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Item 1. Business

2023-03-17 compared with 2022-03-03 · 249 added, 360 removed, 594 unchanged (51% of the section changed)

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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 three clinical-stage product candidates, in addition to one late-stage preclinical product candidate and five additional preclinical programs.

We currently have two clinical-stage product candidates, in addition to one late-stage preclinical product candidate.

The following table summarizes our current programs:

Seralutinib (GB002:

PDGFR, CSF1R and c-KIT Inhibitor)

Seralutinib (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 reverse pathological remodeling by addressing mechanisms that 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 PDGFR and c-KIT, marketed for oncology indications, showed statistically significant improvement in its primary efficacy endpoint, however serious systemic toxicities were also observed.

To date, these serious toxicities have not been observed with seralutinib in our completed short-duration Phase 1 single-ascending dose / multiple ascending dose, or SAD / MAD, studies in healthy volunteers or in our two-week Phase 1b trial in PAH patients.

In the 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 second half of 2022, subject to developments in the ongoing COVID-19 pandemic.

In December 2022, we announced positive topline results from the 24-week Phase 2 TORREY trial in 86 PAH patients.

In this well-treated patient population, the seralutinib arm demonstrated a statistically significant improvement of 14.3% against the placebo arm in its primary efficacy endpoint, pulmonary vascular resistance, or PVR.

Seralutinib has been generally well tolerated in all completed clinical trials.

Upon completion of the 24-week blinded portion of the Phase 2 TORREY Study, patients were able to enroll into an open-label extension trial.

We anticipate reporting results from this ongoing open-label extension trial in the middle of 2023.

We expect to commence a registrational Phase 3 clinical trial in PAH in the second half of 2023.

We in-licensed seralutinib from Pulmokine, Inc.

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The United States Food and Drug Administration, or FDA, and the European Commission, or EC, have granted seralutinib orphan drug designation for the treatment of patients with PAH.

GB004 (Gut-Targeted HIF-1 α Stabilizer)

GB004 is a 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 trial 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 completed enrollment for the ongoing Phase 2 SHIFT-UC trial in patients with active mild-to-moderate UC in the fourth quarter of 2021.

Topline results for the week 12 primary endpoint for this trial are expected to be publicly reported in the second quarter of 2022, and topline results for the week 36 treat-through endpoint for this trial are expected to be publicly reported in the fourth quarter of 2022.

We in-licensed GB004 from Aadi Bioscience, Inc., or Aadi, in 2018 and retain worldwide rights.

GB5121 (CNS-Penetrant BTK Inhibitor)

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Inhibition of BTK results in the immediate blockade and down-regulation of several cellular activities that drive autoimmunity and inflammation.

Active BTK signaling is also present in many B cell malignancies.

signaling is also present in many B cell malignancies.

BTK inhibitors are approved in the United States to treat oncology indications.

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We believe the CNS penetration observed in these preclinical studies supports the development of GB5121 as a potential therapy for the treatment of hematologic malignancies in the CNS, including PCNSL.

GB5121 is currently being evaluated in a Phase 1 clinical study in healthy volunteers.

We expect to initiate a global Phase 1b/2 clinical trial in PCNSL patients in the first half of 2022.

GB5121 is currently being evaluated in the Phase 1b/2 STAR CNS Study in relapsed / refractory PCNSL and other rare CNS malignancies.

Based upon the benefit / risk profile observed to date and a prioritization of resources to support the seralutinib program, we have decided to pause enrollment in the Phase 1b/2 STAR CNS study.

We plan to discuss available data with the study’s Data Review Committee to determine next steps.

We expect to report data from this ongoing, open-label clinical trial at relevant medical conferences.

GB5121 was internally developed and is wholly owned.

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In preclinical mouse models, GB7208 has demonstrated superior CNS penetration at studied doses, when compared to selected BTK inhibitors in development for autoimmune indications, including MS.

GB7208 is currently undergoing preclinical testing, and pending the outcomes of our ongoing preclinical work, we expect to initiate a Phase 1 study in healthy volunteers in the second half of 2022.

GB7208 is currently undergoing preclinical testing.

GB7208 was internally developed and is wholly owned.

Our Research Capabilities and Preclinical Programs

Including GB7208, we have six 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.

Including GB7208, we have multiple programs in preclinical development, with a focus on the therapeutic areas of immunology, inflammation and oncology, and we are currently evaluating the continued development of our multiple programs in preclinical development.

Our founders and management team have held senior positions at leading biopharmaceutical companies and possess substantial experience and expertise across the spectrum of drug discovery, development and commercialization.

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He held that position from December 2008 until the company's acquisition by Abbott Laboratories in April 2010.

Bryan Giraudo, our Chief Financial Officer and Chief Operating Officer, has extensive biotechnology and medical technology finance 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.

Bryan Giraudo, our Chief Financial Officer and Chief Operating Officer, has extensive biotechnology and medical technology finance experience, having previously served as Senior Managing Director at Leerink Partners and Managing Director at Merrill Lynch, Pierce, Fenner & Smith Incorporated.

Richard Aranda, M.D., our Chief Medical Officer, is an experienced clinician and drug developer with previous experience at Bristol Myers Squibb Company, Novo-Nordisk, Inc., Receptos and Celegene Corporation.

Laura Carter, Ph.D., our Chief Scientific Officer, has over 20 years of industry experience spanning target identification and validation activities through Phase 2 clinical trials in multiple

therapeutic areas having previously held positions at Lycera Corporation, Medimmune, Array Biopharma and Wyeth.

Christian Waage, our Executive Vice President, has meaningful management 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.

Laura Carter, Ph.D., our Chief Scientific Officer, has over 20 years of industry experience spanning target identification and validation activities through Phase 2 clinical trials in multiple therapeutic areas having previously held positions at Lycera Corporation, Medimmune, Array Biopharma and Wyeth.

Christian Waage, our Executive Vice President, Technical Operations & Administration, has meaningful management 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.

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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.

