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Item 1. Business

2022-03-25 compared with 2021-03-04 · 249 added, 218 removed, 382 unchanged (55% of the section changed)

We are a clinical-stage biotechnology company focused on developing treatments for patients suffering from complex rare diseases using our novel cell penetrating peptide technology platform.

Our lead product candidate, CTI-1601, is a subcutaneously administered, recombinant fusion protein intended to deliver human frataxin, or FXN, an essential protein, to the mitochondria of patients with Friedreich’s ataxia.

Friedreich’s ataxia is a rare, progressive and fatal disease in which patients are unable to produce sufficient FXN due to a genetic abnormality.

There is currently no effective therapy for Friedreich’s ataxia.

CTI-1601 is currently being evaluated in Phase 1 clinical trials in patients with Friedreich’s ataxia.

We have received orphan drug status, fast track designation and rare pediatric disease designation, from the U.S.

Food and Drug Administration, or the FDA, for CTI‑1601.

In addition, we received orphan drug designation for CTI-1601 from the European Commission.

The receipt of such designations or positive opinions may not result in a faster development process, review or approval compared to products considered for approval under conventional FDA or European Medicines Agency, or EMA, procedures and does not assure ultimate approval by the FDA or EMA.

We believe that our cell penetrating peptide, or CPP, technology platform, which enables a therapeutic molecule to cross a cell membrane in order to reach intracellular targets, has the potential to enable the treatment of other rare and orphan diseases.

Our lead product candidate, CTI-1601, is a subcutaneously administered, recombinant fusion protein intended to deliver human frataxin ("FXN") an essential protein, to the mitochondria of patients with Friedreich’s ataxia.

Friedreich’s ataxia is a rare, progressive and fatal disease in which patients are unable to produce sufficient FXN due to a genetic abnormality.

There is currently no approved therapy for Friedreich’s ataxia.

We have completed two Phase 1 clinical trials in patients with Friedreich’s ataxia but the clinical development of CTI-1601 is currently subject to a clinical hold issued by the U.S.

Food and Drug Administration ("FDA") in May 2021.

We submitted a response to the clinical hold in January 2022 but were informed by the FDA in February 2022 that the clinical hold would remain in place and that additional data is needed to resolve the clinical hold.

We are evaluating how best to respond to their request.

We do not know when, or if, the clinical hold will be lifted.

We have received orphan drug status, fast track designation and rare pediatric disease designation, from the FDA for CTI-1601.

In addition, we received orphan drug and Priority Medicines ("PRIME") designations for CTI-1601 from the European Commission.

The receipt of such designations or positive opinions may not result in a faster development process, review or approval compared to products considered for approval under conventional FDA or European Medicines Agency ("EMA") procedures and does not assure ultimate approval by the FDA or EMA.

We believe that our cell penetrating peptide ("CPP") technology platform, which enables a therapeutic molecule to cross a cell membrane in order to reach intracellular targets, has the potential to enable the treatment of other rare and orphan diseases.

We intend to use our proprietary platform to target additional orphan indications characterized by deficiencies in or alterations of intracellular content or activity.

We have assembled an experienced management team, each of whom has over 20 years of pharmaceutical industry experience.

Our management team and consultants have significant expertise in discovery, nonclinical and clinical development, regulatory affairs and the development of manufacturing processes utilizing good manufacturing practices, or GMPs, for biologics and small molecules.

We believe that our management team’s diverse mix of skills provides for the implementation of effective approaches to drug and biologic development.

Our strategy is to become a leader in the treatment of rare diseases by leveraging our technology platform and applying our management team’s know how and expertise to the development of CTI-1601 and other future pipeline programs.

Our management team and consultants have significant expertise in discovery, non-clinical and clinical development, regulatory affairs and the development of manufacturing processes utilizing good manufacturing practices (GMPs") for biologics and small molecules.

We believe that our management team’s diverse mix of skills provides for the implementation of effective approaches to drug and biologic development.

Key elements of our strategy include:

Advance CTI-1601 through Clinical Development and Regulatory Approval in the United States the European Union, or EU, and other foreign jurisdictions.

CTI-1601 is currently in Phase 1 clinical trials in the United States.

We are collaborating with key opinion leaders and seeking guidance from regulatory authorities to develop a clinical development plan for regulatory approval of CTI-1601 in the United States, the EU, the UK, Australia and Canada...

If CTI-1601 receives regulatory approvals, commercialize CTI-1601 in the United States, the EU, and other relevant countries independently or with third parties .

We intend to evaluate commercialization options in the United States the EU and in other foreign jurisdictions throughout the world where Friedreich’s ataxia patients can benefit.

Advance CTI-1601 through clinical development and regulatory approval in the United States the European Union and other foreign jurisdictions.

We have completed two Phase 1 clinical trials of CTI-1601 in patients with Friedreich’s ataxia in the United States but the clinical development of CTI-1601 is currently subject to a clinical hold issued by the FDA in May 2021.

We do not know when or if the clinical hold will be lifted.

We are continuing to collaborate with key opinion leaders and seek guidance from regulatory authorities to develop and execute a clinical development plan for regulatory approval of CTI-1601 in the United States, the European Union, the United Kingdom, Australia and Canada.

If CTI-1601 receives regulatory approvals, commercialize CTI-1601 in the United States, the European Union, and other relevant countries independently or with third parties .

We intend to evaluate commercialization options in the United States, the European Union, and in other foreign jurisdictions throughout the world where Friedreich’s ataxia patients can benefit, if we are successful in obtaining regulatory approval.

We may build our own internal sales force;

we may enter into a joint marketing partnership with another pharmaceutical or biotechnology company, whereby it may jointly sell and market CTI-1601;

we may enter into a joint marketing

partnership with another pharmaceutical or biotechnology company, whereby we may jointly sell and market CTI-1601, if approved;

or we may seek to out-license CTI-1601, whereby other pharmaceutical or biotechnology companies sell and market CTI-1601 and pay us milestone and/or royalty payments on sales.

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In addition, with our expertise in the use of a CPP to effectively deliver proteins to intracellular targets, we believe that our scientists are well positioned to design and develop additional therapies that will address unmet medical needs associated with other rare diseases.

We also plan to continue to build our intellectual property estate to improve our protein replacement therapy platform.

We also plan to continue to build our intellectual property portfolio to improve our protein replacement therapy platform.

Continue to Strengthen Key Relationships .

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The members of our scientific advisory board consist of distinguished research scientists, professors and industry experts recognized as key opinion leaders in the fields of rare disease, pediatrics and mitochondrial disease.

We build these relationships to enhance our knowledge of the patient’s needs and utilize that knowledge to design development programs intended to address unmet medical needs and add value for the patient.

Platform Technology for Treatment of Rare Genetic Diseases

There are estimated to be between 5,000 and 7,000 rare genetic diseases, which, collectively affect hundreds of millions of people worldwide.

Of the hundreds of millions of individuals suffering from these rare genetic

diseases, only 5% have therapeutic options available to manage their disease.

Of the hundreds of millions of individuals suffering from these rare genetic diseases, only approximately 5% have therapeutic options available to manage their disease.

Many of these diseases result from a deficiency in the amount or the function of a particular target molecule, often a protein.

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The ability to transport therapeutic proteins across biological membranes has, to date, not been reproducibly achieved.

The collective population of people with rare diseases stands to benefit from the emergence of a scalable treatment platform that can transport therapeutics across cell membranes to deliver them to the intracellular site of activity.

The collective population of people with rare diseases stands to benefit from the emergence of a scalable treatment platform that can transport therapeutic proteins across cell membranes to deliver them to the intracellular site of activity.

In addition, traditionally, medical treatment for each rare genetic disorder has been approached on a disease-by-disease basis.

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We are utilizing this approach to identify therapeutic opportunities where our molecules and technology are more likely to be impactful.

Lead Product Candidate—CTI-1601 For the Treatment of Friedreich’s ataxia

Friedreich’s ataxia

Friedreich’s ataxia is a rare genetic disease that is the most common inherited ataxia in humans, with an estimated 4,000-5,000 individuals living with Friedreich’s ataxia in the United States and between 18,000 and 20,000 patients affected by the condition in the EU and the United Kingdom.

Friedreich’s ataxia results from a deficiency of the mitochondrial protein, FXN.

