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Item 1. Business

2021-02-25 compared with 2020-03-05 · 519 added, 618 removed, 518 unchanged (69% of the section changed)

We are a biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutic medicines for patients with significant unmet medical need.

We have a pipeline of clinical-stage product candidates, rilonacept, mavrilimumab, KPL-716 and KPL-404, that are expected to generate data-readouts throughout 2020.

These product candidates are based on strong biologic rationales or validated mechanisms of action, target underserved conditions and offer the potential for differentiation.

Further, by modulating different parts of the innate and adaptive immune system, we believe they have the potential to address multiple devastating diseases.

Rilonacept is a protein cytokine trap for inhibiting interleukin‑1 alpha, or IL‑1α, and interleukin‑1 beta, or IL‑1β.

Cytokines are small proteins that play a key role in cell signaling.

Rilonacept is approved by the U.S.

Food and Drug Administration, or the FDA, for the treatment of Cryopyrin‑Associated Periodic Syndromes, or CAPS, and has been commercially sold as ARCALYST by Regeneron Pharmaceuticals, Inc., or Regeneron, for this indication since 2008.

Our product candidates, rilonacept, mavrilimumab, vixarelimab and KPL-404, are based on strong biologic rationale or validated mechanisms, target underserved conditions and offer the potential for differentiation.

This pipeline of product candidates are designed to modulate immunological pathways across a spectrum of diseases.

Rilonacept is a protein cytokine trap for inhibiting interleukin-1alpha, or IL-1α, and interleukin-1beta, or IL-1β.

Cytokines are small proteins that play a role in cell signaling.

Rilonacept was discovered and developed by Regeneron Pharmaceuticals, Inc., or Regeneron, and is approved by the U.S.

Food and Drug Administration, or FDA, under the brand name ARCALYST for the treatment of cryopyrin-associated periodic syndrome, or CAPS, specifically familial cold autoinflammatory syndrome and muckle-wells syndrome, and for the treatment of deficiency of IL-1 receptor antagonist, or DIRA.

We licensed rilonacept from Regeneron in 2017.

We are initially developing rilonacept for the treatment of recurrent pericarditis, a painful autoinflammatory cardiovascular disease with an estimated U.S.

prevalent population of approximately 40,000 patients seeking and receiving medical treatment.

We are initially developing rilonacept for the potential treatment of recurrent pericarditis, a painful inflammatory cardiovascular disease with an estimated U.S.

prevalent population of approximately 40,000 patients

seeking and receiving medical treatment.

Currently there is no FDA-approved therapy for the treatment of recurrent pericarditis.

We are conducting a single, pivotal, global, Phase 3 clinical trial in recurrent pericarditis, named RHAPSODY.

We expect to report top‑line data in the second half of 2020.

RHAPSODY is a double‑blind, placebo‑controlled, randomized‑withdrawal, or RW, design study with open‑label extension which is designed to assess the efficacy and safety of rilonacept treatment in subjects with recurrent pericarditis.

We received Breakthrough Therapy designation from the FDA for rilonacept for the treatment of recurrent pericarditis in 2019, and reported final data from our open‑label Phase 2 proof‑of‑concept clinical trial of rilonacept in a range of recurrent pericarditis populations at the American Heart Association Scientific Sessions in November 2019.

The data derived from the study provided early evidence that rilonacept treatment in the study improved clinically meaningful outcomes associated with the unmet medical need in recurrent pericarditis.

Rilonacept was generally well-tolerated in the study, with adverse events consistent with the FDA approved rilonacept label for the treatment of CAPS, including Familial Cold Autoinflammatory Syndrome and Muckle-Wells Syndrome.

The most common adverse events were mild, transient injection site reactions that did not cause discontinuation.

There was one treatment-related serious adverse event which resulted in discontinuation:

a skin abscess which responded to medical treatment.

Infections are included in the rilonacept label for CAPS.

Mavrilimumab is a monoclonal antibody that antagonizes the signaling of granulocyte macrophage colony stimulating factor, or GM‑CSF.

We are focusing our initial development efforts for mavrilimumab on giant cell arteritis, or GCA, a chronic inflammatory disease of medium-to-large arteries with an estimated U.S.

prevalence of approximately 75,000 –

150,000 patients.

We received Breakthrough Therapy designation from the FDA for rilonacept for the treatment of recurrent pericarditis in 2019 and Orphan Drug designation from the FDA for rilonacept for the treatment of pericarditis, which includes the treatment of recurrent pericarditis, in 2020.

In June 2020, we reported final results from RHAPSODY, our pivotal Phase 3 clinical trial of rilonacept in subjects with recurrent pericarditis.

RHAPSODY met its prescribed primary and all major secondary efficacy endpoints with statistical significance, showing that rilonacept improved clinically meaningful outcomes associated with unmet medical need in recurrent pericarditis.

RHAPSODY data were also published in The New England Journal of Medicine simultaneously with a late-breaking scientific presentation at the American Heart Association’s Scientific Sessions 2020.

The FDA accepted the supplemental Biologics License Application, or sBLA, for rilonacept in recurrent pericarditis with priority review and assigned a Prescription Drug User Fee Act, or PDUFA, goal date of March 21, 2021.

If approved by the FDA for recurrent pericarditis, we expect the potential commercial launch of rilonacept in recurrent pericarditis in the first half of 2021 and consequently would take responsibility for sales and distribution of rilonacept for all approved indications in the United States and evenly split profits on sales with Regeneron, after deducting certain commercialization expenses subject to specified limits.

Mavrilimumab is a fully-human monoclonal antibody that antagonizes granulocyte-macrophage colony stimulating factor, or GM-CSF.

We licensed mavrilimumab from MedImmune Limited, or MedImmune, in 2017.

There is only one FDA-approved therapy for GCA, which is an adjunct to corticosteroid therapy, and we believe an unmet need persists.

We are conducting a randomized, double‑blind, placebo‑controlled, global Phase 2 proof‑of‑concept clinical trial of mavrilimumab in GCA.

We expect to report top‑line data in the second half of 2020.

In December 2019, we entered into a clinical collaboration with Kite, a Gilead Company, or Kite, to initiate a Phase 2 clinical trial evaluating the combination of Yescarta (axicabtagene ciloleucel) and mavrilimumab in relapsed or refractory large B-Cell lymphoma.

The objective of the Phase 2 trial is to determine the effect of mavrilimumab on the safety of Yescarta.

Treatment related induction of GM-CSF has been identified through clinical, translational and preclinical studies as a potential key signal associated with side effects of chimeric antigen receptor T, or CAR T, cell therapy.

Preclinical evidence suggest the potential for interruption of GM-CSF signaling to disrupt CAR T cell mediated inflammation without disrupting anti-tumor activity.

Kite will be the sponsor of this study and responsible for its conduct.

KPL‑716 is a monoclonal antibody that simultaneously inhibits the signaling of the cytokines interleukin‑31, or IL‑31, and oncostatin M, or OSM, by targeting their common receptor subunit, oncostatin M receptor beta, or OSMRβ.

We licensed KPL-716 from Biogen MA, Inc., or Biogen, in 2016.

We believe KPL-716 is the only monoclonal antibody in development that simultaneously targets both pathways.

We are conducting a randomized, double-blind, placebo-controlled, Phase 2a clinical trial of KPL-716 in subjects with prurigo nodularis, a chronic inflammatory skin condition with an estimated U.S.

We are evaluating mavrilimumab for the potential treatment of giant cell arteritis, or GCA, a chronic inflammatory disease of the medium-to-large arteries with an estimated U.S.

prevalence of approximately 75,000 to 150,000 patients.

There is only one FDA-approved therapy for GCA, which is an adjunct to corticosteroid therapy, and we believe that an unmet need persists.

We received Orphan Drug designation from the FDA for mavrilimumab for the treatment of GCA in 2020.

In November 2020, we presented results from our Phase 2 proof-of-concept trial of mavrilimumab in subjects with GCA at the late-breaking abstracts session during the American College of Rheumatology, or ACR, Convergence 2020.

The Phase 2 trial met both its prescribed primary efficacy endpoint of time-to-first adjudicated GCA flare by Week 26 in all treated patients and the secondary efficacy endpoint of sustained remission at Week 26 in all treated patients with statistical significance.

In addition, while the trial was not powered for individual disease cohorts, there was a consistent trend of efficacy across the new onset and relapsing/refractory cohorts.

We expect to provide next steps for mavrilimumab, including in GCA, in the first half of 2021.

We are also evaluating mavrilimumab for the potential treatment of severe coronavirus 2019 disease, or COVID-19, pneumonia and hyperinflammation.

In June 2020, we announced 28-day clinical outcomes from an open-label investigator-initiated treatment protocol with mavrilimumab conducted in Italy in 13 non-mechanically ventilated patients with severe COVID-19 pneumonia and hyperinflammation.

Mavrilimumab-treated patients experienced earlier and improved clinical outcomes compared to control-group patients, including earlier weaning from supplemental oxygen, shorter hospitalizations, and no deaths.

These data were published in The Lancet Rheumatology .

In December 2020, we reported results from a placebo-controlled investigator-initiated study in the same patient population across a consortium of academic sites in the United States showing encouraging trends of reduced mortality and duration of mechanical ventilation in patients treated with mavrilimumab on top of standard of care therapy.

We are conducting a placebo-controlled Phase 2/3 clinical trial of mavrilimumab in severe COVID-19 pneumonia and hyperinflammation.

We expect to provide data from the Phase 2 portion of the Phase 2/3 trial in the first half of 2021.

Vixarelimab is a fully-human monoclonal antibody that simultaneously inhibits the signaling of the cytokines interleukin 31, or IL-31, and oncostatin M, or OSM, by targeting their common receptor subunit, oncostatin M receptor beta, or OSMRβ.

We believe vixarelimab is the only monoclonal antibody in development that simultaneously targets both pathways.

We licensed vixarelimab from Biogen MA, Inc., or Biogen, in 2016.

We are evaluating vixarelimab for the potential treatment of prurigo nodularis, a chronic inflammatory skin condition with an estimated U.S.

prevalence of approximately 300,000 patients.

Currently, there is no FDA-approved therapy for prurigo nodularis.

We expect data from this trial by the end of April 2020.

We are also conducting an exploratory Phase 2 clinical trial in diseases characterized by chronic pruritus.

This randomized, double-blind, placebo-controlled trial is designed to identify chronic pruritic conditions where signaling through OSMRβ

may be playing a role and to investigate the efficacy, safety and tolerability of KPL-716 in reducing the moderate-to-severe pruritus experienced by these subjects.

We expect interim data from cohorts of this study in the first half of 2020.

In August 2019, we reported interim results from the repeated-single-dose Phase 1b clinical trial of KPL-716 in subjects with moderate-to-severe atopic dermatitis.

Atopic dermatitis provided a proxy for evaluating target engagement in IL-31 driven pruritic diseases.

Interim repeated-single-dose Phase 1b data through the 12-week treatment period showed a rapid and sustained anti-pruritic response as measured by Worst-Itch Numeric Rating Scale (WI-NRS).

There were no serious adverse events.

However, there were more atopic dermatitis flares in the KPL-716-treated population versus placebo (47.6% versus 4.5%);

all subjects who experienced a flare were successfully managed with topical corticosteroids.

KPL-716 was otherwise well-tolerated by all subjects.

KPL‑404 is a monoclonal antibody inhibitor of the CD40/CD40L interaction, a central control node of T‑cell‑dependent, B‑cell‑mediated humoral adaptive immunity.

In the first quarter of 2019, we acquired all of the outstanding capital stock of Primatope Therapeutics, Inc., or Primatope, the company that owned or controlled the intellectual property related to KPL‑404.

In the second half of 2019, we initiated a single-ascending-dose Phase 1 clinical trial of KPL-404 in healthy volunteers.

The first-in-human trial is designed to provide safety and pharmacokinetics data as well as receptor occupancy and T-cell dependent antibody response (TDAR).

We expect top-line data in the second half of 2020.

We received Breakthrough Therapy designation for vixarelimab for the treatment of pruritus associated with prurigo nodularis in 2020.

In April 2020, we reported results from our Phase 2a trial of vixarelimab in prurigo nodularis.

The Phase 2a trial met its primary efficacy endpoint, as there was a statistically significant reduction in weekly-average Worst-Itch Numeric Rating Scale, or WI-

NRS, from baseline at Week 8 in vixarelimab recipients compared to placebo recipients.

In addition, the majority of vixarelimab recipients showed a clinically meaningful greater-than-or-equal-to 4-point weekly-average WI-NRS reduction at Week 8 and a statistically significant percentage of vixarelimab recipients achieved a prurigo nodularis-investigator’s global assessment, or PN-IGA score of 0/1 at Week 8 compared to placebo recipients.

We are conducting a Phase 2b dose ranging study of vixarelimab in patients with prurigo nodularis.

KPL-404 is a humanized monoclonal antibody that is designed to inhibit the CD40-CD40 ligand, or CD40L, interaction, a central control node of T-cell-dependent, B-cell-mediated humoral adaptive immunity.

We believe that disrupting the CD40-CD40L interaction is an attractive approach for multiple autoimmune disease pathologies such as rheumatoid arthritis, Sjogren’s syndrome, Graves’ disease, systemic lupus erythematosus and solid organ transplant graft rejection.

We acquired all of the outstanding securities of Primatope Therapeutics, Inc., or Primatope, the company that owned or controlled the intellectual property related to KPL-404 in 2019.

We are conducting a single-ascending-dose Phase 1 clinical trial of KPL-404 in healthy volunteers to evaluate the safety and tolerability of KPL-404 as well as pharmacokinetics, CD40 receptor occupancy, or RO, the immune response to the novel test antigen keyhole limpet hemocyanin, or KLH, in clinically relevant dose cohorts, and T-cell dependent antibody response, or TDAR, in these subjects.

The study is divided into two parts:

a single dose of KPL-404 0.03 mg/kg, 0.3 mg/kg, 1 mg/kg, 3 mg/kg or 10 mg/kg intravenously, or IV, and a single dose of KPL-404 1 mg/kg or 5 mg/kg subcutaneously, or SC.

In November 2020, we reported preliminary data from the Phase 1 trial.

All dose escalations occurred as per protocol with no dose limiting safety findings.

All six subjects dosed with KPL-404 3 mg/kg IV showed full receptor occupancy through Day 29, which corresponded with complete suppression of TDAR to KLH through Day 29.

Consistent dose relatedness was shown in the lower dose level cohorts, including 0.03 mg/kg, 0.3 mg/kg, 1 mg/kg IV and 1 mg/kg SC.

We believe that the data support further evaluation in patients, including potential IV or SC monthly administration.

Further, we expect final data and safety follow-up from all cohorts of the Phase 1 trial in the first half of 2021.

The following table summarizes our current pipeline of product candidates:

(1) Rilonacept (ARCALYST®) is approved and marketed for cryopyrin-associated periodic syndrome, in the United States by Regeneron.

(2) Clinical collaboration with Kite.

(3) Chronic Idiopathic Pruritus, Chronic Idiopathic Urticaria, Plaque Psoriasis, Lichen Simplex Chronicus, Lichen Planus.

= interleukin-1 alpha ;

= interleukin 1 beta;

GM-CSFRα

= granulocyte macrophage colony stimulating factor receptor alpha;

= oncostatin M receptor beta

We evaluate options across our portfolio in an effort to maximize value and improve capital allocation based on data, including potential additional indications for rilonacept, mavrilimumab and KPL‑716, being opportunistic in our business development activities, considering appropriate opportunities to partner or out-license our programs, as well as conducting internal research to discover and develop molecules to expand our portfolio.

We have assembled an experienced management team with a successful track record.

Our management team has expertise across the spectrum of global drug discovery, development, manufacturing and commercialization activities in diseases within both large and orphan indications.

Our Chairman and Chief Executive Officer, Sanj K.

Patel, has more than 25 years of scientific, clinical and commercial experience in the pharmaceutical and biotechnology industries.

Our Chief Medical Officer, John F.

Paolini, M.D., Ph.D., has more than 18 years of experience planning, operating and executing clinical development programs across a range of disease indications from orphan diseases to large cardiovascular diseases, and ten years as a practicing cardiologist.

Other members of our senior management team have held key management positions at other pharmaceutical and biotechnology companies that developed and commercialized therapies for underserved, rare and specialty‑focused patient populations.

These companies include Synageva, Genzyme, Novo Nordisk, Shire, Sanofi, Pfizer, Bayer, Merck, Novartis and Vertex, among others.

Our goal is to build a fully-integrated, global biopharmaceutical company by discovering, acquiring, developing and commercializing life-changing therapies for debilitating diseases.

We have a pipeline of immune-modulating, clinical-stage product candidates that are based on strong biologic rationale or validated mechanisms, target underserved conditions and offer the potential for differentiation.

Rilonacept (ARCALYST®) is approved and marketed for cryopyrin-associated periodic syndrome (CAPS) and maintenance of remission of Deficiency of Interleukin-1 Receptor Antagonist (DIRA) in the United States by Regeneron Pharmaceuticals, Inc.

The FDA granted Breakthrough Therapy designation to rilonacept for recurrent pericarditis in 2019 and Orphan Drug designation to rilonacept for pericarditis in 2020.

The FDA granted Orphan Drug designation to mavrilimumab for giant cell arteritis in 2020.

The FDA granted Breakthrough Therapy designation to vixarelimab for the treatment of pruritus associated with prurigo nodularis in 2020.

IL-1 α = interleukin-1 α ;

IL-1 β = interleukin-1 β ;

GM-CSFR α = granulocyte macrophage colony stimulating factor receptor alpha;

OSMR β = oncostatin M receptor beta;

PDUFA = Prescription Drug User Fee Act ;

MENA = Middle East North Africa.

We evaluate options across our portfolio in an effort to maximize value and improve capital allocation based on data, including potential additional indications for rilonacept, mavrilimumab and vixarelimab, being opportunistic in our business development activities, considering appropriate opportunities to partner or out-license our programs, as well as conducting internal research to discover and develop molecules to expand our portfolio.

We are a biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutic medicines for patients suffering from debilitating diseases with significant unmet medical need.

Our product candidates, rilonacept, mavrilimumab, vixarelimab and KPL-404, are based on strong biologic rationale or validated mechanisms, target underserved conditions, and offer the potential for differentiation.

These pipeline assets are designed to modulate immunological pathways across a spectrum of diseases.

Critical components of our business strategy include the following:

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● Commercialize Our Product Candidates to Bring Therapies to Patients.

We believe this approach will enable us to effectively reach patients and prescribers that our product candidates target and leverage the commercial potential of our product candidates.

We intend to market and commercialize our product candidates, if approved, in the United States and potentially in select international markets by developing sales, marketing, medical affairs, access and reimbursement capabilities as well as implementing disease awareness campaigns, among other things, as appropriate for the potential commercial opportunity – starting with the potential commercial launch of rilonacept in recurrent pericarditis if approved by the FDA.

We believe this approach will enable us to effectively reach

patients and prescribers that our product candidates target and leverage the commercial potential of our product candidates.

● Explore Opportunities to Drive Value and Maximize the Potential of Our Existing Portfolio.

