What changed in this filing

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Item 1A. Risk Factors

2021-11-04 compared with 2021-08-10 · 48 added, 45 removed, 1182 unchanged (7% of the section changed)

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Since inception, we have incurred significant operating losses.

Our net loss was $70.8 million for the year ended December 31, 2020 and $36.6 million for the six months ended June 30, 2021.

As of June 30, 2021, we had an accumulated deficit of $258.3 million.

Our net loss was $70.8 million for the year ended December 31, 2020 and $57.4 million for the nine months ended September 30, 2021.

As of September 30, 2021, we had an accumulated deficit of $279.0 million.

To date, we have funded our operations primarily from the sale of shares of our common stock in public offerings, a private placement, and in “at-the-market” offerings, through issuances of convertible preferred stock, and from upfront payments received under our collaboration and license agreements.

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continue our clinical development of losmapimod, including our ongoing open label extension of our Phase 2b clinical trial of losmapimod for the treatment of FSHD and our ongoing Phase 2 open label clinical trial of losmapimod for the treatment of FSHD;

continue our clinical development of FTX-6058, including our ongoing Phase 1 clinical trial in healthy adult volunteers and our planned Phase 1b clinical trial of FTX-6058 in patients with sickle cell disease, or SCD;

continue our clinical development of FTX-6058, including our ongoing Phase 1 clinical trial in healthy adult volunteers and patients with SCD and our planned Phase 1b clinical trial of FTX-6058 in patients with sickle cell disease, or SCD;

continue our ongoing preclinical studies;

advance clinical-stage product candidates into later stage trials;

pursue the discovery of drug targets for other rare diseases and the subsequent development of any resulting product candidates;

pursue the discovery of drug targets for other genetically defined rare diseases and the subsequent development of any resulting product candidates;

seek regulatory approvals for any product candidates that successfully complete clinical trials;

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If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

We expect to devote substantial financial resources to our ongoing and planned activities, particularly as we continue our open label extension of our Phase 2b clinical trial and our phase 2 open label clinical trial of losmapimod for the treatment of FSHD, continue our Phase 1 clinical trial of FTX-6058 in healthy adult volunteers, prepare for our planned Phase 1b clinical trial of FTX-6058 in patients with SCD, continue research and development and initiate additional clinical trials of, and seek regulatory approval for, these and other product candidates.

We expect to devote substantial financial resources to our ongoing and planned activities, particularly as we continue our open label extension of our Phase 2b clinical trial and our phase 2 open label clinical trial of losmapimod for the treatment of FSHD, continue our Phase 1 clinical trial of FTX-6058 in healthy adult volunteers and patients with SCD, prepare for our planned Phase 1b clinical trial of FTX-6058 in patients with SCD, continue research and development and initiate additional clinical trials of, and seek regulatory approval for, these and other product candidates.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance our preclinical activities and clinical trials.

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Our future capital requirements will depend on many factors, including:

the progress, costs and results of our ongoing open label extension of our Phase 2b clinical trial of losmapimod for the treatment of FSHD, our ongoing Phase 2 open label clinical trial of losmapimod for the treatment of FSHD, our ongoing Phase 1 clinical trial of FTX-6058 in healthy adult volunteers and our planned Phase 1b clinical trial of FTX-6058 in patients with SCD;

the progress, costs and results of our ongoing open label extension of our Phase 2b clinical trial of losmapimod for the treatment of FSHD, our ongoing Phase 2 open label clinical trial of losmapimod for the treatment of FSHD, our ongoing Phase 1 clinical trial of FTX-6058 in healthy adult volunteers and patients with SCD and our planned Phase 1b clinical trial of FTX-6058 in patients with SCD;

the scope, progress, costs and results of discovery research, preclinical development, laboratory testing and clinical trials for our current product candidates in additional indications or for any future product candidates that we may pursue;

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the extent to which we acquire or in-license other products, product candidates, technologies or data referencing rights.

As of June 30, 2021, we had cash, cash equivalents, and marketable securities of approximately $125.6 million.

We believe that our cash, cash equivalents, and marketable securities as of June 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

As of September 30, 2021, we had cash, cash equivalents, and marketable securities of approximately $240.3 million.

We believe that our cash, cash equivalents, and marketable securities as of September 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements into 2024.

However, we have based this estimate on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us.