Lead Product Candidate—CTI-1601 For the Treatment of Friedreich’s ataxia

Friedreich’s ataxia

Friedreich’s ataxia is a rare genetic disease that is the most commonly inherited ataxia in humans, with approximately 20,000 individuals living with Friedreich’s ataxia globally, and of these individuals, approximately 5,000 are in the United States and the majority of the remaining individuals are in the European Union.

Friedreich’s ataxia results from a deficiency of the mitochondrial protein, FXN.

FXN is an essential and phylogenetically conserved protein that is found in cells throughout the body, with highest levels found in the heart, spinal cord, liver, pancreas, and skeletal muscle.

FXN is encoded in the nucleus, expressed in the cytoplasm and transported into the mitochondria, where it is processed to the mature form.

FXN is encoded in the nucleus of the cell, expressed in the cytoplasm and transported into the mitochondria, where it is processed to the mature form.

As part of this process the mitochondrial targeting sequence is cleaved off in the mitochondria by a naturally occurring enzyme.

Friedreich’s ataxia is a progressive multi-symptom disease typically presenting in mid-childhood that affects the functioning of multiple organs and systems.

It is a debilitating neurodegenerative disease that results in poor coordination of legs and arms, progressive loss of the ability to walk, generalized weakness, loss of sensation, scoliosis, diabetes and cardiomyopathy as well as impaired vision, hearing and speech.

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A hypertrophic cardiomyopathy is common and associated with early mortality, typically between 30 and 50 years of age.

As of March 2021, there are no medical treatment options approved for the treatment of Friedreich’s ataxia.

As of February 2022, there are no medical treatment options approved for the treatment of Friedreich’s ataxia.

CTI-1601, a biologic fusion protein that is administered subcutaneously, consists of a CPP genetically fused to human FXN, and includes a mitochondrial targeting sequence.

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See Figure 1.

CTI-1601 is currently being evaluated in Phase 1 clinical trials.

Based solely on the results of our nonclinical development program, we believe that administering CTI-1601 may increase FXN levels in the mitochondria of patients with Friedreich’s ataxia and patients could potentially experience:

We have completed two Phase 1 CTI-1601 clinical trials.

Clinical development of CTI-1601 is currently subject to a clinical hold issued by the FDA in May 2021.

Based on the results of our non-clinical development program as well as results from our Phase 1 clinical trials, we believe that administering CTI-1601 may increase FXN levels in the mitochondria of patients with Friedreich’s ataxia and patients could potentially experience:

improved cellular function;

a positive impact on Friedreich’s ataxia symptoms;

a slowing of progression of the disease, potentially prolonging life.

Our knowledge of CTI-1601 and of the impact of CTI-1601 on gene expression gives our scientists the ability to identify potential additional disease indications based on similar alterations of genomic, lipidomic and proteomic patterns in rare diseases models.

Thus, our technology may allow us to address other rare genetic diseases that either require the replacement of molecules that need to target specific intracellular organelles, or that share alteration patterns that overlap and that are impacted by treatment with CTI-1601.

In our Phase 1 clinical trials, CTI-1601 appeared to increase FXN levels in the peripheral tissues that were tested (buccal cells, skin biopsies and platelets).

Based on this, we believe that our technology may allow us to address other rare genetic diseases that either require the replacement of molecules that need to target specific intracellular organelles, or that share similar clinical symptoms that overlap with Friedreich’s ataxia.

Finally, the use of CTI-1601 to improve mitochondrial function in other rare diseases that demonstrate evidence of mitochondrial dysfunction is also being explored.

Development of CTI-1601

Nonclinical Development

Knock-Out Mice Studies

Non-clinical Development

Knock-Out Mice and Other Non-clinical Studies

CTI-1601 has been demonstrated to prolong the life of knock-out mice or KO mice whose heart and skeletal muscles were deficient in FXN.

These mice, when untreated, develop a severe hypertrophic cardiomyopathy similar to patients with Friedreich’s ataxia and, like many Friedreich’s ataxia patients, die early in life.

In nonclinical studies of CTI-1601, the median survival in animals treated with vehicle of 98 days was extended to a median survival of 166 days in animals treated with CTI-1601 subcutaneously three times per week (p=0.0001).

These mice, when untreated, develop a severe hypertrophic cardiomyopathy similar to patients with Friedreich’s ataxia and, like many Friedreich’s ataxia patients, die early in life.

In non-clinical studies of CTI-1601, the median survival in animals treated with vehicle of 98 days was extended to a median survival of 166 days in animals treated with CTI-1601 subcutaneously three times per week (p=0.0001).

Furthermore, 87.5% of mice treated with CTI-1601 survived beyond the mean age of death in the vehicle treated group (107.5 days) whereas only 33% of vehicle treated animals survived.

Results are reflected in Figure 2.

In a second study conducted at an independent laboratory, a similar mouse model was studied.

In a separate study conducted at an independent laboratory, a similar mouse model was studied.

In this study doses of 2 mg/kg, 10 mg/kg, 30 mg/kg, 60 mg/kg and 100 mg/kg administered subcutaneously every other day were compared to vehicle.

After 2 weeks of dosing, mitochondrial extracts from cardiac tissue were analyzed for the presence of human FXN.

In addition, activity of succinate dehydrogenase, or SDH, an enzyme whose activity is dependent on the presence of FXN, was also analyzed.

In addition, activity of succinate dehydrogenase ("SDH") an enzyme whose activity is dependent on the presence of FXN, was also analyzed.

Human FXN was found in the mitochondria of the cardiomyocytes and increased with increasing dose.

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There was no further increase in activity when the animals were dosed with 60 mg/kg or 100 mg/kg but the effect was maintained at levels equivalent to that of wild type animals.

See Figure 3 and 4.

A third study, also performed at an independent laboratory, demonstrated the maintenance of cardiac function when the same KO mouse model was studied.

See Figures 3 and 4.

Another study, also performed at an independent laboratory, demonstrated the maintenance of cardiac function when the same KO mouse model was studied.

These mice were treated with CTI-1601 at doses of 10 mg/kg every other day for 6 weeks.

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Using a neurologic mouse model, treatment with CTI-1601 prevented the development of ataxia in mice whose nervous system was deficient in FXN compared to those treated with placebo.

In multiple nonclinical studies in rodents and non-human primates, or NHPs , human FXN was found to be distributed into all tissues tested following CTI-1601 dosing.

In multiple non-clinical studies in rodents and non-human primates ("NHPs") human FXN was found to be distributed into all tissues tested following CTI-1601 dosing.

See Figure 7.

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CSF, Skin, Buccal Cells, Platelets

Since CTI-1601 is intended to increase FXN levels in patients with Friedreich’s ataxia who are deficient in FXN, it is important to be able to measure changes in human FXN in the clinic in easily accessible tissues.

To accomplish this, we have developed an assay that can measure and quantify human FXN in buccal swabs skin biopsies and platelets.

To accomplish this, we have developed a proprietary assay that can measure and quantify human FXN in buccal swabs, skin biopsies and platelets.

This process is designed to allow repeated analysis of changes in human FXN in patients over time as they are dosed with CTI-1601.

The effectiveness of this assay was demonstrated in NHPs dosed for 14 days with 15 mg/kg twice a day of CTI-1601.

The effectiveness of this assay was first demonstrated by its ability to detect the presence of human FXN in those tissues in cynomolgus monkeys.

In an exploratory study, NHPs were dosed for 14 days with 15 mg/kg twice a day of CTI-1601.

Buccal swabs skin biopsies and platelets were obtained on Day 3 prior to administration of any CTI-1601 but after two days of dosing with vehicle.

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This is demonstrated by the appearance of the green bars on Day 10 and 16 in the figure below.

This study demonstrates that CTI-1601 delivers human FXN to NHPs when administered subcutaneously and that we should be able to use our proprietary assay to evaluate change in FXN level in patients with Friedreich’s ataxia as CTI-1601 enters early-stage clinical trials.

Non-Human Primate and Rat Studies

We have conducted 28-day and 13-week GLP toxicology studies for CTI-1601 in two species, rat and NHP.

This study demonstrates that CTI-1601 delivers human FXN to NHPs when administered subcutaneously and that we should be able to use our proprietary assay to evaluate changes in FXN levels in patients with Friedreich’s ataxia as CTI-1601 enters early-stage clinical trials.

Non-Human Primate and Rat Toxicology Studies

We previously conducted 28-day and 13-week GLP toxicology studies of CTI-1601 in two species, rat and NHP.