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Our Product Candidates

Rilonacept was approved by the FDA for the treatment of CAPS which includes cold auto‑inflammatory syndrome and Muckle‑Wells syndrome, and has been commercially sold as ARCALYST in the United States by Regeneron for this indication since 2008.

Rilonacept was approved by the FDA for the treatment of CAPS, which includes cold auto-inflammatory syndrome and Muckle-Wells syndrome, and DIRA and has been commercially sold as ARCALYST in the United States by Regeneron for CAPS since 2008.

We licensed rilonacept in 2017 from Regeneron.

We believe that rilonacept has potential to treat certain diseases mediated by both IL‑1α

and IL‑1β.

We believe that rilonacept has potential to treat certain diseases mediated by both IL-1α and IL-1β.

Our lead indication for rilonacept is recurrent pericarditis, a painful autoinflammatory cardiovascular disease with an estimated U.S.

prevalent population of approximately 40,000 patients seeking and receiving medical treatment.

We are conducting a single, pivotal, global, Phase 3 clinical trial in recurrent pericarditis, named RHAPSODY.

We expect to report top‑line data from this trial in the second half of 2020.

In June 2020, we reported final results from RHAPSODY, our global, double-blind, placebo-controlled, randomized-withdrawal design, pivotal Phase 3 clinical trial of rilonacept in subjects with recurrent pericarditis.

RHAPSODY data were also published in The New England Journal of Medicine simultaneously with a late-breaking scientific presentation at the American Heart Association’s Scientific Sessions 2020.

The FDA accepted the sBLA for rilonacept in recurrent pericarditis with priority review and assigned a PDUFA goal date of March 21, 2021.

There is currently no FDA-approved therapy for the treatment of recurrent pericarditis.

There is currently one other FDA‑approved agent that blocks both IL‑1α

and IL‑1β

signaling, anakinra (KINERET), produced by Sobi, Inc, or Sobi, is approved for other indications, and one that blocks only IL‑1β, canakinumab (ILARIS), produced by Novartis Pharmaceuticals Corporation, or Novartis, is approved for other indications.

There is currently one other FDA-approved agent that blocks both IL-1α and IL-1β signaling, anakinra (KINERET), produced by Sobi, Inc, or Sobi, is approved for other indications, and one that blocks only IL-1β, canakinumab (ILARIS), produced by Novartis Pharmaceuticals Corporation, or Novartis, is approved for other indications.

We believe both therapies have limitations.

Anakinra requires once‑daily injections, and canakinumab blocks only IL‑1β, making it less effective or potentially ineffective in diseases driven by IL‑1α

We believe that rilonacept with its more moderate, once‑weekly dosing schedule and its ability to inhibit both IL‑1α

and IL‑1β

could provide an improved therapeutic option for a variety of diseases mediated by both IL‑1α

and IL‑1β.

Anakinra requires once-daily injections, and canakinumab blocks only IL-1β, making it less effective or potentially ineffective in diseases driven by IL-1α pathology.

We believe that rilonacept with its more moderate, once-weekly dosing schedule and its ability to inhibit both IL-1α and IL-1β could provide an improved therapeutic option for a variety of diseases mediated by both IL-1α and IL-1β.

Mechanism of Action

Rilonacept is an inhibitor of IL‑1α

and IL‑1β.

and IL‑1β

have been demonstrated to play a key role in inflammatory diseases.

and IL‑1β

provoke potent, pro‑inflammatory events by engaging the IL‑1α

and IL‑1β

Following tissue insult, the release of IL‑1α

acts as the primary initiating signal to coordinate the mobilization of immune cells to the damaged area, while IL‑1β

is secreted mostly by macrophages and is a prototypical cytokine of the canonical NLRB-3 inflammasome.

and IL‑1β

signaling results in a dramatic increase in the production of cytokines that orchestrate the proliferation and recruitment of phagocytes to the site of damage, resulting in inflammation.

Moreover, IL‑1α

and IL‑1β

signaling also affect other immune‑system cells, such as T‑cells and B‑cells.

IL‑1β’s role in the inflammation process has been extensively studied, while in comparison, much is still unknown about the independent function of IL‑1α

in disease pathology.

Despite driving similar immunological outcomes, IL‑1α

and IL‑1β

differ substantially in their expression and regulation, and non‑redundant roles for IL‑1α

or IL‑1β

have been demonstrated in multiple inflammatory diseases.

There are disease states in which IL‑1β

inhibition alone does not appear to be sufficient for disease remission in the absence of IL‑1α

Published studies suggest certain autoinflammatory diseases may, in fact, be pathologically driven primarily by IL‑1α.

An investigator‑initiated study of anakinra successfully demonstrated mechanistic proof‑of‑concept for inhibiting both IL‑1α

and IL‑1β

in the treatment of recurrent pericarditis.

In a published case study, a patient with a refractory form of recurrent pericarditis, who was well‑controlled on anakinra, was switched from anakinra to canakinumab, which inhibits only IL‑1β, for tolerability reasons.

The patient’s disease returned despite further dose escalation of canakinumab.

When the patient was switched back to anakinra, which inhibits IL‑α

and IL‑β, the disease promptly went back into remission.

These data, together with clinical data from our open-label Phase 2 proof‑of‑concept study and confirmatory market research, may indicate that IL‑1α

and IL‑1β

play unique roles in recurrent pericarditis and other autoinflammatory diseases in which the pathology may be driven primarily by IL‑1α.

Rilonacept is an inhibitor of IL-1α and IL-1β.

IL-1α and IL-1β have been demonstrated to play a key role in inflammatory diseases.

IL-1α and IL-1β provoke potent, pro-inflammatory events by engaging the IL-1α and IL-1β receptor.

Following tissue insult, the release of IL-1α acts as the primary initiating signal to coordinate the mobilization of immune cells to the damaged area, while IL-1β is secreted mostly by macrophages and is a prototypical cytokine of the canonical NLRB-3 inflammasome.

IL-1α and IL-1β signaling results in a dramatic increase in the production of cytokines that orchestrate the proliferation and recruitment of phagocytes to the site of damage, resulting in inflammation.

Moreover, IL-1α and IL-1β signaling also affect other immune-system cells, such as T-cells and B-cells.

IL-1β’s role in the inflammation process has been extensively studied, while in comparison, much is still unknown about the independent function of IL-1α in disease pathology.

Despite driving similar immunological outcomes, IL-1α and IL-1β differ substantially in their expression and regulation, and non-redundant roles for IL-1α or IL-1β have been demonstrated in multiple inflammatory diseases.

There are disease states in which IL-1β inhibition alone does not appear to be sufficient for disease remission in the absence of IL-1α inhibition.

Published studies suggest certain autoinflammatory diseases may, in fact, be pathologically driven primarily by IL-1α.

An investigator-initiated study of anakinra successfully demonstrated mechanistic proof-of-concept for inhibiting both IL-1α and IL-1β in the treatment of recurrent pericarditis.

In a published case study, a patient with a refractory form of recurrent pericarditis, who was well-controlled on anakinra, was switched from anakinra to canakinumab, which inhibits only IL-1β, for tolerability reasons.

The patient’s disease returned despite further dose escalation of canakinumab.

When the patient was switched back to anakinra, which inhibits IL-α and IL-β, the disease promptly went back into remission.

These data, together with clinical data from our open-label Phase 2 proof-of-concept study and confirmatory market research, may indicate that IL-1α and IL-1β play unique roles in recurrent pericarditis and other autoinflammatory diseases in which the pathology may be driven primarily by IL-1α.

Background and Market Opportunity for Recurrent Pericarditis

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We intend to focus our development of rilonacept for the treatment of recurrent pericarditis initially in the United States, and we are exploring opportunities for potential expansion into other countries.

Claims analysis, cross validated with published estimates, supports a prevalent population of patients with recurrent pericarditis seeking and receiving medical treatment to be approximately 40,000 patients in the United States per year.

Claims analysis, cross validated with published estimates, support a prevalent population of patients with recurrent pericarditis seeking and receiving medical treatment to be approximately 40,000 patients in the United States per year.

Within this estimated diagnosed and treated recurrent pericarditis patient population, there are certain subgroups of patients totaling approximately 14,000 with particularly high unmet medical needs consisting of:

● patients who are refractory to all conventional treatments (approximately 3,000);

patients who are refractory to nonsteroidal anti-inflammatory drugs, or NSAIDs / colchicine but where steroid usage is not appropriate (approximately 5,000);

● patients who are refractory to nonsteroidal anti-inflammatory drugs, or NSAIDs and/or colchicine but where steroid usage is not appropriate (approximately 5,000);

● patients otherwise not well-managed and have multiple recurrences despite previously responding to NSAIDs, colchicine and/or steroids (approximately 5,000);

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We are not aware of any current therapies approved by the FDA for the treatment of recurrent pericarditis.

A patient’s initial acute episode of pericarditis is typically treated with over‑the‑counter or prescription NSAIDs or colchicine, both of which are used off‑label.

A patient’s initial acute episode of pericarditis is typically treated with over-the-counter or prescription NSAIDs or colchicine, both of which are used off-label.

Recurrent episodes are treated in a similar manner or by adding systemic corticosteroids which are also used off-label.

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Fourth-line treatment for these patients may include other immunosuppressants such as methotrexate and azathioprine, as well as anakinra.

Rilonacept is a weekly, subcutaneously‑injected, recombinant fusion protein that blocks IL‑1α

and IL‑1β

Rilonacept is a weekly, subcutaneously-injected, recombinant fusion protein that blocks IL-1α and IL-1β signaling.

Beyond recurrent pericarditis, we believe there is significant potential for rilonacept to address additional indications, including other pericarditis populations.

More broadly, we believe diseases characterized by painful serosal inflammation may be driven by IL‑1α, and we intend to consider development of rilonacept in these indications and in others where we believe IL‑1α

or IL‑1β

play a key role in disease pathophysiology.

Clinical Development Plan for Recurrent Pericarditis

We are conducting a pivotal, global Phase 3 clinical trial, named RHAPSODY.

The trial is intended to evaluate the efficacy and safety of rilonacept treatment in subjects with recurrent pericarditis.

RHAPSODY is a double‑blind, placebo‑controlled, RW trial, with an open‑label extension period.

The trial is designed to randomize up to 75 subjects into the RW period.

Eligible subjects present at screening with at least a third pericarditis episode, defined as at least 1 day with pericarditis pain ≥

4 on the 11‑point NRS and a C‑reactive protein, or CRP, value ≥1 mg/dL within the 7‑day period prior to first study drug administration.

Subjects included in the study may be receiving concomitant NSAIDs or colchicine or oral corticosteroid treatment in any combination.

The clinical trial is comprised of 5 periods:

More broadly, we believe diseases characterized by painful serosal inflammation may be driven by IL-1α, and we intend to consider development of rilonacept in these indications and in others where we believe IL-1α or IL-1β play a key role in disease pathophysiology.

Phase 3 Clinical Trial in Recurrent Pericarditis

We conducted a global, randomized withdrawal design, pivotal Phase 3 clinical trial of rilonacept in recurrent pericarditis, named RHAPSODY.

Eligible patients presented at screening with at least a third pericarditis episode, defined as at least 1 day with pericarditis pain of ≥ 4 on the 11-point NRS and a CRP value ≥ 1 mg/dL within the 7-day period prior to first study drug administration.

Patients could be receiving concomitant NSAIDs and/or colchicine and/or oral corticosteroid treatment in any combination.

The study was comprised of 4 periods:

a screening period;

a single‑blind run‑in period during which subjects receive a 320 mg loading dose of rilonacept subcutaneously, or SC, followed by a weekly 160 mg SC dose while background pericarditis medications are tapered and discontinued;

a double‑blind, placebo‑controlled 24‑week RW period where clinical responders to rilonacept are randomized 1:1 to 160 mg SC weekly rilonacept or placebo;

a long‑term extension treatment period for where all subjects completing the RW period have the option to receive up to 24‑weeks of open‑label rilonacept 160 mg SC weekly;

a long‑term extension follow‑up period during which all subjects in the long‑term extension period will be followed for 24 weeks for safety and pericarditis recurrences.

The primary efficacy endpoint is time‑to‑first‑pericarditis‑recurrence in the RW period.

The Clinical Endpoint Committee will adjudicate all suspected pericarditis recurrences for inclusion in the primary efficacy endpoint analysis.

We have reached our target enrollment and expect to report top‑line data in the second half of 2020.

Phase 2 Study Results

In 2019, we completed a Phase 2 proof‑of‑concept clinical trial of rilonacept in recurrent pericarditis and reported final data at the American Heart Association Scientific Sessions in November 2019.The Phase 2 trial evaluated the treatment response to rilonacept in a range of recurrent pericarditis populations and was divided into five parts across two cohorts.

Actively symptomatic recurrent pericarditis patients:

Symptomatic patients with recurrent pericarditis and CRP > 1 mg/dL;

Symptomatic patients with recurrent pericarditis and CRP ≤

1 mg/dL but pericardial inflammation confirmed by magnetic resonance imaging, or MRI;

Symptomatic patients with post-pericardiotomy syndrome, or PPS and CRP > 1 mg/dL.

Corticosteroid-dependent recurrent pericarditis patients not actively experiencing a recurrence:

Asymptomatic patients with recurrent pericarditis who were dependent upon or unable to wean off corticosteroids;

Asymptomatic patients with PPS who were dependent upon or unable to wean off corticosteroids.

In this study, all patients received a loading dose of rilonacept 320 mg subcutaneously, or SC, followed by 160 mg SC weekly maintenance on top of any combination of co-administered NSAIDs and/or colchicine and/or corticosteroids during a six-week base treatment period.

There was an optional 18-week extension treatment period, during which physicians were given the option to wean patients off concomitant NSAIDs, colchicine, and/or corticosteroids.

The assessed efficacy outcomes measures included an 11-point NRS, CRP, electrocardiogram, and echocardiogram to measure the size of the pericardial effusion.

25 unique patients enrolled in the six-week base treatment period across Parts 1 through 5 of the Phase 2 trial, and 23 patients continued into the optional 18-week extension treatment period and completed 24 weeks of treatment.

The Phase 2 data provided first evidence that rilonacept treatment in the study improved clinically meaningful outcomes associated with the unmet medical need in recurrent pericarditis.

Resolution of Pericarditis Episodes

We expect that symptomatic recurrent pericarditis patients with CRP > 1mg/dL (Parts 1 and 4;

n = 13), who were failing standard of care management with NSAIDs, colchicine, and/or corticosteroids, will be the most relevant to the enrollment population for the RHAPSODY Phase 3 clinical trial.

In the Phase 2 trial, a rapid reduction in both reported pain and inflammation after the first dose as well as a persistent and clinically meaningful response were observed throughout the trial for these patients.

Mean patient-reported pericardial pain on an 11-point NRS decreased from 4.5 at baseline to 0.5 at 24 weeks;

mean CRP decreased from 4.6 mg/dL at baseline to 0.2 mg/dL at 24 weeks;

mean time to CRP normalization was nine days;

pericardial signs resolved or improved in all patients, including pericardial effusion (6/7 patients), PR depression (2/3 patients), widespread ST elevation (2/2 patients) and pericardial rub (2/2 patients).

In symptomatic recurrent pericarditis patients with CRP ≤

1mg/dL (Part 2;

n = 3), who were failing standard of care management with NSAIDs, colchicine, and/or corticosteroids, a reduction in both reported pain and inflammation after the first dose as well as a persistent and clinically meaningful response were observed throughout the trial.

Mean patient-reported pericardial pain on an 11-point NRS decreased from 4.7 at baseline to 0.0 at 24 weeks;

mean CRP decreased from 0.46 mg/dL at baseline to 0.32 mg/dL at 24 weeks.

Tapering and Discontinuation of Corticosteroids without Pericarditis Recurrence

15 recurrent pericarditis patients on corticosteroids at baseline enrolled in the six-week base treatment period, and 13 continued into the optional 18-week extension treatment period and completed 24 weeks of treatment.

During the optional 18-week extension treatment period, investigators were given the option to wean patients from concomitant medications while continuing weekly rilonacept treatment.

All patients on corticosteroids stopped or tapered corticosteroids during this part of the study without experiencing a recurrent pericarditis episode.

11 recurrent pericarditis patients discontinued corticosteroids completely:

four symptomatic patients across Parts 1 and 2 as well as seven corticosteroid-dependent patients across Parts 3 and 5.

The corticosteroid dose was successfully tapered in the two remaining recurrent pericarditis patients by the end of the 24-week study period:

one symptomatic patient in Part 2 and one corticosteroid-dependent patient in Part 3.

Reduction in Recurrences of Pericarditis Episodes while on Treatment

A comparison of the annualized incidence of pericarditis episodes during the trial while receiving rilonacept versus patients’

own natural history in the period prior to the trial showed a decrease in annualized incidence of pericarditis episodes across all parts from 3.9 episodes/year prior to the study to <0.18 episodes/year.

Improved Quality of Life Scores

Rilonacept treatment also resulted in improvement of Patient Reported Outcomes Measurement Information System, or PROMIS, Global Health scores for Physical and Mental Global Health (U.S.

mean score = 50.0;

standard deviation = 10).

A clinically meaningful difference is thought to be one standard deviation, or ten points.

In symptomatic recurrent pericarditis patients (Parts 1, 2, and 4), the mean Physical and Mental Global Health baseline scores were 39.9 and 44.5, respectively, and improved to 51.3 and 50.5, respectively, at 24 weeks.

In corticosteroid-dependent recurrent pericarditis patients (Parts 3 and 5), the mean Physical and Mental Global Health baseline scores were 43.3 and 46.5, respectively, and improved to 46.8 and 50.7, respectively, at 24 weeks.

Rilonacept was generally well-tolerated in the study, with adverse events consistent with the FDA-approved label for the treatment of CAPS, including Familial Cold Autoinflammatory Syndrome and Muckle-Wells Syndrome.

The most common adverse events were mild, transient injection site reactions that did not cause discontinuation.

There was one treatment-related serious adverse event which resulted in discontinuation:

a subcutaneous abscess which responded to medical treatment.

Infections are included in the rilonacept label for CAPS.

Clinical History of Rilonacept

Regeneron evaluated rilonacept in a total of 21 clinical trials, including two trials in over 100 patients for the treatment of CAPS, and six trials in over 1,800 patients for the treatment of gout flares.

Regeneron evaluated rilonacept for the treatment of CAPS in two trials.

In these trials, 109 patients with CAPS, including eight pediatric patients, were treated with at least one dose of rilonacept.

In the pivotal efficacy trial, which evaluated the long‑term efficacy and safety of once‑weekly dosing, 160 mg of rilonacept markedly decreased the clinical signs and symptoms of CAPS.

Regeneron evaluated rilonacept for the treatment of gout flares in six trials.

In the two pivotal efficacy trials in patients with gout, which evaluated the efficacy of once‑weekly dosing for the prevention of gout flares during initiation of uric acid‑lowering therapy, rilonacept at doses of 80 mg and 160 mg significantly decreased the number of gout flares.

Regeneron abandoned active development for the treatment of gout flares after receiving a complete response letter from the FDA requesting additional clinical data, as well as additional CMC information related to a proposed new dosage form Regeneron was evaluating for gout, which was different than the dosage form approved in the CAPS indication and now being used for pericarditis.