Our goal is to be an industry leader in 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 three clinical-stage product candidates, one late-stage preclinical product candidate, and an additional five 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.

We continue to evaluate potential neurological conditions for GB7208.

• 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.

• Leverage the clinical 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.

We plan to utilize this deep, broad set of expertise and experiences as we execute on our in-house discovery and development strategies, including our planned registrational Phase 3 clinical trial of seralutinib in PAH.

• Increase 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 seralutinib in both WHO Group 1 and WHO Group 3 pulmonary hypertension.

We also continue to evaluate potential neurological conditions for our CNS-penetrant BTK inhibitors, GB5121 and GB7208.

• Engage in partnerships, collaborations, licensing deals or other transactions.

Gossamer may seek to enter transactions to gain access to additional financial, clinical or commercial resources to support the development and commercialization of its product candidates.

Our Product Candidates

Seralutinib (GB002:

PDGFR, CSF1R and c-KIT Inhibitor)

Seralutinib (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, 2021, seralutinib has been generally well tolerated in completed clinical trials.

To date, these serious toxicities have not been observed with seralutinib in our completed short-duration Phase 1 SAD / MAD studies in healthy volunteers or in our two-week Phase 1b trial in PAH patients.

In the 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 second half of 2022, subject to developments in the ongoing COVID-19 pandemic.

In December 2022, we announced positive topline results from the 24-week Phase 2 TORREY trial in 86 PAH patients.

In this well-treated patient population, the seralutinib arm demonstrated a statistically significant improvement against the placebo arm in its primary efficacy endpoint, pulmonary vascular resistance, or PVR.

Improvements in PVR favored the seralutinib arm across all pre-specified patient sub-groups.

Seralutinib has been generally well tolerated in all completed clinical trials.

Upon completion of the 24-week blinded portion of the Phase 2 TORREY Study, patients were able to enroll into an open-label extension trial.

We anticipate reporting results from this ongoing open-label extension trial in the middle of 2023.

We expect to commence a registrational Phase 3 clinical trial in PAH in the second half of 2023.

We in-licensed seralutinib from Pulmokine, Inc.

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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.

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.

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The trial met its primary endpoint, improvement in 6-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 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.

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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.

One of these risk categorization tools, the REVEAL 2.0 Risk Score, was utilized in the completed Phase 2 TORREY Study.

Multiple PAH-specific treatments have been introduced in the past two decades, however PAH continues to have a high morbidity and mortality.

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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 2020 exceeded $5 billion.

Total branded PAH drug sales worldwide in 2021 were approximately $5.9 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 (and guanylate cyclase stimulators), ERAs, and prostanoids (and prostacyclin receptor agonists).

PDE5 inhibitors are often used in combination with ERAs as an early treatment strategy.

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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.

While some 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 pathophysiology.

The vasodilation effects of approved PAH therapies, while capable of 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 the ability to safely reverse pathological remodeling could provide utility across functional classes and risk categories.

New investigational therapies, such as sotatercept (Merck & Co., Inc.), may impact the PAH treatment paradigm, if approved.

Sotatercept, a subcutaneously administered activin receptor type IIA-Fc fusion protein, is an investigational drug candidate that has been evaluated in a completed Phase 3 PAH clinical trial.

Seralutinib Product Differentiation

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Additionally, seralutinib is multiple orders more potent against CSF1R, as compared to imatinib.

We believe seralutinib has the potential to be a differentiated 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;

• a convenient, simple and portable inhalation methodology and delivery system.

We believe seralutinib has the potential to be a PAH therapeutic that may provide a:

• differentiated, anti-proliferative mechanism that addresses the underlying mechanisms of PAH;

• more tolerable safety profile than systemic imatinib;

• 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 inhibits both PGDFR α and β, and it inhibited and reversed cell overgrowth in lung blood vessels in a PAH rat model, which 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.

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.

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Irregularities in BMPR2 expression have been linked to PAH.

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.

Summary of Completed Phase 1a Studies

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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 trial.

In December 2020, we announced 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.

Eight patients completed the two-week blinded portion of the trial.

Enrollment for this trial was temporarily paused due to the COVID-19 pandemic but was reopened in the third quarter of 2020.

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Both patients demonstrated a decrease in NT-proBNP levels from baseline, and both patients demonstrated an increase in 6MWD from baseline.

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 on the active arm will receive seralutinib at doses ranging from 45 mg twice daily to 90 mg twice daily.

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 trial.

Topline results from the TORREY trial are expected in the second 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.

We have completed Phase 1 SAD and MAD studies in healthy volunteers and a Phase 1b trial in patients with active UC, and GB004 was generally well tolerated.

We commenced the Phase 2 SHIFT-UC trial in patients with active mild-to-moderate UC in October 2020, and we announced that we had completed trial enrollment in the fourth quarter of 2021.

We in-licensed GB004 from Aadi in 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.

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 disease 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 studies 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 includes 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.

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 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.

For those patients with mild-to-moderate disease who do not respond to 5-ASAs, these immunomodulatory therapies and associated toxicities and risks may not be appropriate.

There exists substantial unmet need for additional mild-to-moderate treatment options.

The treatment of moderate-to-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-integrins, anti-IL-12 / -23s, S1P1 receptor modulators and 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 trial 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 trial, 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 Aadi 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 eight 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 seven 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 is utilizing a tablet formulation of GB004.

Summary of Completed Phase 1b Clinical Trial in UC

The Phase 1b trial 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 trial 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 trial, 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 disease, despite treatment with 5-ASA therapy.

In the fourth quarter of 2021, we announced the completion of enrollment.

Patients are 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 trial.

The 12-week primary endpoint of the SHIFT-UC study is clinical remission, with secondary endpoints including clinical response, histological remission, endoscopic improvement and mucosal healing.

The trial 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.

The co-primary endpoint of the SHIFT-UC study is percentage of participants with a treatment emergent adverse event, from the first dose of the open-label extension through week 28 of the open-label extension.

Topline results for the 12-week primary endpoint for the SHIFT-UC trial are expected in the second quarter of 2022.

