Gossamer Bio, Inc. 10-K

Item 1. Business. Overview We are a clinical-stage biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutics in the disease areas of immunology, inflammation and oncology. Our goal is to be an industry leader in each of these therapeutic areas and to enhance and extend the lives of patients suffering from such diseases. To accomplish this goal, we have assembled a deeply experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world. Our collective immunology and translational discovery and development expertise serves as the foundation of our company. We intend to maintain a scientifically rigorous and inclusive corporate culture where employees strive to bring improved therapeutic options to patients. We are pursuing product candidates with strong scientific rationale to address indications where there is both a high unmet need and an opportunity to develop best-in-class or first-in-class therapeutics. We currently have four clinical-stage product candidates, in addition to six preclinical programs. 3 Table of Contents The following table summarizes our current programs: Seralutinib (GB002: PDGFR, CSF1R and c-KIT Inhibitor) Seralutinib, also known as GB002, is an inhaled, small molecule, platelet-derived growth factor receptor, or PDGFR, colony-stimulating factor 1 receptor, or CSF1R, and c-KIT inhibitor in development for the treatment of pulmonary arterial hypertension, or PAH. Seralutinib has been generally well tolerated in completed clinical trials. In contrast to the three classes of marketed vasodilatory therapies for PAH, we believe that seralutinib has the potential to be disease-modifying by addressing the cellular overgrowth, fibrosis and vascular remodeling which underlie PAH. Inhaled seralutinib, which is designed to act on both isoforms of the PDGFR, α and β, as well as the CSF1R and c-KIT pathways, inhibited and reversed cellular overgrowth in lung blood vessels in multiple animal PAH models. In 2013, results from a Phase 3 clinical trial in PAH of imatinib (Gleevec), an oral tyrosine kinase inhibitor with known activity against PDGF and c-KIT, marketed for oncology indications, showed statistically significant improvement in its primary efficacy endpoint, however systemic toxicities were also observed. To date, these toxicities have not been observed with seralutinib in our completed Phase 1 single-ascending dose / multiple ascending dose, or SAD / MAD, studies in healthy volunteers or in our Phase 1b study in PAH patients. In the two-week Phase 1b clinical trial in PAH patients, seralutinib demonstrated rapid systemic clearance, target engagement via whole blood CSF1R stabilization assay and was generally well tolerated. We commenced the Phase 2 TORREY trial in PAH patients in December 2020. Topline results from this trial are expected in the first half of 2022, subject to developments in the ongoing COVID-19 pandemic. We in-licensed seralutinib from Pulmokine, Inc. in 2017 and retain worldwide rights. The United States Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, have granted seralutinib orphan drug designation for the treatment of patients with PAH. GB004 (HIF-1 α Stabilizer) GB004 is a novel, gut-targeted, oral small molecule being developed for the treatment of inflammatory bowel disease, or IBD, including ulcerative colitis, or UC, and Crohn’s disease, or CD. GB004 stabilizes hypoxia-inducible factor 1α, or HIF-1α, through the inhibition of prolyl hydroxylase domains, or PHDs, key enzymes involved in HIF degradation. Preclinical data from animal models of IBD demonstrated that HIF-1α stabilization restores intestinal epithelial barrier integrity and function and results in immunomodulatory effects that we believe are important in reducing inflammation and enhancing mucosal healing in IBD patients. We have completed Phase 1 SAD and MAD studies in healthy volunteers and a Phase 1b study in patients with active UC, and GB004 has been generally well tolerated. In a 28-day Phase 1b clinical trial in patients with active UC, GB004 was well-tolerated, demonstrated a gut-targeted PK profile, showed evidence of target engagement, and initial signs of potential clinical efficacy were observed. We commenced the Phase 2 SHIFT-UC trial in patients with active mild-to-moderate UC in October 2020. Topline results from this trial are expected in the first half of 2022, subject to developments in the ongoing COVID-19 pandemic. We in-licensed GB004 from Aerpio Pharmaceuticals, Inc., or Aerpio, in June 2018 and retain worldwide rights. 4 Table of Contents GB1275 (CD11b Modulator) GB1275 is an oral, small molecule, CD11b modulator in clinical development for the treatment of oncology indications. CD11b and CD18 are members of the integrin family of cell adhesion receptors that combine to form the functional adhesion receptor CD11b / CD18, also known as Mac-1, CR3 or alpha-M beta-2, on cell surfaces. CD11b is highly expressed on myeloid cells of the immune system, including tumor-associated macrophages, or TAMs, and myeloid derived suppressor cells, or MDSCs, which play a significant role in promoting tumor growth, immune evasion and metastasis. Increased presence of CD11b positive MDSCs in tumors is observed across multiple tumor types and is associated with poor prognosis in multiple cancers. GB1275 is currently being tested in an ongoing Phase 1/2 clinical trial (KEYNOTE-A36) for the treatment of selected solid tumor types. In the fourth quarter of 2019, we announced a clinical trial and supply agreement with Merck & Co., Inc., or Merck, to evaluate the combination of GB1275 and pembrolizumab (Keytruda) in advanced solid tumors, as part of the ongoing Phase 1/2 clinical trial. In this ongoing Phase 1/2 clinical trial, oral GB1275 alone and in combination with pembrolizumab, up to 1,200 mg twice daily, or BID, has been generally well tolerated. To date, one partial response, or PR, has been observed in a patient with microsatellite stable colorectal cancer, or MSS CRC, and biomarker data suggest that GB1275, alone or in combination with pembrolizumab, may modulate myeloid cell biology in the tumor microenvironment, or TME, inducing a more inflamed tumor phenotype. We expect to report further data from this trial in 2021. The FDA and the EMA have granted GB1275 orphan drug designation for the treatment of patients with pancreatic cancer. We retain worldwide rights to GB1275. GB001 (DP2 Antagonist) GB001 is an oral prostaglandin D2 receptor 2, or DP2, antagonist in development for the treatment of moderate-to-severe eosinophilic asthma. GB001 has been studied in over 800 subjects who have received at least 1 dose in completed clinical trials to date and has been generally well tolerated up to a dose of 40 mg. In the global Phase 2b LEDA study, GB001 showed a consistent numerical reduction of 32-35% across all three dose groups in proportion of patients with asthma worsening by week 24, as compared to placebo, which was the primary endpoint of the clinical trial, but these results were not statistically significant for any of three dose groups. Additionally, in the same clinical trial, GB001 showed a nominally statistically significant reduction in time-to-first asthma worsening for the 20 mg and the 60 mg dose groups of GB001, as compared to placebo, which was the key secondary endpoint. The 40 mg dose of GB001 also demonstrated a numeric improvement, as compared to placebo, but this result was not statistically significant. One adverse event of interest was a serious adverse event, or SAE, of liver chemistry elevations meeting Hy’s Law criteria in the GB001 60 mg group. The patient was asymptomatic during the event, which was reversible and resolved without sequelae. In a Phase 2 clinical trial conducted in Japan, GB001 showed a statistically significant improvement in time-to-first asthma worsening compared to placebo. A single SAE, intrahepatic cholestasis, a liver disorder, deemed by the investigator likely to be related to study drug was observed in a Japanese patient who had received a 160 mg dose of GB001 in a Phase 1 clinical trial conducted by Teijin Pharma Limited, or Teijin. The patient had GB001 exposure levels approximately three to five times higher than the other patients receiving the 160 mg dose. We engaged with the FDA and the EMA about the clinical development path in asthma, and based off those interactions, we believe that there is a viable clinical development path for GB001, or its backup molecule, in asthma. We do not currently plan to move forward with GB001, or its backup molecule, in further clinical trials without a partner. As previously announced, we do not plan to continue further development of GB001 in chronic rhinosinusitis, or CRS. We retain worldwide rights to GB001, excluding Japan. Our Research Capabilities and Preclinical Programs We currently have multiple programs in preclinical development. We are continuing to build our research capabilities, specifically focusing on our areas of expertise within immunology, inflammation and oncology, in order to advance new programs into the clinic, as well as to optimize our existing programs. We have six programs in preclinical development, and we expect at least one additional product candidate to enter clinical trials within the next 12 months. Our Team Our founders and management team have held senior positions at leading biopharmaceutical companies, including Receptos, Inc., Bristol-Myers Squibb Company, and Celgene Corporation, among others, and possess substantial experience and expertise across the spectrum of drug discovery, development and commercialization. Faheem Hasnain is our Co-Founder and has served as our Chief Executive Officer since November 2020 and as our Chairman since our inception. Mr. Hasnain also served as our Chief Executive Officer from our inception through July 2018 and our Executive Chairman from July 2018 through June 2019. Prior to co-founding Gossamer Bio, Mr. Hasnain served as President, CEO and as a Director of Receptos, Inc. from November 2010 to August 2015. Receptos was a public company formed in 2009 focused on developing treatments in immunology and metabolic disorders and was purchased by Celgene Corporation in August 2015. Previously, Mr. Hasnain was the President and Chief Executive Officer and a director of Facet 5 Table of Contents Biotech Corporation, a biology-driven antibody company with a focus in multiple sclerosis and oncology. He held that position from December 2008 until the company's acquisition by Abbott Laboratories in April 2010. Luisa Salter-Cid, Ph.D., our Chief Scientific Officer, was previously the Head of Immunology Discovery at Bristol-Myers Squibb, having overseen immunology and immuno-oncology discovery efforts since 2005. Bryan Giraudo, our Chief Financial Officer, has extensive biotechnology and medical technology investment banking experience, having previously served as Senior Managing Director at Leerink Partners (now known as SVB Leerink) and Managing Director at Merrill Lynch, Pierce, Fenner & Smith Incorporated. Christian Waage, our Executive Vice President and General Counsel, has extensive biotechnology experience, having previously held various positions at Receptos, most recently as Managing Director after its acquisition by Celgene, and served at Ardea Biosciences, Inc. as Vice President, General Counsel. Our Strategy We are a clinical-stage biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutics in the disease areas of immunology, inflammation and oncology. Our goal is to be an industry leader in each of these therapeutic areas and to enhance and extend the lives of patients suffering from such diseases. Critical components of our business strategy include: • Create deep therapeutic centers of excellence by leveraging our immunology and translational discovery and development expertise. We currently have four clinical-stage product candidates and six preclinical-stage programs across the areas of immunology, inflammation and oncology. We will continue to build out our portfolio, focusing on these therapeutic areas, through both internal discovery and strategic transactions to create a diversified portfolio of early and late-stage product candidates. • Maximize the impact of our product candidates by expanding development across multiple indications. We aim to focus our development efforts on product candidates that have the potential to treat multiple diseases and plan to develop them in additional indications where warranted. For example, we plan to develop GB004 in both UC and CD, and we are evaluating GB1275 for the treatment of multiple solid tumor types. • Expeditiously generate proof-of-concept data from our preclinical programs to facilitate value creation and efficient capital deployment. We view our preclinical programs as important drivers of the long-term sustainability of our company. We plan to advance our preclinical programs to generate meaningful data to determine quickly whether each warrants clinical development. • Leverage the drug discovery, development and commercialization expertise of our world-class team. Our executive management team and key scientific leaders have successfully discovered, developed and commercialized small molecule and biologic agents at both large and small biopharmaceutical companies. We plan to utilize this deep, broad set of expertise and experiences as we execute on our in-house discovery and development strategies and evaluate new external acquisition opportunities. Our Product Candidates Seralutinib (GB002: PDGFR, CSF1R and c-KIT Inhibitor) Seralutinib, also known as GB002, is an inhaled, small molecule, PDGFR, CSF1R and c-KIT inhibitor in development for the treatment of PAH. As of December 31, 2020, seralutinib has been generally well tolerated in completed clinical trials. In contrast to the three classes of marketed vasodilatory therapies for PAH, we believe that seralutinib has the potential to be disease-modifying by addressing the cellular overgrowth, fibrosis and vascular remodeling which underlie PAH. Inhaled seralutinib, which is designed to act on both isoforms of the PDGF receptor, α and β, as well as the CSF1R and c-KIT pathways, inhibited and reversed cellular overgrowth in lung blood vessels in animal PAH models. In 2013, results from a Phase 3 clinical trial in PAH of imatinib (Gleevec), an oral tyrosine kinase inhibitor with known activity against PDGF and c-KIT, marketed for oncology indications, showed statistically significant improvement in its primary efficacy endpoint, however systemic toxicities were also observed. To date, these toxicities have not been observed with seralutinib in our completed Phase 1 SAD / MAD studies in healthy volunteers or in our Phase 1b study in PAH patients. In the two-week Phase 1b clinical trial in PAH patients, seralutinib rapid systemic clearance, target engagement via whole blood CSF1R stabilization assay and was generally well tolerated. We commenced the Phase 2 TORREY trial in PAH patients in December 2020. Topline results from this trial are expected in the first half of 2022, subject to developments in the ongoing COVID-19 pandemic. We in-licensed 6 Table of Contents seralutinib from Pulmokine, Inc. in 2017 and retain worldwide rights. The FDA and the EMA have granted seralutinib orphan drug designation for the treatment of patients with PAH. Mechanism of Action PAH is driven by abnormal cellular proliferation within and around the small blood vessels of the lung that carry blood from the right side of the heart to the lungs. Functional and structural changes in the pulmonary vasculature, known as vascular remodeling, can lead to smooth muscle cell proliferation and migration from the middle layer of the blood vessel into the inner layer. This can result in the development of plexiform and neointimal lesions that can obstruct blood flow. The obstruction of blood flow in the pulmonary vessels can also predispose patients to thrombosis, or blood clots, within these small pulmonary vessels that further blocks blood flow. This progressive obstruction of blood flow from the right side of the heart to the lungs can cause the right ventricle to fail, thus leading to severe breathlessness, reduced exercise tolerance and death. Seralutinib was designed to inhibit multiple kinases that play a role in the pathology of PAH, including PDGFRα/β, c-KIT and CSF1R. The PDGFR is a tyrosine kinase receptor which, when activated by its agonist, induces cellular proliferation. PDGF expression is known to be particularly important to stimulating smooth muscle cell proliferation in PAH patients. PDGFRs and their ligands are both upregulated in PAH. Upregulated PDGF signaling results in endothelial cell