Other Indications:

Regeneron conducted a total of 13 clinical trials of rilonacept for the treatment of rheumatoid arthritis, or RA, polymyalgia rheumatica, osteoarthritis, coronary artery disease, systemic juvenile idiopathic arthritis and end‑stage renal disease.

In the 21 clinical studies conducted by Regeneron with rilonacept to date, the most common adverse events reported were injection site reactions and upper respiratory tract infections.

Across these studies, there were a total of five serious adverse events, or SAEs, that were assessed by investigators as drug related.

Among patients treated with rilonacept there were three SAEs, colitis, gastrointestinal hemorrhage, and drug eruption.

One patient treated with placebo experienced cellulitis and another placebo‑treated patient died.

The largest clinical programs conducted by Regeneron with rilonacept were its Phase 2 and Phase 3 programs for gout flare prevention, which treated a total of 1,886 patients.

The most common adverse events reported for the 160 mg dose, the dosage used for the treatment of CAPS, were injection site reactions (15.5% for rilonacept versus 2.6% for placebo) and upper respiratory tract infections (10.3% for rilonacept versus 10.1% for placebo).

a single-blind run-in period during which patients received a loading dose of rilonacept 320 mg injected SC followed by 160 mg SC weekly while background pericarditis medications were tapered and discontinued;

a double-blind, placebo-controlled randomized withdrawal period during which clinical responders to rilonacept were randomized 1:1 and received 160 mg SC weekly rilonacept or placebo;

and a long-term extension treatment period with up to 24 months of open-label rilonacept 160 mg SC weekly.

The primary efficacy endpoint was time-to-first pericarditis-recurrence in the randomized withdrawal period.

The Clinical Endpoint Committee adjudicated all suspected pericarditis recurrences for inclusion in the primary efficacy endpoint analysis.

Phase 3 Clinical Trial Results in Recurrent Pericarditis

In June 2020, we announced RHAPSODY met its prespecified primary and all major secondary efficacy endpoints, showing that rilonacept improved clinically meaningful outcomes associated with the unmet medical need in recurrent pericarditis.

RHAPSODY data were also published in The New England Journal of Medicine simultaneously with a late-breaking scientific presentation at the American Heart Association’s Scientific Sessions in November 2020.

The primary efficacy endpoint of time-to-first adjudicated pericarditis recurrence in the randomized withdrawal period was highly statistically significant.

● Median [95% CI] time to pericarditis recurrence for rilonacept recipients in the randomized withdrawal period could not be estimated due to the low number of recurrences in the rilonacept treatment arm.

The median time-to-recurrence for placebo recipients was 8.6 [4.0-11.7] weeks (Hazard Ratio = 0.04, p<0.0001).

● Rilonacept recipients experienced a 96% reduction in risk of recurrent pericarditis events.

All major secondary efficacy endpoints in the randomized withdrawal period were also highly statistically significant.

● 81% of rilonacept recipients maintained clinical response at Week 16 of the randomized withdrawal period, compared to 20% of placebo recipients (p=0.0002).

Consistent results were observed at Week 8 and Week 24 and were also highly statistically significant (p<0.0001 and p=0.0022, respectively).

● The proportion of rilonacept recipients with absent or minimal pericarditis symptoms at Week 16 of the randomized withdrawal period was 81% compared to 25% for placebo recipients (p=0.0006).

Consistent results were observed at Week 8 and Week 24 and were also highly statistically significant (p<0.0001 and p=0.0002, respectively).

Rilonacept was well-tolerated in the study, with adverse events consistent with the FDA-approved label for the treatment of CAPS.

The most common adverse events were injection site reactions.

Commercial Strategy for Rilonacept

We intend to have a focused and targeted launch effort, with a specialty cardiology salesforce of approximately 30 representatives calling on high-volume accounts and high-volume specialists.

The salesforce will be complemented by our current medical affairs, payor and patient services teams, as well as an efficient digital marketing effort.

Through a data-driven market assessment, we have developed what we believe to be a highly efficient launch model built around four key strategic imperatives.

The first of which is, establishing the unmet need and working to ensure recurrent pericarditis is viewed as a serious, debilitating disease, that is primarily driven by IL-1.

The second is, working to ensure rilonacept is viewed as the product of choice for the treatment and prevention of recurrent pericarditis.

The third strategic imperative relates to reimbursement and working to ensure broad patient access at a price that reflects rilonacept’s value as a first-in-class IL-1 inhibitor of inflammation.

The final strategic imperative is building robust patient support programs to optimize the patient and customer experience with rilonacept as well as with Kiniksa.

Overall, our efforts are focused on developing a program and tactics to help with broad uptake and adoption of rilonacept as well as ensuring a positive patient experience.

Commercial History of Rilonacept

The FDA approved rilonacept under the brand name ARCALYST for the treatment of CAPS, specifically familial cold autoinflammatory syndrome and muckle-wells syndrome, in 2008, and subsequently approved it for the treatment of DIRA in 2020.

Mavrilimumab is a fully-human monoclonal antibody that antagonizes GM-CSF signaling by binding to the alpha subunit of the GM-CSF receptor.

Our lead indication for mavrilimumab is GCA, a chronic inflammatory disease of medium-large blood vessels with an estimated U.S.

prevalence of approximately 75,000 –

150,000 patients.

We have commenced dosing in multiple countries in a randomized, double‑blind, placebo‑controlled, global Phase 2 proof‑of‑concept trial for the study of mavrilimumab in GCA.

We expect to report top‑line data in the second half of 2020.

Before we licensed mavrilimumab in 2017, MedImmune, Limited, or MedImmune, was developing mavrilimumab for the treatment of RA.

prevalence of approximately 75,000 to 150,000 patients.

We received Orphan Drug designation from the FDA for mavrilimumab for the treatment of GCA in 2020.

In November 2020, we presented results from our randomized, double-blind, placebo-controlled, global Phase 2 proof-of-concept trial of mavrilimumab in subjects with GCA at the late-breaking abstracts session during the ACR Convergence 2020.

Before we licensed mavrilimumab in 2017, MedImmune was developing mavrilimumab for the treatment of RA.

MedImmune had received authorization to conduct clinical trials for RA in Europe and executed an extensive Phase 1 and Phase 2 clinical program where the company studied mavrilimumab in over 550 patients with RA through Phase 2b.

All of MedImmune’s European clinical trials achieved their prospectively defined primary endpoints of safety or efficacy.

We are also evaluating mavrilimumab for the potential treatment of COVID-19 pneumonia and hyperinflammation.

Additionally, in December 2020, we reported results from a randomized, double-blind, placebo-controlled, investigator-initiated study in the same patient population across a consortium of academic sites in the United States.

We are conducting a global, randomized, double-blind, placebo-controlled Phase 2/3 clinical trial of mavrilimumab in severe COVID-19 pneumonia and hyperinflammation.

We expect to provide data from the Phase 2 portion of the Phase 2/3 trial in the first half of 2021.

Mechanism of Action

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Reported data suggest GM-CSF is a key player in the immune system, as follows:

GM‑CSF enhanced trafficking of myeloid cells through activated endothelium of blood vessels and contributed to monocyte and macrophage accumulation in blood vessels during inflammation;

GM‑CSF promoted activation, differentiation, survival and proliferation of monocytes and macrophages, as well as resident tissue macrophages in inflamed tissues;

GM‑CSF production led to activation of the vasculature and bone marrow and also promoted the differentiation of effector T cells at inflamed sites and draining lymph nodes;

GM‑CSF regulated the phenotype of antigen‑presenting cells in inflamed tissues by promoting the differentiation of infiltrating monocytes into M1 macrophages and monocyte‑derived dendritic cells, or MoDCs.

o GM-CSF enhanced trafficking of myeloid cells through activated endothelium of blood vessels and contributed to monocyte and macrophage accumulation in blood vessels during inflammation;

o GM-CSF promoted activation, differentiation, survival and proliferation of monocytes and macrophages, as well as resident tissue macrophages in inflamed tissues;

o GM-CSF production led to activation of the vasculature and bone marrow and also promoted the differentiation of effector T cells at inflamed sites and draining lymph nodes;

o GM-CSF regulated the phenotype of antigen-presenting cells in inflamed tissues by promoting the differentiation of infiltrating monocytes into M1 macrophages and monocyte-derived dendritic cells, or MoDCs.

Additionally, GM-CSF has been shown to be a confirmed mediator in RA based on the results from the Phase 2b clinical trial in RA conducted by MedImmune.

In this trial, mavrilimumab achieved the co‑primary endpoints of change from baseline in disease activity score, or DAS, at week 12 and a response of 20% or greater improvement in the American College of Rheumatology criteria, at week 24.

Patients with mavrilimumab showed a statistically significant reduction in DAS scores at all dosages compared to placebo, and significantly more mavrilimumab‑treated patients achieved ACR20 at all dosages compared to placebo.

In this trial, mavrilimumab achieved the co-primary endpoints of change from baseline in disease activity score, or DAS, at week 12 and a response of 20% or greater improvement in the American College of Rheumatology criteria, or ACR20, at week 24.

Patients treated with mavrilimumab showed a statistically significant reduction in DAS scores at all dosages compared to placebo, and significantly more mavrilimumab-treated patients achieved ACR20 at all dosages compared to placebo.

Background and Market Opportunity for Giant Cell Arteritis

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We chose GCA as our first indication for mavrilimumab due to the mechanistic rationale of inhibiting GM-CSF.

GM‑CSF is a key growth factor for many of these key inflammatory cell types and is found in high

concentrations at the site of damage in the vessel wall.

GM-CSF is a key growth factor for many of these key inflammatory cell types and is found in high concentrations at the site of damage in the vessel wall.

We believe that data provide a solid rationale for antagonizing this signaling with mavrilimumab.

Preclinical Rationale for GCA

At the 2019 American College of Rheumatology conference, each of Dr.

Weyand and Dr.

Cid presented preclinical data sponsored by Kiniksa, which we believe support the mechanistic rationale for targeting granulocyte macrophage colony stimulating factor receptor alpha, or GM-CSFRα, in patients with GCA.

Weyand made an oral presentation entitled GM-CSF is a Pro-Inflammatory Cytokine in Experimental Vasculitis of Medium and Large Arteries.

Data from a validated in vivo model of vasculitis showed that, compared to treatment controls, mavrilimumab, reduced tissue inflammation in the arteries.

In the model, normal human arteries were engrafted into immune-deficient mice.

Following the engraftment, peripheral blood mononuclear cells from patients with GCA were transferred to the mice which then caused vasculitis to appear in the normal arteries within 7-10 days.

After the inflammation had been established, animals were treated with mavrilimumab.

Treatment with mavrilimumab resulted in statistically significant reductions in the number of CD3+ T-cells and in innate and adaptive immune responses in the inflamed arteries in addition to significant reductions in key cytokines known to play a role in GCA pathology including interferon-gamma, or IFN-γ.

These data illustrate that blockade of GM-CSFRα

signaling had a strong anti-inflammatory activity.

We believe the reduced expression of IFN-γ

in mice treated with mavrilimumab is of significance for treating GCA as it is the signature cytokine produced by the T helper type 1, or TH1, cell lineage which, along with GM-CSF, has been implicated in multinucleated giant cell formation.

The TH1 signature is relatively unresponsive to glucocorticoid therapy and often persists in steroid-treated patients and is believed to mediate chronic and refractory disease.

Cid presented a poster entitled GM-CSF Pathway Signature Identified in Temporal Artery Biopsies of Patients with Giant Cell Arteritis.

Data from this study examining human temporal artery biopsies from two independent sources showed the GM-CSF signaling pathway molecular signature was upregulated in GCA biopsies versus control at both the messenger ribonucleic acid (mRNA) and protein level.

GM-CSF and TH1 pathway signatures (including IFN-γ) were demonstrated in GCA patient temporal arteries by independent analytical techniques.

The data also demonstrated active GM-CSF signaling in diseased tissue is evidenced by increased expression of PU.1, a transcription factor downstream of GM-CSF signaling, in the vessel wall.

Additionally, treatment of ex vivo cultures of GCA arteries with mavrilimumab suppressed expression of these gene products, suggesting the biological activity of mavrilimumab on genes relevant to GCA pathophysiology.

Phase 2 Clinical Trial for GCA

We are conducting a randomized, double‑blind, placebo‑controlled, global Phase 2 proof‑of‑concept trial in multiple countries.

The Phase 2 clinical trial of mavrilimumab for the treatment of GCA was designed to enroll approximately 60-70 subjects with new‑onset and refractory disease.

Subjects are randomized 3:2 to mavrilimumab 150 mg or placebo injected SC once every two weeks co‑administered with a corticosteroid taper.

Treatment duration is 26 weeks, and the primary efficacy endpoint is time to first flare.

In the United States, the FDA initially placed our Investigational New Drug application, or IND, on clinical hold due a request for additional information regarding the 510(k)‑cleared delivery device to be used in our Phase 2 clinical trial.

The device‑related information request did not pertain to preclinical toxicology data nor the design of our trial.

We provided the FDA with the requested information and the IND became active.

We expect to report top‑line data in the second half of 2020.

We anticipate that to help inform the risk/benefit profile for the use of mavrilimumab in GCA, we will need to demonstrate the effectiveness and safety of mavrilimumab after 26 weeks, as well as evaluate its pharmacokinetic profile and the effectiveness of mavrilimumab at different doses.

We also intend to initiate research and development activities of mavrilimumab’s potential across other various disease states where cells of myeloid phenotype have been implicated by the literature, such as other vasculitides and cardiomyopathies, diseases characterized by barrier dysfunction, other arthropathies or oncologic indications.

Phase 2 Clinical Trial Evaluating Mavrilimumab with YESCARTA

In December of 2019, we entered into a clinical collaboration with Kite to initiate a Phase 2 clinical trial evaluating the combination of Yescarta and mavrilimumab in relapsed or refractory large B-Cell lymphoma.

The objective of the trial is to determine the effect of mavrilimumab on the safety of Yescarta.

Treatment related induction of GM-CSF has been identified through clinical, translational and preclinical studies as a potential key signal associated with side effects of CAR T cell therapy.

Preclinical evidence suggests the potential for interruption of GM-CSF signaling to disrupt CAR T cell mediated inflammation without disrupting anti-tumor activity.

Kite will be the sponsor or this study and responsible for its conduct.

We conducted a randomized, double-blind, placebo-controlled, global Phase 2 trial consisting of a 6-week screening period, a 26-week double-blind placebo-controlled treatment period, and a 12-week washout safety follow-up period.

Patients age 50 to 85 years with active GCA, confirmed by temporal artery biopsy and/or imaging, with erythrocyte sedimentation rate, or ESR, ≥ 30 mm/hour or C-reactive protein, or CRP, ≥ 1 mg/dL, and symptoms of GCA within 6 weeks from randomization, were included.

All patients were required to have achieved corticosteroid-induced remission (resolution of symptoms, ESR < 20 mm/hour, CRP < 1 mg/dL) prior to randomization.

Seventy (70) patients were randomized 3:2 to mavrilimumab 150 mg or placebo biweekly injected SC, co-administered with a protocol-defined 26-week oral corticosteroid taper.

Patients were stratified by new onset (n=35) or relapsing/refractory (n=35) disease.

The primary efficacy endpoint was time-to-first adjudicated GCA flare by Week 26 in all treated patients and the secondary efficacy endpoint was sustained remission at Week 26 in all treated patients with statistical significance.

Phase 2 Clinical Trial Results for GCA

In November 2020, we announced that results from our randomized, double-blind, placebo-controlled, global Phase 2 proof-of-concept trial of mavrilimumab in subjects with GCA were presented at the late-breaking abstracts session during the ACR Convergence 2020.

The Phase 2 trial met both its prescribed primary and efficacy endpoint of time-to-first adjudicated GCA flare by Week 26 in all treated patients and the secondary efficacy endpoint of sustained remission at Week 26 in all treated patients with statistical significance.

In addition, while the trial was not powered for individual disease cohorts, there was a consistent trend of efficacy across the new onset and relapsing/refractory cohorts.

Mavrilimumab was well-tolerated in the Phase 2 trial;

there were no drug-related SAEs, and the rates of drug-related treatment-emergent adverse events between mavrilimumab recipients and placebo recipients were similar.

We expect to provide next steps for the development of mavrilimumab, including in GCA, in the first half of 2021.

The primary efficacy endpoint of time-to-first adjudicated GCA flare by Week 26 in all treated patients was statistically significant (Hazard Ratio = 0.38, p=0.0263).

● Median time-to-flare by Week 26 could not be estimated in mavrilimumab recipients due to the low number of flares in the mavrilimumab treatment arm.

The median time-to-flare for placebo recipients was 25.1 weeks.

There was a 62% lower risk of flare in mavrilimumab recipients compared to placebo recipients.

The secondary efficacy endpoint of sustained remission at Week 26 in all treated patients was also statistically significant.

● The sustained remission rate at Week 26 was 33.3 percentage points higher in mavrilimumab recipients (83.2%) compared to placebo recipients (49.9%) (p=0.0038).

Mavrilimumab was well-tolerated;

there were no drug-related SAEs, and the rates of drug-related treatment-emergent adverse events between mavrilimumab recipients and placebo recipients were similar.

Clinical Development for Mavrilimumab in COVID-19 Pneumonia and Hyperinflammation

These data were published in The Lancet Rheumatology.

In December 2020, we reported results from a randomized, double-blind, placebo-controlled investigator-initiated study in the same patient population across a consortium of academic sites in the United States showing encouraging trends of reduced mortality and duration of mechanical ventilation in patients treated with mavrilimumab on top of standard of care therapy.

There was no difference in SAEs between the mavrilimumab arm and the placebo arm in the investigator-initiated study.

We are conducting a global, randomized, double-blind, placebo-controlled Phase 2/3 clinical trial of mavrilimumab in severe COVID-19 pneumonia and hyperinflammation.

We expect to provide data from the Phase 2 portion of the Phase 2/3 trial in the first half of 2021.

Clinical History in Rheumatoid Arthritis

MedImmune had received authorization to conduct clinical trials for rheumatoid arthritis, or RA, in Europe and executed an extensive Phase 1 and Phase 2 clinical program where the company studied mavrilimumab in over 550 patients with RA through Phase 2b.

All of MedImmune’s European clinical trials achieved their prospectively defined primary endpoints of safety or efficacy.

MedImmune’s IND for the clinical development of mavrilimumab for the treatment of RA was initially put on clinical hold in 2010 before human data had been generated due to certain effects that were observed in non‑clinical studies, which coincides with a theoretical risk of developing PAP, possibly in the setting of GM‑CSF inhibition.

Since then, in 2014, the FDA acknowledged that clinical studies in refractory RA may be appropriate based on MedImmune’s clinical studies in Europe in which it dosed over 550 RA patients with mavrilimumab with no evidence of PAP attributable to mavrilimumab following long‑term administration.

All of MedImmune’s European clinical trials achieved their prospectively defined primary endpoints of safety or efficacy.

