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Item 1. Business

2024-02-28 compared with 2023-03-02 · 427 added, 425 removed, 544 unchanged (61% of the section changed)

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 portfolio of immune-modulating assets, ARCALYST® (rilonacept), KPL-404 and mavrilimumab, are based on strong biologic rationale or validated mechanisms, target a spectrum of underserved cardiovascular and autoimmune conditions, and offer the potential for differentiation.

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

Our portfolio of immune-modulating assets, ARCALYST (rilonacept), abiprubart (also known as KPL-404) and mavrilimumab, is based on strong biologic rationale or validated mechanisms, targets a spectrum of underserved cardiovascular and autoimmune conditions, and offers the potential for differentiation.

ARCALYST is an interleukin-1α and interleukin-1β cytokine trap.

In 2017, we licensed ARCALYST from Regeneron, who discovered and initially developed the drug.

In 2017, we licensed ARCALYST from Regeneron, which discovered and initially developed the drug.

Our exclusive license to ARCALYST from Regeneron includes worldwide rights, excluding the Middle East and North Africa, for all applications other than those in oncology and local administration to the eye or ear.

We received U.S.

Food and Drug Administration (the “FDA”) approval of ARCALYST for the treatment of recurrent pericarditis and reduction in risk of recurrence in adults and children 12 years and older in March 2021.

Recurrent pericarditis is a painful inflammatory cardiovascular disease with an estimated U.S.

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

ARCALYST is commercially available across the United States through a network of distributors.

ARCALYST is also approved in the United States for the treatment of Cryopyrin-Associated Periodic Syndromes (“CAPS”) specifically Familial Cold Autoinflammatory Syndrome and Muckle-Wells Syndrome in adults and children 12 years and older, and the maintenance of remission in Deficiency of Interleukin-1 Receptor Antagonist (“DIRA”) in adults and children weighing 10 kg or more.

We are responsible for sales and distribution of ARCALYST in all approved indications in the United States, and evenly split profits on sales as well as third-party proceeds with Regeneron.

In February 2022, we granted Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd.

(“Huadong”) exclusive rights to develop and commercialize ARCALYST in the Asia Pacific region, excluding Japan.

KPL-404 is an investigational monoclonal antibody inhibitor of CD40-CD154 interaction.

We received FDA approval of ARCALYST for the treatment of recurrent pericarditis and reduction in risk of recurrence in adults and children 12 years and older in March 2021.

Recurrent pericarditis is a painful inflammatory cardiovascular disease with an estimated United States prevalent population of approximately 40,000 patients seeking and receiving medical treatment.

ARCALYST is commercially available across the United States through a select network of distributors.

ARCALYST is also approved in the United States for the treatment of Cryopyrin-Associated Periodic Syndromes (“CAPS”), including Familial Cold Autoinflammatory Syndrome (“FCAS”) and Muckle-Wells Syndrome in adults and children 12 years and older, and the maintenance of remission in Deficiency of Interleukin-1 Receptor Antagonist (“DIRA”) in adults and children weighing 10 kg or more.

We are responsible for sales and distribution of ARCALYST in all approved indications in the United States, and evenly split profits on sales as well as third party proceeds with Regeneron.

In March 2023, Regeneron initiated a technology transfer of the manufacturing process for ARCALYST drug substance, and we are working with Regeneron to qualify a new CDMO.

Abiprubart (KPL-404) is an investigational monoclonal antibody inhibitor of CD40-CD154 costimulatory interaction.

In 2019, we acquired all of the outstanding securities of Primatope Therapeutics, Inc.

(“Primatope”), the company that owned or controlled the intellectual property related to KPL-404.

In connection with our acquisition of Primatope, we acquired an exclusive world-wide license to KPL-404 from Beth Israel Deaconess Medical Center, Inc.

(“Primatope”), the company that owned or controlled the intellectual property related to abiprubart.

In connection with our acquisition of Primatope, we acquired an exclusive world-wide license to abiprubart from Beth Israel Deaconess Medical Center, Inc.

The CD40-CD154 interaction is a key T-cell co-stimulatory signal critical for B-cell maturation, immunoglobulin class switching and Type 1 immune response.

We believe disrupting the CD40-CD154 interaction is an attractive approach to address multiple autoimmune disease pathologies such as rheumatoid arthritis (“ RA ”), Sjogren’s syndrome, Graves’ disease and systemic lupus erythematosus .

In May 2021, we announced positive final data from our Phase 1 single-ascending-dose clinical trial of KPL-404 in healthy volunteers, which evaluated safety and pharmacokinetics, as well as receptor occupancy and T-cell dependent antibody response.

In December 2021, we initiated a Phase 2 clinical trial of KPL-404 in RA, which is designed to evaluate pharmacokinetics, safety and efficacy with subcutaneous administration.

In January 2023, we announced that we had completed enrollment of the second and final cohort of the multiple ascending dose portion of such trial.

Following completion of this portion of the trial, the proof-of-concept portion will begin.

We expect data from the trial in the first half of 2024.

We believe disrupting the CD40-CD154 interaction is an attractive approach to address multiple autoimmune disease pathologies .

In December 2021, we initiated a Phase 2 clinical trial of abiprubart in rheumatoid arthritis (“RA”), which is designed to evaluate pharmacokinetics, safety and efficacy with subcutaneous administration.

In January 2024, we announced topline clinical data from Cohorts 1, 2 and 3 of the trial, and that the trial met its primary efficacy endpoint in Cohort 3 at the weekly dose level.

We expect to announce data from Cohort 4 of the trial in the second quarter of 2024.

For more information see “ Business – Our Products – Abiprubart – Clinical and Pre-Clinical Trials – Phase 2 Trial in Rheumatoid Arthritis ”.

Mavrilimumab is an investigational monoclonal antibody inhibitor targeting granulocyte-macrophage colony stimulating factor receptor alpha (“GM-CSFRα”).

In 2017, we licensed exclusive worldwide rights in all indications to mavrilimumab from MedImmune, Limited (“MedImmune”).

We are pursuing collaborative study agreements to evaluate the potential of mavrilimumab in rare cardiovascular diseases where the GM-CSF mechanism has been implicated.

We previously evaluated mavrilimumab in giant cell arteritis (“GCA”), a chronic inflammatory disease of the medium-to-large arteries, and COVID-19-related acute respiratory distress syndrome (“ARDS”).

In February 2022, we granted Huadong exclusive rights to develop and commercialize mavrilimumab in the Asia Pacific region, excluding Japan.

Vixarelimab is an investigational monoclonal antibody inhibitor of signaling through oncostatin M receptor beta (“OSMRβ”), which was previously part of our portfolio of immune-modulating assets.

In September 2022, we closed an agreement granting Genentech, Inc.

Hoffmann-La Roche Ltd (collectively, “Genentech”) an exclusive worldwide license to develop and commercialize vixarelimab.

Pursuant to such agreement, we have agreed to complete our in-progress Phase 2b dose-ranging clinical trial of vixarelimab for the treatment of prurigo nodularis, a chronic inflammatory skin condition.

The following table summarizes our current pipeline of products and product candidates:

Approved in the U.S.;

ARCALYST is also approved for cryopyrin-associated periodic syndromes (CAPS) and deficiency of the interleukin-1 receptor antagonist (DIRA);

We are currently evaluating potential partnership opportunities to advance mavrilimumab’s development.

The following table summarizes our current products, product candidates and out-licensing arrangements:

Approved in the United States;

ARCALYST is also approved for CAPS and DIRA;

The FDA granted Breakthrough Therapy designation to ARCALYST for recurrent pericarditis in 2019;

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the European Commission granted Orphan Drug designation to ARCALYST for the treatment of idiopathic pericarditis in 2021;

Kiniksa has worldwide rights, excluding the Middle East and North Africa;

Kiniksa granted Huadong exclusive rights in the Asia Pacific Region, excluding Japan;

Phase 2 clinical trials of mavrilimumab in rheumatoid arthritis and giant cell arteritis achieved their primary and secondary endpoints with statistical significance;

Kiniksa granted Huadong Medicine exclusive rights in the Asia Pacific Region, excluding Japan.

IL-1α = interleukin-1α;

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OSMRβ = oncostatin M receptor beta.

Using a data-centric approach, our team considers a wide variety of metrics to drive informed capital allocation strategies and generate value from our portfolio of immune-modulating assets, including by analyzing potential additional indications for ARCALYST, KPL-404 and mavrilimumab, being opportunistic in our business development activities to in-license or acquire programs, considering appropriate opportunities to partner or out-license our programs and conducting internal research to discover and develop molecules to expand our portfolio.

Our portfolio of immune-modulating assets, ARCALYST, KPL-404 and mavrilimumab, are based on strong biologic rationale or validated mechanisms, target a spectrum of underserved cardiovascular and autoimmune conditions, and offer the potential for differentiation.

Using a data-centric approach, our team considers a wide variety of metrics to drive informed capital allocation strategies and generate value from our portfolio of immune-modulating assets, including by analyzing potential additional indications for our products and product candidates, being opportunistic in our business development activities to in-license or acquire programs, considering appropriate opportunities to partner or out-license our programs and conducting internal research to discover and develop molecules to expand our portfolio.

The core of our strategy is the identification, development and commercialization of therapeutic medicines for patients suffering from debilitating diseases with significant unmet medical need.

We put patients first and live by our motto:

Every Second Counts™.

Critical components of our business strategy include the following:

● Commercialize ARCALYST and Our Product Candidates, if Approved .

In connection with our commercial launch of ARCALYST for the treatment of recurrent pericarditis, we have built a specialty cardiology sales team that we expect will continue to effectively reach patients and prescribers and successfully leverage ARCALYST’s commercial potential.

We also expect that we will be able to leverage our existing commercial infrastructure to launch and commercialize our other current and future product candidates, if approved.

We have invested in a talented and specialized cardiology sales team, complemented by an efficient marketing strategy, to effectively reach patients and prescribers.

By expanding awareness and building the market for our recurrent pericarditis therapy, we expect to increase patient identification, secure patient access and drive commercial success.

As we develop therapies in other spaces, including the immune-modulating field, we expect to leverage our experience commercializing ARCALYST to maximize the commercial potential of our current and future product candidates, if approved.

● Advance Our Product Candidates Through the Development Process .

We are pursuing multiple product candidates in parallel and have advanced these programs with the goal of delivering differentiated therapies to patients.

We believe that each of our product candidates has the potential to address significant unmet medical needs and intend to develop them efficiently in a data-driven manner.

Using a data-driven approach, we evaluate development opportunities, possible indications and other factors to advance our portfolio of assets.

We believe that each of our product candidates holds the potential to offer differentiated therapies to patients, and we aim to unlock that potential through innovative research and development.

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

We believe that our product candidates have potential in multiple indications.

Our assets are designed to modulate immunological signaling pathways that are implicated across a spectrum of diseases.

We may also seek collaborations, licenses and other strategic relationships to assist in advancing and expanding our current programs, as appropriate, to drive value.

We have and may in the future seek collaborations, licenses and other strategic relationships to assist in advancing and expanding our current programs, as appropriate.

In addition, strategic out-licensing transactions may be used as a source of non-dilutive capital to support our commercial and clinical activities.

● Work to Identify, Discover, Acquire and Develop New Therapies.

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We received FDA approval of ARCALYST for the treatment of recurrent pericarditis and reduction in risk of recurrence in adults and children 12 years and older in March 2021.

ARCALYST is also approved in the United States for the treatment of CAPS, specifically Familial Cold Autoinflammatory Syndrome and Muckle-Wells Syndrome in adults and children 12 years and older, and the maintenance of remission in DIRA in adults and children weighing 10 kg or more.

ARCALYST is also approved in the United States for the treatment of CAPS, including FCAS and Muckle-Wells Syndrome in adults and children 12 years and older, and the maintenance of remission in DIRA in adults and children weighing 10 kg or more.

ARCALYST was sold by Regeneron in the United States for the treatment of CAPS from 2008 and DIRA from 2020 until we assumed responsibility for sales in such indications in March 2021.

Recurrent pericarditis is a painful autoinflammatory cardiovascular disease with an estimated U.S.

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

Recurrent pericarditis is a painful autoinflammatory cardiovascular disease with an estimated United States prevalent population of approximately 40,000 patients seeking and receiving medical treatment.

We received Breakthrough Therapy designation from the FDA for ARCALYST for the treatment of recurrent pericarditis in 2019 , Orphan Drug designation from the FDA for ARCALYST for the treatment of pericarditis, which includes the treatment of recurrent pericarditis, in 2020 and FDA approval of ARCALYST for the treatment of recurrent pericarditis and reduction in risk of recurrence in adults and pediatric patients 12 years and older in March 2021.