In the rat studies, some injection sites showed edema and erythema with associated histologic changes localized to the injection site.

The rat studies showed no significant clinical observations and no significant systemic histopathological findings.

In the NHP studies, some injection sites were raised and firm with dose dependent histologic changes around the injection sites.

In the NHP studies, some injection sites were raised and firm with dose dependent histologic changes localized to the injection sites.

The NHP 28-day study showed no systemic toxicity.

The NHP 13-week study showed no systemic toxicity in the low dose group, and minimal to mild histopathological findings in the high dose group.

There were also several episodes of occasional transient rigidity in some animals observed immediately after dosing in the two highest dose groups at very high exposures.

The NHP 13-week study showed no systemic toxicity in the low and mid-dose groups, and minimal to mild histopathological findings in the high dose group.

There were also several episodes of occasional transient muscle rigidity in some animals observed immediately after dosing in the two highest dose groups at very high exposures.

These clinical observations resolved with no intervention and all of the NHPs who experienced these clinical observations received all doses and completed the in-life portion of the study.

We are progressing our toxicology program to support chronic dosing of CTI-1601 and are performing all required studies to support a BLA submission.

The results from these toxicology studies cannot be predicted and could affect the timing and design of the development program for CTI-1601 as well as have an impact on the future safety profile of CTI-1601.

To support extended dosing of patients with CTI-1601, we conducted a 26-week NHP toxicology study in 2021.

In May 2021 we notified the FDA of certain mortalities which occurred at the highest dose levels in the then-ongoing study.

On May 25, 2021, the FDA placed a clinical hold on the CTI-1601 clinical program.

In the clinical hold letter, the FDA stated that it needed to review a full study report from the then-ongoing NHP study and that we could not initiate additional interventional clinical trials until we submitted such report and received notification from the FDA that additional clinical trials could commence.

At the time of the FDA clinical hold, we had no interventional clinical trials with patients enrolled or enrolling.

In July 2021, we completed dosing in the 26-week NHP toxicology study.

The study included four dose groups in addition to vehicle.

Data from the study were collected throughout the second half of 2021 and included in the complete response to the clinical hold submitted to the FDA in January 2022.

In February 2022, we received feedback from the FDA following our submission of the complete response which included a comprehensive study report from the 26-week NHP toxicology study.

The FDA stated that it was maintaining its clinical hold at this time and requested additional information.

We are evaluating how best to respond to their request and also are reassessing the timing of the planned open label extension and the pediatric MAD studies.

Clinical Development

We continue to plan and perform toxicology studies required by FDA to support future clinical studies.

We intend to continue to work closely with the FDA regarding design and timing of the other required studies.

Non-Interventional Studies

We have conducted non-interventional studies to examine the range of tissue FXN concentrations in platelets, buccal cells and skin cells in individuals who are homozygous for the normal FXN gene.

Tissue samples in these studies were collected using the same sampling techniques and proprietary assay used in the interventional studies.

In a 2020 study we obtained data from 8 healthy adults, but the study was then terminated early by the study site due to competing priorities during the COVID-19 pandemic.

In 2021 we initiated a second study that enrolled approximately 60 healthy adults.

Enrollment in this study was completed in early 2022.

Clinical Trials

We submitted our IND application for CTI-1601 in September of 2019 and began Phase 1 clinical trials in December of 2019 in patients with Friedreich’s ataxia.

The design of the clinical trials included a Phase 1 Single Ascending Dose, or SAD trial.

The primary objective of the SAD study was to assess the safety and tolerability of increasing doses of CTI-1601 when administered subcutaneously to patients with Friedreich’s ataxia who are 18 years of age and older.

Patients received either CTI-1601 or placebo.

Pharmacokinetics and pharmacodynamics were also being assessed.

The first two cohorts of this study were dosed prior to March of 2020 after which we paused the study due to concerns about patient safety given the COVID-19 pandemic.

After implementing additional patient safety procedures, we dosed the third cohort of this study in July 2020.

In December 2020 we announced the completion of dosing of the Phase 1 SAD trial.

A safety review committee reviewed preliminary blinded data after each cohort of the SAD trial.

Based on preliminary data, single subcutaneous injections of CTI-1601 at doses up to 100 mg are thought to have been well tolerated.

During the trials, mild and transient injection site adverse events were reported and no serious adverse events were reported.

At all doses tested, the Phase 1 SAD data support further investigation of CTI-1601 Our analysis of the clinical trial results remains ongoing.

In August 2020 we initiated a multiple ascending dose or MAD trial in patients with Friedreich ’ s ataxia which is currently planned to have three cohorts .

The third cohort in this study was dosed in the first quarter of 202 1 .

Based on data from the initial three cohorts we will assess whether to close out the MAD trial as planned or whether to add a fourth cohort to enhance our understanding of the safety and tolerability, PK and PD of CTI-1601 .

As in the SAD study the primary endpoint for the MAD study is safety and tolerability.

A lso, as in the SAD clinical trial, pharmacokinetics will be assessed.

In addition, we will be measuring changes in FXN level over the course of treatment to determine if an increase in FXN in peripheral tissues is achieved.

Development Plan

We expect to initiate an open label extension, or OLE, which we refer to as the JIVE study, in the second half of 2021.

The JIVE study is a clinical trial that will enroll patients who participated in the SAD or MAD study if they are eligible and is designed to gather long-term safety and tolerability data.

In the SAD and MAD clinical studies patients received either CTI-1601 or placebo while in our JIVE study, all patients will receive CTI-1601.

We expect to initiate a MAD placebo-controlled study of CTI-1601 in patients under 18 years of age in the second half of 2021.

Completed Initial Phase 1 Clinical Studies in Adults with Friedreich’s ataxia

We submitted our IND application for CTI-1601 and began Phase 1 clinical trials in 2019 in patients with Friedreich’s ataxia.

We completed two clinical studies of CTI-1601 in adult subjects with Friedreich’s ataxia, a single ascending dose ("SAD") study (completed in 2020) and a multiple ascending dose ("MAD") study (completed in 2021).

The primary objective for the SAD and MAD studies was to assess the tolerability of CTI-1601 at doses ranging from 25 mg to 100 mg administered via subcutaneous ("SC") injection.

The secondary objectives were to establish the pharmacokinetics ("PK") of CTI-1601 administration in humans and to explore the pharmacodynamics ("PD") of CTI-1601 administration by measuring tissue FXN concentrations in accessible tissues, namely buccal and skin cells, and in platelets.

Administration of CTI-1601 via SC injection appeared to be well tolerated up to doses of 100 mg administered daily for up to 13 days.

No serious adverse events ("SAEs") were reported in either study.

The most common treatment emergent adverse events ("TEAEs") were injection site reactions ("ISRs") that were generally mild, self-limited, and usually resolved within approximately 1 hour.

There was rapid uptake of CTI-1601 into the circulation following SC injection, and exposure appears to be proportional to dose.

Data from the MAD study demonstrated that after 7 days of daily dosing of 50 mg and 100 mg of CTI-1601 in subjects with Friedreich’s ataxia, mean tissue FXN concentrations increased in the tissues studied by approximately 2- to 3-fold to levels that are similar to or exceed levels we would expect to see in asymptomatic heterozygous carriers (See Figure 9).

Patients in the 25 mg cohort were dosed once a day for the first 4 days followed by 1 dose every third day through Day 13 for a total of 7 doses, while the patients in the 50 mg cohort were dosed once a day for the first 7 days followed by 1 dose every other day through Day 13 for a total of 10 doses, and patients in the 100 mg cohort were dosed once a day for 13 days consecutively for a total of 13 doses.

(See Figure 10).

The study was designed in this fashion to ensure that the pharmacokinetics of CTI-1601 in patients with Friedreich’s ataxia were characterized at the lower doses before the dose was escalated.

This is typical of first in human studies such as multiple-ascending dose trials that evaluate a study drug’s clinical safety profile.

We believe the data provide preliminary clinical evidence of the potential of CTI-1601 as a treatment for patients with Friedreich’s ataxia and warrant continued evaluation of the potential benefits of sustained treatment.

CTI-1601 Development Plan

We are in the process of evaluating the timeline of the open label extension ("OLE") study which we refer to as the Jive study and the pediatric MAD placebo-controlled study.