MedImmune’s investigational new drug application, or IND, for the clinical development of mavrilimumab for the treatment of RA in the United States was initially put on clinical hold in 2010 before human data had been generated due to certain effects that were observed in non-clinical studies, which coincides with a theoretical risk of developing pulmonary alveolar proteinosis, or PAP, possibly in the setting of GM-CSF inhibition.

MedImmune did not engage in further dialogue with the FDA and withdrew the IND for mavrilimumab for the treatment of RA.

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We believe that these safety results provide an accurate early representation of the safety profile of mavrilimumab, which we believe to be at least competitive with and potentially better than existing systemically administered agents for autoimmune diseases.

Mavrilimumab’s results from Phase 2b clinical trials in RA have provided important information about its safety and efficacy profile and helped solidify our choice for focusing our development efforts in GCA as a lead indication.

In addition to the reductions to the primary endpoint demonstrated in the Phase 2b trials, other markers of inflammation, such as CRP, erythrocyte sedimentation rate, or ESR, and IL‑6, were similarly reduced, as shown in the

Mavrilimumab’s results from MedImmune’s European Phase 2b clinical trials in RA have provided important information about its safety and efficacy profile and helped solidify our choice for focusing our development efforts in GCA as a lead indication.

In addition to the reductions to the primary endpoint demonstrated in MedImmune’s European Phase 2b trials, other markers of inflammation, such as CRP, ESR, and IL-6, were similarly reduced, as shown in the

graphs below.

CRP, ESR and IL-6 are key markers of disease activity for GCA.

We believe that these results may also provide evidence for mavrilimumab’s utility across a broad range of indications with a similar biomarker profile.

We believe that these results may also provide evidence for mavrilimumab’s potential utility across a broad range of indications with a similar biomarker profile.

Burmester GR, et al.

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*p<0.05, **p<0.01, ***p<0.001 mavrilimumab versus placebo

KPL‑716 is a fully‑human monoclonal antibody that targets OSMRβ, which mediates signaling of IL‑31 and OSM, two key cytokines implicated in inflammation, pruritus and fibrosis.

We believe KPL‑716 to be the only monoclonal antibody in development that targets both pathways simultaneously.

We completed our Phase 1a/1b program in atopic dermatitis subjects in 2019.

Both the single IV dose and repeated-single doses of KPL-716 resulted in a marked and rapid reduction in pruritus as measured by a numerical rating score.

We believe these results support further development of KPL-716 as an anti-pruritic treatment for diseases with upregulated signaling through OSMRβ.

We are initially evaluating KPL‑716 for the treatment of a variety of pruritic diseases potentially driven by signaling through OSMRβ, including prurigo nodularis, a chronic inflammatory skin condition with an estimated U.S.

Vixarelimab is a fully-human monoclonal antibody that targets OSMRβ, which mediates signaling of IL-31 and OSM, two key cytokines implicated in inflammation, pruritus and fibrosis.

We believe vixarelimab to be the only monoclonal antibody in development that targets both pathways simultaneously.

We acquired the assets relating to vixarelimab from Biogen, in 2016.

We are evaluating vixarelimab for the potential treatment of prurigo nodularis, a chronic inflammatory skin condition with an estimated U.S.

prevalence of approximately 300,000 patients.

We acquired the assets relating to KPL‑716 from Biogen MA, Inc., or Biogen, in 2016.

We received Breakthrough Therapy designation for vixarelimab for the treatment of pruritus associated with prurigo nodularis in 2020.

In April 2020, we reported results from our randomized, double-blind, placebo-controlled Phase 2a trial of vixarelimab in prurigo nodularis.

We are conducting a randomized, double-blind, placebo-controlled Phase 2b dose ranging study of vixarelimab in patients with prurigo nodularis designed to investigate the efficacy, safety, and pharmacokinetics.

Mechanism of Action

The OSMRβ

subunit is an IL‑6 type receptor which combines with one of two other subunits to form two distinct cytokine receptors used for the signaling of two different cytokines:

The OSMRβ subunit is an IL-6 type receptor which combines with one of two other subunits to form two distinct cytokine receptors used for the signaling of two different cytokines:

IL-31, and OSM.

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OSM is produced primarily under inflammatory conditions and stimulates dermal fibroblast proliferation and migration as well as synthesis of collagen and glycosaminoglycan in the skin, leading to fibrosis.

In addition to these functions, OSM signaling through the type II OSM receptor upregulates interleukin‑4, or IL‑4, interleukin‑13 receptor, or IL‑13Rα1, and interleukin‑4 receptor, or IL‑4Rα, in human skin equivalent cultures, upregulates IL‑4Rα

in primary human keratinocytes and also impairs expression of filaggrin, loricrin and involucrin (classical “differentiation”

of the epidermal differentiation complex cluster) in human skin equivalent cultures.

In addition to these functions, OSM signaling through the type II OSM receptor upregulates interleukin-4, or IL-4, interleukin-13 receptor, or IL-13Rα1, and interleukin-4 receptor, or IL-4Rα, in human skin equivalent cultures, upregulates IL-4Rα in primary human keratinocytes and also impairs expression of filaggrin, loricrin and involucrin (classical “differentiation” markers of the epidermal differentiation complex cluster) in human skin equivalent cultures.

These data implicate OSM signaling as important in many autoimmune diseases characterized by barrier dysfunction, fibrosis and inflammation.

KPL‑716 inhibits both IL‑31 and OSM activities at their respective receptors, potentially disrupting the pruritus, inflammation and fibrosis mediated by these cytokine pathways.

Background and Market Opportunity for Prurigo Nodularis and Other Chronic Pruritic Diseases

Prurigo Nodularis

Vixarelimab inhibits both IL-31 and OSM activities at their respective receptors, potentially disrupting the pruritus, inflammation and fibrosis mediated by these cytokine pathways.

Background and Market Opportunity for Prurigo Nodularis

Prurigo nodularis is a chronic inflammatory skin condition that affects primarily older adults and is characterized by multiple firm and extremely pruritic nodules typically located on the arms and legs.

The etiology of prurigo nodularis is largely unknown, however, human biopsy studies have shown that the cytokines IL‑31 and OSM and the receptor chains IL‑31Rα

and OSMRβ

are highly expressed in prurigo nodularis lesions.

The etiology of prurigo nodularis is largely unknown, however, human biopsy studies have shown that the cytokines IL-31 and OSM and the receptor chains IL-31Rα and OSMRβ are highly expressed in prurigo nodularis lesions.

The pruritus is severe and distressing and can be sudden, sporadic or continuous, worsening with heat, sweating or irritation from clothing.

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The exact prevalence of prurigo nodularis is unknown, however, we estimate there to be approximately 300,000 prevalent cases in the United States.

Other Chronic Pruritic Diseases

Our exploratory, pilot Phase 2 clinical trial was designed to evaluate study populations with chronic idiopathic urticaria, chronic idiopathic pruritus, plaque psoriasis, lichen planus, and lichen simplex chronicus.

Chronic Idiopathic Urticaria.

Chronic idiopathic urticaria is the chronic occurrence of hives without a known cause.

We estimate that there are approximately two to three million patients in the United States with chronic idiopathic urticaria.

Based on company survey data of over 100 treating physicians, or company survey data, approximately one out of three patients experience pruritus that is refractory to conventional therapies, and among patients treating their chronic idiopathic urticaria with Xolair (omalizumab), 15% to 20% continue to experience pruritus.

Chronic Idiopathic Pruritus.

Chronic idiopathic pruritus is chronic itching without a known cause.

Based on company survey data, treating physicians report that there is approximately one patient with idiopathic pruritus for every three atopic dermatitis patients, and approximately 50% of these patients experience symptoms lasting for more than one year and one in three treated patients experience refractory pruritus.

Plaque Psoriasis.

Plaque psoriasis is the most common form of psoriasis and causes skin lesions with silvery scales.

We estimate that there are approximately 12 million patients with plaque psoriasis in the United States with approximately two to three million patients experiencing moderate‑to‑severe pruritus.

Lichen Planus.

Lichen planus is a chronic inflammatory and immune‑mediated disease that affects the skin, nails, hair, and mucous membranes.

We estimate that there are approximately 500,000 patients in the United States with lichen planus.

Based on company survey data, treating physicians report that among treated patients with this disease, approximately one in every three experience refractory pruritus.

Lichen Simplex Chronicus.

Lichen simplex chronicus results from chronic itching and scratching, which causes lichenified skin.

Based on company survey data, treating physicians report approximately one lichen simplex chronicus patient for every prurigo nodularis patient, which equates to approximately 300,000 addressable patients in the United States, and among treated patients with lichen simplex chronicus, approximately 40% experience refractory pruritus.

Current Treatment Landscape for Prurigo Nodularis

Prurigo Nodularis

We are not aware of any current FDA‑approved therapies for treating prurigo nodularis, and the treatment approach ranges from topical corticosteroids and occlusive steroid containing bandages for more mild patients to systemic corticosteroid, ultraviolet phototherapy and systemic therapies such as thalidomide, methotrexate and cyclosporine for those patients who fail initial treatments.

We are not aware of any FDA-approved therapies for treating prurigo nodularis, and the treatment approach ranges from topical corticosteroids and occlusive steroid containing bandages for more mild patients to systemic corticosteroid, ultraviolet phototherapy and systemic therapies such as thalidomide, methotrexate and cyclosporine for those patients who fail initial treatments.

Patients have reported using opioid pain medications to attempt to control the disease in its most severe form.

KPL‑716 is a fully‑human monoclonal antibody that targets two key pathways for the development of pruritus, inflammation and fibrosis through inhibition of OSMRβ.

Vixarelimab is a fully-human monoclonal antibody that targets two key pathways for the development of pruritus, inflammation and fibrosis through inhibition of OSMRβ.

Chronic pruritic diseases are often characterized by a complex interplay among pruritus, inflammation and fibrosis.

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Of particular relevance is the central role of OSM in inflammation and barrier function and its autocrine effects on type II OSM receptor in IL-31-dependent epidermal proliferation and remodeling as well as inflammation.

There is a relatively large body of literature linking inflammatory pruritic and inflammatory diseases to both IL‑31 and OSM via signaling though OSMRβ.

KPL‑716 has been specifically designed to target both pathways simultaneously and thus KPL‑716 may disrupt this pathologic cycle in patients afflicted by prurigo nodularis and atopic dermatitis.

Preclinical Development

In our preclinical development program we have observed favorable pharmacokinetics and toxicology characteristics to support clinical development of KPL‑716.

KPL‑716 has shown signs of efficacy in two non‑human primate models.

In the first, KPL‑716 abrogated the pharmacodynamic marker of pruritus in an IL‑31 challenge model.

A single three milligram per kilogram dose of KPL‑716 substantially reduced scratch counts despite multiple repeated injections of IL‑31 over several weeks at concentrations we believe to be supraphysiologic in a disease context.

In the second non‑human primate model, KPL‑716 again abrogated the painful response to an injection to an inflammatory agent called carrageenan through the time period measured after a single infusion of KPL‑716, implicating OSM in the inflammatory response.

We have conducted preclinical toxicology studies for KPL‑716 with a no adverse event level of 500 milligrams per kilogram with intravenous dosing.

Phase 1a/1b Clinical Trial

In early 2017, we filed an IND application and began clinical development with KPL‑716 in a Phase 1a/1b clinical trial in healthy volunteers and in subjects with moderate‑to‑severe atopic dermatitis experiencing moderate‑to‑severe pruritus, respectively.

The first portion of the Phase 1a/1b clinical trial utilized a randomized, double‑blind, placebo‑controlled, single‑ascending‑dose, sequential‑group design to evaluate the safety, tolerability, pharmacokinetics and immunogenicity of KPL‑716 in healthy volunteers and subjects with atopic dermatitis following IV or SC

administration.

We used the pruritis in atopic dermatitis as a proxy for IL‑31‑driven pruritic diseases, including prurigo nodularis.

In total, 50 healthy volunteers and 32 subjects with moderate‑to‑severe atopic dermatitis experiencing moderate‑to‑severe pruritus received a single dose of KPL‑716 or placebo in the Phase 1a/1b clinical trial, with the top dose of 20 mg/kg IV in healthy volunteers and 7.5 mg/kg IV in subjects with atopic dermatitis.

There was a seven‑day wash out period of prior therapies for all subjects with atopic dermatitis before treatment, and topical corticosteroids, or TCS, were not allowed through day 28.

All subjects were given TSC to use as needed after day 28, and rescue medication was provided for atopic dermatitis flares throughout the study.

KPL‑716 was well‑tolerated, no dose‑limiting toxicities were observed, and there were no serious adverse events.

All drug‑related or potentially drug‑related treatment‑emergent adverse events, or DR‑TEAE, were mild, except for one patient who experienced a moderate DR‑TEAE of dizziness.

KPL‑716 showed dose‑dependent elimination consistent with a target‑mediated drug disposition profile and was still detectable at least eight weeks after the high dose of 7.5 mg/kg IV in subjects with atopic dermatitis.

We believe the available pharmacokinetic and bioavailability data are supportive of testing once every other week or once monthly SC dosing regimens in subsequent studies of KPL‑716.

An exploratory analysis of data in ten subjects with moderate‑to‑severe atopic dermatitis receiving a single dose of KPL‑716 7.5 mg/kg IV versus ten pooled placebo IV recipients provided an early signal of efficacy for KPL‑716 in reducing pruritus, indicative of target engagement.

Among these groups, we observed:

Mean percentage change in weekly‑average Worst‑Itch Numeric Rating Scale, or WI‑NRS, decreased by 40.4% in KPL‑716 recipients compared to a 17.6% decrease in placebo recipients at day 28 in the absence of concomitant TCS.

Mean percentage change in pruritus Visual Analog Scale, or VAS, decreased by 55.4% in KPL‑716 recipients compared to a 10.4% decrease in placebo recipients at day 28 in the absence of concomitant TCS.

50% of KPL‑716 recipients showed a ≥

4‑point reduction in weekly‑average WI‑NRS, compared to 10% of placebo recipients at day 28 in the absence of concomitant TCS.

The maximum decrease in WI‑NRS at day 28 in the absence of concomitant TCS was ≥

8 points (1 subject) in KPL‑716 recipients compared to a maximum decrease of 4 points in placebo recipients.

KPL‑716 appeared to show a persistent effect on weekly‑average WI‑NRS in the period after day 28 through day 56, during which concomitant TCS use was permitted.

KPL‑716 recipients reported a 59.5% decrease in sleep‑loss VAS compared to a 2.3% decrease in placebo recipients at day 28 in the absence of concomitant TCS.

The mean percentage change in Eczema Area and Severity Index, or EASI (a standardized measure of atopic dermatitis disease severity), decreased by 42.3% in KPL‑716 recipients compared to a 25% decrease in placebo recipients at Day 28 in absence of concomitant TCS.

In August of 2019 we reported interim results from the repeated-single-dose Phase 1b clinical trial.

The Phase 1b trial used a weekly 360 mg SC dose in a randomized, double-blind, placebo-controlled design in order to evaluate safety and exploratory disease response markers.

The 360 mg SC dose was intended to replicate and extend exposures from the prior single-ascending-dose Phase 1b clinical trial where an early signal of efficacy had been observed in reducing pruritus after a single 7.5 mg/kg intravenous dose.

In the repeated-single-dose Phase 1b clinical trial, 43 subjects with moderate-to-severe atopic dermatitis were enrolled and randomized 1:1 to KPL-716 or placebo once weekly for 12 weeks.

There was a seven-day wash out period of all other therapies before treatment, and topical

corticosteroids were not allowed throughout the 12-week treatment period.

However, rescue medication was available for atopic dermatitis flares throughout the study.

In an interim analysis of the data through the 12-week treatment period as of August 19, 2019, KPL-716 showed a rapid and sustained anti-pruritic response as measured by a reduction in Worst-Itch Numeric Rating Scale, or WI-NRS, in subjects with moderate-to-severe atopic dermatitis:

Mean change from baseline in weekly-average WI-NRS at Week 1 was -28.1% in KPL-716 recipients compared to -6.8% in placebo recipients.

Mean change from baseline in weekly-average WI-NRS at Week 12 was -55.0% in KPL-716 recipients compared to -30.9% in placebo recipients.

52.6% of KPL-716 recipients demonstrated a ≥

4-point reduction in weekly-average WI-NRS at Week 12 compared to 26.3% of placebo recipients.

There was no meaningful benefit of repeated-single-doses of KPL-716 on other efficacy endpoints specific to atopic dermatitis, including EASI and Scoring Atopic Dermatitis, or SCORAD.

There were no serious adverse events.

However, there were more atopic dermatitis flares in the KPL-716-treated population versus placebo

(47.6% versus 4.5%) through the 12-week treatment period;

all subjects who experienced a flare were successfully managed with topical corticosteroids.

KPL-716 was otherwise well-tolerated by all subjects.

We believe these single‑dose and repeated-single doses study results provide proof‑of‑principle for KPL‑716’s potential to treat a spectrum of IL‑31‑driven pruritic diseases and support our plans to advance KPL‑716 into multiple chronic pruritic diseases.

Axis Identified in Prurigo Nodularis

In 2019 at the Annual Meeting of the Society for Investigative Dermatology, we presented preclinical data identifying the OSMRβ

axis in prurigo nodularis subjects.

Data from Kiniksa’s longitudinal observational study in prurigo nodularis, or LOTUS-PN suggest that the OSMRβ

axis (IL-31, OSM, IL-31 receptor alpha (IL-31Rα) and OSMRβ) may play a role in the pathogenesis of prurigo nodularis given its prevalent expression in lesional prurigo nodularis.

IL-31 messenger ribonucleic acid, or mRNA, was expressed in approximately two-thirds of lesional biopsies from prurigo nodularis patients with WI-NRS ≥

7 compared to one-tenth in healthy volunteers.

Additionally, lesional biopsies from prurigo nodularis patients contained mononuclear cells expressing OSM, OSMRβ, IL-31 and IL-31Rα

protein compared with non-lesional biopsies.

There is a relatively large body of literature linking inflammatory pruritic and inflammatory diseases to both IL-31 and OSM via signaling though OSMRβ.

Vixarelimab has been specifically designed to target both pathways simultaneously and thus vixarelimab may disrupt this pathologic cycle in patients afflicted by prurigo nodularis and atopic dermatitis.

OSMRβ Axis Identified in Prurigo Nodularis

In 2019 at the Annual Meeting of the Society for Investigative Dermatology, we presented preclinical data identifying the OSMRβ axis in prurigo nodularis subjects.

Data from our longitudinal observational study in prurigo nodularis, or LOTUS-PN suggest that the OSMRβ axis (IL-31, OSM, IL-31 receptor alpha (IL-31Rα) and OSMRβ) may play a role in the pathogenesis of prurigo nodularis given its prevalent expression in lesional prurigo nodularis.

messenger ribonucleic acid was expressed in approximately two-thirds of lesional biopsies from prurigo nodularis patients with WI-NRS ≥ 7 compared to one-tenth in healthy volunteers.

Additionally, lesional biopsies from prurigo nodularis patients contained mononuclear cells expressing OSM, OSMRβ, IL-31 and IL-31Rα protein compared with non-lesional biopsies.