Additionally, in 2021, the European Commission granted Orphan Drug designation to ARCALYST for the treatment of idiopathic pericarditis.

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

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

RHAPSODY met its prespecified primary and all major secondary efficacy endpoints with statistical significance, showing that ARCALYST 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.

In November 2022, data from the long-term extension portion of the RHAPSODY trial were presented at the American Heart Association’s Scientific Sessions which demonstrated, among other things, that continued ARCALYST treatment beyond 18 months resulted in continued treatment response.

Subsequent data from the long-term extension portion of RHAPSODY, reported in 2022, demonstrated, among other things, that continued ARCALYST treatment beyond 18 months resulted in continued treatment response.

In February 2022, we granted Huadong exclusive rights to develop and commercialize ARCALYST in the Asia Pacific region, excluding Japan.

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We believe that inhibiting both IL-1α and IL-1β signaling is important for treating 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 ILα and ILβ, the disease promptly went back into remission.

In a published case study, a participant 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 participant’s disease returned despite further dose escalation of canakinumab.

When the participant was switched back to anakinra, which inhibits ILα and ILβ, the disease promptly went back into remission.

These data, together with clinical data from our pivotal Phase 3 clinical trial of ARCALYST, 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.

Other literature published after the June 2022 completion of RHAPSODY corroborated these findings in larger populations of participants.

Beyond recurrent pericarditis, we believe there is significant potential for ARCALYST to address additional indications.

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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 in the U.S.

who suffer from persistent underlying disease, multiple recurrences and an inadequate response to conventional therapy who serve as our core target patient population.

Our commercialization efforts are focused initially on the approximately 14,000 patients in the United States who suffer from persistent underlying disease, multiple recurrences and an inadequate response to conventional therapy.

Outside of our core target patient population, there are approximately 26,000 additional patients who are experiencing their first recurrence of the disease.

We have seen that, as we expand awareness about the disease and our therapy, healthcare professionals look to prescribe ARCALYST earlier in the

disease’s natural history.

We expect that continuing to execute on this strategy will enable us to target this additional patient population more fully.

Current Treatment Landscape for Recurrent Pericarditis and Our Solution

ARCALYST, a weekly, subcutaneously injected, recombinant fusion protein that blocks IL-1α and IL-1β signaling, is the first and only FDA-approved therapy for 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 NSAIDs or colchicine, both of which are used off-label.

Prior to ARCALYST’s approval, episodes of recurrent pericarditis would usually have been treated in a similar manner or by adding systemic corticosteroids which were also used off-label.

Both colchicine and corticosteroids often have deleterious effects when used at high doses or for long periods of time, including, for colchicine, gastrointestinal distress and neutropenia and, for corticosteroids, glaucoma, fluid retention, hypertension, mood changes, memory changes, other psychological effects, weight gain and diabetes.

Both colchicine and corticosteroids often have adverse effects when used at high doses or for long periods of time, including, for colchicine, gastrointestinal distress and neutropenia and, for corticosteroids, glaucoma, fluid retention, hypertension, mood changes, memory changes, other psychological effects, weight gain and diabetes.

For these reasons, we believe that ARCALYST plays an important role as a steroid-sparing therapy to be used following a failure on NSAIDs or colchicine to effectively treat recurrent pericarditis.

Clinical Trials

RHAPSODY met its prespecified primary and all major secondary efficacy endpoints with statistical significance.

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

Median [95% confidence interval (“CI”)] time to pericarditis recurrence for ARCALYST recipients in the randomized withdrawal period could not be estimated due to the low number of recurrences in the ARCALYST 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).

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The proportion of ARCALYST 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).

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

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

The percentage of trial days in which participants reported none/minimal pericarditis pain (NRS≤2) at Week 16 of the randomized withdrawal period (a secondary efficacy endpoint of the study) was 92% for ARCALYST recipients compared to 40% for placebo recipients (p<0.0001).

Finally, the time to treatment response (NRS≤2 and CRP≤0.5 mg/dL) for ARCALYST recipients was 5.0 days [95% CI].

Median time to ARCALYST monotherapy was 7.9 weeks [95% CI].

We believe these data show that ARCALYST demonstrates clinically meaningful outcomes associated with unmet medical need in recurrent pericarditis.

In November 2022, data from the long-term extension (“LTE”) portion of the RHAPSODY trial were presented at the American Heart Association Scientific Sessions 2022.

LTE data included in the presentation demonstrated continued ARCALYST treatment beyond 18 months resulted in continued treatment response.

The median [maximum at end of LTE] duration of continuous rilonacept therapy for all patients in RHAPSODY was 23 [35] months;

the median [maximum at end of LTE] duration of continuous rilonacept therapy was 18 months [27] months for US patients (n=45) and 29 [35] months for non-US patients (n=29).

The annualized incidence of pericarditis recurrences while on therapy for all patients (n=74) during the first 18 months of the LTE portion of the trial was 0.04 events per patient-year (compared to 4.4 events per patient-year prior to study entry).

Patients (n = 52) were given the option at 18 months from their most recent pericarditis recurrence to continue or suspend rilonacept treatment for observation.

There were 33 patients who elected to continue ARCALYST treatment, and the only recurrence in this group was associated with a treatment interruption of 4 weeks.

Of the patients who suspended treatment (n=8), 75% (n=6) experienced pericarditis recurrences.

The median [interquartile range (IQR)] time-to-event was 11.8 [3.7, Not-Estimable (NE)] weeks.

The 98% reduction in risk of recurrent pericarditis events in patients who continued rilonacept treatment beyond 18 months (Hazard Ratio = 0.02, p<0.0001) was consistent with the results of the randomized withdrawal period.

In November 2022, data from the long-term extension (“LTE”) portion of the RHAPSODY trial were presented, which demonstrated continued ARCALYST treatment beyond 18 months resulted in continued treatment response.

The median [maximum at end of LTE] duration of continuous rilonacept therapy for all participants in RHAPSODY was 23 [35] months;

the median [maximum at end of LTE] duration of continuous rilonacept therapy was 18 months [27] months for United States participants (n=45) and 29 [35] months for non-United States participants (n=29).

The annualized incidence of pericarditis recurrences while on therapy for all participants (n=74) during the first 18 months of the LTE portion of the trial was 0.04 events per participant-year (compared to 4.4 events per participant-year prior to study entry), none of which were associated with an elevation in C-Reactive Protein (CRP).

Participants (n = 52) were given the option at 18 months from their most recent pericarditis recurrence to continue or suspend rilonacept treatment for observation.

There were 33 participants who elected to continue ARCALYST treatment, and the only recurrence in this group was associated with a treatment interruption of 4 weeks.

Of the participants who suspended treatment at 18 months (n=8), 75% (n=6) experienced pericarditis recurrences, all of which were associated with an elevation in CRP.

The median (interquartile range) time-to-event was 11.8 (3.7, Not-Estimable) weeks.

The 98% reduction in risk of recurrent pericarditis events in participants who continued rilonacept treatment beyond 18 months (Hazard Ratio = 0.02, p<0.0001) was consistent with the results of the randomized withdrawal period.

Commercial Strategy for ARCALYST

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Our specialty salesforce of approximately 85 representatives as of December 31, 2023 calls on high-volume accounts and prescribers.

Our salesforce is complemented by our medical affairs, payor and patient services teams who work to ensure broad patient access to ARCALYST, educate communities, collaborate with patient advocacy groups and drive scientific understanding of recurrent pericarditis.

Further, we have established an efficient marketing effort intended to help spread awareness of ARCALYST and recurrent pericarditis among prescribers and patients.

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

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

The second strategic imperative is working to ensure ARCALYST is viewed as the product of choice for the treatment and reduction in risk of recurrent pericarditis in patients over 12 years of age.

The third strategic imperative relates to reimbursement and working to ensure broad patient access at a price that reflects ARCALYST’s value as the first and only FDA-approved therapy for recurrent pericarditis.

The fourth and final strategic imperative is building robust patient support programs to optimize patient experiences with ARCALYST and Kiniksa.

Overall, our efforts are focused on programs and tactics to help with uptake and adoption of ARCALYST as well as ensuring a positive patient experience.

Our salesforce is complemented by our medical affairs, payor and patient services teams who work to secure broad patient access to ARCALYST, educate communities, collaborate with patient advocacy groups and drive scientific understanding of recurrent pericarditis.

Further, we have established an efficient marketing effort intended to educate and raise awareness of recurrent pericarditis among prescribers and patients and promote ARCALYST as the first and only treatment for this debilitating disease.

Using these resources, our commercialization efforts are focused on four strategic imperatives to increase the uptake and adoption of ARCALYST as well as ensuring a positive patient experience.

First, we are focused on increasing awareness of the disease and its impact on patients’ lives.

Our sales and marketing teams work to educate patients and prescribers about the signs, symptoms, duration and treatment of the disease, and the impact that recurrent pericarditis has on patients’ lives.

In addition, we have strategically expanded our field force since launch to improve our ability to connect with prescribers who we believe are best able to identify and treat recurrent pericarditis patients.

By closing the knowledge gap around this rare condition, we expect to drive greater patient access to our therapy.

Second, we seek to advance the treatment paradigm of recurrent pericarditis, ensuring that ARCALYST is viewed as the product of choice for the treatment and reduction in risk of recurrent pericarditis in patients over 12 years of age, ahead of other therapies with a less favorable benefit-risk, such as corticosteroids.

Third, we work to secure broad patient access at a price that reflects ARCALYST’s value as the first and only FDA-approved therapy for recurrent pericarditis.

Helping to ensure affordability and access to treatment by patients is one of our core principles.

To this end, we offer a suite of programs to support affordability for eligible patients who are prescribed ARCALYST.

Lastly, we have built a robust patient support program to optimize patient experiences with ARCALYST and Kiniksa.

O ur Kiniksa OneConnect™ program offer s personalized treatment support for eligible patients prescribed ARCALYST , and we continue to improve the service with patient feedback.

Our Product Candidates

KPL-404 is an investigational monoclonal antibody inhibitor of CD40-CD154 interaction.

Abiprubart is an investigational monoclonal antibody inhibitor of CD40-CD154 costimulatory interaction.

CD40-CD154 interaction is a key T-cell co-stimulatory signal critical for B-cell maturation, immunoglobulin class switching, and Type 1 immune response.

In May 2021, we reported positive final data from our randomized, double-blind, placebo-controlled, single-ascending-dose Phase 1 single-ascending-dose clinical trial of KPL-404 in healthy volunteers which evaluated safety and pharmacokinetics, as well as RO, and TDAR in these subjects.

KPL-404 showed dose-dependent increases in concentration across cohorts.

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

KPL-404 was well-tolerated, and there were no serious adverse reactions.

Subjects dosed with KPL-404 10 mg/kg IV showed full RO through at least Day 71 and complete suppression of TDAR after keyhole limpet hemocyanin (“KLH”), challenge and re-challenge through at least Day 57.

Subjects dosed subcutaneously with KPL-404 5 mg/kg showed full RO through Day 43 and suppression of TDAR after KLH challenge through at least Day 29.

We are enrolling and dosing participants in a Phase 2 clinical trial of KPL-404 in rheumatoid arthritis, which is designed to enable its potential development in a spectrum of autoimmune diseases believed to be mediated by the CD40-CD154 co-stimulatory interaction.

In January 2023, we announced that we had completed enrollment of the second and final cohort of the multiple ascending dose portion of such trial.

Following completion of this portion of the trial, the proof-of-concept portion will begin.

We expect data from the trial in the first half of 2024.

In May 2021, we reported positive final data from our randomized, double-blind, placebo-controlled, single-ascending-dose Phase 1 clinical trial of abiprubart in healthy volunteers which evaluated safety and pharmacokinetics, as well as receptor occupancy (“RO”) and T-dependent antibody response (“TDAR”) in these subjects.

We are currently conducting a Phase 2 clinical trial of abiprubart in RA, which is designed to enable its potential development in a spectrum of autoimmune diseases believed to be mediated by the CD40-CD154 co-stimulatory interaction.

In January 2024, we announced topline clinical data from Cohorts 1, 2 and 3 of the trial and that the trial met its primary efficacy endpoint in Cohort 3 at the weekly dose level.

We expect to announce data from Cohort 4 of the trial in the second quarter of 2024.

We have not yet announced next steps for our abiprubart program, but the CD40-CD154 costimulatory interaction has been implicated in a number of devastating auto-immune diseases.

We plan to make further development decisions based upon the totality of the data following the receipt of data from Cohort 4 of our Phase 2 clinical trial.

Mechanism of Action

KPL-404 is designed to block CD40-CD154 interaction by binding to and inhibiting signaling through the CD40 receptor.