Topline results for the 36-week treat-through endpoint are expected in the fourth quarter of 2022.

Summary of Completed Phase 2 PAH Clinical Trial (TORREY Study)

In December 2022, we announced positive topline results from the completed Phase 2 TORREY Study, a randomized, double-blind, placebo-controlled, multi-center clinical trial in PAH patients.

We enrolled 86 Functional Class II and III PAH patients who were not meeting treatment goal despite background PAH treatment.

57% of enrolled patients were on triple background PAH therapy, and 40% were on double background PAH therapy.

Patients on the active arm received seralutinib at doses starting at 60 mg twice daily, and they titrated up to 90 mg twice daily.

While the protocol allowed for down-titration to 45 mg twice daily as necessary, the substantial majority of patients on the seralutinib arm were able to achieve and maintain 90 mg twice daily.

Patients remained on their background PAH therapies throughout the trial.

Seralutinib demonstrated a statistically significant improvement on the primary endpoint, change from baseline in PVR over a 24-week treatment period.

A mean improvement in PVR between the placebo and seralutinib arms of

96.1 dynes (p = 0.0310), equating to a placebo-corrected improvement of 14.3%, was observed in the study.

Improvements in PVR favored the seralutinib arm across all pre-specified patient sub-groups.

The key secondary endpoint in the TORREY Study was change from baseline to week 24 in 6MWD.

An observed mean difference in 6MWD between placebo and seralutinib of 6.5 meters numerically favored the seralutinib arm.

Changes in 6MWD also favored seralutinib in the majority of pre-specified sub-groups.

The trial was neither powered nor designed for statistical significance in 6MWD.

Enhanced effects for both PVR and 6MWD were observed in patients with more severe baseline disease, as defined by WHO Functional Class, or FC, and REVEAL 2.0 Risk Scores.

In FC III patients, a 21% reduction in PVR (p = 0.0427) and 37-meter improvement in 6MWD (p = 0.0476) were observed for the seralutinib arm vs.

In patients with a baseline REVEAL 2.0 Risk Score of 6 or greater, a 23% reduction in PVR (p = 0.0134) and 22-meter improvement in 6MWD (p = 0.2482) were observed for the seralutinib arm vs.

Seralutinib treatment resulted in a statistically significant reduction in NT-proBNP, a biomarker of right heart stress, as early as 12 weeks, increasing to a 408.3 ng/L mean difference from placebo at Week 24 (p = 0.0012).

This biomarker change was accompanied by clinically relevant and statistically significant changes for seralutinib vs.

placebo in key assessments of right heart structure and function, including right atrium area, right ventricle free wall strain and pulmonary artery compliance.

Seralutinib was generally well tolerated in the TORREY study, with treatment emergent adverse events, or TEAEs, reported in 36 (86%) and 41 (93%) of the patients in the placebo and seralutinib arms, respectively.

The vast majority of TEAEs reported in the study were mild to moderate in severity.

In the seralutinib arm, there was one SAE related to study drug reported, while no SAEs related to study drug were reported in the placebo arm.

The most frequently reported TEAE in the study was cough, reported in 16 (38%) and 19 (43%) of the patients in the placebo and seralutinib arms, respectively.

Of the 19 patients reporting cough in the seralutinib arm, 17 experienced mild cough, while 2 experienced moderate cough.

The most frequently reported TEAEs in the IMPRES Phase 3 study of imatinib in PAH, including nausea, peripheral edema, diarrhea, and vomiting, were observed at substantially lower frequency in the TORREY study, and reported cases were generally well balanced between the seralutinib and placebo arms.

No cases of subdural hematoma were reported in the study.

Upon completion of the 24-week blinded portion of the Phase 2 TORREY Study, patients were able to enroll into an open-label extension trial.

We anticipate reporting results from this ongoing open-label extension trial in the middle of 2023.

Summary of Planned Phase 3 PAH Clinical Trial

We expect to commence a Phase 3 PAH clinical trial in the second half of 2023.

The planned Phase 3 clinical trial will be a randomized, double-blind, placebo-controlled, global clinical trial in PAH patients.

Patients will be randomized to receive either seralutinib or placebo, in addition to their background PAH therapies.

We are engaging with global regulatory authorities in the first half of 2023 and expect that these interactions will inform the final design of the Phase 3 clinical trial.

Based on FDA feedback, we expect to test a single dose of 90 mg twice daily, and we expect the primary endpoint of the trial to be change in 6MWD from baseline;

provided, however, the final trial design is subject to further feedback from global regulatory authorities.

In addition to secondary and exploratory endpoints, safety and tolerability will also be evaluated in the Phase 3 clinical trial.

Clinical Development Plan in Additional Indications

We believe that seralutinib has potential for use as a therapeutic treatment for pulmonary hypertension associated with interstitial lung disease, or PH-ILD.

A subgroup of WHO Group 3 Pulmonary Hypertension, PH-ILD is a collection of progressive and often fatal forms of pulmonary hypertension that affect the small airways of the lungs.

These diseases are characterized by pulmonary vascular pathology associated with pulmonary hypertension, in addition to thickening and scarring of the lung interstitium from interstitial lung disease.

There is only one FDA-approved treatment for PH-ILD, and there are no approved therapies in the EU.

We believe that seralutinib has the potential to improve the quality of life for PH-ILD patients.

We expect to commence clinical development in PH-ILD in the second half of 2023 or the first half of 2024.

GB5121 (CNS-Penetrant BTK Inhibitor)

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In preclinical mouse models, GB5121 has demonstrated superior CNS penetration at studied doses when compared to selected BTK inhibitors.

GB5121 is currently being evaluated in a Phase 1 clinical study in healthy volunteers.

We expect to initiate a global Phase 1b/2 clinical trial in PCNSL patients in the first half of 2022.

We believe the CNS penetration observed in these preclinical studies

supports the development of GB5121 as a potential therapy for the treatment of hematologic malignancies in the CNS, including PCNSL.