The Jive study is a clinical trial that will enroll patients who participated in the SAD or MAD study if they are eligible and is designed to gather long-term data to assess safety and tolerability, dose, PK and PD, and potential efficacy of SC administration of CTI-1601 in subjects with Friedreich’s ataxia.

The pediatric MAD placebo-controlled study will be in patients from two to seventeen years of age.

These patients may also be eligible to enroll in the Jive study after completing participation in the MAD study.

We expect to initiate a registration study once enough data to inform on dosing and trial design has been obtained.

This is currently planned for the second half of 2022.

This study’s design and protocol will be based on the results of the earlier studies and will incorporate feedback we receive from discussions with the regulatory authorities.

The biopharmaceutical industry is characterized by intense and dynamic competition to develop new technologies and proprietary therapies.

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

While we believe that our platform technology, product candidates and scientific expertise in the field of rare diseases provide competitive advantages, we face competition from various sources, including larger and better-funded pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies, as well as from academic institutions, governmental agencies and public and private research institutions.

CTI-1601 may compete with other therapies in development for Friedreich’s ataxia, including development programs by Reata Pharmaceuticals, Inc., PTC Therapeutics, Retrotope, Minoryx Therapeutics, Frategene and.

Exicure as well as companies applying gene therapy technologies such as Neurocrine, Novartis, Takeda, Pfizer, Sarepta (Aavanti Bio) and Design Therapeutics.

In addition, we compete with other companies who are focused on developing and commercializing rare disease therapies, including Agios, Alexion, Amicus, BioCryst, Biomarin, Ultragenyx, and others who may develop products that could compete with CTI-1601, or other rare disease therapies that we may target and develop.

Many of our competitors have significantly greater financial, technical and human resources than we do.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated amongst a smaller number of our competitors.

Our commercial opportunity could be reduced or eliminated if our competitors develop or market products or other novel therapies that are more effective, safer or less costly than our product candidates or obtain regulatory approval for their products more rapidly than we may obtain approval for our product candidates.

We expect to initiate a global registration study once sufficient data is available to inform decisions regarding dosing and trial design.

The design and protocol of the study will be based on the results of the earlier studies and will incorporate feedback from regulatory authorities in various countries.

The progression of the Jive study and the global registration study are pending lifting of the clinical hold.

Intellectual Property

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In addition, we require confidentiality or service agreements from third parties that receive our confidential information or materials.

As of March 1, 2021, our intellectual property portfolio was composed of numerous international and United States non-provisional applications and United States provisional patent applications that we own or co-own, and 5 issued patents and additional provisional patent applications in the United States that we license from academic institutions.

The issued patents in the United States licensed by us, which include issued patents generically covering the composition of matter for CTI-1601 and methods for treating Friedreich’s ataxia, have expiration dates between 2024 and 2034.

As of February 1, 2022, our intellectual property portfolio was composed of numerous international and United States non-provisional applications and United States provisional patent applications that we own or co-own, and five issued patents and additional non-provisional patent applications in the United States that we license from academic institutions.

The issued patents in the United States licensed by us, which include issued patents generically covering the composition of matter for CTI-1601 and methods for treating Friedreich’s ataxia, have

expiration dates between 2024 and 2034.

The international and the United States non-provisional patent applications licensed by us relate to composition of matter and methods of use for CTI-1601.

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A provisional patent application allows for an effective filing date to be established with regard to an invention, but once a provisional patent application is filed, either a corresponding non-provisional patent application or a petition to convert the provisional patent application into a non-provisional patent application must be filed within 12 months or such effective filing date will be lost.

If we or our licensor timely files non-provisional patent applications in the United States and in countries outside of the United States with regard to our provisional patent applications and these non-provisional patent applications result in issued patents, such patents are expected to expire in 2041, without taking potential patent term adjustment or patent term extension into consideration.

If we or our licensor timely files non-provisional patent applications in the United States and in countries outside of the United States with regard to our provisional patent applications and these non-provisional patent applications result in issued patents, such patents are expected to expire in 2041 and 2042, without taking potential patent term adjustment or patent term extension into consideration.

CTI-1601 is covered by licensed issued patents (composition of matter and methods of use) in the United States which, if properly maintained, will expire in 2024 and 2025 (respectively), excluding any patent term extensions that might be available following the grant of marketing authorizations.

We also possess an exclusive license to an international and a United States non-provisional patent application for CTI-1601 (composition of matter and methods of use).

If the international patent applications are timely nationalized in countries outside of the United States, and the patent applications in the United States and other countries result in issued patents, those patents would be expected to expire in the United States and in countries outside of the United States in 2040, This estimated expiration excludes any patent term adjustment that might be available following the grant of the patent and any patent term extensions that might be available following the grant of marketing authorizations.

We also possess an exclusive license to non-provisional applications in the United States and certain countries outside the United States for CTI-1601 (composition of matter and methods of use).

If the patent applications in the United States and other countries result in issued patents, those patents would be expected to expire in the United States and in countries outside of the United States in 2040, This estimated expiration excludes any patent term adjustment that might be available following the grant of the patent and any patent term extensions that might be available following the grant of marketing authorizations.

We cannot predict whether the patent applications we and our licensors are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties.

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The actual protection afforded by a patent, which can vary from country to country, depends on the type of patent, the scope of its coverage and the availability of legal remedies in the country.

We also use other forms of protection besides patent protection and regulatory exclusivity, such as trademark, copyright, and trade secret protectio n, to enhance our intellectual property, particularly where we do not believe patent protection is appropriate or obtainable.

We also use other forms of protection besides patent protection and regulatory exclusivity, such as trademark, copyright, and trade secret protection, to enhance our intellectual property, particularly where we do not believe patent protection is appropriate or obtainable.

We aim to take advantage of all of the intellectual property rights that are available to us and believe that this comprehensive approach will provide us with proprietary exclusive positions for our product candidates, such as CTI-1601, where available.

In-License Agreements

We are party to a License Agreement (the “WFUHS License”), dated November 30, 2016 with Wake Forest University Health Sciences (“WFUHS”) and a License Agreement (the “IU License”), dated November 30, 2016, as amended, with Indiana University (“IU”).

We are party to a License Agreement ("WFUHS License") dated November 30, 2016 with Wake Forest University Health Sciences ("WFUHS") and a License Agreement ("IU License") dated November 30, 2016, as amended, with Indiana University ("IU").

Such agreements provide for a transferable, worldwide license to certain patent rights regarding technology used by us with respect to the development of CTI-1601.

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We are also obligated to reimburse WFUHS and IU for patent-related expenses.

In the event that we dispute the validity of any of the licensed patents, the royalty rate would be tripled during such dispute.

In the event that we dispute the validity of any of the licensed patents, the royalty rate would be tripled during such

We are also obligated to pay to IU a minimum annual royalty of less than $0.1 million per annum starting in the 2020 calendar year for the term of the agreement.

In the event that we are required to pay IU consideration, then we may deduct 20% of such IU consideration on a dollar-for-dollar basis from the consideration due to WFUHS.

In the event that the Company is required to pay WFUHS consideration, then we may deduct 60% of such WFUHS consideration on a dollar-for-dollar basis from the consideration due to IU.

In the event that we are required to pay WFUHS consideration, then we may deduct 60% of such WFUHS consideration on a dollar-for-dollar basis from the consideration due to IU.

During the twelve months ended December 31, 2021 and 2020, no milestones were achieved, and no expense was recognized.

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CTI-1601 is a biologic fusion protein that is produced in E.

We have worked with contract manufacturers to develop a cGMP manufacturing process and analytical methods for drug substance to support Phase 1 clinical trials.

Drug product was also developed and packaged into single use vials for the Phase 1 clinical program.

We also use third party manufacturers for the production of drug product, clinical packaging and storage and distribution.

We relied on third parties to store the CTI-1601 master cell bank and working cell bank, each stored at a different location.

We continue to advance the manufacturing of CTI-1601, obtain stability data, and produce drug product for ongoing toxicology studies and future clinical trials.

We are continually trying to optimize our manufacturing process to increase yields and decrease costs and increase reliability in supply chains.

We have worked with contract manufacturers to develop, in accordance with current good manufacturing practice ("cGMP") a manufacturing process and analytical methods for drug substance to support clinical trials.

The drug product manufacturing process was also developed and packaged into single use vials for the clinical program.