and fibroblast dysfunction and the proliferation and migration of smooth muscle cells. This effect results in the overgrowth and occlusion of blood vessels in the lung. Kinase inhibitors with activity against the PDGF pathway have shown the ability to reverse PAH in animal models. Inhaled seralutinib is designed to act on both isoforms of the PDGFR, α and β. Data from preclinical animal models and human lung histology from PAH patients suggests that it is important to inhibit both of these isoforms of the PDGF receptor. PDGFRα is highly expressed in pulmonary arteriole vascular smooth muscle cells, or PAVSMCs. Inhibiting PDGFRα may help reduce the abnormal cell proliferation of PAVSMCs that results in blood vessel thickening. PDGFRβ is more highly expressed in fibroblasts and myofibroblasts that are involved with the abnormal cell proliferation within the blood vessel that leads to the obstruction of the pulmonary arterioles. We believe inhibiting PDGFRβ is therefore important in decreasing the abnormal cell proliferation of these cell types. The c-KIT pathway was also identified as an important growth factor involved in pulmonary vascular remodeling, particularly in the cells implicated in perivascular inflammation. An analysis of lung and pulmonary arteriole samples has also shown increased gene expression of c-KIT in idiopathic PAH. c-KIT positive endothelial cells may also secrete PDGF, and perivascular c-KIT positive mast cells have been shown to secrete pro-inflammatory cytokines and tryptase that further contribute to the inflammatory process in PAH. Mechanistic validation of a PDGFR and c-KIT kinase inhibitor has been observed in studies of imatinib (Gleevec), an oral tyrosine kinase inhibitor with known activity against the PDGFR and c-KIT pathways, which demonstrated proof-of-concept in humans in a Phase 3 clinical trial in PAH. In preclinical models, as compared to imatinib, seralutinib was a more potent inhibitor of the PDGFRα isoform, and seralutinib was a ten-fold more potent inhibitor of the PDGFRβ isoform and c-KIT. Macrophages have also been identified as one of the most important inflammatory cells in the development and exacerbation of PAH. Macrophages, which express the CSF1 receptor, are now recognized to play an important role in PAH pathology. Activated CSF1R positive macrophages accumulate around pulmonary arterioles in PAH, which has been shown in vivo in PAH patients with positron emission tomography. Additionally, macrophage activity in PAH is associated with bone morphogenetic protein receptor type II, or BMPR2, levels. The decrease in BMPR2 characteristic of PAH results in induction of granulocyte-macrophage colony-stimulating factor, or GM-CSF, and macrophage recruitment. Notably, in the BMPR2 knock out mouse, there is significant pulmonary inflammation due to activation of tissue macrophages. Furthermore, inflammatory macrophages secrete PDGF and stimulate pulmonary artery smooth muscle cell migration and proliferation, accelerating the feedback loop of inflammation, hyperproliferation and fibrosis that characterize PAH. Prior PDGF Pathway Development in PAH—The IMPRES Phase 3 Clinical Trial of Imatinib The IMPRES trial was a Phase 3 clinical trial conducted by Novartis of imatinib (Gleevec) in patients with PAH. Imatinib has known activity against multiple tyrosine kinases, including the PDGFR, c-KIT receptors and Abelson murine leukemia viral oncogene homolog 1, or c-ABL. 202 patients were enrolled in the IMPRES trial, of which 41% were being treated with prostanoids, oral phosphodiesterase type 5, or PDE5, inhibitors and oral endothelin receptor agonists, or 7 Table of Contents ERAs. The study met its primary endpoint, improvement in six-minute walk distance, or 6MWD, versus placebo at week 24 from baseline, with statistical significance (p = 0.002). The p-value is the probability that the difference between two data sets was due to chance. The smaller the p-value, the more likely the differences are not due to chance alone. In general, if the p-value is less than or equal to 0.05, the outcome is considered statistically significant. The FDA’s evidentiary standard of efficacy generally relies on a p-value of less than or equal to 0.05. Patients on imatinib also demonstrated statistically significant improvements in measures of hemodynamics, including pulmonary vascular resistance, or PVR, a standard measurement in the evaluation of patients with PAH. However, systemic adverse events such as bleeding and poor tolerability and frequent drug discontinuation led to a high drop-out rate within the active arm of the trial. Subdural hematomas occurred in eight patients who were also being administered oral anticoagulants during the study. Novartis withdrew its supplemental regulatory applications in PAH in 2013 and, to our knowledge, did not pursue further development of imatinib in the indication. Overview of Pulmonary Arterial Hypertension PAH is a rare disease that is characterized by abnormally high blood pressure in the blood vessels carrying deoxygenated blood from the right side of the heart to the lungs and is progressive and often fatal. Symptoms include shortness of breath at rest or with minimal exertion. Other symptoms include fatigue, chest pain, dizzy spells and fainting. The progressive nature of this disease causes the right side of the heart to work much harder and eventually weaken or fail. Patients are often evaluated by functional class, which categorizes patients by their ability to carry out physical activity and symptom severity. Worsening symptoms, and thus higher numbered functional classes, are associated with higher mortality. The four functional classes established by the World Health Organization are detailed below in Table 1. Table 1. PAH Functional Classes Functional Class Description Class I Patients with PAH, but without resulting limitation of physical activity. Ordinary physical activity does not cause undue dyspnea or fatigue, chest pain or near syncope. Class II Patients with PAH resulting in slight limitation of physical activity. They are comfortable at rest. Ordinary physical activity causes undue dyspnea or fatigue, chest pain or near syncope. Class III Patients with PAH resulting in marked limitation of physical activity. They are comfortable at rest. Less than ordinary activity causes undue dyspnea or fatigue, chest pain or near syncope. Class IV Patients with PAH with inability to carry out any physical activity without symptoms. These patients manifest signs of right heart failure. Dyspnea and/or fatigue may even be present at rest. Discomfort is increased by any physical activity. Additionally, recent medical society guidelines have identified intermediate and high-risk categories of PAH based on several variables including signs of right heart failure, rate of symptom progression, functional class, 6MWD, maximum oxygen consumption, NT-proBNP, which is a biomarker for heart failure and measures of right heart function. Despite the introduction of many new therapies over the last several years, PAH continues to have a high morbidity and mortality. Based on registry data, newly diagnosed functional class III and IV patients have 5-year survival rates of 60% and 44%, respectively, while rates for previously diagnosed patients were even lower at 57% and 27%, respectively. Overview of PAH Market Diagnosed PAH prevalence in the United States is approximately 53,000 patients, as of 2018, and prevalence is highest among women between the ages of 30-60. The number of diagnosed PAH patients continues to increase, and we believe this increase is likely due to enhanced awareness and diagnosis of the disease. Total PAH drug sales worldwide in 2019 exceeded $5 billion. Treatment Paradigm in PAH Currently approved PAH therapies consist of three classes of vasodilators: PDE5 inhibitors (and guanylate cyclase stimulators), ERAs, and prostanoids. PDE5 inhibitors are often used in combination with ERAs as an early treatment strategy. In patients who fail to respond to combination therapy of an ERA and a PDE5 inhibitor, it is common practice to add a 8 Table of Contents prostanoid. Prostanoids are also commonly used to treat patients with evidence of right heart failure. While existing treatments have led to significant improvements in time to clinical worsening and other composite endpoints in PAH patients, none directly alter the underlying disease process. The effect of vasodilation, while improving blood flow through the lungs, may eventually be overtaken by the worsening cellular proliferation and arterial remodeling underlying the condition. We believe an agent with disease-modifying characteristics that safely addresses the underlying cellular overgrowth could provide utility across functional classes and risk categories. Seralutinib Product Differentiation Seralutinib is an inhaled kinase inhibitor designed to build on the evidence of efficacy seen in trials of imatinib while overcoming imatinib’s observed systemic safety and tolerability issues and improving on imatinib's kinase inhibitory profile. Seralutinib is designed to have a differentiated selectivity profile as compared to imatinib with increased potency against the PDGFRα isoform, ten-fold higher potency against the PDGFRβ isoform and c-KIT, and no activity against c-ABL or the tyrosine kinase, LCK. Additionally, seralutinib is multiple orders more potent against CSF1R, as compared to imatinib. We believe seralutinib has the potential to be a differentiated and disease-modifying PAH therapeutic that may provide: • an improved response to PDGF-driven abnormal cell proliferation in pulmonary arteries by addressing the underlying mechanism that leads to arterial wall thickening; • a more tolerable safety profile than systemic imatinib; and • a convenient, simple and portable inhalation methodology and delivery system. Clinical Development History of Seralutinib Summary of Preclinical Program Seralutinib inhibits both PGDFR α and β, and it inhibited and reversed cell overgrowth in lung blood vessels in a rat model of PAH, as shown below in Figure 1. This rat model replicates many features of human PAH, including the abnormal cell proliferation that can block the small vessels of the lung. Seralutinib substantially reduced the occlusive lesions in the small lung blood vessels in this model. Additionally, seralutinib demonstrated a statistically significant reduction in right ventricular systolic pressure as compared to placebo. Figure 1. Reversed Vascular Remodeling by Seralutinib Through Inhibition of PDGFR In a separate rat model of PAH, the SU5416 hypoxia model, seralutinib demonstrated a statistically significant reduction in circulating plasma NT-proBNP compared to placebo, while the difference between imatinib and placebo was not significant for this PAH biomarker. Seralutinib also restored rat lung BMPR2 expression to healthy levels, which was a statistically significant improvement as compared to placebo and imatinib. Irregularities in BMPR2 expression have been linked to PAH. 9 Table of Contents Summary of Completed Phase 1a Study We completed Phase 1a SAD and MAD double-blind, placebo-controlled, randomized studies of orally inhaled seralutinib in 82 healthy adult volunteers. We assessed pharmacokinetics, or PK, parameters and safety. Seralutinib was well-tolerated, and there were no dose-limiting toxicities. No SAEs were reported, and no reported AEs led to study drug discontinuation. The most common AEs were throat irritation and cough, which were mild in severity and similar in incidence to placebo. Following single and multiple oral inhalations, seralutinib was rapidly absorbed into and cleared from the systemic circulation. Seralutinib exposure increased in a dose-proportional manner following single and multiple dose administration. Summary of Completed Phase 1b PAH Clinical Trial In December 2020, we announced initial topline results from the completed Phase 1b randomized, double-blind, placebo-controlled, multi-center trial of seralutinib in functional class II and III PAH patients. At the time of announcement, eight patients had completed the two-week blinded portion of the study. Enrollment for this study was temporarily paused due to the ongoing COVID-19 pandemic but was reopened in the third quarter of 2020. The primary outcome of this 2-week trial was safety and tolerability. Seralutinib was generally well tolerated in PAH patients, and all eight patients completed the 2-week study. There were no SAEs, and the most frequently reported AEs were mild-to-moderate cough and mild headache. Systemic PK was characterized by low systemic exposure and rapid drug clearance in PAH patients, which was consistent with PK data from the Phase 1a trials in healthy volunteers. Target engagement in PAH patients was demonstrated via whole blood CSF1R stabilization assay across all tested dose levels. Upon completion of the 2-week Phase 1b study, patients were given the option of entering into an open-label extension phase. Summary of Ongoing Phase 2 PAH Clinical Trial (TORREY Study) In December 2020, we commenced the Phase 2 TORREY trial, a randomized, double-blind, placebo-controlled, multi-center clinical trial in PAH patients. We are enrolling approximately 80 functional class II and III PAH patients who are on background therapy, including patients on triple therapy. Patients will be randomized in a 1:1 fashion to seralutinib and placebo. Patients will remain on their background PAH therapies throughout the trial. The primary endpoint of the TORREY trial is change from baseline in pulmonary vascular resistance at week 24, with a key secondary endpoint of change from baseline to week 24 in 6MWD, although the trial is not powered for statistical significance in 6MWD. We are also assessing relevant safety endpoints and exploratory endpoints, including changes in echocardiogram readings, functional class, and biomarkers, such as NT-proBNP. We have implemented COVID-19 mitigation plans related to this trial, including opening more sites, spread regionally across the globe, and incorporating countries less impacted by the pandemic. Upon completion of the 24-week TORREY trial, patients will have the option of entering a stand-alone open-label extension study. Topline results from the TORREY trial are expected in the first half of 2022, subject to developments in the ongoing COVID-19 pandemic. GB004 (HIF-1 α Stabilizer) GB004 is a novel, gut-targeted, oral small molecule being developed for the treatment of IBD including UC and CD. GB004 stabilizes HIF-1α through the inhibition of PHDs, key enzymes involved in HIF degradation. Preclinical data from animal models of IBD demonstrated that HIF-1α stabilization restores intestinal epithelial barrier integrity and function and results in immunomodulatory effects that we believe are important in reducing inflammation and enhancing mucosal healing in IBD patients. We have completed Phase 1 SAD and MAD studies in healthy volunteers and a Phase 1b study in patients with active UC, and GB004 was generally well tolerated. In a 28-day Phase 1b clinical trial in patients with active UC, GB004 was well-tolerated, demonstrated a gut-targeted PK profile, showed evidence of target engagement, and initial signs of potential clinical efficacy were observed. We commenced the Phase 2 SHIFT-UC trial in patients with active mild-to-moderate UC in October 2020. Topline results from this trial are expected in the first half of 2022, subject to developments in the ongoing COVID-19 pandemic. We in-licensed GB004 from Aerpio in June 2018 and retain worldwide rights. Mechanism of Action Stable expression of HIF-1α results in translocation to the nucleus and induces expression of genes known to promote epithelial integrity and mucosal barrier function. When oxygen levels within the cell and tissue are normal, HIFs are rapidly degraded by PHD enzymes. However, when oxygen levels are low, as in hypoxia in inflamed intestinal epithelium, HIF-1α accumulates in the cytoplasm and translocates to the nucleus. HIF-1α binds to constitutively expressed HIF-1β in the nucleus and drives the expression of hypoxia-induced genes, which improve oxygen delivery, regulate the glycolytic pathway, reduce cellular apoptosis, and upregulate epithelial barrier integrity. The state of chronic tissue injury in patients with IBD leads to dysregulation of HIF stability, which can lead to epithelial apoptosis, disruption of the intestinal wall barrier and inflammation. 