Abiprubart is designed to block CD40-CD154 costimulatory 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 that point to the broad potential power of the mechanism has been established in RA, systemic lupus erythematosus, primary Sjogren’s syndrome and Graves’ disease.

External clinical data that point to the broad potential power of the mechanism has been established in RA, systemic lupus erythematosus, Primary Sjögren’s syndrome and Graves’ disease.

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

KPL-404 inhibits CD40-CD154 interaction with low-single digit nanomolar affinity in vitro .

The presentation of KPL-404 is as a high-concentration, liquid formulation, which we believe may allow for a higher delivered dose in one subcutaneous injection than all other competitors whose formulations are limited mainly to high dose IV or lower-dose subcutaneous administration.

Abiprubart inhibits CD40-CD154 costimulatory interaction with low-single digit nanomolar affinity to CD40 in vitro .

The presentation of abiprubart is as a high-concentration liquid formulation, which we believe may allow for a higher delivered dose in one subcutaneous injection than all other competitors whose formulations are limited mainly to high dose IV or lower-dose subcutaneous administration.

We believe some competitor assets do not fully antagonize signaling as evidenced by efficacy failures and the generation of anti-drug antibodies even at maximum delivered and/or attainable dose levels.

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Preclinical Development

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 (KLH) at drug levels achieving 100% receptor occupancy.

In preclinical development, abiprubart 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.

Data published in a peer-reviewed journal demonstrated that abiprubart prolonged the suppression of TDAR response in a non-human primate model.

Abiprubart 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 Clinical Trial

We previously conducted a Phase 1 single-ascending-dose clinical trial of KPL-404, which was a randomized, double-blind, placebo-controlled, single-ascending-dose, first-in-human study that was 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 subcutaneously administered to separate cohorts of healthy volunteers.

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

We previously conducted a Phase 1 single-ascending-dose clinical trial of abiprubart, which was a randomized, double-blind, placebo-controlled, single-ascending-dose, first-in-human study that was divided into two parts:

a single dose of abiprubart 0.03 mg/kg, 0.3 mg/kg, 1 mg/kg, 3 mg/kg or 10 mg/kg IV and a single dose of abiprubart 1 mg/kg or 5 mg/kg subcutaneously administered to separate cohorts of healthy volunteers.

The primary objective was to assess the safety and tolerability of abiprubart.

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

In May 2021, we reported final results from this Phase 1 trial of KPL-404, which met both its primary objective and secondary endpoints.

Results from the trial included the following:

● KPL-404 showed dose-dependent increases in concentration across cohorts.

In May 2021, we reported final results from this Phase 1 trial of abiprubart, which met both its primary objective and secondary endpoints.

Results from the trial, which were presented at a scientific meeting and published in a peer-reviewed journal, included the following:

● Abiprubart showed dose-dependent increases in concentration across cohorts.

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

● KPL-404 was well-tolerated, and there were no serious adverse events.

● Subjects dosed with KPL-404 10 mg/kg IV showed full RO through at least Day 71 and complete suppression of TDAR after KLH challenge and re-challenge through at least Day 57.

● Subjects subcutaneously dosed with KPL-404 5 mg/kg showed full RO through Day 43 and suppression of TDAR after KLH challenge through at least Day 29.

These data confirm and extend previously-reported 3 mg/kg IV cohort data, in which RO and suppression of TDAR after KLH challenge were demonstrated through Day 29.

● The 3 mg/kg IV dose level had previously demonstrated complete suppression of memory TDAR response to a re-challenge on Day 29.

● Anti-drug antibodies to KPL-404 were suppressed for at least 57 days at 10 mg/kg IV;

● Abiprubart was well-tolerated, and there were no serious adverse events.

● Subjects dosed with abiprubart 10 mg/kg IV showed full RO through at least Day 71 and complete suppression of TDAR after KLH challenge and re-challenge through at least Day 57.

● The 3 mg/kg IV dose level demonstrated complete suppression of memory TDAR response to a re-challenge on Day 29.

● Subjects subcutaneously dosed with abiprubart 5 mg/kg showed full RO through Day 43 and suppression of TDAR after KLH challenge through at least Day 29.

These data confirm and extend the 3 mg/kg IV cohort data.

● Anti-drug antibodies to abiprubart were suppressed for at least 57 days at 10 mg/kg IV;

the suppression of antibody responses to the drug itself is an independent indicator of target engagement and pharmacodynamic effect.

Phase 2 Trial in Rheumatoid Arthritis

In December 2021, we commenced a Phase 2 clinical trial of KPL-404 in RA.

The Phase 2 trial is a randomized, double-blind, placebo-controlled study designed to provide pharmacokinetic data and early signal of efficacy with chronic administration, and optionality to evaluate KPL-404 across a range of other autoimmune diseases.

The trial is expected to enroll participants with active RA who have an inadequate response to or are intolerant to a Janus kinase inhibitor (a “JAKi”) or at least one biologic disease-modifying anti-rheumatic drug (a “bDMARD”).

Subjects who have failed both bDMARD and JAKi are excluded from the study.

Cohorts 1 and 2 will each sequentially randomize eight participants in a 6:2 ratio to receive KPL-404 (2mg/kg or 5mg/kg, respectively) or placebo as a subcutaneous injection every 2 weeks for 12 weeks.

The primary efficacy endpoints for Cohorts 1 and 2 will be to evaluate pharmacokinetic data across dosing levels and to collect the incidence of treatment-emergent adverse events.

In November, 2022, we disclosed that we had amended the trial to (a) eliminate a 10 mg/kg biweekly subcutaneous dose arm from the multiple-ascending dose portion of the trial (i.e., removing the original Cohort 3 from the trial) and (b) replace the 10 mg/kg biweekly subcutaneous dose arm of the proof-of-concept portion of the trial with a 5 mg/kg weekly subcutaneous dose arm (the revised Cohort 3).

Cohort 3 will randomize up to 75 participants in a 1:1:1 ratio to receive KPL-404 5 mg/kg or placebo as a subcutaneous injection every week or 5 mg/kg every 2 weeks for 12 weeks.

The participants receiving KPL-404 5 mg/kg every 2 weeks will receive weekly administrations of alternating active investigational product and matching blinded placebo.

The primary efficacy endpoint for Cohort 3 will be the change in baseline in DAS28-CRP at Week 12.

Secondary endpoints for Cohort 3 will be the incidence of treatment-emergent adverse events and to evaluate pharmacokinetic data across dose levels.

We expect data from the trial in the first half of 2024.

In December 2021, we commenced a Phase 2 clinical trial of abiprubart in RA.

The Phase 2 trial is a randomized, double-blind, placebo-controlled study designed to provide pharmacokinetic data and early signal of efficacy with chronic administration, and optionality to evaluate abiprubart across a range of other autoimmune diseases.

The trial enrolled participants with active RA who had an inadequate response to or were intolerant to a Janus kinase inhibitor (a “JAKi”) or at least one biologic disease-modifying anti-rheumatic drug (a “bDMARD”).

Cohorts 1 and 2 each sequentially randomized eight participants in a 6:2 ratio to receive abiprubart (2mg/kg or 5mg/kg, respectively) or placebo as a subcutaneous injection every 2 weeks for 12 weeks.

The primary objective for Cohorts 1 and 2 included pharmacokinetics across dosing levels and the incidence of treatment-emergent adverse events.

Cohort 3 randomized 78 participants in a 1:1:1 ratio to receive abiprubart 5 mg/kg every week, 5 mg/kg every 2 weeks, or placebo every week as a subcutaneous injection for 12 weeks.

The participants who received abiprubart 5 mg/kg every 2 weeks received weekly administrations of alternating active investigational product and matching blinded placebo.

The primary efficacy endpoint for Cohort 3 was the change in baseline in DAS28-CRP at Week 12.

The secondary objectives for Cohort 3 were the incidence of treatment-emergent adverse events and pharmacokinetics across dose levels.

Cohort 4 randomized 51 participants in a 3:2 ratio to receive abiprubart 400mg (following a 600 mg loading dose) or placebo as a subcutaneous injection every 4 weeks for 12 weeks.

The primary efficacy endpoint for Cohort 4 was identical to Cohort 3.

In January 2024, we reported topline data from Cohorts 1, 2 and 3 of the trial.

We expect to report data from Cohort 4 in the second quarter of 2024.

The reported data were as follows:

● In Cohorts 1 and 2 (the pharmacokinetic-lead in), multiple doses of abiprubart were well-tolerated and enabled the proof-of-concept portion of the study.

Although these cohorts were not powered for DAS28-CRP, the secondary efficacy endpoint of Cohorts 3 and 4, the following results were observed:

o In Cohort 1, in the abiprubart 2 mg/kg subcutaneous biweekly dosing group (n=6), the mean change from baseline in DAS28-CRP at week 12 was -3.16 points compared to -1.09 points in pooled placebo participants (n=4), (mean difference = -2.07, p=0.0312).

o In Cohort 2, in the abiprubart 5 mg/kg subcutaneous biweekly dosing group (n=6), the mean change from baseline in DAS28-CRP at week 12 was -3.44 points compared to pooled placebo participants (n=4), (mean difference = -2.35, p=0.0338).

● In Cohort 3, in the abiprubart 5 mg/kg subcutaneous weekly dosing group (n=27), the Least Squares (“LS”) mean change [95% CI] from baseline in DAS28-CRP at week 12 was -2.21 [-2.62, -1.80] points compared to -1.65 [-2.07, -1.23] points in placebo participants (n=26), (LS mean difference = -0.56, p=0.0487).

● In Cohort 3, in the abiprubart 5 mg/kg subcutaneous biweekly dosing group (n=25), the LS mean change [95% CI] from baseline in DAS28-CRP at week 12 was -2.00 [-2.43, -1.58] points compared to -1.65 [-2.07, -1.23] points in placebo participants (n=26), (LS mean difference = -0.35, p=0.2140).

● Abiprubart significantly reduced rheumatoid factor (a clinical marker of disease activity and autoantibody pharmacodynamic marker of CD40 target engagement) by over 40% in both Cohort 3 dose levels.

● Abiprubart was well-tolerated, with no dose-related adverse experiences observed.

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

We are pursuing collaborative study agreements to evaluate the potential of mavrilimumab in rare cardiovascular diseases where the GM-CSF mechanism has been implicated.

We are currently evaluating potential partnership opportunities to advance mavrilimumab’s development.

We previously evaluated mavrilimumab in COVID-19-related ARDS.

Following the announcement that the Phase 3 portion of our global, double-blind, placebo-controlled clinical trial of mavrilimumab in COVID-19-related ARDS did not meet its primary efficacy endpoint in December 2021, we decided not to progress mavrilimumab in such indication at that time.

We also previously evaluated mavrilimumab in 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.

We also previously evaluated mavrilimumab in GCA, a chronic inflammatory disease of the medium-to-large arteries with an estimated United States prevalence of approximately 75,000 to 150,000 patients.

In October 2020, we announced that our global, randomized, double-blind, placebo-controlled Phase 2 proof-of-concept clinical trial for the study of mavrilimumab in GCA achieved both the primary efficacy endpoint of time-to-first adjudicated GCA flare by week 26 in all treated participants and the secondary efficacy endpoint of sustained remission at week 26 in all treated participants with statistical significance.

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These studies have demonstrated that with GM-CSF overexpression, pathological changes almost always follow.

Subsequent data from our Phase 2 clinical trial of mavrilimumab in GCA, which met its primary and secondary efficacy endpoints, further supported the mechanistic rationale of targeting GM-CSF.

Mavrilimumab is designed to inhibit the signaling of GM-CSF, a growth factor that stimulates the production of certain types of white blood cells.

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We conduct internal discovery activities directed toward wholly owned molecules for the treatment of debilitating disease targets where we believe there to be a strong mechanistic rationale and potential for clear differentiation from existing approved agents or those in development.

Manufacturing

We do not currently own or operate any late-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 commercial manufacture of ARCALYST and our future products.

Regeneron manufactures and supplies all of our requirements of ARCALYST for development and commercial activities pursuant to the Supply Agreement (as defined below).

The Supply Agreement terminates upon the sooner of the termination of the Regeneron Agreement and the date of the completion of the transfer of technology related to the manufacture of ARCALYST drug substance.

Regeneron, in turn, relies upon a third party CDMO to conduct fill/finish operations for ARCALYST.

We are currently conducting a transfer of technology related to the manufacturing process of ARCALYST drug substance and the analytical testing methods of ARCALYST drug substance and drug product.

As part of this process, we are qualifying and contracting with a CDMO who will serve as the new manufacturer of ARCALYST drug substance and CTLs who will serve as the new analytical testing labs of ARCALYST drug substance and drug product.