GB5121 is currently being evaluated in the Phase 1b/2 STAR CNS Study in relapsed / refractory PCNSL and other rare CNS malignancies.

Based upon the benefit / risk profile observed to date and a prioritization of resources to support the seralutinib program, we have decided to pause enrollment in the Phase 1b/2 STAR CNS study.

We plan to discuss available data with the study’s Data Review Committee to determine next steps.

We expect to report data from this ongoing, open-label clinical trial at relevant medical conferences.

GB5121 was internally developed and is wholly owned.

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BTK is a non-receptor protein-tyrosine kinase that belongs to the TEC family of kinases.

It is present in hematopoietic cells such as B cells, macrophages, neutrophils

and mast cells.

It is present in hematopoietic cells such as B cells, macrophages, neutrophils and mast cells.

BTK is a critical mediator of B cell receptor, or BCR, signaling and the adaptive immune response.

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Treatment with BTK inhibitors is associated with on-target and off-target AEs, such as rash, diarrhea, infection, bleeding, cytopenias and cardiovascular AEs, including atrial fibrillation.

Liver enzyme elevations have also been observed in patients receiving BTK inhibitors.

Molecules with modest selectivity may incur increased off-target AEs through unintended interaction with off-target kinases.

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Summary of Ongoing Phase 1 Clinical Study

In the fourth quarter of 2021, we commenced a dose-escalating Phase 1 open-label study in healthy human volunteers to evaluate the safety, tolerability, PK and PD of GB5121 in humans.

In the fourth quarter of 2021, we commenced a dose-escalating Phase 1 study in healthy human volunteers to evaluate the safety, tolerability, PK and PD of GB5121 in humans.

The study includes both SAD and MAD portions as well as clinical pharmacology assessments.

Summary of Planned Phase 1b/2 Clinical Trial in PCNSL

We plan to initiate the Phase 1b portion of a global Phase 1b/2 clinical trial in the first half of 2022.

The Phase 1b portion of the trial will enroll patients with recurrent or refractory primary or secondary CNS lymphoma or with recurrent or refractory primary vitreoretinal lymphoma.

The primary endpoints of the Phase 1b will include safety and tolerability, and the secondary endpoints will include overall response rate, or ORR, and duration of response.

Summary of Ongoing STAR CNS Phase 1b/2 Clinical Trial in PCNSL

In the second quarter of 2022, we commenced the Phase 1b portion of a global Phase 1b/2 clinical trial.

The Phase 1b portion of the trial enrolled patients with recurrent or refractory primary or secondary CNS lymphoma or with recurrent or refractory primary vitreoretinal lymphoma.

The primary endpoint of the Phase 1b is safety and tolerability, and the secondary endpoints include overall response rate, or ORR, and duration of response.

Phase 2 dose selection will be informed by the results from the Phase 1b.

The Phase 2 portion of the of the trial will enroll recurrent or refractory PCNSL patients and is expected to initiate in the first half of 2023.

The primary endpoint of the Phase 2 portion of the trial will be ORR, and secondary endpoints will include duration of response, overall survival, progression free survival, safety and tolerability.

Based upon the benefit / risk profile observed to date and a prioritization of resources to support the seralutinib program, we have decided to pause enrollment in the Phase 1b/2 STAR CNS study.

We plan to discuss available data with the study’s Data Review Committee to determine next steps.

GB7208 (CNS-Penetrant BTK Inhibitor)

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In preclinical mouse models, GB7208 has demonstrated superior CNS penetration at studied doses, when compared to selected BTK inhibitors in development for autoimmune indications, including MS.

GB7208 is currently undergoing preclinical testing, and pending the outcomes of our ongoing preclinical work, we expect to initiate a Phase 1 study in healthy volunteers in the second half of 2022.

GB7208 is currently undergoing preclinical testing.

GB7208 was internally developed and is wholly owned.

Our Research Capabilities and Preclinical Programs

Including GB7208, we have six programs in preclinical development.

The biotechnology and pharmaceutical industries are characterized by rapid technological advancement, significant competition and an emphasis on intellectual property.

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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 expect competition in this patient set will include prostanoids / prostacyclin receptor agonists, including Orenitram (United Therapeutics Corporation, or United Therapeutics), Uptravi (Janssen), Tyvaso (United Therapeutics), and Remodulin (United Therapeutics).

We also may face some competition from products used in class I and II patients, such as the oral PDE5 inhibitors, including Revatio (Pfizer Inc.) and Adcirca (United Therapeutics);

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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 (Merck & Co., Inc.), RVT-1201 (Altavant Sciences, Inc.), MK-5475 (Merck) and GMA310 (Gmax Biopharm LLC).

PAH is also an active indication for investigational drugs, and we may face competition in the future from ralinepag (Pfizer and United Therapeutics), sotatercept (Merck & Co., Inc.), rodatristat ethyl (Enzyyant Therapeutics GmbH) and MK-5475 (Merck).

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.

GB5121 and GB7208 are BTK inhibitors for the treatment of oncological and immunological indications, including PCNSL and MS.

There are no FDA or EMA approved therapies for refractory or recurrent PCNSL.

There are no FDA or EC approved therapies for refractory or recurrent PCNSL.

If approved in MS, GB7208 may face competition from existing approved and investigational therapies.

While no BTK inhibitors are FDA or EMA approved for the treatment of either PCNSL or MS, we believe that if approved, GB5121 and / or GB7208 may face competition from currently FDA and EMA approved BTK inhibitors Imbruvica (AbbVie Inc.

/ Janssen), Calquence (AstraZeneca plc) and / or Brukinsa (BeiGene, Ltd.).

Our BTK inhibitors may also face competition from BTK inhibitor Velexbru (Ono Pharmaceutical Co., Ltd.), which is approved in Japan, South Korea and Taiwan for the treatment of recurrent or refractory primary central nervous system lymphoma.