10 Table of Contents Through inhibition of PHDs, GB004 stabilizes HIF-1α in preclinical models and in studies of healthy volunteers and patients with active UC. This stabilization results in an increase in the activation of HIF-1α mediated protective pathways. In preclinical rodent models of colitis, GB004 demonstrated statistically significant restitution of the epithelial barrier and mucosal healing as compared to placebo, with similar improvements to dexamethasone, a corticosteroid used for the treatment of moderate-to-severe IBD. Gut biopsies from patients with active UC in our Phase 1b trial showed increased expression of genes associated with HIF-1α stabilization and enhanced epithelial barrier function, such as tight junction protein 1, or TJP1, and Claudin 1, or CLDN1, and evidence of reduced gut epithelial neutrophil activity in the GB004 group compared to placebo. Modulation of HIF stability is being evaluated in other diseases contexts, including in the treatment of anemia due to chronic kidney disease. The systemic PHD inhibitors being developed in this setting have on-target effects of increased erythropoietin, or EPO, and vascular endothelial growth factor, or VEGF. As this would be an undesirable effect in patients with IBD, we have designed GB004 to be gut-targeted, with multi-fold higher concentrations in the gut than in the periphery. In our Phase 1 healthy volunteer trials and in our Phase 1b trial in patients with active UC, no differences in plasma EPO or VEGF levels were observed for GB004 relative to placebo or with respect to GB004 dose. In addition to promoting the expression of protective pathways, HIF-1α is also an important modulator of the innate and adaptive immune response. Stabilized HIF-1α increases antimicrobial peptides, factors that protect the host from infection. HIF-1α may also be critical for directly regulating immune cell function in the local inflammatory response, which may lead to the reduction of inflammation in IBD. Overview of IBD IBD refers to two conditions, UC and CD, which are characterized by chronic inflammation of the gastrointestinal, or GI, tract. Global epidemiology of IBD varies greatly from region to region. Although the incidence of IBD has remained stable or fallen in western countries over the last 2 decades, it is currently on a sharp rise in developing, newly industrialized areas. Due to the chronic nature of IBD, prevalence rates continue to grow slowly across Europe and North America, and IBD is estimated to affect up to 0.5% of the population in many countries. Ulcerative Colitis UC is characterized by chronic mucosal inflammation and loss of epithelial barrier function, and both contribute to disruption of local immune homeostasis in the colon. UC follows a relapsing / remitting disease course. The primary cause of UC is not precisely known but may include environmental, dietary and genetic factors, or it may be related to the gut microbiome. Typically presenting as abdominal pain, bloody diarrhea and fecal urgency / incontinence, UC is associated with a notable psychosocial burden; the symptoms of UC negatively impact patients’ physical and mental well-being and their ability to work, socialize, and maintain relationships. This impact tends to increase with disease severity, with up to 20% of patients experiencing acute, severe UC requiring hospitalization. Notably, due to chronic inflammation associated with UC, the risk of colorectal cancer is 2.4 times higher in patients with UC as compared with the general population. Crohn’s Disease CD is a chronic, inflammatory condition that involves the full thickness of the wall of the GI tract and is characterized by erosions, strictures and perforations of the intestine. Symptoms include diarrhea, abdominal pain, blood in the stool, and weight loss. Maintaining symptomatic control and obtaining remission are critical to minimizing short-term and long-term complications and to improving the outcomes and quality of life for patients with CD. The natural course of CD is a progression from inflammation of the mucosa to stricture formation of the intestine and of mucosal penetration or fistula formation, with the risk of stricture and fistula increasing with the duration of CD. Overview of the IBD Market Approximately three million Americans report being diagnosed with either UC or CD. The current biologic market is dominated by the anti-TNF antibodies Humira, marketed by AbbVie Inc., and Remicade, marketed by Janssen Pharmaceuticals, Inc., or Janssen, and the growing share of the anti-integrin antibody Entyvio, marketed by Takeda Pharmaceuticals America, Inc. 11 Table of Contents Treatment Paradigm in IBD Treatment of IBD consists mainly of immunosuppressive therapies. Treatment choices depend on the patient’s disease severity and responsiveness to therapy. Medications that treat mild-to-moderate IBD are generally well tolerated. However, as the severity of IBD increases, the potential toxicities of the medications required to manage the disease also increase. For example, treatment of mild-to-moderate patients typically starts with topical agents, such as 5-aminosalicylic acid, or 5-ASA. For those IBD patients who do not respond to 5-ASAs, or those with more severe disease, corticosteroids are generally used to induce clinical remission. However, longer-term treatment with corticosteroids is associated with multiple adverse effects. Patients with moderately to severely active IBD, who become nonresponsive or intolerant to corticosteroids, are treated with immunomodulators, biologics or a Janus kinase, or JAK, inhibitor. Immunomodulators show a delay in onset of action of one to three months and can result in neutropenia, pancreatitis, nephrotoxicity and hepatotoxicity. Therefore, the treatment of IBD patients with moderate-to-severe active disease is dominated by anti-TNF biologics. This paradigm is shifting because of the approval of agents in other classes, such as an anti-integrin, an anti-IL-12 / IL-23 and a JAK inhibitor. There is potential that the approval of biosimilar anti-TNF biologics moves the class further up in the treatment paradigm. Additional immune suppressive therapies for the treatment of IBD are expected in the coming years with the anticipated introduction of oral S1P1 inhibitors and additional oral JAK inhibitors. GB004 Product Differentiation GB004 is designed to be gut-targeted with higher intestinal exposure than systemic exposure. In IBD animal models, GB004 has demonstrated greater accumulation of HIF-1α than HIF-2α which may lead to restoration of epithelial barrier function and resolution of inflammation, while avoiding the potential adverse effects of increased EPO. In the Phase 1b study in patients with active UC, GB004 showed rapid clearance from systemic circulation, suggesting gut-targeted PK, and multi-fold higher concentrations of drug in the gut as compared to the plasma after eight hours of dosing. Additionally, in this study, GB004 continued to demonstrate no effects on systemic EPO or VEGF. GB004 is distinct, and may have a differentiated profile, from the immunomodulatory or immunosuppressive mechanisms of approved IBD medicines and those in late-stage development. By reducing local inflammation and potentially restoring intestinal epithelial barrier function and restitution through GB004’s gut-targeted nature and preferential stabilization of HIF-1α, we believe GB004 could improve outcomes for IBD patients. We believe this mechanism has potential as a standalone therapeutic as well as a combination therapy with other therapeutic mechanisms in IBD. Clinical Development History of GB004 Summary of Completed Phase 1 Clinical Studies in Healthy Volunteers GB004 was evaluated by Aerpio in a first-in-human Phase 1 SAD study in healthy male volunteers. The primary objective of the study was to evaluate the safety and tolerability of ascending dose levels of GB004 after single oral administrations. The secondary objective was to characterize PK. A total of 40 subjects were randomized into five cohorts with 8 subjects each. All subjects completed the study. The five dose levels evaluated in this study were 20 mg, 60 mg, 120 mg, and 240 mg in 50 ml of solution and 240 mg in 100 ml of solution. GB004 was generally well tolerated. No SAEs occurred. There were no differences in systemic levels of VEGF and EPO between GB004 and placebo. GB004 was also evaluated in a randomized, double-blind, placebo-controlled, MAD study to assess the safety, tolerability, PK and pharmacodynamic, or PD, effects in healthy male and female volunteers. A total of 42 subjects were randomized to GB004 or placebo. Evaluated dose levels of GB004 solution were 60 mg, 120 mg and 240 mg per day. All GB004 doses evaluated in this study were well tolerated. No SAEs occurred. The PK profile for GB004 was consistent with its intended preferential exposure in the gut. There were no differences in systemic levels of VEGF and EPO between GB004 and placebo. GB004 engaged the target and stabilized HIF-1α, as demonstrated by upregulated gene expression in the gut. GB004 was also evaluated in a randomized, double-blind, placebo-controlled Phase 1a study to assess the safety, tolerability, PK and PD, effects of various doses and formulations in healthy male and female volunteers. Volunteers received daily doses of 120 mg solution or placebo, or up to 240 mg tablet, or up to 240 mg delayed-release tablet, or placebo for 7 days. All formulations of GB004 were generally well tolerated, and in this study, the tolerability of 240 mg tablet was comparable to the 120 mg solution dose. No SAEs occurred. There were no differences in systemic levels of VEGF and EPO between GB004 and placebo. In the Phase 2 SHIFT-UC trial, Gossamer will be utilizing a tablet formulation of GB004. 12 Table of Contents Summary of Completed Phase 1b Clinical Trial in UC The Phase 1b study was designed to evaluate the safety, tolerability and PK of a 120 mg once-daily dose of GB004 in a solution formulation over a 28-day treatment period in UC patients with active disease despite treatment with 5-ASA therapy. In addition, PD and clinical activity were studied as exploratory measures. 34 patients were randomized 2:1 to receive either GB004 (n=23) or placebo (n=11). GB004 was generally well tolerated during the study with no effects on systemic EPO or VEGF observed, relative to placebo. The most frequent AEs experienced by patients on the GB004 group were nausea and dysgeusia, all of which were mild in severity, aside from one case of moderate nausea. All patients completed the study, except for a single patient in the GB004 group who experienced an SAE of worsening UC, which was deemed by the investigator to be unrelated to study drug. GB004 demonstrated a gut-targeted PK profile with rapid clearance from systemic circulation and multi-fold higher concentrations of drug in the gut, as compared to the plasma after eight hours of dosing. Data from gut biopsies showed increased expression of genes associated with HIF-1α stabilization and enhanced epithelial barrier function, such as TJP1 and CLDN1, and evidence of reduced gut epithelial neutrophil activity in the GB004 group compared to placebo. While this four-week study was not powered to show differences in clinical outcomes, several encouraging trends related to treatment with GB004 were observed at day 28. Mucosal healing, defined as the achievement of both histologic remission and endoscopic improvement in the sigmoid or rectum, was observed in four of 23 patients (17.4%) in the GB004 group compared to zero of 11 patients in the placebo group. Ten of 23 patients (43.5%) in the GB004 group achieved histologic remission in either the sigmoid or rectum compared to two of 11 patients (18.2%) in the placebo group. Favorable trends were also observed in clinical response (6/20 [30.0%] vs. 2/11 [18.2%]) and improvement in the rectal bleeding sub-score (13/21 [61.9%] vs. 5/11 [45.5%]). Rectal bleeding resolution was seen in 12 of 21 (57.1%) patients receiving GB004 vs. four of 11 placebo patients (36.4%). One patient in the GB004 group achieved clinical remission; no patients in the placebo group achieved clinical remission. Summary of Ongoing Phase 2 Clinical Trial in UC (SHIFT-UC Study) In October 2020, we commenced the Phase 2 SHIFT-UC trial, a randomized, double-blind, placebo-controlled, multi-center clinical trial in UC patients with active mild-to-moderate UC. We are enrolling approximately 195 patients with active mild-to-moderate UC disease despite treatment with 5-ASA therapy. Patients will be randomized in a 1:1:1 ratio to one of two doses of GB004 in tablet form and placebo. Patients are required to remain on stable background 5-ASA therapy throughout the study. The primary endpoint of the SHIFT-UC study is clinical remission at week 12, with secondary endpoints including clinical response, histological remission, endoscopic improvement and mucosal healing. The study will also evaluate these endpoints at week 36. We are also assessing relevant safety endpoints and exploratory endpoints. Patients may also enter an open-label extension upon completion of the placebo-controlled period or by meeting disease activity criteria during the placebo-controlled period at or after week 12. Topline 12-week results from the SHIFT-UC trial are expected in the first half of 2022, subject to developments in the ongoing COVID-19 pandemic. GB1275 (CD11b Modulator) GB1275 is an oral, small molecule, CD11b modulator in clinical development for the treatment of oncology indications. CD11b and CD18 are members of the integrin family of cell adhesion receptors that combine to form the functional adhesion receptor CD11b / CD18, also known as Mac-1, CR3 or alpha-M beta-2, on cell surfaces. CD11b is highly expressed on myeloid cells of the immune system, including TAMs and MDSCs, which play a significant role in promoting tumor growth, immune evasion and metastasis. Increased presence of CD11b positive MDSCs in tumors is observed across multiple tumor types and is associated with poor prognosis in multiple cancers. GB1275 is currently being tested in an ongoing Phase 1/2 clinical trial (KEYNOTE-A36) for the treatment of selected solid tumor types. In the fourth quarter of 2019, we announced a clinical trial and supply agreement with Merck to evaluate the combination of GB1275 and pembrolizumab (Keytruda) in advanced solid tumors, as part of the ongoing Phase 1/2 clinical trial. In this ongoing Phase 1/2 clinical trial, oral GB1275 alone and in combination with pembrolizumab, up to 1,200mg BID, has been generally well tolerated. To date, one PR has been observed in a patient with MSS CRC, and biomarker data suggest that GB1275, alone or in combination with pembrolizumab, may modulate myeloid cell biology in the TME, inducing a more inflamed tumor phenotype. We expect to report further data from this trial in 2021. The FDA and the EMA have granted GB1275 orphan drug designation for the treatment of patients with pancreatic cancer. We retain worldwide rights to GB1275. Mechanism of Action The introduction of immune checkpoint therapies has revolutionized the treatment of many cancers in recent years. Despite this, the effectiveness of approved immunotherapies has been limited to a minority of patients in only a small number of approved indications, and many cancers show little to no response to checkpoint therapy. In many cancers, innate immune cells, such as TAMs and MDSCs, are recruited into the TME, where they induce a suppressive state which down- 13 Table of Contents regulates the activation and infiltration of cytotoxic T lymphocyte, or CD8 + T cells. The result is an immunologically ‘cold’ tumor state, which allows for tumor growth and metastasis, ultimately resulting in reduced survival. GB1275 is being developed to address the immunological state leading to cold tumors, which state down-regulates the activation and infiltration of tumor-killing cytotoxic CD8 + T cells in the TME. GB1275 binds to CD11b on TAMs and MDSCs, and preclinical data showed that GB1275 reduced tumor influx of CD11b-positive MDSCs and re-polarized immuno-suppressive (M2) TAMs towards the pro-immune M1 phenotype. These pharmacodynamic effects have the potential to convert the TME from an immunosuppressive / cold state to an immunologically hot, or active state, which would ultimately allow the influx of activated, tumoricidal CD8 + T cells. Preclinical studies of GB1275 have demonstrated reduced tumor burden and improved survival as a single agent and in combination with chemotherapy and immuno-oncology therapies across multiple tumor mouse models, including pancreatic, breast and colon cancer. Preclinical studies and profile characterization of GB1275 support daily oral dosing with no significant preclinical toxicology findings. Clinical Development Plan in Selected Solid Tumors Summary of Ongoing Phase 1/2 Clinical Trial (KEYNOTE-A36 Study) We commenced a Phase 1/2 open-label, multi-center trial (KEYNOTE-A36 Study) with GB1275 in the third quarter of 2019. The Phase 1 portion of the trial is studying patients with selected tumor types, including pancreatic adenocarcinoma, esophageal adenocarcinoma, esophageal squamous cell carcinoma, gastric adenocarcinoma, gastroesophageal junction adenocarcinoma, triple negative breast cancer, castration-resistant prostate cancer and MSS CRC. The Phase 1 portion of the trial consists of dose escalation of GB1275 monotherapy, dose escalation in combination with pembrolizumab (Keytruda), and in patients with pancreatic adenocarcinoma, dose escalation in combination with standard-of-care chemotherapy. The dose escalation portion of the Phase 1 has been completed, and the study will enroll up to 40 patients in a Phase 1 expansion cohort, studying the recommended Phase 2 dose, in patients with gastric or esophageal cancer that have progressed after initial response to anti-PD-1 therapy and patients with advanced MSS CRC. Subject to the results of the Phase 1 expansion cohort, the Phase 1 portion of the trial will be followed by a Phase 2 basket expansion phase in patients with specified metastatic solid tumors. The primary endpoints of the Phase 1 portion of the trial are safety, tolerability and PK. The primary endpoint of the Phase 2 portion of the trial is objective response rate. Clinical safety data to date from the Phase 1 portion of the ongoing Phase 1/2 clinical trial suggest that GB1275 alone and combined with pembrolizumab, up to 1,200 mg BID, has been generally well tolerated in these clinical trials. The maximum tolerated dose of GB1275 has not been reached, and no significant overlapping toxicities between GB1275 and pembrolizumab were observed, suggesting that GB1275 can be safely combined with pembrolizumab. Encouraging anti-tumor activity has been observed, particularly at GB1275 doses greater than or equal to 800 mg BID in tumor types that are known to be less responsive to checkpoint inhibitors, including triple negative breast cancer, castration-resistant prostate cancer, MSS CRC or gastric cancer. As of October 14, 2020, seven cases of prolonged stable disease (greater than 84 days) have been observed, among which one MSS CRC patient subsequently had a PR. Five of these seven cases have occurred at doses 800mg BID or greater. Biological activity, including the down-regulation of peripheral MDSCs, the increase in tumor-infiltrating lymphocytes, and CD8+ T cell changes in tumor tissue, was observed with GB1275 alone and in combination with pembrolizumab, supporting the mechanism of action of GB1275 in modulating myeloid cell biology in the TME, potentially to enhance anti-tumor response when it is combined with a checkpoint inhibitor. We expect to release additional data from this trial in 2021. Further clinical development of GB1275 in cancer indications will be informed by the results of the ongoing Phase 1/2 study. GB001 (DP2 Antagonist) GB001 is an oral DP2 antagonist in development for the treatment of moderate-to-severe eosinophilic asthma. GB001 has been studied in over 800 subjects who have received at least one dose in completed clinical trials to date and has been generally well tolerated up to a dose of 40 mg. In the global Phase 2b LEDA study, GB001 showed a consistent numeric reduction in odds of 32-35% across all three dose groups in proportion of patients with asthma worsening by week 24, as compared to placebo, which was the primary endpoint of the clinical trial, but these results were not statistically significant for any of three dose groups. Additionally, in the same clinical trial, GB001 showed a nominally statistically significant reduction in time-to-first asthma worsening for the 20 mg and the 60 mg dose groups of GB001, as compared to placebo, which was the key secondary endpoint. The 40 mg dose of GB001 also demonstrated a numeric improvement, as compared to placebo, but this result was not statistically significant. One adverse event of interest was an SAE of liver chemistry elevations meeting Hy’s Law criteria in the GB001 60 mg group. The patient was asymptomatic during the event, which was reversible and resolved without sequelae. In a Phase 2 clinical trial conducted in Japan, GB001 showed a statistically significant improvement in time- 14 Table of Contents to-first asthma worsening compared to placebo. A single SAE, intrahepatic cholestasis, a liver disorder, deemed by the investigator likely to be related to study drug was observed in a Japanese patient who had received a 160 mg dose of GB001 in a Phase 1 clinical trial conducted by Teijin. The patient had GB001 exposure levels approximately three to five times higher than the other patients receiving the 160 mg dose. We engaged with the FDA and the EMA about the clinical development path in asthma, and based off those interactions, we believe that there is a viable clinical development path for GB001, or its backup molecule, in asthma. We do not currently plan to move forward with GB001, or its backup molecule, in further clinical trials without a partner. As previously announced, we do not plan to continue further development of GB001 in CRS. We retain worldwide rights to GB001, excluding Japan. Mechanism of Action DP2, also known as CRTh2, is a receptor for prostaglandin D2, or PGD2, a lipid mediator produced mainly by mast cells. DP2 is primarily responsible for mediating the pro-inflammatory effects of PGD2, including: • the activation of T helper 2, or Th2, cells, ILC2 cells, basophils and eosinophils; • the stimulation of type 2 cytokine production, including IL-4, IL-5 and IL-13, by Th2 cells; and • the increased expression of adhesion molecules on eosinophils and basophils. These pro-inflammatory effects contribute to airway constriction, swelling in the walls of the airways and mucous production at sites of allergic airway inflammation, all of which are hallmarks of the airway obstruction seen in asthma. The expression of DP2 is more common in patients with more severe disease, and, importantly, a significant proportion of severe asthma patients have eosinophilic inflammation. Aberrant Th2 cell activation and resulting type 2 cytokine production have been shown to play a prominent role in various allergic and inflammatory disorders beyond eosinophilic asthma, including chronic rhinosinusitis, or CRS, chronic spontaneous urticaria, eosinophilic esophagitis and atopic dermatitis. GB001 has been shown in preclinical studies to be a selective antagonist of the DP2 receptor. GB001 binds reversibly to human DP2 with an affinity, or Ki, of 1 to 2 nanomolar, significantly greater than its affinity for the other PGD2 receptors. No significant activity was demonstrated in a standard selectivity panel of 90 other receptors and enzymes. In in vitro assays conducted by us, GB001 compared favorably to other DP2 antagonists, including high binding affinity, prolonged pharmacodynamics, long receptor residence time and slow receptor dissociation. Furthermore, we believe based on these data that GB001 may be highly insurmountable, meaning high concentrations of PGD2 would not be able to overcome receptor inhibition. Combined with our observed human plasma half-life of 10 to 15 hours, we believe these measurements support the oral, once-daily dosing regimen of GB001. Overview of Asthma Asthma is a complex, chronic, highly heterogeneous inflammatory condition of the airways characterized by airflow obstruction, bronchial hyperactivity and airway inflammation. Symptoms of asthma, which can be fatal, are also called asthma exacerbations or attacks and include episodes of wheezing, breathlessness, chest tightness and coughing. Patients are deemed to have intermittent, mild, moderate or severe disease based on the frequency and severity of their symptoms. Asthma can also be sub-categorized by the composition of the white blood cells that are causing inflammation in and around the airway wall. We estimate that approximately 50% of severe asthma patients have a phenotype called eosinophilic asthma, which is marked by an increase of eosinophils in the mucosal sputum that coats the airways. Eosinophils are immune cells that have been shown to play a major role in inflammation and allergic response, and eosinophilic asthma is associated with more severe symptoms, late-onset disease and response to steroid treatment. Clinical Development History of GB001 We acquired GB001 through our acquisition of Pulmagen Therapeutics (Asthma) Limited, or Pulmagen, a wholly-owned subsidiary of our AA BioPharma Inc. subsidiary, in January 2018, after its partner, Teijin, completed a positive Phase 2, proof-of-concept clinical trial in Japanese patients. We have worldwide rights, outside of Japan, to all of the data from the two Phase 2 clinical trials conducted by Pulmagen and Teijin described below. In addition, Gossamer has completed two Phase 2 trials with GB001 for the treatment of asthma and CRS. Over 800 subjects have received at least one dose of GB001 in completed clinical trials to date. 15 Table of Contents Summary of Pulmagen and Teijin Phase 1 Clinical Trials In Phase 1 studies conducted by Pulmagen and Teijin, GB001 demonstrated safety and PD parameters consistent with the DP2 drug class. Most treatment emergent adverse events, or TEAEs, were mild or moderate and were considered not related to study drug. A single SAE deemed by the investigator likely to be related to study drug was observed in a Japanese patient who had received a 160 mg dose of GB001, which is eight times higher than the highest dose Teijin tested in its Phase 2 clinical trial conducted in Japan. The patient experienced intrahepatic cholestasis, which resolved after treatment discontinuation. At the time of the intrahepatic cholestasis, the patient had GB001 exposure levels approximately three to five times higher than other patients receiving the 160 mg dose. Other than this SAE, there were no laboratory testing, physical exam or electrocardiographic findings that were considered to be clinically significant and related to GB001. Summary of Completed Pulmagen Phase 2 Clinical Trial In December 2014, Pulmagen completed a Phase 2 clinical trial of GB001, the primary objectives of which were (1) to evaluate the safety and efficacy of 20 mg GB001 once daily compared to placebo and an active comparator, montelukast, over a 10-week treatment period and (2) to evaluate the effect of the co-administration of 10 mg montelukast once daily with GB001 treatment in a two-week extension. The primary endpoint was improvement in forced expiratory volume in one second, or FEV1, over 10 weeks. The study enrolled 248 patients with mild-to-moderate asthma that were uncontrolled on low- or medium-dose ICS, randomized 1:1:1 to placebo, 20 mg GB001 once daily and 10 mg montelukast once daily. Patients were put on a standard medium-dose of ICS with and without LABA in a four-week lead-in to the study, during which they were also removed from their LABA, if applicable. GB001 was generally well tolerated with a TEAE incidence similar to placebo, but the study did not meet its primary endpoint. Notably, neither the active comparator, montelukast, nor GB001, showed statistically significant differences in FEV1 improvement as compared to placebo. We believe the lack of statistically significant differences between the active treatment arms and placebo was primarily related to study design and execution issues related to patient selection, including adherence to ICS therapy, eosinophilic phenotype thresholds and disease severity. Summary of Completed Teijin Phase 2 Clinical Trial In December 2016, Pulmagen and Teijin announced results from a Phase 2 clinical trial of GB001 conducted by Teijin in Japan. The trial was a double-blind, randomized, placebo-controlled, multi-center study, enrolling 158 patients with mild-to-moderate asthma who were using LABA and/or medium-dose ICS to control their disease. Patients on LABA discontinued its use upon entry to the trial, and all patients were brought to a standardized medium dose of ICS for a four-week lead-in period. Patients were then randomized 1:1:1 to one of two dose arms of GB001, 5 mg or 20 mg once daily, or to placebo in combination with a low dose of ICS for four weeks. Following this period of combination with low-dose ICS, use of ICS was discontinued, and patients continued taking GB001 or placebo for 12 weeks. The primary endpoint of the trial was change in morning peak expiratory flow, or AM PEF, a measure of lung function, from baseline to the last visit, marked as study completion or termination from the trial. A statistically significant difference was seen in the AM PEF between placebo and both arms of GB001 (p = 0.015, 5 mg; p = 0.027, 20 mg). In addition, time-to-first asthma worsening reached statistical significance for the 20 mg dose arm versus placebo (p < 0.001). Asthma worsening in this trial was defined as a composite measure to help characterize overall uncontrolled asthma, including exacerbations. GB001 was generally well tolerated in this trial, with adverse events consistent with placebo, including nasopharyngitis, gastrointestinal disorders and measures of blood and liver markers. No SAEs were observed in the GB001 treatment arms. Summary of Completed Phase 2b Eosinophilic Asthma Clinical Trial (LEDA Study) In October 2020, we announced topline results from the completed Phase 2b clinical trial (LEDA Study) of GB001 in moderate-to-severe eosinophilic asthma. The primary objective of this clinical trial was to evaluate the efficacy and safety of 20 mg, 40 mg, and 60 mg GB001 once daily relative to placebo when added to standard of care treatment. The LEDA study enrolled 480 patients with uncontrolled, moderate-to-severe eosinophilic asthma and assessed the effect of oral GB001 add-on therapy to standard of care over 24 weeks, comparing three dose groups of once-daily, oral GB001 (20 mg, n=120; 40 mg, n=118; and 60 mg, n=122) to placebo (n=120). The primary outcome, asthma worsening, included five components and was chosen for its sensitivity in detecting deterioration in clinical outcome measures known to be correlated with exacerbations. Asthma worsening was a 16 Table of Contents composite outcome defined as the occurrence of any one of the following at any time by Week 24: deterioration of morning peak expiratory flow, pre-bronchodilator FEV1, or asthma control as measured by the Asthma Control Questionnaire 5, relative to baseline; an increase in rescue medication use relative to baseline; or the occurrence of a severe asthma exacerbation, defined as deterioration of asthma that led to the use of systemic corticosteroids for at least 3 days, hospitalization, or an Emergency Department visit. This endpoint has previously been used in the context of steroid withdrawal studies, including a prior Phase 2 trial of GB001. The primary endpoint of the trial was not met, though consistent and meaningful numeric reductions in the odds of asthma worsening as compared to placebo were observed across all GB001 groups: 33% (p=0.1425), 32% (p=0.1482), and 35% (p=0.1086), for the GB001 20 mg, 40 mg, and 60 mg groups, respectively. In addition, statistically significant improvements in the key secondary endpoint of time to first asthma worsening as compared to placebo were observed for GB001 20 mg and 60 mg (28% and 30% risk reduction, p=0.0466 and p=0.0304, respectively), with GB001 40 mg also demonstrating a numeric improvement (23%, p=0.1222). Numeric reductions for each GB001 group as compared to placebo were seen across all individual components of the asthma worsening endpoint. In addition to asthma worsening, the expected Phase 3 registrational endpoint of annualized severe exacerbation rate, or AER, was evaluated as a secondary endpoint. While AER is typically formally evaluated in large Phase 3 studies with a one-year duration, reductions as compared to placebo were seen for each GB001 group (GB001 20 mg: 20%; 40 mg: 25%; 60 mg: 11%), although the reductions were not statistically significant. Numeric improvements in lung function, as measured by morning peak expiratory flow and pre-bronchodilator FEV1, and asthma control, as measured by the Asthma Control Questionnaire were also observed for all three GB001 groups compared to placebo. The incidence of adverse events was generally comparable across treatment groups: 65.8% placebo, 65.8% GB001 20 mg, 69.5% GB001 40 mg, and 68.0% GB001 60 mg. Adverse events of interest (liver chemistry elevations leading to study drug discontinuation) occurred more frequently in GB001 60 mg (4.1%, n=5) than placebo (0.8%, n=1), GB001 20 mg (0.8%, n=1), or GB001 40 mg (1.7%, n=2). One adverse event of interest was a SAE of liver chemistry elevations meeting Hy’s Law criteria in the GB001 60 mg group. The patient was asymptomatic during the event, which was reversible and resolved without sequelae. Completed Phase 2 Chronic Rhinosinusitis Clinical Trial (TITAN Study) The TITAN trial enrolled 97 patients with CRS with and without nasal polyps and assessed treatment with GB001 40 mg as compared to placebo over 16 weeks. Neither the primary nor the secondary endpoints of the trial were met. The safety and tolerability of GB001 40 mg was generally consistent with that observed in the LEDA Study. We do not plan to continue further development of GB001 in CRS. Our Research Capabilities and Preclinical Programs We currently have multiple programs in preclinical development. We are continuing to build our research capabilities, specifically focusing on our areas of expertise within immunology, inflammation and oncology, in order to advance new programs into the clinic, as well as to optimize our existing programs. We have six programs in preclinical development, and we expect at least one additional product candidate to enter clinical trials within the next 12 months. Competition The biotechnology and pharmaceutical industries are characterized by rapid technological advancement, significant competition and an emphasis on intellectual property. We face potential competition from many different sources, including major and specialty pharmaceutical and biotechnology companies, academic research institutions, governmental agencies and public and private research institutions. Any product candidates that we successfully develop and commercialize will compete with current therapies and new therapies that may become available in the future. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects or more convenient than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we do. We believe that the key competitive factors affecting the success of any of our product candidates will include efficacy, safety profile, convenience, cost, level of promotional activity devoted to them and intellectual property protection. We expect to face competition from existing products and products in development for each of our product candidates. Seralutinib is a PDGFR, CSF1R and c-KIT inhibitor initially targeted for PAH patients. We expect competition in this patient set will include prostanoids, available in oral form as Orenitram (United Therapeutics Corporation, or United Therapeutics) and Uptravi (Janssen), by inhalation as Tyvaso (United Therapeutics), and by infusion as Remodulin (United Therapeutics). We also may face some competition from products used in class I and II patients, such as the oral PDE5 17 Table of Contents inhibitors, including Revatio (Pfizer Inc.) and Adcirca (United Therapeutics); the sGC stimulator Adempas (Bayer AG); and oral ERAs, including Tracleer (Janssen), Letairis (Gilead Sciences, Inc.) and Opsumit (Janssen). We believe that, if approved, seralutinib could be used alongside all three classes of approved therapies. PAH is also an active indication for investigational drugs, and we may face competition in the future from ralinepag (Arena Pharmaceuticals, Inc. and United Therapeutics), sotatercept (Acceleron Pharma, Inc.), RVT-1201 (Altavant Sciences, Inc.), PB1046 (PhaseBio Pharmaceuticals Inc.), MK-5475 (Merck) and GMA310 (Gmax Biopharm LLC). Additionally, although not approved for the treatment of PAH, we may face competition from formulations of imatinib, including those from Tenax Therapeutics, Aerovate Therapeutics and Aerami Therapeutics / Vectura Group. GB004 is a HIF-1α stabilizer with the potential to restore epithelial barrier function in patients with IBD. Patients with mild to moderate UC can initially be maintained in remission using a 5-ASA. For those patients who do not respond to 5-ASA, or those with more severe and / or extensive disease at diagnosis, corticosteroids are generally the next line of treatment. Patients who have become nonresponsive or intolerant to corticosteroids may move to azathioprine and 6-mercaptopurine. The treatment of severe patients is dominated by anti-TNF biologics, though the paradigm is shifting because of the approval of agents in other classes, such as anti-integrin, IL-12 / IL-23, and JAK inhibitors. There is potential that the approval of biosimilar anti-TNF biologics moves the class further up in the treatment paradigm. Further disruption is expected in the coming years through the introduction of oral S1P1 inhibitors and additional oral JAK inhibitors. GB1275 is a CD11b modulator for the treatment of cancer indications. To our knowledge, there are no other CD11b modulator programs in clinical development for oncology. Our initial targeted cancer indications for GB1275 include pancreatic, gastric, esophageal, prostate, triple negative breast cancer and colorectal. Treatment for patients in these indications has historically included chemotherapy, radiation, targeted therapy and surgery. In recent years immune checkpoint inhibitors have received approvals, including Keytruda (pembrolizumab / Merck) and Tecentriq (atezolizumab / Bristol-Myers Squibb), for the treatment of some of these difficult to treat cancer indications, including gastric and esophageal cancers (Keytruda) and triple negative breast cancer (Tecentriq). In addition to current standard of care, we may face competition from compounds with novel mechanisms of action that are currently in clinical development, including compounds targeting the CCR2, CCR5, CSF1R and CXCR2 pathways. GB001, in development for the treatment of moderate-to-severe eosinophilic asthma, is an oral DP2 antagonist, a class of medicines with no currently approved agents. However, other DP2 antagonists are currently in development by Chiesi Farmaceutici S.p.A., Merck, Sunshine Lake Pharma Co., Ltd., Idorsia Pharmaceuticals Ltd., ZAI Lab Ltd. and CSPC ZhongQi Pharmaceutical Technology Co., Ltd. If approved, we will also face branded competition from existing biologics, including Xolair (omalizumab / anti-IgE, marketed by Genentech and Novartis) and Dupixent (dupilumab / anti-IL-4 / IL-13, marketed by Regeneron Pharmaceuticals, Inc. and Sanofi S.A.), for moderate-to-severe asthma, and Nucala (mepolizumab / anti-IL-5, marketed by GlaxoSmithKline), Cinqair (reslizumab / anti-IL-5, marketed by Teva Pharmaceutical Industries Ltd.), and Fasenra (benralizumab / anti-IL-5R, marketed by AstraZeneca Pharmaceuticals LP) for severe eosinophilic asthma. We will also face competition from generic montelukast, which is utilized in mild-to-moderate patients. Several other agents are advancing in clinical trials for moderate and / or severe asthma, including tezepelumab (anti-TSLP; Amgen Inc. / AstraZeneca), REGN3500 (anti-IL-33R; Regeneron), masitinib (anti-c-kit / PDGF; AB Science S.A.) and Dexpramipexole (dopamine receptor agonist, Knopp Biosciences LLC). There may be other earlier stage clinical programs that, if approved, would compete with our product candidates. Many of our competitors have substantially greater financial, technical and human resources than we have. Additional mergers and acquisitions in the pharmaceutical industry may result in even more resources being concentrated in our competitors. Competition may increase further as a result of advances made in the commercial applicability of technologies and greater availability of capital for investment in these fields. Our success will be based in part on our ability to build and actively manage a portfolio of drugs that addresses unmet medical needs and creates value in patient therapy. License Agreements Pulmokine In October 2017, we entered into a license agreement, or the Pulmokine Agreement, with Pulmokine, Inc., under which we were granted an exclusive worldwide license and sublicense to certain intellectual property rights owned or controlled by Pulmokine, including intellectual property rights co-owned by Pulmokine and Gilead Sciences, to develop and commercialize seralutinib and certain backup compounds for the treatment, prevention and diagnosis of any and all disease or conditions. We also have the right to sublicense our rights under the Pulmokine Agreement, subject to certain conditions. We are required to use commercially reasonable efforts to develop and commercialize at least one licensed product in the United States and in at least two countries in the European Union. 18 Table of Contents Under the terms of the Pulmokine Agreement, we made an upfront payment of $5.5 million and a milestone payment of $5.0 million to Pulmokine and are obligated to make future development and regulatory milestone payments of up to $58 million, commercial milestone payments of up to $45 million, and sales milestone payments of up to $190 million. We are also obligated to pay tiered royalties on sales for each licensed product, at percentages ranging from the mid-single digits to the high single-digits. In addition, if we choose to sublicense or assign to any third parties our rights under the Pulmokine Agreement with respect to a licensed product, or our seralutinib operating subsidiary undergoes a change of control, we must pay to Pulmokine a specified percentage of all revenue to be received in connection with such transaction. Our royalty obligations and the Pulmokine Agreement will expire on a licensed product-by-licensed product and country-by-country basis on the later of ten years from the date of first commercial sale or when there is no longer a valid patent claim covering such licensed product or specified regulatory exclusivity for the licensed product in such country. The Pulmokine Agreement may be terminated in its entirety either by Pulmokine or by us in the event of an uncured material breach by the other party, in the event the other party is subject to specified bankruptcy, insolvency or similar circumstances, or in the event of a force majeure event under certain circumstances. The agreement may be terminated by Pulmokine if we commence a legal action challenging the validity or enforceability of any licensed patents. We may terminate the agreement, either in its entirety or on a product-by-product basis, in the event of potential safety or efficacy concerns affecting a licensed product. The intellectual property rights co-owned by Pulmokine and Gilead Sciences are subject to a license agreement, or the Gilead Agreement, between Pulmokine and Gilead Sciences. Under the Gilead Agreement, Pulmokine is required to use commercially reasonable efforts to develop and commercialize at least one licensed product, which obligation can be satisfied through our development efforts required under the Pulmokine Agreement, and to pay Gilead Sciences future regulatory milestone payments and royalties. Upon termination of the Gilead Agreement for any reason, our sublicense under the Pulmokine Agreement will survive provided that we did not cause a material breach that was the basis for such termination and we agree to be bound by the terms of the Gilead Agreement. The Pulmokine Agreement also includes a sublicense to patents concerning methods for detecting pulmonary arterial hypertension owned by The Rensselaer Center for Translational Research, Inc., or Rensselaer, and licensed to Pulmokine in an exclusive license agreement, or the Rensselaer License. Under the Rensselaer License, Pulmokine is required to use commercially reasonable efforts to develop and commercialize at least one licensed product covered by the Rensselaer patent rights, which obligation can be satisfied through our development efforts. If such obligation is not satisfied by Pulmokine or us, or the Rensselaer License is otherwise terminated for any reason, our sublicense under the Pulmokine Agreement will, at our option, either terminate or, subject to Rensselaer’s approval and our acceptance of the provisions of the Rensselaer License, convert to a license directly between us and Rensselaer. Upon termination of the Pulmokine Agreement for any reason, all rights and licenses granted to us under the agreement will terminate and revert to Pulmokine, and in the event of certain termination events, we would grant Pulmokine worldwide rights to the terminated program. Aerpio Pharmaceuticals In June 2018, we entered into a license agreement, or the Aerpio Agreement, with Aerpio Pharmaceuticals, Inc., under which we were granted an exclusive worldwide license to certain intellectual property rights owned or controlled by Aerpio to develop and commercialize GB004 and certain other related compounds for all applications. We also have the right to sublicense our rights under the Aerpio Agreement, subject to certain conditions. We are required to use commercially reasonable efforts to develop and commercialize at least one licensed product in the United States, in at least two countries in the European Union, and in Japan, in each case for at least one of the initial indications of UC or CD. The Aerpio Agreement also includes a sublicense to a patent concerning methods for treating inflammatory bowel disease owned by The Regents of the University of Colorado, or UC Regents, and licensed to Aerpio in a nonexclusive license agreement, or the UC Regents License. If Aerpio breaches the UC Regents License and the UC Regents terminate the license, our sublicense under the Aerpio Agreement will also terminate. Under the terms of the Aerpio Agreement, we made an upfront payment of $20 million to Aerpio in June 2018, which represented the purchase consideration for an asset acquisition. On May 11, 2020, we entered into an amendment to the license agreement with Aerpio pursuant to which we made an upfront payment of $15.0 million to Aerpio for a reduction in future milestone payments and royalties. Under the amended license agreement, we are obligated to make future approval milestone payments of up to $40.0 million and a sales milestone payment of $50.0 million. We are also obligated to pay tiered royalties on sales for each licensed product, at percentages ranging from a low- to mid-single-digits, subject to certain customary reductions. In addition, if we choose to sublicense or assign to any third parties our rights under the Aerpio Agreement with respect to any licensed product or if our GB004 operating subsidiary undergoes a change of control and the value of such transaction exceeds a specified value, we have an option to pay a specified percentage of all revenue to be 19 Table of Contents received in connection with such transaction, and if we exercise the option Aerpio will no longer be paid the development, regulatory, commercial or sales milestones or royalties on the sales of licensed products under the agreement. If we do not exercise our buy-down option with respect to a sublicense or assignment of our rights under the Aerpio Agreement or with respect to a change of control of our GB004 operating subsidiary, Aerpio will have an option to receive a specified percentage of all revenue received in connection with such transaction, and if Aerpio exercises the option Aerpio will no longer be paid the development, regulatory, commercial or sales milestones or royalties on sales of licensed products under the agreement. Our royalty obligations and the Aerpio Agreement will expire on a licensed product-by-licensed product and country-by-country basis on the later of fifteen years from the date of first commercial sale or when there is no longer a valid patent claim covering such licensed product in such country. The agreement may be terminated either by Aerpio or by us in the event of an uncured material breach by the other party or in the event the other party becomes subject to specified bankruptcy, insolvency or similar circumstances. In the event we commence a legal action challenging the validity or enforceability of any licensed patents, Aerpio will have the right to terminate the agreement or elect to increase milestone and royalty payments by a specified percentage. We may terminate the agreement in the event of potential safety or efficacy concerns affecting a licensed product. Upon termination of the agreement for any reason all rights and licenses granted to us under the agreement will terminate, and in the event of certain termination events, we would grant Aerpio worldwide rights to the terminated program. Manufacturing We currently rely on multiple third-party manufacturers for the manufacture of our product candidates for preclinical and clinical testing. We intend to rely on third-party contract manufacturers for commercial manufacturing if our product candidates receive marketing approval. Typically, there are multiple sources for all of the