See, Risk Factors – Risks Related to Manufacturing and Our Reliance on Third Parties – We are conducting a technology transfer with respect to the manufacturing process of ARCALYST drug substance from Regeneron to a new CDMO and the analytical testing methods of ARCALYST drug substance and drug product to new CTLs.

Such technology transfer will be subject to significant risks and uncertainties.

We also have engaged CDMOs to produce our clinical product candidates.

We intend to use such CDMOs for development and scale-up work for any future clinical trials and eventual commercialization of such product candidates, if approved.

We require our CDMOs to conduct manufacturing activities in compliance with current good manufacturing practice or similar foreign requirements (“cGMP”).

We have assembled a team of experienced employees and consultants to provide the necessary technical, quality and regulatory oversight of our CDMOs.

We currently perform most process development internally but are reliant on CDMOs for late-stage clinical manufacturing, process qualification and validation and commercial supply.

We anticipate that the CDMOs currently manufacturing our product candidates will have the capacity to support both future clinical supply and commercial-scale production, but we do not have any formal agreements at this time with any of such CDMOs to cover commercial production.

We also may elect to pursue additional CDMOs for manufacturing supplies of drug substance and finished drug product in the future.

Our reliance on third parties to manufacture certain of our products and product candidates exposes us to risks, and any technology transfer of the manufacturing process for our products or product candidates may be subject to a number of risks and uncertainties, see “ Risk Factors – Risks Related to Manufacturing and Our Reliance on Third Parties.

Commercial Operations

Our commercial team combines dozens of years of pharmaceutical commercial leadership experience with a passion for helping patients with significant unmet medical need.

Since March 2021, we have marketed ARCALYST, our only commercial product, in the United States for recurrent pericarditis, a debilitating disease, and have established our own specialty salesforce to expand our commercialization efforts nationwide.

Our salesforce is complemented by our medical affairs, payor and patient services teams.

We have also built an efficient digital marketing effort by targeting prescribers currently treating recurrent pericarditis to complement the reach of our salesforce.

For more information, see “ —Our Products—ARCALYST – Commercial Strategy for ARCALYST .”

We intend to expand our capabilities in parallel with the development path of our product candidates.

For each product candidate, we will establish commercialization strategies as we approach potential marketing approval, including leveraging our then-existing medical affairs, payor and patient services teams, and marketing organization, as well as building bespoke infrastructure to address the specific needs and challenges inherent to any targeted indication.

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.

Our products and any product candidates that we successfully develop and commercialize may compete with existing products and new products that may become available in the future.

The key competitive factors affecting the success of ARCALYST, abiprubart and mavrilimumab and any other product candidates that we develop, if approved, are likely to be their efficacy, safety, convenience, price, the level of biosimilar competition and the availability of reimbursement from government and other third party payors.

Our commercial opportunities 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.

Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours.

In addition, our ability to compete may be affected in many cases by insurers or other third party payors seeking to encourage the use of biosimilar products.

See “ Risk Factors—Risks Related to Competition, Executing our Strategy and Managing Growth—We face substantial competition, which may result in others discovering, developing or commercializing drugs before or more successfully than we do .”

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

Recurrent Pericarditis :

We are not aware of any FDA-approved therapies for recurrent pericarditis, but we are aware of two programs being developed for this indication.

One is by R-Pharm International (RPH-104), which inhibits IL-1α/IL-1β-induced signaling and is in Phase 2 development;

the other is an oral cannabidiol being developed by Cardiol Therapeutics in an open label Phase 2 setting.

Dual IL-1α and IL-1β Inhibition :

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

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

Lutikizumab is an IL-1α/IL-1β inhibitor and is being developed by Abbvie for the treatment of hidradenitis suppurativa and RPH-104 is also an IL-1α/IL-1β inhibitor and is currently in development 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.

IL-1α Inhibition Alone :

There are 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 product candidates seeking a label for recurrent pericarditis.

Other Competitors .

We are also aware of several other molecules which do not directly compete with our approved indications but nonetheless target IL-1α and/or IL-1β directly or indirectly.

We are also aware of several molecules in development designed to inhibit the NLRP3 inflammasome, an intracellular sensor of a broad range of danger signals, that leads to the release of IL-1β and IL-18.

Clinical stage development programs targeting IL-1α and/or IL-1β directly or indirectly via the NLRP3 inflammasome include VTX2735 (by Ventyx Biosciences in CAPS) and VTX3232 (Ventyx Biosciences, no indication announced);

ZYIL-1 (by Zydus Lifesciences in amyotrophic lateral sclerosis);

HT-6184 (by Halia in myelodysplastic syndromes);

OLT1177 (by Olatec Therapeutics in osteoarthritis of the knee);

DFV-890 (by Novartis in FCAS);

Selnoflast (by Roche in ulcerative colitis), NT-0167 and NT-0796 (by NodThera, no indication announced);

and Somalix and Inzomelid (by Roche, no indications announced).

There are various programs in clinical development antagonizing the CD40 / CD154 costimulatory pathway;

however, we believe the high concentration liquid formulation of abiprubart enables chronic subcutaneous dosing at a higher dose level than other similar drugs, which could be a key differentiator.

Subcutaneous Administration :

Novartis A.G.

is developing CFZ-533, or iscalimab (anti-CD40) for subcutaneous administration for the treatment of Sjögren’s Syndrome and is studying other various indications in clinical development.

Intravenous Administration Only :

is developing the Tn3 fusion protein, dazodalibep (anti-CD40L) in Sjogren’s Syndrome;

are developing dapirolizumab pegol (anti-CD40L) for the treatment of moderately to severely active Systemic Lupus Erythematosus;

and Eledon Pharmaceuticals, Inc.

is developing AT-1501 (anti-CD40L) for use by patients undergoing kidney transplantation.

Potential Subcutaneous Administration :

Certain other programs present the potential for subcutaneous administration.

Sanofi S.A./ImmuNext Inc.

are developing frexilimab (anti-CD40L) for the treatment of Multiple Sclerosis, Primary Sjögren’s Syndrome and Systemic Lupus Erythematosus;

Bristol Myers-Squibb is developing BMS-986325 (anti-CD40) for the treatment of Primary Sjögren’s Syndrome;

Innovent Bio is developing IBI-355 (anti-CD40L, no indication announced);

Lundbeck A/S is developing Lu AG22515 (bi-specific, anti-CD40L & Albumin (scFv)2-Fab, no indication announced).

GM-CSF Antagonists :

There are programs in clinical development in various indications that modulate GM-CSF signaling from I-MAB Biopharma Co.

(plonmarlimab in RA), Roivant Sciences Ltd.

(gimsilumab and namilumab in sarcoidosis) and Humanigen, Inc.

(lenzilumab).

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

License and Acquisition Agreements

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Genentech Agreement

In August 2022 we entered into a license agreement (the “Genentech License Agreement”) with Genentech, pursuant to which we granted Genentech exclusive worldwide rights to develop, manufacture and commercialize vixarelimab and related antibodies (each, a “Genentech Licensed Product”).

In August 2022 we entered into a license agreement (the “Genentech License Agreement”) with Genentech, Inc.

Hoffmann-La Roche Ltd.

(collectively, “Genentech”), pursuant to which we granted Genentech exclusive worldwide rights to develop, manufacture and commercialize vixarelimab and related antibodies (each, a “Genentech Licensed Product”).

The Genentech License Agreement became effective in September 2022 following termination of the statutory waiting period under the Hart-Scott Rodino Act.

Under the Genentech License Agreement, we received an upfront payment of $80.0 million for the license.

In the first quarter of 2023, following our last delivery of certain drug supplies to Genentech, Genentech became obligated to make an additional cash payment of $20.0 million.

In addition, we will be eligible to receive up to approximately $600.0 million in contingent payments, including specified development, regulatory and sales-based milestones, before fulfilling our upstream financial obligations.

Additionally, in 2023, we received a total of $35.0 million in additional payments from Genentech related to delivery of certain drug material to Genentech and Genentech’s achievement of a development milestone.

In the fourth quarter of 2023, following the achievement of a development milestone related to a second indication under the Genentech License Agreement, Genentech became obligated to make an additional cash payment of $10.0 million, which was received in the first quarter of 2024.

We are eligible to receive up to approximately $575.0 million in additional contingent payments, including specified development, regulatory and sales-based milestones, before fulfilling our upstream financial obligations.

We will also be eligible to receive tiered percentage royalties on a Genentech Licensed Product-by-Genentech Licensed Product basis ranging from low-double digits to mid-teens on annual net sales of each Genentech Licensed Product, subject to certain customary reductions, with an aggregate minimum floor, before fulfilling our upstream financial obligations.

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Pursuant and subject to the terms of the Genentech License Agreement, Genentech has the exclusive worldwide right to conduct development and commercialization activities for Genentech Licensed Products at its sole cost.

Notwithstanding the foregoing, we are responsible, at our sole cost, for continuing to conduct and finalize our Phase 2b clinical trial assessing the efficacy, safety and tolerability of vixarelimab in reducing pruritis in prurigo nodularis.

Notwithstanding the foregoing, we are responsible, at our sole cost, for completing the Phase 2b clinical trial assessing the efficacy, safety and tolerability of vixarelimab in reducing pruritis in prurigo nodularis.

We and Genentech participate in a joint transition committee, which coordinates and oversees the technology and inventory transition activities relating to the development of the Genentech Licensed Products and our conduct and finalization of the Phase 2b clinical trial.

Genentech has the right, for a specified period of time, to purchase an additional batch of vixarelimab drug substance under the Genentech License Agreement at cost plus a markup.

Under the Genentech License Agreement, Genentech has the right to assume manufacturing responsibilities for Genentech Licensed Products.

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We otherwise retain our current rights to the Huadong Licensed Products outside the Huadong Territory.

Under the Huadong Collaboration Agreements, we received a total upfront cash payment of $22.0 million, which includes $12.0 million for the Huadong Territory license of ARCALYST and $10.0 million for the Huadong

Territory license of mavrilimumab.

We will be eligible to receive up to approximately $70.0 million in payments for ARCALYST, and up to approximately $576.0 million in payments for mavrilimumab, including specified development, regulatory and sales-based milestones.

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In March 2021, when the FDA granted approval of ARCALYST for the treatment of recurrent pericarditis and reduction in risk of recurrence in adults and children 12 years and older, we assumed the sales and distribution of ARCALYST for CAPS and DIRA in the United States.

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 and a regulatory milestone payment of $20.0 million in the first quarter of 2021.

Under the Regeneron Agreement, we paid $32.5 million in connection with upfront fees and the achievement of regulatory milestones.

We evenly split profits on sales of ARCALYST with Regeneron , where profits are determined after deducting from net sales of ARCALYST certain costs related to the manufacturing and commercialization of ARCALYST.

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(ii) customary commercialization expenses, including the cost of our field force, and (iii) our cost to market, advertise and otherwise promote ARCALYST, with such costs identified in subsection (iii) subject to specified limits.

In addition, should there be a transfer of technology related to the manufacture of ARCALYST, then, to the extent permitted in accordance with the Regeneron Agreement, the fully-burdened costs of each of us and Regeneron incurred in performing (or having performed) such technology transfer shall also be deducted from net sales of ARCALYST to determine profit.

To the extent permitted in accordance with the Regeneron Agreement, the fully-burdened costs of each of us and Regeneron incurred in performing (or having performed) the technology transfer of the manufacturing process for ARCALYST drug substance will also be deducted from net sales of ARCALYST to determine profit.

We also evenly split with Regeneron any proceeds received by us from any licensees, sublicensees and distributors in consideration for the sale, license or other disposition of rights with respect to ARCALYST, including upfront payments, milestone payments and royalties.

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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.

We have also entered into a commercial supply agreement with Regeneron (the “Supply Agreement”).

Pursuant to the Supply Agreement, Regeneron has the exclusive right to manufacture and supply all of our requirements of ARCALYST for development or commercialization activities.

The Supply Agreement terminates upon the termination of the Regeneron Agreement or the date of completion of the transfer of technology related to the manufacture of ARCALYST.

We have also entered into a commercial supply agreement with Regeneron (the “Supply Agreement”), under which Regeneron agreed to manufacture product for our clinical and commercial use.

License Agreement with MedImmune

In December 2017, we entered into a license agreement with MedImmune (the “MedImmune Agreement”), pursuant to which MedImmune granted us an exclusive, sublicensable, worldwide license to certain intellectual property rights to make, use, develop and commercialize mavrilimumab and any other product containing an antibody to the GM-CSF receptor alpha that is covered by certain MedImmune patent rights for all indications.

We also acquired non-exclusive licenses to other MedImmune technology for use in exploiting licensed products.