We may also face competition from early and late-stage investigational BTK inhibitors, including, but not limited to, evobrutinib, tolebrutinib, fenebrutinib, orelabrutinib, pirtobrutinib, rilzabrutinib and remibrutinib.

While no BTK inhibitors are FDA or EC approved for the treatment of either PCNSL or MS, we believe that if approved, GB5121 and / or GB7208 may face competition from currently FDA and / or EC approved BTK inhibitors Imbruvica (AbbVie Inc.

/ Janssen), Calquence (AstraZeneca plc), Brukinsa (BeiGene, Ltd.) and / or Jaypirca (Eli Lilly and Company).

Our BTK inhibitors may also face competition from BTK inhibitor Velexbru (Ono Pharmaceutical Co., Ltd.), which is approved in Japan, South Korea and

Taiwan for the treatment of recurrent or refractory primary central nervous system lymphoma.

There may be other earlier stage clinical programs that, if approved, would compete with our product candidates.

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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.

In 2023, we anticipate incurring a development milestone payment of $10.0 million upon initiation of seralutinib in a Phase 3 clinical trial.

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.

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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.

Aadi Bioscience

In June 2018, we entered into a license agreement, or the Aadi Agreement, with Aerpio Pharmaceuticals, Inc., now known as Aadi, under which we were granted an exclusive worldwide license to certain intellectual property rights owned or controlled by Aadi to develop and commercialize GB004 and certain other related compounds for all applications.

We also have the right to sublicense our rights under the Aadi 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 Aadi 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 Aadi in a nonexclusive license agreement, or the UC Regents License.

If Aadi breaches the UC Regents License and the UC Regents terminate the license, our sublicense under the Aadi Agreement will also terminate.

Under the terms of the Aadi Agreement, we made an upfront payment of $20 million to Aadi 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 Aadi pursuant to which we made an upfront payment of $15.0 million to Aadi 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 Aadi 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 received in connection with such transaction, and if we exercise the option Aadi 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 Aadi Agreement or with respect to a change of control of our GB004 operating subsidiary, Aadi will have an option to receive a specified percentage of all revenue received in connection with such transaction, and if Aadi exercises the option Aadi 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 Aadi 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 Aadi 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, Aadi 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 Aadi worldwide rights to the terminated program.

Manufacturing

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Intellectual property rights may not address all potential threats to our competitive advantage.

As of December 31, 2021, 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.

As of December 31, 2022, with respect to seralutinib, we have exclusively licensed two issued U.S.

patents owned by Pulmokine, which are not due to expire before 2037, excluding any additional term for patent term extension;

one pending U.S.

Patent application, which, if issued, is not due to expire before 2037, excluding any additional term for patent term extension;

and a number of patents and pending applications in other jurisdictions, including issued patents in Mexico and Russia, and pending applications in Australia, Brazil, Canada, China, the European Patent Convention, India, Japan, South Korea, and New Zealand, which, if issued, are not due to expire before 2037, excluding any additional term for patent term extension.

These patents and patent applications are directed to method of use claims.

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.

two 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.

and a number of patents and pending patent applications in other jurisdictions, including issued patents in Australia, Canada, China, the European Patent Convention and Japan, and pending applications in Australia, China, the European Patent Convention and Japan.

These patents and patent applications are directed to seralutinib compound, formulation and method of use claims.

As of December 31, 2021, with respect to GB004, we have exclusively licensed from Aadi 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 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.

Additionally, as of December 31, 2021, with respect to GB004, we owned one pending US patent application and three pending international patent applications directed to formulations and solid forms of GB004, which, if issued, are not due to expire before 2040, excluding any additional term for patent term extension.

We also own one pending patent application, which, if issued, is not due to expire before 2041, directed to forms of seralutinib.

As of December 31, 2022, with respect to GB5121, we owned one pending U.S.

patent application, and a corresponding international patent application, directed to GB5121 compound, formulation and method of use claims, which, if issued, is not due to expire before 2041, excluding any additional term for patent term extension.

patent application, ten corresponding foreign patent applications, and one international application directed to GB5121 compound, formulation and method of use claims, which, if issued, is not due to expire before 2041, excluding any additional term for patent term extension.

As of December 31, 2022, with respect to GB7208, we owned one pending U.S.

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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.

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.

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An IND is a request for authorization from the FDA to administer an investigational drug product to humans.

The sponsor will also include a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated, if the clinical trial lends itself to an efficacy evaluation.

efficacy evaluation.

Some preclinical testing may continue even after the IND is submitted.

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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.

Each protocol must be submitted to the FDA as part of the IND as well as any subsequent protocol amendments.

While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, 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.

Furthermore, an independent 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.

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 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.

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 disclose 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.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

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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.

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.

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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.

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 disclose 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

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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.

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.

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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.

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.

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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.

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.

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.

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Specifically, a product candidate is eligible for fast track designation if it is 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.

Fast track designation applies to the combination of the product and the specific indication for which it is being studied.

Fast track designation applies to the combination of the product candidate and the specific indication for which it is being studied.

The sponsor of a fast track product candidate has opportunities for more frequent interactions with the applicable FDA review team during development.

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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 will generally require that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials.

As a condition of approval, the FDA will generally require that a sponsor of a drug receiving

accelerated approval perform adequate and well-controlled confirmatory 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.

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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.

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.

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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.

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.

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(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;

(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

(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.

and (9) established a Center for Medicare and Medicaid 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.

On June 17, 2021, the U.S.

Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without

specifically ruling on the constitutionality of the ACA.

Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.

Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

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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 through March 31, 2022, unless additional Congressional action is taken.

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, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, 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.

Most recently, on August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law.

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap;

imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023);

and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

For that and other reasons, it is currently unclear how the IRA will be effectuated.

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.

We expect that healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

Healthcare Fraud and Abuse Laws and Compliance Requirements

Federal and state healthcare laws and regulations restrict business practices in the biopharmaceutical industry.

Federal, state and foreign 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.

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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.

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;

Similar to the federal Anti-Kickback Statute, 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 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 non-physician providers including physician assistants and nurse practitioners, 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, local and foreign 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;

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and state and local laws that require the registration of pharmaceutical sales representatives.