We also use third party manufacturers for the clinical packaging, storage and distribution of CTI-1601.

We rely on third parties to store the CTI-1601 master cell bank and working cell bank, each stored at a different location.

We continue to advance the manufacturing of CTI-1601, obtain stability data, and produce drug product for toxicology studies and future clinical trials.

We are continually trying to optimize our manufacturing process to increase yields, decrease costs and increase reliability in supply chains.

The final process will need to be successfully scaled up to support commercial manufacturing.

The drug substance which is in frozen liquid form for CTI-1601 is currently manufactured for us by KBI Biopharma, Inc.

We are party to a Master Services Agreement, as amended, with KBI, pursuant to which KBI provides biological development and clinical manufacturing services with respect to CTI-1601.

We currently produce a frozen liquid form of drug product at another manufacturer.

We are undertaking a program with a third-party manufacturer to begin to produce a lyophilized version of the drug product from the same KBI drug substance, that, once available, we intend to use in certain of our future planned clinical trials.

Human Capital Resources

Employees and Compensation

In order to achieve the goals and expectations of our Company, it is crucial that we continue to attract and retain top talent.

To facilitate talent attraction and retention, we strive to make our company a safe and rewarding workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits and health and wellness programs, and by programs that build connections between our employees.

To facilitate talent attraction and retention, we strive to make our company a safe and rewarding workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits, paid time-off and health and wellness programs, including programs that build connections between our employees.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, and which comply with local and federal government regulations.

This includes having some of our non-laboratory employees work from home, while implementing additional safety measures for employees continuing critical on-site work.

As of March 1 2021, we employed 28 full-time employees in the United States.

As of February 1, 2022, we employed 31 full-time employees in the United States.

None of our employees are represented by a labor organization or under any collective-bargaining arrangements.

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The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

Diversity and Inclusion

We value the diversity of our employees and take pride in our commitment to diversity and inclusion across all levels of our organizational structure and with respect to our board of directors.

We value diversity and inclusion across our entire workforce.

We are committed to developing strategies for building diverse teams and promoting the advancement of employees from diverse backgrounds.

Scientific Advisors

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Marni Joy Falk, MD

Executive Director, Mitochondrial Medicine Frontier Program at Children’s Hospital of Philadelphia;

Professor, Department of Human Genetics and Department of Pediatrics, University of Pennsylvania Perelman School of Medicine

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Professor of Pediatrics, Indiana University School of Medicine

Marshall Summar, MD

Margaret O’Malley Chair of Genetic Medicine at Children’s National Hospital;

Chair, Division of Genetics of Metabolism and Director, Rare Disease Institute, Children’s National Hospital

We lease office and laboratory space, which consists of approximately 5,000 square feet and 1,750 square feet located in Bala Cynwyd, PA and Philadelphia, PA, respectively.

Our office lease expires in August 2023 with an option to extend for three years, and our laboratory lease expires in December 2021, with an option to extend for an additional year .

The Company believes that it will need to increase both its office and laboratory facilities in the near

Our office lease expires in August 2023 with an option to extend for three years, and our laboratory lease expires in December 2022.

We believe that we will need to increase both its office and laboratory facilities in the near term.

We believe that both appropriate office and laboratory space will be readily available on commercially reasonable terms.

As part of the Merger (as defined below) with Zafgen, Inc., we acquired a non-cancellable operating lease for approximately 17,705 square feet of office space at 3 Center Plaza, Boston, Massachusetts, or the Boston Lease.

The Boston Lease expires on October 30, 2029.

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Corporate Information

We were founded in 2005 as a Delaware corporation under the name Zafgen, Inc., or Zafgen.

On May 28, 2020, Zafgen completed a reverse merger with Chondrial Therapeutics, Inc., or Chondrial, in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated December 17, 2019, by and among Zafgen, Zordich Merger Sub, Inc., Chondrial and Chondrial Therapeutics Holdings, LLC, pursuant to which Zordich Merger Sub, Inc.

merged with and into Chondrial, with Chondrial surviving as a wholly owned subsidiary of the Company.

We were founded in 2005 as a Delaware corporation under the name Zafgen, Inc.

On May 28, 2020, Zafgen completed a reverse merger with Chondrial Therapeutics, Inc.

("Chondrial") in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated December 17, 2019, by and among Zafgen, Zordich Merger Sub, Inc., Chondrial and Chondrial Therapeutics Holdings, LLC, pursuant to which Zordich Merger Sub, Inc.

merged with and into Chondrial, with Chondrial surviving as our wholly owned subsidiary.

Following completion of the Merger, Zafgen, Inc.

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Our website address is www.larimartx.com.

The information on, or that can be accessed through, our website is not part of this prospectus and is not incorporated by reference herein.

The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K and is not incorporated by reference herein.

We have included our website address as an inactive textual reference only.

Available Information

We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission, or the SEC, under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission ("the SEC") under the Securities Exchange Act of 1934, as amended ("the Exchange Act").

The SEC maintains an internet website, www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC.

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Government Regulation

In the United States, drug and biologic products are licensed by FDA for marketing under the Public Health Service Act, referred to as the PHS Act, and regulated under the Federal Food, Drug, and Cosmetic Act, or the FDCA.

In the United States, drug and biologic products are licensed by the FDA for marketing under the Public Health Service Act, referred to as the PHS Act, and regulated under the Federal Food, Drug, and Cosmetic Act ("the FDCA").

Both the FDCA and the PHS Act and their corresponding regulations govern, among other things, the testing, manufacturing, safety, purity, potency, efficacy, labeling, packaging, storage, record keeping, distribution, marketing, sales, import, export, reporting, advertising and other promotional practices involving drug and biological products.

FDA clearance must be obtained before clinical testing of drug and biologic products.

FDA licensure also must be obtained before marketing of drug and biological products.

FDA licensure also must be obtained before the marketing of drug and biological products.

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

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

completion of nonclinical laboratory tests and animal studies according to Good Laboratory Practices, or GLPs, and applicable requirements for the humane use of laboratory animals or other applicable regulations;

preparation of clinical trial material in accordance with Good Manufacturing Practices, or GMPs;

submission to the FDA of an application for an Investigational New Drug, or IND application, which must become effective before human clinical trials may begin;

approval by an institutional review board, or IRB, reviewing each clinical site before each clinical trial may be initiated;

performance of adequate and well-controlled human clinical trials according to Good Clinical Practices, or GCPs and any additional requirements for the protection of human research subjects and their health information, to establish the safety, purity, potency, and efficacy, of the proposed drug or biological product for its intended use;

submission to the FDA of New Drug Application, or NDA, or Biologics License Application, or BLA, for marketing approval that includes substantive evidence of safety, purity, potency, and efficacy from results of nonclinical testing and clinical trials;

satisfactory completion of an FDA inspection prior to NDA or BLA approval of the manufacturing facility or facilities where the drug or biological product is produced to assess compliance with GMPs, to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity;

potential FDA audit of the nonclinical and clinical study sites that generated the data in support of the NDA or BLA;

completion of non-clinical laboratory tests and animal studies according to Good Laboratory Practices, or GLPs, and applicable requirements for the humane use of laboratory animals or other applicable regulations;

preparation of clinical trial material in accordance with Good Manufacturing Practices ("GMPs");

submission to the FDA of an application for an Investigational New Drug ("IND application"), which must become effective before human clinical trials may begin;

approval by an institutional review board ("IRB") reviewing each clinical site before each clinical trial may be initiated;

performance of adequate and well-controlled human clinical trials according to Good Clinical Practices ("GCPs") and any additional requirements for the protection of human research subjects and their health information, to establish the safety, purity, potency, and efficacy, of the proposed drug or biological product for its intended use;

submission to the FDA of New Drug Application ("NDA) or Biologics License Application ("BLA") for marketing approval that includes substantive evidence of safety, purity, potency, and efficacy from results of non-clinical testing and clinical trials;

potential FDA audit of the non-clinical and clinical study sites that generated the data in support of the NDA or BLA;

potential FDA Advisory Committee meeting to elicit expert input on critical issues and including a vote by external committee members;

FDA review and approval, or licensure, of the NDA or BLA, and payment of associated user fees, when applicable;

compliance with any post approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategies, or REMS, and the potential requirement to conduct post approval studies.

Before testing any drug or biological product candidate in humans, the product candidate enters the preclinical testing stage.