We also acquired

non-exclusive licenses to other MedImmune technology for use in exploiting licensed products.

We also acquired reference rights to relevant manufacturing and regulatory documents, and MedImmune’s existing inventory of mavrilimumab drug substance and product.

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

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

In addition, we made a $5.0 million pass-through payment and a $10.0 million milestone payment in the year ended December 31, 2019 related to the achievement of specified clinical milestone events achieved during the year ended December 31, 2018.

Under the MedImmune Agreement, we paid a total of $23.0 million in connection with upfront fees, a pass-through payment and milestone payment related to the achievement of specified clinical milestones.

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 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.

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

Under the Biogen Agreement, we made an upfront payment of $11.5 million and a technology transfer payment of $0.5 million to Biogen.

In addition, we made a milestone payments in each of 2017 and 2019 totaling $14.3 million and are obligated to make additional milestone payments for each antibody product that includes the Acquired Biogen Assets (each, a “Biogen Antibody Product” and, together, “Biogen Antibody Products”), of up to $315.0 million in the aggregate upon the achievement of specified milestones.

Under the Biogen Agreement, we paid a total of $26.3 million in connection with upfront fees, a technology transfer payment and certain specified milestone payments.

We are obligated to make additional milestone payments for each antibody product that includes the Acquired Biogen Assets (each, a “Biogen Antibody Product” and, together, “Biogen Antibody Products”), of up to $315.0 million in the aggregate upon the achievement of specified milestones.

These milestone payments relate to multiple indications for a Biogen Antibody Product and are comprised of up to $165.0 million in the aggregate upon achievement of specified clinical and regulatory milestone events and $150.0 million in the aggregate upon the achievement of specified annual net sales milestones.

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

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 Biogen Antibody Products, in each case, in the event we decide to sell the Acquired Biogen Assets, including through the sale of our company, or out-license the rights to the Biogen Antibody Products.

sell the Acquired Biogen Assets, including through the sale of our company, or out-license the rights to the Biogen Antibody Products.

Biogen waived such right in connection with the Genentech License Agreement.

The Biogen Agreement will terminate upon the expiration of all payment obligations in all countries related to the last Biogen Antibody Product subject to the Biogen Agreement.

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Upon the termination or expiration of the Genentech License Agreement, the amendments to the terms of the Biogen Agreement, as set forth in the Second Biogen Amendment, will terminate and all terms of the Biogen Agreement will revert to the version of such terms in effect as of immediately prior to the effective date of the Genentech License Agreement.

Primatope Stock Purchase Option Agreement

In September 2017, we entered into a stock purchase option agreement (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 (the “Primatope Acquisition”).

The aggregate amount of upfront and contingent payments we paid to the former Primatope shareholders to acquire Primatope was comprised of (i) $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 (ii) $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 BIDMC to make, use, develop and commercialize KPL-404 under the BIDMC license agreement (the “BIDMC Agreement”).

Beth Israel Deaconess Medical Center License Agreement

In 2019, we acquired all of the outstanding securities of Primatope Therapeutics, Inc.

(“Primatope”), the company that owned or controlled the intellectual property related to abiprubart.

In connection with our acquisition of Primatope, we acquired the rights to an exclusive license to certain intellectual property rights controlled by BIDMC to make, use, develop and commercialize abiprubart under the BIDMC license agreement (the “BIDMC Agreement”).

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

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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.

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

The Supply Agreement terminates upon the termination of the Regeneron Agreement or the date of completion of the transfer of technology related to the manufacture of ARCALYST.

Regeneron, in turn, relies

upon a third-party CMO to conduct fill/finish operations for ARCALYST.

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

For example, Regeneron could unilaterally initiate a technology transfer to us as early as March 2023.

We also have engaged CMOs to produce mavrilimumab drug substance and drug product and have qualified CMOs to produce KPL-404 drug product.

We currently remain the sole producer of KPL-404 drug substance.

We intend to use CMOs for development and scale-up work for any future clinical trials and eventual commercialization of mavrilimumab and KPL-404, if approved.

We require our CMOs to conduct manufacturing activities in compliance with current good manufacturing practice or similar foreign requirements (“cGMP”).

We have assembled a team of experienced employees and consultants to provide the necessary technical, quality and regulatory oversight of our CMOs.

We currently perform most process development internally but are reliant on CMOs for late-stage clinical manufacturing, process qualification and validation and commercial supply.

We anticipate that these CMOs will have the capacity to support both clinical supply and commercial-scale production, but we do not have any formal agreements at this time with any of these CMOs to cover commercial production.

We also may elect to pursue additional CMOs for manufacturing supplies of drug substance and finished drug product in the future.

Our reliance on third-parties to manufacture certain of our products and product candidates exposes us to risks, and any technology transfer of our products or product candidates may be subject to a number of risks and uncertainties, see “ Risk Factors – Risks Related to Manufacturing and Our Reliance on Third Parties.

Commercial Operations

Our commercial team combines dozens of years of pharmaceutical commercial leadership experience with a passion for helping patients with significant unmet need.

Our salesforce is complemented by our current medical affairs, payor and patient services teams.

We have also built an efficient digital marketing effort by targeting prescribers currently treating recurrent pericarditis.

We intend to expand our capabilities in parallel with the development path of our product candidates.

For each product candidate, we intend to establish commercialization strategies 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 teams, and marketing organization.

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

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

The key competitive factors affecting the success of ARCALYST, KPL-404 and mavrilimumab 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.

Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours.

In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products.

See “ Risk Factors—Risks Related to Competition, Executing our Strategy and Managing Growth—We face

substantial competition, which may result in others discovering, developing or commercializing drugs before or more successfully than we do .”

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

Recurrent Pericarditis :

We are not aware of any FDA-approved therapies for recurrent pericarditis, but we are aware of two programs being developed in this indication.

One is by R-Pharm International (RPH-104), which inhibits IL-1α/IL-1β-induced signaling and is in Phase 2 development;

the other is an oral cannabidiol being developed by Cardiol Therapeutics in an open label Phase 2 setting.

Dual IL-1α and IL-1β Inhibition :

Anakinra (KINERET), marketed by Swedish Orphan Biovitrum AB, is currently approved for use in RA, 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 :

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.

In addition, there are several molecules in development designed to inhibit the NLRP3 inflammasome, an intracellular sensor of a broad range of danger signals, that leads to the release of IL-1β and IL-18.

Clinical stage development programs include:

VTX2735 and VTX3232 (Ventyx Biosciences, Inc.), ZYIL-1 (Zydus Lifesciences Ltd.), HT-6184 (Halia Therapeutics, Inc.), OLT1177 (Olatec Therapeutics LLC), DFV-890 (Novartis A.G.), Selnoflast (Roche), NT-0167 and NT-0796 (NodThera Ltd.), Somalix and Onzomelid (Roche).

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.

There are various programs in clinical development antagonizing the CD40 / CD154 costimulatory pathway, however we believe the high concentration liquid formulation of KPL-404 enables chronic subcutaneous dosing, which could be a key differentiator.

Subcutaneous Administration :

Novartis A.G.

is developing CFZ-533, or iscalimab (anti-CD40) for subcutaneous administration for the treatment of Sjögren's Syndrome.

Intravenous Administration Only :

Horizon Therapeutics plc (in the process of being acquired by Amgen Inc.) is developing the Tn3 fusion protein, dazodalibep (anti-CD40L);

are developing dapirolizumab pegol (anti-CD40L) for the treatment of moderately to severely active Systemic Lupus Erythematosus;

and Eledon Pharmaceuticals, Inc.

is developing AT-1501 (anti-CD40L) for use by patients undergoing kidney transplantation.

Potential Subcutaneous Administration :

Certain other programs present the potential for subcutaneous administration.

Sanofi S.A./ImmuNext Inc.

are developing SAR441344 (anti-CD40L) for the treatment of Primary Sjögren's Syndrome and Systemic Lupus Erythematosus, Bristol Myers-Squibb is developing BMS-986325 (anti-CD40) for the treatment of Primary Sjögren's Syndrome;

Lundbeck A/S is developing Lu AG22515 (bi-specific, anti-CD40L & Albumin (scFv)2-Fab).

GM-CSF Antagonists :

There are programs in clinical development in various indications that modulate GM-CSF signaling from I-MAB Biopharma (plonmarlimab), Roivant Sciences Ltd.

(gimsilumab and namilumab) and Humanigen, Inc.

(lenzilumab).

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

Intellectual Property

Our success depends in part on our ability to obtain and maintain proprietary protection for our drug candidates, manufacturing and process discoveries, and other know-how, to operate without infringing the proprietary rights of others, and to prevent others from infringing our proprietary rights.

We plan to protect our proprietary position using a variety of methods, which include pursuing U.S.

and foreign patent applications related to our proprietary technology, inventions and improvements, including compositions of matter, drug product formulations, methods of use and methods of manufacture, that are important to the development and implementation of our business.

We plan to protect our proprietary position using a variety of methods, which include pursuing United States and foreign patent applications related to our proprietary technology, inventions and improvements, including compositions of matter, drug product formulations, methods of use and methods of manufacture, that are important to the development and implementation of our business.

For example, we or our licensors have or are pursuing patents covering the composition of matter for each of our product candidates and we generally pursue patent protection covering methods of use for each clinical program.

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We have a field-specific exclusive license under the Regeneron Agreement to granted patents and pending applications in the United States and numerous other jurisdictions relating to ARCALYST.

As of December 31, 2022, the patent rights in-licensed under the Regeneron Agreement relating to our program include two granted patents in the United States and 25 patents granted in other jurisdictions, including Canada, Australia, Brazil and selected countries in Europe and Asia.

As of December 31, 2023,

the patent rights in-licensed under the Regeneron Agreement relating to our program include three granted patents in the United States and a patent granted in Japan.

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

patent covering ARCALYST as a composition of matter expired in 2020, and relevant composition of matter patents issued outside of the United States are expected to expire in 2023, not including any patent term extensions.

Two patents covering methods of using ARCALYST in the treatment of recurrent pericarditis have issued in the U.S.

and have a statutory term that expires in 2038, not including any patent term adjustment.

A United States patent covering ARCALYST as a composition of matter expired in 2020, and relevant composition of matter patents issued outside of the United States expired in 2023.

Three patents covering methods of using ARCALYST in the treatment of recurrent pericarditis have issued in the United States and have a statutory term that expires in 2038, not including any patent term adjustment.

In March 2021, the FDA granted approval for ARCALYST for the treatment of recurrent pericarditis and reduction in risk of recurrence in adults and children 12 years of age and older, which granted us seven years of marketing exclusivity in the United States.

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

We also have an exclusive license with BIDMC to granted patents and pending patent applications in the United States and numerous other jurisdictions relating to KPL-404.

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

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

We also have an exclusive license with BIDMC to granted patents and pending patent applications in the United States and numerous other jurisdictions relating to abiprubart.

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

As of December 31, 2023, the patent rights acquired from Primatope include four patents granted in the United States and 32 patents granted in other jurisdictions, including Australia, Brazil and selected countries in Europe and Asia.

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The issued composition of matter patents acquired from Primatope have statutory expiration dates in 2036, not including any patent term extensions or adjustments.

As of December 31, 2022, the patent rights licensed from BIDMC include two patents granted in the United States and 32 patents granted in other jurisdictions, including Canada, Australia and selected countries in Europe and Asia.

As of December 31, 2023, the patent rights licensed from BIDMC include two patents granted in the United States and 33 patents granted in other jurisdictions, including Canada and selected countries in Europe and Asia.

In addition, the patent rights licensed from BIDMC include patent applications pending in the United States, Europe and Canada.

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As of December 31, 2023, the patent rights in-licensed under the MedImmune Agreement relating to our program include three granted patents in the United States and 113 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, Australia, 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.

patents may be longer due to patent term adjustment to compensate for delays during the patent prosecution process.

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 United States patents may be longer due to patent term adjustment to compensate for delays during the patent prosecution process.

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.

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

There can be no assurances that patents will issue from any pending patent applications or that any existing patents may be extended.

See “ Risk Factors—Risks Related to Intellectual Property—If we are unable to adequately protect our proprietary technology or obtain and maintain patent protection for our technology and products, if the scope of the patent protection obtained is not sufficiently broad, or if the terms of our patents are insufficient to protect our product candidates for an adequate amount of time, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be materially impaired .”

Other Intellectual Property

In addition to the above, we maintain certain other intellectual property, including trademarks and know-how, related to our pre-clinical development and broader Kiniksa brand.

There can be no assurances that patents will issue from any of our pending patent applications or that any of our existing patents may be extended.