Phase 2a Clinical Trial in Prurigo Nodularis

Based on the results from the single-dose IV Phase 1b results in atopic dermatitis subjects, we initiated a Phase 2a randomized, double blind, placebo‑controlled clinical trial to evaluate the efficacy, safety, tolerability, PK and immunogenicity of KPL-716 administered SC in subjects with moderate-to-severe prurigo nodularis experiencing moderate-to-severe pruritus.

The Phase 2a study includes two arms:

one placebo arm and one active arm administered as 360mg weekly subcutaneous doses after a 720mg loading dose;

designed to achieve maximum or near maximum steady-state exposures.

The primary and key secondary endpoints, which focus on pruritus, are to be evaluated at 8 weeks.

Other secondary endpoints explore the impact of KPL‑716 versus placebo on pruritus, sleep, quality of life and disease severity over time (at each week of the study treatment period up to and including week 8).

We expect to report data from this trial by the end of April 2020.

Axis Identified in Other Chronic Pruritic Diseases

At the Annual Meeting of the European Society of Dermatological Research in 2019, we presented preclinical data identifying the OSMRβ

axis as relevant in chronic pruritic diseases.

Increased mRNA transcript levels and protein levels of OSMRβ, in formalin-fixed paraffin-embedded biopsies from patients with chronic idiopathic urticaria, chronic idiopathic pruritus, lichen planus and lichen simplex chronicus, relative to healthy control skin samples, suggest the IL-31/OSM signaling axis is associated with these pruritic diseases.

Elevated levels of OSMRβ

mRNA and protein observed in regions of inflammatory infiltrate of all chronic pruritic diseases tested, relative to healthy controls, suggest that the OSMRβ

axis may be active in, and contributing to, these skin disorders.

Particularly, OSM and IL-31 mRNA and protein were present in each disease evaluated for these cytokines.

Exploratory Multi‑Indication, Pilot Phase 2 Clinical Trial

We believe there are multiple chronic pruritic diseases where IL‑31 and OSM may play a role in disease pathology.

In the first half of 2019, we initiated an exploratory, multi‑indication, randomized, double‑blind, placebo‑controlled, pilot clinical trial designed to (1) explore the role of IL‑31 and OSM in a number of diseases characterized by chronic pruritus seen by dermatologists or allergists and (2) investigate the efficacy, safety and tolerability of KPL‑716 in reducing the moderate to severe pruritus experienced by these subjects, with study populations in chronic idiopathic urticaria, chronic idiopathic pruritus, plaque psoriasis, lichen planus, and lichen simplex chronicus.

The trial is comprised of multiple cohorts, each for a different study population.

Each cohort being an independent sub‑study assessing each study population for presence of an IL‑31 or OSM protein or ribonucleic acid signature via biopsy and investigating the efficacy, safety and tolerability of KPL‑716 administered SC in reducing pruritus in these populations.

Investigators and subjects remain blinded throughout the study.

Each cohort could enroll up to a maximum of 26 subjects with each subject experiencing WI‑NRS of seven or above at screening.

A loading dose of KPL‑716 (720 mg) or matching placebo is administered on day 1, followed by single, weekly SC injections of KPL‑716 (360 mg) or matching placebo for the next seven weeks, with the goal of achieving maximum or near maximum exposures at steady state.

The goal of this exploratory study is to identify chronic pruritic conditions where IL‑31 or OSM may be playing a role and assess the presence or absence of reduction in pruritus after KPL‑716 treatment.

We expect to report interim data from cohorts of this trial in the first half of 2020

KPL‑404 is a humanized monoclonal antibody that is designed to inhibit the CD40‑CD40 ligand interaction (CD40L), a key T‑cell co‑stimulatory signal critical for B‑cell maturation and immunoglobulin class switching.

We conducted a Phase 2a randomized, double blind, placebo-controlled clinical trial to evaluate the efficacy, safety, tolerability, PK and immunogenicity of vixarelimab administered SC in subjects with moderate-to-severe prurigo nodularis experiencing moderate-to-severe pruritus.

The trial enrolled and treated 49 patients with moderate-to-severe prurigo nodularis (mean PN-IGA of 3.4) experiencing moderate-to-severe pruritus (mean WI-NRS score of 8.3).

Patients were randomized 1:1 to receive a loading dose of vixarelimab 720 mg (n=23) or placebo (n=26) SC followed by vixarelimab 360 mg or placebo SC weekly.

The primary efficacy endpoint was percent change versus baseline in weekly-average WI-NRS at Week 8 (using the last observation carried forward analysis).

Phase 2a Clinical Trial Results in Prurigo Nodularis

In April 2020, we reported results from our randomized, double-blind, placebo-controlled Phase 2a trial of vixarelimab in prurigo nodularis.

The Phase 2a trial met its primary efficacy endpoint, as there was a statistically significant reduction in weekly-average WI-NRS from baseline at Week 8 in vixarelimab recipients compared to placebo recipients.

In addition, the majority of vixarelimab recipients showed a clinically meaningful greater-than-or-equal-to 4-point weekly-average WI-NRS reduction at Week 8 and a statistically significant percentage of vixarelimab recipients achieved a prurigo nodularis-investigator’s global assessment, or PN-IGA, score of 0/1 at Week 8 compared to placebo recipients.

● Least squares-mean change from baseline in weekly-average WI-NRS at Week 8 was -50.6% in vixarelimab recipients compared to -29.4% in placebo recipients (mean difference 21.1%;

● Median change from baseline in weekly-average WI-NRS at Week 8 was -69.8% in vixarelimab recipients compared to -36.1% in placebo recipients.

● 30.4% of vixarelimab recipients achieved a PN-IGA score of 0/1 at Week 8 compared to 7.7% of placebo recipients (p=0.032).

● 52.2% of vixarelimab recipients demonstrated a ≥ 4-point reduction in weekly-average WI-NRS at Week 8 compared to 30.8% of placebo recipients (p=0.109).

In this Phase 2a trial, vixarelimab was well-tolerated by all subjects and no dose-limiting adverse experiences were observed.

There were no SAEs or atopic dermatitis flares.

Phase 2b Clinical Trial in Prurigo Nodularis

In December 2020, we announced the commencement of dosing in the Phase 2b clinical trial of vixarelimab in prurigo nodularis.

The Phase 2b trial is a randomized, double-blind, placebo-controlled study designed to investigate the efficacy, safety, and pharmacokinetics of vixarelimab in patients with prurigo nodularis.

The trial is expected to enroll approximately 180 patients experiencing severe pruritus.

Patients will be randomized 1:1:1:1 to receive vixarelimab 540 mg, 360 mg, 120 mg, or placebo as a once-monthly SC injection.

The primary efficacy endpoint is the percent change from baseline in the weekly-average WI-NRS at Week 16.

Key secondary endpoints include the proportion of patients achieving greater-than-or-equal-to 4-point weekly-average WI-NRS reduction at Week 16 and the proportion of patients achieving a 0/1 score (clear/almost clear) on the PN-IGA at Week 16.

KPL-404 is a humanized monoclonal antibody that is designed to inhibit the CD40-CD40L interaction, a key T-cell co-stimulatory signal critical for B-cell maturation and immunoglobulin class switching.

Since September 2017, we have had a license to conduct research and development on KPL-404 from Primatope, the company that owned or controlled the intellectual property related to KPL-404 and, in March 2019, we acquired the company.

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Mechanism of Action and External Clinical Proof of Concept

KPL-404 is designed to block the CD40/CD40L interaction by binding to and inhibiting signaling through CD40 receptor.

KPL-404 is designed to block the CD40/CD40L interaction by binding to and inhibiting signaling through the CD40 receptor.

CD40 is a member of the Tumor Necrosis Factor Receptor superfamily which is constitutively or inducibly expressed on the surface of a variety of immune and non-immune cell types including B cells, macrophages, dendritic cells, microglia, endothelial cells, epithelial cells, and keratinocytes and can also be upregulated on other cell types in the context of autoimmune disease.

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The role of CD40 in B cells has been extensively characterized and has been shown to be essential for productive primary and secondary humoral immune responses to T dependent antigens.

External clinical data point to the broad potential power of the mechanism has been established in rheumatoid arthritis, systemic lupus erythematosus, primary Sjogren’s syndrome, Graves’

disease and prevention of kidney transplant rejection.

External clinical data that point to the broad potential power of the mechanism has been established in RA, systemic lupus erythematosus, primary Sjogren’s syndrome, Graves’ disease and prevention of kidney transplant rejection.

Ongoing Phase 2 trials from competitors implicate additional indications for potential development, including type 1 diabetes, inflammatory bowel disease, prevention of liver transplant rejection, hidradenitis suppurativa, lupus nephritis and multiple sclerosis.

KPL-404 inhibits the signaling of CD40 and CD40L with low-single digit nanomolar affinity in vitro .

The presentation of KPL-404 is as a high-concentration, liquid formulation potentially suitable for subcutaneous administration at doses of up to 5mg/kg, which we believe may, allow for a higher delivered dose in one SC injection than all other competitors who are mainly limited to high dose IV formulations or SC formulations.

The presentation of KPL-404 is as a high-concentration, liquid formulation potentially suitable for SC administration at doses of up to 5mg/kg, which we believe may, allow for a higher delivered dose in one SC injection than all other competitors who are mainly limited to high dose IV formulations or SC formulations.

We believe high-dose IV and SC formulations do not fully antagonize signaling as evidenced by the generation of anti-drug antibodies ever at maximum delivered dose levels.

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In preclinical development, KPL-404 has been observed to have a favorable pharmacokinetic and toxicology profile and has shown activity in multiple non-human primate models of organ transplant rejection, as well as in multiple TDAR models.

The data in the graphs below show in a non-human primate TDAR model that KPL-404 had linear pharmacokinetics with low variability which translated into complete suppression of antibody responses to a novel antigen (keyhole limpet hemocyanin, or KLH) at drug levels achieving 100% receptor occupancy.

The data in the graphs below show in a non-human primate TDAR model that KPL-404 had linear pharmacokinetics with low variability which translated into complete suppression of antibody responses to a novel antigen (KLH) at drug levels achieving 100% receptor occupancy.

Phase 1 Program

In 2019, we began enrollment and dosing of subjects in a single-ascending-dose Phase 1 clinical trial of KPL-404 in healthy volunteers.

The first-in-human trial is designed to provide safety and pharmacokinetics data as well as receptor occupancy and TDAR data from a KLH challenge for single rising intravenous and subcutaneous dose levels of KPL-404.

We expect to report top-line data from this trial in the second half of 2020.

We are conducting a Phase 1 trial of KPL-404.

The Phase 1 trial is a randomized, double-blind, placebo-controlled, single-ascending-dose, first-in-human study that is divided into two parts:

a single dose of KPL-404 0.03 mg/kg, 0.3 mg/kg, 1 mg/kg, 3 mg/kg or 10 mg/kg IV and a single dose of KPL-404 1 mg/kg or 5 mg/kg SC.

The primary objective is to assess the safety and tolerability of KPL-404.

Secondary endpoints include pharmacokinetics, CD40 receptor occupancy, the immune response to the novel test antigen KLH in clinically relevant dose cohorts, and the anti-drug antibody response.

In November 2020 we announced preliminary data from the Phase 1 clinical trial.

All dose escalations occurred as per protocol with no dose limiting safety findings.

All 6 subjects dosed with KPL-404 3 mg/kg IV showed full receptor occupancy through Day 29, which corresponded with complete suppression of the TDAR to KLH through Day 29.

Consistent dose relatedness was shown in the lower dose level cohorts, including 0.03 mg/kg, 0.3 mg/kg, 1 mg/kg IV and 1 mg/kg SC.

Data collection for the higher dose level cohorts, 10 mg/kg IV and 5 mg/kg SC, is ongoing.

We believe the data support subsequent study in patients, including potential IV or SC monthly administration.

We expect final data and safety follow-up from all cohorts in the first half of 2021.

Discovery Activities

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In September 2017, we entered into a license agreement with Regeneron, or the Regeneron Agreement.

Pursuant to the Regeneron Agreement, Regeneron granted us an exclusive license under certain intellectual property rights controlled by Regeneron to develop and commercialize rilonacept worldwide, aside from Israel, Egypt, Turkey and select countries in the Middle East and northern Africa, which we refer to collectively as the Excluded Territory.

In the United States and Japan, our license is initially for all indications other than those involving local administration to the eye or ear, oncology, deficiency of the interleukin-1 receptor antagonist, or DIRA, and CAPS.

If we are successful in

receiving marketing approval for rilonacept in the United States for a new indication, the scope of the license granted to us will automatically expand to include DIRA and CAPS in the United States and Japan, and we will assume the sales and distribution of rilonacept in these additional indications.

Outside the United States and Japan, our license is for all indications other than local application to the eye or ear, oncology, CAPS, DIRA and certain periodic fever syndromes set forth in the Regeneron Agreement, collectively the Excluded Indications.

Under the Regeneron Agreement, we are obligated to use commercially reasonable efforts to develop and commercialize rilonacept outside of the Excluded Indications in our territory.

Upon receiving positive data in a Phase 3 clinical trial, Regeneron will transfer the biologics license application, or BLA, for rilonacept to us.

We made an upfront payment of $5.0 million to Regeneron and are obligated to make regulatory milestone payments of up to $27.5 million in the aggregate.

If we are successful in receiving marketing approval for rilonacept in the United States for a new indication, the scope of the license granted to us will automatically expand to include DIRA and CAPS in the United States and Japan, and we will assume the sales and distribution of rilonacept in these additional indications.

Outside the United States and Japan, our license is for all indications other than local application to the eye or ear, oncology, DIRA, CAPS and certain periodic fever syndromes set forth in the Regeneron Agreement, collectively the Excluded Indications.

Under the Regeneron Agreement, we are obligated to use commercially reasonable efforts to develop and commercialize

rilonacept outside of the excluded indications, or the Excluded Indications, in our territory.

Upon receiving positive data in a Phase 3 clinical trial, Regeneron transferred the biologics license application, or BLA, for rilonacept to us.

Under the Regeneron Agreement, we made an upfront payment of $5.0 million.

In addition, we made a $7.5 million payment in the fourth quarter of 2020 in connection with the achievement of a specified regulatory milestone event.

We are obligated to make a regulatory milestone payment of $20.0 million, which may be met in the first quarter of 2021.

If we are successful in receiving marketing approval for rilonacept in the United States for a new indication, such as recurrent pericarditis, we will assume the sales and distribution of rilonacept in DIRA and CAPS.

Thereafter, we have agreed to evenly split profits on our sales of rilonacept with Regeneron after deducting certain commercialization expenses subject to specified limits.

Regeneron has a right of first negotiation over our engagement of third parties to support our promotional activities in excess of a specified level and over the assignment or sale of our rights to any product we develop under the Regeneron Agreement to a third-party.

Furthermore, under certain circumstances, we will need Regeneron’s prior consent to assign our rights under the Regeneron Agreement.

The Regeneron Agreement will expire on the date on which we, our affiliates or sublicensees are no longer developing or commercializing any product containing rilonacept.

We may terminate the agreement for convenience at any time after the date that is 18 months after the effective date of the agreement with 180 days’

written notice or one year’s written notice if we terminate the agreement following U.S.

We may terminate the agreement for convenience at any time after the date that is eighteen months after the effective date of the agreement with 180 days’ written notice or one year’s written notice if we terminate the agreement following U.S.

marketing approval of a rilonacept product developed by us.

We may also terminate with three months’

written notice if we reasonably determine that rilonacept is unsafe in the indications we are pursuing.

Regeneron may terminate the agreement if there is a consecutive twelve (12) month period during which we do not conduct any material development or commercialization activities or we do not grant a sublicense to a third‑party to do so, or if we challenge Regeneron’s patent rights in any country in our territory.

We may also terminate with three months’ written notice if we reasonably determine that rilonacept is unsafe in the indications we are pursuing.

Regeneron may terminate the agreement if there is a consecutive twelve month period during which we do not conduct any material development or commercialization activities or we do not grant a sublicense to a third-party to do so, or if we challenge Regeneron’s patent rights in any country in our territory.

Either party may terminate the agreement in the event of a material breach by the other party that remains uncured for 90 days (or 30 days for payment-related breaches), or by either party due to the insolvency or bankruptcy of the other party.

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We must use commercially reasonable efforts to develop and commercialize the licensed products.

We made an upfront payment of $8.0 million to MedImmune and are obligated to make future clinical, regulatory and initial sales milestone payments of up to $72.5 million in the aggregate for the first two indications, including a milestone payment of $10.0 million which we paid upon the occurrence of a specified regulatory milestone, and clinical and regulatory milestone payments of up to $15.0 million in the aggregate for each subsequent indication.

We are also obligated to make milestone payments to MedImmune of up to $85.0 million upon the achievement of annual net sales thresholds up to, but excluding, $1.0 billion in annual net sales as well as additional milestone payments

aggregating up to $1.1 billion upon the achievement of additional annual net sales thresholds starting at $1.0 billion and higher.

Under the MedImmune Agreement, we made an upfront payment of $8.0 million.

In addition, we made a $5 million pass-through payment and a $10 million milestone payment in year ended December 31, 2019 related to the achievement of specified clinical milestone events achieved during the year ended December 31, 2018.

We are also obligated to make future clinical, regulatory and initial sales milestone payments of up to $57.5 million in the aggregate for the first two indications.

In addition, we are also obligated to make future clinical and regulatory milestone payments of up to $15.0 million in the aggregate for each subsequent indication.

In July 2020, we entered into an amendment to the MedImmune Agreement to establish a new coronavirus field and defer the payment of certain development and regulatory milestones as applied to the new coronavirus field.

We are obligated to make milestone payments to

MedImmune of up to $85.0 million upon the achievement of annual net sales thresholds up to, but excluding, $1.0 billion in annual net sales as well as additional milestone payments aggregating up to $1.1 billion upon the achievement of additional annual net sales thresholds starting at $1.0 billion and higher.

Commencing on the first commercial sale of licensed products, we are obligated to pay tiered royalties on escalating tiers of annual net sales of licensed products starting in the low double-digit percentages and ending at twenty percent.

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For example, in the United States, a reference biological product is granted 12 years of data exclusivity from the time of first licensure of the product, which means that the FDA cannot make effective the approval of a biosimilar product that references the biologic product until 12 years from the date on which the reference product was first licensed.

In the European Union, new products authorized for marketing may qualify for eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization.

The two‑year period may be extended to three years if during the first eight years a new therapeutic indication with significant clinical benefit over existing therapies is approved.

Furthermore, if a product candidate that has received orphan designation is subsequently approved for the disease or condition for which it has such designation, the product may be entitled to orphan drug exclusivity, which generally grants seven years of market exclusivity in the United States and up to 10 years of market exclusivity in the European Union, and such period may run contemporaneously with the other exclusivities that may apply.

In the European Union, an orphan product can also obtain an additional two years of market exclusivity for pediatric studies.

In the EEA, new products authorized for marketing (i.e.

reference products) may qualify for eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization.

The two-year period may be extended to three years if during the first eight years the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

Furthermore, if a product candidate that has received orphan designation is subsequently approved for the disease or condition for which it has such designation, the product may be entitled to orphan drug exclusivity, which generally grants seven years of market exclusivity in the United States and up to 10 years of market exclusivity in the EEA, and such period may run contemporaneously with the other exclusivities that may apply.