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We are early in our development efforts, and we have advanced only two product candidates into clinical trials, losmapimod for the treatment of FSHD, and FTX-6058 in healthy adult volunteers.

We have invested substantially all of our efforts and financial resources in our proprietary product engine to identify and validate cellular drug targets that can potentially modulate gene expression to address the root cause of rare diseases.

Our ability to generate product revenues, which we do not expect will occur for many years, if ever, will depend heavily on the successful development, regulatory approval and eventual commercialization of our product candidates.

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We may not be successful in our efforts to use our product engine to build a pipeline of product candidates.

A key element of our strategy is to use our proprietary product engine to identify and validate cellular drug targets that can potentially modulate gene expression to address the root cause of rare diseases, with an initial focus on identifying small molecules specific to the identified cellular target.

A key element of our strategy is to use our proprietary product engine to identify and validate cellular drug targets that can potentially modulate gene expression to address the root cause of genetically defined rare diseases, with an initial focus on identifying small molecules specific to the identified cellular target.

Even if we are successful in identifying drug targets and potential product candidates, such candidates that we identify may not be suitable for clinical development, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to receive marketing approval and achieve market acceptance.

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We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside of the United States.

Because of our primary focus on rare diseases, we may have difficulty enrolling a sufficient number of eligible patients.

Because of our primary focus on genetically defined rare diseases, we may have difficulty enrolling a sufficient number of eligible patients.

Patient enrollment is affected by a variety of other factors, including:

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Because certain of the target patient populations of our product candidates are small, and the addressable patient population even smaller, we must be able to successfully identify patients and capture a significant market share to achieve profitability and growth.

We primarily focus our research and product development on treatments for rare diseases.

We primarily focus our research and product development on treatments for genetically defined rare diseases.

Given the small number of patients who have the rare diseases that we are targeting, it is critical to our ability to grow and become profitable that we continue to successfully identify patients with these rare diseases.

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We rely, and expect to continue to rely, on third parties to manufacture clinical supplies of our product candidates and we expect to rely on third parties to manufacture commercial supplies of our products, if and when approved for marketing by applicable regulatory authorities, as well as for packaging, sterilization, storage, distribution and other production logistics.

If we are unable to enter into such arrangements on the terms or timeline we expect, development and/or commercialization of our product candidates may be delayed.

If these third parties do not successfully carry out their contractual duties, meet expected deadlines or manufacture

our product candidates in accordance with regulatory requirements, if there are disagreements between us and such parties or if such parties are unable to expand capacities to support commercialization of any of our product candidates for which we obtain marketing approval, we may not be able to fulfill, or may be delayed in producing sufficient product candidates to meet, our supply requirements.

If we are unable to enter into such arrangements on the terms or timeline we expect, development and/or commercialization of our product candidates

may be delayed.

If these third parties do not successfully carry out their contractual duties, meet expected deadlines or manufacture our product candidates in accordance with regulatory requirements, if there are disagreements between us and such parties or if such parties are unable to expand capacities to support commercialization of any of our product candidates for which we obtain marketing approval, we may not be able to fulfill, or may be delayed in producing sufficient product candidates to meet, our supply requirements.

These facilities may also be affected by natural disasters, such as floods or fire, a s well as public health issues (for example, an outbreak of a contagious disease such as COVID-19 ), or such facilities could face manufacturing issues, such as contamination or regulatory concerns following a regulatory inspection of such facility.

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

Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict

imports of drugs from countries where they may be sold at lower prices than in the United States.

Net prices for drugs may be reduced by mandatory discounts or

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

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

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In addition, although we believe we have obtained sufficient quantities of FTX-6058 from a CMO for the completion of our ongoing Phase 1 clinical trial, we cannot be sure we have correctly estimated our drug product requirements, which could delay, prevent or impair our development efforts.

We expect to rely on third parties for the manufacture of FTX-6058 for any future clinical trials and for the manufacture of any future product candidates for preclinical and clinical testing.

We expect to rely on third parties for the manufacture of FTX-6058 for any future clinical trials, including our planned Phase 1b trial in patients with SCD, and for the manufacture of any future product candidates for preclinical and clinical testing.

We also expect to rely on third-party manufacturers or third-party collaborators for the manufacture of commercial supply of any other product candidates for which we or our collaborators obtain marketing approval.