See “ Risk Factors—Risks Related to Intellectual Property— If we are unable to adequately protect our proprietary technology or obtain and maintain patent protection for our technology and products, if the scope of the patent protection obtained is not sufficiently broad, or if the terms of our patents are insufficient to protect our product candidates for an adequate amount of time, our competitors could develop and

commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be materially impaired .”

In the future, if and when our drug candidates receive approval by the FDA or comparable regulatory authorities in other jurisdictions (as applicable, “regulatory authorities”), 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.

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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.

The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.

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

United States Government Regulation of Biological Products

In the United States, the FDA regulates biologics under the Federal Food, Drug, and Cosmetic Act (the “FDCA”) and the Public Health Service Act (the “PHSA”) and their implementing regulations.

Biologics are also subject to other federal, state and local statutes and regulations.

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

● Completion of extensive preclinical studies and tests in accordance with applicable regulations, including Good Laboratory Practice (“GLP”), regulations and applicable requirements for the humane use of laboratory animals or other applicable regulations;

● Submission to FDA of an IND which must become effective before human clinical trials may begin;

● Submission to FDA of an investigational new drug application (an “IND”) which must become effective before human clinical trials may begin;

● Approval by an independent institutional review board (an “IRB”), or ethics committee at each clinical trial site before each trial may be initiated;

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An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before human clinical trials may begin.

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

An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to CMC issues, preclinical issues, or one or more issues in the proposed clinical trials and places the clinical trial on a clinical hold.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

As a result, submission of an IND may not necessarily result in the FDA allowing clinical trials to commence.

The FDA also may place the IND on partial clinical hold, and a proposed study may only be partially executable, including due to FDA restrictions.

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

Clinical Trials

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

Furthermore, each

clinical trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits.

The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative, and must monitor the clinical trial until completed.

Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, commonly known as a Data Safety Monitoring Board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

Depending on its charter, this group may determine whether a trial may move forward at designated check points based on access to certain data from the trial.

The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the participants are being exposed to an unacceptable health risk.

Furthermore, an IRB representing each institution at which the clinical trial will be conducted must review and approve the plan for any clinical trial, including, among other things, the protocol and informed consent information to be provided to clinical trial subjects or their legal representatives, to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits.

The IRB also must monitor the clinical trial until completed.

Some clinical trials also include oversight by an independent group of qualified experts organized by the clinical study sponsor, commonly known as a Data Safety Monitoring Board, which may recommend continuation of a trial as planned, changes in the trial or cessation of the trial at designated check points based on access to certain data from the trial.

The FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the participants are being exposed to an unacceptable health risk.

Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to participants.

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

● Phase 1 clinical trials generally involve a small number of healthy participants with the target disease or condition who are initially exposed to a single dose and then multiple doses of the product candidate.

The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the drug, and, if possible, to gain early evidence on effectiveness.

● Phase 1 clinical trials generally involve a small number of healthy participants, or in the case of product candidates for severe or life-threatening diseases, including rare diseases, participants with the target disease or condition who are initially exposed to a single dose and then multiple doses of the product

The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, tolerability and safety of the drug.

● Phase 2 clinical trials involve studies in participants with the target disease or condition to determine the optimal dose and dosing schedule.

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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.

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 (collectively, “CMC”) 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 substantial evidence supporting the safety, purity, potency (or efficacy) of the product candidate and may include both negative and ambiguous results of preclinical studies and clinical trials as well as positive findings.

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Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act (the “PDUFA”), for original BLAs, the FDA has ten months from the filing date in which to complete its initial review of a standard application and respond to the applicant, and six months from the 60-day filing date for an application with priority review.

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.

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.

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

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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 (“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.

The REMS plan could include medication guides, physician communication plans, assessment plans or elements to assure safe use, such as restricted distribution methods, patient registries or other risk minimization tools.

The FDA determines the requirement for a REMS, as well as the specific REMS provisions, on a case-by-case basis.

If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS.

The FDA will not approve a BLA without a REMS, if required.

Under the Pediatric Research Equity Act (“PREA”), a BLA or supplement to a BLA must contain data that are adequate to assess the safety and efficacy of the product candidate for the claimed indications in all relevant pediatric populations and to support dosing and administration for each pediatric population for which the product is safe and effective.

The FDA may grant deferrals for submission of pediatric data or full or partial waivers.

The Food and Drug Administration Safety and Innovation Act, amended the FDCA to require that a sponsor who is planning to submit a

marketing application for a product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan (a “iPSP”) within sixty days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase 3 or Phase 2/3 clinical trial.

The initial iPSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including trial objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information.

Sponsors must submit an initial Pediatric Study Plan (a “iPSP”) that includes an outline of the pediatric study or studies that the sponsor plans to conduct, including trial objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information.

The FDA and the sponsor must reach an agreement on the iPSP.

A sponsor can submit amendments to an agreed upon initial iPSP at any time if changes to the pediatric plan need to be considered based on data collected from preclinical studies, early phase clinical trials or other clinical development programs.

After the FDA evaluates a BLA, it will issue an approval letter or a Complete Response Letter.

The FDA reviews a BLA to determine, among other things, whether the product candidate is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product candidate’s identity, strength, quality and purity.

The approval process is lengthy and difficult, and the FDA may refuse to approve a BLA if the applicable regulatory criteria are not satisfied or may require additional clinical or other data and information.

After the FDA evaluates a BLA, it will issue an approval letter or a Complete Response Letter (“CRL”).

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

A Complete Response Letter indicates that the review cycle of the application is complete and the application will not be approved in its present form.

A Complete Response Letter usually describes all of the specific deficiencies in the BLA identified by the FDA.

The Complete Response Letter may require additional clinical or other data, additional clinical trial(s) or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing.

If a Complete Response Letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.

A CRL indicates that the review cycle of the application is complete and the application will not be approved in its present form.

A CRL usually describes all of the specific deficiencies in the BLA identified by the FDA.

The CRL may require additional clinical or other data, additional clinical trial(s) or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing.

If a CRL is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.

If and when the deficiencies have been addressed to the FDA’s satisfaction, the FDA will issue an approval letter.

Even if such data and information are submitted, the FDA may decide that the re-submitted BLA does not satisfy the criteria for approval.

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.

If a product receives regulatory approval, the approval is limited to the conditions of use (e.g., patient population, indication) described in the FDA-approved labeling.

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 risk evaluation and mitigation strategy (“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.

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.

Orphan Drug Designation

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

Orphan Drug designation must be requested before submitting a BLA.

Orphan Drug designation must be requested by the sponsor 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.

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In addition, 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.

However, competitors may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.

A designated Orphan Drug may not receive Orphan Drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.

In addition, exclusive marketing rights in the U.S.

may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Expedited Review and Approval

The FDA has various programs, including Fast Track designation, Breakthrough Therapy designation, accelerated approval and priority review, which are intended to expedite or simplify the process for the development and FDA review of drugs and biologics that are intended for the treatment of serious or life-threatening diseases or conditions and demonstrate the potential to address unmet medical needs.

The purpose of these programs is to provide important new drugs and biologics to patients earlier than under standard FDA review procedures.

The FDA is authorized to designate certain product candidates for expedited development and review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition.

These programs include Fast Track designation, Breakthrough Therapy designation, accelerated approval and priority review.

To be eligible for a Fast Track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need for such disease or condition.

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The FDA may also review sections of the BLA for a Fast Track product on a rolling basis before the complete application is submitted, if the sponsor and the FDA agree on a schedule for the submission of the application sections, and the sponsor pays any required user fees upon submission of the first section of the BLA.

A product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for Breakthrough Therapy designation to expedite its development and review.

A product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for Breakthrough Therapy designation.

A product candidate can receive Breakthrough Therapy designation if preliminary clinical evidence indicates that the product candidate, alone or in combination with one or more other drugs or biologics, 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 beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate, including involvement of senior managers.

Any BLA submitted to the FDA for approval, including a BLA for a product candidate with a Fast Track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

A BLA is eligible for priority review if the product candidate is designed to treat a serious condition, and if approved, would provide a significant improvement in safety or effectiveness compared to marketed products.

The FDA may designate a product candidate is eligible for priority review if the product candidate is designed to treat a serious condition, and if approved, would provide a significant improvement in safety or effectiveness compared to marketed products.

The FDA will attempt to direct additional resources to the evaluation of an application for a biologic designated for priority review in an effort to facilitate the review.

The FDA endeavors to review original BLAs with priority review designations within six months of the filing date as compared to ten months under its standard review goals.

In addition, a product candidate 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 candidate 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.

The FDA endeavors to review original

BLAs with priority review designations within six months of the filing date as compared to ten months under its standard review goals.

In addition, a product candidate intended to treat serious or life-threatening diseases or conditions may be eligible for accelerated approval upon a determination that the product candidate 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 generally requires that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled confirmatory 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.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be

Furthermore, Fast Track designation, Breakthrough Therapy designation, accelerated approval and priority review do not change the standards for approval and may not ultimately expedite the development or approval process.

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An abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product was created by the Biologics Price Competition and Innovation Act of 2009 (the “BPCIA”) as part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (the “ACA”).

Biosimilarity, which requires that the biological product be highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there be no clinically meaningful differences between the product and the reference product in terms of safety, purity and potency, must be shown through analytical studies, animal studies and a clinical trial or trials.

Under the BPCIA, a manufacturer may submit an application for a biological product that is “biosimilar to” or “interchangeable with” a previously approved biological product or “reference product.” Biosimilarity, which requires that the biological product be highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there be no clinically meaningful differences between the product and the reference product in terms of safety, purity and potency, must be shown through analytical studies, animal studies and a clinical trial or trials.

Interchangeability requires that a biological product be biosimilar to the reference product and that the product can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple times to an individual, that the product and the reference product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product without such alternation or switch.

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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.

Foreign Government Regulation

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

The CTA must include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation.

include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation.

The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules.

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Other national and EU-wide regulatory requirements may also apply.

Medicines used in clinical trials must be manufactured in accordance with cGMP.

Other national and EU-wide regulatory requirements may also apply.

Marketing Authorization

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Under the centralized procedure and in exceptional cases, the CHMP might perform an accelerated review of a MA in no more than 150 days (not including clock stops).

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.

In March 2016, the EMA launched an initiative, the Priority Medicines (“PRIME”) scheme, a voluntary scheme aimed at enhancing the EMA’s support for the development of medicines that target unmet medical needs.

It is based on increased interaction and early dialogue with companies developing promising medicines, to optimize their product development plans and speed up their evaluation to help them reach patients earlier.

Product developers that benefit from PRIME designation can expect to be eligible for accelerated assessment but this is not guaranteed.

Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated MAA assessment once a dossier has been submitted.

Importantly, a dedicated contact and rapporteur from the CHMP is appointed early in the PRIME scheme facilitating increased understanding of the product at EMA’s committee level.

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

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

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New products authorized for marketing (i.e., reference products) generally receive eight years of data exclusivity and an additional two years of market exclusivity upon receiving MA.

If granted, 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 MA in the EU during a period of eight years from the date on which the reference product was first authorized in the EU.

The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until ten years have elapsed from the initial authorization of the reference product in the EU.

If granted, the data exclusivity period prevents biosimilar applicants from relying on the pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a biosimilar MA in the EU during a period of eight years from the date on which the reference product was first authorized in the EU.

The market exclusivity period prevents a successful 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 MA 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.

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(2) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify investment;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition.

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition

authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition.

The application for Orphan Drug designation must be submitted before the application for MA.

Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a MA, entitled to ten years of market exclusivity for the approved therapeutic indication.

During this ten-year orphan market exclusivity period, the competent authorities cannot accept another MAA, or grant an MA, or accept an application to extend a MA for a similar product for the same indication.

The period of market exclusivity is extended by

two years for orphan medicinal products that have also complied with an agreed pediatric investigation plan (a “PIP”).

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

During this ten-year orphan market exclusivity period, the competent authorities cannot accept another MAA, grant an MA, or accept an application to extend a MA for a similar product for the same indication.

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

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Pediatrics Development

In the EU, MAAs 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 (the “PDCO”).

In the EU, MAAs for new medicinal products generally must either include the results of studies conducted in the pediatric population or contain a PDCO-approved plan to address the needs of the pediatric population in an appropriate and timely way, in compliance with a pediatric investigation plan (a “PIP”) agreed with the EMA’s Pediatric Committee (the “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 EU member states 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.

Further, the obligation to provide pediatric clinical trial data can be waived by the PDCO when this data is not needed or appropriate because the product is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients.

Once the MA is obtained in all EU member states and study results are included in the product information, even when negative, the product is eligible for six months’ supplementary extension of the basic patent 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 ten-year orphan market exclusivity is granted.