In the EEA, the ten-year period of market exclusivity is extended by two years for drugs that also have complied with an agreed pediatric investigation plan, or PIP, granted at the time of review of the orphan drug designation.

In the United States, an additional six-month period of pediatric exclusivity may be available as an extension to any existing non-patent regulatory exclusivity period if the sponsor has conducted and submitted pediatric studies in response to a written request from the FDA.

Additionally, our eligibility for regulatory exclusivity may depend in part on the indications for which we seek regulatory approval of our product candidates, which may depend on the data we receive from our clinical studies, and accordingly, may change over time, and the laws and regulations governing regulatory exclusivity may change in various jurisdictions as the political focus on drug exclusivity increases.

For risk related to regulatory exclusivity matters, see “Risk Factors—Risks related to product development and regulatory approval.”

The MedImmune Agreement will remain in effect until the expiration of the royalty term in all countries for all licensed products.

The MedImmune Agreement may be terminated earlier at any time by us with at least 90 days’

prior notice, by either party in the event of material breach by the other party that remains uncured for 90 days, by either party for insolvency or bankruptcy of the other party, or immediately by MedImmune if we challenge the licensed patents.

The MedImmune Agreement may be terminated earlier at any time by us with at least 90 days’ prior notice, by either party in the event of material breach by the other party that remains uncured for 90 days, by either party for insolvency or bankruptcy of the other party, or immediately by MedImmune if we challenge the licensed patents.

Biogen Asset Purchase Agreement

In September 2016, we completed the acquisition of certain assets of Biogen pursuant to an asset purchase agreement, or the Biogen Agreement.

Pursuant to the Biogen Agreement, we acquired all of Biogen’s right, title and interest in and to certain assets used in or relating to KPL‑716 and other antibodies covered by certain patent rights, together the Acquired Assets, including patents and other intellectual property rights, clinical data, certain contracts, know‑how and inventory.

In addition, Biogen granted us a non‑exclusive, sublicensable, worldwide license to certain background patent rights related the KPL‑716 program.

Pursuant to the Biogen Agreement, we acquired all of Biogen’s right, title and interest in and to certain assets used in or relating to vixarelimab and other antibodies covered by certain patent rights, together the Acquired Assets, including patents and other intellectual property rights, clinical data, certain contracts,

know-how and inventory, which we refer to collectively as the acquired assets, or the Acquired Assets.

In addition, Biogen granted us a non-exclusive, sublicensable, worldwide license to certain background patent rights related the vixarelimab program.

Under the Biogen Agreement, we are obligated to use commercially reasonable efforts to develop and commercialize the Acquired Assets.

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We must pay such royalties on a product-by-product and country-by-country basis until the latest to occur of the expiration of patents that cover an Antibody Product, the expiration of regulatory exclusivity or the tenth anniversary of first commercial sale of such product in such country.

We have also agreed to pay certain obligations under third‑party contracts retained by Biogen that relate to KPL‑716.

We have also agreed to pay certain obligations under third-party contracts retained by Biogen that relate to vixarelimab.

In countries where patents covering Antibody Products have issued, the statutory expiration date is 2034, not including any patent term extensions or adjustments.

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In the European Union, new products authorized for marketing may qualify for eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization.

The two‑year period may be extended to three years if during the first eight years a new therapeutic indication with significant clinical benefit over existing therapies is approved.

In the European Union, an orphan product can also obtain an additional two years of market exclusivity for pediatric studies.

In the EEA, new products authorized (i.e.

reference products) for marketing may qualify for eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization.

The two-year period may be extended to three years if the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

Furthermore, if a product candidate that has received orphan designation is subsequently approved for the disease or condition for which it has such designation, the product may be entitled to orphan drug exclusivity, which generally grants seven years of market exclusivity in the United States and up to 10 years of market exclusivity in the EEA, and such period may run contemporaneously with the other exclusivities that may apply.

For risk related to regulatory exclusivity matters, see “Risk Factors—Risks related to product development and regulatory approval.”

on drug exclusivity increases.

For risk related to regulatory exclusivity matters, see “Risk Factors—Risks related to product development and regulatory approval.”

Under the Biogen Agreement, Biogen has a time-limited right of first negotiation to purchase the assets we acquired from Biogen or obtain a license to exploit Antibody Products, in each case, in the event we decide to sell the acquired assets, including through the sale of our company, or out-license the rights to the Antibody Products.

The Biogen Agreement will remain in effect until expiration of all payment obligations in all countries related to the last antibody product subject to the Biogen Agreement.

The Biogen Agreement may be terminated by us with

90 days’

prior notice, by either party in the event of a material breach by the other party that remains uncured for 90 days (or 30 days for payment‑related breaches) or by both parties upon mutual consent.

The Biogen Agreement may be terminated by us with 90 days’ prior notice, by either party in the event of a material breach by the other party that remains uncured for 90 days (or 30 days for payment-related breaches) or by both parties upon mutual consent.

In the event of a termination, the Acquired Assets, including certain licenses and rights related thereto, will revert to Biogen, and, upon written request by Biogen, we are required to grant to Biogen an exclusive, worldwide, sub-licensable license to certain of our intellectual property related to the Acquired Assets, including know-how and patent rights.

Primatope Stock Purchase Option Agreement

In September 2017, we entered into a stock purchase option agreement, or the Primatope Agreement, with Primatope, pursuant to which we were granted a license to certain intellectual property rights owned or controlled by Primatope to research, develop, and manufacture the preclinical antibody, KPL-404, and an exclusive call option through April 2018 to purchase all of the outstanding securities of Primatope with up to three extensions periods through mid-January 2019.

Upon execution of the agreement, we made $0.5 million in upfront payments for the initial option period and we made payments totaling $0.8 million for extending option period through mid-January 2019.

During the option periods, we conducted research and preclinical work to assess the viability of the program.

In January 2019, we exercised the call option and in March 2019, we acquired all of the outstanding securities of Primatope, or Primatope Acquisition.

The aggregate amount of upfront and contingent payments we paid to the former Primatope shareholders to acquire Primatope was comprised of (1) $15.0 million paid at closing in March 2019, comprised of upfront consideration of $10.0 million and milestone payments of $5.0 million which had been achieved as of the closing date, and (2) $3.0 million paid in June 2019 for the final milestone payment, which was achieved following the closing during the six months ended June 30, 2019, each paid in a combination of cash and our Class A common shares (inclusive of escrow and holdback share amounts) in accordance with the Primatope Agreement.

We released the escrow and issued Class A common shares that were held back at closing in June 2020 and issued the Class A common shares that were held back at the final milestone payment in September 2020.

As a result of the Primatope Acquisition, we acquired the rights to an exclusive license to certain intellectual property rights controlled by Beth Israel Deaconess Medical Center, Inc., or BIDMC, to make, use, develop and commercialize KPL-404 under the BIDMC l icense agreement, or BIDMC Agreement.

Under the BIDMC Agreement, we are solely responsible for all development, regulatory and commercial activities and costs.

We are also responsible for costs related to filing, prosecuting and maintaining the licensed patent rights.

Under the BIDMC Agreement, we are obligated to pay an insignificant annual maintenance fee as well as clinical and regulatory milestone payments of up to an aggregate of $1.2 million to BIDMC.

We are also obligated to pay a low single-digit royalty on annual net sales of products licensed under the agreement, if approved.

Manufacturing

We do not currently own or operate any late stage manufacturing facilities.

Although we built early stage manufacturing facilities to produce drug substance to support certain of our preclinical and early clinical studies, we rely on third parties to manufacture all of our drug product candidates.

We have entered into a clinical supply agreement with Regeneron to manufacture and supply rilonacept for our clinical trials.

Regeneron has also agreed to provide commercial drug material until at least the earlier of four years after U.S.

marketing approval or seven years after the effective date of the agreement.

We believe that we have sufficient quantities of drug substance to supply our Phase 2 clinical trial of mavrilimumab for the treatment of GCA.

We also acquired a certain amount of finished mavrilimumab drug product that we plan to use in this clinical trial, and have entered into a fill/finish supply agreement with a contract manufacturing organization, or CMO, to produce additional finished mavrilimumab drug product from our current inventory of drug substance.

There are certain components, for example, media and feed, used to produce our current mavrilimumab inventory that the CMO is not able to use in our future manufacturing process.

We and this CMO or any other CMO that we enter into agreement with to manufacture mavrilimumab will need to find alternative components to replace the media and feed that had been used by MedImmune to date in the manufacture of mavrilimumab.

We acquired a certain amount of KPL‑716 drug substance from Biogen from which we produced KPL‑716 drug product using a CMO.

In addition, we have engaged CMOs to manufacture KPL‑716 drug substance and drug product currently in use in our on-going clinical trials.

We intend to use CMOs for development and scale‑up work for any future clinical trials and eventual commercialization of KPL‑716, if approved.

We engaged CMOs to produce our clinical drug substance for certain preclinical studies, but we intend to produce our preclinical product candidates for Phase 1 and Phase 2 studies in our own early stage manufacturing facilities.

Although we have built a development and manufacturing facility to produce drug substance to support certain research, preclinical and other clinical development for our product candidates, we rely, and expect to continue to rely, on third parties for the manufacture of our late-stage product candidates and certain of our early-stage product candidates for the majority of our clinical development efforts, as well as for the potential commercial manufacture of our product candidates, if approved.

We have also entered into a Supply Agreement with Regeneron pursuant to which Regeneron has the exclusive right to manufacture and supply all of our requirements of rilonacept for clinical development.

If Regeneron determines to discontinue the supply of rilonacept to us, it must use its reasonable efforts to transfer all relevant documentation,

materials and technology necessary for the manufacture of rilonacept to us or our designee.

The Supply Agreement terminates upon the termination of the Regeneron Agreement or the transfer of technology related to the bulk manufacture of rilonacept.

Regeneron, in turn, relies upon a third-party CMO to conduct fill/finish operations for rilonacept.

Under certain circumstances, we or Regeneron could initiate a technology transfer to either us or another CMO to manufacture rilonacept.

We also have entered into an agreement with a CMO to produce mavrilimumab beyond our current inventory and have engaged CMOs to manufacture vixarelimab drug substance and drug product currently in use in our on-going clinical trials.

We intend to use CMOs for development and scale-up work for any future clinical trials and eventual commercialization of mavrilimumab and vixarelimab, if approved.

We have also engaged CMOs to produce our clinical drug substance for certain preclinical studies, but we intend to produce our preclinical product candidates for Phase 1 and Phase 2 studies in our own early stage manufacturing facilities.

We plan to continue to use CMOs to produce the corresponding drug product clinical material.

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Our team is experienced in commercial leadership and we intend to expand our capabilities in parallel with the development path of our product candidates.

If the FDA approves rilonacept for recurrent pericarditis, we intend to market and commercialize rilonacept in the United States by developing our own sales, marketing and medical affairs organizations targeting a subset of cardiologists and rheumatologists currently treating pericarditis.

For our other product candidates, we intend to establish commercialization strategies for each as we approach potential marketing approval and, due to the specialization among physicians treating the indications we are targeting, we expect to be able leverage our then‑existing sales, marketing and medical affairs organizations.

If the FDA approves rilonacept for recurrent pericarditis, we intend to market and commercialize rilonacept in the United States and, in anticipation of a potential commercial launch, we are establishing our own a specialty cardiology salesforce that will be complemented by our current medical affairs and payor and patient services teams as well as an efficient digital marketing effort by our current marketing team targeting a subset of cardiologists currently treating pericarditis.

For our other product candidates, we intend to establish commercialization strategies for each as we approach potential marketing approval and, due to the specialization among physicians treating the indications we are targeting, we expect to be able leverage our then-existing medical affairs, payor and patient services, and marketing organizations.

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products.

We face potential competition from many different sources, including pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions.

Any product candidates that we successfully develop and commercialize, including rilonacept, mavrilimumab and KPL‑716, and any other product candidates that we may develop, may compete with existing products and new products that may become available in the future.

Any product candidates that we successfully develop and commercialize, including rilonacept, mavrilimumab, vixarelimab and KPL-404, and any other product candidates that we may develop, may compete with existing products and new products that may become available in the future.

Our competitors may have significantly greater financial resources, established presence in the market, expertise in research and development, manufacturing, preclinical and clinical testing, obtaining regulatory approvals and reimbursement and marketing approved products than we do.

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Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

The key competitive factors affecting the success of rilonacept, mavrilimumab and KPL‑716, and any other product candidates that we develop, if approved, are likely to be our product candidates, including their efficacy, safety, convenience, price, the level of generic competition and the availability of reimbursement from government and other third‑party payors.

The key competitive factors affecting the success of rilonacept, mavrilimumab, vixarelimab and KPL-404 and any other product candidates that we develop, if approved, are likely to be our product candidates, including their efficacy, safety, convenience, price, the level of generic competition and the availability of reimbursement from government and other third-party payors.

Our commercial opportunity for any of our product candidates could be reduced or eliminated if our competitors develop and commercialize products that are more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop.

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We are aware of the following products currently marketed or in clinical development for the treatment of the diseases that we are initially targeting:

We are not aware of any therapies currently approved by the FDA for the treatment of recurrent pericarditis, our lead indication for rilonacept.

Anakinra (KINERET), produced by Sobi, is an FDA‑approved agent that inhibits IL‑1α

and IL‑1β

signaling and is approved for RA and CAPS.

Canakinumab (ILARIS), produced by Novartis, is a monoclonal antibody which inhibits IL‑1β

signaling and is approved for use in CAPS, tumor necrosis factor receptor associated period syndrome, hyperimmunoglobulin D syndrome, familiar Mediterranean fever and active systemic juvenile idiopathic arthritis.

There are also other therapies modulating IL‑1α

or IL‑1β

which are in various stages of clinical development for diseases other than recurrent pericarditis from AbbVie, Inc., or AbbVie, Janssen, and Handok Inc.

Tocilizumab (ACTEMRA), produced by Hoffmann—La Roche AG, or Roche, and Chugai Pharmaceutical Co., Ltd., is an IL‑6 inhibitor that is approved by the FDA for the treatment of GCA on top of a concomitant corticosteroid taper.

In addition, Eli Lilly and AbbVie are conducting clinical trials for oral janus kinase inhibitors.

is recruiting a Phase 3 clinical trial with their anti‑IL‑6 program and Novartis International AG, is recruiting a trial with their IL-17 antagonist secukinumab (Cosentyx).

Recurrent Pericarditis:

We are not aware of any approved therapies in recurrent pericarditis, but are aware of one program (RPH-104) being developed by R-Pharm International, which inhibits IL-1β/IL-1F2-induced signaling and is in Phase 2 development in recurrent pericarditis subjects in Russia.

Dual IL-1α and IL-1β Inhibition:

Anakinra (KINERET), marketed by Swedish Orphan Biovitrum AB, is currently approved for use in Rheumatoid Arthritis, CAPS and DIRA.

We are not aware of any active, industry sponsored development programs using anakinra seeking a label for recurrent pericarditis.

IL-1β Inhibition Alone:

Canakinumab (ILARIS), marketed by Novartis Pharmaceuticals Corporation, is currently approved for use in CAPS, Tumor Necrosis Factor Receptor Associated Periodic Syndrome (TRAPS), Hyperimmunoglobulin D Syndrome (HIDS), Mevalonate Kinase Deficiency (MKD) and Familial Mediterranean Fever (FMF), Still’s Disease and Systemic Juvenile Idiopathic Arthritis (SJIA).

We are not aware of any active, industry sponsored development programs using canakinumab seeking a label for recurrent pericarditis.

Additionally, Novartis is also developing gevokizumab for use in oncologic indications.

IL-1α Inhibition Alone:

There are other therapies which modulate IL-1α in preclinical and clinical development for diseases other than recurrent pericarditis from Johnson & Johnson and XBIOTECH USA, INC.

We are not aware of any active, industry sponsored development programs for these programs seeking a label for recurrent pericarditis.

Giant Cell Arteritis:

Tocilizumab (ACTEMRA), produced by Hoffmann—La Roche AG, or Roche, and Chugai Pharmaceutical Co., Ltd., is an IL-6 inhibitor that is approved by the FDA for the treatment of GCA on top of a concomitant corticosteroid taper.

In addition, Eli Lilly and Company AbbVie, Inc.

are conducting clinical trials for oral janus kinase inhibitors;

Novartis International AG, is recruiting a trial with their IL-17 antagonist secukinumab (Cosentyx) and Janssen Global Services, LLC is in active development with their IL-23 antagonist guselkumab (Tremfya).

We are also pursuing mavrilimumab development for the treatment of COVID-19 pneumonia and hyperinflammation.

There are currently hundreds of active, industry sponsored clinical trials testing many different mechanisms of action for the treatment of COVID-19 related therapeutic areas in addition to the approved vaccines, and the many other clinical trials testing vaccines, for the prevention of COVID-19.

GM-CSF Antagonists:

There are also four other programs in clinical development in various indications that modulate GM‑CSF signaling from GlaxoSmithKline plc, or GSK, Izana Bioscience Ltd., I-MAB Biopharma and Humanigen, Inc.

We are not aware of any therapies currently approved by the FDA for the treatment of prurigo nodularis.

Menlo Therapeutics Inc., Trevi Therapeutics, Inc., Regeneron, and Galderma SA, or Galderma, have programs in various stages of clinical development for the treatment of prurigo nodularis.

Novartis AG, Abbvie and Boehringer Ingelheim International GmbH, Biogen Inc.

/ UCB, Viela Bio, Astellas, Sanofi S.A.

/ImmuNext Inc.

and Anelixis Therapeutics all have active development programs with either CD40 or CD40L antagonists.

There are also five other programs in clinical development outside of GCA in various indications that modulate GM-CSF signaling from GlaxoSmithKline plc, or GSK (otilimab), Izana Bioscience Ltd.

(namilumab), I-MAB Biopharma (plonmarlimab), Roivant Sciences Ltd.

(gimsilumab) and Humanigen, Inc.

(lenzilumab).

All of these competitive programs target the GM-CSF ligand itself versus targeting the GM-CSF receptor.

We are not aware of any therapies currently approved by the FDA for the treatment of prurigo nodularis and we are also not aware of any programs in preclinical or clinical development targeting OSMRβ antagonism.

Prurigo Nodularis:

Trevi Therapeutics, Inc., is conducting a Phase 2/3 study with their k -opioid antagonist, nalbuphine ER;

Galderma SA is conducting a Phase 3 study with their IL-31 specific antagonist nemolizumab;

and, Regeneron / Sanofi SA are conducting a Phase 3 study with their IL-4 antagonist dupilumab (Dupixent).

There are various programs in clinical development antagonizing the CD40 / CD40L signaling pathway that can be distinguished by the potential to be administered subcutaneously and those programs, that due to their high required doses or short plasma half-lives, are currently being studied as intravenous only:

Intravenous Administration Only:

Astellas Pharma Inc.

is developing bleselumab (anti-CD40R);

Viela Bio (currently in the process of being acquired by Horizon Therapeutics plc) is developing the Tn3 fusion protein, VIB4920 (anti-CD40L);

are developing dapirolizumab pegol (anti-CD40L);

and, Eledon Pharmaceuticals, Inc.