Foreign laws and regulations may be broader in scope than the provisions described above and may apply regardless of payor.

These laws and regulations may differ from one another in significant ways, thus further complicating compliance efforts.

For instance, in the EU, many EU member states have adopted specific anti-gift statutes that further limit commercial practices for medicinal products, in particular vis-à-vis healthcare professionals and organizations.

Additionally, there has been a recent trend of increased regulation of payments and transfers of value provided to healthcare professionals or entities and many EU member states have adopted national “Sunshine Acts” which impose reporting and transparency requirements (often on an annual basis), similar to the requirements in the United States, on pharmaceutical companies.

Certain countries also mandate implementation of commercial compliance programs, or require disclosure of marketing expenditures and pricing information.

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.

and foreign healthcare programs, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of operations.

Data Privacy and Security Laws

Numerous state and federal laws, regulations and standards govern the collection, use, access to, confidentiality and security of health-related and other personal information, and could apply now or in the future to our operations or the operations of our partners.

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 Federal Trade Commission 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 CCPA, the California Privacy Rights Act, or CPRA, govern the privacy and security of personal information, including health-related 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.

In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, and federal and state consumer protection laws and regulations 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.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

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Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or biological substances.

Non-clinical studies must be conducted in compliance with the principles of good laboratory practice, or GLP, as set forth in EU Directive 2004/10/EC.

Non-clinical (pharmaco-toxicological) studies must be conducted in compliance with the principles of good laboratory practice, or GLP, as set forth in EU Directive 2004/10/EC (unless otherwise justified for certain particular medicinal products – e.g., radio-pharmaceutical precursors for radio-labelling purposes).

In particular, non-clinical studies, both in vitro and in vivo, must be planned, performed, monitored, recorded, reported and archived in accordance with the GLP principles, which define a set of rules and criteria for a quality system for the organizational process and the conditions for non-clinical studies.

These GLP standards reflect the Organization for Economic Co-operation and Development requirements.

Certain countries outside of the United States have a similar process that requires the submission of a clinical study application much like the IND prior to the commencement of human clinical studies.

Clinical studies of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Conference on Harmonization, or ICH, guidelines on GCP as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.

Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Conference on Harmonization, or ICH, guidelines on GCP as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

If the sponsor of the clinical trial is not established within the EU, it must appoint an EU entity to act as its legal representative.

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The CTR notably harmonizes the assessment and supervision processes for clinical trials throughout the EU via a Clinical Trials Information System, which contains a centralized EU portal and database.

While the Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single application to all member states concerned.

While the Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials.

The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state.

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Each member state’s decision is communicated to the sponsor via the centralized EU portal.

Once the CTA is approved, clinical study development may proceed.

Once the CTA is approved, clinical trial development may proceed.

The CTR foresees a three-year transition period.

The extent to which ongoing and new clinical trials will be governed by the CTR varies.

For clinical trials whose CTA was made under the Clinical Trials Directive before January 31, 2022, the Clinical Trials Directive will continue to apply on a transitional basis for three years.

Additionally, sponsors may still choose to submit a CTA under either the Clinical Trials Directive or the CTR until January 31, 2023 and, if authorised, those will be governed by the Clinical Trials Directive until January 31, 2025.

By that date, all ongoing trials will become subject to the provisions of the CTR.

Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the

application of the EU Clinical Trials Directive remain governed by said Directive until January 31, 2025.

After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR.

Medicines used in clinical trials must be manufactured in accordance with Good Manufacturing Practices , or GMP.

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To market a medicinal product in the EU, we must obtain a marketing authorization, or MA.

To obtain regulatory approval of an investigational medicinal product under EU regulatory systems, we must submit a marketing authorization application, or MAA.

To obtain regulatory approval of an investigational medicinal product under EU regulatory systems, we must submit a MA application, or MAA.

The process for doing this depends, among other things, on the nature of the medicinal product.

There are two types of MAs:

• ”Centralized MAs” are is issued by the European Commission through the centralized procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and are valid throughout the EU.

• ”Centralized MAs” are is issued by the EC through the centralized procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and are valid throughout the EU.

The centralized procedure is mandatory for certain types of products, such as:

(i) medicinal products derived from biotechnology medicinal products, (ii) designated orphan medicinal products, (iii) advanced therapy medicinal products, or ATMPs, and (iv) medicinal products containing a new active substance indicated for the treatment certain diseases, such as HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other dysfunctions and viral diseases.

The centralized procedure is optional for products containing a new active substance not yet authorized in the EU, or for products

that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.

The centralized procedure is optional for products containing a new active substance not yet authorized in the EU, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.

• “National MAs” are issued by the competent authorities of the EU member states, only cover their respective territory, and are available for products not falling within the mandatory scope of the centralized procedure.

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An initial meeting initiates these relationships and includes a team of multidisciplinary experts at the EMA to provide guidance on the overall development and regulatory strategies.

Moreover, in the EU, a “conditional” MA may be granted in cases where all the required safety and efficacy data are not yet available.

The conditional MA is subject to conditions to be fulfilled for generating the missing data or ensuring increased safety measures.

It is valid for one year and has to be renewed annually until fulfillment of all the conditions.

Once the pending studies are provided, it can become a “standard” MA.

However, if the conditions are not fulfilled within the timeframe set by the EMA, the MA ceases to be renewed.

Furthermore, MA may also be granted “under exceptional circumstances” when the applicant can show that it is unable to provide comprehensive data on the efficacy and safety under normal conditions of use even after the product has been authorized and subject to specific procedures being introduced.

may arise in particular when the intended indications are very rare and, in the present state of scientific knowledge, it is not possible to provide comprehensive information, or when generating data may be contrary to generally accepted ethical principles.

This MA is close to the conditional MA as it is reserved to medicinal products to be approved for severe diseases or unmet medical needs and the applicant does not hold the complete data set legally required for the grant of a MA.