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

PRIME Designation

In the EU, innovative products that target conditions with an unmet medical need may be eligible for a number of expedited development and review programs, such as the Priority Medicine (“PRIME”) scheme, which provides incentives similar to the Breakthrough Therapy designation in the United States.

PRIME is a voluntary operational framework based on increased interaction and early dialogue between the EMA and companies developing promising medicines, to optimize their product development plans and speed up their evaluation to help them reach patients earlier.

The benefits of a PRIME designation include the appointment of a rapporteur before submission of an MAA, early dialogue and scientific advice at key development milestones, and the potential to qualify products for accelerated review earlier in the application process.

Product developers that benefit from PRIME designation may be eligible for accelerated assessment (in 150 days instead of 210 days), which may be granted for medicinal products of major interest from a public health perspective or that target an unmet medical need, but this is not guaranteed.

Post-approval Requirements

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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.

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

The holder of a MA must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance (a “QPPV”) who is

responsible for the establishment and maintenance of that system and oversees the safety profiles of medicinal products and any emerging safety concerns.

Key obligations include expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports (“PSURs”).

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Direct-to-consumer advertising of prescription medicines is also prohibited in the EU.

Although general requirements for advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations in each member state and can differ from one country to another.

Although general requirements for advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations and various trade associations’ codes of conduct in each member state and can differ from one country to another.

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.

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

In February 2023, the EU and UK reached an agreement, known as the Windsor Framework, on the future of trade with Northern Ireland, which amends certain aspects of the Northern Ireland protocol.

Pursuant to the Northern Ireland protocol, different medicinal product regulatory regimes applied in Great Britain (being England, Scotland and Wales) and Northern Ireland.

In particular, Northern Ireland was bound by EU law concerning medicinal products, whereas Great Britain was not.

The Windsor Framework corrects this by disapplying EU pharmaceutical law in Northern Ireland and ensuring regulatory continuity between Great Britain and Northern Ireland.

In practice this means that, when these provisions take effect on January 1, 2025, medicinal products destined for sale in both Great Britain and Northern Ireland will be sold under one marketing authorization (MA), and in the same packaging and labelling.

The EU laws that have been transposed into United Kingdom (the “UK”) law through secondary legislation remain applicable in Great Britain.

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

New legislation such as the EU CTR or in relation to orphan medicines will not be applicable to Great Britain.

However, under the Retained EU Law (Revocation and Reform) Act 2023, which received royal assent on June 29, 2023, any retained EU law not expressly preserved and “assimilated” into domestic law or extended by ministerial regulations (to no later than June 23, 2026) was automatically expired and revoked by December 31, 2023.

New legislation such as the EU CTR or in relation to orphan medicines is, therefore, not applicable to Great Britain.

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

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

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

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

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

The MHRA may rely on a decision taken by the European Commission on the approval of a new (centralized procedure) MA when determining an application for a GB authorization (the so-called “EC Decision Reliance Procedure”);

or use the MHRA’s decentralized or mutual recognition procedures which enable MAs approved in EU member states (or Iceland, Liechtenstein, Norway) to be granted in GB (the so-called “MRDC Reliance Procedure”).

The MHRA may use the MHRA’s decentralized or mutual recognition procedures which enable MAs approved in EU member states (or Iceland, Liechtenstein or Norway) to be granted in GB (the so-called “MRDC Reliance Procedure”).

Until December 31, 2023, the MHRA was able to rely on a decision taken by the European Commission on the approval of a new (centralized procedure) MA when determining an application for a GB authorization (the so called “EC Decision Reliance Procedure”).

Since January 1, 2024, the EC Decision Reliance Procedure has been replaced by the new International Recognition procedure (“IRP”).

The IRP expands the trusted regulatory partners to which the MHRA relies upon to include Australia, Canada, Switzerland, Singapore, Japan, the United States and the EU.

The MHRA will retain the authority to reject IRP applications if the evidence provided is considered insufficiently robust.

There will be no pre-MA orphan designation.

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Rest of the World Regulation

For other countries outside of the EU and the United States, such as countries in Eastern Europe, Latin America, Asia, or Japan, the requirements governing the conduct of clinical trials, product licensing, pricing and

reimbursement vary from jurisdiction to jurisdiction.

Additionally, the clinical trials must be conducted in accordance with GCP requirements and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

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Other Healthcare Laws

In addition to FDA restrictions on the marketing of pharmaceutical products, other U.S., federal, state and foreign 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 and transparency laws with respect to drug pricing and payments and other transfers of value made to physicians and other healthcare professionals.

Similar laws exists in foreign jurisdictions, including the EU, 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 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.

Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly.

Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not meet the requirements of a statutory or regulatory exception or safe harbor.

Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the U.S.

federal Anti-Kickback Statute.

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.

The majority of states also have anti-kickback laws, which establish similar prohibitions and in some cases may apply to items or services reimbursed by any third-party payor, including commercial insurers, or to self-pay patients.

The federal false claims and civil monetary penalties laws, including the civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false, fictitious or fraudulent claim for payment to, or approval by, the federal government, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S.

federal government.

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.

federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

Actions under the civil False Claims Act may be brought by the Attorney General or as a qui tam action by a private individual in the name of the government.

Violations of the civil False Claims Act can result in very significant monetary penalties and treble damages.

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.

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.

Federal civil monetary penalties laws impose civil fines for, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies.

The federal Health Insurance Portability and Accountability Act of 1996 (“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.

federal Anti-Kickback Statute, 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.

In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians and certain other healthcare providers.

The ACA 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), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), 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.

Moreover, analogous state and foreign laws and regulations may be broader in scope than the provisions described above and may apply regardless of payor.

In the U.S., activities of pharmaceutical manufacturers are subject to numerous other federal, state, and local laws designed to, for example, prevent “fraud and abuse” in the delivery of and payment for healthcare;

promote transparency in interactions with others in the healthcare industry;

and regulate government payment for drugs.

These laws are enforced by various federal and state enforcement authorities and non-compliance, or alleged non-compliance, with such laws could adversely affect our reputation, our business and our financial results.

See “ Risk Factors – Risks Related to Commercialization- Our business operations are subject to extensive healthcare regulation and enforcement by various government entities, and our failure to strictly adhere to these regulatory requirements could have a detrimental impact on our business .” Similar laws exist in foreign jurisdictions, including the EU, as well.

We may be subject to various federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws (which typically prohibit soliciting, offering, receiving, or paying anything of value to generate healthcare business reimbursable by third party payors, including Medicare and Medicaid), and false claims laws (which generally

prohibit anyone from knowingly and willingly presenting, or causing to be presented, any false or fraudulent claims for payment for reimbursed drugs or services to third party payors, including Medicare and Medicaid).

Although the specific provisions of these laws vary, their scope is generally broad and there may not be regulations, guidance, or court decisions that apply the laws to particular industry practices.

Laws and regulations have also been enacted by the federal government and various states to regulate the sales and marketing practices of pharmaceutical manufacturers, including laws that require manufacturers to adopt certain compliance standards;

restrict interactions with healthcare professionals;

disclose financial interactions with healthcare professionals to the government and public;

report pricing information or marketing expenditures;

or register sales representatives.

Many of these laws and regulations contain ambiguous requirements or require administrative guidance for implementation.

Given the lack of clarity in laws and their implementation, our activities could be subject to challenge.

We may need to obtain and maintain licenses for our manufacturing and distribution activities in the states in which we operate or distribute our products.

Moreover, analogous foreign laws and regulations may be broader in scope than the provisions described above and may apply regardless of payor.

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

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

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

Additionally, there has been a recent trend of increased regulation of payments and transfers of value provided to healthcare professionals or entities and many EU member states have adopted national laws which impose requirements to disclose financial interactions with healthcare professionals to the government and public (often on an annual basis), similar to the requirements in the United States, on pharmaceutical companies.

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

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.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations.

Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.

Given that the scope of these laws is often broad and government interpretation and enforcement of these laws is constantly evolving, we cannot be certain that our activities will not be challenged.

Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare professionals, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.

Ensuring that business arrangements with third parties comply with applicable healthcare laws and regulations is costly and time consuming.

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 of executive officers and employees of such companies, 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

Significant uncertainty exists as to the coverage and reimbursement status of any biological products for which we obtain regulatory approval.

The United States government, state legislatures and governments outside the United States have shown significant interest in implementing cost containment programs to limit the growth of government-paid healthcare costs, including price-controls, restrictions on reimbursement and requirements for substitution of generic products for branded drug and biologic products.

Significant uncertainty exists as to the coverage and reimbursement status of any approved biological products.

The United States government, state legislatures and governments outside the United States have shown significant interest in implementing cost containment programs to limit the growth of government-paid healthcare costs, including price-controls, restrictions on reimbursement and requirements for substitution of biosimilar products for branded drug and biologic products.

In the United States and markets in other countries, patients who are prescribed products generally rely on third party payors to reimburse all or a substantial part of the associated healthcare costs.

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For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs.

If approved, sales of our product candidates will depend, in part, on the availability of coverage and adequate reimbursement from third-party payors.

If approved, sales of our product candidates will depend, in part, on the availability of coverage and adequate

reimbursement from third party payors.

Third party payors include government authorities, managed care plans, private health insurers and other organizations.

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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.

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.

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In addition, in some countries, cross border imports from low-priced markets exert a commercial pressure on pricing within a country.

Government Price Reporting

Medicaid is a joint federal and state program administered by the states for low-income and disabled beneficiaries.

Under the Medicaid Drug Rebate Program (“MDRP”), as a condition of federal funds being made available for our covered outpatient drugs under Medicaid and for certain drugs or biologicals under Medicare Part B, we pay a rebate to state Medicaid programs for each unit of our covered outpatient drugs dispensed to a Medicaid beneficiary and paid for by the state Medicaid program.

Medicaid rebates are based on pricing data that we report on a monthly and quarterly basis to the U.S.

Centers for Medicare & Medicaid Services (“CMS”), the federal agency that administers the MDRP and Medicare programs.

For the MDRP, these data include the average manufacturer price (“AMP”) for each drug and, in the case of innovator products, best price.

If we become aware that our MDRP price reporting submission for a prior period was incorrect or has changed as a result of recalculation of the pricing data, we must resubmit the revised data for up to three years after those data originally were due.

If we fail to provide information timely or are found to have knowingly submitted false information to the government, we may be subject to civil monetary penalties and other sanctions, including termination from the MDRP, in which case payment would not be available for our covered outpatient drugs under Medicaid or, if applicable, Medicare Part B.

Federal law requires that a manufacturer that participates in the MDRP also participate in the Public Health Service’s 340B drug pricing program (the “340B program”) in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B.

The 340B program is administered by the Health Resources and Services Administration (“HRSA”) and requires us, as a participating manufacturer, to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for our covered outpatient drugs when used in an outpatient setting.

These 340B covered entities include a variety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as hospitals that serve a disproportionate share of low-income patients.

A drug that is designated for a rare disease or condition by the Secretary of Health and Human Services is not subject to the 340B ceiling price requirement with regard to the following types of covered entities:

rural referral centers, sole community hospitals, critical access hospitals, and free-standing cancer hospitals.

The 340B ceiling price is calculated using a statutory formula, which is based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP.

In general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement.

We must report 340B ceiling prices to HRSA on a quarterly basis, and HRSA publishes them to 340B covered entities.

HRSA has finalized regulations regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities for 340B-eligible drugs.

HRSA has also finalized an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges, and through which manufacturers may pursue claims against 340B covered entities for engaging in unlawful diversion or duplicate discounting of 340B drugs.

In order to be eligible to have drug products paid for with federal funds under Medicaid and Medicare Part B and purchased by certain federal agencies and grantees, we must also participate in the U.S.

Department of Veterans Affairs (“VA”) Federal Supply Schedule (“FSS”) pricing program.

Under the VA/FSS program, we must report the Non-Federal Average Manufacturer Price (“Non-FAMP”) for our covered drugs to the VA and charge certain federal agencies no more than the Federal Ceiling Price, which is calculated based on Non-FAMP using a statutory formula.

These four agencies are the VA, the U.S.

Department of Defense, the U.S.

Coast Guard, and the U.S.

Public Health Service (including the Indian Health Service).

We must also pay rebates on products purchased by military personnel and dependents through the TRICARE retail pharmacy program.

If we fail to provide timely information or are found to have knowingly submitted false information, we may be subject to civil monetary penalties.

Individual states continue to consider and have enacted legislation to limit the growth of healthcare costs, including the cost of prescription drugs and combination products.

A number of states have either implemented or are considering implementation of drug price transparency legislation.