(formerly Novus, and also formerly Anelixis) are developing AT-1501 (anti-CD40L).

Potential Subcutaneous Administration:

Novartis A.G.

is developing CFZ-533, or iscalimab (anti-CD40), Sanofi S.A./ImmuNext Inc.

are developing SAR441344 (anti-CD40L), and Abbvie, Inc.

and Boehringer Ingelheim International GmbH are developing ravagalimab (anti-CD40).

Intellectual Property

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patent covering rilonacept as a composition of matter has a statutory expiration date in 2019, not including patent term adjustment, and relevant counterparts outside of the United States are expected to expire between 2019 and 2023, in each case, not including any patent term extensions.

If we are successful in obtaining regulatory approval of rilonacept for the treatment of recurrent pericarditis and receive orphan designation, we would rely on orphan exclusivity, which generally grants seven years of marketing exclusivity in the United States and 10 years of marketing exclusivity in Europe.

See “—License agreement with Regeneron”

above for additional information on our rights under the Regeneron Agreement.

The FDA granted orphan drug designation for rilonacept for the treatment of pericarditis, which includes recurrent pericarditis.

If we are successful in obtaining regulatory approval of rilonacept for the treatment of recurrent pericarditis, we would rely on orphan exclusivity, which generally grants seven years of marketing exclusivity in the United States and, if orphan designation is similarly granted in the European Union, 10 years of marketing exclusivity in Europe.

See “—License agreement with Regeneron” above for additional information on our rights under the Regeneron Agreement.

We have an exclusive license under the MedImmune Agreement to granted patents and pending patent applications in the United States and numerous other jurisdictions relating to mavrilimumab.

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As of December 31, 2020, the patent rights in licensed under the MedImmune Agreement relating to our program include three granted patents in the United States and 106 patents granted in other jurisdictions, including Canada, Australia and selected countries in Europe and Asia.

In addition, the patent rights in‑licensed under the MedImmune Agreement relating to our program include patent applications that are pending in the United States and selected countries in Asia and Latin America.

In addition, the patent rights in licensed under the MedImmune Agreement relating to our program include patent applications that are pending in the United States, Europe, Canada, and selected countries in Asia and Latin America.

The composition of matter patents for mavrilimumab generally have statutory expiration dates in 2027, although the term of some U.S.

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Patent term extension could extend the expiration date of one patent in the United States and patents in certain other jurisdictions, each in accordance with applicable law.

There can be no assurances that patents will issue from any

pending patent applications.

See “—License agreement with MedImmune”

above for additional information on our rights under the MedImmune Agreement.”

We own, via our acquisition of certain assets from Biogen, granted patents and pending patent applications in the United States and numerous other jurisdictions relating to KPL‑716.

These patents and patent applications cover KPL‑716 as a composition of matter and its use.

As of December 31, 2019, the patent rights acquired from Biogen include four patents granted in the United States and 32 patents granted in other jurisdictions, including Australia, Mexico and selected countries in Europe and Asia.

In addition, the patent rights acquired from Biogen include patent applications pending in the United States, Europe, Canada, and selected countries in Asia.

The issued composition of matter patents for KPL‑716 have statutory expiration dates in 2034.

There can be no assurances that patents will issue from any pending patent applications.

See “—License agreement with MedImmune” above for additional information on our rights under the MedImmune Agreement.

We own, via our acquisition of certain assets from Biogen, granted patents and pending patent applications in the United States and numerous other jurisdictions relating to vixarelimab.

These patents and patent applications cover vixarelimab as a composition of matter and its use.

As of December 31, 2020, the patent rights acquired from Biogen include four patents granted in the United States and 38 patents granted in other jurisdictions, including Australia, Mexico, South Africa and selected countries in Europe and Asia.

In addition, the patent rights acquired from Biogen include patent applications pending in the United States, Europe, Canada, and selected countries in Asia and Latin America.

The issued composition of matter patents for vixarelimab have statutory expiration dates in 2034.

Patent term extension could extend the expiration date of one patent in the United States and patents in certain other jurisdictions, each in accordance with applicable law.

There can be no assurance that patents will issue from any of our pending patent applications.

See “—Biogen asset purchase agreement”

above for additional information on our rights under the Biogen Agreement.

The term of individual patents depends upon the legal term for patents in the countries in which they are obtained.

In most countries, including the United States, the patent term is 20 years from the earliest filing date of a non‑provisional patent application.

In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO, in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier expiring patent.

In certain countries, the term of a patent that covers a drug product may also be eligible for patent term extension when regulatory approval is granted, provided the legal requirements are met.

In the future, if and when our drug candidates receive approval by the FDA or comparable regulatory authorities in other jurisdictions, provided the legal requirements are met, we expect to apply for patent term extensions on issued patents covering those drugs, depending upon the length of the clinical trials for each drug and other factors.

There can be no assurance that any of our pending patent applications will issue or that we will benefit from any patent term extension or favorable adjustment to the term of any of our patents.

See “—Biogen asset purchase agreement” above for additional information on our rights under the Biogen Agreement.

We own, via our acquisition of Primatope, granted patents and pending patent applications in the United States and numerous other jurisdictions relating to KPL 404.

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These patents and patent applications cover KPL 404 as a composition of matter and its use.

As of December 31, 2019, the patent rights acquired from Primatope include two patents granted in the United States.

As of December 31, 2020, the patent rights acquired from Primatope include three patents granted in the United States.

In addition, the patent rights acquired from Primatope include patent applications pending in the United States, Europe, Canada, and selected countries in Asia.

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There can be no assurance that patents will issue from any of our pending patent applications.

The term of individual patents depends upon the legal term for patents in the countries in which they are obtained.

In most countries, including the United States, the patent term is 20 years from the earliest filing date of a non provisional patent application.

In certain countries, the term of a patent that covers a drug product may also be eligible for patent term extension when regulatory approval is granted, provided the legal requirements are met.

In the future, if and when our drug candidates receive approval by the FDA or

comparable regulatory authorities in other jurisdictions, provided the legal requirements are met, we expect to apply for patent term extensions on issued patents covering those drugs, depending upon the length of the clinical trials for each drug and other factors.

There can be no assurance that any of our pending patent applications will issue or that we will benefit from any patent term extension or favorable adjustment to the term of any of our patents.

Government Regulation

Government authorities in the United States at the federal, state and local level and in other countries and jurisdictions, including the European Union, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug products, such as rilonacept, mavrilimumab and our other product candidates.

Generally, before a new drug can be marketed, considerable

data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific for each regulatory authority, submitted for review and approved by the regulatory authority.

Generally, before a new drug can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific for each regulatory authority, submitted for review and approved by the regulatory authority.

Government Regulation of Biological Products

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Failure to comply with the applicable U.S.

requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending biologic license applications, or BLAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits or civil or criminal penalties.

The process required by the FDA before a biologic may be marketed in the United States generally involves the following:

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● A determination by FDA within 60 days of its receipt of a BLA to accept the filing for review;

Satisfactory completion of one or more FDA pre‑approval inspections of the manufacturing facility or facilities where the biologic will be produced to assess compliance with cGMPs to assure that the facilities, methods and controls used in product manufacture are adequate to preserve the biologic’s identity, strength, quality and purity;

● Satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the biologic will be produced to assess compliance with cGMPs to assure that the facilities, methods and controls used in product manufacture are adequate to preserve the biologic’s identity, strength, quality and purity;

● Potential FDA audit of the preclinical or clinical trial sites that generated the data in support of the BLA;

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Before testing any biological product candidate, including our product candidates, in humans, the product candidate must undergo rigorous preclinical testing.

The preclinical development stage generally involves laboratory

evaluations of the chemistry, formulation and stability of the product candidate, as well as trials to evaluate toxicity in animals, which support subsequent clinical testing.

The preclinical development stage generally involves laboratory evaluations of the chemistry, formulation and stability of the product candidate, as well as trials to evaluate toxicity in animals, which support subsequent clinical testing.

The conduct of the preclinical tests must comply with federal regulations and requirements, including GLP regulations.

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BLA Review and Approval

Assuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications.

The BLA must contain proof of safety, purity, potency and efficacy and may include both negative and ambiguous results of preclinical studies and clinical trials as well as positive findings.

Data may come from company‑sponsored clinical trials intended to test the safety and efficacy of a product’s use or from a number of alternative sources, including studies initiated by investigators.

Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a product’s use or from a number of alternative sources, including studies initiated by investigators.

To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational product to the satisfaction of the FDA.

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The FDA does not always meet its PDUFA goal dates, and the review process is often significantly extended by FDA requests for additional information or clarification.

This review typically takes twelve months from the date the BLA is submitted to the FDA because the FDA has approximately two months to make a “filing”

This review typically takes twelve months from the date the BLA is submitted to the FDA because the FDA has approximately two months to make a “filing” decision.

Before approving a BLA, the FDA will typically conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether the manufacturing processes and facilities comply with cGMPs.

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The FDA is not bound by recommendations of an advisory committee, but it considers such recommendations when making decisions on approval.

The FDA likely will re‑analyze the clinical trial data, which

could result in extensive discussions between the FDA and the applicant during the review process.

The FDA likely will re-analyze the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the review process.

The FDA also may require submission of a Risk Evaluation and Mitigation Strategy, or REMS, plan if it determines that a REMS is necessary to ensure that the benefits of the drug outweigh its risks and to assure the safe use of the biological product.

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If a product receives regulatory approval, the approval is limited to the conditions of use (e.g., patient population, indication) described in the label.

Further, depending on the specific risk(s) to be addressed, the FDA may require that contraindications, warnings or precautions be included in the product labeling, require that post‑approval trials, including Phase 4 clinical trials, be conducted to further assess a product’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.

The FDA may prevent or limit further marketing of a product based on the results of post‑marketing trials or surveillance programs, or new safety findings after market introduction.

Further, depending on the specific risk(s) to be addressed, the FDA may require that contraindications, warnings or precautions be included in the product labeling, require that post-approval trials, including Phase 4 clinical trials, be conducted to further assess a product’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.

The FDA may prevent or limit further marketing of a product based on

the results of post-marketing trials or surveillance programs, or new safety findings after market introduction.

After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

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Orphan drug designation must be requested before submitting a BLA.

After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed

publicly by the FDA.

After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

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

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If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication for seven years from the date of such approval, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity by means of greater effectiveness, greater safety, by providing a major contribution to patient care or in instances of drug supply issues.

Orphan drug exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval before we do of the same product, as defined by the FDA, for the same indication we are seeking, or if our product candidate is determined to be contained within the scope of the competitor’s product for the same indication or disease.

If one of our products designated as an orphan drug receives marketing approval for an indication broader than that which is designated, it may not be entitled to orphan drug exclusivity.

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In addition, a product may be eligible for accelerated approval.

Drug and biologics 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.

Drug and biologics intended to treat serious or life-threatening diseases or conditions may be eligible for accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be

measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials to verify the predicted clinical benefit.

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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.

In addition, a sponsor can request designation of a product candidate as a “Breakthrough Therapy.”

A Breakthrough Therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life‑threatening disease or condition, and preliminary clinical evidence indicates

that the drug or biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

In addition, a sponsor can request designation of a product candidate as a “Breakthrough Therapy.” A Breakthrough Therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The designation includes all of the Fast Track program features, as well as more intensive FDA interaction and guidance.

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Post-approval Requirements

Following approval of a new product, the manufacturer and the approved product are subject to pervasive and continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting of adverse experiences with the product, product sampling and distribution restrictions, complying with promotion and advertising requirements, which include restrictions on promoting drugs for unapproved uses or patient populations (i.e., “off‑label use”) and limitations on industry‑sponsored scientific and educational activities.

Following approval of a new product, the manufacturer and the approved product are subject to pervasive and continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting of adverse experiences with the product, product sampling and distribution restrictions, complying with promotion and advertising requirements, which include restrictions on promoting drugs for unapproved uses or patient populations (i.e., “off-label use”) and limitations on industry-sponsored scientific and educational activities.

Although physicians may prescribe legally available products for off-label uses, manufacturers may not market or promote such uses.

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Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.

The discovery of conditions that violate these rules, including failure to conform to cGMPs, could result in enforcement actions, and the discovery of problems with a product after approval may result in restrictions on a product, manufacturer or holder of an approved BLA, including voluntary recall.

The discovery of conditions that violate these

rules, including failure to conform to cGMPs, could result in enforcement actions, and the discovery of problems with a product after approval may result in restrictions on a product, manufacturer or holder of an approved BLA, including voluntary recall.

Once an approval or clearance of a drug is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information;

imposition of post‑market or clinical trials to assess

new safety risks;

imposition of post-market or clinical trials to assess new safety risks;

or imposition of distribution or other restrictions under a REMS program.

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A reference biological product is granted 12 years of data exclusivity from the time of first licensure of the product, and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product.

“First licensure”

typically means the initial date the particular product at issue was licensed in the United States.

Date of first licensure does not include the date of licensure of (and a new period of exclusivity is not available for) a supplement for the reference product for a subsequent application filed by the same sponsor or manufacturer of the reference product (or licensor, predecessor in interest or other related entity) for a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device or strength or for a modification to the structure of the biological product that does not result in a change in

safety, purity or potency.

“First licensure” typically means the initial date the particular product at issue was licensed in the United States.

Therefore, one must determine whether a new product includes a modification to the structure of a previously licensed product that results in a change in safety, purity or potency to assess whether the licensure of the new product is a first licensure that triggers its own period of exclusivity.

Whether a subsequent application, if approved, warrants exclusivity as the “first licensure”

of a biological product is determined on a case‑by‑case basis with data submitted by the sponsor.

Whether a subsequent application, if approved, warrants exclusivity as the “first licensure” of a biological product is determined on a case-by-case basis with data submitted by the sponsor.

The BPCIA is complex and continues to be interpreted and implemented by the FDA.

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European Union Drug Development, Review and Approval

In the European Union, our product candidates also may be subject to extensive regulatory requirements.

As in the United States, medicinal products can be marketed only if a marketing authorization from the competent regulatory agencies has been obtained.

In the European Union, or EU, our product candidates also may be subject to extensive regulatory requirements.

As in the United States, medical products can be marketed only if a marketing authorization from the competent regulatory agencies has been obtained whether or not product candidates obtain FDA approval for a pharmaceutical product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can start clinical trials or marketing of the products in those countries or jurisdictions.

The approval process ultimately varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods.

The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval.

Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others.

Similar to the United States, the various phases of preclinical and clinical research in the European Union are subject to significant regulatory controls.

The Clinical Trials Directive 2001/20/EC, the Directive 2005/28/EC on GCP, and the related national implementing provisions of the individual EU Member States govern the system for the approval of clinical trials in the European Union.

Under this system, an applicant must obtain prior approval from the competent national authority of the EU Member States in which the clinical trial is to be conducted.

Furthermore, the applicant may only start a clinical trial at a specific study site after the competent ethics committee has issued a favorable opinion.

The clinical trial application must be accompanied by, among other documents, an IMPD (the Common Technical Document) with supporting information prescribed by Directive 2001/20/EC, Directive 2005/28/EC, where relevant the implementing national provisions of the individual EU Member States and further detailed in applicable guidance documents.

The EU Clinical Trials Directive 2001/20/EC as well as the Directive 2005/28/EC on good clinical practice as regards investigational drug products for human use, or GCP, and the related national implementing provisions of the individual EU Member States govern the system for the approval of clinical trials in the in the European Economic Area,

or EEA (27 EU Member States plus Iceland, Norway and Liechtenstein).

Under this system, before a clinical trial can be initiated, an applicant must obtain approval in each EEA Member State in which the clinical trial is to be conducted by two separate entities:

the national competent authority and one or more ethics committees much like the FDA and the IRB, respectively.

In all cases, the clinical studies must be conducted in accordance with GCP.

Good Laboratory Practice standards must also be respected during the conduct of the trials, including the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use, or ICH, as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

All suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial have to be reported to the competent national authority and the ethics committee of the Member State where they occurred.

In April 2014, the new Clinical Trials Regulation, (EU) No 536/2014 (Clinical Trials Regulation) was adopted.

The Regulation is anticipated to come into application in 2020.

The Clinical Trials Regulation will be directly applicable in all the EU Member States, repealing the current Clinical Trials Directive 2001/20/EC.

The requirements and process governing the conduct of clinical studies are to a significant extent harmonized at EU level but could vary from country to country.

During the development of a medicinal product, the European Medicines Agency, or EMA, and national regulators within the EU provide the opportunity for dialogue and guidance on the development program.

The EU Member States have transposed and applied the provisions of the Clinical Trials Directive in a manner that is not always uniform.

This has led to variations in the rules governing the conduct of clinical trials in the individual EU Member States.

The EU has, therefore, adopted Regulation (EU) No 536/2014 (Clinical Trials Regulation) in April 2014.

The Regulation is expected to come into application in 2022.

The Clinical Trials Regulation will be directly applicable in all the EU Member States, repealing the current Clinical Trials Directive.

Conduct of all clinical trials performed in the European Union will continue to be bound by currently applicable provisions until the new Clinical Trials Regulation becomes applicable.

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If a clinical trial continues for more than three years from the day on which the Clinical Trials Regulation becomes applicable the Clinical Trials Regulation will at that time begin to apply to the clinical trial.

The new Clinical Trials Regulation aims to simplify and streamline the approval of clinical trials in the European Union.

The main characteristics of the regulation include:

a streamlined application procedure via a single entry point, the “EU portal”;

a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for clinical trial sponsors;

and a harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts.

Part I is assessed by the competent authorities of all EU Member States in which an application for authorization of a clinical trial has been submitted (Member States concerned).

Part II is assessed separately by each Member State concerned.

Strict deadlines have been established for the assessment of clinical trial applications.

The role of the relevant ethics committees in the assessment procedure will continue to be governed by the national law of the concerned EU Member State.

However, overall related timelines will be defined by the Clinical Trials Regulation.

To obtain a marketing authorization of a drug in the European Union, we may submit marketing authorization applications, or MAA, either under the so‑called centralized (mandatory for biologics) or national authorization procedures (if intended to submit only in a single country).

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

To obtain a marketing authorization, or MA, of a drug in the EEA, we may submit marketing authorization applications, or MAA, either under the so-called centralized (mandatory for biologics) or national authorization procedures.

Centralized Procedure

The centralized procedure provides for the grant of a single marketing authorization following a favorable opinion by the European Medicines Agency, or EMA, that is valid in all EU member states, as well as Iceland, Liechtenstein and Norway.

The centralized procedure is compulsory for medicines produced by specified biotechnological processes, products designated as orphan medicinal products, advanced‑therapy medicines (such as gene‑therapy, somatic cell‑therapy or tissue‑engineered medicines) and products with a new active substance indicated for the treatment of specified diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases and other immune dysfunctions and viral diseases.

The centralized procedure is optional for products that represent a significant therapeutic, scientific or technical innovation, or whose authorization would be in the interest of public health.

Under the centralized procedure the maximum timeframe for the evaluation of an MAA by the EMA is 210 days, excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the Committee of Medicinal Products for Human Use, or the CHMP.