Nonclinical tests include laboratory evaluations of product chemistry, pharmacology, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate.

The conduct of the nonclinical tests must comply with federal regulations and requirements including GLPs.

The clinical study sponsor must submit the results of the nonclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.

Some nonclinical testing typically continues after the IND is submitted.

compliance with any post approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategies ("REMS") and the potential requirement to conduct post approval studies.

Before testing any drug or biological product candidate in humans, the product candidate enters the non-clinical testing stage.

Non-clinical tests include laboratory evaluations of product chemistry, pharmacology, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate.

The conduct of the non-clinical tests must comply with federal regulations and requirements including GLPs.

The clinical study sponsor must submit the results of the non-clinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.

Some non-clinical testing typically continues after the IND is submitted.

An IND is an exemption from the FDCA that allows an unapproved product to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer an investigational product to humans.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA requests certain changes to a protocol before the trial can begin, or the FDA places the clinical trial on a clinical hold within that 30-day time period.

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

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA requests certain changes to a protocol before

the trial can begin, or the FDA places the clinical trial on a clinical hold within that 30-day time period.

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

The FDA may also impose clinical holds on a drug or biological product candidate at any time before or during clinical trials due to safety concerns or non-compliance.

If the FDA imposes a clinical hold, trials may not recommence without FDA authorization and then only under terms authorized by the FDA.

Clinical trials may involve the administration of the drug or biological product candidate to healthy volunteers or subjects under the supervision of qualified investigators, generally physicians not employed by or under the study sponsor’s control.

Clinical trials involving some products for certain diseases, including some rare diseases may begin with testing in patients with the disease.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur.

Each protocol and any amendments to the protocol must be submitted to the

FDA as part of the IND.

Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising the GCP requirements, including the requirement that all research subjects or his or her legal representative provide informed consent.

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

Further, each clinical trial must be reviewed and approved by an independent IRB, at or servicing each institution at which the clinical trial will be conducted.

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The IRB also approves the form and content of the informed consent that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed.

Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee.

Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data monitoring committee.

The data monitoring committee may review safety data and/or efficacy data.

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

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An Open Label Expansion study may also be conducted.

An OLE study typically enrolls participants of previous clinical trials and is designed to gather the long-term safety and tolerability data on a potential new medicine beyond the time period of the original studies.

An OLE study typically enrolls participants from previous clinical trials and is designed to gather the long-term safety and tolerability data on a potential new medicine beyond the time period of the original studies.

Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval.

These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.

These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication in real-world scenarios.

They provide additional information regarding risks, benefits and best use, including longer term safety data.

During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators.

Annual progress reports detailing the results of the clinical trials must be submitted to the FDA.

Written IND safety reports must be promptly submitted to the FDA and the investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious suspected adverse reactions over that listed in the protocol or investigator brochure.

the rate of a serious suspected adverse reactions over that listed in the protocol or investigator brochure.

The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting.

The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information.

Phase 1, Phase 2, and Phase 3 clinical trials may not be completed successfully within any specified period, if at all.

The FDA or the sponsor or its data safety monitoring board may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.

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

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the physical characteristics of the drug or biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with GMP requirements.

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After the completion of clinical trials of a drug or biological product, FDA approval of an NDA, or BLA, must be obtained before commercial marketing of the product.

A BLA submission is planned for CTI-1601.

The NDA or BLA must include results of product development, laboratory and animal studies, human studies, information on the manufacture and composition of the product, proposed labeling and other relevant information.

The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept the NDA or BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.

Under the Prescription Drug User Fee Act, as amended, or PDUFA, each NDA or BLA may be accompanied by a significant user fee.

Under the Prescription Drug User Fee Act, as amended, ("PDUFA") each NDA or BLA may be accompanied by a significant user fee.

Under federal law, the submission of most applications is subject to an application user fee.

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The resubmitted application is also subject to review before the FDA accepts it for filing.

The application also needs to be published and submitted in an electronic format that can be processed through the FDA’s electronic systems.

If the electronic submission is not compatible with FDA’s systems, the NDA or BLA can be refused for filing.

The application also needs to be published and submitted in an electronic format that can be processed through the FDA’s electronic systems.

If the electronic submission is not compatible with FDA’s systems, the NDA or BLA can be refused for filing.

Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the NDA or BLA.

The FDA reviews the NDA or BLA to determine, among other things, whether the proposed product is safe, potent, and effective, for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with GMPs to assure and preserve the product’s identity, safety, strength, quality, potency and purity.

The FDA reviews the

NDA or BLA to determine, among other things, whether the proposed product is safe, potent, and effective, for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with GMPs to assure and preserve the product’s identity, safety, strength, quality, potency and purity.

The FDA may refer applications for novel products or products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions.

The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

During the drug or biological product approval process, the FDA also will determine whether a REMS is necessary to assure the safe use of the biological product.

During the drug or biological product approval process, the FDA will also determine whether a Risk Evaluation and Mitigation Strategy ("REMS") is necessary to assure the safe use of the biological product.

If the FDA concludes a REMS is needed, the sponsor of the NDA or BLA must submit a proposed REMS;

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The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.

In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed to further assess a drug or biological product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized.

As a condition for approval, the FDA may also require additional nonclinical testing as a Phase 4 commitment.

As a condition for approval, the FDA may also require additional non-clinical testing as a Phase 4 commitment.

One of the performance goals agreed to by the FDA under the PDUFA is to review standard NDAs or BLAs in 10 months from filing and priority NDAs or BLAs in six months from filing, whereupon a review decision is to be made.

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Manufacturers of our products are required to comply with applicable requirements in the GMP regulations, including quality control and quality assurance and maintenance of records and documentation.

Following approval, the manufacturing facilities are subject to biennial inspections by the FDA’s and such inspections may result in an issuance of FDA Form 483 deficiency observations, untitled letter, or a warning letter, which can lead to plant shutdown and other more serious penalties and fines.

Prior to the institution of any manufacturing changes, a determination needs to be made whether FDA approval is required in advance.

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Other post-approval requirements applicable to drug and biological products, include reporting of GMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse events, reporting updated safety and efficacy information, and complying with electronic record and signature requirements.

After a n NDA or BLA is approved, the product also may be subject to official lot release.

After an NDA or BLA is approved, the product may also be subject to official lot release.

As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.

If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot.

The FDA also may perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer.

The FDA may also perform certain confirmatory tests on lots of some products, before releasing the lots for distribution by the manufacturer.

In addition, the FDA may conduct laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of drug and biological products.

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Defects in manufacturing of commercial products can result in product recalls.

We also must comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-consumer advertising, the prohibition on promoting products for uses or inpatient populations that are not described in the product’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet.

We must also comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-consumer advertising, the prohibition on promoting products for uses or inpatient populations that are not described in the product’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet.

Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions.

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Any agency or judicial enforcement action could have a material adverse effect.

Drug and biological product manufacturers and other entities involved in the manufacture and distribution of approved drug and biological products are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with GMPs and other laws.

Drug and biologic product manufacturers and other entities involved in the manufacture and distribution of approved drug and biological products are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with GMPs and other laws.

Accordingly, manufacturers must continue to expend time, money, and effort in the areas of production and quality control to maintain GMP compliance.

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Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant Orphan Drug Designation (referred to as “ODD”) to a drug or biological 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 a drug or biological product available in the United States for this type of disease or condition will be recovered from sales of the product.

ODD must be requested before submitting a BLA.

Under the Orphan Drug Act, the FDA may grant Orphan Drug Designation ("ODD") 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 a drug or biologic product available in the United States for this type of disease or condition will be recovered from sales of the product.

ODD must be requested before submitting an NDA or BLA.

After the FDA grants ODD, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

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

Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same drug or biological product as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease.

Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same drug or biologic product as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease.

If a drug or biological product designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity.

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As a condition of approval, the FDA may require a sponsor of a drug or biological product receiving accelerated approval to perform post-marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug or biological product may be subject to accelerated withdrawal procedures.

Moreover, under the Food and Drug Administration Safety and Innovation Act enacted in 2012, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug or biological product that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biological product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

Drug and biological products designated as breakthrough therapies are also eligible for accelerated approval.

Moreover, under the Food and Drug Administration Safety and Innovation Act enacted in 2012, a sponsor can request designation of a product candidate as a “breakthrough therapy.”