Government Programs and Price Reporting

We are subject to federal laws, including the Medicaid Drug Rebate Program (the “MDRP”), that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs.

Reporting requirements are complex and, in some instances, require reporting manufacturers to make reasonable assumptions in interpreting their obligations.

Our products are eligible to be reimbursed by Medicaid.

Medicaid is a joint federal and state program that is administered by the states for low-income and disabled beneficiaries.

Under the MDRP, participating manufacturers are required to pay a rebate for each unit of product reimbursed under the state Medicaid programs.

The amount of the rebate for each product is set by law and depends in part on the prices at which our products are sold to certain other purchasers and may be subject to an additional discount if certain pricing increases more than inflation.

State Medicaid programs and Medicaid managed care plans can seek additional “supplemental” rebates from manufacturers.

Medicare is a federal program that is administered by the federal government that covers individuals age 65 and over, disabled individuals and individuals with certain conditions.

Medicare Part B generally covers drugs that are usually administered by physicians or other clinicians.

Medicare Part B pays for such drugs under a payment methodology based on the average sales price (“ASP”) of the drugs, with manufacturers reporting an ASP for their drug products.

Reimbursement levels and reimbursement methodologies have come under scrutiny and may be subject to change.

Medicare Part D provides coverage for self-administered drugs (i.e., drugs that do not need to be injected or otherwise administered by a physician).

Medicare Part D is administered by private prescription drug plans approved by the U.S.

government and each drug plan establishes its own Medicare Part D formulary for prescription drug coverage and pricing, which the drug plan may modify from time-to-time.

The prescription drug plans negotiate pricing with manufacturers and may condition formulary placement on the availability of manufacturer discounts.

Manufacturers with marketed brand name drugs are required to provide discounts on brand name prescription drugs utilized by Medicare Part D beneficiaries, with discount requirements changing over time.

● Federal Purchasers .

Drug products are subject to discounted pricing when purchased by federal agencies via the Federal Supply Schedule (“FSS”).

FSS participation is required for a drug to be covered and reimbursed by certain federal agencies and for coverage under Medicaid, Medicare Part B and the Public Health Service (“PHS”) 340B drug pricing program.

FSS pricing is negotiated periodically with the Department of Veterans Affairs.

FSS pricing is intended not to exceed the price that a manufacturer charges its most-favored non-federal customer for its product.

In addition, prices for drugs purchased by the Veterans Administration, Department of Defense (including drugs purchased by military personnel and dependents through the TRICARE retail pharmacy program), Coast Guard and PHS are subject to a cap on pricing (known as the “federal ceiling price”) and may be subject to an additional discount if pricing increases more than the rate of inflation.

● PHS 340B Drug Pricing Program .

To maintain coverage of drugs under the MDRP and Medicare Part B, manufacturers are required to extend discounts to certain purchases under the PHS 340B drug pricing program.

Purchasers eligible for discounts include hospitals that serve a disproportionate share of financially needy patients, community health clinics and other entities that receive health services grants from the PHS.

Additionally, a number of states have either implemented or are considering implementation of drug price transparency legislation.

Requirements under such laws include advance notice of planned price increases, reporting price increase amounts and factors considered in taking such increases, wholesale acquisition cost information disclosure to prescribers, purchasers, and state agencies, and new product notice and reporting.

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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 FDA’s 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 (the “Cures Act”) was signed into law.

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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.

A primary trend in the U.S.

healthcare industry and elsewhere is cost containment.

Government authorities and other third-party payors have attempted to control costs by limiting coverage and the level of reimbursement for particular medical products and services, implementing reductions in Medicare and other healthcare funding and applying new payment methodologies.

For example, in March 2010, the ACA was enacted, which, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program;

introduced a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;

extended manufacturer Medicaid rebate obligations to utilization by individuals enrolled in Medicaid managed care plans;

established a new Medicare Part D coverage gap discount program;

subjected drug manufacturers to new annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs;

created a new Patient Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

and established a Center for Medicare and Medicaid 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, executive and Congressional challenges to certain aspects of the ACA.

On June 17, 2021, the U.S.

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

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted.

The Budget Control Act of 2011, among other things, led to reductions of Medicare payments to providers, which will remain in effect through 2031 unless additional Congressional action is taken.

More recently, in March 2021, President Biden signed into law the American Rescue Plan Act of 2021, which eliminates the statutory cap on the Medicaid drug rebate, currently set at 100% of a drug’s AMP, beginning January 1, 2024.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA 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 and will remain in effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional action is taken by Congress;

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;

and the American Rescue Plan Act of 2021, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s AMP, beginning January 1, 2024.

More recently, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for pharmaceutical and biologic products.

Most recently, on August 16, 2022 the Inflation Reduction Act of 2022 (“IRA”) was signed into law.

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

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

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

The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

For that and other reasons, it is currently unclear how the IRA will be effectuated, and the impact of the IRA on the pharmaceutical industry cannot yet be fully determined.

Additionally, in the United States, federal and state governments continue to propose and pass legislation designed to reform delivery of, or payment for, health care, which include initiatives to reduce the cost of healthcare generally and drugs specifically.

For example, in March 2010, the U.S.

Congress enacted the ACA, which expanded health care coverage through Medicaid expansion and the implementation of the individual mandate for health insurance coverage and which included changes to the coverage and reimbursement of drug products under government healthcare programs.

Since its enactment, there have been and likely will be judicial, administrative, executive and legislative challenges to certain aspects of the ACA.

Beyond the ACA, there are ongoing and widespread health care reform efforts, a number of which have focused on regulation of prices or payment for drug products.

Drug pricing and payment reform was a focus of the Trump Administration and has been a focus of the Biden Administration.

For example, federal legislation enacted in 2021 eliminates a statutory cap on Medicaid drug rebate program rebates effective January 1, 2024.

As another example, the Inflation Reduction Act (the “IRA”) of 2022 includes a number of changes intended to address rising prescription drug prices in Medicare Parts B and D, with varying implementation dates.

These changes include caps on Medicare Part D out-of-pocket costs, Medicare Part B and Part D drug price inflation rebates, a new Medicare Part D manufacturer discount drug program (replacing the ACA Medicare Part D coverage gap discount program) and a drug price negotiation program for certain high spend Medicare Part B and D drugs (with the first list of drugs announced in 2023).

Subsequent to the enactment of the IRA, in 2022, the Biden administration released an executive order directing the Department of Health and Human Services (“HHS”) to report on how the Center for Medicare and Medicaid Innovation (the “CMMI”) could be leveraged to test new models for lowering drug costs for Medicare and Medicaid beneficiaries.

The report was issued in 2023 and proposed various models that the CMMI is currently developing which seek to lower the cost of drugs, promote accessibility, and improve quality of care, models are currently still in development.

The impact of the IRA on our business and the broader pharmaceutical industry remains uncertain as implementation is ongoing.

These changes or other changes could affect the market conditions for our products.

We expect continued scrutiny on drug pricing and government price reporting from Congress, agencies, and other bodies.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

Specifically, there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug and biologic pricing, reduce the cost of prescription drugs and biologics under Medicare, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drugs and biologics.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, marketing cost disclosure and other transparency measures, and, in some cases, measures designed to encourage importation from other countries and bulk purchasing.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price constraints, restrictions on copayment assistance by pharmaceutical manufacturers, value-based pricing, marketing cost disclosure and other transparency measures, and, in some cases, measures designed to encourage importation from other countries and bulk purchasing.

Healthcare reform efforts have been and may continue to be subject to scrutiny and legal challenge.

For example, with respect to the ACA, tax reform legislation was enacted that eliminated the tax penalty established for individuals who do not maintain mandated health insurance coverage beginning in 2019 and, in 2021, the U.S.

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

As another example, revisions to regulations under the federal anti-kickback statute would remove protection for traditional Medicare Part D discounts offered by pharmaceutical manufacturers to pharmacy benefit managers and health plans.

Pursuant to court order, the removal was delayed and recent legislation imposed a moratorium on implementation of the rule until January 2032.

As another example, the IRA drug price negotiation program has been challenged in litigation filed by various pharmaceutical manufacturers and industry groups.

Health care reform at the federal or state level could affect demand for, or pricing of, our product candidates if approved for sale.

We cannot, however, predict the ultimate content, timing, or effect of any federal and state reform efforts.

There is no assurance that federal or state health care reform will not adversely affect our future business and financial results.

In addition, other broader legislative changes have been adopted that could have an adverse effect upon, and could prevent, our products’ commercial success.

For example, the Budget Control Act of 2011, as amended, resulted in the imposition of reductions in Medicare (but not Medicaid) payments to providers in 2013 and remains in effect through 2032 unless additional Congressional action is taken.

Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes or fees that may be imposed on us could have an adverse impact on our results of operations.

Outside the United States, there are also reform efforts.

On December 13, 2021, the EU adopted Regulation No 2021/2282 on Health Technology Assessment (the “HTA”).

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Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.

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.

On April 26, 2023, the Commission published its long-awaited proposals to revise the EU’s pharmaceutical legislation.

The proposals seek to balance supporting innovation and increasing affordability and availability of medicines.

The most controversial proposal is the shortening of regulatory protection periods to six (6) years of data exclusivity and two (2) years of market exclusivity (rather than the current eight (8) years data exclusivity and two (2) years market exclusivity).

Other proposals include:

(i) a transferable data exclusivity voucher for ‘priority antimicrobials’ entitling the holder to an additional one year data protection for any other centrally approved product (provided this is used within the first four years of data protection for that product) in an effort to encourage the development of new antimicrobials capable of combating antimicrobial resistance;

(ii) greater flexibility for hospital pharmacies to prepare product for dispensing products in response to individual prescriptions;

(iii) compulsory licenses for public health emergencies which would lead to suspension of data and market exclusivities while the compulsory license is in place;

(iv) further transparency and disclosure requirements;

(v) requirements for MAA to include an environmental risk assessment for the product;

and (vi) streamlining regulatory procedures, reducing approval timeline by over 50 days for centrally authorized products.

Timelines for these proposed changes to legislation are currently unknown and may be further complicated by the end of the current Commission’s term of office in October 2024.

Data Privacy and Security Laws

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

In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws and consumer protection laws and regulations govern the collection, use, disclosure, and protection of health-related and other personal information.

addition, certain foreign laws govern the privacy and security of personal data, including health-related data.

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

and consumer protection laws and regulations govern the collection, use, disclosure, and protection of health-related and other personal information.

In addition, certain foreign laws govern the privacy and security of personal data, including health-related data.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

Human Capital

We aim to cultivate a highly-skilled and passionate team determined to strive to deliver transformative therapies to the patients who need them most.

We aim to cultivate a highly-skilled and passionate team determined to deliver transformative therapies to the patients who need them most.

As of December 31, 2023, we had approximately 297 full-time employees, of which approximately 286 were located within the United States and approximately 11 were located outside of the United States.

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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 different 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.

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 and a robust benefit package designed to promote well-being across different 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, Equity and Inclusion.

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We believe that our business benefits from the different perspectives that a diverse workforce brings, and we pride ourselves on having an inclusive culture.

In 2021, we launched our diversity statement as a way to formally express our commitment to diversity, equity and inclusion (“DEI”) goals and initiated a monthly DEI dashboard for our employees.

Our diversity statement formally expresses our commitment to diversity, equity and inclusion (“DEI”) goals and we maintain a monthly DEI dashboard for our employees.

This initiative is part of our broader effort to establish a systematic approach towards DEI.

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Health and safety principles 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 and emergency response plan, driving to understand and mitigate against health and safety incidents.

To foster a safe and healthy culture, we have implemented a comprehensive safety program and emergency response plan to ensure that we understand and mitigate health and safety incidents.

As part of our employee health and safety program, we have a number of safety policies that employees are required to train on, conduct periodic on-site safety drills at our offices and perform periodic internal and external safety audits.

In response to the COVID-19 pandemic and measures introduced by state and federal governments in the United States, we have implemented COVID-19-specific workplace safety protocols at our facilities.

require all employees entering our workplaces in the United States to be fully vaccinated against COVID-19, subject to a reasonable accommodation process.

We have also established additional safety measures at our facilities, including providing personal protective equipment and recommending that employees stay home while feeling unwell.

We continue to monitor the developments, restrictions and requirements in jurisdictions where we have offices, and plan to update the protocols for our offices, as applicable.

In addition, we maintain an infectious disease policy to address safety risks arising from COVID-19 and any future pandemic or disease outbreak.

Our Corporate Information

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Where You Can Find More Information

We are subject to the information requirements of the Securities Exchange Act of 1934, as amended.

We are subject to the information requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically, such as ourselves, with the SEC at http://www.sec.gov .

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

What changed 10-K

Item 1. Business