Accelerated assessment might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest, particularly from the point of view of therapeutic innovation.

The timeframe for the evaluation of an MAA under the accelerated assessment procedure is of 150 days, excluding stop‑clocks.

The centralized procedure provides for the grant of a single MA by the European Commission following a favorable opinion by the Committee for Medicinal Products for Human Use, or CHMP, of the EMA, that is valid throughout the entire territory of the EEA.

The centralized procedure is compulsory for certain types of medicines, such as medicines derived from biotechnological processes, products designated as orphan medicinal products, advanced-therapy medicines (such as gene-therapy, somatic cell-therapy or tissue-engineered products) and products with a new active substance indicated for the treatment of specified diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases and other immune dysfunctions and viral diseases.

The centralized procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that represent a significant therapeutic, scientific or technical innovation, or whose authorization would be in the interest of public health.

National Authorization Procedures

There are also two other possible routes to authorize medicinal products in several EU countries, which are available for investigational medicinal products that fall outside the scope of the centralized procedure:

There are also other possible routes to authorize medicinal products in several EEA countries, which are available for investigational medicinal products that fall outside the scope of the centralized procedure.

National MAs, are issued by the competent authorities of the Member States of the EEA and only cover their respective territory.

● Decentralized procedure.

Using the decentralized procedure, an applicant may apply for simultaneous authorization in more than one EU country of medicinal products that have not yet been authorized in any EU country and that do not fall within the mandatory scope of the centralized procedure.

Using the decentralized procedure, an applicant may apply for simultaneous authorization in more than one EEA country of medicinal products that have not yet been authorized in any EU country and that do not fall within the mandatory scope of the centralized procedure.

● Mutual recognition procedure.

In the mutual recognition procedure, a medicine is first authorized in one EU Member State, in accordance with the national procedures of that country.

Following this, further marketing authorizations can be sought from other EU countries in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization.

Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk‑benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

In the mutual recognition procedure, a medicine is first authorized in one EEA country, in accordance with the national procedures of that country.

Following this, further marketing authorizations can be sought from other EEA countries in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization.

Under the above described procedures, in order to grant the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

MAs have an initial duration of five years.

After these five years, the authorization may be renewed on the basis of a reevaluation of the risk-benefit balance.

Innovative products that target an unmet medical need and are expected to be of major public health interest may be eligible for a number of expedited development and review programs, such as the PRIME scheme, which provides incentives similar to the breakthrough therapy designation in the U.S.

Such products are generally eligible for accelerated assessment (according to which the timeframe for the evaluation of a MA application is reduced to 150 days, excluding clock stops) and may also benefit from different types of fast track approvals, such as a conditional marketing authorization or a marketing authorization under exceptional circumstances granted on the basis of less comprehensive clinical data than normally required (respectively in the likelihood that the sponsor will provide such data within an agreed timeframe or when comprehensive data cannot be obtained even after authorization).

European Union Regulatory Exclusivity

In the European Union, new products authorized for marketing (i.e., reference products) qualify for eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization.

The data exclusivity

period prevents generic applicants from relying on the preclinical and clinical trial data contained in the dossier of the reference product when applying for a generic marketing authorization in the European Union during a period of eight years from the date on which the reference product was first authorized in the European Union.

The market exclusivity period prevents a successful generic applicant from commercializing its product in the EU until ten years have elapsed from the initial authorization of the reference product in the EU.

The ten‑year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

In the EEA, new products authorized for marketing (i.e., reference products) qualify for eight years of data exclusivity and an additional two years of market exclusivity upon MA.

The data exclusivity period prevents generic or biosimilar applicants from relying on the pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar marketing authorization in the European Union during a period of eight years from the date on which the reference product was first authorized in the European Union.

The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until ten years have elapsed from the initial authorization of the reference product in the EU.

The overall ten-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

European Union Orphan Designation and Exclusivity

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(2) either (a) such condition affects no more than five in 10,000 persons in the European Union when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the European Union to justify investment;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the European Union, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000.

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the European Union, or if such a method exists, the product

will be of significant benefit to those affected by the condition.

Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication.

The application for orphan designation must be submitted before the application for marketing authorization.

The applicant will receive a fee reduction for the marketing authorization application if the orphan designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted.

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

The application for orphan drug designation must be submitted before the application for MA.

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

The ten-year market exclusivity in the European Union may 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, if the product is sufficiently profitable not to justify maintenance of market exclusivity.

Additionally, marketing authorization may be granted to a similar product for the same indication at any time if:

the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior;

Additionally, MA may be granted to a similar product for the same indication at any time if (1) the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior;

(2) the applicant consents to a second orphan medicinal product application;

the applicant cannot supply enough orphan medicinal product.

or (3) the applicant cannot supply enough orphan medicinal product.

Pediatrics Development

In the EEA, MAA for new medicinal products have to include the results of studies conducted in the pediatric population, in compliance with a PIP agreed with the EMA's Pediatric Committee, or PDCO.

The PIP sets out the timing and measures proposed to generate data to support a pediatric indication of the drug for which MA is being sought.

The PDCO can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults.

Further, the obligation to provide pediatric clinical trial data can be waived by the PDCO when these data is not needed or appropriate because the product is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients.

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

Post-approval Requirements

Similar to the United States, both marketing authorization 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 EU Member States.

The holder of MA for a medicinal product must also comply with pharmacovigilance legislation and its related regulations and guidelines, which entail many requirements for conducting pharmacovigilance, or the assessment and monitoring of the safety of medicinal products.

Failure to comply with EU and national 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 medicinal 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 marketing authorization, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.

In addition, the advertising and promotion of our products is also subject to EU laws concerning promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices.

In addition, other national legislation of individual EU Member States may apply to the advertising and promotion of medicinal products and may differ from one country to another.

Violations of the rules governing the promotion of medicinal products in the European Union could be penalized by administrative measures, fines and imprisonment.

These laws may further limit or restrict the advertising and promotion of our products to the general public and may also impose limitations on its promotional activities with healthcare professionals.

Rest of the World Regulation

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In addition to FDA restrictions on the marketing of pharmaceutical products, other U.S., federal and state healthcare regulatory laws restrict business practices in the pharmaceutical industry.

These laws include, but are not

limited to, federal and state anti‑kickback, false claims, data privacy and security and physician payment and drug pricing transparency laws.

These laws include, but are not limited to, federal and state anti-kickback, false claims, data privacy and security and physician payment and drug pricing transparency laws.

Similar laws exists in foreign jurisdictions, including the EEA, as well.

federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, receiving or providing any remuneration, directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.

The term “remuneration”

has been broadly interpreted to include anything of value.

The term “remuneration” has been broadly interpreted to include anything of value.

The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical and medical device manufacturers on the one hand and prescribers, purchasers, formulary managers and beneficiaries on the other hand.

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Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances.

Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated.

In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

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federal government.

A claim includes “any request or demand”

for money or property presented to the U.S.

A claim includes “any request or demand” for money or property presented to the U.S.

Moreover, a claim including items or services resulting from a violation of the U.S.

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Several biopharmaceutical, medical device and other healthcare companies have been prosecuted under these laws for, among other things, allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.

Other companies have been prosecuted for causing false claims to be submitted because of the companies’

marketing of products for unapproved (e.g., off‑label), and thus non‑covered, uses.

In addition, the civil monetary penalties statute imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of products for unapproved (e.g., off-label), and thus non-covered, uses.

In addition, the civil monetary penalties statute imposes penalties against any person who is determined to have presented or caused to be

presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

Many states also have similar fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

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Similar sanctions and penalties, as well as imprisonment, also can be imposed upon executive officers and employees of such companies.

Given the significant size of actual and potential settlements, it is expected that the government authorities will continue to devote substantial resources to investigating healthcare providers’

and manufacturers’

compliance with applicable fraud and abuse laws.

scheme to defraud any healthcare benefit program, including private third‑party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

Given the significant size of actual and potential settlements, it is expected that the government authorities will continue to devote substantial resources to investigating healthcare providers’ and manufacturers’ compliance with applicable fraud and abuse laws.

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

Similar to the U.S.

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In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians and certain other healthcare providers.

provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), and additional categories of health care in 2022, and teaching hospitals as well as ownership and investment interests held by physicians and their immediate family members.

The Affordable Care Act imposed, among other things, new annual reporting requirements through the Physician Payments Sunshine Act for covered manufacturers for certain payments and “transfers of value” provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), and additional categories of health care providers in 2022, and teaching hospitals as well as ownership and investment interests held by physicians and their immediate family members.

Failure to submit timely, accurately and completely the required information for all payments, transfers of value and ownership or investment interests may result in civil monetary penalties.

Covered manufacturers must submit reports by the 90 th day of each subsequent calendar year and the reported information is publicly made available on a searchable website.

In addition, certain states require implementation of compliance programs and compliance with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, impose restrictions on marketing practices or require the tracking and reporting of marketing expenditures and pricing information as well as gifts, compensation and other remuneration or items of value provided to physicians and other healthcare professionals and entities.

We may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their respective implementing regulations, impose specified requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates.

Among other things, HITECH made HIPAAs security standards directly applicable to “business associates,”

defined as independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity, although we believe that we would not be considered a “business associate”

in the normal course of our business.

HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

Even when HIPAA does not apply, according to the Federal Trade Commission or the FTC, failing to take appropriate steps to keep consumers’

personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, or the FTCA, 15 U.S.C §

The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, impose specified requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates, that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity, although we believe that we would not be considered a “business associate” in the normal course of our business.

Entities that are found to be in violation of HIPAA, whether as the result of a breach of unsecured PHI, a complaint about privacy practices, or an audit by HHS, may be subject to significant civil, criminal, and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.

Further, entities that knowingly receive individually identifiable health information from a HIPAA covered entity in a manner that is not authorized or permitted by HIPAA may be subject to criminal penalties.

Even when HIPAA does not apply, according to the Federal Trade Commission or the FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

cost of available tools to improve security and reduce vulnerabilities.

Individually identifiable health information is considered sensitive data that merits stronger safeguards.

The FTC’s guidance for appropriately securing consumers’

personal information is similar to what is required by the HIPAA security regulations.

In addition, state laws govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same requirements, thus complicating compliance efforts.

For example, California enacted the California Consumer Privacy Act, or the CCPA, on June 28, 2018, which went into effect on January 1, 2020.

For example, California enacted the California Consumer Privacy Act, or the CCPA, which went into effect on January 1, 2020.

The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

Similar laws and regulations in jurisdictions outside of the United States, which may include, for instance, applicable post‑marketing requirements, anti‑fraud and abuse laws and implementation of corporate compliance programs, reporting of payments or other transfers of value to healthcare professionals or data privacy and security laws,

may apply to us to the extent that any of our product candidates, once approved, are sold in a country other than the United States.

Further, the California Privacy Rights Act, or the CPRA, was recently voted into law by California residents.

The CPRA significantly amends the CCPA, and imposes additional data protection obligations on covered companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data.

It also creates a new California data protection agency specifically tasked to enforce the law, which would likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security.

The substantive requirements for businesses subject to the CPRA will go into effect on January 1, 2023, and become enforceable on July 1, 2023.

Similar laws and regulations in jurisdictions outside of the United States, which may include, for instance, applicable post-marketing requirements, anti-fraud and abuse laws and implementation of corporate compliance programs, reporting of payments or other transfers of value to healthcare professionals or data privacy and security laws, may apply to us to the extent that any of our product candidates, once approved, are sold in a country other than the United States.

Because of the breadth of these laws and the narrowness of their exceptions and safe harbors, it is possible that business activities can be subject to challenge under one or more of such laws.

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Ensuring that business arrangements with third parties comply with applicable healthcare laws and regulations is costly and time consuming.

If business operations are found to be in violation of any of the laws described above or any other applicable governmental regulations a pharmaceutical manufacturer may be subject to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement of profits, individual imprisonment, exclusion from governmental funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits and future earnings, additional reporting obligations and oversight if subject to a corporate integrity agreement or other agreement to resolve allegations of non‑compliance with these laws, and curtailment or restructuring of operations, any of which could adversely affect a pharmaceutical manufacturer’s ability to operate its business and the results of its operations.

If business operations are found to be in violation of any of the laws described above or any other applicable governmental regulations a pharmaceutical manufacturer may be subject to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement of profits, individual imprisonment, exclusion from governmental funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits and future earnings, additional reporting obligations and oversight if subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and curtailment or restructuring of operations, any of which could adversely affect a pharmaceutical manufacturer’s ability to operate its business and the results of its operations.

Coverage, Pricing and Reimbursement

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A decision by a third-party payor not to cover our product candidates, or to impose coverage criteria the limiting situations in which our product candidates are covered, could reduce physician utilization of a product.

Moreover, a third‑party payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved.

Moreover, a third-party payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved.

Adequate third-party reimbursement may not be available to enable a manufacturer to maintain price levels sufficient to realize an appropriate return on its investment in product development.

Additionally, coverage, coverage criteria, and reimbursement for products can differ significantly from payor to payor.

One third‑party payor’s decision to cover a particular medical product does not ensure that other payors will also provide coverage for the medical product, or will provide coverage at an adequate reimbursement rate.

One third-party payor’s decision to cover a particular medical product does not ensure that other payors will also provide coverage for the medical product, or will provide coverage at an adequate reimbursement rate.

As a result, the coverage determination process usually requires manufacturers to provide scientific, clinical and health economic support for the use of their products to each payor separately, which is a time-consuming process.

As noted above, the marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide coverage and adequate reimbursement.

increasing emphasis on cost containment measures in the United States has increased and we expect will continue to increase the pressure on pharmaceutical pricing.

The increasing emphasis on cost containment measures in the United States has increased and we expect will continue to increase the pressure on pharmaceutical pricing.

Coverage policies and third-party reimbursement rates may change at any time.

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The requirements governing drug pricing and reimbursement vary widely from country to country.

In the European Union, governments influence the price of products through their pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to consumers.

In the EEA, governments influence the price of products through their pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to consumers.

Member States are free to restrict the range of pharmaceutical products for which their national health insurance systems provide reimbursement, and to control the prices and reimbursement levels of pharmaceutical products for human use.

Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed to by the government.

Member States may approve a specific price or level of reimbursement for the pharmaceutical product, or alternatively adopt a system of direct or indirect controls on the profitability of the company responsible for placing the pharmaceutical product on the market, including volume-based arrangements, caps and reference pricing mechanisms.

To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost effectiveness of a particular product to currently available therapies.

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Healthcare Reform and Potential Changes to Healthcare Laws

The FDAs and other regulatory authorities’

policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates.

The FDAs and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates.

For example, in December 2016, the 21st Century Cures Act, or Cures Act, was signed into law.

The Cures Act, among other things, is intended to modernize the regulation of drugs and devices and to spur innovation, but its ultimate implementation is uncertain.

In addition, in August 2017, the FDA Reauthorization Act was signed into law, which reauthorized the FDAs user fee programs and included additional drug and device provisions that build on the Cures Act.

addition, in August 2017, the FDA Reauthorization Act was signed into law, which reauthorized the FDAs user fee programs and included additional drug and device provisions that build on the Cures Act.

If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we otherwise may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.

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extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care plans;

imposed mandatory discounts for certain Medicare Part D beneficiaries as a condition for manufacturers’

outpatient drugs coverage under Medicare Part D;

subjected drug manufacturers to new annual fees based on pharmaceutical companies’

share of sales to federal healthcare programs;

imposed mandatory discounts for certain Medicare Part D beneficiaries as a condition for manufacturers’ outpatient drugs coverage under Medicare Part D;

subjected drug manufacturers to new annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs;

imposed a new federal excise tax on the sale of certain medical devices;

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and established a Center for Medicare Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act, and we expect there will be additional challenges and amendments to the Affordable Care Act in the future.

The current Presidential administration and members of the U.S.

Congress have indicated that they may continue to seek to modify, repeal or otherwise invalidate all, or certain provisions of, the Affordable Care Act.

Most recently, the Tax Cuts and Jobs Acts was enacted, which, among other things, removes penalties for not complying with the individual mandate to carry health insurance.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act.

By way of example, the Tax Cuts and Jobs Acts was enacted, which, among other things, removes penalties for not complying with the individual mandate to carry health insurance.

On December 14, 2018, a U.S.

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On December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the district court’s decision that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

It is unclear how these decisions, subsequent appeals, if any, or other efforts to challenge, repeal or replace the Affordable Care Act will impact the law or our business.

Supreme Court is currently reviewing the case, although it is unclear how the Supreme Court will rule.

It is also unclear how other efforts, if any, to challenge, repeal or replace the Affordable Care Act will impact the law or our business.

In addition, other legislative changes have been proposed and adopted in the United States since the Affordable Care Act to reduce healthcare expenditures.

These changes include the Budget Control Act of 2011, which, among other things, included aggregate reductions of Medicare payments to providers of 2% per fiscal year and that will remain in effect through 2029 unless additional action is taken by Congress;

and the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

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We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that governments and third-party payors will pay for healthcare products and services.

As of December 31, 2019, we had 137 employees, 135 of which were full-time employees.

Human Capital

We are intent on cultivating a highly-skilled and passionate team determined to strive to deliver transformative therapies to the patients who need them most.

As of December 31, 2020, we had approximately 168 full-time employees, of which approximately 164 were located within the United States and 4 employees were located outside of the United States.

We believe that the success and growth of our business depends in large part on our continued ability to attract, retain and motivate qualified personnel at all levels of our company.

To do that, we employ a number of measures, including competitive compensation and benefits, fostering an ethical culture that values diversity and inclusion, and focusing on employee safety and wellness as well as training.

These measures help form our human capital management framework and are advanced through the following:

Competitive Pay and Benefits.

We provide our employees with competitive fixed salaries, cash bonus opportunities designed to incentivize achievement of our goals and individual objectives, equity awards and opportunities for equity ownership through our employee share purchase plan as well as a robust benefit package designed to promote well-being across all aspects of our employees’ lives, including comprehensive health insurance, dental and vision plans, life and other employment related insurance, retirement planning through a 401(k) plan with partial company match, and paid time off.

Diversity and Inclusion.

We value diversity and inclusion at all levels of our company.

We believe that our business benefits from the different perspectives that a diverse workforce brings, and we pride ourselves on having an inclusive culture based on our shared mission and values.

Health and Safety and our Response to COVID-19.

Health and Safety are firmly rooted across our company through the integration of health and safety processes throughout our business and risk management.

To foster a safe and healthy culture, we have implemented a comprehensive safety program, driving to understand and mitigate against health and safety incidents.

In response to the COVID-19 pandemic and measures introduced by state and federal governments in the United States, we implemented workplace protocols at our facilities.

While the majority of our employees are able to carry out their responsibilities working outside of our physical locations, for our essential workers and those choosing to return to our offices to carry out their responsibilities, we implemented additional safety measures, including occupancy limits, restricting business travel, providing and requiring the use of personal protective equipment, self-screening prior to accessing our facilities, and others.

We continue to monitor the developments, restrictions and requirements in jurisdictions where we have employees, and update our protocols as applicable.

Our Corporate Information

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What changed 10-K

Item 1. Business