A breakthrough therapy is defined as a drug or biologic product that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biologic product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.

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 decides that the time period for FDA review or approval will not be shortened.

Furthermore, fast-track designation, priority review, accelerated approval and breakthrough therapy designation, do not change the standards for approval and may not ultimately expedite the development or approval process.

Biologics Price Competition and Innovation Act

The Biologics Price Competition and Innovation Act of 2009, or BPCIA, which was enacted as part of the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, or PPACA, created an abbreviated approval pathway for biological products that are demonstrated to be "biosimilar" or "interchangeable" with an FDA-licensed reference biological product via an approved BLA.

The Biologics Price Competition and Innovation Act of 2009 ("BPCIA") which was enacted as part of the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 ("PPACA") created an abbreviated approval pathway for biological products that are demonstrated to be "biosimilar" or "interchangeable" with an FDA-licensed reference biological product via an approved BLA.

Biosimilarity to an approved reference product requires that there be no differences in conditions of use, route of administration, dosage form, and strength, and no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency.

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before we can commence clinical studies or marketing of the product in those countries.

The approval process and requirements vary from country to country, so the number and type of nonclinical, clinical, and manufacturing studies needed may differ, and the time may be longer or shorter than that required for FDA approval.

To obtain regulatory approval of an orphan drug under the EU regulatory system, we are mandated to submit a Marketing Authorization Application, or MAAs, to be assessed in the Centralized Procedure.

The centralized procedure, which came into operation in 1995, allows applicants to obtain a marketing authorization that is valid throughout the EU.

The approval process and requirements vary from country to country, so the number and type of non-clinical, clinical, and manufacturing studies needed may differ, and the time may be longer or shorter than that required for FDA approval.

To obtain regulatory approval of an orphan drug under the European Union's regulatory system, we are mandated to submit a Marketing Authorization Application ("MAAs"), to be assessed in the Centralized Procedure.

The centralized procedure, which came into operation in 1995, allows applicants to obtain a marketing authorization that is valid throughout the European Union.

It is compulsory for medicinal products manufactured using biotechnological processes, for orphan medicinal products and for human products containing a new active substance which was not authorized in the Community before 20 May 2004 (date of entry into force of Regulation (EC) No 726/2004) and which are intended for the treatment of AIDS, cancer, neurodegenerative disorder or diabetes.

The centralized procedure is optional for any other products containing new active substances not authorized in the Community before 20 May 2004 or for products which constitute a significant therapeutic, scientific or technical innovation or for which a Community authorization is in the interests of patients at Community level.

When a company wishes to place on the market a medicinal product that is eligible for the centralized procedure, it sends an application directly to the European Medicines Agency, or EMA, to be assessed by the Committee for Medicinal Products for Human Use, or CHMP.

When a company wishes to place on the market a medicinal product that is eligible for the centralized procedure, it sends an application directly to the European Medicines Agency ("EMA"), to be assessed by the Committee for Medicinal Products for Human Use ("CHMP").

The CHMP is responsible for conducting the assessment of whether a medicine meets the required quality, safety and efficacy requirements, and whether the product has a positive risk/benefit/risk profile.

The procedure results in a Commission decision, which is valid in all EU Member States.

The procedure results in a Commission decision, which is valid in all European Union Member States.

Centrally authorized products may be marketed in all Member States.

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They coordinate the EMA's scientific assessment of the medicinal product and prepare draft reports.

Once the draft reports are prepared (other experts might be called upon for this purpose), they are sent to the CHMP, whose comments or objections are communicated to the applicant.

Once the draft reports are prepared (other experts might be called upon for this purpose),

they are sent to the CHMP, whose comments or objections are communicated to the applicant.

The rapporteur is therefore the privileged interlocutor of the applicant and continues to play this role, even after the MA has been granted.

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and the labelling and the package leaflet, or Annex 3.

The annexes are translated into the 22 other official languages of the EU During the decision-making process, the Commission services verify that the marketing authorization complies with Union law.

The annexes are translated into the 22 other official languages of the European Union During the decision-making process, the Commission services verify that the marketing authorization complies with Union law.

The Commission has fifteen days to prepare a draft decision.

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The draft decision is then sent to the Standing Committee on Medicinal Products for Human Use, (Member States have one representative each in both of these committees) for their opinions.

The Centralized Procedure provides for the grant of a single marketing authorization that is valid for all EU member states.

The Centralized Procedure provides for the grant of a single marketing authorization that is valid for all European Union member states.

The Decentralized Procedure provides for approval by one or more other, or concerned, member states of an assessment of an application performed by one member state, known as the reference member state.

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If a member state cannot approve the assessment report and related materials on the grounds of potential serious risk to the public health, the disputed points may eventually be referred to the European Commission, whose decision is binding on all member states.

Applications from persons or companies seeking "orphan medicinal product designation" for products they intend to develop for the diagnosis, prevention, or treatment of life-threatening or very serious conditions that affect not more than 5 in 10,000 persons in the EU are reviewed by the Committee for Orphan Medicinal Products, or COMP.

In addition, orphan drug designation can be granted if the drug is intended for a life threatening, seriously debilitating, or serious and chronic condition in the EU and that without incentives it is unlikely that sales of the drug in the EU would be sufficient to justify developing the drug.

Orphan drug designation is only available if there is no other satisfactory method approved in the EU of diagnosing, preventing, or treating the condition, or if such a method exists, the proposed orphan drug will be of significant benefit to patients.

We have obtained orphan drug designation for CTX-1601.

Applications from persons or companies seeking "orphan medicinal product designation" for products they intend to develop for the diagnosis, prevention, or treatment of life-threatening or very serious conditions that affect not more than 5 in 10,000 persons in the European Union are reviewed by the Committee for Orphan Medicinal Products, or COMP.

In addition, orphan drug designation can be granted if the drug is intended for a life threatening, seriously debilitating, or serious and chronic condition in the European Union and that without incentives it is unlikely that sales of the drug in the European Union would be sufficient to justify developing the drug.

Orphan drug designation is only available if there is no other satisfactory method approved in the European Union of diagnosing, preventing, or treating the condition, or if such a method exists, the proposed orphan drug will be of significant benefit to patients.

We have obtained orphan drug designation for CTI-1601.

Orphan drug designation provides opportunities for fee reductions, protocol assistance and access to the centralized procedure before and during the first year after marketing approval.

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This demonstration of clinical superiority may be done at the time of initial approval or in post-approval studies, depending on the type of marketing authorization granted.

A Pediatric Investigation Plan, or PIP, in the EU is aimed at ensuring that the necessary data are obtained to support the authorization of a medicine for children, through studies in children.

EMA offers a scheme that is intended to reinforce early dialogue with, and regulatory support from, EMA in order to stimulate innovation, optimize development and enable accelerated assessment of PRIority MEdicines ("PRIME").

It is intended to build upon the scientific advice scheme and accelerated assessment procedure offered by EMA.

The scheme is voluntary and eligibility criteria must be met for a medicine to qualify for PRIME.

The PRIME scheme is open to medicines under development and for which the applicant intends to apply for an initial marketing authorization application through the centralized procedure.

Eligible products must target conditions for which where is an unmet medical need (there is no satisfactory method of diagnosis, prevention or treatment in the European Union or, if there is, the new medicine will bring a major therapeutic advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods or therapy or improving existing ones.

Applicants will typically be at the exploratory clinical trial phase of development and will have preliminary clinical evidence in patients to demonstrate the promising activity of the medicine and its potential to address to a significant extent an unmet medical need.

In exceptional cases, applicants from the academic sector or SMEs (small and medium sized enterprises) may submit an eligibility request at an earlier stage of development if compelling non-clinical data in a relevant model provide early evidence of promising activity, and first in man studies indicate adequate exposure for the desired pharmacotherapeutic effects and tolerability.

If a medicine is selected for the PRIME scheme, EMA:

Appoints a rapporteur from the Committee for Medicinal Products for Human Use ("CHMP") or from the Committee for Advanced Therapies ("CAT") to provide continuous support and to build up knowledge of the medicine in advance of the filing of a marketing authorization application;

Issues guidance on the applicant’s overall development plan and regulatory strategy;

Organizes a kick-off meeting with the rapporteur and experts from relevant EMA committees and working groups;

Provides a dedicated EMA contact person;

Provides scientific advice at key development milestones, involving additional stakeholders, such as health technology assessment bodies and patients, as needed.