However, unlike the conditional MA, the applicant does not have to provide the missing data and will never have to.

Although the MA “under exceptional circumstances” is granted definitively, the risk-benefit balance of the medicinal product is reviewed annually and the MA is withdrawn in case the risk-benefit ratio is no longer favorable.

MAs have an initial duration of five years.

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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 MA is obtained in all EU member states and study results are included in the product information, even when negative, the product is eligible for six months’ supplementary protection certificate extension (if any is in effect at the time of approval) or, in the case of orphan pharmaceutical products, a two year extension of the orphan market exclusivity is granted.

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In the EU, an application for designation as an orphan product can be made any time prior to the filing of an MAA.

Orphan drug designation entitles a party to incentives such fee reductions or fee waivers, protocol assistance, and access to the centralized procedure.

Upon grant of a MA, orphan medicinal products are entitled to a ten-year period of market exclusivity for the approved therapeutic indication, which means that the EMA cannot accept another MAA, or grant a MA, or accept an application to extend a MA for a similar product for the same indication for a period of ten years.

Orphan designation entitles a party to incentives such fee reductions or fee waivers, protocol assistance, and access to the centralized procedure.

Upon grant of a MA, orphan medicinal products are entitled to a ten-year period of market exclusivity for the approved therapeutic indication, which means that the regulatory authorities cannot accept another MAA, or grant a MA, or accept an application to extend a MA for a similar product for the same indication for a period of ten years.

The period of market exclusivity is extended by two years for orphan medicinal products that have also complied with an agreed PIP.

No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.

Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

The orphan exclusivity 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, or where the prevalence of the condition has increased above the threshold.

Orphan designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

The orphan exclusivity 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 designation, for example because the product is sufficiently profitable not to justify market exclusivity, or where the prevalence of the condition has increased above the threshold.

Granting of an authorization for another similar orphan medicinal product can happen at any time if:

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Post-Approval Requirements

Similar to the United States, both MA holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA, the European Commission and/or the competent regulatory authorities of the member states.

The holder of a MA must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance who is responsible for oversight of that system.

Similar to the United States, both MA holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA, the EC and/or the competent regulatory authorities of the member states.

The holder of a MA must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance, or QPPV, who is responsible for establishment and maintenance of that system, and oversees the safety profiles of medicinal products and any emerging safety concerns.

Key obligations include expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports, or PSURs.

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The aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland.

pharmaceutical products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory requirements may result in administrative, civil or criminal penalties.

Failure to comply with EU and member state laws that apply to the conduct of clinical trials, manufacturing approval, MA of medicinal products and marketing of such products, both before and after grant of the MA, manufacturing of pharmaceutical products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory requirements may result in administrative, civil or criminal penalties.

These penalties could include delays or refusal to authorize the conduct of clinical trials, or to grant MA, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the MA, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.

Regulation of Combination Products in the EU

The EU regulates medical devices and medicinal products separately, through different legislative instruments, and the applicable requirements will vary depending on the type of drug-device combination product.

EU guidance has been published to help manufacturers select the right regulatory framework.

Drug-delivery products intended to administer a medicinal product where the medicinal product and the device form a single integral product are regulated as medicinal products in the EU.

The EMA is responsible for evaluating the quality, safety and efficacy of MAAs submitted through the centralized procedure, including the safety and performance of the medical device in relation to its use with the medicinal product.

The EMA or the EU member state national competent authority will assess the product in accordance with the rules for medicinal products described above but the device part must comply with the Medical Devices Regulation (including the general safety and performance requirements provided in Annex I).

MAA must include – where available – the results of the assessment of the conformity of the device part with the Medical Devices Regulation contained in the manufacturer’s EU declaration of conformity of the device or the relevant certificate issued by a notified body.

If the MAA does not include the results of the conformity assessment and where for the conformity assessment of the device, if used separately, the involvement of a notified body is required, the competent authority must require the applicant to provide a notified body opinion on the conformity of the device.

By contrast, in case of drug-delivery products intended to administer a medicinal product where the device and the medicinal product do not form a single integral product (but are e.g.

co-packaged), the medicinal product is regulated in accordance with the rules for medicinal products described above while the device part is regulated as a medical device and will have to comply with all the requirements set forth by the Medical Devices Regulation.

The characteristics of non-integral devices used for the administration of medicinal products may impact the quality, safety and efficacy profile of the medicinal products.

To the extent that administration devices are co-packaged with the medicinal product or, in exceptional cases, where the use of a specific type of administration device is specifically provided for in the product information of the medicinal product, additional information may need to be provided in the MAA for the medicinal product on the characteristics of the medical device(s) that may impact on the quality, safety and/or efficacy of the medicinal product.

The requirements regarding quality documentation for medicinal products when used with a medical device, including single integral products, co-packaged and referenced products, are outlined in the EMA guideline of July 22, 2021, which became applicable as of January 1, 2022.

The aforementioned EU rules are generally applicable in the EEA.

Brexit and the Regulatory Framework in the United Kingdom

The United Kingdom, or UK, left the EU on January 31, 2020, following which existing EU medicinal product legislation continued to apply in the UK during the transition period under the terms of the EU-UK Withdrawal Agreement.

The transition period, which ended on December 31, 2020, maintained access to the EU single market and to the global trade deals negotiated by the EU on behalf of its members.

The transition period provided time for the UK and EU to negotiate a framework for partnership for the future, which was then crystallized in the Trade and Cooperation Agreement, or TCA, and became effective on the January 1, 2021.

The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of GMP inspections of manufacturing facilities for medicinal products and GMP documents issued, but does not foresee wholesale mutual recognition of UK and EU pharmaceutical regulations.

EU laws which have been transposed into UK law through secondary legislation continue to be applicable as “retained EU law”.

However, new legislation such as the EU CTR will not be applicable.

Since the end of the Brexit transition period on January 1, 2021, Great Britain (England, Scotland and Wales) has not been directly subject to EU laws, however under the terms of the Ireland/Northern Ireland Protocol, EU laws generally apply to Northern Ireland.