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Currently, our patent portfolio related to FTX-6058 includes one issued U.S.

patent, two U.S.

non-provisional applications, one PCT application, and three U.S.

provisional applications.

In order to continue to pursue protection based on the PCT application, we will need to nationalize the PCT application into corresponding foreign applications prior to the expiration deadline of the PCT application.

Even then, further patents may never issue from our patent applications, or the scope of any patent may not be sufficient to provide a competitive advantage.

patent that is expected to expire in 2040, two U.S.

non-provisional applications and related pending patent applications in Canada and Mexico, Europe, Africa, Australia and New Zealand, South America, and Asia that, if issued, are expected to expire between 2039 and 2040, and three pending U.S.

provisional applications, if resulting in an issued patent, would be expected to expire in 2042.

Patents may never issue from our patent applications, or the scope of any patent may not be sufficient to provide a competitive advantage.

With respect to losmapimod, the patents to losmapimod licensed from GSK as a composition of matter and pharmaceutical composition are expected to expire on February 10, 2023.

We own one patent covering the use of losmapimod for the treatment of patients with FSHD and we own one patent covering the use of other clinical-stage p38 inhibitors for the treatment of patients with FSHD.

We own one U.S.

patent covering the use of losmapimod for the treatment of patients with FSHD and one U.S.

patent covering the use of other clinical-stage p38 inhibitors for the treatment of patients with FSHD, each of which are expected to expire in 2038, and related patents and pending patent applications in Canada and Mexico, Europe, Africa, Australia and New Zealand, South America, and Asia with expiration dates in 2038.

We also own two related pending U.S.

non-provisional applications and one U.S.

provisional application that, if resulting in issued patents, are expected to expire between 2038 and 2042.

In addition, our owned patents and patent applications pertaining to losmapimod are not to the composition but, rather, are directed to certain methods of treating FSHD.

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Moreover, we or our licensors may be subject to a third-party preissuance submission of prior art to the United States Patent and Trademark Office, or USPTO, or become involved in opposition, derivation, revocation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or product candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize drugs without infringing third-party patent rights.

manufacture or commercialize drugs without infringing third-party patent rights.

If the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

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patent provide protection for the method of using losmapimod for the treatment of FSHD and while we also believe that the specific and generic claims contained in our issued and pending U.S.

non-provisional and provisional applications

provide protection for the pharmaceutical compositions and methods of use for FTX-6058, third parties may nevertheless challenge such claims.

non-provisional and provisional applications provide protection for the pharmaceutical compositions and methods of use for FTX-6058, third parties may nevertheless challenge such claims.

If any such claims are invalidated or rendered unenforceable for any reason, we will lose valuable intellectual property rights and our ability to prevent others from competing with us would be impaired.

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Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of merit.

We may not be aware of all such intellectual property rights potentially relating to our technology and product

candidates and their uses, or we may incorrectly conclude that third party intellectual property is invalid or that our activities and product candidates do not infringe such intellectual property.

We may not be aware of all such intellectual property rights potentially relating to our technology and product candidates and their uses, or we may incorrectly conclude that third party intellectual property is invalid or that our activities and product candidates do not infringe such intellectual property.

Thus, we do not know with certainty that our technology and product candidates, or our development and commercialization thereof, do not and will not infringe, misappropriate or otherwise violate any third party’s intellectual property.

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In certain circumstances, we rely on our licensing partners to pay these fees to, or comply with the procedural and documentary rules of, the relevant patent agency.

With respect to our patents, we rely on an annuity service, outside firms and outside counsel to remind us of

the due dates and to make payment after we instruct them to do so.

With respect to our patents, we rely on an annuity service, outside firms and outside counsel to remind us of the due dates and to make payment after we instruct them to do so.

While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

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The Trump Administration also took several executive actions that had the potential to impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities.

T hose Executive Orders were rescinded by President Biden , but future executive actions from this or a subsequent administration could impose similar burdens on the FDA .

Those Executive Orders were rescinded by President Biden, but future executive actions from this or a subsequent administration could impose similar burdens on the FDA.

If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired.

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Certain of these orders are reflected in recently promulgated regulations, including an interim final rule implementing President Trump’s most favored nation model, but such final rule is currently subject to a nationwide preliminary injunction.

In August 2021, the Centers for Medicare & Medicaid Services issued a new proposed rule similar to the President Trump’s most favored nation model under which Medicare Part B reimbursement for certain drugs would be based on lower prices in other countries.

The Biden Administration has frozen certain of the previous administration’s measures to reform drug prices, pending further review.

It remains to be seen how the Biden Administration will address pricing of prescription pharmaceuticals, but under Medicare Part D, the Biden Administration may seek to establish a ceiling for the launch prices of all branded, biologic, and certain generic drugs by referencing the average price of these drugs in other developed countries.

At the same time, the Biden Administration may seek to limit Medicare Part D and public option drug prices through a tax penalty on manufacturers for increases in the cost of drugs and biologics above the general inflation rate.

At the same time, the Biden Administration may seek to limit Medicare Part D and public

option drug prices through a tax penalty on manufacturers for increases in the cost of drugs and biologics above the general inflation rate .

The American Rescue Plan Act of 2021, comprehensive COVID-19 relief legislation recently enacted under the Biden Administration, includes a number of healthcare-related provisions, such as support to rural health care providers, increased tax subsidies for health insurance purchased through insurance exchange marketplaces, financial incentives to states to expand Medicaid programs and elimination of the Medicaid drug rebate cap effective in 2024.

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We cannot eliminate the risk of contamination or injury from these materials.

In the event of contamination or injury resulting from our use of hazardous materials, we could be held

liable for any resulting damages, and any liability could exceed our resources.

In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources.

Liability under certain environmental laws governing the release and cleanup of hazardous materials is joint and several and could be imposed without regard to fault.

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Foreign Corrupt Practices Act, or FCPA, and other anti-corruption laws that apply in countries where we do business and may do business in the future.

The Bribery Act, FCPA and these other laws generally prohibit us, our officers, and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage.

The Bribery Act, FCPA and these other laws generally prohibit us, our officers, and our employees and intermediaries from

bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage.

Compliance with the FCPA, in particular, is expensive and difficult, particularly in countries in which corruption is a recognized problem.

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Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect.

Cyber-attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, unauthorized access to or deletion of files, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information.

Cyber-attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, unauthorized access to or deletion of files, social engineering and other

means to affect service reliability and threaten the confidentiality, integrity and availability of information.

For example, we make extensive use of cloud-based storage systems, and in October 2018, we experienced a breach of one such system.

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The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy.

Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of

skills and experience required to successfully develop, gain regulatory approval of and commercialize products.

Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products.

Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel.

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Our executive officers, directors and principal stockholders, if they choose to act together, have the ability to control or significantly influence all matters submitted to stockholders for approval.

As of August 3, 2021, our executive officers and directors and our stockholders who owned more than 5% of our outstanding common stock in the aggregate beneficially owned shares representing approximately 52.8% of our capital stock.

As of October 28, 2021, our executive officers and directors and our stockholders who owned more than 5% of our outstanding common stock in the aggregate beneficially owned shares representing approximately 49.3% of our capital stock.

As a result, if these stockholders were to choose to act together, they would be able to control or significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs.

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Given the limited trading history of our common stock, there is a risk that an active trading market for our shares may not continue to develop or be sustained.

If an active market for our common stock does not continue to develop or is not sustained, it may be difficult for our stockholders to sell their shares without depressing the market price for the shares, or at all.

market for our common stock does not continue to develop or is not sustained, it may be difficult for our stockholders to sell their shares without depressing the market price for the shares, or at all.

If securities analysts do not publish or cease publishing research or reports or publish misleading, inaccurate or unfavorable research about our business or if they publish negative evaluations of our stock, the price and trading volume of our stock could decline.

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We currently have on file with the SEC a universal shelf registration statement which allows us to offer and sell registered common stock, preferred stock, debt securities, depositary shares, warrants and/or units from time to time pursuant to one or more offerings up to an aggregate of $250 million, at prices and terms to be determined at the time of sale.

In addition, we have filed registration statements registering all shares of common stock that we may issue under our equity compensation plans.

These shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates.

In addition, we have filed or intend to file registration statements registering all shares of common stock that we may issue under our equity compensation plans or pursuant to equity awards made to newly hired employees outside of equity compensation plans.

Such registered shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates.

We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

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To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.

internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.

In this regard, we will need to continue to dedicate internal resources, including through hiring additional financial and accounting personnel, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.

Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors