assistants, certain types of advanced practice nurses and teaching hospitals, as well as investment interests held by physicians and their immediate family members.

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Non-innovator products are also subject to an additional rebate.

The additional rebate is similar to that discussed above for innovator products, except that the baseline AMP quarter is the fifth full quarter after launch (for non- innovator multiple source drugs launched on April 1, 2013 or later) or the third quarter of 2014 (for those

launched before April 1, 2013).

The terms of participation in the Medicaid drug rebate program impose an obligation to correct the prices reported in previous quarters, as may be necessary.

Any such corrections could result in additional or lesser rebate liability, depending on the direction of the correction.

In addition to retroactive rebates, if a manufacturer were found to have knowingly submitted false information to the government, federal law provides for civil monetary penalties for failing to provide required information, late submission of required information, and false information.

In addition to retroactive rebates, if a manufacturer

were found to have knowingly submitted false information to the government, federal law provides for civil monetary penalties for failing to provide required information, late submission of required information, and false information.

A manufacturer must also participate in a federal program known as the 340B drug pricing program in order for federal funds to be available to pay for the manufacturer’s drugs under Medicaid and Medicare Part B.

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Finally, manufacturers are required to disclose in FSS contract proposals all commercial pricing that is equal to or less than the proposed FSS pricing, and subsequent to award of an FSS contract, manufacturers are required to monitor certain commercial price reductions and extend commensurate price reductions to the government, under the terms of the FSS contract Price Reductions Clause.

Among the remedies available to the government for any failure to properly disclose

commercial pricing and/or to extend FSS contract price reductions is recoupment of any FSS overcharges that may result from such omissions.

Among the remedies available to the government for any failure to properly disclose commercial pricing and/or to extend FSS contract price reductions is recoupment of any FSS overcharges that may result from such omissions.

Tricare Retail Pharmacy Network Program

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We have established relationships with contract research organizations (“CROs”), universities and other institutions, which we utilize to perform many of the day-to-day activities associated with our drug development.

Where possible, we have sought to include leading scientific investigators and advisors to enhance our internal capabilities.

Where possible, we have

sought to include leading scientific investigators and advisors to enhance our internal capabilities.

Research and development issues are reviewed internally by our executive management and supporting scientific team.

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There is also a risk that third parties may hold proprietary rights that preclude us from marketing our product candidate or that others will market a superior or equivalent product.

As a result of these factors, we are unable to accurately estimate the nature, timing and future costs necessary to complete the development of this product candidate.

As a result of these factors, we are unable to accurately estimate the nature, timing and future costs necessary to complete future development of PEDMARK ® .

What changed 10-K

Item 1. Business