For SMEs who enter the scheme based on data showing proof of principle, the appointment of the rapporteur occurs once they have generated data confirming eligibility at proof of concept stage.

They are required to submit relevant data and justification as the product development reaches this stage.

Medicines that are selected for the PRIME scheme are also expected to benefit from EMA’s accelerated assessment procedure at the time of application for marketing authorization.

Where, during the course of development, a medicine no longer meets the eligibility criteria, support under the PRIME scheme may be withdrawn.

A Pediatric Investigation Plan ("PIP") in the European Union is aimed at ensuring that the necessary data are obtained to support the authorization of a medicine for children, through studies in children.

All applications for marketing authorization for new medicines have to include the results of studies as described in an agreed PIP, unless the study results are deferred, or the medicine is exempt because of a waiver.

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with the results of studies from a PIP included in the product information are eligible for an extension of their supplementary protection certificate by six months.

This is the case even when the studies’ results are negative.

This is the case even when the studies’

results are negative.

For orphan medicines, the incentive is an additional two years of market exclusivity.

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during the transition period under the terms of the EU-UK Withdrawal Agreement.

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

A transition period, which ended on December 31, 2020, maintained access to the EU single market and to the global trade deals

negotiated by the EU on behalf of its members.

The transition period provided time for the U.K.

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

From January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or MHRA, will be the U.K.’s standalone medicines and medical devices regulator.

and EU to negotiate a framework for partnership for the future, which was then crystallized in the Trade and Cooperation Agreement ("TCA") and became effective on the January 1, 2021.

From January 1, 2021, the Medicines and Healthcare products Regulatory Agency ("MHRA") will be the U.K.’s standalone medicines and medical devices regulator.

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

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The federal Anti-Kickback Statute makes it illegal for any person or entity to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is in exchange for or to induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid.

The term “remuneration” has been broadly interpreted to include anything of value;

The term “remuneration”

has been broadly interpreted to include anything of value;

Federal false claims and false statement laws, including the federal civil False Claims Act, prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent;

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 or making any false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their implementing regulations, impose obligations on certain types of individuals and

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their implementing regulations, impose obligations on certain types of individuals;

entities regarding the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information;

The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments or other transfers of value made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

The Foreign Corrupt Practices Act, or FCPA prohibits U.S.

Beginning in 2022, applicable manufacturers are also required to report such information regarding payments and transfers of value provided, as well as ownership and investment interests held, during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists and certified nurse-midwives;

The Foreign Corrupt Practices Act ("FCPA") prohibits U.S.

businesses and their representatives from offering to pay, paying, promising to pay or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business.

Many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs.

Additionally, we may be subject to state laws that require pharmaceutical companies to comply with the federal government’s and/or pharmaceutical industry’s voluntary compliance guidelines, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, as well as state and foreign laws governing the privacy and security of health information, many of which differ from each other in significant ways and often are not preempted by HIPAA.

Additionally, to the extent that our product is sold in a foreign country, we may be subject to similar foreign laws.

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Therefore, any reduction in reimbursement that results from federal legislation or regulation may result in a similar reduction in payments from private payers.

The P atient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the Affordable Care Act substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the Affordable Care Act substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry.

The Affordable Care Act is intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on pharmaceutical and medical device manufacturers, and impose additional health policy reforms.

Among other things, the Affordable Care Act expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum Medicaid rebate for both branded and generic drugs, expanded the 340B program, and revised the definition of average manufacturer price , or AMP , which could increase the amount of Medicaid drug rebates manufacturers are required to pay to states.

The legislation also extended Medicaid drug rebates, previously due only on fee-for-service Medicaid utilization, to include the utilization of Medicaid managed care organizations as well and created an alternative rebate formula for certain new formulations of certain existing products that is intended to increase the amount of rebates due on those drugs.

Among other things, the Affordable Care Act expanded manufacturers’

rebate liability under the Medicaid Drug Rebate Program by increasing the minimum Medicaid rebate for both branded and generic drugs, expanded the 340B program, and revised the definition of average manufacturer price ("AMP"), which could increase the amount of Medicaid drug rebates manufacturers are required to pay to states.

The legislation also extended Medicaid drug rebates, previously due only on fee-for-service Medicaid utilization, to include the utilization of Medicaid managed care organizations and created an alternative rebate formula for certain new formulations of certain existing products that is intended to increase the amount of rebates due on those drugs.

On February 1, 2016, CMS issued final regulations to implement the changes to the Medicaid Drug Rebate program under the Affordable Care Act.

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The Budget Control Act of 2011, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress.

The Joint Select Committee did not achieve its targeted deficit reduction of an amount greater than $1.2 trillion for the fiscal years 2012 through 2021, triggering the legislation’s automatic reductions to several government programs.

These reductions included aggregate reductions to Medicare payments to healthcare providers of up to 2.0% per fiscal year, which went into effect in April 2013.

Subsequent litigation extended the 2% reduction, on average, to 2030 unless additional Congressional action is taken.

However, pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, the 2% Medicare sequester reductions have been suspended from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic.

Subsequent legislation extended the 2% reduction, on average, to 2030 unless additional Congressional action is taken.

However, pursuant to the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") the 2% Medicare sequester reductions were suspended from May 1, 2020 through December 31, 2021 due to the COVID-19 pandemic.

The sequester will remain in place through 2030.

On January 2, 2013, the American Taxpayer Relief Act was signed into law, which, among other things, 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.

Further legislative and regulatory changes under the Affordable Care Act remain possible, although the new Administration under President Biden has signaled that it plans to build on the Affordable Care Act and expand the number of people who are eligible for subsidies under it.

President Biden indicated that he intends to use executive orders to undo changes to the Affordable Care Act made by the former administration and would advocate for legislation to build on the Affordable Care Act.

It is unknown what form any such changes or any law would take, and how or whether it may affect our business in the future.

We expect that changes or additions to the Affordable Care Act, the Medicare and Medicaid programs, changes allowing the federal government to directly negotiate drug prices and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry.

The Affordable Care Act has been subject to challenges in the courts.

The Affordable Care Act also has been subject to challenges in court.

On December 14, 2018, a Texas U.S.

District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.

District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress.

On December 18, 2019, the Fifth Circuit U.S.

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An appeal was taken to the U.S.

Supreme Court which heard oral arguments in the case on November 10, 2020.

A ruling is expected in 2021.

The Affordable Care Act requires pharmaceutical manufacturers of branded prescription drugs to pay a branded prescription drug fee to the federal government.

Each individual pharmaceutical manufacturer pays a prorated share of the branded prescription drug fee, based on the dollar value of its branded prescription drug sales to certain federal programs identified in the law.

Furthermore, the law requires manufacturers to provide a 50% discount off the negotiated price of prescriptions filled by beneficiaries in the Medicare Part D coverage gap, referred to as the “donut hole.” The Bipartisan Budget Act of 2018, or the BBA, among other things, amended the Affordable Care Act, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole,” by increasing from 50 percent to 70 percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D.

The Affordable Care Act also expanded the Public Health Service’s 340B drug pricing program.

The 340B drug pricing program requires participating manufacturers to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for the manufacturer’s covered outpatient drugs.

The Affordable Care Act expanded the 340B program to include additional types of covered entities:

certain free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals, each as defined by the Affordable Care Act.

Because the 340B ceiling price is determined based on AMP and Medicaid drug rebate data, revisions to the Medicaid rebate formula and AMP definition could cause the required 340B discounts to increase.

Payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives as well.

For example, CMS may develop new payment and delivery models, such as bundled payment models.

Recently, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products.

Such scrutiny has resulted in several recent U.S.

Congressional inquiries and proposed, and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for pharmaceutical products.

Supreme Court.

On June 17, 2021, the Supreme Court ruled that the plaintiffs lacked standing to challenge the law as they had not alleged personal injury traceable to the allegedly unlawful conduct.

As a result, the Supreme Court did not rule on the constitutionality of the Affordable Care Act.

Further changes to and under the Affordable Care Act remain possible but it is unknown what form any such changes or any law proposed to replace or revise the Affordable Care Act would take, and how or whether it may affect our business in the future.

We expect that changes to the Affordable Care Act, the Medicare and Medicaid programs, changes allowing the federal government to directly negotiate drug prices and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

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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