It is currently unclear to what extent the Government of the United Kingdom, or UK, will seek to align its regulations with the EU.

The EU laws that have been transposed into UK law through secondary legislation remain applicable in Great Britain.

However, under the Retained EU Law (Revocation and Reform) Bill 2022, which is currently before the UK parliament, any retained EU law not expressly preserved and “assimilated” into domestic law or extended by ministerial regulations (to no later than June 23, 2026) will automatically expire and be revoked by December 31, 2023.

In addition, new legislation such as the (EU) CTR is not applicable in Great Britain.

Whilst the EU-UK Trade and Cooperation Agreement, or TCA, includes the mutual recognition of GMP inspections of manufacturing facilities for medicinal products and GMP documents issued, it does not contain wholesale mutual recognition of UK and EU pharmaceutical regulations and product standards.

There may be divergent local requirements in Great Britain from the EU in the future, which may impact clinical and development activities that occur in the UK in the future.

Similarly, clinical trial submissions in the UK will not be able to be bundled with those of EU countries within the EMA Clinical Trial Information System, or CTIS, adding further complexity, cost and potential risk to future clinical and development activity in the UK.

Significant political and economic uncertainty remains about how much the relationship between the UK and EU will differ as a result of the UK’s withdrawal.

The UK government has passed a new Medicines and Medical Devices Act 2021, which introduces delegated powers in favor of the Secretary of State or an ‘appropriate authority’ to amend or supplement existing regulations in the area of medicinal products and medical devices.

This allows new rules to be introduced in the future by way of secondary legislation, which aims to allow flexibility in addressing regulatory gaps and future changes in the fields of human medicines, clinical trials and medical devices.

As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or MHRA, is the UK’s standalone medicines and medical devices regulator.

Since January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or MHRA, has been the UK’s standalone medicines and medical devices regulator.

As a result of the Northern Ireland protocol, different rules will apply in Northern Ireland than in England, Wales, and Scotland, together, Great Britain, or GB;

broadly, Northern Ireland will continue to follow the EU regulatory regime, but its national competent authority will remain the MHRA.

The MHRA has published a guidance on how various aspects of the UK regulatory regime for medicines will operate in GB and in Northern Ireland following the expiry of the Brexit transition period on December 31, 2020.

The guidance includes clinical trials, importing, exporting, and pharmacovigilance and is relevant to any business involved in the research, development, or commercialization of medicines in the UK.

The new guidance was given effect via the Human Medicines Regulations (Amendment etc.) (EU Exit) Regulations 2019, or the “Exit Regulations”.

The MHRA has introduced changes to national licensing procedures, including procedures to prioritize access to new medicines that will benefit patients, including a 150-day assessment and a rolling review procedure.

All existing EU MAs for centrally authorized products were automatically converted or grandfathered into UK MAs, effective in GB (only), free of charge on January 1, 2021, unless the MA holder chooses to opt-out.

In order to use the centralized procedure to obtain a MA that will be valid throughout the EEA, companies must be established in the EEA.

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In order to obtain a UK MA to commercialize products in the UK, an applicant must be established in the UK and must follow one of the UK national authorization procedures or one of the remaining post-Brexit international cooperation procedures to obtain an MA to commercialize products in the UK.

The MHRA may rely on a decision taken by the European Commission on the approval of a new (centralized procedure) MA when determining an application for a GB authorization;

The MHRA may rely on a decision taken by the EC on the approval of a new (centralized procedure) MA when determining an application for a GB authorization;

or use the MHRA’s decentralized or mutual recognition procedures which enable MAs approved in EU member states (or Iceland, Liechtenstein, Norway) to be granted in GB.

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Should an orphan designation be granted, the period or market exclusivity will be set from the date of first approval of the product in GB.

Regulation of Combination Products in the EU

EU guidance has been published to help manufacturers select the right regulatory framework.

Drug-delivery products intended to administer a medicinal product where the medicinal product and the device form a single integral product are regulated as medicinal products in the EU.

The EMA is responsible for evaluating the

quality, safety and efficacy of MAAs submitted through the centralized procedure, including the safety and performance of the medical device in relation to its use with the medicinal product.

By contrast, in case of drug-delivery products intended to administer a medicinal product where the device and the medicinal product do not form a single integral product (but are e.g.

The characteristics of non-integral devices used for the administration of medicinal products may impact the quality, safety and efficacy profile of the medicinal products.

The aforementioned EU rules are generally applicable in the EEA.

The UK regulatory framework in relation to clinical trials is derived from existing EU legislation (as implemented into UK law, through secondary legislation).

On January 17, 2022, the MHRA launched an eight-week consultation on reframing the UK legislation for clinical trials.

The consultation closed on March 14, 2022 and aims to streamline clinical trials approvals, enable innovation, enhance clinical trials transparency, enable greater risk proportionality, and promote patient and public involvement in clinical trials.

The outcome of the consultation is being closely watched and will determine whether the UK chooses to align with the (EU) CTR or diverge from it to maintain regulatory flexibility.

Data privacy and security laws

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Laws and regulations in the EU and other jurisdictions apply broadly to the collection, use, storage, disclosure, processing and security of personal data, and have generally become more stringent over time.

For example, the General Data Protection Regulation, or GDPR, imposes strict requirements for processing the personal data of individuals within the EEA.

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 million or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties.

Additionally, following the United Kingdom’s withdrawal from the European Union, from January 1, 2021, companies have had to comply with the GDPR and the United Kingdom GDPR, or UK GDPR, each regime having the ability to fine 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, for example around how data can lawfully be transferred between each jurisdiction, which exposes us to further compliance risk.

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.

Human Capital

4 unchanged sentences

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 25, 2022, we had 185 full-time employees and no part-time employees.

As of March 10, 2023, we had 178 full-time employees and no part-time employees.

Of those 178 employees, 54, or 30%, have a Ph.D.

17 unchanged sentences

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

What changed 10-K

Item 1. Business