materials required for the manufacture of our product candidates. Our manufacturing strategy enables us to more efficiently direct financial resources to the research, development and commercialization of product candidates rather than diverting resources to internally develop manufacturing facilities. As our product candidates advance through development, we expect to enter into longer-term commercial supply agreements with key suppliers and manufacturers to fulfill and secure our production needs. Intellectual Property We strive to protect the proprietary technology, inventions and improvements that are commercially important to our business, including seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties. We also rely on trade secrets and know-how relating to our proprietary technology and product candidates and continuing innovation to develop, strengthen and maintain our proprietary position. We also plan to rely on data exclusivity, market exclusivity and patent term extensions when available. Our commercial success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions and improvements; to preserve the confidentiality of our trade secrets; to defend and enforce our proprietary rights, including any patents that we may own in the future; and to operate without infringing on the valid and enforceable patents and other proprietary rights of third parties. Intellectual property rights may not address all potential threats to our competitive advantage. Seralutinib As of December 31, 2020, with respect to seralutinib, we have exclusively licensed one issued U.S. patent and a number of pending applications in other jurisdictions owned by Pulmokine directed to method of use claims, which, if issued, are not due to expire before 2037, excluding any additional term for patent term extension. We also have exclusively licensed four issued U.S. patents co-owned by Pulmokine and Gilead Sciences, Inc., which are not due to expire before 2034, excluding any additional term for patent term extension; five pending U.S. patent applications, which, if issued, are not due to expire before 2034, excluding any additional term for patent term extension; and a number of patents and pending patent applications in other jurisdictions, including issued patents in Australia, Canada, the European Patent Convention and Japan, and pending applications in Australia, Canada, China, the European Patent Convention and Japan. These patents and patent applications are directed to seralutinib compound, formulation and method of use claims. GB004 As of December 31, 2020, with respect to GB004, we have exclusively licensed from Aerpio ten issued U.S. patents directed to compound, pharmaceutical composition and method of use claims, eight of which are not due to expire before 2030, and one, directed to synthetic method claims, is not due to expire before 2035, excluding any additional term for patent term extension; two pending U.S. patent applications directed to compound and method of use claims, which, if issued, are not due to expire before 2030, excluding any additional term for patent term extension; and a number of patents and pending patent applications in other jurisdictions. The patents and pending patent applications directed to compound, pharmaceutical composition and method of use claims in other jurisdictions, and which are not due to expire before 2030, include issued 20 Table of Contents patents in Australia, Canada, China, the European Patent Convention, India, Japan, Mexico, New Zealand and South Korea, and pending patent applications in Brazil, the European Patent Convention, India, Mexico and South Korea. The patents and pending patent applications directed to synthetic method claims in other jurisdictions, and which are not due to expire before 2035, include pending patent applications in China, the European Patent Convention, India and Japan. GB1275 As of December 31, 2020, we owned one issued U.S. patent directed to compound, pharmaceutical composition and method of use claims for GB1275, which, if issued, is not due to expire before 2036, excluding any additional term for patent term extension, and a number of corresponding patent applications pending in other jurisdictions, including Australia, Brazil, Canada, China, the European Patent Convention, Israel, Japan, Mexico, New Zealand, Singapore and South Korea, also directed to compound, pharmaceutical composition and method of use claims for GB1275. GB001 As of December 31, 2020, with respect to GB001, we owned one issued U.S. patent directed to compound and pharmaceutical composition claims, which is not due to expire before 2026, excluding any additional term for patent term extension, and a number of patents in other jurisdictions, including issued patents in Australia, Canada, China, the European Patent Convention, India, Mexico, New Zealand, Russia, and Brazil directed to compound and pharmaceutical composition claims. As of December 31, 2020, we owned one U.S. patent directed to compound claims, which is not due to expire before 2037, excluding any additional term for patent term adjustment or extension, and a number of pending patent applications in other jurisdictions, including pending applications in Australia, Brazil, Canada, China, the European Patent Convention, India, South Korea, Mexico, New Zealand, Russia, and Taiwan directed to compound claims. As of December 31, 2020, with respect to a backup DP2 molecule, we owned three issued U.S. patent directed to compound and pharmaceutical composition claims, which are not due to expire before 2032, excluding any additional patent term extension, and a number of patents and pending patent applications in other jurisdictions, including issued patents in UK, France, Germany, China, Japan, Korea, Australia, Canada, New Zealand, Mexico and Israel, and pending patent applications in India and Brazil. With respect to our product candidates and processes we intend to develop and commercialize in the normal course of business, we intend to pursue patent protection covering, when possible, compositions, methods of use, dosing and formulations. We may also pursue patent protection with respect to manufacturing and drug development processes and technologies. Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies. We may not be able to obtain patent protections for our compositions, methods of use, dosing and formulations, manufacturing and drug development processes and technologies throughout the world. Issued patents can provide protection for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance and the legal term of patents in the countries in which they are obtained. In general, patents issued for applications filed in the United States can provide exclusionary rights for 20 years from the earliest effective filing date. In addition, in certain instances, the term of an issued U.S. patent that covers or claims an FDA approved product can be extended to recapture a portion of the term effectively lost as a result of the FDA regulatory review period, which is called patent term extension. The restoration period cannot be longer than five years and the total patent term, including the restoration period, must not exceed 14 years following FDA approval. The term of patents outside of the United States varies in accordance with the laws of the foreign jurisdiction, but typically is also 20 years from the earliest effective filing date. However, the actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country, and the validity and enforceability of the patent. Patent term may be inadequate to protect our competitive position on our products for an adequate amount of time. The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions. No consistent policy regarding the scope of claims allowable in patents in the field of biopharmaceuticals has emerged in the United States. The relevant patent laws and their interpretation outside of the United States is also uncertain. Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our technology or product candidates and could affect the value of such intellectual property. In particular, our ability to stop third parties from making, using, selling, offering to sell or importing products that infringe our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology, inventions and improvements. We cannot guarantee that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our products, the methods of use or manufacture of those products. Moreover, even our issued patents do not guarantee us the right to practice our technology in relation to the commercialization of our products. Patent and other intellectual property rights in the pharmaceutical and biotechnology space are evolving and involve many risks and uncertainties. For example, third parties may have blocking patents that could be used to prevent us from commercializing 21 Table of Contents our product candidates and practicing our proprietary technology, and our issued patents may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing related products or could limit the term of patent protection that otherwise may exist for our product candidates. In addition, the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents. For these reasons, we may face competition with respect to our product candidates. Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any particular product candidate can be commercialized, any patent protection for such product may expire or remain in force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides. Government Regulation Government authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing and export and import of products such as those we are developing. A new drug must be approved by the FDA through the new drug application, or NDA, process before it may be legally marketed in the United States. Certain of our product candidates are subject to regulation as combination products, which means that they are composed of both a drug product and device product. If marketed individually, each component would be subject to different regulatory pathways and reviewed by different centers within the FDA. A combination product, however, is assigned to a Center that will have primary jurisdiction over its regulation based on a determination of the combination product’s primary mode of action, which is the single mode of action that provides the most important therapeutic action. In the case of our inhaled product candidate regulated as a combination product, the primary mode of action is attributable to the drug component of the product, which means that the FDA’s Center for Drug Evaluation and Research has primary jurisdiction over the premarket development, review and approval. Accordingly, we plan to investigate this product through the IND framework and seek approval through the NDA pathway. We do not anticipate that the FDA will require a separate medical device authorization for the device, but this could change during the course of its review of any marketing application that we may submit. U.S. Drug Development Process In the United States, the FDA regulates drugs under the federal Food, Drug, and Cosmetic Act, or the FDCA, and its implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval may subject an applicant to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us. The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice, or GLP, regulations and other applicable regulations; • submission to the FDA of an IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; 22 Table of Contents • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current GMP, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and • FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States. Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information and analytical data, to the FDA as part of the IND. An IND is a request for authorization from the FDA to administer an investigational new drug product to humans. The sponsor will also include a protocol detailing, among other things, the objectives of the first phase of the clinical trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated, if the first phase lends itself to an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns about on-going or proposed clinical trials or non-compliance with specific FDA requirements, and the trials may not begin or continue until the FDA notifies the sponsor that the hold has been lifted. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial. All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCP regulations, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial. They must be conducted under protocols detailing, among other things, the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND as well as any subsequent protocol amendments, and timely safety reports must be submitted to the FDA and the investigators for serious and unexpected adverse events. An IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations. Human clinical trials are typically conducted in three sequential phases that may overlap or be combined: • Phase 1 : The product candidate is initially introduced into healthy human volunteers and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness. In the case of some products for severe or life-threatening diseases, such as cancer, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients. Sponsors sometimes designate their Phase 1 clinical trials as Phase 1a or Phase 1b. Phase 1b clinical trials are typically aimed at confirming dosing, pharmacokinetics and safety in larger number of patients. Some Phase 1b studies evaluate biomarkers or surrogate markers that may be associated with efficacy in patients with specific types of diseases. • Phase 2 : This phase involves clinical trials in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and appropriate dosage. • Phase 3 : Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population, generally at geographically dispersed clinical study sites. These clinical trials are intended to establish the overall risk-benefit ratio of the product candidate and provide, if appropriate, an adequate basis for product labeling. Post-approval trials, sometimes referred to as Phase 4 studies, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA. The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate 23 Table of Contents approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. In addition, some clinical trials are overseen by an independent group of qualified experts organized by the sponsor, known as a data safety monitoring board or committee. Depending on its charter, this group may determine whether a trial may move forward at designated check points based on access to certain data from the trial. During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA is submitted. Meetings at other times may be requested. These meetings can provide an opportunity for the sponsor to share information about the data gathered to date, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development. Sponsors typically use the meetings at the end of the Phase 2 trial to discuss Phase 2 clinical results and present plans for the pivotal Phase 3 clinical trials that they believe will support approval of the new drug. Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug. In addition, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. While the IND is active and before approval, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure. There are also requirements governing the reporting of ongoing clinical trials and completed trial results to public registries. Sponsors of certain clinical trials of FDA-regulated products are required to register and disclose specified clinical trial information, which is publicly available at www.clinicaltrials.gov. Information related to the product, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to discuss the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed until the new product or new indication being studied has been approved. Regulation of Combination Products in the United States Certain products may be comprised of components, such as drug components and device components that would normally be regulated under different types of regulatory authorities, and frequently by different centers at the FDA. These products are known as combination products. Specifically, under regulations issued by the FDA, a combination product may be: • a product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity; • two or more separate products packaged together in a single package or as a unit and comprised of drug and device products, device and biological products, or biological and drug products; • a drug, or device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug, or device, or biological product where both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed, e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose; or • any investigational drug, or device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect. 24 Table of Contents Under the FDCA and its implementing regulations, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product. The designation of a lead center generally eliminates the need to receive approvals from more than one FDA component for combination products, although it does not preclude consultations by the lead center with other components of FDA. The determination of which center will be the lead center is based on the “primary mode of action” of the combination product. Thus, if the primary mode of action of a drug-device combination product is attributable to the drug product, the FDA center responsible for premarket review of the drug product would have primary jurisdiction for the combination product. The FDA has also established an Office of Combination Products to address issues surrounding combination products and provide more certainty to the regulatory review process. That office serves as a focal point for combination product issues for agency reviewers and industry. It is also responsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the FDA center that has primary jurisdiction for review of combination products where the jurisdiction is unclear or in dispute. A combination product with a drug primary mode of action generally would be reviewed and approved pursuant to the drug approval processes under the FDCA. In reviewing the NDA application for such a product, however, FDA reviewers in the drug center could consult with their counterparts in the device center to ensure that the device component of the combination product met applicable requirements regarding safety, effectiveness, durability and performance. In addition, under FDA regulations, combination products are subject to cGMP requirements applicable to both drugs and devices, including the Quality System, or QS, regulations applicable to medical devices. NDA Review and Approval Process The results of product development, preclinical and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product. The submission of an NDA is subject to the payment of substantial user fees; a waiver of such fees may be obtained under certain limited circumstances. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality and purity. Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission. This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision after it the application is submitted. The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review The FDA may request additional information rather than accept an NDA for filing. In this event, the NDA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. The FDA may refer an application for a novel drug to an advisory committee. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements. After the FDA evaluates an NDA, it will issue an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the drug with prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application will not be approved in its present form. A Complete Response Letter usually describes the specific deficiencies in the NDA identified by the FDA and may require additional clinical data, such as an additional pivotal Phase 3 trial or other significant and time consuming requirements related to clinical trials, nonclinical studies or manufacturing. If a Complete Response Letter is issued, the sponsor must resubmit the NDA or, addressing all of the deficiencies identified in the letter, or withdraw the application. Even if such data and information are submitted, the FDA may decide that the NDA does not satisfy the criteria for approval. If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. In addition, the FDA may require a sponsor to conduct Phase 4 testing, which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval, and may require testing and surveillance programs to monitor the safety of approved products which have been commercialized. The FDA may also place other conditions on approval including the requirement for a risk evaluation and mitigation strategy, or REMS, to assure the safe use of the drug. If the FDA concludes a 25 Table of Contents REMS is needed, the sponsor of the NDA must submit a proposed REMS. The FDA will not approve the NDA without an approved REMS, if required. A REMS could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products. Marketing approval may be withdrawn for non-compliance with regulatory requirements or if problems occur following initial marketing. The Pediatric Research Equity Act, or PREA, requires a sponsor to conduct pediatric clinical trials for most drugs, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs and supplements must contain a pediatric assessment unless the sponsor has received a deferral or waiver. The required assessment must evaluate the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the drug is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric clinical trials begin. The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation. Orphan Drug Designation Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States or, if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug product available in the United States for this type of disease or condition will be recovered from sales of the product. Orphan designation must be requested before submitting an NDA. After the FDA grants orphan designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or inability to manufacture the product in sufficient quantities. The designation of such drug also entitles a party to financial incentives such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers. However, competitors, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. Orphan exclusivity also could block the approval of one of our product candidates for seven years if a competitor obtains approval of the same drug as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease. In addition, if an orphan designated product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan exclusivity. In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if the second applicant demonstrates that its product is clinically superior to the approved product with orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. seralutinib has received orphan drug designation for the treatment of patients with PAH, and GB1275 has received orphan drug designation for the treatment of pancreatic cancer. Expedited Development and Review Programs A sponsor may seek approval of its product candidate under programs designed to accelerate FDA’s review and approval of new drugs and biological products that meet certain criteria. The FDA has a fast track designation program that is intended to expedite or facilitate the process for reviewing new drug products that meet certain criteria. Specifically, new drugs are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Unique to a fast track product, the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA. Any product submitted to the FDA for approval, including a product with a fast track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and 26 Table of Contents accelerated approval. A product is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the safety or effectiveness of the treatment, diagnosis or prevention of a serious disease or condition. The FDA will attempt to direct additional resources to the evaluation of an application for a new drug designated for priority review in an effort to facilitate the review. The FDA endeavors to review applications with priority review designations within six months of the filing date as compared to ten months for review of new molecular entity NDAs under its current PDUFA review goals. Priority review designation does not change the scientific/medical standard for approval or the quality of evidence necessary to support approval. In addition, a product may be eligible for accelerated approval. Drug products intended to treat serious or life-threatening diseases or conditions may be eligible for accelerated approval upon a determination that the product has an effect on 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. As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. FDA may withdraw approval of a drug or indication approved under accelerated approval if, for example, the confirmatory trial fails to verify the predicted clinical benefit of the product. The FDA Safety and Innovation Act established a category of drugs referred to as “breakthrough therapies” that may be eligible to receive breakthrough therapy designation. A sponsor may seek FDA designation of a product candidate as a “breakthrough therapy” if the product is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. If the FDA designates a breakthrough therapy, it may take actions appropriate to expedite the development and review of the application, which may include holding meetings with the sponsor and the review team throughout the development of the therapy; 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 nonclinical and clinical data necessary for approval is as efficient as practicable; involving senior managers and experienced review staff, as appropriate, in a collaborative, cross-disciplinary review; 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 review team and the sponsor; and considering alternative clinical trial designs when scientifically appropriate, which may result in smaller trials or more efficient trials that require less time to complete and may minimize the number of patients exposed to a potentially less efficacious treatment. The designation includes all of the fast track program features, which means that the sponsor may file sections of the NDA for review on a rolling basis if certain conditions are satisfied, including an agreement with FDA on the proposed schedule for submission of portions of the application and the payment of applicable user fees before the FDA may initiate a review. The breakthrough therapy designation is a distinct status from both accelerated approval and priority review, which can also be granted to the same drug if relevant criteria are met. If a product is designated as breakthrough therapy, the FDA will work to expedite the development and review of such drug. Fast track designation, priority review and breakthrough therapy designation do not change the standards for approval but may expedite the development or approval process. Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. We may explore some of these opportunities for our product candidates as appropriate. Post-Approval Requirements Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. After approval, some types of changes to the approved product, such as adding new indications, certain manufacturing changes and additional labeling claims, are subject to further FDA review and approval. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP regulations and other laws and regulations. In addition, the FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization. 27 Table of Contents Any drug products manufactured or distributed by us or our partners pursuant to FDA approvals will be subject to pervasive and continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the drug, providing the FDA with updated safety and efficacy information, drug sampling and distribution requirements, complying with certain electronic records and signature requirements, and complying with FDA promotion and advertising requirements. The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market and imposes requirements and restrictions on drug manufacturers, such as those related to direct-to-consumer advertising, the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet. Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant or manufacturer to administrative or judicial civil or criminal sanctions and adverse publicity. FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical holds on post-approval clinical trials, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties. Marketing Exclusivity Market exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not approve or even accept for review an abbreviated new drug application, or ANDA, or an NDA submitted under Section 505(b)(2), or 505(b)(2) NDA, submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder. The FDCA alternatively provides three years of marketing exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the modification for which the drug received approval on the basis of the new clinical investigations and does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for drugs containing the active agent for the original indication or condition of use. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. Pediatric exclusivity is another type of marketing exclusivity available in the United States. Pediatric exclusivity provides for an additional six months of marketing exclusivity attached to another period of exclusivity if a sponsor conducts clinical trials in children in response to a written request from the FDA. The issuance of a written request does not require the sponsor to undertake the described clinical trials. In addition, orphan drug exclusivity, as described above, may offer a seven-year period of marketing exclusivity, except in certain circumstances. U.S. Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of any product candidate for which we may seek regulatory approval. Sales in the United States will depend, in part, on the availability of sufficient coverage and adequate reimbursement from third-party payors, which include government health programs such as Medicare, Medicaid, TRICARE and the Veterans Administration, as well as managed care organizations and private health insurers. Prices at which we or our customers seek reimbursement for our product candidates can be subject to challenge, reduction or denial by third-party payors. The process for determining whether a third-party payor will provide coverage for a product is typically separate from the process for setting the reimbursement rate that the payor will pay for the product. A third-party payor’s 28 Table of Contents decision to provide coverage for a product does not imply that an adequate reimbursement rate will be available. Additionally, in the United States there is no uniform policy among payors for coverage or reimbursement. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies, but also have their own methods and approval processes. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. If coverage and adequate reimbursement are not available, or are available only at limited levels, successful commercialization of, and obtaining a satisfactory financial return on, any product we develop may not be possible. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. In order to obtain coverage and reimbursement for any product that might be approved for marketing, we may need to conduct expensive studies in order to demonstrate the medical necessity and cost-effectiveness of any products, which would be in addition to the costs expended to obtain regulatory approvals. Third-party payors may not consider our product candidates to be medically necessary or cost-effective compared to other available therapies, or the rebate percentages required to secure favorable coverage may not yield an adequate margin over cost or may not enable us to maintain price levels sufficient to realize an appropriate return on our investment in drug development. U.S. Healthcare Reform In the United States, there has been, and continues to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of product candidates, restrict or regulate post-approval activities, and affect the profitable sale of product candidates. Among policy makers and payors in the United States, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. In March 2010, the Patient Protection and Affordable Care Act, or ACA, was passed, which substantially changed the way healthcare is financed by both the government and private insurers, and significantly impacts the U.S. pharmaceutical industry. The ACA, among other things: (1) increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations; (2) created a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics that are inhaled, infused, instilled, implanted or injected; (3) established an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in certain government healthcare programs; (4) expanded the availability of lower pricing under the 340B drug pricing program by adding new entities to the program; (5) expanded the eligibility criteria for Medicaid programs; (6) created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; (7) created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (which was increased to 70% commencing January 1, 2019) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; (8) established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and (9) established a Center for Medicare Innovation at the Centers for Medicare & Medicaid Services, or CMS, to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drugs. Since its enactment, there have been judicial and political challenges to certain aspects of the ACA. For example, the Tax Cuts and Jobs Act of 2017, or Tax Act, included a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the ACA are invalid as well. On December 18, 2019, the U.S. Court of Appeals for the 5th Circuit affirmed the District Court’s decision that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. The U.S. Supreme Court is currently reviewing the case, although it is unclear when a decision will be made or how the Supreme Court will rule. In addition, there may be other efforts to challenge, repeal or replace the ACA. Other legislative changes have been proposed and adopted since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, resulted in aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 29 Table of Contents through March 31, 2021, unless additional Congressional action is taken. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. The likelihood of success of these and other measures proposed by the former Trump administration is unclear, particularly in light of the new Biden administration. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Additionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017, or Right to Try Act, was signed into law. The law, among other things, provides a federal framework for patients to access certain investigational new drug products that have completed a Phase I clinical trial. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA approval under the FDA expanded access program. There is no obligation for a drug manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act. U.S. Healthcare Fraud and Abuse Laws and Compliance Requirements Federal and state healthcare laws and regulations restrict business practices in the biopharmaceutical industry. These laws include anti-kickback and false claims laws and regulations, and transparency laws and regulations. The federal Anti-Kickback Statute prohibits, among other things, individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. The federal civil and criminal false claims laws, including the civil False Claims Act, prohibit, among other things, any individual or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act and the civil monetary penalties statute. The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal civil and criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program. The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals beginning in 2022, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians (as defined by statute) and their immediate family members. Similar state and local laws and regulations may also restrict business practices in the biopharmaceutical industry, such as state anti-kickback and false claims laws, which may apply to business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and 30 Table of Contents marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities; and state and local laws that require the registration of pharmaceutical sales representatives. Efforts to ensure compliance with applicable healthcare laws and regulations can involve substantial costs. Violations of healthcare laws can result in significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, individual imprisonment, possible exclusion from participation in Medicare, Medicaid and other U.S. healthcare programs, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of operations. U.S. Data Privacy & Security In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including HIPAA, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners. In addition, certain state laws, such as the California Consumer Privacy Act, or the CCPA, and the California Privacy Rights Act, or the CPRA, govern the privacy and security of personal information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing. Foreign Regulation In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions. Although many of the issues discussed above with respect to the United States apply similarly in the context of the European Union, or EU, the approval process varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others. To market a medicinal product in the European Economic Area, or EEA (which is comprised of the 28 Member States of the EU plus Norway, Iceland and Liechtenstein), we must obtain a Marketing Authorization, or MA. There are two types of marketing authorizations: • the Community MA, which is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use of the European Medicines Agency, or EMA, and which is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, advanced therapy products, and medicinal products containing a new active substance indicated for the treatment certain diseases, such as AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases. The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU; and • National MAs, which are issued by the competent authorities of the Member States of the EEA and only cover their respective territory, are available for products not falling within the mandatory scope of the Centralized Procedure. Where a product has already been authorized for marketing in a Member State of the EEA, this National MA can be recognized in another Member State through the Mutual Recognition Procedure. If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. 31 Table of Contents Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy. Data and marketing exclusivity In the EEA, new products authorized for marketing, or reference products, qualify for eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization. The data exclusivity period prevents generic or biosimilar applicants from relying on the preclinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar marketing authorization in the EU during a period of eight years from the date on which the reference product was first authorized in the EU. The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until 10 years have elapsed from the initial authorization of the reference product in the EU. The 10-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those 10 years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. Pediatric investigation plan In the EEA, marketing authorization applications for new medicinal products not authorized have to include the results of studies conducted in the pediatric population, in compliance with a pediatric investigation plan, or PIP, agreed with the EMA’s Pediatric Committee, or PDCO. The PIP sets out the timing and measures proposed to generate data to support a pediatric indication of the drug for which marketing authorization is being sought. The PDCO can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults. Further, the obligation to provide pediatric clinical trial data can be waived by the PDCO when these data is not needed or appropriate because the product is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients. Once the marketing authorization is obtained in all Member States of the EU and study results are included in the product information, even when negative, the product is eligible for six months’ supplementary protection certificate extension. Orphan drug designation In the EEA, a medicinal product can be designated as an orphan drug if its sponsor can establish that the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in ten thousand persons in the EU when the application is made, or that the product is intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition in the European Community and that without incentives it is unlikely that the marketing of the drug in the EU would generate sufficient return to justify the necessary investment. For either of these conditions, the applicant must demonstrate that there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized in the EU or, if such method exists, the drug will be of significant benefit to those affected by that condition. In the EEA, an application for designation as an orphan product can be made any time prior to the filing of an application for approval to market the product. Marketing authorization for an orphan drug leads to a ten-year period of market exclusivity. During this market exclusivity period, the EMA or the member state competent authorities, cannot accept another application for a marketing authorization, or grant a marketing authorization, for a similar medicinal product for the same indication. The period of market exclusivity is extended by two years for medicines that have also complied with an agreed PIP. This period may, however, be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan drug designation, for example because the product is sufficiently profitable not to justify market exclusivity. Market exclusivity can be revoked only in very selected cases, such as consent from the marketing authorization holder, inability to supply sufficient quantities of the product, demonstration of “clinical superiority” by a similar medicinal product, or, after a review by the Committee for Orphan Medicinal Products, requested by a member state in the fifth year of the marketing exclusivity period (if the designation criteria are believed to no longer apply). Medicinal products designated as orphan drugs pursuant are eligible for incentives made available by the EU and its Member States to support research into, and the development and availability of, orphan drugs. 32 Table of Contents Clinical trials Clinical trials of medicinal products in the European Union must be conducted in accordance with European Union and national regulations and the International Conference on Harmonization, or ICH, guidelines on GCPs. Additional GCP guidelines from the European Commission, focusing in particular on traceability, apply to clinical trials of advanced therapy medicinal products. If the sponsor of the clinical trial is not established within the European Union, it must appoint an entity within the European Union to act as its legal representative. The sponsor must take out a clinical trial insurance policy, and in most EU countries, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial. Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization from the competent authority, and a positive opinion from an independent ethics committee. The application for a clinical trial authorization must include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation. Currently, clinical trial authorization applications must be submitted to the competent authority in each EU Member State in which the trial will be conducted. Under the new Regulation on Clinical Trials, which is currently expected to take effect in 2019, there will be a centralized application procedure where one national authority takes the lead in reviewing the application and the other national authorities have only a limited involvement. Any substantial changes to the trial protocol or other information submitted with the clinical trial applications must be notified to or approved by the relevant competent authorities and ethics committees. Medicines used in clinical trials must be manufactured in accordance with cGMP. Other national and European Union-wide regulatory requirements also apply. Privacy and data protection laws We are also subject to laws and regulations in non-U.S. countries covering data privacy and the protection of health-related and other personal data. EU member states and other jurisdictions have adopted data protection laws and regulations, which impose significant compliance obligations. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure, processing and security of personal data that identifies or may be used to identify an individual, such as names, contact information, and sensitive personal data such as health data. These laws and regulations are subject to frequent revisions and differing interpretations, and have generally become more stringent over time. The General Data Protection Regulation, or GDPR, went into effect in May 2018. The GDPR imposes many requirements for controllers and processors of personal data of individuals within the EEA, including, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining to health data and pseudonymized (i.e., key-coded) data and additional obligations when we contract third-party processors in connection with the processing of the personal data. The GDPR allows EU and EEA Member States to make additional laws and regulations further limiting the processing of genetic, biometric or health data. Failure to comply with the requirements of GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties. Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the EU and the United States remains uncertain. For example, in 2016, the EU and United States agreed to a transfer framework for data transferred from the EU to the United States, called the Privacy Shield, but the Privacy Shield was invalidated in July 2020 by the Court of Justice of the European Union. Further, from January 1, 2021, companies have to comply with the GDPR and also the United Kingdom GDPR (UK GDPR), which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, e.g. fines up to the greater of €20 million (£17.5 million) or 4% of global turnover. The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the United Kingdom will be regulated in the long term. Currently there is a four to six-month grace period agreed in the EU and United Kingdom Trade and Cooperation Agreement, ending June 30, 2021 at the latest, whilst the parties discuss an adequacy decision. However, it is not clear whether (and when) an adequacy decision may be granted by the European Commission enabling data transfers from EU member states to the United Kingdom long term without additional measures. These changes may lead to additional costs and increase our overall risk exposure. 33 Table of Contents Human Capital We have assembled a deeply experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world. Our employees are a team of highly dedicated, passionate individuals who pride themselves on a culture of respect, humility, transparency, inclusion, dedication, collaboration and fun. Our ultimate goal is to enhance and extend the lives of patients. Our philosophy is to offer a comprehensive compensation and benefits package to support our greatest assets, our people, and our human capital resources objectives include, as applicable, identifying, attracting, retaining and motivating our highly qualified management and our clinical, scientific and other employees and consultants. The principal purposes of our equity and cash incentive plans are to attract, retain and motivate personnel through the granting of stock-based and cash-based compensation awards, in order to align our interests and the interests of our stockholders with those of our employees and consultants. As of February 19, 2021, we had 195 full-time employees and one part-time employee. Of those 196 employees, 65, or 33%, have a Ph.D. or M.D., and 103, or 53%, are women. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good. Corporate Information We were incorporated under the laws of the state of Delaware on October 26, 2015 under the name FSG, Bio, Inc. and changed our name to Gossamer Bio, Inc. in 2017. Our principal executive offices are located at 3013 Science Park Road, Suite 200, San Diego, California 92121, and our telephone number is (858) 684-1300. Available Information Our internet address is www.gossamerbio.com. Our investor relations website is located at http://ir.gossamerbio.com. We make available free of charge on our investor relations website under “filings” our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, our directors’ and officers’ Section 16 reports and any amendments to those reports as soon as reasonably practicable after filing or furnishing such materials to the US Securities and Exchange Commission, or SEC. They are also available for free on the SEC’s website at www.sec.gov . The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing.